Tim Hortons Inc. Announces 2009 First Quarter Results



    
    Positive same-store sales growth results in 7.8% operating income
    increase to $104.9 million

    (All amounts in Canadian dollars)

                         Financial & Sales Highlights
                         ----------------------------

    -------------------------------------------------------------------------
    First Quarter Ended                          Q1 2009   Q1 2008  % Change
    -------------------------------------------------------------------------
    Revenues                                    $  507.2  $  460.3     10.2%
    Operating Income(1)                         $  104.9  $   97.3      7.8%
    Effective Tax Rate(1)                           33.3%     32.8%
    Net Income attributable to THI              $   66.4  $   61.8      7.5%
    Diluted Earnings Per Share (EPS)
     attributable to THI                        $   0.37  $   0.33     10.1%
    Fully Diluted Shares                           181.3     185.8    (2.4)%
    -------------------------------------------------------------------------
    ($ in millions, except EPS. Fully diluted shares in millions. All numbers
    rounded.)

    (1) Operating Income and Effective Tax Rate incorporate adoption of SFAS
        160 - Noncontrolling Interests in Consolidated Financial Statements.

    -------------------------------------------------------------------------
    Same-Store Sales(2)                                    Q1 2009   Q1 2008
    -------------------------------------------------------------------------
    Canada                                                    3.4%      3.5%
    U.S.                                                      3.2%      1.0%
    -------------------------------------------------------------------------
    (2) Includes sales at Franchised and Company-owned locations. As of
        March 29, 2009, 99.4% of the Company's restaurants in Canada and
        96.4% of its U.S. restaurants were franchised.

    Highlights
    ----------
    -   First quarter systemwide sales(3) increased 6.6% on a constant
        currency basis
    -   28 new locations opened in first quarter, 20 in Canada and 8 in the
        U.S.
    -   Board declares quarterly dividend of $0.10 per share
    -   Board approves reorganization as a Canadian public company subject to
        shareholder approval and satisfaction of additional conditions; share
        repurchase program deferred in a related decision
    

    OAKVILLE, ON, May 7 /CNW/ - Tim Hortons Inc. (NYSE:   THI, TSX: THI) today
announced its results for the first quarter ended March 29, 2009.
    "Sales growth in both our Canadian and U.S. markets was quite strong in
the first quarter considering the challenging economic circumstances that
continued to persist. Sales accelerated through the quarter after a slow start
in January, supported by active menu and marketing programs and previous
pricing in the system. We also continued to execute our growth agenda, opening
new restaurants in targeted U.S. markets and throughout Canada," said Don
Schroeder, president and CEO.

    Consolidated Results

    First quarter systemwide sales(3) grew 6.6% on a constant currency basis.
Total revenues were $507.2 million in the first quarter, up 10.2% compared to
$460.3 million in the same period of 2008. Systemwide sales growth drove
higher rents, royalties and distribution revenues. Total revenues also
benefited from a positive impact of approximately 1.8% from foreign exchange
translation. These factors were partially offset by lower revenues from
Company-operated and FIN 46R restaurants.
    Sales, consisting primarily of warehouse sales, increased 10.8% in the
first quarter compared to last year. Higher sales reflect new products managed
through the supply chain including expansion in the grocery store channel,
higher prices on coffee and other commodities, as a result of higher
underlying costs, and systemwide sales growth. Significant changes in foreign
exchange rates also contributed to the growth. Rents and royalties rose 8.3%
in the first quarter, consistent with systemwide sales growth. Franchise fees
increased 13.9% year-over-year, due to higher revenue from restaurant resales
and replacements, a higher number of renovations and foreign exchange.
    Same-store sales increased 3.4% in Canada and 3.2% in the U.S., and
progressively strengthened during the quarter. Same-store sales were driven by
active menu and marketing initiatives that included combo product offerings
focused on both the breakfast and snacking day parts, as well as our popular
annual Roll Up the Rim to Win(R) contest. This year's contest included prizes
such as Toyota Venzas(R), $10,000 cash, Toshiba(R) Laptops, TimCards(R) and
millions of food prizes. Previous pricing in the system also contributed to
same-store sales growth, as did the timing of Easter compared to last year. In
the second quarter, the benefit of previous pricing in the system is expected
to be less than 1% and the timing benefit of the shift in Easter will reverse.
    During the quarter, we continued to offer combo programs in Canada and
the U.S. Several combo initiatives focused on the breakfast day part,
including breakfast sandwiches with hash browns. In the U.S., combo programs
also included a sausage and a biscuit at an attractive price point. Cherry
Chocolate Bloom donuts, Trail Mix cookies and Whole Grain Blueberry muffins
were promoted during the quarter. In the snacking day part, we bundled coffee
and tea with muffin or cookie combinations at an attractive price point. In
March, we introduced Wrap Snackers with BBQ and Ranch flavors in both Canada
and the U.S., subsequently supported by a buy-one get-one free promotion in
Canada and a free sample promotion in the U.S.
    Foreign exchange negatively impacted individual cost structure line items
by more than 2% on average in the first quarter, more than offsetting the
positive impact of foreign exchange on revenues.
    Cost of sales in the first quarter were up 10.2%. Costs associated with
new products managed through the supply chain, product mix and cost changes,
including increases in underlying commodity costs, and a higher number of
system restaurants open contributed to higher warehouse costs, as did higher
average same-store sales and foreign exchange. Operating expenses grew 14.2%
in the first quarter. The largest components of the operating expense increase
were the higher number of locations and related rent and property expenses.
Higher depreciation, project and related support costs also contributed to the
increase, as did foreign exchange. Franchise fee costs rose 8.2%, attributable
to higher costs from resales and replacements, a higher number of renovations
and replacements, and foreign exchange changes. Lower support costs and
expenses partially offset these higher costs.
    General and administrative costs increased 8.4% compared to the same
period last year. The increase incorporates higher professional fees, foreign
currency impacts and a timing shift of certain items. Approximately $1.4
million in costs were incurred to support the Company's ongoing initiative to
undertake a feasibility assessment relating to the Company's corporate
structure (see Corporate Developments for further information).
    Equity income increased by 6.7% during the quarter to $7.9 million
compared to $7.4 million last year. Equity income was reduced in the first
quarter of 2008 as our bakery joint venture had a product supply issue and
began commissioning a new pastry line.
    Operating income for the first quarter was $104.9 million, an increase of
7.8% from $97.3 million in the same period last year. Operating income
benefited from higher revenue growth and improvement of the U.S. segment
including benefits associated with the restaurant closures and related asset
impairment charge which occurred in late 2008.
    Net interest expense was $4.9 million in the first quarter compared to
$4.4 million last year. The increase is the result of lower interest income
and higher interest expense on additional capital leases offset partially by
lower interest costs on external debt.
    First quarter net income attributable to Tim Hortons was $66.4 million,
increasing 7.5% from $61.8 million last year. Net income growth was offset in
part by a higher effective tax rate, which was 33.3% compared to 32.8% in the
same period last year.
    Diluted earnings per share attributable to Tim Hortons (EPS) were $0.37,
up 10.1% compared to $0.33 in the first quarter of 2008. There were 2.4% fewer
shares outstanding in the quarter due to the Company's share repurchase
program.

    Segmented Performance Commentary

    
    Canada
    ------
    

    Canadian same-store sales in the first quarter increased by 3.4%, of
which approximately 2.8% was due to previous pricing in the system. The timing
of Easter compared to last year contributed approximately 0.4% to same-store
sales growth and will reverse in the second quarter. Sales improved in
February and March after experiencing more moderate growth in January due
primarily to poor weather. Strong menu promotional programs, including combo
programs, contributed to the sales performance in a challenging economic
climate, supported by advertising that included the Roll Up the Rim to Win(R)
campaign.
    Operating income in the Canadian segment was $115.4 million, increasing
8.3% compared to $106.5 million in the first quarter of 2008. A total of 20
restaurants were opened in Canada during the quarter.

    
    United States
    -------------
    

    The U.S. segment had strong sales performance with a 3.2% increase in
same-store sales, reversing declines the past two quarters. Sales in the U.S.
business also progressively strengthened during the quarter. Previous pricing
in the system contributed approximately 3.2% to the same-store sales increase,
which also benefited by approximately 0.7% from the timing of Easter compared
to the same quarter last year, an impact that will reverse in the second
quarter. Innovation relating to menu promotional activities, including product
combo offerings and bundles with attractive price points, helped drive sales
this quarter. By the end of the first quarter, 15 co-branded Tim Hortons -
Cold Stone Creamery(R) locations had been opened, including one co-branded
Cold Stone Creamery site, experiencing positive consumer trial and sales
contributions.
    The U.S. segment had an operating loss of $0.6 million in the first
quarter, a significant improvement compared to a loss of $2.9 million in the
same quarter last year. Approximately $1.4 million of the earnings improvement
was related to benefits from the impairment and restaurant closure charge
taken in the fourth quarter of 2008. Currency translation raised both U.S.
segment revenues and costs by approximately 19% during the quarter compared to
the same period in 2008. A total of 8 locations were opened in the U.S. during
the quarter.
    Internationally, in the Republic of Ireland and the U.K., there are now
299 licensed locations primarily in the convenience store channel under the
Tim Hortons brand.

    Corporate Developments

    
    Corporate Structure
    -------------------
    

    As previously disclosed, the Company commenced a review in the fourth
quarter of 2008, with the support of external advisors, to assess various
opportunities related to our corporate structure, including potentially
converting our parent company from a U.S. to a Canadian corporation. This
review is now substantially complete, and Management and the Board have
determined that it would be in the best interests of the Company and our
shareholders for our U.S. parent corporation to reorganize as a Canadian
public company. The timing and completion of the contemplated reorganization
is subject to shareholder approval, and also remains subject to the
satisfaction of additional transaction conditions, including conditions
relating to certain Canadian tax considerations. Although the Company is
taking steps to proceed with this potential transaction and resolve the
outstanding conditions, there can be no assurance that we will be able to
satisfy these conditions within our anticipated timeframes, or at all, for
that matter. Additional information about the proposed reorganization will be
provided as we proceed.
    In addition to significant operational and administrative benefits, it is
anticipated that the reorganization, if approved, would create long-term value
by bringing our effective tax rates closer to lower Canadian statutory rates.
The potential change in jurisdiction of incorporation does not in any way
affect the Company's commitment to growing our business in the U.S. or our
underlying operations, as previously outlined. We would expect to incur
certain charges for discrete items, the majority of which would be non-cash
tax charges, and transactional costs in the year of implementation. If the
transaction is implemented in 2009, the impact of the charges and
transactional costs would result in our 2009 targeted tax rate exceeding the
identified range of 32% to 34% and, potentially, could cause our targeted
operating income to fall below the targeted range.
    The Company intends to maintain dual listings on both the New York Stock
Exchange and Toronto Stock Exchange following the proposed reorganization.

    
    $200 million Share Repurchase Program
    -------------------------------------
    

    During the quarter, the Company spent $16.7 million to purchase
approximately 0.6 million shares as part of our share repurchase program. As
announced earlier this year, the Company contemplated deferring future share
repurchases as part of its 2009 program in the event a decision was made to
proceed with a change in the Company's corporate structure. As a result of the
Board's decision to approve a transaction to reorganize as a public Canadian
company, subject to shareholder approval and additional conditions, the
Company has decided to defer further purchases in this year's share repurchase
program. Given the decision to defer the program, we do not expect to complete
the full authorized amount of the share repurchase program. Following
implementation of a new structure, if approved by shareholders and other
conditions are satisfied, the Company plans to re-evaluate its share purchase
program in the context of its overall capital allocation activities.

    
    Board declares dividend payment of $0.10 per share
    --------------------------------------------------
    

    The Board of Directors has declared a quarterly dividend of $0.10 per
share payable on June 16th, 2009 to shareholders of record as of June 2nd,
2009. The Company's current dividend policy is to pay a total of 20%-25% of
prior year, normalized annual net earnings in dividends each year, returning
value to shareholders based on the Company's earnings growth.
    Dividends are paid in Canadian dollars to all shareholders with Canadian
resident addresses whose shares are registered with Computershare (the
Company's transfer agent). For all other shareholders, including all
shareholders who hold their shares indirectly (i.e., through their broker) and
regardless of country of residence, the dividend will be converted to U.S.
dollars on June 9th, 2009 at the daily noon rate established by the Bank of
Canada and paid in U.S. dollars on June 16th, 2009.

    
    Tim Hortons to host conference call at 1:30 p.m. (EDST) today, May 7th,
    2009
    

    Tim Hortons will host a conference call to discuss its first quarter
results beginning at 1:30 p.m. Eastern Daylight Savings Time (EDST) on
Thursday, May 7th, 2009. Investors and the public may listen to the conference
call by calling (416) 641-6712 or 1 (800) 354-6885 (no access code required),
or through simultaneous webcast by visiting the investor relations website at
www.timhortons-invest.com, and clicking on the "Events and Presentations" tab.
A slide presentation will be available to coincide with the conference call on
this site. A replay of the call will be available for one week and can be
accessed by calling (416) 626-4100 or 1 (800) 558-5253. The reservation number
for the replay of the call is 21412008. The call will also be archived on our
website for one year.

    Annual Meeting of Stockholders

    Tim Hortons will host its annual meeting of stockholders on May 8th, 2009
at the School of Hospitality Management, Ted Rogers School of Business,
Ryerson University, 7th Floor Auditorium, 55 Dundas Street West, Toronto,
Ontario starting at 10:30 a.m. The annual meeting will be simulcast, including
presentation material, and will be accessible by visiting the "Events and
Presentations" tab at www.timhortons-invest.com. An archive of the simulcast
will also be available at this site for a period of one year.

    Safe Harbor Statement

    Certain information in this news release, particularly information
regarding future economic performance, finances, and plans, expectations and
objectives of management, is forward-looking as contemplated under the Private
Securities Litigation Reform Act of 1995. Various factors including those
described as "risk factors" in the Company's 2008 Annual Report on Form 10-K,
filed February 26, 2009, and those risk factors set forth in our Safe Harbor
Statement, as well as other possible factors not listed or described in the
foregoing, could affect the Company's actual results and cause such results to
differ materially from those expressed in forward-looking statements. As such,
readers are cautioned not to place undue reliance on forward-looking
statements contained in this news release, which speak only as of the date
hereof. Except as required by federal or provincial securities laws, the
Company undertakes no obligation to publicly release any revisions to the
forward looking statements contained in this release, or to update them to
reflect events or circumstances occurring after the date of this release, or
to reflect the occurrence of unanticipated events, even if new information,
future events or other circumstances have made the forward-looking statements
incorrect or misleading. Please review the Company's Safe Harbor Statement at
timhortons.com/en/about/safeharbor.html.

    
    (3) Total systemwide sales growth includes restaurant level sales at both
        Company and Franchise restaurants. Approximately 99% of our
        consolidated system is franchised as at March 29th, 2009. Systemwide
        sales growth is determined using a constant exchange rate, where
        noted, to exclude the effects of foreign currency translation. U.S.
        dollar sales are converted to Canadian dollar amounts using the
        average exchange rate of the base year for the period covered. For
        the first quarter of 2009, systemwide sales growth was up 6.6%
        compared to the first quarter of 2008. Systemwide sales are important
        to understanding our business performance as they impact our
        franchise royalties and rental income, as well as our distribution
        income. Changes in systemwide sales are driven by changes in average
        same-store sales and changes in the number of systemwide restaurants.
    

    Tim Hortons Inc. Overview

    Tim Hortons is the fourth largest publicly-traded quick service
restaurant chain in North America based on market capitalization, and the
largest in Canada. Tim Hortons appeals to a broad range of consumer tastes,
with a menu that includes coffee and donuts, premium coffees, flavored
cappuccinos, specialty teas, home-style soups, fresh sandwiches and fresh
baked goods. As of March 29, 2009, Tim Hortons had 3,457 systemwide
restaurants, including 2,930 in Canada and 527 in the United States. More
information about the Company is available at www.timhortons.com.



    
                      TIM HORTONS INC. AND SUBSIDIARIES
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
     (In thousands of Canadian dollars, except share and per share data)

                                   (Unaudited)

                                 First quarter ended
                                March 29,   March 30,
                                    2009        2008    $ Change    % Change
                              ----------- ----------- ----------- -----------
    REVENUES
    Sales                      $ 339,619   $ 306,506   $  33,113       10.8%
    Franchise revenues:
      Rents and royalties        147,139     135,880      11,259        8.3%
      Franchise fees              20,427      17,931       2,496       13.9%
                              ----------- ----------- ----------- -----------
                                 167,566     153,811      13,755        8.9%
                              ----------- ----------- ----------- -----------
    TOTAL REVENUES               507,185     460,317      46,868       10.2%
                              ----------- ----------- ----------- -----------

    COSTS AND EXPENSES
    Cost of sales                299,951     272,283      27,668       10.2%
    Operating expenses            57,106      50,009       7,097       14.2%
    Franchise fee costs           19,778      18,280       1,498        8.2%
    General and administrative
     expenses                     33,476      30,886       2,590        8.4%
    Equity (income)               (7,855)     (7,362)       (493)       6.7%
    Other (income), net             (164)     (1,111)        947         N/M
                              ----------- ----------- ----------- -----------
    TOTAL COSTS AND
     EXPENSES, NET               402,292     362,985      39,307       10.8%
                              ----------- ----------- ----------- -----------

    OPERATING INCOME             104,893      97,332       7,561        7.8%

    Interest (expense)            (5,457)     (6,351)        894      (14.1%)
    Interest income                  554       1,990      (1,436)        N/M
                              ----------- ----------- ----------- -----------

    INCOME BEFORE INCOME TAXES    99,990      92,971       7,019        7.5%

    INCOME TAXES                  33,261      30,489       2,772        9.1%
                              ----------- ----------- ----------- -----------

    Net Income                    66,729      62,482       4,247        6.8%
    Net income attributable to
     noncontrolling interests        290         662        (372)     (56.2%)
                              ----------- ----------- ----------- -----------
    NET INCOME ATTRIBUTABLE TO
     TIM HORTONS INC.          $  66,439   $  61,820   $   4,619        7.5%
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------
    Basic earnings per share of
     common stock attributable
     to Tim Hortons Inc.       $    0.37   $    0.33   $    0.03       10.1%
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------
    Diluted earnings per share
     of common stock attributable
     to Tim Hortons Inc.       $    0.37   $    0.33   $    0.03       10.1%
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------
    Weighted average number of
     shares of common stock -
     Basic (in thousands)        181,072     185,515      (4,443)      (2.4%)
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------
    Weighted average number of
     shares of common stock -
     Diluted (in thousands)      181,301     185,811      (4,510)      (2.4%)
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------
    Dividend per share of
     common stock              $    0.10   $    0.09   $    0.01
                              ----------- ----------- -----------
                              ----------- ----------- -----------
    N/M - not meaningful
    (all numbers rounded)



                      TIM HORTONS INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEET
                     (In thousands of Canadian dollars)

                                                             As at
                                                  ---------------------------
                                                    March 29,    December 28,
                                                       2009          2008
                                                  ------------- -------------
                                                          (Unaudited)
    ASSETS

    Current assets
      Cash and cash equivalents                   $     56,694  $    101,636
      Restricted cash and cash equivalents              34,286        62,329
      Accounts receivable, net                         153,658       159,505
      Notes receivable, net                             24,437        22,615
      Deferred income taxes                             17,548        19,760
      Inventories and other, net                        79,271        71,505
      Advertising fund restricted assets                26,108        27,684
                                                  ------------- -------------
    Total current assets                               392,002       465,034

    Property and equipment, net                      1,347,245     1,332,852

    Notes receivable, net                               16,775        17,645

    Deferred income taxes                               31,764        29,285

    Intangible assets, net                               2,471         2,606

    Equity investments                                 129,771       132,364

    Other assets                                        11,525        12,841
                                                  ------------- -------------
    Total assets                                  $  1,931,553  $  1,992,627
                                                  ------------- -------------
                                                  ------------- -------------



                      TIM HORTONS INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEET
                      (In thousands of Canadian dollars)

                                                             As at
                                                  ---------------------------
                                                    March 29,    December 28,
                                                       2009          2008
                                                  ------------- -------------
                                                         (Unaudited)

    LIABILITIES AND EQUITY

    Current liabilities
      Accounts payable                            $    111,803  $    157,210
      Accrued liabilities:
        Salaries and wages                               6,905        18,492
        Taxes                                           17,128        25,605
        Other                                           75,415       110,518
      Advertising fund restricted liabilities           46,293        47,544
      Current portion of long-term obligations           6,753         6,691
                                                  ------------- -------------
    Total current liabilities                          264,297       366,060
                                                  ------------- -------------

    Long-term obligations
      Term debt                                        331,678       332,506
      Advertising fund restricted debt                   5,304         6,929
      Capital leases                                    59,858        59,052
      Deferred income taxes                             14,197        13,604
      Other long-term liabilities                       73,753        72,467
                                                  ------------- -------------
    Total long-term obligations                        484,790       484,558
                                                  ------------- -------------

    Equity
      Equity of Tim Hortons Inc.
        Common stock, (US$0.001 par value per share)
          Authorized: 1,000,000,000 shares
          Issued: 193,302,977 shares                       289           289
        Capital in excess of par value                 930,336       929,102
        Treasury stock, at cost: 12,313,899 and
         11,754,201 shares, respectively              (416,020)     (399,314)
        Common stock held in trust, at cost:
         358,186 and 358,186 shares, respectively      (12,287)      (12,287)
        Retained earnings                              725,835       677,550
        Accumulated other comprehensive loss           (47,117)      (54,936)
                                                  ------------- -------------
      Total equity of Tim Hortons Inc.               1,181,036     1,140,404
      Noncontrolling interests                           1,430         1,605
                                                  ------------- -------------
    Total equity                                     1,182,466     1,142,009
                                                  ------------- -------------
    Total liabilities and equity                  $  1,931,553  $  1,992,627
                                                  ------------- -------------
                                                  ------------- -------------



                      TIM HORTONS INC. AND SUBSIDIARIES
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                     (In thousands of Canadian dollars)

                                                      First Quarter Ended
                                                  ---------------------------
                                                    March 29,      March 30,
                                                      2009           2008
                                                  ------------- -------------
                                                          (Unaudited)
    CASH FLOWS PROVIDED FROM (USED IN)
     OPERATING ACTIVITIES
    Net income                                    $     66,729  $     62,482
    Net income attributable to noncontrolling
     interests                                            (290)         (662)
    Adjustments to reconcile net income to net
     cash provided by operating activities
      Depreciation and amortization                     24,791        21,866
      Stock-based compensation expense                   1,481         1,650
      Equity income, net of cash dividends               2,633         3,122
      Deferred income taxes                                799        (1,840)
      Changes in operating assets and liabilities
        Restricted cash and cash equivalents            28,166        19,897
        Accounts and notes receivable                    6,266           826
        Inventories and other                           (6,556)        1,340
        Accounts payable and accrued liabilities       (99,405)      (95,867)
      Other, net                                         1,170         5,659
                                                  ------------- -------------
    Net cash provided from operating activities         25,784        18,473
                                                  ------------- -------------

    CASH FLOWS (USED IN) PROVIDED FROM
     INVESTING ACTIVITIES
    Capital expenditures                               (35,721)      (32,511)
    Principal payments on notes receivable                 585           689
    Other investing activities                          (1,286)         (127)
                                                  ------------- -------------
    Net cash used in investing activities              (36,422)      (31,949)
                                                  ------------- -------------

    CASH FLOWS (USED IN) PROVIDED FROM FINANCING
     ACTIVITIES
    Purchase of treasury stock                         (16,706)      (51,399)
    Dividend payments                                  (18,154)      (16,719)
    Proceeds from issuance of debt, net of
     issuance costs                                        572         1,257
    Principal payments on other long-term debt
     obligations                                        (1,261)       (1,271)
                                                  ------------- -------------
    Net cash used in financing activities              (35,549)      (68,132)
                                                  ------------- -------------

    Effect of exchange rate changes on cash              1,245         1,547
                                                  ------------- -------------

    Decrease in cash and cash equivalents              (44,942)      (80,061)

    Cash and cash equivalents at beginning
     of period                                         101,636       157,602

                                                  ------------- -------------
    Cash and cash equivalents at end of period    $     56,694  $     77,541
                                                  ------------- -------------
                                                  ------------- -------------



                      TIM HORTONS INC. AND SUBSIDIARIES
                              SEGMENT REPORTING
                     (In thousands of Canadian dollars)

                                   (Unaudited)

                                             First Quarter Ended
                              -----------------------------------------------
                                March 29,     % of      March 30,     % of
                                  2009        Total       2008        Total
                              ----------- ----------- ----------- -----------
    REVENUES
    Canada                     $ 436,603       86.1%   $ 400,150       86.9%
    U.S.                          40,473        8.0%      29,964        6.5%
                              ----------- ----------- ----------- -----------
    Total reportable segments    477,076       94.1%     430,114       93.4%
    Noncontrolling interests -
     Restaurants consolidated
     under FIN 46R                30,109        5.9%      30,203        6.6%
                              ----------- ----------- ----------- -----------
    Total                      $ 507,185      100.0%   $ 460,317      100.0%
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------

    SEGMENT OPERATING INCOME
     (LOSS)
    Canada                     $ 115,376      100.5%   $ 106,535      102.8%
    U.S.                            (564)     (0.5)%      (2,879)     (2.8)%
                              ----------- ----------- ----------- -----------
    Reportable Segment
     Operating Income            114,812      100.0%     103,656      100.0%
                                          -----------             -----------
                                          -----------             -----------
    Noncontrolling interests -
     Restaurants consolidated
     under FIN 46R                   397                     828
    Corporate Charges            (10,316)                 (7,152)
                              -----------             -----------
    Consolidated Operating
     Income                      104,893                  97,332
    Interest, net                 (4,903)                 (4,361)
    Income taxes                 (33,261)                (30,489)
                              -----------             -----------
    Net Income                    66,729                  62,482
    Net Income attributable to
     noncontrolling interests       (290)                   (662)
                              -----------             -----------
    Net Income attributable to
     Tim Hortons Inc.          $  66,439               $  61,820
                              -----------             -----------
                              -----------             -----------


                                 First Quarter Ended
                              -----------------------
                                March 29,   March 30,
                                  2009        2008     $ Change    % Change
                              ----------- ----------- ----------- -----------
    Sales is comprised of:
    Warehouse sales            $ 303,374   $ 264,705   $  38,669       14.6%
    Company-operated
     restaurant sales              6,136      11,598      (5,462)    (47.1)%
    Sales from restaurants
     consolidated under FIN 46R   30,109      30,203         (94)     (0.3)%
                              ----------- ----------- ----------- -----------
                               $ 339,619   $ 306,506   $  33,113       10.8%
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------



                      TIM HORTONS INC. AND SUBSIDIARIES
                         SYSTEMWIDE RESTAURANT COUNT

                                               Increase/            Increase/
                         As of      As of     (Decrease)   As of   (Decrease)
                       March 29, December 28, From Prior March 30, From Prior
                          2009       2008       Quarter     2008      Year
                      -------------------------------------------------------
    Tim Hortons
    -----------

      Canada
        Company-operated      17         15          2         24         (7)
        Franchised         2,913      2,902         11      2,815         98
                      -------------------------------------------------------
      Total                2,930      2,917         13      2,839         91

    % Franchised           99.4%      99.5%                99.2%

      U.S.
        Company-operated      19         19          0         40        (21)
        Franchised           508        501          7        359        149
                      -------------------------------------------------------
      Total                  527        520          7        399        128

    % Franchised           96.4%      96.3%                 90.0%

    Total Tim Hortons
        Company-operated      36         34          2         64        (28)
        Franchised         3,421      3,403         18      3,174        247
                      -------------------------------------------------------
    Total                  3,457      3,437         20      3,238        219
                      -------------------------------------------------------
                      -------------------------------------------------------

    % Franchised           99.0%      99.0%                 98.0%



                      TIM HORTONS INC. AND SUBSIDIARIES
                         Income Statement Definitions

    Sales                          Primarily includes sales of products,
                                   supplies and restaurant equipment (except
                                   for initial equipment packages sold to
                                   franchisees as part of the establishment
                                   of their restaurant's business - see
                                   "Franchise Fees") that are shipped
                                   directly from our warehouses or by third
                                   party distributors to the restaurants,
                                   which we include in warehouse or
                                   distribution sales. Sales include canned
                                   coffee sales through the grocery channel.
                                   Sales also include sales from Company-
                                   operated restaurants and sales from
                                   restaurants that are consolidated in
                                   accordance with FIN 46R.

    Rents and Royalties            Includes franchisee royalties and rental
                                   revenues.

    Franchise Fees                 Includes the sales revenue from initial
                                   equipment packages, as well as fees for
                                   various costs and expenses related to
                                   establishing a franchisee's business.

    Cost of Sales                  Includes costs associated with our
                                   distribution business, including cost of
                                   goods, direct labour and depreciation, as
                                   well as the cost of goods delivered by
                                   third-party distributors to the
                                   restaurants, and for canned coffee sold
                                   through grocery stores. Cost of sales also
                                   includes food, paper and labour costs for
                                   Company-operated restaurants and
                                   restaurants that are consolidated in
                                   accordance with FIN 46R.

    Operating Expenses             Includes rent expense related to
                                   properties leased to franchisees and other
                                   property-related costs (including
                                   depreciation).

    Franchise fee costs            Includes costs of equipment sold to
                                   franchisees as part of the commencement of
                                   their restaurant business, as well as
                                   training and other costs necessary to
                                   ensure a successful restaurant opening.

    General and Administrative     Includes costs that cannot be directly
                                   related to generating revenue, including
                                   expenses associated with our corporate and
                                   administrative functions, allocation of
                                   expenses related to corporate functions,
                                   depreciation of office equipment, the
                                   majority of our information technology
                                   systems, and head office real estate.

    Equity Income                  Includes income from equity investments in
                                   joint ventures and other minority
                                   investments over which we exercise
                                   significant influence. Equity income from
                                   these investments is considered to be an
                                   integrated part of our business operations
                                   and is, therefore, included in operating
                                   income. Income amounts are shown as
                                   reductions to total costs and expenses.

    Other Expense (Income), net    Includes expenses (income) that are not
                                   directly derived from the Company's
                                   primary businesses. Items include currency
                                   adjustments, gains and losses on asset
                                   sales, and other asset write-offs.

    Noncontrolling interests       Represents restaurants that the Company is
                                   required to consolidate under FIN 46R.

    Comprehensive Income           Represents the change in our net assets
                                   during the reporting period from
                                   transactions and other events and
                                   circumstances from non-owner sources. It
                                   includes net income and other
                                   comprehensive income such as foreign
                                   currency translation adjustments and the
                                   impact of cash flow hedges.
    





For further information:

For further information: Investors: Scott Bonikowsky, (905) 339-6186 or
investor_relations@timhortons.com; Media: David Morelli, (905) 339-6277 or
morelli_david@timhortons.com


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