Tim Hortons Inc. Announces Third Quarter Net Income of $67.4 Million



    (All amounts in Canadian dollars)

    Revenues up 18.6% with continued sales momentum;
    New 12-month, $200 million share repurchase program announced

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

    -----------------------------------------------------------------
                               September 30,     October 1,
    Third Quarter Ended                2007           2006  % Change
    -----------------------------------------------------------------
    Revenues                        $ 490.5        $ 413.6     18.6%
    Operating Income                $ 108.3        $  91.3     18.7%
    Effective Tax Rate                35.2%          41.0%       n/a
    Net Income                      $  67.4        $  51.8     30.0%
    Earnings Per Share              $  0.36        $  0.27     33.3%
    Fully Diluted Shares              187.9          193.5    (2.9)%
    -----------------------------------------------------------------

    ($ in millions except EPS. Fully diluted shares in millions)

    -----------------------------------------------------------------
    Same Store Sales    Q3 2007     Q3 2006    2007 YTD    2006 YTD
    -----------------------------------------------------------------
    Canada                7.5%        5.9%       6.8%        6.8%
    U.S.                  4.5%        9.2%       4.1%        9.1%
    -----------------------------------------------------------------
    As of September 30, 2007, 99% of the Company's stores in Canada
    and 87% of the stores in the U.S. were franchised.

    Third Quarter Highlights
    ------------------------

      -  Systemwide sales(1) increased 11.7%
      -  Same-store sales grew 7.5% in Canada and 4.5% in the U.S.
      -  40 new restaurants opened
      -  Revenues rose 18.6%, operating income increased 18.7%
      -  Sixth consecutive $0.07 quarterly dividend declared
      -  New $200 million share repurchase plan announced
    

    OAKVILLE, ON, Oct. 26 /CNW/ - Tim Hortons Inc. (NYSE:  THI, TSX: THI) today
announced its results for the third quarter ended September 30, 2007.
    Systemwide sales growth, which includes sales from company-operated and
franchise restaurants, rose 11.7% in the quarter. Third quarter same-store
sales increased 7.5% in Canada and 4.5% in the U.S. Total revenues were $490.5
million in the third quarter, an 18.6% increase compared to $413.6 million in
the same period last year. Net income was $67.4 million in the third quarter,
a 30.0% increase compared to $51.8 million last year.
    "Canadian same-store sales growth sustained momentum this past quarter,
while U.S. same-store sales growth held nicely in a challenging sales
environment. Our U.S. segment sales performance was particularly healthy
considering the exceptionally strong comparable period in 2006 due to the
previous introduction of the breakfast sandwich in that market," said Paul
House, Chairman and Chief Executive Officer. "We continue to execute well
against our strategies and our performance this past quarter reflects those
efforts," House added.

    Consolidated Performance

    During the quarter, a total of 40 restaurants were opened compared to 29
in the third quarter last year. The total number of restaurants opened in 2007
is 79, compared to 86 this time last year. Restaurant openings are typically
weighted more heavily in the fourth quarter each year.
    Sales growth during the quarter was fueled primarily by the Company's
promotional program, store level execution and some pricing in Canada. During
the quarter, featured promotions in Canada were the breakfast sandwich, a
lemon-baked theme including Lemon Crinkle Donuts, 12-Grain Bagel with Omega 3,
Fruit Bites and Apple Toffee Danish. In the U.S., featured promotions included
the roll-out of ICED Coffee, in addition to the Lemon Crinkle Donut, large
gourmet cookies, chocolate baked goods, Apple Toffee Danish and the
introduction of a new Bagel B.E.L.T. breakfast sandwich.
    Pricing contributed 2.7% to same-store sales growth in Canada during the
quarter and 0.3% in the U.S.
    Revenues were $490.5 million in the quarter, up 18.6% compared to
$413.6 million in the same period last year. Sales growth of 20.4%, consisting
primarily of distribution sales, grew by a substantially higher percentage
than systemwide sales growth due to the completion of the implementation of
three-channel delivery of dry, frozen and refrigerated goods from our Guelph,
Ontario facility. Rent and royalty revenues increased by 12.1%, consistent
with systemwide sales growth. Franchisee fees, which are based primarily on
restaurant openings, increased 42.2%, primarily reflecting a higher number of
restaurant openings compared to the same period in 2006. Corresponding
franchisee fee costs increased more than franchisee fees due to the timing of 
expenses.
    Costs of sales grew 20.0% in the third quarter compared to the third
quarter of 2006. The increased costs primarily reflect growth in systemwide
sales and higher distribution costs associated with three-channel delivery.
Operating expenses increased 13.4% year-over-year, due to a higher number of
restaurants in the system with corresponding  depreciation and lease costs.
    Third quarter operating income was $108.3 million, an increase of 18.7%
compared to $91.3 million for the same period in 2006. Operating income was
consistent with revenue growth during the quarter. Operating income
performance this quarter primarily reflects higher systemwide sales, higher
sales from distribution and lower general and administrative costs. General
and administrative costs declined 2.8% year-over-year, primarily due to the
timing of Restricted Share Unit (RSU) grants made in the second quarter this
year instead of the third quarter last year and accelerated vesting of RSUs
associated with the separation from Wendy's International, Inc. Lower RSU
costs were partially offset by higher standalone public company costs and
expenses related to the Company's franchisee convention.
    Net interest expense in the third quarter of 2007 was $4.3 million
compared to $3.4 million in the same period last year. This net increase
reflects lower interest income from cash on hand due to share repurchase and
dividend activities, and higher interest expense compared to the same period
in 2006.
    Third quarter net income was $67.4 million, an increase of 30.0% compared
to $51.8 million last year. The effective tax rate for the third quarter of
2007 was 35.2%, higher than targeted for the quarter due to future expected
settlement of certain outstanding tax matters with tax authorities. The
effective tax rate compares to 41.0% in the comparable period in 2006. The
higher rate in 2006 was due primarily to discrete items that did not recur.
Reported diluted earnings per share (EPS) were $0.36 compared to $0.27 in the
third quarter of 2006. Third quarter reported EPS also reflects the diluted
weighted average shares outstanding in the third quarter of 187.9 million
compared to 193.5 million in the same period last year, a 2.9% decrease due to
share repurchases.

    Segmented Performance Commentary

    The Canadian business continued to outperform our long-term same-store
sales aspirations, up 7.5% compared to the same quarter in 2006. Approximately
2.7% of same-store sales growth this quarter was due to pricing. Segment
margins were modestly impacted by increased revenues from the distribution
business which has lower margins but a positive overall income contribution.
The Canadian segment had operating income of $119.1 million for the quarter. A
total of 31 restaurants were opened in Canada during the quarter.
    The U.S. segment, which accounts for less than 10% of the Company's
revenues, experienced same-store sales growth of 4.5% during the quarter, of
which only 0.3% was from pricing. While lower than long-term same-store sales
growth aspirations, the Company is pleased with this result given the
challenging sales environment in which this performance was delivered. The
U.S. segment had a loss of $0.3 million for the quarter, mainly reflecting
continued investment in developing our targeted U.S. markets. A total of 9
restaurants were opened during the quarter.
    Total operating income at the end of the third quarter is ahead of the
Company's growth target of 10%. If third quarter year-to-date trends continue
for the remainder of the year, the Company expects to exceed its established
2007 target of 10% operating income growth.

    Corporate Highlights

    The Company substantially completed its rollout of the MasterCard(TM)
payment system in participating restaurants, now in place at approximately
2,100 locations. The Company is pleased with initial customer acceptance and
use of the MasterCard payment system in the early stages of the
implementation. The reloadable, cashless TimCard(TM) was introduced recently
in Canada using the same technology platform as the MasterCard payment system.
Both initiatives are designed to provide customer convenience and increase
speed of service.
    As previously disclosed, the Company continued its implementation of a
general ledger and U.S. fixed asset subledger conversion in the third quarter.
Management is satisfied with progress of its implementation and currently
plans to rely on its new system for the fourth quarter and year-end. There are
certain risks in implementing financial reporting systems in the fourth
quarter with respect to Sarbanes-Oxley Section 404. The Company has taken
steps it believes appropriate to mitigate these risks but there can be no
assurance that these steps will entirely eliminate this risk.

    $200 million share repurchase program announced
    -----------------------------------------------
    The Company's 2006-2007 $200 million share repurchase program was
successfully completed in September, 2007. A total of 5.8 million shares were
purchased at an average net cost of $34.43 per share as part of this program.
The Board of Directors has approved a new 12-month, $200 million share
repurchase program as part of the Company's ongoing focus of creating value
for shareholders. Implementation of the program is subject to final regulatory
approval. For details on the new program, please refer to the news release
issued today in conjunction with this earnings release.

    Board declares sixth consecutive quarterly dividend
    ---------------------------------------------------
    The Board of Directors has approved a $0.07 quarterly dividend. The
dividend is payable on November 20, 2007 to shareholders of record as of
November 6, 2007.
    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 November 13, 2007 at the daily noon rate established by the Bank of
Canada and paid in U.S. dollars on November 20, 2007.

    Board appoints Michael J. Endres as Chair of Audit Committee
    ------------------------------------------------------------
    The Board of Directors has appointed Michael J. Endres as Chair of the
Audit Committee, replacing David P. Lauer, who has stepped down from the Board
as previously announced on September 28, 2007. Mr. Lauer is continuing his
service on the Board of Directors of Wendy's International, Inc., and in
conjunction therewith, Mr. Lauer resigned from the Company's Board of
Directors. Mr. Endres has served as a director at Tim Hortons since 2006. He
is Managing Principal of Stonehenge Financial Holdings, Inc., a private equity
firm that he co-founded in 1999. Prior to founding Stonehenge, Mr. Endres was
Vice-Chairman of Banc One Capital Holdings Corporation and Chairman of Banc
One Capital Partners.

    Tim Hortons to host conference call at 10:30 a.m. today,
    October 26
    --------------------------------------------------------
    Tim Hortons will host a conference call beginning at 10:30 a.m. (Eastern
Standard Time) today. Investors and the public may listen to the conference
call in either one of the following ways: Phone: The dial-in number is (416)
641-6712 or 1-800-354-6885. No access code is required. A replay of the call
will be available for one year and can be accessed at (416) 626-4100 or
1-800-558-5253. The reservation number for the replay call is 21351036. A
slide presentation will be available to coincide with the conference call, and
can be accessed at www.timhortons.com under the investor information section,
by clicking on the "Presentations" tab.
    A simultaneous Web Cast of the conference call will be available at
www.timhortons.com. The call will also be archived for a period of one-year at
the site, which can be found by going to the "Investor Information" section
and clicking on the "Audio Archives" tab.

    (1) Systemwide Sales Growth
    ---------------------------
    Total systemwide sales growth includes restaurant level sales at both
Company and Franchise restaurants. Approximately 98% of our system is
franchised as at September 30, 2007. Systemwide sales growth is determined
using a constant exchange rate 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
third quarter of 2007, system-wide sales growth was 11.7% over the third
quarter of 2006. Systemwide sales impact our franchise royalties and rental
income, as well as our distribution sales. Changes in systemwide sales are
driven by changes in average same store sales and changes in the number of
systemwide restaurants.

    Safe Harbor Statement
    ---------------------
    Certain information in this news release, particularly information
regarding future economic performance and finances, and plans, expectations
and objectives of management, is forward-looking. Factors set forth in the
Company's Safe Harbor Statement under the Private Securities Litigation Reform
Act of 1995, including by reference the "risk factors" outlined in the
Company's most recent Form 10-K filed March 9, 2007, in addition to other
possible factors not listed or described in the Safe Harbor Statement, 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
http://www.timhortons.com/safeharbor.html.

    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 September 30, 2007, Tim Hortons had 3,110 system-wide
restaurants, including 2,758 in Canada and 352 in the United States. More
information about the Company is available at www.timhortons.com.


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

                             (Unaudited)

                         Third Quarter Ended
                       September     October
                        30, 2007     1, 2006    $ Change    % Change
                      ----------- ----------- ----------- -----------
    REVENUES
    Sales             $  327,020  $  271,534  $   55,486       20.4%
    Franchise revenues
      Rents and
       royalties         143,449     127,912      15,537       12.1%
      Franchise fees      20,072      14,117       5,955       42.2%
                      ----------- ----------- ----------- -----------
                         163,521     142,029      21,492       15.1%
                      ----------- ----------- ----------- -----------
    TOTAL REVENUES       490,541     413,563      76,978       18.6%
                      ----------- ----------- ----------- -----------

    COSTS AND EXPENSES
    Cost of sales        288,168     240,161      48,007       20.0%
    Operating expenses    51,617      45,532       6,085       13.4%
    Franchise fee costs   20,432      13,579       6,853       50.5%
    General &
     administrative
     expenses             30,758      31,647        (889)      (2.8%)
    Equity (income)       (9,861)     (9,082)       (779)       8.6%
    Other expense
     (income), net         1,090         431         659         N/M
                      ----------- ----------- ----------- -----------
    TOTAL COSTS &
     EXPENSES, NET       382,204     322,268      59,936       18.6%
                      ----------- ----------- ----------- -----------

    OPERATING INCOME     108,337      91,295      17,042       18.7%

    Interest (expense)    (6,118)     (5,707)       (411)       7.2%
    Interest income        1,823       2,333        (510)     (21.9%)
                      ----------- ----------- ----------- -----------

    INCOME BEFORE
     INCOME TAXES        104,042      87,921      16,121       18.3%

    INCOME TAXES          36,661      36,080         581        1.6%
                      ----------- ----------- ----------- -----------

    NET INCOME        $   67,381  $   51,841  $   15,540       30.0%
                      ----------- ----------- ----------- -----------
                      ----------- ----------- ----------- -----------

    Basic earnings
     per share of
     common stock     $     0.36  $     0.27  $     0.09       33.3%
                      ----------- ----------- ----------- -----------
                      ----------- ----------- ----------- -----------

    Diluted earnings
     per share of
     common stock     $     0.36  $     0.27  $     0.09       33.3%
                      ----------- ----------- ----------- -----------
                      ----------- ----------- ----------- -----------

    Basic shares of
     common stock
     (in thousands)      187,684     193,303      (5,619)      (2.9%)
                      ----------- ----------- ----------- -----------
                      ----------- ----------- ----------- -----------

    Diluted shares of
     common stock
     (in thousands)      187,879     193,486      (5,607)      (2.9%)
                      ----------- ----------- ----------- -----------
                      ----------- ----------- ----------- -----------

    Dividend per share
     of common stock
     (post initial
     public offering) $     0.07  $     0.07  $     0.00
                      ----------- ----------- -----------
                      ----------- ----------- -----------

    N/M - not meaningful
    (all numbers rounded)



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

                             (Unaudited)

                          Year-to-Date Ended
                       September     October
                        30, 2007     1, 2006    $ Change    % Change
                      ----------- ----------- ----------- -----------
    REVENUES
    Sales             $  913,364  $  777,638  $  135,726       17.5%
    Franchise revenues
      Rents and
       royalties         410,803     370,279      40,524       10.9%
      Franchise fees      56,239      45,175      11,064       24.5%
                      ----------- ----------- ----------- -----------
                         467,042     415,454      51,588       12.4%
                      ----------- ----------- ----------- -----------
    TOTAL REVENUES     1,380,406   1,193,092     187,314       15.7%
                      ----------- ----------- ----------- -----------

    COSTS AND EXPENSES
    Cost of sales        805,419     683,351     122,068       17.9%
    Operating expenses   148,881     132,275      16,606       12.6%
    Franchise fee costs   53,909      44,507       9,402       21.1%
    General &
     administrative
     expenses             90,318      87,426       2,892        3.3%
    Equity (income)      (28,873)    (26,679)     (2,194)       8.2%
    Other expense
     (income), net         1,870        (702)      2,572         N/M
                      ----------- ----------- ----------- -----------
    TOTAL COSTS &
     EXPENSES, NET     1,071,524     920,178     151,346       16.4%
                      ----------- ----------- ----------- -----------

    OPERATING INCOME     308,882     272,914      35,968       13.2%

    Interest (expense)   (17,882)    (16,475)     (1,407)       8.5%
    Interest income        5,143       9,195      (4,052)     (44.1%)
    Affiliated interest
     (expense), net            -      (7,876)      7,876         N/M
                      ----------- ----------- ----------- -----------

    INCOME BEFORE
     INCOME TAXES        296,143     257,758      38,385       14.9%

    INCOME TAXES         102,262      66,017      36,245       54.9%
                      ----------- ----------- ----------- -----------

    NET INCOME        $  193,881  $  191,741  $    2,140        1.1%
                      ----------- ----------- ----------- -----------
                      ----------- ----------- ----------- -----------

    Basic earnings
     per share of
     common stock     $     1.03  $     1.05      ($0.02)      (1.9%)
                      ----------- ----------- ----------- -----------
                      ----------- ----------- ----------- -----------

    Diluted earnings
     per share of
     common stock     $     1.02  $     1.05      ($0.03)      (2.9%)
                      ----------- ----------- ----------- -----------
                      ----------- ----------- ----------- -----------

    Basic shares of
     common stock
     (in thousands)      189,049     182,797       6,252        3.4%
                      ----------- ----------- ----------- -----------
                      ----------- ----------- ----------- -----------

    Diluted shares of
     common stock
     (in thousands)      189,319     183,072       6,247        3.4%
                      ----------- ----------- ----------- -----------
                      ----------- ----------- ----------- -----------

    Dividend per share
     of common stock
     (post initial
     public offering) $     0.21  $     0.07  $     0.14
                      ----------- ----------- -----------
                      ----------- ----------- -----------

    N/M - not meaningful
    (all numbers rounded)



                   TIM HORTONS INC. AND SUBSIDARIES
                     CONSOLIDATED BALANCE SHEETS
                 (In thousands of Canadian dollars)


                                               September    December
                                                30, 2007    31, 2006
                                              ----------- -----------
                                                    (Unaudited)
    ASSETS

    Current assets
      Cash and cash equivalents               $  109,960  $  176,083
      Accounts receivable, net                   108,255     110,403
      Notes receivable, net                       12,021      14,248
      Deferred income taxes                       14,001       6,759
      Inventories and other, net                  58,251      53,888
      Advertising fund restricted assets          20,265      25,513
                                              ----------- -----------
                                                 322,753     386,894

    Property and equipment, net                1,155,219   1,164,536

    Notes receivable, net                         13,450      16,504

    Deferred income taxes                         20,442      23,579

    Intangible assets, net                         3,280       3,683

    Equity investments                           138,076     139,671

    Other assets                                   9,848      10,120
                                              ----------- -----------
                                              $1,663,068  $1,744,987
                                              ----------- -----------
                                              ----------- -----------



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


                                               September    December
                                                30, 2007    31, 2006
                                              ----------- -----------
                                                    (Unaudited)
    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities
      Accounts payable                        $   97,649  $  115,570
      Accrued expenses:
        Salaries and wages                        13,081      18,927
        Taxes                                     26,267      27,103
        Other                                     51,273      66,262
      Advertising fund restricted liabilities     38,941      41,809
      Current portion of long-term obligations     5,808       5,518
                                              ----------- -----------
                                                 233,019     275,189
                                              ----------- -----------
    Long-term obligations
      Term debt                                  327,070     325,590
      Advertising fund restricted debt            16,615      23,337
      Capital leases                              49,296      44,774
                                              ----------- -----------
                                                 392,981     393,701
                                              ----------- -----------

    Deferred income taxes                         17,580      17,879
    Other long-term liabilities                   52,999      39,814

    Stockholders' equity
      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             920,503     918,043
      Treasury stock, at cost: 5,796,352 and
       1,930,244 shares, respectively           (199,590)    (64,971)
      Common stock held in trust, at cost:
       421,344 and 266,295 shares,
       respectively                              (14,628)     (9,171)
      Retained earnings                          396,409     248,980
      Accumulated other comprehensive
       income (loss):
        Cumulative translation adjustments
         and other                              (136,494)    (74,766)
                                              ----------- -----------
                                                 966,489   1,018,404
                                              ----------- -----------
                                              $1,663,068  $1,744,987
                                              ----------- -----------
                                              ----------- -----------



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

                             (Unaudited)

                                    Third Quarter Ended
                       September                 October
                        30, 2007  % of Total     1, 2006  % of Total
                      ----------- ----------- ----------- -----------
    REVENUES
    Canada            $  453,408       92.4%  $  379,892       91.9%
    U.S.                  37,133        7.6%      33,671        8.1%
                      ----------- ----------- ----------- -----------
    Total Revenues    $  490,541      100.0%  $  413,563      100.0%
                      ----------- ----------- ----------- -----------
                      ----------- ----------- ----------- -----------

    SEGMENT OPERATING
     INCOME (LOSS)
    Canada            $  119,066      100.2%  $  101,338       99.6%
    U.S.                    (288)      (0.2%)        357        0.4%
                      ----------- ----------- ----------- -----------
    Reportable Segment
     Operating Income    118,778      100.0%     101,695      100.0%
                                  -----------             -----------
                                  -----------             -----------
    Corporate Charges    (10,441)                (10,400)
                      -----------             -----------
    Consolidated
     Operating Income    108,337                  91,295

    Interest, net         (4,295)                 (3,374)
    Income taxes         (36,661)                (36,080)
                      -----------             -----------
    Net Income        $   67,381              $   51,841
                      -----------             -----------
                      -----------             -----------


                                     Year-to-Date Ended
                       September                 October
                        30, 2007  % of Total     1, 2006  % of Total
                      ----------- ----------- ----------- -----------
    REVENUES
    Canada            $1,267,151       91.8%  $1,092,822       91.6%
    U.S.                 113,255        8.2%     100,270        8.4%
                      ----------- ----------- ----------- -----------
    Total Revenues    $1,380,406      100.0%  $1,193,092      100.0%
                      ----------- ----------- ----------- -----------
                      ----------- ----------- ----------- -----------

    SEGMENT OPERATING
     INCOME (LOSS)
    Canada            $  341,719      101.3%  $  297,582       99.6%
    U.S.                  (4,327)      (1.3%)      1,245        0.4%
                      ----------- ----------- ----------- -----------
    Reportable Segment
     Operating Income    337,392      100.0%     298,827      100.0%
                                  -----------             -----------
                                  -----------             -----------
    Corporate Charges    (28,510)                (25,913)
    Consolidated
     Operating Income    308,882                 272,914

    Interest, net        (12,739)                (15,156)
    Income taxes        (102,262)                (66,017)
                      -----------             -----------
    Net Income        $  193,881              $  191,741
                      -----------             -----------
                      -----------             -----------



                  TIM HORTONS INC. AND SUBSIDIARIES
                       SYSTEMWIDE RESTAURANTS


                                     Increase/             Increase/
                   As of      As of (Decrease)      As of (Decrease)
               September       July From Prior    October From Prior
                30, 2007    1, 2007    Quarter    1, 2006       Year
              -------------------------------------------------------
    Tim Hortons
    -----------
      U.S.
        Company       47         50         (3)        61        (14)
        Franchise    305        295         10        244         61
              -------------------------------------------------------
                     352        345          7        305         47

    % Franchised   86.6%      85.5%                 80.0%

      Canada
        Company       23         26         (3)        41        (18)
        Franchise  2,735      2,707         28      2,596        139
              -------------------------------------------------------
                   2,758      2,733         25      2,637        121

    % Franchised   99.2%      99.0%                 98.4%

    Total Tim Hortons
        Company       70         76         (6)       102        (32)
        Franchise  3,040      3,002         38      2,840        200
              -------------------------------------------------------
                   3,110      3,078         32      2,942        168
              -------------------------------------------------------
              -------------------------------------------------------

    % Franchised  97.7%       97.5%                 96.5%



                    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 refer
                    to as warehouse or distribution sales. Sales
                    include canned coffee sales through the grocery
                    channel. Sales also include sales from
                    Company-operated restaurants and sales from
                    franchise restaurants that are consolidated in
                    accordance with FIN 46R.

    Rents and       Includes franchisee royalties and rental
    Royalties       revenues.

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

    Cost of         Includes costs associated with our distribution
    Sales           warehouses, 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 franchise
                    restaurants that are consolidated in accordance
                    with FIN 46R.

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

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

    General and     Includes costs that cannot be directly related to
    Administrative  generating revenue, including expenses associated
                    with our corporate and administrative functions,
                    allocation of expenses related to corporate
                    functions and services historically provided to
                    us by Wendy's and 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 Income    Includes expenses (income) that are not directly
    and Expense     derived from the Company's primary businesses.
                    Items include restaurant closure costs, currency
                    adjustments, real estate sales, minority interest
                    related to the consolidation of franchised
                    restaurants pursuant to FIN 46R, and other asset
                    write-offs.

    Comprehensive   Represents the change in our net assets during
    Income          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
bonikowsky_scott@timhortons.com; MEDIA: Rachel Douglas: (905) 339-6277 or
douglas_rachel@timhortons.com


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