Tim Hortons 10-Q 5 Nov 09 2009 Q3 Quarterly report Financial data

Statement Of Income Alternative

Statement Of Income Alternative (CAD $)
In Thousands, except Per Share data	3 Months Ended Sep. 27, 2009	3 Months Ended Sep. 28, 2008	9 Months Ended Sep. 27, 2009	9 Months Ended Sep. 28, 2008
Revenues
Sales	$373,035	$333,581	$1,084,773	$975,960
Franchise revenues:
Rents and royalties	166,914	155,214	478,732	444,640
Franchise fees	23,605	20,200	63,319	59,404
Franchise Revenue, Total	190,519	175,414	542,051	504,044
Total revenues	563,554	508,995	1,626,824	1,480,004
Costs and expenses
Cost of sales	327,923	293,056	956,219	858,440
Operating expenses	59,053	53,596	175,586	158,227
Franchise fee costs	21,754	19,840	61,147	58,028
General and administrative expenses	35,363	29,986	104,533	96,996
Equity (income)	(9,415)	(9,429)	(25,964)	(26,792)
Other (income), net	(359)	(664)	(675)	(2,390)
Total costs and expenses, net	434,319	386,385	1,270,846	1,142,509
Operating income	129,235	122,610	355,978	337,495
Interest (expense)	(5,068)	(6,288)	(15,617)	(18,608)
Interest income	272	957	1,056	4,020
Income before income taxes	124,439	117,279	341,417	322,907
Income taxes (note 2)	62,873	38,092	134,918	105,922
Net income	61,566	79,187	206,499	216,985
Net income attributable to noncontrolling interests	387	430	1,121	1,434
Net income attributable to Tim Hortons Inc.	$61,179	$78,757	$205,378	$215,551
Basic earnings per share of common stock attributable to Tim Hortons Inc. (note 3)	0.34	0.43	1.14	1.17
Diluted earnings per share of common stock attributable to Tim Hortons Inc. (note 3)	0.34	0.43	1.13	1.17
Weighted average number of shares of common stock outstanding - Basic (in thousands) (note 3)	180,681	182,431	180,878	184,735
Weighted average number of shares of common stock outstanding - Diluted (in thousands) (note 3)	180,864	182,662	181,076	185,013
Dividend per share of common stock	0.1	0.09	0.3	0.27

Statement Of Financial Position

Statement Of Financial Position Classified (CAD $)
In Thousands	9 Months Ended Sep. 27, 2009	9 Months Ended Dec. 28, 2008
Current assets
Cash and cash equivalents	$213,745	$101,636
Restricted cash and cash equivalents	13,534	62,329
Restricted investments	20,152	0
Accounts receivable, net	159,016	159,505
Notes receivable, net	27,457	22,615
Deferred income taxes	11,596	19,760
Inventories and other, net (note 4)	60,916	71,505
Advertising fund restricted assets (note 5)	23,173	27,684
Total current assets	529,589	465,034
Property and equipment, net	1,330,941	1,332,852
Notes receivable, net	13,503	17,645
Deferred income taxes	8,517	29,285
Intangible assets, net	2,202	2,606
Equity investments	126,159	132,364
Other assets	16,677	12,841
Total assets	2,027,588	1,992,627
Current liabilities
Accounts payable (note 6)	152,302	157,210
Accrued liabilities:
Salaries and wages	14,474	18,492
Taxes	32,681	25,605
Other (note 6)	70,821	110,518
Advertising fund restricted liabilities (note 5)	40,255	47,544
Current portion of long-term obligations	7,795	6,691
Total current liabilities	318,328	366,060
Long-term obligations
Term debt	334,155	332,506
Advertising fund restricted debt (note 5)	2,092	6,929
Capital leases	61,759	59,052
Deferred income taxes	5,635	13,604
Other long-term liabilities	77,553	72,467
Total long-term obligations	481,194	484,558
Commitments and contingencies (note 7)	-	-
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	928,780	929,102
Treasury stock, at cost: 12,306,100 and 11,754,201 shares, respectively (note 8)	(415,751)	(399,314)
Common stock held in trust, at cost: 316,129 and 358,186 shares, respectively	(10,712)	(12,287)
Retained earnings	828,345	677,550
Accumulated other comprehensive loss	(104,451)	(54,936)
Total equity of Tim Hortons Inc.	1,226,500	1,140,404
Noncontrolling interests	1,566	1,605
Total equity	1,228,066	1,142,009
Total liabilities and equity	$2,027,588	$1,992,627

1_Statement Of Financial Positi

Statement Of Financial Position Classified (Parenthetical) (CAD $)
	Sep. 27, 2009	Dec. 28, 2008
Common stock, par value	0.001	0.001
Common stock, Authorized	1,000,000,000	1,000,000,000
Common stock, Issued	193,302,977	193,302,977
Treasury stock, shares	12,306,100	11,754,201
Common stock held in trust, shares	316,129	358,186

Statement Of Cash Flows Indirec

Statement Of Cash Flows Indirect (CAD $)
In Thousands	9 Months Ended Sep. 27, 2009	9 Months Ended Sep. 28, 2008
Cash flows provided from (used in) operating activities
Net income	$206,499	$216,985
Net income attributable to noncontrolling interests	(1,121)	(1,434)
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	74,605	66,811
Stock-based compensation expense	6,801	7,909
Equity income, net of cash dividends	7,204	3,782
Deferred income taxes	18,725	(3,034)
Changes in operating assets and liabilities
Restricted cash and cash equivalents	48,447	30,094
Accounts and notes receivable	(1,292)	(12,483)
Inventories and other	8,985	2,748
Accounts payable and accrued liabilities	(40,662)	(77,920)
Other, net	6,694	11,368
Net cash provided from operating activities	334,885	244,826
Cash flows (used in) provided from investing activities
Capital expenditures	(111,382)	(112,060)
Purchase of restricted investments	(20,136)	(11,959)
Principal payments on notes receivable	2,263	2,563
Other investing activities	(14,991)	(8,979)
Net cash used in investing activities	(144,246)	(130,435)
Cash flows (used in) provided from financing activities
Purchase of treasury stock	(16,701)	(149,770)
Purchase of common stock held in trust	(713)	(3,842)
Dividend payments	(54,583)	(49,748)
Purchase of common stock for settlement of restricted stock units	(232)	(226)
Proceeds from issuance of debt, net of issuance costs	2,707	2,068
Principal payments on other long-term debt obligations	(3,893)	(4,897)
Net cash used in financing activities	(73,415)	(206,415)
Effect of exchange rate changes on cash	(5,115)	2,036
Increase (decrease) in cash and cash equivalents	112,109	(89,988)
Cash and cash equivalents at beginning of period	101,636	157,602
Cash and cash equivalents at end of period	213,745	67,614
Supplemental disclosures of cash flow information:
Interest paid	14,790	17,630
Income taxes paid	108,016	117,567
Non-cash investing and financing activities:
Capital lease obligations incurred	$6,422	$10,518

Statement Of Shareholders Equit

Statement Of Shareholders Equity And Other Comprehensive Income (CAD $)
In Thousands	Common stock	Capital in excess of par value	Treasury stock	Common stock held in trust	Retained earnings	Accumulated other comprehensive (loss) income	Total equity of Tim Hortons Inc.	Noncontrolling interests	Common stocks	Treasury stocks	Common stocks held in trust	Total
Balance at beginning of period at Dec. 30, 2007									193,303	(6,750)	(421)
Balance at beginning of period at Dec. 30, 2007	$289	$931,084	($235,155)	($14,628)	$458,958	($138,465)		$2,361
Balance at beginning of period at Dec. 30, 2007									193,303	(6,750)	(421)
Balance at beginning of period at Dec. 30, 2007	289	931,084	(235,155)	(14,628)	458,958	(138,465)		2,361
Net income					284,678			2,217
Purchased during the period				(3,842)
Purchased during the period (note 8)			(165,258)
Other comprehensive (loss) income (note 10)						83,529
Stock-based compensation		(1,982)
Distributions and other to noncontrolling interests								(2,973)
Dividends					(66,086)
Disbursed or sold from Trust during the period				6,183
Reissued during the period			1,099
Purchased during the period											(116)
Purchased during the period (note 8)										(5,036)
Disbursed or sold from Trust during the period											179
Reissued during the period										32
Balance at end of period at Dec. 28, 2008	289	929,102	(399,314)	(12,287)	677,550	(54,936)	1,140,404	1,605				1,142,009
Balance at end of period at Dec. 28, 2008									193,303	(11,754)	(358)	181,191
Balance at beginning of period at Dec. 28, 2008									193,303			181,191
Balance at beginning of period at Dec. 28, 2008	289						1,140,404					1,142,009
Net income					205,378			1,121				206,499
Purchased during the period				(713)
Purchased during the period (note 8)			(16,701)
Other comprehensive (loss) income (note 10)						(49,515)
Stock-based compensation		(322)
Distributions and other to noncontrolling interests								(1,160)
Dividends					(54,583)
Disbursed or sold from Trust during the period				2,288
Reissued during the period			264
Purchased during the period											(25)
Purchased during the period (note 8)										(560)
Disbursed or sold from Trust during the period											67
Reissued during the period										8
Balance at end of period at Sep. 27, 2009	289	928,780	(415,751)	(10,712)	828,345	(104,451)	1,226,500	1,566				1,228,066
Balance at end of period at Sep. 27, 2009									193,303	(12,306)	(316)	180,681
Balance at beginning of period at Jun. 28, 2009									193,303
Balance at beginning of period at Jun. 28, 2009	289						1,226,500
Balance at end of period at Sep. 27, 2009	$289						$1,226,500
Balance at end of period at Sep. 27, 2009									193,303

NOTE 1 MANAGEMENT STATEMENT AND

NOTE 1 MANAGEMENT STATEMENT AND BASIS OF PRESENTATION
	9 Months Ended Sep. 27, 2009 CAD ($) CAD / shares
Notes to Financial Statements [Abstract]
NOTE 1 MANAGEMENT STATEMENT AND BASIS OF PRESENTATION	NOTE 1 MANAGEMENT STATEMENT AND BASIS OF PRESENTATION Tim Hortons Inc. was a Delaware corporation (together with its subsidiaries, collectively referred to herein as the Company) and, prior to March29, 2006, was a wholly-owned subsidiary of Wendys International, Inc. (together with its subsidiaries, collectively referred to herein as Wendys). At 12:00 a.m. on September28, 2009, Tim Hortons Inc. effected a merger that resulted in the conversion of existing common stock of the Company, US$0.001 par value per share, into an equal number of common shares, without par value, in a new Canadian public company, also named Tim Hortons Inc., a corporation incorporated under the Canada Business Corporations Act. The new Canadian public company and its subsidiaries continue to conduct the business previously conducted by the Delaware corporation and its subsidiaries in substantially the same manner (see Note 14). As this periodic report relates to the third quarter of 2009 and the reorganization was not effective until the commencement of the fourth quarter of 2009, as used in these Notes to the Condensed Consolidated Financial Statements, the Company continues to mean the Delaware public company and its subsidiaries. The Companys principal business is the development and franchising, and, to a minimal extent, the operation of quick-service restaurants that serve coffee and other hot and cold beverages, baked goods, sandwiches, soups and other food products. In addition, the Company has vertically integrated manufacturing, warehouse and distribution operations which supply a significant portion of the system restaurants with paper and equipment, as well as food products, including shelf-stable products, and, from one distribution centre, refrigerated and frozen food products. The Company also controls the real estate underlying a substantial majority of the system restaurants, which generates another source of revenue. As of September27, 2009, the Company and its franchisees operated 2,971 restaurants in Canada (99.4% franchised) and 556 restaurants in the United States (U.S.) (99.1% franchised) under the name Tim Hortons. In addition, the Company had 292 licensed locations in the Republic of Ireland and the United Kingdom as of September27, 2009. The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). In the opinion of management, the accompanying Condensed Consolidated Financial Statements contain all adjustments (all of which are normal and recurring in nature) necessary to state fairly the Companys financial position as of September27, 2009 and December28, 2008, and the condensed consolidated results of operations, comprehensive income (see Note 10) and cash flows for the quarters and year-to-date periods ended September27, 2009 and September28, 2008. All of these financial statements are unaudited. These Condensed Consolidated Financial Statements should be read in conjunction with the 2008 Consolidated Financial Statements which are contained in the Companys Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on F

NOTE 2 INCOME TAXES

NOTE 2 INCOME TAXES
	9 Months Ended Sep. 27, 2009 CAD ($) CAD / shares
Notes to Financial Statements [Abstract]
NOTE 2 INCOME TAXES	NOTE 2 INCOME TAXES The effective tax rate was 50.5% and 32.5% for the third quarters ended September27, 2009 and September28, 2008, respectively. The effective tax rate for the year-to-date periods ended September27, 2009 and September28, 2008 was 39.5% and 32.8%, respectively. The variance between periods is substantially explained by the tax impacts of the completion of the public company merger on September28, 2009, as approved by the Companys stockholders on September22, 2009, and the subsequent reorganization of the Company and its subsidiaries (collectively, the Reorganization). The stockholders approval was considered a triggering event for purposes of recording discrete items associated with the Reorganization. The discrete items resulting from the Reorganization that contributed to the increase in the third quarter and year-to-date 2009 effective tax rates included: a non-cash valuation allowance relating to the uncertainty of realizing $18.7 million of deferred tax assets associated with the U.S. operations, U.S. withholding tax expense of $7.8 million, and other tax charges of $4.8 million resulting from the Reorganization. These expenses were offset by the reversal of $11.4 million of previously accrued Canadian withholding taxes.

NOTE 3 NET INCOME PER SHARE OF

NOTE 3 NET INCOME PER SHARE OF COMMON STOCK ATTRIBUTABLE TO TIM HORTONS INC.
	9 Months Ended Sep. 27, 2009 CAD ($) CAD / shares
Notes to Financial Statements [Abstract]
NOTE 3 NET INCOME PER SHARE OF COMMON STOCK ATTRIBUTABLE TO TIM HORTONS INC.	NOTE 3 NET INCOME PER SHARE OF COMMON STOCK ATTRIBUTABLE TO TIM HORTONS INC. Basic earnings per share of common stock attributable to Tim Hortons Inc. are computed by dividing net income attributable to Tim Hortons Inc.s common stockholders by the weighted average number of shares of common stock outstanding. Diluted computations are based on the treasury stock method and include assumed issuances of outstanding restricted stock units and stock options with tandem stock appreciation rights (SARs), as prescribed in ASC 260 (formerly SFAS No.128) , as the sum of: (i)the amount, if any, the employee must pay upon exercise; (ii)the amount of compensation cost attributed to future services and not yet recognized; and (iii)the amount of tax benefits (both current and deferred), if any, that would be credited to additional paid-in capital assuming exercise of the options, net of shares assumed to be repurchased from the assumed proceeds, when dilutive. Stock options granted in 2008 and 2009 were anti-dilutive for the third quarter and year-to-date periods ended September27, 2009 and September28, 2008, respectively, and therefore were excluded from the calculation of earnings per share of common stock attributable to Tim Hortons Inc. The computations of basic and diluted earnings per share of common stock attributable to Tim Hortons Inc. are shown below: Third quarter ended Year-to-dateperiodended September27, 2009 September28, 2008 September27, 2009 September28, 2008 Net income attributable to Tim Hortons Inc. for computation of basic and diluted earnings per share of common stock attributable to Tim Hortons Inc. $ 61,179 $ 78,757 $ 205,378 $ 215,551 Weighted average shares outstanding for computation of basic earnings per share of common stock attributable to Tim Hortons Inc. (in thousands) 180,681 182,431 180,878 184,735 Dilutive restricted stock units (in thousands) 183 231 198 278 Weighted average shares outstanding for computation of diluted earnings per share of common stock attributable to Tim Hortons Inc. (in thousands) 180,864 182,662 181,076 185,013 Basic earnings per share of common stock attributable to Tim Hortons Inc. $ 0.34 $ 0.43 $ 1.14 $ 1.17 Diluted earnings per share of common stock attributable to Tim Hortons Inc. $ 0.34 $ 0.43 $ 1.13 $ 1.17

NOTE 4 INVENTORIES AND OTHER, N

NOTE 4 INVENTORIES AND OTHER, NET
	9 Months Ended Sep. 27, 2009 CAD ($) CAD / shares
Notes to Financial Statements [Abstract]
NOTE 4 INVENTORIES AND OTHER, NET	NOTE 4 INVENTORIES AND OTHER, NET Inventories (which are comprised primarily of finished goods) and other, net include the following as at September27, 2009 and December28, 2008: September27, 2009 December28, 2008 Inventories finished goods $ 48,403 $ 43,252 Inventory obsolescence provision (1,219 ) (873 ) Inventories, net 47,184 42,379 Prepaids and other 13,732 29,126 Total inventories and other, net $ 60,916 $ 71,505

NOTE 5 RESTRICTED ASSETS AND LI

NOTE 5 RESTRICTED ASSETS AND LIABILITIES - ADVERTISING FUND
	9 Months Ended Sep. 27, 2009 CAD ($) CAD / shares
Notes to Financial Statements [Abstract]
NOTE 5 RESTRICTED ASSETS AND LIABILITIES - ADVERTISING FUND	NOTE 5 RESTRICTED ASSETS AND LIABILITIES ADVERTISING FUND The Company participates in two advertising funds established to collect and administer funds contributed for use in advertising and promotional programs designed to increase sales and enhance the reputation of the Company and its franchise owners. Separate advertising funds are administered for Canada and the U.S. In accordance with ASC 952Franchisors (formerly SFAS No.45Accounting for Franchisee Fee Revenue), the revenue, expenses and cash flows of the advertising funds are generally not included in the Companys Condensed Consolidated Statement of Operations or Cash Flows because the contributions to these advertising funds are designated for specific purposes, and the Company generally acts, in substance, as an agent with regard to these contributions. The assets held by these advertising funds are considered restricted. These current restricted assets, current restricted liabilities and advertising fund restricted collateralized long-term debt are identified on the Companys Condensed Consolidated Balance Sheet. In addition, at September27, 2009 and December28, 2008, Property and equipment, net, included $20.8 million and $26.8 million, respectively, of advertising fund property and equipment, and Deferred income taxes long-term included $1.6 million and nil, respectively, of advertising fund deferred income taxes.

NOTE 6 ACCOUNTS PAYABLE AND ACC

NOTE 6 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES - OTHER
	9 Months Ended Sep. 27, 2009 CAD ($) CAD / shares
Notes to Financial Statements [Abstract]
NOTE 6 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES - OTHER	NOTE 6 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES OTHER Included within Accounts payable are the following obligations as at September27, 2009 and December28, 2008: September27, 2009 December28, 2008 Accounts payable $ 130,103 $ 138,704 Construction holdbacks and accruals 22,199 18,506 $ 152,302 $ 157,210 Included within Accrued liabilities, Other are the following obligations as at September27, 2009 and December28, 2008: September27, 2009 December28, 2008 Gift certificate obligations $ 9,043 $ 12,960 Cash card obligations 35,362 62,882 Other accrued liabilities 26,416 34,676 $ 70,821 $ 110,518 Accrued liabilities, Other include accrued rent expense, deposits, and various equipment and other accruals.

NOTE 7 COMMITMENTS AND CONTINGE

NOTE 7 COMMITMENTS AND CONTINGENCIES
	9 Months Ended Sep. 27, 2009 CAD ($) CAD / shares
Notes to Financial Statements [Abstract]
NOTE 7 COMMITMENTS AND CONTINGENCIES	NOTE 7 COMMITMENTS AND CONTINGENCIES The Company has guaranteed certain lease and debt payments, primarily related to franchisees, amounting to $0.6 million and $0.7 million as at September27, 2009 and December28, 2008, respectively. In the event of default by a franchise owner, the Company generally retains the right to acquire possession of the related restaurants. The Company is also the guarantor on $9.2 million as at September27, 2009 and $8.7 million as at December28, 2008 in letters of credit and surety bonds with various parties; however, management does not expect any material loss to result from these instruments because management does not believe performance will be required as the underlying event(s) that would require payment are not expected to occur and have not occurred as of September27, 2009. The length of the lease, loan and other arrangements guaranteed by the Company or for which the Company is contingently liable varies, but generally does not exceed seven years. The Company has entered into purchase arrangements with some of its suppliers having terms which generally do not exceed one fiscal year. The range of prices and volume of purchases under the agreements may vary according to the Companys demand for the products and fluctuations in market rates. These agreements help the Company secure pricing and product availability. The Company does not believe these agreements expose the Company to significant risk. Third parties may seek to hold the Company responsible for retained liabilities of Wendys. Under the separation agreements, Wendys has agreed to indemnify the Company for claims and losses relating to these retained liabilities. However, if those liabilities are significant, and Wendys is not able to fully pay or will not make payment, and the Company is ultimately held liable for these liabilities, there can be no assurance that the Company will be able to recover the full amount of its losses from Wendys. In addition to the guarantees described above, the Company is party to many agreements executed in the ordinary course of business that provide for indemnification of third parties, under specified circumstances, such as lessors of real property leased by the Company, distributors, service providers for various types of services (including commercial banking, investment banking, tax, actuarial and other services), software licensors, marketing and advertising firms, securities underwriters and others. Generally, these agreements obligate the Company to indemnify the third parties only if certain events occur or claims are made, as these contingent events or claims are defined in each of these agreements. The Company believes that the resolution of any claims that might arise in the future, either individually or in the aggregate, would not materially affect the earnings or financial condition of the Company. On June12, 2008, a claim was filed against the Company and certain of its affiliates in the Ontario Superior Court of Justice (Court) by two of its franchisees, Fairview Donut Inc. and Brule Foods Ltd., alleging, generally, that the Companys Always Fresh baking system and expansion of lunc

NOTE 8 CAPITAL STOCK

NOTE 8 CAPITAL STOCK
	9 Months Ended Sep. 27, 2009 CAD ($) CAD / shares
Notes to Financial Statements [Abstract]
NOTE 8 CAPITAL STOCK	NOTE 8 CAPITAL STOCK In November 2008, the Companys Board of Directors approved a 2009 share repurchase program for up to $200 million, not to exceed the regulatory maximum of 9,077,438 shares, which was equivalent to 5% of the Companys outstanding shares of common stock at the time of regulatory approval on February25, 2009. The 2009 program commenced on March2, 2009 and will end March1, 2010 or sooner if the $200 million maximum or the 5% of outstanding share limit is reached, or, at the discretion of management or the Companys Board of Directors, subject to the Companys compliance with regulatory requirements. Purchases were approved to be made under the 2009 repurchase program at managements discretion, subject to applicable regulatory requirements and market, cost and other considerations, as well as under automatic trading plan, or 10b5-1 provisions. The Company purchased approximately 0.6million of common stock for a total cost of $16.7 million under this program in March 2009. Thereafter, the Company decided to defer further purchases under the 2009 share repurchase program until it could undertake a complete review of its capital allocation activities post-reorganization as a Canadian public company (see Note 14). In the year-to-date period ended September28, 2008, the Company purchased approximately 4.5million shares of common stock for a total cost of $149.8 million under the Companys 2007-2008 repurchase program, which expired in October 2008.

NOTE 9 STOCK-BASED COMPENSATION

NOTE 9 STOCK-BASED COMPENSATION
	9 Months Ended Sep. 27, 2009 CAD ($) CAD / shares
Notes to Financial Statements [Abstract]
NOTE 9 STOCK-BASED COMPENSATION	NOTE 9 STOCK-BASED COMPENSATION Total stock-based compensation expense included in General and administrative expenses on the Condensed Consolidated Statement of Operations is detailed as follows: Thirdquarterended Year-to-dateperiodended September27, 2009 September28, 2008 September27, 2009 September28, 2008 Restricted stock units $ 1,552 $ 1,871 $ 4,476 $ 6,857 Stock options and tandem SARs 599 154 1,322 538 Deferred stock units 572 334 1,003 514 Total stock-based compensation expense $ 2,723 $ 2,359 $ 6,801 $ 7,909 In addition, a gain of approximately $0.5 million and $0.3 million was recorded during both the third quarter of 2009 and 2008, respectively (nil year-to-date 2009 and a loss of $0.1 million year-to-date 2008, respectively) relating to the total return swap (TRS) (see Note 12). Details of stock-based compensation grants and settlements during year-to-date 2009 are set forth below. Restricted stock units The Companys Human Resource and Compensation Committee (HRCC) approved awards of 139,757 restricted stock units (RSUs) with dividend equivalent rights, which were granted on May15, 2009. The fair market value of each RSU awarded as part of this grant (the mean of the high and low prices for the Companys shares of common stock traded on the Toronto Stock Exchange (TSX)) on May15, 2009 was $28.87. Awards under this grant are scheduled to vest in either equal installments or in one lump sum at the end of a 30-month period. In accordance with ASC 718CompensationStock Compensation (ASC 718) (formerly SFAS No.123RShare-Based Payment (revised 2004) (SFAS 123R)), RSUs granted to retirement-eligible employees are expensed immediately. In the year-to-date period ended September27, 2009, the Company funded its employee benefit plan trust, which, in turn, purchased approximately 25,000 shares of common stock for approximately $0.7 million (116,000 shares for $3.8 million in year-to-date 2008). For accounting purposes, the cost of the purchase of shares held in trust has been accounted for as a reduction in outstanding shares of common stock, and the trust has been consolidated in accordance with ASC 810 (formerly FIN 46R), since the Company is the primary beneficiary, as that term is defined by ASC 810. The trust is used to fix the Companys future cash requirements in connection with the settlement, after vesting, of outstanding RSUs by delivery of shares of common stock held in the trust to most of the Canadian officers and employees that participate in the 2006 Stock Incentive Plan, as amended and restated from time to time (the 2006 Plan). In the year-to-date period ended September27, 2009, approximately 151,000 (217,000 in year-to-date 2008) RSUs that were previously granted vested in accordance with the terms of such awards. The Companys settlement obligations, after provision for the payment of minimum statutory withholding tax requirements for which employees are responsible, were satisfied by the disbursement of approximately 67,000 (97,000 in year-

NOTE 10 CONDENSED CONSOLIDATED

NOTE 10 CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
	9 Months Ended Sep. 27, 2009 CAD ($) CAD / shares
Notes to Financial Statements [Abstract]
NOTE 10 CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME	NOTE 10 CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME The components of other comprehensive (loss) income (OCI) and total comprehensive (loss) income are shown below: Third quarter ended Year-to-dateperiodended September27, 2009 September28, 2008 September27, 2009 September28, 2008 Net income $ 61,566 $ 79,187 $ 206,499 $ 216,985 Other comprehensive (loss) income Translation adjustments (24,847 ) 7,869 (45,804 ) 18,191 Cash flow hedges: Net change in fair value of derivatives (476 ) (1,755 ) (249 ) (2,778 ) Amount of net loss (gain) reclassified to earnings during the period 1,939 754 (3,462 ) 2,133 Total cash flow hedges 1,463 (1,001 ) (3,711 ) (645 ) Total other comprehensive (loss) income (23,384 ) 6,868 (49,515 ) 17,546 Total comprehensive income 38,182 86,055 156,984 234,531 Total comprehensive income attributable to noncontrolling interests 387 430 1,121 1,434 Total comprehensive income attributable to Tim Hortons Inc. $ 37,795 $ 85,625 $ 155,863 $ 233,097 Income tax (expense)/recovery components netted in the above table are detailed as follows: Thirdquarterended Year-to-dateperiodended September27, 2009 September28, 2008 September27, 2009 September28, 2008 Cash flow hedges: Net change in fair value of derivatives $ 30 $ 511 $ 261 $ 1,217 Amounts realized in earnings $ (428 ) $ (151 ) $ (1,134 ) $ (198 )

NOTE 11 SEGMENT REPORTING

NOTE 11 SEGMENT REPORTING
	9 Months Ended Sep. 27, 2009 CAD ($) CAD / shares
Notes to Financial Statements [Abstract]
NOTE 11 SEGMENT REPORTING	NOTE 11 SEGMENT REPORTING The Company operates in the food-service industry and has determined that its reportable segments are those that are based on the Companys methods of internal reporting and management structure. The Companys reportable segments are the geographic locations of Canada and the U.S. As set forth in the table below, there are no amounts of revenues shown between reportable segments. The table below presents information about reportable segments: Third quarter ended Year-to-date period ended September27, 2009 % of Total September28, 2008 % of Total September27, 2009 % of Total September28, 2008 % of Total Revenues Canada $ 492,043 87.3 % $ 442,295 86.9 % $ 1,405,653 86.4 % $ 1,280,982 86.6 % U.S. 38,909 6.9 % 31,162 6.1 % 125,517 7.7 % 96,640 6.5 % Total reportable segments 530,952 94.2 % 473,457 93.0 % 1,531,170 94.1 % 1,377,622 93.1 % Noncontrolling interests Non-owned consolidated restaurants 32,602 5.8 % 35,538 7.0 % 95,654 5.9 % 102,382 6.9 % Total $ 563,554 100.0 % $ 508,995 100.0 % $ 1,626,824 100.0 % $ 1,480,004 100.0 % Segment operating income (loss) Canada $ 140,783 99.2 % $ 132,892 101.6 % $ 387,126 99.1 % $ 369,860 101.4 % U.S. 1,079 0.8 % (2,119 ) (1.6 )% 3,656 0.9 % (5,188 ) (1.4 )% Reportable segment operating income 141,862 100.0 % 130,773 100.0 % 390,782 100.0 % 364,672 100.0 % Noncontrolling interests Non-owned consolidated restaurants 426 538 1,283 1,794 Corporate charges (1) (13,053 ) (8,701 ) (36,087 ) (28,971 ) Consolidated operating income 129,235 122,610 355,978 337,495 Interest, net (4,796 ) (5,331 ) (14,561 ) (14,588 ) Income taxes (62,873 ) (38,092 ) (134,918 ) (105,922 ) Net income 61,566 79,187 206,499 216,985 Net income attributable to noncontrolling interests 387 430 1,121 1,434 Net income attributable to Tim Hortons Inc. $ 61,179 $ 78,757 $ 205,378 $ 215,551

NOTE 12 DERIVATIVES AND FAIR VA

NOTE 12 DERIVATIVES AND FAIR VALUE MEASUREMENTS
	9 Months Ended Sep. 27, 2009 CAD ($) CAD / shares
Notes to Financial Statements [Abstract]
NOTE 12 DERIVATIVES AND FAIR VALUE MEASUREMENTS	NOTE 12 DERIVATIVES AND FAIR VALUE MEASUREMENTS Derivatives ASC 815 (formerly SFAS No.133), as amended, requires companies to recognize all derivatives as either assets or liabilities at fair value on the Condensed Consolidated Balance Sheet. ASC 815 (formerly SFAS No.133) also permits companies to designate all derivatives that qualify as hedging instruments as fair value hedges, cash flow hedges, or hedges of net investments in foreign operations. This designation is based on the exposure being hedged. The Company has a policy prohibiting speculative trading in derivatives. The Company may enter into derivatives that are not designated as hedging instruments for accounting purposes, but which largely offset the economic impact of certain foreign currency transactions. The Company limits its counterparty risk associated with its slate of derivative instruments by utilizing a number of different financial institutions. The Company continually monitors its positions, and the credit ratings of its counterparties, and adjusts positions if appropriate. The Company did not have any significant exposure to any individual counterparty at September27, 2009 or December28, 2008. Cash flow hedges: The Companys exposure to foreign exchange risk is mainly related to fluctuations between the Canadian dollar and the U.S. dollar. The Company is also exposed to changes in interest rates. The Company seeks to manage its cash flow and income exposures arising from these fluctuations and may use derivative products to reduce the risk of a significant impact on its cash flows or income. The Company does not hedge foreign currency and interest rate exposure in a manner that would entirely eliminate the effect of changes in foreign currency exchange rates, or interest rates on net income and cash flows. The fair value of derivatives used by the Company are based on quoted market prices for comparable products and have, therefore, been classified as observable Level 2 inputs as defined by ASC 820 (formerly SFAS No.157) (see below). The Company enters into cash flow hedges to reduce the exposure to variability in certain expected future cash flows. The types of cash flow hedges the Company may enter into include, but are not limited to: (i)interest rate swaps that effectively convert a portion of floating rate debt to fixed rate debt and are designed to reduce the impact of interest rate changes on future interest expense; and (ii)forward foreign exchange contracts that are entered into to fix the price of U.S. dollar denominated future purchases. For cash flow hedges, the effective portion of the gains or losses on derivatives is reported in the cash flow hedges component of accumulated other comprehensive (loss) income in Total equity of Tim Hortons Inc. and reclassified into earnings in the same period or periods in which the hedged transaction affects earnings. The ineffective portion of gains or losses on derivatives is reported in the Condensed Consolidated Statement of Operations. The Company discontinues hedge accounting: (i)when it determines that the cash flow derivative is no longer effective in offsetting changes in the cash flows of a

NOTE 13 RECENT ACCOUNTING PRONO

NOTE 13 RECENT ACCOUNTING PRONOUNCEMENTS
	9 Months Ended Sep. 27, 2009 CAD ($) CAD / shares
Notes to Financial Statements [Abstract]
NOTE 13 RECENT ACCOUNTING PRONOUNCEMENTS	NOTE 13 RECENT ACCOUNTING PRONOUNCEMENTS In June 2009, the FASB issued SFAS No.167Amendments to FASB Interpretation No.46(R) (SFAS No.167). This Statement amends Interpretation 46(R) to require an enterprise to perform an analysis to determine whether the enterprises variable interest or interests give it a controlling financial interest in a variable interest entity. This analysis identifies the primary beneficiary of a variable interest entity as the enterprise that has both of the following characteristics: (a)the power to direct the activities of a variable interest entity that most significantly impact the entitys economic performance; and (b)the obligation to absorb losses of the entity that could potentially be significant to the variable interest entity or the right to receive benefits from the entity that could potentially be significant to the variable interest entity. Additionally, an enterprise is required to assess whether it has an implicit financial responsibility to ensure that a variable interest entity operates as designed when determining whether it has the power to direct the activities of the variable interest entity that most significantly impact the entitys economic performance. This statement also amends Interpretation 46(R) to eliminate the quantitative approach previously required for determining the primary beneficiary of a variable interest entity, amends certain guidance for determining whether an entity is a variable interest entity, adds an additional reconsideration event for determining whether an entity is a variable interest entity, and requires enhanced disclosures that will provide users of financial statements with more transparent information about an enterprises involvement in a variable interest entity. This Standard is effective for annual reporting periods that begin after November15, 2009. The Company is currently assessing the potential impact, if any, the adoption of SFAS No.167 may have on its Condensed Consolidated Financial Statements.

NOTE 14 SUBSEQUENT EVENTS

NOTE 14 SUBSEQUENT EVENTS
	9 Months Ended Sep. 27, 2009 CAD ($) CAD / shares
Notes to Financial Statements [Abstract]
NOTE 14 SUBSEQUENT EVENTS	NOTE 14 SUBSEQUENT EVENTS At a special meeting of stockholders held on September22, 2009, the Companys stockholders voted to approve the reorganization of the Company as a Canadian public company. Pursuant to that approval, THI Mergeco Inc., a Delaware corporation and the then wholly-owned subsidiary of the Canadian public company, merged with and into the Company effective at 12:00 a.m. Eastern Time on September28, 2009 (the Merger). In connection with the Merger, Tim Hortons Inc., a corporation incorporated under the Canada Business Corporations Act, became the publicly held parent company of the group of companies previously controlled by the Company. In connection with the Merger, each outstanding share of the Companys common stock automatically converted into one common share of the Canadian public company. The issuance of common shares (and the associated share purchase rights) was registered under the Securities Act of 1933, as amended, pursuant to the registration statement of the Canadian public company on Form S-4 (No. 333-160286), which was declared effective by the U.S. Securities and Exchange Commission on August12, 2009. The common shares of the Canadian public company are traded on both the New York Stock Exchange and the Toronto Stock Exchange under the symbol THI. The Canadian public company is authorized to issue an unlimited number of common shares, one ClassA preferred share and an unlimited number of preferred shares, issuable in series. The Merger will be accounted for as a reorganization of entities under common control; therefore, there will be no revaluation of the Companys consolidated assets and liabilities, and the Canadian public company will continue to use the historical cost basis method of accounting. In addition, as is consistent with Canadian laws, treasury shares previously held by the Company were cancelled and will be netted within common stock in the equity section of the Canadian public companys condensed consolidated balance sheet. In addition, the senior bank facility and stock-based compensation plans were amended to replace the Company with the new Canadian public company. These amendments did not result in any change in accounting. In addition, the Board of Directors of the Canadian public company approved the resumption of the 2009 share repurchase program beginning in the fourth quarter of 2009. The Canadian public company expects to spend up to $150 million during the remainder of the program until it terminates on March1, 2010. Shares will be repurchased through a combination of a 10b5-1, or automatic trading program, and through managements discretion, subject to regulatory requirements, and market, cost, and other considerations.

Document Information

Document Information
	9 Months Ended Sep. 27, 2009 CAD ($) CAD / shares
Document Information [Text Block]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	2009-09-27

Entity Information

Entity Information (CAD $)
	9 Months Ended Sep. 27, 2009	Nov. 04, 2009
Entity [Text Block]
Trading Symbol	THI
Entity Registrant Name	Tim Hortons Inc.
Entity Central Index Key	0001345111
Current Fiscal Year End Date	--01-03
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		180,996,877