Tim Hortons 10-K 4 Mar 10 2010 FY Annual report Financial data

Statement Of Income Alternative

Statement Of Income Alternative (CAD $)
In Thousands, except Per Share data	12 Months Ended Jan. 03, 2010	12 Months Ended Dec. 28, 2008	12 Months Ended Dec. 30, 2007
Revenues
Sales	$1,494,196	$1,348,015	$1,248,574
Franchise revenues
Rents and royalties	657,909	601,870	553,441
Franchise fees	90,033	93,808	93,835
Franchise Revenue, Total	747,942	695,678	647,276
Total revenues	2,242,138	2,043,693	1,895,850
Costs and expenses
Cost of sales	1,318,576	1,180,998	1,099,248
Operating expenses	238,791	216,605	201,153
Franchise fee costs	86,903	87,486	87,077
General and administrative expenses	141,739	130,846	119,416
Equity (income) (note 11)	(35,963)	(37,282)	(38,460)
Asset impairment and related closure costs (note 3)	0	21,266	0
Other (income), net	(3,319)	(2,564)	(644)
Total costs and expenses, net	1,746,727	1,597,355	1,467,790
Operating income	495,411	446,338	428,060
Interest (expense)	(21,220)	(24,558)	(24,118)
Interest income	1,950	4,926	7,411
Income before income taxes	476,141	426,706	411,353
Income taxes (note 6)	178,263	139,812	139,441
Net income	297,878	286,894	271,912
Net income attributable to noncontrolling interests	1,511	2,216	2,361
Net income attributable to Tim Hortons Inc.	$296,367	$284,678	$269,551
Basic earnings per common share attributable to Tim Hortons Inc. (note 2)	1.64	1.55	1.43
Diluted earnings per common share attributable to Tim Hortons Inc. (note 2)	1.64	1.55	1.43
Weighted average number of common shares outstanding - Basic (in thousands) (note 2)	180,477	183,298	188,465
Weighted average number of common shares outstanding - Diluted (in thousands) (note 2)	180,609	183,492	188,759
Dividends per common share	0.4	0.36	0.28

Statement Of Financial Position

Statement Of Financial Position Classified (CAD $)
In Thousands	Jan. 03, 2010	Dec. 28, 2008
Current assets
Cash and cash equivalents	$103,267	$101,636
Restricted cash and cash equivalents (note 1)	60,629	62,329
Restricted investments (note 1)	20,186	0
Accounts receivable, net (note 4)	170,757	159,505
Notes receivable, net (note 5)	38,609	22,615
Deferred income taxes (note 6)	3,388	19,760
Inventories and other, net (note 7)	68,289	71,505
Advertising fund restricted assets (note 8)	26,681	27,684
Total current assets	491,806	465,034
Property and equipment, net (note 9)	1,340,757	1,332,852
Notes receivable, net (note 5)	9,782	17,645
Deferred income taxes (note 6)	8,919	29,285
Intangible assets, net (note 10)	6,034	2,606
Equity investments (note 11)	120,939	132,364
Other assets	18,416	12,841
Total assets	1,996,653	1,992,627
Current liabilities
Accounts payable (note 12)	129,563	157,210
Accrued liabilities:
Salaries and wages	20,324	18,492
Taxes	25,220	25,605
Other (note 12)	112,173	110,518
Deferred income taxes (note 6)	376	0
Advertising fund restricted liabilities (note 8 and note 13)	43,944	47,544
Current portion of long-term obligations	7,642	6,691
Total current liabilities	339,242	366,060
Long-term obligations
Term debt (note 13)	335,995	332,506
Advertising fund restricted debt (note 8 and note 13)	415	6,929
Capital leases (note 15)	67,156	59,052
Deferred income taxes (note 6)	4,603	13,604
Other long-term liabilities	78,304	72,467
Total long-term obligations	486,473	484,558
Equity of Tim Hortons Inc.
Capital in excess of par value	0	929,102
Treasury stock, at cost: nil and 11,754,201 shares, respectively (note 17)	0	(399,314)
Common shares held in Trust, at cost: 278,500 and 358,186 shares, respectively (note 17)	(9,437)	(12,287)
Retained earnings	796,235	677,550
Accumulated other comprehensive loss	(120,626)	(54,936)
Total equity of Tim Hortons Inc.	1,169,044	1,140,404
Noncontrolling interests	1,894	1,605
Total equity	1,170,938	1,142,009
Total liabilities and equity	$1,996,653	$1,992,627

1_Statement Of Financial Positi

Statement Of Financial Position Classified (Parenthetical) (CAD $)
	Jan. 03, 2010	Dec. 28, 2008
Treasury stock, shares		11,754,201
Common shares held in Trust, shares	278,500	358,186

Statement Of Cash Flows Indirec

Statement Of Cash Flows Indirect (CAD $)
In Thousands	12 Months Ended Jan. 03, 2010	12 Months Ended Dec. 28, 2008	12 Months Ended Dec. 30, 2007
Cash flows provided from (used in) operating activities
Net income	$297,878	$286,894	$271,912
Net income attributable to noncontrolling interest	(1,511)	(2,216)	(2,361)
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	101,447	91,278	83,595
Asset impairment and related closure costs (note 3)	0	21,266	0
Stock-based compensation expense	8,869	9,630	8,560
Equity income, net of cash dividends	11,397	4,519	1,448
Deferred income taxes	25,342	(13,714)	(7,097)
Changes in operating assets and liabilities
Restricted cash and cash equivalents	789	(23,820)	(37,790)
Accounts and notes receivable	(13,692)	(51,235)	3,577
Inventories and other	1,012	(3,708)	(8,323)
Accounts payable and accrued liabilities	(19,726)	22,723	58,461
Other, net	3,846	14,398	21,994
Net cash provided from operating activities	415,651	356,015	393,976
Cash flows (used in) provided from investing activities
Capital expenditures	(157,971)	(174,247)	(175,541)
Purchase of restricted investments	(20,136)	(11,881)	0
Proceeds from sale of restricted investments	0	12,000	0
Principal payments on notes receivable	2,821	3,939	6,791
Other investing activities	(22,540)	(13,418)	(11,101)
Net cash used in investing activities	(197,826)	(183,607)	(179,851)
Cash flows (used in) provided from financing activities
Purchase of common shares/stock held in trust (note 17)	(713)	(3,842)	(7,202)
Purchase of common shares/stock for settlement of share/stock-based compensation (note 18)	(477)	(226)	(110)
Dividend payments	(72,506)	(66,086)	(52,865)
Proceeds from issuance of debt, net of issuance costs	3,507	3,796	2,588
Tax sharing payment from Wendy's	0	0	9,116
Principal payments on other long-term debt obligations	(6,582)	(7,376)	(4,060)
Net cash used in financing activities	(206,873)	(238,992)	(223,137)
Effect of exchange rate changes on cash	(9,321)	10,618	(9,469)
Increase (decrease) in cash and cash equivalents	1,631	(55,966)	(18,481)
Cash and cash equivalents at beginning of year	101,636	157,602	176,083
Cash and cash equivalents at end of year	$103,267	$101,636	$157,602

Statement Of Shareholders Equit

Statement Of Shareholders Equity And Other Comprehensive Income (CAD $)
In Thousands	Capital in excess of par value	Treasury stock (note 17)		Retained earnings	Accumulated other comprehensive loss		Common stock	Total Equity of Tim Hortons Inc.	Noncontrolling interests	Total
Balance at beginning of year at Dec. 31, 2006		(1,930)	(266)			0	193,303
Balance at beginning of year at Dec. 31, 2006	$918,043	($64,971)	($9,171)	$248,980	($74,766)	$0	$289		$2,183
Opening adjustment - adoption of ASC 740-10 (formerly FIN 48) (note 6)				(6,708)
Purchased during the year		(170,604)
Stock-based compensation	3,925
Purchased during the year			(7,202)
Other comprehensive income/(loss)					(63,699)					(63,699)
Adjusted opening retained earnings				242,272
Reissued during the year (note 18)		420
Tax sharing payment from Wendy's	9,116
Disbursed or sold from Trust during the year (note 18)			1,745
Net income				269,551					2,361	271,912
Cancelled and retired during the year (note 17)		0
Converted from/to common stock/shares (note 17)	0					0	0
Dividends				(52,865)
Distributions and other to noncontrolling interests									(2,183)
Repurchase of common shares				0		0
Purchased during the year		(4,832)
Purchased during the year			(207)
Converted from/to common stock/shares (note 17)						0	0
Reissued during the year (note 18)		12
Disbursed or sold from Trust during year (note 18)			52
Repurchased during the year (note 17)						0
Cancelled and retired during the year (note 17)		0
Balance at end of year at Dec. 30, 2007	931,084	(235,155)	(14,628)	458,958	(138,465)	0	289	1,002,083	2,361	1,004,444
Balance at end of year at Dec. 30, 2007		(6,750)	(421)			0	193,303			186,132
Opening adjustment - adoption of ASC 740-10 (formerly FIN 48) (note 6)				0
Purchased during the year		(165,258)
Stock-based compensation	(1,982)
Purchased during the year			(3,842)
Other comprehensive income/(loss)					83,529					83,529
Adjusted opening retained earnings				458,958
Reissued during the year (note 18)		1,099
Tax sharing payment from Wendy's	0
Disbursed or sold from Trust during the year (note 18)			6,183
Net income				284,678					2,216	286,894
Cancelled and retired during the year (note 17)		0
Converted from/to common stock/shares (note 17)	0					0	0
Dividends				(66,086)
Distributions and other to noncontrolling interests									(2,972)
Repurchase of common shares				0		0
Purchased during the year		(5,036)
Purchased during the year			(116)
Converted from/to common stock/shares (note 17)						0	0
Reissued during the year (note 18)		32
Disbursed or sold from Trust during year (note 18)			179
Repurchased during the year (note 17)						0
Cancelled and retired during the year (note 17)		0
Balance at end of year at Dec. 28, 2008	929,102	(399,314)	(12,287)	677,550	(54,936)	0	289	1,140,404	1,605	1,142,009
Balance at end of year at Dec. 28, 2008		(11,754)	(358)			0	193,303			181,191
Opening adjustment - adoption of ASC 740-10 (formerly FIN 48) (note 6)				0
Purchased during the year		(16,701)
Stock-based compensation	(322)
Purchased during the year			(713)
Other comprehensive income/(loss)					(65,690)					(65,690)
Adjusted opening retained earnings				677,550
Reissued during the year (note 18)		264
Tax sharing payment from Wendy's	0
Disbursed or sold from Trust during the year (note 18)			3,563
Net income				296,367					1,511	297,878
Cancelled and retired during the year (note 17)		415,751
Converted from/to common stock/shares (note 17)	(928,780)					513,318	(289)
Dividends				(72,506)
Distributions and other to noncontrolling interests									(1,222)
Repurchase of common shares				(105,176)		(10,446)
Purchased during the year		(560)
Purchased during the year			(25)
Converted from/to common stock/shares (note 17)						180,997	(193,303)
Reissued during the year (note 18)		8
Disbursed or sold from Trust during year (note 18)			104
Repurchased during the year (note 17)						(3,678)
Cancelled and retired during the year (note 17)		12,306
Balance at end of year at Jan. 03, 2010	$0	$0	($9,437)	$796,235	($120,626)	$502,872	$0	$1,169,044	$1,894	$1,170,938
Balance at end of year at Jan. 03, 2010		0	(279)			177,319	0			177,040

Statement Of Other Comprehensiv

Statement Of Other Comprehensive Income (CAD $)
In Thousands	12 Months Ended Jan. 03, 2010	12 Months Ended Dec. 28, 2008	12 Months Ended Dec. 30, 2007
Net income	$297,878	$286,894	$271,912
Other comprehensive income (loss)
Translation adjustments	(61,892)	82,918	(60,922)
Cash flow hedges:
Net change in fair value of derivatives	(11,576)	(2,379)	(7,303)
Amount of net loss reclassified to earnings during the year	7,778	2,990	4,526
Total cash flow hedges	(3,798)	611	(2,777)
Total other comprehensive (loss) income	(65,690)	83,529	(63,699)
Total comprehensive income	232,188	370,423	208,213
Total comprehensive income attributable to noncontrolling interest	1,511	2,216	2,361
Total comprehensive income attributable to Tim Hortons Inc.	230,677	368,207	205,852
Cash flow hedges:
Net change in fair value of derivatives	987	3,048	23
Amounts realized in earnings	($1,602)	($333)	($21)

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
	12 Months Ended Jan. 03, 2010 CAD ($) CAD / shares
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of business Tim Hortons Inc. is a corporation governed by the Canada Business Corporations Act. For periods on or before September27, 2009, Tim Hortons Inc. was a Delaware corporation (together with its subsidiaries, collectively referred to herein as THI USA). References herein to Tim Hortons, or the Company refer to THI USA and its subsidiaries for periods on or before September27, 2009 and to Tim Hortons Inc., a corporation governed by the Canada Business Corporations Act and its subsidiaries for periods on or after September28, 2009, unless specifically noted otherwise. At 12:00 a.m. on September28, 2009, THI USA effected a merger that resulted in the conversion of existing common stock of THI USA, US$0.001 par value per share, into an equal number of common shares, without par value, in the Company. The Company conducts the business previously conducted by THI USA in substantially the same manner (see Note 17). The Merger was accounted for as a reorganization of entities under common control; therefore, there was no revaluation of THI USAs consolidated assets and liabilities, and the Company will continue to use the historical cost basis method of accounting. 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 including ice cream in some of its locations. 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 January3, 2010, the Company and its franchisees operated 3,015 restaurants in Canada (99.6% franchised) and 563 restaurants in the United States (U.S.) (99.1% franchised) under the name Tim Hortons. In addition, the Company had 291 primarily self-serve licensed locations in the Republic of Ireland and the United Kingdom as of January3, 2010. Fiscal year The Companys fiscal year ends on the Sunday nearest to December31. The Companys 2009 fiscal year consisted of 53 weeks, and the 2008 and 2007 fiscal years of the Company both consisted of 52 weeks. FASB Accounting Standards Codification In June 2009, the Financial Accounting Standards Board (FASB) issued Statement of Accounting Standards (SFAS) No.168The FASB Accounting Standards CodificationTM and Hierarchy of Generally Accepted Accounting Principles a replacement of FASB Statement No.162 (SFAS No.168), now known as FASB Accounting Standards Codification (ASC) 105Generally Accepted Accounting Principles (ASC 105). The FASB Accounting Standards CodificationTM (Codification) has become the source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. This St

EARNINGS PER COMMON SHARE ATTRI

EARNINGS PER COMMON SHARE ATTRIBUTABLE TO TIM HORTONS INC.
	12 Months Ended Jan. 03, 2010 CAD ($) CAD / shares
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO TIM HORTONS INC.	NOTE 2 EARNINGS PER COMMON SHARE ATTRIBUTABLE TO TIM HORTONS INC. Basic earnings per common share attributable to Tim Hortons Inc. are computed by dividing net income attributable to Tim Hortons Inc.s common shareholders by the weighted average number of common shares outstanding. Diluted computations are based on the treasury stock method and include assumed issuances of outstanding restricted stock units and stock options with tandem 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 contributed surplus assuming exercise of the options, net of shares assumed to be repurchased from the assumed proceeds, when dilutive. Stock options were anti-dilutive for 2009 and 2008, respectively, and, therefore, were excluded from the calculation of diluted earnings per common share attributable to Tim Hortons Inc. The computations of basic and diluted earnings per common share attributable to Tim Hortons Inc. are shown below: Year ended January3, 2010 December28, 2008 December30, 2007 (in thousands, except per share data) Net income attributable to Tim Hortons Inc. for computation of basic and diluted earnings per common share attributable to Tim Hortons Inc. $ 296,367 $ 284,678 $ 269,551 Weighted average shares outstanding for computation of basic earnings per common share attributable to Tim Hortons Inc. (in thousands) 180,477 183,298 188,465 Dilutive impact of restricted stock units (in thousands) 132 194 294 Weighted average shares outstanding for computation of diluted earnings per common share attributable to Tim Hortons Inc. (in thousands) 180,609 183,492 188,759 Basic earnings per common share attributable to Tim Hortons Inc. $ 1.64 $ 1.55 $ 1.43 Diluted earnings per common share attributable to Tim Hortons Inc. $ 1.64 $ 1.55 $ 1.43

ASSET IMPAIRMENT AND RELATED CL

ASSET IMPAIRMENT AND RELATED CLOSURE COSTS
	12 Months Ended Jan. 03, 2010 CAD ($) CAD / shares
ASSET IMPAIRMENT AND RELATED CLOSURE COSTS	NOTE 3 ASSET IMPAIRMENT AND RELATED CLOSURE COSTS During the fourth quarter of 2008, the Company initiated a strategic review of its approach to the U.S. market. Upon completion of this review, it was determined that 11 underperforming restaurants in two southern New England markets would be closed. An impairment review was also performed for the remaining assets operating in the two affected southern New England markets. At the conclusion of this review, the Company determined that the future expected cash flows in these markets were insufficient to recover the carrying value of these assets, resulting in an impairment charge being recorded. The following table outlines the charges associated with the impairment and restaurant closures: 2008 Impairment Restaurant closurecosts Total (in thousands) Impairment of assets $ 13,703 $ 2,856 $ 16,559 Lease commitments 4,501 4,501 Other 206 206 Total asset impairment and related closure costs $ 13,703 $ 7,563 $ 21,266 Impairment: The fair value of these asset groups was determined in order to calculate the amount of impairment for the asset group. The most significant asset in these asset groups is property and buildings for which the fair value of the underlying real estate was primarily based on third-party appraisals of the assets. The shortfall of fair value compared to carrying value for each asset group was then allocated to the assets within the respective asset group. Restaurant closure costs: The fair value of the assets associated with the closed restaurants was based on estimated salvage value for leaseholds and equipment and, in the case of owned properties, the fair value of underlying real estate was based on third-party appraisals performed by the above-mentioned valuators. The liability relating to ongoing lease commitments takes into account sublease assumptions and is undiscounted. Other costs associated with restaurant closures relate primarily to severance costs. The impairment loss and related restaurant closure costs are included in Asset impairment and related closure costs on the Consolidated Statement of Operations and Consolidated Statement of Cash Flow. They have also been reflected in the U.S. operating segment (see Note 20).

ACCOUNTS RECEIVABLE

ACCOUNTS RECEIVABLE
	12 Months Ended Jan. 03, 2010 CAD ($) CAD / shares
ACCOUNTS RECEIVABLE	NOTE 4 ACCOUNTS RECEIVABLE Accounts receivable are net of an allowance for doubtful accounts of $1.7 million at January3, 2010 (December28, 2008: $2.8 million). The carrying amount of the accounts receivable outstanding approximates fair value due to the short-term nature of these balances.

NOTES RECEIVABLE

NOTES RECEIVABLE
	12 Months Ended Jan. 03, 2010 CAD ($) CAD / shares
NOTES RECEIVABLE	NOTE 5 NOTES RECEIVABLE The Company has developed a franchise incentive program (FIP) for some of the Companys U.S. franchisees, which provides financing for both the initial franchise fee and the purchase of certain restaurant equipment, furniture, trades fixtures, and interior signs. The payment for those assets is deferred for a period of 104 weeks from the date of opening, and the franchisee has the option to pay for the initial franchise fee on a weekly basis over a period of up to 104 weeks from the opening of the restaurant as well. Notes receivable arise primarily from the financing of such arrangements under the FIP and from past-due franchisee obligations. Most of these notes are generally non-interest bearing and are payable in full at the end of 104 weeks. In certain circumstances, notes have been extended beyond the 104 week period to accommodate the franchisee being able to obtain third-party financing or other arrangements are made with the franchisee. The need for a reserve for uncollectible amounts is reviewed on a specific franchisee basis using information available to the Company, including past-due balances and the financial strength of the franchisee. Uncollectible amounts for notes receivable, both principal and interest, are provided for when those amounts are identified as uncollectible and were $0.5 million and $0.8 million at January3, 2010 and December28, 2008, respectively. The estimated fair value of the Companys notes receivable was approximately $48 million and $39 million as at January3, 2010 and December28, 2008, respectively. 2009 2008 (in thousands) Notes receivable, discounted, short-term $ 38,609 $ 22,615 Notes receivable, discounted, long-term 9,782 17,645 $ 48,391 $ 40,260

INCOME TAXES

INCOME TAXES
	12 Months Ended Jan. 03, 2010 CAD ($) CAD / shares
INCOME TAXES	NOTE 6 INCOME TAXES The Company reorganized to become a Canadian public company on September28, 2009. For periods prior to September28, 2009, the parent company was a U.S. public company (see Notes 1 and 17). The provision for income taxes for the fiscal year 2009 consisted of the following: January3, 2010 Current Canadian $ 142,267 Foreign (primarily U.S.) 13,535 155,802 Deferred Canadian 3,771 Foreign (primarily U.S.) 18,690 22,461 $ 178,263 The provision for income taxes in the fiscal years 2008 and 2007 consisted of the following: December28, 2008 December30, 2007 Current U.S. federal $ 616 $ 1,259 U.S. state and local 281 426 Foreign (primarily Canada) 149,920 141,164 150,817 142,849 Deferred U.S. federal (7,986 ) (5,829 ) U.S. state and local (392 ) (236 ) Foreign (primarily Canada) (2,627 ) 2,657 (11,005 ) (3,408 ) $ 139,812 $ 139,441 The foreign income tax expense for the year ended January3, 2010 was primarily U.S., as compared to the years ended December28, 2008 and December30, 2007, when the foreign income tax expense was primarily Canadian. The provision for foreign taxes includes withholding taxes. Income before income taxes for fiscal year 2009 was primarily Canadian in the amount of $435.2 million. Income before income taxes for the fiscal years ended 2008 and 2007, which was also primarily Canadian, was $422.5 million and $382.9 million, respectively. The tax-effected temporary differences which gave rise to deferred tax assets and liabilities at each year end consisted of the following: 2009 2008 (in thousands) Deferred tax assets U.S. foreign tax credit carry-forwards $ 21,925 $ 47,567 Lease transactions 40,133 51,433 Property and equipment basis differences 9,321 4,523 Intangible assets basis differences 8,715 8,555 Benefit plans 3,026 3,600 Reserves not currently deductible 1,829 3,470 Deferred income 19,320 24,972 Loss carry-forwards 6,997 6,028 All other 1,453 5,043 112,719 155,191 Valuation allowance (58,639 ) (62,191 ) $ 54,080 $ 93,000 Deferred tax liabilities Lease transactions $ 24,378 $ 33,885 Property and equipment basis differences 20,487 18,407 Intangible assets basis differences 1,300 701 Unremitted earnings foreign operations 283 980 All other 304 3,586 $ 46,752 $ 57,559 Net deferred tax assets $ 7,328 $ 35,441 Reported in Consolidated Balance Sheet as: Deferred income taxes current asset $ 3,388

INVENTORIES AND OTHER, NET

INVENTORIES AND OTHER, NET
	12 Months Ended Jan. 03, 2010 CAD ($) CAD / shares
INVENTORIES AND OTHER, NET	NOTE 7 INVENTORIES AND OTHER, NET Inventories (which are comprised primarily of finished goods), and other, net include the following for the 2009 and 2008 fiscal years: 2009 2008 (in thousands) Inventories $ 56,948 $ 43,252 Inventory obsolescence provision (1,138 ) (873 ) Inventories, net 55,810 42,379 Prepaids and other 12,479 29,126 Total inventories and other, net $ 68,289 $ 71,505

RESTRICTED ASSETS AND LIABILITI

RESTRICTED ASSETS AND LIABILITIES-ADVERTISING FUNDS
	12 Months Ended Jan. 03, 2010 CAD ($) CAD / shares
RESTRICTED ASSETS AND LIABILITIES-ADVERTISING FUNDS	NOTE 8 RESTRICTED ASSETS AND LIABILITIESADVERTISING FUNDS 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 Consolidated Statement of Operations and Cash Flows because the contributions to these advertising funds are designated for specific purposes, and the Company acts, in substance, as an agent with regard to these contributions. The assets and liabilities of these advertising funds are reflected in the Companys Consolidated Balance Sheet as follows: 2009 2008 (in thousands) Restricted assetscurrent $ 26,681 $ 27,684 Property and equipment, net 18,159 26,789 Other assetslong-term 1,256 Total assets $ 46,096 $ 54,473 Restricted liabilitiescurrent 43,944 47,544 Restricted debtlong-term 415 6,929 Deferred income taxeslong-term 1,737 Total liabilities $ 46,096 $ 54,473 Contributions to the advertising funds are required to be made from Company-operated and franchise restaurants and restaurants under operator agreements. These contributions are based on a percentage of restaurant retail sales and are used for local, regional and national advertising as well as brand protection and development programs. The Company may collect up to 4.0% of restaurant sales from franchisees and Company-operated restaurants for contribution to the advertising funds. The following table summarizes actual contribution rates to the advertising funds for franchise and Company-operated restaurants: Advertising Fund Contribution Rate as of Year-end 2009 2008 2007 Canada 3.5 %(1) 3.5 % 3.5 % U.S. 4.0 % 4.0 % 4.0 % (1) The Company introduced a temporary reduction of 0.25% to the contribution rate for Canadian franchisees during July 2009 through December 2009. During this period, the Company continued to collect the full 3.5% contribution. A rebate for this temporary reduction will be issued in early 2010 to eligible franchisees. Company contributions made from its Company-operated restaurants to its various advertising funds totaled $0.9 million, $1.4 million and $2.0 million in 2009, 2008 and 2007, respectively. Total advertising expense of the Company, including these amounts and contributions made at the discretion of the Company, and expenditures for local advertising costs and other marketing and advertising expenses amounted to $4.2 million, $5.4 million and $4.9 million for 2009, 2008 and 2007, respectively. The total amount spent by the advertising funds in 2009, 2008 and 2007 amounted to $190.2 million, $176.1 million and $173.7 million, res

PROPERTY AND EQUIPMENT, NET

PROPERTY AND EQUIPMENT, NET
	12 Months Ended Jan. 03, 2010 CAD ($) CAD / shares
PROPERTY AND EQUIPMENT, NET	NOTE 9 PROPERTY AND EQUIPMENT, NET Property and equipment, at cost, net of impairment charges, at 2009 and 2008 fiscal year ends consisted of the following: 2009 2008 (in thousands) Land $ 240,148 $ 244,919 Buildings and leasehold improvements 1,213,298 1,172,703 Restaurant and other equipment 126,020 126,879 Capital leases 136,477 117,657 Computer hardware and software 104,667 80,564 Advertising fund property and equipment 57,687 55,975 Other 100,844 77,804 Construction-in-progress 17,860 36,198 1,997,001 1,912,699 Less: Accumulated depreciation and amortization (656,244 ) (579,847 ) $ 1,340,757 $ 1,332,852 The Company capitalized $0.4 million of interest and other costs in property and equipment, primarily associated with the construction of new restaurants (2008 $0.6 million). The Companys capitalized software costs, including certain costs associated with internally developed software, are $63.9 million and $51.3 million as at January3, 2010 and December28, 2008, respectively, and are included in either Computer hardware and software or Construction-in-progress above. The net book value of these assets is $35.4 million and $29.2 million as at January3, 2010 and December28, 2008, respectively. Capital leases are comprised primarily of buildings. The Company added $13.8 million of additional capital leased assets in 2009 (2008: $13.7 million). In 2008, the Company recorded pre-tax property and equipment impairment charges of $16.6 million related to two New England markets in the U.S. operating segment (see Note 3).

INTANGIBLE ASSETS, NET

INTANGIBLE ASSETS, NET
	12 Months Ended Jan. 03, 2010 CAD ($) CAD / shares
INTANGIBLE ASSETS, NET	NOTE 10 INTANGIBLE ASSETS, NET The table below presents the intangible assets as of January3, 2010 and December28, 2008: 2009 2008 (in thousands) Persona $ 6,455 $ 6,455 Exclusivity rights 4,000 10,455 6,455 Accumulated amortization (4,421 ) (3,849 ) Net carrying amount $ 6,034 $ 2,606 Persona represents the use of the name and likeness of Ronald V. Joyce, a former owner of the Company. The name and likeness are being amortized over a period of twelve years ending in 2013. In the fourth quarter of 2009, the Company entered into two separate collaborative arrangements with Kahala Corp., parent company of Cold Stone Creamery, Inc. The nature and purpose of the arrangements is to expand both parties co-branding and other development initiatives. The Company has the exclusive development rights in Canada, and certain rights to use licenses within the U.S., to operate ice cream and frozen confections retail outlets in combination with Tim Hortons retail outlets. The Company has paid a Master License Fee to Kahala Franchise Corp. in the amount of $4 million to acquire the Companys exclusive Cold Stone Creamery development rights in Canada. This exclusivity right is being amortized over a period of 10 years ending in 2019, corresponding with the initial term of the agreement. Payments and receipts regarding collaborative agreements are presented in the Companys Consolidated Statement of Operations based on the nature and contractual terms of the arrangement, the nature of the payments, and applicable accounting guidance. For the fiscal year ended January3, 2010, these payments (which include advertising, royalty and various product fees) were not significant. Amounts attributable to transactions arising between the Company and its franchisees in connection with these arrangements are included in Revenues and, on a consolidated basis, were not significant for the year ended January3, 2010. Total intangibles amortization expense was $0.6 million in 2009 and $0.5 million in 2008 and 2007, respectively. The estimated annual intangibles amortization expense for 2010 through 2013 is approximately $0.9 million, and approximately $0.4 million through 2019.

EQUITY INVESTMENTS

EQUITY INVESTMENTS
	12 Months Ended Jan. 03, 2010 CAD ($) CAD / shares
EQUITY INVESTMENTS	NOTE 11 EQUITY INVESTMENTS Effective December29, 2008, the Company adopted provisions within ASC 323InvestmentsEquity Method and Joint Ventures (ASC 323) (formerly Emerging Issues Task Force 08-6Equity Method Accounting Considerations (EITF 08-6)), which was issued to clarify the accounting for certain transactions and impairment considerations involving equity-method investments. The adoption of ASC 323 (formerly EITF 08-6) did not impact the Companys Consolidated Financial Statements or associated note disclosure in 2009. Combined summarized financial information for the Companys investments accounted for using the equity method is shown below. These investments are almost exclusively in operating ventures closely integrated into the Companys operations, such as the joint venture investments described below and in Note 22. These amounts are in aggregate at 100% levels. The net income amounts shown below include income tax expense of $8.5 million, $10.8 million, and $7.6 million for 2009, 2008, and 2007, respectively. The Companys ownership percentage of these income tax amounts is included as part of equity income shown on the Consolidated Statements of Operations, unless the investment pertains to a partnership or joint venture, in which case ownership percentage of earnings is attributed to the partner or venturer and the associated income tax is included in income taxes on the Consolidated Statement of Operations. Year ended January3, 2010 December28, 2008 December30, 2007 (in thousands) Income Statement Information Revenues $ 227,032 $ 219,271 $ 199,520 Expenses attributable to revenues $ (132,707 ) $ (122,593 ) $ (105,576 ) Net Income $ 71,606 $ 74,031 $ 76,246 2009 2008 (in thousands) Balance Sheet Information Current assets $ 44,693 $ 53,716 Non-current assets $ 243,598 $ 257,564 Current liabilities $ 10,063 $ 11,241 Non-current liabilities $ 17,234 $ 17,281 The Companys two most significant equity investments are its 50% owned joint venture with Aryzta AG (formerly IAWS Group plc) (Arytza), which supplies the Companys restaurants with certain par-baked products, and its 50% owned joint venture with Wendys International, Inc., which jointly holds real estate underlying Canadian combination restaurants (see Note 22). In fiscal 2009, the Company received distributions of $16.5 million, representing the Companys share, from its partnership with Wendys ($15.0 million in 2008 and $13.5 million in 2007) and dividends of $30.0 million, representing the Companys share, from its joint-venture with Arytza ($24.0 million in both 2008 and 2007).

ACCOUNTS PAYABLE AND ACCRUED LI

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES-OTHER
	12 Months Ended Jan. 03, 2010 CAD ($) CAD / shares
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES-OTHER	NOTE 12 ACCOUNTS PAYABLE AND ACCRUED LIABILITIESOTHER Included within Accounts payable are the following obligations as at January3, 2010 and December28, 2008: 2009 2008 (in thousands) Accounts payable $ 109,288 $ 138,704 Construction holdbacks and accruals 20,275 18,506 $ 129,563 $ 157,210 Included within Accrued liabilities, Other are the following obligations as at January3, 2010 and December28, 2008: 2009 2008 (in thousands) Gift certificate obligations to customers $ 8,348 $ 12,960 Cash card obligations to customers 74,292 62,882 Other accrued liabilities 29,533 34,676 $ 112,173 $ 110,518 Accrued liabilities, Other include accrued rent expense, deposits, and various equipment and other accruals. The carrying amount of Accounts payable and Accrued liabilities approximates fair value due to the short-term nature of these balances.

TERM DEBT

TERM DEBT
	12 Months Ended Jan. 03, 2010 CAD ($) CAD / shares
TERM DEBT	NOTE 13 TERM DEBT The Company has an unsecured five-year senior bank facility with a syndicate of Canadian and U.S. financial institutions that consists of a $300.0 million Canadian term loan; a $200.0 million Canadian revolving credit facility (which includes $15.0 million in overdraft availability and a $25.0 million letter of credit facility); and a US$100.0 million U.S. revolving credit facility (which includes a US$10.0 million letter of credit facility) (collectively referred to as the Senior Bank Facility). The Senior Bank Facility matures on February28, 2011. The term loan bears interest at a variable rate per annum equal to Canadian prime rate or, alternatively, the Company may elect to borrow by way of bankers acceptances (or loans equivalent thereto) plus a margin. The Senior Bank Facility contains various covenants which, among other things, require the maintenance of two financial ratiosa consolidated maximum total debt to earnings before interest expenses, taxes, depreciation and amortization (EBITDA) ratio and a minimum fixed charge coverage ratio. The Company was in compliance with these covenants as at January3, 2010. The Canadian and U.S. revolving credit facilities are both undrawn, except for approximately $8.6 million (2008: $7.6 million) to support standby letters of credit. The revolving facilities are available for general corporate purposes. The Company incurs commitment fees based on the revolving credit facilities, whether used or unused. The fees vary according to the Companys leverage ratio and, as at January3, 2010 and December28, 2008, equaled 0.08% and 0.125% of the facility amount, respectively. Advances under the Canadian revolving credit facility bear interest at a variable rate per annum equal to the Canadian prime rate or, alternatively, the Company may elect to borrow by way of bankers acceptances or LIBOR, plus a margin. Advances under the U.S. revolving credit facility bear interest at a rate per annum equal to the U.S. prime rate or LIBOR plus a margin. This facility was amended and restated upon the completion of the public company reorganization (Note 1) to, among other administrative changes, include the Company and our primary U.S. operating subsidiary as borrowers. The Senior Bank Facility contains certain covenants that will limit the ability of the Company to, among other things: incur additional indebtedness; create liens; merge with other entities; sell assets; make restricted payments; make certain investments, loans, advances, guarantees or acquisitions; change the nature of its business; enter into transactions with affiliates; enter into certain restrictive agreements; or pay dividends or make share repurchases if the Company is not in compliance with the financial covenants or if such transactions would cause the Company to not be in compliance with the financial covenants. In connection with the term loan, the Company entered into a $30.0 million and a $100.0 million interest rate swap in June 2007 and March 2006, respectively, with multiple financial institutions to help manage its exposure to interest rate volatility. The interest rate swaps are recorded at fair value and

DERIVATIVES AND FAIR VALUE MEAS

DERIVATIVES AND FAIR VALUE MEASUREMENTS
	12 Months Ended Jan. 03, 2010 CAD ($) CAD / shares
DERIVATIVES AND FAIR VALUE MEASUREMENTS	NOTE 14 DERIVATIVES AND FAIR VALUE MEASUREMENTS Derivatives The Company may enter into derivative instruments with maturities generally not longer than three years to hedge foreign exchange risk, interest rate risk, and the variability in cash flows related to the tandem SARs associated with stock options (Note 18). Forward currency contracts to sell Canadian dollars and buy US$75.0 million and US$41.0 million were outstanding as of January3, 2010 and December28, 2008, respectively, to hedge purchases from third parties. The contracts outstanding at January3, 2010 mature on various dates through January 2010 and December 2010. The fair value unrealized loss on these forward contracts was $2.0 million as of January3, 2010 (fair value unrealized gain of $4.9 million as of December28, 2008). In both 2009 and 2008, the Company entered into separate total return swaps (TRS) to help manage the variability in cash flows and, to a lesser extent, earnings associated with stock-based compensation awards that will settle in cash, namely, the tandem SARs that are associated with stock options (see Note 18). A TRS is a contract that involves the exchange of payments between the Company and a financial institution. The payments under the TRS are: (i)those based on changes in the value of reference assets, which, in this case, are the Companys common shares; (ii)dividends on the Companys common shares subject to the TRS, and; (iii)a variable interest rate specified in the contract. The number of the Companys underlying common shares covered under these contracts is 294,900. Neither TRS qualified as an accounting hedge under ASC 815 (formerly SFAS No.133, as amended); and, as such, they are adjusted to fair value each reporting period in accordance with ASC 815 (formerly SFAS No.133, as mended). Gains and losses on the fair value adjustment of the TRS are included in General and administrative expenses. The revaluation resulted in minimal gains for 2009 and 2008. Each TRS has a seven-year term, but the contracts allows for partial settlements over the term, without penalty. In connection with the term loan facility, the Company entered into interest rate swaps in the amount of $30.0 million and $100.0million with multiple financial institutions in June 2007 and March 2006, respectively, to help manage its exposure to interest rate volatility. By entering into the interest rate swaps, the Company agreed to receive interest at a variable rate and pay interest at a fixed rate. The interest rate swaps essentially fix a portion of the interest rate variability on the term loan, as described below, but the rate remains subject to variation if the applicable margin under the credit facilities increases or decreases. The interest rate swaps essentially fixed the interest rate on the swapped portion of the debt to 5.04% and 5.16% at January3, 2010 and December28, 2008, respectively, and mature on February28, 2011. The weighted average interest rate on this debt, including the swapped portion, was 3.02% for fiscal 2009 (2008: 4.61%). The interest rate swaps are considered to be highly effective cash flow hedges according to criteria specified in ASC 81

LEASES

LEASES
	12 Months Ended Jan. 03, 2010 CAD ($) CAD / shares
LEASES	NOTE 15 LEASES The Company occupies land and buildings and uses equipment under terms of numerous lease agreements expiring on various dates through 2049 (except for one lease that expires in 2086). Land and building leases generally have an initial term of 10 to 20 years, while land-only lease terms can extend longer. Many of these leases provide for future rent escalations and renewal options. Certain leases require contingent rent, determined as a percentage of sales. Most leases also obligate the Company to pay the cost of maintenance, insurance and property taxes. Assets leased under capital leases and included in property and equipment, but excluding leasehold improvements, consisted of the following: 2009 2008 (in thousands) Buildings $ 129,098 $ 110,507 Other 7,411 7,150 Accumulated depreciation (45,389 ) (38,762 ) Balance as of end of year $ 91,120 $ 78,895 At January3, 2010, future minimum lease payments for all leases, and the present value of the net minimum lease payments for all capital leases, were as follows: CapitalLeases OperatingLeases (in thousands) 2010 $ 13,767 $ 73,818 2011 12,709 68,126 2012 10,532 57,637 2013 10,727 58,667 2014 10,246 54,649 Later years 68,503 471,355 Total minimum lease payments $ 126,484 $ 784,252 Amount representing interest (52,390 ) Present value of net minimum lease payments 74,094 Current portion (6,938 ) $ 67,156 Included in the total minimum lease obligations are minimum payments due to the Company under non-cancelable subleases with lessees in amounts of $109 million for capital leases and $540 million for operating leases. Rent expense consists of rentals for premises and equipment leases. Rent expense for each year is included in operating expenses and amounted to: Year ended January3, 2010 December28, 2008 December30, 2007 (in thousands) Minimum rents $ 80,133 $ 73,823 $ 68,613 Contingent rents 68,026 65,007 60,580 $ 148,159 $ 138,830 $ 129,193 In connection with the franchising of certain restaurants, the Company has leased or subleased land, buildings and equipment to the related franchise owners. Most leases provide for fixed payments with contingent rent after sales exceed certain levels, while others provide for monthly rentals based on a percentage of sales. Lease terms are generally ten years with one or more five-year renewal options. The franchise owners bear the cost of maintenance, insurance, and property taxes. At each year end, Company assets included in property and equipment leased under operating leases, including leasehold improvements under operating and capital leases, consisted of the following: 2009 2008 (in thousands) Land $ 216,409 $ 2

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES
	12 Months Ended Jan. 03, 2010 CAD ($) CAD / shares
COMMITMENTS AND CONTINGENCIES	NOTE 16 COMMITMENTS AND CONTINGENCIES The Company has guaranteed certain leases and debt payments, primarily related to franchisees, amounting to $0.5 million and $0.7 million at January3, 2010 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. At January3, 2010 and December28, 2008, the Company is also the guarantor on $9.3 million and $8.7 million, respectively, 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 January3, 2010. 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 for 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 International, Inc. (Wendys). Under the separation agreements entered into with Wendys at the time of our initial public offering, 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 the respective agreements. The Company believes that the resolution of any such 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.

COMMON SHARES

COMMON SHARES
	12 Months Ended Jan. 03, 2010 CAD ($) CAD / shares
COMMON SHARES	NOTE 17 COMMON SHARES Corporate Reorganization At a special meeting of stockholders held on September22, 2009, THI USAs stockholders voted to approve the reorganization of the corporate structure of THI USA and its subsidiaries such that the public company parent would be a Canadian company. Pursuant to that approval, THI Mergeco Inc., a Delaware corporation and the then wholly-owned subsidiary of the entity that would become the Canadian public company, merged with and into THI USA, effective at 12:00 a.m. Eastern Time on September28, 2009 (the Merger). In connection with the Merger, the Company, a corporation incorporated under the Canada Business Corporations Act, became the publicly held parent company of the group of companies previously controlled by THI USA. In connection with the Merger, each outstanding share of THI USAs common stock automatically converted into one common share of the 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 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 Company are traded on both the New York Stock Exchange and the Toronto Stock Exchange under the symbol THI. The Company is authorized to issue an unlimited number of common shares, of which 177,318,614 are outstanding as at January3, 2010. In addition, the Company is authorized to issue one ClassA preferred share and an unlimited number of preferred shares, issuable in series. The Company does not have any preferred shares outstanding as at January3, 2010. The Merger was accounted for as a reorganization of entities under common control; therefore, there was no revaluation of THI USAs consolidated assets and liabilities, and the Company will continue to use the historical cost basis method of accounting. In addition, consistent with Canadian corporate law, treasury shares previously held by THI USA were cancelled and were classified within common shares in the equity section of the Companys Consolidated Balance Sheet. In addition, the Senior Bank Facility and stock-based compensation plans were amended to replace THI USA with the Company, and to make certain other modifications in connection with the reorganization and otherwise. These amendments did not result in any change in accounting. Share repurchase programs 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 was suspended between April 2009 and October 2009 until the Company completed a review of its capital allocation activities after the reorganization as a Canadian public company. The program resumed in November 2009. Shares were repurchased through a combination of an automatic trading program, and through managements discretion, subject t

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION
	12 Months Ended Jan. 03, 2010 CAD ($) CAD / shares
STOCK-BASED COMPENSATION	NOTE 18 STOCK-BASED COMPENSATION The Companys 2006 Stock Incentive Plan (2006 Plan) has been in place since the Companys initial public offering. The 2006 Plan was assumed by the Company upon the completion of the reorganization to a Canadian public company. The 2006 Plan is an omnibus plan, designed to allow for a broad range of equity- based compensation awards in the form of stock options, restricted stock, restricted stock units (RSUs), SARs, dividend equivalent rights, performance awards and share awards to eligible employees and directors of the Company or its subsidiaries. Total share-based awards of 1.4million have been made under the 2006 Plan during fiscal years 2007, 2008 and 2009 to officers and certain employees, of which 0.7million were granted as RSUs and 0.7million as stock options with tandem SARs. Dividend equivalent rights have accrued on the RSUs. A total of 2,900,000 shares were authorized under the 2006 Plan, of which 1,038,670 share-based awards are outstanding as at January3, 2010. Total stock-based compensation expense included in General and administrative expense on the Consolidated Statement of Operations is detailed as follows: Year ended January3, 2010 December28, 2008 December30, 2007 Restricted stock units $ 5,715 $ 8,278 $ 7,744 Stock options and tandem SARs 1,830 631 Deferred stock units 1,324 721 816 Total stock-based compensation expense $ 8,869 $ 9,630 $ 8,560 Details of stock-based compensation grants and settlements in fiscal 2009, 2008 and 2007 are set forth below. Restricted stock units The following is a summary of RSU activity for employees and outside directors granted under the Companys 2006 Plan for the years ended December30, 2007, December28, 2008, and January3, 2010: RestrictedStock Units Weighted AverageFair ValueperUnit (inthousands) (in dollars) 2007 Balance at January1, 2007 344 $ 28.13 Granted 295 34.99 Dividend equivalent rights 4 34.73 Vested and settled (118 ) 28.40 Forfeited (21 ) 31.43 Balance at December30, 2007 504 $ 31.98 2008 Granted 233 $ 33.02 Dividend equivalent rights 5 32.68 Vested and settled (326 ) 30.38 Forfeited (10 ) 32.63 Balance at December28, 2008 406 $ 33.82 2009 Granted 140 $ 28.87 Dividend equivalent rights 5 30.54 Vested and settled (234 ) 34.41 Forfeited (5 ) 32.16 Balance at January3, 2010 312 $ 31.15 The Companys Human Resource and Compensation Committee (the HRCC) approved RSU awards, which are reflected in the table above and below. RSUs were not granted in May 2009 to the named executive officers because the performance pre-condition, relating to a required threshold level of operating income, to the grant of the RSUs (prior to grant, referred to as performance-conditioned RSUs) was n

RETIREMENT PLANS

RETIREMENT PLANS
	12 Months Ended Jan. 03, 2010 CAD ($) CAD / shares
RETIREMENT PLANS	NOTE 19 RETIREMENT PLANS Certain Company employees participate in various defined contribution plans. Costs for Company employees participating in these plans were approximately $6.6 million for 2009 and 2008, respectively, and $6.0 million for 2007. These costs are included in General and administrative expense on the Consolidated Statement of Operations.

SEGMENT REPORTING

SEGMENT REPORTING
	12 Months Ended Jan. 03, 2010 CAD ($) CAD / shares
SEGMENT REPORTING	NOTE 20 SEGMENT REPORTING The Company operates exclusively 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 and represent the manner in which the Companys chief decision maker views and evaluates the various aspects of the Companys business. 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: Year ended January3, 2010 % of total December28, 2008 % of total December30, 2007 % of total Revenues Canada $ 1,944,673 86.7 % $ 1,764,869 86.4 % $ 1,627,835 85.9 % U.S 168,216 7.5 % 142,874 7.0 % 142,708 7.5 % Total reportable segments 2,112,889 94.2 % 1,907,743 93.3 % 1,770,543 93.4 % Noncontrolling interests Non-owned consolidated restaurants 129,249 5.8 % 135,950 6.7 % 125,307 6.6 % Total $ 2,242,138 100.0 % $ 2,043,693 100.0 % $ 1,895,850 100.0 % Segment Operating Income (Loss) Canada $ 534,131 99.1 % $ 507,006 105.5 % $ 467,884 101.0 % U.S.(1) 4,840 0.9 % (26,488 ) (5.5 )% (4,804 ) (1.0 )% Reportable segment operating income 538,971 100.0 % 480,518 100.0 % 463,080 100.0 % Noncontrolling interests Non-owned consolidated restaurants 1,732 2,772 2,951 Corporate charges(2) (45,292 ) (36,952 ) (37,971 ) Consolidated Operating Income 495,411 446,338 428,060 Interest, Net (19,270 ) (19,632 ) (16,707 ) Income Taxes (178,263 ) (139,812 ) (139,441 ) Net Income 297,878 286,894 271,912 Net Income Attributable to Noncontrolling Interests 1,511 2,216 2,361 Net Income Attributable to Tim Hortons $ 296,367 $ 284,678 $ 269,551 Capital Expenditures Canada $ 130,897 $ 113,775 $ 114,501 U.S. 29,604 60,472 61,040 $ 160,501 $ 174,247 $ 175,541 (1) Includes $21,266 of asset impairment and related closure costs in 2008. (2) Corporate charges include certain overhead costs which are not allo

SUPPLEMENTAL CASH FLOW INFORMAT

SUPPLEMENTAL CASH FLOW INFORMATION
	12 Months Ended Jan. 03, 2010 CAD ($) CAD / shares
SUPPLEMENTAL CASH FLOW INFORMATION	NOTE 21 SUPPLEMENTAL CASH FLOW INFORMATION Year ended January3, 2010 December31, 2008 December30, 2007 (in thousands) Supplemental disclosures of cash flow information: Interest paid $ 21,097 $ 23,088 $ 25,255 Income taxes paid $ 153,789 $ 153,973 $ 130,727 Non-cash investing and financing activities: Capital lease obligations incurred $ 13,847 $ 13,680 $ 15,090

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS
	12 Months Ended Jan. 03, 2010 CAD ($) CAD / shares
RELATED PARTY TRANSACTIONS	NOTE 22 RELATED PARTY TRANSACTIONS In 2009, the Company purchased products from its bakery joint venture totaling $73.6 million (2008: $69.0 million). These purchases related to products produced by this joint venture and distributed, primarily by the Company, to a portion of its system of restaurants. The Company had accounts payable outstanding of $3.6 million to its bakery joint-venture as at January3, 2010 ($3.2 million in 2008). Included in contingent rent expense (see Note 16) are expenses associated with the Companys 50/50 joint venture with Wendys for the years ended 2009 and 2008 of $23.6 million and $23.0 million, respectively. The Company had accounts payable outstanding of $2.4 million with this joint venture as at January3, 2010 ($1.9 million in 2008) and accounts receivable from this joint venture of $0.2 million ($0.9 million in 2008). In addition, the Company has a $6.2 million note receivable outstanding as at January3, 2010 (2008: nil) and due before December 31, 2010 from the trust fund holding plan assets in connection with the termination of the Companys former supplemental executive retirement plan and settlement of account balances to the participants as a result thereof.

RECENT ACCOUNTING PRONOUNCEMENT

RECENT ACCOUNTING PRONOUNCEMENTS
	12 Months Ended Jan. 03, 2010 CAD ($) CAD / shares
RECENT ACCOUNTING PRONOUNCEMENTS	NOTE 23 RECENT ACCOUNTING PRONOUNCEMENTS In June 2009, the FASB issued SFAS No.167Amendments to FASB Interpretation No.46(R) (SFAS No.167), now codified within ASC 810Consolidations. 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: (i)the power to direct the activities of a variable interest entity that most significantly impact the entitys economic performance; and (ii)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 the adoption of SFAS No.167 may have on its Consolidated Financial Statements. In October 2009, the FASB issued Accounting Standard Update (ASU) No.2009-13Multiple Deliverable Revenue Arrangements, as codified in ASC 605Revenue Recognition. The objective of this ASU is to address the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than as a combined unit. The ASU also establishes a selling price hierarchy for determining the selling price of a deliverable and has expanded disclosures related to vendors multiple-deliverable revenue arrangements. This ASU is effective for fiscal years beginning after June15, 2010, and the Company is currently assessing the potential impact, if any, the adoption of this ASU may have on its Consolidated Financial Statements. In January 2010, the FASB issued Accounting Standard Update (ASU) No.2010-02Accounting and Reporting for Decreases in Ownership of a Subsidiary-A Scope Clarification, as codified in ASC 810Consolidations. This ASU clarifies the applicable scope and implementation issues of ASC 810, originally issued as FASB Statement No.160Noncontrolling Interests in Consolidated Finan

QUARTERLY FINANCIAL DATA

QUARTERLY FINANCIAL DATA (UNAUDITED)
	12 Months Ended Jan. 03, 2010 CAD ($) CAD / shares
QUARTERLY FINANCIAL DATA (UNAUDITED)	NOTE 24 QUARTERLY FINANCIAL DATA (UNAUDITED) 2009 Q1 Q2 Q3 Q4(1) (in thousands, except per share data) Revenues Sales $ 339,619 $ 372,119 $ 373,035 $ 409,423 Franchise revenues Rents and royalties 147,139 164,679 166,914 179,177 Franchise fees 20,427 19,287 23,605 26,714 167,566 183,966 190,519 205,891 Total revenues 507,185 556,085 563,554 615,314 Total costs and expenses, net(2) 402,292 434,235 434,319 475,881 Operating income $ 104,893 $ 121,850 $ 129,235 $ 139,433 Net income attributable to Tim Hortons Inc.(3) $ 66,439 $ 77,760 $ 61,179 $ 90,989 Earnings per share fully diluted(4) $ 0.37 $ 0.43 $ 0.34 $ 0.51 2008 Q1 Q2 Q3 Q4 (in thousands, except per share data) Revenues Sales $ 306,506 $ 335,873 $ 333,581 $ 372,055 Franchise revenues Rents and royalties 135,880 153,546 155,214 157,230 Franchise fees 17,931 21,273 20,200 34,404 153,811 174,819 175,414 191,634 Total revenues 460,317 510,692 508,995 563,689 Total costs and expenses, net(5) 362,985 393,139 386,385 454,846 Operating income $ 97,332 $ 117,553 $ 122,610 $ 108,843 Net income attributable to Tim Hortons Inc.(6) $ 61,820 $ 74,974 $ 78,757 $ 69,127 Earnings per sharefully diluted(6) $ 0.33 $ 0.41 $ 0.43 $ 0.38 (1) The 2009 fiscal year consists of 53 weeks. As a result, the fourth quarter of 2009 represents 14 weeks compared to all other quarters presented that represent 13 weeks. The extra operating week impacted revenues, costs and expense by approximately 6% to 7%. (2) Total costs and expenses, net includes $1.4 million, $2.7 million and $3.2 million of professional advisory and shareholder-related transaction costs in connection with the reorganization of the Company to a Canadian public company in the first, second, and third quarters of 2009, respectively (see Note 1). (3) Net income attributable to Tim Hortons Inc. includes $1.0 million, $2.6 million and $3.1 million of professional advisory and shareholder-related transaction costs, net of tax, and $20.0 million of deferred tax expenses related primarily to a deferred tax valuation allowance related to the reorganization of the Company to a Canadian public company in the first, second, and third quarters of 2009, respectively (see Note 1 and 6). (4) Earnings per share was impacted by $0.01, $0.01 and $0.13 for professional advisory and shareholder-related transaction costs, net of tax, and the def

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS
	12 Months Ended Jan. 03, 2010 CAD ($) CAD / shares
SUBSEQUENT EVENTS	NOTE 25 SUBSEQUENT EVENTS On March 1, 2010, the Company obtained regulatory approval from the Toronto Stock Exchange (TSX) to commence its 2010 share repurchase program (2010 program) for up to $200 million in common shares, not to exceed the regulatory maximum of 8,817,291 shares, equivalent to 5% of the outstanding common shares as of February19, 2010. Purchases of common shares will be made through a combination of automatic trading plan purchases, and at managements discretion in compliance with regulatory requirements, and given prevailing market, cost, and other considerations. Repurchases will be made by the Company on either the TSX, the New York Stock Exchange and/or other Canadian marketplaces, subject to regulatory requirements. Shares repurchased pursuant to the 2010 program will be cancelled. The 2010 program commenced March 3, 2010 and will end on March 2, 2011, or sooner if the $200 million or 5% share maximum has been reached. There can be no assurance as to the precise number of shares that will be repurchased under the 2010 program, or the aggregate dollar amount of the shares purchased. The 2010 program may also be terminated at the Companys discretion in compliance with applicable regulatory requirements.

SCHEDULE II TO CONSOLIDATED FIN

SCHEDULE II TO CONSOLIDATED FINANCIAL STATEMENTS-VALUATION AND QUALIFYING ACCOUNTS
	12 Months Ended Jan. 03, 2010 CAD ($) CAD / shares
SCHEDULE II TO CONSOLIDATED FINANCIAL STATEMENTS-VALUATION AND QUALIFYING ACCOUNTS	SCHEDULE II TO CONSOLIDATED FINANCIAL STATEMENTSVALUATION AND QUALIFYING ACCOUNTS (in thousands) Classification Balanceat Beginning of Year Charged (Credited) toCosts Expenses Additions (Deductions) Balanceat End of Year (in thousands) Fiscal year ended January3, 2010: Deferred tax asset valuation allowance $ 62,191 $ 4,703 $ (8,255 ) $ 58,639 Allowance for doubtful accounts and notes 2,829 (283 ) (348 ) 2,198 Inventory reserve 873 824 (559 ) 1,138 $ 65,893 $ 5,244 $ (9,162 ) $ 61,975 Fiscal year ended December28, 2008: Deferred tax asset valuation allowance(1) $ 40,845 $ 10,418 $ 10,928 $ 62,191 Allowance for doubtful accounts and notes 2,491 1,286 (948 ) 2,829 Inventory reserve 1,228 67 (422 ) 873 $ 44,564 $ 11,771 $ 9,558 $ 65,893 Fiscal year ended December30, 2007: Deferred tax asset valuation allowance(2) $ 80,138 $ (2,454 ) $ (36,839 ) $ 40,845 Allowance for doubtful accounts and notes 2,024 1,196 (729 ) 2,491 Inventory reserve 2,713 290 (1,775 ) 1,228 $ 84,875 $ (968 ) $ (39,343 ) $ 44,564 (1) In the fiscal year ended December28, 2008, the increase in the deferred tax asset valuation allowance primarily resulted from increases to temporary differences related to the U.S. operations, and the translation of those amounts from U.S. dollars to Canadian dollars. (2) In the fiscal year ended December30, 2007, the reduction of the deferred tax asset valuation allowance primarily represents a reduction related to translation adjustments and the settlement of the use of the Companys tax attributes by Wendys pursuant to the tax sharing agreement. Year-end balances are reflected in the Consolidated Balance Sheets as follows: January3, 2010 December28, 2008 Valuation allowance, deferred income taxes $ 58,639 $ 62,191 Deducted from accounts receivable and notes receivable, net 2,198 2,829 Deducted from inventories and other, net 1,138 873 $ 61,975 $ 65,893

Document Information

Document Information
	12 Months Ended Jan. 03, 2010 CAD ($) CAD / shares
Document Type	10-K
Amendment Flag	false
Document Period End Date	2010-01-03

Entity Information

Entity Information (CAD $)
	12 Months Ended Jan. 03, 2010	Mar. 01, 2010	Jun. 28, 2009
Trading Symbol	THI
Entity Registrant Name	Tim Hortons Inc.
Entity Central Index Key	0001345111
Current Fiscal Year End Date	--01-03
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		176,199,824
Entity Public Float			$5,176,881,365