Market Snapshot
  • U.S.
  • Europe
  • Asia
Ticker Volume Price Price Delta
DJIA 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 2.54 0.14%
NASDAQ 4,095.52 9.29 0.23%
Ticker Volume Price Price Delta
STOXX 50 3,155.81 16.55 0.53%
FTSE 100 6,625.25 41.08 0.62%
DAX 9,409.71 91.89 0.99%
Ticker Volume Price Price Delta
NIKKEI 14,548.12 31.85 0.22%
TOPIX 1,173.34 -0.03 -0.00%
HANG SENG 22,760.24 64.23 0.28%

Tim Hortons Inc. announces 2013 first quarter results:



            Tim Hortons Inc. announces 2013 first quarter results:

PR Newswire

OAKVILLE, ON, May 8, 2013

Global foodservices and beverage leader Marc Caira appointed new President and
CEO

New products performing well; first quarter sales constrained by weather and
challenging industry conditions

(Unaudited.  All amounts in Canadian dollars and presented in accordance with
U.S. GAAP.)

                      Financial & Sales Highlights
Performance                                                       %
                                     Q1 2013      Q1 2012    Year-over-
                                                             Year Change
Total revenues                      $     731.5   $    721.3    1.4%
Operating income                    $     127.9   $    131.6   (2.8)%
Adjusted operating income ^(1)      $     137.4   $    131.6    4.4%
Effective tax rate                        27.7%        27.7%       
Net income attributable to THI     $       86.2      $  88.8   (2.9)%
Diluted earnings per share
  attributable to THI ("EPS") ^(2) $       0.56  $      0.56   (0.4)%
Fully diluted shares                      153.5        157.5   (2.5)%

(All numbers in millions, except EPS and effective tax rate.  All numbers
rounded.)

(1)     Adjusted operating income is a non-GAAP measure, and excludes a $9.5
million charge for corporate reorganization expenses in Q1 2013.  Please refer
to "Information on non-GAAP Measure" and the reconciliation information in
footnote (5) of this release for details of reconciling items.
(2)     The impact of corporate reorganization expenses on EPS was $0.05 in Q1
2013.

Same-Store Sales ^(3) Q1 2013 Q1 2012
Canada                (0.3)%   5.2%
U.S.                  (0.5)%   8.5%

(3)     Includes average same-store sales at Franchised and Company-operated
locations open for 13 months or more.  Substantially all of our restaurants
are franchised.

Highlights

  * Global foodservices and beverage executive Marc Caira appointed President
    and CEO, will commence his duties with the Company on July 2^nd, 2013
  * Continued challenges due to economy and weather, but Panini sandwich and
    single-serve coffee platforms contributed positively to first quarter
    sales
  * Operating income of $127.9 million in the quarter. Operating income and
    EPS impacted by $9.5 million ($0.05 per share) in corporate reorganization
    expenses; adjusted operating income^(1), which excludes this impact, grew
    4.4%
  * New 5-year agreement signed to develop up to 100 restaurants in Saudi
    Arabia
  * Announced extension of single-serve coffee offering to include K-Cup^®
    brewer-compatible capsules

 

OAKVILLE, ON, May 8, 2013 /PRNewswire/ - Tim Hortons Inc. (TSX: THI, NYSE:
THI) today announced results for the first quarter ended March 31^st, 2013.

"While it was a soft quarter as expected, we are taking important steps to
continue to expand and enhance our system, improve the guest experience and
build value for our shareholders.  I'm delighted that today we have announced
Marc Caira will be joining us as our new President and CEO.  Marc, a longtime
senior Nestlé executive, has a keen understanding of the global foodservices
industry, and specifically the hot beverage and food sectors, that is second
to none.  We look forward to his leadership as we continue to hone our
strategies to support future growth and fulfill our ongoing commitment to
generating strong shareholder returns," said Paul House, executive chairman,
president and CEO.

Consolidated Results

All percentage increases and decreases represent year-over-year changes for
the first quarter of 2013 compared to the first quarter of 2012, unless
otherwise noted.

Systemwide sales^(4) increased 3.2% on a constant currency basis.  This growth
was driven by new restaurant development in Canada and the U.S., with net
growth of 246 restaurants systemwide in the past year.

Our total revenues increased 1.4% to $731.5 million, compared to $721.3
million last year. The revenue growth rate was below that of systemwide sales
due to a 2.0% decline in distribution sales, the largest component of
revenues.

Distribution sales were impacted by lower commodity prices, which were also
reflected in lower cost of sales.  We typically pass commodity price increases
and decreases on to our owners, but there can be variability in timing of when
we pass through these costs quarter-to-quarter.  The decrease was partially
offset by the growth in systemwide sales.

Rents and royalties increased 4.0% in the first quarter, driven primarily by
growth in the number of systemwide restaurants.  Franchise fees grew 13.5%,
due to a higher number of renovations during the quarter, partially offset by
fewer restaurant sales, as we opened more restaurants under operating
agreements.  Variable interest entities ("VIEs") sales were up 11.2%, driven
by an increase in the number of non-owned restaurants, primarily in the U.S.,
that were consolidated for accounting purposes.

Total costs and expenses were up 2.4%, with increases in operating expenses
and corporate reorganization expenses offsetting decreases in cost of sales
and general and administrative expenses. Absent the corporate reorganization
expenses, total costs and expenses would have increased by 0.8%.

Cost of sales declined by 0.8% due to the reduced commodity prices, partially
offset by increased VIE cost of sales.  Operating expenses increased by 14.9%,
due largely to increased depreciation and rent expenses associated with the
new properties added to the system.  Higher property maintenance expenses and
the depreciation impact of the digital menu board program also contributed to
the increase.

Franchise fee costs grew by 11.2%, due to increased renovation activity,
partially offset by fewer restaurant sales. General and administrative
expenses were down 6.7% due to lower salaries and benefits, driven by lower
stock-based compensation expense and vacancies expected to be filled in coming
months, partially offset by the favourable timing of certain benefit costs in
the first quarter of 2012.

At the end of the first quarter of 2013, we completed the implementation of
the new organizational structure we began in the second half of 2012.  We
incurred $9.5 million of corporate reorganization expenses in the quarter,
consisting primarily of termination costs, professional fees and other costs.

First quarter operating income of $127.9 million was down by 2.8% compared to
$131.6 million a year earlier.  The decrease was largely attributable to the
corporate reorganization expenses.  Adjusted operating income^(5), which
excludes the impact of the corporate reorganization expenses, increased 4.4%
to $137.4 million. (Please refer to "Information on non-GAAP Measure" below
for a reconciliation of adjusted operating income to operating income, the
most directly comparable GAAP measure).

Net income attributable to Tim Hortons Inc. in the first quarter was $86.2
million, a decrease of 2.9% compared to $88.8 million last year.  The decrease
resulted from reduced operating income, which was significantly impacted by
the corporate reorganization expenses.

EPS of $0.56 was flat compared to the first quarter of last year.  The
decrease in net income attributable to THI was largely offset by the positive,
cumulative impact of our share repurchase program.  On average we had 2.5%
fewer fully-diluted common shares outstanding in the first quarter compared to
the same period last year.  The corporate reorganization expenses incurred in
the first quarter of 2013 reduced EPS by approximately $0.05.

Segmented Performance Commentary

Changes to Reportable Segments

Effective in the first quarter of 2013, we revised our reportable segments to
align with the roles and responsibilities within our new corporate structure. 
Our three reportable segments are the Canada business unit, the U.S. business
unit, and Corporate services. The two business units comprise
restaurant-related operations, including rents and royalties, sales of product
through our supply chain and an allocation of supply chain income based on the
unit's respective systemwide sales, franchise fees, corporate restaurants, and
business-unit-related general and administrative expenses. Our business unit
results exclude the effect of VIEs.

Corporate services consists of services supporting the business units,
including general and administrative expenses, and manufacturing and
distribution activities. The results of our International operations, which
are not significant, are included in Corporate services.  Previously, the
results of manufacturing and distribution activities were included within
their respective geographic segment. Additionally, we have revised the
allocation of shared restaurant services between the Canadian and U.S.
business units.

We have reclassified the segment data for the first quarter of 2012 to conform
to the current period's presentation.  Further details are included in the
Management's Discussion and Analysis section of our Quarterly Report on Form
10-Q for the period ended March 31, 2013 ("Form 10-Q"), filed today with the
U.S. Securities and Exchange Commission and Canadian Securities
Administrators.

Overall Commentary

The operating environment remained challenging in the first quarter. In
Canada, we believe consumer confidence and discretionary spending have been
negatively impacted by rising unemployment, high consumer debt and the cooling
housing market.  U.S. consumers are also facing elevated unemployment relative
to pre-recessionary levels, as well as concerns arising from changes to fiscal
policy.  In response to the low-growth environment, competitive activity in
the consumer sector remains intense, impacting the performance of many
participants in the sector.

Our same-store sales results were negatively affected by the inclusion of both
New Year's Day and the Easter weekend in the first quarter of 2013, as these
holidays fell within different reporting periods in 2012.  In both Canada and
the U.S., we also had very strong prior year comparables in 2012, which
benefited in part from unseasonably warm winter weather in our largest markets
during the first quarter of last year. In comparison, we experienced more
traditional winter weather throughout the first quarter of 2013.

We have a number of initiatives planned for the balance of fiscal 2013 which
we believe will help drive same-store sales growth in both Canada and the
U.S., including marketing, promotional and operational programs and ongoing
menu innovation. We will also continue to focus on our long-term initiatives
to increase capacity, such as our drive-thru enhancements currently planned at
more than 1,000 locations in Canada including new menu boards and, in some
cases, order station relocations and double order stations.

Canada

Same-store sales in our Canadian segment declined by 0.3% in the first
quarter.  A higher average cheque, driven by both pricing and product mix, was
offset by a decrease in transactions.  Panini sandwiches and single-serve
coffee, both introduced late last year, positively contributed to same-store
sales in the quarter, helping to offset a decrease in hot beverage sales.  New
products introduced in the first quarter, including flatbread Breakfast Panini
sandwiches and vanilla bean lattes, were well received, but did not have a
significant impact on same-store sales results due to the timing of their
launch towards the end of the quarter.

Operating income in the Canadian segment was $145.8 million, a decrease of
1.0% compared to $147.2 million in the first quarter last year.  Systemwide
sales growth of 2.5% in Canada led to increased rents and royalties revenues,
but this was more than offset by increased operating expenses driven by an
overall increase in the number of properties owned or leased, and higher
support costs related to property maintenance. This decrease was partially
offset by an increase in supply chain income, driven by the growth in
systemwide sales. Systemwide transactions experienced a slight decline, due
largely, we believe, to general operating conditions.

We opened 24 restaurants in Canada during the quarter.

United States

U.S. same-store sales declined by 0.5%.  A higher average cheque, due
primarily to pricing, was offset by a decline in same-store transactions.
Systemwide transactions continued to increase, reflecting the ongoing
development of new restaurants, which also drove systemwide sales growth of
7.8%.

In the U.S., the weather had a negative effect on sales of both our cold
specialty drinks and our Cold Stone Creamery products.

Operating income in the U.S. segment was $0.9 million, a decrease of $0.7
million from the first quarter of 2012.  Rents and royalties revenues
increased, driven by systemwide sales growth, but were more than offset by an
increase in relief primarily related to restaurants opened in fiscal 2012 and
higher operating expenses resulting from the expansion of the system and
increased renovation activity. This decrease was partially offset by an
increase in supply chain income, driven by the growth in systemwide sales.

We opened 8 restaurants in the U.S. during the quarter.

Corporate services

The Corporate services segment incurred an operating loss of $10.7 million,
compared to a loss of $18.8 million in the first quarter of 2012.  The
improvement was driven by income from distribution services, resulting from
operational improvements, the timing of certain expenses, and variability
related to commodity cost volatility which is expected to reverse in the
latter part of fiscal 2013.  Also contributing to the reduced operating loss
were lower general and administrative expenses, as described above.  Other
income, related primarily to a corporate property sale in the first quarter of
2013, was also recognized in Corporate services.

We opened 3 restaurants in the Gulf Cooperation Council (GCC) during the
quarter.

Significant Developments & Initiatives

Marc Caira appointed President and CEO, related board changes announced

Marc Caira has been appointed President and CEO effective July 2nd, 2013.  Mr.
Caira, a Canadian, 59, was most recently Global CEO of Nestlé Professional and
a member of the Executive Board of Nestlé SA, the world's largest food and
beverage company, and recognized leader in nutrition, health and wellness.
Nestlé Professional is one of the world's largest organizations in the hot and
cold beverage and food industry, operating in approximately 100 countries.

He will replace Paul House, who will become non-Executive Chairman of the
Board of Directors at the effective time of Mr. Caira's appointment.  Mr.
House has led the Company since May of 2011 serving as Executive Chairman,
President and CEO.  Mr. Caira will be nominated for election as a director at
the Annual Meeting of Shareholders to be held on May 9^th, 2013, in accordance
with applicable requirements, instead of Mr. Ronald Osborne, who sadly passed
away on April 9^th.  The Board of Directors has commenced a search process for
two replacement directors, and has retained a highly-regarded search firm to
conduct the process.

"We are delighted to announce Marc's appointment as President and CEO.  His
knowledge and experience in the global foodservices and beverage industry, and
his strong leadership, make him the ideal person to lead the Company into the
future.  We are also indebted to Paul House for his significant ongoing
commitment and contributions to the organization, and are pleased that he will
take on the exclusive role of Chairman," said Frank Iacobucci, lead director.

Saudi Arabia area development agreement signed

The Company has signed an area development agreement (ADA) with Apparel FZCO
("Apparel") to develop up to 100 Tim Hortons multi-format restaurants in Saudi
Arabia over the next 5 years.  This ADA complements the existing agreement
with Dubai-based Apparel to open up to 120 restaurants over 5 years in the GCC
including United Arab Emirates, Oman, Bahrain, Kuwait and Qatar.  A total of
27 restaurants have been opened in these markets, with a total of 20 locations
planned in 2013.  Development in Saudi Arabia will be managed by Apparel and
will focus on major urban markets, with opportunity for development beyond the
initial 100 targeted locations. We continue to assess additional international
markets for development in various regions of the world as part of our
international strategy.

Tim Hortons to launch new K-Cup^® compatible single-serve coffee platform

Following the successful 2012 launch of the Company's single-serve coffee
offering on the TASSIMO^® system, we have reached an agreement to introduce
premium Tim Hortons coffee on the Mother Parkers Tea & Coffee RealCup™
platform.  The RealCup™ system uses a unique filter design that is compatible
with K-Cup^® brewers, but is not affiliated with K-Cup^® or Keurig^®.  Under
the terms of the agreement, Tim Hortons premium-blend coffee and decaf coffee
will be sold in Tim Hortons restaurants in Canada and the U.S., and online in
a single-serve format. This market introduction, anticipated in July of this
year, will provide access to approximately half of the Canadian market not
currently reached by our existing single-serve coffee offering.

Board declares dividend payment of $0.26 per common share 

The Board of Directors has declared a quarterly dividend of $0.26 per common
share, payable on June 7^th, 2013 to shareholders of record as of May 23^rd,
2013.  Dividends are declared and paid in Canadian dollars to all shareholders
with Canadian resident addresses. For U.S. resident shareholders, dividends
paid will be converted to U.S. dollars based on prevailing exchange rates at
the time of conversion by Tim Hortons for registered shareholders and by
Clearing and Depository Services Inc. for beneficial shareholders.

Annual Meeting of Shareholders

The Tim Hortons annual meeting of shareholders will be held on Thursday, May
9^th, 2013 at 10:30 a.m. (EDT). A live web cast of the meeting, including
presentation material, will be available at www.timhortons-invest.com in the
Events and Presentations section, where an archive of the web cast and
presentation material will also be available for a period of one year.

Tim Hortons conference call today at 2:30 p.m. (EDT) Wednesday, May 8^th, 2013

Tim Hortons will host a conference call today to discuss first quarter
results, scheduled to begin at 2:30 p.m. (EDT). The dial-in number is (416)
641-6712 or (800) 773-0497. No access code is required. A simultaneous web
cast of the call, including presentation material, will be available at
www.timhortons-invest.com. A replay of the call will be available until May
15^th, 2013 and can be accessed at (416) 626-4100 or (800) 558-5253. The call
replay reservation number is 21655853. The call and presentation material will
also be archived for a period of one year in the Events and Presentations
section.

Safe Harbor Statement

Certain information in this news release, particularly information regarding
future economic performance, finances, and plans, expectations and objectives
of management, and other information, constitutes forward-looking information
within the meaning of Canadian securities laws and forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995. 
We refer to all of these as forward-looking statements. Various factors
including competition in the quick service segment of the food service
industry, general economic conditions and others described as "risk factors"
in the Company's 2012 Annual Report on Form 10-K filed February 21^st, 2013,
and our Quarterly Report on Form 10-Q to be filed on May 8^th, 2013 with the
U.S. Securities and Exchange Commission and Canadian Securities
Administrators, could affect the Company's actual results and cause such
results to differ materially from those expressed in forward-looking
statements. As such, readers are cautioned not to place undue reliance on
forward-looking statements contained in this news release, which speak only as
to management's expectations as of the date hereof.

Forward-looking statements are based on a number of assumptions which may
prove to be incorrect, including, but not limited to, assumptions about: the
absence of an adverse event or condition that damages our strong brand
position and reputation; the absence of a material increase in competition or
in volume or type of competitive activity within the quick service restaurant
segment of the food service industry; general worldwide economic conditions;
cost and availability of commodities; the ability to retain our senior
management team or the inability to attract and retain new qualified
personnel; continuing positive working relationships with the majority of the
Company's restaurant owners; the absence of any material adverse effects
arising as a result of litigation; and there being no significant change in
the Company's ability to comply with current or future regulatory
requirements.

We are presenting this information for the purpose of informing you of
management's current expectations regarding these matters, and this
information may not be appropriate for any other purpose.  We assume no
obligation to update or alter any forward-looking statements after they are
made, whether as a result of new information, future events, or otherwise,
except as required by applicable law.  Please review the Company's Safe Harbor
Statement at www.timhortons.com/en/about/safeharbor.html.

^(4) Total systemwide sales growth includes restaurant level sales at both
Company and Franchised restaurants. Approximately 99.6% of our systemwide
restaurants were franchised as at March 31^st, 2013. Systemwide sales growth
is determined using a constant exchange rate where noted, to exclude the
effects of foreign currency translation. U.S. dollar sales are converted to
Canadian dollar amounts using the average exchange rate of the base year for
the period covered.  For the first quarter of 2013, systemwide sales on a
constant currency basis increased 3.2% compared to the first quarter of 2012.
Systemwide sales are important to understanding our business performance as
they impact our franchise royalties and rental income, as well as our
distribution income. Changes in systemwide sales are driven by changes in
average same-store sales and changes in the number of systemwide restaurants,
and are ultimately driven by consumer demand.

We believe systemwide sales and same-store sales growth provide meaningful
information to investors regarding the size of our system, the overall health
and financial performance of the system, and the strength of our brand and
restaurant owner base, which ultimately impacts our consolidated and segmented
financial performance. Franchised restaurant sales are not generally included
in our Condensed Consolidated Financial Statements (except for certain
non-owned restaurants consolidated in accordance with applicable accounting
rules). The amount of systemwide sales impacts our rental and royalties
revenues, as well as distribution revenues.

^(5) Information on non-GAAP Measure 

Adjusted operating income is a non-GAAP measure. See below reconciliations for
adjusting items to calculate adjusted operating income. Management uses
adjusted operating income to assist in the evaluation of year-over-year
performance, and believes that it will be helpful to investors as a measure of
underlying operational growth rates. This non-GAAP measure is not intended to
replace the presentation of our financial results in accordance with GAAP. The
Company's use of the term adjusted operating income may differ from similar
measures reported by other companies. The reconciliation of operating income,
a GAAP measure, to adjusted operating income, a non-GAAP measure, is set forth
in the table below:

Reconciliation of Adjusted Operating Income

                                          Q1 2013    Q1 2012
                                           (in millions)
Operating income                        $   127.9  $   131.6
Add: Corporate reorganization expenses        9.5        -
Adjusted operating income^(i)           $   137.4  $   131.6

______________

All numbers rounded
(i)     Includes operating income for non-owned restaurants consolidated
pursuant to applicable accounting rules and from the Tim Hortons Advertising
and Promotion Fund (Canada) of $1.3 million and $1.5 million in the first
quarters of 2013 and 2012, respectively, which decreased adjusted operating
income growth by 0.2%.

Tim Hortons Inc. Overview

Tim Hortons is one of the largest publicly-traded restaurant chains in North
America based on market capitalization, and the largest in Canada. Operating
in the quick service segment of the restaurant industry, Tim Hortons appeals
to a broad range of consumer tastes, with a menu that includes premium coffee,
espresso-based hot and cold specialty drinks, including lattes, cappuccinos
and espresso shots, specialty teas and fruit smoothies, home-style soups,
fresh Panini and classic sandwiches, wraps, hot breakfast sandwiches and fresh
baked goods, including our trademark donuts. As of March 31^st, 2013, Tim
Hortons had 4,288 systemwide restaurants, including 3,453 in Canada, 808 in
the United States and 27 in the Gulf Cooperation Council. More information
about the Company is available at www.timhortons.com.

 
                      TIM HORTONS INC. AND SUBSIDIARIES
               CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
    (in thousands of Canadian dollars, except share and per share data) 
                                (Unaudited)
 
                                First quarter ended                         
                               March 31,    April 1,
                                    2013        2012   $ Change   % Change  
                                                                            
REVENUES                                                                    
Sales                           $523,887    $523,302       $585       0.1%  
Franchise revenues                                                          
        Rents and royalties      187,454     180,186      7,268       4.0%  
        Franchise fees            20,196      17,796      2,400      13.5%  
                                 207,650     197,982      9,668       4.9%  
TOTAL REVENUES                   731,537     721,284     10,253       1.4%  
                                                                            
COSTS AND EXPENSES                                                          
Cost of sales                    461,354     464,920    (3,566)     (0.8%)  
Operating expenses                75,733      65,925      9,808      14.9%  
Franchise fee costs               22,552      20,282      2,270      11.2%  
General and administrative
expenses                          38,668      41,423    (2,755)     (6.7%)  
Equity income                    (3,349)     (3,246)      (103)       3.2%  
Corporate reorganization
expenses                           9,475           0      9,475        n/m  
Other (income) expense, net        (813)         357    (1,170)        n/m  
TOTAL COSTS AND EXPENSES, NET    603,620     589,661     13,959       2.4%  
                                                                            
OPERATING INCOME                 127,917     131,623    (3,706)     (2.8%)  
                                                                            
Interest expense                 (8,663)     (7,898)      (765)       9.7%  
Interest income                      928         711        217      30.5%  
                                                                            
INCOME BEFORE INCOME TAXES       120,182     124,436    (4,254)     (3.4%)  
                                                                            
Income taxes                      33,259      34,457    (1,198)     (3.5%)  
                                                                            
Net income                        86,923      89,979    (3,056)     (3.4%)  
Net income attributable to
noncontrolling interests             752       1,200      (448)    (37.3%)  
                                                                            
NET INCOME ATTRIBUTABLE TO TIM
HORTONS INC.                     $86,171     $88,779   ($2,608)     (2.9%)  
                                                                            
Basic earnings per common
share attributable to Tim
Hortons Inc.                       $0.56       $0.57    ($0.01)     (0.5%)  
                                                                            
Diluted earnings per common
share attributable to Tim
Hortons Inc.                       $0.56       $0.56      $0.00     (0.4%)  
                                                                            
Weighted average number of
common shares outstanding (in
thousands) - Basic               153,091     156,993    (3,902)     (2.5%)  
                                                                            
Weighted average number of
common shares outstanding (in
thousands) - Diluted             153,548     157,490    (3,942)     (2.5%)  
                                                                            
Dividends per common share         $0.26       $0.21      $0.05             
                                                                            
n/m - not meaningful                                                        
(all numbers rounded)                                                       
                                                                            

 
 
 
                    TIM HORTONS INC. AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED BALANCE SHEET
                   (in thousands of Canadian dollars) 
                                                                         
                                                                         
                                                     As at
                                       March 31, 2013   December 30, 2012
                                                                         
                                                  (Unaudited)
                                                                         
ASSETS                                                                   
                                                                         
Current assets                                                           
  Cash and cash equivalents                   $74,641            $120,139
  Restricted cash and cash equivalents        104,021             150,574
  Accounts receivable, net                    211,137             171,605
  Notes receivable, net                         5,932               7,531
  Deferred income taxes                         7,758               7,142
  Inventories and other, net                  108,796             107,000
  Advertising fund restricted assets           43,543              45,337
Total current assets                          555,828             609,328
                                                                         
Property and equipment, net                 1,570,769           1,553,308
                                                                         
Intangible assets, net                          3,423               3,674
                                                                         
Notes receivable, net                           5,672               1,246
                                                                         
Deferred income taxes                          10,716              10,559
                                                                         
Equity investments                             41,644              41,268
                                                                         
Other assets                                   71,326              64,796
Total assets                               $2,259,378          $2,284,179

                                                                              
                                                                              
                                                                              
                      TIM HORTONS INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEET
     (in thousands of Canadian dollars, except share and per share data)
                                                                              
                                                                              
                                                                              
                                                          As at
                                            March 31, 2013   December 30, 2012
                                                                              
                                                       (Unaudited)
                                                                              
LIABILITIES AND EQUITY                                                        
                                                                              
Current liabilities                                                           
  Accounts payable                                $134,391            $169,762
  Accrued liabilities                                                         
     Salaries and wages                             13,969              21,477
     Taxes                                          15,002               8,391
     Other                                         149,581             197,871
  Deferred income taxes                                581                 197
  Advertising fund liabilities                      44,542              44,893
  Current portion of long-term obligations          19,337              20,781
Total current liabilities                          377,403             463,372
                                                                              
Long-term obligations                                                         
  Long-term debt                                   358,470             359,471
  Long-term debt - Advertising fund                 46,411              46,849
  Capital leases                                   107,725             104,383
  Deferred income taxes                             10,049              10,399
  Other long-term liabilities                      113,020             109,614
Total long-term obligations                        635,675             630,716
                                                                              
Commitments and contingencies                                                 
                                                                              
Equity                                                                        
  Equity of Tim Hortons Inc.                                                  
     Common shares                                                            
            $2.84 stated value per share,
            Authorized: unlimited shares,                                     
            Issued: 153,404,839 shares             435,033             435,033
     Common shares held in Trust, at cost:
     314,334 and 316,923 shares,
     respectively                                 (13,247)            (13,356)
     Contributed surplus                            11,516              10,970
     Retained earnings                             939,853             893,619
     Accumulated other comprehensive loss        (128,408)           (139,028)
Total equity of Tim Hortons Inc.                 1,244,747           1,187,238
Noncontrolling interests                             1,553               2,853
Total equity                                     1,246,300           1,190,091
Total liabilities and equity                    $2,259,378          $2,284,179

                                                                             
                                                                             
                                                                             
                      TIM HORTONS INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                     (in thousands of Canadian dollars)
                                                                             
                                                                             
                                                  First Quarter Ended        
                                             March 31, 2013   April 1, 2012  
                                                                             
                                                     (Unaudited)    
                                                                             
CASH FLOWS PROVIDED FROM (USED IN) OPERATING
ACTIVITIES                                                                   
Net income                                          $86,923         $89,979  
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities                                                                   
               Depreciation and amortization         35,638          30,956  
               Stock-based compensation
               expense                                7,387           7,181  
               Deferred income taxes                (1,113)             303  
       Changes in operating assets and
       liabilities                                                           
               Restricted cash and cash
               equivalents                           46,766          44,630  
               Accounts receivable                 (37,849)        (19,799)  
               Inventories and other                (5,331)        (11,148)  
               Accounts payable and accrued
               liabilities                         (87,073)        (70,481)  
               Taxes                                  6,597        (12,572)  
       Other                                        (3,741)           7,329  
                                                                             
Net cash provided from operating activities          48,204          66,378  
                                                                             
CASH FLOWS (USED IN) PROVIDED FROM INVESTING
ACTIVITIES                                                                   
Capital expenditures                               (47,479)        (34,269)  
Capital expenditures - Advertising fund             (2,761)        (14,014)  
Other investing activities                            1,601             960  
                                                                             
Net cash (used in) investing activities            (48,639)        (47,323)  
                                                                             
CASH FLOWS (USED IN) PROVIDED FROM FINANCING
ACTIVITIES                                                                   
Repurchase of common shares                               0        (86,416)  
Dividend payments to common shareholders           (39,885)        (33,046)  
Short-term borrowings                                     0          25,000  
Principal payments on long-term debt
obligations                                         (4,488)         (2,045)  
Other financing activities                          (1,414)           9,736  
                                                                             
Net cash (used in) financing activities            (45,787)        (86,771)  
                                                                             
Effect of exchange rate changes on cash                 724         (1,011)  
                                                                             
(Decrease) in cash and cash equivalents            (45,498)        (68,727)  
                                                                             
Cash and cash equivalents at beginning of
period                                              120,139         126,497  
                                                                             
Cash and cash equivalents at end of period          $74,641         $57,770  

                                                                    
                                                                    
                                                                    
                   TIM HORTONS INC. AND SUBSIDIARIES
                           SEGMENT REPORTING
                   (in thousands of Canadian dollars)
 
 
                                                                    
                                        First quarter ended         
                                  March 31, 2013     April 1, 2012  
                                                                    
                                            (Unaudited)             
                                                                    
REVENUES ^(1)                                                       
Canada                                  $593,673          $599,883  
U.S.                                      44,448            38,429  
Corporate services                         4,125             4,471  
Total reportable segments                642,246           642,783  
Variable interest entities                89,291            78,501  
Total                                   $731,537          $721,284  
                                                                    
SEGMENT OPERATING INCOME (LOSS)                                     
Canada                                  $145,821          $147,226  
U.S.                                         910             1,654  
Corporate services                      (10,665)          (18,785)  
Total reportable segments                136,066           130,095  
Variable interest entities                 1,326             1,528  
Corporate reorganization expenses        (9,475)                 0  
Consolidated Operating Income            127,917           131,623  
Interest, net                            (7,735)           (7,187)  
Income before income taxes              $120,182          $124,436  
                                                                    
^(1) Inter-segment revenues have been eliminated.

 
 
                                                                              
                                            First quarter ended               
                                March 31,    April 1,
                                     2013        2012    $ Change   % Change  
                                                                              
                                                (Unaudited)                   
Consolidated Sales is comprised
of:                                                                           
   Distribution sales            $431,151    $439,728    ($8,577)     (2.0)%  
   Company-operated restaurant
   sales                            5,976       5,560         416       7.5%  
   Sales from variable interest
   entities                        86,760      78,014       8,746      11.2%  
Total Sales                      $523,887    $523,302        $585       0.1%  
                                                                              
                                            First quarter ended               
                                March 31,    April 1,
                                     2013        2012    $ Change   % Change  
                                                                              
                                                (Unaudited)                   
Consolidated Cost of sales is
comprised of:                                                                 
   Distribution cost of sales    $375,553    $389,948   ($14,395)     (3.7)%  
   Company-operated restaurant
   cost of sales                    7,010       6,080         930      15.3%  
   Cost of sales of variable
   interest entities               78,791      68,892       9,899      14.4%  
Total Cost of sales              $461,354    $464,920    ($3,566)     (0.8)%

 

                                                                              
                      TIM HORTONS INC. AND SUBSIDIARIES
                         SYSTEMWIDE RESTAURANT COUNT
 
                                               Increase/            Increase/
                            As at     As at   (Decrease)   As at   (Decrease)
                            March   December   From Year  April 1, From Prior
                           31, 2013 30, 2012      End       2012      Year
                                                                              
                                                                              
Canada                                                                        
  Company-operated               15        18         (3)       16         (1)
  Franchised - standard       3,312     3,294          18    3,179         133
  and non-standard
  Franchised - self-serve       126       124           2      120           6
  kiosks
Total                         3,453     3,436          17    3,315         138
                                                                              
% Franchised                  99.6%     99.5%                99.5%            
                                                                              
U.S.                                                                          
  Company-operated                2         4         (2)        7         (5)
  Franchised - standard         626       621           5      549          77
  and non-standard
  Franchised - self-serve       180       179           1      165          15
  kiosks
Total                           808       804           4      721          87
                                                                              
% Franchised                  99.8%     99.5%                99.0%            
                                                                              
International (Gulf
Cooperation Council)                                                          
  Franchised - standard          27        24           3        6          21
  and non-standard
Total                            27        24           3        6          21
                                                                              
% Franchised                 100.0%    100.0%               100.0%            
                                                                              
Total system                                                                  
  Company-operated               17        22         (5)       23         (6)
  Franchised - standard       3,965     3,939          26    3,734         231
  and non-standard
  Franchised - self-serve       306       303           3      285          21
  kiosks
Total                         4,288     4,264          24    4,042         246
                                                                              
% Franchised                  99.6%     99.5%                99.4%            

                      TIM HORTONS INC. AND SUBSIDIARIES
                         Income Statement Definitions
                                                                              
                                                                              
Sales                      Sales include Distribution sales, sales from
                           company-operated restaurants, and sales from
                           consolidated Non-owned restaurants. Distribution
                           sales comprise sales of products (including a
                           minimal amount of manufacturing product sales to
                           third parties), supplies, and restaurant equipment
                           outside of initial restaurant establishment or
                           renovations (see "Franchise Fees") that are shipped
                           directly from our warehouses or by third-party
                           distributors to restaurants or retailers through
                           our supply chain. Sales from company-operated
                           restaurants and consolidated Non-owned restaurants
                           comprise restaurant-level sales to our customers.
                           The consolidation of Non-owned restaurants
                           essentially replaces our rents and royalties with
                           restaurant sales, which are included in VIEs'
                           sales. 
                                                                              
Rents and royalties        Includes royalties and rental revenues earned, net
                           of relief, and certain advertising levies
                           associated with our Canadian Advertising Fund
                           relating primarily to the Expanded Menu Board
                           Program.
                                                                              
Franchise fees             Includes license fees and equipment packages, at
                           initiation of a restaurant and in connection with
                           the renewal or renovation, and revenues related to
                           master license agreements.
                                                                              
Cost of sales              Cost of sales includes costs associated with the
                           management of our supply chain, including cost of
                           goods, direct labour and depreciation, as well as
                           the cost of goods delivered by third-party
                           distributors to restaurants for which we manage the
                           supply chain logistics, and for canned coffee sold
                           through grocery stores. Cost of sales also includes
                           food, paper and labour costs of Company-operated
                           restaurants and consolidated Non-owned restaurants.
                                                                              
Operating expenses         Includes rent expense related to properties leased
                           to restaurant owners and other property-related
                           costs including depreciation. Also included are
                           certain operating expenses related to our
                           distribution business such as warehouse technology
                           costs and utilities, and product development costs.
                                                                              
Franchise fee costs        Includes the cost of equipment sold to restaurant
                           owners at the commencement or in connection with
                           the renovation of their restaurant business,
                           including training and other costs necessary to
                           assist with a successful restaurant opening, and/or
                           the introduction of our Cold Stone Creamery^®
                           co-branding offering into existing locations. Also
                           includes support costs related to project-related
                           and/or operational initiatives.
                                                                              
General and administrative Includes costs that cannot be directly related to
expenses                   generating revenue, including expenses associated
                           with our corporate and administrative functions,
                           depreciation of head office buildings and office
                           equipment, and the majority of our information
                           technology systems.
                                                                              
Corporate reorganization   Includes termination costs and professional fees
expenses                   related to the implementation of our new Corporate
                           Centre and Business Unit organizational structure,
                           as well as CEO transition costs.
                                                                              
Equity income              Includes income from equity investments in
                           partnerships and joint ventures and other minority
                           investments over which we exercise significant
                           influence. Equity income from these investments is
                           considered to be an integrated part of our business
                           operations and is therefore included in operating
                           income.
                                                                              
Other (income) expense,    Includes (income) expenses that are not directly
net                        derived from the Company's primary businesses, such
                           as foreign currency adjustments, gains and losses
                           on asset sales, and other asset write-offs.
                                                                              
Net income attributable to Relates to the consolidation of Non-owned
noncontrolling interests   restaurants pursuant to applicable accounting
                           rules.

 

 

 

 

 

 

 

 

 

 

 

 

 

SOURCE Tim Hortons Inc.

Contact:

Scott Bonikowsky, (905) 339-6186 or bonikowsky_scott@timhortons.com
Sponsored Links
Advertisement
Advertisements
Sponsored Links
Advertisement