Tim Hortons Inc. announces 2013 second quarter results:

           Tim Hortons Inc. announces 2013 second quarter results:

PR Newswire

OAKVILLE, ON, Aug. 8, 2013

Same-store sales return to positive growth; solid earnings performance

Updated capital structure announced to include planned recapitalization and
expanded share repurchase program

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

                         Financial & Sales Highlights
                                                                         
Performance                                               %
                          Q2 2013        Q2 2012     Year-over-       YTD 2013
                                                     Year Change
Total revenues         $   800.1  $    785.6    1.9%     $    1,531.7
Operating income       $     176.6  $     158.8    11.2%    $    304.5
Adjusted operating     $    177.2  $     160.1    10.7%    $    314.6
income ^(1)
Effective tax rate            26.1%          27.6%                   26.7%
Net income             $    123.7  $    108.1    14.5%    $    209.9
attributable to THI
Diluted earnings per
share                  $  0.81  $    0.69    17.0%    $  1.37
 attributable to THI
("EPS")
Fully diluted shares          152.6          156.0   (2.2)%           153.1

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

(1) Adjusted operating income is a non-GAAP measure, and excludes
         corporate reorganization expenses of $0.6 million in Q2 2013 ($10.1
         million YTD 2013) and $1.3 million in Q2 2012 ($1.3 million YTD
         2012). Please refer to "Information on non-GAAP Measure" and the
         reconciliation information in footnote (3) of this release for
         details of reconciling items.

                                      
Same-Store Sales ^(2) Q2 2013 Q2 2012 YTD 2013
Canada                 1.5%    1.8%     0.6%
U.S.                   1.4%    4.9%     0.5%

(2) 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

  *EPS growth of 17.0% in the quarter, Adjusted operating income up 10.7%^(3)
  *Company returns to positive same-store sales growth in both Canada and the
    U.S.
  *Maintaining 2013 EPS targets, but expecting full-year same-store sales
    growth in Canada and the U.S. to be below targeted ranges based on
    year-to-date performance
  *Company plans to maximize strong financial position through a $900 million
    recapitalization and expanded share repurchase program, while maintaining
    investment grade credit rating
  *Company committed to driving U.S. market success; focused on initiatives
    to improve returns including working with well-capitalized franchisees
  *Sherri Brillon and Thomas V. Milroy appointed to Board of Directors,
    bringing additional financial and strategic expertise to the Board



OAKVILLE, ON, Aug. 8, 2013 /PRNewswire/ - Tim Hortons Inc. (TSX: THI, NYSE:
THI) today announced results for the second quarter ended June 30^th, 2013.

"We delivered solid profitability in the quarter and progression in same-store
sales. Although the operating environment remains challenging, we are focused
on building our market leadership to drive top line growth," said Marc Caira,
president and CEO.

"Following a comprehensive review, we plan to take advantage of our
considerable financial strength and the historic low interest rate environment
by adding $900 million in incremental leverage to repurchase shares. Adding
leverage to repurchase shares while maintaining our investment grade rating is
consistent with our ongoing focus on shareholder value creation, while
preserving our strategic flexibility to invest in the business for the
long-term benefit of all shareholders," added Caira.

Consolidated Results

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

Systemwide sales^(4) increased 5.0% on a constant currency basis. This growth
resulted from new restaurant development in Canada and the U.S., with net
growth of 233 restaurants systemwide in the past year, and from same-store
sales growth of 1.5% in Canada and 1.4% in the U.S.

Our total revenues increased 1.9% to $800.1 million, compared to $785.6
million last year. The revenue growth rate was below that of systemwide sales
due to a decline in distribution sales, the largest component of revenues.
Distribution sales decreased due to lower prices for coffee and other
commodities, which were also reflected in lower cost of sales. The decrease
in distribution sales was partially offset by the growth in systemwide sales.

Variable interest entities ("VIEs") sales increased 9.4%. While the number of
non-owned restaurants consolidated for accounting purposes has decreased since
the start of fiscal 2013, it remains higher than it was a year ago, driven
primarily by the addition of U.S. restaurants.

Rents and royalties grew by 5.2% in the second quarter, consistent with the
growth in systemwide sales. Franchise fees decreased by 2.4%, due to a lower
number and the type of restaurant sales, partially offset by a higher number
of renovations during the quarter.

Total costs and expenses declined 0.5% in the second quarter, driven by lower
cost of sales and general and administrative (G&A) expense, partly offset by
higher operating expenses.

Cost of sales decreased by 0.8% due to the reduced commodity prices and
operational improvements in our distribution centres, partially offset by
increased VIE cost of sales. Operating expenses increased by 6.5%, due
largely to increased depreciation and rent expenses associated with the new
properties added to the system, as well as the depreciation impact of the
digital menu board program. Franchise fee costs fell by 5.9% due to a lower
number and the type of restaurant sales, partially offset by increased
renovation activity.

G&A expenses decreased by 5.5% due to lower salaries and benefits, driven by
vacancies, some of which are expected to be filled during fiscal 2013, and
lower stock-based compensation expense.

We incurred $0.6 million of corporate reorganization expenses in the second
quarter relating to the CEO transition, compared to $1.3 million of
professional fees a year earlier.

Operating income of $176.6 million was up 11.2% from $158.8 million in the
second quarter of 2012. The growth was driven by increased systemwide sales,
combined with reduced expenses, particularly G&A. Adjusted operating
income^(3), which excludes the impact of the corporate reorganization
expenses, increased 10.7% to $177.2 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. was $123.7 million, an increase of
14.5% from $108.1 million a year earlier. The improvement resulted from
higher operating income, as well as a lower effective tax rate due to discrete
items that occurred during the quarter.

EPS of $0.81 grew by $0.12 or 17.0% due to the increase in net income
attributable to THI, as well as the positive, cumulative impact of our share
repurchase programs. On average we had 2.2% fewer fully-diluted common shares
outstanding in the second quarter compared to the same period last year. We
have maintained our previously established fiscal 2013 EPS target range of
$2.87 to $2.97 per share.

Segmented Performance Commentary

The operating environment continued to be challenging in the second quarter.
We believe ongoing macro-economic uncertainty and low growth has been
impacting consumer confidence and discretionary spending in both Canada and
the U.S, leading to an overall intensified competitive environment, and
ultimately, a negative impact on the performance of several restaurant chains
and consumer companies.

Despite these challenges, we returned to positive same-store sales growth in
the second quarter of 2013 after experiencing declines in the first quarter.
Although we anticipate further positive growth in the second half of the year,
given our year-to-date performance, we expect full-year same-store sales
growth to be below our previously established targeted ranges of 2% to 4% in
Canada and 3% to 5% in the U.S.

We have reclassified the segment data for the second quarter of 2012 to
conform to the current period's presentation, which has been revised
consistent with changes to our reportable segments announced last quarter.

Canada

Same-store sales in our Canadian segment grew by 1.5%. The increase was driven
by gains in average cheque resulting from pricing, and to a lesser extent,
favourable product mix, partially offset by a decrease in transactions.
Systemwide transactions grew as we added more restaurants to our system.

Operating income in the Canadian segment was $174.8 million, an increase of
$9.4 million or 5.7%. Systemwide sales growth of 4.4% in Canada resulted in
higher rents and royalties income and a higher allocation of supply chain
income. Segment operating income also benefited from increased franchise fee
income and lower G&A expenses. We opened 21 restaurants in Canada during the
quarter.

United States

U.S. same-store sales increased by 1.4% in the quarter, driven primarily by an
increase in transactions. Operating income was $2.6 million in the U.S.
segment, a decrease of $1.5 million from the second quarter of 2012.
Systemwide sales growth of 8.6% led to increased rents and royalties revenues,
which were more than offset by an increase in relief primarily related to
restaurants opened in fiscal 2012, as well as higher operating expenses
resulting from an increase in the number of properties owned or leased. In
the second quarter of 2012, operating income benefitted from a $0.7 million
reversal of previously accrued closure costs related to our New England
markets. We opened 5 standard and non-standard restaurants in the U.S. during
the quarter.

We believe the U.S. market has the potential to significantly contribute to
the Company's long-term earnings growth, and we are committed to driving
market success. Our sales progression in many U.S. markets mirrors that of
many of our Canadian markets in their early development stages. However,
overall sales volumes in our newer U.S. markets do not yet match our larger,
more developed markets in the U.S., and, as a result, do not generate a strong
return. We are seeking meaningful improvement in the returns on the capital we
have deployed in the U.S. segment, and we have accordingly begun to accelerate
our initiative to partner with well-capitalized franchisees in the U.S. as
part of our development approach. While development capital in 2013 is mostly
committed, starting in 2014, we expect to reduce capital being deployed in the
U.S. segment as we look to new ways to profitably develop the U.S. market.

Corporate services

The Corporate services segment incurred an operating loss of $1.4 million,
compared to a loss of $11.1 million in the second quarter of 2012. The
improvement was driven by distribution services income resulting from
operational improvements in our distribution centres, and favourable product
margin variability which will partially reverse in the second half of 2013.
Also contributing to the reduced operating loss were lower G&A expenses and
lower manufacturing costs.

Our International operations also contributed positively, due in part to our
expansion into Saudi Arabia. We opened 2 restaurants in the Gulf Cooperation
Council (GCC) during the quarter.

Significant Developments & Initiatives

Board approves expanded share repurchase program, to be funded by new debt

We are acting to take advantage of the Company's considerable balance sheet
strength and cash flows, with Board approval of $900 million in additional
debt, expected to be in the form of bank debt and/or newly issued bonds, which
the Company plans to use to repurchase shares subject to market conditions,
the negotiation and execution of agreements, and regulatory approvals.

We are targeting $1 billion in share repurchases over the next 12 months,
including the remaining authorization in the existing program, and the
deployment of the $900 million in planned debt proceeds. We expect our credit
metrics to remain investment grade following the recapitalization, thereby
preserving our strong balance sheet, cash flows, and access to capital as we
pursue our strategic planning work.

Consistent with these plans, the Company has obtained regulatory approval from
the Toronto Stock Exchange ("TSX") to amend its Normal Course Issuer Bid
(NCIB) to remove the former maximum dollar cap of $250 million. As a result,
under our amended NCIB, we will be entitled to purchase up to 10% of our
"public float" as at February 14, 2013 (being 15,239,531 common shares),
subject to the negotiation and execution of an amended broker agreement. We
plan to retain flexibility and evaluate alternative means of purchasing
shares, including, for example, implementing a new normal course or
substantial issuer bid, subject to market conditions, the negotiation and
execution of agreements, and regulatory approvals, for the remainder of the
targeted $1 billion in share purchases in the most effective, efficient means
possible.

Sherri Brillon and Thomas V. Milroy appointed to Board of Directors

Sherri Brillon and Thomas V. Milroy have been appointed to the Tim Hortons
Board of Directors, effective August 8^th, 2013. Both new directors bring
considerable financial expertise and leadership experience to the Board. Ms.
Brillon is Executive Vice-President and Chief Financial Officer of Encana
Corporation, a leading North American energy producer. Mr. Milroy is Chief
Executive Officer of BMO Capital Markets, and is responsible for all of BMO
Financial Group's businesses involving corporate, institutional and government
clients in North America and globally.

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 September 4^th, 2013 to shareholders of record as of August
19^th, 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.

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

Tim Hortons will host a conference call today to discuss second 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 August
15^th, 2013 and can be accessed at (416) 626-4100 or (800) 558-5253. The call
replay reservation number is 21668941. 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 August 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; ability to obtain financing on
favourable terms; ability to maintain investment grade credit ratings;
prospects and execution risks concerning the U.S. market strategy; 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.

^(3) 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

                                  Q2 2013    Q2 2012   YTD 2013   YTD 2012
                                    (in millions)          (in millions)
Operating income                $ 176.6  $ 158.8  $ 304.5  $ 290.5
Add: Corporate reorganization
expenses                              0.6        1.3       10.1        1.3
Adjusted operating income       $ 177.2  $ 160.1  $ 314.6  $ 291.7

______________

All numbers rounded

^(4) Total systemwide sales growth includes restaurant level sales at both
Company and Franchised restaurants. Approximately 99.5% of our systemwide
restaurants were franchised as at June 30^th, 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 second quarter of 2013, systemwide sales on a constant
currency basis increased 5.0% compared to the second 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.

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, fresh baked goods,
grilled Panini and classic sandwiches, wraps, soups, prepared foods and other
food products. As of June 30^th, 2013, Tim Hortons had 4,304 systemwide
restaurants, including 3,468 in Canada, 807 in the United States and 29 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)
                                                             
                               Second quarter ended                    
                             June 30,
                                  2013     July 1, 2012  $ Change  % Change
                                                                    
REVENUES                                                             
Sales                          $568,562      $563,772    $4,790      0.8%
Franchise revenues                                                   
 Rents and royalties         209,289       198,973    10,316      5.2%
 Franchise fees               22,288        22,836     (548)    (2.4%)
                               231,577       221,809     9,768      4.4%
TOTAL REVENUES                  800,139       785,581    14,558      1.9%
                                                                    
COSTS AND EXPENSES                                                   
Cost of sales                   489,092       492,900   (3,808)    (0.8%)
Operating expenses               76,986        72,314     4,672      6.5%
Franchise fee costs              23,326        24,794   (1,468)    (5.9%)
General and administrative   
expenses                           38,038        40,272   (2,234)    (5.5%)
Equity income                   (3,916)       (3,859)      (57)      1.5%
Corporate reorganization     
expenses                              604         1,277     (673)   (52.7%)
Other (income) expense, net       (570)         (956)       386   (40.4%)
TOTAL COSTS AND EXPENSES,    
NET                               623,560       626,742   (3,182)    (0.5%)
                                                                    
OPERATING INCOME                176,579       158,839    17,740     11.2%
                                                                    
Interest expense                (8,922)       (8,650)     (272)      3.1%
Interest income                     791           723        68      9.4%
                                                                    
INCOME BEFORE INCOME TAXES      168,448       150,912    17,536     11.6%
                                                                    
Income taxes                     43,886        41,675     2,211      5.3%
                                                                    
Net income                     124,562       109,237    15,325     14.0%
Net income attributable to   
noncontrolling interests              826         1,170     (344)   (29.4%)
                                                                    
NET INCOME ATTRIBUTABLE TO   
TIM HORTONS INC.                 $123,736      $108,067   $15,669     14.5%
                                                                    
Basic earnings per common    
share attributable to Tim
Hortons Inc.                        $0.81         $0.70     $0.11     17.0%
                                                                    
Diluted earnings per common  
share attributable to Tim
Hortons Inc.                        $0.81         $0.69     $0.12     17.0%
                                                                    
Weighted average number of   
common shares outstanding
(in thousands) - Basic            152,083       155,351   (3,268)    (2.1%)
                                                                    
Weighted average number of
common shares outstanding
(in thousands) - Diluted        152,637       155,995   (3,358)    (2.2%)
                                                                    
Dividends per common share        $0.26         $0.21     $0.05         
                                                                    
(all numbers rounded)                                                
                                                                    

                      TIM HORTONS INC. AND SUBSIDIARIES
               CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS 
    (In thousands of Canadian dollars, except share and per share data) 
                                (Unaudited) 
                                                                    
                          Year-to-date period ended                    
                         June 30, 2013  July 1, 2012  $ Change  % Change
                                                                    
REVENUES                                                             
Sales                        $1,092,449    $1,087,074    $5,375      0.5%
Franchise revenues                                                   
 Rents and royalties         396,743       379,159    17,584      4.6%
 Franchise fees               42,484        40,632     1,852      4.6%
                               439,227       419,791    19,436      4.6%
TOTAL REVENUES                1,531,676     1,506,865    24,811      1.6%
                                                                    
COSTS AND EXPENSES                                                   
Cost of sales                   950,446       957,820   (7,374)    (0.8%)
Operating expenses              152,719       138,239    14,480     10.5%
Franchise fee costs              45,878        45,076       802      1.8%
General and
administrative expenses          76,706        81,695   (4,989)    (6.1%)
Equity income                   (7,265)       (7,105)     (160)      2.3%
Corporate
reorganization expenses          10,079         1,277     8,802       n/m
Other (income) expense,
net                             (1,383)         (599)     (784)       n/m
TOTAL COSTS AND
EXPENSES, NET                 1,227,180     1,216,403    10,777      0.9%
                                                                    
OPERATING INCOME                304,496       290,462    14,034      4.8%
                                                                    
Interest expense               (17,585)      (16,548)   (1,037)      6.3%
Interest income                   1,719         1,434       285     19.9%
                                                                    
INCOME BEFORE INCOME
TAXES                           288,630       275,348    13,282      4.8%
                                                                    
Income taxes                     77,145        76,132     1,013      1.3%
                                                                    
Net income                     211,485       199,216    12,269      6.2%
Net income attributable
to noncontrolling
interests                         1,578         2,370     (792)   (33.4%)
                                                                    
NET INCOME ATTRIBUTABLE
TO TIM HORTONS INC.            $209,907      $196,846   $13,061      6.6%
                                                                    
Basic earnings per
common share
attributable to Tim
Hortons Inc.                      $1.38         $1.27     $0.11      8.7%
                                                                    
Diluted earnings per
common share
attributable to Tim
Hortons Inc.                      $1.37         $1.26     $0.11      8.8%
                                                                    
Weighted average number
of common shares
outstanding (in
thousands) - Basic              152,597       155,589   (2,992)    (1.9%)
                                                                    
Weighted average number
of common shares
outstanding (in
thousands) - Diluted            153,133       156,207   (3,074)    (2.0%)
                                                                    
Dividends per common
share                             $0.52         $0.42     $0.10         
                                                                    
n/m - not meaningful                                                 
(all numbers rounded)                                                
                                                                    

                     TIM HORTONS INC. AND SUBSIDIARIES 
                     CONDENSED CONSOLIDATED BALANCE SHEET
                      (in thousands of Canadian dollars)
                                 (Unaudited)
                                                                
                                                 As at
                                   June 30, 2013   December 30, 2012
                                                                
                                                                
ASSETS                                                           
                                                                
Current assets                                                   
 Cash and cash equivalents              $86,603           $120,139
 Restricted cash and cash
equivalents                              104,780            150,574
 Accounts receivable, net               188,989            171,605
 Notes receivable, net                    5,946              7,531
 Deferred income taxes                    6,844              7,142
 Inventories and other,
net                                      109,639            107,000
 Advertising fund
restricted assets                         38,264             45,337
Total current assets                     541,065            609,328
                                                                
Property and equipment, net            1,588,991          1,553,308
                                                                
Intangible assets, net                     3,195              3,674
                                                                
Notes receivable, net                      5,662              1,246
                                                                
Deferred income taxes                     11,540             10,559
                                                                
Equity investments                        41,830             41,268
                                                                
Other assets                              72,603             64,796
Total assets                          $2,264,886         $2,284,179
                                                

                     TIM HORTONS INC. AND SUBSIDIARIES 
                   CONDENSED CONSOLIDATED BALANCE SHEET 
     (in thousands of Canadian dollars, except share and per share data)
                                 (Unaudited)
                                                                       
                                                        As at
                                          June 30, 2013  December 30, 2012
                                                                       
                                                                       
LIABILITIES AND EQUITY                                                  
                                                                       
Current liabilities                                                     
 Accounts payable                             $140,648           $169,762
 Accrued liabilities                                                   
 Salaries and wages                         14,642             21,477
 Taxes                                      12,574              8,391
 Tim Card Obligation and other             147,913            197,871
 Deferred income taxes                           1,052                197
 Advertising fund liabilities                   42,624             44,893
 Current portion of long-term
obligations                                      20,130             20,781
Total current liabilities                       379,583            463,372
                                                                       
Long-term obligations                                                   
 Long-term debt                                364,335            359,471
 Long-term debt - Advertising fund              44,393             46,849
 Capital leases                                115,645            104,383
 Deferred income taxes                           8,468             10,399
 Other long-term liabilities                   116,601            109,614
Total long-term obligations                     649,442            630,716
                                                                       
Commitments and contingencies                                           
                                                                       
Equity                                                                  
 Equity of Tim Hortons Inc.                                            
  Common shares                                                      
  $2.84 stated value per share,
Authorized: unlimited shares,                                           
  Issued: 151,319,384 and
153,404,839 shares, respectively                429,105            435,033
  Common shares held in Trust, at
cost: 340,314 and 316,923 shares,
respectively                                   (14,969)           (13,356)
Contributed surplus                        13,388            10,970
  Retained earnings                          916,421            893,619
  Accumulated other comprehensive
loss                                          (108,851)          (139,028)
Total equity of Tim Hortons Inc.              1,235,094          1,187,238
Noncontrolling interests                            767              2,853
Total equity                                  1,235,861          1,190,091
Total liabilities and equity                 $2,264,886         $2,284,179
                                                       

                      TIM HORTONS INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                      (in thousands of Canadian dollars)
                                 (Unaudited)
                                                                       
                                               Year-to-date period ended
                                              June 30, 2013  July 1, 2012
                                                                       
                                                                       
CASH FLOWS PROVIDED FROM (USED IN)
OPERATING ACTIVITIES                                                    
Net income                                          $211,485      $199,216
Adjustments to reconcile net income to net
cash provided from operating activities                                 
               Depreciation and
             amortization                           72,368        62,379
               Stock-based compensation
             expense                                12,535        11,869
             Deferred income taxes                 (2,539)       (2,081)
       Changes in operating assets and
      liabilities                                                      
               Restricted cash and cash
             equivalents                            46,356        43,290
             Accounts receivable                   (8,254)      (32,425)
             Inventories and other                 (5,218)         7,285
               Accounts payable and accrued
             liabilities                          (75,262)      (64,156)
             Taxes                                   4,144       (8,674)
      Other                                           2,714         (352)
                                                                       
Net cash provided from operating activities          258,329       216,351
                                                                       
CASH FLOWS (USED IN) PROVIDED FROM
INVESTING ACTIVITIES                                                    
Capital expenditures                               (88,272)      (66,628)
Capital expenditures - Advertising fund              (5,224)      (30,830)
Other investing activities                             6,125       (8,710)
                                                                       
Net cash (used in) investing activities             (87,371)     (106,168)
                                                                       
CASH FLOWS (USED IN) PROVIDED FROM
FINANCING ACTIVITIES                                                    
Repurchase of common shares                        (113,803)     (136,509)
Dividend payments to common shareholders            (79,348)      (65,661)
Net proceeds from issue of debt -
Advertising fund                                           0        32,262
Principal payments on long-term debt
obligations                                          (8,543)       (4,078)
Other financing activities                           (5,001)       (4,739)
                                                                       
Net cash (used in) financing activities            (206,695)     (178,725)
                                                                       
Effect of exchange rate changes on cash                2,201         (222)
                                                                       
(Decrease) in cash and cash equivalents             (33,536)      (68,764)
                                                                       
Cash and cash equivalents at beginning of
period                                               120,139       126,497
                                                                       
Cash and cash equivalents at end of period           $86,603       $57,733
                                             

                      TIM HORTONS INC. AND SUBSIDIARIES
                              SEGMENT REPORTING
                      (in thousands of Canadian dollars)
                                 (Unaudited)
                                                                
                                 Second quarter
                                           ended                         
                               June 30,    July 1,
                                        2013      2012                  
                                                                
                                                                
    REVENUES ^(1)                                                
            Canada            $657,682  $651,361                  
            U.S.                41,220    43,154                  
             Corporate        
             services                  5,204     4,551                  
     Total reportable          
    segments                         704,106   699,066                  
     Variable interest         
    entities                          96,033    86,515                  
    Total                      $800,139  $785,581                  
                                                                
     SEGMENT OPERATING         
    INCOME (LOSS)                                                     
            Canada            $174,760  $165,360                  
            U.S.                 2,587     4,101                  
             Corporate        
             services                (1,424)  (11,117)                  
     Total reportable          
    segments                         175,923   158,344                  
     Variable interest         
    entities                           1,260     1,772                  
     Corporate                 
     reorganization
    expenses                           (604)   (1,277)                  
     Consolidated              
    Operating Income                 176,579   158,839                  
    Interest, net               (8,131)   (7,927)                  
     Income before income      
    taxes                           $168,448  $150,912                  
                                                                
^(1) Inter-segment revenues have been eliminated.
    
                                                                
                                        Second quarter ended
                               June 30,    July 1,                     %
                                        2013      2012   $ Change   Change
                                                                
     Consolidated Sales is     
    comprised of:                                                     
    Distribution sales      $468,597  $471,274   ($2,677)   (0.6%)
     Company-operated       
    restaurant sales                   6,501     7,039      (538)   (7.6%)
     Sales from             
     variable interest
    entities                          93,464    85,459      8,005     9.4%
    Total Sales                $568,562  $563,772     $4,790     0.8%
                                                                
                                        Second quarter ended
                               June 30,    July 1,                     %
                                        2013      2012   $ Change   Change
                                                                
     Consolidated Cost of      
     sales is comprised
    of:                                                               
     Distribution cost      
    of sales                        $399,019  $410,224  ($11,205)   (2.7%)
     Company-operated       
     restaurant cost of
    sales                              6,613     7,697    (1,084)  (14.1%)
     Cost of sales of       
     variable interest
    entities                          83,460    74,979      8,481    11.3%
    Total Cost of sales        $489,092  $492,900   ($3,808)   (0.8%)
                                                          

                       TIM HORTONS INC. AND SUBSIDIARIES
                               SEGMENT REPORTING
                      (in thousands of Canadian dollars)
                                  (Unaudited)
                                                                 
                               Year-to-date period
                                           ended                          
                              June 30,     July 1,
                                     2013        2012                    
                                                                 
                                                                 
    REVENUES ^(1)                                                 
           Canada           $1,251,355  $1,251,244                 
           U.S.                 85,668      81,583                 
            Corporate       
            services                   9,329       9,022                 
     Total reportable        
    segments                       1,346,352   1,341,849                 
     Variable interest       
    entities                         185,324     165,016                 
    Total                    $1,531,676  $1,506,865                 
                                                                 
     SEGMENT OPERATING       
    INCOME (LOSS)                                                      
           Canada             $320,581    $312,586                 
           U.S.                  3,497       5,755                 
            Corporate       
            services                (12,089)    (29,902)                 
     Total reportable        
    segments                         311,989     288,439                 
     Variable interest       
    entities                           2,586       3,300                 
     Corporate               
     reorganization
    expenses                        (10,079)     (1,277)                 
     Consolidated            
    Operating Income                 304,496     290,462                 
    Interest, net              (15,866)    (15,114)                 
     Income before           
    income taxes                    $288,630    $275,348                 
                                                                 
^(1) Inter-segment revenues have been eliminated.
                                                                 
                                                                 
                                     Year-to-date period ended
                              June 30,     July 1,                   %
                                     2013        2012     $ Change   Change
                                                                 
     Consolidated Sales      
    is comprised of:                                                   
     Distribution         
    sales                           $899,748    $911,002  ($11,254)  (1.2)%
     Company-operated     
    restaurant sales                  12,477      12,599      (122)  (1.0)%
     Sales from           
     variable interest
    entities                         180,224     163,473     16,751   10.2%
    Total Sales              $1,092,449  $1,087,074     $5,375    0.5%
                                                                 
                                     Year-to-date period ended
                              June 30,     July 1,                   %
                                     2013        2012     $ Change   Change
                                                                 
     Consolidated Cost       
     of sales is
    comprised of:                                                      
     Distribution         
    cost of sales                   $774,572    $800,172  ($25,600)  (3.2)%
     Company-operated     
     restaurant cost of
    sales                             13,623      13,777      (154)  (1.1)%
     Cost of sales of     
     variable interest
    entities                         162,251     143,871     18,380   12.8%
    Total Cost of sales        $950,446    $957,820   ($7,374)  (0.8)%
                                                            

                          TIM HORTONS INC. AND SUBSIDIARIES
                             SYSTEMWIDE RESTAURANT COUNT
                                                                   
                                     Increase/             Increase/
                   As at     As at     (Decrease)    As at    (Decrease)
                         June                                     July
                          30,     December      From Year           1,     From Prior
                     2013   30, 2012          End      2012         Year
                                                                   
                                                                   
Canada                                                              
                      17           18            (1)           11              6
Company-operated                                              
 Franchised
- standard and          3,324        3,294             30        3,200            124
non-standard                                                  
 Franchised
- self-serve              127          124              3          115             12
kiosks                                                        
Total                3,468      3,436           32     3,326          142
                                                                   
% Franchised         99.5%      99.5%                 99.7%            
                                                                   
U.S.                                                                
                       3            4            (1)           10            (7)
Company-operated                                              
 Franchised
- standard and            627          621              6          551             76
non-standard                                                  
 Franchised
- self-serve              177          179            (2)          173              4
kiosks                                                        
Total                  807        804            3       734           73
                                                                   
% Franchised         99.6%      99.5%                 98.6%            
                                                                   
International
(Gulf
Cooperation
Council)                                                            
 Franchised
- standard and             29           24              5           11             18
non-standard                                                  
Total                   29         24            5        11           18
                                                                   
% Franchised        100.0%     100.0%                100.0%            
                                                                   
Total system                                                        
                      20           22            (2)           21            (1)
Company-operated                                              
 Franchised
- standard and          3,980        3,939             41        3,762            218
non-standard                                                  
 Franchised
- self-serve              304          303              1          288             16
kiosks                                                        
Total                4,304      4,264           40     4,071          233
                                                                   
% Franchised         99.5%      99.5%                 99.5%            
                                                          

                      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 guests. 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                Includes costs that cannot be directly related to
administrative 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    Relates to the consolidation of Non-owned
to noncontrolling            restaurants pursuant to applicable accounting
interests                    rules.















SOURCE Tim Hortons

Contact:

Scott Bonikowsky, (905) 339-6186 orbonikowsky_scott@timhortons.com