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Canada 98-0641955(State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number)

874 Sinclair Road, Oakville, ON, Canada L6K 2Y1(Zip Code)

Date Filed: Feb 25, 2014

TIM HORTONS INC.(Exact name of Registrant as specified in its charter)

__________________________________________________________________________

(Address of principal executive offices)

Created by EDGAR Online, Inc.

TIM HORTONS INC.

TABLE1

Form Type: 10-K

Period End: Dec 29, 2013

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At End of Year(US$) Fiscal Year Average High LowJanuary 3, 2010 0.96 0.88 0.97 0.77January 2, 2011 1.00 0.97 1.00 0.93January 1, 2012 0.98 1.02 1.06 0.95December 30, 2012 1.00 1.00 1.03 0.96December 29, 2013 0.93 0.97 1.02 0.93



TIM HORTONS INC.

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Canadian Locations byProvince/Territory Standard Non-Standard

Company Franchise Company FranchiseAlberta - 237 - 92British Columbia - 226 - 66Manitoba 2 61 2 34New Brunswick - 100 - 14

Newfoundland andLabrador - 46 - 10Nova Scotia 1 137 - 29

Northwest Territories - 1 - -Nunavut - - - -Ontario 5 1,197 1 526Prince Edward Island - 13 - 7Quebec 3 465 - 108Saskatchewan - 54 - 15Yukon - 2 - -Canada 11 2,539 3 901



TIM HORTONS INC.

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Self-ServeKiosksFranchise Total

21 35028 3205 104

- 114

1 575 172

- 15 561 1,790

- 206 5822 71

- 2134 3,588

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United States Self-ServeLocations by State Standard Non-Standard Kiosks

Company Franchise Company Franchise FranchiseCalifornia - - - 3 -Delaware - - - 1 -Florida - - - 2 -Indiana - 1 - - -

Kentucky - 2 - 2 -Maine - 22 - 4 -Maryland - - - 2 -

Michigan - 185 - 39 4New Jersey - - - 2 -New York - 147 - 96 162North Dakota - 1 - 1 -Ohio 1 121 - 19 -Pennsylvania 1 14 - 5 15Virginia - 1 - 1 -West Virginia - 5 - - -United States 2 499 - 177 181

58.30%

Gulf CooperationCouncil Locations by Self-ServeCountry Standard Non-Standard Kiosks

Company Franchise Company Franchise FranchiseUnited Arab Emirates - 28 - 6 -

Oman - 2 - - -Kuwait - 1 - - -Qatar - 1 - - -Total - 32 - 6 -

% of restaurants that are standard-U.S.


TIM HORTONS INC.

TABLE4

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Total3121

4262

2282405

2141

3525

859

Total34

211

38

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% of restaurants that are standard-Systemwide 68.70%

Republic of Ireland and United Kingdom Locations Non-StandardFull-Service

Self-Serve Kiosks LocationsRepublic of Ireland(1) 193 3United Kingdom(1) 59 -

Total 252 3

_____________



TIM HORTONS INC.

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Total196

59

255

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Location Type Owned/LeasedRochester, New York (U.S. coffeeroasting facility) Manufacturing LeasedOakville, Ontario (fondant and fillsfacility) Manufacturing OwnedHamilton, Ontario (Canadian coffee

roasting facility) Manufacturing OwnedGuelph, Ontario Distribution/Office OwnedCalgary, Alberta Distribution/Office Owned

Debert, Nova Scotia Distribution/Office OwnedLangley, British Columbia Distribution/Office OwnedKingston, Ontario Distribution/Office OwnedMontreal, Quebec Distribution/Office LeasedOakville, Ontario Warehouse OwnedOakville, Ontario Offices OwnedDublin, Ohio Office LeasedLachine, Quebec Office OwnedLachine, Quebec Office Leased

Williamsville, New York Office LeasedBrighton, Michigan Office LeasedVaudreuil Dorion, Quebec Warehouse/Office Leased



TIM HORTONS INC.

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Approximate SquareFootage

38,000

36,650

76,000191,67935,500

28,00027,500135,08030,27037,000

153,06023,614

5,0008,000

< 2,500< 2,500

12,500

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Exchange(1)

2012 Fiscal Year High Low Close HighFirst Quarter (EndedApril 4) 54.92$ 47.36$ 53.36$ 55.31$Second Quarter (EndedJuly 4) 57.91$ 56.90$ 53.67$ 58.47$

Third Quarter (EndedSeptember 30) 55.73$ 49.62$ 51.16$ 55.02$Fourth Quarter (Ended

December 30) 52.60$ 45.11$ 48.51$ 53.91$

2013 Fiscal Year High Low Close HighFirst Quarter (Ended March31) 55.50$ 47.83$ 55.21$ 54.62$Second Quarter (Ended June30) 58.85$ 53.25$ 56.88$ 58.01$

Third Quarter (EndedSeptember 29) 61.52$ 56.06$ 59.45$ 59.72$Fourth Quarter (EndedDecember 29) 64.18$ 58.67$ 62.29$ 61.46$

________________(1) Source: FactSet


Toronto Stock Exchange (Cdn.$) New York

Toronto Stock Exchange (Cdn.$) New York


TIM HORTONS INC.

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Low Close

46.55$ 53.54$

50.43$ 52.64$

49.59$ 52.03$

45.41$ 48.68$

Low Close

47.76$ 54.32$

51.86$ 54.13$

53.74$ 57.70$

56.77$ 58.19$

Stock Exchange (US$)

Stock Exchange (US$)

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2012 Fiscal YearFirst Quarter (Declared February 2012) 0.21$Second Quarter (Declared May 2012) 0.21$Third Quarter (Declared August 2012) 0.21$



TIM HORTONS INC.

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2013 Fiscal Year

First Quarter (Declared February 2013) 0.26$Second Quarter (Declared May 2013) 0.26$

Third Quarter (Declared August 2013) 0.26$

Fourth Quarter (Declared November 2012) $0.21


TIM HORTONS INC.

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Number of securitiesto be issued uponexercise of outstandingoptions, warrantsand rights(1)

Plan Category (a)Equity compensation plans approved bysecurity holders 1,502,663

Equity compensation plans not approvedby security holders N/ATotal 1,502,663

________________

EQUITY COMPENSATION P


TIM HORTONS INC.

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Weighted-average Number of securitiesexercise price of remaining availableoutstanding for future issuance under options, warrants equity compensationand rights plans (excluding securities

(b)(2) reflected in column (a)) (c)

$47.11 1,397,337

N/A N/A$47.11 1,397,337

LAN INFORMATION

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26-Dec-08 31-Dec-09 31-Dec-10S&P/TSX Composite Index (Cdn.$)(2) 100.00$ 146.30$ 172.00$S&P/TSX Consumer Discretionary Index(Cdn.$)(2) 100.00$ 125.40$ 157.40$

S&P 500 (U.S.$) 100.00$ 152.60$ 186.10$Tim Hortons Inc. (TSX) 100.00$ 98.10$ 127.30$Tim Hortons Inc. (NYSE) 100.00$ 112.30$ 153.80$

________________

CUMULATIVE TOTAL RETURN (1)Assuming an investment of US/CDN $100 and reinvestment of Dividends

[[Image Removed]]


TIM HORTONS INC.

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30-Dec-11 28-Dec-12 27-Dec-13157.10$ 166.80$ 189.70$

133.10$ 161.40$ 232.00$

185.90$ 214.80$ 296.40$155.10$ 155.00$ 202.70$183.40$ 187.40$ 228.10$

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200820092010201120122013

(2)

Date Filed: Feb 25,

Created by EDGAR

TIM HORTONS INC.

TABLE12

Form Type: 10-K

Period End: Dec 29,

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-23%13%

5%-2%2%

-7%

Since September 29, 2006, the Company has been included in the S&P/TSX

014

Online, Inc.

2013

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(a) (b)Total Number Average Price

of Shares Paid per Period Purchased(1) Share (Cdn.)(2)Monthly Period #10 (September 30, 2013 - 1,966,350 61.15$

November 3, 2013)Monthly Period #11 (November 4, 2013 -December 1, 2013) 3,514,877 60.91$Monthly Period #12 (December 2, 2013 - 2,321,000 62.27$December 29, 2013)Total 7,802,227 61.31$

________________

(1) Based on settlement date.

ISSUER PURCHASES OF EQUITY SECURITIES


TIM HORTONS INC.

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(c)Total Number (d)of Shares MaximumPurchased as Number of Part of Publicly Shares that MayAnnounced Yet be Purchased

Plans or Under the PlansPrograms or Programs (3)

1,966,350 8,990,750

3,506,0485,484,702

2,321,000 3,163,702

7,793,398 3,163,702

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2013 2012

Consolidated Statements ofOperations DataRevenues

Sales 2,265,884$ 2,225,659$Franchise revenues:Rents and royalties(3) 821,221 780,992

Franchise fees 168,428 113,853989,649 894,845Total revenues 3,255,533 3,120,504Corporate reorganizationexpenses 11,761 18,874De-branding costs(4) 19,016 -Asset impairment and closurecosts, net(5) 2,889 (372)Other costs and expenses 2,600,772 2,507,477

Total costs and expenses 2,634,438 2,525,979Gain on sale of interest inMaidstone Bakeries(6) - -Operating income 621,095 594,525

Interest expense, net 35,466 30,413Income before income taxes 585,629 564,112Income taxes 156,980 156,346Net income 428,649$ 407,766$Net income attributable to noncontrolling interests 4,280$ 4,881$

Net income attributable to TimHortons Inc. 424,369$ 402,885$Diluted earnings per commonshare attributable to TimHortons Inc. 2.82$ 2.59$Weighted average number of

common shares outstanding -diluted 150,622 155,676Dividends per common share 1.04$ 0.84$Consolidated Balance Sheets Data

Cash and cash equivalents 50,414$ 120,139$Restricted cash and cashequivalents and Restrictedinvestments 155,006$ 150,574$Total assets 2,433,823$ 2,284,179$

(in thonumber of re


TIM HORTONS INC.

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Long-term debt and capitalleases(7) 981,851$ 531,484$Total liabilities 1,672,304$ 1,094,088$Total equity 761,519$ 1,190,091$

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Fiscal Years(1)(2)2011 2010 2009

2,012,170$ 1,755,244$ 1,704,065$

733,217 687,039 644,755

107,579 94,212 90,033840,796 781,251 734,7882,852,966 2,536,495 2,438,853

- - -- - -

372 28,298 -2,283,119 1,997,034 1,913,251

2,283,491 2,025,332 1,913,251

- 361,075 -569,475 872,238 525,602

25,873 24,180 19,184543,602 848,058 506,418157,854 200,940 186,606385,748$ 647,118$ 319,812$

2,936$ 23,159$ 23,445$

382,812$ 623,959$ 296,367$

2.35$ 3.58$ 1.64$

162,597 174,215 180,6090.68$ 0.52$ 0.40$

126,497$ 574,354$ 121,653$

130,613$ 105,080$ 80,815$2,203,950$ 2,481,516$ 2,094,291$

sands, except per share data, taurants, and otherwise where noted)

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457,290$ 437,348$ 411,694$1,049,517$ 1,039,074$ 838,605$1,154,433$ 1,442,442$ 1,255,686$

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2013 2012

Other Financial DataEBITDA attributable to TimHortons Inc.(8) 764,579$ 714,485$

Capital expenditures (includingCanadian Advertising Fund) 242,970$ 235,808$Operating margin(9) (%) 19.10% 19.10%

Other Operating DataTotal systemwide salesgrowth(10)(11) 4.70% 6.90%Systemwide restaurant unitgrowth(11) 5.10% 6.30%Canada average same-store salesgrowth(11) 1.10% 2.80%U.S. average same-store salesgrowth(11) 1.80% 4.60%

Total system restaurantsfranchised (%) 99.60% 99.50%Restaurants open at end of year- Canada

Standard(12) 2,550 2,454Non-standard(13) 904 858Self-serve kiosk(13) 134 124Total Canada 3,588 3,436Restaurants open at end of year- U.S.

Standard(12) 501 478Non-standard(13) 177 147Self-serve kiosk(13) 181 179Total U.S. 859 804Total North America 4,447 4,240Average sales per standard

restaurant:(11)(12)Canada 2,177$ 2,170$U.S. (U.S. dollars) 1,089$ 1,095$U.S. (Canadian dollars) 1,125$ 1,096$

Average sales per non-standardrestaurant:(11)(13)Canada 907$ 891$U.S. (U.S. dollars) 434$ 449$U.S. (Canadian dollars) 448$ 449$

(in thonumber of res


TIM HORTONS INC.

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________________

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Fiscal Years(1)(2)2011 2010 2009

678,997$ 956,532$ 599,939$

181,267$ 132,912$ 160,458$20.00% 34.40% 21.60%

7.40% 6.20% 7.90%

7.10% 4.80% 4.10%

4.00% 4.90% 2.90%

6.30% 3.90% 3.20%

99.60% 99.50% 99.50%

2,373 2,279 2,193803 757 724119 112 98

3,295 3,148 3,015

435 405 422115 74 54164 123 87714 602 563

4,009 3,750 3,578

2,129$ 2,070$ 2,025$1,069$ 978$ 957$1,059$ 1,012$ 1,097$

870$ 830$ 794$451$ 459$ 426$447$ 475$ 488$

sands, except per share data, taurants, and otherwise where noted)

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Fiscal Years(1)(2)2013 2012 2011

(in thousands)Franchised restaurant sales:Canada (Canadian dollars) 6,152,096$ 5,907,481$ 5,564,263$U.S. (U.S. dollars) 586,515$ 532,214$ 472,969$



TIM HORTONS INC.

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2010 2009

5,181,831$ 4,880,934$439,227$ 409,882$

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interest expense, and because we have borrowed money for variouscorporate purposes, interest expense is a necessary element of ourcosts;

depreciation and amortization expense, and because we use property andequipment, depreciation and amortization expense is a necessary element

of our costs; and

income tax expense, and because the payment of taxes is part of ouroperations, tax expense is a necessary element of our costs and abilityto operate.



TIM HORTONS INC.

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Fiscal Years(1)(2)2013 2012 2011

(in thousands)Net income 428,649$ 407,766$ 385,748$Interest expense, net 35,466 30,413 25,873Income tax expense 156,980 156,346 157,854Operating income 621,095 594,525 569,475

Depreciation and amortization 161,809 132,167 115,869EBITDA* 782,904 726,692 685,344EBITDA attributable to VIEs 18,325 12,207 6,347

EBITDA attributable to TimHortons Inc. 764,579$ 714,485$ 678,997$



TIM HORTONS INC.

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2010 2009

647,118$ 319,812$24,180 19,184

200,940 186,606872,238 525,602

118,385 113,475990,632 639,077

34,091 39,138

956,532$ 599,939$

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Measure Target ActualSame-store Sales GrowthCanada 2.00% - 4.00% 1.10%

U.S. 3.00% - 5.00% 1.80%

Restaurant DevelopmentCanada 160 - 180 168

restaurants

U.S. 70 - 90 74 full-serverestaurants

International 14 restaurants20

Effective tax rate 26.80%

$2.82 (asattributable to Tim reported)Hortons Inc. ("EPS")



TIM HORTONS INC.

TABLE19

Form Type: 10-K


28%

Diluted earnings per share $2.87 - $2.97(excludingCorporate

reorganization

restaurants

full-serverestaurants

Approximatelyrestaurants

Approximately

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expenses)

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Commentary

Our same-store sales growth wasbelow our targeted ranges inboth Canada and the U.S. due to,we believe, the persistentlychallenged economic environment

in which the quick servicerestaurant industry operates,including an increasingly

intense competitive environmentand lower discretionaryspending.

Our Canadian restaurantdevelopment was within ourtargeted range. Approximatelytwo-thirds of restaurants

developed in fiscal 2013 werestandard format, in-line withour targets, and included 12self-serve kiosks.

We also achieved our U.S.development target, of whichapproximately half were standardformat restaurants.Additionally, we opened fiveself-serve kiosks.

Although we were below ourtarget, we continued to activelyexpand within the GulfCooperation Council ("GCC") withprimarily standard restaurantopenings.

Our actual fiscal 2013 effectivetax rate was lower than thetargeted effective tax rateprimarily due to releases of tax

reserves.Our actual EPS includes a $0.06per share reduction related toCorporate reorganization costs,which was not included as part

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of Management's fiscal 2013guidance. It also includes a$0.10 per share reductionrelated to Cold StoneCreamery de-branding costs, andthe benefits from a lower

effective tax rate (see above)and fewer shares outstanding dueto our expanded share repurchaseprogram, none of which werecontemplated as part ofManagement's fiscal 2013guidance.

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Measure Target ActualCapital ExpendituresCanada and U.S. 250$ - 300$

Canadian Advertising Fund 22.00$ million

million $221.0 mi

Up to $50 million


TIM HORTONS INC.

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Commentary

renovations at over 300restaurants in Canada and theU.S., and drive-thru initiativesat over 1,400 locations in

Canada. Our actual capitalexpenditures are reflected on acash basis, which can be

impacted by the timing ofpayments compared to the actualdate of acquisition.

llion Our capital expenditures include

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Measure Target ActualCompounded annual 8% - 10% 7.80%adjusted operatingincome growth(from 2010 -2013)(1)

Compounded annual 12% - 15% 13.50%

adjusted EPSgrowth (from 2010- 2013)(1)

New restaurantdevelopmentCanada Approximately 600 651

U.S. Approximately 300 387

Total North Approximately 900 1,038

America

_____________



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CommentaryOur compounded annual adjustedoperating income growth wasbelow our targeted range due, webelieve, to the persistentlychallenging economic environmentand slow recovery following the

global recession in 2008 and2009.Our EPS growth during this

period benefited from anincrease in net income,reflective, in part, of a lowereffective tax rate due todiscrete items recognized infiscal 2013, and an expandedshare repurchase program, bothof which were not anticipated inour original targets.

In Canada, we now have 3,588total system restaurants,

including an increased presencein Quebec.In the U.S., we now have 859system restaurants in 15 states,including 181 self-serve kiosks.In North America, we have

increased our total restaurantssince 2010 by approximately 24%.Our total system restaurants inNorth America now number 4,447.In addition, we began developingrestaurants Internationally.

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2013(a) 2010(a)621.10$ 872.20$

19.0011.80

28.3030.00

(361.10)

(48.90)651.90 520.50

2010(a)3.58

0.160.14

(1.84)2.04

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Measure TargetSame-store Sales GrowthCanada 1.00% - 3.00%

U.S. 2.00% - 4.00%



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Commentary

We expect to continue our positive same-storesales growth trends in both Canada and theU.S., despite the increasingly intensecompetitive environment, by undertaking amulti-faceted approach that emphasizes our

unique market differentiators. These include:leveraging our fiscal 2013 investments indrive-thru initiatives and renovations to

improve speed of service; product and menuinnovation aimed at driving higher averagecheque; and marketing and promotionalactivity.

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Measure TargetRestaurantDevelopment

Canada 140 - 160

U.S. 40 - 60

Effective tax rate

EPS 3.17$ - 3.27$


full-serve

restaurants

Approximately29.00%


TIM HORTONS INC.

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CommentaryWe expect to open approximately 215-255restaurants, in Canada, the U.S. andInternationally.In Canada, we expect our restaurantdevelopment to be evenly split betweenstandard and non-standard locations, a slight

shift from historical norms. We continue tolook for opportunities to build our brandacross Canada and offer convenience to our

customers. The non-standard formats provide uswith an opportunity to do so in acapital-efficient manner. We intend tocontinue our development focus in our growthmarkets, specifically in Western Canada,Ontario, and Quebec, and in major urbanmarkets.In the U.S., we also expect restaurantdevelopment to be evenly split between

standard and non-standard full-servelocations, and we expect to complement theserestaurant openings with self-serve kiosks toenhance convenience for our guests. Our

development will be primarily in core andpriority markets. We are focused on improvingour returns on the capital that we deploy inthe U.S. segment and, accordingly, will seekless capital intensive developmentopportunities.

We expect our effective tax rate, excludingthe impact of any discrete events orlegislative changes, to be slightly higherthan our fiscal 2013 target of approximately28.0%, as a result of changes to our capitalstructure.

We expect operating income to grow in bothCanada and the U.S. in fiscal 2014 throughcontinued same-store sales growth coupled withnew restaurant development. We added leverage

to our capital structure in late fiscal 2013,and plan to increase leverage in the firsthalf of fiscal 2014, the proceeds of which canbe used for general corporate purposes,including to fund our expanded share

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repurchase program. The increased leveragedrives both higher interest expense and ahigher effective tax rate, but coupled withour expanded share repurchase program, isaccretive to our overall EPS growth. We expectthat our 2014 share repurchase program, to a

maximum of $440.0 million, will commence inFebruary 2014 and end in February 2015, orearlier if the applicable maximums arereached.

Our 2014 capital expenditure targets reflectour focus on reducing the amount of ourcapital employed; of this target, our U.S.capital expenditures are expected to be U.S.

$30.0 million. We plan to increase the numberof restaurant renovations in Canada in fiscal2014 as compared to fiscal 2013. We will

continue to invest in technology and othercorporate initiatives to drive new levels ofproductivity and efficiency across ourbusiness.

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Selected Operating and Financial HighlightsFiscal Years

($ in millions, except per share data) 2013 2012Systemwide sales growth(1) 4.70% 6.90%Same-store sales growth(1)Canada 1.10% 2.80%U.S. 1.80% 4.60%

Systemwide restaurants 4,485 4,264Revenues 3,255.50$ 3,120.50$Operating income 621.10$ 594.50$

Adjusted operating income(2) 651.90$ 613.40$Net income attributable to Tim Hortons Inc. 424.40$ 402.90$Diluted EPS 2.82$ 2.59$Weighted average number of common sharesoutstanding - Diluted (in millions) 150.60 155.70

________________



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20117.40%

4.00%6.30%

4,0142,853.00$

569.50$

575.70$ 382.80$2.35$

162.60

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Change fromFiscal Years prior year

2013 2012 0%(in millions)

Operating income 621.10$ 594.50$ 4.50%Add: Corporate reorganizationexpenses / CEO Separation 11.80 18.90 n/m

Add: De-branding costs 19.00$ -$ n/aAdjusted operating income 651.90$ 613.40$ 6.30%

________________All numbers roundedn/m Not meaningful



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Change fromFiscal Year prior year

2011 0%

569.50 4.40%

6.30 n/m

- n/a575.70 6.50%

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Q1 Q2 Q3 Q4 Year Canada

2013 -0.30% 1.50% 1.70% 1.60% 1.10%2012 5.20% 1.80% 1.90% 2.60% 2.80%2011 2.00% 3.80% 4.70% 5.50% 4.00%

U.S.2013 -0.50% 1.40% 3.00% 3.10% 1.80%

2012 8.50% 4.90% 2.30% 3.20% 4.60%2011 4.90% 6.60% 6.30% 7.20% 6.30%



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Canada U.S.2013 1.10% 1.80%2012 2.80% 4.60%2011 4.00% 6.30%2010 4.90% 3.90%

2009* 2.90% 3.20%2008 4.40% 0.80%

2007 6.10% 4.10%2006 7.70% 8.90%2005 5.50% 7.00%

2004* 7.80% 9.80%10-year average 4.70% 5.00%

________________



TIM HORTONS INC.

TABLE28

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New Restaurant Development

years:Fiscal 2013

Full-serve

Standard and Self-serveNon-standard Kiosks Total

Canada

Restaurants opened 156 12 168Restaurants closed (15) (1) (16)Net change 141 11 152U.S.Restaurants opened 74 5 79Restaurants closed (20) (4) (24)Net change 54 1 55International (GCC)Restaurants opened 14 - 14

Total CompanyRestaurants opened 244 17 261Restaurants closed (35) (5) (40)Net change 209 12 221

The opening of restaurants in new and existing markets in Canada and the Uhas been a significant contributor to our growth. Set forth in the table belois a summary of restaurant openings and closures for the past three fiscal


TIM HORTONS INC.

TABLE29

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Fiscal 2012 Fiscal 2011Full-serve Full-serve

Standard and Self-serve Standard and Self-serveNon-standard Kiosks Total Non-standard Kiosks Total

150 9 159 166 9 175(13) (5) (18) (26) (2) (28)137 4 141 140 7 147

85 13 98 72 42 114(3) (5) (8) (2) - (2)82 8 90 70 42 112

19 - 19 5 - 5

254 22 276 243 51 294(16) (10) (26) (28) (2) (30)238 12 250 215 49 264

.S.

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Systemwide Restaurant CountFiscal Year

2013 2012 2011CanadaCompany-operated 14 18 10

3,294 3,166Franchised - self-serve kiosk 134 124 119

Total 3,588 3,436 3,295% Franchised 99.60% 99.50% 99.70%U.S.

Company-operated 2 4 8Franchised - standard and non-standard 676 621 542Franchised - self-serve kiosks 181 179 164Total 859 804 714% Franchised 99.80% 99.50% 98.90%International (GCC)Franchised - standard and non-standard 38 24 5% Franchised 100.00% 100.00% 100.00%Total system

Company-operated 16 22 183,939 3,713

Franchised - self-serve kiosks 315 303 283Total 4,485 4,264 4,014

% Franchised 99.60% 99.50% 99.60%

Franchised - standard and non-standard 3,440

Franchised - standard and non-standard 4,154


TIM HORTONS INC.

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Segment Operating Income

% of Total % of Total2013 Revenues 2012 Revenues

($ in thousands)Operating IncomeCanada 665,675$ 20.40% 653,916$ 21.00%U.S. 5,107 0.20% 9,620 0.30%Corporate services (44,517) -1.40% (57,013) -1.80%Total reportable segments 626,265 19.20% 606,523 19.40%

VIEs 6,591 0.20% 6,876 0.20%Corporate reorganizationexpenses (11,761) -0.40% (18,874) -0.60%Consolidated Operating

Income 621,095$ 19.10% 594,525$ 19.10%


Canada


TIM HORTONS INC.

TABLE31

Form Type: 10-K



information). The Company has reclassified the segment data for prior years toconform to the current year's presentation.

Fiscal 2013 compared to Fiscal 2012

Fiscal 2013 Compared to Fiscal 2012

We have revised our segment reporting as a result of the realignment of rolesand responsibilities within our Business Unit and Corporate Centre design (see

Total Costs and Expenses-Corporate Reorganization Expenses below). Effective forfiscal 2013, the chief decision maker views and evaluates the Company's

reportable segments as the Canadian and U.S. business units, and CorporateServices (see Item 8. Financial Statements-Note 21 Segment Reporting for further

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ChangeDollars Percentage

11,759$(4,513) (46.9 )%12,496 (21.9 )%19,742

(285) (4.1 )%

7,113 n/m

26,570$ 4.50%

1.80%

3.30%

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% of Total % of Total2012 Revenues 2011 Revenues

($ in thousands)Operating IncomeCanada 653,916$ 21.00% 625,139$ 21.90%U.S. 9,620 0.30% 8,897 0.30%

Corporate services (57,013) -1.80% (68,281) -2.40%Total reportable segments 606,523 19.40% 565,755 19.80%VIEs 6,876 0.20% 3,720 0.10%

Corporate reorganizationexpenses (18,874) -0.60% - 0%Consolidated OperatingIncome 594,525$ 19.10% 569,475$ 20.00%


50

Fiscal 2012 Compared to Fiscal 2011

--------------------------------------------------------------------------------------------------------------------------------------------


TIM HORTONS INC.

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ChangeDollars Percentage

28,777$ 4.60%723 8.10%

11,268 -16.50%40,768 7.20%

3,156 84.80%

(18,874) n/m

25,050$ 4.40%

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% of2013 Total Revenues 2012

($ in thousands)RevenuesSales 2,265,884$ 69.60% 2,225,659$Franchise revenues:Rents and royalties(2) 821,221 25.20% 780,992

Franchise fees 168,428 5.20% 113,853989,649 30.40% 894,845

Total revenues 3,255,533 100.00% 3,120,504

Costs and expensesCost of sales 1,972,903 60.60% 1,957,338Operating expenses 321,836 9.90% 284,321Franchise fee costs 162,605 5.00% 116,644General and administrativeexpenses 159,523 4.90% 163,885Equity (income) (15,170) -0.50% (14,693)Corporate reorganizationexpenses 11,761 0.40% 18,874

De-branding costs 19,016 0.60% -Asset impairment 2,889 0.10% (372)Other (income), net (925) 0% (18)Total costs and expenses,

net 2,634,438 80.90% 2,525,979Operating income 621,095 19.10% 594,525Interest (expense) (39,078) -1.20% (33,709)Interest income 3,612 0.10% 3,296Income before income taxes 585,629 18.00% 564,112Income taxes 156,980 4.80% 156,346

Net income 428,649 13.20% 407,766Net income attributable tonon controlling interests 4,280 0.10% 4,881Net income attributable toTim Hortons Inc. 424,369$ 13.00% 402,885$

______________n/m Not meaningful



TIM HORTONS INC.

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% of Change(1)Total Revenues Dollars Percentage

71.30% 40,225$ 1.80%

25.00% 40,229 5.20%

3.60% 54,575 47.90%28.70% 94,804 10.60%

100.00% 135,029 4.30%

62.70% 15,565 0.80%9.10% 37,515 13.20%3.70% 45,961 39.40%

5.30% (4,362) -2.70%-0.50% (477) 3.20%

0.60% (7,113) n/m

0% 19,016 n/m0% 3,261 n/m0% (907) n/m

80.90% 108,459 4.30%19.10% 26,570 4.50%-1.10% (5,369) 15.90%0.10% 316 9.60%

18.10% 21,517 3.80%5.00% 634 0.40%

13.10% 20,883 5.10%

0.20% (601) -12.30%

12.90% 21,484$ 5.30%

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Fiscal Years2013 2012

Franchised restaurant sales (in thousands)Canada (Canadian dollars) 6,152,096$ 5,907,481$U.S. (U.S. dollars) 586,515$ 532,214$



TIM HORTONS INC.

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Fiscal Years As at2013 2012 December 29, 2013 December 30, 2012

AverageCanada 115 120 106 131U.S. 232 198 225 234Total 347 318 331 365



TIM HORTONS INC.

TABLE35

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% of2012 Total Revenues 2011

($ in thousands)RevenuesSales 2,225,659$ 71.30% 2,012,170$Franchise revenues:Rents and royalties(2) 780,992 25.00% 733,217

Franchise fees 113,853 3.60% 107,579894,845 28.70% 840,796

Total revenues 3,120,504 100.00% 2,852,966

Costs and expensesCost of sales 1,957,338 62.70% 1,772,375Operating expenses 284,321 9.10% 256,676Franchise fee costs 116,644 3.70% 104,884General and administrativeexpenses 163,885 5.30% 165,598Equity (income) (14,693) -0.50% (14,354)Corporate reorganizationexpenses 18,874 0.60% -

Asset impairment (372) 0% 372Other (income), net (18) 0% (2,060)Total costs and expenses,net 2,525,979 80.90% 2,283,491

Operating income 594,525 19.10% 569,475Interest (expense) (33,709) -1.10% (30,000)Interest income 3,296 0.10% 4,127Income before income taxes 564,112 18.10% 543,602Income taxes 156,346 5.00% 157,854Net income 407,766 13.10% 385,748

Net income attributable tonon controlling interests 4,881 0.20% 2,936Net income attributable toTim Hortons Inc. 402,885$ 12.90% 382,812$

______________n/m Not meaningful



TIM HORTONS INC.

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% of Change(1)Total Revenues Dollars Percentage

70.50% 213,489$ 10.60%

25.70% 47,775 6.50%

3.80% 6,274 5.80%29.50% 54,049 6.40%

100.00% 267,538 9.40%

62.10% 184,963 10.40%9.00% 27,645 10.80%3.70% 11,760 11.20%

5.80% (1,713) -1.00%-0.50% (339) 2.40%

0% 18,874 n/m

0% (744) n/m-0.10% 2,042 n/m

80.00% 242,488 10.60%

20.00% 25,050 4.40%-1.10% (3,709) 12.40%0.10% (831) -20.10%

19.10% 20,510 3.80%5.50% (1,508) -1.00%

13.50% 22,018 5.70%

0.10% 1,945 66.20%

13.40% 20,073$ 5.20%

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Fiscal Years2012 2011

Franchised restaurant sales (in thousands)Canada (Canadian dollars) 5,907,481$ 5,564,263$U.S. (U.S. dollars) 532,214$ 472,969$



TIM HORTONS INC.

TABLE37

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Fiscal Years As at2012 2011 December 30, 2012 January 1, 2012

AverageCanada 120 107 131 121U.S. 198 165 234 188Total 318 272 365 309



TIM HORTONS INC.

TABLE38

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Fiscal Years2013 2012 2011

(in millions)Capital expenditures(1)New restaurants 99.80$ 113.00$ 84.30$Existing restaurants(2) 98.70 51.40 50.00Other capital expenditures(3) 22.50 22.40 42.60

186.80$ 176.90$Ad Fund(4) 22.00 49.00 4.40

235.80$ 181.30$

________________

Total capital expenditures, excluding Ad Fund $ 221.0

Total capital expenditures, including Ad Fund $ 243.0


TIM HORTONS INC.

TABLE40

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2013 2012 2011(in millions)

62.50$ 53.60$U.S. 41.00 50.50 30.70Total 99.80$ 113.00$ 84.30$

Canada $ 58.9


TIM HORTONS INC.

TABLE41

Form Type: 10-K



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Less than 1Year 1 - 3 Years

Contractual ObligationsLong-term debt, including

interest and current maturities 50,855$ 101,008$Capital leases 21,690 44,602Operating leases 102,643 194,154

Purchase obligations(1) 363,706 21,984Total contractual obligations(2) $ 538,894 361,748$

________________



TIM HORTONS INC.

BALANCE_SHEET

Form Type: 10-K


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Future Commitmentnot Recorded onBalance Sheet

357,210$109,987

1,051,742

392,6711,911,610$

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December 29, 2013RevenuesSales (note 21) 2,265,884$

Franchise revenuesRents and royalties 821,221Franchise fees 168,428

989,649Total revenues 3,255,533Costs and expensesCost of sales (note 21) 1,972,903Operating expenses 321,836Franchise fee costs 162,605General and administrative expenses 159,523Equity (income) (note 11) (15,170)Corporate reorganization expenses (note 2) 11,761

De-branding costs (note 3) 19,016Asset impairment 2,889Other (income), net (925)Total costs and expenses, net 2,634,438

Operating income 621,095Interest (expense) (39,078)Interest income 3,612Income before income taxes 585,629Income taxes (note 7) 156,980Net income 428,649

Net income attributable to non controllinginterests (note 20) 4,280Net income attributable to Tim Hortons Inc. 424,369$Basic earnings per common share attributableto Tim HortonsInc. (note 4) 2.83$

Diluted earnings per common shareattributable to Tim HortonsInc. (note 4) 2.82$Weighted average number of common shares

outstanding (inthousands) - Basic (note 4) 150,155Weighted average number of common sharesoutstanding (inthousands) - Diluted (note 4) 150,622

TIM HORTONS INC. AND SUBSIDIARIESCONSOLIDATED STATEMENT OF OPERATIONS

(in thousands of Canadian dollars, except share and per share data)


TIM HORTONS INC.

INCOME_STATEMENT

Form Type: 10-K



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Dividends per common share 1.04$

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Year-endedDecember 30, 2012 January 1, 2012

2,225,659$ 2,012,170$

780,992 733,217113,853 107,579

894,845 840,7963,120,504 2,852,966

1,957,338 1,772,375284,321 256,676116,644 104,884163,885 165,598(14,693) (14,354)18,874 -

- -(372) 372(18) (2,060)

2,525,979 2,283,491

594,525 569,475(33,709) (30,000)

3,296 4,127564,112 543,602156,346 157,854407,766 385,748

4,881 2,936402,885$ 382,812$

2.60$ 2.36$

2.59$ 2.35$

155,160 162,145

155,676 162,597

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0.84$ 0.68$

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December 29, 2013Net income 428,649$Other comprehensive income (loss)

Translation adjustments gain (loss) 31,333Unrealized gains (losses) from cash flowhedges (note 15)

Gain (loss) from change in fair value ofderivatives 174Amount of net (gain) loss reclassified toearnings during the year (3,002)Tax (expense) recovery (note 15) (1,579)Other comprehensive income (loss) 26,926Comprehensive income 455,575$Comprehensive income attributable to noncontrolling interests 4,280

Comprehensive income attributable to TimHortons Inc. 451,295$

TIM HORTONS INC. AND SUBSIDIARIESCONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(in thousands of Canadian dollars)


TIM HORTONS INC.

TABLE42

Form Type: 10-K



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407,766$ 385,748$

(7,268) 9,634

(5,009) 3,243

24 4,8401,442 (2,345)

(10,811) 15,372396,955$ 401,120$

4,881 2,936

392,074$ 398,184$

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As atDecember 29, 2013

AssetsCurrent assets

Cash and cash equivalents 50,414$Restricted cash and cash equivalents 155,006Accounts receivable, net (note 5) 210,664

Notes receivable, net (note 6) 4,631Deferred income taxes (note 7) 10,165Inventories and other, net (note 8) 104,326Advertising fund restricted assets (note 20) 39,783Total current assets 574,989Property and equipment, net (note 9) 1,685,043Notes receivable, net (note 6) 4,483Deferred income taxes (note 7) 11,018Equity investments (note 11) 40,738

Other assets (note 10) 117,552Total assets 2,433,823$Liabilities and EquityCurrent liabilities

Accounts payable (note 12) 204,514$Accrued liabilities (note 12) 274,008Deferred income taxes (note 7) -Advertising fund liabilities (note 20) 59,912Short-term borrowings (note 13) 30,000Current portion of long-term obligations 17,782

Total current liabilities 586,216Long-term obligationsLong-term debt (note 13) 843,020Capital leases (note 16) 121,049Deferred income taxes (note 7) 9,929Other long-term liabilities (note 12) 112,090

Total long-term obligations 1,086,088Commitments and contingencies (note 17)EquityEquity of Tim Hortons Inc.

Common shares ($2.84 stated value per share).Authorized: unlimited shares.Issued: 141,329,010 and 153,404,839 shares,respectively (note 18) 400,738Common shares held in Trust, at cost: 293,816 and

TIM HORTONS INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEET

(in thousands of Canadian dollars, except share and per share data)


TIM HORTONS INC.

BALANCE_SHEET2

Form Type: 10-K



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316,923 shares, respectively (note 18) (12,924)Contributed surplus 11,033Retained earnings 474,409Accumulated other comprehensive loss (112,102)Total equity of Tim Hortons Inc. 761,154Non controlling interests (note 20) 365

Total equity 761,519Total liabilities and equity 2,433,823$

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December 30, 2012

120,139$150,574171,605

7,5317,142107,000

45,337609,328

1,553,3081,246

10,55941,268

68,4702,284,179$

169,762$227,739

19744,893

-20,781

463,372

406,320104,383

10,399109,614

630,716

435,033

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(13,356)10,970

893,619(139,028)

1,187,2382,853

1,190,0912,284,179$

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Net cash (used in) financing activities (434,081)Effect of exchange rate changes on cash 2,883(Decrease) in cash and cash equivalents (69,725)Cash and cash equivalents at beginning ofyear 120,139Cash and cash equivalents at end of year 50,414$

Supplemental disclosures of cash flowinformation:Interest paid 36,268$Income taxes paid 191,503$Non-cash investing and financing activities:Capital lease obligations incurred 34,712$

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407,766$ 385,748$

132,167 115,86911,862 17,3235,065 (5,433)

(20,182) (63,264)(1,346) 2,09933,415 (32,057)6,692 349

(18,065) (39,197)

- -- -

1,913 10,030559,287 391,467

(186,777) (176,890)

(49,031) (4,377)- 38,000

(6,400) (9,460)(242,208) (152,727)

(225,200) (572,452)(130,509) (110,187)

(3,913) (6,692)- -

51,850 3,699- -

(7,710) (8,586)(6,885) 6,398

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from the Trust(4) - - 66 2,885Stock-basedcompensation - - - -Othercomprehensiveincome (loss)

beforereclassifications - - - -Amountsreclassifiedfrom AOCI(5) - - - -NCI transactions - - - -Net income - - - -Dividends anddistributions,

net - - - -Balance as at

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- - - - 2,885

63 (712) - - (649)

- - 31,333 (2,407) 28,926

- - - (2,000) (2,000)- (483) - - (483)- 424,369 - - 424,369

- (156,141) - - (156,141)

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NCI(2) Total Equity

$ $

5,641$ 1,442,442$

- (575,249)

- 2,203

- 796

- 15,372

2,936 385,748

(6,692) (116,879)

1,885$ 1,154,433$

- (231,354)

- 2,934

- 2,452

- (10,811)907 -

4,881 407,766

(4,820) (135,329)

2,853$ 1,190,091$

- (722,991)

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2013Systemwide Restaurant CountFranchised restaurants in operation - beginning of period 4,242Restaurants opened 258Restaurants closed (39)Net transfers within the franchised system 8Franchised restaurants in operation - end of period 4,469

Company-operated restaurants - end of period 16Total systemwide restaurants - end of period(1) 4,485% of restaurants franchised - end of period 99.60%

________________



TIM HORTONS INC.

TABLE44

Form Type: 10-K


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2012 2011

3,996 3,730271 294(26) (29)

1 14,242 3,996

22 184,264 4,014

99.50% 99.60%

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Building and leasehold improvements 10Restaurant and other equipment 7Capital leases 8Computer hardware and software 3Advertising fund property and equipment 3Manufacturing and other equipment 4

Construction in progress



TIM HORTONS INC.

TABLE45

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9,016$ -$7,602 -2,256 -

18,874$ -$

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Termination Professionalcosts fees and other

Costs incurred during fiscal 2012 9,016$ 7,602$Paid during fiscal 2012 (1,458) (3,775)Accrued as at December 30, 2012 7,558 3,827Costs incurred during fiscal 2013 6,342 2,349Paid during fiscal 2013 (12,932) (5,947)

Accrued as at December 29, 2013(1) $ 968 229$

_____________



TIM HORTONS INC.

TABLE47

Form Type: 10-K


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CEO transitioncosts Total

2,256$ 18,874$(411) (5,644)

1,845 13,2303,070 11,761(466) (19,345)

4,449$ 5,646$

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-$ -$

- -- -- -

-$ -$

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December 29, 2013Net income attributable to Tim Hortons Inc. 424,369$Weighted average number of sharesoutstanding for computation of basicearnings per common share attributable to

Tim Hortons Inc. (in thousands) 150,155Dilutive impact of restricted stock units(in thousands) 212

Dilutive impact of stock options with tandemSARs (in thousands) 255Weighted average number of sharesoutstanding for computation of dilutedearnings per common share attributable toTim Hortons Inc. (in thousands) 150,622Basic earnings per common share attributableto Tim Hortons Inc. 2.83$Diluted earnings per common share

attributable to Tim Hortons Inc. 2.82$

NOTE 4 EARNINGS PER COMMON SHARE ATTRIBUTABLE TO TIM HORTONS INC.


TIM HORTONS INC.

TABLE49

Form Type: 10-K



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402,885$ 382,812$

155,160 162,145

217 197

299 255

155,676 162,597

2.60$ 2.36$

2.59$ 2.35$

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December 30, 2012112,522$

2,386

57,942172,850(1,245)

171,605$

Sata)

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NOTE 7 INCOME TAXESYear-ended

December 29, 2013 December 30, 2012 January 1, 2012CurrentCanadian(1) 159,369$ 148,168$ 157,685$

Foreign(2) 2,453 3,323 5,240161,822 151,491 162,925DeferredCanadian(1) (5,848) 2,836 (2,506)Foreign(2) 1,006 2,019 (2,565)

(4,842) 4,855 (5,071)Income tax expense $ 156,980 156,346$ 157,854$

________________

TIM HORTONS INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in thousands of Canadian dollars, except share and per share data) - Continued


TIM HORTONS INC.

TABLE52

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January 1, 2012543,602$

28.30%153,567

(1,846)

152

3,271

2,226484157,854$

29.00%

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and liabilities consisted of the following:


Deferred tax assets

U.S. foreign tax credit carryforwards 18,649$Lease transactions 64,796Property and equipment basis differences 11,757Intangible assets basis differences 1,479Stock-based compensation plans 6,062Reserves and expenses not currently deductible 8,631Deferred income 16,659Loss carryforwards 10,960All other 539

139,532Valuation allowance (46,760)

92,772$Deferred tax liabilities

Lease transactions 43,409$Property and equipment basis differences 26,581Unremitted earnings - foreign operations(1) 3,621Stock-based compensation plans 6,486All other 1,421

81,518$

Net deferred tax assets 11,254$Reported in Consolidated Balance Sheet as:Deferred income taxes - current asset 10,165$Deferred income taxes - long-term asset 11,018Deferred income taxes - current liability -Deferred income taxes - long-term liability (9,929)

11,254$

________________




The tax-effected temporary differences which gave rise to deferred tax assets


TIM HORTONS INC.

TABLE54

Form Type: 10-K


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December 29, 2013Balance at beginning of year 25,041$Additions based on tax positions related to the currentyear 510Additions for tax positions of prior years 3,983Reductions for tax positions of prior years (1,280)Reductions related to settlements with taxing

authorities (821)Reductions as a result of a lapse of applicable statuteof limitations (10,114)

Balance at end of year 17,319$Reported in the Consolidated Balance Sheet as:Accrued liabilities, Taxes -$Other long-term liabilities (note 12) 17,319

17,319$



TIM HORTONS INC.

TABLE55

Form Type: 10-K


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NOTE 8 INVENTORIES AND OTHER, NETAs atDecember 29, 2013

Raw materials 22,789$Finished goods 69,348

92,137Inventory obsolescence provision (1,754)

Inventories, net 90,383Prepaids and other 13,943Total Inventories and other, net $ 104,326



TIM HORTONS INC.

TABLE56

Form Type: 10-K


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NOTE 9 PROPERTY AND EQUIPMENT, NETAs at

December 29, 2013Land 259,386$Buildings and leasehold improvements 1,638,755

Restaurant and other equipment 208,986Capital leases(1) 233,090Computer hardware and software(2) 124,114Advertising fund property and equipment(3) 138,858Manufacturing and other equipment 97,083Construction in progress 35,827Property and equipment, net of impairment 2,736,099Accumulated depreciation and amortization (1,051,056)Total Property and equipment, net 1,685,043$

________________


(in thousands of Canadian dollars, except share and per share data) - Co


TIM HORTONS INC.

TABLE57

Form Type: 10-K



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December 30, 2012248,097$

1,481,454

188,216205,543117,266116,044112,991

18,9572,488,568(935,260)

1,553,308$

tinued

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NOTE 10 OTHER ASSETSAs atDecember 29, 2013 December 30, 2012

Bearer deposit notes(1) $ 41,403 41,403$Tax deposits(2) 36,532 -TRS contracts(1) 21,393 7,504Rent leveling 5,419 5,240

Intangible assets(3) 494 3,674Other long-term assets 12,311 10,649Total Other assets 117,552$ 68,470$

________________



TIM HORTONS INC.

TABLE58

Form Type: 10-K


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NOTE 11 EQUITY INVESTMENTS

Year-ended

Income Statement InformationRevenues 42,997$Expenses attributable to revenues (12,074)$Net income 30,341$

Equity income-THI 15,170$


Balance Sheet InformationCurrent assets 7,832$ 8,408$Non-current assets 82,274$ 86,352$Current liabilities 1,432$ 4,010$

Non-current liabilities 8,206$ 9,138$Partners' equity 80,468$ 81,612$Equity investment by THI 40,738$ 41,268$



TIM HORTONS INC.

TABLE59

Form Type: 10-K


income tax expense as the majority of these investments pertain to a partnership

or joint venture, in which case ownership percentage of earnings is attributedto the partner or joint venturer and the associated income tax is included inIncome taxes in the Consolidated Statement of Operations.

December 29, 2013 D

December 29, 2013



Combined summarized financial information for the Company's investments

accounted for using the equity method is shown below. These amounts are, inaggregate, at 100% levels. The net income amounts shown below generally exclude

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January 1, 2012

42,863$ 42,105$(12,902)$ (12,712)$29,382$ 29,067$

14,693$ 14,354$

ecember 30, 2012

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Accounts payableAs atDecember 29, 2013 December 30, 2012

Accounts payable 142,131$ 126,312$Construction holdbacks and accruals 57,527 31,008Corporate reorganization accrual (note 2) 4,856 12,442

Total Accounts payable 204,514$ 169,762$

NOTE 12 ACCOUNTS PAYABLE, ACCRUED LIABILITIES, AND OTHER LONG-TERM LIABILITIES


TIM HORTONS INC.

TABLE60

Form Type: 10-K



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Other long-term liabilitiesAs atDecember 29, 2013

Accrued rent leveling liability 32,070$Stock-based compensation liabilities (note 19) 25,532Uncertain tax position liability (note 7) 24,926Maidstone Bakeries supply contract deferred liability 7,799

Other accrued long-term liabilities(1) 21,763Total Other long-term liabilities 112,090$

________________



TIM HORTONS INC.

TABLE62

Form Type: 10-K


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December 30, 201229,244$17,47928,61015,352

18,929109,614$

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NOTE 13 LONG-TERM DEBTAs atDecember 29, 2013

Senior Unsecured Notes, Series 1, due June 1, 2017 301,196$Senior Unsecured Notes, Series 2, due December 1, 2023 449,892Advertising fund debt 30,189Other debt 69,794

851,071$Less: current portion(1) (8,051)Total Long-term debt 843,020$

________________



TIM HORTONS INC.

TABLE63

Form Type: 10-K


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December 30, 2012301,544$

-56,50060,223

418,267$(11,947)406,320$

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December 30, 2012Fair value

asset (liability)(1)

(2,014)$--

7,5045,490$

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As atDecember 29, 2013Fair value

Fair value asset Carrying Fair valuehierarchy (liability) value hierarchy

Bearer deposit notes(1) Level 2 41,403$ 41,403$ Level 2Notes receivable,

net(2) Level 3 9,114$ 9,114$ Level 3Series 1 Notes(3) Level 2 (315,519)$ (301,196)$ Level 2Series 2 Notes(3) Level 2 (445,419)$ (449,892)$ n/a

Advertising fund termdebt(4) Level 3 (30,189)$ (30,189)$ Level 3Other debt(5) Level 3 (126,548)$ (69,794)$ Level 3

________________



TIM HORTONS INC.

TABLE66

Form Type: 10-K


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December 30, 2012Fair valueasset Carrying(liability) value

41,403$ 41,403$

8,777$ 8,777$(325,857)$ (301,544)$

-$ -$

(56,500)$ (56,500)$(125,000)$ (60,223)$

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NOTE 15 DERIVATIVES

December 29, 2013Netasset

Asset Liability (liability)Derivativesdesignated as cashflow hedginginstrumentsForward currencycontracts(1) 4,181$ -$ 4,181$

Interest rate swap(2) $ - (49)$ (49)$

Interest rateforwards(3) 285$ -$ 285$Derivatives notdesignated as

hedging instrumentsTRS(4) 21,393$ -$ 21,393$Forward currencycontracts(1) -$ -$ -$

________________


(in thousands of Canadian dollars, except share and per share data) - Contin


TIM HORTONS INC.

TABLE67

Form Type: 10-K



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As at

December 30, 2012Classification on NetConsolidated asset

Balance Sheet Asset Liability (liability)

Accountsreceivable, net 494$ (2,315)$ (1,821)$Other long termliabilities -$ -$ -$

Accountsreceivable, net -$ -$ -$

Other assets 8,614$ (1,110)$ 7,504$

n/a $5 (198)$ (193)$

ued

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Classification onConsolidated

Balance Sheet

Accounts payable, net

n/a

n/a

Other assets

Accounts payable, net

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Derivatives Classification on Amount of designated as cash Consolidated gain (loss)flow hedging Statement of recognizedinstruments(1) Operations in OCI(2)Forward currencycontracts Cost of sales 9,971$

Interest rateswap(3) Interest (expense) (242)Interest rate

forwards(4) Interest (expense) (9,555)Total 174Income tax effect Income taxes (2,581)Net of income taxes (2,407)$

________________



TIM HORTONS INC.

INCOME_STATEMENT2

Form Type: 10-K


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Year-ended December 29, 2013Amount of net Amount of(gain) loss gain (loss)reclassified Total effect recognizedto earnings on OCI(2) in OCI(2)

(3,969)$ 6,002$ (5,009)$

193 (49) -

774 (8,781) -(3,002) (2,828) (5,009)1,002 (1,579) 1,455

(2,000)$ (4,407)$ (3,554)$

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Year-ended December 30, 2012Amount of net(gain) lossreclassified Total effectto earnings on OCI(2)

(667)$ (5,676)$

- -

691 69124 (4,985)(13) 1,44211$ (3,543)$

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Year-ended

December 30, 2012 January 1, 2012

1,782$ (5,033)$

1,097 (904)

2,879$ (5,937)$

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NOTE 16 LEASES

As atDecember 29, 2013 December 30, 2012

Buildings 220,933$ 197,438$Other(1) 13,039 9,083

Accumulated depreciation (75,437) (67,721)Total 158,535$ 138,800$

________________



TIM HORTONS INC.

TABLE68

Form Type: 10-K


land-only lease terms can extend longer. Many of these leases provide for future

rent escalations and renewal options. Certain leases require contingent rent,determined as a percentage of sales. Most leases also obligate the Company topay the cost of maintenance, insurance and property taxes.

Assets leased under capital leases and included in property and equipment, butexcluding leasehold improvements, consisted of the following:



The Company occupies land and buildings and uses equipment under terms of

numerous lease agreements expiring on various dates through fiscal 2052. Landand building leases generally have an initial term of 10 to 30 years, while

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Capital Leases Operating Leases2014 21,690$ 102,643$2015 25,723 103,7842016 18,879 90,3702017 15,906 77,9962018 16,270 77,764

Subsequent years 142,299 599,185

Total minimum lease payments(1) 240,767$ 1,051,742$Amount representing interest (109,987)Present value of net minimum lease payments 130,780

Current portion (9,731)121,049$

________________



TIM HORTONS INC.

TABLE69

Form Type: 10-K


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Year-endedDecember 29, 2013 December 30, 2012 January 1, 2012

Minimum rents 106,303$ 96,482$ 89,329$Contingent rents 77,892 77,842 74,549Total rent expense(1) $ 184,195 174,324$ 163,878$

________________



TIM HORTONS INC.

TABLE70

Form Type: 10-K


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As atDecember 29, 2013 December 30, 2012

Land 189,301$ 180,073$Buildings and leasehold improvements 1,474,802 1,318,194Restaurant equipment 82,406 70,645

1,746,509 1,568,912Accumulated depreciation (690,246) (604,703)

1,056,263$ 964,209$



TIM HORTONS INC.

TABLE71

Form Type: 10-K


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Operating Leases2014 231,307$2015 202,5772016 165,9732017 136,8562018 107,201

Subsequent years 237,211

Total 1,081,125$



TIM HORTONS INC.

TABLE72

Form Type: 10-K


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Minimum rents 314,865$ 300,021$ 291,557$Contingent rents 264,820 257,594 242,101Total rental income(1) $ 579,685 557,615$ 533,658$

________________



TIM HORTONS INC.

TABLE73

Form Type: 10-K


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NOTE 19 STOCK-BASED COMPENSATIONYear-ended

December 29, December 30,2013 2012

Restricted stock units 6,522$ 9,537$Stock options and tandem SARs 12,745 1,599Deferred stock units 2,722 726

Total stock-based compensation expense(1)(2) $ 21,989 11,862$

________________



TIM HORTONS INC.

TABLE74

Form Type: 10-K


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January 1, 20126,247$9,0552,021

17,323$

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Restricted stock units

Weighted AverageRestricted Stock Grant Date FairUnits Value per Unit(in thousands) (in dollars)

Balance as at December 30, 2012 312 50.91$Granted(1) 160 56.73Dividend equivalent rights 7 56.40

Vested and settled(2) (150) 47.56Forfeited (22) 52.29Balance as at December 29, 2013(3) 307 55.60$

________________



TIM HORTONS INC.

TABLE75

Form Type: 10-K


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WeightedAverageRemaining

Total Intrinsic ContractualValue Life(in thousands)

15,147$ 1.50

19,119$ 1.40

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Deferred stock unitsWeighted Average

Deferred Stock Grant Date FairUnits Value per Unit(in thousands) (in dollars)

Balance as at December 30, 2012 138 37.56$Granted(1) 11 57.59

Dividend equivalent rights 3 57.02Settled(2) (11) 37.41Balance as at December 29, 2013(3) 141 39.57$

________________



TIM HORTONS INC.

TABLE76

Form Type: 10-K


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WeightedAverageRemainingContractualLife(in years)

4.70

4.60

3.40

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Year-endedDecember 29, 2013 December 30, 2012

Expected share price volatility(1) 13% - 17% 9% - 20%Risk-free interest rate(2) 1.1% - 1.6% 1.1% - 1.3%Expected life(3) 0.5 - 4.0 years 1.0 - 4.0 yearsExpected dividend yield(4) 1.70% 1.80%Closing share price (in dollars)(5) 62.29$ 48.51$

Weighted average grant price 57.91$ 54.86$

________________



TIM HORTONS INC.

TABLE78

Form Type: 10-K


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January 1, 201216% - 22%1.0% - 1.1%1.7 - 3.9 years

1.40%49.36$

45.76$

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NOTE 20 VARIABLE INTEREST ENTITIES


% of Systemwide





VIEs for which the Company is the primary beneficiary

Non-owned restaurants


TIM HORTONS INC.

TABLE79

Form Type: 10-K

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December 30, 2012

% of Systemwide

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Advertising expenses $ 255,056 230,317$ 214,989$



TIM HORTONS INC.

TABLE80

Form Type: 10-K


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December 29, 2013Company contributions 10,800$Contributions from consolidated non-ownedrestaurants 13,801Total Company contributions 24,601$



TIM HORTONS INC.

TABLE81

Form Type: 10-K


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10,813$ 10,487$

12,545 10,46623,358$ 20,953$

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RestaurantVIEs(1)Sales 369,850$Advertising levies -Total revenues 369,850Cost of sales 364,260Operating expenses -Asset impairment(3) 441Operating income 5,149

Interest expense -Income before taxes 5,149Income taxes 869

interests 4,280$

December 30, 2012

Restaurant Advertising TotalVIEs(1) fund VIEs(2) VIEs

Sales 338,005$ -$ 338,005$Advertising levies - 5,624 5,624Total revenues 338,005 5,624 343,629Cost of sales 332,151 - 332,151

Operating expenses - 4,602 4,602Asset impairment - - -Operating income 5,854 1,022 6,876Interest expense - 1,022 1,022

Income before taxes 5,854 - 5,854Income taxes 973 - 973Net incomeattributable to noncontrolling interests 4,881$ -$ 4,881$


TIM HORTONS INC.

TABLE82

Form Type: 10-K



Year-Decembe

Advefund V

Net income attributable to non controlling



The revenues and expenses associated with the Company's consolidated Non-ownedrestaurants and advertising funds presented on a gross basis, prior to

consolidation adjustments, are as follows:

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________________

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TotalVIEs-$ 369,850$

10,711 10,71110,711 380,561

- 364,2609,269 9,269

- 4411,442 6,591

1,442 1,442- 5,149- 869

-$ 4,280$

Year-ended

Restaurant TotalVIEs(1) VIEs

282,384$ -$ 282,384$- 634 634

282,384 634 283,018277,953 - 277,953

- 634 634900 - 900

3,531 - 3,531138 - 138

3,393 - 3,393457 - 457

2,936$ -$ 2,936$

Advertisingfund VIEs(2)

nded29, 2013

tising IEs(2)

January 1, 2012

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consolidation adjustments, are as follows:As at

December 29, 2013

Restaurant AdvertisingVIEs fund VIEsCash and cash equivalents 7,773$ -$Advertising fund restricted assets -current - 39,783Other current assets 7,155 -Property and equipment, net 20,471 70,485Other long-term assets 370 1,271Total assets 35,769$ 111,539$

Notes payable to Tim Hortons Inc. -current(1)(2) 13,689$ 3,040$Advertising fund liabilities -current - 59,913

Other current liabilities(3) 11,706 5,253Notes payable to Tim Hortons Inc. -long-term(1)(2) 628 15,200Long-term debt(3) - 25,157Other long-term liabilities 9,381 2,976Total liabilities 35,404 111,539

Equity of VIEs 365 -Total liabilities and equity 35,769$ 111,539$

________________





The assets and liabilities associated with the Company's consolidated Non-ownedrestaurants and advertising funds presented on a gross basis, prior to


TIM HORTONS INC.

TABLE83

Form Type: 10-K

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December 30, 2012

Restaurant AdvertisingVIEs fund VIEs10,851$ -$

- 45,3376,770 -

19,536 57,925572 2,095

37,729$ 105,357$

13,637$ -$

- 44,893

14,548 9,919

804 -- 46,849

5,887 3,69634,876 105,357

2,853 -37,729$ 105,357$

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Year-endedDecember 29, 2013 December 30, 2012

Revenues(1)Canada 2,660,358$ 2,595,921$U.S. 197,226 165,723Corporate services 17,388 15,231Total reportable segments 2,874,972 2,776,875

VIEs 380,561 343,629Total 3,255,533$ 3,120,504$Operating Income (Loss)

Canada 665,675$ 653,916$U.S.(2) 5,107 9,620Corporate services (44,517) (57,013)Total reportable segments 626,265 606,523VIEs(2) 6,591 6,876Corporate reorganization expenses (11,761) (18,874)Consolidated Operating Income 621,095 594,525Interest, net (35,466) (30,413)Income before income taxes 585,629$ 564,112$

________________



TIM HORTONS INC.

TABLE84

Form Type: 10-K


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January 1, 2012

2,403,002$156,291

10,6552,569,948

283,0182,852,966$

625,139$ 8,897(68,281)565,755

3,720-

569,475(25,873)543,602$

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values less costs to sell.Year-ended

December 29, 2013 December 30, 2012

Capital expendituresCanada(1) 153,877$ 113,546$U.S. 49,757 59,998Corporate services 17,366 13,233Total reportable segments $ 221,000 186,777$

______________





$0.5 million was recognized in the U.S. segment and $0.9 million related toconsolidated VIEs. Impairment charges reflect real estate and equipment fair


TIM HORTONS INC.

TABLE85

Form Type: 10-K

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January 1, 2012

95,343$38,55442,993

176,890$

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Total Property and equipment, netCanada(1) 1,008,141$U.S.(1) 413,928Corporate services(2) 175,804Total reportable segments 1,597,873

VIEs 87,170Consolidated Property and equipment, net $ 1,685,043Total Assets

Canada 1,300,220$U.S. 450,377Corporate services 272,330Total reportable segments 2,022,927VIEs 143,301Unallocated assets(3) 267,595Consolidated Total assets 2,433,823$

_______________



TIM HORTONS INC.

TABLE86

Form Type: 10-K


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December 30, 2012

915,733$378,457184,938

1,479,128

74,1801,553,308$

1,175,552$ 400,231281,043

1,856,826139,462287,891

2,284,179$

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reconciled to total consolidated amounts are as follows:

December 29, 2013Depreciation and amortization

Canada 100,567$U.S. 33,853Corporate services 15,655Total reportable segments 150,075$VIEs 11,734$Consolidated depreciation and amortization 161,809$




Significant non-cash items included in reportable segment operating income and


TIM HORTONS INC.

TABLE87

Form Type: 10-K


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84,724$ 74,962$23,837 20,48817,254 17,602

125,815$ 113,052$6,352$ 2,817$

132,167$ 115,869$

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December 29, 2013SalesDistribution sales 1,872,296$Company-operated restaurant sales 23,738Sales from VIEs 369,850Total Sales 2,265,884$

December 29, 2013Cost of salesDistribution cost of sales 1,619,858$Company-operated restaurant cost of sales 25,446Cost of sales from VIEs 327,599Total Cost of sales 1,972,903$



TIM HORTONS INC.

TABLE88

Form Type: 10-K


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1,860,683$ 1,705,692$26,970 24,094

338,006 282,3842,225,659$ 2,012,170$


1,631,091$ 1,501,503$28,857 24,720

297,390 246,1521,957,338$ 1,772,375$

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NOTE 22 RELATED PARTY TRANSACTIONS

its 50/50 joint venture with Wendy's:

December 29, 2013Contingent rent expense(1) 25,329$

________________

The Company had the following expenses and outstanding balances associ


TIM HORTONS INC.

TABLE89

Form Type: 10-K



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25,102$ 24,677$

ated with

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2013

Q1 Q2RevenuesSales 523,887$ 568,562$

Franchise revenuesRents and royalties 187,454 209,289Franchise fees 20,196 22,288

207,650 231,577Total revenues 731,537 800,139Corporate reorganizationexpense (note 2) (9,475) (604)De-branding costs (note 3) - -Other costs and expenses, net (594,145) (622,956)

Operating income 127,917$ 176,579$Net income attributable to TimHortons Inc. 86,171$ 123,736$Diluted earnings per common share

attributable to Tim Hortons Inc. 0.56$ 0.81$

2012Q1 Q2

Revenues

Sales 523,302$ 563,772$Franchise revenuesRents and royalties 180,186 198,973Franchise fees 17,796 22,836

197,982 221,809Total revenues 721,284 785,581

Corporate reorganization expense(note 2) - (1,277)Other costs and expenses, net (589,661) (625,465)Operating income 131,623$ 158,839$

Net income attributable to TimHortons Inc. 88,779$ 108,067$Diluted earnings per common shareattributable to Tim Hortons Inc. 0.56$ 0.69$



(in thousands of Canadian dollars, except share and per share data) - Conti

NOTE 23 QUARTERLY FINANCIAL DATA (UNAUDITED)


TIM HORTONS INC.

TABLE91

Form Type: 10-K


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Q3 Q4

575,780$ 597,655$

212,114 212,36437,459 88,485

249,573 300,849825,353 898,504

(953) (729)- (19,016)

(655,572) (730,988)

168,828$ 147,771$

113,863$ 100,599$

0.75$ 0.69$

Q3 Q4

568,541$ 570,044$

201,556 200,27731,943 41,278

233,499 241,555802,040 811,599

(8,565) (9,032)(639,816) (652,163)153,659$ 150,404$

105,698$ 100,341$

0.68$ 0.65$

nued

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Balance atBeginning of Charged (Credited)

Classification Year to Costs & ExpensesFiscal year ended December 29, 2013:

Deferred tax asset valuation allowance 39,190$ 3,022$Allowance for doubtful accounts and notes 3,035 1,606Inventory reserve 1,015 2,181

43,240$ 6,809$Fiscal year ended December 30, 2012:Deferred tax asset valuation allowance 40,494$ 6,431$Allowance for doubtful accounts and notes 3,239 890Inventory reserve 844 1,238

44,577$ 8,559$Fiscal year ended January 1, 2012:Deferred tax asset valuation allowance 37,471$ 2,226$Allowance for doubtful accounts and notes 1,484 4,651

Inventory reserve 1,052 68940,007$ 7,566$

SCHEDULE IITO CONSOLIDATED FINANCIAL STATEMENTS-VALUATION AND QUALIFYING ACCOUNTS

(in thousands)


TIM HORTONS INC.

VALUATION_AND_QUALIFYING_ACCOUNTS

Form Type: 10-K



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Additions Balance at End(Deductions) of Year

4,548$ 46,760$(1,474) 3,167(1,442) 1,754

1,632$ 51,681$

(7,735)$ 39,190$(1,094) 3,035(1,067) 1,015(9,896)$ 43,240$

797$ 40,494$(2,896) 3,239

(897) 844(2,996)$ 44,577$

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December 29,2013

Valuation allowance, deferred income taxes 46,760$Deducted from accounts receivable and notes receivable, net 3,167Deducted from inventories and other, net 1,754

51,681$



TIM HORTONS INC.

TABLE92

Form Type: 10-K


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December 30,2012

39,190$3,0351,015

43,240$

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Name Age Position with CompanyMarc Caira Executive Chairman, President and Chief

60 Executive OfficerCynthia J. Devine 49 Chief Financial Officer David F. Clanachan 52 Chief Operations Officer

William A. Moir 65 Chief Brand and Marketing Officer Roland M. Walton 58 President, Tim Hortons CanadaJill E. Sutton Executive Vice President, General

42 Counsel and SecretaryMichel Meilleur Executive Vice President, Tim Hortons42 U.S.

Stephen Wuthmann Executive Vice President, Human56 Resources

EXECUTIVE OFFICERS OF THE REGISTRANT


TIM HORTONS INC.

NAME_AND_TITLE

Form Type: 10-K



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Officer Since

201320031997

19901997

2006

2008

2013

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Exhibit Description

2(a) Agreement and Plan of Merger, datedAugust 6, 2009, by and among theRegistrant, THI Mergeco Inc., andTim Hortons Inc.

3(a) Articles of Incorporation of the

Registrant, as amended

3(b) By-Law No. 1 of the Registrant

4(a) Shareholder Rights Plan Agreement,

dated Aug

TIM_10-K_20140225

Documents

Transcript of TIM_10-K_20140225