TimTim HortonsHortons Inc.Inc. BearBear StearnsStearns 14th Annual Retail, Restaurants & Consumer Conference Today’s Presentation IntroductionsIntroductions –– ScottScott BonikowskyBonikowsky SectorSector OutlookOutlook andand TimTim HortonsHortons StrategyStrategy forfor GrowthGrowth PaulPaul HouseHouse,, ExecutiveExecutive ChairmanChairman BusinessBusiness ModelModel andand CompetitiveCompetitive AdvantagesAdvantages DonDon SchroederSchroeder,, PresidentPresident andand CEOCEO FinancialFinancial OverviewOverview andand 20082008 TargetsTargets CynthiaCynthia DevineDevine,, ExecutiveExecutive VPVP && ChiefChief FinancialFinancial OfficerOfficer 2 Safe Harbor Statement CertainCertain statementsstatements inin thisthis presentationpresentation andand ourour reresponsesponse toto variousvarious questionsquestions maymay constituteconstitute “forward-“forward- lookinglooking statements”statements” withinwithin thethe meaninmeaningg ofof thethe U.S.U.S. PrivatePrivate SecuritiesSecurities LitigationLitigation ReformReform ActAct ofof 19951995 andand applicableapplicable CanadianCanadian securitiessecurities law.law. SuchSuch forward-loforward-lookingoking statementsstatements areare basedbased onon currentcurrent expectationsexpectations andand involveinvolve certaincertain risksrisks andand uncertainties.uncertainties. ActualActual resultsresults mightmight differdiffer materiallymaterially fromfrom thosethose projectedprojected inin thethe forward-lookingforward-looking statements.statements. InIn somesome cases,cases, informationinformation regardingregarding certaincertain importantimportant factorsfactors thatthat couldcould causecause actualactual resultsresults toto differdiffer materiallymaterially fromfrom anyany susuchch forward-lookingforward-looking statementstatement appearsappears oror isis discusseddiscussed togethertogether withwith suchsuch statements.statements. AdditiAdditionalonal informationinformation concerningconcerning factorsfactors thatthat couldcould causecause actualactual resultsresults toto differdiffer materiallymaterially fromfrom thosethose inin thethe forward-lookingforward-looking ststatementsatements isis containedcontained inin thethe mostmost recentrecent FormForm 10-K10-K filedfiled FebruaryFebruary 26,26, 2008,2008, presspress releasesreleases andand otherother filifilingsngs withwith thethe SecuritiesSecurities anandd ExchangeExchange CommissionCommission andand CanadianCanadian securitiessecurities regulators.regulators. InIn particular,particular, thethe fafactorsctors describeddescribed underunder ‘‘Risk‘‘Risk Factors’’Factors’’ inin the Form 10-K andand otherother possiblepossible factorsfactors notnot listedlisted,, couldcould affectaffect ourour actualactual resultsresults andand causecause suchsuch resultsresults toto differdiffer materiallymaterially fromfrom thosethose expressedexpressed inin forward-lookingforward-looking statements.statements. ManyMany ofof thethe factorsfactors thatthat willwill determinedetermine ourour futurefuture perfperformanceormance areare beyondbeyond ourour abilityability toto controlcontrol oror predict.predict. YouYou areare cautionedcautioned notnot toto putput undueundue reliancereliance onon anyany foforward-lookingrward-looking statements.statements. ExceptExcept asas requiredrequired byby applicableapplicable securitiessecurities laws,laws, wewe dodo nonott havehave anyany intentionintention oror obligationobligation toto updateupdate forward-lookingforward-looking statementsstatements afterafter thisthis presentation,presentation, eveneven ifif newnew information,information, fufutureture eventsevents oror otherother circumstancescircumstances havehave mademade themthem incorrectincorrect oror misleading.misleading. YouYou cancan reviewreview thethe fullfull tetextxt ofof thethe Company’sCompany’s SafeSafe HarborHarbor StatementStatement onon ourour websitewebsite atat www.timhortons.com/safeharbor.html.www.timhortons.com/safeharbor.html. ThisThis presentationpresentation referencesreferences Non-GAAPNon-GAAP financialfinancial ininformation.formation. ReconciliationReconciliation informationinformation toto thethe mostmost directlydirectly comparablecomparable GAAPGAAP financialfinancial measuremeasure isis includedincluded inin thisthis presentationpresentation andand isis postedposted onon ourour web-site,web-site, asas requiredrequired byby RegulationRegulation G,G, underunder thethe investorinvestor information/presentationsinformation/presentations tabs.tabs. 3 4 Investment Summary ProvenProven businessbusiness modelmodel thatthat createscreates competitivecompetitive advantageadvantage andand generatesgenerates severalseveral earningsearnings streams.streams. IconicIconic brandbrand statusstatus andand marketmarket shareshare leadershipleadership inin Canada,Canada, withwith aa growinggrowing regionalregional presencepresence inin targetedtargeted corecore northeastnortheast andand midwestmidwest marketsmarkets inin thethe US.US. StrongStrong financialfinancial performanceperformance andand cashcash flowflow overover long-long- periodsperiods ofof time.time. Same-storeSame-store salessales andand unitunit growthgrowth opportunitiesopportunities inin bothboth thethe CanadianCanadian andand USUS segments.segments. 5 2007 Corporate & Performance Highlights RecordRecord revenuesrevenues andand earningsearnings GuelphGuelph distributiondistribution centrecentre rolloutrollout completed,completed, providingproviding 3-3- channelchannel deliverydelivery toto 85%85% ofof OntarioOntario restaurantsrestaurants ShareholderShareholder valuevalue creationcreation programsprograms C$200C$200 millionmillion shareshare repurchaserepurchase programprogram 28.6%28.6% increaseincrease inin quarterlyquarterly dividenddividend announcedannounced forfor 20082008 6 2008 sector outlook is challenging…. ….but Tim Hortons is well positioned ChallengingChallenging economiceconomic situationsituation facingfacing QSRQSR // fastfast casualcasual sector,sector, particularlyparticularly inin thethe US,US, inin firstfirst halfhalf ofof 2008.2008. IntensifiedIntensified competitivecompetitive discountingdiscounting activitiesactivities acrossacross thethe USUS restaurantrestaurant sectorsector toto boostboost traffic.traffic. WeWe havehave performedperformed wellwell inin goodgood timestimes andand bad,bad, andand considerconsider ourselvesourselves relativelyrelatively wellwell positioned.positioned. PricePrice // qualityquality valuevalue positionposition FinancialFinancial positionposition andand layeredlayered incomeincome streamsstreams •• FranchiseeFranchisee recruitmentrecruitment andand realreal estateestate opportunitiesopportunities 7 Proven performance over the long-term 15-Year Canadian Same-Store Sales Performance 1212 Tim Hortons US 10-Year Average 10.510.5 Same-Store Sales Growth is 8.5% 10.210.2 1010 9.19.1 7.97.9 7.87.8 88 7.77.7 7.47.4 7.57.5 7.27.2 5.9 5.55.5 5.9 66 5.25.2 5.25.2 4.74.7 4.84.8 3.93.9 44 22 00 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 8 Executing our core growth strategies 9 Same-Store Sales Growth Drivers ProductProduct innovationinnovation BreakfastBreakfast dayday partpart LunchLunch dayday partpart –– hot hot signaturesignature sandwichsandwich EmphasisEmphasis onon overalloverall customercustomer experienceexperience andand speedspeed ofof serviceservice BrandBrand awarenessawareness andand loyaltyloyalty 10 Unit Expansion: Consistent Restaurant Growth Total Units Systemwide 98% Franchised 3,221 3,047 2,885 2,721 2,527 2,348 2,163 As of December 30, 2007 11 Unit Growth – Significant Canadian opportunities Current Restaurant Penetration 2,8232,823 restaurantsrestaurants 99%99% franchisedfranchised WEST Total Units 578 Population / Unit 16,616 ATLANTIC Total Units 366 QUEBEC Population / Unit 6,407 Total Units 358 Population / Unit 20,977 ONTARIO Total Units 1,521 Population / Unit 8,083 As of December 30, 2007 12 “We Fit Anywhere” 3,500-4,000 unit potential in Canada Standard Restaurants Non-Standard Restaurants Health Care 10% Retail Education 10% Opportunity: 15% Offices 7% Western provinces Quebec Urban centres 2007 Percentage of non-standard units 13 70 million consumers in our US markets Tim Hortons US 398398 restaurantsrestaurants 89%89% franchisedfranchised Maine 24 Upstate New York Michigan 103 98 Massachusetts, Erie, PA Connecticut & Ohio 5 Rhode Island 94 66 Kentucky & W. Virginia 8 As of December 30, 2007 14 Average unit sales volumes have historically experienced positive trending over time TimTim HortonsHortons USUS TimTim HortonsHortons CanadaCanada AverageAverage salessales perper AverageAverage salessales perper standardstandard restaurantrestaurant standardstandard restaurantrestaurant (000’s) (000’s) US figures in US currency 15 Innovation Agenda 16 17 BusinessBusiness overviewoverview VerticalVertical integrationintegration asas aa corecore strategystrategy CoffeeCoffee buyingbuying capabilitycapability TimTim HortonsHortons marketmarket positionposition 18 Franchising is the core of our system: Our model generates several earnings streams % of restaurants franchised % of revenues for fiscal year 2007 98%98% 9393 29% 88 88 66% 5% 8080 7878 Sales / Distribution Rent & Royalties 7878 Franchise Fees 7474 6666 Source: Company research, 2007 19 Time-tested business model Multiple Earning Layers The Tim Hortons business model is time-tested and different than most QSR companies. This model