Tim Hortons Inc. Announces Solid Second-Quarter Results; Company Declares First-Ever Dividend; Revenue Increased 10.4% to $406.8 Million; Operating Income up 8.3% to $98.5 Million

All results are in Canadian dollars.

Second-quarter results

-- Total revenues were $406.8 million in the second quarter, compared to $368.5 million in the second quarter of 2005, a 10.4% increase.

-- Tim Hortons(R) opened a total of 30 restaurants in the quarter. The openings consisted of 24 restaurants in Canada and 6 in the United States.

-- Same-store sales were very strong, as the Company reported increases of 6.1% in Canada and 8.4% in the United States.

"We are pleased to have delivered another solid quarter with goodtop-line growth," said Chief Executive Officer and President PaulHouse. "Our emphasis on product innovation, along with our ongoingfocus on speed of service, continues to drive very strong results. Wealso demonstrated good control of costs across the Company, despiteabsorbing incremental expenses, including the implementation of ournew distribution centre and additional resources related to becoming astandalone public company."

The Company's second-quarter operating income was $98.5 millioncompared to $90.9 million in the second quarter of 2005, an 8.3%increase. The primary components of this increase were strongsame-store sales and new store development. Second-quarter pretaxincome was $95.2 million compared to $89.0 million in 2005, a 6.9%increase. Net income was $76.3 million compared to $60.9 million, a25.3% increase. Reported diluted earnings per share (EPS) were $0.39compared to $0.38 in the second quarter of 2005.

The following items impacted the Company's 2006 second-quarterreported results relative to the second quarter of 2005:

-- A lower year-over-year second-quarter effective tax rate (19.8% vs. 31.6%), which resulted primarily from the resolution of tax audits. The Company does not expect such benefits to recur in subsequent periods.

-- Net interest expense of $3.3 million compared to $1.9 million in the second quarter of 2005, related primarily to interest expense incurred under the Company's new external debt of $300 million.

-- A $1.7-million decrease in the Other Income line due to a gain on an asset sale in the second quarter of 2005 that did not recur in 2006.

-- Costs related to the Company's decision to revise the implementation schedule for distributing frozen products at its new distribution centre. The Company expects the incremental revenues to offset these costs when frozen distribution is fully implemented by the new target date of mid to late 2007.

-- General and administrative (G&A) expenses of $27.5 million, or 6.8% of revenue, compared to $25.1 million, or 6.8% of revenue, in 2005. The year-over-year Dollar increase in G&A relates primarily to the accelerated vesting of Wendy's International, Inc. restricted stock units held by Tim Hortons employees expected to occur at the time of the spin-off pursuant to the terms of the Wendy's stock incentive plan. (See the section entitled "Spin-off of Tim Hortons shares to Wendy's shareholders on track for October 1" below.) Incremental costs related to additional resources as the Company prepares to begin operating as a standalone public company also affected G&A in the quarter. These incremental costs were partly offset by lower shared-services charges from Wendy's.

-- A 33.35 million increase in the weighted average number of shares outstanding in the second quarter of 2006 due to the Company's March initial public offering.

Solid promotional calendar continues to drive sales in Canada,U.S.

Tim Hortons promoted its new caramel-themed baked goods, includingcaramel-chocolate donuts, caramel apple fritters, caramel streuselcakes and caramel turnovers in April. The Company promoted icedcappuccino with "flavour shots" of butter caramel, French vanilla,hazelnut or raspberry during May. These flavour shots can also beadded to other beverages. Through May and June, Tim Hortons introduceda new chunky chicken salad wrap, and in June promotedstrawberry-themed desserts, featuring a strawberry tart.

"Our iced cappuccino is a perennial summer favourite that helpsimprove sales in warm-weather periods.," House said. "In addition, thenew chicken salad wrap is one of the products that can help us buildour lunch business."

The Company also benefited from pricing increases implemented inseveral key markets in Canada and the U.S. in late 2005 and early2006, which accounted for approximately two to three points of thetotal same-store sales percentage increase in both countries.

In the third quarter, Tim Hortons will again promote its flavourediced cappuccino and its toasted chicken club sandwich in both Canadaand the U.S. The Company will also promote its twelve grain bagel inCanada and its chicken salad wrap in the U.S. and plans to introduceits hot breakfast sandwich in Canada in late 2006 or early 2007.

Board approves first quarterly dividend

The Board of Directors approved the Company's first-ever quarterlydividend, payable on August 24, to shareholders of record as of August10. The $0.07 per-share dividend represents one quarter of the annualpayout ratio of approximately 23% of the adjusted trailingfour-quarter net income of $234.6 million. The adjustments to reportedtrailing four-quarter net income of $222.6 million include 1) addingthe after-tax impact of goodwill and asset impairment charges of $33.5million expensed in the fourth quarter of 2005 and 2) subtractingtotal tax benefits recognized in the first two quarters of 2006 of$21.5 million. The Company believes trailing four-quarter net income,adjusted as mentioned, is a more appropriate basis than reportedtrailing four-quarter net income from which to calculate the annualpayout ratio.

"The dividend demonstrates our commitment to enhancing totalreturns for our shareholders," House said.

On the payment date (August 24), the Company will pay the dividendto all registered shareholders with Canadian resident addresses inCanadian dollars. For all other shareholders, the dividend will beconverted to U.S. dollars on August 17 at the daily noon rateestablished by the Bank of Canada and paid in U.S. dollars on August24. Shareholders who own shares indirectly (e.g., through a broker)should contact their respective broker, investment dealer, or otherparticipant for more information. The Company expects that futuredividends will be paid in a similar manner.

Spin-off of Tim Hortons shares to Wendy's shareholders on trackfor October 1

Wendy's International, Inc. (NYSE: WEN) recently announced thatits Board of Directors has confirmed its intent to spin off the 160.0million shares of Tim Hortons that it currently owns. The sharesrepresent an 82.75% ownership stake in Tim Hortons. Wendy's istargeting October 1, 2006, to complete the spin-off, assuming it hasreceived from the IRS a ruling on the tax-free status of thedistribution prior to that date. The record date to determine theshareholders who will be eligible for the distribution of Tim Hortonsshares will be set by the Wendy's Board of Directors.

In preparation for the spin-off, Tim Hortons will continue tobuild the infrastructure necessary to be a standalone public company.The Company has added resources in the Financial Reporting, Treasury,Corporate Governance and Securities Law areas. Tim Hortons expects tohave in place sufficient resources in the areas it has historicallyshared with Wendy's prior to the separation date. Some sharedresources, such as Information Technology, will extend beyond theseparation date.

Tim Hortons to host conference call at 3 p.m. today, July 27

Tim Hortons will host a conference call beginning at 3:00 p.m.(Eastern) today, July 27. Investors and the public may participate inthe conference call in either one of the following ways:

-- Phone Call: The dial-in number is (877) 572-6014 (Canada and U.S.) or (706) 679-4852 (International). No need to register in advance.

-- Simultaneous Web Cast: Available at www.timhortons-invest.com and www.wendys-invest.com. The call will also be archived on those sites.

2Q Same-Store Sales Summary

2Q 2006 2Q 2005 2006 YTD
----------------------------------------------------------------------
Tim Hortons Canada(a) 6.1% 5.6% 7.3%
----------------------------------------------------------------------
Tim Hortons U.S.(a) 8.4% 9.1% 9.1%
----------------------------------------------------------------------

(a) As of July 2, 2006, 99% of the Company's stores in Canada --
and 79% of the stores in the U.S. -- were franchised.


Monthly Same-Store Sales Summary for April(a), May, and June

April April May May June June
2006 2005 2006 2005 2006 2005
----------------------------------------------------------------------
Tim Hortons Canada 5.0% 6.5% 6.4% 6.3% 7.1% 3.7%
----------------------------------------------------------------------
Tim Hortons U.S. 5.6% 11.5% 10.0% 9.0% 10.1% 6.2%
----------------------------------------------------------------------

(a) April sales results were impacted by an Easter shift, as the
holiday was in the first quarter a year ago, but was in the
second quarter this year.

Safe Harbor statement

Certain information in this news release, particularly informationregarding future economic performance and finances, and plans,expectations and objectives of management, is forward-looking. Factorsset forth in the Company's Safe Harbor Statement under the PrivateSecurities Litigation Reform Act of 1995, in addition to otherpossible factors not listed, could affect the Company's actual resultsand cause such results to differ materially from those expressed inforward-looking statements. Please review the Company's Safe HarborStatement at http://www.timhortons.com/safeharbor.html.

Tim Hortons Inc. overview

Tim Hortons Inc. is Canada's largest quick service restaurantchain. Founded in 1964 as a coffee and donut shop, Tim Hortons hasevolved to meet consumer tastes, with a menu that now includes premiumcoffee, flavoured cappuccinos, specialty teas, home-style soups, freshsandwiches and fresh baked goods. As of July 2, 2006, Tim Hortonssystem-wide restaurants numbered 2,625 in Canada and 297 in the UnitedStates. More information about the Company is available atwww.timhortons.com.
TIM HORTONS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of Canadian dollars, except per share data)

(Unaudited)

Second Quarter Ended
7/2/2006 7/3/2005 $ Change % Change
---------- --------- --------- ---------

REVENUES
Sales $263,453 $242,422 $21,031 8.7%
Franchise revenues
Rents and royalties 126,843 115,240 11,603 10.1%
Franchise fees 16,475 10,858 5,617 51.7%
---------- --------- --------- ---------
143,318 126,098 17,220 13.7%
---------- --------- --------- ---------
TOTAL REVENUES 406,771 368,520 38,251 10.4%
---------- --------- --------- ---------

COSTS AND EXPENSES
Cost of sales 229,278 208,939 20,339 9.7%
Operating expenses 43,748 41,081 2,667 6.5%
Franchise fee costs 17,011 12,458 4,553 36.5%
General & administrative
expenses 27,493 25,069 2,424 9.7%
Equity (income) (9,144) (8,193) (951) 11.6%
Other (income) expense, net (123) (1,778) 1,655 (93.1%)
---------- --------- --------- ---------
TOTAL COSTS & EXPENSES, NET 308,263 277,576 30,687 11.1%
---------- --------- --------- ---------

OPERATING INCOME 98,508 90,944 7,564 8.3%

Interest (expense) (6,652) (1,135) (5,517) N/M
Interest income 4,433 657 3,776 N/M
Affiliated interest (expense),
net (1,087) (1,438) 351 (24.4%)
---------- --------- --------- ---------

INCOME BEFORE INCOME TAXES 95,202 89,028 6,174 6.9%

INCOME TAXES 18,892 28,129 (9,237) (32.8%)
---------- --------- --------- ---------

NET INCOME $76,310 $60,899 $15,411 25.3%
========== ========= ========= =========

Basic and fully dilutive
earnings per share of common
stock $0.39 $0.38 $0.01 4.7%
========== ========= ========= =========

Basic and fully dilutive
shares of common stock (in
thousands) 193,303 159,953 33,350 20.8%
========== ========= ========= =========

N/M - not meaningful



TIM HORTONS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of Canadian dollars, except per share data)

(Unaudited)

Year-to-Date Ended
7/2/2006 7/3/2005 $ Change % Change
---------- --------- --------- ---------

REVENUES
Sales $506,104 $451,718 $54,386 12.0%
Franchise revenues
Rents and royalties 242,367 217,296 25,071 11.5%
Franchise fees 31,058 23,095 7,963 34.5%
---------- --------- --------- ---------
273,425 240,391 33,034 13.7%
---------- --------- --------- ---------
TOTAL REVENUES 779,529 692,109 87,420 12.6%
---------- --------- --------- ---------

COSTS AND EXPENSES
Cost of sales 443,190 392,006 51,184 13.1%
Operating expenses 86,743 79,275 7,468 9.4%
Franchise fee costs 30,928 24,494 6,434 26.3%
General & administrative
expenses 55,779 50,532 5,247 10.4%
Equity (income) (17,597) (15,799) (1,798) 11.4%
Other (income) expense, net (1,133) (1,852) 719 (38.8%)
---------- --------- --------- ---------
TOTAL COSTS & EXPENSES, NET 597,910 528,656 69,254 13.1%
---------- --------- --------- ---------

OPERATING INCOME 181,619 163,453 18,166 11.1%

Interest (expense) (10,768) (1,988) (8,780) N/M
Interest income 6,862 1,409 5,453 N/M
Affiliated interest (expense),
net (7,876) (3,192) (4,684) N/M
---------- --------- --------- ---------

INCOME BEFORE INCOME TAXES 169,837 159,682 10,155 6.4%

INCOME TAXES 29,937 51,282 (21,345) (41.6%)
---------- --------- --------- ---------

NET INCOME $139,900 $108,400 $31,500 29.1%
========== ========= ========= =========

Basic and fully dilutive
earnings per share of common
stock $0.79 $0.68 $0.11 17.3%
========== ========= ========= =========

Basic and fully dilutive
shares of common stock (in
thousands) 177,544 159,953 17,591 11.0%
========== ========= ========= =========

N/M - not meaningful


TIM HORTONS INC. AND SUBSIDARIES
CONSOLIDATED BALANCE SHEETS
(In thousands of Canadian dollars)

July 2, January 1,
2006 2006
------------ -----------
(Unaudited)


ASSETS

Current assets
Cash and cash equivalents $134,134 $186,182
Accounts receivable, net 97,514 85,695
Notes receivable, net 12,651 11,545
Deferred income taxes 6,711 4,273
Inventories and other, net 48,979 39,322
Amounts receivable from Wendy's 29,640 -
Advertising fund restricted assets 18,001 17,055
------------ -----------
347,630 344,072
------------ -----------

Property and equipment, net 1,078,940 1,061,646

Notes receivable, net 12,458 15,042

Deferred income taxes 17,017 17,913

Intangible assets, net 3,959 4,221

Equity investments 141,443 141,257

Other assets 11,913 12,712
------------ -----------
$1,613,360 $1,596,863
============ ===========



TIM HORTONS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands of Canadian dollars)

July 2, January 1,
2006 2006
------------ -----------
(Unaudited)



LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
Accounts payable $84,565 $110,086
Accrued expenses:
Salaries and wages 11,815 15,033
Taxes 14,563 62,952
Other 35,136 61,944
Deferred income taxes 175 349
Advertising fund restricted liabilities 30,972 34,571
Amounts payable to Wendy's - 10,585
Notes payable to Wendy's - 1,116,288
Current portion of long-term obligations 8,107 7,985
------------ -----------
185,333 1,419,793
------------ -----------
Long-term obligations
Term debt 322,655 21,254
Advertising fund restricted debt 27,693 22,064
Capital leases 43,968 44,652
------------ -----------
394,316 87,970
------------ -----------

Deferred income taxes 11,958 15,159
Other long-term liabilities 35,695 34,563

Shareholders' equity
Common stock, (US$0.001 par value per
share),
Authorized: 1,000,000,000 shares,
Issued: 193,302,977 and 159,952,977 shares,
respectively 289 239
Capital in excess of stated value 917,678 81,249
Retained earnings 156,330 16,430
Accumulated other comprehensive income
(expense):
Cumulative translation adjustments and other (88,239) (52,911)
------------ -----------
986,058 45,007
Unearned compensation - restricted stock - (5,629)
------------ -----------
986,058 39,378
------------ -----------
$1,613,360 $1,596,863
============ ===========



TIM HORTONS INC. AND SUBSIDIARIES
SYSTEMWIDE RESTAURANTS

Increase/ Increase/
As of As of (Decrease) As of (Decrease)
July 2, April 2, From Prior July 3, From Prior
2006 2006 Quarter 2005 Year
---------------------------------------------------

Tim Hortons
-------------------
U.S.
Company 62 63 (1) 67 (5)
Franchise 235 229 6 197 38
---------------------------------------------------
297 292 5 264 33
Canada
Company 40 35 5 32 8
Franchise 2,585 2,576 9 2,459 126
---------------------------------------------------
2,625 2,611 14 2,491 134

Total Tim Hortons
Company 102 98 4 99 3
Franchise 2,820 2,805 15 2,656 164
---------------------------------------------------
2,922 2,903 19 2,755 167
===================================================



TIM HORTONS INC. AND SUBSIDIARIES
Income Statement Definitions

Sales Primarily includes sales of products, supplies and
restaurant equipment (except for initial
equipment packages sold to franchisees as part of
the establishment of their restaurant's business
- see "Franchise Fees") that are shipped directly
from our warehouses or by third party
distributors to the restaurants, which we refer
to as warehouse or distribution sales. Sales also
include sales from company-operated restaurants
and sales from franchise restaurants that are
consolidated in accordance with FIN 46R.

Rents and Royalties Includes franchisee royalties and rental revenues.

Franchise Fees Includes fees for various costs and expenses
related to establishing a franchisee's business
and include the sales revenue from initial
equipment packages.

Cost of Sales Includes costs associated with our distribution
warehouses, including cost of goods, direct
labour and depreciation as well as the cost of
goods delivered by third party distributors to
the restaurants and for canned coffee sold
through grocery stores. It also includes food,
paper and labour costs for company-operated
restaurants and franchise restaurants that are
consolidated in accordance with FIN 46R.

Operating Expenses Includes rent expense related to properties leased
to franchisees and other property-related costs
(including depreciation).

Franchise fee costs Includes costs of equipment sold to franchisees as
part of the initiation of their restaurant
business, as well as training and other costs
necessary to ensure a successful restaurant
opening.

General and Includes costs that cannot be directly related to
Administrative generating revenue, including expenses associated
with our corporate and administrative functions,
allocation of expenses related to corporate
functions and services historically provided to
us by Wendy's and depreciation of office
equipment, information technology systems and
head office real estate.

Equity Income Includes income from equity investments in 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. Income
amounts are shown as reductions to total costs
and expenses.

Other Income and Includes expenses (income) that are not directly
Expense derived from the Company's primary businesses.
Items include restaurant closures, currency
adjustments, real estate sales and other asset
write-offs.