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<TITLE>S-1</TITLE>
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

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<DIV align="center" style="font-size: 10pt;">
<B>As filed with the Securities and Exchange Commission on
December&nbsp;1, 2005</B>
</DIV>

<DIV align="right" style="font-size: 9pt;">
<B>Registration
No.&nbsp;333-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>
</DIV>

<DIV align="center" style="font-size: 6pt;">
<DIV style="width: 100%; border-top: 2.0pt solid black; font-size: 1pt">&nbsp;</DIV>
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<B>UNITED STATES</B>
</DIV>

<DIV align="center" style="font-size: 14pt;">
<B>SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt;">
<B>Washington,&nbsp;D.C. 20549</B>
</DIV>

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<B>FORM&nbsp;S-1</B>
</DIV>

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<DIV style="width: 27%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 12pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>REGISTRATION STATEMENT UNDER</B>
</DIV>

<DIV align="center" style="font-size: 12pt;">
<B>THE SECURITIES ACT OF 1933</B>
</DIV>

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<DIV style="width: 27%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
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<DIV align="center" style="font-size: 18pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Tim Hortons Inc.</B>
</DIV>

<DIV align="center" style="font-size: 8pt;">
<I>(Exact Name of Registrant as Specified in its Charter)</I>
</DIV>
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    <TD align="center" valign="top">
    <B><FONT face="helvetica,arial">Delaware</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    <B><FONT face="helvetica,arial">5812</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    <B><FONT face="helvetica,arial">51-0370507</FONT></B></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <I><FONT face="helvetica,arial">(State or Other Jurisdiction
    of<BR>
    Incorporation or Organization)</FONT></I></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    <I><FONT face="helvetica,arial">(Primary Standard Industrial<BR>
    Classification Code Number)</FONT></I></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    <I><FONT face="helvetica,arial">(I.R.S. Employer<BR>
    Identification Number)</FONT></I></TD>
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<DIV align="center" style="font-size: 9pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>874 Sinclair Road</B>
</DIV>

<DIV align="center" style="font-size: 9pt;">
<B>Oakville, Ontario L6K 2Y1</B>
</DIV>

<DIV align="center" style="font-size: 9pt;">
<B>Canada (905) 845-6511</B>
</DIV>

<DIV align="center" style="font-size: 8pt;">
<I>(Address, Including Zip Code, and Telephone Number,</I>
</DIV>

<DIV align="center" style="font-size: 8pt;">
<I>Including Area Code, of Registrant&#146;s Principal Executive
Offices)</I>
</DIV>

<DIV align="center" style="font-size: 4pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 27%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 9pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>The Corporation Trust Company</B>
</DIV>

<DIV align="center" style="font-size: 9pt;">
<B>Corporation Trust Center</B>
</DIV>

<DIV align="center" style="font-size: 9pt;">
<B>1209 Orange Street</B>
</DIV>

<DIV align="center" style="font-size: 9pt;">
<B>Wilmington, Delaware 19801 (302) 658-7581</B>
</DIV>

<DIV align="center" style="font-size: 8pt;">
<I>(Name, Address, Including Zip Code, and Telephone Number,</I>
</DIV>

<DIV align="center" style="font-size: 8pt;">
<I>Including Area Code, of Agent For Service)</I>
</DIV>

<DIV align="center" style="font-size: 4pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 27%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 9pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Copies To:</I></B>
</DIV>
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    <TD width="3%">&nbsp;</TD>
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    <TD width="3%">&nbsp;</TD>
    <TD width="31%">&nbsp;</TD>
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<TR>
    <TD align="center" valign="top">
    <B><FONT face="helvetica,arial">Leon M. McCorkle,&nbsp;Jr.<BR>
    Executive Vice President,<BR>
    General Counsel and Secretary<BR>
    Wendy&#146;s International, Inc.<BR>
    P.O. Box&nbsp;256<BR>
    4288&nbsp;West Dublin-Granville Road<BR>
    Dublin, Ohio 43017-0256<BR>
    (614)&nbsp;764-3100</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    <B><FONT face="helvetica,arial">J. Steven Patterson<BR>
    Akin Gump Strauss Hauer&nbsp;&#38; Feld LLP<BR>
    Robert S. Strauss Building<BR>
    1333 New Hampshire Avenue, N.W.<BR>
    Washington,&nbsp;D.C. 20036-1564<BR>
    (202) 887-4000<BR>
    (202) 887-4288</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    <B><FONT face="helvetica,arial">Robert E. Buckholz,&nbsp;Jr.<BR>
    Sullivan&nbsp;&#38; Cromwell LLP<BR>
    125 Broad Street<BR>
    New York, New York 10004-2498<BR>
    (212) 558-4000<BR>
    (212) 558-3588</FONT></B></TD>
</TR>

</TABLE>
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<DIV align="left" style="font-size: 9pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;
<B>Approximate date of commencement of proposed sale to the
public:</B> As soon as practicable after the effective date of
this Registration Statement.
</DIV>

<DIV align="left" style="font-size: 9pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;
If the securities being registered on this form are being
offered on a delayed or continuous basis pursuant to
Rule&nbsp;415 under the Securities Act of 1933, check the
following
box.&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;
</FONT>
</DIV>

<DIV align="left" style="font-size: 9pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;
If this form is filed to register additional securities for an
offering pursuant to Rule&nbsp;462(b) under the Securities Act,
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same
offering.&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;
</FONT>
</DIV>

<DIV align="left" style="font-size: 9pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;
If this form is a post-effective amendment filed pursuant to
Rule&nbsp;462(c) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering.&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;
</FONT>
</DIV>

<DIV align="left" style="font-size: 9pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;
If this form is a post-effective amendment filed pursuant to
Rule&nbsp;462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering.&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;
</FONT>
</DIV>

<DIV align="left" style="font-size: 9pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;
If delivery of the prospectus is expected to be made pursuant to
Rule&nbsp;434 under the Securities Act, please check the
following
box.&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;
</FONT>
</DIV>

<DIV align="center" style="font-size: 4pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 27%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 15pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CALCULATION OF REGISTRATION FEE</B>
</DIV>
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    <TD width="21%">&nbsp;</TD>
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    <TD width="15%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD><!-- Right VRule -->
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<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;border-right:1.5pt solid #000000;">&nbsp;</TD>
</TR>

<TR style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><FONT face="helvetica,arial">Proposed Maximum</FONT></TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><FONT face="helvetica,arial">Amount Of</FONT></TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
</TR>

<TR style="font-size: 10pt;">
    <TD align="center" nowrap><FONT face="helvetica,arial">Title Of Each Class&nbsp;Of Securities To Be Registered</FONT></TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><FONT face="helvetica,arial">Aggregate Offering Price(1)</FONT></TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><FONT face="helvetica,arial">Registration Fee</FONT></TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;border-right:1.5pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Common shares, no stated value per
    share
    </FONT></TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">$600,000,000
    </FONT></TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">$64,200
    </FONT></TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>

</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>

</TR>

</TABLE>
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    <TD width="97%"></TD>
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<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Estimated solely for the purpose of calculating the amount of
    the registration fee pursuant to Rule&nbsp;457(o). The proposed
    maximum aggregate offering price includes amounts attributable
    to shares that the underwriters may purchase to cover
    over-allotments, if any.</TD>
</TR>

</TABLE>

<DIV align="center" style="font-size: 4pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 27%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 9pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;
<B>The registrant hereby amends this registration statement on
such date or dates as may be necessary to delay its effective
date until the registrant shall file a further amendment which
specifically states that this registration statement shall
thereafter become effective in accordance with Section&nbsp;8(a)
of the Securities Act of 1933, or until this registration
statement shall become effective on such date as the Securities
and Exchange Commission, acting pursuant to said
Section&nbsp;8(a), may determine.</B>
</DIV>

<DIV align="center" style="font-size: 3pt; margin-top: 2pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 4pt;">
<DIV style="width: 100%; border-top: 2.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<TABLE width="100%" cellpadding="5" style="border: 3pt double #000000; margin-bottom: 6pt; font-size: 10pt"><TR><TD>
<FONT color="#E8112D">The information in this preliminary
prospectus is not complete and may be changed. These securities
may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This
preliminary prospectus is not an offer to sell nor does it seek
an offer to buy these securities in any jurisdiction where the
offer or sale is not permitted.
</FONT> <BR>
</TD></TR></TABLE>

<DIV align="center" style="font-size: 10pt; margin-top: 1pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<FONT color="#E8112D">Subject to Completion. Dated
December&nbsp;1, 2005.
</FONT>
</DIV>

<DIV align="center" style="font-size: 14pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common
Shares
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<IMG src="y15067y1506700.gif" alt="(TIM HORTONS LOGO)">
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Tim Hortons Inc.</B>
</DIV>

<DIV align="center" style="font-size: 14pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Common Shares
</DIV>

<DIV align="center" style="font-size: 4pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 27%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This is an initial public offering of common shares of Tim
Hortons Inc. All of the common shares are being sold by the
company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Prior to this offering, there has been no public market for the
common shares. It is currently estimated that the initial public
offering price per share will be between
US$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and
US$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
Tim Hortons Inc. intends to apply to list the common shares on
the New York Stock Exchange and the Toronto Stock Exchange under
the symbol &#147;THI.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>See &#147;Risk Factors&#148; on page&nbsp;10 to read about
factors you should consider before buying common shares.</I>
</DIV>

<DIV align="center" style="font-size: 4pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 27%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>Neither the Securities and Exchange Commission nor any other
regulatory body has approved or disapproved of these securities
or passed upon the accuracy or adequacy of this prospectus. Any
representation to the contrary is a criminal offense.</B>
</DIV>

<DIV align="center" style="font-size: 4pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 27%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>
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    <TD width="4%">&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><FONT face="helvetica,arial">Per Share</FONT></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><FONT face="helvetica,arial">Total</FONT></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Initial public offering price
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">US$</FONT></TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">US$</FONT></TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Underwriting discount
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">US$</FONT></TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">US$</FONT></TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Proceeds, before expenses, to Tim
    Hortons Inc.&nbsp;</FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">US$</FONT></TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">US$</FONT></TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
To the extent the underwriters sell more
than &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common
shares, the underwriters have the option to purchase up to an
additional &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common
shares from Tim Hortons Inc. at the initial public offering
price less the underwriting discount.
</DIV>

<DIV align="center" style="font-size: 4pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 27%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The underwriters expect to deliver the shares against payment in
New York, New York
on &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2006.
</DIV>

<DIV style="margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 16pt;">

<TR>
    <TD width="50%"></TD>
    <TD width="50%"></TD>
</TR>

<TR valign="top">
    <TD align="left"><B>Goldman, Sachs&nbsp;&#38; Co.</B></TD>
    <TD align="right"><B>RBC Capital Markets</B></TD>
</TR>

</TABLE>

<DIV align="center" style="font-size: 4pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 27%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Prospectus
dated &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2006.
</DIV>

</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 21pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>[inside cover art]</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

</DIV>

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 9pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Tim Hortons Inc., a wholly-owned subsidiary of Wendy&#146;s
International, Inc., owns and operates the quick service
restaurant chain known as &#147;Tim Hortons.&#148; Unless the
context otherwise requires, any references in this prospectus to
&#147;we,&#148; &#147;our,&#148; &#147;us&#148; and the
&#147;Company&#148; refer to Tim Hortons Inc. and its
consolidated subsidiaries as in effect on the closing date of
this offering, but not to any of the franchisees that operate
Tim Hortons restaurants. Any references in this prospectus to
&#147;Wendy&#146;s&#148; refer to Wendy&#146;s International,
Inc. and its consolidated subsidiaries, other than us. <B>Unless
otherwise specified, references to &#147;dollars&#148; or
&#147;$&#148; in this prospectus are to
Canadian&nbsp;dollars.</B></I>
</DIV>

<DIV align="left" style="font-size: 9pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>We believe systemwide sales, which consists of aggregate
sales by all franchised and company-operated restaurants, and
average same-store sales provide meaningful information to
investors concerning the size of our system, the overall health
of the system and the strength of our brand. Information about
systemwide and average same-store sales is included in this
prospectus. Franchisee operations generally are not included in
our financial statements; however, franchisee sales result in
royalties and rental income that are included in our franchise
revenues.</I>
</DIV>

<DIV align="center" style="font-size: 9pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>EXCHANGE RATE DATA</B>
</DIV>

<DIV align="left" style="font-size: 9pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>We report our results in Canadian dollars. The following
table sets forth, for the periods indicated, the high, low,
average and period-end noon buying rates in New York for cable
transfers payable in foreign currencies, as certified for
customs purposes by the Federal Reserve Bank of New York, in
Canadian dollars per U.S.&nbsp;dollar. No representation is made
that the U.S.&nbsp;dollar amounts have been, could have been or
could be converted into Canadian dollars at the noon buying rate
on such dates or any other dates.</I>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9pt; margin-top: 3pt; ">

<TR style="font-size: 1pt;">
    <TD width="55%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B><FONT face="helvetica,arial">Noon Buying Rate</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><I><FONT face="helvetica,arial">Year Ended December&nbsp;31</FONT></I></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Period End</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Average<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">High</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Low</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I><FONT face="helvetica,arial">2000</FONT></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><I><FONT face="helvetica,arial">$</FONT></I></TD>
    <TD align="right" valign="bottom" nowrap><I><FONT face="helvetica,arial">1.4995</FONT></I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><I><FONT face="helvetica,arial">$</FONT></I></TD>
    <TD align="right" valign="bottom" nowrap><I><FONT face="helvetica,arial">1.4855</FONT></I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><I><FONT face="helvetica,arial">$</FONT></I></TD>
    <TD align="right" valign="bottom" nowrap><I><FONT face="helvetica,arial">1.5600</FONT></I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><I><FONT face="helvetica,arial">$</FONT></I></TD>
    <TD align="right" valign="bottom" nowrap><I><FONT face="helvetica,arial">1.4350</FONT></I></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I><FONT face="helvetica,arial">2001</FONT></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I><FONT face="helvetica,arial">1.5925</FONT></I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I><FONT face="helvetica,arial">1.5488</FONT></I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I><FONT face="helvetica,arial">1.6023</FONT></I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I><FONT face="helvetica,arial">1.4933</FONT></I></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I><FONT face="helvetica,arial">2002</FONT></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I><FONT face="helvetica,arial">1.5800</FONT></I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I><FONT face="helvetica,arial">1.5704</FONT></I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I><FONT face="helvetica,arial">1.6128</FONT></I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I><FONT face="helvetica,arial">1.5108</FONT></I></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I><FONT face="helvetica,arial">2003</FONT></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I><FONT face="helvetica,arial">1.2923</FONT></I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I><FONT face="helvetica,arial">1.4008</FONT></I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I><FONT face="helvetica,arial">1.5750</FONT></I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I><FONT face="helvetica,arial">1.2923</FONT></I></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I><FONT face="helvetica,arial">2004</FONT></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I><FONT face="helvetica,arial">1.2034</FONT></I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I><FONT face="helvetica,arial">1.3017</FONT></I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I><FONT face="helvetica,arial">1.3970</FONT></I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I><FONT face="helvetica,arial">1.1775</FONT></I></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I><FONT face="helvetica,arial">2005</FONT></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 3pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 9pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><I>(1)&nbsp;</I></TD>
    <TD align="left">
    <I>Determined by averaging the rates on the last business day of
    each month during the respective period.</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 9pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>On November&nbsp;30, 2005, the noon buying rate in New York
for cable transfers payable in foreign currencies, as certified
for customs purposes by the Federal Reserve Bank of New York,
was Cdn$1.1670&nbsp;= US$1.00.</I>
</DIV>

<P align="center" style="font-size: 10pt;">i

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt;">
<A name='101'></A>
</DIV>

<!-- link1 "PROSPECTUS SUMMARY" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>PROSPECTUS SUMMARY</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>This summary highlights information contained in this
prospectus. Because it is a summary, it does not contain all of
the information you should consider before investing in our
common shares. You should carefully read the entire prospectus.
In particular, you should read the section entitled &#147;Risk
Factors&#148; and our historical consolidated financial
statements and the notes thereto included elsewhere in this
prospectus.</I>
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='102'></A>
</DIV>

<!-- link1 "Our Company" -->

<DIV align="center" style="font-size: 10pt; margin-top: 21pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Our Company</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We are the largest quick service restaurant (QSR)&nbsp;chain in
Canada based on systemwide sales and number of restaurants open.
According to the Canadian Restaurant and Foodservices
Association (CRFA)&nbsp;and Statistics Canada, in 2004 our
system represented 22.6% of the $14.0&nbsp;billion QSR segment
of the Canadian foodservice industry based on sales dollars,
almost 25.0% larger than our nearest competitor.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Since our founding in 1964, we have been committed to a close
relationship with our franchisees, which has helped build Tim
Hortons&#174; into one of the most widely recognized consumer
brands in Canada. We believe we have achieved outstanding
customer loyalty by offering superior food quality, variety and
consistency in a convenient and friendly environment. According
to a tracking study we conducted in 2003, approximately 46.0% of
our Canadian customers visit our restaurants four or more times
per week. Our menu spans a broad range of categories that appeal
to customers throughout the day, such as premium blend coffee,
flavoured cappuccinos, specialty and steeped teas, home-style
soups, fresh sandwiches and freshly baked goods including
donuts, bagels, muffins, cookies, croissants and pastries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Since the end of 1995, our systemwide sales and revenues have
grown at compound annual growth rates (CAGRs) of 18.5% and
17.1%, respectively. This growth has been a result of expanding
the number of system restaurants by a 9.6% CAGR and increasing
average annual same-store sales by 7.0% and 10.0% in Canada and
the U.S., respectively. We have produced average same-store
sales increases for 13 and 14 consecutive years in Canada and
the U.S., respectively, with average annual same-store sales
increases of 7.1% and 7.7%, respectively, over those periods.
Since the end of 1995, we have increased our total operating
income at a 20.5% CAGR.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of October&nbsp;2, 2005, we had a system of 2,801 restaurants
in Canada and the U.S.&nbsp;Our 2,529 restaurants across Canada
include 660 smaller restaurants in non-standard locations such
as gas station convenience stores, universities, hospitals and
office buildings. In the U.S., we have a regional presence
primarily in the Northeast and Midwest with 272 restaurants in
10&nbsp;states, concentrated in three major markets. As of
October&nbsp;2, 2005, franchisees operated 2,498, or 98.8%, of
the restaurants in Canada and 207, or 76.1%, of the restaurants
in the U.S.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have a diversified base of revenue and operating income
generated from franchisee royalties and fees, rental income,
warehouse sales and company-operated stores. In fiscal 2004, we
had total revenues of $1.3&nbsp;billion, operating income of
$319.3&nbsp;million, and net income of $205.1&nbsp;million. In
the nine months ended October&nbsp;2, 2005, we had total
revenues of $1.1&nbsp;billion, operating income of
$259.3&nbsp;million and net income of $174.7&nbsp;million.
Average same-store sales increases for fiscal 2004 were 7.4% in
Canada and 9.8% in the U.S., and in the nine months ended
October&nbsp;2, 2005, were 5.0% in Canada and 7.0% in the U.S.
</DIV>

<DIV align="left" style="font-size: 10pt;">
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<B>Our Competitive Strengths</B>
</DIV>

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<B>Iconic brand status in Canada.</B> Tim Hortons was recognized
as the best managed brand in Canada, according to annual surveys
published by <I>Canadian Business</I> magazine in 2004 and 2005.
In addition, in an internal 2005 national study, when consumers
were asked which fast service chain,
</DIV>
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convenience store or gas station they stop at to have a coffee,
snack or meal most often, Tim Hortons was named 37% of the time,
nearly three times higher than the nearest competitor. We
believe our brand strength is a result of our ongoing systemwide
commitment to operational excellence, product quality,
continuous innovation, superior customer service, exceptional
value, community involvement and successful relationships with
our franchisees. We were also named one of Canada&#146;s most
admired corporate cultures in 2005 by <I>Canadian Business</I>
magazine.
</DIV>

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<B>Leading market positions in Canada.</B> According to the 2005
NPD foodservice industry report, our system represented 74.0% of
the coffee and baked goods sector of the Canadian QSR segment,
based on the number of customers served over the 12&nbsp;months
ended August&nbsp;31, 2005. In addition, we have the leading
market position in the Canadian QSR segment, based on systemwide
sales, and a very strong presence in every province. We believe
our presence in key markets and our ability to leverage our
scale in advertising will help us maintain and extend our market
leadership position.
</DIV>

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<B>Systemwide focus on operational excellence.</B> We are an
operations-driven organization. We invest substantial resources
in developing programs, processes, technology and field support
for our system of franchised and company-operated restaurants.
We focus on continuous improvement in operations so we can
consistently serve high-quality food while providing exceptional
customer courtesy, order accuracy and speed of service, thereby
enhancing our customers&#146; overall experience.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>Energized and committed franchisee base.</B> Our over 1,000
franchisees in North America are critical to our success,
delivering exceptional hands-on customer service every day. Our
franchisees are strongly committed to our system growth, having
collectively invested over $75.0&nbsp;million of their capital
in infrastructure support during 2002 and 2003 for our
proprietary &#147;Always Fresh&#148; baking system. The average
Tim Hortons franchisee in Canada has been part of our system for
almost nine years and owns three restaurants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>Integrated and scalable business model.</B> We have invested
substantial resources and capital in developing an integrated
and scalable business model. Our vertically integrated
manufacturing and distribution platforms enable us to realize
economies of scale and offer customers innovative products. Our
Always Fresh system enables us to bake and serve fresh and
consistent products throughout the day, as well as to open
restaurants in a variety of formats, sizes and locations. We
control the site selection, design and construction of our
restaurants, which enables us to increase penetration in
existing and new markets by improving customer convenience. We
control the real estate for approximately 80.0% of our system
restaurants, which generates a recurring stream of rental income.
</DIV>

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<B>Proven, experienced management team with track record of
exceptional growth.</B> Our executive management team has an
average tenure with us of more than 12&nbsp;years. Together with
our dedicated team of employees, they have significantly
contributed to our strong financial performance. Between 1995
and 2004, we increased our average sales per standard Canadian
restaurant from $878,000 to $1.7&nbsp;million. Our financial
performance is a result of our focus on restaurant operations,
coordination among employees and franchisees and the performance
of our vertically integrated manufacturing and distribution
platforms.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='104'></A>
</DIV>

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<B>Our Business Strategy</B>
</DIV>

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<B>Drive sales growth at existing restaurants through continued
innovation.</B> Our consistent systemwide sales growth reflects
our strong and increasing brand awareness, emphasis on customer
service and continuous product and process innovation. We strive
to meet our customers&#146; needs throughout the day and expect
to continue to improve restaurant efficiency levels and invest
in technology to improve customer service.
</DIV>
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>Sustain the health and viability of our franchisee base.</B>
We have developed a large, highly committed and diversified
franchisee base, which is a critical component of our systemwide
success. We will continue to strengthen and grow our franchise
system by extending the Tim Hortons brand and continuing to
offer superior product development, operations oversight and
franchisee support.
</DIV>

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<B>Increase penetration of the Canadian market.</B> We will
continue to leverage our brand strength to further penetrate the
Canadian market using our franchise business model. Although we
have the leading market position in the Canadian QSR segment,
based on systemwide sales, and a very strong presence in every
province, there are numerous growth opportunities in the Western
provinces, Quebec and select high-traffic metropolitan areas.
Our &#147;we fit anywhere&#148; strategy of non-standard formats
gives us the flexibility to add restaurants in high-traffic
consumer locations without over-saturating any individual
market. Our long-term goal is to have between 3,500 and 4,000
system restaurants open in Canada.
</DIV>

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<B>Pursue long-term profitable expansion in the United
States.</B> We have become a strong regional player in the U.S.,
with restaurants in 10&nbsp;states, primarily in the Northeast
and Midwest regions. Tim Hortons restaurants in the
U.S.&nbsp;experienced an average annual same-store sales growth
of 9.8% from 1999 through 2004, even as we expanded our
U.S.&nbsp;system during that period from 108 to
251&nbsp;restaurants. We will continue our efforts to profitably
expand our system&#146;s U.S.&nbsp;presence by further
penetrating existing markets, entering adjacent markets and
selectively pursuing other strategic initiatives. Our goal is to
have 500 system restaurants open in the U.S.&nbsp;by the end of
2008.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='105'></A>
</DIV>

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<DIV align="center" style="font-size: 10pt; margin-top: 21pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Our Relationship with Wendy&#146;s&#174;</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We are currently a wholly-owned subsidiary of Wendy&#146;s. Upon
completion of this offering, Wendy&#146;s will own
approximately &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of our outstanding
common shares, or approximately &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
if the underwriters exercise their over-allotment option in
full. Wendy&#146;s will have the ability to direct the election
of members of our board of directors and to determine the
outcome of other matters submitted to a vote of our shareholders.
</DIV>

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Wendy&#146;s has advised us that its current intent is to
continue to hold all of our common shares owned by it following
this offering. However, Wendy&#146;s is not subject to any
contractual obligation to maintain its share ownership, except
that Wendy&#146;s has agreed not to sell or otherwise dispose of
any of our common shares for a period of 180&nbsp;days after the
date of this prospectus without the prior written consent of the
representatives of the underwriters. Wendy&#146;s may, however,
without consent of the representatives of the underwriters and
subject to the determination of its board of directors,
determine to spin-off to its shareholders all of our common
shares that it owns.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Immediately prior to the closing of this offering, we will enter
into agreements with Wendy&#146;s related to the separation of
our business operations from Wendy&#146;s. These agreements will
govern various interim and ongoing relationships between
Wendy&#146;s and us. For more information regarding these
agreements, see &#147;Our Relationship With Wendy&#146;s&#148;
and our historical consolidated financial statements and the
notes thereto included elsewhere in this prospectus.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Wendy&#146;s is one of the world&#146;s largest restaurant
operating and franchising companies with over 9,800 total
restaurants and quality brands, including Wendy&#146;s, Tim
Hortons, Baja Fresh&#174; Mexican Grill and investments in Cafe
Express and Pasta Pomodoro&#174;.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='106'></A>
</DIV>

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<B>Company Information</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of the date of the initial filing of the registration
statement, of which this prospectus is a part, Tim Hortons Inc.
is a Delaware corporation. Before the completion of this
offering, we intend to merge into a newly-formed Ohio
corporation named Tim Hortons Inc. We are, and from that merger
</DIV>
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until the completion of this offering, will be, a wholly-owned
subsidiary of Wendy&#146;s. Although the merger has not been
completed as of the date of this initial filing of the
registration statement of which this prospectus is a part, we
have made certain disclosures in this prospectus as if the
merger had been completed and we were an Ohio corporation. Our
principal executive offices are located at 874 Sinclair Road,
Oakville, Ontario, Canada L6K&nbsp;2Y1. Our telephone number is
(905)&nbsp;845-6511. Our website address is www.timhortons.com.
Information contained on our website is not incorporated by
reference into this prospectus, and you should not consider
information on our website as part of this prospectus.
</DIV>
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<DIV align="left" style="font-size: 10pt;">
<A name='107'></A>
</DIV>

<!-- link1 "The Offering" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>The Offering</B>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt;">

<TR>
    <TD width="28%"></TD>
    <TD width="1%"></TD>
    <TD width="71%"></TD>
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    <TD valign="top">
    Common shares offered by us</TD>
    <TD></TD>
    <TD valign="top">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    Underwriters&#146; option to purchase additional common shares</TD>
    <TD></TD>
    <TD valign="top">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    Common shares to be held by Wendy&#146;s immediately after this
    offering</TD>
    <TD></TD>
    <TD valign="top">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    Common shares outstanding immediately after this offering</TD>
    <TD></TD>
    <TD valign="top">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    Use of proceeds</TD>
    <TD></TD>
    <TD valign="top">
    We estimate that the net proceeds from this offering of common
    shares, after deducting estimated underwriting discounts and
    commissions and estimated offering expenses, will be
    approximately
    $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million
    ($&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million
    if the underwriters exercise their over-allotment option in
    full). We will use those net proceeds, together with proceeds
    from a term loan agreement that we will enter into prior to the
    closing of this offering, to repay debt owed to Wendy&#146;s.
    See &#147;Use of Proceeds&#148; and &#147;Management&#146;s
    Discussion and Analysis of Financial Condition and Results of
    Operations&#151; Liquidity and Capital Resources&#151; Loan
    Agreements.&#148;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    Dividend policy</TD>
    <TD></TD>
    <TD valign="top">
    We intend to declare and pay dividends in Canadian dollars on
    our common shares; however, the declaration and payment of
    future dividends is discretionary, and the amount, if any, will
    be dependent upon our results of operations, financial
    condition, contractual restrictions and other factors deemed
    relevant by our board of directors. See &#147;Dividend
    Policy.&#148;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    NYSE and TSX listings</TD>
    <TD></TD>
    <TD valign="top">
    We intend to apply to list our common shares on the New York
    Stock Exchange (NYSE)&nbsp;and the Toronto Stock Exchange
    (TSX)&nbsp;under the symbol &#147;THI.&#148;</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Unless we specifically state otherwise, all information in this
prospectus regarding our common shares:
</DIV>

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    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    gives effect to the transactions described under &#147;Our
    Relationship With Wendy&#146;s&#148;;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    gives effect to
    a &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;for &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;stock
    split that we intend to effect immediately prior to the closing
    of this offering;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    assumes no exercise by the underwriters of their over-allotment
    option to
    purchase &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;additional
    common shares;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    excludes common shares reserved for issuance under equity
    incentive plans.</TD>
</TR>

</TABLE>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Risk Factors</B>
</DIV>

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Investing in our common shares involves substantial risk. You
should carefully consider all of the information set forth in
this prospectus and, in particular, you should evaluate the
specific factors set forth under &#147;Risk Factors&#148; in
deciding whether to invest in our common shares.
</DIV>
</DIV>

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</DIV>

<!-- link1 "SUMMARY HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA" -->

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<B>SUMMARY HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table presents our summary historical consolidated
financial and other data and should be read in conjunction with
information contained in &#147;Management&#146;s Discussion and
Analysis of Financial Condition and Results of Operations,&#148;
&#147;Selected Historical Consolidated Financial and Other
Data,&#148; &#147;Unaudited Pro Forma Consolidated Financial
Information&#148; and our historical consolidated financial
statements and notes thereto included elsewhere in this
prospectus. Our historical consolidated financial information
may not be indicative of our future performance and does not
necessarily reflect what our financial position and results of
operations would have been had we operated as a separate,
stand-alone entity during the periods covered.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our summary historical consolidated financial data as of
December&nbsp;28, 2003 and January&nbsp;2, 2005 and for fiscal
years 2002 (year ended December&nbsp;29, 2002), 2003 (year ended
December&nbsp;28, 2003) and 2004 (year ended January&nbsp;2,
2005) have been derived from our audited historical consolidated
financial statements included elsewhere in this prospectus.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our summary historical consolidated financial data as of
October&nbsp;2, 2005 and for the nine months ended
September&nbsp;26, 2004 and October&nbsp;2, 2005 have been
derived from our unaudited condensed consolidated financial
statements included elsewhere in this prospectus and include all
adjustments (consisting only of normal recurring adjustments)
necessary for a fair statement of our financial position and
results of operations as of the dates and for the periods
indicated. Results for the nine months ended October&nbsp;2,
2005 are not necessarily indicative of the results that may be
expected for the entire year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The summary unaudited pro forma consolidated financial
information as of October&nbsp;2, 2005 and for the fiscal year
2004 and the nine months ended October&nbsp;2, 2005 were derived
from our &#147;Unaudited Pro Forma Consolidated Financial
Information&#148; included elsewhere in this prospectus, and
gives effect, in the manner described under &#147;Unaudited Pro
Forma Consolidated Financial Information,&#148; to (i)&nbsp;the
non-cash settlement of intercompany notes and trade balances
between us and Wendy&#146;s, (ii)&nbsp;the entering into of a
new term loan agreement; (iii)&nbsp;the completion of this
offering, and (iv)&nbsp;the application of the proceeds of the
new term loan and the offering to repay indebtedness owed to
Wendy&#146;s as described under &#147;Use of Proceeds,&#148; all
of which are collectively referred to as the
&#147;Adjustments.&#148; Our unaudited pro forma balance sheet
as of October&nbsp;2, 2005 gives pro forma effect to the
Adjustments as if they had occurred on such date. Our unaudited
pro forma statements of operations for fiscal year 2004 and the
nine months ended October&nbsp;2, 2005 give pro forma effect to
the Adjustments as if they had occurred on December&nbsp;29,
2003 as described under &#147;Unaudited Pro Forma Consolidated
Financial Information.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>The unaudited pro forma financial data as of October&nbsp;2,
2005 and for fiscal year 2004 and for the nine months ended
October&nbsp;2, 2005 is presented for informational purposes
only, and does not purport to represent what our results of
operations would actually have been if the transactions had
occurred on the dates indicated, nor does it purport to project
our results of operations or financial condition that we may
achieve in the future.</B>
</DIV>
</DIV>

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<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="22%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B><FONT face="helvetica,arial">Fiscal Years<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">Nine Months Ended</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Pro Forma</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Pro Forma</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">September&nbsp;26,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">October&nbsp;2,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">October&nbsp;2,</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="26" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands, except number of shares)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Consolidated Statements of
    Operations Data</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Sales
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">656,833</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">727,508</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">845,231</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">602,978</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">703,484</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Franchise
    revenues<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">402,738</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">444,272</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">493,035</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">350,081</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">374,684</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,059,571</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,171,780</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,338,266</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">953,059</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,078,168</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total costs and expenses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">826,258</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">892,883</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,018,961</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">720,821</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">818,847</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Operating income (EBIT)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">233,313</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">278,897</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">319,305</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">232,238</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">259,321</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Interest expense, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,554</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,924</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,109</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,365</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">983</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Affiliated interest expense, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">17,786</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11,110</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,410</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,536</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,910</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income before income taxes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">212,973</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">262,863</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">305,786</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">221,337</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">253,428</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income taxes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">80,161</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">106,601</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100,735</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">70,505</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">78,767</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">132,812</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">156,262</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">205,051</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">150,832</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">174,661</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Basic earnings per common share
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">190</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">223</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">293</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">215</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">250</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Average common shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">700</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">700</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">700</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">700</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">700</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Consolidated Balance Sheets
    Data&nbsp;&#151; at end of period indicated</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">86,151</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">129,301</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">119,248</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    assets<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,547,023</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,756,869</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,716,296</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Long-term
    debt<SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">367,674</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">246,841</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">188,024</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    liabilities<SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">704,245</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">735,180</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,656,152</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total shareholder&#146;s equity
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">842,778</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,021,689</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">60,144</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="39%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">Fiscal Years<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Nine Months Ended</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">September&nbsp;26,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">October&nbsp;2,</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands, except number of restaurants</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B><FONT face="helvetica,arial">and where noted)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Other Financial Data</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">EBITDA<SUP style="font-size: 85%; vertical-align: text-top">(5)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">282,422</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">337,698</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">388,313</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">280,098</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">312,922</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Capital expenditures
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">111,788</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">131,865</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">197,810</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">126,343</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">131,866</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Other Operating Data</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total systemwide sales
    growth<SUP style="font-size: 85%; vertical-align: text-top">(6)(7)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Systemwide restaurant unit
    growth<SUP style="font-size: 85%; vertical-align: text-top">(6)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Canada average same-store sales
    growth<SUP style="font-size: 85%; vertical-align: text-top">(6)
    (8)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">U.S.&nbsp;average same-store sales
    growth<SUP style="font-size: 85%; vertical-align: text-top">(6)
    (8)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Restaurants open at end of
    period&nbsp;&#151; Canada
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Company-operated
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">31</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">32</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">31</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">28</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">31</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Franchise
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,157</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,311</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,439</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,371</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,498</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Restaurants open at end of
    period&nbsp;&#151; U.S.
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Company-operated
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">40</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">67</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">66</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">65</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Franchise
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">120</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">159</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">184</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">167</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">207</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,348</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,527</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,721</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,632</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,801</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Average sales per standard
    restaurant:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Canada (<I>in thousands of Canadian
    dollars</I>)
    <SUP style="font-size: 85%; vertical-align: text-top">(6)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,555</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,625</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,730</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">U.S.&nbsp;(<I>in thousands of U.S.
    dollars</I>)<SUP style="font-size: 85%; vertical-align: text-top">(6)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">874</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">894</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">897</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>
</DIV>

<P align="center" style="font-size: 10pt;">7

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Fiscal 2004 consisted of 53&nbsp;weeks. Fiscal 2003 and 2002
    each consisted of 52&nbsp;weeks.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    Franchise revenues consist of (a)&nbsp;royalties, which
    typically range from 3.0% to 4.5% of gross franchise restaurant
    sales, (b)&nbsp;rents, which typically range from 8.5% to 10.0%
    of gross franchise restaurant sales, and (c)&nbsp;fees, which
    are typically charged at the inception of the franchise
    relationship. Franchise restaurant sales are reported to us by
    our franchisees. Franchise restaurant sales are not included in
    our financial statements, other than approximately
    80&nbsp;franchisees whose results of operations are consolidated
    with ours pursuant to FIN&nbsp;46R, as described in
    &#147;Management&#146;s Discussion and Analysis of Financial
    Condition and Results of Operations&#151; Results of
    Operations&#151; Financial Definitions&#151; Sales.&#148;
    However, franchise restaurant sales result in royalties and
    rental income, which are included in our franchise revenues. The
    reported franchise restaurant sales were:</TD>
</TR>

</TABLE>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">Fiscal Years<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Franchise restaurant sales:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Canada (<I>in thousands of Canadian
    dollars</I>)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,412,625</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,713,248</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,137,898</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">U.S.&nbsp;(<I>in thousands of
    U.S.&nbsp;dollars</I>)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">93,603</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">123,272</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">163,712</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    Total assets include notes and accounts receivable from
    Wendy&#146;s, which will be distributed by us to Wendy&#146;s in
    the fourth quarter of 2005. Notes and amounts receivable from
    Wendy&#146;s were:</TD>
</TR>

</TABLE>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="94%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="65%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">At End of Fiscal</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Year Indicated</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">As of</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">October 2,</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Notes receivable from Wendy&#146;s
    included in current assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">59,210</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">173,747</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">189,111</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Notes receivable from Wendy&#146;s
    included in long-term assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">128,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">128,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accounts receivable from
    Wendy&#146;s included in current assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">138,580</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">52,192</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">34,069</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>(4)&nbsp;</TD>
    <TD align="left">
    Long-term debt includes long-term debt, capital leases and notes
    payable to Wendy&#146;s. Notes payable to Wendy&#146;s are also
    included in current liabilities. As of October&nbsp;2, 2005, we
    had outstanding a note payable to Wendy&#146;s in the principal
    amount of US$960.0&nbsp;million. Other than that note, notes
    payable to Wendy&#146;s will be contributed as equity to us in
    the fourth quarter of 2005. Notes payable to Wendy&#146;s
    totalled the following amounts:</TD>
</TR>

</TABLE>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="94%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="65%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">At End of Fiscal</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Year Indicated</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">As of</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">October 2,</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands)</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Notes payable to Wendy&#146;s
    included in current liabilities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">84,167</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">185,725</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,186,293</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Notes payable to Wendy&#146;s
    included in long-term debt
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">304,488</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">181,090</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100,283</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>(5)&nbsp;</TD>
    <TD align="left">
    EBITDA is defined as net income before interest, taxes,
    depreciation and amortization and is used by management as a
    performance measure for benchmarking against our peers and our
    competitors. We believe EBITDA is useful to investors because it
    is frequently used by securities analysts, investors and other
    interested parties to evaluate companies in our industry. EBITDA
    is not a recognized term under GAAP, should not be viewed in
    isolation and does not purport to be an alternative to net
    income as an indicator of operating performance or cash flows
    from operating activities as a measure of liquidity. There are
    material limitations associated with making the adjustments to
    calculate EBITDA and using this non-GAAP financial measure as</TD>
</TR>

</TABLE>
</DIV>

<P align="center" style="font-size: 10pt;">8

</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<FONT face="helvetica,arial">

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD align="left">
    compared to the most directly comparable GAAP financial measure.
    For instance, EBITDA does not include:</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    interest expense, and because we have borrowed money to finance
    our operations, interest expense is a necessary element of our
    costs and ability to generate revenue;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    depreciation and amortization expense, and because we use
    capital assets, depreciation and amortization expense is a
    necessary element of our costs and ability to generate
    revenue;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    tax expense, and because the payment of taxes is part of our
    operations, tax expense is a necessary element of our costs and
    ability to operate.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD align="left">
    Additionally, EBITDA is not intended to be a measure of free
    cash flow for management&#146;s discretionary use, as it does
    not consider certain cash requirements such as capital
    expenditures, contractual commitments, interest payments, tax
    payments and debt service requirements. Because not all
    companies use identical calculations, this presentation of
    EBITDA may not be comparable to other similarly titled measures
    of other companies.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table is a reconciliation of our net income to
EBITDA:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="34%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">Fiscal Years<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Nine Months Ended</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">September&nbsp;26,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">October&nbsp;2,</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">132,812</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">156,262</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">205,051</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">150,832</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">174,661</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Interest expense, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">20,340</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16,034</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13,519</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,901</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,893</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income tax expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">80,161</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">106,601</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100,735</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">70,505</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">78,767</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Operating income (EBIT)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">233,313</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">278,897</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">319,305</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">232,238</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">259,321</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">49,109</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">58,801</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">69,008</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">47,860</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">53,601</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">EBITDA
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">282,422</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">337,698</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">388,313</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">280,098</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">312,922</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>(6)&nbsp;</TD>
    <TD align="left">
    Includes both franchised and company-operated restaurants.
    Franchise restaurant sales are not included in our financial
    statements, other than approximately 80 franchisees whose
    results of operations are consolidated with ours pursuant to
    FIN&nbsp;46R. However, franchise restaurant sales result in
    royalties and rental income, which are included in our franchise
    revenues.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(7)&nbsp;</TD>
    <TD align="left">
    Total systemwide sales growth is determined using a constant
    exchange rate to exclude the effects of foreign currency
    translation. U.S. dollar sales are converted to Canadian dollar
    amounts using the average exchange rate of the base year for the
    period covered.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(8)&nbsp;</TD>
    <TD align="left">
    For Canadian restaurants, average same-store sales are based on
    restaurants that have been open for a minimum of one calendar
    year. For U.S.&nbsp;restaurants, a restaurant is included in our
    average same-store sales calculation beginning in the
    13th&nbsp;month after the restaurant&#146;s opening.</TD>
</TR>

</TABLE>
</DIV>

<P align="center" style="font-size: 10pt;">9

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt;">
<A name='109'></A>
</DIV>

<!-- link1 "RISK FACTORS" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>RISK FACTORS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Investing in our common shares involves a high degree of
risk. You should consider carefully the following factors and
the other information in this prospectus before deciding to
purchase any of our common shares. If any of the following risks
actually occurs, our business, financial condition, results of
operation and cash flow could suffer materially and adversely.
In that case, the trading price of our common shares could
decline, and you might lose all or part of your investment.</I>
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='110'></A>
</DIV>

<!-- link1 "Risks Relating to Our Business and Industry" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Risks Relating to Our Business and Industry</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>The QSR segment is highly competitive, and that
competition could adversely affect our operating results.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The QSR segment of the foodservice industry is intensely
competitive regarding price, service, location, personnel and
type and quality of food. Tim Hortons restaurants compete with
international, regional and local organizations primarily
through the quality, variety and value perception of food
products offered. Other key competitive factors include the
number and location of restaurants, quality and speed of
service, attractiveness of facilities, effectiveness of
advertising and marketing programs, and new product development
by us and our competitors. We anticipate intense competition
will continue to focus on pricing. Some of our competitors have
substantially larger marketing budgets, which may provide them
with a competitive advantage. In addition, our system competes
within the food service market and the QSR segment not only for
customers but also for management and hourly employees, suitable
real estate sites and qualified franchisees. If we are unable to
maintain our competitive position, we could experience downward
pressure on prices, lower demand for our products, reduced
margins, the inability to take advantage of new business
opportunities and the loss of market share.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>We are subject to changes in economic, market and other
conditions.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The QSR segment is affected by:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    changes in international, national, regional and local economic
    conditions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    consumer preferences and spending patterns;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    demographic trends;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the impact of inclement weather, natural disasters and other
    calamities;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    traffic patterns;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the type, number and location of competing restaurants;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the effects of war or terrorist activities and any governmental
    responses thereto.</TD>
</TR>

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Factors such as inflation, food costs, labour and benefit costs,
legal claims and the availability of management and hourly
employees also affect restaurant operations and administrative
expenses. Our system&#146;s ability to finance new restaurant
development and improvements and additions to existing
restaurants, and our acquisition of restaurants from, or sale of
restaurants to, franchisees, are affected by economic
conditions, including interest rates and other government
policies impacting land and construction costs and the cost and
availability of borrowed funds.
</DIV>

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<B><I>Events reported in the media, such as incidents involving
food-borne illnesses or food tampering, whether or not accurate,
can cause damage to our brand and swiftly affect our sales and
profitability.</I></B>
</DIV>

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Reports, whether true or not, of food-borne illnesses (such as
e-coli, avian flu, bovine spongiform encephalopathy, hepatitis
A, trichinosis or salmonella) and injuries caused by food
tampering have in the past severely injured the reputations of
participants in the QSR segment and
</DIV>

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could in the future affect us as well. Anything that damages our
reputation or brand could immediately and severely hurt
systemwide sales and, accordingly, our revenues. If our
customers become ill from food-borne illnesses, we could also be
forced to temporarily close some restaurants. In addition,
instances of food-borne illnesses or food tampering, even those
occurring solely at the restaurants of our competitors, could,
by resulting in negative publicity about the restaurant
industry, adversely affect system sales on a local, regional or
systemwide basis. A decrease in customer traffic as a result of
these health concerns or negative publicity, or as a result of a
temporary closure of any of our restaurants, could materially
harm our business.
</DIV>

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<B><I>Failure to retain our existing senior management team or
our inability to attract and retain new qualified personnel
could hurt our business and inhibit our ability to operate and
grow successfully.</I></B>
</DIV>

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Our success will continue to depend to a significant extent on
our leadership team (specifically, our chief executive officer
and president) and other key management personnel. We may not be
able to retain our executive officers and key personnel or
attract additional qualified management personnel. Our success
also will continue to depend on our ability to attract and
retain qualified franchisees and other personnel to operate our
restaurants and distribution centres.
</DIV>

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<B><I>Failure to successfully implement our growth strategy
could harm our business.</I></B>
</DIV>

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We plan to increase the number of Tim Hortons restaurants, but
we may not be able to achieve our growth objectives and our new
restaurants may not be profitable. The opening and success of
restaurants depends on various factors, including:
</DIV>

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    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    competition from other QSRs in current and future markets;</TD>
</TR>

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    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    our degree of saturation in existing markets;</TD>
</TR>

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    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the identification and availability of suitable and economically
    viable locations;</TD>
</TR>

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    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    sales levels at existing restaurants;</TD>
</TR>

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    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the negotiation of acceptable lease or purchase terms for new
    locations;</TD>
</TR>

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    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    permitting and regulatory compliance;</TD>
</TR>

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    <TD style="font-size: 6pt">&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the ability to meet construction schedules;</TD>
</TR>

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    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the availability of qualified franchisees and their financial
    and other development capabilities (including their ability to
    obtain acceptable financing);</TD>
</TR>

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    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    our ability to hire and train qualified management
    personnel;&nbsp;and</TD>
</TR>

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    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    general economic and business conditions.</TD>
</TR>

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If we are unable to open as many new restaurants as we hope or
otherwise to successfully implement our growth strategy, our
revenue growth and profitability may be adversely affected.
</DIV>

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<B><I>We may not effectively expand our presence in the U.S.,
where our brand is not as well known and where competitive
conditions and markets may differ from those to which we are
accustomed.</I></B>
</DIV>

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We plan to continue expanding in the U.S., including into areas
where customers are unfamiliar with our brand. We will need to
build brand awareness in those markets through greater
investments in advertising and promotional activity than in
comparable Canadian markets and those activities may not promote
our brand as effectively as intended, if at all.
</DIV>

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Many of the U.S. markets into which we intend to expand will
have competitive conditions, consumer tastes and discretionary
spending patterns that differ from our existing markets. We may
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need to adapt our brand and our restaurants to those markets.
Those markets may have lower average unit sales, and may have
higher construction, occupancy or operating costs than existing
Tim Hortons restaurants. Sales and profits at restaurants opened
in new markets may take longer to reach expected levels or may
never do so.
</DIV>

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In addition, if Tim Hortons restaurants are less profitable in
U.S. markets, we could have difficulty finding qualified U.S.
franchisees willing to participate in our expansion. This could
limit our&nbsp;ability to expand or could dilute the quality of
our franchisees, either of which would likely hurt our revenue
growth and operating results. We also currently provide
financing support to new U.S.&nbsp;franchisees; if U.S.
restaurants are not successful, we may have to expand our
financing support programs or extend financing on more generous
terms, either of which could adversely affect our net income.
</DIV>

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<B><I>Our distribution operations are subject to pressures
outside of our control that could adversely affect the results
of our manufacturing and distribution operations.</I></B>
</DIV>

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We sell coffee and other drinks, non-perishable food, supplies,
packaging and equipment to system restaurants from five
warehouses located across Canada, primarily using our fleet of
trucks and trailers. Transportation costs, including fuel costs
and costs incurred as a result of inclement weather, may affect
our distribution operations. Historically, fuel costs have been
subject to wide price fluctuations based on geopolitical issues
and variations in supply and demand. Also, inclement weather
such as snow storms or ice storms could adversely impact our
ability to transport ingredients and supplies. These factors are
out of our control. If fuel costs rise, or stay at their current
elevated levels, the operating costs of our distribution
operations would increase and likely depress our profitability.
In the event of a fuel supply shortage or significant weather
development, higher transportation costs or the curtailment of
scheduled service could result, either of which could injure our
relationship with our franchisees and reduce our profitability.
</DIV>

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In addition, because our U.S. franchisees are not required to
purchase their ingredients and supplies from us, our
manufacturing and distribution operations may be subject to
competition. The presence of other suppliers who meet our
quality standards and specifications could cause downward
pressure on the prices and amounts we receive for ingredients
and supplies sold to our U.S. franchisees, which would adversely
affect the results of our manufacturing and distribution
operations.
</DIV>

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<B><I>Termination of our Maidstone Bakeries joint venture could
adversely affect our business.</I></B>
</DIV>

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The Maidstone Bakeries facility, which supplies all of our
donuts and Timbits&#174; (bite-sized donuts) and a significant
portion of our other bread products to system restaurants, is
owned by a 50-50 joint venture between us and a subsidiary of
IAWS Group plc (IAWS). The agreements governing the joint
venture contemplate various procedures relating to the
termination of the joint venture, including a compulsory
buy/sell procedure. After March&nbsp;6, 2006, either party may
initiate the compulsory buy/sell procedure. In addition, certain
of the technology used at the Maidstone Bakeries facility is
owned by a third party, Irish Bakery Inventions Limited (IBIL),
and is licensed to the joint venture. This license extends until
no later than April 2012.
</DIV>

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Under certain circumstances, upon the termination of these
agreements, we and our franchisees could be forced to purchase
par-baked products manufactured by the facility at higher costs,
or we would need to incur significant capital costs to build our
own par-baked manufacturing facility using our independent
rights to the technology, or find alternative products and/or
production methods. Even if we were to build our own par-baked
goods manufacturing facility, we would not be able to produce
bread and/or bread products formerly purchased from the joint
venture to the extent they were prepared from recipes licensed
to the joint venture by IAWS and we were not able to license
them directly from IAWS on favourable terms, or at all. Further,
IAWS could under certain circumstances have the right to build
its own par-baked goods manufacturing facility using its
</DIV>

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independent rights to the par-baking technology, and manufacture
and sell par-baked donuts to our competitors, provided it did
not use our recipes. Any of the foregoing events could injure
our brand, cause us to lose revenues and/or increase our costs.
See &#147;Business&#151;Our Manufacturing and Distribution
Platforms.&#148;
</DIV>

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<B><I>Shortages or interruptions in the supply or delivery of
perishable food products could adversely affect our operating
results.</I></B>
</DIV>

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We and our franchisees are dependent on frequent deliveries of
perishable food products that meet our specifications. Shortages
or interruptions in the supply of perishable food products
caused by unanticipated demand, problems in production or
distribution, disease or food-borne illnesses, inclement weather
or other conditions could adversely affect the availability,
quality and cost of ingredients, which would likely adversely
affect our business.
</DIV>

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Donuts and other par-baked products sold systemwide are
manufactured at the Maidstone Bakeries facility in Ontario,
Canada using proprietary processes. Due to the proprietary
nature of the manufacturing process, alternative suppliers for
our donuts and Timbits are not readily available. As a result,
if the facility&#146;s operations were to be significantly and
negatively impacted by an unexpected event, system restaurants
might not be able to provide donuts and other par-baked products
to their customers for a period of time, which could injure our
relationships with our franchisees as well as our
customers&#146; perception of us and our brand. This would
likely adversely affect our growth strategy and results of
operations.
</DIV>

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<B><I>We will require a significant amount of cash, the
availability of which depends on many factors beyond our
control.</I></B>
</DIV>

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We intend to continue to grow the number of Tim Hortons
restaurants in Canada and the U.S. To support that expansion, we
will require a significant amount of cash. We will also need
cash to service our debt obligations and to fund potential
capital expenditures. Whether the cash we require is available,
and the cost associated with borrowing or otherwise raising any
cash not generated by operations, depends on many factors beyond
our control, including general economic, financial, competitive,
legislative, regulatory and other factors.
</DIV>

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We cannot assure you our business will generate sufficient cash
flow or that future borrowings or other sources of cash will be
available to us in an amount sufficient to enable us to continue
our growth, make dividend payments, pay our debt or fund capital
expenditures or our other liquidity needs. If our future cash
flow from operations and other capital resources are
insufficient to pay our obligations as they mature or to fund
our other needs, we may be forced to reduce or delay our growth,
business activities and capital expenditures, sell assets,
obtain additional equity or debt capital or restructure or
refinance all or a portion of our debt, on or before maturity.
We cannot assure you that we will be able to refinance any of
our debt, on a timely basis or on satisfactory terms, if at all.
In addition, the terms of our existing debt and other future
debt may limit our ability to pursue any of these alternatives.
If we are unable to pay or refinance any of our debt on a timely
basis or on satisfactory terms, or to effect any other action
relating to our debt on satisfactory terms or at all, our
business may be harmed.
</DIV>

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<B><I>Current restaurant locations may become unattractive, and
attractive new locations may not be available for a reasonable
price, if at all.</I></B>
</DIV>

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The success of any restaurant depends in substantial part on its
location. There can be no assurance that current locations will
continue to be attractive as demographic patterns change.
Neighbourhood or economic conditions where restaurants are
located could decline in the future, thus resulting in
potentially reduced sales in those locations. In addition,
rising real estate prices, particularly in the Western provinces
of Canada and the Northeastern region of the U.S., may
</DIV>

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restrict our ability to purchase or lease new desirable
locations. If we cannot obtain desirable locations at reasonable
prices our ability to effect our growth strategy will be
adversely affected.
</DIV>

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<B><I>Changing health or dietary preferences may cause consumers
to avoid products offered by our system in favour of alternative
foods.</I></B>
</DIV>

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A significant portion of our systemwide sales is derived from
products, including donuts, muffins, cookies, croissants and
pastries, which contain high levels of fat and sugar and may be
considered harmful to the health of consumers. The foodservice
industry is affected by consumer preferences and perceptions. If
prevailing health or dietary preferences and perceptions cause
consumers to avoid these products offered by our system in
favour of alternative or healthier foods, demand for our
products may be reduced and our business could be harmed. For
example, there has recently been a trend towards
low-carbohydrate diets which may have caused or may in the
future cause some of our consumers to consider reducing
consumption of our baked products. There has also been increased
focus on the health risks posed by trans-fatty acids, which many
of our products contain.
</DIV>

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Moreover, because our system sales are primarily dependent on
coffee and baked goods, if consumer demand for those products
decreases as a result of changing health or dietary preferences
and perceptions, our business would suffer more than if we had a
more diversified menu, as do many other QSRs.
</DIV>

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<B><I>We are subject to governmental regulation, and our failure
to comply with existing or future regulations could adversely
affect our business and results of operations.</I></B>
</DIV>

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We and our franchisees are subject to various federal, state,
provincial and local laws affecting our and their businesses.
The successful development and operation of restaurants depend
to a significant extent on the selection and acquisition of
suitable sites, which are subject to zoning, land use (including
the placement of drive-thru windows), environmental (including
litter), traffic and other regulations. Restaurant operations
are also subject to licensing and regulation by state,
provincial and local departments relating to health, food
preparation, sanitation and safety standards, federal,
provincial and state labour laws (including applicable minimum
wage requirements, overtime, working and safety conditions and
citizenship requirements), federal, provincial and state laws
prohibiting discrimination and other laws regulating the design
and operation of facilities, such as the Americans with
Disabilities Act of 1990 and similar Canadian provincial
legislation. Changes in these laws and regulations may adversely
affect our financial results.
</DIV>

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In recent years, there has been an increased legislative,
regulatory and consumer focus on nutrition and advertising
practices in the food industry, particularly among QSRs. As a
result, we may become subject to regulatory initiatives in the
area of nutrition disclosure or advertising, such as
requirements to provide information about the nutritional
content of our food, which could increase our expenses. For
example, trans-fatty acid legislation has recently been enacted
in Canada, which will introduce new nutritional labeling
requirements in Canada and may negatively impact our
customers&#146; perceptions of our products.
</DIV>

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We own or lease a large number of retail properties and operate
a trucking fleet and distribution system, and these operations
involve environmental risks. We are subject to federal, state,
provincial and local environmental, health and safety laws and
regulations concerning the discharge, storage, handling, release
and disposal of hazardous or toxic substances. These
environmental laws provide for significant fines, penalties and
liabilities, sometimes without regard to whether the owner,
operator or occupant of the property knew of, or was responsible
for, the release or presence of the hazardous or toxic
substances. Third parties may also make claims against owners,
operators or occupants of properties for personal injuries and
property damage associated with releases of, or actual or
alleged exposure to, such substances. We cannot predict what
environmental laws will be enacted in the future, how existing
or future environmental laws will be
</DIV>

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administered or interpreted, or the amount of future
expenditures that we may need to make to comply with, or to
satisfy claims relating to, environmental laws. A number of our
restaurant sites were formerly gas stations, are on locations
where gas stations currently operate or are adjacent to gas
stations, or were used for other commercial activities that can
create environmental impacts. We may also acquire or lease these
types of sites in the future. We have not conducted a
comprehensive environmental review of all of our properties or
operations. We may not have identified all of the potential
environmental liabilities at our owned and leased properties,
and any such liabilities identified in the future could have a
material adverse effect on our operations or results of
operations. See &#147;Business&#151; Environmental, Health and
Safety.&#148;
</DIV>

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The operation of our franchise system is also subject to
franchise laws and regulations enacted by a number of provinces
and states and rules promulgated by the U.S. Federal Trade
Commission. Any future legislation regulating our franchise
relationships may negatively affect our operations, particularly
our relationship with our franchisees. Failure to comply with
new or existing franchise laws and regulations in any
jurisdiction or to obtain required government approvals could
result in a ban or temporary suspension on future franchise
sales. Changes in applicable accounting rules imposed by
governmental regulators or private governing bodies could also
affect our results of operations.
</DIV>

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<B><I>We are affected by commodity market fluctuations,
particularly with respect to high-quality coffee beans, which
could reduce our profitability or sales.</I></B>
</DIV>

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We purchase large quantities of food and supplies, which can be
subject to significant price fluctuations due to seasonal
shifts, climate conditions, industry demand, changes in
international commodity markets and other factors. The market
for high-quality coffee beans is particularly volatile, both in
terms of price changes and available supply. Our internal
polling data shows that coffee represented over half of
systemwide restaurant sales in Canada, and over 25% of
systemwide restaurant sales in the U.S., during fiscal 2004. Any
increase in the price, or reduction in the availability, of
high-quality coffee beans could hurt both our and our
franchisees&#146; businesses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We sell coffee and other drinks, non-perishable food, frozen
food, supplies, packaging and equipment, and our joint venture
with IAWS provides par-baked donuts, Timbits and other bread
products, to all system restaurants. Neither we nor the joint
venture typically have written contracts or long-term
arrangements with coffee, sugar or other raw material suppliers.
Accordingly, the prices we and the joint venture pay for those
items may fluctuate significantly. If the price of any of those
items increases, then, to the extent we pass on that increase,
the operating costs of system restaurants would increase. If
system restaurant prices rise because of those increased costs
it may cause our customers to visit our restaurants less
frequently, or to purchase fewer items during any visit. That,
in turn, could reduce profits at our company-operated
restaurants and reduce gross sales at our franchise restaurants,
which would reduce the rental income and royalties payable to
us. If, on the other hand, we do not pass on cost increases to
the system, that would reduce the profitability of our
manufacturing and distribution operations.
</DIV>

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<B><I>We face risks associated with litigation from customers,
franchisees, employees and others in the ordinary course of
business.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Claims of illness or injury relating to food quality or food
handling are common in the food service industry. In addition,
class action lawsuits have been filed, and may continue to be
filed, against various QSRs alleging, among other things, that
QSRs have failed to disclose the health risks associated with
high-fat foods and that QSRs&#146; marketing practices have
encouraged obesity. In addition to decreasing our sales and
profitability and diverting our management resources, adverse
publicity or a substantial judgment against us could negatively
impact our brand reputation, hindering our ability to attract
and retain qualified franchisees and grow our business.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Further, we may be subject to employee, franchisee and other
claims in the future based on, among other things,
discrimination, harassment, wrongful termination and wage, rest
break and meal break issues, including those relating to
overtime compensation. These types of claims, as well as other
types of lawsuits to which we are subject from time to time, can
distract our management&#146;s attention from our business
operations. We have been subject to these types of claims in the
past, and if one or more of these claims were to be successful
or if there is a significant increase in the number of these
claims, our business, financial condition and results of
operations could be adversely affected.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Fluctuations in the value of the Canadian and U.S. dollars
can affect the value of our common shares and any dividends we
pay, as well as our revenues and earnings.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The majority of our operations and our principal executive
office are in Canada. Accordingly, although our financial
statements are presented in accordance with United States
generally accepted accounting principles, or GAAP, we report,
and will report, our results in Canadian dollars. If you are a
U.S. shareholder, the value of your investment in us will
fluctuate as the U.S. dollar rises and falls against the
Canadian dollar. Also, if we pay dividends in the future, we
will pay those dividends in Canadian dollars. Accordingly, if
the U.S. dollar rises in value relative to the Canadian dollar,
the U.S.&nbsp;dollar value of the dividend payments received by
U.S.&nbsp;common shareholders would be less than they would have
been if exchange rates were stable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If the U.S. dollar falls in value relative to the Canadian
dollar, then our U.S.&nbsp;operations would be less profitable
to us for two reasons. First, U.S. system operating costs would
increase because those restaurants purchase certain of their
supplies from Canadian sources. Second, any profits reported by
our U.S. segment would contribute less to our consolidated
Canadian dollar earnings because of the weaker U.S.&nbsp;dollar.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Exchange rate fluctuations may also cause the price of goods to
increase or decrease for us and our franchisees. For example, a
decrease in the value of the Canadian dollar compared to the
U.S.&nbsp;dollar would proportionately increase the cost of
coffee beans, which are traded in U.S.&nbsp;dollars, for our
Canadian restaurants. During 2003 and 2004 the Canadian dollar/
U.S.&nbsp;dollar exchange rate varied from a high of 1.5750
Canadian dollars per U.S.&nbsp;dollar to a low of 1.1775
Canadian dollars per U.S.&nbsp;dollar.
</DIV>

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<B><I>We may not be able to adequately protect our intellectual
property, which could harm the value of our brand and branded
products and adversely affect our business.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The success of our business depends on our continued ability to
use our existing trademarks, service marks and other components
of our brand in order to increase brand awareness and further
develop our branded products in both the U.S. and Canadian
markets. We may not be able to adequately protect our
trademarks, and our use of these trademarks may result in
liability for trademark infringement, trademark dilution or
unfair competition. All of the steps we have taken to protect
our intellectual property in the U.S. and in Canada may not be
adequate.
</DIV>

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In addition, we rely on our proprietary product delivery
platform and par-baking technology to support our
franchisees&#146; business and our growth strategies. We have
not filed applications for or obtained patents for our
par-baking technology, and patents have not been obtained for
most of the par-baking technology used by our joint venture with
IAWS. If a competitor obtains a patent for, co-opts or more
successfully implements our or the joint venture&#146;s
proprietary techniques or technologies, our operations and
growth could be harmed, and we may be forced to defend one or
more patent-infringement claims or assertions.
</DIV>

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We and/or the joint venture may from time to time be required to
institute litigation to enforce our trademarks or other
intellectual property rights, or to protect our trade secrets or
proprietary techniques and technologies. Such litigation could
result in substantial costs and diversion of
</DIV>

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<DIV align="left" style="font-size: 10pt;">
resources and could negatively affect our sales, profitability
and prospects regardless of whether we and/or the joint venture
are able to successfully enforce our rights.
</DIV>

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<B><I>Our earnings and business growth strategy depends in large
part on the success of our franchisees, and we may be harmed by
actions taken by our franchisees that are outside of our
control.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A substantial portion of our earnings comes from royalties and
other amounts paid by our franchisees, who operated 96.6% of the
total number of Tim Hortons restaurants as of October&nbsp;2,
2005. Our franchisees are independent contractors, and their
employees are not our employees. We provide training and support
to, and monitor the operations of, our franchisees, but the
quality of their restaurant operations may be diminished by any
number of factors beyond our control. Consequently, our
franchisees may not successfully operate stores in a manner
consistent with our standards and requirements and may not hire
and train qualified managers and other restaurant personnel. Any
operational shortcoming of a franchise restaurant is likely to
be attributed by consumers to our entire system, thus damaging
our brand reputation and potentially affecting our revenues and
profitability. Furthermore, if a significant number of our
franchisees were to become insolvent or otherwise were unwilling
or unable to pay us for food and supplies purchased or
royalties, rent or other fees, our business and results of
operations would be harmed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>We are subject to all of the risks associated with owning
and leasing real estate.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of October&nbsp;2, 2005, we owned the land and building, or
leased the land and/or the building, for 2,267 system
restaurants. Accordingly, we are subject to all of the risks
generally associated with owning and leasing real estate,
including changes in the investment climate for real estate,
demographic trends and supply or demand for the use of the
restaurants, which may result from competition from similar
restaurants in the area, as well as liability for environmental
contamination as further discussed above under &#147;&#151;We
are subject to governmental regulation, and our failure to
comply with existing or future regulations could adversely
affect our business and results of operations.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We lease land generally for initial terms of 10 to
20&nbsp;years. Many leases provide that the landlord may
increase the rent over the term of the lease. Most leases
require us to pay all of the cost of insurance, taxes,
maintenance and utilities. We generally cannot cancel these
leases. If an existing or future store is not profitable, and we
decide to close it, we may nonetheless be committed to perform
our obligations under the applicable lease including, among
other things, paying the base rent for the balance of the lease
term. In addition, as each of our leases expires, we may fail to
negotiate renewals, either on commercially acceptable terms or
at all, which could cause us to close stores in desirable
locations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>We will have significant debt obligations, which could
adversely affect our business and limit our ability to plan for
or respond to changes in our business.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
After the completion of this offering and the repayment of our
outstanding amounts owed to Wendy&#146;s, our total indebtedness
for borrowed money will be approximately $500.0&nbsp;million,
including indebtedness under our new term loan agreement. We may
also incur additional indebtedness in the future, including
pursuant to our two new revolving credit facilities, which will
have available $200.0&nbsp;million and US$100.0&nbsp;million,
respectively. Our significant indebtedness could have adverse
consequences, including:
</DIV>

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    <TD width="4%"></TD>
    <TD width="1%"></TD>
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</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    increasing our vulnerability to adverse economic, regulatory and
    industry conditions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    limiting our ability to compete and our flexibility in planning
    for, or reacting to, changes in our business and the industry;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    limiting our ability to borrow additional funds;&nbsp;and</TD>
</TR>

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    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    requiring us to dedicate a substantial portion of our cash flow
    from operations to payments on our debt, thereby reducing funds
    available for working capital, capital expenditures,
    acquisitions and other purposes.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If our cash flow and capital resources are insufficient to
service our debt obligations, we may be forced to sell assets,
seek additional equity or debt capital or restructure our debt.
However, these measures might be unsuccessful or inadequate in
permitting us to meet scheduled debt service obligations. We may
be unable to restructure or refinance our obligations and obtain
additional equity financing or sell assets on satisfactory terms
or at all. As a result, an inability to meet our debt
obligations could cause us to default on those obligations. A
default under any debt instrument could, in turn, result in
defaults under other debt instruments. Any such defaults could
have a material adverse effect on our business, financial
condition and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Our loan agreements could restrict our ability to finance
operations and capital needs, make acquisitions or engage in
other business activities.</I></B>
</DIV>

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We will enter into a term loan agreement and two revolving
credit facilities prior to the completion of this offering.
Those agreements will include restrictive covenants that, among
other things, may restrict our ability to:
</DIV>

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    <TD width="4%"></TD>
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    <TD width="95%"></TD>
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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    incur additional debt;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    pay dividends;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    make certain acquisitions and investments;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    repurchase our equity;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    create liens;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    enter into transactions with affiliates;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    enter into sale-leaseback transactions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    dispose of all or substantially all of our assets;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    merge or consolidate with another entity.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
These restrictions could limit our financial flexibility,
prohibit or limit any contemplated strategic initiatives, or
limit our ability to grow and increase our revenues or respond
to competitive changes. In addition, events beyond our control
could cause us to breach these restrictive covenants. If we fail
to comply with the terms and covenants in any of the loan
agreements, that could lead to a default, which would entitle
the lenders to accelerate the indebtedness and declare all
amounts owed due and payable. A default under any loan agreement
could, in turn, result in defaults under the other loan
agreements and other debt instruments. Any such defaults could
materially impair our financial condition and liquidity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>We intend to evaluate acquisitions, joint ventures and
other strategic initiatives that may complement or expand our
business. We may not be able to obtain or complete such
transactions, and those that we do complete could have a
negative effect on our operations.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our future success may depend on opportunities to buy or obtain
rights to other businesses or technologies that could
complement, enhance or expand our current business or products
or that might otherwise offer us growth opportunities. In
particular, we intend to evaluate potential mergers,
acquisitions, joint venture investments, strategic initiatives,
alliances, vertical integration opportunities and divestitures.
These transactions and arrangements involve various inherent
risks, including:
</DIV>

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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    accurately assessing the value, future growth potential,
    strengths, weaknesses, contingent and other liabilities and
    potential profitability of acquisition candidates;</TD>
</TR>

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    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the potential loss of key personnel of an acquired business;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    our ability to achieve projected economic and operating
    synergies;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    difficulties successfully integrating, operating, maintaining
    and managing newly acquired operations or employees;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    difficulties maintaining uniform standards, controls, procedures
    and policies;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    unanticipated changes in business and economic conditions
    affecting an acquired business;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the diversion of our management&#146;s attention from our
    existing business to integrate the operations and personnel of
    the acquired or combined business or implement the strategic
    initiative.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For example, in May 2004 we acquired 42 restaurants in New
England. We have limited consumer brand awareness in this market
and face significant competition from at least one competitor
with a much larger presence in this market, and we continue to
operate these restaurants as company-operated restaurants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, we may not be able to complete desirable
transactions, for reasons including a failure to secure
financing, as a result of our separation agreements or as a
result of restrictive covenants in our debt instruments or other
agreements with third parties. See &#147;Our Relationship with
Wendy&#146;s&#151;Agreements Between Wendy&#146;s and Us&#148;
for a description of the restrictions arising under the
separation agreements. For example, our joint venture agreement
with IAWS obligates us to offer IAWS the opportunity to
participate on an equal basis in automated baking ventures that
we acquire or undertake in North America, to the extent those
ventures manufacture specified categories of par-baked frozen
products. Also, our loan agreements will impose certain
restrictions on our ability to operate our business. See
&#147;&#151;Our loan agreements could restrict our ability to
finance operations and capital needs, make acquisitions or
engage in other business activities.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>We will incur increased costs as a result of being a
public company.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Prior to this offering, as a subsidiary of a publicly-held
company, we were not directly responsible for the corporate
governance and financial reporting practices, policies and
disclosure required of a publicly-traded company. As a public
company, we will incur significant legal, accounting and other
expenses that we did not directly incur in the past. In
addition, the Sarbanes-Oxley Act of 2002, as well as new rules
implemented by the SEC, Canadian securities regulatory
authorities and the NYSE&#174; require or may require changes in
corporate governance practices of public companies. We expect
these new rules and regulations to increase our legal and
financial compliance costs and to make some activities more
time-consuming and costly.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Our annual and quarterly financial results may fluctuate
depending on various factors, many of which are beyond our
control, and if we fail to meet the expectations of securities
analysts or investors, our share price may decline
significantly.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our sales and operating results can vary from quarter to quarter
and year to year depending on various factors, many of which are
beyond our control. These factors include:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    variations in the timing and volume of our sales and our
    franchisees&#146; sales;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    sales promotions by us and our competitors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    changes in average same-store sales and customer visits;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    variations in the price, availability and shipping costs of our
    supplies;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    seasonal effects on demand for our products;</TD>
</TR>

</TABLE>

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<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    unexpected slowdowns in our new store development efforts;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    changes in competitive and economic conditions generally;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    changes in the cost or availability of our ingredients or labour;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    weather and acts of God;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    changes in the number of franchise agreement renewals;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    foreign currency exposure.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Certain of the foregoing events may directly and immediately
decrease demand for our products. If customer demand decreases
rapidly, our results of operations would also decline
precipitously.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Our historical financial results may not be representative
of our results as a separate, stand-alone company.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The historical financial information included in this prospectus
has been derived from the consolidated financial statements of
Wendy&#146;s and does not necessarily reflect what our financial
position, results of operations, cash flows, costs or expenses
would have been had we been a separate, stand-alone company
during the periods presented, or that we may achieve in the
future. Although Wendy&#146;s did account for us as a business
segment, Wendy&#146;s did not account for us, and we were not
operated, as a separate, stand-alone company for the historical
periods presented. The historical costs and expenses reflected
in our financial statements include an allocation for certain
corporate functions historically provided by Wendy&#146;s,
including general corporate expenses, employee benefits and
incentives and interest expense. These allocations were based on
what we and Wendy&#146;s considered to be reasonable reflections
of the historical utilization levels of these services required
in support of our business. Our pro forma adjustments reflect
changes that may occur in our funding and operations as a result
of this offering. For additional information, see &#147;Selected
Historical Consolidated Financial and Other Data,&#148;
&#147;Unaudited Pro Forma Consolidated Financial
Information,&#148; &#147;Management&#146;s Discussion and
Analysis of Financial Condition and Results of Operations&#148;
and our consolidated financial statements and the notes thereto
included elsewhere in this prospectus.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Our ability to operate our business effectively may suffer
if we do not, quickly and cost-effectively, establish our own
securities compliance and financial reporting functions in order
to operate as a stand-alone public company, and the transitional
services Wendy&#146;s has agreed to provide us may not be
sufficient for our needs.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Historically, we have relied on Wendy&#146;s to provide services
relating to compliance with securities laws and other public
reporting matters, including Sarbanes-Oxley compliance.
Initially after this offering we will continue to use some of
Wendy&#146;s systems in these areas; however, if a spin-off by
Wendy&#146;s of our common shares to its shareholders occurs, we
will need to handle these matters internally. We will enter into
a shared services agreement with Wendy&#146;s pursuant to which
Wendy&#146;s will provide these services to us for a defined
period of time. See &#147;Our Relationship with
Wendy&#146;s&#151;Agreements Between Wendy&#146;s and
Us&#151;Shared Services Agreement.&#148; These services may not
be sufficient to meet our needs, and after that agreement
expires we may not be able to replace these services at all or
obtain these services at prices and on terms as favourable as we
currently have. Similar agreements with third parties may have
been more or less favourable to us. Any failure or significant
downtime in our own public reporting systems or in such systems
of Wendy&#146;s during the transitional period could impact our
results and/or hinder our ability to comply with securities laws
and, therefore, hurt our operating results and/or the market
price of our common shares.
</DIV>

<P align="center" style="font-size: 10pt;">20

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<DIV align="left" style="font-size: 10pt;">
<A name='111'></A>
</DIV>

<!-- link1 "Risks Related to Our Relationship with Wendy&#146;s" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Risks Related to Our Relationship with Wendy&#146;s</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Following this offering, we will continue to be dependent
on Wendy&#146;s to provide us with many key services for our
business.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Since December 1995, we have been operated as a wholly-owned
subsidiary of Wendy&#146;s, and many key services required by us
for the operation of our business are currently provided by
Wendy&#146;s and its subsidiaries, including services related to
internal controls and external financial reporting. Prior to the
completion of this offering, we will enter into agreements with
Wendy&#146;s related to the separation of our business
operations from Wendy&#146;s, including a shared services
agreement. Under the terms of the shared services agreement,
which will be signed at the completion of this offering,
Wendy&#146;s will provide us with many key services, including
services relating to internal controls and external financial
reporting. We expect some of these services to be provided for
longer or shorter periods than the initial term. We believe it
is necessary for Wendy&#146;s to provide these services for us
under the shared services agreement to facilitate the efficient
operation of our business as we transition to becoming a public
company. We will, as a result, initially be dependent on
Wendy&#146;s for shared services following this offering. See
&#147;Our Relationship with Wendy&#146;s&#151;Agreements Between
Wendy&#146;s and Us&#151;Shared Services Agreement.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Once the transition periods specified in the shared services
agreement have expired and are not renewed, or if Wendy&#146;s
does not or is unable to perform its obligations under the
shared services agreement, we will be required to provide these
services ourselves or to obtain substitute arrangements with
third parties. We may be unable to provide these services
because of financial or other constraints or be unable to
implement substitute arrangements on a timely basis on terms
that are favourable to us, or at all.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Following the completion of this offering, we will no longer
have access to the borrowing capacity, cash flow and assets, and
some services, provided by Wendy&#146;s and its subsidiaries
that were available while we were wholly-owned by Wendy&#146;s.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>As long as Wendy&#146;s controls our company, your ability
to influence the outcome of matters requiring shareholder
approval will be limited.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
After the completion of this offering, Wendy&#146;s will
own &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of our outstanding common
shares, or &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% if the underwriters
exercise their over-allotment option in full. As long as
Wendy&#146;s has voting control of our company, Wendy&#146;s
will have the ability to take many shareholder actions
irrespective of the vote of any other shareholder. As a result,
Wendy&#146;s will have the ability to influence or control all
matters affecting us, including:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the composition of our board of directors and, through our board
    of directors, decision-making with respect to our business
    direction and policies, including the appointment and removal of
    our officers;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    any determinations with respect to acquisitions of businesses,
    mergers or other business combinations;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    our acquisition or disposition of assets;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    our capital structure;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    our payment or non-payment of dividends;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    determinations with respect to our tax returns.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This voting control may discourage transactions involving a
change of control of our company, including transactions in
which you as a holder of our common shares might otherwise
receive a premium for your shares over the then-current market
price. Furthermore, Wendy&#146;s generally has the right at any
time to spin-off our common shares that it owns or to sell a
controlling interest in us to a
</DIV>

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<DIV align="left" style="font-size: 10pt;">
third party after the expiration of the 180&nbsp;day lockup
period, without your approval and without providing for a
purchase of your shares. See &#147;Shares Eligible for Future
Sales.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>We may have potential business conflicts of interest with
Wendy&#146;s regarding our past and ongoing relationships, and
because of Wendy&#146;s controlling ownership in us, the
resolution of these conflicts may not be favourable to
us.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Conflicts of interest may arise between Wendy&#146;s and us in a
number of areas relating to our past and ongoing relationships,
including:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    labour, tax, employee benefit, indemnification and other matters
    arising under the separation agreements;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    intellectual property matters;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    employee recruiting and retention;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    competition for franchisees or restaurant locations;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    sales or distributions by Wendy&#146;s of all or any portion of
    its ownership interest in us, which could be to one of our
    competitors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    business combinations involving us;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    business opportunities that may be attractive to both
    Wendy&#146;s and us.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We may not be able to resolve any potential conflicts, and, even
if we do so, the resolution may be less favourable to us than if
we were dealing with an unaffiliated party.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>We may compete directly with Wendy&#146;s, which could
adversely affect our results of operations.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Wendy&#146;s is primarily engaged in the business of operating,
developing and franchising a system of distinctive QSRs, with
restaurants in the United States, Canada and other international
markets. Wendy&#146;s is not restricted in any manner from
competing with us. After this offering, Wendy&#146;s may expand,
through development of new QSRs, products or businesses,
acquisitions or otherwise, its operations that compete with us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Wendy&#146;s will not be required to offer corporate
opportunities to us, and our articles of incorporation will
permit some of our directors to offer some corporate
opportunities to Wendy&#146;s before us.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our articles of incorporation will provide that Wendy&#146;s is
under no obligation to communicate or offer any corporate
opportunity to us. In addition, Wendy&#146;s will have the right
to engage in similar activities as us, do business with our
suppliers and customers and, except as limited by the master
separation agreement, employ or otherwise engage any of our
officers or employees. Our articles of incorporation also
outline how corporate opportunities are to be assigned in the
event that any person who is a director of both Wendy&#146;s and
us learns of any corporate opportunities. As a result,
Wendy&#146;s may gain the benefit of corporate opportunities
that are presented to our directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Our separation agreements with Wendy&#146;s require us to
assume the past, present and future liabilities related to our
business and may be less favourable to us than if they had been
negotiated with unaffiliated third parties.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We will negotiate our separation agreements with Wendy&#146;s
while we are a wholly-owned subsidiary of Wendy&#146;s and will
enter into these agreements immediately prior to the completion
of this offering. Had these agreements been negotiated with
unaffiliated third parties, they might have been more favourable
to us. Pursuant to these agreements, we have agreed to indemnify
Wendy&#146;s for, among other matters, all past, present and
future liabilities related to our business, and we have
</DIV>

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<DIV align="left" style="font-size: 10pt;">
assumed these liabilities under the separation agreements. Such
liabilities include unknown liabilities that could be
significant. The allocation of assets and liabilities between
Wendy&#146;s and us may not reflect the allocation that would
have been reached between two unaffiliated parties. See
&#147;Our Relationship with Wendy&#146;s&#151;Agreements Between
Wendy&#146;s and Us&#148; for a description of these obligations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Our business and your investment in our common shares may
be adversely affected if Wendy&#146;s does not spin-off our
shares.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Wendy&#146;s may spin-off our common shares that it owns;
however, Wendy&#146;s has the sole right to decide when, and
whether, it will effect such a spin-off. Unless and until such a
spin-off occurs, we will face the risks discussed in this
prospectus relating to Wendy&#146;s, including its control of us
and potential conflicts of interest between Wendy&#146;s and us.
In addition, if a spin-off does not occur, the liquidity of the
market for our common shares may be constrained for as long as
Wendy&#146;s continues to hold a significant position in our
common shares. A lack of liquidity in the market for our common
shares may adversely affect our share price.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>The separation agreements may limit our ability to obtain
additional financing or make acquisitions and may require us to
pay significant tax liabilities.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We may engage, or desire to engage, in future financings or
acquisitions. However, because the separation agreements are
designed to preserve the tax-free status of a potential
spin-off, those agreements may severely limit our ability to
effect future financings or acquisitions. For the spin-off to be
tax-free to Wendy&#146;s and its shareholders, among other
things, Wendy&#146;s must own at least 80% of all of our voting
power (and at least 80% of the shares of any class of non-voting
shares) at the time of the spin-off. Therefore, we will be
limited in our ability to issue voting securities, non-voting
shares or convertible debt without Wendy&#146;s prior consent,
and Wendy&#146;s may be unwilling to give that consent so long
as it intends to complete the spin-off. We have also agreed to
certain additional restrictions that are intended to preserve
the tax-free status of the spin-off. See &#147;Our Relationship
with Wendy&#146;s&#151;Agreements Between Wendy&#146;s and
Us&#151;Tax Sharing Agreement&#148; for a description of these
restrictions.
</DIV>

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In addition, we have agreed with Wendy&#146;s that we will not
(without Wendy&#146;s prior written consent) take any of the
following actions prior to the distribution:
</DIV>

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    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    acquire any businesses or assets with an aggregate value of more
    than
    $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million
    for all such acquisitions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    dispose of any assets with an aggregate value of more than
    $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million
    for all such dispositions;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    acquire any equity or debt securities of any other person with
    an aggregate value of more than
    $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million
    for all such acquisitions.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The separation agreements also provide that for so long as
Wendy&#146;s owns at least 50% of all of our voting power, we
will not (without the prior written consent of Wendy&#146;s)
take any actions that could reasonably result in Wendy&#146;s
being in breach or in default under any contract or agreement.
</DIV>

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Finally, we are required to indemnify Wendy&#146;s against
certain tax-related liabilities incurred by Wendy&#146;s
relating to a potential spin-off to the extent caused by us.
These liabilities include the substantial tax-related liability
(calculated without regard to any net operating loss or other
tax attribute of Wendy&#146;s) that would result if the spin-off
failed to qualify as a tax-free transaction.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
See &#147;Our Relationship with Wendy&#146;s&#151;Agreements
Between Wendy&#146;s and Us&#148; for a description of the
separation agreements.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Third parties may seek to hold us responsible for
liabilities of Wendy&#146;s that we did not assume in our
agreements.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Third parties may seek to hold us responsible for retained
liabilities of Wendy&#146;s. Under the separation agreements,
Wendy&#146;s has agreed to indemnify us for claims and losses
relating to these retained liabilities. However, if those
liabilities are significant and we are ultimately held liable
for them, we cannot assure you that we will be able to recover
the full amount of our losses from Wendy&#146;s.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Our directors and executive officers who own Wendy&#146;s
common shares or options to acquire Wendy&#146;s common shares
or who hold positions with Wendy&#146;s may have potential
conflicts of interest.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Ownership of Wendy&#146;s common shares, options to acquire
Wendy&#146;s common shares and other equity securities of
Wendy&#146;s by certain of our directors and officers after this
offering and the presence of Wendy&#146;s directors or officers
on our board of directors could create, or appear to create,
potential conflicts of interest when those directors and
officers are faced with decisions that could have different
implications for Wendy&#146;s than they do for us. See
&#147;Management&#148; for a description of the extent of the
relationship between our directors and officers and Wendy&#146;s.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Our prior and continuing relationship with Wendy&#146;s
exposes us to risks attributable to businesses of
Wendy&#146;s.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Wendy&#146;s is obligated to indemnify us for losses that a
party may seek to impose upon us or our affiliates for
liabilities relating to the Wendy&#146;s business that are
incurred through a breach of the separation agreements or any
ancillary agreement by Wendy&#146;s or its non-Tim Hortons
affiliates, if losses are attributable to Wendy&#146;s in
connection with this offering or are not expressly assumed by us
under the separation agreements. Immediately following this
offering, any claims made against us that are properly
attributable to Wendy&#146;s in accordance with these
arrangements would require us to exercise our rights under the
separation agreements to obtain payment from Wendy&#146;s. We
are exposed to the risk that, in these circumstances,
Wendy&#146;s cannot, or will not, make the required payment.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='112'></A>
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Risks Related to this Offering</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>There currently exists no market for our common shares. An
active trading market may not develop for our common shares, and
the price of our common shares may be subject to factors beyond
our control. If our share price fluctuates after this offering,
you could lose all or a significant part of your
investment.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Prior to this offering, no public market existed for our common
shares. An active and liquid market for the common shares may
not develop following the completion of this offering, or, if
developed, may not be maintained. If an active public market
does not develop or is not maintained, you may have difficulty
selling your common shares. The initial public offering price of
our common shares was determined by negotiations between us,
Wendy&#146;s and the underwriters for this offering and may not
be indicative of the price at which the common shares will trade
following the completion of this offering.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The market price of our common shares may also be influenced by
many other factors, some of which are beyond our control,
including, among other things:
</DIV>

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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    actual or anticipated variations in average same-store sales or
    quarterly operating results;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    changes in financial estimates or opinions by research analysts;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    actual or anticipated changes in the Canadian and
    U.S.&nbsp;economies or the food service industry;</TD>
</TR>

</TABLE>

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    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    terrorist acts or wars;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    weather and acts of God;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    changes in the market volatility of other QSRs;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    announcements by us or our competitors of significant
    acquisitions, strategic partnerships, divestitures, joint
    ventures or other strategic initiatives;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    actual or anticipated sales or distributions of common shares by
    Wendy&#146;s, as well as by our officers and directors, whether
    in the market, in subsequent public offerings or in a spin-off.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As a result of this volatility, you may not be able to resell
your common shares at or above the initial public offering
price. In addition, the stock market in general has experienced
extreme price and volume fluctuations that have often been
unrelated or disproportionate to the operating performance of
companies like us. These broad market and industry factors may
materially reduce the market price of the common shares,
regardless of our operating performance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Investors purchasing common shares in this offering will
incur substantial and immediate dilution.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The initial public offering price of our common shares is
substantially higher than the net tangible book value per
outstanding common share. Purchasers of our common shares in
this offering will incur immediate and substantial dilution of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
common share in the net tangible book value of our common shares
from an assumed initial public offering price of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
common share. If the underwriters exercise their option to
purchase additional shares in full, there will be dilution of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
common share in the net tangible book value of our common
shares. This means that if we were to be liquidated immediately
after this offering, there might be no assets available for
distribution to you after satisfaction of all our obligations to
creditors. For further description of the effects of dilution in
the net tangible book value of our common shares, see
&#147;Dilution.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Our share price may decline because of the ability of
Wendy&#146;s and others to sell our common shares.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales of substantial amounts of our common shares after this
offering, or the possibility of those sales, could adversely
affect the market price of our common shares and impede our
ability to raise capital through the issuance of equity
securities. See &#147;Shares Eligible for Future Sale&#148; for
a discussion of possible future sales of our common shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
After this offering, Wendy&#146;s will
own &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of our outstanding common
shares ( &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% if the underwriters
exercise their over-allotment option in full). Wendy&#146;s has
no contractual obligation to retain any of our common shares,
except for a limited period, described under
&#147;Underwriting,&#148; during which it will not sell any of
our common shares without the underwriters&#146; consent until
180&nbsp;days after the date of this prospectus. Subject to
applicable securities laws, after the expiration of this 180-day
lock-up period or before, with consent of the representatives of
the underwriters to this offering, Wendy&#146;s may sell any and
all of our common shares that it beneficially owns and may
distribute any or all of these shares to its shareholders.
Moreover, this 180-day lock-up period does not apply to the
spin-off (if it occurs) by Wendy&#146;s of its remaining
ownership interest in us to its common shareholders, who would
not be subject to any resale restrictions. The registration
rights agreement we will enter into with Wendy&#146;s grants
Wendy&#146;s the right to require us to register our common
shares it holds in specified circumstances. See &#147;Our
Relationship With Wendy&#146;s&#151; Agreements Between
Wendy&#146;s and Us&#151; Registration Rights Agreement.&#148;
In addition, after the expiration of this 180-day lock-up
period, we could issue and sell additional common shares,
subject to Wendy&#146;s consent. Any sale by Wendy&#146;s or us
of our common shares in the public market, or the perception
that sales could occur (for example, as a result of the
spin-off), could adversely affect prevailing market prices for
our common shares.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In connection with this offering, we intend to file a
registration statement on Form&nbsp;S-8 to register common
shares that are or will be reserved for issuance under our stock
incentive plan. Significant sales of our common shares pursuant
to our stock incentive plan could also adversely affect the
prevailing market price for our common shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>We will be a &#147;controlled company&#148; within the
meaning of the New York Stock Exchange rules, and, as a result,
will qualify for, and intend to rely on, exemptions from certain
corporate governance requirements that provide protection to
shareholders of other companies.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
After the completion of this offering, Wendy&#146;s will own
more than 50% of the total voting power of our common shares and
we will be a &#147;controlled company&#148; under the NYSE
corporate governance standards. As a controlled company, we
intend to utilize certain exemptions under the NYSE standards
that free us from the obligation to comply with certain NYSE
corporate governance requirements, including the requirements:
</DIV>

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    <TD width="4%"></TD>
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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    that a majority of the board of directors consists of
    independent directors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    that we have a nominating and governance committee that is
    composed entirely of independent directors with a written
    charter addressing the committee&#146;s purpose and
    responsibilities;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    that we have a compensation committee that is composed entirely
    of independent directors with a written charter addressing the
    committee&#146;s purpose and responsibilities;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    for an annual performance evaluation of the nominating and
    governance committee and compensation committee.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We intend to use these exemptions and, as a result, you will not
have the same protection afforded to shareholders of companies
that are subject to all of the NYSE corporate governance
requirements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>We will not have complete control over our tax decisions
and could be liable for income taxes owed by
Wendy&#146;s.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For so long as Wendy&#146;s continues to own at least 80% of the
total voting power and value of our common shares, we and
certain of our U.S.&nbsp;subsidiaries will be included in
Wendy&#146;s consolidated group for U.S.&nbsp;federal income tax
purposes. In addition, we or one or more of our subsidiaries may
be included in the combined, consolidated or unitary tax returns
of Wendy&#146;s or one or more of its subsidiaries for
U.S.&nbsp;state or local income tax purposes. Under the tax
sharing agreement, we will pay to or receive from Wendy&#146;s
the amount of U.S.&nbsp;federal, state and local income taxes
that we would be required to pay to or entitled to receive from
the relevant taxing authorities if we and our subsidiaries filed
combined, consolidated or unitary tax returns and were not
included in the consolidated, combined or unitary tax returns of
Wendy&#146;s or its subsidiaries. In addition, by virtue of its
controlling ownership and the tax sharing agreement,
Wendy&#146;s will effectively control all of our U.S. and
Canadian tax decisions. The tax sharing agreement provides that
Wendy&#146;s will have sole authority to respond to and conduct
all tax proceedings (including tax audits) relating to us, to
file all income tax returns on our behalf and to determine the
amount of our liability to (or entitlement to payment from)
Wendy&#146;s under the tax sharing agreement. This arrangement
may result in conflicts of interest between Wendy&#146;s and us.
For example, under the tax sharing agreement, Wendy&#146;s will
be able to choose to contest, compromise or settle any
adjustment or deficiency proposed by the relevant taxing
authority in a manner that may be beneficial to Wendy&#146;s and
detrimental to us. See &#147;Our Relationship With
Wendy&#146;s&#151;Agreements Between Wendy&#146;s and
Us&#151;Tax Sharing Agreement.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Moreover, notwithstanding the tax sharing agreement,
U.S.&nbsp;federal law provides that each member of a
consolidated group is liable for the group&#146;s entire tax
obligation. Thus, to the extent Wendy&#146;s or other members of
the group fail to make any U.S.&nbsp;federal income tax payments
required
</DIV>

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<DIV align="left" style="font-size: 10pt;">
by law, we would be liable for the shortfall. Similar principles
may apply for foreign, state and local income tax purposes where
we file combined, consolidated or unitary returns with
Wendy&#146;s or its subsidiaries for federal, foreign, state and
local income tax purposes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Our articles of incorporation, code of regulations and
Ohio state law contain provisions that may have the effect of
delaying or preventing a change in control of us.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our articles of incorporation authorize our board of directors
to issue up
to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;preferred
shares and to determine the powers, preferences, privileges,
rights, including voting rights, qualifications, limitations and
restrictions on those shares, without any further vote or action
by the shareholders. The rights of the holders of our common
shares will be subject to, and may be adversely affected by, the
rights of the holders of any preferred shares that may be issued
in the future. The issuance of preferred shares could have the
effect of delaying, deterring or preventing a change in control
and could adversely affect the voting power or economic value of
your shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, provisions of our articles of incorporation, code
of regulations and Ohio law, together or separately, could
discourage potential acquisition proposals, delay or prevent a
change in control and limit the price that certain investors
might be willing to pay in the future for our common shares.
Among other things, these provisions establish a staggered
board, require a supermajority vote to remove directors, and
establish certain advance notice procedures for nomination of
candidates for election as directors and for shareholder
proposals to be considered at shareholders&#146; meetings. For a
further description of these provisions of our articles of
incorporation, code of regulations and Ohio law, see
&#147;Description of Capital Stock&#151; Anti-Takeover Effects
of Certain Provisions of our Articles of Incorporation, Our Code
of Regulations and Ohio Law.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>If, after this offering, we are unable to satisfy the
requirements of Section&nbsp;404 of the Sarbanes-Oxley Act, or
our internal controls over financial reporting are not
effective, the reliability of our financial statements may be
questioned and our share price may suffer.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Section&nbsp;404 of the Sarbanes-Oxley Act requires any company
subject to the reporting requirements of the
U.S.&nbsp;securities laws to perform a comprehensive evaluation
of its and its subsidiaries&#146; internal controls over
financial reporting. To comply with this statute and comparable
requirements of Canadian securities laws, we will be required to
document and test our internal control procedures, our
management will be required to assess and issue a report
concerning our internal controls over financial reporting and
our independent auditors will be required to issue an opinion on
management&#146;s assessment and the effectiveness of those
matters. Our compliance with Section&nbsp;404 of the
Sarbanes-Oxley Act and comparable requirements of Canadian
securities laws will first be reported on in connection with the
filing of our annual report on Form&nbsp;10-K for the fiscal
year ending December&nbsp;30, 2007. The rules governing the
standards that must be met for management to assess our internal
controls over financial reporting are new and complex and
require significant documentation, testing and possible
remediation to meet the detailed standards under the rules.
During the course of its testing, our management may identify
material weaknesses or significant deficiencies which may not be
remedied in time to meet the deadline imposed by the SEC rules
implementing Section&nbsp;404 and comparable requirements of
Canadian securities regulations. If our management cannot
favourably assess the effectiveness of our internal controls
over financial reporting or our auditors identify material
weaknesses in our internal controls, investor confidence in our
financial results may weaken, and our share price may suffer.
</DIV>

<P align="center" style="font-size: 10pt;">27

</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt;">
<A name='113'></A>
</DIV>

<!-- link1 "SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>SPECIAL NOTE&nbsp;REGARDING FORWARD-LOOKING STATEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Certain information contained in this prospectus, particularly
information regarding future economic performance and finances,
plans and objectives of management, is forward-looking. In some
cases, information regarding certain important factors that
could cause actual results to differ materially from any such
forward-looking statement appears together with such statement.
In addition, the following factors, in addition to the other
factors described under &#147;Risk Factors&#148; and other
possible factors not listed, could affect our actual results and
cause such results to differ materially from those expressed in
forward-looking statements. These factors include:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    competition within the QSR segment, which remains extremely
    intense, with many competitors pursuing heavy price discounting;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    changes in economic conditions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    changes in consumer perceptions of dietary health and food
    safety;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    harsh weather, particularly in the first and fourth quarters;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    changes in consumer tastes;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    labour and benefit costs;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    legal claims;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    our ability to maintain good relationships with our franchisees;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    our ability to retain or replace our key members of management;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    our continued ability, and the ability of our franchisees, to
    obtain suitable locations and financing for new restaurant
    development;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    governmental initiatives such as minimum wage rates, taxes and
    possible franchise legislation;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    changes in applicable accounting rules.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Many of the factors that will determine our future performance
are beyond our ability to control or predict. You are cautioned
not to put undue reliance on any forward-looking statements.
Except as required by applicable securities laws, we do not have
any intention or obligation to update forward-looking statements
after we distribute this prospectus, even if new information,
future events or other circumstances have made them incorrect or
misleading.
</DIV>

<P align="center" style="font-size: 10pt;">28

</FONT>

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<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt;">
<A name='114'></A>
</DIV>

<!-- link1 "USE OF PROCEEDS" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>USE OF PROCEEDS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We estimate that our net proceeds from the sale of
approximately &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common
shares in this offering, after deducting estimated underwriting
discounts and commissions and estimated offering expenses, will
be approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million
($&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million
if the underwriters exercise their over-allotment option in
full), assuming the shares are offered at
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
common share, which is the midpoint of the estimated offering
price range set forth on the cover page of this prospectus. We
intend to use the net proceeds from this offering, together with
estimated borrowings of $500.0&nbsp;million under a new term
loan agreement we will enter into prior to this offering, to pay
the US$960.0&nbsp;million of indebtedness, together with accrued
interest, owed to Wendy&#146;s under a US$960.0&nbsp;million
promissory note. For a description of the promissory note and
the new term loan agreement, see &#147;Management&#146;s
Discussion and Analysis of Financial Condition and Results of
Operations&#151;Liquidity and Capital Resources&#151;Loan
Agreements.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='115'></A>
</DIV>

<!-- link1 "DIVIDEND POLICY" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>DIVIDEND POLICY</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We did not pay any cash dividends on our common shares in 2003
or 2004. In September 2005 we distributed, as a dividend on our
common shares, a promissory note to Wendy&#146;s in the
principal amount of US$960.0&nbsp;million. The note is payable
within 30&nbsp;days of demand and bears an interest rate of
3.0%&nbsp;per annum.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We currently intend to declare and pay dividends on our common
shares. However, we cannot assure you sufficient cash will be
available to pay such dividends. In addition, our new loan
agreements may impose restrictions on our ability to pay
dividends, and thus our ability to pay dividends on our common
shares will depend upon, among other things, our level of
indebtedness at the time of the proposed dividend and whether we
are in default under any of our debt instruments. Our future
dividend policy will also depend on the requirements of any
future financing agreements to which we may be a party and other
factors considered relevant by our board of directors. Further,
any future declaration and payment of dividends is discretionary
and our board of directors may at any time modify or revoke our
dividend policy on our common shares. Until we are spun-off by
Wendy&#146;s, if ever, our board of directors will be elected
by, and our company controlled by, Wendy&#146;s, our controlling
shareholder. After the completion of this offering, any
dividends we pay will be declared and paid in Canadian dollars.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For information regarding restrictions on our payment of
dividends, see &#147;Risks Relating to Our Business and
Industry&#151;Our loan agreements could restrict our ability to
finance operations and capital needs, make acquisitions or
engage in other business activities,&#148; &#147;Our
Relationship with Wendy&#146;s&#151;Wendy&#146;s as our
Controlling Shareholder&#148; and &#147;Risks Related to Our
Relationship with Wendy&#146;s&#151;As long as Wendy&#146;s
controls our company, your ability to influence the outcome of
matters requiring shareholder approval will be limited.&#148;
</DIV>

<P align="center" style="font-size: 10pt;">29

</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt;">
<A name='116'></A>
</DIV>

<!-- link1 "CAPITALIZATION" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CAPITALIZATION</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth our cash and cash equivalents and
our consolidated capitalization as of October&nbsp;2, 2005 on an
actual basis and on an as adjusted basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The as adjusted financial information as of October&nbsp;2, 2005
gives effect to (1)&nbsp;the non-cash settlement of notes and
trade balances between Wendy&#146;s and us in the fourth quarter
of 2005, other than our note payable to Wendy&#146;s in the
principal amount of US$960.0&nbsp;million, (2)&nbsp;our
incurrence of $500.0&nbsp;million of indebtedness under our new
term loan agreement
in &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2006,
(3)&nbsp;the completion of this offering and (4)&nbsp;the
application of the estimated net proceeds to be received from
this offering, based on an assumed initial public offering price
of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
common share (the midpoint of the range shown on the cover page
of this prospectus) and the $500.0&nbsp;million of indebtedness
under the term loan agreement, to repay US$960.0&nbsp;million in
principal amount of indebtedness, together with accrued
interest, to Wendy&#146;s.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
You should read this table together with &#147;Use of
Proceeds,&#148; &#147;Selected Historical Consolidated Financial
and Other Data,&#148; &#147;Unaudited Pro Forma Consolidated
Financial Information,&#148; &#147;Management&#146;s Discussion
and Analysis of Financial Condition and Results of
Operations,&#148; &#147;Description of Capital Stock,&#148; and
our consolidated financial statements and the notes thereto
included elsewhere in this prospectus.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">As of October&nbsp;2, 2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Actual</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">As Adjusted</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">119,248</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Debt</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Term
    debt<SUP style="font-size: 85%; vertical-align: text-top">(1)(2)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">20,231</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Notes payable to
    Wendy&#146;s<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,286,576</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Capital
    leases<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">53,628</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total debt
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,360,435</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Shareholder&#146;s
    equity:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Common stock, no stated value per
    share
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">134,363</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Retained earnings
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Unearned compensation&nbsp;&#151;
    restricted stock
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(6,503</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accumulated other comprehensive
    expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(67,716</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total shareholder&#146;s equity
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">60,144</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total capitalization
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,420,579</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Includes current portion.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    Excludes advertising fund debt of $22.2&nbsp;million. See
    Note&nbsp;10 to our unaudited historical condensed consolidated
    financial statements included elsewhere in this prospectus.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">30

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt;">
<A name='117'></A>
</DIV>

<!-- link1 "DILUTION" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>DILUTION</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If you invest in our common shares, your ownership interest will
be diluted to the extent of the difference between the initial
public offering price per common share and the net tangible book
value per common share upon the completion of this offering.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our net tangible book value as of October&nbsp;2, 2005 was
approximately $25.3&nbsp;million, or $36,153 per common share.
The net tangible book value per common share represents the
amount of our total tangible assets (total assets less
intangible assets) less total liabilities, divided by the total
number of outstanding common shares. After giving effect to the
sale of common shares offered by us in this offering at an
assumed initial public offering price of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
common share, which is the midpoint of the range set forth on
the cover page of this prospectus, and after deducting the
estimated underwriting discounts and offering expenses payable
by us, our net tangible book value, as adjusted, as of
October&nbsp;2, 2005, would have equaled approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million,
or
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
common share. This represents an immediate decrease in net
tangible book value of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
common share to Wendy&#146;s, as our sole shareholder prior to
this offering, and an immediate dilution in net tangible book
value of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
common share to new investors purchasing shares in this
offering. If the initial public offering price is higher or
lower, the dilution to new investors will be greater or less,
respectively. The following table illustrates this dilution per
common share.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="83%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Assumed initial public offering
    price per common share
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net tangible book value per common
    share as of October&nbsp;2, 2005
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Increase in net tangible book value
    per common share attributable to this offering
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Pro forma, as adjusted net tangible
    book value per common share after this offering
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Dilution per common share to new
    investors
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table summarizes, as of October&nbsp;2, 2005, the
total number of common shares on an aggregate basis purchased
from us, the total consideration paid and the average price per
common share paid. The calculations with respect to common
shares purchased by new investors in this offering reflect an
assumed initial public offering price of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
common share, which is the midpoint of the range set forth in
the cover of this prospectus, and do not reflect the estimated
underwriting discount and offering expenses.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="26%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Common Shares</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Purchased</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Total Consideration</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Average</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Price Per</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Number</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Percent</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Amount</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Percent</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Share</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Wendy&#146;s
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(1)</FONT></SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">New investors
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100.00</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100.00</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Represents the aggregate of (a)&nbsp;consideration paid by
    Wendy&#146;s in 1995 for all of the ownership interest in our
    predecessor entity and (b)&nbsp;equity advances made by
    Wendy&#146;s to our predecessor entity or its subsidiaries since
    the date of the merger of us and Wendy&#146;s.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">31

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt;">
<A name='118'></A>
</DIV>

<!-- link1 "SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table presents our selected historical
consolidated financial and other data and should be read in
conjunction with &#147;Management&#146;s Discussion and Analysis
of Financial Condition and Results of Operations&#148; and our
historical consolidated financial statements and notes thereto
included elsewhere in this prospectus. Our historical
consolidated financial information may not be indicative of our
future performance and does not necessarily reflect what our
financial position and results of operations would have been had
we operated as a separate, stand-alone entity during the periods
covered.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our selected historical consolidated financial data as of
December&nbsp;28, 2003 and January&nbsp;2, 2005 and for fiscal
years 2002 (year ended December&nbsp;29, 2002), 2003 (year ended
December&nbsp;28, 2003) and 2004 (year ended January&nbsp;2,
2005) have been derived from our audited historical consolidated
financial statements included elsewhere in this prospectus.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our selected historical consolidated financial data as of fiscal
year end 2000 (December&nbsp;31, 2000), fiscal year end 2001
(December&nbsp;30, 2001) and fiscal year end 2002
(December&nbsp;29, 2002) and for fiscal years 2001 (year ended
December&nbsp;30, 2001) and 2000 (year ended December&nbsp;31,
2000) have been derived from our unaudited consolidated
financial information, not included in this prospectus.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our selected historical consolidated financial data as of
October&nbsp;2, 2005 and for the nine months ended
September&nbsp;26, 2004 and October&nbsp;2, 2005 have been
derived from our unaudited condensed consolidated financial
statements included elsewhere in this prospectus and include all
adjustments (consisting only of normal recurring adjustments)
necessary for a fair statement of our financial position and
results of operations as of the date and for the periods
indicated. Results for the nine months ended October&nbsp;2,
2005 are not necessarily indicative of the results that may be
expected for the entire year.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="26%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR style="font-size: 7pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B><FONT face="helvetica,arial">Fiscal Years<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Nine Months Ended</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="19">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">September&nbsp;26,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">October&nbsp;2,</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2000</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2001</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 7pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="26" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands, except number of restaurants and where noted)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Consolidated Statements of
    Operations Data</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Sales
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">521,016</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">593,712</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">656,833</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">727,508</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">845,231</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">602,978</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">703,484</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Franchise
    revenues<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">290,935</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">332,351</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">402,738</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">444,272</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">493,035</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">350,081</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">374,684</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">811,951</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">926,063</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,059,571</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,171,780</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,338,266</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">953,059</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,078,168</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total costs and expenses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">653,801</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">744,738</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">826,258</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">892,883</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,018,961</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">720,821</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">818,847</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Operating income (EBIT)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">158,150</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">181,325</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">233,313</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">278,897</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">319,305</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">232,238</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">259,321</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Interest (income) expense, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,599</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">827</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,554</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,924</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,109</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,365</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">983</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Affiliated interest expense, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,923</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,208</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">17,786</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11,110</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,410</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,536</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,910</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income before income taxes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">155,826</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">175,290</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">212,973</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">262,863</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">305,786</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">221,337</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">253,428</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income taxes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">61,931</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">43,119</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">80,161</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">106,601</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100,735</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">70,505</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">78,767</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net Income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">93,895</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">132,171</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">132,812</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">156,262</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">205,051</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">150,832</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">174,661</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Basic earnings per common share
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">134</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">189</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">190</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">223</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">293</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">215</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">250</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Average common shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">700</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">700</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">700</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">700</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">700</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">700</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">700</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Consolidated Balance Sheets
    Data&nbsp;&#151; at end of period indicated</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">104,015</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">79,789</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">89,338</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">86,151</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">129,301</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">119,248</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    assets<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,003,424</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,246,440</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,661,399</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,547,023</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,756,869</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,716,296</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Long-term
    debt<SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">141,224</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">552,558</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">401,270</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">367,674</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">246,841</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">188,024</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    liabilities<SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">401,093</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">901,496</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">739,442</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">704,245</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">735,180</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,656,152</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total shareholder&#146;s equity
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">602,331</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">344,944</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">921,957</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">842,778</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,021,689</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">60,144</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Other Financial Data</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">EBITDA<SUP style="font-size: 85%; vertical-align: text-top">(5)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">190,719</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">219,903</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">282,422</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">337,698</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">388,313</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">280,098</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">312,922</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Capital expenditures
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">102,403</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">129,685</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">111,788</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">131,865</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">197,810</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">126,343</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">131,866</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<P align="center" style="font-size: 10pt;">32

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="23%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR style="font-size: 7pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B><FONT face="helvetica,arial">Fiscal Years<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Nine Months Ended</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="19">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">September&nbsp;26,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">October&nbsp;2,</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2000</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2001</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 7pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="26" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands, except number of restaurants and where noted)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Other Operating Data</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total systemwide sales
    growth<SUP style="font-size: 85%; vertical-align: text-top">(6)(7)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">19.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">18.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Systemwide restaurant unit
    growth<SUP style="font-size: 85%; vertical-align: text-top">(6)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Canada average same-store sales
    growth
    <SUP style="font-size: 85%; vertical-align: text-top">(6)(8)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">U.S.&nbsp;average same-store sales
    growth
    <SUP style="font-size: 85%; vertical-align: text-top">(6)(8)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Restaurants open at end of<BR>
    period&nbsp;&#151; Canada
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Company-operated
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">47</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">40</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">31</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">32</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">31</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">28</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">31</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Franchise
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,813</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,983</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,157</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,311</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,439</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,371</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,498</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Restaurants open at end of<BR>
    period&nbsp;&#151; U.S.
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Company-operated
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">59</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">57</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">40</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">67</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">66</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">65</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Franchise
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">61</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">83</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">120</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">159</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">184</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">167</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">207</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,980</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,163</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,348</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,527</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,721</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,632</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,801</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Average sales per standard
    restaurant:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Canada (<I>in&nbsp;thousands of
    Canadian&nbsp;dollars</I>)<SUP style="font-size: 85%; vertical-align: text-top">(6)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,354</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,458</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,555</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,625</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,730</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">U.S.&nbsp;(<I>in&nbsp;thousands of
    U.S.&nbsp;dollars</I>)
    <SUP style="font-size: 85%; vertical-align: text-top">(6)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">747</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">809</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">874</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">894</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">897</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Fiscal 2004 consisted of 53&nbsp;weeks. Fiscal 2000, 2001, 2002
    and 2003 each consisted of 52&nbsp;weeks.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    Franchise revenues consist of (a)&nbsp;royalties, which
    typically range from 3.0% to 4.5% of gross franchise restaurant
    sales, (b)&nbsp;rents, which typically range from 8.5% to 10.0%
    of gross franchise restaurant sales, and (c)&nbsp;fees, which
    are typically charged at the inception of the franchise
    relationship. Franchise restaurant sales are reported to us by
    our franchisees. Franchise restaurant sales are not included in
    our financial statements, other than approximately 80
    franchisees whose results of operations are consolidated with
    ours pursuant to FIN&nbsp;46R, as described in
    &#147;Management&#146;s Discussion and Analysis of Financial
    Condition and Results of Operations&#151;Results of
    Operations&#151;Financial Definitions&#151;Sales.&#148; However,
    franchise restaurant sales result in royalties and rental
    income, which are included in our franchise revenues. The
    reported franchise restaurant sales were:</TD>
</TR>

</TABLE>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="94%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="29%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B><FONT face="helvetica,arial">Fiscal Years<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Nine Months Ended</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="19">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">September&nbsp;26,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">October&nbsp;2,</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2000</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2001</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Franchise restaurant sales:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Canada (<I>in&nbsp;thousands of
    Canadian dollars</I>)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,785,555</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,072,706</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,412,625</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,713,248</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,137,898</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,278,383</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,524,436</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">U.S.&nbsp;(<I>in&nbsp;thousands of
    U.S.&nbsp;dollars</I>)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">39,431</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">61,322</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">93,603</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">123,272</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">163,712</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">116,079</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">145,161</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    Total assets include notes and accounts receivable from
    Wendy&#146;s, which will be distributed by us to Wendy&#146;s in
    the fourth quarter of 2005. Notes and amounts receivable from
    Wendy&#146;s were:</TD>
</TR>

</TABLE>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="94%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="49%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR style="font-size: 7pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B><FONT face="helvetica,arial">At End of Fiscal Year Indicated</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">As of</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="19">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">October&nbsp;2,</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2000</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2001</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 7pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Notes receivable from Wendy&#146;s
    included in current assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">44,964</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">120,178</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">361,148</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">59,210</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">173,747</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">189,111</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Notes receivable from Wendy&#146;s
    included in long-term assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">128,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">128,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">128,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">128,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">128,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accounts receivable from (payable
    to) Wendy&#146;s included in current assets (liabilities)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,951</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(56,836</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">297,720</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">138,580</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">52,192</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">34,069</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>(4)&nbsp;</TD>
    <TD align="left">
    Long-term debt includes long-term debt, capital leases and notes
    payable to Wendy&#146;s. Notes payable to Wendy&#146;s are also
    included in current liabilities. As of October&nbsp;2, 2005, we
    had outstanding a note payable to Wendy&#146;s in the principal</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">33

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD align="left">
    <FONT style="font-size: 8pt">amount of US$960.0&nbsp;million.
    Other than that note, notes payable to Wendy&#146;s will be
    contributed as equity to us in the fourth quarter of 2005. Notes
    payable to Wendy&#146;s totalled the following amounts:
    </FONT></TD>
</TR>

</TABLE>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="94%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="48%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR style="font-size: 7pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B><FONT face="helvetica,arial">At End of Fiscal Year Indicated</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">As of</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="19">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">October&nbsp;2,</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2000</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2001</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 7pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands)</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Notes payable to Wendy&#146;s
    included in current liabilities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">104,634</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">131,987</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">144,778</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">84,167</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">185,725</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,186,293</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Notes payable to Wendy&#146;s
    included in long-term debt
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">108,468</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">505,793</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">343,954</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">304,488</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">181,090</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100,283</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>(5)&nbsp;</TD>
    <TD align="left">
    EBITDA is defined as net income before interest, taxes,
    depreciation and amortization and is used by management as a
    performance measure for benchmarking against our peers and our
    competitors. We believe EBITDA is useful to investors because it
    is frequently used by securities analysts, investors and other
    interested parties to evaluate companies in our industry. EBITDA
    is not a recognized term under GAAP, should not be viewed in
    isolation and does not purport to be an alternative to net
    income as an indicator of operating performance or cash flows
    from operating activities as a measure of liquidity. There are
    material limitations associated with making the adjustments to
    calculate EBITDA and using this non-GAAP financial measure as
    compared to the most directly comparable GAAP financial measure.
    For instance, EBITDA does not include:</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="2%"></TD>
    <TD width="2%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp; &#149;&nbsp;</TD>
    <TD align="left">
    interest expense, and because we have borrowed money to finance
    our operations, interest expense is a necessary element of our
    costs and ability to generate revenue;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp; &#149;&nbsp;</TD>
    <TD align="left">
    depreciation and amortization expense, and because we use
    capital assets, depreciation and amortization expense is a
    necessary element of our costs and ability to generate
    revenue;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp; &#149;&nbsp;</TD>
    <TD align="left">
    tax expense, and because the payment of taxes is part of our
    operations, tax expense is a necessary element of our costs and
    ability to operate.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD align="left">
    <FONT style="font-size: 8pt">Additionally, EBITDA is not
    intended to be a measure of free cash flow for management&#146;s
    discretionary use, as it does not consider certain cash
    requirements such as capital expenditures, contractual
    commitments, interest payments, tax payments and debt service
    requirements. Because not all companies use identical
    calculations, this presentation of EBITDA may not be comparable
    to other similarly titled measures of other companies.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 8pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;The following table is a reconciliation
of our net income to EBITDA:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="94%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="42%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR style="font-size: 7pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B><FONT face="helvetica,arial">Fiscal Years<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Nine Months Ended</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="19">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">September&nbsp;26,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">October&nbsp;2,</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2000</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2001</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 7pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="26" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">93,895</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">132,171</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">132,812</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">156,262</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">205,051</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">150,832</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">174,661</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Interest expense, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,324</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,035</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">20,340</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16,034</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13,519</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,901</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,893</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income tax expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">61,931</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">43,119</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">80,161</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">106,601</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100,735</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">70,505</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">78,767</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Operating income (EBIT)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">158,150</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">181,325</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">233,313</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">278,897</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">319,305</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">232,238</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">259,321</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">32,569</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">38,578</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">49,109</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">58,801</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">69,008</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">47,860</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">53,601</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">EBITDA
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">190,719</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">219,903</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">282,422</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">337,698</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">388,313</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">280,098</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">312,922</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>(6)&nbsp;</TD>
    <TD align="left">
    Includes both franchised and company-operated restaurants.
    Franchise restaurant sales are not included in our financial
    statements, other than approximately 80 franchisees whose
    results of operations are consolidated with ours pursuant to
    FIN&nbsp;46R. However, franchise restaurant sales result in
    royalties and rental income, which are included in our revenues.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(7)&nbsp;</TD>
    <TD align="left">
    Total systemwide sales growth is determined using a constant
    exchange rate to exclude the effects of foreign currency
    translation. U.S. dollar sales are converted to Canadian dollar
    amounts using the average exchange rate of the base year for the
    period covered.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(8)&nbsp;</TD>
    <TD align="left">
    For Canadian restaurants, average same-store sales are based on
    restaurants that have been opened for a minimum of one calendar
    year. For U.S.&nbsp;restaurants, a restaurant is included in our
    average same-store sales calculation beginning the
    13th&nbsp;month after the restaurant&#146;s opening.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">34

</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt;">
<A name='119'></A>
</DIV>

<!-- link1 "UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The unaudited pro forma consolidated statement of operations for
the fiscal year ended January&nbsp;2, 2005 presented below was
derived from our audited consolidated financial statements and
the notes thereto included elsewhere in this prospectus. The
unaudited pro forma consolidated statement of operations for the
nine months ended October&nbsp;2, 2005 and the unaudited pro
forma consolidated balance sheet as of October&nbsp;2, 2005
presented below were derived from our unaudited condensed
consolidated financial statements and the notes thereto included
elsewhere in this prospectus.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our unaudited pro forma consolidated statements of operations
present our results from operations for the fiscal year ended
January&nbsp;2, 2005 and the nine months ended October&nbsp;2,
2005 as if the following events occurred on December&nbsp;29,
2003:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    intercompany notes and trade balances between us and
    Wendy&#146;s in the net amount of
    $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
    including accrued interest, were settled;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    we entered into the new term loan agreement and incurred
    $500.0&nbsp;million of indebtedness thereunder;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    this offering had been completed at an assumed initial public
    offering price of
    $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
    common share, which is the midpoint of the estimated offering
    price range set forth on the cover page of this
    prospectus;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the outstanding principal balance, including accrued interest,
    of the US$960.0&nbsp;million intercompany note issued by us to
    Wendy&#146;s was repaid with all of the net proceeds of this
    offering and the indebtedness incurred under the term loan
    agreement.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our unaudited pro forma consolidated balance sheet has been
prepared based on the assumption that the aforementioned events
occurred on October&nbsp;2, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The unaudited pro forma consolidated statements of operations
information for the fiscal year ended January&nbsp;2, 2005 and
for the fiscal nine months ended October&nbsp;2, 2005 include
all normal recurring adjustments that we believe are necessary
for a fair statement of the results for such periods.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our historical financial information has been prepared on a
consolidated basis using the historical results of operations
and bases of the assets and liabilities of the business, and
gives effect to allocations of expenses from Wendy&#146;s.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The unaudited pro forma consolidated financial information has
been prepared based on available information and assumptions
that we believe are reasonable and is intended for informational
purposes only; it is not necessarily indicative of what the
financial position or results of operations actually would have
been had the aforementioned events occurred at the dates
indicated, and it does not purport to project our future
financial position or results of operations.
</DIV>

<P align="center" style="font-size: 10pt;">35

</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt;">
<A name='120'></A>
</DIV>

<!-- link1 "Unaudited Pro Forma Consolidated Statement of Operations" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Unaudited Pro Forma Consolidated Statement of Operations</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="40%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B><FONT face="helvetica,arial">Nine Months Ended October&nbsp;2, 2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Adjustments</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Separation/</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Historical</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Debt Incurrence</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Offering</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Pro Forma</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B><FONT face="helvetica,arial">(In thousands, except number of shares)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Revenues</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Sales
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">703,484</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Franchise revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">374,684</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,078,168</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cost of sales
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">613,245</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Operating expenses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">162,685</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">General and administrative expenses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">73,728</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Equity income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(23,281</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other (income) expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(7,530</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total costs and expenses, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">818,847</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Operating income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">259,321</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Interest
    expense<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(3,283</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Interest income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,300</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Affiliated interest expense, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(4,910</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income before income taxes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">253,428</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income
    taxes<SUP style="font-size: 85%; vertical-align: text-top">(2)(3)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">78,767</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">174,661</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Basic earnings per common
    share<SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">250</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Weighted average number of common
    shares outstanding
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">700</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<P align="center" style="font-size: 10pt;">36

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Unaudited Pro Forma Consolidated Statement of Operations</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="39%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B><FONT face="helvetica,arial">Fiscal Year Ended January&nbsp;2, 2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Adjustments</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Separation/</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Historical</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Debt Incurrence</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Offering</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Pro Forma</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B><FONT face="helvetica,arial">(In thousands, except number of shares)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Revenues</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Sales
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">845,231</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Franchise revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">493,035</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,338,266</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cost of sales
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">741,198</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Operating expenses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">223,451</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">General and administrative expenses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">85,744</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Equity income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(32,548</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other (income) expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,116</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total costs and expenses, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,018,961</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Operating income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">319,305</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Interest
    expense<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(6,911</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Interest income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,802</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Affiliated interest expense, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(9,410</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income before income taxes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">305,786</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income
    taxes<SUP style="font-size: 85%; vertical-align: text-top">(2)(3)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100,735</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">205,051</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Basic earnings per common
    share<SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">293</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Weighted average number of common
    shares outstanding
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">700</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<P align="center" style="font-size: 10pt;">37

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt;">
<A name='121'></A>
</DIV>

<!-- link1 "Unaudited Pro Forma Consolidated Balance Sheet" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Unaudited Pro Forma Consolidated Balance Sheet</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B><FONT face="helvetica,arial">As of October&nbsp;2, 2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Adjustments<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Debt</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Separation/</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Historical</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Issuance</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Offering</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Pro Forma</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B><FONT face="helvetica,arial">(In thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Current assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">119,248</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accounts receivable, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">85,397</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Notes receivable, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,912</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deferred income taxes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,137</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Inventories and other
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">34,673</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Amounts receivable from
    Wendy&#146;s<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">34,069</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Notes receivable from
    Wendy&#146;s<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">189,111</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Advertising fund restricted assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">19,274</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total current assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">492,821</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Property and equipment, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,009,197</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Notes receivable, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15,491</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">29,877</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deferred income taxes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,013</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Intangible assets, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,960</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Equity investments
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">142,291</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12,646</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,716,296</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="18">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Liabilities and shareholder&#146;s
    equity
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Current liabilities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accounts payable
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">78,920</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accrued expenses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Salaries and wages
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,865</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Taxes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">62,787</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">39,058</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deferred income taxes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">538</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Advertising fund restricted
    liabilities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">30,979</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Notes payable to
    Wendy&#146;s<SUP style="font-size: 85%; vertical-align: text-top">(2)(5)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,186,293</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Current portion of long-term
    obligations
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,334</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total current liabilities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,414,774</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Long-term obligations
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Term
    debt<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">19,890</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Notes payable to
    Wendy&#146;s<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100,283</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Advertising fund restricted debt
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">19,216</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Capital leases
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">48,635</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total long-term obligations
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">188,024</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deferred income taxes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22,155</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other long-term liabilities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">31,199</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Shareholder&#146;s equity
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Common
    stock<SUP style="font-size: 85%; vertical-align: text-top">(2)(4)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">134,363</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Retained earnings
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accumulated other comprehensive
    income (Expense):
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cumulative translation adjustments
    and other
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(67,716</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Unearned
    compensation&#151;restricted stock
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(6,503</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total shareholder&#146;s equity
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">60,144</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total liabilities and
    shareholder&#146;s equity
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,716,296</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<P align="center" style="font-size: 10pt;">38

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt;">
<A name='122'></A>
</DIV>

<!-- link1 "Notes to Unaudited Pro Forma Consolidated Financial Information" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to Unaudited Pro Forma Consolidated Financial
Information</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Statement of Operations</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(1)&nbsp;This adjustment gives effect to the interest expense
incurred in the respective periods in relation to indebtedness
under the new term loan agreement. The loan agreement interest
rate is based upon an assumed interest rate of &nbsp;&nbsp;%,
which is the mid-point of our estimated range of interest rates
on this debt. A
<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">8</FONT>%&nbsp;change
to the assumed interest rate would change our annual interest
expense by
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(2)&nbsp;This adjustment represents the estimated tax expense
related to the estimated interest expense adjustment discussed
in Note (1)&nbsp;above at our statutory rate of 35.0%&nbsp;for
the fiscal year ended January&nbsp;2, 2005 and 34.0%&nbsp;for
the fiscal nine months ended October&nbsp;2, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(3)&nbsp;An estimated effective tax rate
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% has been applied
to the pro forma adjustments, which is higher than the effective
tax rate that has historically been applied to our results. The
increase in effective tax rate is primarily attributable to the
changed capital structure following our separation from
Wendy&#146;s and the $500.0&nbsp;million in principal amount of
long-term debt that we will incur under the term loan agreement
prior to the completion of this offering. The
$500.0&nbsp;million debt will be used, together with the net
proceeds from this offering, to repay indebtedness owed to
Wendy&#146;s. The estimated effective tax rate differs from the
statutory tax rate
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% that applies in
the&nbsp;U.S.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(4)&nbsp;Basic income per common share is calculated by dividing
net income by the weighted average number of common shares
outstanding. The historic basic income per common share is based
on 700&nbsp;shares outstanding and the pro forma basic income
per common share is based
on &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
outstanding. Unaudited pro forma basic income per common share
has been calculated in accordance with the SEC rules of initial
public offerings, which require that the denominator in the
weighted average share calculation should only include the
number of common shares whose proceeds are being reflected as
pro forma adjustments in the consolidated statements of
operations. Therefore, pro forma weighted average common shares
for purposes of the unaudited pro forma based income per common
share calculation have been adjusted to reflect the sale
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common
shares by us in this offering.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Balance Sheet</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(1)&nbsp;Set forth below are estimated sources and uses of funds
reflected in the pro forma balance sheet.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="42%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Sources</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Uses</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Proceeds from this offering
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">Repayment of indebtedness to
    Wendy&#146;s
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Borrowings under a new term loan
    agreement
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">500.0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">Transaction costs
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total sources
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">Total uses
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The offering is expected to raise proceeds of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million (net of estimated
fees and expenses). <BR>
 We intend to use the net proceeds from this offering, together
with estimated borrowings of $500.0&nbsp;million under a new
term loan agreement we will enter into prior to the completion
of this offering, to repay indebtedness owed to Wendy&#146;s.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(2)&nbsp;This adjustment gives effect to the non-cash settlement
of notes and trade balances between us and Wendy&#146;s in the
net amount of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(3)&nbsp;Represents the net impact of the incurrence of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;of
long-term debt under our new term loan agreement
on &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2006.
</DIV>

<P align="center" style="font-size: 10pt;">39

</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(4)&nbsp;This adjustment represents the net proceeds from this
offering of approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
assuming an initial public offering price of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
common share, the midpoint range set forth on the cover page of
this prospectus and estimated fees and expenses of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(5)&nbsp;On September&nbsp;27, 2005, we distributed an
intercompany note to Wendy&#146;s in the original principal
amount of US$960.0&nbsp;million as a dividend on our common
shares. This adjustment gives effect to the repayment of that
note using the net proceeds from the long-term debt referred to
in Note&nbsp;(3) above and the offering.
</DIV>

<P align="center" style="font-size: 10pt;">40

</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt;">
<A name='123'></A>
</DIV>

<!-- link1 "MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>FINANCIAL CONDITION AND RESULTS OF OPERATIONS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>You should read the following discussion in conjunction with
&#147;Selected Historical Consolidated Financial and Other
Data,&#148; &#147;Unaudited Pro Forma Consolidated Financial
Information&#148; and our historical consolidated financial
statements and notes thereto included elsewhere in the
prospectus. The following discussion includes forward-looking
statements that are not historical facts but reflect our current
expectation regarding future results. Actual results may differ
materially from the results discussed in the forward-looking
statements because of a number of risks and uncertainties,
including the matters discussed below and elsewhere in this
prospectus, particularly under the heading &#147;Risk
Factors.&#148; Historical trends should not be taken as
indicative of future operations.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>We believe systemwide sales and average same-store sales
provide meaningful information to investors concerning the size
of our system, the overall health of the system and the strength
of our brand. Information about systemwide sales and average
same-store sales is included in this prospectus. Franchise
restaurant sales generally are not included in our financial
statements; however, franchise restaurant sales result in
royalties and rental income, which are included in our franchise
revenues.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Overview</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We franchise and operate Tim Hortons restaurants in both Canada
and the U.S.&nbsp;Our business model includes controlling the
real estate for most of our franchise restaurants. We also
distribute coffee and other drinks, non-perishable food,
supplies, packaging and equipment to system restaurants in
Canada through our five distribution centres. In the
U.S.&nbsp;we supply similar products to system restaurants
through third-party distributors. Our system, which consists of
franchised and company-operated restaurants, represented 22.6%
of the $14.0&nbsp;billion Canadian QSR segment at year end 2004
based on systemwide restaurant sales dollars.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In each of fiscal 2003 and 2004, we delivered record annual
revenues and net income. Our fiscal 2004 revenues and net income
of approximately $1.3&nbsp;billion and $205.1&nbsp;million,
respectively, represented a $166.5&nbsp;million, or 14.2%,
increase in revenues and $48.8&nbsp;million, or 31.2%, increase
in net income from fiscal 2003. In fiscal 2003 revenues were up
$112.2&nbsp;million, or 10.6%, to approximately
$1.2&nbsp;billion while net income rose $23.5&nbsp;million, or
17.7%, to $156.3&nbsp;million. The increased net income in
fiscal 2004 and 2003 was driven by improved income from
operations, and fiscal 2004 also included a reduction in
interest and tax expenses when compared to fiscal 2003. Segment
operating income (operating income attributable to our
reportable segments, which consist of Canada and the U.S.)
increased $51.0&nbsp;million in fiscal 2004 over 2003, which was
an increase of 17.4%, while fiscal 2003 segment operating income
increased 15.5% over fiscal 2002, from $253.2&nbsp;million to
$292.5&nbsp;million. Overall, the improvements in segment
operating income have been driven by average same-store sales
growth and opening new restaurants in Canada. Our fiscal 2004
results also benefited from one additional operating week (the
53rd&nbsp;week) in the fiscal year. The additional week occurs
periodically because our fiscal year ends on the Sunday nearest
to December&nbsp;31.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For the first nine months of 2005 (which ended October&nbsp;2,
2005) our revenues and net income were up $125.1&nbsp;million
and $23.8&nbsp;million, or 13.1% and 15.8%, respectively, over
the first nine months of 2004 (which ended on September&nbsp;26,
2004), primarily as a result of continued average same-store
sales gains and continued growth in the number of systemwide
restaurants, resulting in higher royalty, rental and
distribution income. Also, during the first nine months of 2005
we had a $5.1&nbsp;million one-time mark-to-market gain on
cross-border intercompany notes. This gain was partially offset
by an increase in corporate general and administrative expenses
due primarily to costs associated with this offering and
expenses related to restricted stock units that were granted and
expensed for the first time in 2005.
</DIV>

<P align="center" style="font-size: 10pt;">41

</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Selected Operating and Financial Highlights</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">Fiscal Years</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Nine Months Ended</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">September&nbsp;26,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">October&nbsp;2,</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands, except where noted)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Systemwide sales growth
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16.3%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12.6%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16.6%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15.0%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11.7%</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Average same-store sales growth
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Canada
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.2%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4.8%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.4%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.7%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5.0%</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">U.S.
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9.9%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4.5%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9.8%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10.1%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.0%</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Systemwide restaurants
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,348</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,527</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,721</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,632</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,801</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,059,571</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,171,780</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,338,266</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">953,059</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,078,168</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Operating income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">233,313</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">278,897</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">319,305</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">232,238</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">259,321</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">132,812</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">156,262</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">205,051</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">150,832</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">174,661</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Systemwide Sales Growth</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our financial results are driven largely by changes in
systemwide sales, which include restaurant-level sales at both
franchised and company-operated restaurants. The amount of
systemwide sales impacts our franchisee royalties and rental
income, as well as our distribution sales. Changes in systemwide
sales are driven by changes in average same-store sales and
changes in the number of restaurants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Average Same-Store Sales Growth</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Average same-store sales, one of the key metrics we use to
assess our performance, provides information on total retail
sales at restaurants operating systemwide throughout the
relevant period and provide a useful comparison between periods.
In fiscal 2004, Canadian average same-store sales increased 7.4%
over fiscal 2003, which was our 13th&nbsp;consecutive annual
increase in Canada. In the U.S., average same-store sales
(measured in local currency) increased 9.8% in fiscal 2004 over
2003, which represented our 14th&nbsp;consecutive annual
increase.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our average same-store sales growth is attributable to several
key factors, including new product introductions, improvements
in restaurant speed of service and other operational
efficiencies, more frequent customer visits, expansion into
broader menu offerings and, on a less frequent basis, pricing.
Restaurant-level price increases are primarily used to offset
higher restaurant-level costs on key items such as coffee and
labour.
</DIV>

<P align="center" style="font-size: 10pt;">42

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth average same-store sales
increases for the first nine months of 2005 and for fiscal 2002,
2003 and 2004 on a comparable 52-week basis. Franchise
restaurant sales are not included in our financial statements
(other than approximately 80&nbsp;franchisees whose results of
operations are consolidated with ours pursuant to Financial
Accounting Standards Board (FASB) Interpretation No.&nbsp;46
(FIN&nbsp;46R), <I>Consolidation of Variable Interest
Entities&#151;an interpretation of ARB&nbsp;51 (revised December
2003)</I>, but franchise restaurant sales result in royalties
and rental income, which are included in our consolidated
financial statements as franchise revenues.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="33%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B><FONT face="helvetica,arial">Historical Average Same-Store Sales Increase<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">1st&nbsp;Quarter</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2nd&nbsp;Quarter</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">3rd&nbsp;Quarter</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">4th&nbsp;Quarter</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Year</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Canada</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2002
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.9%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9.4%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5.8%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5.7%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.2%</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2003
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3.9%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4.0%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5.5%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5.7%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4.8%</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2004
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6.6%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.8%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8.4%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6.6%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.4%</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2005
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5.8%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5.6%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3.6%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5.0%</FONT></TD>
    <TD align="left" valign="bottom" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(2)</FONT></SUP></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">U.S.</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2002
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10.0%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13.8%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8.9%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.2%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9.9%</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2003
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.4%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3.3%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6.8%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.2%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4.5%</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2004
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10.3%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10.2%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9.8%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9.1%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9.8%</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2005
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.7%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9.1%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4.7%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.0%</FONT></TD>
    <TD align="left" valign="bottom" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(2)</FONT></SUP></TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    For Canadian restaurants, average same-store sales are based on
    restaurants that have been open for a minimum of one calendar
    year. For U.S.&nbsp;restaurants, a restaurant is included in our
    average same-store calculation beginning in the 13th&nbsp;month
    following the restaurant&#146;s opening.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    Represents average same-store sales growth for the first nine
    months of 2005.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>New Restaurant Development</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Opening restaurants in new and existing markets in Canada and
the U.S.&nbsp;has been a significant contributor to our growth.
From the end of 1995, when we merged with Wendy&#146;s, to
January&nbsp;2, 2005, we increased the total number of Tim
Hortons restaurants from 1,197 to 2,721&nbsp;restaurants,
representing an average annual growth rate of over 9.6%.
Approximately 85.0% of this growth has come from our expansion
in Canada, with the largest increases in Ontario and Western
Canada. Our U.S.&nbsp;growth of 234 restaurants from 1995 to
2004 has come from three major markets, namely Michigan, New
York and Ohio. During 2004, we also acquired 42 restaurants in
New England.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
From the end of fiscal 2001 to the end of fiscal 2004, we opened
558 system restaurants, net of restaurant closures. Typically,
20 to 30 system restaurants are closed annually, primarily in
Canada. Restaurant closures typically result from an opportunity
to improve a location, upgrade size and layout or add a
drive-thru. During the first nine months of 2005 we opened 94
restaurants (73 in Canada and 21 in the U.S.) and closed 14
restaurants (all in Canada).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our system includes over 2,800 restaurants across Canada and the
U.S.&nbsp;At October&nbsp;2, 2005, 2,705, or 96.6%, were
franchised (98.8% in Canada and 76.1% in the&nbsp;U.S.).
</DIV>

<P align="center" style="font-size: 10pt;">43

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table shows our restaurant count as of
September&nbsp;26, 2004, October&nbsp;2, 2005 and as of the end
of fiscal 2002, 2003 and 2004. Also included in the table is a
breakdown of our company-operated and franchised restaurants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Systemwide Restaurant Count</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="43%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">Fiscal Year End</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Nine Months Ended</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">September&nbsp;26,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">October&nbsp;2,</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Canada</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Company-operated
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">31</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">32</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">31</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">28</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">31</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Franchise
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,157</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,311</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,439</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,371</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,498</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,188</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,343</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,470</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,399</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,529</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">U.S.</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Company-operated
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">40</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">67</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">66</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">65</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Franchise
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">120</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">159</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">184</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">167</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">207</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">160</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">184</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">251</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">233</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">272</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total system</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Company-operated
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">71</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">57</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">98</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">94</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">96</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Franchise
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,277</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,470</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,623</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,538</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,705</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,348</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,527</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,721</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,632</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,801</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Operating Income</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We reported record operating income (income before income taxes
and interest) in each of fiscal 2004 and 2003. These results
were primarily due to increases in average same-store sales,
opening of new restaurants, and operational improvements due to
the systemwide rollout of par-baked products sold through our
manufacturing joint venture. The launch of our Always Fresh
baking system in 2002 involved a conversion to the use of
par-baked products in our restaurants. Par-baking enables us to
offer customers fresher, more consistent products all day, and
enables significant operating efficiencies at the restaurant
level. The conversion to our Always Fresh baking system began
during the third quarter of 2002 and was completed during the
first quarter of 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For the first nine months of 2005, we recorded higher operating
income than in any previous comparable period, with an increase
of 11.7% over the comparable period in 2004 as a result of
continued average same-store sales gains and continued growth in
the number of systemwide restaurants. We also had a
$5.1&nbsp;million one-time mark-to-market gain on cross-border
intercompany notes during the first nine months of 2005. This
gain was partially offset by an increase in corporate general
and administrative expenses due primarily to costs associated
with this offering and expenses related to restricted stock
units of Wendy&#146;s that were granted and expensed for the
first time in 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Segment Operating Income</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Systemwide sales and average same-store sales growth are
affected by the business and economic environments in Canada and
the U.S.&nbsp;We manage and review financial results from
Canadian and U.S.&nbsp;operations separately. We therefore have
determined the reportable segments for our business to be Canada
and the U.S.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Segment operating income increased by 11.4% for the first nine
months of 2005 over the same period in 2004, by 17.4% in fiscal
2004 over 2003 and by 15.5% in fiscal 2003 over 2002. The
improvements primarily related to increases in average
same-store sales, development of new
</DIV>

<P align="center" style="font-size: 10pt;">44

</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt;">
restaurants and improvements in equity income. Equity income
increases from fiscal 2002 to 2004 related to improvements in
results at our joint venture with IAWS and our joint venture
with Wendy&#146;s Restaurants of Canada in certain combination
restaurants. See &#147;&#151;Equity Income.&#148; Overall, our
total segment operating income from our reportable segments as a
percent of total revenues was 26.1% and 25.7% in the first nine
months of 2004 and 2005, respectively, and 23.9%, 25.0% and
25.7% for fiscal 2002, 2003 and 2004, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For the first nine months of 2005 compared to the corresponding
period in 2004, segment operating income increased
$28.3&nbsp;million, primarily driven by our Canadian segment,
which increased operating income by 12.4%. Canadian average
same-store sales increased 5.0% over the prior period and we
opened 73 new system restaurants in that period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In fiscal 2004, total segment operating income increased
$51.0&nbsp;million over fiscal 2003, principally through our
Canadian segment, which increased operating income by 17.8%.
Canadian average same-store sales increased by 7.4% and we
opened 155 new system restaurants in fiscal 2004.
U.S.&nbsp;average same-store sales increased by 9.8% in fiscal
2004 over 2003. However, U.S.&nbsp;segment operating loss
increased as a result of a decrease in company-operated store
earnings, which was attributable to the performance of the 42
restaurants acquired in New England in the second quarter of
2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In fiscal 2003, total segment operating income increased
$39.3&nbsp;million over fiscal 2002. Our Canadian segment
accounted for most of the increase, with operating income
increasing by 14.3%, as Canadian average same-store sales
increased 4.8% and 185 new restaurants were opened.
U.S.&nbsp;segment operating losses were reduced by
$2.8&nbsp;million in fiscal 2003 over 2002 due to average
same-store sales increases of 4.5% and refranchising of a number
of company-operated restaurants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In fiscal 2003, corporate unallocated charges included
$6.1&nbsp;million in foreign exchange gains resulting from
cross-border interest payments. Foreign currency hedges against
future interest payments were established in mid-2003 and
extended into 2004 to mitigate currency effects on these
payments. In addition, the frequency of intercompany payments
has been increased to minimize the exposure.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following tables show information about the operating income
of our reportable segments:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Operating Income</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="28%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap><B><FONT face="helvetica,arial">First Nine Months 2005 Compared to First Nine Months 2004</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">2005 Change</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">% of</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">% of</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Revenues</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Revenues</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Dollars</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Percentage</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands, except where noted)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Canada
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">279,300</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">248,478</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">30,822</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">U.S.&nbsp;</FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,110</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(0.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">415</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,525</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">n/m</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Segment operating income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">277,190</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">248,893</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">28,297</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Corporate<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(17,869</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(16,655</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,214</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(7.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total operating income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">259,321</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">232,238</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">27,083</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<P align="center" style="font-size: 10pt;">45

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="28%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap><B><FONT face="helvetica,arial">Fiscal 2004 Compared to 2003</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">2004 Change</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">% of</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">% of</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Revenues</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Revenues</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Dollars</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Percentage</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands, except where noted)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Canada
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">344,476</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">292,526</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">51,950</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">17.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">U.S.&nbsp;</FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(981</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(0.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(27</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(954</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">n/m</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Segment operating income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">343,495</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">292,499</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">50,996</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">17.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Corporate<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(24,190</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(13,602</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(10,588</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(77.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total operating income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">319,305</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">278,897</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">40,408</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="28%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap><B><FONT face="helvetica,arial">Fiscal 2003 Compared to 2002</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">2003 Change</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">% of</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">% of</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Revenues</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Revenues</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Dollars</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Percentage</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands, except where noted)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Canada
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">292,526</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">256,027</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">36,499</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">U.S.&nbsp;</FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(27</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,827</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(0.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,800</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">99.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Segment operating income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">292,499</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">253,200</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">39,299</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Corporate<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(13,602</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(19,887</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,285</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">31.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total operating income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">278,897</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">233,313</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">45,584</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">19.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Corporate charges include certain overhead costs that are not
    allocated to individual business units and the impact of certain
    foreign currency exchange gains and losses.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
n/m&nbsp;&#151; The comparison is not meaningful.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Basis of Presentation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our consolidated financial statements have been derived from the
consolidated financial statements and accounting records of
Wendy&#146;s, principally from statements and records
representing the Tim Hortons business segment. Our consolidated
statements of operations also include expense allocations for
certain corporate functions historically provided to us by
Wendy&#146;s, including general corporate expenses related to
corporate functions such as executive oversight, risk
management, information technology, accounting, legal, investor
relations, human resources, tax, other services and employee
benefits and incentives, including stock-based compensation
arrangements. The allocations are primarily based on specific
identification and the relative percentage of our revenues and
headcount to the respective total Wendy&#146;s costs. These
allocations are reflected in general and administrative expenses
in our consolidated statements of operations and totalled
$12.7&nbsp;million, $12.9&nbsp;million and $13.3&nbsp;million on
a pre-tax basis for fiscal 2002, 2003 and 2004, respectively. We
and Wendy&#146;s consider these allocations to be a reasonable
reflection of the utilization of services provided. The
allocations may not, however, reflect the expense we would have
incurred as a stand-alone company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Affiliated interest expense, net in the consolidated statements
of operations reflects interest costs related to specific net
borrowings by us, in the form of promissory notes, from
Wendy&#146;s. No amount is included in affiliated interest
expense, net for other amounts owed to Wendy&#146;s by us which
were not in the form of a promissory note and for which no
interest rate was specified. Also, Wendy&#146;s has not
allocated a portion of its external debt interest cost to us. As
a result, interest
</DIV>

<P align="center" style="font-size: 10pt;">46

</FONT>

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<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt;">
expense recorded by us does not reflect the expense we would
have incurred as a stand-alone company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our functional currency is the U.S.&nbsp;dollar, primarily
because of our historical financial inter-relatedness with
Wendy&#146;s. The majority of our operations, restaurants and
cash flows, however, are based in Canada, and we are primarily
managed in Canadian dollars. As a result, our reporting currency
is the Canadian dollar. Our historical consolidated financial
statements and notes thereto are prepared in conformity with
accounting principles generally accepted in the&nbsp;U.S.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The discussion below should be read in conjunction with our
historical consolidated financial statements and the notes
thereto for a full understanding of our financial position and
results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Financial Definitions</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Sales</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Primarily includes sales of products, supplies and restaurant
equipment (except for initial equipment packages sold to
franchisees) 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 include canned coffee
sales through the grocery channel. Sales also include sales from
company-operated restaurants and, beginning in 2004, sales of
approximately 80 franchise restaurants that are consolidated in
accordance with FIN&nbsp;46R.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Franchise Revenues</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Consists primarily of franchisee royalties and fees, as well as
rental income. Franchisee fees include charges for various costs
and expenses related to establishing a franchisee&#146;s
business and include initial equipment packages.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Cost of Sales</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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 sales sold through grocery
stores.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Also includes food, paper and labour costs for company-operated
restaurants and, beginning in 2004, approximately 80 franchise
restaurants that are consolidated in accordance with
FIN&nbsp;46R.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Operating Expenses</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Includes rent expense related to properties leased to
franchisees, other property-related costs (including
depreciation) and costs of equipment sold to franchisees as part
of the initiation of their restaurant&#146;s business, as well
as training and other costs necessary to ensure a successful
restaurant opening and costs to operate and maintain the
distribution warehouses and our coffee roaster (excluding cost
of sales). Also included are insurance, maintenance and support
costs for personnel directly related to restaurant operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>General and Administrative Expenses</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Includes costs that cannot be directly related to generating
revenue, including expenses associated with our corporate and
administrative functions and allocation of expenses related to
corporate functions and services historically provided to us by
Wendy&#146;s and depreciation of office equipment, information
technology systems and head office real estate.
</DIV>

<P align="center" style="font-size: 10pt;">47

</FONT>

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<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Equity Income</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Other Income and Expense</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Includes expenses (income) that are not directly derived from
our primary businesses. Expenses include restaurant closures and
other asset write-offs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Comprehensive Income</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Represents the change in our net assets during the reporting
period from transactions and other events and circumstances from
non-owner sources. It includes net income and other
comprehensive income such as foreign currency translation
adjustments.
</DIV>

<P align="center" style="font-size: 10pt;">48

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Results of Operations</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Nine Months Ended October&nbsp;2, 2005 Compared to Nine
Months Ended September&nbsp;26, 2004</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Below is a summary of comparative results of operations and a
more detailed discussion of results for the first nine months of
each of fiscal 2005 and 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Results of Operations</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="26%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B><FONT face="helvetica,arial">Nine Months Ended</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">2005 Change</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">October&nbsp;2,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">% of</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">September</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">% of</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Revenues</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">26, 2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Revenues</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">$</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">%</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands, except where noted)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Revenues</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Sales
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">703,484</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">65.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">602,978</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">63.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100,506</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Franchise revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">374,684</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">34.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">350,081</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">36.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24,603</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,078,168</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">953,059</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">125,109</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Costs and expenses</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cost of sales
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">613,245</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">56.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">527,818</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">55.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">85,427</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Operating expenses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">162,685</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">154,501</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,184</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">General and administrative expenses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">73,728</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">61,893</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11,835</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">19.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Equity income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(23,281</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(23,089</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(192</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other (income) expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(7,530</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(0.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(302</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(7,228</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">n/m</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total costs and expenses,
    net</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">818,847</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">75.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">720,821</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">75.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">98,026</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Operating income</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">259,321</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">232,238</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">27,083</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Interest expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(3,283</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(0.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(5,015</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(0.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,732</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(34.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Interest income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,300</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,650</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">650</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">39.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Affiliated interest expense, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(4,910</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(0.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(7,536</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(0.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,626</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(34.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income before income taxes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">253,428</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">221,337</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">32,091</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income taxes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">78,767</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">70,505</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,262</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Net income</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">174,661</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">150,832</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23,829</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
n/m&nbsp;&#151; The comparison is not meaningful.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Revenues</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Sales</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the first nine months of 2005 sales increased
$100.5&nbsp;million, or 16.7%, over the comparable period in
2004. Warehouse sales increased $69.2&nbsp;million, or 13.7%,
driven by an increase in the number of franchise restaurants
open and increases in average same-store sales. The remaining
increase in warehouse sales was primarily related to an increase
in the value of coffee sales as a result of a rise in the
underlying cost of green (unroasted) coffee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Company-operated restaurant sales were $92.7&nbsp;million and
$123.0&nbsp;million in the first nine months of 2004 and 2005,
respectively. The increase in company-operated restaurant sales
of
</DIV>

<P align="center" style="font-size: 10pt;">49

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt;">
$30.3&nbsp;million is primarily attributable to our adoption of
FIN&nbsp;46R on April&nbsp;1, 2004, which resulted in the
consolidation of 79 franchise restaurants for the first nine
months of 2004 and 83 franchise restaurants for the first nine
months of 2005. Accordingly, we recorded additional sales of
$47.1&nbsp;million and $73.7&nbsp;million during the first nine
months of 2004 and 2005, respectively, an increase of
$26.6&nbsp;million. $6.4&nbsp;million of the remaining increase
in company-operated restaurant sales is due primarily to an
increase in the number of company-operated restaurants in the
U.S.&nbsp;resulting from our acquisition of 42 restaurants in
New England in the second quarter of 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
U.S.&nbsp;sales are denominated in U.S.&nbsp;dollars and
translated into Canadian dollars for reporting our results. The
strengthening of the Canadian dollar relative to the
U.S.&nbsp;dollar during the first nine months of 2004 and 2005
reduced the value of reported sales by approximately 0.9%
compared to the value that would have been reported had there
been no exchange rate movement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Franchise Revenues</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Franchise revenues increased $24.6&nbsp;million, or 7.0%, in the
first nine months of 2005 over the comparable period in 2004.
Rental income from restaurants leased to franchisees increased
by $23.4&nbsp;million to $247.7&nbsp;million. Royalty income
increased $8.0&nbsp;million, or 10.4%. Although the
consolidation of 79 restaurants on average during the first nine
months of 2005 in accordance with FIN&nbsp;46R reduced our rent
and royalty income by $5.2&nbsp;million for that period, our net
growth in both rental income and royalty income reflects an
increase in the number of franchise restaurants open and the
positive average same-store sales growth over this time period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Total franchise fees during the first nine months of 2005
decreased $6.9&nbsp;million, or 14.2%, from the comparable
period in 2004, mainly due to a decrease in the number of
restaurants sold and a shift in emphasis from standard to
non-standard restaurants. Non-standard restaurants include
kiosks and locations in gas stations, hospitals, universities
and office buildings and typically have lower franchise fees.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
U.S.&nbsp;franchise revenues are denominated in
U.S.&nbsp;dollars and translated into Canadian dollars for
reporting of our results. The strengthening of the Canadian
dollar relative to the U.S.&nbsp;dollar between the first three
quarters of 2004 and 2005 reduced the value of reported
franchise revenues by approximately 0.6% compared to the value
that would have been reported had there been no exchange rate
movement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Total Costs and Expenses</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Cost of Sales</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cost of sales increased $85.4&nbsp;million, or 16.2%, in the
first nine months of 2005 compared to the comparable period in
2004. This increase was primarily driven by an increase in
warehouse cost of sales of $58.2&nbsp;million, or 13.2%, during
the period which resulted from an increase in warehouse sales.
In addition, warehouse cost of sales were also impacted by an
increase in the cost of green coffee, which increased warehouse
sales and cost of sales.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Warehouse cost of sales expressed as a percentage of warehouse
sales was 87.1% for the first nine months of 2005 and 87.6% for
the first nine months of 2004. These percentages reflect
changing product mix and margins during the reporting period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Company-operated restaurant cost of sales, which includes food,
paper, labour and occupancy costs, vary with the average number
and mix of company-operated restaurants. These costs increased
by $28.2&nbsp;million, or 32.0%, from $88.2&nbsp;million in the
first nine months of 2004 to $116.4&nbsp;million in the
equivalent period in 2005. Of this increase, $20.1&nbsp;million
relates to the effect of our adoption of FIN&nbsp;46R on
April&nbsp;1, 2004, which resulted in the consolidation of 83
franchise restaurants. The remaining increase primarily relates
to the impact of consolidating for the entire first nine months
of 2005 the 42&nbsp;U.S.&nbsp;company-operated restaurants that
were acquired in the second quarter of 2004.
</DIV>

<P align="center" style="font-size: 10pt;">50

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<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The strengthening of the Canadian dollar relative to the
U.S.&nbsp;dollar during the first nine months of 2005 over the
comparable period in 2004 reduced the value of reported cost of
sales by approximately 1.1%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Operating Expenses</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Total operating expenses for the first nine months of 2005
increased by $8.2&nbsp;million as compared to the corresponding
period in 2004, representing an increase of 5.3%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The largest component of operating expenses is rent expense and
property costs, which increased by $11.0&nbsp;million, or 10.6%,
during the period. Our Canadian operations contributed the
majority of the increase with an increase of $9.2&nbsp;million
in rent expense and other property costs during the period,
largely due to the increase in the number of properties being
leased and then subleased to franchisees. At October&nbsp;2,
2005 there were 1,969 properties owned or leased by us in Canada
and then subleased to franchisees, compared to 1,861 such
properties in 2004. In addition, rent expense also increased due
to higher percentage rent payments stemming from strong
same-store sales growth.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our U.S.&nbsp;operating expenses are denominated in
U.S.&nbsp;dollars and translated to Canadian dollars for
reporting of our consolidated results. The strengthening of the
Canadian dollar relative to the U.S.&nbsp;dollar between the
first nine months of each of 2004 and 2005 reduced the value of
reported operating expenses by approximately 1.0% compared to
the value that would have been reported had there been no
exchange rate movement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>General and Administrative Expenses</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
General and administrative expenses increased from
$61.9&nbsp;million for the first nine months of 2004 to
$73.7&nbsp;million for the first nine months of 2005. As a
percentage of revenues, general and administrative expenses
increased from 6.5% to 6.8%. This increase is primarily
attributable to higher carve-out costs relating to corporate
functions such as executive oversight, costs associated with
this offering and charges for Wendy&#146;s stock-based
compensation, which were granted and expensed for the first time
in 2005. In addition, general and administrative costs
(excluding carve-out) increased primarily due to growth in our
business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Equity Income</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Equity income relates to income from equity investments in joint
ventures and other minority investments over which we exercise
significant influence. For the first nine months of 2005, equity
income was $23.3&nbsp;million, up $0.2&nbsp;million from the
comparable period in 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Other Income and Expense</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For the first nine months of 2005, other income of
$7.5&nbsp;million related to a $5.1&nbsp;million one-time
mark-to-market gain on cross-border intercompany notes in
addition to a gain on sale of vacant land.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Interest Expense (Including Affiliated Interest
Expense)</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Interest expense was $8.2&nbsp;million for the first nine months
of 2005 and $12.6&nbsp;million for the comparable period in
2004. The decrease of $4.4&nbsp;million is primarily due to
higher capitalized interest relating to our new distribution
centre in Guelph, Ontario and lower affiliated interest expense
of which approximately $2.0&nbsp;million relates to a net
decrease in average indebtedness and approximately
$0.6&nbsp;million relates to a change in foreign exchange rates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Interest Income</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Interest income was $2.3&nbsp;million for the first nine months
of 2005 and $1.7&nbsp;million for the first nine months of 2004,
primarily relating to changes in average cash balances.
</DIV>

<P align="center" style="font-size: 10pt;">51

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Income Taxes</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The effective income tax rate for the first nine months of 2005
was 31.1% compared to 31.9% for the comparable period in 2004.
The change is primarily attributable to the favourable taxation
of currency transactions and Canadian rate reductions, which
were partially offset by non-deductible costs related to this
offering.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Comprehensive Income</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For the first nine months of 2005 comprehensive income increased
$11.2&nbsp;million over the comparable period in 2004. This
change relates to a net income increase of $23.8&nbsp;million
and a decrease due to the impact from translation and other
adjustments of $12.6&nbsp;million. There was slight
strengthening in the Canadian dollar for the first nine months
in 2005 and for the same period in 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Recent Developments</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We expect to record during the fourth quarter of fiscal 2005
between US$15.0 and US$20.0&nbsp;million in pre-tax charges for
the impairment of certain fixed assets associated with Tim
Hortons restaurants in New England that were acquired in 2004.
We also expect to record a non-cash impairment charge of
approximately US$25.0&nbsp;million pre-tax for the writedown of
goodwill as part of our annual review for impairment of goodwill
for Tim Hortons U.S. This goodwill arose as a result of the New
England acquisition in fiscal 2004. We perform our annual review
for impairment of goodwill in the fourth quarter of the fiscal
year. To determine the range of the estimated goodwill charges,
we estimated the fair market value of the business based on
historical performance, discounted cash flow projections and
comparative market data.
</DIV>

<P align="center" style="font-size: 10pt;">52

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Fiscal 2002 to Fiscal 2004</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Below is a summary of comparative results of operations and a
more detailed discussion of results for the fiscal 2002 to 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Results of Operations</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="28%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B><FONT face="helvetica,arial">Fiscal 2004 Compared to 2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">2004 Change</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">% of</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">% of</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Revenues</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Revenues</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">$</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">%</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands, except where noted)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Revenues</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Sales
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">845,231</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">63.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">727,508</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">62.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">117,723</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Franchise revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">493,035</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">36.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">444,272</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">37.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">48,763</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,338,266</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,171,780</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">166,486</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Costs and expenses</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cost of sales
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">741,198</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">55.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">636,311</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">54.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">104,887</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Operating expenses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">223,451</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">202,314</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">17.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">21,137</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">General and administrative expenses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">85,744</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">80,394</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,350</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Equity income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(32,548</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(23,057</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(9,491</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">41.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other (income) expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,116</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(3,079</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(0.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,195</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">n/m</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total costs and expenses,
    net</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,018,961</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">76.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">892,883</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">76.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">126,078</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Operating income</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">319,305</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">278,897</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">40,408</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Interest expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(6,911</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(0.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(7,022</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(0.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">111</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Interest income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,802</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,098</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">704</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">33.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Affiliated interest expense, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(9,410</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(0.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(11,110</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(0.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,700</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(15.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income before income taxes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">305,786</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">262,863</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">42,923</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income taxes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100,735</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">106,601</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(5,866</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(5.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Net income</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">205,051</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">156,262</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">48,789</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">31.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<P align="center" style="font-size: 10pt;">53

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="28%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B><FONT face="helvetica,arial">Fiscal 2003 Compared to 2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">2003 Change</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">% of</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">% of</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Revenues</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Revenues</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">$</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">%</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands, except where noted)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Revenues</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Sales
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">727,508</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">62.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">656,833</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">62.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">70,675</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Franchise revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">444,272</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">37.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">402,738</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">38.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">41,534</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,171,780</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,059,571</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">112,209</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Costs and expenses</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cost of sales
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">636,311</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">54.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">575,337</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">54.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">60,974</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Operating expenses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">202,314</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">17.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">191,749</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">18.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,565</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">General and administrative expenses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">80,394</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">71,851</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,543</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Equity income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(23,057</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(5,056</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(0.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(18,001</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">n/m</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other (income) expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(3,079</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(0.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(7,623</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(0.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,544</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(59.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total costs and expenses,
    net</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">892,883</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">76.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">826,258</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">78.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">66,625</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Operating income</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">278,897</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">233,313</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">45,584</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">19.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Interest expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(7,022</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(0.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(5,425</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(0.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,597</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">29.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Interest income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,098</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,871</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(773</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(26.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Affiliated interest expense, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(11,110</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(0.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(17,786</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,676</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(37.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income before income taxes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">262,863</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">212,973</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">20.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">49,890</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income taxes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">106,601</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">80,161</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26,440</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">33.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Net income</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">156,262</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">132,812</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23,450</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">17.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt;">
n/m&nbsp;&#151; The comparison is not meaningful.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Revenues</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Sales</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales grew $117.7&nbsp;million, or 16.2%, in fiscal 2004 over
2003, and $70.7&nbsp;million, or 10.8%, in fiscal 2003 over
2002. Warehouse sales increased $38.0&nbsp;million, or 5.7%, in
fiscal 2004 over 2003 and $94.5&nbsp;million, or 16.5%, in
fiscal 2003 over 2002. In general, our warehouse sales growth is
driven by increased demand for products due to increases in the
number of restaurants and growth in our average same-store
sales. In 2004, the impact of the increase in systemwide sales
was partially offset by the conversion to Always Fresh bakery
products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Always Fresh system conversion began during the third
quarter of 2002 and was completed during the first quarter of
2004. Sales of dry ingredient mixes, which were previously
distributed through our warehouses to system restaurants,
declined as a result of the conversion to par-baked donut
manufacturing. In part, this was offset by new sales of some
frozen products delivered by third party distributors to the
restaurants. In 2002 and 2003 during the conversion, sales of
Always Fresh system equipment to franchisees increased sales,
which also helped offset the declines in dry ingredient mix
sales. The net impact of the Always Fresh system conversion
resulted in a decline in warehouse sales of 2.7% in fiscal 2004
over 2003 and an increase in fiscal 2003 over 2002 of 10.5%.
</DIV>

<P align="center" style="font-size: 10pt;">54

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Company-operated restaurant sales vary with the number of
company-operated restaurants in the system. In Canada, the
average number of company-operated restaurants has been
approximately 31 from 2002 to 2004 and as a result sales have
been fairly constant over this time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the U.S., our average number of company-operated restaurants
has varied over the past three years. From fiscal 2003 to
2004&nbsp;company-operated restaurant revenues increased
$16.4&nbsp;million before the impact of the weakening of the
U.S.&nbsp;dollar. The majority of this increase related to the
acquisition of the 42&nbsp;restaurants in New England, which we
have operated since the acquisition in the second quarter of
2004. In fiscal 2003, U.S.&nbsp;company-operated restaurant
sales decreased $17.1&nbsp;million, or 37.6% (before the impact
of currency), reflecting our franchising of company-operated
restaurants in the U.S.&nbsp;during this period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In fiscal 2004, sales were also impacted by the consolidation of
approximately 80 franchise restaurants in accordance with
FIN&nbsp;46R, which was adopted in the second quarter of 2004.
The net impact on sales was an increase of approximately
$59.7&nbsp;million in fiscal 2004 over 2003. Although the impact
of FIN&nbsp;46R resulted in the increase or elimination of
certain amounts for financial reporting, there was no net
operating income impact to our financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales from our U.S.&nbsp;operations are denominated in
U.S.&nbsp;dollars and translated into Canadian dollars for
reporting our results. In both 2004 and 2003, the strengthening
of the Canadian dollar relative to the U.S.&nbsp;dollar reduced
sales value by 0.8% and 1.0%, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales included a 53rd&nbsp;week in 2004, compared to
52&nbsp;weeks in each of 2003 and 2002.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Franchise Revenues</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Franchise revenues increased $48.8&nbsp;million, or 11.0%, in
fiscal 2004 over 2003, and increased $41.5&nbsp;million, or
10.3%, in fiscal 2003 over 2002. Rental income from restaurants
leased to franchisees increased by $34.4&nbsp;million, or 14.3%,
in fiscal 2003 over 2002 and by $33.1&nbsp;million, or 12.1%, in
fiscal 2004 over 2003. Royalty income increased by
$11.3&nbsp;million, or 13.8%, in fiscal 2003 over 2002 and by
$13.2&nbsp;million, or 14.2%, in fiscal 2004 over 2003. Although
the consolidation of 77&nbsp;restaurants on average during
fiscal 2004 in accordance with FIN&nbsp;46R reduced our rent and
royalty income by $13.6&nbsp;million for that period, our net
growth in both rental income and royalty income reflects an
increase in the number of franchise restaurants open and the
positive average same-store sales growth in both Canada and the
U.S.&nbsp;over fiscal 2002 to 2004. At the end of fiscal 2004,
total restaurants leased to franchisees were 1,920 compared to
1,809 at the end of fiscal 2003 and 1,679 at the end of fiscal
2002.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Total franchise fees increased $2.4&nbsp;million, or 3.2%, in
fiscal 2004 over 2003 reflecting higher average fees from
franchises sold due to higher restaurant equipment costs, which
offset a decrease in the number of restaurants sold.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Revenues from our U.S.&nbsp;operations are denominated in
U.S.&nbsp;dollars and translated into Canadian dollars for
reporting our results. In both fiscal 2004 and 2003 the
strengthening of the Canadian dollar relative to the
U.S.&nbsp;dollar reduced total franchise revenues by 0.6%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Revenues include a 53rd&nbsp;week in 2004 compared to
52&nbsp;weeks in each of fiscal 2003 and 2002.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Total Costs and Expenses</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Cost of Sales</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cost of sales increased $104.9&nbsp;million, or 16.5%, in fiscal
2004 over 2003 and $61.0&nbsp;million, or 10.6%, in fiscal 2003
over 2002. Warehouse cost of sales increased $40.5&nbsp;million,
or 7.0%, in fiscal 2004 compared to $85.5&nbsp;million, or
17.4%, in fiscal 2003. The increases in fiscal 2004 and 2003 are
primarily the result of additional sales to franchisees, due to
the increased number of restaurants serviced, higher average
sales per restaurant and an additional week of operations in
fiscal 2004.
</DIV>

<P align="center" style="font-size: 10pt;">55

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<DIV align="left" style="font-size: 10pt;">
The increase in systemwide sales translated to an increase in
warehouse cost of sales, including coffee, other drinks, cups
and lids and various other products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The conversion of restaurants to our Always Fresh baking system
impacted warehouse cost of sales year over year. The Always
Fresh system conversion began during the third quarter of 2002
and was completed during the first quarter of 2004. Cost of
sales of dry ingredient mixes declined during the conversion
period but in fiscal 2003 was offset by cost of sales for Always
Fresh system equipment sold to franchisees. In both fiscal 2004
and 2003 the decline in cost of sales of dry ingredient mixes
was partially offset by the cost of sales of frozen products
shipped by third party distributors to restaurants. The net
impact of the Always Fresh system conversion resulted in a
decline in warehouse cost of sales of 1.7% in fiscal 2004 over
2003, but an increase in fiscal 2003 over 2002 of 14.5%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The financial impact of adopting FIN&nbsp;46R in fiscal 2004 was
to reduce warehouse cost of sales by $8.9&nbsp;million for costs
already reflected in company-operated restaurant cost of sales.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Excluding the impact of restaurants required to be consolidated
under FIN&nbsp;46R, warehouse cost of sales expressed as a
percentage of warehouse sales was 87.5% for fiscal 2004, 86.5%
for fiscal 2003 and 85.8% for fiscal 2002. These percentages
reflect a changing product mix during the reporting periods.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cost of sales also includes food, paper, labour and occupancy
cost for company-operated restaurants and varies with the
average number and mix of company-operated restaurants.
Company-operated restaurant cost of sales decreased by
$22.3&nbsp;million, or 25.9%, from fiscal 2002 to 2003 and
increased by $65.1&nbsp;million, or 101.8%, from fiscal 2003 to
2004. The differences in company-operated restaurant cost of
sales between fiscal years primarily reflects the number and mix
of company-operated restaurants we operate in the U.S., with an
average of 54&nbsp;company-operated restaurants in fiscal 2004
compared to 30 in fiscal 2003 and 45 in fiscal 2002. The average
number of company-operated restaurants in fiscal 2004 includes
the impact of the 2004 acquisition of 42 restaurants in New
England. $55.5&nbsp;million of the increase in company-operated
restaurant cost of sales in fiscal 2004 is due to the
consolidation of additional restaurants under FIN&nbsp;46R.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The strengthening of the Canadian dollar relative to the
U.S.&nbsp;dollar reduced the value of reported cost of sales by
approximately 0.9% between fiscal 2003 and 2004 and 1.1% between
fiscal 2002 and 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Operating Expenses</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Operating expenses increased $21.1&nbsp;million, or 10.4%, in
fiscal 2004 over 2003 and $10.6&nbsp;million, or 5.5%, in fiscal
2003 over 2002. Rent expense and property costs increased in
fiscal 2004 and 2003 by $17.7&nbsp;million and
$11.2&nbsp;million, respectively, over the prior period due to
the growth in the number of properties being leased and then
subleased to franchisees. The increases were also a result of
higher percentage rent on certain properties resulting from the
positive average same-store sales growth, and the inclusion of
the 53rd&nbsp;week in 2004. The change was primarily related to
our Canadian operations. There were 1,920 restaurants owned or
leased by us in Canada and then subleased to franchisees at the
end of fiscal 2004 versus 1,809 at the end of fiscal 2003 and
1,679 at the end of fiscal 2002.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Franchise sales expenses decreased by $2.2&nbsp;million, or
3.1%, from fiscal 2002 to 2003 and increased by
$2.3&nbsp;million, or 3.3%, from fiscal 2003 to 2004. Of the
$2.2&nbsp;million decrease in franchise sales expense in fiscal
2003, $1.4&nbsp;million is due to the impact of foreign exchange.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The increase in franchise sales expense from fiscal 2003 to 2004
is primarily due to the higher average equipment cost, resulting
from the size and type of restaurant being sold, on all types of
franchise sales, particularly traditional restaurants and
resales. The higher average cost is consistent with the higher
average franchise fees in fiscal 2004. This increase is offset
by $0.8&nbsp;million due to the negative impact of foreign
exchange.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The strengthening of the Canadian dollar relative to the
U.S.&nbsp;dollar reduced the value of reported operating
expenses by approximately 0.8% between fiscal 2003 and 2004 and
1.3% between fiscal 2002 and 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>General and Administrative Expenses</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
General and administrative expenses are comprised of expenses
associated with corporate and administrative functions that
support current operations and provide the infrastructure to
support future growth. This expense category also includes
expense allocations from Wendy&#146;s.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
From fiscal 2003 to 2004, general and administrative expenses
increased by approximately $5.4&nbsp;million or 6.7%. As a
percentage of revenue, this cost category decreased slightly
from approximately 6.9% in fiscal 2003 to 6.4% in fiscal 2004.
This change is partly because we recognized higher
performance-based bonuses related to the successful completion
of the Always Fresh system conversion in 2003, and also reflects
the fact that revenues grew at a higher rate than general and
administrative costs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
From fiscal 2002 to 2003, general and administrative expenses
increased from approximately $71.9&nbsp;million to
$80.4&nbsp;million, an increase of approximately 11.9%. As a
percentage of revenue, this cost category remained relatively
consistent, representing 6.8% in fiscal 2002 and 6.9% in fiscal
2003. This increase in fiscal 2003 reflects the higher
performance-based bonuses related to the successful completion
of the Always Fresh conversion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Equity Income</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Equity income relates to income from equity investments in joint
ventures and other minority investments over which we exercise
significant influence. In fiscal 2003 and 2004 equity income
increased by $18.0&nbsp;million and $9.5&nbsp;million,
respectively, over the prior period due to improvements in both
of our two main equity investments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our most significant equity investment is our 50-50 joint
venture with IAWS. This joint venture commissioned the
construction of the Maidstone Bakeries facility, which was
substantially completed in 2002, and following the completion of
our conversion to the Always Fresh baking system during the
first quarter of 2004 this facility has been providing par-baked
donuts, Timbits and bread products. The income earned from this
investment represents the majority of the improvement in equity
income from fiscal 2002 to 2004. Future income growth from the
existing product lines will be primarily based on systemwide
sales growth.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A second significant equity investment is our 50-50 partnership
with Wendy&#146;s Restaurants of Canada, which relates to the
operation of combination restaurants throughout Canada. The
income generated from this investment has remained at a
relatively constant percentage of our total revenues during
fiscal 2002, 2003 and 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Other Income and Expense</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Other income and expense includes amounts that are not directly
derived from our primary businesses. This includes expenses
related to restaurant closures, other asset write-offs, foreign
exchange gains and losses and minority interest. Our adoption in
fiscal 2004 of FIN&nbsp;46R resulted in the consolidation of
certain franchise restaurants and the recognition of
approximately $1.4&nbsp;million in minority interest expense
related to these restaurants. This expense was largely offset by
favourable currency adjustments resulting in an unrealized
foreign exchange gain of approximately $1.4&nbsp;million
associated with the translation of U.S.&nbsp;denominated
intercompany debt with Wendy&#146;s.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our fiscal 2003 other income of approximately $3.1&nbsp;million
included foreign exchange gains of approximately
$3.8&nbsp;million, less a loss on disposal of fixed assets of
approximately $1.5&nbsp;million relating to the sale of certain
real estate properties.
</DIV>

<P align="center" style="font-size: 10pt;">57

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In fiscal 2002, the largest portion of other income related to a
gain on the disposal of our cup manufacturing business of
approximately $5.0&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Interest Expense (Including Affiliated Interest
Expense)</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Interest expense was $16.3&nbsp;million in fiscal 2004,
$18.1&nbsp;million in fiscal 2003 and $23.2&nbsp;million in
fiscal 2002. The change year over year primarily relates to a
decrease in affiliated interest expense of $1.7&nbsp;million in
fiscal 2004 and $6.7&nbsp;million in fiscal 2003. Of these
decreases, approximately $0.8&nbsp;million in fiscal 2004 and
$4.6&nbsp;million in fiscal 2003 relate to lower average
indebtedness during the applicable year and approximately
$0.9&nbsp;million in fiscal 2004 and $2.1&nbsp;million in fiscal
2003 relate to changes in foreign exchange rates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Interest Income</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Interest income was $2.8&nbsp;million in fiscal 2004,
$2.1&nbsp;million in fiscal 2003 and $2.9&nbsp;million in fiscal
2002. Changes primarily relate to changes in average cash
balances throughout the years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Income Taxes</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our effective income tax rate for fiscal 2004 was 32.9%,
compared to 40.6% for fiscal 2003 and 37.6% for fiscal 2002. The
rate was lower in 2004 as a result of the reduction in Canadian
tax rates and a non-recurring increase in the valuation
allowance for deferred taxes associated with foreign tax credits
that occurred in fiscal 2003. The rate was higher in fiscal 2003
compared to fiscal 2002 primarily due to the aforementioned
change to the valuation allowance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Comprehensive Income</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Comprehensive income increased $47.9&nbsp;million and decreased
$2.1&nbsp;million in 2004 and 2003, respectively. Net income
increased $48.8&nbsp;million and $23.5&nbsp;million in 2004 and
2003, respectively. Due almost entirely to unfavourable
translation adjustments, the impact from translation and other
adjustments decreased comprehensive income by $0.9&nbsp;million
and $25.6&nbsp;million in 2004 and 2003, respectively. There was
strengthening in the Canadian dollar in fiscal 2004 and an even
more significant improvement in the Canadian dollar in fiscal
2003 versus 2002.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Liquidity and Capital Resources</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Overview</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our primary source of liquidity has historically been cash
provided by our Canadian operating activities, which has been
used to fund continued growth in restaurants, other capital
expenditures, acquisitions and investments. We have also
historically received significant financing from Wendy&#146;s.
Historically, our Canadian operations have managed their own
cash on a centralized basis and independent of Wendy&#146;s. Our
U.S.&nbsp;operations&#146; cash was managed by Wendy&#146;s.
U.S.&nbsp;cash receipts were transferred to Wendy&#146;s on a
regular basis and Wendy&#146;s provided funds to cover the
disbursements. To the extent receipts were less than
disbursements, the U.S.&nbsp;operations obtained borrowings from
Wendy&#146;s. Wendy&#146;s has informed us that they intend that
notes and trade balances outstanding as of October&nbsp;2, 2005,
between Wendy&#146;s and us, other than the
US$960.0&nbsp;million of indebtedness, which will be repaid by
us with the net proceeds from this offering and the term loan
agreement, will be distributed by us to Wendy&#146;s or
contributed as equity to us in the fourth quarter of 2005,
forming a continuing part of our equity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our primary liquidity and capital requirements are for new store
construction and general corporate needs. Historically, our
working capital needs have not been significant because of our
focused management of accounts receivable and inventory. We
believe we will have sufficient cash flows from operations to
fund our working capital requirements.
</DIV>

<P align="center" style="font-size: 10pt;">58

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<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If additional funds are needed for strategic initiatives or
other corporate purposes, we believe we could borrow additional
funds while maintaining a strong capital structure. Our ability
to issue additional equity is constrained because our issuance
of additional shares may cause the spin-off to be taxable, and
under the tax sharing agreement we would be required to
indemnify Wendy&#146;s against the tax.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We are committed to a strong capital structure and financial
profile. In connection with our separation from Wendy&#146;s, we
and Wendy&#146;s determined the amount of debt that we would
incur after considering our ability to service the debt, our
leasing arrangements, our ability to finance current and future
growth initiatives and the capital structure of comparable
companies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Total borrowings, as well as cash and cash equivalents, as
presented in our historical consolidated financial statements
are not representative of the debt or cash and cash equivalents
that we will have following our separation from Wendy&#146;s.
Historically, Wendy&#146;s has centrally managed its capital
structure in order to optimize its costs of funding and
financial flexibility at the corporate level. Consequently, the
debt being carried in our historical financial statements does
not necessarily reflect our debt capacity and financing
requirements. See &#147;Unaudited Pro Forma Consolidated
Financial Information.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Loan Agreements</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of October&nbsp;2, 2005, we have a $25.0&nbsp;million
revolving credit facility which is guaranteed by Wendy&#146;s
and undrawn. Prior to the completion of this offering we expect
to enter into a term loan agreement, under which we will incur
new long-term indebtedness of approximately $500.0&nbsp;million
in aggregate principal amount. We also intend to enter into two
revolving credit facilities: a $200.0&nbsp;million revolving
credit facility in Canada and a US$100.0&nbsp;million revolving
credit facility in the U.S.&nbsp;The terms of these new
borrowing arrangements have not yet been finalized.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In September 2005 we distributed, as a dividend on our common
shares, a promissory note to Wendy&#146;s in the principal
amount of US$960.0&nbsp;million. The note is payable within
30&nbsp;days of demand and bears an interest rate of
3.0%&nbsp;per annum. We intend to use the net proceeds from this
offering and the term loan agreement to repay our obligations
under this note. We have hedged most of the U.S.&nbsp;dollar
foreign currency risk to align with the expected repayment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Comparative Cash Flows</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Operating Activities.</I> Net cash provided from operating
activities was $277.5&nbsp;million for the first nine months of
2004 as compared to $168.2&nbsp;million for the first nine
months of 2005. Net cash provided from operating activities was
$146.9&nbsp;million in fiscal 2002, compared to
$147.2&nbsp;million in fiscal 2003 and $400.6&nbsp;million in
fiscal 2004. Operating cash flows for the first nine months of
2005 declined $109.3&nbsp;million due primarily to timing
differences in working capital relating to payments of accounts
payable and accrued expenses and lower net cash inflows relating
to amounts due from and to Wendy&#146;s. In addition, interest
and tax payments for the first nine months of 2005 were higher
than in the comparative prior year period. Partially offsetting
these operating cash flow declines, net income, net of
amortization and depreciation expense, was higher for the first
nine months of 2005 compared to the first nine months of 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Net operating cash flows in fiscal 2003 were $0.3&nbsp;million
higher than fiscal 2002 and $253.4&nbsp;million lower than
fiscal 2004. Cash flows in fiscal 2003 compared to fiscal 2002
benefited from higher net income, net of amortization and
depreciation expense, which was substantially offset by higher
interest and tax payments due to timing. Compared to fiscal
2003, fiscal 2004 cash flows benefited from higher net income,
net of amortization and depreciation expense, increases in
accounts payable and accrued expenses relating primarily to the
timing of vendor payments and also benefited from lower interest
payments. In addition, in fiscal 2004 we received more than
$120.0&nbsp;million in additional amounts from Wendy&#146;s. See
&#147;&#151;&nbsp;Financing Activities&#148; below for a
description of the cash flows between us and Wendy&#146;s.
</DIV>

<P align="center" style="font-size: 10pt;">59

</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Investing Activities.</I> Net cash used in investing
activities for the first nine months of 2004 was
$255.4&nbsp;million as compared to $151.7&nbsp;million for the
first nine months of 2005. Net cash used in investing activities
was $597.3&nbsp;million in 2002, $108.0&nbsp;million in 2003 and
$357.0&nbsp;million in 2004. Capital expenditures is typically
the largest ongoing component of our investing activities and
includes expenditures for new restaurants, improvements to
existing restaurants and other capital expenditures. A summary
of capital expenditures for fiscal 2002, 2003 and 2004 and for
the first nine months of 2004 and 2005 is as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="53%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">Fiscal Years</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">First Nine Months</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B><FONT face="helvetica,arial">Capital expenditures</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B><FONT face="helvetica,arial">(in millions)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">New restaurants
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">82.7</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">89.1</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">132.5</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">65.8</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">52.6</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Store improvements
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6.5</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">29.9</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25.7</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">20.8</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">30.0</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other capital needs
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22.6</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12.9</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">39.6</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">39.7</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">49.3</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total capital expenditures
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">111.8</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">131.9</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">197.8</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">126.3</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">131.9</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In fiscal 2004, new restaurant capital expenditures were
$68.9&nbsp;million in Canada and $63.6&nbsp;million in the U.S.,
both of which increased over the prior year. We expect fiscal
2005 capital expenditures to be in the range of
$225.0&nbsp;million to $250.0&nbsp;million for new restaurant
development, remodeling, maintenance, technology initiatives and
other capital needs. Capital spending in fiscal 2005 is expected
to be higher than the last several years due primarily to our
new distribution and warehousing facility to be completed in
2006 to better serve our distribution needs. The expected
investment in the new facility is in excess of
$70.0&nbsp;million, of which approximately 25.0% was spent in
fiscal 2004. It is currently estimated that approximately 70.0%
will be spent in 2005 and 5.0% in 2006. We anticipate fiscal
2006 systemwide new restaurant growth will be similar to 2005 in
the range of 180 to 200.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Other significant items impacting our investing cash flows in
the nine month comparative periods included net short term loans
made to Wendy&#146;s of $103.9&nbsp;million for the first nine
months of 2004 compared to $21.9&nbsp;million in the first nine
months of 2005, the $60.9&nbsp;million acquisition of
42&nbsp;restaurants in New England in 2004 compared to no
restaurant acquisitions made in 2005 and the 2004 maturity of
short term investments of $31.9&nbsp;million compared to no
similar investments or maturities in 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The $489.3&nbsp;million difference between fiscal 2002 and 2003
investing activity is primarily related to a $544.8&nbsp;million
change in our investing cash flows with Wendy&#146;s. (See also
&#147;Financing Activities&#148; below for a description of the
cash flows between us and Wendy&#146;s.) Also, in fiscal 2002 we
received proceeds of $31.5&nbsp;million from the sale of our cup
business and made investments primarily in our joint venture
with IAWS totaling $33.5&nbsp;million, compared to
$9.0&nbsp;million invested in fiscal 2003. The
$249.0&nbsp;million increase in investing cash used in fiscal
2004 compared to 2003 was primarily driven by a
$197.6&nbsp;million net increase in cash outflows for loans made
to Wendy&#146;s. Other significant differences included
short-term investments of $31.9&nbsp;million made in fiscal 2003
which matured in 2004 and $60.9&nbsp;million used for the 2004
acquisition of 42&nbsp;restaurants in New England. As in prior
years, we may invest in new business opportunities and expand
our joint venture with IAWS. We will also evaluate other
opportunities as they arise.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Financing Activities.</I> Financing activities provided cash
of $18.6&nbsp;million for the first nine months of 2004 and used
cash of $26.2&nbsp;million for the first nine months of 2005.
Financing activities provided cash of $460.3&nbsp;million, used
cash of $39.4&nbsp;million and provided cash of
$0.5&nbsp;million in 2002, 2003 and 2004, respectively. The
primary differences impacting the comparability of financing
activities between years are net cash flows related to debt
between us and Wendy&#146;s.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Since 1995 we have been a wholly-owned subsidiary of
Wendy&#146;s. Accordingly, we did not seek significant external
financing as we received funding in various forms from
Wendy&#146;s. Wendy&#146;s primarily uses a worldwide
centralized approach to cash management and the financing of
</DIV>

<P align="center" style="font-size: 10pt;">60

</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt;">
operations. Types of transactions between us and Wendy&#146;s
include (1)&nbsp;transfers of cash from our U.S.&nbsp;operations
to Wendy&#146;s bank account on a regular basis, (2)&nbsp;net
cash borrowings from Wendy&#146;s used to fund operations,
capital expenditures, acquisitions and for other purposes,
(3)&nbsp;payment of related party dividends and interest to
Wendy&#146;s on a regular basis and (4)&nbsp;allocations of
corporate expenses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Contractual Obligations</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our significant contractual obligations and commitments as of
January&nbsp;2, 2005 are shown in the following table. Purchase
obligations primarily include commitments for advertising
expenditures and purchases for certain food-related ingredients.
These contractual obligations for long-term debt reflect our
historical debt level, which is not representative of the debt
repayments that will actually be due under our capital structure
at the completion of this offering.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="42%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B><FONT face="helvetica,arial">Payments Due by Period</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Less than</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">After</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" nowrap><B><FONT face="helvetica,arial">Contractual Obligations</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">1&nbsp;Year</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">1-3&nbsp;Years</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">3-5&nbsp;Years</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">5&nbsp;Years</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Total</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Long-term debt, including current
    maturities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">283</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">465</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">721</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16,876</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">18,345</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Capital leases
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,097</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16,857</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12,751</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">49,813</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">88,518</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Operating leases
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">52,406</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">94,452</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">86,006</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">326,023</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">558,887</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Purchase obligations
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">155,055</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,464</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">389</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">200</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">163,108</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total contractual
    obligations</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">216,841</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">119,238</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">99,867</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">392,912</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">828,858</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 9pt; ">

<TR style="font-size: 1pt;">
    <TD width="77%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">As of</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD align="left" nowrap><B><FONT face="helvetica,arial">Other Commercial Commitments</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">January&nbsp;2, 2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Franchisee lease and loan guarantees
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,461</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Letters of credit
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,959</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total other commercial
    commitments</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,420</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of January&nbsp;2, 2005, we have guaranteed certain leases
and debt payments of franchisees amounting to $1.5&nbsp;million.
In the event of default by a franchisee, we generally retain the
right to acquire possession of the related restaurants. We are
also the guarantor on $5.0&nbsp;million in letters of credit
with various parties; however, we do not expect any material
loss to result from these instruments because we do not believe
performance will be required. Effective January&nbsp;1, 2003, we
adopted FIN&nbsp;45, &#147;Guarantor&#146;s Accounting and
Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others.&#148; In accordance with
FIN&nbsp;45 and based on available information, we have accrued
for certain guarantees and indemnities as of October&nbsp;2,
2005 and January&nbsp;2, 2005 in amounts which, in total, are
not material.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Certain of our U.S.&nbsp;employees participate in two
Wendy&#146;s-sponsored U.S.&nbsp;domestic defined benefit
pension plans. Wendy&#146;s manages those plans on a
consolidated basis and makes contributions to those plans in
amounts sufficient, on an actuarial basis, to fund, at a
minimum, its portion of the plans&#146; normal cost on a current
basis, and to fund its portion of the actuarial liability for
past service costs in accordance with Department of Treasury
Regulations. Obligations to persons who are participants as of
the date of this prospectus will remain the responsibility of
Wendy&#146;s. See &#147;Agreements Between Wendy&#146;s and
Us.&#148; We do not intend to adopt a new U.S.&nbsp;defined
benefit pension plan. Based on a headcount allocation approach,
our pro rata expense related to the Wendy&#146;s plans was not
significant.
</DIV>

<P align="center" style="font-size: 10pt;">61

</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At January&nbsp;2, 2005, our reserves for doubtful receivables
and possible losses on notes receivable totalled
$3.1&nbsp;million. These reserves are included in accounts
receivable. As of October&nbsp;2, 2005, the reserve for doubtful
receivables and possible losses on notes receivable declined to
$1.7&nbsp;million as our Canadian operations improved processes
related to collections for franchisee and other accounts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, as of October&nbsp;2, 2005 we were obligated to
Wendy&#146;s on a promissory note in the principal amount of
US$960.0&nbsp;million. The note is payable within 30&nbsp;days
of demand and bears an interest rate of 3.0%&nbsp;per annum. We
intend to use the net proceeds from this offering and the term
loan agreement to repay our obligations under this note. We have
hedged most of the U.S.&nbsp;dollar foreign currency risk to
align with the expected repayment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Off-Balance Sheet Arrangements</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We do not have &#147;off-balance sheet&#148; arrangements as of
October&nbsp;2, 2005 and January&nbsp;2, 2005 as that term is
described by the SEC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Quantitative and Qualitative Disclosures about Market Risk</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Inflation</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Financial statements determined on a historical cost basis may
not accurately reflect all the effects of changing prices on an
enterprise. Several factors tend to reduce the impact of
inflation for our business. Inventories approximate current
market prices, there is some ability to adjust prices and
liabilities are repaid with dollars of reduced purchasing power.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Foreign Exchange Risk</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our exposure to foreign exchange risk is primarily related to
fluctuations in the Canadian dollar relative to the
U.S.&nbsp;dollar. The impact of foreign exchange rates on our
income statement has predominantly been related to our
U.S.&nbsp;operations. In addition to the foreign currency
exposure from ongoing operations, we have identified exposure to
Canadian dollar exchange rates related to certain intercompany
cross-border notes. In connection with the completion of this
offering, these intercompany notes are now expected to be repaid
and, accordingly, were marked-to-market in 2005. Previously, the
translation of these intercompany notes was recorded as a
component of comprehensive income, rather than in income, in
accordance with FAS&nbsp;52, <I>Foreign Currency
Translation</I>. To manage this additional exposure, we entered
into forward currency contracts to sell $500.0&nbsp;million and
buy US$427.4&nbsp;million. Under Statement of Financial
Accounting Standards (SFAS)&nbsp;No.&nbsp;133, these forward
currency contracts are designated as highly effective cash flow
hedges. In accordance with SFAS&nbsp;No.&nbsp;133, we defer
unrealized gains and losses arising from these contracts until
the impact of the related transactions occur. The fair value
unrealized losses on these contracts as of October&nbsp;2, 2005
was $5.0&nbsp;million. During the first nine months of 2005,
$5.1&nbsp;million was recorded as a net transaction gain related
to the intercompany notes prior to entering into the forward
currency contracts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Also, in the fourth quarter of 2005 we entered into forward
currency contracts to sell $578.0&nbsp;million and buy
US$490.5&nbsp;million in order to hedge certain net investment
positions in Canadian subsidiaries. Under
SFAS&nbsp;No.&nbsp;133, these forward currency contracts are
designated as highly effective hedges and changes in the fair
value of these instruments will be immediately recognized in
other comprehensive income, to offset the change in the value of
the net investment being hedged.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The ongoing operational exposure to U.S.&nbsp;dollar exchange
rates on our cash flows primarily includes purchases paid for by
Canadian operations in U.S.&nbsp;dollars and payments from our
Canadian operations to our U.S.&nbsp;operations and to
Wendy&#146;s. Net cash flows between the Canadian and
U.S.&nbsp;dollar currencies were in excess of
$100.0&nbsp;million for the first nine months of 2005 and for
fiscal
</DIV>

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<DIV align="left" style="font-size: 10pt;">
2004. Forward currency contracts to sell Canadian dollars and
buy US$34.9&nbsp;million and US$38.8&nbsp;million were
outstanding as of October&nbsp;2, 2005 and January&nbsp;2, 2005,
respectively, to hedge purchases from third parties and
intercompany payments. The contracts outstanding at
October&nbsp;2, 2005 and January&nbsp;2, 2005 mature at various
dates through April 2006 and June 2005. The fair value
unrealized losses on these forward contracts was
$6.6&nbsp;million as of October&nbsp;2, 2005 and
$6.0&nbsp;million as of January&nbsp;2, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Wendy&#146;s has historically managed certain of our hedging
arrangements. After the completion of this offering, we will
manage all hedging arrangements. We intend to manage our cash
flows and balance sheet exposure to changes in the value of
foreign currencies. We may use derivative products to reduce the
risk of a significant negative impact on our U.S.&nbsp;dollar
cash flows or income. We do not hedge foreign currency exposure
in a manner that would entirely eliminate the effect of changes
in foreign currency exchange rates on net income and cash flows.
We have a policy forbidding trading or speculating in foreign
currency. By their nature, derivative financial instruments
involve risk including the credit risk of non-performance by
counterparties, and our maximum potential loss may exceed the
amount recognized in our balance sheet. To minimize this risk,
we limit the notional amount per counterparty to a maximum of
$100.0&nbsp;million except in special circumstances for which
board approval is obtained.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Changes in the fair value of the cash flow hedges and net
investment hedges due to changes in U.S. and Canadian dollar
exchange rates are offset by the underlying transaction with
little or no impact to our net income.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At the current level of annual operating income generated from
our U.S.&nbsp;operations, if the U.S.&nbsp;currency rate changes
by $0.05, or 4.0%, compared to the
average&nbsp;2005&nbsp;year-to-date exchange rate, for an entire
year, the annual impact on our net income would be immaterial.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Interest Rate Risk</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Historically, we have had insignificant external borrowings. We
will become exposed to interest rate risk impacting our net
borrowing costs if our new long-term borrowings of
$500.0&nbsp;million bear a floating rate of interest. We will
seek to manage our exposure to interest rate risk and to lower
our net borrowing costs by managing the mix of fixed and
floating rate instruments based on capital markets and business
conditions. We will not enter into speculative swaps or other
speculative financial contracts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Commodity Risk</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We purchase certain products in the normal course of business,
the prices of which are affected by commodity prices. Therefore,
we are exposed to some price volatility related to weather and
various other market conditions outside of our control. However,
we do employ various purchasing and pricing contract techniques
in an effort to minimize volatility. Generally these techniques
include setting fixed prices with suppliers, setting in advance
the price for products, such as green coffee, to be delivered in
the future and unit pricing based on an average of commodity
prices over the corresponding period of time. We do not
generally make use of financial instruments to hedge commodity
prices, partly because of these contract pricing techniques.
While price volatility can occur, which would impact profit
margins, we have the ability to increase selling prices to
offset a rise in commodity prices.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Concentration of Credit Risk</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have cash in various Canadian bank accounts above amounts
guaranteed by the Canada Deposit Insurance Corporation (CDIC).
The amount in Canadian banks above CDIC limits was approximately
$114.6&nbsp;million and $129.5&nbsp;million as of
October&nbsp;2, 2005 and January&nbsp;2, 2005, respectively. We
utilize only high-grade banks in Canada for accounts that might
exceed CDIC limits. We also have cash balances in various
U.S.&nbsp;bank accounts above the Federal Deposit Insurance
</DIV>

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<DIV align="left" style="font-size: 10pt;">
Corporation (FDIC)&nbsp;guarantee limits. We subscribe to a bank
rating system and only utilize high-grade banks for accounts
that might exceed these limits. The amount in U.S.&nbsp;banks
above FDIC limits was approximately $1.9&nbsp;million as of
October&nbsp;2, 2005 and was not material as of January&nbsp;2,
2005.
</DIV>

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<B>The Application of Critical Accounting Policies</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We describe our significant accounting policies, including our
critical accounting policies, in Note&nbsp;1 of our audited
historical consolidated financial statements. Critical
accounting policies are those that we believe are both
significant and may require us to make difficult, subjective or
complex judgments, often because we need to estimate the effect
of inherently uncertain matters. The preparation of financial
statements in conformity with accounting principles generally
accepted in the U.S.&nbsp;requires us to make assumptions and
estimates that can have a material impact on the results of our
operations. The earnings reporting process is covered by our
system of internal controls, and generally does not require
significant estimates and judgments. However, estimates and
judgments are inherent in the calculations of royalty and other
franchise-related revenue collections, legal obligations, income
taxes, various other commitments and contingencies, valuations
used when assessing potential impairment of goodwill, other
intangibles and other long lived assets and the estimation of
the useful lives of fixed assets and other long-lived assets.
While we apply our judgment based on historical experience,
current economic and industry conditions and various assumptions
believed to be reasonable under the circumstances, actual
results could vary from these assumptions. Materially different
amounts may be reported using different assumptions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Revenue Recognition</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Revenue at company-operated restaurants is recognized as
customers pay for products at the time of sale. We operate
warehouses in Canada to distribute coffee and other dry goods to
an extensive franchise system. Revenues from these sales are
recorded when the product is delivered to the franchisee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Franchise revenues consist of royalties, rents and various
franchisee fees. Royalties and rent revenues are recognized in
the month earned at estimated realizable amounts, and fee
revenues are recognized when the related services have been
performed and when the related franchise restaurant is opened.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We provide for estimated losses for revenues that are not likely
to be collected. Although we generally enjoy a good relationship
with our franchisees, and collection rates are currently high,
if average sales or the financial health of our franchisees were
to deteriorate, we might have to increase reserves against
collection of franchise revenues.
</DIV>

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<B><I>Income Taxes</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have accounted for, and currently account for, income taxes
in accordance with SFAS&nbsp;No.&nbsp;109, <I>Accounting for
Income Taxes</I>. We record both Canadian and U.S.&nbsp;income
tax liabilities utilizing known obligations and estimates of
potential obligations. A deferred tax asset or liability is
recognized whenever there are future tax effects from existing
temporary differences and operating loss and tax credit
carryforwards. When considered necessary, we record a valuation
allowance to reduce deferred tax assets to the balance that is
more likely than not to be realized. Management must make
estimates and judgments on future taxable income, considering
feasible tax planning strategies and taking into account
existing facts and circumstances, to determine the proper
valuation allowance. When we determine that deferred tax assets
could be realized in greater or lesser amounts than recorded,
the asset balance and income statement reflect the change in the
period such determination is made. Due to changes in facts and
circumstances and the estimates and judgments that are involved
in determining the proper valuation allowance, differences
between actual future events and prior estimates and judgments
could result in adjustments to this valuation
</DIV>

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<DIV align="left" style="font-size: 10pt;">
allowance. We use an estimate of our annual effective tax rate
at each interim period based on the facts and circumstances
available at that time while the actual effective tax rate is
calculated at year-end. As a subsidiary of Wendy&#146;s, we are
not a separate taxable entity for U.S.&nbsp;federal and certain
state income tax purposes. Consequently, Wendy&#146;s includes
our results of operations in its combined U.S.&nbsp;federal and
state income tax returns. Our U.S.&nbsp;tax provision is
computed on a separate return basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Property and Equipment, and Leasehold Improvements</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Depreciation and amortization are recognized using the
straight-line method in amounts adequate to amortize costs over
the following estimated useful lives: buildings, up to
40&nbsp;years; restaurant equipment, up to 15&nbsp;years; other
equipment, up to 10&nbsp;years; and leasehold improvements and
property under capital leases, the lesser of the useful life of
the asset or the lease term, as that term is defined in
SFAS&nbsp;No.&nbsp;13, &#147;Accounting for Leases,&#148; as
amended. We estimate useful lives on buildings and equipment
based on historical data and industry trends. We capitalize
certain internally developed software costs which are amortized
over a period of up to 10&nbsp;years. We monitor our
capitalization and amortization policies to ensure they remain
appropriate. Intangibles separate from goodwill are amortized on
a straight-line basis over periods of up to 30&nbsp;years. Lives
may be related to legal or contractual lives or must be
estimated by management based on specific circumstances.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Impairment of Long-Lived Assets</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Long-lived assets are grouped into operating markets and tested
for impairment whenever an event occurs that indicates that
impairment may exist. We test for impairment using the cash
flows of the operating markets. A significant deterioration in
the cash flows of an operating market or other circumstances may
trigger impairment testing. If impairment is indicated, the fair
value of the fixed assets is estimated using the discounted cash
flows of the market or third party appraisals. The interest rate
used in preparing discounted cash flows is management&#146;s
estimate of the weighted average cost of capital.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Goodwill</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Goodwill resulted primarily from our acquisition of 42
restaurants in New England in 2004. Goodwill is not subject to
amortization. We test goodwill for impairment annually in the
fourth quarter (or in interim periods if events or changes in
circumstances indicate that its carrying amount may not be
recoverable) by comparing the fair value of each reporting unit,
as measured by discounted cash flows and market multiples based
on earnings, to the carrying value, to determine if there is an
indication that a potential impairment may exist. Our reporting
units are Canada and the U.S.&nbsp;Each constitutes a business
and has discrete financial information available that is
regularly reviewed by management. One of the most significant
assumptions is the projection of future sales. We review our
assumptions each time goodwill is tested for impairment and make
appropriate adjustments, if any, based on facts and
circumstances available at that time. We tested for goodwill
impairment as of year-end 2004, and no impairment was indicated.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Reserves Contingencies for Litigation and Other
Matters</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the normal course of business, we must make continuing
estimates of potential future legal obligations and liabilities,
which requires the use of management&#146;s judgment on the
outcome of various issues. Management may also use outside legal
advice to assist in the estimating process. However, the
ultimate outcome of various legal issues could be different than
management estimates, and adjustments to income could be
required.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Variable Interest Entities</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We adopted FIN&nbsp;46R in 2004. We enter into flexible lease
arrangements with certain franchisees who are not required to
invest a significant amount of equity. Because the legal entity
within which such a franchise operates is considered to not be
adequately capitalized, that entity is considered a variable
interest entity (VIE). Based on our review of the financial
statements received from these franchisees, our mathematical
projections indicate we are the primary beneficiary of these
VIEs and, accordingly, we have consolidated approximately 80
franchise restaurants as of 2004, or approximately 3.0% of our
total franchise restaurants. The related minority interest is
not considered material and is classified in other income, net
on the statement of income and other long-term liabilities on
the balance sheet.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have no equity interest in any of our franchisees and have no
&#147;off-balance sheet&#148; exposures relative to any of our
franchisees. None of our assets serves as collateral for the
consolidated franchisees, and creditors of these franchisees
have no recourse to us. The only exposure to us related to these
VIEs relates to the collection of amounts due to us, which are
collected weekly and which were recorded net of uncollectible
amounts in our financial statements prior to the adoption of
FIN&nbsp;46R. The agreements governing the lease arrangements
can be cancelled by either the franchisee or us with
30&nbsp;days notice, further reducing our potential exposure.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Franchisee VIEs for which we are determined to be the primary
beneficiary have no impact on our reported net income. The
impact of consolidating these VIEs to our balance sheet is also
not significant. There is a small percentage of franchise
restaurants considered to be VIEs in which we hold a significant
variable interest, but for which we are not the primary
beneficiary. Our maximum exposure to loss as a result of its
involvement with this small percentage of franchise restaurants
is also not material.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Recently Issued Accounting Standards</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In December 2004, the FASB issued SFAS&nbsp;No.&nbsp;123R,
&#147;Share-Based Payment,&#148; which requires an entity to
measure the cost of employee services received in exchange for
an award of equity instruments based on the grant-date fair
value of the award using an option-pricing model. The cost of
the awards, including the related tax effects, will be
recognized in income. This statement eliminates the alternative
to use the intrinsic value method for valuing stock based
compensation, which typically resulted in recognition of no
compensation cost. This statement was to become effective for
interim or annual periods beginning after June&nbsp;15, 2005,
with early adoption encouraged. On April&nbsp;15, 2005, the SEC
issued Release No.&nbsp;33-8568, which amended the date for
compliance with SFAS&nbsp;No.&nbsp;123R to the first interim or
annual period of the first fiscal year beginning after
June&nbsp;15, 2005, with early adoption permitted. On
October&nbsp;27, 2005, Wendy&#146;s announced that its
compensation committee, after discussion with its board of
directors, approved accelerated vesting of all outstanding stock
options, except those held by the independent directors of
Wendy&#146;s. The decision to accelerate vesting of stock
options was made primarily to reduce non-cash compensation
expense that would have been recorded in future periods
following adoption of SFAS&nbsp;No.&nbsp;123R. and is expected
to have a positive effect on employee morale and retention. The
Wendy&#146;s compensation committee imposed a holding period
that will require all executive officers to refrain from selling
net shares acquired upon any exercise of these accelerated
options, until the date on which the exercise would have been
permitted under the option&#146;s original vesting terms or, if
earlier, the executive officer&#146;s death, disability or
termination of employment. Under SFAS&nbsp;No.&nbsp;123R, the
classification of cash flows between operating and financing
activities will be affected due to a change in treatment for tax
benefits realized. As a result of the acceleration of vesting on
the majority of Wendy&#146;s outstanding stock options, we do
not expect the adoption of SFAS&nbsp;No.&nbsp;123R to have a
significant impact on our financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
SFAS&nbsp;No.&nbsp;123R requires recognition of compensation
cost under a non-substantive vesting period approach, which
requires recognition of compensation expense when an employee is
eligible
</DIV>

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<DIV align="left" style="font-size: 10pt;">
to retire. We have historically recognized this cost under the
nominal vesting approach, generally over the normal vesting
period of the award. When we adopt SFAS&nbsp;No.&nbsp;123R in
the first quarter of 2006, we will change to the non-substantive
approach.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In June 2005, the Emerging Issues Task Force (EITF) reached a
consensus on Issue&nbsp;No.&nbsp;05-06, &#147;Determining the
Amortization Period for Leasehold Improvements.&#148; The
consensus requires that the amortization period for leasehold
improvements acquired in a business combination or acquired
subsequent to lease inception should be based on the lesser of
the useful life of the leasehold improvements or the period of
the lease including all renewal periods that are reasonably
assured of exercise at the time of the acquisition. The
consensus is to be applied prospectively to leasehold
improvements acquired subsequent to June&nbsp;29, 2005. This
consensus is consistent with our accounting policy and thus had
no impact upon adoption.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In October 2005, the FASB issued FSP FAS&nbsp;123(R)-2,
&#147;Practical Accommodation to the Application of Grant Date
as Defined in FASB Statement No.&nbsp;123(R),&#148; which
provides clarification of the concept of mutual understanding
between employer and employee with respect to the grant date of
a share-based payment award. This FSP provides that a mutual
understanding of the key terms and conditions of an award shall
be presumed to exist at the date the award is approved by
management if the recipient does not have the ability to
negotiate the key terms and conditions of the award and those
key terms and conditions will be communicated to the individual
recipient within a relatively short time period from the date of
approval. This guidance shall be applied upon initial adoption
of SFAS&nbsp;No.&nbsp;123R. We do not expect adoption to have a
significant impact on our financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In October 2005, the FASB issued FSP FAS&nbsp;13-1,
&#147;Accounting for Rental Costs Incurred during a Construction
Period,&#148; which addresses the accounting for rental costs
associated with operating leases that are incurred during a
construction period. This FSP requires that rental costs
associated with ground or building operating leases that are
incurred during a construction period be recognized as rental
expense and included in income from continuing operations. The
guidance in this FSP shall be applied to the first reporting
period beginning after December&nbsp;15, 2005, with early
adoption permitted. We are currently evaluating the impact of
adopting FSP FAS&nbsp;13-1, but do not expect it to have a
significant impact on our financial statements.
</DIV>

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<B>BUSINESS</B>
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<B>Overview</B>
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We are the largest QSR chain in Canada based on systemwide sales
and number of restaurants open, with a menu spanning a broad
range of categories that appeal to customers throughout the day,
such as premium blend coffee, flavoured cappuccinos, specialty
and steeped teas, home-style soups, fresh sandwiches and freshly
baked goods. According to the CRFA and Statistics Canada, in
2004 our system represented 22.6% of the $14.0&nbsp;billion QSR
segment of the Canadian foodservice industry based on sales
dollars, almost 25.0% larger than McDonald&#146;s, our nearest
competitor. According to a tracking study we conducted in 2003,
approximately 46.0% of our Canadian customers visit our
restaurants four or more times per week. We believe we have
achieved this outstanding customer loyalty by offering a varied
menu of products with superior quality and consistency in a
convenient and friendly environment at an exceptional value and
by being very involved in the communities we serve. The appeal
of our menu and our commitment to convenience also allow most of
our restaurants to operate 24&nbsp;hours each day with no
two-hour period accounting for more than 20.0% of our average
daily sales.
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Our restaurants operate under a variety of formats. A standard
Tim Hortons restaurant is a free-standing building ranging in
size from 1,400 to 3,090&nbsp;square feet with a convenient
drive-thru window and featuring innovative merchandising
techniques designed to capture our customers&#146; senses and
generate incremental sales. As of October&nbsp;2, 2005, we had a
system of 2,801 restaurants in Canada and the U.S. Our 2,529
restaurants across Canada include 660&nbsp;non-standard, smaller
restaurants in locations such as universities, hospitals and
office buildings. We have a significant and long-standing
strategic partnership with Exxon-Mobil&#146;s Canadian
subsidiary, with more than 325&nbsp;kiosks located within their
Esso<FONT style="font-variant:SMALL-CAPS">&#174;</FONT>
convenience stores in Canada. In the U.S., we have a regional
presence in the Northeast and Midwest with 272&nbsp;restaurants
in 10&nbsp;states, concentrated in three major markets. As of
October&nbsp;2, 2005, franchisees operated 2,705, or 98.8%, of
the restaurants in Canada and 207, or 76.1%, of the restaurants
in the U.S.
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We have developed what we believe to be a superior business
model characterized by financial stability and scalability,
operational excellence and flexibility. Our diverse revenue and
operating income base is generated from franchisee royalties and
fees, rental income, warehouse sales and company-operated
stores, limiting our exposure to commodity price fluctuations.
Franchisee royalties are typically paid weekly based on a
percentage of gross sales. We have a rigorous restaurant site
selection and development process and differentiate ourselves
from most restaurant companies by controlling the real estate of
most of our franchise restaurants. Our vertically-integrated
manufacturing and distribution capabilities include a joint
venture bakery and a coffee roasting plant. These operations
improve product quality, variety and consistency, expand our
product offering capabilities, ensure availability and timely
delivery of products and provide economies of scale and labour
efficiencies. We have distributed dry goods and other items to
our franchisees for over 30&nbsp;years and have generated
consistent income from our product distribution and warehouse
operations.
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Since our founding in 1964, we have been committed to a strategy
of earning the trust of our customers through product quality
and price value. This focus has built Tim Hortons into one of
the most widely-recognized consumer brands in Canada, delivering
consistent revenue growth and increasing profits. Since the end
of 1995, our systemwide sales have grown at an 18.5% CAGR and
our revenues have grown at a 17.1% CAGR. This growth is a result
of expanding the number of restaurants annually by a 9.6% CAGR
and increasing average annual same-store sales by 7.0% and 10.0%
in Canada and the U.S., respectively, over that period. In
fiscal 2004, we had total revenues of $1.3&nbsp;billion,
operating income of $319.3&nbsp;million and net income of
$205.1&nbsp;million, representing increases from fiscal 2003 of
14.2%, 14.5% and 31.2%, respectively. In the nine months ended
October&nbsp;2, 2005, we had total revenues of
$1.1&nbsp;billion, operating income of $259.3&nbsp;million and
net income of $174.7&nbsp;million, representing increases from
the first nine months of fiscal 2004 of 13.1%, 11.7% and 15.8%,
respectively.
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<B>Our History</B>
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In May 1964, Tim Horton, a National Hockey League All-Star
defenseman, opened his first coffee and donut shop on Ottawa
Street in Hamilton, Ontario. In 1967, Ron Joyce, then the
operator of three Tim Hortons restaurants, became partners with
Tim Horton and together they opened 37&nbsp;new restaurants over
the next seven years. After Tim Horton&#146;s death in 1974,
Mr.&nbsp;Joyce continued to expand the chain, becoming its sole
owner in 1975. In the early 1990s, Tim Hortons and Wendy&#146;s
entered into a partnership to develop real estate and
combination restaurants containing Wendy&#146;s and Tim Hortons
under the same roof. In 1995, Wendy&#146;s purchased
Mr.&nbsp;Joyce&#146;s ownership of the Tim Hortons system.
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Initially a coffee and donut chain, Tim Hortons restaurant
offerings have evolved to meet changing consumer tastes. We have
added sandwiches, soups, specialty coffees and additional baked
goods to our staple coffee and donut offerings, and our
restaurant formats have adapted to meet our customers&#146;
growing demand for convenience and comfort. In 1996, the
addition of bagels to the Tim Hortons menu began a key shift in
our focus to the use of par-baked products&#151; products that
are baked almost to completion at a baking facility,
flash-frozen and shipped to system restaurants, where the baking
process is completed using proprietary ovens. In 2002, our joint
venture with IAWS commissioned the construction of the Maidstone
Bakeries facility, which manufactures par-baked donuts, Timbits
and other bread products for system restaurants. This facility
allows Tim Hortons restaurants to provide our signature Always
Fresh products.
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<B>Our Industry</B>
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We compete in the QSR segment in Canada and the U.S.&nbsp;Our
industry in both countries is large, growing and characterized
by change due to shifting demographic, economic and consumer
taste trends. Over the past decade, rising household income and
an increase in desire for convenience have led to growth in
total expenditures for food-away-from-home and the proportion of
total food expenditures allocated to spending on
food-away-from-home. The growth in real disposable income
combined with the increased time commitments of dual income
families is expected to continue.
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Foodservice sales in Canada grew by 2.6% in 2004 to
$46.8&nbsp;billion and are expected to surpass
$50.0&nbsp;billion in 2006, according to the CRFA. The QSR
segment represents 30.0% of the total Canadian foodservice
industry and its sales are projected to grow 4.1% in 2006. From
2000 to 2005, the Canadian QSR segment grew at a 4.1% CAGR.
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In the U.S., the QSR segment is the largest segment of the
restaurant industry. According to the 2005 Technomic Information
Service <I>Top-500 Chain Restaurant Report</I>, sales at QSRs in
the U.S.&nbsp;were approximately US$159.6&nbsp;billion in 2004,
up 7.5% over 2003, and are projected to increase at a 5.4% CAGR
between 2004 and 2009.
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<B>Our Competitive Strengths</B>
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<B><I>Iconic brand status in Canada.</I></B> Tim Hortons was
recognized as the best managed brand in Canada, according to
annual surveys published by <I>Canadian Business</I> magazine in
2004 and 2005. In addition, in an internal 2005 national study
conducted for us by Segmentation Marketing Limited, when
consumers were asked which fast service chain, convenience store
or gas station they stop at to have a coffee, snack or meal most
often, Tim Hortons was named 37.0% of the time, nearly three
times higher than the nearest competitor. We believe our leading
position in terms of market share, number of system restaurants
open and systemwide sales volume demonstrates our unparalleled
level of consumer acceptance. We believe the strength of our
brand and culture is a result of our ongoing systemwide
commitment to product quality, continuous innovation, superior
customer service, exceptional value and successful relationships
with our franchisees. Our brand has been further strengthened
over the past 30&nbsp;years by our close involvement and
participation in the communities we serve, including our
association with The Tim Horton Children&#146;s Foundation, a
non-
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profit charitable organization that provides a fun-filled camp
environment for children from economically disadvantaged homes.
We were also named one of Canada&#146;s most admired corporate
cultures for 2005 by <I>Canadian Business</I> magazine. We will
continue to leverage our brand name as we execute our growth
strategy in Canada and the U.S.
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<B><I>Leading market positions in Canada.</I></B> According to
the 2005 NPD foodservice industry report, our system represented
74.0% of the coffee and baked goods sector of the Canadian QSR
segment, based on the number of customers served over the
12&nbsp;months ended August&nbsp;31, 2005. In addition, we have
the leading market position in the Canadian QSR segment, based
on systemwide sales, and a very strong presence in every
province. We believe our presence in key markets and our ability
to leverage our scale in advertising will help us maintain and
extend our market leadership position.
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<B><I>Systemwide focus on operational excellence.</I></B> We are
an operations-driven organization. We invest substantial
resources in developing programs, processes, technology and
field support for our system of franchised and company-operated
restaurants. We focus on continuous improvement in operations so
we can consistently serve high quality food while providing
exceptional customer courtesy, order accuracy and speed of
service, thereby enhancing our customers&#146; overall
experience.
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<B><I>Energized and committed franchisee base.</I></B> Since our
founding, we have been committed to working closely with our
franchisees. Our over 1,000&nbsp;franchisees in North America
are critical to our success, delivering exceptional hands-on
customer service every day. Our franchisees are strongly
committed to our system growth, having collectively invested
over $75.0&nbsp;million of their capital in infrastructure
support during 2002 and 2003 for our proprietary Always Fresh
baking system. The average Tim Hortons franchisee in Canada has
been a franchisee for almost nine years and owns three
restaurants. Our unique franchise model, whereby we typically
acquire rights to control and develop restaurant real estate,
provides us access to a broader franchisee base and encourages
consistent execution of our growth and profitability strategy.
We actively manage and share information with our franchisees
through an advisory board, operations and business committees,
regional and national in-person meetings and annual surveys.
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<B><I>Integrated and scalable business model.</I></B> We have
invested substantial resources and capital in developing an
integrated and scalable business model. Our vertically
integrated manufacturing and distribution platforms enable us to
realize economies of scale and offer customers innovative
products. Our Always Fresh system enables us to bake and serve
fresh and consistent products throughout the day, as well as to
open restaurants in a variety of formats, sizes and locations.
We control the site selection, design and construction of our
restaurants, which enables us to increase penetration in
existing and new markets by improving customer convenience. We
control the real estate for approximately 80.0% of our system
restaurants, which generates a recurring stream of rental income.
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<B><I>Proven, experienced management team with track record of
exceptional growth.</I></B> Our executive management team has an
average tenure with us of more than 12&nbsp;years. Together with
our dedicated team of employees, they have significantly
contributed to our strong financial performance. Between 1995
and 2004, we increased our average sales per standard Canadian
restaurant from $878,000 to $1.7&nbsp;million. Our financial
performance is a result of our focus on restaurant operations,
coordination among employees and franchisees and the performance
of our vertically integrated manufacturing and distribution
platforms. We believe the strength and stability of our senior
management team will continue to be a competitive advantage as
we execute our growth strategies.
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<B>Our Business Strategy</B>
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Our goal is to increase our revenues and profitability through a
combination of increased same-store sales, new restaurant growth
and continuous improvement in our operations with new products,
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processes and technologies. We intend to achieve this goal
through the continued execution of our business strategy, which
includes the following key elements:
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<B><I>Drive sales growth at existing restaurants through
continued innovation.</I></B> We have achieved average annual
systemwide sales growth of 18.5% since the end of 1995. This
reflects our strong and increasing brand awareness, emphasis on
customer service and continuous product and process innovation.
We strive to foster a culture of innovation among our employees
and franchisees, challenging the organization to constantly
monitor and respond to the changing tastes and needs of
consumers. We believe we have a unique assortment of fresh
signature products that meet our customers&#146; needs across
all parts of the day. We plan to expand our menu to offer more
quality items under our beverage, soup, sandwich and baked goods
categories to drive sales throughout the day and attract new
customers. In addition, we intend to continue to use effective
national, regional and local advertising and promotions, as well
as our involvement in our communities, to increase our brand
awareness with consumers. We also intend to continue improving
restaurant efficiency levels and expanding each
restaurant&#146;s capacity for customer transactions to drive
incremental sales, while investing in technology to improve
customer service.
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<B><I>Sustain the health and viability of our franchisee
base.</I></B> We have developed a large, diversified, and, we
believe, highly committed franchisee base, which is a critical
component of our systemwide success. We intend to continue
strengthening our franchise system by building the Tim Hortons
brand, attracting and retaining experienced and motivated
franchisees whose interests are aligned with ours, providing new
and innovative menu offerings, providing real estate and
operational support and being involved in our franchisee
communities. We believe these measures will enhance the overall
strength of our system and provide both us and our franchisees
with attractive returns, allowing both of us to reinvest in the
business.
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<B><I>Increase penetration of the Canadian market.</I></B> We
will continue leveraging our brand strength to further penetrate
the Canadian market using our franchise business model. Although
we have a leading market position in the Canadian QSR segment,
based on systemwide sales, and a very strong presence in every
province, there are numerous growth opportunities in the Western
provinces, Quebec and select high-traffic metropolitan areas.
Our &#147;we fit anywhere&#148; strategy of non-standard formats
gives us the flexibility to add restaurants in high-traffic
consumer locations without over-saturating any individual
market. Further, our rigorous restaurant location and franchisee
selection processes are integral to the successful execution of
our growth strategy. Our long-term goal is to have between 3,500
and 4,000&nbsp;system restaurants open in Canada.
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<B><I>Pursue long-term profitable expansion in the United
States.</I></B> We have become a strong regional player in the
U.S., with locations in 10&nbsp;states, primarily in the
Northeast and Midwest regions. Tim Hortons restaurants in the
U.S.&nbsp;have experienced an average annual same-store sales
growth of 9.8% from 1999 to 2004, even as we have expanded our
U.S.&nbsp;system during that period from 108 to 251 restaurants.
We intend to continue our efforts to profitably expand our
system&#146;s U.S.&nbsp;presence by further penetrating existing
markets, entering adjacent markets and selectively pursuing
other strategic initiatives. Our goal is to have 500 system
restaurants open in the U.S.&nbsp;by the end of 2008.
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<B>Our Menu</B>
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Our menu spans a broad range of categories designed to appeal to
customers throughout the day, such as premium blend coffee,
flavoured cappuccinos, specialty and steeped teas, home-style
soups, fresh sandwiches and freshly baked goods, including
donuts, bagels, muffins, cookies, croissants and pastries.
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While the largest portion of systemwide sales are generated in
the morning daypart, we generate sales throughout the day.
According to NPD&#146;s May 2005 report:
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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    we lead the breakfast/a.m. snack category in the QSR segment
    with a 60.7% share of eater occasions, while McDonald&#146;s is
    second with a 10.3% share;</TD>
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    <TD style="font-size: 6pt">&nbsp;</TD>
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<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    we rank second in Canada in the lunch category in the QSR
    segment with a 12% share of eater occasions, compared to 23.5%
    for McDonald&#146;s;&nbsp;and</TD>
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    <TD style="font-size: 6pt">&nbsp;</TD>
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<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    we lead the p.m. snack category (which excludes dinner) in the
    QSR segment with a 44.7%&nbsp;share of eater occasions, with
    McDonald&#146;s second at 11.6%.</TD>
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The following chart shows the percent of revenues generated by
product category during the first nine months of 2005 in Canada
and the U.S.:
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    <TD width="79%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
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    <TD width="1%">&nbsp;</TD>
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    <TD align="center" nowrap><B><FONT face="helvetica,arial">Product</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Canada</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">U.S.</FONT></B></TD><TD></TD>
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    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
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    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
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    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Coffee
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">47</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">31</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
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    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Baked goods
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">29</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Soup and sandwiches
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Hot beverages
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cold beverages
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Miscellaneous hardware and gifts
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Coffee.</I> 46.0% of our Canadian customers visit our
restaurants an average of four or more times per week. We
believe our high quality coffee, made only from 100% Arabica
beans, is a major reason for the high volume of return visits.
Our commitment to the quality of our coffee is evidenced by
strict guidelines that, as part of our Always Fresh strategy,
Tim Hortons coffee must be sold within 20&nbsp;minutes of being
brewed. We also provide a coffee-specific training course for
franchisees and operations field personnel, and maintain a
&#147;coffee lab&#148; in our national research and development
centre to monitor coffee quality. In addition, in 2001 we
purchased our Maidstone Coffee roasting facility in Rochester,
New York. This facility now supplies one-third of the Tim
Hortons system, with the balance provided by third-party
roasters.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Baked goods.</I> Tim Hortons restaurants sell a wide variety
of donuts, as well as Timbits (bite-sized donuts), danishes,
cookies, muffins and more. Every month we market a new donut
variety as our &#147;product of the month,&#148; such as
&#147;melt-in-your-mouth&#148; toffee glazed, caramel
cappuccino, triple berry and pumpkin spiced glazed donuts. These
limited-time products help drive repeat visits by our customers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We introduced bagels as a menu item in 1996. Today, according to
NPD&#146;s August 2005 report, we sell four of every five bagels
sold in the QSR segment in Canada. Introducing bagels showed us
the quality and taste that a par-baked product could provide and
provided an opportunity for further innovation; to maintain
speed of service for bagels, we developed higher-speed
&#147;turbo toasters&#148; that allow us to toast a bagel in
under 20&nbsp;seconds.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Soups and sandwiches.</I> We originally introduced soup and
sandwiches as lunch products in the late 1980s and early 1990s,
and launched our branded line called &#147;Tim&#146;s
Own&#148;&#174; soups and sandwiches in 1998. According to
NPD&#146;s August 2005 report, 45.9% of all soup occasions in
the Canadian QSR segment occur at our system restaurants. Our
nearest competitor has a 3.0% share.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Hot and cold beverages.</I> In addition to coffee, other hot
beverages we sell include flavoured cappuccinos, specialty and
steeped teas, hot chocolate, &#147;Caf&#233; Mocha&#148; (hot
chocolate, coffee and whipped cream) and &#147;Hot
Smoothees&#148; (flavoured caffeine-free hot drinks). Our cold
drink offerings range from juices to sodas and iced cappuccinos.
</DIV>

<P align="center" style="font-size: 10pt;">72

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<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Restaurant Operations Support</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The ability of our system to consistently deliver on our
customer promise&#151;delivering high quality food and excellent
service at a compelling value&#151;has been and will continue to
be critical to our success. Because our franchisees operate the
vast majority of our restaurants, we have invested substantial
resources in developing programs, processes, technologies and
field support personnel to support our franchisees. Our
franchisees are committed to maintaining the highest caliber of
operations and customer satisfaction, and together we
continuously look for improvement in all facets of the
operations, with high levels of focus on speed of service,
consistency of product quality, overall restaurant appeal and
dining experience.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We are an operations-driven business, as evidenced by the
substantial investments we have made in our proprietary Always
Fresh baking system, our innovative store designs, our
restaurant equipment packages and the ongoing training and
development of our people. Our field management is in regular
contact with our franchisees, frequently visiting the
restaurants and providing support and consultation on all facets
of the business, including:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    ongoing new product research and process innovation;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    identifying and evaluating restaurant sites and managing the
    real estate development, financing, design and construction
    process with our franchisees;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    providing initial training to new franchisees and ongoing
    training for existing franchisees;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    analyzing, sharing and instituting best practices across the
    system in all areas of operations and recognizing top performers.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 1993 we instituted the Always Fresh appraisal program to
measure restaurant compliance with our high standards. The
appraisal, which focuses on product quality, freshness and
availability, speed of service and hospitality, restaurant
cleanliness, product merchandising and housekeeping, is designed
to promote a consistent customer experience across the system.
We award cash prizes to the top three restaurants in each of 16
regions and designate as &#147;Platinum Award Restaurants&#148;
those restaurants that score at least 92.0% on the appraisal.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Product and Process Innovation</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
New product development is critical to our long-term success and
is a significant factor behind our average same-store sales
growth. As we have expanded from a coffee and donut chain to a
provider of breakfast, lunch and snack products, we have
maintained our focus on high quality products. Product
innovation begins with an intensive research and development
process that analyzes each potential new menu item, including
small market tests to gauge consumer taste preferences, and
concludes with an analysis of the economics of food cost and
margin and final price point.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 2002, our joint venture with IAWS commissioned the
construction of the Maidstone Bakeries facility, which
manufactures par-baked donuts, Timbits (bite-sized donuts) and
selected breads, following our traditional recipes. Those
products are then flash frozen and shipped to system
restaurants, each of which contains an Always Fresh oven with
our proprietary technology. The restaurant completes the baking
process with this oven, allowing the product to be served warm
to the customer within a few minutes of baking.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Always Fresh baking system allows our restaurants to prepare
and serve products more often and in smaller batches, which
allows customers to purchase fresh baked goods throughout the
day and night. It also provides products of more consistent
quality from restaurant to restaurant. In addition, this system
provides operational efficiencies: food waste is reduced because
product volumes can be managed more closely, and the limited
space required for the Always Fresh oven permits even our
non-standard kiosk locations to provide fresh baked goods. Our
franchisees
</DIV>

<P align="center" style="font-size: 10pt;">73

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<DIV align="left" style="font-size: 10pt;">
collectively invested over $75.0&nbsp;million of their capital
in infrastructure support during 2002 and 2003 for our Always
Fresh baking system.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Our Real Estate Operations</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Overseeing and directing all aspects of real estate for system
restaurants is a critical core competency for us. Before we
approve a location for development, we review that
location&#146;s demographics, site access, visibility, traffic
counts, mix of residential/retail/commercial surroundings,
competitive activity and proposed rental structure. We also
assess the performance of nearby Tim Hortons locations, project
the location&#146;s ability to meet financial return targets and
consider whether an existing or new franchisee should operate
the location. Once a specific location is approved for
development, it usually takes 10 to 12&nbsp;months until
construction of the restaurant is completed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following chart shows our real estate operations as of
October&nbsp;2, 2005.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="71%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Canada</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">U.S.</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Total</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Owned restaurant properties
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">451</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">158</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">609</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Leased restaurant properties
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,549</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">109</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,658</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Restaurant properties owned or
    leased from third parties by franchisees
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">529</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">534</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We lease land generally for initial terms of 10 to
20&nbsp;years, sometimes with an option for us to purchase the
real estate. Leases covering approximately 30.0% of our total
leased properties at October&nbsp;2, 2005, primarily
non-standard locations, require us to pay all or a component of
the rent as a percentage (ranging from 2.0% to 13.0%) of annual
sales.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Restaurant Designs, Atmosphere and Layout</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The d&#233;cor, layout and overall feel of Tim Hortons
restaurants have evolved to meet changing customer needs and
tastes, as well as to respond to operational growth and
innovation. While we have a standard&#151;and highly
recognizable&#151;stand-alone restaurant design, we vary our
design to fit into unique situations. Ultimately, we control the
design and building of our restaurants to cater to the market
and the neighbourhood in which they are located.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Choosing and Training our Franchisees</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Finding exceptional franchisee candidates is critical to our
system&#146;s successful growth and development. Accordingly, we
value our comprehensive franchise screening and recruitment
process, which employs multi-level interviews with our senior
operations management and requires candidates to work two to
three different shifts in an existing franchisee&#146;s
restaurant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Each new franchisee participates in a mandatory eight-week
intensive training program to learn all aspects of operating a
Tim Hortons restaurant in accordance with our standards. We also
provide ongoing training and education to franchisees and their
staff.
</DIV>

<P align="center" style="font-size: 10pt;">74

</FONT>

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<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Quality Control and Food Safety</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our quality control procedures are rigorous and include several
systemwide programs designed to maintain an excellent, safe and
consistent environment for our customers and employees. Our
district managers implement the following quality control
programs in every Tim Hortons restaurant:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="38%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="19%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="37%">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Program</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" nowrap><B><FONT face="helvetica,arial">Quality Control Programs</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Frequency</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Areas of Focus</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Always Fresh Appraisal
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    <FONT face="helvetica,arial">Nine times<BR>
    annually
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Product quality, freshness,
    availability, speed of service, hospitality, merchandising and
    cleanliness
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Always Fresh Back of the House
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    <FONT face="helvetica,arial">Six times<BR>
    annually
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Restaurant condition, appearance,
    cleanliness and procedural compliance
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Security Audit
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    <FONT face="helvetica,arial">Annual
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Physical security,
    interior/exterior lighting, cash handling protocols and
    surveillance and security systems
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Always Fair Evaluation
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    <FONT face="helvetica,arial">Annual
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Employee incentive programs and
    performance management, documentation, compliance with regulated
    employee standards
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Hospitality Evaluation
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    <FONT face="helvetica,arial">Ongoing
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Customer service via anonymous
    feedback over the Internet or toll-free telephone line
    </FONT></TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Because our brand is so closely linked to the public&#146;s
perception of our food quality and safety, we require all of our
franchisees, as well as their managers and our operations
personnel, to complete the ServSafe&#174; food safety training
program. ServSafe is the most widely accepted food safety
program among local, provincial, state and federal health
departments in Canada and the U.S.&nbsp;Each participant must
complete this program with a passing grade and be re-certified
every five years. We also conduct site visits and unscheduled
food safety audits, and require that all restaurant staff
complete a multi-level food safety training module as part of
their mandatory training. Each element of this training program
has been assessed by different levels of government in different
jurisdictions for content and accuracy.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Our Locations</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At October&nbsp;2, 2005, our system was comprised of 2,801
restaurants in a variety of standard and non-standard formats.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Standard.</I> Our standard restaurant measures between 1,400
to 3,090&nbsp;square feet, with a dining room, a counter for
placing orders and, in 71.0% of our standard restaurants,
drive-thru service. Standard restaurants comprised 78.0% of our
system as of October&nbsp;2, 2005. Typically, we construct
single or double drive-thru restaurants if seating is not
required or property size is an issue. We have &#147;combination
stores,&#148; which offer Tim Hortons and Wendy&#146;s products
at one location. Our combination stores have a common area
dining room and separate counters. Today we have
168&nbsp;combination stores in Canada and 42 in the U.S.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Non-Standard.</I> We design our non-standard restaurants to
fit anywhere. They are kiosks located in office towers,
hospitals, colleges, airports, gas station convenience stores
and on smaller pieces of property. These units can average from
150&nbsp;square feet to 900&nbsp;square feet. These non-standard
restaurants allow us to further penetrate regions where
significant numbers of our standard restaurants already exist.
</DIV>

<P align="center" style="font-size: 10pt;">75

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table illustrates our system restaurant locations
as of October&nbsp;2, 2005 and the market penetration by
restaurant type.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="74%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Non-</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD align="left" nowrap><B><FONT face="helvetica,arial">Location by Province/Territory</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Standard</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">standard</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Alberta
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">141</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">53</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">British Columbia
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">141</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">62</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Manitoba
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">36</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">New Brunswick
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">99</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Newfoundland
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">45</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Nova Scotia
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">144</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">35</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Northwest Territories
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Ontario
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">988</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">392</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Prince Edward Island
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Quebec
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">237</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">57</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Saskatchewan
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Yukon
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,869</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">660</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="74%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Non-</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD align="left" nowrap><B><FONT face="helvetica,arial">Location by State</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Standard</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">standard</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Connecticut
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Kentucky
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Massachusetts
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Maine
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Michigan
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">71</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">New York
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">62</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Ohio
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">65</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Pennsylvania
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Rhode Island
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">West Virginia
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
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    <FONT face="helvetica,arial">Total
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    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">254</FONT></TD>
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    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">18</FONT></TD>
    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
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<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Our Franchisees</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of October&nbsp;2, 2005, over 1,000&nbsp;franchisees operated
2,498 Tim Hortons restaurants in Canada and 207 restaurants in
10 U.S.&nbsp;states. In Canada, our average franchisee operates
three restaurants and has been a franchisee in our system for
almost nine years. In the U.S., the average franchisee operates
two restaurants and has been a franchisee for about four years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our long-term goal is to have franchisees own most Tim Hortons
restaurants and to maintain a small number of company-operated
restaurants for franchisee training and new product testing. As
of October&nbsp;2, 2005, franchisees owned 98.8% of our Canadian
restaurants, and we expect to follow the same approach over the
long term in the U.S.&nbsp;As of October&nbsp;2, 2005,
franchisees owned 76.1% of our U.S.&nbsp;restaurants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our franchisees operate under several types of license
agreements, with a typical term for a standard restaurant of
10&nbsp;years plus aggregate renewal period(s) of approximately
10&nbsp;years.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In Canada, franchisees generally are required to pay us:
(i)&nbsp;between 3.0% and 4.5% of weekly gross sales of the
restaurant as a royalty; plus, if the franchisee leases land
and/or buildings from us (ii)&nbsp;a monthly rental equal to
(a)&nbsp;a minimum monthly rental payment or (b)&nbsp;a
percentage (usually 10%) of monthly gross sales, whichever is
greater.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the U.S., franchisees generally are required to pay us:
(i)&nbsp;4.5% of weekly gross sales of the restaurant as a
royalty; plus (ii)&nbsp;if the franchisee leases land and/or
buildings from us, a monthly rental equal to a percentage
(usually 8.5%) of monthly gross sales.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Generally, we retain the right to reacquire a franchisee&#146;s
interest in a restaurant, at a pre-agreed price formula based on
a depreciated value, if the franchisee receives an offer to
purchase the franchisee&#146;s interest during the first five
years of the license agreement. After that period, we retain a
right of first refusal regarding any proposed transfer of the
franchisee&#146;s interest, together with the right to consent
to any proposed new franchisee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under the license agreement, each franchisee is required to make
contributions to an advertising fund based on a percentage of
restaurant gross sales.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
To keep system restaurants up-to-date both aesthetically and
operationally, our license agreements require a full scale
renovation of each system restaurant at least every
10&nbsp;years. Each franchisee invests a majority of the capital
required for these renovations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In Canada, and generally in the U.S., we do not grant an
exclusive or protected area or territory to the franchisee. The
license is a &#147;location&#148; license only, and we reserve
the right to grant additional licenses for Tim Hortons
restaurants at any location.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We may terminate the license agreement if, among other things,
the franchisee: does not pay fees or royalties owing when due;
breaches obligations relating to health, hygiene or safety
standards that are not adequately remedied; becomes bankrupt;
fails to maintain adequate insurance; understates gross sales;
transfers any rights or obligations contrary to the license
agreement; or commits or permits the commission of any criminal
offense or violation of the franchisee&#146;s obligations that
may have an adverse effect on our system or the Tim Hortons
trademarks or goodwill.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In certain circumstances, we will enter into arrangements,
typically called operator agreements, in which the operator
acquires the right to operate a Tim Hortons restaurant, but we
continue to be the owner of the equipment, signage and trade
fixtures. Such arrangements usually require the operator to pay
20.0% of weekly gross sales to us. If the restaurant is a single
drive-thru or double drive-thru, the operator is required to pay
21.5% of weekly gross sales. Additionally, the operator will be
responsible for paying all trade debts, wages and salary
expenses, maintenance and repair costs, all real property and
business taxes levied against the restaurant and any other
expenses incurred in connection with the operation of the
restaurant. In any such arrangement, the operator does not own
or have any rights to the equipment, signage and trade fixtures
provided by us to operate the restaurant, and we or the operator
each have the option of terminating the agreement upon
30&nbsp;days notice. For purposes of this prospectus, references
to franchisees include these operators, and references to
license agreements include these operator agreements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have developed a franchise incentive program for some of our
U.S. franchisees, which provides short-term financing for both
the initial franchise fee and the purchase of certain restaurant
equipment, furniture, trades fixtures, and interior signs. The
purchase of those assets is deferred for a period of
130&nbsp;weeks from the date of opening, and the franchisee has
the right to finance the initial franchise fee over a period of
104&nbsp;weeks from the opening. During the initial 130-week
period, the royalty payments are typically reduced from 4.5% to
2.5% and rent is typically reduced from 8.5% to 8.0%. After the
130&nbsp;week initial period, the royalty rate and rental rate
return to the standard amount referred to above for U.S.
restaurants. In addition, payment for the equipment package is
due and owing at that time. Recognition of franchise fee revenue
from this program is deferred until
</DIV>

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the restaurants achieve certain sales volume levels. This
program is limited in scope, and its parameters will continue to
evolve.
</DIV>

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<B>Marketing Our Brand Image</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our marketing is designed to create and extend our brand image
as &#147;your neighbourhood Tims&#148; that offers &#147;quality
products at reasonable prices.&#148; We use radio, television
and outdoor advertising and event sponsorship, as well as our
highly visible community caring programs, to reinforce this
brand image to our customers. Our customer base is diverse, with
an equal mix of male and female customers and customers from all
socio-economic levels.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>National Marketing Program</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Franchisees fund substantially all of our national marketing
programs by making contributions to the Canadian or
U.S.&nbsp;&#147;adfunds.&#148; In fiscal 2004, franchisees and
company-operated restaurants in Canada contributed
$109.7&nbsp;million (approximately 3.5% of sales), and
franchisees and company-operated restaurants in the
U.S.&nbsp;contributed US$7.5&nbsp;million (approximately 4.0% of
sales) to the respective adfunds. Each adfund is independently
audited and has a national advisory board of elected franchisees.
</DIV>

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<B><I>Regional Marketing Programs</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Regional marketing groups (approximately 280 in Canada and 18 in
the U.S.), to which each franchisee and company-operated
restaurant contributes 0.025% to 0.5% of its sales as part of
its national marketing program contribution, sponsor and support
locally-targeted marketing programs. We support these regional
marketing groups with market strategy and regional plans and
programs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Our Manufacturing and Distribution Platforms</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition to being a franchisor, we are a key supplier to our
franchised restaurants. We own and operate five distribution
centres that supply system restaurants with non-perishable food
supplies, packaging and equipment. These centres are located in
Langley, British Columbia; Calgary, Alberta; Kingston, Ontario;
Guelph, Ontario; and Debert, Nova Scotia. We also own and
operate a fleet of 62 trucks and 118 trailers that deliver to
our Canadian restaurants on a weekly and bi-weekly basis. We use
third-party logistics providers to deliver products to our
U.S.&nbsp;restaurants and limited areas of Canada.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We completed our newest, 157,000&nbsp;square foot distribution
centre in Guelph, Ontario, in December 2005. By the end of 2006,
we expect for the first time to be able to deliver many frozen
foods to approximately 85.0% our restaurants in Ontario. We
believe this facility, which combines high-density storage and
an automated storage/retrieval system, will be one of the most
advanced food service distribution facilities in Canada and will
allow us to improve our distribution efficiency and create
additional economies of scale.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our Maidstone Coffee facility, located in Rochester, New York,
roasts coffee for approximately one-third of our restaurants,
and roasts a separate blend for many Wendy&#146;s restaurants.
We acquired this plant in 2001 as part of our
U.S.&nbsp;expansion, and we believe it will generate additional
distribution efficiencies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 2001, we formed a 50-50 joint venture with a subsidiary of
IAWS to commission the construction of the Maidstone Bakeries
facility, a 320,000 square foot par-baking facility located in
Brantford, Ontario. The Maidstone Bakeries facility manufactures
donuts, Timbits and other par-baked breads that are supplied to
system restaurants in Canada and the U.S., allowing us to
achieve consistency of product, economies of scale and labour
efficiencies. The Maidstone Bakeries facility also produces
bread products for IAWS subsidiary companies.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The agreements governing the joint venture contemplate various
procedures relating to the termination of the joint venture,
including a compulsory buy/sell procedure. After March&nbsp;6,
2006, either party may initiate the compulsory buy/sell
procedure. A party choosing to initiate the compulsory buy/sell
procedure must offer to either purchase all of the other
shareholder&#146;s shares or to sell all of its shares, both at
the same price. The other shareholder then must choose to
control the joint venture by purchasing the offering
shareholder&#146;s shares, or to exit the joint venture by
electing to have its shares purchased at the specified price.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If IAWS were to initiate this compulsory buy/sell procedure, and
we were to elect to have IAWS purchase all of our shares in the
joint venture, our right to buy par-baked donuts and Timbits
from the Maidstone Bakeries facility would be limited to the
longer of our obligation to buy donuts and Timbits and the joint
venture&#146;s corresponding obligation to continue to supply
donuts and Timbits to us, extending for 12&nbsp;years from the
last date on which the development of a new donut production
line at the joint venture facility was commissioned for us by
the joint venture and seven years from the date of sale of our
shares. We would also be able to purchase other par-baked
products from the joint venture during the seven-year period
following a sale. If IAWS were to initiate the compulsory
buy/sell procedure and we were to purchase IAWS&#146; shares,
and the buy-out price was less than 85% of a specified formula
amount, then IAWS would have the right to build its own
par-baked goods manufacturing facility using its independent
rights to the par-baking technology, and manufacture and sell
par-baked donuts to competitors of ours, provided it did not use
our recipes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, certain of the technology used at the Maidstone
Bakeries facility is owned by a third party, Irish Bakery
Inventions Limited (IBIL), and is licensed to the joint venture
on an exclusive basis. This license terminates no later than
April 2012. A wholly-owned subsidiary of the joint venture has
the option to acquire this technology from IBIL by June 2011 for
nominal consideration, which option must be exercised and the
technology acquired from IBIL for the Maidstone Bakeries
facility to continue to use this technology after April 2012 and
to secure our independent right to use this technology at any
other par-baking facility that we may develop. If this option is
not exercised and the rights to the technology are not acquired
from IBIL, we would be forced to negotiate with IBIL separately
to obtain rights to this technology and, if we are not
successful, to seek out alternative products and design
processes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Our Suppliers</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our system restaurants purchase par-baked products manufactured
at the Maidstone Bakeries facility, and many of our system
restaurants purchase coffee that is roasted and blended at our
Maidstone Coffee plant. We sell most other raw materials and
supplies, including coffee, sugar, paper goods and other
restaurant supplies, to system restaurants. We purchase those
raw materials and supplies from multiple suppliers and generally
have alternative sources of supply for each.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
While we have many suppliers and alternate suppliers, the
available supply and price for high quality coffee beans can
fluctuate dramatically. Accordingly, we monitor world market
conditions for green coffee and contract for future supply
volumes to ensure an available supply and a stable price. See
&#147;Risk Factors&#151; Risks Relating to Our Business and
Industry&#151; Termination of our Maidstone Bakery joint venture
could adversely affect our business&#148; and &#147;Risk
Factors&#151; Risks Relating to Our Business and Industry&#151;
We are affected by commodity market fluctuations, particularly
with respect to high-quality coffee beans, which could reduce
our profitability or sales.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Management Information Systems</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have developed information technology systems to generate
further efficiencies in our supply chain and in our
relationships with our franchisees. For example, our Internet
portal allows franchisees and their store managers to place
online orders with our distribution centre and report their
daily sales. The portal also provides system restaurants with
up-to-date news and quality assurance alerts, and permits
franchisees to view their order status and accounts receivable
online
</DIV>

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and keep their payables current. We have also instituted
standardized internal management software for system restaurants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have standardized our restaurant management software with an
application service provider to give our restaurants the ability
to manage their day-to-day management functions, staff
scheduling, inventory control and daily cash accounting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Corporate Social Responsibility</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We and our franchisees support several community outreach
projects and programs. We dedicate time and resources toward
three major areas of corporate social responsibility:
The&nbsp;Tim&nbsp;Horton Children&#146;s Foundation, local
regional marketing programs like the Timbits Minor Sports
program and our sustainable coffee project.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>The Tim Horton Children&#146;s Foundation</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our most notable community outreach project is The Tim Horton
Children&#146;s Foundation, an independent non-profit charitable
organization established in 1974 that provides a
professionally-operated, fun-filled camp environment for
children from economically disadvantaged homes. Every year,
local children are selected from the communities in which our
restaurants operate to attend various programs throughout the
year at one of our camps, including a ten-day summer residence
camp experience.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The camp experience is designed to give children confidence in
their abilities, pride in their accomplishments, and the chance
to gain a positive view of this world and their future in it.
The camps are unique in that children are flown to regions where
they do not live, so as to experience travel and diversity of
geography and culture. The foundation has camps located in
Kananaskis, Alberta; Parry Sound, Ontario; St. George, Ontario;
Quyon, Quebec; Tatamagouche, Nova Scotia; and Campbellsville,
Kentucky. Last year over 10,000&nbsp;children from Canada and
the U.S.&nbsp;attended one of these camps.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Timbits Minor Sports Program</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Regional Tim Hortons restaurant groups (280 across Canada and 18
in the U.S.) participate in a variety of marketing programs that
benefit their community at a local level. One successful example
of this regional approach is the Timbits Minor Sports program,
which provides annual support to sports teams for over 140,000
children, ages four through eight.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Coffee Sustainability</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 2005 we launched a sustainable coffee partnership pilot
project to make a meaningful contribution in the fight against
poverty among the people who provide one of our most important
products, and to play a meaningful role in providing for the
future supply of quality green coffee. This pilot project
includes approximately 1,000 coffee producers and their
families, and is intended to directly improve the living
conditions of about 5,000 people. Under the program small coffee
producers will be provided with technical support and training
to help them increase the amount and quality of coffee they
produce and help them get their coffee to market, while
emphasizing the need to respect and protect the environment. The
program also aims to improve the social conditions of the
farmers and their families by identifying and addressing the
pressing needs of the families, especially youth education.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Our Employees</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Corporate employees</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We encourage our employees to be innovative, achieve excellence
in everything that they do, act fairly and ethically, and
demonstrate a &#147;can do&#148; attitude. Tim Hortons has been
voted as one of the &#147;100 Best Employers&#148; in Canada for
the past several years in <I>Maclean&#146;s Magazine</I>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our head office is in Oakville, Ontario, and we have six
regional offices, located in Langley, British Columbia; Calgary,
Alberta; Kingston, Ontario; Montreal, Quebec; Debert, Nova
Scotia; and Columbus, Ohio. We have approximately 1,600
corporate employees in our regional offices and distribution
centres. None of our employees are covered by collective
bargaining agreements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Restaurant-level employees</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We believe that it is important for our system to be the
employer of choice in the QSR segment, a business noted for
first-time employment. To encourage this, we have developed a
restaurant-level human resources strategy that focuses on
providing an enjoyable work experience. The program is designed
to provide training and advice, including staff incentive
program ideas, to franchisees on how to recruit, retain,
compensate and treat employees so as to be clearly positioned as
an &#147;employer of choice.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Our Competition</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We face intense competition with a wide variety of restaurants
on a national, regional and local level, including QSRs,
fast-casual restaurants focused on specialty coffee, baked goods
and sandwiches, as well as convenience stores that sell food and
beverages. The size and strength of our competitors vary by
region, and there are numerous competitors in nearly every
market in which we conduct business or expect to enter. We
believe competition within the QSR segment is based on, among
other things, product quality, concept, atmosphere, customer
service, convenience and price. Additionally, we compete with
restaurants and other specialty restaurants for personnel,
suitable restaurant locations and qualified franchisees.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 2002, we surpassed McDonald&#146;s as the number one
restaurant chain in Canada in terms of sales and number of
restaurants, according to <I>Food Service and Hospitality</I>
magazine (FSH). We are also significantly larger in Canada than
our other competitors in the QSR segment based on systemwide
sales, including, for example, Subway&#174;, KFC&#174;,
A&#38;W&#174;, and in the coffee and baked goods segment,
Starbucks&#174;, Second Cup&#174; and Coffee Time. In Canada, we
also compete with multiple QSRs and specialty coffee restaurants
that operate on a regional basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the U.S., we have developed into a strong regional player in
certain markets in the Northeast and Midwest. We currently
compete with specialty coffee retailers, baked goods retailers,
sandwich shops and convenience stores, ranging from small local
independent operators to well-capitalized national and regional
chains, such as McDonald&#146;s, Starbucks, Subway and
Dunkin&#146; Donuts&#174;. Many of our competitors in the U.S.
are significantly larger than us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Seasonality</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our business is moderately seasonal. Sales and operating income
are generally lower in the first quarter due, in part, to a low
number of new restaurant openings and post-holiday spending
patterns, and typically higher in the fourth quarter due, in
part, to a higher number of restaurant openings and sales of
holiday packaged coffee and other merchandise. Because our
business is moderately seasonal, results for any quarter are not
necessarily indicative of the results that may be achieved for
any other quarter or for the full fiscal year.
</DIV>

<P align="center" style="font-size: 10pt;">81

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Trademarks and Service Marks</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have registered various trademarks and service marks in
Canada, the U.S. and certain other jurisdictions. We have also
registered various Internet domain names, including
www.timhortons.com. Our registered marks include:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Tim Hortons signature</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Tim Hortons&nbsp;&#38; Always Fresh Oval Background Design</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Roll Up The Rim To Win&#174;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Timbits</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We believe our trademarks, service marks and other proprietary
rights have significant value and are important to our
brand-building efforts and the marketing of our restaurant
system. We intend to protect and vigorously defend our rights to
this intellectual property.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Environmental</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We own or lease most of our approximately 2,800 restaurant
properties in Canada and the U.S. and also own and operate five
distribution facilities in Canada and a coffee plant in New York
state. Our joint venture with IAWS owns and operates a baking
facility in Ontario, Canada. In addition to utilizing
third-party distributors, we distribute products to our system
restaurants through our trucking fleet. Each of these activities
is subject to complex environmental, health and safety
regulatory regimes, and involves the risk of environmental
liability. There are also potential risks for road and on-site
releases and accidents that could result in environmental
contamination that is not within our control. Where those
activities involve the known use of hazardous substances and
petroleum compounds, we undertake to comply with regulatory
requirements in connection with our use of such substances and
compounds.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our restaurants have not been the subject of any material
environmental investigations or claims during our ownership,
lease or operation; however, we have not conducted a
comprehensive environmental review of all of our properties or
operations. We have conducted investigations of many of our
owned and leased properties, including in connection with our
1995 merger with Wendy&#146;s. We also conduct environmental due
diligence when considering potential new restaurant locations,
which typically includes a Phase&nbsp;I Environmental Site
Assessment, although such an assessment will not necessarily
identify all environmental conditions associated with any such
property. When the Phase&nbsp;I Environmental Site Assessment
indicates a potential environmental problem at a particular
location, we carry out a Phase&nbsp;II Environmental Site
Assessment to specifically test that location for contaminants.
We have identified contamination caused by third-party
operations not material to us individually or in the aggregate
and have in many cases given third parties notice that it is
their obligation to address the contamination. If the relevant
third party is insolvent, has not addressed the identified
contamination properly or completely or our rights against the
third party have otherwise expired, then under certain
environmental, health and safety laws, or otherwise at law, we
could be held liable as an owner, operator or occupant to
address any remaining contamination. Further, we may not have
identified all of the potential environmental liabilities at our
owned and leased properties, and any such liabilities identified
in the future could have a material adverse effect on our
operations or results of operations. See also the discussion of
environmental, health and safety laws in &#147;Risk
Factors&#151;We are subject to government regulation, and our
failure to comply with existing or future regulations could
adversely affect our business and operating results.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Government Affairs</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We track ongoing government activity that may have an impact on
our business or operations. In particular, we monitor government
activity and our compliance in the areas of zoning, employment
standards, workplace health and safety, food safety and
handling, human rights, income and other
</DIV>

<P align="center" style="font-size: 10pt;">82

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<DIV align="left" style="font-size: 10pt;">
taxes, the environment and franchise legislation. We comply in
all material respects with any applicable franchise disclosure
legislation as it pertains to the offer and sale of franchises.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Governments and consumer advocacy groups are encouraging
alternative food processing methods that will result in
significant reductions in trans-fatty acids (TFA)&nbsp;and
legislation has recently been enacted in Canada that will
introduce new nutritional labeling requirements for foods
containing TFAs. We are studying the process required to lower
TFA content. In this regard, we have examined possible
alternatives to our current baking and frying shortenings. We
continue to research approaches to allow us to reduce the amount
of TFA in our products while still maintaining the taste and
quality that our consumers require. We are also monitoring new
oilseed technology, which may provide an opportunity to reduce
the saturated fat content in some of our products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Litigation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
From time to time we are a defendant in litigation arising in
the normal course of business. Claims typically pertain to
&#147;slip and fall&#148; accidents, employment claims and
claims from customers alleging illness, injury or other food
quality, health or operational concerns. These types of claims,
which are referred to and generally covered by insurance, have
not had a material effect on us. As of the date of this
prospectus, we are not party to any litigation that we believe
is material to our business.
</DIV>

<P align="center" style="font-size: 10pt;">83

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<DIV align="left" style="font-size: 10pt;">
<A name='125'></A>
</DIV>

<!-- link1 "MANAGEMENT" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>MANAGEMENT</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Directors and Executive Officers</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Set forth below is certain information regarding our current
executive officers and our current and prospective directors.
Currently, two individuals, John Schuessler and Kerrii Anderson,
are officers of Wendy&#146;s and are serving as directors for us
and for Wendy&#146;s. David Lauer serves as a director for us
and for Wendy&#146;s. Contemporaneously with the completion of
this offering, we will add up
to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;additional
directors who are currently unaffiliated with us or Wendy&#146;s
and who qualify as independent directors. None of these
prospective directors is listed below.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

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    <TD width="40%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Years</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD align="left" nowrap><B><FONT face="helvetica,arial">Name and Municipality of Residence</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Age</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Position(s)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">with us</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">John T. Schuessler<BR>
    Dublin, Ohio
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">54</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">Director
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Kerrii B. Anderson<BR>
    Columbus, Ohio
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">48</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">Director
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">David P. Lauer<BR>
    Dublin, Ohio
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">62</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">Director
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Paul D. House<BR>
    Stoney Creek, Ontario
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">62</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">Chief Executive Officer and
    President; Director
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">20</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cynthia J. Devine<BR>
    Mississauga, Ontario
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">41</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">Executive Vice President and Chief
    Financial Officer; Director
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">David F. Clanachan<BR>
    Burlington, Ontario
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">43</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">Executive Vice President: Training,
    Operations Standards, Research and Development
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">William A. Moir<BR>
    Mississauga, Ontario
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">57</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">Executive Vice President, Marketing
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Donald B. Schroeder<BR>
    Burlington, Ontario
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">59</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">Executive Vice President,
    Administration
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Roland M. Walton<BR>
    Oakville, Ontario
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">50</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">Executive Vice President, Operations
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Our Non-Employee Directors</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>John T. Schuessler </I>is Chairman of the Board, Chief
Executive Officer and President of Wendy&#146;s.
Mr.&nbsp;Schuessler joined Wendy&#146;s in 1976. He was
Executive Vice President, U.S.&nbsp;Operations of Wendy&#146;s
from 1995 until 1997, when he became Wendy&#146;s President and
Chief Operating Officer, U.S.&nbsp;Operations. He became
Wendy&#146;s Chief Executive Officer and President in March 2000.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Kerrii B. Anderson </I>is Executive Vice President and Chief
Financial Officer, as well as a director, of Wendy&#146;s. She
joined Wendy&#146;s in September 2000. From 1987 until September
2000, Mrs.&nbsp;Anderson was Senior Vice President and Chief
Financial Officer of M/ I Schottenstein Homes, Inc.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>David P. Lauer </I>has been a director of Wendy&#146;s since
2000. Mr.&nbsp;Lauer was President and Chief Operating Officer
of Bank One NA, Columbus, from 1997 until 2001 and was Office
Managing Partner of the Columbus office of Deloitte&nbsp;&#38;
Touche LLP from 1989 until 1997. Mr.&nbsp;Lauer was also a
member of the Board of Directors of Deloitte&nbsp;&#38; Touche
LLP from 1988 to 1995. He has been a
</DIV>

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<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt;">
Certified Public Accountant since 1968. Mr.&nbsp;Lauer also
serves as a director of AirNet Systems, Inc., Diamond Hill
Investment Group, Huntington Bancshares Incorporated and R.G.
Barry Corporation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Our Executive Officers</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Paul D. House </I>joined us as Vice-President of Marketing in
1985. In January of 1993, Mr.&nbsp;House was named Chief
Operating Officer, and then President and Chief Operating
Officer in 1995. Mr.&nbsp;House sits on the Board of Directors
of Wendy&#146;s and on the Board of Directors of
The&nbsp;Tim&nbsp;Horton Children&#146;s Foundation.
Mr.&nbsp;House joined Dairy Queen Canada in 1972 and held
various management positions until his promotion to
Vice-President of Canadian Operations, responsible for the
business in Canada. Mr.&nbsp;House holds a B.A. in Economics
from McMaster University.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Cynthia J. Devine </I>joined us in November 2003 as Senior
Vice President of Finance and Chief Financial Officer,
responsible for overseeing accounting, financial reporting,
financial planning and analysis, tax and information systems,
for the Tim Hortons brand. She was promoted to Executive Vice
President of Finance and Chief Financial Officer in April 2005.
Prior to joining us, Mrs.&nbsp;Devine served as Senior
Vice-President Finance for Maple Leaf Foods, a large Canadian
food processing company and from 1999 to 2001 held the position
of Chief Financial Officer for Pepsi-Cola&#174; Canada.
Mrs.&nbsp;Devine, a Chartered Accountant, holds an Honors
Business Administration degree from the University of Western
Ontario.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>David F. Clanachan </I>joined us in 1992 and held various
positions in the Operations Department until he was promoted to
the position of Vice President, Operations&#151;Western Ontario
in 1997. Prior to that time, he was a Director of Operations for
an international food company, with approximately 12&nbsp;years
of experience in the industry. In August 2001, he was promoted
to the position of Executive Vice President of Training,
Operations Standards and Research&nbsp;&#38; Development.
Mr.&nbsp;Clanachan is also our operations lead in our joint
venture with IAWS. Mr.&nbsp;Clanachan holds a Bachelor of
Commerce degree from the University of Windsor.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>William A. Moir </I>joined us in 1990 as Vice President of
Marketing, and was promoted to Executive Vice President of
Marketing in 1997. Prior to joining us, Mr.&nbsp;Moir gained
extensive marketing management experience, holding key positions
with K-Tel, Shell Oil and Labatt Breweries. He is a Director and
past Chairman of the Coffee Association of Canada, as well as a
member of the Board of Directors of The Tim Horton
Children&#146;s Foundation. Mr.&nbsp;Moir holds an Honors
Business degree from the University of Manitoba.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Donald B. Schroeder </I>joined us in 1991 as Vice President
of Human Resources and International Development. He was named
Executive Vice President of Administration in 1995, responsible
for Human Resources, Administration, Manufacturing, Distribution
and Purchasing. Mr.&nbsp;Schroeder is the President of The Tim
Horton Children&#146;s Foundation, a position he has held since
1991. Mr.&nbsp;Schroeder holds a Bachelor of Laws degree from
the University of Western Ontario and a Master of Laws degree
from Osgoode Hall Law School.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Roland M. Walton </I>joined us in 1997 as Executive Vice
President of Operations, responsible for operations in both
Canada and the U.S.&nbsp;His restaurant industry experience
includes Wendy&#146;s Canada, Pizza Hut&#174; Canada and Pizza
Hut USA. In 1995 Mr.&nbsp;Walton held the position of Division
Vice President for Pizza Hut USA&#146;s Central Division.
Mr.&nbsp;Walton holds a Bachelor of Commerce degree from the
University of Guelph.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Board Composition</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our board of directors will, contemporaneously with the closing
of this offering, consist
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;directors.
Pursuant to our regulations, when the authorized number of
directors is &nbsp;or more, up to a maximum
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
the directors will be divided into three classes, designated as
Class&nbsp;I, Class&nbsp;II and Class&nbsp;III. The members of
each class will serve for a staggered, three-year
</DIV>

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<DIV align="left" style="font-size: 10pt;">
term, except that Class&nbsp;I directors in the initial term
immediately following this offering will serve for one year and
Class&nbsp;II directors in the initial term immediately
following this offering will serve for two years. Each director
will be elected to serve until the election of the
director&#146;s successor at an annual meeting of shareholders
for the election of directors for the year in which the
director&#146;s term expires or at a special meeting called for
that purpose. As of the date of this prospectus, we do not
anticipate increasing or decreasing the authorized number of
directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Audit Committee</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Upon completion of this offering, our board of directors will
establish an audit committee. Because we will be a
&#147;controlled company&#148; within the meaning of the NYSE
corporate governance standards, we will not be required to, and
will not, have a compensation or nominating and governance
committee. The audit committee will be comprised
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The audit committee&#146;s functions will include providing
assistance to the board of directors in fulfilling its oversight
responsibility relating to our financial statements and the
financial reporting process, compliance with legal and
regulatory requirements, the qualifications and independence of
our independent registered public accounting firm, our system of
internal controls, the internal audit function, our code of
ethical conduct, retaining and, if appropriate, terminating the
independent registered public accounting firm, and approving
audit and non-audit services to be performed by the independent
registered public accounting firm.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Board of Directors&#146; Compensation and Relationships</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Compensation of Non-Employee Directors</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We intend to adopt a board compensation package that provides
appropriate compensation to our non-employee directors, using
both cash and equity-based compensation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Interlocks and Insider Participation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Initially, compensation recommendations regarding our executive
officers will be made by the Wendy&#146;s compensation
committee. Our board of directors may appoint a successor
compensation committee after the completion of this offering.
Except for Paul D. House, who serves as a director of
Wendy&#146;s, none of our executive officers serve on the
compensation committee or board of directors of any other
company of which any of the members of our board of directors is
an executive officer.
</DIV>

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<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Share Ownership of Directors and Executive Officers</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
All of our common shares are currently owned by Wendy&#146;s,
and thus none of our executive officers or directors currently
owns our common shares. The treatment of all Wendy&#146;s stock
options, restricted stock units and other equity awards held by
our employees is discussed below. See &#147;&#151;Treatment of
Wendy&#146;s Options, Restricted Stock and Restricted Stock
Units.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth the beneficial ownership of
Wendy&#146;s common shares held by our directors, the executive
officers named in the Summary Compensation Table and all of our
directors and executive officers as a group, as of
November&nbsp;21, 2005. Each director owns less than 1.0% of the
outstanding Wendy&#146;s common shares. All of our current
directors and executive officers as a group own less than 2.0%
of Wendy&#146;s outstanding common shares. Except as otherwise
noted, the individual director or executive officer (including
his or her family members) had sole voting and investment power
with respect to the Wendy&#146;s common shares.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="33%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="23%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>

<TR style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Amount and</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Nature of Beneficial</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 10pt;">
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Title of Class</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Name of Beneficial Owner</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Ownership<SUP style="font-size: 85%; vertical-align: text-top">(1)(2)</SUP></FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Percent of Class</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Common Shares of Wendy&#146;s
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">John T. Schuessler
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">698,403</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">*</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">Kerrii B. Anderson
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">306,836</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">*</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">David P. Lauer
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">152,746</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">*</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">Paul D. House
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">190,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">*</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">Cynthia J. Devine
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">30,612</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">*</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">William A. Moir
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">153,454</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">*</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">Donald B. Schroeder
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">110,083</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">*</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">Roland M. Walton
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">124,250</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">*</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">All directors and executive
    officers as a group (9&nbsp;persons)
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,766,384</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1.5%</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp; *</TD>
    <TD align="left">
    Less than 1%.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    The amounts reflected in this table include common shares in
    which there is shared voting and investment power.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    Includes stock options exercisable within 60&nbsp;days following
    November&nbsp;21, 2005 and restricted shares. Amounts do not
    include holdings of restricted stock units.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The information regarding beneficial ownership is based on
information furnished by each director or executive officer, or
information contained in filings made with the SEC.
</DIV>

<P align="center" style="font-size: 10pt;">87

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<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Executive Compensation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table summarizes the compensation awarded or paid
to, or earned by, the named executive officers during each of
the last three fiscal years.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Summary Compensation Table</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="31%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Long-Term</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Compensation</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Awards</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B><FONT face="helvetica,arial">Annual Compensation</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Number of</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Shares</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Other Annual</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Underlying</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">All Other</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD align="left" nowrap><B><FONT face="helvetica,arial">Name and Principal Positions</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Year</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Salary</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Bonus</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Compensation</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Options<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Compensation<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Paul D. House
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">2004</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">406,860</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">927,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(3)</FONT></SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">66,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">331,367</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Chief Executive Officer and
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">2003</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">386,505</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">1,109,225</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(3)</FONT></SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">72,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">290,699</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">President
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">2002</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">374,985</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">948,468</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(3)</FONT></SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">88,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">246,289</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cynthia J. Devine
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">2004</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">229,125</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">257,500</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(3)</FONT></SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">29,600</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">17,495</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Executive Vice President
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">2003</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">24,231</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">101,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(3)</FONT></SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">1,022</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">and Chief Financial
    Officer<SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">2002</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(3)</FONT></SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Alfred Lane
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">2004</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">269,692</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">489,250</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(3)</FONT></SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">35,750</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">165,109</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Executive Vice President,
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">2003</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">257,875</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">494,869</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(3)</FONT></SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">39,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">168,974</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Development and
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">2002</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">249,200</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">516,325</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(3)</FONT></SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">54,833</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">146,860</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">General
    Counsel<SUP style="font-size: 85%; vertical-align: text-top">(5)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">William A. Moir
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">2004</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">265,588</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">489,250</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(3)</FONT></SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">35,750</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">178,586</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Executive Vice President,
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">2003</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">250,513</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">559,869</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(3)</FONT></SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">39,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">164,918</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Marketing
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">2002</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">241,339</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">516,325</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(3)</FONT></SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">54,833</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">144,955</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Donald B. Schroeder
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">2004</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">265,964</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">489,250</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(3)</FONT></SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">35,750</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">165,537</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Executive Vice President,
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">2003</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">252,007</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">494,869</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(3)</FONT></SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">39,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">167,687</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Administration
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">2002</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">243,527</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">516,325</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(3)</FONT></SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">54,833</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">145,369</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Roland M. Walton
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">2004</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">265,588</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">489,250</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(3)</FONT></SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">35,750</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">98,440</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Executive Vice President,
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">2003</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">250,513</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">579,869</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(3)</FONT></SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">39,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">89,179</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Operations
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">2002</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">241,340</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">516,325</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(3)</FONT></SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">54,833</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">77,963</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Options to acquire common shares of Wendy&#146;s.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    The amounts shown in this column for each named executive
    officer consist of (i)&nbsp;contributions or other allocations
    to our defined contribution pension plan, (ii) the amount
    allocated to the account of each of the named executive officers
    under our supplemental executive retirement plan (SERP),
    (iii)&nbsp;executive health benefits paid by us for coverage for
    the named executive officers and (iv)&nbsp;life and accidental
    death or dismemberment insurance premiums, each as follows:</TD>
</TR>

</TABLE>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="50%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">Defined Contribution</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">Defined Contribution SERP</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">Pension Plan</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">Allocation</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" nowrap><B><FONT face="helvetica,arial">Name</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Paul D. House
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,333</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">317,039</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">278,194</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">235,216</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cynthia J. Devine
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,113</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">969</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,138</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Alfred Lane
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,798</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,321</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">152,007</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">154,843</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">136,180</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">William A. Moir
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,637</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,026</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">165,645</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">153,665</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">133,882</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Donald B. Schroeder
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,651</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,086</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">151,407</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">153,904</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">134,615</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Roland M. Walton
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,637</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,026</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">85,499</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">76,981</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">66,890</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<P align="center" style="font-size: 10pt;">88

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="53%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">Life and Accidental</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">Death or</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">Executive Health</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">Dismemberment</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">Benefits Paid by Us</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">Insurance Premiums</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" nowrap><B><FONT face="helvetica,arial">Name</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Paul D. House
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,969</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">945</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">895</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,359</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,227</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,178</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cynthia J. Devine
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">945</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,299</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">53</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Alfred Lane
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">945</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,954</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">895</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,359</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">856</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">785</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">William A. Moir
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">945</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">895</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,359</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,227</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,178</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Donald B. Schroeder
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,120</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,470</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">576</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,359</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,227</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,178</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Roland M. Walton
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">945</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">945</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">895</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,359</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,227</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,178</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    The aggregate amount of perquisites and other benefits received
    by each individual did not exceed the lesser of US$50,000 or
    10.0% of the total annual salary and bonus of such individuals
    in 2002, 2003 or 2004.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(4)&nbsp;</TD>
    <TD align="left">
    Mrs.&nbsp;Devine joined us in November 2003 as Senior Vice
    President of Finance and Chief Financial Officer. She was
    promoted to her current position in April 2005.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(5)&nbsp;</TD>
    <TD align="left">
    Mr.&nbsp;Lane died on September&nbsp;13, 2005.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Options Granted in Last Fiscal Year</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth information regarding options
granted by Wendy&#146;s during the previous fiscal year to each
of the named executive officers with respect to Wendy&#146;s
common shares.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="27%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B><FONT face="helvetica,arial">Individual Grants</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">% of Total</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Number of</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Options</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Securities</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Granted to</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Underlying</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Employees</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Exercise</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Grant Date</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Options</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">in</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Price</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Expiration</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Present</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Name</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Granted<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Fiscal Year</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(US$/share)<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Date</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Value (US$)<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP></FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Paul D. House
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">66,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4.86</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">40.6150</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4/21/2014</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">784,740</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cynthia J. Devine
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,250</FONT></TD>
    <TD align="left" valign="bottom" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(4)</FONT></SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.68</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">39.4050</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1/28/2014</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">106,384</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">20,350</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1.50</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">40.6150</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4/21/2014</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">241,962</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Alfred Lane
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">35,750</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2.63</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">40.6150</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4/21/2014</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">425,068</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">William A. Moir
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">35,750</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2.63</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">40.6150</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4/21/2014</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">425,068</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Donald B. Schroeder
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">35,750</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2.63</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">40.6150</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4/21/2014</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">425,068</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Roland M. Walton
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">35,750</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2.63</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">40.6150</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4/21/2014</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">425,068</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 9pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Except as noted in footnote&nbsp;4 below, as originally granted
    25.0% of the options listed in this column became exercisable on
    April&nbsp;22, 2005. An additional 25.0% would become
    exercisable on each successive April 22. The Wendy&#146;s
    Compensation Committee approved accelerating the vesting of all
    outstanding, unvested options, including options listed in this
    column, effective October&nbsp;27, 2005. As a result, all of
    these options are currently exercisable. If the executive
    officer&#146;s employment is terminated by reason of death or
    disability, the options may be exercised at any time during the
    12-month period after his or her death or date of becoming
    disabled, subject to the stated term of the options. If the
    executive officer&#146;s employment is terminated by reason of
    his or her retirement, the options may be exercised during the
    48-month period after the retirement date, subject to the stated
    term of the options.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    The exercise price is the mean of the high and low prices at
    which Wendy&#146;s common shares are traded on the NYSE on the
    date of grant.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    All values shown are pretax. Values shown for grants expiring in
    April 2014 were calculated using the Black-Scholes option
    pricing model and the following assumptions: expected volatility
    31.0%; risk-free rate of return 3.3%; dividend yield 1.2%; and
    an expected time of exercise of 4.9&nbsp;years. Values shown for
    the grant expiring in January 2014 were calculated using the
    same assumptions except that the risk-free rate of return was
    calculated at 3.3%. No adjustments were made for the
    non-transferability of the options or for the risk of
    forfeiture. We are not aware of any model which will determine
    with reasonable accuracy a present value based on future unknown
    or volatile factors. No gain to the optionees is possible
    without an increase in the market price of Wendy&#146;s common
    shares above the market price on the date of grant. If such
    increase</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">89

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD align="left">
    <FONT style="font-size: 9pt">occurs, all Wendy&#146;s
    shareholders will benefit commensurately. If no increase in the
    market price occurs, optionees will realize no value from stock
    options.
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT style="font-size: 9pt">(4)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT style="font-size: 9pt">As originally granted, 25.0% of
    these options became exercisable on January&nbsp;27, 2005. An
    additional 25.0% would become exercisable on each successive
    January 27. The other terms of these options are as described
    above in footnote&nbsp;1.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Aggregated Option Exercises in Last Fiscal Year and Fiscal
Year-End Option Values</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth information regarding each
individual exercise of options with respect to Wendy&#146;s
common shares made during the last fiscal year by each of the
named executive officers.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="25%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>


<TR style="font-size: 9pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Number of Securities</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR style="font-size: 9pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Underlying Unexercised</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Value of Unexercised</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 9pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Options at</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">In-the-Money Options at</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 9pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Shares</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Value</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Fiscal Year-end</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Fiscal Year-end(US$)<SUP style="font-size: 85%; vertical-align: text-top">(2)(3)</SUP></FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 9pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Acquired on</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Realized</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 9pt;">
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Name</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Exercise<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(US$)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Exercisable</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Unexercisable</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Exercisable</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Unexercisable</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Paul D. House
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">257,623</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">179,575</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,095,174</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">864,959</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cynthia J. Devine
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">29,600</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Alfred Lane
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,931</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">103,051</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">66,065</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">98,292</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">432,022</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">458,025</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">William A. Moir
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">127,858</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">98,271</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,341,856</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">457,762</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Donald B. Schroeder
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26,387</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">358,930</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">77,696</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">98,275</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">577,918</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">457,812</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Roland M. Walton
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">115,805</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">98,271</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,302,663</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">457,762</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 9pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Common shares of Wendy&#146;s.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    Based on the fiscal year-end closing price of US$39.26&nbsp;per
    share.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    All values as shown are pretax.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Treatment of Wendy&#146;s Options, Restricted Stock and
Restricted Stock Units</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our employees will have the right to exercise their vested
Wendy&#146;s stock options in accordance with the terms of the
Wendy&#146;s stock option plan under which they were granted and
the terms of their respective grants. Restricted stock and
restricted stock units granted in 2005 under Wendy&#146;s plans
will continue to vest while the respective employee remains
employed by us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Wendy&#146;s restricted stock units can be settled only in
Wendy&#146;s common shares and include dividend equivalent
rights. These units generally vest on May&nbsp;1, 2006,
May&nbsp;1, 2007 and November&nbsp;1, 2007. These vesting dates
may be accelerated if Wendy&#146;s is involved in certain
change-in-control transactions. If a grantee&#146;s employment
is terminated for any reason other than death, disability or
retirement, the units will be canceled as of the date of such
termination. If the grantee&#146;s employment is terminated by
reason of his or her death, disability or retirement, the units
will immediately vest.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>2006 Stock Incentive Plan</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Prior to the closing of this offering, we will adopt the Tim
Hortons Inc. 2006 Stock Incentive Plan (the 2006 Plan). The plan
is an omnibus plan, designed to allow for a broad range of
equity-based compensation awards, which will afford our board
flexibility to compensate management and employees in the
future. It is the current intention of the board to primarily
use restricted stock units with dividend equivalent rights. We
believe equity compensation aligns the interests of employees
and non-employee directors with the interests of our other
shareholders. The 2006 Plan is intended to accomplish three
major objectives:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    encourage the judgment, initiative and efforts of employees and
    non-employee directors toward our continuing success;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">90

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    increase stock ownership levels of key employees and
    non-employee directors;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    assist us in attracting, retaining and motivating key employees
    and non-employee directors.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Key employees may include not only our executive officers but
also may include other officers or employees who are able to
contribute significantly to our success and growth.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following is a brief summary of the material provisions of
the 2006 Plan, which summary is qualified in its entirety by
reference to the full text of the 2006 Plan, which is attached
as an exhibit to the registration statement of which this
prospectus is a part.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The 2006 Plan provides for equity compensation awards in the
form of stock options, restricted stock, stock units, stock
appreciation rights, dividend equivalent rights, performance
awards and share awards (collectively, &#147;Awards&#148;) to
eligible employees and directors of us or our subsidiaries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The 2006 Plan authorizes up
to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common
shares for grants of Awards. The common shares offered under the
2006 Plan may be authorized but unissued shares, treasury shares
or any combination thereof. To the extent any Award based on
common shares expires or terminates without having been
exercised in full, is forfeited or is settled in cash, the
common shares subject to that Award will be available for other
Awards. Also, to the extent an option is exercised by tendering
common shares as payment of the exercise price and/or required
tax withholding, the maximum number of shares available under
the 2006 Plan will be increased by the number of shares so
tendered. The 2006 Plan provides that the maximum number of
common shares for which Awards may be granted to any single
participant in any calendar year may not
exceed &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;for
performance shares
and &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;for
options and stock appreciation rights, collectively. The dollar
amount of cash or the fair market value of common shares that
any single participant may receive in any calendar year for
performance units denominated in dollars may not
exceed&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Fair market value under the 2006 Plan is equal to the mean of
the high and low prices at which our common shares were traded
on the TSX on the relevant date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The 2006 Plan will initially be administered by the Wendy&#146;s
compensation committee. Our board of directors will have the
right to appoint a successor committee, which will consist of
not less than three members of our board (the Wendy&#146;s
compensation committee and any successor committee are
referenced in this description as the &#147;Committee&#148;).
Each member of the successor Committee will be a non-employee
director (within the meaning of Securities and Exchange
Commission Rule&nbsp;16b-3) and will satisfy any applicable
stock exchange requirements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Committee has the authority to select the individuals,
including foreign nationals, to whom, and the time or times at
which, Awards will be granted, the number of common shares to be
subject to each grant, the terms and conditions of each Award,
and the duration of leaves of absence that may be granted to
participants without constituting a termination of their
employment for purposes of the 2006 Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Committee cannot make any adjustment (other than in
connection with a stock dividend, recapitalization or other
transaction where an adjustment is permitted or required under
the terms of the 2006 Plan) or amendment where the adjustment or
amendment would reduce or have the effect of reducing the
exercise price of an option or stock appreciation right
previously granted under the 2006 Plan, whether through
amendment, cancellation, replacement grants or other means,
unless our shareholders have approved the adjustment or
amendment.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Awards Available Under the 2006 Plan</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>Restricted Stock.</I></B> The 2006 Plan provides for
Awards of restricted stock, which will contain such
restrictions, terms and conditions as the Committee shall
determine. Unless the Committee determines otherwise, the
grantee of an Award of restricted stock will have the right to
vote the shares and to receive all dividends and other
distributions on the shares prior to vesting. However, the
Committee may, in its discretion, determine that dividends on
the restricted stock will be deferred
</DIV>

<P align="center" style="font-size: 10pt;">91

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt;">
until the lapsing of the restrictions imposed on the shares and
either held in cash or reinvested in shares of restricted stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>Formula Restricted Stock Units.</I></B> Beginning in 2006,
each non-employee director will be
granted &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;restricted
stock units under the 2006 Plan on the date on which the
regularly scheduled board meeting is held during our second
fiscal quarter (the &#147;Formula Restricted Stock Units&#148;).
One-third of the shares of each Formula Restricted Stock Unit
grant will vest on each of the first two anniversaries of the
grant date of the Formula Restricted Stock Units and the
remainder will vest on November&nbsp;1 following the second
anniversary of the grant date. The grantee of an award of
Formula Restricted Stock Units will have the right to receive
dividends and other distributions on the shares prior to
vesting. However, any dividends or distributions paid in cash
will be reinvested in our common shares, and all such reinvested
dividends and distributions will be deferred until the lapsing
of the restrictions imposed on the Formula Restricted Stock
Units in respect of which the dividends and distributions were
paid.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>Stock Units.</I></B> The Committee may make Awards of
stock units under the 2006 Plan, which will represent the right
of the grantee to receive a payment upon vesting or on any later
date specified by the Committee equal to the fair market value
of common shares as of the date the stock unit was granted, the
vesting date or any other date as determined by the Committee.
The Committee may place a limitation on the amount payable in
respect of each stock unit at the time of grant and may provide
for the settlement of stock units in cash or in common shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>Stock Options.</I></B> The 2006 Plan provides for both
incentive stock options as defined under Section&nbsp;422 of the
Internal Revenue Code (&#147;ISOs&#148;) and non-qualified stock
options (&#147;Non-Qualified Options&#148; and collectively with
ISOs, &#147;Options&#148;). The 2006 Plan provides that the
purchase price for all common shares covered by each Option
granted cannot be less than 100.0% of the fair market value of
the common shares on the date of grant. In the case of any ISO
granted to an individual who, on the effective date of grant,
owns shares possessing more than 10.0% of our total combined
voting power, the exercise price per share must be at least
110.0% of the fair market value of the common shares on the date
of grant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The purchase price for common shares covered by an Option must
be paid in full at the time of exercise of the Option by cash or
cheque, by the delivery of our common shares having a fair
market value on the date of exercise equal to the exercise price
or by tender of other property acceptable to the Committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
No individual may be granted ISOs under the 2006 Plan if the
grant would cause the aggregate fair market value (determined as
of the date the ISOs are granted) of the common shares with
respect to which ISOs are exercisable for the first time by the
optionee during any calendar year under all stock option plans
maintained by us and our subsidiaries to exceed US$100,000.
</DIV>

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The Committee has the authority to determine the term of an
Option, up to a maximum of 10&nbsp;years, and each Option will
be exercisable as determined by the Committee. The Committee may
accelerate the exercisability of an Option at any time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At any time after an Option granted under the 2006 Plan becomes
exercisable, the Committee has the right, in its sole discretion
and without the consent of an optionee, to cancel the Option and
pay to the optionee the excess of the fair market value of the
common shares covered by the Option over the option exercise
price at the date the Committee provides written notice of its
intention to exercise the right. Such amount may be paid in
cash, our common shares or a combination thereof, as the
Committee may determine. To the extent payment is made in common
shares, the number of such common shares will be determined by
dividing the amount of the payment to be made by the fair market
value of the common shares on the date of the notice of election
to the optionee.
</DIV>

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<B><I>Stock Appreciation Rights.</I></B> A stock appreciation
right (&#147;SAR&#148;) may be granted under the 2006 Plan
either alone or in conjunction with an Option. A SAR related to
an Option generally terminates upon the expiration, forfeiture
or exercise of the related Option, and is exercisable only to
</DIV>

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the extent that the related Option is exercisable. The Committee
will determine the exercisability, vesting and duration of a SAR
unrelated to an Option, provided that the maximum term of a SAR
may not exceed 10&nbsp;years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Upon the exercise of a SAR related to an Option, the related
Option will be canceled to the extent of the number of shares
for which the SAR is exercised. Upon exercise of a SAR, the
grantee will receive cash, common shares, or a combination of
both equal to (1)&nbsp;the excess of the fair market value of
common shares on the date the SAR was granted or, if the SAR is
related to an Option, the option price, times (2)&nbsp;the
number of shares as to which the SAR is being exercised. At the
time of grant, the Committee may place a limitation on the
amount payable upon exercise of a SAR.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>Performance Shares.</I></B> Performance shares are common
shares issued to eligible individuals under the 2006 Plan, which
shares will become vested on the terms, conditions and
satisfaction of Performance Objectives (as defined and described
below) as the Committee may determine. Unless the Committee
determines otherwise, the grantee of an award of performance
shares will have the right to vote the performance shares and to
receive all dividends and other distributions on the performance
shares prior to vesting. However, the Committee may, in its
discretion, determine that dividends on the performance shares
will be deferred until the lapsing of the restrictions imposed
on the performance shares and either held in cash or reinvested
in performance shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>Performance Units.</I></B> The value of a performance unit
may be denominated in common shares or a specified dollar
amount. Each performance unit will represent the right to
receive, in the case of share-denominated units, the fair market
value of a share (or a percentage thereof (which may be more
than 100.0%) depending on the level of Performance Objective
attainment) on the date the performance unit was granted, the
date the performance unit became vested or any other date
specified by the Committee or, in the case of dollar-denominated
units, the specified dollar amount (or a percentage thereof
(which may be more than 100.0%) depending on the level of
Performance Objective attainment). At the time of grant, the
Committee may place a limitation on the maximum amount payable
in respect of a vested performance unit. Payment may be made in
common shares, cash, or a combination thereof, including
restricted stock if the Committee so determines at the time of
grant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>Performance Objectives.</I></B> Performance Objectives
applicable to performance shares or performance units may be
expressed in terms of earnings per share, earnings (which may be
expressed as earnings before specified items), return on assets,
return on invested capital, revenue, operating income, cash
flow, total shareholder return or any combination thereof and
may be in respect of the performance of the Company, any of its
subsidiaries, operating units or combination thereof (the
&#147;Performance Objectives&#148;). The Committee has the power
to modify the Performance Objectives after they have been
established as may be appropriate, including, for example, to
reflect specified corporate transactions, accounting or tax law
changes and other extraordinary or nonrecurring events. However,
no modification may be made if it would adversely affect the
treatment of any performance award designated by the Committee
as &#147;performance-based compensation&#148; within the meaning
of Section&nbsp;162(m) of the Internal Revenue Code and the
regulations thereunder. Prior to the lapse of restrictions on
performance shares or the payout in respect of performance units
designated as performance-based compensation, the Committee must
certify the extent to which the Performance Objectives have been
satisfied.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>Dividend Equivalent Rights.</I></B> Dividend equivalent
rights may be granted in conjunction with another Award or as a
separate Award. Grantees of dividend equivalent rights will be
entitled to receive payments in single or multiple installments,
as determined by the Committee, equivalent to all or some
portion of the cash dividends payable with respect to common
shares (as specified in the applicable Award agreement).
Payments may be made in cash, common shares or a combination
thereof. Amounts payable in respect of dividend equivalent
rights may be payable currently or, if applicable, deferred
until the lapsing of restrictions on the dividend equivalent
rights or
</DIV>

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<DIV align="left" style="font-size: 10pt;">
until the vesting, exercise, payment, settlement or other lapse
of restrictions on the Award to which the dividend equivalent
rights relate. If the amounts payable are deferred, the
Committee will determine whether the deferred amounts are to be
held in cash, reinvested in shares or deemed notionally to be
reinvested in shares.
</DIV>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Share Awards</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Committee may grant an Award of common shares as additional
compensation for services rendered or in lieu of cash or other
compensation to which an eligible employee or non-employee
director is entitled. Grants of share awards will be made on the
terms and conditions as the Committee may determine in its
discretion.
</DIV>

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<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Performance-Based Compensation</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Unless otherwise provided in an Award agreement, each Option and
SAR, and if designated in&nbsp;an Award agreement, each
performance share and performance unit granted under the 2006
Plan&nbsp;is&nbsp;intended to constitute &#147;performance-based
compensation&#148; within the meaning of
Section&nbsp;162(m)(4)(c) of the Code and the regulations
thereunder. The Committee will not be entitled to exercise any
discretion otherwise authorized under the 2006 Plan with respect
to Awards intended to constitute performance-based compensation
if the ability to exercise or the exercise of the discretion
would cause the compensation attributable to the Awards to fail
to qualify as performance-based compensation.
</DIV>

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<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Deferral of Payments or Vesting</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Committee may provide for the deferral of the issuance or
vesting in common shares or the payment of cash in respect of an
Award granted under the Plan. The terms of any such deferral
will be set forth in the applicable Award agreement.
</DIV>

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<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Amendment and Termination</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our board of directors may amend or terminate the 2006&nbsp;Plan
at any time. However, the board cannot change any Award in a
manner that will impair the rights of the grantee therein
without the consent of that grantee.
</DIV>

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<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Change in Control</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The 2006&nbsp;Plan provides that in the event of a &#147;Change
in Control&#148; (as defined in the 2006&nbsp;Plan), all Options
and SARs will become immediately exercisable, the restrictions
applicable to outstanding restricted stock will lapse, and stock
units will become fully vested. In addition, unless the
Committee determines otherwise, all restrictions on outstanding
performance shares will lapse, and outstanding performance units
will become vested, in each case as if all Performance
Objectives had been satisfied at the highest level by us and the
grantee. In addition, regarding performance units, unless the
Committee determines otherwise, the grantee will be entitled to
receive a cash payment within 10&nbsp;days after the Change in
Control in respect of the performance units that become vested
as a result of a Change in Control.
</DIV>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Adjustments</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The 2006&nbsp;Plan provides that the Committee will determine
the appropriate adjustments, if any, to outstanding Awards and
the shares available for future Awards in connection with a
reclassification, recapitalization, merger, consolidation,
reorganization, spin-off, split-up, issuance of warrants or
rights or debentures, stock dividend, stock split, reverse stock
split, cash dividend, property dividend, combination or exchange
of shares, repurchase of shares, change in corporate structure
or otherwise (a &#147;Change in Capitalization&#148;).
Adjustments may be made to the number and class of our common
shares or other stock or securities which are subject to
outstanding Awards
</DIV>

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<DIV align="left" style="font-size: 10pt;">
granted under the 2006&nbsp;Plan, the maximum number and class
of our common shares or other stock or securities which may be
granted under the 2006&nbsp;Plan or to any individual in any
calendar year, and the Performance Objectives applicable to
performance shares and performance units. If the grantee of an
Award is entitled to new, additional or different shares of our
securities or any other corporation by reason of a Change in
Capitalization, the new, additional or different shares will be
subject to all of the conditions, restrictions and performance
criteria that were applicable to the common shares subject to
the Award prior to the Change in Capitalization.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the event we are involved in a liquidation, dissolution,
merger or consolidation (a&nbsp;&#147;Transaction&#148;),
outstanding Awards will be treated as provided for in the
agreement entered into in connection with the Transaction or, if
not so provided in the agreement, grantees will be entitled to
receive the same consideration that each holder of one of our
common shares was entitled to receive in the Transaction in
respect of a common share. However, the consideration will
remain subject to all of the conditions, restrictions and
performance criteria which were applicable to the Awards prior
to the transaction.
</DIV>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Transferability</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Awards granted under the 2006&nbsp;Plan are generally
non-transferable and, in the case of Options and SARs, may be
exercised, during a grantee&#146;s lifetime, only by the
grantee. However, in the case of Options, if the grantee becomes
incapacitated or if the option agreement so provides, the
optionee&#146;s legal representative or estate may exercise the
Option or&nbsp;SAR.
</DIV>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Termination of Employment</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The 2006&nbsp;Plan contains provisions concerning the treatment
of Awards upon termination of employment. These provisions will
apply unless the Committee determines otherwise in an applicable
Award agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under these provisions, if a grantee dies or becomes disabled,
the grantee&#146;s Options and SARs will become immediately
exercisable and may be exercised for a period of one year
following death or disability (but in no event beyond the
maximum term of the Option or SAR). The grantee&#146;s
performance shares and performance units will remain
outstanding, and the grantee will be entitled to a pro rata
portion of the payment otherwise payable in respect of the
performance shares or units on the date the performance shares
or units would have been paid if the grantee had remained
employed with us or a subsidiary. Finally, the grantee&#146;s
restricted stock, stock units and Formula Restricted Stock Units
will become immediately vested.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If a grantee who is a non-employee director retires after
attaining age&nbsp;55 with at least three years of service as a
director, the grantee&#146;s Formula Restricted Stock Units will
become immediately vested. The Committee will have the authority
to provide for accelerated vesting of equity compensation awards
made under the 2006 Plan to employees who retire and to
establish the definition of retirement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If a grantee&#146;s employment with us is terminated without
cause in connection with a disposition of one or more
restaurants or other assets by us or our subsidiaries, or in
connection with a sale or other disposition of a subsidiary, the
grantee&#146;s Options and SARs will remain outstanding for one
year (but in no event beyond the maximum term of the Option or
SAR) and unvested Options and SARs will continue to vest in
accordance with the applicable vesting schedule. The
grantee&#146;s performance shares and performance units will
remain outstanding, and the grantee will be entitled to a pro
rata portion of the payment otherwise payable in respect of the
performance shares or units on the date the performance shares
or units would have been paid if the grantee had remained
employed with the Company or a subsidiary. Finally, the
grantee&#146;s restricted stock and stock units will become
immediately vested.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If a grantee&#146;s employment with us or our subsidiaries
terminates for any reason other than those described above, all
Awards the grantee holds will be forfeited immediately unless
otherwise determined by the Committee at any time prior to or
after termination with the grantee&#146;s consent, except any
vested Options or SARs the grantee holds will remain exercisable
for a period of 30&nbsp;days following termination of employment.
</DIV>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Forfeiture for Misconduct</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If a grantee has used for profit or disclosed to unauthorized
persons our or our subsidiaries&#146; confidential information
or trade secrets, breached any contract with or violated any
fiduciary obligation to us or our subsidiaries, engaged in
unlawful trading in our securities or securities of another
company based on information gained as a result of that
grantee&#146;s employment or directorship with us or our
subsidiaries, all Awards the grantee holds will automatically be
forfeited, unless the Committee determines otherwise.
</DIV>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Tax Withholding</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If a grantee recognizes taxable income in connection with the
receipt of common shares or cash under the 2006&nbsp;Plan, the
grantee will pay the federal, state, provincial and local income
taxes and other amounts required by law to be withheld by us in
connection with the receipt prior to the issuance of the shares
or payment of the cash. The grantee may elect to have us
withhold a portion of the common shares issuable with a fair
market value equal to the amount of withholding taxes in
satisfaction of the obligation to pay the withholding taxes.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Tax Treatment Upon a Change in Control.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If Options under the 2006 Plan vest or are paid on an
accelerated basis upon a Change in Control, some or all of the
value of that acceleration may be considered an &#147;excess
parachute payment&#148; under 280G of the Code, which would
result in the imposition of a 20.0% federal excise tax on the
recipients of the excess parachute payments and a loss of the
Company&#146;s deduction for the excess parachute payments.
</DIV>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Performance Based Compensation.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Section&nbsp;162(m) of the Internal Revenue Code disallows a
federal income tax deduction for certain compensation in excess
of US$1.0&nbsp;million per year paid to each of the
Company&#146;s chief executive officer and its four other most
highly compensated executive officers. Compensation that
qualifies as &#147;performance-based compensation&#148; is not
subject to the US$1.0&nbsp;million limit. It is anticipated
that, in general, the Committee will operate the 2006 Plan in a
manner designed to avoid loss of the Company&#146;s tax
deduction relating to Options because of Section&nbsp;162(m).
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Total Anticipated Share Option Grants and Stock Ownership</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth the number of our common shares
and restricted share units that are expected to be beneficially
owned after the completion of this offering (without giving
effect to vesting schedules or any shares purchased in this
offering) by each of our directors, the executive officers named
in the Summary Compensation Table and all of our directors and
executive officers as a group.
</DIV>
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    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Restricted</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
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<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Shares</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Shares</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
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    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Issued&nbsp;Upon</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Under&nbsp;Options</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Issued&nbsp;Upon</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Completion</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Issued Upon</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Completion</FONT></B></TD><TD></TD>
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<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">of This</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Completion of</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">of This</FONT></B></TD><TD></TD>
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    <TD align="center" nowrap><B><FONT face="helvetica,arial">Directors and Executive Officers</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Offering</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">This Offering</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Offering</FONT></B></TD><TD></TD>
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    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Total</FONT></B></TD><TD></TD>
</TR>

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    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
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</TABLE>
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</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 72pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Executive Agreements</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have not entered into any employment agreements with any
executive officers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Limitation of Liability and Indemnification Matters</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As permitted by applicable Ohio law, we have included in our
code of regulations a provision to generally eliminate the
personal liability of our directors for monetary damages for
breach or alleged breach of their fiduciary duties as directors.
However, this provision does not eliminate or limit liability of
a director for a director&#146;s breach of the duty of loyalty,
for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, for any
transaction from which a director derived an improper personal
benefit and for other specified actions. In addition, our
articles of incorporation and code of regulations provide that
we are required to indemnify our officers and directors under a
number of circumstances, including those circumstances in which
indemnification would otherwise be discretionary, and we are
required to pay expenses to our officers and directors as
incurred in connection with proceedings against them for which
they may be indemnified in advance of a final determination of
their entitlement to indemnification. At present, we are not
aware of any pending or threatened litigation or proceeding
involving a director, officer, employee or agent of ours in
which indemnification would be required or permitted. We believe
these indemnification provisions are necessary to attract and
retain qualified persons as directors and officers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Insofar as indemnification for liabilities arising under the
Securities Act may be granted to directors, officers or persons
controlling us under the foregoing provisions, we have been
informed that in the opinion of the Securities and Exchange
Commission this indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<A name='126'></A>
</DIV>

<!-- link1 "PRINCIPAL SHAREHOLDER" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>PRINCIPAL SHAREHOLDER</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
After completion of this offering, Wendy&#146;s will own
approximately &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of our outstanding
common shares, or approximately &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
if the underwriters exercise their over-allotment option
in&nbsp;full.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under applicable provisions of the Ohio General Corporation Law
and our articles of incorporation, Wendy&#146;s will be able,
acting alone, to elect our entire board of directors and approve
any action requiring shareholder approval. Except for
Wendy&#146;s, we are not aware of any person or group that will
beneficially own more than 5.0% of the outstanding shares of our
common shares following this offering. The address of
Wendy&#146;s principal executive office is
P.O.&nbsp;Box&nbsp;256, 4288&nbsp;West&nbsp;Dublin-Granville
Road, Dublin, Ohio&nbsp;43017-0256.
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<A name='127'></A>
</DIV>

<!-- link1 "OUR RELATIONSHIP WITH WENDY&#146;S" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>OUR RELATIONSHIP WITH WENDY&#146;S</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>General</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Prior to this offering, we were operated as a wholly-owned
subsidiary of Wendy&#146;s. Immediately following this offering,
Wendy&#146;s will continue to own
approximately &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of our common
shares. If the underwriters exercise their option to purchase
additional shares in full, immediately following this offering,
Wendy&#146;s will own &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of our
common shares. Wendy&#146;s will continue to have the power
acting alone to approve any action requiring a vote of the
majority of our voting shares and to elect all of our directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Historical Relationship With Wendy&#146;s</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have been a wholly-owned subsidiary of Wendy&#146;s since our
merger with Wendy&#146;s in December 1995. As a result, in the
ordinary course of our business, we have received various
services provided by Wendy&#146;s, including insurance, risk
management, information technology, tax, financial services,
shared benefits administration, payroll and external financial
reporting. Wendy&#146;s has also provided us with the services
of a number of its executives and employees. Our historical
consolidated financial statements include allocations to us by
Wendy&#146;s of its costs related to these services. These cost
allocations have been determined on a basis that we and
Wendy&#146;s consider to be reasonable reflections of the use of
services provided or the benefit received by us. On a pre-tax
basis, these allocations totalled $12.7&nbsp;million in fiscal
2002, $12.9&nbsp;million in fiscal 2003, $13.3&nbsp;million in
fiscal 2004 and $13.8&nbsp;million for the nine months ended
October&nbsp;2, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Wendy&#146;s as Our Controlling Shareholder</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As long as Wendy&#146;s continues to control more than 50.0% of
the combined voting power of our common shares, Wendy&#146;s
will be able to direct the election of all of the members of our
board and exercise a controlling influence over our business and
affairs, including any determinations with respect to mergers or
other business combinations involving us, our acquisition or
disposition of assets, our incurrence of indebtedness, our
issuance of any additional common shares or other equity
securities, and the payment of dividends with respect to our
common shares. Similarly, Wendy&#146;s will have the power to
determine matters submitted to a vote of our shareholders
without the consent of our other shareholders, will have the
power to prevent a change in control of our company and will
have the power to take other actions that might be favourable to
Wendy&#146;s but unfavourable to us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If the Wendy&#146;s board of directors determines to take such
action, Wendy&#146;s could spin-off its remaining ownership
interest in us to its common shareholders by means of a special
dividend to its common shareholders. Beneficial ownership of at
least 80.0% of the total voting power and value of our
outstanding common shares is required for Wendy&#146;s to
continue to include us in its consolidated group for federal
income tax purposes, and beneficial ownership of at least 80.0%
of the total voting power and 80.0% of each class of nonvoting
capital stock is required for Wendy&#146;s to effect a tax-free
spin-off or certain other tax-free transactions relating to us.
As a result, we cannot be sure how long Wendy&#146;s will own
our common shares following this offering.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Agreements Between Wendy&#146;s and Us</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This section provides a summary description of agreements
between Wendy&#146;s and us relating to this offering and our
relationship with Wendy&#146;s after this offering. The
description of the agreements is not complete and, with respect
to each such agreement, is qualified by reference to the terms
of the agreement, each of which will be filed as an exhibit to
the registration statement of which this prospectus is a part.
We encourage you to read the full text of these agreements. We
will enter into these agreements with Wendy&#146;s immediately
prior to the completion of this offering; accordingly, we have
entered or will enter into these agreements with Wendy&#146;s in
the context of our
</DIV>

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<DIV align="left" style="font-size: 10pt;">
relationship as a wholly-owned subsidiary of Wendy&#146;s. The
prices and other terms of these agreements may be less
favourable to us than those we could have obtained in
arm&#146;s-length negotiations with unaffiliated third parties
for similar services or under similar agreements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Master Separation Agreement</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The master separation agreement contains the key provisions
related to our separation from Wendy&#146;s, this offering and
the spin-off (if it occurs) of our common shares held by
Wendy&#146;s to its stockholders following completion of this
offering.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>The Spin-off (if it occurs).</I></B> Wendy&#146;s has
advised us that, subject to the determination of its board of
directors, it may in the future determine to spin-off all of our
common shares that it owns to its stockholders. Wendy&#146;s has
the sole discretion to determine the form, structure and all
other terms of any transactions to effect the spin-off. Any
spin-off would be subject to several conditions that must either
be satisfied or waived by Wendy&#146;s, in its sole discretion,
including:
</DIV>

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    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    receipt of an opinion of tax counsel to the effect that, among
    other things, the spin-off should qualify as a tax-free
    distribution for federal income tax purposes under
    Section&nbsp;355 of the Internal Revenue Code;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    receipt of any necessary government approvals and material
    consents; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    lack of any order, injunction, decree or regulation issued by
    any court or agency of competent jurisdiction or other legal
    restraint or prohibition preventing the completion of the
    spin-off.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
See &#147;Risk Factors&#151;Risks Related to Our Relationship
with Wendy&#146;s&#151;Our business and your investment in our
common shares may be adversely affected if Wendy&#146;s does not
spin-off our shares.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If Wendy&#146;s determines to effect the spin-off, we are
required by the master separation agreement to cooperate with
Wendy&#146;s in all respects to accomplish the spin-off and to
promptly take any and all actions necessary or desirable to
effect the spin-off.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>Expenses.</I></B> We and Wendy&#146;s generally will be
responsible for our own costs (including all third-party costs)
incurred in connection with the transactions contemplated by the
master separation agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>Other Provisions.</I></B> In addition to the terms and
provisions described above, the master separation agreement
provides for the sharing of information and dispute resolution.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Shared Services Agreement</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The shared services agreement will govern the provision by
Wendy&#146;s to us of certain support services and the provision
by us to Wendy&#146;s of certain other support services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Tax Sharing Agreement</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The tax sharing agreement will govern Wendy&#146;s and our
respective rights, responsibilities and obligations after this
offering with respect to taxes for tax periods ending on or
before this offering. Generally, taxes incurred or accrued prior
to this offering that are attributable to the business of one
party will be borne solely by that party. In addition, the tax
sharing agreement addresses the allocation of liability for
taxes incurred as a result of restructuring activities
undertaken to implement this offering and the spin-off (if it
occurs). We are required to indemnify Wendy&#146;s for certain
tax liabilities incurred in connection with the spin-off, if it
occurs. We also will be limited in our ability to issue shares
and our ability to enter into transactions involving
acquisitions of our common shares because of potential adverse
tax consequences.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Registration Rights Agreement</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The registration rights agreement will provide Wendy&#146;s with
certain rights relating to our common shares held by
Wendy&#146;s. These registration rights generally become
effective if Wendy&#146;s informs us that it no longer intends
to complete the spin-off of our common shares to its
shareholders. Under the agreement, Wendy&#146;s will have the
right to require us to register for offer and sale all or a
portion of the common shares covered by the agreement, so long
as the shares Wendy&#146;s requires us to register represent at
least &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of the aggregate common
shares then issued and outstanding and Wendy&#146;s holds at
least &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of our then-outstanding
common shares on the date the registration request is made.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We will bear all registration expenses if these registration
rights are exercised, other than underwriting discounts and
commissions. These registration rights terminate as to
Wendy&#146;s shares when Wendy&#146;s may sell those shares
under Rule&nbsp;144(k) of the Securities Act (which will only
occur when Wendy&#146;s is no longer our affiliate).
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='128'></A>
</DIV>

<!-- link1 "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A trust for the benefit of Paul D. House is the sole shareholder
of a corporation which purchased a shopping centre property in
Tottenham, Ontario, Canada from an unrelated third party in
1998. As part of that purchase, the corporation now leases a Tim
Hortons restaurant to one of our subsidiaries, which lease has a
remaining term of nine years. The amounts of rent paid to the
corporation in fiscal 2004 and the first nine months of 2005
were $55,000 and $44,013, respectively. In our opinion, the
terms of this lease are no less favourable than we could have
obtained from an unrelated third party.
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<A name='129'></A>
</DIV>

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<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>DESCRIPTION OF CAPITAL STOCK</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of the date of the initial filing of the registration
statement, of which this prospectus is a part, Tim Hortons Inc.
is a Delaware corporation. Before the completion of this
offering, we intend to merge into a newly-formed Ohio
corporation named Tim Hortons Inc. We are, and from that merger
until the completion of this offering, will be, a wholly-owned
subsidiary of Wendy&#146;s. Although the merger has not been
completed as of the date of this initial filing of the
registration statement of which this prospectus is a part, we
have made certain disclosures in this prospectus as if the
merger had been completed and we were an Ohio corporation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our articles of incorporation provide that we may issue up
to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common
shares, no stated value,
and &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;preferred
shares, no stated value. Upon completion of this offering, we
will
have &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common
shares outstanding
(&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
if the underwriters&#146; option to purchase additional shares
is exercised is full) and preferred shares outstanding. The
number of common shares outstanding assumes the issuance
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;pursuant
to the terms of our equity incentive plan. We expect to issue
these &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;immediately
following the pricing of, but prior to, the consummation of this
offering; however, the issuances remain subject to approval by
our board of directors prior to the consummation of this
offering.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following description of our capital stock does not purport
to be complete and is subject to, and is qualified by, our
articles of incorporation and code of regulations, which will be
filed as exhibits to the registration statement of which this
prospectus is part.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Common Shares</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of the date of this prospectus, and before giving effect to
this offering, all of our outstanding common shares were owned
by Wendy&#146;s.
</DIV>

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Holders of common shares are entitled to one vote per share on
all matters to be voted on by the shareholders. The holders of
common shares are not entitled to cumulative voting rights.
Generally, all matters to be voted on by shareholders must be
approved by a majority (or, in the case of election of
directors, by a plurality) of the votes entitled to be cast by
all common shareholders present in person or represented by
proxy, voting together as a single class, subject to any voting
rights granted to holders of any preferred shares.
</DIV>

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Holders of common shares have no preemptive rights, and the
common shares are not subject to further calls or assessments by
us. There are no redemptive or sinking fund provisions
applicable to the common shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Holders of common shares will share in an equal amount per share
in any dividend declared by the board of directors, subject to
any preferential rights of any outstanding preferred shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Upon liquidation, dissolution or winding up of our affairs, our
creditors and any holders of preferred shares will be paid
before any distribution to holders of common shares. The holders
of common shares would be entitled to receive a pro rata
distribution of any excess amount. All outstanding common shares
are, and the common shares offered in this offering when issued
and paid for will be, fully paid and nonassessable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The rights, preferences and privileges of holders of common
shares are subject to, and may be adversely affected by, the
rights of holders of shares of any series of preferred shares
which our board of directors may designate and issue in the
future.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Preferred Shares</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The board may fix by resolution the designations, preferences
and relative, participating, optional or other rights and the
qualifications, limitations or restrictions of our preferred
shares, including the number of shares in any series,
liquidation preferences, dividend rates, voting rights,
conversion rights and redemption provisions. The issuance of
preferred shares and the terms selected by the board could
decrease the amount of earnings and assets available for
distribution to holders of our common shares or adversely affect
the rights and powers, including voting rights, of the holders
of our common shares without any further vote or action by the
common shareholders. Any series of preferred shares issued by
the board could have priority over the common shares in terms of
dividend or liquidation rights or both. The issuance of
preferred shares, or the issuance of rights to purchase
preferred shares, could make it more difficult for a third party
to acquire a majority of our outstanding voting shares and
thereby have the effect of delaying, deferring or preventing a
change of control of the company or an unsolicited acquisition
proposal or of making the removal of management more difficult.
Additionally, the issuance of preferred shares may have the
effect of decreasing the market price of our common shares.
There are currently no outstanding preferred shares and we have
no present intention to issue any preferred shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Provisions of Our Articles of Incorporation Governing
Corporate Opportunities and Related Party Transactions</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
After this offering, Wendy&#146;s will remain a substantial
shareholder of ours. We and Wendy&#146;s are engaged in the same
or similar activities or lines of business and have interests in
the same areas of corporate opportunities. Our articles of
incorporation will provide that Wendy&#146;s is under no
obligation to communicate or offer any corporate opportunity to
us. See &#147;Risk Factors&#151;Risks Related to Our
Relationship with Wendy&#146;s&#151;Wendy&#146;s will not be
required to offer corporate opportunities to us, and our
articles of incorporation will permit some of our directors to
offer some corporate opportunities to Wendy&#146;s before
us.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Anti-Takeover Effects of Certain Provisions of our Articles
of Incorporation, our Code of Regulations and Ohio Law.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Provisions of our articles of incorporation and regulations and
of the Ohio General Corporation Law summarized below may be
deemed to have an anti-takeover effect and may delay, defer or
prevent a tender offer or takeover attempt that a shareholder
might consider in its best interest, including those attempts
that might result in a premium over the market price for the
shares held by shareholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>No Cumulative Voting.</I></B> Where cumulative voting is
permitted, each share is entitled to as many votes as there are
directors to be elected and each shareholder may cast all of his
or her votes for a single candidate or distribute such votes
among two or more candidates. Cumulative voting makes it easier
for a minority shareholder to elect a director. Our articles of
incorporation expressly deny shareholders the right to
cumulative voting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>Supermajority Vote to Remove Directors.</I></B> Our
regulations will provide that the shareholders may remove a
director only by the vote of the holders of not less than
three-fourths of the voting power of the corporation entitling
them to elect directors in place of those to be removed. This
provision, when coupled with the voting power of the common
shares held by Wendy&#146;s (&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
following this offering), will preclude any other shareholder or
shareholders from removing incumbent directors and
simultaneously gaining control of the board of directors by
filling the vacancies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>Classified Board.</I></B> Our regulations provide for the
board of directors to be divided
into &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;classes.
Because the regulations will
authorize &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;directors,
approximately &nbsp;of the board of directors will be elected
each year. This provision, when coupled with the vote required to
</DIV>

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<DIV align="left" style="font-size: 10pt;">
remove directors, can preclude even a majority shareholder from
gaining control of the board of directors in one election.
</DIV>

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<B><I>Authorized But Unissued Shares.</I></B> Our authorized but
unissued common shares and preferred shares are available for
future issuance without shareholder approval. These additional
shares may be utilized for a variety of corporate purposes,
including future public offerings to raise additional capital,
corporate acquisitions and employee benefit plans. Our articles
of incorporation authorize our board of directors to issue up
to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;preferred
shares and to determine the powers, preferences, privileges,
rights, including voting rights, qualifications, limitations and
restrictions on those shares, without any further vote or action
by the shareholders. The existence of authorized but unissued
common shares and preferred shares could have the effect of
delaying, deterring or preventing an attempt to obtain control
of us by means of a proxy contest, tender offer, merger or
otherwise.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>Special Meeting of Shareholders.</I></B> Our regulations
provide that special meetings of our shareholders may be called
only by:
</DIV>

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    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the chairman of the board, the president, or in case of the
    president&#146;s death or disability, the vice president
    authorized to exercise the authority of the president;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the directors by action at a meeting, or a majority of the
    incumbent directors acting without a meeting;&nbsp;or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the holders of at least &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of all
    shares outstanding and entitled to vote thereat.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>Actions by Written Consent.</I></B> Section&nbsp;1701.54
of the Ohio General Corporation Law requires that an action by
written consent of the shareholders in lieu of a meeting be
unanimous, except that under Section&nbsp;1701.11 of the Ohio
General Corporation Law, the regulations may be amended by an
action by written consent of holders of two-thirds of the voting
power of the corporation or, if the articles of incorporation or
regulations otherwise provide, such greater or lesser amount,
but not less than a majority. Our regulations provide that the
regulations may be amended by an action by written consent of
holders of a majority of our total voting power. Based on its
ownership after the proposed offering, Wendy&#146;s will have
enough shares to amend our regulations. This provision coupled
with Wendy&#146;s ownership may have the effect of delaying,
deferring or preventing a tender offer or takeover attempt that
a shareholder might consider in its best interest.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>Advance Notice Requirements for Shareholder Proposals and
Director Nominations.</I></B> Our regulations provide that
shareholders seeking to nominate candidates for election as
directors at an annual or special meeting of shareholders must
provide timely notice to us in writing. To be timely, a
shareholder&#146;s notice must be received at our principal
executive offices not less than 60&nbsp;days nor more than
90&nbsp;days prior to the first anniversary of the date of the
previous year&#146;s annual meeting (or, if the date of the
annual meeting is changed by more than 30&nbsp;days from the
anniversary date of the preceding year&#146;s annual meeting, or
in the case of a special meeting, within 10&nbsp;days after we
mail the notice of the date of the meeting or otherwise publicly
disclose the date of the meeting). The regulations also
prescribe the proper written form for a shareholder&#146;s
notice. These provisions may preclude shareholders from making
nominations for directors at an annual or special meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>We Are Subject to the Ohio Control Share Acquisition
Statute.</I></B> We are subject to Section&nbsp;1701.831 of the
Ohio Revised Code, known as the &#147;Ohio Control Share
Acquisition Statute.&#148; This statute provides that, unless a
corporation&#146;s articles of incorporation or code of
regulations provide that such section does not apply, notice and
information filings, and special shareholder meeting and voting
procedures, must occur prior to any person&#146;s acquisition of
an issuer&#146;s shares
</DIV>

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that would entitle the acquirer to exercise or direct the voting
power of the issuer in the election of directors within any of
the following ranges:
</DIV>

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    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    one-fifth or more but less than one-third of the voting power;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    one-third or more but less than a majority of the voting
    power;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    a majority of the voting power.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>We Are Subject to the Merger Moratorium Statute.</I></B>
We are subject to Chapter&nbsp;1704 of the Ohio Revised Code,
known as the &#147;Merger Moratorium Statute.&#148; This statute
prohibits certain transactions if they involve both the issuer
and either a person who became the beneficial owner of 10.0% or
more of the issuer&#146;s shares without the prior approval of
its board of directors or anyone affiliated or associated with
such person, unless a corporation&#146;s articles of
incorporation or code of regulations provide that such statute
does not apply. The prohibition imposed by Chapter&nbsp;1704 is
absolute for at least three years and continues indefinitely
thereafter unless the transaction is approved by the holders of
at least two-thirds of the voting power of the issuer or
satisfies statutory conditions relating to the fairness of the
consideration to be received by the shareholders.
</DIV>

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<B>Transfer Agent and Registrar</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The transfer agent and registrar for our common shares
is &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
The transfer agent&#146;s telephone number
is &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
</DIV>

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<A name='130'></A>
</DIV>

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<B>SHARES ELIGIBLE FOR FUTURE SALE</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Prior to this offering, there has been no public market for our
common shares. The sale of a substantial amount of our common
shares in the public market after this offering, or the
perception that such sales may occur, could adversely affect the
prevailing market price of our common shares. Furthermore,
because some of our shares will not be available for sale
shortly after this offering due to the contractual and legal
restrictions on resale described below, the sale of a
substantial amount of common shares in the public market after
these restrictions lapse could adversely affect the prevailing
market price of our common shares and our ability to raise
equity capital in the future.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Upon the closing of this offering, we expect to have a total
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;outstanding
common shares, which includes
the &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common
shares sold by us in this offering. If the underwriters exercise
their over-allotment in full, we expect to
have &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common
shares outstanding upon the closing of this offering.
</DIV>

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All of the common shares sold in this offering will be freely
tradable without restriction or further registration under the
Securities Act or applicable Canadian securities laws, except
for &#147;restricted&#148; shares held by persons who may be
deemed our &#147;affiliates,&#148; as that term is defined under
Rule&nbsp;144 of the Securities Act. An &#147;affiliate&#148; is
a person that directly, or indirectly through one or more
intermediaries, controls or is controlled by us or is under
common control with us.
</DIV>

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The common shares held by Wendy&#146;s are deemed
&#147;restricted securities&#148; as that term is defined in
Rule&nbsp;144 under the Securities Act and will be deemed to be
held by Wendy&#146;s for more than two years. These restricted
securities may be sold in the public market by Wendy&#146;s only
if they are registered or if they qualify for an exemption from
registration under Rule&nbsp;144 or Rule&nbsp;144(k) under the
Securities Act. These rules are summarized below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Rule&nbsp;144</B>
</DIV>

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Affiliates will be permitted to sell common shares that they
purchase in this offering only through registration under the
Securities Act or pursuant to an exemption from registration
under the Securities Act, such as the exemption available by
complying with Rule&nbsp;144 of the Securities Act. In general,
under Rule&nbsp;144 in effect as of the date of this prospectus,
beginning 90&nbsp;days after the date of this prospectus, an
affiliate who has beneficially owned our common shares for at
least one year would be entitled to sell in brokers&#146;
transactions a number of such shares within any three-month
period that does not exceed the greater of:
</DIV>

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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    1.0% of the number of common shares then outstanding, which is
    approximately &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common
    shares upon the closing of this offering;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the average weekly trading volume of our common shares on the
    New York Stock Exchange during the four calendar weeks preceding
    each such sale, subject to certain restrictions.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales under Rule&nbsp;144 are also subject to other requirements
regarding the manner of sale, notice filing and the availability
of current public information about us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Lock-up Agreements</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We, our directors and officers and Wendy&#146;s have agreed with
the underwriters not to sell, dispose of or hedge any common
shares, subject to specified exceptions, during the period from
the date of this prospectus continuing through the date that is
180&nbsp;days after the date of this prospectus, except with the
prior written consent of the representatives of the
underwriters. In addition, Wendy&#146;s lock-up agreement will
not restrict its ability to spin-off all of our common shares
that it owns to its common shareholders as described below under
&#147;&#151;&nbsp;Spin-off.&#148;
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Shares Issued Under Employee Plans</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We intend to file registration statements on Form&nbsp;S-8 under
the Securities Act to register approximately common shares
issuable, with respect to common shares to be granted, or
otherwise, under our employee plans. Currently, there are no
outstanding options to purchase common shares. These
registration statements are expected to be filed following the
effective date of the registration statement of which this
prospectus is a part and will be effective upon filing. Shares
issued upon the exercise of share options or restricted stock
units after the effective date of the Form&nbsp;S-8 registration
statements will be eligible for resale in the public market
without restriction, subject to Rule&nbsp;144 limitations
applicable to affiliates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Registration Rights</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
After the closing of this offering and the expiration of the
lock-up period described above, Wendy&#146;s will be entitled to
certain rights with respect to the registration of our common
shares under the Securities Act, under the terms of a
registration rights agreement between us and Wendy&#146;s. See
&#147;Our Relationship With Wendy&#146;s&#151;Agreements Between
Wendy&#146;s and Us&#151;Registration Rights Agreement.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Spin-off</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If Wendy&#146;s board of directors determines to take such
action, Wendy&#146;s could spin-off its remaining ownership
interest in us to its common shareholders by means of a special
dividend to its common shareholders. Completion of the spin-off
would be contingent upon the satisfaction or waiver of a variety
of conditions, including the receipt of a favourable tax ruling
from the Internal Revenue Service and/or a favourable opinion of
Wendy&#146;s tax advisor as to the tax-free nature of the
distribution for U.S.&nbsp;federal income tax purposes. Common
shares distributed to Wendy&#146;s shareholders in the spin-off
transaction generally would be freely transferable, except for
common shares received by persons who may be deemed to be our
affiliates and except to the extent such common shares are
subject to the lock-up agreements described under
&#147;Underwriting.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Additional Restrictions for Sales in Canada</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The sale of any of our common shares in the public market in
Canada by Wendy&#146;s (as our controlling shareholder) will be
subject to restrictions under applicable Canadian securities
laws in addition to those restrictions noted above, unless the
sale is qualified under a prospectus filed with Canadian
securities regulatory authorities or if the following conditions
are fulfilled:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    such sale occurs only after four months have lapsed from the
    date of a final receipt issued by Canadian securities regulatory
    authorities in respect of the final Canadian prospectus relating
    to the offering; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    prior notice of the sale must be filed with Canadian securities
    regulatory authorities at least seven days before any sale.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales under the procedure noted above are also subject to other
requirements and restrictions regarding the manner of sale,
payment of commissions, reporting and availability of current
public information about us and compliance with applicable
Canadian securities laws.
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<A name='131'></A>
</DIV>

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<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CERTAIN U.S.&nbsp;FEDERAL TAX CONSIDERATIONS</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>FOR NON U.S.&nbsp;HOLDERS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following is a summary of certain United States federal
income and estate tax consequences of the purchase, ownership
and disposition of our common shares as of the date hereof.
Except where noted, this summary deals only with common shares
that are held as a capital asset by a non-U.S.&nbsp;holder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A &#147;non-U.S.&nbsp;holder&#148; means a person (other than a
partnership) that is not for United States federal income tax
purposes any of the following:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    an individual U.S.&nbsp;citizen or resident;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    a corporation (or any other entity treated as a corporation for
    U.S.&nbsp;federal income tax purposes) created or organized in
    or under the laws of the U.S., any state thereof or the District
    of Columbia;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    an estate the income of which is subject to U.S.&nbsp;federal
    income taxation regardless of its source;&nbsp;or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    a trust if it (1)&nbsp;is subject to the primary supervision of
    a court within the U.S. and one or more U.S.&nbsp;persons have
    the authority to control all substantial decisions of the trust
    or (2)&nbsp;has a valid election in effect under applicable
    United States Treasury regulations to be treated as a
    U.S.&nbsp;person.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This summary is based upon provisions of the Internal Revenue
Code of 1986 (the &#147;Code&#148;), and regulations, rulings
and judicial decisions as of the date hereof. Those authorities
may be changed, perhaps retroactively, so as to result in
U.S.&nbsp;federal income and estate tax consequences different
from those summarized below. This summary does not address all
aspects of U.S.&nbsp;federal income and estate taxes and does
not deal with foreign, state, local or other tax considerations
that may be relevant to non-U.S.&nbsp;holders in light of their
personal circumstances. In addition, it does not represent a
detailed description of the U.S.&nbsp;federal income and estate
tax consequences applicable to you if you are subject to special
treatment under the U.S.&nbsp;federal income tax laws (including
if you are a U.S.&nbsp;expatriate, &#147;controlled foreign
corporation,&#148; &#147;passive foreign investment
company,&#148; corporation that accumulates earnings to avoid
U.S.&nbsp;federal income tax or an investor in a pass-through
entity). We cannot assure you a change in law will not alter
significantly the tax considerations described in this summary.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If a partnership holds common shares, the tax treatment of a
partner will generally depend upon the status of the partner and
the activities of the partnership. If you are a partner of a
partnership holding common shares, you should consult your tax
advisors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>If you are considering the purchase of common shares, you
should consult your own tax advisors concerning the particular
U.S.&nbsp;federal income and estate tax consequences to you of
the ownership of common shares, as well as the consequences to
you arising under the laws of any other taxing jurisdiction.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Dividends</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Dividends paid to a non-U.S.&nbsp;holder of common shares
generally will be subject to withholding of U.S.&nbsp;federal
income tax at a 30.0% rate or such lower rate as may be
specified by an applicable income tax treaty. The rate of
withholding tax on dividends pursuant to the
Canada-U.S.&nbsp;Income Tax Convention is generally 15.0%.
However, dividends that are effectively connected with the
conduct of a trade or business by the non-U.S.&nbsp;holder
within the U.S.&nbsp;(and, where a tax treaty applies, are
attributable to a U.S.&nbsp;permanent establishment of the
non-U.S.&nbsp;holder) are not subject to the withholding tax,
provided certain certification and disclosure requirements are
satisfied. Instead, such
</DIV>

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<DIV align="left" style="font-size: 10pt;">
dividends are subject to U.S.&nbsp;federal income tax on a net
income basis in the same manner as if the non-U.S.&nbsp;holder
were a U.S.&nbsp;person as defined under the Code. Any such
effectively connected dividends received by a foreign
corporation may be subject to an additional &#147;branch profits
tax&#148; at a 30.0% rate or such lower rate as may be specified
by an applicable income tax treaty.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A non-U.S.&nbsp;holder of common shares who wishes to claim the
benefit of an applicable treaty rate for dividends will be
required to complete Internal Revenue Service Form&nbsp;W-8BEN
(or other applicable form) and certify under penalty of perjury
that such holder is eligible for benefits under the applicable
treaty. Special certification and other requirements apply to
certain non-U.S.&nbsp;holders that are pass-through entities
rather than corporations or individuals. In addition, Treasury
regulations provide special procedures for payments of dividends
through certain intermediaries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A non-U.S.&nbsp;holder of common shares eligible for a reduced
rate of U.S.&nbsp;withholding tax pursuant to an income tax
treaty may obtain a refund of any excess amounts withheld by
filing an appropriate claim for refund with the Internal Revenue
Service.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Gain on Disposition of Common Shares</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Any gain realized on the disposition of common shares generally
will not be subject to United States federal income tax unless:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the gain is effectively connected with a trade or business of
    the non-U.S.&nbsp;holder in the United States (and, if required
    by an applicable income tax treaty, is attributable to a United
    States permanent establishment of the non-U.S.&nbsp;holder);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the non-U.S.&nbsp;holder is an individual who is present in the
    U.S.&nbsp;for 183&nbsp;days or more in the taxable year of that
    disposition, and certain other conditions are met;&nbsp;or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    we are or have been a &#147;United States real property holding
    corporation&#148; for U.S.&nbsp;federal income tax purposes and
    certain other conditions are met.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
An individual non-U.S.&nbsp;holder described in the first bullet
point immediately above will be subject to tax on the net gain
derived from the sale under regular graduated U.S.&nbsp;federal
income tax rates. An individual non-U.S.&nbsp;holder described
in the second bullet point immediately above will be subject to
a flat 30.0% tax on the gain derived from the sale, which may be
offset by U.S.&nbsp;source capital losses, even though the
individual is not considered a resident of the U.S.&nbsp;If a
non-U.S.&nbsp;holder that is a foreign corporation falls under
the first bullet point immediately above, it will be subject to
tax on its net gain in the same manner as if it were a
U.S.&nbsp;person as defined under the Code and, in addition, may
be subject to the branch profits tax equal to 30.0% of its
effectively connected earnings and profits or at such lower rate
as may be specified by an applicable income tax treaty.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We believe we are not and do not anticipate becoming a
&#147;United States real property holding corporation&#148; for
U.S.&nbsp;federal income tax purposes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Federal Estate Tax</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Common shares held by an individual non-U.S.&nbsp;holder at the
time of death will be included in such holder&#146;s gross
estate for U.S.&nbsp;federal estate tax purposes, unless an
applicable estate tax treaty provides otherwise.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Information Reporting and Backup Withholding</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We must report annually to the Internal Revenue Service and to
each non-U.S.&nbsp;holder the amount of dividends paid to such
holder and the tax withheld with respect to such dividends,
</DIV>

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<DIV align="left" style="font-size: 10pt;">
regardless of whether withholding was required. Copies of the
information returns reporting such dividends and withholding may
also be made available to the tax authorities in the country in
which the non-U.S.&nbsp;holder resides under the provisions of
an applicable income tax treaty.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A non-U.S.&nbsp;holder will be subject to backup withholding for
dividends paid to such holder unless such holder certifies under
penalty of perjury that it is a non-U.S.&nbsp;holder (and the
payor does not have actual knowledge or reason to know that such
holder is a U.S.&nbsp;person as defined under the Code), or such
holder otherwise establishes an exemption.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Information reporting and, depending on the circumstances,
backup withholding will apply to the proceeds of a sale of
common shares within the U.S.&nbsp;or conducted through certain
U.S.-related financial intermediaries, unless the beneficial
owner certifies under penalty of perjury that it is a
non-U.S.&nbsp;holder (and the payor does not have actual
knowledge or reason to know that the beneficial owner is a
U.S.&nbsp;person as defined under the Code) or such owner
otherwise establishes an exemption. Certain shareholders,
including all corporations, are exempt from the backup
withholding rules.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Any amounts withheld under the backup withholding rules may be
allowed as a refund or a credit against a
non-U.S.&nbsp;holder&#146;s U.S.&nbsp;federal income tax
liability provided the required information is furnished to the
Internal Revenue Service.
</DIV>

<P align="center" style="font-size: 10pt;">110

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<DIV align="left" style="font-size: 10pt;">
<A name='132'></A>
</DIV>

<!-- link1 "UNDERWRITING" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>UNDERWRITING</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We, Wendy&#146;s and the underwriters named below have entered
into an underwriting agreement with respect to the common shares
being offered. Subject to certain conditions, each underwriter
has severally agreed to purchase the number of common shares
indicated in the following table. Goldman, Sachs&nbsp;&#38; Co.
and RBC Capital Markets Corporation are the representatives of
the underwriters.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="73%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" nowrap><B><FONT face="helvetica,arial">Underwriters</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Number of Shares</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goldman, Sachs&nbsp;&#38;
    Co.&nbsp;</FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">RBC Capital Markets Corporation
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The offering is being made concurrently in the United States and
in each of the provinces and territories of Canada. The common
shares will be offered in the United States through those
underwriters who are registered to offer the common shares for
the sale in the United States and such other registered dealers
as may be designated by the underwriters. The common shares will
be offered in each of the provinces and territories of Canada
through those underwriters or their Canadian affiliates who are
registered to offer the common shares for sale in such provinces
and territories and such other registered dealers as may be
designated by the underwriters. Subject to applicable law, the
underwriters may offer the common shares outside of the United
States and Canada.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The underwriters are committed to take and pay for all of the
common shares being offered, if any are taken, other than the
common shares covered by the option described below unless and
until this option is exercised.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If the underwriters sell more common shares than the total
number set forth in the table above, the underwriters have an
option to buy up to an
additional &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common
shares from us to cover such sales. They may exercise that
option for 30&nbsp;days after the date of completion of this
offering. If any common shares are purchased pursuant to this
option, the underwriters will severally purchase common shares
in approximately the same proportion as set forth in the table
above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table shows the per common share and total
underwriting discounts and commissions to be paid to the
underwriters by us. Such amounts are shown assuming both no
exercise and full exercise of the underwriters&#146; option to
purchase &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;additional
common shares.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" nowrap><B><FONT face="helvetica,arial">Paid by us</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">No Exercise</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Full Exercise</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Per Share
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">US$</FONT></TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">US$</FONT></TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">US$</FONT></TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">US$</FONT></TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Common shares sold by the underwriters to the public will
initially be offered at the initial public offering price set
forth on the cover of this prospectus. Any common shares sold by
the underwriters to securities dealers may be sold at a discount
of up to
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
common share from the initial public offering price. Any such
securities dealers may resell any common shares purchased from
the underwriters to certain other brokers or dealers at a
discount of up to
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
common share from the initial public offering price. If all the
common shares are not sold at the initial public offering price,
the representatives may change the offering price and the other
selling terms.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We and our executive officers and directors and Wendy&#146;s
have agreed with the underwriters, subject to limited
exceptions, not to dispose of or hedge any Tim Hortons Inc.
common shares or securities convertible into or exchangeable for
such common shares during the period from the date of this
prospectus continuing through the date 180&nbsp;days after the
date of this prospectus, except with the prior written consent
of the representatives. This agreement does not apply to any
existing
</DIV>

<P align="center" style="font-size: 10pt;">111

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<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt;">
employee benefit plans or Wendy&#146;s right to spin-off all of
our common shares that it owns to its shareholders. See
&#147;Shares Available for Future Sale&#148; for a discussion of
certain transfer restrictions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The 180-day restricted period described in the preceding
paragraph will be automatically extended if: (1)&nbsp;during the
last 17&nbsp;days of the 180-day restricted period we issue an
earnings release or announce material news or a material event;
or (2)&nbsp;prior to the expiration of the 180-day restricted
period, we announce that we will release earnings results during
the 15-day period following the last day of the 180-day period,
in which case the restrictions described in the preceding
paragraph will continue to apply until the expiration of the
18-day period beginning on the issuance of the earnings release
or the announcement of the material news or material event.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Prior to the offering, there has been no public market for our
common shares. The initial public offering price has been
negotiated among us, Wendy&#146;s and the representatives. Among
the factors to be considered in determining the initial public
offering price of the common shares, in addition to prevailing
market conditions, will be our historical performance, estimates
of our business potential and earnings prospects, an assessment
of our management and the consideration of the above factors in
relation to market valuation of companies in related businesses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In connection with our intended application to list the common
shares on the New York Stock Exchange, in order to meet one of
the requirements for listing, the underwriters will undertake to
sell lots of 100 or more shares to a minimum of
2,000&nbsp;beneficial holders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The underwriting agreement provides that the obligations of the
underwriters to purchase the common shares included in this
offering are subject to approval of legal matters by counsel and
to other conditions. The obligations of the underwriters under
the underwriting agreement may be terminated at their discretion
on the basis of their assessment of the financial markets and
may also be terminated upon the occurrence of certain stated
events. The underwriters are obligated to purchase all the
common shares (other than those covered by the over-allotment
option described below) if they purchase any of the common
shares. In connection with this offering, the underwriters may
purchase and sell common shares in the open market. These
transactions may include short sales, stabilizing transactions
and purchases to cover positions created by short sales. Short
sales involve the sale by the underwriters of a greater number
of shares than they are required to purchase in the offering.
&#147;Covered&#148; short sales are sales made in an amount not
greater than the underwriters&#146; option to purchase
additional shares from us in the offering. The underwriters may
close out any covered short position by either exercising their
option to purchase additional shares or purchasing shares in the
open market. In determining the source of shares to close out
the covered short position, the underwriters will consider,
among other things, the price of shares available for purchase
in the open market as compared to the price at which they may
purchase additional shares pursuant to the option granted to
them. &#147;Naked&#148; short sales are any sales in excess of
such option. The underwriters must close out any naked short
position by purchasing shares in the open market. A naked short
position is more likely to be created if the underwriters are
concerned that there may be downward pressure on the price of
the common shares in the open market after pricing that could
adversely affect investors who purchase in the offering.
Stabilizing transactions consist of various bids for or
purchases of common shares made by the underwriters in the open
market prior to the completion of the offering.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In accordance with policy statements of the Ontario Securities
Commission and the Autorit&#233; des march&#233;s financiers,
the underwriters may not throughout the period of distribution,
bid for or purchase common shares. Exceptions, however, exist
where the bid or purchase is not made to create the appearance
of active trading in, or rising prices of, the common shares.
These exceptions include a bid or purchase permitted under the
by-laws and rules of applicable regulatory authorities and the
Toronto Stock Exchange relating to market stabilization and
passive market making activities and a bid or purchase made for
and on behalf of a customer where the order was not solicited
during the period of distribution. Subject to the foregoing and
applicable laws, in connection with the
</DIV>

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<DIV align="left" style="font-size: 10pt;">
offering and pursuant to the first exception mentioned above,
the underwriters may over-allot or effect transactions that
stabilize or maintain the market price of the share at levels
other than those which might otherwise prevail on the open
market. Any of these activities may have the effect of
preventing or retarding a decline in the market price of the
common shares. They may also cause the price of the common
shares to be higher than the price that would otherwise exist in
the open market in the absences of these transactions. The
underwriters may conduct these transactions on the NYSE, the TSX
or in the over-the-counter market, or otherwise. If the
underwriters commence any of these transactions, they may
discontinue them at any time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The underwriters may also impose a penalty bid. This occurs when
a particular underwriter repays to the underwriters a portion of
the underwriting discount received by it because the
representatives have repurchased shares sold by or for the
account of such underwriter in stabilizing or short covering
transactions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Purchases to cover a short position and stabilizing transactions
may have the effect of preventing or retarding a decline in the
market price of the our common shares, and together with the
imposition of the penalty bid, may stabilize, maintain or
otherwise affect the market price of the common shares. As a
result, the price of the common shares may be higher than the
price that otherwise might exist in the open market. If these
activities are commenced, they may be discontinued at any time.
These transactions may be effected on the NYSE, on the TSX, in
the over-the-counter market or otherwise.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Each of the underwriters has represented and agreed that:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (1)&nbsp;it has not made or will not make an offer of shares to
    the public in the United Kingdom within the meaning of
    section&nbsp;102B of the Financial Services and Markets Act 2000
    (as amended) (FSMA)&nbsp;except to legal entities that are
    authorized or regulated to operate in the financial markets or,
    if not so authorized or regulated, whose corporate purpose is
    solely to invest in securities or otherwise in circumstances
    which do not require the publication by the company of a
    prospectus pursuant to the Prospectus Rules of the Financial
    Services Authority (FSA);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (2)&nbsp;it has only communicated or caused to be communicated
    and will only communicate or cause to be communicated an
    invitation or inducement to engage in investment activity
    (within the meaning of section&nbsp;21 of FSMA) to persons who
    have professional experience in matters relating to investments
    falling within Article&nbsp;19(5) of the Financial Services and
    Markets Act 2000 (Financial Promotion) Order 2005 or in
    circumstances in which section&nbsp;21 of FSMA does not apply to
    the company;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (3)&nbsp;it has complied with, and will comply with all
    applicable provisions of FSMA with respect to anything done by
    it in relation to the common shares in, from or otherwise
    involving the United Kingdom.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In relation to each Member State of the European Economic Area
which has implemented the Prospectus Directive (each, a Relevant
Member State), each underwriter has represented and agreed that
with effect from and including the date on which the Prospectus
Directive is implemented in that Relevant Member State (the
Relevant Implementation Date) it has not made and will not make
an offer of shares to the public in that Relevant Member State
prior to the publication of a prospectus in relation to the
shares which has been approved by the competent authority in
that Relevant Member State or, where appropriate, approved in
another Relevant Member State and notified to the competent
authority in that Relevant Member State, all in accordance with
the Prospectus Directive, except that it may, with effect from
and including the Relevant Implementation Date, make an offer of
shares to the public in that Relevant Member State at any time
</DIV>

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<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (1)&nbsp;to legal entities which are authorized or regulated to
    operate in the financial markets or, if not so authorized or
    regulated, whose corporate purpose is solely to invest in
    securities;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (2)&nbsp;to any legal entity which has two or more of
    (a)&nbsp;an average of at least 250 employees during the last
    financial year; (b)&nbsp;a total balance sheet of more than
    <FONT face="helvetica,arial">&#128;</FONT>43,000,000 and
    (c)&nbsp;an annual net turnover of more than
    <FONT face="helvetica,arial">&#128;</FONT>50,000,000, as shown
    in its last annual or consolidated accounts;&nbsp;or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (3)&nbsp;in any other circumstances which do not require the
    publication by the Issuer of a prospectus pursuant to
    Article&nbsp;3 of the Prospectus Directive.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For the purposes of this provision, the expression an
&#147;offer of shares to the public&#148; in relation to any
shares in any Relevant Member State means the communication in
any form and by any means of sufficient information on the terms
of the offer and the shares to be offered so as to enable an
investor to decide to purchase or subscribe the shares, as the
same may be varied in that Relevant Member State by any measure
implementing the Prospectus Directive in that Relevant Member
State and the expression Prospectus Directive means Directive
2003/71/ EC and includes any relevant implementing measure in
each Relevant Member State.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The shares may not be offered or sold by means of any document
other than to persons whose ordinary business is to buy or sell
shares or debentures, whether as principal or agent, or in
circumstances which do not constitute an offer to the public
within the meaning of the Companies Ordinance (Cap.&nbsp;32) of
Hong&nbsp;Kong, and no advertisement, invitation or document
relating to the shares may be issued, whether in Hong&nbsp;Kong
or elsewhere, which is directed at, or the contents of which are
likely to be accessed or read by, the public in Hong&nbsp;Kong
(except if permitted to do so under the securities laws of
Hong&nbsp;Kong) other than with respect to shares which are or
are intended to be disposed of only to persons outside
Hong&nbsp;Kong or only to &#147;professional investors&#148;
within the meaning of the Securities and Futures Ordinance
(Cap.&nbsp;571) of Hong&nbsp;Kong and any rules made thereunder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This prospectus has not been registered as a prospectus with the
Monetary Authority of Singapore. Accordingly, this prospectus
and any other document or material in connection with the offer
or sale, or invitation for subscription or purchase, of the
common shares may not be circulated or distributed, nor may the
common shares be offered or sold, or be made the subject of an
invitation for subscription or purchase, whether directly or
indirectly, to persons in Singapore other than (1)&nbsp;to an
institutional investor under Section&nbsp;274 of the Securities
and Futures Act, Chapter&nbsp;289 of Singapore (the
&#147;SFA&#148;), (2)&nbsp;to a relevant person, or any person
pursuant to Section&nbsp;275(1A), and in accordance with the
conditions, specified in Section&nbsp;275 of the SFA or
(3)&nbsp;otherwise pursuant to, and in accordance with the
conditions of, any other applicable provision of the SFA.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Where the common shares are subscribed or purchased under
Section&nbsp;275 by a relevant person which is: (a)&nbsp;a
corporation (which is not an accredited investor) the sole
business of which is to hold investments and the entire share
capital of which is owned by one or more individuals, each of
whom is an accredited investor; or (b)&nbsp;a trust (where the
trustee is not an accredited investor) whose sole purpose is to
hold investments and each beneficiary is an accredited investor,
shares, debentures and units of shares and debentures of that
corporation or the beneficiaries&#146; rights and interest in
that trust shall not be transferable for 6&nbsp;months after
that corporation or that trust has acquired the common shares
under Section&nbsp;275 except: (1)&nbsp;to an institutional
investor under Section&nbsp;274 of the SFA or to a relevant
person, or any person pursuant to Section&nbsp;275(1A), and in
accordance with the conditions, specified in Section&nbsp;275 of
the SFA; (2)&nbsp;where no consideration is given for the
transfer; or (3)&nbsp;by operation of law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our common shares have not been and will not be registered under
the Securities and Exchange Law of Japan (the Securities and
Exchange Law) and each underwriter has agreed that it will not
offer or sell any of our common shares, directly or indirectly,
in Japan or to, or for the benefit
</DIV>

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<DIV align="left" style="font-size: 10pt;">
of, any resident of Japan (which term as used herein means any
person resident in Japan, including any corporation or other
entity organized under the laws of Japan), or to others for
re-offering or resale, directly or indirectly, in Japan or to a
resident of Japan, except pursuant to an exemption from the
registration requirements of, and otherwise in compliance with,
the Securities and Exchange Law and any other applicable laws,
regulations and ministerial guidelines of Japan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At our request, the underwriters have reserved up
to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common&nbsp;shares
for sale, at the initial public offering price, through a
directed share program to persons that we believe have
contributed to our growth, including franchisees, members of our
management and our employees and directors. There can be no
assurance that any of the reserved common shares will be so
purchased. The number of common shares available for sale to the
general public in this offering will be reduced to the extent
the reserved common shares are purchased in the directed share
program. Any reserved common shares not purchased through the
directed share program will be offered to the general public on
the same basis as the other common shares offered hereby.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The underwriters do not expect sales to discretionary accounts
to exceed five percent of the total number of common shares
offered.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We estimate that our share of the total expenses of this
offering, excluding underwriting discounts and commissions, will
be approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have agreed to indemnify the several underwriters against
certain liabilities, including liabilities under the Securities
Act of 1933 and applicable Canadian securities laws.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Certain of the underwriters and their respective affiliates
have, from time to time, performed, and may in the future
perform, various financial advisory and investment banking
services for Wendy&#146;s and/or us, for which they received or
will receive customary fees and expenses.
</DIV>

<P align="center" style="font-size: 10pt;">115

</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt;">
<A name='133'></A>
</DIV>

<!-- link1 "LEGAL MATTERS" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>LEGAL MATTERS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The validity of the common shares offered hereby will be passed
upon for us by Vorys, Sater, Seymour and Pease LLP, Columbus,
Ohio, and for the underwriters by Sullivan&nbsp;&#38; Cromwell
LLP, New York, New York. Certain matters regarding Canadian law
will be passed upon for us by Lang Michener LLP, and for the
underwriters by Torys LLP. Certain other matters will be passed
upon for us by Akin Gump Strauss Hauer&nbsp;&#38; Feld LLP,
Washington,&nbsp;D.C.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='134'></A>
</DIV>

<!-- link1 "EXPERTS" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>EXPERTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The consolidated financial statements as of December&nbsp;28,
2003 and January&nbsp;2, 2005, and for the years ended
December&nbsp;29, 2002, December&nbsp;28, 2003 and
January&nbsp;2, 2005 included in this prospectus have been so
included in reliance on the report of PricewaterhouseCoopers
LLP, an independent registered public accounting firm, given on
the authority of said firm as experts in auditing and accounting.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='135'></A>
</DIV>

<!-- link1 "WHERE YOU CAN FIND ADDITIONAL INFORMATION" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>WHERE YOU CAN FIND ADDITIONAL INFORMATION</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have filed with the SEC a registration statement on
Form&nbsp;S-1 under the Securities Act with respect to the
issuance of our common shares being offered hereby. This
prospectus, which forms a part of the registration statement,
does not contain all of the information set forth in the
registration statement. For further information with respect to
us and our common shares, reference is made to the registration
statement. Statements contained in this prospectus as to the
contents of any contract or other document are not necessarily
complete, and, where such contract or other document is an
exhibit to the registration statement, each such statement is
qualified by the provisions in such exhibit, to which reference
is hereby made. We are not currently subject to the
informational requirements of the Exchange Act. As a result of
this offering, we will become subject to the informational
requirements of the Exchange Act and, in accordance therewith,
will file reports and other information with the SEC. The
registration statement, such reports and other information can
be inspected and copied at the Public Reference Room of the SEC
located at 100 F Street, N.E., Washington D.C. 20549. Copies of
such materials, including copies of all or any portion of the
registration statement, can be obtained from the Public
Reference Room of the SEC at prescribed rates. You can call the
SEC at 1-800-SEC-0330 to obtain information on the operation of
the Public Reference Room. Such materials may also be accessed
electronically by means of the SEC&#146;s home page on the
Internet (<I>http://www.sec.gov</I>).
</DIV>

<P align="center" style="font-size: 10pt;">116

</FONT>
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<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt;">

</DIV>

<DIV align="left" style="font-size: 10pt;">
<!-- TOC -->
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name="tocpage"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='136'></A>
</DIV>

<!-- link1 "INDEX TO CONSOLIDATED FINANCIAL STATEMENTS" -->

<DIV align="center" style="font-size: 10pt;">
<B>INDEX TO CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="89%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Consolidated Financial
    Statements</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#302'>Report of
    Independent Registered Public Accounting Firm</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">F-2</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#303'>Consolidated
    Statements of Operations for fiscal 2002, 2003 and 2004</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">F-3</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#304'>Consolidated
    Balance Sheets at December&nbsp;28, 2003 and January&nbsp;2,
    2005</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">F-4</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#305'>Consolidated
    Statements of Cash Flows for fiscal 2002, 2003, and 2004</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">F-5</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#306'>Consolidated
    Statements of Shareholder&#146;s Equity for fiscal 2002, 2003
    and 2004</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">F-6</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#307'>Consolidated
    Statements of Comprehensive Income for fiscal 2002, 2003 and
    2004</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">F-7</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#308'>Notes to the
    Consolidated Financial Statements</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">F-8</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Interim Condensed Consolidated
    Financial Statements (Unaudited)</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#311'>Condensed
    Consolidated Statements of Operations for the nine months ended
    September&nbsp;26, 2004 and October&nbsp;2, 2005</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">F-34</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#312'>Condensed
    Consolidated Balance Sheets at January 2, 2005 and
    October&nbsp;2, 2005</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">F-35</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#313'>Condensed
    Consolidated Statements of Cash Flows for the nine months ended
    September&nbsp;26, 2004 and October&nbsp;2, 2005</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">F-36</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#316'>Notes to the
    Condensed Consolidated Financial Statements</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">F-37</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#309'>Schedule&nbsp;II&nbsp;&#151;
    Valuation and Qualifying Accounts</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">F-45</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="y15067exv23w2.htm">EX-23.2: CONSENT OF PRICEWATERHOUSECOOPERS LLP</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="y15067exv24w1.htm">EX-24.1: POWERS OF ATTORNEY</A></FONT></TD></TR>
</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt;">
<!-- /TOC -->
</DIV>

<P align="center" style="font-size: 10pt;">F-1

</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt;">
<A name='302'></A>
</DIV>

<!-- link1 "Report of Independent Registered Public Accounting Firm" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Report of Independent Registered Public Accounting Firm</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
To the Board of Directors and Shareholder of Tim Hortons Inc.:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In our opinion, the accompanying consolidated balance sheets and
the related consolidated statements of operations,
shareholder&#146;s equity, comprehensive income and cash flows
present fairly, in all material respects, the financial position
of Tim Hortons Inc. and its subsidiaries at January&nbsp;2, 2005
and December&nbsp;28, 2003 and the results of their operations
and their cash flows for each of the years ended January&nbsp;2,
2005, December&nbsp;28, 2003, and December&nbsp;29, 2002 in
conformity with accounting principles generally accepted in the
United States of America. In addition, in our opinion, the
financial statement schedule listed in the accompanying index
presents fairly, in all material respects, the information set
forth therein when read in conjunction with the related
consolidated financial statements. These financial statements
and financial statement schedule are the responsibility of the
Company&#146;s management. Our responsibility is to express an
opinion on these financial statements and financial statement
schedule based on our audits. We conducted our audits of these
statements in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles
used and significant estimates made by management, and
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for
our&nbsp;opinion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
/s/ <FONT style="font-variant:SMALL-CAPS">PricewaterhouseCoopers
LLP
</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Columbus, Ohio
</DIV>

<DIV align="left" style="font-size: 10pt;">
November&nbsp;30, 2005
</DIV>

<P align="center" style="font-size: 10pt;">F-2

</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt;">
<A name='301'></A>
</DIV>

<!-- link1 "TIM HORTONS INC. AND SUBSIDIARIES" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='303'></A>
</DIV>

<!-- link1 "Consolidated Statements of Operations" -->

<DIV align="center" style="font-size: 10pt;">
<B>Consolidated Statements of Operations</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">Years ended December&nbsp;29, 2002,</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">December&nbsp;28, 2003 and</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">January&nbsp;2,&nbsp;2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands,</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">except number of shares)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Revenues</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Sales
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">656,833</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">727,508</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">845,231</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Franchise revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">402,738</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">444,272</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">493,035</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total revenues</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,059,571</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,171,780</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,338,266</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Costs and expenses</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cost of sales
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">575,337</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">636,311</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">741,198</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Operating expenses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">191,749</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">202,314</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">223,451</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">General and administrative expenses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">71,851</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">80,394</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">85,744</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Equity income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(5,056</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(23,057</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(32,548</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other (income) expense, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(7,623</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(3,079</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,116</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total costs and expenses,
    net</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">826,258</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">892,883</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,018,961</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Operating income</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">233,313</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">278,897</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">319,305</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Interest expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(5,425</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(7,022</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(6,911</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Interest income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,871</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,098</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,802</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Affiliated interest expense, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(17,786</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(11,110</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(9,410</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Income before income
    taxes</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">212,973</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">262,863</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">305,786</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Income taxes</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">80,161</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">106,601</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100,735</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Net income</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">132,812</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">156,262</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">205,051</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Basic earnings per common
    share</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">190</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">223</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">293</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Basic shares</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">700</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">700</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">700</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="center" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
See accompanying Notes to the Consolidated Financial Statements.
</DIV>

<P align="center" style="font-size: 10pt;">F-3

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='304'></A>
</DIV>

<!-- link1 "Consolidated Balance Sheets" -->

<DIV align="center" style="font-size: 10pt;">
<B>Consolidated Balance Sheets</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="62%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>


<TR>
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">December&nbsp;28, 2003 and</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">January&nbsp;2, 2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Assets</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Current assets</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">86,151</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">129,301</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accounts receivable, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">92,054</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">80,889</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Notes receivable, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,404</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,627</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deferred income taxes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,644</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,269</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Inventories and other
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25,786</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">35,150</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Short-term investments
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">32,210</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Amounts receivable from Wendy&#146;s
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">138,580</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">52,192</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Notes receivable from Wendy&#146;s
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">59,210</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">173,747</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Advertising fund restricted assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">20,309</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">21,333</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total current assets</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">465,348</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">504,508</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Property and equipment,
    net</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">789,995</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">909,624</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Notes receivable, net</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">18,151</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11,959</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Goodwill</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">30,527</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Deferred income taxes</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,633</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,151</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Intangible assets, net</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,865</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,777</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Equity investments</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">128,207</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">146,415</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Note receivable from
    Wendy&#146;s</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">128,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">128,000</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Other assets</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,824</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,908</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total assets</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,547,023</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,756,869</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="12">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Liabilities and
    Shareholder&#146;s Equity</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Current liabilities</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accounts payable
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">69,425</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">94,702</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accrued expenses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Salaries and wages
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,585</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,102</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Taxes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">61,016</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">72,214</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">51,114</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">55,624</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deferred income taxes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,567</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">529</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Advertising fund restricted
    liabilities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">20,309</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">21,333</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Notes payable to Wendy&#146;s
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">84,167</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">185,725</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Current portion of long-term
    obligations
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,431</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,757</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total current
    liabilities</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">295,614</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">438,986</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Long-term obligations</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Term debt
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14,721</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">18,062</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Notes payable to Wendy&#146;s
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">304,488</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">181,090</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Capital leases
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">48,465</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">47,689</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total long-term
    obligations</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">367,674</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">246,841</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Deferred income taxes</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15,968</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23,325</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Other long-term
    liabilities</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24,989</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26,028</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Commitments and
    contingencies</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Shareholder&#146;s
    equity</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Common stock, no stated value per
    share, Authorized: 1,000&nbsp;shares,
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Issued 700&nbsp;shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">233,707</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">233,707</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Retained earnings
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">628,575</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">833,626</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accumulated other comprehensive
    expense:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cumulative translation adjustments
    and other
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(19,504</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(45,644</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total shareholder&#146;s
    equity</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">842,778</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,021,689</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total liabilities and
    shareholder&#146;s equity</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,547,023</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,756,869</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="center" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
See accompanying Notes to the Consolidated Financial Statements.
</DIV>

<P align="center" style="font-size: 10pt;">F-4

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='305'></A>
</DIV>

<!-- link1 "Consolidated Statements of Cash Flows" -->

<DIV align="center" style="font-size: 10pt;">
<B>Consolidated Statements of Cash Flows</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 3pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="55%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR>
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">Years ended</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">December&nbsp;29, 2002,</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">December&nbsp;28, 2003 and</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">January&nbsp;2, 2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Cash flows from operating
    activities</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">132,812</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">156,262</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">205,051</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Adjustments to reconcile net income
    to net cash provided by operating activities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">49,109</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">58,801</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">69,008</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Equity income, net of dividends
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,056</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(15,557</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(19,248</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deferred income taxes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,652</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">32,794</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,049</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Gain from sale
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(4,966</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Changes in operating assets and
    liabilities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accounts and notes receivable
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,444</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(28,680</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">18,262</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Inventories and other
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,087</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(206</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(8,734</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accounts payable and accrued
    expenses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">33,061</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16,216</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">40,464</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Amounts receivable from (payable
    to) Wendy&#146;s
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(44,671</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(50,745</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">86,388</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Increase (decrease) in other assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,820</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,049</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">483</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(17,345</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(20,648</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,848</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net cash provided by operating
    activities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">146,885</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">147,188</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">400,571</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Cash flows from investing
    activities</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Capital expenditures
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(111,788</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(131,865</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(197,810</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Acquisition of New England
    restaurants
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(60,874</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Proceeds from sale of cup business
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">31,486</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Principal payments on notes
    receivable
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,997</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,158</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,770</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Investments in joint ventures and
    other investments
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(38,718</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(9,018</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,982</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Short-term investments
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(31,924</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">31,924</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Short-term (loans to) repayments by
    Wendy&#146;s, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(476,679</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">68,083</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(129,518</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other investing activities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(8,578</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(7,475</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(6,465</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net cash used in investing
    activities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(597,280</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(108,041</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(356,955</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Cash flows from financing
    activities</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Proceeds from issuance of debt
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,709</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,195</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,812</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Short-term debt (repayments to)
    borrowings from
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Wendys, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14,774</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(38,064</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Long-term borrowings from
    Wendy&#146;s
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">54,377</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Repayment of long-term borrowings
    from Wendy&#146;s
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(52,552</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Capital contributions from
    Wendy&#146;s
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">443,884</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Principal payments on other
    long-term debt obligations
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,059</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(4,487</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(4,130</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net cash provided by (used in)
    financing activities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">460,308</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(39,356</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">507</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Effect of exchange rate changes on
    cash
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(364</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,978</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(973</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Increase (decrease) in cash and
    cash equivalents</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,549</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(3,187</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">43,150</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Cash and cash equivalents at
    beginning of period</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">79,789</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">89,338</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">86,151</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Cash and cash equivalents at end
    of period</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">89,338</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">86,151</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">129,301</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Supplemental disclosures of cash
    flow information:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Interest paid
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13,464</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25,790</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15,424</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income taxes paid
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">72,382</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">92,152</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">92,712</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Non-cash investing and financing
    activities:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Capital lease obligations incurred
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13,051</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">21,921</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,381</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">See also Note&nbsp;15
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="center" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
See accompanying Notes to the Consolidated Financial Statements.
</DIV>

<P align="center" style="font-size: 10pt;">F-5

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='306'></A>
</DIV>

<!-- link1 "Consolidated Statements of Shareholder&#146;s Equity" -->

<DIV align="center" style="font-size: 10pt;">
<B>Consolidated Statements of Shareholder&#146;s Equity</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">Years ended</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">December&nbsp;29, 2002,</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">December&nbsp;28, 2003 and</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">January&nbsp;2, 2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands, except number of</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">shares)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Common stock</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Balance at beginning of period
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">443,884</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">233,707</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Capital contribution from
    Wendy&#146;s
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">443,884</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">37,498</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Acquisition and retirement of
    exchangeable shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(247,675</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Balance at end of period
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">443,884</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">233,707</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">233,707</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Retained earnings</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Balance at beginning of period
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">339,501</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">472,313</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">628,575</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">132,812</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">156,262</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">205,051</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Balance at end of period
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">472,313</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">628,575</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">833,626</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Accumulated other comprehensive
    income (expense)</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,760</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(19,504</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(45,644</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Shareholder&#146;s
    equity</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">921,957</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">842,778</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,021,689</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Common shares issued and
    outstanding</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">700</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">700</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">700</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="center" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
See accompanying Notes to the Consolidated Financial Statements.
</DIV>

<P align="center" style="font-size: 10pt;">F-6

</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='307'></A>
</DIV>

<!-- link1 "Consolidated Statements of Comprehensive Income" -->

<DIV align="center" style="font-size: 10pt;">
<B>Consolidated Statements of Comprehensive Income</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="64%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">Years ended</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">December&nbsp;29, 2002,</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">December&nbsp;28, 2003 and</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">January&nbsp;2, 2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Net income</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">132,812</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">156,262</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">205,051</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Other comprehensive income
    (expense)</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Translation adjustments and other
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">318</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(25,264</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(26,140</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Comprehensive income</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">133,130</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">130,998</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">178,911</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="center" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
See accompanying Notes to the Consolidated Financial Statements.
</DIV>

<P align="center" style="font-size: 10pt;">F-7

</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='308'></A>
</DIV>

<!-- link1 "Notes to the Consolidated Financial Statements" -->

<DIV align="center" style="font-size: 10pt;">
<B>Notes to the Consolidated Financial Statements</B>
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>NOTE&nbsp;1</B></TD>
    <TD>
    <B>SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Description of business</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Tim Hortons Inc. (together with its subsidiaries, referred to
herein as the &#147;Company&#148;) is a wholly-owned subsidiary
of Wendy&#146;s International, Inc. (together with its other
subsidiaries &#147;Wendy&#146;s&#148;). The Company anticipates
completing an initial public offering (&#147;IPO&#148;) in the
quarter ending April&nbsp;2, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company&#146;s principal business is the operation,
development and franchising of quick-service restaurants serving
high-quality food including hot and cold coffee, baked goods,
sandwiches and soups. As of January&nbsp;2, 2005 the Company and
its franchisees operated 2,470 restaurants in Canada and
251&nbsp;units in the United States (&#147;U.S.&#148;) under the
name &#147;Tim Hortons&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Fiscal year</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company&#146;s fiscal year ends on the Sunday nearest to
December&nbsp;31. The 2002 and 2003 fiscal years consisted of
52&nbsp;weeks, and the 2004 fiscal year consisted of
53&nbsp;weeks.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Basis of presentation</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The functional currency of the Company is the U.S.&nbsp;dollar
primarily because of its historical financial inter-relatedness
with Wendy&#146;s. The majority of the Company&#146;s
operations, restaurants and cash flows are based in Canada and
the Company is primarily managed in Canadian dollars. As a
result, the reporting currency is the Canadian dollar. The
Consolidated Financial Statements and notes are prepared in
conformity with accounting principles generally accepted in the
United States of America.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Consolidated Financial Statements include the results and
balances of the Company, its wholly-owned subsidiaries and
certain franchisees consolidated according to Financial
Accounting Standards Board (&#147;FASB&#148;) Interpretation No.
(&#147;FIN&#148;)&nbsp;46R, <I>Consolidation of Variable
Interest Entities&#151; an interpretation of ARB&nbsp;51
(revised December 2003)</I>. The Company&#146;s Consolidated
Financial Statements have been derived from the consolidated
financial statements and accounting records of Wendy&#146;s,
principally representing the Hortons Segment in the Wendy&#146;s
financial statements, using the historical results of
operations, and historical basis of assets and liabilities of
the business. Management believes the assumptions underlying the
Consolidated Financial Statements are reasonable. However, the
Consolidated Financial Statements included herein may not
necessarily reflect the Company&#146;s results of operations,
financial position and cash flows in the future or what its
results of operations, financial position and cash flows would
have been had the Company been a stand-alone company during the
periods presented. Amounts due to and receivable from
Wendy&#146;s, including related party debt, are shown separately
on the balance sheets. All significant intercompany accounts and
transactions have been eliminated in consolidation (see also
Note&nbsp;13 to the Consolidated Financial Statements for
consolidation of the Company&#146;s advertising funds).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Investments in unconsolidated affiliates over which the Company
exercises significant influence but is not the primary
beneficiary and does not have control are accounted for using
the equity method. The Company&#146;s share of the net income or
loss of these unconsolidated affiliates is included in equity
income, which is included as part of operating income because
investees are operating ventures closely integrated in the
Company&#146;s business operations (see also Note&nbsp;16 to the
Consolidated Financial Statements).
</DIV>

<P align="center" style="font-size: 10pt;">F-8

</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to the Consolidated Financial Statements &#151;
(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Cash and cash equivalents</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company considers short-term investments with original
maturities of three months or less as cash equivalents.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Accounting estimates</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management to make assumptions and estimates.
These affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues
and expenses during the reporting periods. Estimates and
judgments are inherent in the calculations of royalty and other
franchise-related revenue collections, legal obligations, income
taxes, insurance liabilities, various other commitments and
contingencies, valuations used when assessing potential
impairment of goodwill, other intangibles and fixed assets and
the estimation of the useful lives of fixed assets and other
long-lived assets. While management applies its judgment based
on assumptions believed to be reasonable under the
circumstances, actual results could vary from these assumptions.
It is possible that materially different amounts would be
reported using different assumptions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the normal course of business, the Company must make
continuing estimates of potential future legal obligations and
liabilities, which requires the use of management&#146;s
judgment on the outcome of various issues. Management may also
use outside legal advice to assist in the estimating process.
However, the ultimate outcome of various legal issues could be
different than management estimates, and adjustments to income
could be required.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Inventories</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Inventories, amounting to $27.0&nbsp;million and
$31.3&nbsp;million, net of reserves of $1.3&nbsp;million and
$1.3&nbsp;million, at December&nbsp;28, 2003, and
January&nbsp;2, 2005 respectively, are stated at the lower of
cost (first-in, first-out) or market, and consist primarily of
restaurant food items, new equipment and parts and paper
supplies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Property and equipment</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Depreciation and amortization are recognized using the
straight-line method in amounts adequate to amortize costs over
the following estimated useful lives: buildings, up to
40&nbsp;years; restaurant and operating equipment, up to
15&nbsp;years; other equipment, up to 10&nbsp;years; leasehold
improvements and property under capital leases, the lesser of
the useful life of the asset or the lease term as that term is
defined in Statement of Financial Accounting Standards
(&#147;SFAS&#148;) No.&nbsp;13, &#147;Accounting for
Leases,&#148; as amended. Interest and other costs associated
with the construction of new restaurants are capitalized. Major
improvements are capitalized, while maintenance and repairs are
expensed when incurred. Long-lived assets are grouped into
operating markets and tested for impairment whenever an event
occurs that indicates an impairment may exist. The Company tests
for impairment using the cash flows of the operating markets.
A&nbsp;significant deterioration in the cash flows of an
operating market or other circumstances may trigger impairment
testing. Gains and losses on the disposition of fixed assets are
classified in other (income) expense, net.
</DIV>

<P align="center" style="font-size: 10pt;">F-9

</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to the Consolidated Financial Statements &#151;
(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Property and equipment, at cost, at each year-end consisted of
the following:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="71%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Land
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">154,174</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">183,521</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Buildings
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">359,802</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">443,736</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Leasehold improvements
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">262,617</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">271,738</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Restaurant equipment
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">92,980</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100,428</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Capital leases
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">76,938</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">81,247</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Computer hardware and software
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">40,380</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">44,334</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Vehicles
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">18,073</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">18,194</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16,423</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">33,497</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Construction in progress
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22,005</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">38,683</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,043,392</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,215,378</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accumulated depreciation and
    amortization
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(253,397</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(305,754</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">789,995</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">909,624</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company capitalizes certain internally developed software
costs, which are amortized over a period of up to 10&nbsp;years.
At December&nbsp;28, 2003 and January&nbsp;2, 2005, capitalized
software development costs, net of accumulated amortization,
amounted to $16.2&nbsp;million and $22.8&nbsp;million,
respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Leases</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For operating leases, minimum lease payments, including minimum
scheduled rent increases, are recognized as rent expense on a
straight line basis over the lease term as that term is defined
in SFAS&nbsp;No.&nbsp;13, as amended, including any option
periods considered in the lease term and any periods during
which the Company has use of the property but is not charged
rent by a landlord (&#147;rent holiday&#148;). Contingent
rentals are generally based on either a percentage of restaurant
sales or as a percentage of restaurant sales in excess of
stipulated amounts, and thus are not included in minimum lease
payments but are included in rent expense when incurred. Rent is
capitalized during the construction of a restaurant. Leasehold
improvement incentives paid to the Company by a landlord are
recorded as a liability and amortized as a reduction of rent
expense over the lease term. No individual lease is material to
the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
When determining the lease term for purposes of recording
depreciation and rent or for evaluating whether a lease is
capital or operating, the Company includes option periods for
which failure to renew the lease imposes an economic penalty on
the Company of such an amount that a renewal appears, at the
inception of the lease, to be reasonably assured. For example,
such an economic penalty would exist if the Company were to
choose not to exercise an option on leased land upon which the
Company had constructed a restaurant and, as a result, the
Company would lose the ability to use the restaurant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the case of property that is leased or sub-leased by the
Company to franchisees, minimum lease receipts are recorded as
rent revenue on a straight-line basis. Contingent rent revenue
is generally based on a percentage of franchisee restaurant
sales and is recorded as earned.
</DIV>

<P align="center" style="font-size: 10pt;">F-10

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<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to the Consolidated Financial Statements &#151;
(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
&#146;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Goodwill and other intangibles</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Goodwill is the excess of the cost of an acquired entity over
the fair value of acquired net assets. For purposes of testing
goodwill for impairment, the Company has determined that its
reporting units are Canada and the U.S.&nbsp;Each constitutes a
business and has discrete financial information available which
is regularly reviewed by management. The Company tests goodwill
for impairment at least annually by comparing the reporting unit
fair value, using discounted cash flows, to the carrying value
to determine if there is an indication that a potential
impairment may exist. Intangibles separate from goodwill are
amortized on a straight-line basis over periods of up to
12&nbsp;years. Lives are generally related to legal or
contractual lives, but in some cases must be estimated by
management based on specific circumstances. The Company tests
intangible assets for impairment whenever events or
circumstances indicate that an impairment may exist.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Notes receivable</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Notes receivable arise primarily from the sale of certain
product and equipment to franchisees as well as agreements by
the Company, under certain circumstances, to a structured
repayment plan for certain franchise fees and past due
franchisee obligations. Most of these notes are generally
non-interest bearing and are payable in full at the end of
thirty months. The need for a reserve for uncollectible amounts
is reviewed on a specific franchisee basis using information
available to the Company, including past due balances and the
financial strength of the franchisee. Uncollectible amounts for
both principal and interest are provided for as those amounts
are identified and were $0.7&nbsp;million and $0.5&nbsp;million
at December&nbsp;28, 2003 and January&nbsp;2, 2005,
respectively. The carrying amount of notes receivable
approximates fair value.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Other accrued expenses</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Included within other accrued expenses is $17.6&nbsp;million and
$21.5&nbsp;million related to gift certificates at
December&nbsp;28, 2003 and January&nbsp;2, 2005, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Revenue recognition</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company operates warehouses in Canada to distribute coffee
and other dry goods to an extensive franchise system. Revenues
from warehouse sales are recorded when the product is delivered
to the franchisee. Franchise revenues consist of royalties,
rents and various franchise fees. Normally all revenue is
collected within a month after a period ends. The timing of
revenue recognition for both sales and franchise revenues does
not involve significant contingencies and judgments other than
providing adequate reserves against collections of
franchise-related revenues. Also, see discussion of
&#147;Franchise operations&#148; below for further information
regarding franchise revenues.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Franchise operations</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company is predominately franchised. The Company grants
franchises to independent operators who in turn pay franchise
fees and other payments, which may include equipment, royalties
and, in some cases, rents for each restaurant opened. Franchise
fees and equipment sales generally are recorded as income when
each restaurant commences operations. Royalties, based upon a
percent of monthly sales, are recognized as income on the
accrual basis. The Company has
</DIV>

<P align="center" style="font-size: 10pt;">F-11

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<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to the Consolidated Financial Statements &#151;
(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
established reserves related to the collection of franchise
royalties and other franchise-related receivables and
commitments (see Note&nbsp;11 to the Consolidated Financial
Statements).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company generally controls, either through ownership or by
renting, a significant majority of the real estate on which the
Company&#146;s restaurants are located and leases the real
estate to its franchisees. Rental income is recorded on the
accrual basis, generally based upon a percent of monthly sales.
Rental income included in franchise revenues is shown in
Note&nbsp;5 to the Consolidated Financial Statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Franchise owners receive assistance in such areas as real estate
site selection, construction consulting, purchasing and
marketing from company personnel. These franchise expenses are
included in operating costs. Revenues from the sale of equipment
related to establishing a franchisee&#146;s business are
included in franchise revenues.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Variable interest entities</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company enters into flexible lease arrangements with certain
franchisees who are not required to invest a significant amount
of equity. Because the legal entity within which such a
franchise operates is considered to not be adequately
capitalized, that entity is considered a variable interest
entity (&#147;VIE&#148;). Based on review of the financial
statements it receives from these franchisees, the mathematical
projections performed by the Company indicate the Company is the
primary beneficiary, as that term is defined by FIN&nbsp;46R, of
these VIEs and, accordingly, the Company has consolidated
approximately 80 franchised restaurants as of 2004, or
approximately 3% of the Company&#146;s total franchise
restaurants and systemwide restaurants. The related minority
interest is classified in other (income) expense, net on the
statement of income and other long-term liabilities on the
balance sheet and is not material.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company has no equity interest in any of its franchisees and
has no &#147;off-balance sheet&#148; exposures relative to any
of its franchisees as that term is described by the Securities
and Exchange Commission. None of the Company&#146;s assets
serves as collateral for the consolidated franchisees and
creditors of these franchisees have no recourse to the Company.
The only exposure to the Company related to these VIEs relates
to the collection of amounts due to the Company, which are
collected weekly and which were recorded net of uncollectible
amounts in the Company&#146;s financial statements prior to the
adoption of FIN&nbsp;46R. The agreements governing the lease
arrangements can be cancelled by either the franchisee or the
Company with 30&nbsp;days notice, further reducing potential
exposure to the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Franchisee VIEs for which the Company is determined to be the
primary beneficiary have no impact on net income reported by the
Company. The impact of consolidating these VIEs to the
Company&#146;s balance sheet is also not significant. There is a
small percentage of franchise restaurants considered to be VIEs
for which the Company holds a significant variable interest, but
for which the Company is not the primary beneficiary. The
Company&#146;s maximum exposure to loss as a result of its
involvement with this small percentage of franchise restaurants
is also not material.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Advertising costs</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company expenses advertising costs as incurred with the
exception of media development costs that are expensed beginning
in the month that the advertisement is first communicated (see
Note&nbsp;13 to the Consolidated Financial Statements).
</DIV>

<P align="center" style="font-size: 10pt;">F-12

</FONT>

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<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to the Consolidated Financial Statements &#151;
(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Foreign operations</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Assets and liabilities from the U.S.&nbsp;operations and certain
legal entities have a U.S.&nbsp;dollar functional currency and
are translated at the year-end Canadian dollar exchange rates
and U.S.&nbsp;revenues and expenses are translated at average
Canadian dollar exchange rates for the period. Resulting
translation adjustments are recorded as a component of
shareholder&#146;s equity and in other comprehensive income.
Total translation adjustments included in accumulated other
comprehensive income (expense)&nbsp;at December&nbsp;28, 2003
and January&nbsp;2, 2005 were $(17.3)&nbsp;million and
$(47.6)&nbsp;million, respectively. Total transaction gains
(losses) included in other expense, net, were
$(0.4)&nbsp;million, $3.8&nbsp;million and $1.4&nbsp;million for
2002, 2003 and 2004, respectively. The functional currency of
each of the Company&#146;s subsidiaries and legal entities is
the local currency in which each subsidiary operates, which is
either the Canadian or the U.S.&nbsp;dollar.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Derivative instruments</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 2003 and 2004, the Company entered into forward currency
contracts that reduce the Company&#146;s cash flow exposure to
changes in the U.S. and Canada exchange rates. In addition,
Wendy&#146;s corporate treasury has entered into forward
currency contracts for the benefit of the Company. Forward
currency contracts entered into by the Company and by
Wendy&#146;s for the benefit of the Company to sell Canadian
dollars and buy U.S.&nbsp;dollars of $77.3&nbsp;million and
$38.8&nbsp;million were outstanding as of December&nbsp;28, 2003
and January&nbsp;2, 2005, respectively, to hedge inter-company
payments and purchases from third parties. The contracts
outstanding at December&nbsp;28, 2003 and January&nbsp;2, 2005
matured at various dates through January 2005 and June 2005,
respectively, and are considered to be highly effective cash
flow hedges according to criteria specified in
SFAS&nbsp;No.&nbsp;133, &#147;Accounting for Derivative
Instruments and Hedging Activities&#148;. Accordingly, the
Company defers unrealized gains and losses arising from these
contracts until the impact of the related transactions occur.
The fair value unrealized losses on the contracts as of
December&nbsp;28, 2003 and January&nbsp;2, 2005 of
$5.5&nbsp;million and $6.0&nbsp;million, respectively, are based
on quoted market prices and offset the impact of the underlying
transactions. See also Note&nbsp;17 to the Consolidated
Financial Statements for other derivatives entered into in 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Net income per share</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Basic earnings per common share are computed by dividing net
income available to common shareholders by the weighted average
number of common shares outstanding. No potentially dilutive
options or shares have been issued.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Stock options and other equity-based compensation</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Certain employees of the Company participate in the stock option
plans of Wendy&#146;s which provide stock options to acquire
common shares of Wendy&#146;s. Grants of options to employees
and the periods during which such options can be exercised are
at the discretion of the Compensation Committee of the
Wendy&#146;s Board of Directors. All options expire at the end
of the exercise period. Wendy&#146;s uses the intrinsic value
method to account for stock-based compensation grants as defined
in Accounting Principles Board (&#147;APB&#148;) Opinion
No.&nbsp;25, &#147;Accounting for Stock Issued to
Employees.&#148; The Company uses APB Opinion No.&nbsp;25 to
account for stock compensation expense as allowed for a
subsidiary under FIN&nbsp;44. Options are granted with exercise
prices equal to the fair market value of the Wendy&#146;s common
shares on the date of grant, and, accordingly, no amounts
applicable at the date of grant are charged to net income. The
Company recognizes options in the
</DIV>

<P align="center" style="font-size: 10pt;">F-13

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<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to the Consolidated Financial Statements &#151;
(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
financial statements as expense when the original terms of
certain options are modified requiring a new measurement date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The pro forma disclosures below are provided as if the Company
adopted the cost recognition requirements under
SFAS&nbsp;No.&nbsp;123&nbsp;&#151; &#147;Accounting for
Stock-Based Compensation&#148;, as amended by
SFAS&nbsp;No.&nbsp;148. The fair value of each option granted is
estimated on the date of grant using the Black-Scholes
option-pricing model. This model requires the use of subjective
assumptions that can materially affect fair value estimates, and
therefore, this model does not necessarily provide a reliable
single measure of the fair value of Wendy&#146;s stock options.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In calculating the fair value of options issued, the underlying
characteristics of grants made under the Wendy&#146;s WeShare
Plan and the 1990 Plan are unique enough to warrant using
different assumptions for these calculations because the
different employee groups exhibit different exercise patterns
(see Note&nbsp;8 to the Consolidated Financial Statements for a
description of these plans).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In calculating the fair value of options issued to Company
employees that received grants under the Wendy&#146;s WeShare
Plan in 2002 and 2003 and under the 2003 Plan in 2004, the
following assumptions were used for the years indicated:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="64%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" nowrap><B><FONT face="helvetica,arial">Assumption</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Dividend yield
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">0.8%
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">0.8%
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">1.2%
    </FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Expected volatility
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">32.0%
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">30.0%
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">27.0%
    </FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Risk-free interest rate
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">3.8%
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">2.1%
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">2.8%
    </FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Expected lives
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">2.7&nbsp;years
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">2.7&nbsp;years
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">3.1&nbsp;years
    </FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Per share weighted average fair
    value of options granted (expressed in U.S.&nbsp;dollars)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">$8.93
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">$5.10
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">$8.22
    </FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In calculating the fair value of options issued to Company
employees under the Wendy&#146;s 1990 Plan for key employees,
the following assumptions were used for the years indicated:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="64%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" nowrap><B><FONT face="helvetica,arial">Assumption</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Dividend yield
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">0.8%
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">0.8%
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">1.2%
    </FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Expected volatility
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">33.0%
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">34.0%
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">31.0%
    </FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Weighted average risk-free interest
    rate
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">4.7%
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">3.0%
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">3.5%
    </FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Expected lives
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">4.9&nbsp;years
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">4.9&nbsp;years
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">4.9&nbsp;years
    </FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Per share weighted average fair
    value of options granted (expressed in U.S.&nbsp;dollars)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">$12.87
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">$8.88
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">$11.89
    </FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<P align="center" style="font-size: 10pt;">F-14

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to the Consolidated Financial Statements &#151;
(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Had compensation expense been recognized for stock-based
compensation plans in accordance with provisions of
SFAS&nbsp;No.&nbsp;123, as amended by SFAS&nbsp;No.&nbsp;148,
the Company would have recorded net income and earnings per
share as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="64%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net income, as reported
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">132,812</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">156,262</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">205,051</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Add: Stock compensation cost
    recorded under APB Opinion No.&nbsp;25, net of tax
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">398</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deduct: Stock compensation cost
    calculated under SFAS&nbsp;No.&nbsp;123, net of tax
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(6,166</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(6,480</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(6,739</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Pro forma net income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">126,646</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">150,180</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">198,312</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Earnings per share:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Basic as reported
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">190</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">223</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">293</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Basic pro forma
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">181</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">215</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">283</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The above stock compensation cost calculated under
SFAS&nbsp;No.&nbsp;123, net of tax, is based on costs generally
computed over the vesting period of the award.
SFAS&nbsp;No.&nbsp;123R requires compensation cost for
stock-based compensation awards to be recognized immediately for
new awards granted to retirement eligible employees and over the
period from the grant date to the date retirement eligibility is
achieved, if that period is shorter than the normal vesting
period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If the guidance on recognition of stock compensation expense for
retirement eligible employees were applied to the periods
reflected in the financial statements, the impact on the
Company&#146;s pro-forma net income would have been a reduction
of $4.3&nbsp;million, $0.7&nbsp;million and $0.1&nbsp;million
for the years ended December&nbsp;29, 2002, December&nbsp;28,
2003 and January&nbsp;2, 2005, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The impact of applying SFAS&nbsp;No.&nbsp;123 in this pro-forma
disclosure is not necessarily indicative of future results.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>NOTE&nbsp;2</B></TD>
    <TD>
    <B>EXPENSE ALLOCATIONS</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The consolidated statements of operations and balance sheets
include certain amounts related to Wendy&#146;s, including:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>General Corporate Expenses</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
General corporate expense allocations represent costs related to
corporate functions such as executive oversight, risk
management, information technology, accounting, legal, investor
relations, human resources, tax, other services and employee
benefits and incentives Wendy&#146;s provides to the Company.
The allocations are primarily based on specific identification
and the relative percentage of the Company&#146;s revenues and
headcount to the respective total Wendy&#146;s costs.
Substantially all of these allocations are reflected in general
and administrative expenses in the Company&#146;s consolidated
statements of operations and totalled $12.7&nbsp;million,
$12.9&nbsp;million and $13.3&nbsp;million on a pre-tax basis for
2002, 2003 and 2004, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company and Wendy&#146;s considered these general corporate
expense allocations to be a reasonable reflection of the
utilization of services provided. The allocations may not,
however, reflect the expense the Company would have incurred as
a stand-alone company.
</DIV>

<P align="center" style="font-size: 10pt;">F-15

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to the Consolidated Financial Statements &#151;
(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Interest Expense</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Affiliated interest expense, net in the consolidated statements
of operations reflects interest costs related to specific net
borrowings by the Company, in the form of promissory notes, from
Wendy&#146;s. Notes receivable from and payable to Wendy&#146;s
are shown on the Company&#146;s consolidated balance sheets. No
amount is included in affiliated interest expense, net for other
amounts receivable from and payable to Wendy&#146;s which were
not in the form of a promissory note and for which no interest
rate was specified. Also, Wendy&#146;s has not allocated a
portion of its external debt interest cost to the Company. As a
result, net interest expense recorded by the Company does not
reflect the expense the Company would have incurred as a
stand-alone company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Amounts Receivable from and Payable to Wendy&#146;s</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Wendy&#146;s uses primarily a worldwide centralized approach to
cash management and the financing of its operations with all
related activity between the Company and Wendy&#146;s reflected
as amounts receivable from Wendy&#146;s and notes payable and
receivable from Wendy&#146;s in the Company&#146;s consolidated
balance sheets. Types of transactions between the Company and
Wendy&#146;s include (1)&nbsp;cash from the Company&#146;s
U.S.&nbsp;operations which are transferred to Wendy&#146;s bank
account on a regular basis, (2)&nbsp;net cash borrowings from
Wendy&#146;s used to fund operations, capital expenditures,
acquisitions and for other purposes, (3)&nbsp;payment of related
party dividends and interest to Wendy&#146;s on a regular basis,
and (4)&nbsp;allocations of corporate expenses identified above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under the terms of the shared services agreement with
Wendy&#146;s, the amounts receivable from Wendy&#146;s and notes
receivable from and payable to Wendy&#146;s are expected to be
contributed to the Company by Wendy&#146;s or distributed by the
Company to Wendy&#146;s in 2005, forming a part of the
continuing equity of the Company.
</DIV>

<P align="center" style="font-size: 10pt;">F-16

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to the Consolidated Financial Statements &#151;
(Continued)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>NOTE&nbsp;3</B></TD>
    <TD>
    <B>GOODWILL AND OTHER INTANGIBLE ASSETS</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The table below presents amortizable and unamortizable
intangible assets as of December&nbsp;28, 2003 and
January&nbsp;2, 2005:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Gross</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Net</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Carrying</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Accumulated</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Carrying</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Amount</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Amortization</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Amount</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">(In thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">2003</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Amortizable intangible assets:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Trademarks
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,456</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,159</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,297</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,787</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,219</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,568</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,243</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,378</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,865</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Unamortizable intangible assets:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">2004</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Amortizable intangible assets:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Trademarks
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,455</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,696</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,759</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,784</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,766</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,018</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,239</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(3,462</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,777</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Unamortizable intangible assets:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">30,527</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Included in Other above are $1.6&nbsp;million and
$1.0&nbsp;million in 2003 and 2004, respectively, in intangible
assets, net of accumulated amortization of $1.2&nbsp;million and
$1.7&nbsp;million, related to the use of the name and likeness
of Ronald V. Joyce, a former director of the Company. The name
and likeness are being amortized over a period of 5&nbsp;years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Total intangibles amortization expense was $1.1&nbsp;million for
each of the years-ended December&nbsp;28, 2003 and
January&nbsp;2, 2005. The estimated annual intangibles
amortization expense for 2005 and 2006 is approximately
$1.0&nbsp;million and for the years 2007 through 2009 is
approximately $0.5&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The changes in the carrying amount of goodwill for the year
ended 2003, are as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="77%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Canada</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">U.S.</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">(In thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Balance as of December&nbsp;29, 2002
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">660</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">43</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill related to dispositions
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(660</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(43</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Balance as of December&nbsp;28, 2003
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<P align="center" style="font-size: 10pt;">F-17

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to the Consolidated Financial Statements &#151;
(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The changes in the carrying amount of goodwill for the year
ended 2004 are as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="77%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Canada</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">U.S.</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">(In thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Balance as of December&nbsp;28, 2003
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill recorded in connection
    with acquisitions
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">34,984</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Translation adjustments
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(4,457</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Balance as of January&nbsp;2, 2005
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">30,527</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>NOTE&nbsp;4</B></TD>
    <TD>
    <B>TERM DEBT</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Since 1995 the Company has been a wholly-owned subsidiary of
Wendy&#146;s. Accordingly, the Company did not seek significant
external financing as it was funded primarily by Wendy&#146;s.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Notes payable to and receivable from Wendy&#146;s are described
in Note&nbsp;15 to the Consolidated Financial Statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Excluding amounts owed to Wendy&#146;s, the Company&#146;s total
debt at December&nbsp;28, 2003 and January&nbsp;2, 2005 was
$14.8&nbsp;million and $18.3&nbsp;million, respectively. All of
the Company&#146;s debt at December&nbsp;28, 2003 and
$17.5&nbsp;million of the Company&#146;s debt at January&nbsp;2,
2005 was recorded in accordance with EITF&nbsp;97-10, The Effect
of Lessee Involvement in Asset Construction. Under
EITF&nbsp;97-10, the Company is considered the owner of certain
restaurants leased by the Company from an unrelated lessor
because the Company helped to construct some of the structural
elements of those restaurants. Accordingly, the Company has
included the restaurant construction costs for these restaurants
in fixed assets and recorded the lessor&#146;s contributions to
the construction costs for these certain restaurants as debt.
The average imputed interest rate for the debt recorded in
accordance with EITF&nbsp;97-10 is approximately 17%. In
addition to debt recorded in accordance with EITF&nbsp;97-10,
the Company had debt at January&nbsp;2, 2005 of
$0.8&nbsp;million. Based on cash flows and market interest
rates, the estimated fair value of the Company&#146;s recorded
debt, excluding amounts owed to Wendy&#146;s, was approximately
$42&nbsp;million and $48&nbsp;million at December&nbsp;28, 2003
and January&nbsp;2, 2005, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Future maturities for the Company&#146;s recorded debt,
excluding notes payable to Wendy&#146;s and certain Wendy&#146;s
subsidiaries, at January&nbsp;2, 2005 are as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="77%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(In thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2005
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">283</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2006
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">198</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2007
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">267</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2008
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">338</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2009
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">383</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Later years
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16,876</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">18,345</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Current portion
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(283</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">18,062</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At January&nbsp;2, 2005, the Company had a revolving credit
facility of $25.0&nbsp;million, all of which was unused at
January&nbsp;2, 2005.
</DIV>

<P align="center" style="font-size: 10pt;">F-18

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to the Consolidated Financial Statements &#151;
(Continued)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>NOTE&nbsp;5</B></TD>
    <TD>
    <B>LEASES</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company occupies land and buildings and uses equipment under
terms of numerous lease agreements expiring on various dates
through 2043 (except for two leases that expire in 2086 and
2100). Terms of land and building leases are generally equal to
the initial lease period of 10 to 20&nbsp;years while 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 to pay the cost of
maintenance, insurance and property taxes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Assets leased under capital leases, excluding leasehold
improvements, consisted of the following:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="75%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">(In thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Buildings
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">68,244</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">77,156</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,694</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,091</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accumulated depreciation
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(27,194</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(22,197</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">49,744</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">59,050</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At January&nbsp;2, 2005, future minimum lease payments for all
leases, and the present value of the net minimum lease payments
for capital leases, were as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="62%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Capital Leases</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Operating Leases</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">(In thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2005
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,097</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">52,406</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2006
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,234</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">46,537</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2007
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,623</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">47,915</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2008
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,468</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">44,696</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2009
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,283</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">41,310</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Later years
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">49,813</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">326,023</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total minimum lease payments
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">88,518</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">558,887</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Amount representing interest
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(36,355</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Present value of net minimum lease
    payments
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">52,163</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Current portion
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(4,474</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">47,689</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Total minimum lease payments have not been reduced by minimum
sublease rentals of $69.9&nbsp;million under capital leases, and
$453.1&nbsp;million under operating leases due in the future
under non-cancelable subleases.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Rent expense for each year is included in operating expenses and
amounted to:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="68%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">(In thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Minimum rents
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">45,185</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">47,962</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">52,859</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Contingent rents
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16,666</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">19,898</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24,090</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">61,851</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">67,860</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">76,949</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<P align="center" style="font-size: 10pt;">F-19

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to the Consolidated Financial Statements &#151;
(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In connection with the franchising of certain restaurants, the
Company has leased or subleased land, buildings and equipment to
the related franchise owners. Most leases provide for fixed
payments with contingent rent when sales exceed certain levels,
while others provide for monthly rentals based on a percentage
of sales. Lease terms are generally 10&nbsp;years with one or
more five-year renewal options. The franchise owners bear the
cost of maintenance, insurance and property taxes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At each year-end, company assets leased under operating leases,
including leasehold improvements under operating and capital
leases, consisted of the following:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="74%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">(In thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Land
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">136,742</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">145,413</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Buildings
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">651,976</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">708,427</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Equipment
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">75,092</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">69,196</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">863,810</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">923,036</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accumulated depreciation
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(189,041</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(226,978</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">674,769</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">696,058</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At January&nbsp;2, 2005, future minimum lease receipts were as
follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="76%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Operating Leases</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(In thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2005
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">144,694</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2006
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">134,937</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2007
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">124,358</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2008
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">111,628</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2009
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">95,745</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Later years
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">215,559</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">826,921</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Rental income for each period is included in franchise revenues
and amounted to:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="67%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">(In thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Minimum rents
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100,629</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">116,004</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">136,268</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Contingent rents
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">137,976</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">157,203</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">180,399</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">238,605</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">273,207</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">316,667</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<P align="center" style="font-size: 10pt;">F-20

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to the Consolidated Financial Statements &#151;
(Continued)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>NOTE&nbsp;6</B></TD>
    <TD>
    <B>INCOME TAXES</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company&#146;s income tax provision and related deferred
income tax amounts are determined as if the Company filed tax
returns on a stand alone basis. The Company&#146;s
U.S.&nbsp;entities currently join in the filing of a
consolidated U.S.&nbsp;tax return with Wendy&#146;s and its
other U.S.&nbsp;subsidiaries. The provision for income taxes
each period consisted of the following:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="64%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">(In thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Current
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">U.S.&nbsp;Federal
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(4,330</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,207</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(6,482</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">U.S.&nbsp;State and local
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(206</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(173</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">266</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Canadian
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">83,045</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">75,187</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">104,902</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">78,509</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">73,807</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">98,686</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deferred
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">U.S.&nbsp;Federal
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,063</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25,278</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,642</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">U.S.&nbsp;State and local
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">112</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">668</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">247</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Canadian
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(6,523</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,848</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">160</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,652</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">32,794</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,049</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">80,161</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">106,601</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100,735</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The effective income tax rate for 2002 was 37.6% compared to
40.6% for 2003 and 32.9% for 2004. The rate was higher in 2003
compared to 2002 primarily due to the increase to the valuation
allowance for deferred taxes associated with foreign tax credits
that occurred in 2003. The rate was lower in 2004 as a result of
the reduction in Canadian tax rates and the non-recurrence of
the aforementioned change to the valuation allowance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The provision for Canadian taxes includes withholding taxes.
Income before income taxes for Canadian operations was
$204.6&nbsp;million, $226.8&nbsp;million and $266.3&nbsp;million
for the years ended 2002, 2003 and 2004, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The temporary differences which give rise to deferred tax assets
and liabilities at each year-end consisted of the following:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">(In thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deferred tax assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Lease transactions
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,347</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,587</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Canadian operations
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,277</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12,406</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Foreign tax credit carryforwards
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26,012</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">33,304</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">All other
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">46</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">20</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">36,682</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">47,317</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Valuation allowance
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(26,012</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(33,304</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,670</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14,013</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<P align="center" style="font-size: 10pt;">F-21

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to the Consolidated Financial Statements &#151;
(Continued)</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 18pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">(In thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deferred tax liabilities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Lease transactions
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">116</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Property and equipment basis
    differences
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,234</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13,349</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Intangible assets basis differences
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,791</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Canadian operations
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,493</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,191</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">All other
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,176</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">19,928</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25,447</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A deferred tax asset has been established for foreign tax credit
carryforwards. A portion of the credits previously scheduled to
expire in 2006 will now expire in 2011 as a result of the
American Jobs Creation Act of 2004. The balance of the credits
expire in 2014. A valuation allowance in the amount of
$33.3&nbsp;million has been established as a result of
management&#146;s determination that it is more likely than not
that these foreign tax credit carryforwards will not be realized.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A reconciliation of the statutory U.S.&nbsp;federal income tax
rate of 35% to the Company&#146;s effective tax rate for each
year is shown below:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="67%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">(In thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income taxes at statutory rate
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">74,541</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">92,002</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">107,059</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Taxes on non-U.S.&nbsp;earnings,
    net of related tax credits
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,398</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14,473</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(6,964</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">State and local taxes, net of
    federal benefit
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(61</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">321</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">352</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,283</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(195</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">288</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income taxes at effective rate
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">80,161</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">106,601</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100,735</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The determination of annual income tax expense takes into
consideration amounts which may be needed to cover exposures for
open tax years. The Internal Revenue Service is currently
conducting an examination of the Wendy&#146;s federal income tax
returns for the years 2001 through 2004. The Canada Revenue
Agency is currently conducting an examination of various
Canadian subsidiaries of the Company for the years 1999 and
2000. The Company does not expect any material impact on
earnings to result from the resolution of matters related to
open tax years; however, actual settlements may differ from
amounts accrued.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
U.S.&nbsp;income taxes and foreign withholding taxes are not
provided on undistributed earnings of foreign subsidiaries which
are considered to be indefinitely reinvested in the operations
of such subsidiaries. The amount of these earnings was
approximately $45.4&nbsp;million at January&nbsp;2, 2005. The
Company has provided deferred taxes at January&nbsp;2, 2005 on
$132.2&nbsp;million of unremitted earnings, which are not
considered to be indefinitely reinvested. The additional taxes
payable on earnings considered indefinitely reinvested would
approximate $2.3&nbsp;million, consisting primarily of
additional foreign withholding taxes.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>NOTE&nbsp;7</B></TD>
    <TD>
    <B>CAPITAL STOCK</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company has issued and outstanding 700&nbsp;shares of common
stock with one vote per share. All of the Company&#146;s common
shares are held by Wendy&#146;s.
</DIV>

<P align="center" style="font-size: 10pt;">F-22

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to the Consolidated Financial Statements &#151;
(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On December&nbsp;29, 1995, Wendy&#146;s acquired, in a
transaction accounted for as a pooling of interests, all of the
stock of 1052106&nbsp;Ontario Limited, formerly 632687 Alberta
Ltd., the parent company of the Tim Hortons restaurant chain,
for 16.45&nbsp;million shares of a Canadian subsidiary of the
Company exchangeable for 16.45&nbsp;million common shares of
Wendy&#146;s International, Inc. Mr.&nbsp;Ronald V. Joyce, a
former director of Wendy&#146;s, held all of the exchangeable
shares. The Company purchased and retired 1.0&nbsp;million
exchangeable shares from Mr.&nbsp;Joyce for $21.21&nbsp;per
share in 1998 and 9.7&nbsp;million exchangeable shares for
$25.75&nbsp;per share in 2001. On December&nbsp;19, 2002,
Mr.&nbsp;Joyce transferred, with Wendy&#146;s consent, all of
the remaining 5.7&nbsp;million exchangeable shares to an entity
that was wholly-owned by him. On January&nbsp;2, 2003, the
5.7&nbsp;million exchangeable shares were exchanged into common
shares of Wendy&#146;s and the exchangeable shares were retired.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 2002, the Company received capital contributions in the form
of cash from Wendy&#146;s totaling $443.9&nbsp;million. In 2003,
the Company received an additional capital contribution from
Wendy&#146;s in the form of Wendy&#146;s shares totaling
$37.5&nbsp;million. Also in 2003, Wendy&#146;s settled certain
debt obligations to the Company in exchange for an equivalent
value of Wendy&#146;s shares. The total Wendy&#146;s shares
received as a capital contribution and in settlement of debt
totalled 5.7&nbsp;million shares, were valued at
$247.7&nbsp;million and were used in the above 5.7&nbsp;million
share exchange.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>NOTE&nbsp;8</B></TD>
    <TD>
    <B>STOCK COMPENSATION</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Certain employees of the Company participate in various stock
option plans of Wendy&#146;s to acquire Wendy&#146;s common
stock. The following is a description of the Wendy&#146;s plans
and tables summarizing stock option activity, outstanding
options and exercisable options for the Company&#146;s employees.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On August&nbsp;2, 1990, the Wendy&#146;s Board of Directors
adopted the WeShare Stock Option Plan (&#147;WeShare
Plan&#148;), a non-qualified stock option plan that provided for
grants of options equal to 10&nbsp;percent of each eligible
employee&#146;s earnings, with a minimum of 20 options to be
granted to each eligible employee annually. Beginning in 2002,
options equal to 8 to 12&nbsp;percent of each eligible
employee&#146;s earnings could be granted under the WeShare
Plan. The percentage of each eligible employee&#146;s earnings
was determined by Wendy&#146;s annual performance as measured by
earnings per share growth and Wendy&#146;s three-year average
total shareholder return relative to the Standard&nbsp;&#38;
Poor&#146;s 500&nbsp;Index.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On both April&nbsp;29, 2002 and April&nbsp;23, 2003,
approximately 0.1&nbsp;million options were granted under the
WeShare Plan to eligible Company employees at an exercise price
of US$37.87&nbsp;per share and US$27.99&nbsp;per share,
respectively. No options were awarded under the WeShare Plan
in&nbsp;2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On August&nbsp;2, 1990, the Wendy&#146;s Board of Directors
adopted the 1990 Stock Option Plan (&#147;1990&nbsp;Plan&#148;).
A total of 0.7&nbsp;million, 0.5&nbsp;million and
0.5&nbsp;million options were granted to the Company&#146;s
employees under the 1990 Plan in 2002, 2003 and 2004,
respectively. These options were primarily granted on
April&nbsp;29, 2002, April&nbsp;23, 2003 and April&nbsp;22,
2004, at an exercise price of US$37.87&nbsp;per share,
US$27.99&nbsp;per share and US$40.62&nbsp;per share,
respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Both the WeShare Plan and 1990 Plan options have a term of
10&nbsp;years from the grant date and become exercisable in
installments of 25&nbsp;percent on each of the first four
anniversaries of the grant date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On April&nbsp;22, 2004, Wendy&#146;s shareholders approved the
2003 Stock Incentive Plan (&#147;2003&nbsp;Plan&#148;). The 2003
Plan provides for equity compensation awards in the form of
stock options, restricted stock, stock units, stock appreciation
rights, dividend equivalent rights, performance awards
</DIV>

<P align="center" style="font-size: 10pt;">F-23

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to the Consolidated Financial Statements &#151;
(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
and share awards (collectively, &#147;Awards&#148;) to eligible
employees and Directors of the Company or its subsidiaries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A total of 0.1&nbsp;million options were granted to the
Company&#146;s employees under the 2003 Plan during 2004. These
options were primarily granted on April&nbsp;22, 2004 at an
exercise price of&nbsp;US$40.62.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following is a summary of stock option activity for the
Company&#146;s employees for the last three years:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="53%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Wendy&#146;s&nbsp;Shares</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Weighted Average</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Under Option</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Price Per Share</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Shares in thousands)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(in U.S.&nbsp;Dollars)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Balance at December&nbsp;30, 2001
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,805</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24.39</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Granted
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">769</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">37.54</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Exercised
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(280</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22.02</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Canceled
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(27</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25.83</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Balance at December&nbsp;29, 2002
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,267</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">29.08</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Granted
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">622</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">28.01</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Exercised
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(488</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24.28</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Canceled
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(63</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">30.45</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Balance at December&nbsp;28, 2003
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,338</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">29.80</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Granted
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">597</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">40.55</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Exercised
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(121</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23.40</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Canceled
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(79</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">32.64</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Balance at January&nbsp;2, 2005
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,735</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">32.35</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Options exercisable to purchase Wendy&#146;s common shares
totalled 0.8&nbsp;million, 0.8&nbsp;million and 1.2&nbsp;million
at December&nbsp;29, 2002, December&nbsp;28, 2003 and
January&nbsp;2, 2005, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following tables summarize stock options for Wendy&#146;s
shares held by the Company&#146;s employees which were
outstanding and exercisable at January&nbsp;2, 2005:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="39%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">Options Outstanding</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Shares Under</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Weighted&nbsp;Average</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Options</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Remaining</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Weighted&nbsp;Average</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD align="left" nowrap><B><FONT face="helvetica,arial">Range of Exercise Prices</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Outstanding</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Contractual Life</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Exercise Price</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">(In U.S.&nbsp;dollars)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(in years)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(in U.S.&nbsp;Dollars)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">$17.38&nbsp;-&nbsp;$23.03
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">257</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4.7</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">19.65</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">$23.04&nbsp;-&nbsp;&nbsp;28.58
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">998</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.3</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">27.48</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">$28.59&nbsp;-&nbsp;&nbsp;34.36
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">238</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5.0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">30.97</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">$34.37&nbsp;-&nbsp;&nbsp;40.62
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,242</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8.4</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">39.15</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">$17.38&nbsp;-&nbsp;$40.62
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,735</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.4</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">32.35</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<P align="center" style="font-size: 10pt;">F-24

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to the Consolidated Financial Statements &#151;
(Continued)</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 24pt; ">

<TR style="font-size: 1pt;">
    <TD width="63%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Options Exercisable</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Options</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Weighted&nbsp;Average</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Exercisable</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Exercise Price</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Shares in</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(in U.S.&nbsp;dollars)</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD align="left" nowrap><B><FONT face="helvetica,arial">(Range of Exercise Prices In U.S.&nbsp;dollars)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">thousands)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">$17.38&nbsp;-&nbsp;$23.03
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">257</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">19.65</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">$23.04&nbsp;-&nbsp;&nbsp;28.58
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">444</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">27.17</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">$28.59&nbsp;-&nbsp;&nbsp;34.36
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">222</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">30.90</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">$34.37&nbsp;-&nbsp;&nbsp;40.62
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">323</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">37.87</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">$17.38&nbsp;-&nbsp;$40.62
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,246</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">29.05</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>NOTE&nbsp;9</B></TD>
    <TD>
    <B>ACQUISITIONS AND INVESTMENTS</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On May&nbsp;5, 2004, the Company completed its purchase of
certain real and personal assets of Bess Eaton Donut
Flour&nbsp;Co., Inc. and Louis&nbsp;A. Gencarelli,&nbsp;Sr. for
$60.9&nbsp;million. The assets relate to 42&nbsp;coffee and
donut restaurants formerly operated under the Bess Eaton name
throughout Rhode Island, Connecticut and Massachusetts. The
sites have been converted and are operating as Tim Hortons
restaurants. The Company recorded $35.0&nbsp;million of goodwill
related to this acquisition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 2001, the Company formed a joint venture between the Company
and IAWS to build a par-baked goods manufacturing facility in
Canada. The joint venture is owned and jointly-controlled on a
fifty-fifty basis by the Company and IAWS Group plc and supplies
the Company&#146;s entire restaurant system with par-baked
donuts. The Company has committed to invest approximately
$87&nbsp;million in this joint venture, of which approximately
$73&nbsp;million has been invested as of January&nbsp;2, 2005.
At December&nbsp;28, 2003 and January&nbsp;2, 2005, the
Company&#146;s investment in this joint venture was
$74.7&nbsp;million and $89.1&nbsp;million, respectively, which
includes amounts invested and equity earnings less distributions.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>NOTE&nbsp;10</B></TD>
    <TD>
    <B>DISPOSITIONS</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 2002, the Company sold its cup manufacturing business to
Dopaco. The sale, which closed in July 2002, resulted from a
strategic business review by the Company&#146;s management team.
The sale generated approximately $31&nbsp;million in cash and a
one-time pretax gain of $5.0&nbsp;million for the Company. Under
a supply agreement with Dopaco, the Company has agreed to
purchase a minimum of 50% of its cup and lid supplies from
Dopaco, at independently-derived competitive prices, over the
period from July&nbsp;15, 2002 through July&nbsp;15, 2007.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>NOTE&nbsp;11</B></TD>
    <TD>
    <B>COMMITMENTS AND CONTINGENCIES</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Reserves related to possible losses on accounts receivable,
notes receivable, real estate, guarantees, claims and
contingencies involving franchisees totalled $3.9&nbsp;million
at December&nbsp;28, 2003 and $3.1&nbsp;million at
January&nbsp;2, 2005. These reserves are included in accounts
receivable, notes receivable and other accrued expenses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company has guaranteed certain leases and debt payments,
primarily related to franchisees, amounting to $1.0&nbsp;million
and $1.5&nbsp;million at December&nbsp;28, 2003 and
January&nbsp;2, 2005, respectively. In the event of default by a
franchise owner, the Company generally retains the right to
acquire possession of the related restaurants. At
December&nbsp;28, 2003 and January&nbsp;2, 2005, the Company is
also the guarantor on $3.9&nbsp;million and $5.0&nbsp;million,
respectively, in letters of credit with
</DIV>

<P align="center" style="font-size: 10pt;">F-25

</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to the Consolidated Financial Statements &#151;
(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
various parties, however, management does not expect any
material loss to result from these instruments because it does
not believe performance will be required. The length of the
lease, loan and other arrangements guaranteed by the Company or
for which the Company is contingently liable varies, but
generally does not exceed nine years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company participates in the Wendy&#146;s self-insurance
programs for most U.S.&nbsp;workers&#146; compensation, general
liability and automotive liability losses subject to per
occurrence and aggregate annual liability limitations. The
Company also participates in the Wendy&#146;s self-insurance
programs for health care claims for eligible participating
employees subject to certain deductibles and limitations. The
Company is allocated cost from Wendy&#146;s to participate in
these programs on a per head count basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company has entered into purchase arrangements with some of
its suppliers for terms which generally do not exceed one year.
The range of prices and volume of purchases under the agreements
may vary according to the Company&#146;s demand for the products
and fluctuations in market rates. These agreements help the
Company secure pricing and product availability. The Company
does not believe these agreements expose the Company to
significant risk.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition to the guarantees described above, the Company is
party to many agreements executed in the ordinary course of
business that provide for indemnification of third parties,
under specified circumstances, such as lessors of real property
leased by the Company, distributors, service providers for
various types of services (including commercial banking,
investment banking, tax, actuarial and other services), software
licensors, marketing and advertising firms, securities
underwriters and others. Generally, these agreements obligate
the Company to indemnify the third parties only if certain
events occur or claims are made, as these contingent events or
claims are defined in each of these agreements. The Company
believes that the resolution of any claims that might arise in
the future, either individually or in the aggregate, would not
materially affect the earnings or financial condition of the
Company. Effective January&nbsp;1, 2003, the Company adopted
FIN&nbsp;45, &#147;Guarantor&#146;s Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others.&#148; In accordance with FIN&nbsp;45 and
based on available information, the Company has accrued for
certain guarantees and indemnities as of December&nbsp;28, 2003
and January&nbsp;2, 2005 which, in total, are not significant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company and its subsidiaries are parties to various legal
actions and complaints arising in the ordinary course of
business. The Company participates in the Wendy&#146;s
self-insurance programs and many of these actions are covered by
either Wendy&#146;s self-insurance or other insurance programs.
Reserves related to the resolution of legal proceedings are
included in accrued expenses other. It is the opinion of the
Company that the ultimate resolution of such matters will not
materially affect the Company&#146;s financial condition or
earnings.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>NOTE&nbsp;12</B></TD>
    <TD>
    <B>RETIREMENT PLANS</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Certain Company employees participate in various defined
contribution plans of Wendy&#146;s. Costs allocated for Company
employees participating in these plans were approximately
$3.0&nbsp;million for 2002, $2.0&nbsp;million for 2003 and
$4.0&nbsp;million for 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Certain U.S.&nbsp;employees of the Company participate in two
Wendy&#146;s-sponsored U.S.&nbsp;domestic defined benefit
pension plans (the &#147;Plans&#148;). Wendy&#146;s manages the
Plans on a consolidated basis and makes contributions to the
Plans in amounts sufficient, on an actuarial basis, to fund at a
minimum, its portion of the Plans&#146; normal cost on a current
basis, and to fund its portion of the actuarial liability for
past service costs in accordance with U.S.&nbsp;Department of
Treasury Regulations.
</DIV>

<P align="center" style="font-size: 10pt;">F-26

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to the Consolidated Financial Statements &#151;
(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Obligations related to vested participants will remain the
responsibility of Wendy&#146;s. The Company does not intend to
adopt a new U.S.&nbsp;defined benefit pension plan. Based on a
headcount allocation approach, the Company&#146;s pro rata
expense related to the Wendy&#146;s Plans was not significant.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>NOTE&nbsp;13</B></TD>
    <TD>
    <B>ADVERTISING COSTS</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company participates in advertising funds established to
collect and administer funds contributed for use in advertising
and promotional programs designed to increase sales and enhance
the reputation of the Company and its franchise owners. Separate
advertising funds are administered for Canada and the
U.S.&nbsp;In accordance with SFAS&nbsp;No.&nbsp;45,
&#147;Accounting for Franchisee Fee Revenue,&#148; the revenue,
expenses and cash flows of the advertising funds are not
included in the Company&#146;s consolidated statements of
operations and cash flows because the contributions to these
advertising funds are designated for specific purposes, and the
Company acts as an, in substance, agent with regard to these
contributions. The assets held by these advertising funds are
considered restricted. These restricted assets and related
restricted liabilities are identified on the Company&#146;s
balance sheets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Contributions to the advertising funds are required to be made
from both company operated and franchise restaurants and are
based on a percent of restaurant retail sales. In addition to
the contributions to the various advertising funds, Company and
franchise restaurants make additional contributions for local
and regional advertising programs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company may collect up to 4.0% of restaurant sales from
franchisees and company operated restaurants for contribution to
the advertising funds. The following table summarizes actual
contribution rates to the advertising funds for franchise and
company operated restaurants:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="74%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">Advertising Fund</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">Contribution Rate</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">as of</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">Year-End</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Canada
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3.5%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3.5%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3.5%</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">U.S.&nbsp;</FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4.0%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4.0%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4.0%</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Company contributions to its various advertising funds totalled
$4.2&nbsp;million, $4.7&nbsp;million and $3.8&nbsp;million in
2002, 2003 and 2004, respectively. The total amount spent by the
advertising funds in 2002, 2003 and 2004 amounted to
$100.4&nbsp;million, $107.7&nbsp;million and
$119.1&nbsp;million, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Total advertising expense of the Company, net of reimbursements
and including amounts contributed to all of the advertising
funds, local advertising costs and other marketing and
advertising expenses, amounted to $4.6&nbsp;million,
$5.2&nbsp;million and $5.8&nbsp;million for 2002, 2003 and 2004,
respectively.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>NOTE&nbsp;14</B></TD>
    <TD>
    <B>SEGMENT REPORTING</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company operates exclusively in the food-service industry
and has determined that its reportable segments are those that
are based on the Company&#146;s methods of internal reporting
and management structure. The Company&#146;s reportable segments
are Canada and the U.S.&nbsp;There were no material amounts of
revenues or transfers between reportable segments.
</DIV>

<P align="center" style="font-size: 10pt;">F-27

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to the Consolidated Financial Statements &#151;
(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The table below presents information about reportable segments:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Canada</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">U.S.</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Total</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">(In thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">2002</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">946,737</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">112,834</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,059,571</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">% of total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">89</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Operating income (loss)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">256,027</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,827</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">253,200</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">% of total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">101</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">% of revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">27</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Capital expenditures
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">70,515</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">41,273</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">111,788</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">828,218</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">241,121</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,069,339</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">2003</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,079,682</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">92,098</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,171,780</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">% of total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">92</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Operating income (loss)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">292,526</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(27</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">292,499</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">% of total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">% of revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">27</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Capital expenditures
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">90,478</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">41,387</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">131,865</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">973,698</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">241,425</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,215,123</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">2004</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,218,781</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">119,485</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,338,266</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">% of total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">91</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Operating income (loss)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">344,476</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(981</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">343,495</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">% of total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">% of revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">28</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Capital expenditures
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">132,498</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">65,312</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">197,810</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,043,950</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">340,331</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,384,281</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A reconciliation of reportable segment operating income to
consolidated operating income follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="67%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">(In thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Reportable segment operating income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">253,200</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">292,499</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">343,495</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Corporate
    charges<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(19,887</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(13,602</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(24,190</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Consolidated operating income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">233,313</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">278,897</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">319,305</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Corporate charges include certain overhead costs which are not
    allocated to individual segments.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A reconciliation of total reportable segment assets to
consolidated total assets follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="71%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">(In thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,215,123</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,384,281</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Corporate assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">331,900</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">372,588</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Consolidated total assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,547,023</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,756,869</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<P align="center" style="font-size: 10pt;">F-28

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to the Consolidated Financial Statements &#151;
(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Significant non-cash items included in reportable segment
operating income follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="68%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Canada</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">U.S.</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Total</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">(In thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">2002</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">38,526</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,583</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">49,109</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">2003</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">48,123</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,678</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">58,801</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">2004</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">56,225</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12,727</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">68,952</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A reconciliation of total reportable segment depreciation and
amortization expense to consolidated depreciation and
amortization expense follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="68%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">(In thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">49,109</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">58,801</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">68,952</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Corporate charges
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">56</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Consolidated depreciation and
    amortization expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">49,109</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">58,801</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">69,008</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Revenues and long-lived asset information by geographic area
follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="63%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Canada</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">U.S.</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Total</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">(In thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">2002</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">946,737</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">112,834</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,059,571</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Long-lived assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">521,979</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">212,349</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">734,328</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">2003</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,079,682</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">92,098</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,171,780</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Long-lived assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">581,044</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">208,951</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">789,995</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">2004</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,218,781</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">119,485</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,338,266</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Long-lived assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">646,533</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">263,091</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">909,624</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>NOTE&nbsp;15</B></TD>
    <TD>
    <B>RELATED PARTY</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition to the functions historically provided by
Wendy&#146;s to the Company as described in Note&nbsp;2 to the
Consolidated Financial Statements, certain Tim Hortons
restaurants are located in sites in which a Wendy&#146;s
restaurant is also located (the &#147;Combo Stores&#148;). In
Canada, approximately 100 Combo Stores are controlled by a 50-50
joint venture between the Company and Wendy&#146;s. Accordingly,
the joint venture is accounted for using the equity method, and
income from the Company&#146;s portion of income from the joint
venture is classified in equity income on the Company&#146;s
consolidated statements of operations. In 2003 and 2004 the
Company received distributions from the 50-50 joint venture with
Wendy&#146;s of $7.5&nbsp;million and $7.3&nbsp;million,
respectively. At December&nbsp;28, 2003 and January&nbsp;2,
2005, the Company&#146;s investment in this joint venture was
$47.1&nbsp;million and $50.3&nbsp;million, respectively (see
also Note&nbsp;16 to the Consolidated Financial Statements). In
the U.S.&nbsp;the Company controls the approximate 30 Combo
Stores, either through acquisition or lease, and leases the
Wendy&#146;s portion of the Combo Store to Wendy&#146;s or a
Wendy&#146;s franchisee at a rate of 8.5% of the Wendy&#146;s
restaurant sales.
</DIV>

<P align="center" style="font-size: 10pt;">F-29

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to the Consolidated Financial Statements &#151;
(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company enters into financing arrangements with Wendy&#146;s
that include both borrowings from Wendy&#146;s, in the form of
notes payable, and lending of amounts to Wendy&#146;s, in the
form of notes receivable. A summary of these notes and related
outstanding balances is shown in the following tables. The notes
contain no significant restrictions on either the Company or
Wendy&#146;s related to financial ratios, levels of
indebtedness, asset sales or dispositions, liens or other such
covenants. Also, the notes do not include a prepayment penalty.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Notes payable from the Company to Wendy&#146;s are denominated
primarily in U.S.&nbsp;dollars and at each year end consisted of
the following:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="73%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">(In thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Various notes payable due within
    30&nbsp;days on demand from Wendy&#146;s with an average
    interest rate of 7.0%
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">84,167</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">185,725</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">7.25%&nbsp;Note due
    December&nbsp;29, 2005
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">108,468</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">5.5%&nbsp;Note due October&nbsp;22,
    2011
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">196,020</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">149,303</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">6.25%&nbsp;Note due
    November&nbsp;15, 2011
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">31,787</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">388,655</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">366,815</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Current portion
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(84,167</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(185,725</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">304,488</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">181,090</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Notes receivable by the Company from Wendy&#146;s are
denominated primarily in U.S.&nbsp;dollars and at each year end
consisted of the following:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="74%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">(In thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Various notes receivable due within
    30&nbsp;days on demand from the Company with an average interest
    rate of 3.3%
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">59,210</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">173,747</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">7.25%&nbsp;Note due
    November&nbsp;30, 2013
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">128,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">128,000</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">187,210</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">301,747</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Current portion
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(59,210</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(173,747</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">128,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">128,000</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Notes payable between the Company and Wendy&#146;s may be
settled other than in cash. In 2003, Wendy&#146;s settled
approximately $210.0&nbsp;million in notes payable to the
Company in Wendy&#146;s shares (see also Note&nbsp;7 to the
Consolidated Financial Statements). Also, in 2002 approximately
$231.0&nbsp;million of notes payable by the Company to
Wendy&#146;s were settled in exchange for other amounts owed by
Wendy&#146;s to the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
See also Note&nbsp;2 to the Consolidated Financial Statements
for a description of other amounts receivable from Wendy&#146;s.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Wendy&#146;s has provided a guarantee of all of the obligations
under the Company&#146;s U.S.&nbsp;franchise agreement and
U.S.&nbsp;state franchise registrations. Wendy&#146;s has also
guaranteed payment of the Company&#146;s U.S.&nbsp;obligations
that may arise related to the Company&#146;s pool loan guarantee
of certain franchisee borrowings. As of January&nbsp;2, 2005,
the Company&#146;s total pool loan guarantee was
$0.6&nbsp;million.
</DIV>

<P align="center" style="font-size: 10pt;">F-30

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to the Consolidated Financial Statements &#151;
(Continued)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>NOTE&nbsp;16</B></TD>
    <TD>
    <B>EQUITY INVESTMENTS</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Combined summarized financial information for the Company&#146;s
investments accounted for using the equity method is shown
below. These investments almost exclusively are in operating
ventures closely integrated into the Company&#146;s operations,
such as the joint venture investments described in Notes&nbsp;9
and 16 to the Consolidated Financial Statements. These amounts
are in aggregate at 100.0% levels. The net income amounts shown
below include income tax expense (benefit) of
($1.0)&nbsp;million, $5.6&nbsp;million and $8.3&nbsp;million for
2002, 2003 and 2004, respectively. Fifty percent of these income
tax amounts are included as part of equity income shown on the
consolidated statement of operations.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="65%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">(In thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Income Statement
    Information</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">50,236</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">148,147</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">198,726</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Expenses attributable to revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(29,751</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(77,788</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(100,959</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net Income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15,393</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">52,650</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">74,194</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="75%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">(In thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Balance Sheet
    Information</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Current assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">47,220</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">74,085</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Noncurrent assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">284,448</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">290,705</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Current liabilities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">30,971</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">21,106</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Noncurrent liabilities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,310</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15,438</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Retained earnings
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">115,391</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">177,565</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>NOTE&nbsp;17</B></TD>
    <TD>
    <B>SUBSEQUENT EVENTS</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In September 2005, the Company distributed a note to
Wendy&#146;s in the amount of $960.0&nbsp;million in
U.S.&nbsp;dollars ($1.1&nbsp;billion in Canadian dollars). As a
result, retained earnings was reduced to zero and the common
stock value was reduced by $99.3&nbsp;million. The outstanding
principal of the note bears interest at an annual rate of 3.0%.
Both the outstanding principal and accrued interest are due
within 30&nbsp;days of a demand for payment by Wendy&#146;s and
may be prepaid by the Company at any time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition to its foreign currency exposure from ongoing
operations, the Company has identified exposure to Canadian
dollar exchange rates related to certain intercompany
cross-border notes. In connection with the planned IPO of the
Company, the Company determined in the third quarter 2005 that
these intercompany notes are expected to be repaid and,
accordingly, were marked-to-market beginning in the third
quarter 2005. Previously, the translation of these intercompany
notes was recorded into comprehensive income, rather than in the
statement of operations, in accordance with
SFAS&nbsp;No.&nbsp;52, &#147;Foreign Currency Translation.&#148;
To manage this additional exposure, the Company entered into
forward currency contracts to sell $500.0&nbsp;million Canadian
dollars and buy $427.4&nbsp;million U.S.&nbsp;dollars. Under
SFAS&nbsp;No.&nbsp;133, these forward currency contracts are
designated as highly effective cash flow hedges and the Company
defers unrealized gains and losses arising from these contracts
until the impact of the related transactions occur. The fair
value unrealized loss on these contracts as of October&nbsp;2,
2005 was $5.0&nbsp;million. During the third quarter of 2005,
$5.1&nbsp;million was recorded as a transaction gain related to
the mark-to-market of the intercompany notes before entering
into the forward currency contracts.
</DIV>

<P align="center" style="font-size: 10pt;">F-31

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to the Consolidated Financial Statements &#151;
(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Also, in the fourth quarter of 2005 the Company entered in
forward currency contracts to sell $578.0&nbsp;million Canadian
dollars and buy $490.5&nbsp;million U.S.&nbsp;dollars in order
to hedge certain net investment positions in Canadian
subsidiaries. Under SFAS&nbsp;No.&nbsp;133, these forward
currency contracts are designated as highly effective hedges and
changes in the fair value of these instruments will be
immediately recognized in other comprehensive income, to offset
the change in the value of the net investment being hedged.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the fourth quarter of 2005, Wendy&#146;s accelerated the
vesting of all of its remaining unvested stock options,
including all stock options held by the Company&#146;s
employees. As a result, all Wendy&#146;s stock options held by
Company employees became fully vested in October 2005. The
decision to accelerate vesting of stock options was made
primarily to reduce non-cash compensation expense that would
have been recorded in future periods following the adoption of
SFAS&nbsp;No.&nbsp;123R in the first quarter of 2006 and is also
expected to have a positive effect on employee moral and
retention.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>NOTE&nbsp;18</B></TD>
    <TD>
    <B>RECENTLY ISSUED ACCOUNTING STANDARDS</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In December 2004, the Financial Accounting Standards Board
(&#147;FASB&#148;) issued SFAS&nbsp;No.&nbsp;123R,
&#147;Share-Based Payment,&#148; which requires an entity to
measure the cost of employee services received in exchange for
an award of equity instruments based on the grant-date fair
value of the award using an option-pricing model. The cost of
the awards, including the related tax effects, will be
recognized in the consolidated statement of operations. This
statement eliminates the alternative to use the intrinsic value
method for valuing stock based compensation, which typically
resulted in recognition of no compensation cost. This statement
was to become effective for interim or annual periods beginning
after June&nbsp;15, 2005, with early adoption encouraged. On
April&nbsp;15, 2005, the Securities and Exchange Commission
issued Release No.&nbsp;33-8568, which amended the date for
compliance with SFAS&nbsp;No.&nbsp;123R to the first interim or
annual period of the first fiscal year beginning after
June&nbsp;15, 2005, with early adoption permitted. On
October&nbsp;27, 2005, Wendy&#146;s announced that its
Compensation Committee, after discussion with its Board of
Directors, approved accelerated vesting of all outstanding stock
options, except those held by the independent Directors of
Wendy&#146;s. The decision to accelerate vesting of stock
options was made primarily to reduce non-cash compensation
expense that would have been recorded in future periods
following adoption of SFAS&nbsp;No.&nbsp;123R and is expected to
have a positive effect on employee morale and retention. The
Wendy&#146;s Compensation Committee imposed a holding period
that will require all executive officers to refrain from selling
net shares acquired upon any exercise of these accelerated
options, until the date on which the exercise would have been
permitted under the option&#146;s original vesting terms or, if
earlier, the executive officer&#146;s death, disability or
termination of employment. Under SFAS&nbsp;No.&nbsp;123R, the
classification of cash flows between operating and financing
activities will be affected due to a change in treatment for tax
benefits realized. As a result of the acceleration of vesting on
the majority of Wendy&#146;s outstanding stock options, the
Company does not expect the adoption of SFAS&nbsp;No.&nbsp;123R
to have a significant impact on its financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
SFAS&nbsp;No.&nbsp;123R requires recognition of compensation
cost under a non-substantive vesting period approach, which
requires recognition of compensation expense when an employee is
eligible to retire. The Company has historically recognized this
cost under the nominal vesting approach, generally over the
normal vesting period of the award. When the Company adopts
SFAS&nbsp;No.&nbsp;123R in the first quarter of 2006, it will
change to the non-substantive approach. See Note&nbsp;1 to the
Consolidated Financial Statements for a discussion of the impact
of this change when the Company adopts SFAS&nbsp;No.&nbsp;123R.
</DIV>

<P align="center" style="font-size: 10pt;">F-32

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to the Consolidated Financial Statements &#151;
(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In June 2005, the Emerging Issues Task Force (&#147;EITF&#148;)
reached a consensus on Issue No.&nbsp;05-06, &#147;Determining
the Amortization Period for Leasehold Improvements.&#148; The
consensus requires that the amortization period for leasehold
improvements acquired in a business combination or acquired
subsequent to lease inception should be based on the lesser of
the useful life of the leasehold improvements or the period of
the lease including all renewal periods that are reasonably
assured of exercise at the time of the acquisition. The
consensus is to be applied prospectively to leasehold
improvements acquired subsequent to June&nbsp;29, 2005. This
consensus is consistent with the accounting policy followed by
the Company and thus had no impact upon adoption.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In October 2005, the FASB issued FSP FAS&nbsp;123(R)-2,
&#147;Practical Accommodation to the Application of Grant Date
as Defined in FASB Statement No.&nbsp;123(R),&#148; which
provides clarification of the concept of mutual understanding
between employer and employee with respect to the grant date of
a share-based payment award. This FSP provides that a mutual
understanding of the key terms and conditions of an award shall
be presumed to exist at the date the award is approved by
management if the recipient does not have the ability to
negotiate the key terms and conditions of the award and those
key terms and conditions will be communicated to the individual
recipient within a relatively short time period from the date of
approval. This guidance shall be applied upon initial adoption
of SFAS&nbsp;No.&nbsp;123R. The Company does not expect adoption
to have a significant impact on its financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In October 2005, the FASB issued FSP FAS&nbsp;13-1,
&#147;Accounting for Rental Costs Incurred during a Construction
Period,&#148; which addresses the accounting for rental costs
associated with operating leases that are incurred during a
construction period. This FSP requires that rental costs
associated with ground or building operating leases that are
incurred during a construction period be recognized as rental
expense and included in income from continuing operations. The
guidance in this FSP shall be applied to the first reporting
period beginning after December&nbsp;15, 2005, with early
adoption permitted. The Company is currently in the process of
evaluating the impact of adopting FSP FAS&nbsp;13-1, but does
not expect it to have a significant impact on its financial
statements.
</DIV>

<P align="center" style="font-size: 10pt;">F-33

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='311'></A>
</DIV>

<!-- link1 "Condensed Consolidated Statements of Operations" -->

<DIV align="center" style="font-size: 10pt;">
<B>Condensed Consolidated Statements of Operations</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="54%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Nine Months Ended</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Nine Months Ended</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">September&nbsp;26,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">October&nbsp;2,</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands,</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">except share data)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Revenues</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Sales
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">602,978</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">703,484</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Franchise revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">350,081</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">374,684</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total revenues</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">953,059</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,078,168</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Costs and expenses</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cost of sales
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">527,818</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">613,245</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Operating expenses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">154,501</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">162,685</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">General and administrative expenses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">61,893</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">73,728</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Equity income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(23,089</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(23,281</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(302</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(7,530</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total costs and expenses,
    net</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">720,821</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">818,847</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Operating income</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">232,238</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">259,321</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Interest expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(5,015</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(3,283</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Interest income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,650</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,300</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Affiliated interest expense, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(7,536</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(4,910</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Income before income
    taxes</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">221,337</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">253,428</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Income taxes</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">70,505</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">78,767</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Net income</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">150,832</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">174,661</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Basic earnings per common
    share</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">215</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">250</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Basic shares</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">700</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">700</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="center" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
See accompanying Notes to the Condensed Consolidated Financial
Statements.
</DIV>

<P align="center" style="font-size: 10pt;">F-34

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='312'></A>
</DIV>

<!-- link1 "Condensed Consolidated Balance Sheets" -->

<DIV align="center" style="font-size: 10pt;">
<B>Condensed Consolidated Balance Sheets</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="59%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">January&nbsp;2,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">October&nbsp;2,</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="12" align="center" valign="top">
    <B><FONT face="helvetica,arial">ASSETS</FONT></B></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Current assets</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">129,301</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">119,248</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accounts receivable, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">80,889</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">85,397</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Notes receivable, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,627</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,912</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deferred income taxes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,269</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,137</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Inventories and other
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">35,150</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">34,673</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Amounts receivable from Wendy&#146;s
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">52,192</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">34,069</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Notes receivable from Wendy&#146;s
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">173,747</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">189,111</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Advertising fund restricted assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">21,333</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">19,274</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total current assets</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">504,508</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">492,821</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Property and equipment,
    net</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">909,624</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,009,197</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Notes receivable, net</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11,959</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15,491</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Goodwill</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">30,527</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">29,877</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Deferred income taxes</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,151</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,013</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Intangible assets, net</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,777</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,960</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Equity investments</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">146,415</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">142,291</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Note receivable from
    Wendy&#146;s</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">128,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Other assets</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,908</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12,646</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total assets</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,756,869</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,716,296</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="12">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="12" align="center" valign="top">
    <B><FONT face="helvetica,arial">LIABILITIES AND
    SHAREHOLDER&#146;S EQUITY</FONT></B></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Current liabilities</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accounts payable
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">94,702</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">78,920</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accrued expenses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Salaries and wages
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,102</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,865</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Taxes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">72,214</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">62,787</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">55,624</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">39,058</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deferred income taxes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">529</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">538</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Advertising fund restricted
    liabilities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">21,333</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">30,979</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Notes payable to Wendy&#146;s
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">185,725</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,186,293</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Current portion of long-term
    obligations
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,757</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,334</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total current
    liabilities</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">438,986</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,414,774</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Long-term obligations</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Term debt
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">18,062</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">19,890</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Notes payable to Wendy&#146;s
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">181,090</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100,283</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Advertising fund restricted debt
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">19,216</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Capital leases
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">47,689</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">48,635</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total long-term
    obligations</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">246,841</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">188,024</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Deferred income taxes</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23,325</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22,155</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Other long-term
    liabilities</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26,028</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">31,199</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Commitments and
    contingencies</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Shareholder&#146;s
    equity</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Common stock, no stated value per
    share, Authorized: 1,000&nbsp;shares, Issued: 700&nbsp;shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">233,707</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">134,363</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Retained earnings
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">833,626</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accumulated other comprehensive
    income (expense):
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cumulative translation adjustments
    and other
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(45,644</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(67,716</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4"><FONT style="font-size: 9pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,021,689</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">66,647</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Unearned compensation&nbsp;&#151;
    restricted stock
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(6,503</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total shareholder&#146;s
    equity</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,021,689</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">60,144</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total liabilities and
    shareholder&#146;s equity</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,756,869</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,716,296</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="center" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
See accompanying Notes to the Condensed Consolidated Financial
Statements.
</DIV>

<P align="center" style="font-size: 10pt;">F-35

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='313'></A>
</DIV>

<!-- link1 "Condensed Consolidated Statements of Cash Flows" -->

<DIV align="center" style="font-size: 10pt;">
<B>Condensed Consolidated Statements of Cash Flows</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Nine Months Ended</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Nine Months Ended</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">September&nbsp;26,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">October&nbsp;2,</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">(In&nbsp;thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Net cash provided from operating
    activities</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">277,515</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">168,195</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Cash flows from investing
    activities</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Capital expenditures
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(126,343</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(131,866</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Acquisition of New England
    restaurants
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(60,874</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Proceeds from sale
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,884</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Principal payments on notes
    receivable
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,195</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,482</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Investments in joint ventures and
    other investments
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">991</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,732</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Short-term investments
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">31,924</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Short-term loans to Wendy&#146;s,
    net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(103,946</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(21,910</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other investing activities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(4,333</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(6,011</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net cash used in investing
    activities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(255,386</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(151,689</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Cash flows from financing
    activities</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Proceeds from issuance of debt
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,141</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,166</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Long-term borrowings from
    Wendy&#146;s
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">54,377</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Repayment of long-term borrowings
    from Wendy&#146;s
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(34,832</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(25,565</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Principal payments on long-term
    obligations
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(3,114</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,765</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net cash provided by (used in)
    financing activities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">18,572</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(26,164</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Effect of exchange rate changes on
    cash
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,109</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(395</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Increase (decrease) in cash and
    cash equivalents</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">39,592</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(10,053</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Cash and cash equivalents at
    beginning of period</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">86,151</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">129,301</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Cash and cash equivalents at end
    of period</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">125,743</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">119,248</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Supplemental disclosures of cash
    flow information:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Interest paid
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,097</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12,876</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income taxes paid
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">66,684</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">84,161</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Non-cash investing and financing
    activities:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Capital lease obligations incurred
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,355</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,327</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">See also Note&nbsp;11
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="center" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
See accompanying Notes to the Condensed Consolidated Financial
Statements.
</DIV>

<P align="center" style="font-size: 10pt;">F-36

</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='316'></A>
</DIV>

<!-- link1 "Notes to the Condensed Consolidated Financial Statements" -->

<DIV align="center" style="font-size: 10pt;">
<B>Notes to the Condensed Consolidated Financial Statements</B>
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>NOTE&nbsp;1</B></TD>
    <TD>
    <B>MANAGEMENT&#146;S STATEMENT</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the opinion of management, the accompanying Condensed
Consolidated Financial Statements contain all adjustments (all
of which are normal and recurring in nature) necessary to state
fairly the financial position of Tim Hortons Inc. and
subsidiaries (the &#147;Company&#148;) as of January&nbsp;2,
2005 and October&nbsp;2, 2005, and the results of operations,
cash flows and comprehensive income (see Note&nbsp;5) for the
nine month periods ended September&nbsp;26, 2004 and
October&nbsp;2, 2005. All of these financial statements are
unaudited. The Notes to the audited Consolidated Financial
Statements, which are included elsewhere in this prospectus,
should be read in conjunction with these Condensed Consolidated
Financial Statements. The Company is a wholly-owned subsidiary
of Wendy&#146;s International, Inc. (together with its other
subsidiaries &#147;Wendy&#146;s&#148;).
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>NOTE&nbsp;2</B></TD>
    <TD>
    <B>EXPENSE ALLOCATIONS</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The condensed consolidated statements of operations include
expense allocations for certain functions historically provided
by Wendy&#146;s. These allocations include costs related to
corporate functions such as executive oversight, risk
management, information technology, accounting, legal, investor
relations, human resources, tax, other services and employee
benefits and incentives. The allocations are primarily based on
specific identification and the relative percentage of the
Company&#146;s revenues and headcount to the respective total
Wendy&#146;s costs. Substantially all of these allocations are
reflected in general and administrative expenses in the
Company&#146;s condensed consolidated statements of operations
and totalled $8.8&nbsp;million and $13.8&nbsp;million on a
pre-tax basis for the nine month periods ended
September&nbsp;26, 2004 and October&nbsp;2, 2005, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company and Wendy&#146;s considered these general corporate
expense allocations to be a reasonable reflection of the
utilization of services provided. The allocations may not,
however, reflect the expense the Company would have incurred as
a stand-alone company.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>NOTE&nbsp;3</B></TD>
    <TD>
    <B>NET INCOME PER SHARE</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Basic earnings per common share are computed by dividing net
income available to common shareholders by the weighted average
number of common shares outstanding. No potentially dilutive
options or shares have been issued.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>NOTE&nbsp;4</B></TD>
    <TD>
    <B>STOCK OPTIONS AND RESTRICTED STOCK</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Certain employees of the Company participate in various stock
option plans of Wendy&#146;s to acquire common shares of
Wendy&#146;s. Wendy&#146;s uses the intrinsic value method to
account for stock-based compensation grants as defined in
Accounting Principles Board (&#147;APB&#148;) Opinion
No.&nbsp;25, &#147;Accounting for Stock Issued to
Employees.&#148; The Company uses APB Opinion No.&nbsp;25 to
account for stock compensation expense as allowed for a
subsidiary under FIN&nbsp;44. Beginning in 2005, certain Company
employees began receiving Wendy&#146;s restricted stock units,
in lieu of stock options. The Company recorded $1.8&nbsp;million
in compensation expense, pre-tax, for restricted stock units
representing the amount allocated to the Company from
Wendy&#146;s based on a specific employee basis for the nine
month period ended October&nbsp;2, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The pro&nbsp;forma disclosures below are provided as if the
Company had adopted the cost recognition requirements under
Statement of Financial Accounting Standards (&#147;SFAS&#148;)
No.&nbsp;123&#151; &#147;Accounting for Stock-Based
Compensation,&#148; as amended by SFAS&nbsp;No.&nbsp;148. Under
SFAS&nbsp;No.&nbsp;123, the fair value of each stock option
granted is estimated on the date of grant using the Black-Scholes
</DIV>

<P align="center" style="font-size: 10pt;">F-37

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to the Condensed Consolidated Financial Statements
&#151; (Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
option-pricing model. This model requires the use of subjective
assumptions that can materially affect fair value estimates, and
therefore, this model does not necessarily provide a reliable
single measure of the fair value of Wendy&#146;s stock options.
Had compensation expense been recognized for stock-based
compensation plans in accordance with provisions of
SFAS&nbsp;No.&nbsp;123, the Company would have recorded net
income and earnings per share as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="65%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Nine Months Ended</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">September&nbsp;26,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">October&nbsp;2,</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">(In thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net income, as reported
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">150,832</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">174,661</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Add: Stock compensation cost
    recorded under APB Opinion No.&nbsp;25, net of tax
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,138</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deduct: Stock compensation cost
    calculated under SFAS&nbsp;123, net&nbsp;of&nbsp;tax
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(5,026</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(5,804</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Pro forma net income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">145,806</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">169,995</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Earnings per share:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Basic as reported
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">215</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">250</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Basic pro forma
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">208</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">243</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The above stock compensation cost calculated under
SFAS&nbsp;No.&nbsp;123, net of tax is generally based on costs
over the vesting period of the award. SFAS&nbsp;No.&nbsp;123R
requires compensation cost for stock-based compensation awards
to be recognized immediately for new awards granted to
retirement eligible employees and over the period from the grant
date to the date retirement eligibility is achieved, if that
period is shorter than the normal vesting period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If the guidance on recognition of stock compensation expense for
retirement eligible employees was applied to the periods
reflected in the financial statements, the impact on the
Company&#146;s reported net income would have been a reduction
of $1.7&nbsp;million for the nine month period ended
October&nbsp;2, 2005. There would have been no impact to the
reported net income for the nine month period ended
September&nbsp;26, 2004. The impact on the Company&#146;s
pro-forma net income would have been a reduction of
$1.0&nbsp;million, and an increase of $0.6&nbsp;million for the
nine month periods ended September&nbsp;26, 2004 and
October&nbsp;2, 2005, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The impact of applying SFAS&nbsp;No.&nbsp;123 and
SFAS&nbsp;No.&nbsp;123R in this pro-forma disclosure is not
necessarily indicative of future results.
</DIV>

<P align="center" style="font-size: 10pt;">F-38

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to the Condensed Consolidated Financial Statements
&#151; (Continued)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>NOTE&nbsp;5</B></TD>
    <TD>
    <B>CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The components of other comprehensive income (expense)&nbsp;and
total comprehensive income are show below:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="65%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Year-to-Date Ended</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">September&nbsp;26,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">October&nbsp;2,</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">(In thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">150,832</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">174,661</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other comprehensive income:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Translation adjustments and other,
    net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(9,447</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(22,072</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Comprehensive income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">141,385</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">152,589</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Other comprehensive expense is primarily comprised of
translation adjustments related to fluctuations in the Canadian
dollar. There was a strengthening in the Canadian dollar during
the nine month periods ending September&nbsp;26, 2004 and
October&nbsp;2, 2005. At the end of the third quarter 2005, the
Canadian exchange rate was $1.16 versus $1.20 at January&nbsp;2,
2005. At the end of the third quarter 2004, the Canadian
exchange rate was $1.28 versus $1.31 at December&nbsp;28, 2003.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>NOTE&nbsp;6</B></TD>
    <TD>
    <B>SEGMENT REPORTING</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company operates exclusively in the food-service industry
and has determined that its reportable segments are those that
are based on the Company&#146;s methods of internal reporting
and management structure. The Company&#146;s reportable segments
are Canada and the U.S.&nbsp;There were no material amounts of
revenues or transfers between reportable segments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The table below presents information about reportable segments:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Canada</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">U.S.</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Total</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">(In thousands, except where noted)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Nine Months Ended
    September&nbsp;26, 2004
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">869,955</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">83,104</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">953,059</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">% of total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">91</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Operating income (loss)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">248,478</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">415.0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">248,893</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">% of total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">% of revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">29</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Capital expenditures
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">77,048</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">49,295</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">126,343</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Nine Months Ended October&nbsp;2,
    2005
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">978,026</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100,142</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,078,168</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">% of total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">91</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Operating income (loss)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">279,300</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,110</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">277,190</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">% of total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">101</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">% of revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">29</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Capital expenditures
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">92,309</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">39,557</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">131,866</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<P align="center" style="font-size: 10pt;">F-39

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to the Condensed Consolidated Financial Statements
&#151; (Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A reconciliation of reportable segment operating income to
consolidated operating income follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="62%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Nine Months Ended</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">September&nbsp;26,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">October&nbsp;2,</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">(In thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Reportable segment operating income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">248,893</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">277,190</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Corporate
    charges<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(16,655</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(17,869</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Consolidated operating income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">232,238</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">259,321</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Corporate charges include certain overhead costs which are not
    allocated to individual segments.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>NOTE&nbsp;7</B></TD>
    <TD>
    <B>GOODWILL AND OTHER INTANGIBLE ASSETS</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The table below presents amortizable and unamortizable
intangible assets as of January&nbsp;2, 2005 and October&nbsp;2,
2005:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Gross</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Net</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Carrying</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Accumulated</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Carrying</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Amount</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Amortization</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Amount</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">(In thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">January&nbsp;2, 2005</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Amortizable intangible assets:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Trademarks
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,455</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,696</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,759</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,784</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,766</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,018</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,239</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(3,462</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,777</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Unamortizable intangible assets:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">30,527</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">October&nbsp;2, 2005</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Amortizable intangible assets:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Trademarks
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,455</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,099</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,356</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,784</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,180</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">604</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,239</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(4,279</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,960</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Unamortizable intangible assets:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">29,877</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Included in Other above are $1.0&nbsp;million and
$0.6&nbsp;million in intangible assets, net of accumulated
amortization of $1.7&nbsp;million and $2.2&nbsp;million at
January&nbsp;2, 2005 and October&nbsp;2, 2005, respectively,
related to the use of the name and likeness of Ronald V. Joyce,
a former director of the Company. The name and likeness are
being amortized over a period of 5&nbsp;years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Total intangibles amortization expense was $0.8&nbsp;million for
the year-to-date periods ended September&nbsp;26, 2004 and
October&nbsp;2, 2005. The estimated annual intangibles
amortization expense
</DIV>

<P align="center" style="font-size: 10pt;">F-40

</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to the Condensed Consolidated Financial Statements
&#151; (Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
for 2006 is approximately $1.0&nbsp;million and for the years
2007 through 2010 is approximately $0.5&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
All of the Company&#146;s goodwill is assigned to the
U.S.&nbsp;segment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In accordance with SFAS&nbsp;No.&nbsp;142, the Company tests
goodwill for impairment in the fourth quarter of each year (or
in interim periods if events indicate possible impairment). The
calculation used to test for impairment depends upon a number of
estimates and assumptions, including future business results and
interest rates.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>NOTE&nbsp;8</B></TD>
    <TD>
    <B>COMMITMENTS AND CONTINGENCIES</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company has guaranteed certain lease and debt payments
primarily for franchisees, amounting to $1.0&nbsp;million. In
the event of default by a franchise owner, the Company generally
retains the right to acquire possession of the related
restaurants. The Company is also the guarantor on
$5.3&nbsp;million in letters of credit with various parties;
however, management does not expect any material loss to result
from these instruments because it does not believe performance
will be required. The length of the lease, loan and other
arrangements guaranteed by the Company or for which the Company
is contingently liable varies, but generally does not exceed
nine years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table summarizes guarantees of the Company <I>(in
thousands):</I>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="71%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Balance as of</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">October&nbsp;2, 2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Franchisee and other lease and loan
    guarantees:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Canada
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">371</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">U.S.
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">636</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,007</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Letters of credit:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Canada
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,129</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">U.S.
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">214</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,343</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total guarantees and
    indemnifications
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,350</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition to the above guarantees, the Company is party to
many agreements executed in the ordinary course of business that
provide for indemnification of third parties, under specified
circumstances, such as lessors of real property leased by the
Company, distributors, service providers for various types of
services (including commercial banking, investment banking, tax,
actuarial and other services), software licensors, marketing and
advertising firms, securities underwriters and others.
Generally, these agreements obligate the Company to indemnify
the third parties only if certain events occur or claims are
made, as these contingent events or claims are defined in each
of these agreements. The Company believes that the resolution of
any claims that might arise in the future, either individually
or in the aggregate, would not materially affect the earnings or
financial condition of the Company. The liability recorded
related to the above indemnity agreements is not material.
</DIV>

<P align="center" style="font-size: 10pt;">F-41

</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to the Condensed Consolidated Financial Statements
&#151; (Continued)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>NOTE&nbsp;9</B></TD>
    <TD>
    <B>RETIREMENT PLANS</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Certain U.S.&nbsp;employees of the Company participate in two
Wendy&#146;s-sponsored U.S.&nbsp;domestic defined benefit
pension plans (the &#147;Plans&#148;). Wendy&#146;s manages the
Plans on a consolidated basis and makes contributions to the
Plans in amounts sufficient, on an actuarial basis, to fund at a
minimum, its portion of the Plans&#146; normal cost on a current
basis, and to fund its portion of the actuarial liability for
past service costs in accordance with Department of Treasury
Regulations. Obligations related to vested participants will
remain the responsibility of Wendy&#146;s. The Company does not
intend to adopt a new U.S.&nbsp;pension plan. Based on a
headcount allocation approach, the Company&#146;s pro rata
expense related to the Wendy&#146;s Plans was not significant.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>NOTE&nbsp;10</B></TD>
    <TD>
    <B>ADVERTISING FUND</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company participates in various advertising funds
established to collect and administer funds contributed for use
in advertising and promotional programs designed to increase
sales and enhance the reputation of the Company and its
franchise owners. Separate advertising funds are administered
for Canada and the U.S.&nbsp;In accordance with
SFAS&nbsp;No.&nbsp;45, &#147;Accounting for Franchisee Fee
Revenue&#148;, the revenue, expenses and cash flows of the
advertising funds are not included in the Company&#146;s
condensed consolidated statements of operations or cash flows
because the contributions to these advertising funds are
designated for specific purposes, and the Company acts as an, in
substance, agent with regard to these contributions. The assets
held by these advertising funds are considered restricted. The
current restricted assets, current restricted liabilities and
advertising fund debt are identified on the Company&#146;s
balance sheets. The current portion of advertising fund debt is
included in restricted liabilities. In addition, at
October&nbsp;2, 2005, property and equipment, net includes
$30.9&nbsp;million of advertising fund assets.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>NOTE&nbsp;11</B></TD>
    <TD>
    <B>RELATED PARTY</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In September 2005, the Company distributed a note to
Wendy&#146;s in the amount of $960.0&nbsp;million in
U.S.&nbsp;dollars ($1.1&nbsp;billion in Canadian dollars). As a
result, retained earnings was reduced to zero and the common
stock value was reduced by $99.3&nbsp;million. The outstanding
principal of the note bears interest at an annual rate of 3.0%.
Both the outstanding principal and accrued interest are due
within 30&nbsp;days of a demand for payment by Wendy&#146;s and
may be prepaid by the Company at any time. It is expected that
this note will be repaid by the Company to Wendy&#146;s. In 2005
the Company settled a $128.0&nbsp;million note receivable from
Wendy&#146;s net of a $108.5&nbsp;million note payable to
Wendy&#146;s and other amounts with Wendy&#146;s.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>NOTE&nbsp;12</B></TD>
    <TD>
    <B>FOREIGN CURRENCY DERIVATIVES</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition to its foreign currency exposure from ongoing
operations, the Company has identified exposure to Canadian
dollar exchange rates related to certain intercompany
cross-border notes that were marked-to-market beginning in the
third quarter of 2005. In connection with the planned initial
public offering of the Company, the Company determined in the
third quarter 2005 that these intercompany notes are expected to
be repaid and, accordingly, were marked-to-market in the third
quarter 2005. Previously, the translation of these intercompany
notes was recorded into comprehensive income, rather than in the
statement of operations, in accordance with FAS&nbsp;52,
&#147;Foreign Currency Translation.&#148; To manage this
additional exposure, the Company entered into forward currency
contracts to sell $500.0&nbsp;million Canadian dollars and buy
$427.4&nbsp;million U.S.&nbsp;dollars. Under
SFAS&nbsp;No.&nbsp;133, these forward currency contracts are
designated as highly
</DIV>

<P align="center" style="font-size: 10pt;">F-42

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to the Condensed Consolidated Financial Statements
&#151; (Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
effective cash flow hedges. In accordance with
SFAS&nbsp;No.&nbsp;133, the Company defers unrealized gains and
losses arising from these contracts until the impact of the
related transactions occur. The fair value unrealized loss on
these contracts as of October&nbsp;2, 2005 was
$5.0&nbsp;million. During the third quarter of 2005,
$5.1&nbsp;million was recorded as a transaction gain related to
the intercompany notes prior to entering into the forward
currency contracts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Also, in the fourth quarter 2005 the Company entered into
forward currency contracts to sell $578.0&nbsp;million Canadian
dollars and buy $490.5&nbsp;million U.S.&nbsp;dollars in order
to hedge certain net investment positions in Canadian
subsidiaries. Under SFAS&nbsp;No.&nbsp;133, these forward
currency contracts are designated as highly effective hedges and
changes in the fair value of these instruments will be
immediately recognized in other comprehensive income, to offset
the change in the value of the net investment being hedged.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>NOTE&nbsp;13</B></TD>
    <TD>
    <B>RECENTLY ISSUED ACCOUNTING STANDARDS</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In December 2004, the Financial Accounting Standards Board
(&#147;FASB&#148;) issued SFAS&nbsp;No.&nbsp;123R,
&#147;Share-Based Payment,&#148; which requires an entity to
measure the cost of employee services received in exchange for
an award of equity instruments based on the grant-date fair
value of the award using an option-pricing model. The cost of
the awards, including the related tax effects, will be
recognized in the consolidated statement of operations. This
statement eliminates the alternative to use the intrinsic value
method for valuing stock based compensation, which typically
resulted in recognition of no compensation cost. This statement
was to become effective for interim or annual periods beginning
after June&nbsp;15, 2005, with early adoption encouraged. On
April&nbsp;15, 2005, the Securities and Exchange Commission
issued Release No.&nbsp;33-8568, which amended the date for
compliance with SFAS&nbsp;No.&nbsp;123R to the first interim or
annual period of the first fiscal year beginning after
June&nbsp;15, 2005, with early adoption permitted. On
October&nbsp;27, 2005, Wendy&#146;s announced its Compensation
Committee, after discussion with its Board of Directors,
approved accelerated vesting of all outstanding stock options,
except those held by the independent Directors of Wendy&#146;s.
The decision to accelerate vesting of stock options was made
primarily to reduce non-cash compensation expense that would
have been recorded in future periods following adoption of
SFAS&nbsp;No.&nbsp;123R and is expected to have a positive
effect on employee morale and retention. The Wendy&#146;s
Compensation Committee imposed a holding period that will
require all executive officers to refrain from selling net
shares acquired upon any exercise of these accelerated options,
until the date on which the exercise would have been permitted
under the option&#146;s original vesting terms or, if earlier,
the executive officer&#146;s death, disability or termination of
employment. Under SFAS&nbsp;No.&nbsp;123R, the classification of
cash flows between operating and financing activities will be
affected due to a change in treatment for tax benefits realized.
As a result of the acceleration of vesting on the majority of
Wendy&#146;s outstanding stock options, the Company does not
expect the adoption of SFAS&nbsp;No.&nbsp;123R to have a
significant impact on its financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
SFAS&nbsp;No.&nbsp;123R requires recognition of compensation
cost under a non-substantive vesting period approach, which
requires recognition of compensation expense when an employee is
eligible to retire. The Company has historically recognized this
cost under the nominal vesting approach, generally over the
normal vesting period of the award. When the Company adopts
SFAS&nbsp;No.&nbsp;123R in the first quarter of 2006, it will
change to the non-substantive approach. See Note&nbsp;4, Stock
Options and Restricted Stock, for a discussion of the impact of
this change when the Company adopts SFAS&nbsp;No.&nbsp;123R.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In June 2005, the EITF reached a consensus on Issue
No.&nbsp;05-06, &#147;Determining the Amortization Period for
Leasehold Improvements.&#148; The consensus requires that the
amortization
</DIV>

<P align="center" style="font-size: 10pt;">F-43

</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt;">
<B>TIM HORTONS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to the Condensed Consolidated Financial Statements
&#151; (Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
period for leasehold improvements acquired in a business
combination or acquired subsequent to lease inception should be
based on the lesser of the useful life of the leasehold
improvements or the period of the lease including all renewal
periods that are reasonably assured of exercise at the time of
the acquisition. The consensus is to be applied prospectively to
leasehold improvements acquired subsequent to June&nbsp;29,
2005. This consensus is consistent with the accounting policy
followed by the Company and thus had no impact upon adoption.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In October 2005, the FASB issued FSP FAS&nbsp;123(R)-2,
&#147;Practical Accommodation to the Application of Grant Date
as Defined in FASB Statement No.&nbsp;123(R),&#148; which
provides clarification of the concept of mutual understanding
between employer and employee with respect to the grant date of
a share-based payment award. This FSP provides that a mutual
understanding of the key terms and conditions of an award shall
be presumed to exist at the date the award is approved by
management if the recipient does not have the ability to
negotiate the key terms and conditions of the award and those
key terms and conditions will be communicated to the individual
recipient within a relatively short time period from the date of
approval. This guidance shall be applied upon initial adoption
of SFAS&nbsp;No.&nbsp;123R. The Company does not expect adoption
to have a significant impact on its financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In October 2005, the FASB issued FSP FAS&nbsp;13-1,
&#147;Accounting for Rental Costs Incurred during a Construction
Period,&#148; which addresses the accounting for rental costs
associated with operating leases that are incurred during a
construction period. This FSP requires rental costs associated
with ground or building operating leases that are incurred
during a construction period be recognized as rental expense and
included in income from continuing operations. The guidance in
this FSP shall be applied to the first reporting period
beginning after December&nbsp;15, 2005, with early adoption
permitted. The Company is currently in the process of evaluating
the impact of adopting FSP FAS&nbsp;13-1, however, we do not
expect it to have a significant impact on the Company&#146;s
financial statements.
</DIV>

<P align="center" style="font-size: 10pt;">F-44

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

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<DIV align="left" style="font-size: 10pt;">
<A name='309'></A>
</DIV>

<!-- link1 "SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>SCHEDULE&nbsp;II&nbsp;&#151; VALUATION AND QUALIFYING
ACCOUNTS</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="38%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Charged</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Balance&nbsp;at</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Credited)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Balance&nbsp;at</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Beginning</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">to&nbsp;Costs&nbsp;&#38;</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Additions</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">End of</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Classification</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">of Year</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Expenses</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Deductions)(1)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Year</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Fiscal year ended December&nbsp;29,
    2002:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deferred tax asset valuation
    allowance
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">19,517</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13,475</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(242</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">32,750</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Allowance for doubtful accounts
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,902</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,586</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(374</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,942</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">27,419</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11,889</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(616</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">38,692</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Fiscal year ended December&nbsp;28,
    2003:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deferred tax asset valuation
    allowance
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">32,750</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,341</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(5,397</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26,012</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Allowance for doubtful accounts
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,942</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">116</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,193</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,865</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">38,692</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,225</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(7,590</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">29,877</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Fiscal year ended January&nbsp;2,
    2005:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deferred tax asset valuation
    allowance
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26,012</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,223</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,931</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">33,304</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Allowance for doubtful accounts
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,865</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(191</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(526</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,148</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">29,877</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,032</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(3,457</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">36,452</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Primarily represents reserves written off or reversed due to the
    resolution of certain franchise situations and translation
    adjustments.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Year-end balances are reflected in the Consolidated Balance
Sheet as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="51%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">December&nbsp;29,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">December&nbsp;28,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">January&nbsp;2,</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deducted from accounts and notes
    receivable, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,942</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,865</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,148</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deducted from deferred income
    taxes&nbsp;&#151; long-term
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">32,750</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26,012</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">33,304</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">38,692</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">29,877</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">36,452</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<P align="center" style="font-size: 10pt;">F-45

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 2pt;">
<DIV style="width: 100%; border-top: 2.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No dealer, salesperson or
other person is authorized to give any information or to
represent anything not contained in this prospectus. You must
not rely on any unauthorized information or representations.
This prospectus is an offer to sell only the shares offered
hereby, but only under circumstances and in jurisdictions where
it is lawful to do so. The information contained in this
prospectus is current only as of its date.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 27%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
TABLE OF CONTENTS
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 3pt; ">

<TR style="font-size: 1pt;">
    <TD width="87%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><FONT face="helvetica,arial">Page</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#101'>Prospectus
    Summary</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">1
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#109'>Risk
    Factors</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">10
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#113'>Special
    Note&nbsp;Regarding Forward Looking Statements</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">28
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#114'>Use of
    Proceeds</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">29
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#115'>Dividend
    Policy</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">29
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#116'>Capitalization</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">30
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#117'>Dilution</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">31
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#118'>Selected
    Historical Consolidated Financial and Other Data</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">32
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#119'>Unaudited Pro
    Forma Consolidated Financial Information</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">35
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#123'>Management&#146;s
    Discussion And Analysis of Financial Condition And Results of
    Operations</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">41
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#124'>Business</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">68
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#125'>Management</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">84
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#126'>Principal
    Shareholder</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">98
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#127'>Our
    Relationship With Wendy&#146;s</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">99
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#137'>Certain
    Relationships and Related Transactions</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">101
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#129'>Description Of
    Capital Stock</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">102
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#130'>Shares
    Eligible For Future Sale</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">106
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#131'>Certain
    U.S.&nbsp;Federal Tax Considerations for Non U.S. Holders</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">108
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#132'>Underwriting</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">111
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#133'>Legal
    Matters</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">116
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#134'>Experts</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">116
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#135'>Where You Can
    Find Additional Information</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">116
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#136'>Index To
    Consolidated Financial Statements</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    <FONT face="helvetica,arial">F-1
    </FONT></TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="center" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 27%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Through and
including &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2006 (the 25th&nbsp;day after the date of this prospectus), all
dealers effecting transactions in these securities, whether or
not participating in this offering, may be required to deliver a
prospectus. This is in addition to a dealer&#146;s obligation to
deliver a prospectus when acting as an underwriter and with
respect to an unsold allotment or subscription.
</DIV>

<DIV align="center" style="font-size: 3pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 4pt;">
<DIV style="width: 100%; border-top: 2.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 2pt;">
<DIV style="width: 100%; border-top: 2.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 14pt; margin-top: 42pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common
Shares
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 36pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Tim Hortons Inc.</B>
</DIV>

<DIV align="center" style="font-size: 14pt; margin-top: 36pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Common Shares
</DIV>

<DIV align="center" style="font-size: 8pt; margin-top: 113pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 27%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 32pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<IMG src="y15067y1506700.gif" alt="(TIM HORTONS LOGO)">
</DIV>

<DIV align="center" style="font-size: 32pt;">
<DIV style="width: 27%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 16pt; margin-top: 125pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Goldman, Sachs &#38; Co.</B>
</DIV>

<DIV align="center" style="font-size: 16pt;">
<B>RBC Capital Markets</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Representatives of the Underwriters
</DIV>

<DIV align="center" style="font-size: 3pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 4pt;">
<DIV style="width: 100%; border-top: 2.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>PART&nbsp;II</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>INFORMATION NOT REQUIRED IN PROSPECTUS</B>
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>ITEM&nbsp;13.</B></TD>
    <TD>
    <B><I>OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth our estimated costs and expenses
(other than underwriting discounts) payable in connection with
this offering.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="84%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">SEC Registration and Canadian
    Filing Fees
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">80,000</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Printing and Engraving Expenses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">*</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Legal Fees and Expenses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">*</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accounting Fees and Expenses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">*</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">NYSE and TSX Listing Fees
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">*</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Blue Sky Qualification Fees and
    Expenses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">*</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Transfer Agent and Registrar Fees
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">*</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Miscellaneous
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">*</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">*</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD>*&nbsp;</TD>
    <TD align="left">
    To be filed by amendment.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>ITEM&nbsp;14.</B></TD>
    <TD>
    <B><I>INDEMNIFICATION OF DIRECTORS AND OFFICERS</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Division (E)&nbsp;of Section&nbsp;1701.13 of the Ohio Revised
Code governs indemnification by a corporation and provides as
follows:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (E)(1)&nbsp;A corporation may indemnify or agree to indemnify
    any person who was or is a party, or is threatened to be made a
    party, to any threatened, pending, or completed action, suit, or
    proceeding, whether civil, criminal, administrative, or
    investigative, other than an action by or in the right of the
    corporation, by reason of the fact that he is or was a director,
    officer, employee, or agent of the corporation, or is or was
    serving at the request of the corporation as a director,
    trustee, officer, employee, member, manager, or agent of another
    corporation, domestic or foreign, nonprofit or for profit, a
    limited liability company, or a partnership, joint venture,
    trust, or other enterprise, against expenses, including
    attorney&#146;s fees, judgments, fines, and amounts paid in
    settlement actually and reasonably incurred by him in connection
    with such action, suit, or proceeding if he acted in good faith
    and in a manner he reasonably believed to be in or not opposed
    to the best interests of the corporation, and, with respect to
    any criminal action or proceeding, if he had no reasonable cause
    to believe his conduct was unlawful. The termination of any
    action, suit, or proceeding by judgment, order, settlement, or
    conviction, or upon a plea of nolo contendere or its equivalent,
    shall not, of itself, create a presumption that the person did
    not act in good faith and in a manner he reasonably believed to
    be in or not opposed to the best interests of the corporation,
    and, with respect to any criminal action or proceeding, he had
    reasonable cause to believe that his conduct was unlawful.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (2)&nbsp;A corporation may indemnify or agree to indemnify any
    person who was or is a party, or is threatened to be made a
    party, to any threatened, pending, or completed action or suit
    by or in the right of the corporation to procure a judgment in
    its favor, by reason of the fact that he is or was a director,
    officer, employee, or agent of the corporation, or is or was
    serving at the request of the corporation as a director,
    trustee, officer, employee, member, manager, or agent of another
    corporation, domestic or foreign, nonprofit or for profit, a
    limited liability company, or a partnership, joint venture,
    trust, or other enterprise, against expenses, including
    attorney&#146;s fees, actually and reasonably incurred by him in
    connection with the defense or settlement of</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">II-1

</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    such action or suit, if he acted in good faith and in a manner
    he reasonably believed to be in or not opposed to the best
    interests of the corporation, except that no indemnification
    shall be made in respect of any of the following:</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (a)&nbsp;Any claim, issue, or matter as to which such person is
    adjudged to be liable for negligence or misconduct in the
    performance of his duty to the corporation unless, and only to
    the extent that, the court of common pleas or the court in which
    such action or suit was brought determines, upon application,
    that, despite the adjudication of liability, but in view of all
    the circumstances of the case, such person is fairly and
    reasonably entitled to indemnity for such expenses as the court
    of common pleas or such other court shall deem proper;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (b)&nbsp;Any action or suit in which the only liability asserted
    against a director is pursuant to section&nbsp;1701.95 of the
    Revised Code.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (3)&nbsp;To the extent that a director, trustee, officer,
    employee, member, manager, or agent has been successful on the
    merits or otherwise in defense of any action, suit, or
    proceeding referred to in division&nbsp;(E)(1) or&nbsp;(2) of
    this section, or in defense of any claim, issue, or matter
    therein, he shall be indemnified against expenses, including
    attorney&#146;s fees, actually and reasonably incurred by him in
    connection with the action, suit, or proceeding.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (4)&nbsp;Any indemnification under division&nbsp;(E)(1)
    or&nbsp;(2) of this section, unless ordered by a court, shall be
    made by the corporation only as authorized in the specific case,
    upon a determination that indemnification of the director,
    trustee, officer, employee, member, manager, or agent is proper
    in the circumstances because he has met the applicable standard
    of conduct set forth in division&nbsp;(E)(1) or&nbsp;(2) of this
    section. Such determination shall be made as follows:</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (a)&nbsp;By a majority vote of a quorum consisting of directors
    of the indemnifying corporation who were not and are not parties
    to or threatened with the action, suit or proceeding referred to
    in division&nbsp;(E)(1) or&nbsp;(2) of this section;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (b)&nbsp;If the quorum described in division&nbsp;(E)(4)(a) of
    this section is not obtainable or if a majority vote of a quorum
    of disinterested directors so directs, in a written opinion by
    independent legal counsel other than an attorney, or a firm
    having associated with it an attorney, who has been retained by
    or who has performed services for the corporation or any person
    to be indemnified within the past five&nbsp;years;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (c)&nbsp;By the shareholders;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (d)&nbsp;By the court of common pleas or the court in which the
    action, suit, or proceeding referred to in division (E)(1) or
    (2)&nbsp;of this section was brought.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Any determination made by the disinterested directors under
    division&nbsp;(E)(4)(a) or by independent legal counsel under
    division&nbsp;(E)(4)(b) of this section shall be promptly
    communicated to the person who threatened or brought the action
    or suit by or in the right of the corporation under
    division&nbsp;(E)(2) of this section, and, within 10&nbsp;days
    after receipt of such notification, such person shall have the
    right to petition the court of common pleas or the court in
    which such action or suit was brought to review the
    reasonableness of such determination.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (5)(a)&nbsp;Unless at the time of a director&#146;s act or
    omission that is the subject of an action, suit, or proceeding
    referred to in division&nbsp;(E)(1) or&nbsp;(2) of this section,
    the articles or the regulations of a corporation state, by
    specific reference to this division, that the provisions of this
    division do not apply to the corporation and unless the only
    liability asserted against a director in an action, suit or
    proceeding referred to in division&nbsp;(E)(1) or&nbsp;(2) of
    this section is pursuant to section&nbsp;1701.95 of the Revised
    Code, expenses, including attorney&#146;s fees, incurred</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">II-2

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    by a director in defending the action, suit, or proceeding shall
    be paid by the corporation as they are incurred, in advance of
    the final disposition of the action, suit, or proceeding, upon
    receipt of an undertaking by or on behalf of the director in
    which he agrees to do both of the following:</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="12%"></TD>
    <TD width="88%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (i)&nbsp;Repay such amount if it is proved by clear and
    convincing evidence in a court of competent jurisdiction that
    his action or failure to act involved an act or omission
    undertaken with deliberate intent to cause injury to the
    corporation or undertaken with reckless disregard for the best
    interests of the corporation;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (ii)&nbsp;Reasonably cooperate with the corporation concerning
    the action, suit or proceeding.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (b)&nbsp;Expenses, including attorney&#146;s fees, incurred by a
    director, trustee, officer, employee, member, manager, or agent
    in defending any action, suit, or proceeding referred to in
    division&nbsp;(E)(1) or&nbsp;(2) of this section, may be paid by
    the corporation as they are incurred, in advance of the final
    disposition of the action, suit, or proceeding, as authorized by
    the directors in the specific case, upon receipt of an
    undertaking by or on behalf of the director, trustee, officer,
    employee, member, manager, or agent to repay such amount, if it
    ultimately is determined that he is not entitled to be
    indemnified by the corporation.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (6)&nbsp;The indemnification authorized by this section shall
    not be exclusive of, and shall be in addition to, any other
    rights granted to those seeking indemnification under the
    articles, the regulations, any agreement, a vote of shareholders
    or disinterested directors, or otherwise, both as to action in
    their official capacities and as to action in another capacity
    while holding their offices or positions, and shall continue as
    to a person who has ceased to be a director, trustee, officer,
    employee, member, manager, or agent and shall inure to the
    benefit of the heirs, executors, and administrators of such a
    person.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (7)&nbsp;A corporation may purchase and maintain insurance or
    furnish similar protection, including, but not limited to, trust
    funds, letters of credit, or self-insurance, on behalf of or for
    any person who is or was a director, officer, employee, or agent
    of the corporation, or is or was serving at the request of the
    corporation as a director, trustee, officer, employee, member,
    manager, or agent of another corporation, domestic or foreign,
    nonprofit or for profit, a limited liability company, or a
    partnership, joint venture, trust, or other enterprise, against
    any liability asserted against him and incurred by him in any
    such capacity, or arising out of his status as such, whether or
    not the corporation would have the power to indemnify him
    against such liability under this section. Insurance may be
    purchased from or maintained with a person in which the
    corporation has a financial interest.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (8)&nbsp;The authority of a corporation to indemnify persons
    pursuant to division&nbsp;(E)(1) or&nbsp;(2) of this section
    does not limit the payment of expenses as they are incurred,
    indemnification, insurance, or other protection that may be
    provided pursuant to divisions&nbsp;(E)(5), (6) and&nbsp;(7) of
    this section. Divisions&nbsp;(E)(1) and&nbsp;(2) of this section
    do not create any obligation to repay or return payments made by
    the corporation pursuant to division&nbsp;(E)(5), (6),
    or&nbsp;(7).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (9)&nbsp;As used in division (E)&nbsp;of this section,
    &#147;corporation&#148; includes all constituent entities in a
    consolidation or merger and the new or surviving corporation, so
    that any person who is or was a director, officer, employee,
    trustee, member, manager, or agent of such a constituent entity,
    or is or was serving at the request of such constituent entity
    as a director, trustee, officer, employee, member, manager, or
    agent of another corporation, domestic or foreign, nonprofit or
    for profit, a limited liability company, or a partnership, joint
    venture, trust, or other enterprise, shall stand in the same
    position under this section with respect to the new or</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">II-3

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<FONT face="helvetica,arial">

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    surviving corporation as he would if he had served the new or
    surviving corporation in the same capacity.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Registrant&#146;s Regulations governing indemnification by
the Registrant provide as follows:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    Section 5.01. Indemnification. The corporation shall indemnify
    each director and officer, each former director and officer, and
    each person who may have served at its request as an officer,
    and each person who may have served at its request as a
    director, trustee, or officer of any other corporation,
    partnership, joint venture, trust or other enterprise, to the
    greatest extent permitted by Ohio law, with respect to any
    threatened, pending or completed action, suit or proceeding,
    whether civil, criminal, administrative or investigative, to
    which such person was or is a party by reason of the fact that
    he is or was a director or officer of the corporation or is or
    was serving at its request as aforesaid. Indemnification
    hereunder shall include all expenses, including attorneys&#146;
    fees, judgments, fines and amounts paid in settlement if
    actually and reasonably incurred by him in connection with such
    action, suit or proceeding. Such expenses shall be paid in
    advance of the final disposition of such action, suit or
    proceeding upon receipt of an undertaking by or on behalf of
    such person to repay such amount if it shall ultimately be
    determined that he is not entitled to be indemnified by the
    corporation. In addition, the corporation may indemnify or agree
    to indemnify any person who was or is a party or is threatened
    to be made a party to any threatened, pending, or completed
    action, suit or proceeding, whether civil, criminal,
    administrative or investigative, by reason of the fact that he
    is or was an employee or agent of the corporation or is or was
    serving as an employee or agent of another enterprise at the
    request of the corporation; subject, however, to the limitations
    imposed by Ohio law. The indemnification provided by this
    section shall not be deemed exclusive of any other rights to
    which those seeking indemnification may be entitled under the
    Articles or any agreement, vote of shareholders, or
    disinterested directors or otherwise (including, without
    limitation, any insurance), both as to action in his official
    capacity and as to action in another capacity while holding such
    office, and shall continue as to a person who has ceased to be a
    director, trustee, officer, employee or agent and shall inure to
    the benefit of the heirs, executors, administrators and
    successors of such a person.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, the Registrant has purchased insurance coverage
under policies issued
by &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;that
insure directors and officers against certain liabilities that
might be incurred by them in such capacity.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>ITEM&nbsp;15.</B></TD>
    <TD>
    <B><I>RECENT SALES OF UNREGISTERED SECURITIES</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Except for the issuance of common shares to Wendy&#146;s, Tim
Hortons has not issued any securities in unregistered
transactions. The issuance of such securities was exempt from
the registration requirements of the Securities Act pursuant to
Section&nbsp;4(2) thereof.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>ITEM&nbsp;16.</B></TD>
    <TD>
    <B><I>EXHIBITS AND FINANCIAL STATEMENT SCHEDULES</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;Exhibit&nbsp;Index
</DIV>

<P align="center" style="font-size: 10pt;">II-4

</FONT>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A list of exhibits filed with this registration statement on
Form&nbsp;S-1 is set forth on the Exhibit&nbsp;Index and is
incorporated in this Item&nbsp;16(a) by reference.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;Financial Statement Schedules
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
See Schedule&nbsp;II&nbsp;&#151; Valuation and Qualifying
Accounts in Part&nbsp;I of this prospectus.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>ITEM&nbsp;17.</B></TD>
    <TD>
    <B><I>UNDERTAKINGS</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The undersigned Registrant hereby undertakes:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (1)&nbsp;That for purposes of determining any liability under
    the Securities Act of 1933, the information omitted from the
    form of prospectus filed as part of this Registration Statement
    in reliance upon Rule&nbsp;430A and contained in a form of
    prospectus filed by the Registrant pursuant to
    Rule&nbsp;424(b)(1) or&nbsp;(4) or&nbsp;497(h) under the
    Securities Act of 1933 shall be deemed to be part of this
    Registration Statement as of the time it was declared effective.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (2)&nbsp;That for the purpose of determining any liability under
    the Securities Act of 1933, each post-effective amendment that
    contains a form of prospectus shall be deemed to be a new
    registration statement relating to the securities offered
    therein, and the offering of such securities at that time shall
    be deemed to be the initial bona fide offering thereof.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (3)&nbsp;To provide to the underwriters at the closing specified
    in the underwriting agreement certificates in such denominations
    and registered in such names as required by the underwriters to
    permit prompt delivery to each purchaser.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (4)&nbsp;Insofar as indemnification for liabilities arising
    under the Securities Act of 1933 may be permitted to directors,
    officers and controlling persons of the Registrant pursuant to
    the foregoing provisions, or otherwise, the Registrant has been
    advised that in the opinion of the Securities and Exchange
    Commission such indemnification is against public policy as
    expressed in the Securities Act of 1933 and is, therefore,
    unenforceable. In the event that a claim for indemnification
    against such liabilities (other than the payment by the
    Registrant of expenses incurred or paid by a director, officer
    or controlling person of the Registrant in the successful
    defense of any action, suit or proceeding) is asserted by such
    director, officer or controlling person in connection with the
    securities being registered, the Registrant will, unless in the
    opinion of its counsel the matter has been settled by
    controlling precedent, submit to a court of appropriate
    jurisdiction the question whether such indemnification by it is
    against public policy as expressed in the Securities Act of 1933
    and will be governed by the final adjudication of such issue.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">II-5

</FONT>

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<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>SIGNATURES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Oakville, Ontario, on
December&nbsp;1, 2005.
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Tim Hortons&nbsp;Inc.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 48pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>By:&nbsp;</TD>
    <TD align="center">
    /s/ <FONT style="font-variant:SMALL-CAPS">Cynthia&nbsp;J. Devine
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 3pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt" align="left">&nbsp;</DIV></TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Name: Cynthia&nbsp;J. Devine</TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="7%"></TD>
    <TD width="53%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>Title:</TD>
    <TD align="left">
    Executive Vice President and</TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Chief Financial Officer</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons
in the capacities indicated on December&nbsp;1, 2005.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="39%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>


<TR>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Signature</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Title</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    &nbsp;<FONT style="font-variant:SMALL-CAPS" face="helvetica,arial">*<BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV></FONT><FONT face="helvetica,arial">Paul
    D. House
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Chief Executive Officer and
    President (principal executive officer); Director
    </FONT></TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT face="helvetica,arial">/s/
    <FONT style="font-variant:SMALL-CAPS">Cynthia J. Devine<BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV></FONT></FONT><FONT face="helvetica,arial">Cynthia
    J. Devine
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Executive Vice President and Chief
    Financial Officer (principal financial officer and principal
    accounting officer); Director
    </FONT></TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    &nbsp;<FONT style="font-variant:SMALL-CAPS" face="helvetica,arial">*<BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV></FONT><FONT face="helvetica,arial">John
    T. Schuessler
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Director
    </FONT></TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    &nbsp;<FONT style="font-variant:SMALL-CAPS" face="helvetica,arial">*<BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV></FONT><FONT face="helvetica,arial">Kerrii&nbsp;B.
    Anderson
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Director
    </FONT></TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    &nbsp;<FONT style="font-variant:SMALL-CAPS" face="helvetica,arial">*<BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV></FONT><FONT face="helvetica,arial">David&nbsp;P.
    Lauer
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Director
    </FONT></TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <FONT face="helvetica,arial">*By
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    <FONT face="helvetica,arial">/s/
    <FONT style="font-variant:SMALL-CAPS">Cynthia J. Devine<BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV></FONT></FONT><FONT face="helvetica,arial">Cynthia
    J. Devine<BR>
    Attorney-in-fact
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<P align="center" style="font-size: 10pt;">II-6

</FONT>

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<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>EXHIBIT INDEX</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="79%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Exhibit No.</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" nowrap><B><FONT face="helvetica,arial">Description of Exhibit</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">1</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT face="helvetica,arial">.1*</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Form of Underwriting Agreement
    </FONT></TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">3</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT face="helvetica,arial">.1*</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Articles of Incorporation of Tim
    Hortons Inc.
    </FONT></TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">3</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT face="helvetica,arial">.2*</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Code of Regulations of Tim Hortons
    Inc.
    </FONT></TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT face="helvetica,arial">.1*</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Form of Specimen Certificate of
    Common Shares
    </FONT></TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">5</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT face="helvetica,arial">.1*</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Opinion of Vorys, Sater, Seymour
    and Pease LLP
    </FONT></TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT face="helvetica,arial">.1*</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Form of Master Separation Agreement
    </FONT></TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT face="helvetica,arial">.2*</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Form of Shared Services Agreement
    </FONT></TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT face="helvetica,arial">.3*</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Form of Tax Sharing Agreement
    </FONT></TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT face="helvetica,arial">.4*</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Form of Registration Rights
    Agreement
    </FONT></TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">11</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT face="helvetica,arial">.1*</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Statement regarding computation of
    per share earnings
    </FONT></TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">21</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT face="helvetica,arial">.1*</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">List of Subsidiaries
    </FONT></TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">23</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT face="helvetica,arial">.1*</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Consent of Vorys, Sater, Seymour
    and Pease LLP (included as part of its opinion filed as
    Exhibit&nbsp;5.1 hereto)
    </FONT></TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">23</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT face="helvetica,arial">.2</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Consent of PricewaterhouseCoopers
    LLP
    </FONT></TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">24</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT face="helvetica,arial">.1</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Powers of Attorney
    </FONT></TD>
</TR>

</TABLE>
</CENTER>
</FONT>

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<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD>*&nbsp;</TD>
    <TD align="left">
    To be filed by amendment.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">II-7

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S-1
Table of Contents
As filed with the Securities and Exchange Commission on
December 1, 2005
Registration
No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
Tim Hortons Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware
5812
51-0370507
(State or Other Jurisdiction
    of
Incorporation or Organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification Number)
874 Sinclair Road
Oakville, Ontario L6K 2Y1
Canada (905) 845-6511
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive
Offices)
The Corporation Trust Company
Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801 (302) 658-7581
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
Copies To:
Leon M. McCorkle, Jr.
Executive Vice President,
General Counsel and Secretary
Wendy's International, Inc.
P.O. Box 256
4288 West Dublin-Granville Road
Dublin, Ohio 43017-0256
(614) 764-3100
J. Steven Patterson
Akin Gump Strauss Hauer & Feld LLP
Robert S. Strauss Building
1333 New Hampshire Avenue, N.W.
Washington, D.C. 20036-1564
(202) 887-4000
(202) 887-4288
Robert E. Buckholz, Jr.
Sullivan & Cromwell LLP
125 Broad Street
New York, New York 10004-2498
(212) 558-4000
(212) 558-3588
Approximate date of commencement of proposed sale to the
public:
As soon as practicable after the effective date of
this Registration Statement.
If the securities being registered on this form are being
offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, check the
following
box.
o
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same
offering.
o
If this form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering.
o
If this form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering.
o
If delivery of the prospectus is expected to be made pursuant to
Rule 434 under the Securities Act, please check the
following
box.
o
CALCULATION OF REGISTRATION FEE
Proposed Maximum
Amount Of
Title Of Each Class Of Securities To Be Registered
Aggregate Offering Price(1)
Registration Fee
Common shares, no stated value per
    share
$600,000,000
$64,200
(1)
Estimated solely for the purpose of calculating the amount of
    the registration fee pursuant to Rule 457(o). The proposed
    maximum aggregate offering price includes amounts attributable
    to shares that the underwriters may purchase to cover
    over-allotments, if any.
The registrant hereby amends this registration statement on
such date or dates as may be necessary to delay its effective
date until the registrant shall file a further amendment which
specifically states that this registration statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933, or until this registration
statement shall become effective on such date as the Securities
and Exchange Commission, acting pursuant to said
Section 8(a), may determine.
Table of Contents
The information in this preliminary
prospectus is not complete and may be changed. These securities
may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This
preliminary prospectus is not an offer to sell nor does it seek
an offer to buy these securities in any jurisdiction where the
offer or sale is not permitted.
Subject to Completion. Dated
December 1, 2005.
Common
Shares
Tim Hortons Inc.
Common Shares
This is an initial public offering of common shares of Tim
Hortons Inc. All of the common shares are being sold by the
company.
Prior to this offering, there has been no public market for the
common shares. It is currently estimated that the initial public
offering price per share will be between
US$                    and
US$                    .
Tim Hortons Inc. intends to apply to list the common shares on
the New York Stock Exchange and the Toronto Stock Exchange under
the symbol "THI."
See "Risk Factors" on page 10 to read about
factors you should consider before buying common shares.
Neither the Securities and Exchange Commission nor any other
regulatory body has approved or disapproved of these securities
or passed upon the accuracy or adequacy of this prospectus. Any
representation to the contrary is a criminal offense.
Per Share
Total
Initial public offering price
US$
US$
Underwriting discount
US$
US$
Proceeds, before expenses, to Tim
    Hortons Inc.
US$
US$
To the extent the underwriters sell more
than                     common
shares, the underwriters have the option to purchase up to an
additional                     common
shares from Tim Hortons Inc. at the initial public offering
price less the underwriting discount.
The underwriters expect to deliver the shares against payment in
New York, New York
on                     ,
2006.
Goldman, Sachs & Co.
RBC Capital Markets
Prospectus
dated                     ,
2006.
Table of Contents
[inside cover art]
Table of Contents
Tim Hortons Inc., a wholly-owned subsidiary of Wendy's
International, Inc., owns and operates the quick service
restaurant chain known as "Tim Hortons." Unless the
context otherwise requires, any references in this prospectus to
"we," "our," "us" and the
"Company" refer to Tim Hortons Inc. and its
consolidated subsidiaries as in effect on the closing date of
this offering, but not to any of the franchisees that operate
Tim Hortons restaurants. Any references in this prospectus to
"Wendy's" refer to Wendy's International,
Inc. and its consolidated subsidiaries, other than us.
Unless
otherwise specified, references to "dollars" or
"$" in this prospectus are to
Canadian dollars.
We believe systemwide sales, which consists of aggregate
sales by all franchised and company-operated restaurants, and
average same-store sales provide meaningful information to
investors concerning the size of our system, the overall health
of the system and the strength of our brand. Information about
systemwide and average same-store sales is included in this
prospectus. Franchisee operations generally are not included in
our financial statements; however, franchisee sales result in
royalties and rental income that are included in our franchise
revenues.
EXCHANGE RATE DATA
We report our results in Canadian dollars. The following
table sets forth, for the periods indicated, the high, low,
average and period-end noon buying rates in New York for cable
transfers payable in foreign currencies, as certified for
customs purposes by the Federal Reserve Bank of New York, in
Canadian dollars per U.S. dollar. No representation is made
that the U.S. dollar amounts have been, could have been or
could be converted into Canadian dollars at the noon buying rate
on such dates or any other dates.
Noon Buying Rate
Year Ended December 31
Period End
Average
(1)
High
Low
2000
$
1.4995
$
1.4855
$
1.5600
$
1.4350
2001
1.5925
1.5488
1.6023
1.4933
2002
1.5800
1.5704
1.6128
1.5108
2003
1.2923
1.4008
1.5750
1.2923
2004
1.2034
1.3017
1.3970
1.1775
2005
(1)
Determined by averaging the rates on the last business day of
    each month during the respective period.
On November 30, 2005, the noon buying rate in New York
for cable transfers payable in foreign currencies, as certified
for customs purposes by the Federal Reserve Bank of New York,
was Cdn$1.1670 = US$1.00.
i
Table of Contents
PROSPECTUS SUMMARY
This summary highlights information contained in this
prospectus. Because it is a summary, it does not contain all of
the information you should consider before investing in our
common shares. You should carefully read the entire prospectus.
In particular, you should read the section entitled "Risk
Factors" and our historical consolidated financial
statements and the notes thereto included elsewhere in this
prospectus.
Our Company
We are the largest quick service restaurant (QSR) chain in
Canada based on systemwide sales and number of restaurants open.
According to the Canadian Restaurant and Foodservices
Association (CRFA) and Statistics Canada, in 2004 our
system represented 22.6% of the $14.0 billion QSR segment
of the Canadian foodservice industry based on sales dollars,
almost 25.0% larger than our nearest competitor.
Since our founding in 1964, we have been committed to a close
relationship with our franchisees, which has helped build Tim
Hortons® into one of the most widely recognized consumer
brands in Canada. We believe we have achieved outstanding
customer loyalty by offering superior food quality, variety and
consistency in a convenient and friendly environment. According
to a tracking study we conducted in 2003, approximately 46.0% of
our Canadian customers visit our restaurants four or more times
per week. Our menu spans a broad range of categories that appeal
to customers throughout the day, such as premium blend coffee,
flavoured cappuccinos, specialty and steeped teas, home-style
soups, fresh sandwiches and freshly baked goods including
donuts, bagels, muffins, cookies, croissants and pastries.
Since the end of 1995, our systemwide sales and revenues have
grown at compound annual growth rates (CAGRs) of 18.5% and
17.1%, respectively. This growth has been a result of expanding
the number of system restaurants by a 9.6% CAGR and increasing
average annual same-store sales by 7.0% and 10.0% in Canada and
the U.S., respectively. We have produced average same-store
sales increases for 13 and 14 consecutive years in Canada and
the U.S., respectively, with average annual same-store sales
increases of 7.1% and 7.7%, respectively, over those periods.
Since the end of 1995, we have increased our total operating
income at a 20.5% CAGR.
As of October 2, 2005, we had a system of 2,801 restaurants
in Canada and the U.S. Our 2,529 restaurants across Canada
include 660 smaller restaurants in non-standard locations such
as gas station convenience stores, universities, hospitals and
office buildings. In the U.S., we have a regional presence
primarily in the Northeast and Midwest with 272 restaurants in
10 states, concentrated in three major markets. As of
October 2, 2005, franchisees operated 2,498, or 98.8%, of
the restaurants in Canada and 207, or 76.1%, of the restaurants
in the U.S.
We have a diversified base of revenue and operating income
generated from franchisee royalties and fees, rental income,
warehouse sales and company-operated stores. In fiscal 2004, we
had total revenues of $1.3 billion, operating income of
$319.3 million, and net income of $205.1 million. In
the nine months ended October 2, 2005, we had total
revenues of $1.1 billion, operating income of
$259.3 million and net income of $174.7 million.
Average same-store sales increases for fiscal 2004 were 7.4% in
Canada and 9.8% in the U.S., and in the nine months ended
October 2, 2005, were 5.0% in Canada and 7.0% in the U.S.
Our Competitive Strengths
Iconic brand status in Canada.
Tim Hortons was recognized
as the best managed brand in Canada, according to annual surveys
published by
Canadian Business
magazine in 2004 and 2005.
In addition, in an internal 2005 national study, when consumers
were asked which fast service chain,
Table of Contents
convenience store or gas station they stop at to have a coffee,
snack or meal most often, Tim Hortons was named 37% of the time,
nearly three times higher than the nearest competitor. We
believe our brand strength is a result of our ongoing systemwide
commitment to operational excellence, product quality,
continuous innovation, superior customer service, exceptional
value, community involvement and successful relationships with
our franchisees. We were also named one of Canada's most
admired corporate cultures in 2005 by
Canadian Business
magazine.
Leading market positions in Canada.
According to the 2005
NPD foodservice industry report, our system represented 74.0% of
the coffee and baked goods sector of the Canadian QSR segment,
based on the number of customers served over the 12 months
ended August 31, 2005. In addition, we have the leading
market position in the Canadian QSR segment, based on systemwide
sales, and a very strong presence in every province. We believe
our presence in key markets and our ability to leverage our
scale in advertising will help us maintain and extend our market
leadership position.
Systemwide focus on operational excellence.
We are an
operations-driven organization. We invest substantial resources
in developing programs, processes, technology and field support
for our system of franchised and company-operated restaurants.
We focus on continuous improvement in operations so we can
consistently serve high-quality food while providing exceptional
customer courtesy, order accuracy and speed of service, thereby
enhancing our customers' overall experience.
Energized and committed franchisee base.
Our over 1,000
franchisees in North America are critical to our success,
delivering exceptional hands-on customer service every day. Our
franchisees are strongly committed to our system growth, having
collectively invested over $75.0 million of their capital
in infrastructure support during 2002 and 2003 for our
proprietary "Always Fresh" baking system. The average
Tim Hortons franchisee in Canada has been part of our system for
almost nine years and owns three restaurants.
Integrated and scalable business model.
We have invested
substantial resources and capital in developing an integrated
and scalable business model. Our vertically integrated
manufacturing and distribution platforms enable us to realize
economies of scale and offer customers innovative products. Our
Always Fresh system enables us to bake and serve fresh and
consistent products throughout the day, as well as to open
restaurants in a variety of formats, sizes and locations. We
control the site selection, design and construction of our
restaurants, which enables us to increase penetration in
existing and new markets by improving customer convenience. We
control the real estate for approximately 80.0% of our system
restaurants, which generates a recurring stream of rental income.
Proven, experienced management team with track record of
exceptional growth.
Our executive management team has an
average tenure with us of more than 12 years. Together with
our dedicated team of employees, they have significantly
contributed to our strong financial performance. Between 1995
and 2004, we increased our average sales per standard Canadian
restaurant from $878,000 to $1.7 million. Our financial
performance is a result of our focus on restaurant operations,
coordination among employees and franchisees and the performance
of our vertically integrated manufacturing and distribution
platforms.
Our Business Strategy
Drive sales growth at existing restaurants through continued
innovation.
Our consistent systemwide sales growth reflects
our strong and increasing brand awareness, emphasis on customer
service and continuous product and process innovation. We strive
to meet our customers' needs throughout the day and expect
to continue to improve restaurant efficiency levels and invest
in technology to improve customer service.
2
Table of Contents
Sustain the health and viability of our franchisee base.
We have developed a large, highly committed and diversified
franchisee base, which is a critical component of our systemwide
success. We will continue to strengthen and grow our franchise
system by extending the Tim Hortons brand and continuing to
offer superior product development, operations oversight and
franchisee support.
Increase penetration of the Canadian market.
We will
continue to leverage our brand strength to further penetrate the
Canadian market using our franchise business model. Although we
have the leading market position in the Canadian QSR segment,
based on systemwide sales, and a very strong presence in every
province, there are numerous growth opportunities in the Western
provinces, Quebec and select high-traffic metropolitan areas.
Our "we fit anywhere" strategy of non-standard formats
gives us the flexibility to add restaurants in high-traffic
consumer locations without over-saturating any individual
market. Our long-term goal is to have between 3,500 and 4,000
system restaurants open in Canada.
Pursue long-term profitable expansion in the United
States.
We have become a strong regional player in the U.S.,
with restaurants in 10 states, primarily in the Northeast
and Midwest regions. Tim Hortons restaurants in the
U.S. experienced an average annual same-store sales growth
of 9.8% from 1999 through 2004, even as we expanded our
U.S. system during that period from 108 to
251 restaurants. We will continue our efforts to profitably
expand our system's U.S. presence by further
penetrating existing markets, entering adjacent markets and
selectively pursuing other strategic initiatives. Our goal is to
have 500 system restaurants open in the U.S. by the end of
2008.
Our Relationship with Wendy's®
We are currently a wholly-owned subsidiary of Wendy's. Upon
completion of this offering, Wendy's will own
approximately      % of our outstanding
common shares, or approximately      %
if the underwriters exercise their over-allotment option in
full. Wendy's will have the ability to direct the election
of members of our board of directors and to determine the
outcome of other matters submitted to a vote of our shareholders.
Wendy's has advised us that its current intent is to
continue to hold all of our common shares owned by it following
this offering. However, Wendy's is not subject to any
contractual obligation to maintain its share ownership, except
that Wendy's has agreed not to sell or otherwise dispose of
any of our common shares for a period of 180 days after the
date of this prospectus without the prior written consent of the
representatives of the underwriters. Wendy's may, however,
without consent of the representatives of the underwriters and
subject to the determination of its board of directors,
determine to spin-off to its shareholders all of our common
shares that it owns.
Immediately prior to the closing of this offering, we will enter
into agreements with Wendy's related to the separation of
our business operations from Wendy's. These agreements will
govern various interim and ongoing relationships between
Wendy's and us. For more information regarding these
agreements, see "Our Relationship With Wendy's"
and our historical consolidated financial statements and the
notes thereto included elsewhere in this prospectus.
Wendy's is one of the world's largest restaurant
operating and franchising companies with over 9,800 total
restaurants and quality brands, including Wendy's, Tim
Hortons, Baja Fresh® Mexican Grill and investments in Cafe
Express and Pasta Pomodoro®.
Company Information
As of the date of the initial filing of the registration
statement, of which this prospectus is a part, Tim Hortons Inc.
is a Delaware corporation. Before the completion of this
offering, we intend to merge into a newly-formed Ohio
corporation named Tim Hortons Inc. We are, and from that merger
3
Table of Contents
until the completion of this offering, will be, a wholly-owned
subsidiary of Wendy's. Although the merger has not been
completed as of the date of this initial filing of the
registration statement of which this prospectus is a part, we
have made certain disclosures in this prospectus as if the
merger had been completed and we were an Ohio corporation. Our
principal executive offices are located at 874 Sinclair Road,
Oakville, Ontario, Canada L6K 2Y1. Our telephone number is
(905) 845-6511. Our website address is www.timhortons.com.
Information contained on our website is not incorporated by
reference into this prospectus, and you should not consider
information on our website as part of this prospectus.
4
Table of Contents
The Offering
Common shares offered by us
shares
Underwriters' option to purchase additional common shares
shares
Common shares to be held by Wendy's immediately after this
    offering
shares
Common shares outstanding immediately after this offering
shares
Use of proceeds
We estimate that the net proceeds from this offering of common
    shares, after deducting estimated underwriting discounts and
    commissions and estimated offering expenses, will be
    approximately
    $                     million
    ($                     million
    if the underwriters exercise their over-allotment option in
    full). We will use those net proceeds, together with proceeds
    from a term loan agreement that we will enter into prior to the
    closing of this offering, to repay debt owed to Wendy's.
    See "Use of Proceeds" and "Management's
    Discussion and Analysis of Financial Condition and Results of
    Operations— Liquidity and Capital Resources— Loan
    Agreements."
Dividend policy
We intend to declare and pay dividends in Canadian dollars on
    our common shares; however, the declaration and payment of
    future dividends is discretionary, and the amount, if any, will
    be dependent upon our results of operations, financial
    condition, contractual restrictions and other factors deemed
    relevant by our board of directors. See "Dividend
    Policy."
NYSE and TSX listings
We intend to apply to list our common shares on the New York
    Stock Exchange (NYSE) and the Toronto Stock Exchange
    (TSX) under the symbol "THI."
Unless we specifically state otherwise, all information in this
prospectus regarding our common shares:
•
gives effect to the transactions described under "Our
    Relationship With Wendy's";
•
gives effect to
    a      for      stock
    split that we intend to effect immediately prior to the closing
    of this offering;
•
assumes no exercise by the underwriters of their over-allotment
    option to
    purchase                     additional
    common shares; and
•
excludes common shares reserved for issuance under equity
    incentive plans.
Risk Factors
Investing in our common shares involves substantial risk. You
should carefully consider all of the information set forth in
this prospectus and, in particular, you should evaluate the
specific factors set forth under "Risk Factors" in
deciding whether to invest in our common shares.
5
Table of Contents
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA
The following table presents our summary historical consolidated
financial and other data and should be read in conjunction with
information contained in "Management's Discussion and
Analysis of Financial Condition and Results of Operations,"
"Selected Historical Consolidated Financial and Other
Data," "Unaudited Pro Forma Consolidated Financial
Information" and our historical consolidated financial
statements and notes thereto included elsewhere in this
prospectus. Our historical consolidated financial information
may not be indicative of our future performance and does not
necessarily reflect what our financial position and results of
operations would have been had we operated as a separate,
stand-alone entity during the periods covered.
Our summary historical consolidated financial data as of
December 28, 2003 and January 2, 2005 and for fiscal
years 2002 (year ended December 29, 2002), 2003 (year ended
December 28, 2003) and 2004 (year ended January 2,
2005) have been derived from our audited historical consolidated
financial statements included elsewhere in this prospectus.
Our summary historical consolidated financial data as of
October 2, 2005 and for the nine months ended
September 26, 2004 and October 2, 2005 have been
derived from our unaudited condensed consolidated financial
statements included elsewhere in this prospectus and include all
adjustments (consisting only of normal recurring adjustments)
necessary for a fair statement of our financial position and
results of operations as of the dates and for the periods
indicated. Results for the nine months ended October 2,
2005 are not necessarily indicative of the results that may be
expected for the entire year.
The summary unaudited pro forma consolidated financial
information as of October 2, 2005 and for the fiscal year
2004 and the nine months ended October 2, 2005 were derived
from our "Unaudited Pro Forma Consolidated Financial
Information" included elsewhere in this prospectus, and
gives effect, in the manner described under "Unaudited Pro
Forma Consolidated Financial Information," to (i) the
non-cash settlement of intercompany notes and trade balances
between us and Wendy's, (ii) the entering into of a
new term loan agreement; (iii) the completion of this
offering, and (iv) the application of the proceeds of the
new term loan and the offering to repay indebtedness owed to
Wendy's as described under "Use of Proceeds," all
of which are collectively referred to as the
"Adjustments." Our unaudited pro forma balance sheet
as of October 2, 2005 gives pro forma effect to the
Adjustments as if they had occurred on such date. Our unaudited
pro forma statements of operations for fiscal year 2004 and the
nine months ended October 2, 2005 give pro forma effect to
the Adjustments as if they had occurred on December 29,
2003 as described under "Unaudited Pro Forma Consolidated
Financial Information."
The unaudited pro forma financial data as of October 2,
2005 and for fiscal year 2004 and for the nine months ended
October 2, 2005 is presented for informational purposes
only, and does not purport to represent what our results of
operations would actually have been if the transactions had
occurred on the dates indicated, nor does it purport to project
our results of operations or financial condition that we may
achieve in the future.
6
Table of Contents
Fiscal Years
(1)
Nine Months Ended
Pro Forma
Pro Forma
September 26,
October 2,
October 2,
2002
2003
2004
2004
2004
2005
2005
(in thousands, except number of shares)
Consolidated Statements of
    Operations Data
Revenues
Sales
$
656,833
$
727,508
$
845,231
$
602,978
$
703,484
Franchise
    revenues
(2)
402,738
444,272
493,035
350,081
374,684
Total revenues
1,059,571
1,171,780
1,338,266
953,059
1,078,168
Total costs and expenses
826,258
892,883
1,018,961
720,821
818,847
Operating income (EBIT)
233,313
278,897
319,305
232,238
259,321
Interest expense, net
2,554
4,924
4,109
3,365
983
Affiliated interest expense, net
17,786
11,110
9,410
7,536
4,910
Income before income taxes
212,973
262,863
305,786
221,337
253,428
Income taxes
80,161
106,601
100,735
70,505
78,767
Net income
$
132,812
$
156,262
$
205,051
$
150,832
$
174,661
Basic earnings per common share
$
190
$
223
$
293
$
215
$
250
Average common shares
700
700
700
700
700
Consolidated Balance Sheets
    Data — at end of period indicated
Cash and cash equivalents
$
86,151
$
129,301
$
119,248
Total
    assets
(3)
$
1,547,023
$
1,756,869
$
1,716,296
Long-term
    debt
(4)
$
367,674
$
246,841
$
188,024
Total
    liabilities
(4)
$
704,245
$
735,180
$
1,656,152
Total shareholder's equity
$
842,778
$
1,021,689
$
60,144
Fiscal Years
(1)
Nine Months Ended
September 26,
October 2,
2002
2003
2004
2004
2005
(in thousands, except number of restaurants
and where noted)
Other Financial Data
EBITDA
(5)
$
282,422
$
337,698
$
388,313
$
280,098
$
312,922
Capital expenditures
$
111,788
$
131,865
$
197,810
$
126,343
$
131,866
Other Operating Data
Total systemwide sales
    growth
(6)(7)
16.3
%
12.6
%
16.6
%
15.0
%
11.7
%
Systemwide restaurant unit
    growth
(6)
8.6
%
7.6
%
7.7
%
7.9
%
6.4
%
Canada average same-store sales
    growth
(6)
    (8)
7.2
%
4.8
%
7.4
%
7.7
%
5.0
%
U.S. average same-store sales
    growth
(6)
    (8)
9.9
%
4.5
%
9.8
%
10.1
%
7.0
%
Restaurants open at end of
    period — Canada
Company-operated
31
32
31
28
31
Franchise
2,157
2,311
2,439
2,371
2,498
Restaurants open at end of
    period — U.S.
Company-operated
40
25
67
66
65
Franchise
120
159
184
167
207
Total
2,348
2,527
2,721
2,632
2,801
Average sales per standard
    restaurant:
Canada (
in thousands of Canadian
    dollars
)
(6)
$
1,555
$
1,625
$
1,730
U.S. (
in thousands of U.S.
    dollars
)
(6)
$
874
$
894
$
897
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(1)
Fiscal 2004 consisted of 53 weeks. Fiscal 2003 and 2002
    each consisted of 52 weeks.
(2)
Franchise revenues consist of (a) royalties, which
    typically range from 3.0% to 4.5% of gross franchise restaurant
    sales, (b) rents, which typically range from 8.5% to 10.0%
    of gross franchise restaurant sales, and (c) fees, which
    are typically charged at the inception of the franchise
    relationship. Franchise restaurant sales are reported to us by
    our franchisees. Franchise restaurant sales are not included in
    our financial statements, other than approximately
    80 franchisees whose results of operations are consolidated
    with ours pursuant to FIN 46R, as described in
    "Management's Discussion and Analysis of Financial
    Condition and Results of Operations— Results of
    Operations— Financial Definitions— Sales."
    However, franchise restaurant sales result in royalties and
    rental income, which are included in our franchise revenues. The
    reported franchise restaurant sales were:
Fiscal Years
(1)
2002
2003
2004
(in thousands)
Franchise restaurant sales:
Canada (
in thousands of Canadian
    dollars
)
$
2,412,625
$
2,713,248
$
3,137,898
U.S. (
in thousands of
    U.S. dollars
)
$
93,603
$
123,272
$
163,712
(3)
Total assets include notes and accounts receivable from
    Wendy's, which will be distributed by us to Wendy's in
    the fourth quarter of 2005. Notes and amounts receivable from
    Wendy's were:
At End of Fiscal
Year Indicated
As of
October 2,
2003
2004
2005
(in thousands)
Notes receivable from Wendy's
    included in current assets
$
59,210
$
173,747
$
189,111
Notes receivable from Wendy's
    included in long-term assets
$
128,000
$
128,000
$
—
Accounts receivable from
    Wendy's included in current assets
$
138,580
$
52,192
$
34,069
(4)
Long-term debt includes long-term debt, capital leases and notes
    payable to Wendy's. Notes payable to Wendy's are also
    included in current liabilities. As of October 2, 2005, we
    had outstanding a note payable to Wendy's in the principal
    amount of US$960.0 million. Other than that note, notes
    payable to Wendy's will be contributed as equity to us in
    the fourth quarter of 2005. Notes payable to Wendy's
    totalled the following amounts:
At End of Fiscal
Year Indicated
As of
October 2,
2003
2004
2005
(in thousands)
Notes payable to Wendy's
    included in current liabilities
$
84,167
$
185,725
$
1,186,293
Notes payable to Wendy's
    included in long-term debt
$
304,488
$
181,090
$
100,283
(5)
EBITDA is defined as net income before interest, taxes,
    depreciation and amortization and is used by management as a
    performance measure for benchmarking against our peers and our
    competitors. We believe EBITDA is useful to investors because it
    is frequently used by securities analysts, investors and other
    interested parties to evaluate companies in our industry. EBITDA
    is not a recognized term under GAAP, should not be viewed in
    isolation and does not purport to be an alternative to net
    income as an indicator of operating performance or cash flows
    from operating activities as a measure of liquidity. There are
    material limitations associated with making the adjustments to
    calculate EBITDA and using this non-GAAP financial measure as
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compared to the most directly comparable GAAP financial measure.
    For instance, EBITDA does not include:
•
interest expense, and because we have borrowed money to finance
    our operations, interest expense is a necessary element of our
    costs and ability to generate revenue;
•
depreciation and amortization expense, and because we use
    capital assets, depreciation and amortization expense is a
    necessary element of our costs and ability to generate
    revenue; and
•
tax expense, and because the payment of taxes is part of our
    operations, tax expense is a necessary element of our costs and
    ability to operate.
Additionally, EBITDA is not intended to be a measure of free
    cash flow for management's discretionary use, as it does
    not consider certain cash requirements such as capital
    expenditures, contractual commitments, interest payments, tax
    payments and debt service requirements. Because not all
    companies use identical calculations, this presentation of
    EBITDA may not be comparable to other similarly titled measures
    of other companies.
The following table is a reconciliation of our net income to
EBITDA:
Fiscal Years
(1)
Nine Months Ended
September 26,
October 2,
2002
2003
2004
2004
2005
(in thousands)
Net income
$
132,812
$
156,262
$
205,051
$
150,832
$
174,661
Interest expense, net
20,340
16,034
13,519
10,901
5,893
Income tax expense
80,161
106,601
100,735
70,505
78,767
Operating income (EBIT)
$
233,313
$
278,897
$
319,305
$
232,238
$
259,321
Depreciation and amortization
49,109
58,801
69,008
47,860
53,601
EBITDA
$
282,422
$
337,698
$
388,313
$
280,098
$
312,922
(6)
Includes both franchised and company-operated restaurants.
    Franchise restaurant sales are not included in our financial
    statements, other than approximately 80 franchisees whose
    results of operations are consolidated with ours pursuant to
    FIN 46R. However, franchise restaurant sales result in
    royalties and rental income, which are included in our franchise
    revenues.
(7)
Total systemwide sales growth is determined using a constant
    exchange rate to exclude the effects of foreign currency
    translation. U.S. dollar sales are converted to Canadian dollar
    amounts using the average exchange rate of the base year for the
    period covered.
(8)
For Canadian restaurants, average same-store sales are based on
    restaurants that have been open for a minimum of one calendar
    year. For U.S. restaurants, a restaurant is included in our
    average same-store sales calculation beginning in the
    13th month after the restaurant's opening.
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Table of Contents
RISK FACTORS
Investing in our common shares involves a high degree of
risk. You should consider carefully the following factors and
the other information in this prospectus before deciding to
purchase any of our common shares. If any of the following risks
actually occurs, our business, financial condition, results of
operation and cash flow could suffer materially and adversely.
In that case, the trading price of our common shares could
decline, and you might lose all or part of your investment.
Risks Relating to Our Business and Industry
The QSR segment is highly competitive, and that
competition could adversely affect our operating results.
The QSR segment of the foodservice industry is intensely
competitive regarding price, service, location, personnel and
type and quality of food. Tim Hortons restaurants compete with
international, regional and local organizations primarily
through the quality, variety and value perception of food
products offered. Other key competitive factors include the
number and location of restaurants, quality and speed of
service, attractiveness of facilities, effectiveness of
advertising and marketing programs, and new product development
by us and our competitors. We anticipate intense competition
will continue to focus on pricing. Some of our competitors have
substantially larger marketing budgets, which may provide them
with a competitive advantage. In addition, our system competes
within the food service market and the QSR segment not only for
customers but also for management and hourly employees, suitable
real estate sites and qualified franchisees. If we are unable to
maintain our competitive position, we could experience downward
pressure on prices, lower demand for our products, reduced
margins, the inability to take advantage of new business
opportunities and the loss of market share.
We are subject to changes in economic, market and other
conditions.
The QSR segment is affected by:
•
changes in international, national, regional and local economic
    conditions;
•
consumer preferences and spending patterns;
•
demographic trends;
•
the impact of inclement weather, natural disasters and other
    calamities;
•
traffic patterns;
•
the type, number and location of competing restaurants; and
•
the effects of war or terrorist activities and any governmental
    responses thereto.
Factors such as inflation, food costs, labour and benefit costs,
legal claims and the availability of management and hourly
employees also affect restaurant operations and administrative
expenses. Our system's ability to finance new restaurant
development and improvements and additions to existing
restaurants, and our acquisition of restaurants from, or sale of
restaurants to, franchisees, are affected by economic
conditions, including interest rates and other government
policies impacting land and construction costs and the cost and
availability of borrowed funds.
Events reported in the media, such as incidents involving
food-borne illnesses or food tampering, whether or not accurate,
can cause damage to our brand and swiftly affect our sales and
profitability.
Reports, whether true or not, of food-borne illnesses (such as
e-coli, avian flu, bovine spongiform encephalopathy, hepatitis
A, trichinosis or salmonella) and injuries caused by food
tampering have in the past severely injured the reputations of
participants in the QSR segment and
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Table of Contents
could in the future affect us as well. Anything that damages our
reputation or brand could immediately and severely hurt
systemwide sales and, accordingly, our revenues. If our
customers become ill from food-borne illnesses, we could also be
forced to temporarily close some restaurants. In addition,
instances of food-borne illnesses or food tampering, even those
occurring solely at the restaurants of our competitors, could,
by resulting in negative publicity about the restaurant
industry, adversely affect system sales on a local, regional or
systemwide basis. A decrease in customer traffic as a result of
these health concerns or negative publicity, or as a result of a
temporary closure of any of our restaurants, could materially
harm our business.
Failure to retain our existing senior management team or
our inability to attract and retain new qualified personnel
could hurt our business and inhibit our ability to operate and
grow successfully.
Our success will continue to depend to a significant extent on
our leadership team (specifically, our chief executive officer
and president) and other key management personnel. We may not be
able to retain our executive officers and key personnel or
attract additional qualified management personnel. Our success
also will continue to depend on our ability to attract and
retain qualified franchisees and other personnel to operate our
restaurants and distribution centres.
Failure to successfully implement our growth strategy
could harm our business.
We plan to increase the number of Tim Hortons restaurants, but
we may not be able to achieve our growth objectives and our new
restaurants may not be profitable. The opening and success of
restaurants depends on various factors, including:
•
competition from other QSRs in current and future markets;
•
our degree of saturation in existing markets;
•
the identification and availability of suitable and economically
    viable locations;
•
sales levels at existing restaurants;
•
the negotiation of acceptable lease or purchase terms for new
    locations;
•
permitting and regulatory compliance;
•
the ability to meet construction schedules;
•
the availability of qualified franchisees and their financial
    and other development capabilities (including their ability to
    obtain acceptable financing);
•
our ability to hire and train qualified management
    personnel; and
•
general economic and business conditions.
If we are unable to open as many new restaurants as we hope or
otherwise to successfully implement our growth strategy, our
revenue growth and profitability may be adversely affected.
We may not effectively expand our presence in the U.S.,
where our brand is not as well known and where competitive
conditions and markets may differ from those to which we are
accustomed.
We plan to continue expanding in the U.S., including into areas
where customers are unfamiliar with our brand. We will need to
build brand awareness in those markets through greater
investments in advertising and promotional activity than in
comparable Canadian markets and those activities may not promote
our brand as effectively as intended, if at all.
Many of the U.S. markets into which we intend to expand will
have competitive conditions, consumer tastes and discretionary
spending patterns that differ from our existing markets. We may
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Table of Contents
need to adapt our brand and our restaurants to those markets.
Those markets may have lower average unit sales, and may have
higher construction, occupancy or operating costs than existing
Tim Hortons restaurants. Sales and profits at restaurants opened
in new markets may take longer to reach expected levels or may
never do so.
In addition, if Tim Hortons restaurants are less profitable in
U.S. markets, we could have difficulty finding qualified U.S.
franchisees willing to participate in our expansion. This could
limit our ability to expand or could dilute the quality of
our franchisees, either of which would likely hurt our revenue
growth and operating results. We also currently provide
financing support to new U.S. franchisees; if U.S.
restaurants are not successful, we may have to expand our
financing support programs or extend financing on more generous
terms, either of which could adversely affect our net income.
Our distribution operations are subject to pressures
outside of our control that could adversely affect the results
of our manufacturing and distribution operations.
We sell coffee and other drinks, non-perishable food, supplies,
packaging and equipment to system restaurants from five
warehouses located across Canada, primarily using our fleet of
trucks and trailers. Transportation costs, including fuel costs
and costs incurred as a result of inclement weather, may affect
our distribution operations. Historically, fuel costs have been
subject to wide price fluctuations based on geopolitical issues
and variations in supply and demand. Also, inclement weather
such as snow storms or ice storms could adversely impact our
ability to transport ingredients and supplies. These factors are
out of our control. If fuel costs rise, or stay at their current
elevated levels, the operating costs of our distribution
operations would increase and likely depress our profitability.
In the event of a fuel supply shortage or significant weather
development, higher transportation costs or the curtailment of
scheduled service could result, either of which could injure our
relationship with our franchisees and reduce our profitability.
In addition, because our U.S. franchisees are not required to
purchase their ingredients and supplies from us, our
manufacturing and distribution operations may be subject to
competition. The presence of other suppliers who meet our
quality standards and specifications could cause downward
pressure on the prices and amounts we receive for ingredients
and supplies sold to our U.S. franchisees, which would adversely
affect the results of our manufacturing and distribution
operations.
Termination of our Maidstone Bakeries joint venture could
adversely affect our business.
The Maidstone Bakeries facility, which supplies all of our
donuts and Timbits® (bite-sized donuts) and a significant
portion of our other bread products to system restaurants, is
owned by a 50-50 joint venture between us and a subsidiary of
IAWS Group plc (IAWS). The agreements governing the joint
venture contemplate various procedures relating to the
termination of the joint venture, including a compulsory
buy/sell procedure. After March 6, 2006, either party may
initiate the compulsory buy/sell procedure. In addition, certain
of the technology used at the Maidstone Bakeries facility is
owned by a third party, Irish Bakery Inventions Limited (IBIL),
and is licensed to the joint venture. This license extends until
no later than April 2012.
Under certain circumstances, upon the termination of these
agreements, we and our franchisees could be forced to purchase
par-baked products manufactured by the facility at higher costs,
or we would need to incur significant capital costs to build our
own par-baked manufacturing facility using our independent
rights to the technology, or find alternative products and/or
production methods. Even if we were to build our own par-baked
goods manufacturing facility, we would not be able to produce
bread and/or bread products formerly purchased from the joint
venture to the extent they were prepared from recipes licensed
to the joint venture by IAWS and we were not able to license
them directly from IAWS on favourable terms, or at all. Further,
IAWS could under certain circumstances have the right to build
its own par-baked goods manufacturing facility using its
12
Table of Contents
independent rights to the par-baking technology, and manufacture
and sell par-baked donuts to our competitors, provided it did
not use our recipes. Any of the foregoing events could injure
our brand, cause us to lose revenues and/or increase our costs.
See "Business—Our Manufacturing and Distribution
Platforms."
Shortages or interruptions in the supply or delivery of
perishable food products could adversely affect our operating
results.
We and our franchisees are dependent on frequent deliveries of
perishable food products that meet our specifications. Shortages
or interruptions in the supply of perishable food products
caused by unanticipated demand, problems in production or
distribution, disease or food-borne illnesses, inclement weather
or other conditions could adversely affect the availability,
quality and cost of ingredients, which would likely adversely
affect our business.
Donuts and other par-baked products sold systemwide are
manufactured at the Maidstone Bakeries facility in Ontario,
Canada using proprietary processes. Due to the proprietary
nature of the manufacturing process, alternative suppliers for
our donuts and Timbits are not readily available. As a result,
if the facility's operations were to be significantly and
negatively impacted by an unexpected event, system restaurants
might not be able to provide donuts and other par-baked products
to their customers for a period of time, which could injure our
relationships with our franchisees as well as our
customers' perception of us and our brand. This would
likely adversely affect our growth strategy and results of
operations.
We will require a significant amount of cash, the
availability of which depends on many factors beyond our
control.
We intend to continue to grow the number of Tim Hortons
restaurants in Canada and the U.S. To support that expansion, we
will require a significant amount of cash. We will also need
cash to service our debt obligations and to fund potential
capital expenditures. Whether the cash we require is available,
and the cost associated with borrowing or otherwise raising any
cash not generated by operations, depends on many factors beyond
our control, including general economic, financial, competitive,
legislative, regulatory and other factors.
We cannot assure you our business will generate sufficient cash
flow or that future borrowings or other sources of cash will be
available to us in an amount sufficient to enable us to continue
our growth, make dividend payments, pay our debt or fund capital
expenditures or our other liquidity needs. If our future cash
flow from operations and other capital resources are
insufficient to pay our obligations as they mature or to fund
our other needs, we may be forced to reduce or delay our growth,
business activities and capital expenditures, sell assets,
obtain additional equity or debt capital or restructure or
refinance all or a portion of our debt, on or before maturity.
We cannot assure you that we will be able to refinance any of
our debt, on a timely basis or on satisfactory terms, if at all.
In addition, the terms of our existing debt and other future
debt may limit our ability to pursue any of these alternatives.
If we are unable to pay or refinance any of our debt on a timely
basis or on satisfactory terms, or to effect any other action
relating to our debt on satisfactory terms or at all, our
business may be harmed.
Current restaurant locations may become unattractive, and
attractive new locations may not be available for a reasonable
price, if at all.
The success of any restaurant depends in substantial part on its
location. There can be no assurance that current locations will
continue to be attractive as demographic patterns change.
Neighbourhood or economic conditions where restaurants are
located could decline in the future, thus resulting in
potentially reduced sales in those locations. In addition,
rising real estate prices, particularly in the Western provinces
of Canada and the Northeastern region of the U.S., may
13
Table of Contents
restrict our ability to purchase or lease new desirable
locations. If we cannot obtain desirable locations at reasonable
prices our ability to effect our growth strategy will be
adversely affected.
Changing health or dietary preferences may cause consumers
to avoid products offered by our system in favour of alternative
foods.
A significant portion of our systemwide sales is derived from
products, including donuts, muffins, cookies, croissants and
pastries, which contain high levels of fat and sugar and may be
considered harmful to the health of consumers. The foodservice
industry is affected by consumer preferences and perceptions. If
prevailing health or dietary preferences and perceptions cause
consumers to avoid these products offered by our system in
favour of alternative or healthier foods, demand for our
products may be reduced and our business could be harmed. For
example, there has recently been a trend towards
low-carbohydrate diets which may have caused or may in the
future cause some of our consumers to consider reducing
consumption of our baked products. There has also been increased
focus on the health risks posed by trans-fatty acids, which many
of our products contain.
Moreover, because our system sales are primarily dependent on
coffee and baked goods, if consumer demand for those products
decreases as a result of changing health or dietary preferences
and perceptions, our business would suffer more than if we had a
more diversified menu, as do many other QSRs.
We are subject to governmental regulation, and our failure
to comply with existing or future regulations could adversely
affect our business and results of operations.
We and our franchisees are subject to various federal, state,
provincial and local laws affecting our and their businesses.
The successful development and operation of restaurants depend
to a significant extent on the selection and acquisition of
suitable sites, which are subject to zoning, land use (including
the placement of drive-thru windows), environmental (including
litter), traffic and other regulations. Restaurant operations
are also subject to licensing and regulation by state,
provincial and local departments relating to health, food
preparation, sanitation and safety standards, federal,
provincial and state labour laws (including applicable minimum
wage requirements, overtime, working and safety conditions and
citizenship requirements), federal, provincial and state laws
prohibiting discrimination and other laws regulating the design
and operation of facilities, such as the Americans with
Disabilities Act of 1990 and similar Canadian provincial
legislation. Changes in these laws and regulations may adversely
affect our financial results.
In recent years, there has been an increased legislative,
regulatory and consumer focus on nutrition and advertising
practices in the food industry, particularly among QSRs. As a
result, we may become subject to regulatory initiatives in the
area of nutrition disclosure or advertising, such as
requirements to provide information about the nutritional
content of our food, which could increase our expenses. For
example, trans-fatty acid legislation has recently been enacted
in Canada, which will introduce new nutritional labeling
requirements in Canada and may negatively impact our
customers' perceptions of our products.
We own or lease a large number of retail properties and operate
a trucking fleet and distribution system, and these operations
involve environmental risks. We are subject to federal, state,
provincial and local environmental, health and safety laws and
regulations concerning the discharge, storage, handling, release
and disposal of hazardous or toxic substances. These
environmental laws provide for significant fines, penalties and
liabilities, sometimes without regard to whether the owner,
operator or occupant of the property knew of, or was responsible
for, the release or presence of the hazardous or toxic
substances. Third parties may also make claims against owners,
operators or occupants of properties for personal injuries and
property damage associated with releases of, or actual or
alleged exposure to, such substances. We cannot predict what
environmental laws will be enacted in the future, how existing
or future environmental laws will be
14
Table of Contents
administered or interpreted, or the amount of future
expenditures that we may need to make to comply with, or to
satisfy claims relating to, environmental laws. A number of our
restaurant sites were formerly gas stations, are on locations
where gas stations currently operate or are adjacent to gas
stations, or were used for other commercial activities that can
create environmental impacts. We may also acquire or lease these
types of sites in the future. We have not conducted a
comprehensive environmental review of all of our properties or
operations. We may not have identified all of the potential
environmental liabilities at our owned and leased properties,
and any such liabilities identified in the future could have a
material adverse effect on our operations or results of
operations. See "Business— Environmental, Health and
Safety."
The operation of our franchise system is also subject to
franchise laws and regulations enacted by a number of provinces
and states and rules promulgated by the U.S. Federal Trade
Commission. Any future legislation regulating our franchise
relationships may negatively affect our operations, particularly
our relationship with our franchisees. Failure to comply with
new or existing franchise laws and regulations in any
jurisdiction or to obtain required government approvals could
result in a ban or temporary suspension on future franchise
sales. Changes in applicable accounting rules imposed by
governmental regulators or private governing bodies could also
affect our results of operations.
We are affected by commodity market fluctuations,
particularly with respect to high-quality coffee beans, which
could reduce our profitability or sales.
We purchase large quantities of food and supplies, which can be
subject to significant price fluctuations due to seasonal
shifts, climate conditions, industry demand, changes in
international commodity markets and other factors. The market
for high-quality coffee beans is particularly volatile, both in
terms of price changes and available supply. Our internal
polling data shows that coffee represented over half of
systemwide restaurant sales in Canada, and over 25% of
systemwide restaurant sales in the U.S., during fiscal 2004. Any
increase in the price, or reduction in the availability, of
high-quality coffee beans could hurt both our and our
franchisees' businesses.
We sell coffee and other drinks, non-perishable food, frozen
food, supplies, packaging and equipment, and our joint venture
with IAWS provides par-baked donuts, Timbits and other bread
products, to all system restaurants. Neither we nor the joint
venture typically have written contracts or long-term
arrangements with coffee, sugar or other raw material suppliers.
Accordingly, the prices we and the joint venture pay for those
items may fluctuate significantly. If the price of any of those
items increases, then, to the extent we pass on that increase,
the operating costs of system restaurants would increase. If
system restaurant prices rise because of those increased costs
it may cause our customers to visit our restaurants less
frequently, or to purchase fewer items during any visit. That,
in turn, could reduce profits at our company-operated
restaurants and reduce gross sales at our franchise restaurants,
which would reduce the rental income and royalties payable to
us. If, on the other hand, we do not pass on cost increases to
the system, that would reduce the profitability of our
manufacturing and distribution operations.
We face risks associated with litigation from customers,
franchisees, employees and others in the ordinary course of
business.
Claims of illness or injury relating to food quality or food
handling are common in the food service industry. In addition,
class action lawsuits have been filed, and may continue to be
filed, against various QSRs alleging, among other things, that
QSRs have failed to disclose the health risks associated with
high-fat foods and that QSRs' marketing practices have
encouraged obesity. In addition to decreasing our sales and
profitability and diverting our management resources, adverse
publicity or a substantial judgment against us could negatively
impact our brand reputation, hindering our ability to attract
and retain qualified franchisees and grow our business.
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Further, we may be subject to employee, franchisee and other
claims in the future based on, among other things,
discrimination, harassment, wrongful termination and wage, rest
break and meal break issues, including those relating to
overtime compensation. These types of claims, as well as other
types of lawsuits to which we are subject from time to time, can
distract our management's attention from our business
operations. We have been subject to these types of claims in the
past, and if one or more of these claims were to be successful
or if there is a significant increase in the number of these
claims, our business, financial condition and results of
operations could be adversely affected.
Fluctuations in the value of the Canadian and U.S. dollars
can affect the value of our common shares and any dividends we
pay, as well as our revenues and earnings.
The majority of our operations and our principal executive
office are in Canada. Accordingly, although our financial
statements are presented in accordance with United States
generally accepted accounting principles, or GAAP, we report,
and will report, our results in Canadian dollars. If you are a
U.S. shareholder, the value of your investment in us will
fluctuate as the U.S. dollar rises and falls against the
Canadian dollar. Also, if we pay dividends in the future, we
will pay those dividends in Canadian dollars. Accordingly, if
the U.S. dollar rises in value relative to the Canadian dollar,
the U.S. dollar value of the dividend payments received by
U.S. common shareholders would be less than they would have
been if exchange rates were stable.
If the U.S. dollar falls in value relative to the Canadian
dollar, then our U.S. operations would be less profitable
to us for two reasons. First, U.S. system operating costs would
increase because those restaurants purchase certain of their
supplies from Canadian sources. Second, any profits reported by
our U.S. segment would contribute less to our consolidated
Canadian dollar earnings because of the weaker U.S. dollar.
Exchange rate fluctuations may also cause the price of goods to
increase or decrease for us and our franchisees. For example, a
decrease in the value of the Canadian dollar compared to the
U.S. dollar would proportionately increase the cost of
coffee beans, which are traded in U.S. dollars, for our
Canadian restaurants. During 2003 and 2004 the Canadian dollar/
U.S. dollar exchange rate varied from a high of 1.5750
Canadian dollars per U.S. dollar to a low of 1.1775
Canadian dollars per U.S. dollar.
We may not be able to adequately protect our intellectual
property, which could harm the value of our brand and branded
products and adversely affect our business.
The success of our business depends on our continued ability to
use our existing trademarks, service marks and other components
of our brand in order to increase brand awareness and further
develop our branded products in both the U.S. and Canadian
markets. We may not be able to adequately protect our
trademarks, and our use of these trademarks may result in
liability for trademark infringement, trademark dilution or
unfair competition. All of the steps we have taken to protect
our intellectual property in the U.S. and in Canada may not be
adequate.
In addition, we rely on our proprietary product delivery
platform and par-baking technology to support our
franchisees' business and our growth strategies. We have
not filed applications for or obtained patents for our
par-baking technology, and patents have not been obtained for
most of the par-baking technology used by our joint venture with
IAWS. If a competitor obtains a patent for, co-opts or more
successfully implements our or the joint venture's
proprietary techniques or technologies, our operations and
growth could be harmed, and we may be forced to defend one or
more patent-infringement claims or assertions.
We and/or the joint venture may from time to time be required to
institute litigation to enforce our trademarks or other
intellectual property rights, or to protect our trade secrets or
proprietary techniques and technologies. Such litigation could
result in substantial costs and diversion of
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resources and could negatively affect our sales, profitability
and prospects regardless of whether we and/or the joint venture
are able to successfully enforce our rights.
Our earnings and business growth strategy depends in large
part on the success of our franchisees, and we may be harmed by
actions taken by our franchisees that are outside of our
control.
A substantial portion of our earnings comes from royalties and
other amounts paid by our franchisees, who operated 96.6% of the
total number of Tim Hortons restaurants as of October 2,
2005. Our franchisees are independent contractors, and their
employees are not our employees. We provide training and support
to, and monitor the operations of, our franchisees, but the
quality of their restaurant operations may be diminished by any
number of factors beyond our control. Consequently, our
franchisees may not successfully operate stores in a manner
consistent with our standards and requirements and may not hire
and train qualified managers and other restaurant personnel. Any
operational shortcoming of a franchise restaurant is likely to
be attributed by consumers to our entire system, thus damaging
our brand reputation and potentially affecting our revenues and
profitability. Furthermore, if a significant number of our
franchisees were to become insolvent or otherwise were unwilling
or unable to pay us for food and supplies purchased or
royalties, rent or other fees, our business and results of
operations would be harmed.
We are subject to all of the risks associated with owning
and leasing real estate.
As of October 2, 2005, we owned the land and building, or
leased the land and/or the building, for 2,267 system
restaurants. Accordingly, we are subject to all of the risks
generally associated with owning and leasing real estate,
including changes in the investment climate for real estate,
demographic trends and supply or demand for the use of the
restaurants, which may result from competition from similar
restaurants in the area, as well as liability for environmental
contamination as further discussed above under "—We
are subject to governmental regulation, and our failure to
comply with existing or future regulations could adversely
affect our business and results of operations."
We lease land generally for initial terms of 10 to
20 years. Many leases provide that the landlord may
increase the rent over the term of the lease. Most leases
require us to pay all of the cost of insurance, taxes,
maintenance and utilities. We generally cannot cancel these
leases. If an existing or future store is not profitable, and we
decide to close it, we may nonetheless be committed to perform
our obligations under the applicable lease including, among
other things, paying the base rent for the balance of the lease
term. In addition, as each of our leases expires, we may fail to
negotiate renewals, either on commercially acceptable terms or
at all, which could cause us to close stores in desirable
locations.
We will have significant debt obligations, which could
adversely affect our business and limit our ability to plan for
or respond to changes in our business.
After the completion of this offering and the repayment of our
outstanding amounts owed to Wendy's, our total indebtedness
for borrowed money will be approximately $500.0 million,
including indebtedness under our new term loan agreement. We may
also incur additional indebtedness in the future, including
pursuant to our two new revolving credit facilities, which will
have available $200.0 million and US$100.0 million,
respectively. Our significant indebtedness could have adverse
consequences, including:
•
increasing our vulnerability to adverse economic, regulatory and
    industry conditions;
•
limiting our ability to compete and our flexibility in planning
    for, or reacting to, changes in our business and the industry;
•
limiting our ability to borrow additional funds; and
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•
requiring us to dedicate a substantial portion of our cash flow
    from operations to payments on our debt, thereby reducing funds
    available for working capital, capital expenditures,
    acquisitions and other purposes.
If our cash flow and capital resources are insufficient to
service our debt obligations, we may be forced to sell assets,
seek additional equity or debt capital or restructure our debt.
However, these measures might be unsuccessful or inadequate in
permitting us to meet scheduled debt service obligations. We may
be unable to restructure or refinance our obligations and obtain
additional equity financing or sell assets on satisfactory terms
or at all. As a result, an inability to meet our debt
obligations could cause us to default on those obligations. A
default under any debt instrument could, in turn, result in
defaults under other debt instruments. Any such defaults could
have a material adverse effect on our business, financial
condition and results of operations.
Our loan agreements could restrict our ability to finance
operations and capital needs, make acquisitions or engage in
other business activities.
We will enter into a term loan agreement and two revolving
credit facilities prior to the completion of this offering.
Those agreements will include restrictive covenants that, among
other things, may restrict our ability to:
•
incur additional debt;
•
pay dividends;
•
make certain acquisitions and investments;
•
repurchase our equity;
•
create liens;
•
enter into transactions with affiliates;
•
enter into sale-leaseback transactions;
•
dispose of all or substantially all of our assets; and
•
merge or consolidate with another entity.
These restrictions could limit our financial flexibility,
prohibit or limit any contemplated strategic initiatives, or
limit our ability to grow and increase our revenues or respond
to competitive changes. In addition, events beyond our control
could cause us to breach these restrictive covenants. If we fail
to comply with the terms and covenants in any of the loan
agreements, that could lead to a default, which would entitle
the lenders to accelerate the indebtedness and declare all
amounts owed due and payable. A default under any loan agreement
could, in turn, result in defaults under the other loan
agreements and other debt instruments. Any such defaults could
materially impair our financial condition and liquidity.
We intend to evaluate acquisitions, joint ventures and
other strategic initiatives that may complement or expand our
business. We may not be able to obtain or complete such
transactions, and those that we do complete could have a
negative effect on our operations.
Our future success may depend on opportunities to buy or obtain
rights to other businesses or technologies that could
complement, enhance or expand our current business or products
or that might otherwise offer us growth opportunities. In
particular, we intend to evaluate potential mergers,
acquisitions, joint venture investments, strategic initiatives,
alliances, vertical integration opportunities and divestitures.
These transactions and arrangements involve various inherent
risks, including:
•
accurately assessing the value, future growth potential,
    strengths, weaknesses, contingent and other liabilities and
    potential profitability of acquisition candidates;
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•
the potential loss of key personnel of an acquired business;
•
our ability to achieve projected economic and operating
    synergies;
•
difficulties successfully integrating, operating, maintaining
    and managing newly acquired operations or employees;
•
difficulties maintaining uniform standards, controls, procedures
    and policies;
•
unanticipated changes in business and economic conditions
    affecting an acquired business; and
•
the diversion of our management's attention from our
    existing business to integrate the operations and personnel of
    the acquired or combined business or implement the strategic
    initiative.
For example, in May 2004 we acquired 42 restaurants in New
England. We have limited consumer brand awareness in this market
and face significant competition from at least one competitor
with a much larger presence in this market, and we continue to
operate these restaurants as company-operated restaurants.
In addition, we may not be able to complete desirable
transactions, for reasons including a failure to secure
financing, as a result of our separation agreements or as a
result of restrictive covenants in our debt instruments or other
agreements with third parties. See "Our Relationship with
Wendy's—Agreements Between Wendy's and Us"
for a description of the restrictions arising under the
separation agreements. For example, our joint venture agreement
with IAWS obligates us to offer IAWS the opportunity to
participate on an equal basis in automated baking ventures that
we acquire or undertake in North America, to the extent those
ventures manufacture specified categories of par-baked frozen
products. Also, our loan agreements will impose certain
restrictions on our ability to operate our business. See
"—Our loan agreements could restrict our ability to
finance operations and capital needs, make acquisitions or
engage in other business activities."
We will incur increased costs as a result of being a
public company.
Prior to this offering, as a subsidiary of a publicly-held
company, we were not directly responsible for the corporate
governance and financial reporting practices, policies and
disclosure required of a publicly-traded company. As a public
company, we will incur significant legal, accounting and other
expenses that we did not directly incur in the past. In
addition, the Sarbanes-Oxley Act of 2002, as well as new rules
implemented by the SEC, Canadian securities regulatory
authorities and the NYSE® require or may require changes in
corporate governance practices of public companies. We expect
these new rules and regulations to increase our legal and
financial compliance costs and to make some activities more
time-consuming and costly.
Our annual and quarterly financial results may fluctuate
depending on various factors, many of which are beyond our
control, and if we fail to meet the expectations of securities
analysts or investors, our share price may decline
significantly.
Our sales and operating results can vary from quarter to quarter
and year to year depending on various factors, many of which are
beyond our control. These factors include:
•
variations in the timing and volume of our sales and our
    franchisees' sales;
•
sales promotions by us and our competitors;
•
changes in average same-store sales and customer visits;
•
variations in the price, availability and shipping costs of our
    supplies;
•
seasonal effects on demand for our products;
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•
unexpected slowdowns in our new store development efforts;
•
changes in competitive and economic conditions generally;
•
changes in the cost or availability of our ingredients or labour;
•
weather and acts of God;
•
changes in the number of franchise agreement renewals; and
•
foreign currency exposure.
Certain of the foregoing events may directly and immediately
decrease demand for our products. If customer demand decreases
rapidly, our results of operations would also decline
precipitously.
Our historical financial results may not be representative
of our results as a separate, stand-alone company.
The historical financial information included in this prospectus
has been derived from the consolidated financial statements of
Wendy's and does not necessarily reflect what our financial
position, results of operations, cash flows, costs or expenses
would have been had we been a separate, stand-alone company
during the periods presented, or that we may achieve in the
future. Although Wendy's did account for us as a business
segment, Wendy's did not account for us, and we were not
operated, as a separate, stand-alone company for the historical
periods presented. The historical costs and expenses reflected
in our financial statements include an allocation for certain
corporate functions historically provided by Wendy's,
including general corporate expenses, employee benefits and
incentives and interest expense. These allocations were based on
what we and Wendy's considered to be reasonable reflections
of the historical utilization levels of these services required
in support of our business. Our pro forma adjustments reflect
changes that may occur in our funding and operations as a result
of this offering. For additional information, see "Selected
Historical Consolidated Financial and Other Data,"
"Unaudited Pro Forma Consolidated Financial
Information," "Management's Discussion and
Analysis of Financial Condition and Results of Operations"
and our consolidated financial statements and the notes thereto
included elsewhere in this prospectus.
Our ability to operate our business effectively may suffer
if we do not, quickly and cost-effectively, establish our own
securities compliance and financial reporting functions in order
to operate as a stand-alone public company, and the transitional
services Wendy's has agreed to provide us may not be
sufficient for our needs.
Historically, we have relied on Wendy's to provide services
relating to compliance with securities laws and other public
reporting matters, including Sarbanes-Oxley compliance.
Initially after this offering we will continue to use some of
Wendy's systems in these areas; however, if a spin-off by
Wendy's of our common shares to its shareholders occurs, we
will need to handle these matters internally. We will enter into
a shared services agreement with Wendy's pursuant to which
Wendy's will provide these services to us for a defined
period of time. See "Our Relationship with
Wendy's—Agreements Between Wendy's and
Us—Shared Services Agreement." These services may not
be sufficient to meet our needs, and after that agreement
expires we may not be able to replace these services at all or
obtain these services at prices and on terms as favourable as we
currently have. Similar agreements with third parties may have
been more or less favourable to us. Any failure or significant
downtime in our own public reporting systems or in such systems
of Wendy's during the transitional period could impact our
results and/or hinder our ability to comply with securities laws
and, therefore, hurt our operating results and/or the market
price of our common shares.
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Risks Related to Our Relationship with Wendy's
Following this offering, we will continue to be dependent
on Wendy's to provide us with many key services for our
business.
Since December 1995, we have been operated as a wholly-owned
subsidiary of Wendy's, and many key services required by us
for the operation of our business are currently provided by
Wendy's and its subsidiaries, including services related to
internal controls and external financial reporting. Prior to the
completion of this offering, we will enter into agreements with
Wendy's related to the separation of our business
operations from Wendy's, including a shared services
agreement. Under the terms of the shared services agreement,
which will be signed at the completion of this offering,
Wendy's will provide us with many key services, including
services relating to internal controls and external financial
reporting. We expect some of these services to be provided for
longer or shorter periods than the initial term. We believe it
is necessary for Wendy's to provide these services for us
under the shared services agreement to facilitate the efficient
operation of our business as we transition to becoming a public
company. We will, as a result, initially be dependent on
Wendy's for shared services following this offering. See
"Our Relationship with Wendy's—Agreements Between
Wendy's and Us—Shared Services Agreement."
Once the transition periods specified in the shared services
agreement have expired and are not renewed, or if Wendy's
does not or is unable to perform its obligations under the
shared services agreement, we will be required to provide these
services ourselves or to obtain substitute arrangements with
third parties. We may be unable to provide these services
because of financial or other constraints or be unable to
implement substitute arrangements on a timely basis on terms
that are favourable to us, or at all.
Following the completion of this offering, we will no longer
have access to the borrowing capacity, cash flow and assets, and
some services, provided by Wendy's and its subsidiaries
that were available while we were wholly-owned by Wendy's.
As long as Wendy's controls our company, your ability
to influence the outcome of matters requiring shareholder
approval will be limited.
After the completion of this offering, Wendy's will
own      % of our outstanding common
shares, or      % if the underwriters
exercise their over-allotment option in full. As long as
Wendy's has voting control of our company, Wendy's
will have the ability to take many shareholder actions
irrespective of the vote of any other shareholder. As a result,
Wendy's will have the ability to influence or control all
matters affecting us, including:
•
the composition of our board of directors and, through our board
    of directors, decision-making with respect to our business
    direction and policies, including the appointment and removal of
    our officers;
•
any determinations with respect to acquisitions of businesses,
    mergers or other business combinations;
•
our acquisition or disposition of assets;
•
our capital structure;
•
our payment or non-payment of dividends; and
•
determinations with respect to our tax returns.
This voting control may discourage transactions involving a
change of control of our company, including transactions in
which you as a holder of our common shares might otherwise
receive a premium for your shares over the then-current market
price. Furthermore, Wendy's generally has the right at any
time to spin-off our common shares that it owns or to sell a
controlling interest in us to a
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third party after the expiration of the 180 day lockup
period, without your approval and without providing for a
purchase of your shares. See "Shares Eligible for Future
Sales."
We may have potential business conflicts of interest with
Wendy's regarding our past and ongoing relationships, and
because of Wendy's controlling ownership in us, the
resolution of these conflicts may not be favourable to
us.
Conflicts of interest may arise between Wendy's and us in a
number of areas relating to our past and ongoing relationships,
including:
•
labour, tax, employee benefit, indemnification and other matters
    arising under the separation agreements;
•
intellectual property matters;
•
employee recruiting and retention;
•
competition for franchisees or restaurant locations;
•
sales or distributions by Wendy's of all or any portion of
    its ownership interest in us, which could be to one of our
    competitors;
•
business combinations involving us; and
•
business opportunities that may be attractive to both
    Wendy's and us.
We may not be able to resolve any potential conflicts, and, even
if we do so, the resolution may be less favourable to us than if
we were dealing with an unaffiliated party.
We may compete directly with Wendy's, which could
adversely affect our results of operations.
Wendy's is primarily engaged in the business of operating,
developing and franchising a system of distinctive QSRs, with
restaurants in the United States, Canada and other international
markets. Wendy's is not restricted in any manner from
competing with us. After this offering, Wendy's may expand,
through development of new QSRs, products or businesses,
acquisitions or otherwise, its operations that compete with us.
Wendy's will not be required to offer corporate
opportunities to us, and our articles of incorporation will
permit some of our directors to offer some corporate
opportunities to Wendy's before us.
Our articles of incorporation will provide that Wendy's is
under no obligation to communicate or offer any corporate
opportunity to us. In addition, Wendy's will have the right
to engage in similar activities as us, do business with our
suppliers and customers and, except as limited by the master
separation agreement, employ or otherwise engage any of our
officers or employees. Our articles of incorporation also
outline how corporate opportunities are to be assigned in the
event that any person who is a director of both Wendy's and
us learns of any corporate opportunities. As a result,
Wendy's may gain the benefit of corporate opportunities
that are presented to our directors.
Our separation agreements with Wendy's require us to
assume the past, present and future liabilities related to our
business and may be less favourable to us than if they had been
negotiated with unaffiliated third parties.
We will negotiate our separation agreements with Wendy's
while we are a wholly-owned subsidiary of Wendy's and will
enter into these agreements immediately prior to the completion
of this offering. Had these agreements been negotiated with
unaffiliated third parties, they might have been more favourable
to us. Pursuant to these agreements, we have agreed to indemnify
Wendy's for, among other matters, all past, present and
future liabilities related to our business, and we have
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assumed these liabilities under the separation agreements. Such
liabilities include unknown liabilities that could be
significant. The allocation of assets and liabilities between
Wendy's and us may not reflect the allocation that would
have been reached between two unaffiliated parties. See
"Our Relationship with Wendy's—Agreements Between
Wendy's and Us" for a description of these obligations.
Our business and your investment in our common shares may
be adversely affected if Wendy's does not spin-off our
shares.
Wendy's may spin-off our common shares that it owns;
however, Wendy's has the sole right to decide when, and
whether, it will effect such a spin-off. Unless and until such a
spin-off occurs, we will face the risks discussed in this
prospectus relating to Wendy's, including its control of us
and potential conflicts of interest between Wendy's and us.
In addition, if a spin-off does not occur, the liquidity of the
market for our common shares may be constrained for as long as
Wendy's continues to hold a significant position in our
common shares. A lack of liquidity in the market for our common
shares may adversely affect our share price.
The separation agreements may limit our ability to obtain
additional financing or make acquisitions and may require us to
pay significant tax liabilities.
We may engage, or desire to engage, in future financings or
acquisitions. However, because the separation agreements are
designed to preserve the tax-free status of a potential
spin-off, those agreements may severely limit our ability to
effect future financings or acquisitions. For the spin-off to be
tax-free to Wendy's and its shareholders, among other
things, Wendy's must own at least 80% of all of our voting
power (and at least 80% of the shares of any class of non-voting
shares) at the time of the spin-off. Therefore, we will be
limited in our ability to issue voting securities, non-voting
shares or convertible debt without Wendy's prior consent,
and Wendy's may be unwilling to give that consent so long
as it intends to complete the spin-off. We have also agreed to
certain additional restrictions that are intended to preserve
the tax-free status of the spin-off. See "Our Relationship
with Wendy's—Agreements Between Wendy's and
Us—Tax Sharing Agreement" for a description of these
restrictions.
In addition, we have agreed with Wendy's that we will not
(without Wendy's prior written consent) take any of the
following actions prior to the distribution:
•
acquire any businesses or assets with an aggregate value of more
    than
    $           million
    for all such acquisitions;
•
dispose of any assets with an aggregate value of more than
    $           million
    for all such dispositions; and
•
acquire any equity or debt securities of any other person with
    an aggregate value of more than
    $           million
    for all such acquisitions.
The separation agreements also provide that for so long as
Wendy's owns at least 50% of all of our voting power, we
will not (without the prior written consent of Wendy's)
take any actions that could reasonably result in Wendy's
being in breach or in default under any contract or agreement.
Finally, we are required to indemnify Wendy's against
certain tax-related liabilities incurred by Wendy's
relating to a potential spin-off to the extent caused by us.
These liabilities include the substantial tax-related liability
(calculated without regard to any net operating loss or other
tax attribute of Wendy's) that would result if the spin-off
failed to qualify as a tax-free transaction.
See "Our Relationship with Wendy's—Agreements
Between Wendy's and Us" for a description of the
separation agreements.
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Third parties may seek to hold us responsible for
liabilities of Wendy's that we did not assume in our
agreements.
Third parties may seek to hold us responsible for retained
liabilities of Wendy's. Under the separation agreements,
Wendy's has agreed to indemnify us for claims and losses
relating to these retained liabilities. However, if those
liabilities are significant and we are ultimately held liable
for them, we cannot assure you that we will be able to recover
the full amount of our losses from Wendy's.
Our directors and executive officers who own Wendy's
common shares or options to acquire Wendy's common shares
or who hold positions with Wendy's may have potential
conflicts of interest.
Ownership of Wendy's common shares, options to acquire
Wendy's common shares and other equity securities of
Wendy's by certain of our directors and officers after this
offering and the presence of Wendy's directors or officers
on our board of directors could create, or appear to create,
potential conflicts of interest when those directors and
officers are faced with decisions that could have different
implications for Wendy's than they do for us. See
"Management" for a description of the extent of the
relationship between our directors and officers and Wendy's.
Our prior and continuing relationship with Wendy's
exposes us to risks attributable to businesses of
Wendy's.
Wendy's is obligated to indemnify us for losses that a
party may seek to impose upon us or our affiliates for
liabilities relating to the Wendy's business that are
incurred through a breach of the separation agreements or any
ancillary agreement by Wendy's or its non-Tim Hortons
affiliates, if losses are attributable to Wendy's in
connection with this offering or are not expressly assumed by us
under the separation agreements. Immediately following this
offering, any claims made against us that are properly
attributable to Wendy's in accordance with these
arrangements would require us to exercise our rights under the
separation agreements to obtain payment from Wendy's. We
are exposed to the risk that, in these circumstances,
Wendy's cannot, or will not, make the required payment.
Risks Related to this Offering
There currently exists no market for our common shares. An
active trading market may not develop for our common shares, and
the price of our common shares may be subject to factors beyond
our control. If our share price fluctuates after this offering,
you could lose all or a significant part of your
investment.
Prior to this offering, no public market existed for our common
shares. An active and liquid market for the common shares may
not develop following the completion of this offering, or, if
developed, may not be maintained. If an active public market
does not develop or is not maintained, you may have difficulty
selling your common shares. The initial public offering price of
our common shares was determined by negotiations between us,
Wendy's and the underwriters for this offering and may not
be indicative of the price at which the common shares will trade
following the completion of this offering.
The market price of our common shares may also be influenced by
many other factors, some of which are beyond our control,
including, among other things:
•
actual or anticipated variations in average same-store sales or
    quarterly operating results;
•
changes in financial estimates or opinions by research analysts;
•
actual or anticipated changes in the Canadian and
    U.S. economies or the food service industry;
24
Table of Contents
•
terrorist acts or wars;
•
weather and acts of God;
•
changes in the market volatility of other QSRs;
•
announcements by us or our competitors of significant
    acquisitions, strategic partnerships, divestitures, joint
    ventures or other strategic initiatives; and
•
actual or anticipated sales or distributions of common shares by
    Wendy's, as well as by our officers and directors, whether
    in the market, in subsequent public offerings or in a spin-off.
As a result of this volatility, you may not be able to resell
your common shares at or above the initial public offering
price. In addition, the stock market in general has experienced
extreme price and volume fluctuations that have often been
unrelated or disproportionate to the operating performance of
companies like us. These broad market and industry factors may
materially reduce the market price of the common shares,
regardless of our operating performance.
Investors purchasing common shares in this offering will
incur substantial and immediate dilution.
The initial public offering price of our common shares is
substantially higher than the net tangible book value per
outstanding common share. Purchasers of our common shares in
this offering will incur immediate and substantial dilution of
$           per
common share in the net tangible book value of our common shares
from an assumed initial public offering price of
$           per
common share. If the underwriters exercise their option to
purchase additional shares in full, there will be dilution of
$           per
common share in the net tangible book value of our common
shares. This means that if we were to be liquidated immediately
after this offering, there might be no assets available for
distribution to you after satisfaction of all our obligations to
creditors. For further description of the effects of dilution in
the net tangible book value of our common shares, see
"Dilution."
Our share price may decline because of the ability of
Wendy's and others to sell our common shares.
Sales of substantial amounts of our common shares after this
offering, or the possibility of those sales, could adversely
affect the market price of our common shares and impede our
ability to raise capital through the issuance of equity
securities. See "Shares Eligible for Future Sale" for
a discussion of possible future sales of our common shares.
After this offering, Wendy's will
own      % of our outstanding common
shares (      % if the underwriters
exercise their over-allotment option in full). Wendy's has
no contractual obligation to retain any of our common shares,
except for a limited period, described under
"Underwriting," during which it will not sell any of
our common shares without the underwriters' consent until
180 days after the date of this prospectus. Subject to
applicable securities laws, after the expiration of this 180-day
lock-up period or before, with consent of the representatives of
the underwriters to this offering, Wendy's may sell any and
all of our common shares that it beneficially owns and may
distribute any or all of these shares to its shareholders.
Moreover, this 180-day lock-up period does not apply to the
spin-off (if it occurs) by Wendy's of its remaining
ownership interest in us to its common shareholders, who would
not be subject to any resale restrictions. The registration
rights agreement we will enter into with Wendy's grants
Wendy's the right to require us to register our common
shares it holds in specified circumstances. See "Our
Relationship With Wendy's— Agreements Between
Wendy's and Us— Registration Rights Agreement."
In addition, after the expiration of this 180-day lock-up
period, we could issue and sell additional common shares,
subject to Wendy's consent. Any sale by Wendy's or us
of our common shares in the public market, or the perception
that sales could occur (for example, as a result of the
spin-off), could adversely affect prevailing market prices for
our common shares.
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Table of Contents
In connection with this offering, we intend to file a
registration statement on Form S-8 to register common
shares that are or will be reserved for issuance under our stock
incentive plan. Significant sales of our common shares pursuant
to our stock incentive plan could also adversely affect the
prevailing market price for our common shares.
We will be a "controlled company" within the
meaning of the New York Stock Exchange rules, and, as a result,
will qualify for, and intend to rely on, exemptions from certain
corporate governance requirements that provide protection to
shareholders of other companies.
After the completion of this offering, Wendy's will own
more than 50% of the total voting power of our common shares and
we will be a "controlled company" under the NYSE
corporate governance standards. As a controlled company, we
intend to utilize certain exemptions under the NYSE standards
that free us from the obligation to comply with certain NYSE
corporate governance requirements, including the requirements:
•
that a majority of the board of directors consists of
    independent directors;
•
that we have a nominating and governance committee that is
    composed entirely of independent directors with a written
    charter addressing the committee's purpose and
    responsibilities;
•
that we have a compensation committee that is composed entirely
    of independent directors with a written charter addressing the
    committee's purpose and responsibilities; and
•
for an annual performance evaluation of the nominating and
    governance committee and compensation committee.
We intend to use these exemptions and, as a result, you will not
have the same protection afforded to shareholders of companies
that are subject to all of the NYSE corporate governance
requirements.
We will not have complete control over our tax decisions
and could be liable for income taxes owed by
Wendy's.
For so long as Wendy's continues to own at least 80% of the
total voting power and value of our common shares, we and
certain of our U.S. subsidiaries will be included in
Wendy's consolidated group for U.S. federal income tax
purposes. In addition, we or one or more of our subsidiaries may
be included in the combined, consolidated or unitary tax returns
of Wendy's or one or more of its subsidiaries for
U.S. state or local income tax purposes. Under the tax
sharing agreement, we will pay to or receive from Wendy's
the amount of U.S. federal, state and local income taxes
that we would be required to pay to or entitled to receive from
the relevant taxing authorities if we and our subsidiaries filed
combined, consolidated or unitary tax returns and were not
included in the consolidated, combined or unitary tax returns of
Wendy's or its subsidiaries. In addition, by virtue of its
controlling ownership and the tax sharing agreement,
Wendy's will effectively control all of our U.S. and
Canadian tax decisions. The tax sharing agreement provides that
Wendy's will have sole authority to respond to and conduct
all tax proceedings (including tax audits) relating to us, to
file all income tax returns on our behalf and to determine the
amount of our liability to (or entitlement to payment from)
Wendy's under the tax sharing agreement. This arrangement
may result in conflicts of interest between Wendy's and us.
For example, under the tax sharing agreement, Wendy's will
be able to choose to contest, compromise or settle any
adjustment or deficiency proposed by the relevant taxing
authority in a manner that may be beneficial to Wendy's and
detrimental to us. See "Our Relationship With
Wendy's—Agreements Between Wendy's and
Us—Tax Sharing Agreement."
Moreover, notwithstanding the tax sharing agreement,
U.S. federal law provides that each member of a
consolidated group is liable for the group's entire tax
obligation. Thus, to the extent Wendy's or other members of
the group fail to make any U.S. federal income tax payments
required
26
Table of Contents
by law, we would be liable for the shortfall. Similar principles
may apply for foreign, state and local income tax purposes where
we file combined, consolidated or unitary returns with
Wendy's or its subsidiaries for federal, foreign, state and
local income tax purposes.
Our articles of incorporation, code of regulations and
Ohio state law contain provisions that may have the effect of
delaying or preventing a change in control of us.
Our articles of incorporation authorize our board of directors
to issue up
to            preferred
shares and to determine the powers, preferences, privileges,
rights, including voting rights, qualifications, limitations and
restrictions on those shares, without any further vote or action
by the shareholders. The rights of the holders of our common
shares will be subject to, and may be adversely affected by, the
rights of the holders of any preferred shares that may be issued
in the future. The issuance of preferred shares could have the
effect of delaying, deterring or preventing a change in control
and could adversely affect the voting power or economic value of
your shares.
In addition, provisions of our articles of incorporation, code
of regulations and Ohio law, together or separately, could
discourage potential acquisition proposals, delay or prevent a
change in control and limit the price that certain investors
might be willing to pay in the future for our common shares.
Among other things, these provisions establish a staggered
board, require a supermajority vote to remove directors, and
establish certain advance notice procedures for nomination of
candidates for election as directors and for shareholder
proposals to be considered at shareholders' meetings. For a
further description of these provisions of our articles of
incorporation, code of regulations and Ohio law, see
"Description of Capital Stock— Anti-Takeover Effects
of Certain Provisions of our Articles of Incorporation, Our Code
of Regulations and Ohio Law."
If, after this offering, we are unable to satisfy the
requirements of Section 404 of the Sarbanes-Oxley Act, or
our internal controls over financial reporting are not
effective, the reliability of our financial statements may be
questioned and our share price may suffer.
Section 404 of the Sarbanes-Oxley Act requires any company
subject to the reporting requirements of the
U.S. securities laws to perform a comprehensive evaluation
of its and its subsidiaries' internal controls over
financial reporting. To comply with this statute and comparable
requirements of Canadian securities laws, we will be required to
document and test our internal control procedures, our
management will be required to assess and issue a report
concerning our internal controls over financial reporting and
our independent auditors will be required to issue an opinion on
management's assessment and the effectiveness of those
matters. Our compliance with Section 404 of the
Sarbanes-Oxley Act and comparable requirements of Canadian
securities laws will first be reported on in connection with the
filing of our annual report on Form 10-K for the fiscal
year ending December 30, 2007. The rules governing the
standards that must be met for management to assess our internal
controls over financial reporting are new and complex and
require significant documentation, testing and possible
remediation to meet the detailed standards under the rules.
During the course of its testing, our management may identify
material weaknesses or significant deficiencies which may not be
remedied in time to meet the deadline imposed by the SEC rules
implementing Section 404 and comparable requirements of
Canadian securities regulations. If our management cannot
favourably assess the effectiveness of our internal controls
over financial reporting or our auditors identify material
weaknesses in our internal controls, investor confidence in our
financial results may weaken, and our share price may suffer.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain information contained in this prospectus, particularly
information regarding future economic performance and finances,
plans and objectives of management, is forward-looking. In some
cases, information regarding certain important factors that
could cause actual results to differ materially from any such
forward-looking statement appears together with such statement.
In addition, the following factors, in addition to the other
factors described under "Risk Factors" and other
possible factors not listed, could affect our actual results and
cause such results to differ materially from those expressed in
forward-looking statements. These factors include:
•
competition within the QSR segment, which remains extremely
    intense, with many competitors pursuing heavy price discounting;
•
changes in economic conditions;
•
changes in consumer perceptions of dietary health and food
    safety;
•
harsh weather, particularly in the first and fourth quarters;
•
changes in consumer tastes;
•
labour and benefit costs;
•
legal claims;
•
our ability to maintain good relationships with our franchisees;
•
our ability to retain or replace our key members of management;
•
our continued ability, and the ability of our franchisees, to
    obtain suitable locations and financing for new restaurant
    development;
•
governmental initiatives such as minimum wage rates, taxes and
    possible franchise legislation; and
•
changes in applicable accounting rules.
Many of the factors that will determine our future performance
are beyond our ability to control or predict. You are cautioned
not to put undue reliance on any forward-looking statements.
Except as required by applicable securities laws, we do not have
any intention or obligation to update forward-looking statements
after we distribute this prospectus, even if new information,
future events or other circumstances have made them incorrect or
misleading.
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USE OF PROCEEDS
We estimate that our net proceeds from the sale of
approximately            common
shares in this offering, after deducting estimated underwriting
discounts and commissions and estimated offering expenses, will
be approximately
$           million
($           million
if the underwriters exercise their over-allotment option in
full), assuming the shares are offered at
$           per
common share, which is the midpoint of the estimated offering
price range set forth on the cover page of this prospectus. We
intend to use the net proceeds from this offering, together with
estimated borrowings of $500.0 million under a new term
loan agreement we will enter into prior to this offering, to pay
the US$960.0 million of indebtedness, together with accrued
interest, owed to Wendy's under a US$960.0 million
promissory note. For a description of the promissory note and
the new term loan agreement, see "Management's
Discussion and Analysis of Financial Condition and Results of
Operations—Liquidity and Capital Resources—Loan
Agreements."
DIVIDEND POLICY
We did not pay any cash dividends on our common shares in 2003
or 2004. In September 2005 we distributed, as a dividend on our
common shares, a promissory note to Wendy's in the
principal amount of US$960.0 million. The note is payable
within 30 days of demand and bears an interest rate of
3.0% per annum.
We currently intend to declare and pay dividends on our common
shares. However, we cannot assure you sufficient cash will be
available to pay such dividends. In addition, our new loan
agreements may impose restrictions on our ability to pay
dividends, and thus our ability to pay dividends on our common
shares will depend upon, among other things, our level of
indebtedness at the time of the proposed dividend and whether we
are in default under any of our debt instruments. Our future
dividend policy will also depend on the requirements of any
future financing agreements to which we may be a party and other
factors considered relevant by our board of directors. Further,
any future declaration and payment of dividends is discretionary
and our board of directors may at any time modify or revoke our
dividend policy on our common shares. Until we are spun-off by
Wendy's, if ever, our board of directors will be elected
by, and our company controlled by, Wendy's, our controlling
shareholder. After the completion of this offering, any
dividends we pay will be declared and paid in Canadian dollars.
For information regarding restrictions on our payment of
dividends, see "Risks Relating to Our Business and
Industry—Our loan agreements could restrict our ability to
finance operations and capital needs, make acquisitions or
engage in other business activities," "Our
Relationship with Wendy's—Wendy's as our
Controlling Shareholder" and "Risks Related to Our
Relationship with Wendy's—As long as Wendy's
controls our company, your ability to influence the outcome of
matters requiring shareholder approval will be limited."
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Table of Contents
CAPITALIZATION
The following table sets forth our cash and cash equivalents and
our consolidated capitalization as of October 2, 2005 on an
actual basis and on an as adjusted basis.
The as adjusted financial information as of October 2, 2005
gives effect to (1) the non-cash settlement of notes and
trade balances between Wendy's and us in the fourth quarter
of 2005, other than our note payable to Wendy's in the
principal amount of US$960.0 million, (2) our
incurrence of $500.0 million of indebtedness under our new
term loan agreement
in            2006,
(3) the completion of this offering and (4) the
application of the estimated net proceeds to be received from
this offering, based on an assumed initial public offering price
of
$           per
common share (the midpoint of the range shown on the cover page
of this prospectus) and the $500.0 million of indebtedness
under the term loan agreement, to repay US$960.0 million in
principal amount of indebtedness, together with accrued
interest, to Wendy's.
You should read this table together with "Use of
Proceeds," "Selected Historical Consolidated Financial
and Other Data," "Unaudited Pro Forma Consolidated
Financial Information," "Management's Discussion
and Analysis of Financial Condition and Results of
Operations," "Description of Capital Stock," and
our consolidated financial statements and the notes thereto
included elsewhere in this prospectus.
As of October 2, 2005
Actual
As Adjusted
(in thousands)
Cash and cash equivalents
$
119,248
$
Debt
Term
    debt
(1)(2)
$
20,231
$
Notes payable to
    Wendy's
(1)
1,286,576
Capital
    leases
(1)
53,628
Total debt
$
1,360,435
$
Shareholder's
    equity:
Common stock, no stated value per
    share
$
134,363
$
Retained earnings
—
Unearned compensation —
    restricted stock
(6,503
)
Accumulated other comprehensive
    expense
(67,716
)
Total shareholder's equity
$
60,144
$
Total capitalization
$
1,420,579
$
(1)
Includes current portion.
(2)
Excludes advertising fund debt of $22.2 million. See
    Note 10 to our unaudited historical condensed consolidated
    financial statements included elsewhere in this prospectus.
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DILUTION
If you invest in our common shares, your ownership interest will
be diluted to the extent of the difference between the initial
public offering price per common share and the net tangible book
value per common share upon the completion of this offering.
Our net tangible book value as of October 2, 2005 was
approximately $25.3 million, or $36,153 per common share.
The net tangible book value per common share represents the
amount of our total tangible assets (total assets less
intangible assets) less total liabilities, divided by the total
number of outstanding common shares. After giving effect to the
sale of common shares offered by us in this offering at an
assumed initial public offering price of
$           per
common share, which is the midpoint of the range set forth on
the cover page of this prospectus, and after deducting the
estimated underwriting discounts and offering expenses payable
by us, our net tangible book value, as adjusted, as of
October 2, 2005, would have equaled approximately
$           million,
or
$           per
common share. This represents an immediate decrease in net
tangible book value of
$           per
common share to Wendy's, as our sole shareholder prior to
this offering, and an immediate dilution in net tangible book
value of
$           per
common share to new investors purchasing shares in this
offering. If the initial public offering price is higher or
lower, the dilution to new investors will be greater or less,
respectively. The following table illustrates this dilution per
common share.
Assumed initial public offering
    price per common share
$
Net tangible book value per common
    share as of October 2, 2005
$
Increase in net tangible book value
    per common share attributable to this offering
Pro forma, as adjusted net tangible
    book value per common share after this offering
$
Dilution per common share to new
    investors
$
The following table summarizes, as of October 2, 2005, the
total number of common shares on an aggregate basis purchased
from us, the total consideration paid and the average price per
common share paid. The calculations with respect to common
shares purchased by new investors in this offering reflect an
assumed initial public offering price of
$           per
common share, which is the midpoint of the range set forth in
the cover of this prospectus, and do not reflect the estimated
underwriting discount and offering expenses.
Common Shares
Purchased
Total Consideration
Average
Price Per
Number
Percent
Amount
Percent
Share
(in thousands)
(in thousands)
Wendy's
%
$
(1)
%
$
New investors
Total
100.00
%
100.00
%
$
(1)
Represents the aggregate of (a) consideration paid by
    Wendy's in 1995 for all of the ownership interest in our
    predecessor entity and (b) equity advances made by
    Wendy's to our predecessor entity or its subsidiaries since
    the date of the merger of us and Wendy's.
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SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA
The following table presents our selected historical
consolidated financial and other data and should be read in
conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and our
historical consolidated financial statements and notes thereto
included elsewhere in this prospectus. Our historical
consolidated financial information may not be indicative of our
future performance and does not necessarily reflect what our
financial position and results of operations would have been had
we operated as a separate, stand-alone entity during the periods
covered.
Our selected historical consolidated financial data as of
December 28, 2003 and January 2, 2005 and for fiscal
years 2002 (year ended December 29, 2002), 2003 (year ended
December 28, 2003) and 2004 (year ended January 2,
2005) have been derived from our audited historical consolidated
financial statements included elsewhere in this prospectus.
Our selected historical consolidated financial data as of fiscal
year end 2000 (December 31, 2000), fiscal year end 2001
(December 30, 2001) and fiscal year end 2002
(December 29, 2002) and for fiscal years 2001 (year ended
December 30, 2001) and 2000 (year ended December 31,
2000) have been derived from our unaudited consolidated
financial information, not included in this prospectus.
Our selected historical consolidated financial data as of
October 2, 2005 and for the nine months ended
September 26, 2004 and October 2, 2005 have been
derived from our unaudited condensed consolidated financial
statements included elsewhere in this prospectus and include all
adjustments (consisting only of normal recurring adjustments)
necessary for a fair statement of our financial position and
results of operations as of the date and for the periods
indicated. Results for the nine months ended October 2,
2005 are not necessarily indicative of the results that may be
expected for the entire year.
Fiscal Years
(1)
Nine Months Ended
September 26,
October 2,
2000
2001
2002
2003
2004
2004
2005
(in thousands, except number of restaurants and where noted)
Consolidated Statements of
    Operations Data
Revenues
Sales
$
521,016
$
593,712
$
656,833
$
727,508
$
845,231
$
602,978
$
703,484
Franchise
    revenues
(2)
290,935
332,351
402,738
444,272
493,035
350,081
374,684
Total revenues
811,951
926,063
1,059,571
1,171,780
1,338,266
953,059
1,078,168
Total costs and expenses
653,801
744,738
826,258
892,883
1,018,961
720,821
818,847
Operating income (EBIT)
158,150
181,325
233,313
278,897
319,305
232,238
259,321
Interest (income) expense, net
(2,599
)
827
2,554
4,924
4,109
3,365
983
Affiliated interest expense, net
4,923
5,208
17,786
11,110
9,410
7,536
4,910
Income before income taxes
155,826
175,290
212,973
262,863
305,786
221,337
253,428
Income taxes
61,931
43,119
80,161
106,601
100,735
70,505
78,767
Net Income
$
93,895
$
132,171
$
132,812
$
156,262
$
205,051
$
150,832
$
174,661
Basic earnings per common share
$
134
$
189
$
190
$
223
$
293
$
215
$
250
Average common shares
700
700
700
700
700
700
700
Consolidated Balance Sheets
    Data — at end of period indicated
Cash and cash equivalents
$
104,015
$
79,789
$
89,338
$
86,151
$
129,301
$
119,248
Total
    assets
(3)
$
1,003,424
$
1,246,440
$
1,661,399
$
1,547,023
$
1,756,869
$
1,716,296
Long-term
    debt
(4)
$
141,224
$
552,558
$
401,270
$
367,674
$
246,841
$
188,024
Total
    liabilities
(4)
$
401,093
$
901,496
$
739,442
$
704,245
$
735,180
$
1,656,152
Total shareholder's equity
$
602,331
$
344,944
$
921,957
$
842,778
$
1,021,689
$
60,144
Other Financial Data
EBITDA
(5)
$
190,719
$
219,903
$
282,422
$
337,698
$
388,313
$
280,098
$
312,922
Capital expenditures
$
102,403
$
129,685
$
111,788
$
131,865
$
197,810
$
126,343
$
131,866
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Fiscal Years
(1)
Nine Months Ended
September 26,
October 2,
2000
2001
2002
2003
2004
2004
2005
(in thousands, except number of restaurants and where noted)
Other Operating Data
Total systemwide sales
    growth
(6)(7)
19.2
%
18.0
%
16.3
%
12.6
%
16.6
%
15.0
%
11.7
%
Systemwide restaurant unit
    growth
(6)
9.0
%
9.2
%
8.6
%
7.6
%
7.7
%
7.9
%
6.4
%
Canada average same-store sales
    growth
(6)(8)
9.1
%
7.8
%
7.2
%
4.8
%
7.4
%
7.7
%
5.0
%
U.S. average same-store sales
    growth
(6)(8)
12.7
%
7.7
%
9.9
%
4.5
%
9.8
%
10.1
%
7.0
%
Restaurants open at end of
period — Canada
Company-operated
47
40
31
32
31
28
31
Franchise
1,813
1,983
2,157
2,311
2,439
2,371
2,498
Restaurants open at end of
period — U.S.
Company-operated
59
57
40
25
67
66
65
Franchise
61
83
120
159
184
167
207
Total
1,980
2,163
2,348
2,527
2,721
2,632
2,801
Average sales per standard
    restaurant:
Canada (
in thousands of
    Canadian dollars
)
(6)
$
1,354
$
1,458
$
1,555
$
1,625
$
1,730
U.S. (
in thousands of
    U.S. dollars
)
(6)
$
747
$
809
$
874
$
894
$
897
(1)
Fiscal 2004 consisted of 53 weeks. Fiscal 2000, 2001, 2002
    and 2003 each consisted of 52 weeks.
(2)
Franchise revenues consist of (a) royalties, which
    typically range from 3.0% to 4.5% of gross franchise restaurant
    sales, (b) rents, which typically range from 8.5% to 10.0%
    of gross franchise restaurant sales, and (c) fees, which
    are typically charged at the inception of the franchise
    relationship. Franchise restaurant sales are reported to us by
    our franchisees. Franchise restaurant sales are not included in
    our financial statements, other than approximately 80
    franchisees whose results of operations are consolidated with
    ours pursuant to FIN 46R, as described in
    "Management's Discussion and Analysis of Financial
    Condition and Results of Operations—Results of
    Operations—Financial Definitions—Sales." However,
    franchise restaurant sales result in royalties and rental
    income, which are included in our franchise revenues. The
    reported franchise restaurant sales were:
Fiscal Years
(1)
Nine Months Ended
September 26,
October 2,
2000
2001
2002
2003
2004
2004
2005
Franchise restaurant sales:
Canada (
in thousands of
    Canadian dollars
)
$
1,785,555
$
2,072,706
$
2,412,625
$
2,713,248
$
3,137,898
$
2,278,383
$
2,524,436
U.S. (
in thousands of
    U.S. dollars
)
$
39,431
$
61,322
$
93,603
$
123,272
$
163,712
$
116,079
$
145,161
(3)
Total assets include notes and accounts receivable from
    Wendy's, which will be distributed by us to Wendy's in
    the fourth quarter of 2005. Notes and amounts receivable from
    Wendy's were:
At End of Fiscal Year Indicated
As of
October 2,
2000
2001
2002
2003
2004
2005
(in thousands)
Notes receivable from Wendy's
    included in current assets
$
44,964
$
120,178
$
361,148
$
59,210
$
173,747
$
189,111
Notes receivable from Wendy's
    included in long-term assets
$
128,000
$
128,000
$
128,000
$
128,000
$
128,000
—
Accounts receivable from (payable
    to) Wendy's included in current assets (liabilities)
$
3,951
$
(56,836
)
$
297,720
$
138,580
$
52,192
$
34,069
(4)
Long-term debt includes long-term debt, capital leases and notes
    payable to Wendy's. Notes payable to Wendy's are also
    included in current liabilities. As of October 2, 2005, we
    had outstanding a note payable to Wendy's in the principal
33
Table of Contents
amount of US$960.0 million.
    Other than that note, notes payable to Wendy's will be
    contributed as equity to us in the fourth quarter of 2005. Notes
    payable to Wendy's totalled the following amounts:
At End of Fiscal Year Indicated
As of
October 2,
2000
2001
2002
2003
2004
2005
(in thousands)
Notes payable to Wendy's
    included in current liabilities
$
104,634
$
131,987
$
144,778
$
84,167
$
185,725
$
1,186,293
Notes payable to Wendy's
    included in long-term debt
$
108,468
$
505,793
$
343,954
$
304,488
$
181,090
$
100,283
(5)
EBITDA is defined as net income before interest, taxes,
    depreciation and amortization and is used by management as a
    performance measure for benchmarking against our peers and our
    competitors. We believe EBITDA is useful to investors because it
    is frequently used by securities analysts, investors and other
    interested parties to evaluate companies in our industry. EBITDA
    is not a recognized term under GAAP, should not be viewed in
    isolation and does not purport to be an alternative to net
    income as an indicator of operating performance or cash flows
    from operating activities as a measure of liquidity. There are
    material limitations associated with making the adjustments to
    calculate EBITDA and using this non-GAAP financial measure as
    compared to the most directly comparable GAAP financial measure.
    For instance, EBITDA does not include:
•
interest expense, and because we have borrowed money to finance
    our operations, interest expense is a necessary element of our
    costs and ability to generate revenue;
•
depreciation and amortization expense, and because we use
    capital assets, depreciation and amortization expense is a
    necessary element of our costs and ability to generate
    revenue; and
•
tax expense, and because the payment of taxes is part of our
    operations, tax expense is a necessary element of our costs and
    ability to operate.
Additionally, EBITDA is not
    intended to be a measure of free cash flow for management's
    discretionary use, as it does not consider certain cash
    requirements such as capital expenditures, contractual
    commitments, interest payments, tax payments and debt service
    requirements. Because not all companies use identical
    calculations, this presentation of EBITDA may not be comparable
    to other similarly titled measures of other companies.
The following table is a reconciliation
of our net income to EBITDA:
Fiscal Years
(1)
Nine Months Ended
September 26,
October 2,
2000
2001
2002
2003
2004
2004
2005
(in thousands)
Net income
$
93,895
$
132,171
$
132,812
$
156,262
$
205,051
$
150,832
$
174,661
Interest expense, net
2,324
6,035
20,340
16,034
13,519
10,901
5,893
Income tax expense
61,931
43,119
80,161
106,601
100,735
70,505
78,767
Operating income (EBIT)
$
158,150
$
181,325
$
233,313
$
278,897
$
319,305
$
232,238
$
259,321
Depreciation and amortization
32,569
38,578
49,109
58,801
69,008
47,860
53,601
EBITDA
$
190,719
$
219,903
$
282,422
$
337,698
$
388,313
$
280,098
$
312,922
(6)
Includes both franchised and company-operated restaurants.
    Franchise restaurant sales are not included in our financial
    statements, other than approximately 80 franchisees whose
    results of operations are consolidated with ours pursuant to
    FIN 46R. However, franchise restaurant sales result in
    royalties and rental income, which are included in our revenues.
(7)
Total systemwide sales growth is determined using a constant
    exchange rate to exclude the effects of foreign currency
    translation. U.S. dollar sales are converted to Canadian dollar
    amounts using the average exchange rate of the base year for the
    period covered.
(8)
For Canadian restaurants, average same-store sales are based on
    restaurants that have been opened for a minimum of one calendar
    year. For U.S. restaurants, a restaurant is included in our
    average same-store sales calculation beginning the
    13th month after the restaurant's opening.
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Table of Contents
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The unaudited pro forma consolidated statement of operations for
the fiscal year ended January 2, 2005 presented below was
derived from our audited consolidated financial statements and
the notes thereto included elsewhere in this prospectus. The
unaudited pro forma consolidated statement of operations for the
nine months ended October 2, 2005 and the unaudited pro
forma consolidated balance sheet as of October 2, 2005
presented below were derived from our unaudited condensed
consolidated financial statements and the notes thereto included
elsewhere in this prospectus.
Our unaudited pro forma consolidated statements of operations
present our results from operations for the fiscal year ended
January 2, 2005 and the nine months ended October 2,
2005 as if the following events occurred on December 29,
2003:
•
intercompany notes and trade balances between us and
    Wendy's in the net amount of
    $          ,
    including accrued interest, were settled;
•
we entered into the new term loan agreement and incurred
    $500.0 million of indebtedness thereunder;
•
this offering had been completed at an assumed initial public
    offering price of
    $           per
    common share, which is the midpoint of the estimated offering
    price range set forth on the cover page of this
    prospectus; and
•
the outstanding principal balance, including accrued interest,
    of the US$960.0 million intercompany note issued by us to
    Wendy's was repaid with all of the net proceeds of this
    offering and the indebtedness incurred under the term loan
    agreement.
Our unaudited pro forma consolidated balance sheet has been
prepared based on the assumption that the aforementioned events
occurred on October 2, 2005.
The unaudited pro forma consolidated statements of operations
information for the fiscal year ended January 2, 2005 and
for the fiscal nine months ended October 2, 2005 include
all normal recurring adjustments that we believe are necessary
for a fair statement of the results for such periods.
Our historical financial information has been prepared on a
consolidated basis using the historical results of operations
and bases of the assets and liabilities of the business, and
gives effect to allocations of expenses from Wendy's.
The unaudited pro forma consolidated financial information has
been prepared based on available information and assumptions
that we believe are reasonable and is intended for informational
purposes only; it is not necessarily indicative of what the
financial position or results of operations actually would have
been had the aforementioned events occurred at the dates
indicated, and it does not purport to project our future
financial position or results of operations.
35
Table of Contents
Unaudited Pro Forma Consolidated Statement of Operations
Nine Months Ended October 2, 2005
Adjustments
Separation/
Historical
Debt Incurrence
Offering
Pro Forma
(In thousands, except number of shares)
Revenues
Sales
$
703,484
Franchise revenues
374,684
Total revenues
1,078,168
Cost of sales
613,245
Operating expenses
162,685
General and administrative expenses
73,728
Equity income
(23,281
)
Other (income) expense
(7,530
)
Total costs and expenses, net
818,847
Operating income
259,321
Interest
    expense
(1)
(3,283
)
Interest income
2,300
Affiliated interest expense, net
(4,910
)
Income before income taxes
253,428
Income
    taxes
(2)(3)
78,767
Net income
$
174,661
Basic earnings per common
    share
(4)
$
250
Weighted average number of common
    shares outstanding
700
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Table of Contents
Unaudited Pro Forma Consolidated Statement of Operations
Fiscal Year Ended January 2, 2005
Adjustments
Separation/
Historical
Debt Incurrence
Offering
Pro Forma
(In thousands, except number of shares)
Revenues
Sales
$
845,231
Franchise revenues
493,035
Total revenues
1,338,266
Cost of sales
741,198
Operating expenses
223,451
General and administrative expenses
85,744
Equity income
(32,548
)
Other (income) expense
1,116
Total costs and expenses, net
1,018,961
Operating income
319,305
Interest
    expense
(1)
(6,911
)
Interest income
2,802
Affiliated interest expense, net
(9,410
)
Income before income taxes
305,786
Income
    taxes
(2)(3)
100,735
Net income
$
205,051
Basic earnings per common
    share
(4)
$
293
Weighted average number of common
    shares outstanding
700
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Table of Contents
Unaudited Pro Forma Consolidated Balance Sheet
As of October 2, 2005
Adjustments
(1)
Debt
Separation/
Historical
Issuance
Offering
Pro Forma
(In thousands)
Assets
Current assets
Cash and cash equivalents
$
119,248
Accounts receivable, net
85,397
Notes receivable, net
8,912
Deferred income taxes
2,137
Inventories and other
34,673
Amounts receivable from
    Wendy's
(2)
34,069
Notes receivable from
    Wendy's
(2)
189,111
Advertising fund restricted assets
19,274
Total current assets
492,821
Property and equipment, net
1,009,197
Notes receivable, net
15,491
Goodwill
29,877
Deferred income taxes
9,013
Intangible assets, net
4,960
Equity investments
142,291
Other assets
12,646
Total assets
$
1,716,296
Liabilities and shareholder's
    equity
Current liabilities
Accounts payable
$
78,920
Accrued expenses
Salaries and wages
10,865
Taxes
62,787
Other
39,058
Deferred income taxes
538
Advertising fund restricted
    liabilities
30,979
Notes payable to
    Wendy's
(2)(5)
1,186,293
Current portion of long-term
    obligations
5,334
Total current liabilities
1,414,774
Long-term obligations
Term
    debt
(3)
19,890
Notes payable to
    Wendy's
(2)
100,283
Advertising fund restricted debt
19,216
Capital leases
48,635
Total long-term obligations
188,024
Deferred income taxes
22,155
Other long-term liabilities
31,199
Shareholder's equity
Common
    stock
(2)(4)
134,363
Retained earnings
—
Accumulated other comprehensive
    income (Expense):
Cumulative translation adjustments
    and other
(67,716
)
Unearned
    compensation—restricted stock
(6,503
)
Total shareholder's equity
60,144
Total liabilities and
    shareholder's equity
$
1,716,296
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Table of Contents
Notes to Unaudited Pro Forma Consolidated Financial
Information
Statement of Operations
(1) This adjustment gives effect to the interest expense
incurred in the respective periods in relation to indebtedness
under the new term loan agreement. The loan agreement interest
rate is based upon an assumed interest rate of   %,
which is the mid-point of our estimated range of interest rates
on this debt. A
1
/
8
% change
to the assumed interest rate would change our annual interest
expense by
$              .
(2) This adjustment represents the estimated tax expense
related to the estimated interest expense adjustment discussed
in Note (1) above at our statutory rate of 35.0% for
the fiscal year ended January 2, 2005 and 34.0% for
the fiscal nine months ended October 2, 2005.
(3) An estimated effective tax rate
of        % has been applied
to the pro forma adjustments, which is higher than the effective
tax rate that has historically been applied to our results. The
increase in effective tax rate is primarily attributable to the
changed capital structure following our separation from
Wendy's and the $500.0 million in principal amount of
long-term debt that we will incur under the term loan agreement
prior to the completion of this offering. The
$500.0 million debt will be used, together with the net
proceeds from this offering, to repay indebtedness owed to
Wendy's. The estimated effective tax rate differs from the
statutory tax rate
of        % that applies in
the U.S.
(4) Basic income per common share is calculated by dividing
net income by the weighted average number of common shares
outstanding. The historic basic income per common share is based
on 700 shares outstanding and the pro forma basic income
per common share is based
on         shares
outstanding. Unaudited pro forma basic income per common share
has been calculated in accordance with the SEC rules of initial
public offerings, which require that the denominator in the
weighted average share calculation should only include the
number of common shares whose proceeds are being reflected as
pro forma adjustments in the consolidated statements of
operations. Therefore, pro forma weighted average common shares
for purposes of the unaudited pro forma based income per common
share calculation have been adjusted to reflect the sale
of                        common
shares by us in this offering.
Balance Sheet
(1) Set forth below are estimated sources and uses of funds
reflected in the pro forma balance sheet.
Sources
Uses
Proceeds from this offering
$
Repayment of indebtedness to
    Wendy's
$
Borrowings under a new term loan
    agreement
500.0
Transaction costs
Total sources
$
Total uses
$
The offering is expected to raise proceeds of
$      million (net of estimated
fees and expenses).
We intend to use the net proceeds from this offering, together
with estimated borrowings of $500.0 million under a new
term loan agreement we will enter into prior to the completion
of this offering, to repay indebtedness owed to Wendy's.
(2) This adjustment gives effect to the non-cash settlement
of notes and trade balances between us and Wendy's in the
net amount of
$              .
(3) Represents the net impact of the incurrence of
$               of
long-term debt under our new term loan agreement
on               ,
2006.
39
Table of Contents
(4) This adjustment represents the net proceeds from this
offering of approximately
$            ,
assuming an initial public offering price of
$               per
common share, the midpoint range set forth on the cover page of
this prospectus and estimated fees and expenses of
$       .
(5) On September 27, 2005, we distributed an
intercompany note to Wendy's in the original principal
amount of US$960.0 million as a dividend on our common
shares. This adjustment gives effect to the repayment of that
note using the net proceeds from the long-term debt referred to
in Note (3) above and the offering.
40
Table of Contents
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion in conjunction with
"Selected Historical Consolidated Financial and Other
Data," "Unaudited Pro Forma Consolidated Financial
Information" and our historical consolidated financial
statements and notes thereto included elsewhere in the
prospectus. The following discussion includes forward-looking
statements that are not historical facts but reflect our current
expectation regarding future results. Actual results may differ
materially from the results discussed in the forward-looking
statements because of a number of risks and uncertainties,
including the matters discussed below and elsewhere in this
prospectus, particularly under the heading "Risk
Factors." Historical trends should not be taken as
indicative of future operations.
We believe systemwide sales and average same-store sales
provide meaningful information to investors concerning the size
of our system, the overall health of the system and the strength
of our brand. Information about systemwide sales and average
same-store sales is included in this prospectus. Franchise
restaurant sales generally are not included in our financial
statements; however, franchise restaurant sales result in
royalties and rental income, which are included in our franchise
revenues.
Overview
We franchise and operate Tim Hortons restaurants in both Canada
and the U.S. Our business model includes controlling the
real estate for most of our franchise restaurants. We also
distribute coffee and other drinks, non-perishable food,
supplies, packaging and equipment to system restaurants in
Canada through our five distribution centres. In the
U.S. we supply similar products to system restaurants
through third-party distributors. Our system, which consists of
franchised and company-operated restaurants, represented 22.6%
of the $14.0 billion Canadian QSR segment at year end 2004
based on systemwide restaurant sales dollars.
In each of fiscal 2003 and 2004, we delivered record annual
revenues and net income. Our fiscal 2004 revenues and net income
of approximately $1.3 billion and $205.1 million,
respectively, represented a $166.5 million, or 14.2%,
increase in revenues and $48.8 million, or 31.2%, increase
in net income from fiscal 2003. In fiscal 2003 revenues were up
$112.2 million, or 10.6%, to approximately
$1.2 billion while net income rose $23.5 million, or
17.7%, to $156.3 million. The increased net income in
fiscal 2004 and 2003 was driven by improved income from
operations, and fiscal 2004 also included a reduction in
interest and tax expenses when compared to fiscal 2003. Segment
operating income (operating income attributable to our
reportable segments, which consist of Canada and the U.S.)
increased $51.0 million in fiscal 2004 over 2003, which was
an increase of 17.4%, while fiscal 2003 segment operating income
increased 15.5% over fiscal 2002, from $253.2 million to
$292.5 million. Overall, the improvements in segment
operating income have been driven by average same-store sales
growth and opening new restaurants in Canada. Our fiscal 2004
results also benefited from one additional operating week (the
53rd week) in the fiscal year. The additional week occurs
periodically because our fiscal year ends on the Sunday nearest
to December 31.
For the first nine months of 2005 (which ended October 2,
2005) our revenues and net income were up $125.1 million
and $23.8 million, or 13.1% and 15.8%, respectively, over
the first nine months of 2004 (which ended on September 26,
2004), primarily as a result of continued average same-store
sales gains and continued growth in the number of systemwide
restaurants, resulting in higher royalty, rental and
distribution income. Also, during the first nine months of 2005
we had a $5.1 million one-time mark-to-market gain on
cross-border intercompany notes. This gain was partially offset
by an increase in corporate general and administrative expenses
due primarily to costs associated with this offering and
expenses related to restricted stock units that were granted and
expensed for the first time in 2005.
41
Table of Contents
Selected Operating and Financial Highlights
Fiscal Years
Nine Months Ended
September 26,
October 2,
2002
2003
2004
2004
2005
(in thousands, except where noted)
Systemwide sales growth
16.3%
12.6%
16.6%
15.0%
11.7%
Average same-store sales growth
Canada
7.2%
4.8%
7.4%
7.7%
5.0%
U.S.
9.9%
4.5%
9.8%
10.1%
7.0%
Systemwide restaurants
2,348
2,527
2,721
2,632
2,801
Revenues
$
1,059,571
$
1,171,780
$
1,338,266
$
953,059
$
1,078,168
Operating income
$
233,313
$
278,897
$
319,305
$
232,238
$
259,321
Net income
$
132,812
$
156,262
$
205,051
$
150,832
$
174,661
Systemwide Sales Growth
Our financial results are driven largely by changes in
systemwide sales, which include restaurant-level sales at both
franchised and company-operated restaurants. The amount of
systemwide sales impacts our franchisee royalties and rental
income, as well as our distribution sales. Changes in systemwide
sales are driven by changes in average same-store sales and
changes in the number of restaurants.
Average Same-Store Sales Growth
Average same-store sales, one of the key metrics we use to
assess our performance, provides information on total retail
sales at restaurants operating systemwide throughout the
relevant period and provide a useful comparison between periods.
In fiscal 2004, Canadian average same-store sales increased 7.4%
over fiscal 2003, which was our 13th consecutive annual
increase in Canada. In the U.S., average same-store sales
(measured in local currency) increased 9.8% in fiscal 2004 over
2003, which represented our 14th consecutive annual
increase.
Our average same-store sales growth is attributable to several
key factors, including new product introductions, improvements
in restaurant speed of service and other operational
efficiencies, more frequent customer visits, expansion into
broader menu offerings and, on a less frequent basis, pricing.
Restaurant-level price increases are primarily used to offset
higher restaurant-level costs on key items such as coffee and
labour.
42
Table of Contents
The following table sets forth average same-store sales
increases for the first nine months of 2005 and for fiscal 2002,
2003 and 2004 on a comparable 52-week basis. Franchise
restaurant sales are not included in our financial statements
(other than approximately 80 franchisees whose results of
operations are consolidated with ours pursuant to Financial
Accounting Standards Board (FASB) Interpretation No. 46
(FIN 46R),
Consolidation of Variable Interest
Entities—an interpretation of ARB 51 (revised December
2003)
, but franchise restaurant sales result in royalties
and rental income, which are included in our consolidated
financial statements as franchise revenues.
Historical Average Same-Store Sales Increase
(1)
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Year
Canada
2002
7.9%
9.4%
5.8%
5.7%
7.2%
2003
3.9%
4.0%
5.5%
5.7%
4.8%
2004
6.6%
7.8%
8.4%
6.6%
7.4%
2005
5.8%
5.6%
3.6%
5.0%
(2)
U.S.
2002
10.0%
13.8%
8.9%
7.2%
9.9%
2003
0.4%
3.3%
6.8%
7.2%
4.5%
2004
10.3%
10.2%
9.8%
9.1%
9.8%
2005
7.7%
9.1%
4.7%
7.0%
(2)
(1)
For Canadian restaurants, average same-store sales are based on
    restaurants that have been open for a minimum of one calendar
    year. For U.S. restaurants, a restaurant is included in our
    average same-store calculation beginning in the 13th month
    following the restaurant's opening.
(2)
Represents average same-store sales growth for the first nine
    months of 2005.
New Restaurant Development
Opening restaurants in new and existing markets in Canada and
the U.S. has been a significant contributor to our growth.
From the end of 1995, when we merged with Wendy's, to
January 2, 2005, we increased the total number of Tim
Hortons restaurants from 1,197 to 2,721 restaurants,
representing an average annual growth rate of over 9.6%.
Approximately 85.0% of this growth has come from our expansion
in Canada, with the largest increases in Ontario and Western
Canada. Our U.S. growth of 234 restaurants from 1995 to
2004 has come from three major markets, namely Michigan, New
York and Ohio. During 2004, we also acquired 42 restaurants in
New England.
From the end of fiscal 2001 to the end of fiscal 2004, we opened
558 system restaurants, net of restaurant closures. Typically,
20 to 30 system restaurants are closed annually, primarily in
Canada. Restaurant closures typically result from an opportunity
to improve a location, upgrade size and layout or add a
drive-thru. During the first nine months of 2005 we opened 94
restaurants (73 in Canada and 21 in the U.S.) and closed 14
restaurants (all in Canada).
Our system includes over 2,800 restaurants across Canada and the
U.S. At October 2, 2005, 2,705, or 96.6%, were
franchised (98.8% in Canada and 76.1% in the U.S.).
43
Table of Contents
The following table shows our restaurant count as of
September 26, 2004, October 2, 2005 and as of the end
of fiscal 2002, 2003 and 2004. Also included in the table is a
breakdown of our company-operated and franchised restaurants.
Systemwide Restaurant Count
Fiscal Year End
Nine Months Ended
September 26,
October 2,
2002
2003
2004
2004
2005
Canada
Company-operated
31
32
31
28
31
Franchise
2,157
2,311
2,439
2,371
2,498
Total
2,188
2,343
2,470
2,399
2,529
U.S.
Company-operated
40
25
67
66
65
Franchise
120
159
184
167
207
Total
160
184
251
233
272
Total system
Company-operated
71
57
98
94
96
Franchise
2,277
2,470
2,623
2,538
2,705
Total
2,348
2,527
2,721
2,632
2,801
Operating Income
We reported record operating income (income before income taxes
and interest) in each of fiscal 2004 and 2003. These results
were primarily due to increases in average same-store sales,
opening of new restaurants, and operational improvements due to
the systemwide rollout of par-baked products sold through our
manufacturing joint venture. The launch of our Always Fresh
baking system in 2002 involved a conversion to the use of
par-baked products in our restaurants. Par-baking enables us to
offer customers fresher, more consistent products all day, and
enables significant operating efficiencies at the restaurant
level. The conversion to our Always Fresh baking system began
during the third quarter of 2002 and was completed during the
first quarter of 2004.
For the first nine months of 2005, we recorded higher operating
income than in any previous comparable period, with an increase
of 11.7% over the comparable period in 2004 as a result of
continued average same-store sales gains and continued growth in
the number of systemwide restaurants. We also had a
$5.1 million one-time mark-to-market gain on cross-border
intercompany notes during the first nine months of 2005. This
gain was partially offset by an increase in corporate general
and administrative expenses due primarily to costs associated
with this offering and expenses related to restricted stock
units of Wendy's that were granted and expensed for the
first time in 2005.
Segment Operating Income
Systemwide sales and average same-store sales growth are
affected by the business and economic environments in Canada and
the U.S. We manage and review financial results from
Canadian and U.S. operations separately. We therefore have
determined the reportable segments for our business to be Canada
and the U.S.
Segment operating income increased by 11.4% for the first nine
months of 2005 over the same period in 2004, by 17.4% in fiscal
2004 over 2003 and by 15.5% in fiscal 2003 over 2002. The
improvements primarily related to increases in average
same-store sales, development of new
44
Table of Contents
restaurants and improvements in equity income. Equity income
increases from fiscal 2002 to 2004 related to improvements in
results at our joint venture with IAWS and our joint venture
with Wendy's Restaurants of Canada in certain combination
restaurants. See "—Equity Income." Overall, our
total segment operating income from our reportable segments as a
percent of total revenues was 26.1% and 25.7% in the first nine
months of 2004 and 2005, respectively, and 23.9%, 25.0% and
25.7% for fiscal 2002, 2003 and 2004, respectively.
For the first nine months of 2005 compared to the corresponding
period in 2004, segment operating income increased
$28.3 million, primarily driven by our Canadian segment,
which increased operating income by 12.4%. Canadian average
same-store sales increased 5.0% over the prior period and we
opened 73 new system restaurants in that period.
In fiscal 2004, total segment operating income increased
$51.0 million over fiscal 2003, principally through our
Canadian segment, which increased operating income by 17.8%.
Canadian average same-store sales increased by 7.4% and we
opened 155 new system restaurants in fiscal 2004.
U.S. average same-store sales increased by 9.8% in fiscal
2004 over 2003. However, U.S. segment operating loss
increased as a result of a decrease in company-operated store
earnings, which was attributable to the performance of the 42
restaurants acquired in New England in the second quarter of
2004.
In fiscal 2003, total segment operating income increased
$39.3 million over fiscal 2002. Our Canadian segment
accounted for most of the increase, with operating income
increasing by 14.3%, as Canadian average same-store sales
increased 4.8% and 185 new restaurants were opened.
U.S. segment operating losses were reduced by
$2.8 million in fiscal 2003 over 2002 due to average
same-store sales increases of 4.5% and refranchising of a number
of company-operated restaurants.
In fiscal 2003, corporate unallocated charges included
$6.1 million in foreign exchange gains resulting from
cross-border interest payments. Foreign currency hedges against
future interest payments were established in mid-2003 and
extended into 2004 to mitigate currency effects on these
payments. In addition, the frequency of intercompany payments
has been increased to minimize the exposure.
The following tables show information about the operating income
of our reportable segments:
Operating Income
First Nine Months 2005 Compared to First Nine Months 2004
2005 Change
% of
% of
2005
Revenues
2004
Revenues
Dollars
Percentage
(in thousands, except where noted)
Canada
$
279,300
25.9
%
$
248,478
26.1
%
$
30,822
12.4
%
U.S.
(2,110
)
(0.2
%)
415
0.0
%
(2,525
)
n/m
Segment operating income
277,190
25.7
%
248,893
26.1
%
28,297
11.4
%
Corporate
(1)
(17,869
)
(1.7
%)
(16,655
)
(1.7
%)
(1,214
)
(7.3
%)
Total operating income
$
259,321
24.1
%
$
232,238
24.4
%
$
27,083
11.7
%
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Table of Contents
Fiscal 2004 Compared to 2003
2004 Change
% of
% of
2004
Revenues
2003
Revenues
Dollars
Percentage
(in thousands, except where noted)
Canada
$
344,476
25.7
%
$
292,526
25.0
%
$
51,950
17.8
%
U.S.
(981
)
(0.1
%)
(27
)
0.0
%
(954
)
n/m
Segment operating income
343,495
25.7
%
292,499
25.0
%
50,996
17.4
%
Corporate
(1)
(24,190
)
(1.8
%)
(13,602
)
(1.2
%)
(10,588
)
(77.8
%)
Total operating income
$
319,305
23.9
%
$
278,897
23.8
%
$
40,408
14.5
%
Fiscal 2003 Compared to 2002
2003 Change
% of
% of
2003
Revenues
2002
Revenues
Dollars
Percentage
(in thousands, except where noted)
Canada
$
292,526
25.0
%
$
256,027
24.2
%
$
36,499
14.3
%
U.S.
(27
)
0.0
%
(2,827
)
(0.3
%)
2,800
99.0
%
Segment operating income
292,499
25.0
%
253,200
23.9
%
39,299
15.5
%
Corporate
(1)
(13,602
)
(1.2
%)
(19,887
)
(1.9
%)
6,285
31.6
%
Total operating income
$
278,897
23.8
%
$
233,313
22.0
%
$
45,584
19.5
%
(1)
Corporate charges include certain overhead costs that are not
    allocated to individual business units and the impact of certain
    foreign currency exchange gains and losses.
n/m — The comparison is not meaningful.
Basis of Presentation
Our consolidated financial statements have been derived from the
consolidated financial statements and accounting records of
Wendy's, principally from statements and records
representing the Tim Hortons business segment. Our consolidated
statements of operations also include expense allocations for
certain corporate functions historically provided to us by
Wendy's, including general corporate expenses related to
corporate functions such as executive oversight, risk
management, information technology, accounting, legal, investor
relations, human resources, tax, other services and employee
benefits and incentives, including stock-based compensation
arrangements. The allocations are primarily based on specific
identification and the relative percentage of our revenues and
headcount to the respective total Wendy's costs. These
allocations are reflected in general and administrative expenses
in our consolidated statements of operations and totalled
$12.7 million, $12.9 million and $13.3 million on
a pre-tax basis for fiscal 2002, 2003 and 2004, respectively. We
and Wendy's consider these allocations to be a reasonable
reflection of the utilization of services provided. The
allocations may not, however, reflect the expense we would have
incurred as a stand-alone company.
Affiliated interest expense, net in the consolidated statements
of operations reflects interest costs related to specific net
borrowings by us, in the form of promissory notes, from
Wendy's. No amount is included in affiliated interest
expense, net for other amounts owed to Wendy's by us which
were not in the form of a promissory note and for which no
interest rate was specified. Also, Wendy's has not
allocated a portion of its external debt interest cost to us. As
a result, interest
46
Table of Contents
expense recorded by us does not reflect the expense we would
have incurred as a stand-alone company.
Our functional currency is the U.S. dollar, primarily
because of our historical financial inter-relatedness with
Wendy's. The majority of our operations, restaurants and
cash flows, however, are based in Canada, and we are primarily
managed in Canadian dollars. As a result, our reporting currency
is the Canadian dollar. Our historical consolidated financial
statements and notes thereto are prepared in conformity with
accounting principles generally accepted in the U.S.
The discussion below should be read in conjunction with our
historical consolidated financial statements and the notes
thereto for a full understanding of our financial position and
results of operations.
Financial Definitions
Sales
Primarily includes sales of products, supplies and restaurant
equipment (except for initial equipment packages sold to
franchisees) 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 include canned coffee
sales through the grocery channel. Sales also include sales from
company-operated restaurants and, beginning in 2004, sales of
approximately 80 franchise restaurants that are consolidated in
accordance with FIN 46R.
Franchise Revenues
Consists primarily of franchisee royalties and fees, as well as
rental income. Franchisee fees include charges for various costs
and expenses related to establishing a franchisee's
business and include 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 sales sold through grocery
stores.
Also includes food, paper and labour costs for company-operated
restaurants and, beginning in 2004, approximately 80 franchise
restaurants that are consolidated in accordance with
FIN 46R.
Operating Expenses
Includes rent expense related to properties leased to
franchisees, other property-related costs (including
depreciation) and costs of equipment sold to franchisees as part
of the initiation of their restaurant's business, as well
as training and other costs necessary to ensure a successful
restaurant opening and costs to operate and maintain the
distribution warehouses and our coffee roaster (excluding cost
of sales). Also included are insurance, maintenance and support
costs for personnel directly related to restaurant operations.
General and Administrative Expenses
Includes costs that cannot be directly related to generating
revenue, including expenses associated with our corporate and
administrative functions and 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.
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Table of Contents
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 Expense
Includes expenses (income) that are not directly derived from
our primary businesses. Expenses include restaurant closures and
other asset write-offs.
Comprehensive Income
Represents the change in our net assets during the reporting
period from transactions and other events and circumstances from
non-owner sources. It includes net income and other
comprehensive income such as foreign currency translation
adjustments.
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Table of Contents
Results of Operations
Nine Months Ended October 2, 2005 Compared to Nine
Months Ended September 26, 2004
Below is a summary of comparative results of operations and a
more detailed discussion of results for the first nine months of
each of fiscal 2005 and 2004.
Results of Operations
Nine Months Ended
2005 Change
October 2,
% of
September
% of
2005
Revenues
26, 2004
Revenues
$
%
(in thousands, except where noted)
Revenues
Sales
$
703,484
65.2
%
$
602,978
63.3
%
$
100,506
16.7
%
Franchise revenues
374,684
34.8
%
350,081
36.7
%
24,603
7.0
%
Total revenues
1,078,168
100.0
%
953,059
100.0
%
125,109
13.1
%
Costs and expenses
Cost of sales
613,245
56.9
%
527,818
55.4
%
85,427
16.2
%
Operating expenses
162,685
15.1
%
154,501
16.2
%
8,184
5.3
%
General and administrative expenses
73,728
6.8
%
61,893
6.5
%
11,835
19.1
%
Equity income
(23,281
)
(2.2
%)
(23,089
)
(2.4
%)
(192
)
0.8
%
Other (income) expense
(7,530
)
(0.7
%)
(302
)
0.0
%
(7,228
)
n/m
Total costs and expenses,
    net
818,847
75.9
%
720,821
75.6
%
98,026
13.6
%
Operating income
259,321
24.1
%
232,238
24.4
%
27,083
11.7
%
Interest expense
(3,283
)
(0.3
%)
(5,015
)
(0.5
%)
1,732
(34.5
%)
Interest income
2,300
0.2
%
1,650
0.2
%
650
39.4
%
Affiliated interest expense, net
(4,910
)
(0.5
%)
(7,536
)
(0.8
%)
2,626
(34.8
%)
Income before income taxes
253,428
23.5
%
221,337
23.2
%
32,091
14.5
%
Income taxes
78,767
7.3
%
70,505
7.4
%
8,262
11.7
%
Net income
$
174,661
16.2
%
$
150,832
15.8
%
$
23,829
15.8
%
n/m — The comparison is not meaningful.
Revenues
Sales
In the first nine months of 2005 sales increased
$100.5 million, or 16.7%, over the comparable period in
2004. Warehouse sales increased $69.2 million, or 13.7%,
driven by an increase in the number of franchise restaurants
open and increases in average same-store sales. The remaining
increase in warehouse sales was primarily related to an increase
in the value of coffee sales as a result of a rise in the
underlying cost of green (unroasted) coffee.
Company-operated restaurant sales were $92.7 million and
$123.0 million in the first nine months of 2004 and 2005,
respectively. The increase in company-operated restaurant sales
of
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Table of Contents
$30.3 million is primarily attributable to our adoption of
FIN 46R on April 1, 2004, which resulted in the
consolidation of 79 franchise restaurants for the first nine
months of 2004 and 83 franchise restaurants for the first nine
months of 2005. Accordingly, we recorded additional sales of
$47.1 million and $73.7 million during the first nine
months of 2004 and 2005, respectively, an increase of
$26.6 million. $6.4 million of the remaining increase
in company-operated restaurant sales is due primarily to an
increase in the number of company-operated restaurants in the
U.S. resulting from our acquisition of 42 restaurants in
New England in the second quarter of 2004.
U.S. sales are denominated in U.S. dollars and
translated into Canadian dollars for reporting our results. The
strengthening of the Canadian dollar relative to the
U.S. dollar during the first nine months of 2004 and 2005
reduced the value of reported sales by approximately 0.9%
compared to the value that would have been reported had there
been no exchange rate movement.
Franchise Revenues
Franchise revenues increased $24.6 million, or 7.0%, in the
first nine months of 2005 over the comparable period in 2004.
Rental income from restaurants leased to franchisees increased
by $23.4 million to $247.7 million. Royalty income
increased $8.0 million, or 10.4%. Although the
consolidation of 79 restaurants on average during the first nine
months of 2005 in accordance with FIN 46R reduced our rent
and royalty income by $5.2 million for that period, our net
growth in both rental income and royalty income reflects an
increase in the number of franchise restaurants open and the
positive average same-store sales growth over this time period.
Total franchise fees during the first nine months of 2005
decreased $6.9 million, or 14.2%, from the comparable
period in 2004, mainly due to a decrease in the number of
restaurants sold and a shift in emphasis from standard to
non-standard restaurants. Non-standard restaurants include
kiosks and locations in gas stations, hospitals, universities
and office buildings and typically have lower franchise fees.
U.S. franchise revenues are denominated in
U.S. dollars and translated into Canadian dollars for
reporting of our results. The strengthening of the Canadian
dollar relative to the U.S. dollar between the first three
quarters of 2004 and 2005 reduced the value of reported
franchise revenues by approximately 0.6% compared to the value
that would have been reported had there been no exchange rate
movement.
Total Costs and Expenses
Cost of Sales
Cost of sales increased $85.4 million, or 16.2%, in the
first nine months of 2005 compared to the comparable period in
2004. This increase was primarily driven by an increase in
warehouse cost of sales of $58.2 million, or 13.2%, during
the period which resulted from an increase in warehouse sales.
In addition, warehouse cost of sales were also impacted by an
increase in the cost of green coffee, which increased warehouse
sales and cost of sales.
Warehouse cost of sales expressed as a percentage of warehouse
sales was 87.1% for the first nine months of 2005 and 87.6% for
the first nine months of 2004. These percentages reflect
changing product mix and margins during the reporting period.
Company-operated restaurant cost of sales, which includes food,
paper, labour and occupancy costs, vary with the average number
and mix of company-operated restaurants. These costs increased
by $28.2 million, or 32.0%, from $88.2 million in the
first nine months of 2004 to $116.4 million in the
equivalent period in 2005. Of this increase, $20.1 million
relates to the effect of our adoption of FIN 46R on
April 1, 2004, which resulted in the consolidation of 83
franchise restaurants. The remaining increase primarily relates
to the impact of consolidating for the entire first nine months
of 2005 the 42 U.S. company-operated restaurants that
were acquired in the second quarter of 2004.
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Table of Contents
The strengthening of the Canadian dollar relative to the
U.S. dollar during the first nine months of 2005 over the
comparable period in 2004 reduced the value of reported cost of
sales by approximately 1.1%.
Operating Expenses
Total operating expenses for the first nine months of 2005
increased by $8.2 million as compared to the corresponding
period in 2004, representing an increase of 5.3%.
The largest component of operating expenses is rent expense and
property costs, which increased by $11.0 million, or 10.6%,
during the period. Our Canadian operations contributed the
majority of the increase with an increase of $9.2 million
in rent expense and other property costs during the period,
largely due to the increase in the number of properties being
leased and then subleased to franchisees. At October 2,
2005 there were 1,969 properties owned or leased by us in Canada
and then subleased to franchisees, compared to 1,861 such
properties in 2004. In addition, rent expense also increased due
to higher percentage rent payments stemming from strong
same-store sales growth.
Our U.S. operating expenses are denominated in
U.S. dollars and translated to Canadian dollars for
reporting of our consolidated results. The strengthening of the
Canadian dollar relative to the U.S. dollar between the
first nine months of each of 2004 and 2005 reduced the value of
reported operating expenses by approximately 1.0% compared to
the value that would have been reported had there been no
exchange rate movement.
General and Administrative Expenses
General and administrative expenses increased from
$61.9 million for the first nine months of 2004 to
$73.7 million for the first nine months of 2005. As a
percentage of revenues, general and administrative expenses
increased from 6.5% to 6.8%. This increase is primarily
attributable to higher carve-out costs relating to corporate
functions such as executive oversight, costs associated with
this offering and charges for Wendy's stock-based
compensation, which were granted and expensed for the first time
in 2005. In addition, general and administrative costs
(excluding carve-out) increased primarily due to growth in our
business.
Equity Income
Equity income relates to income from equity investments in joint
ventures and other minority investments over which we exercise
significant influence. For the first nine months of 2005, equity
income was $23.3 million, up $0.2 million from the
comparable period in 2004.
Other Income and Expense
For the first nine months of 2005, other income of
$7.5 million related to a $5.1 million one-time
mark-to-market gain on cross-border intercompany notes in
addition to a gain on sale of vacant land.
Interest Expense (Including Affiliated Interest
Expense)
Interest expense was $8.2 million for the first nine months
of 2005 and $12.6 million for the comparable period in
2004. The decrease of $4.4 million is primarily due to
higher capitalized interest relating to our new distribution
centre in Guelph, Ontario and lower affiliated interest expense
of which approximately $2.0 million relates to a net
decrease in average indebtedness and approximately
$0.6 million relates to a change in foreign exchange rates.
Interest Income
Interest income was $2.3 million for the first nine months
of 2005 and $1.7 million for the first nine months of 2004,
primarily relating to changes in average cash balances.
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Table of Contents
Income Taxes
The effective income tax rate for the first nine months of 2005
was 31.1% compared to 31.9% for the comparable period in 2004.
The change is primarily attributable to the favourable taxation
of currency transactions and Canadian rate reductions, which
were partially offset by non-deductible costs related to this
offering.
Comprehensive Income
For the first nine months of 2005 comprehensive income increased
$11.2 million over the comparable period in 2004. This
change relates to a net income increase of $23.8 million
and a decrease due to the impact from translation and other
adjustments of $12.6 million. There was slight
strengthening in the Canadian dollar for the first nine months
in 2005 and for the same period in 2004.
Recent Developments
We expect to record during the fourth quarter of fiscal 2005
between US$15.0 and US$20.0 million in pre-tax charges for
the impairment of certain fixed assets associated with Tim
Hortons restaurants in New England that were acquired in 2004.
We also expect to record a non-cash impairment charge of
approximately US$25.0 million pre-tax for the writedown of
goodwill as part of our annual review for impairment of goodwill
for Tim Hortons U.S. This goodwill arose as a result of the New
England acquisition in fiscal 2004. We perform our annual review
for impairment of goodwill in the fourth quarter of the fiscal
year. To determine the range of the estimated goodwill charges,
we estimated the fair market value of the business based on
historical performance, discounted cash flow projections and
comparative market data.
52
Table of Contents
Fiscal 2002 to Fiscal 2004
Below is a summary of comparative results of operations and a
more detailed discussion of results for the fiscal 2002 to 2004.
Results of Operations
Fiscal 2004 Compared to 2003
2004 Change
% of
% of
2004
Revenues
2003
Revenues
$
%
(in thousands, except where noted)
Revenues
Sales
$
845,231
63.2
%
$
727,508
62.1
%
$
117,723
16.2
%
Franchise revenues
493,035
36.8
%
444,272
37.9
%
48,763
11.0
%
Total revenues
1,338,266
100.0
%
1,171,780
100.0
%
166,486
14.2
%
Costs and expenses
Cost of sales
741,198
55.4
%
636,311
54.3
%
104,887
16.5
%
Operating expenses
223,451
16.7
%
202,314
17.3
%
21,137
10.4
%
General and administrative expenses
85,744
6.4
%
80,394
6.9
%
5,350
6.7
%
Equity income
(32,548
)
(2.4
%)
(23,057
)
(2.0
%)
(9,491
)
41.2
%
Other (income) expense
1,116
0.1
%
(3,079
)
(0.3
%)
4,195
n/m
Total costs and expenses,
    net
1,018,961
76.1
%
892,883
76.2
%
126,078
14.1
%
Operating income
319,305
23.9
%
278,897
23.8
%
40,408
14.5
%
Interest expense
(6,911
)
(0.5
%)
(7,022
)
(0.6
%)
111
(1.6
%)
Interest income
2,802
0.2
%
2,098
0.2
%
704
33.6
%
Affiliated interest expense, net
(9,410
)
(0.7
%)
(11,110
)
(0.9
%)
1,700
(15.3
%)
Income before income taxes
305,786
22.8
%
262,863
22.4
%
42,923
16.3
%
Income taxes
100,735
7.5
%
106,601
9.1
%
(5,866
)
(5.5
%)
Net income
$
205,051
15.3
%
$
156,262
13.3
%
$
48,789
31.2
%
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Table of Contents
Fiscal 2003 Compared to 2002
2003 Change
% of
% of
2003
Revenues
2002
Revenues
$
%
(in thousands, except where noted)
Revenues
Sales
$
727,508
62.1
%
$
656,833
62.0
%
$
70,675
10.8
%
Franchise revenues
444,272
37.9
%
402,738
38.0
%
41,534
10.3
%
Total revenues
1,171,780
100.0
%
1,059,571
100.0
%
112,209
10.6
%
Costs and expenses
Cost of sales
636,311
54.3
%
575,337
54.3
%
60,974
10.6
%
Operating expenses
202,314
17.3
%
191,749
18.1
%
10,565
5.5
%
General and administrative expenses
80,394
6.9
%
71,851
6.8
%
8,543
11.9
%
Equity income
(23,057
)
(2.0
%)
(5,056
)
(0.5
%)
(18,001
)
n/m
Other (income) expense
(3,079
)
(0.3
%)
(7,623
)
(0.7
%)
4,544
(59.6
%)
Total costs and expenses,
    net
892,883
76.2
%
826,258
78.0
%
66,625
8.1
%
Operating income
278,897
23.8
%
233,313
22.0
%
45,584
19.5
%
Interest expense
(7,022
)
(0.6
%)
(5,425
)
(0.5
%)
(1,597
)
29.4
%
Interest income
2,098
0.2
%
2,871
0.3
%
(773
)
(26.9
%)
Affiliated interest expense, net
(11,110
)
(0.9
%)
(17,786
)
(1.7
%)
6,676
(37.5
%)
Income before income taxes
262,863
22.4
%
212,973
20.1
%
49,890
23.4
%
Income taxes
106,601
9.1
%
80,161
7.6
%
26,440
33.0
%
Net income
$
156,262
13.3
%
$
132,812
12.5
%
$
23,450
17.7
%
n/m — The comparison is not meaningful.
Revenues
Sales
Sales grew $117.7 million, or 16.2%, in fiscal 2004 over
2003, and $70.7 million, or 10.8%, in fiscal 2003 over
2002. Warehouse sales increased $38.0 million, or 5.7%, in
fiscal 2004 over 2003 and $94.5 million, or 16.5%, in
fiscal 2003 over 2002. In general, our warehouse sales growth is
driven by increased demand for products due to increases in the
number of restaurants and growth in our average same-store
sales. In 2004, the impact of the increase in systemwide sales
was partially offset by the conversion to Always Fresh bakery
products.
The Always Fresh system conversion began during the third
quarter of 2002 and was completed during the first quarter of
2004. Sales of dry ingredient mixes, which were previously
distributed through our warehouses to system restaurants,
declined as a result of the conversion to par-baked donut
manufacturing. In part, this was offset by new sales of some
frozen products delivered by third party distributors to the
restaurants. In 2002 and 2003 during the conversion, sales of
Always Fresh system equipment to franchisees increased sales,
which also helped offset the declines in dry ingredient mix
sales. The net impact of the Always Fresh system conversion
resulted in a decline in warehouse sales of 2.7% in fiscal 2004
over 2003 and an increase in fiscal 2003 over 2002 of 10.5%.
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Table of Contents
Company-operated restaurant sales vary with the number of
company-operated restaurants in the system. In Canada, the
average number of company-operated restaurants has been
approximately 31 from 2002 to 2004 and as a result sales have
been fairly constant over this time.
In the U.S., our average number of company-operated restaurants
has varied over the past three years. From fiscal 2003 to
2004 company-operated restaurant revenues increased
$16.4 million before the impact of the weakening of the
U.S. dollar. The majority of this increase related to the
acquisition of the 42 restaurants in New England, which we
have operated since the acquisition in the second quarter of
2004. In fiscal 2003, U.S. company-operated restaurant
sales decreased $17.1 million, or 37.6% (before the impact
of currency), reflecting our franchising of company-operated
restaurants in the U.S. during this period.
In fiscal 2004, sales were also impacted by the consolidation of
approximately 80 franchise restaurants in accordance with
FIN 46R, which was adopted in the second quarter of 2004.
The net impact on sales was an increase of approximately
$59.7 million in fiscal 2004 over 2003. Although the impact
of FIN 46R resulted in the increase or elimination of
certain amounts for financial reporting, there was no net
operating income impact to our financial statements.
Sales from our U.S. operations are denominated in
U.S. dollars and translated into Canadian dollars for
reporting our results. In both 2004 and 2003, the strengthening
of the Canadian dollar relative to the U.S. dollar reduced
sales value by 0.8% and 1.0%, respectively.
Sales included a 53rd week in 2004, compared to
52 weeks in each of 2003 and 2002.
Franchise Revenues
Franchise revenues increased $48.8 million, or 11.0%, in
fiscal 2004 over 2003, and increased $41.5 million, or
10.3%, in fiscal 2003 over 2002. Rental income from restaurants
leased to franchisees increased by $34.4 million, or 14.3%,
in fiscal 2003 over 2002 and by $33.1 million, or 12.1%, in
fiscal 2004 over 2003. Royalty income increased by
$11.3 million, or 13.8%, in fiscal 2003 over 2002 and by
$13.2 million, or 14.2%, in fiscal 2004 over 2003. Although
the consolidation of 77 restaurants on average during
fiscal 2004 in accordance with FIN 46R reduced our rent and
royalty income by $13.6 million for that period, our net
growth in both rental income and royalty income reflects an
increase in the number of franchise restaurants open and the
positive average same-store sales growth in both Canada and the
U.S. over fiscal 2002 to 2004. At the end of fiscal 2004,
total restaurants leased to franchisees were 1,920 compared to
1,809 at the end of fiscal 2003 and 1,679 at the end of fiscal
2002.
Total franchise fees increased $2.4 million, or 3.2%, in
fiscal 2004 over 2003 reflecting higher average fees from
franchises sold due to higher restaurant equipment costs, which
offset a decrease in the number of restaurants sold.
Revenues from our U.S. operations are denominated in
U.S. dollars and translated into Canadian dollars for
reporting our results. In both fiscal 2004 and 2003 the
strengthening of the Canadian dollar relative to the
U.S. dollar reduced total franchise revenues by 0.6%.
Revenues include a 53rd week in 2004 compared to
52 weeks in each of fiscal 2003 and 2002.
Total Costs and Expenses
Cost of Sales
Cost of sales increased $104.9 million, or 16.5%, in fiscal
2004 over 2003 and $61.0 million, or 10.6%, in fiscal 2003
over 2002. Warehouse cost of sales increased $40.5 million,
or 7.0%, in fiscal 2004 compared to $85.5 million, or
17.4%, in fiscal 2003. The increases in fiscal 2004 and 2003 are
primarily the result of additional sales to franchisees, due to
the increased number of restaurants serviced, higher average
sales per restaurant and an additional week of operations in
fiscal 2004.
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Table of Contents
The increase in systemwide sales translated to an increase in
warehouse cost of sales, including coffee, other drinks, cups
and lids and various other products.
The conversion of restaurants to our Always Fresh baking system
impacted warehouse cost of sales year over year. The Always
Fresh system conversion began during the third quarter of 2002
and was completed during the first quarter of 2004. Cost of
sales of dry ingredient mixes declined during the conversion
period but in fiscal 2003 was offset by cost of sales for Always
Fresh system equipment sold to franchisees. In both fiscal 2004
and 2003 the decline in cost of sales of dry ingredient mixes
was partially offset by the cost of sales of frozen products
shipped by third party distributors to restaurants. The net
impact of the Always Fresh system conversion resulted in a
decline in warehouse cost of sales of 1.7% in fiscal 2004 over
2003, but an increase in fiscal 2003 over 2002 of 14.5%.
The financial impact of adopting FIN 46R in fiscal 2004 was
to reduce warehouse cost of sales by $8.9 million for costs
already reflected in company-operated restaurant cost of sales.
Excluding the impact of restaurants required to be consolidated
under FIN 46R, warehouse cost of sales expressed as a
percentage of warehouse sales was 87.5% for fiscal 2004, 86.5%
for fiscal 2003 and 85.8% for fiscal 2002. These percentages
reflect a changing product mix during the reporting periods.
Cost of sales also includes food, paper, labour and occupancy
cost for company-operated restaurants and varies with the
average number and mix of company-operated restaurants.
Company-operated restaurant cost of sales decreased by
$22.3 million, or 25.9%, from fiscal 2002 to 2003 and
increased by $65.1 million, or 101.8%, from fiscal 2003 to
2004. The differences in company-operated restaurant cost of
sales between fiscal years primarily reflects the number and mix
of company-operated restaurants we operate in the U.S., with an
average of 54 company-operated restaurants in fiscal 2004
compared to 30 in fiscal 2003 and 45 in fiscal 2002. The average
number of company-operated restaurants in fiscal 2004 includes
the impact of the 2004 acquisition of 42 restaurants in New
England. $55.5 million of the increase in company-operated
restaurant cost of sales in fiscal 2004 is due to the
consolidation of additional restaurants under FIN 46R.
The strengthening of the Canadian dollar relative to the
U.S. dollar reduced the value of reported cost of sales by
approximately 0.9% between fiscal 2003 and 2004 and 1.1% between
fiscal 2002 and 2003.
Operating Expenses
Operating expenses increased $21.1 million, or 10.4%, in
fiscal 2004 over 2003 and $10.6 million, or 5.5%, in fiscal
2003 over 2002. Rent expense and property costs increased in
fiscal 2004 and 2003 by $17.7 million and
$11.2 million, respectively, over the prior period due to
the growth in the number of properties being leased and then
subleased to franchisees. The increases were also a result of
higher percentage rent on certain properties resulting from the
positive average same-store sales growth, and the inclusion of
the 53rd week in 2004. The change was primarily related to
our Canadian operations. There were 1,920 restaurants owned or
leased by us in Canada and then subleased to franchisees at the
end of fiscal 2004 versus 1,809 at the end of fiscal 2003 and
1,679 at the end of fiscal 2002.
Franchise sales expenses decreased by $2.2 million, or
3.1%, from fiscal 2002 to 2003 and increased by
$2.3 million, or 3.3%, from fiscal 2003 to 2004. Of the
$2.2 million decrease in franchise sales expense in fiscal
2003, $1.4 million is due to the impact of foreign exchange.
The increase in franchise sales expense from fiscal 2003 to 2004
is primarily due to the higher average equipment cost, resulting
from the size and type of restaurant being sold, on all types of
franchise sales, particularly traditional restaurants and
resales. The higher average cost is consistent with the higher
average franchise fees in fiscal 2004. This increase is offset
by $0.8 million due to the negative impact of foreign
exchange.
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Table of Contents
The strengthening of the Canadian dollar relative to the
U.S. dollar reduced the value of reported operating
expenses by approximately 0.8% between fiscal 2003 and 2004 and
1.3% between fiscal 2002 and 2003.
General and Administrative Expenses
General and administrative expenses are comprised of expenses
associated with corporate and administrative functions that
support current operations and provide the infrastructure to
support future growth. This expense category also includes
expense allocations from Wendy's.
From fiscal 2003 to 2004, general and administrative expenses
increased by approximately $5.4 million or 6.7%. As a
percentage of revenue, this cost category decreased slightly
from approximately 6.9% in fiscal 2003 to 6.4% in fiscal 2004.
This change is partly because we recognized higher
performance-based bonuses related to the successful completion
of the Always Fresh system conversion in 2003, and also reflects
the fact that revenues grew at a higher rate than general and
administrative costs.
From fiscal 2002 to 2003, general and administrative expenses
increased from approximately $71.9 million to
$80.4 million, an increase of approximately 11.9%. As a
percentage of revenue, this cost category remained relatively
consistent, representing 6.8% in fiscal 2002 and 6.9% in fiscal
2003. This increase in fiscal 2003 reflects the higher
performance-based bonuses related to the successful completion
of the Always Fresh conversion.
Equity Income
Equity income relates to income from equity investments in joint
ventures and other minority investments over which we exercise
significant influence. In fiscal 2003 and 2004 equity income
increased by $18.0 million and $9.5 million,
respectively, over the prior period due to improvements in both
of our two main equity investments.
Our most significant equity investment is our 50-50 joint
venture with IAWS. This joint venture commissioned the
construction of the Maidstone Bakeries facility, which was
substantially completed in 2002, and following the completion of
our conversion to the Always Fresh baking system during the
first quarter of 2004 this facility has been providing par-baked
donuts, Timbits and bread products. The income earned from this
investment represents the majority of the improvement in equity
income from fiscal 2002 to 2004. Future income growth from the
existing product lines will be primarily based on systemwide
sales growth.
A second significant equity investment is our 50-50 partnership
with Wendy's Restaurants of Canada, which relates to the
operation of combination restaurants throughout Canada. The
income generated from this investment has remained at a
relatively constant percentage of our total revenues during
fiscal 2002, 2003 and 2004.
Other Income and Expense
Other income and expense includes amounts that are not directly
derived from our primary businesses. This includes expenses
related to restaurant closures, other asset write-offs, foreign
exchange gains and losses and minority interest. Our adoption in
fiscal 2004 of FIN 46R resulted in the consolidation of
certain franchise restaurants and the recognition of
approximately $1.4 million in minority interest expense
related to these restaurants. This expense was largely offset by
favourable currency adjustments resulting in an unrealized
foreign exchange gain of approximately $1.4 million
associated with the translation of U.S. denominated
intercompany debt with Wendy's.
Our fiscal 2003 other income of approximately $3.1 million
included foreign exchange gains of approximately
$3.8 million, less a loss on disposal of fixed assets of
approximately $1.5 million relating to the sale of certain
real estate properties.
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Table of Contents
In fiscal 2002, the largest portion of other income related to a
gain on the disposal of our cup manufacturing business of
approximately $5.0 million.
Interest Expense (Including Affiliated Interest
Expense)
Interest expense was $16.3 million in fiscal 2004,
$18.1 million in fiscal 2003 and $23.2 million in
fiscal 2002. The change year over year primarily relates to a
decrease in affiliated interest expense of $1.7 million in
fiscal 2004 and $6.7 million in fiscal 2003. Of these
decreases, approximately $0.8 million in fiscal 2004 and
$4.6 million in fiscal 2003 relate to lower average
indebtedness during the applicable year and approximately
$0.9 million in fiscal 2004 and $2.1 million in fiscal
2003 relate to changes in foreign exchange rates.
Interest Income
Interest income was $2.8 million in fiscal 2004,
$2.1 million in fiscal 2003 and $2.9 million in fiscal
2002. Changes primarily relate to changes in average cash
balances throughout the years.
Income Taxes
Our effective income tax rate for fiscal 2004 was 32.9%,
compared to 40.6% for fiscal 2003 and 37.6% for fiscal 2002. The
rate was lower in 2004 as a result of the reduction in Canadian
tax rates and a non-recurring increase in the valuation
allowance for deferred taxes associated with foreign tax credits
that occurred in fiscal 2003. The rate was higher in fiscal 2003
compared to fiscal 2002 primarily due to the aforementioned
change to the valuation allowance.
Comprehensive Income
Comprehensive income increased $47.9 million and decreased
$2.1 million in 2004 and 2003, respectively. Net income
increased $48.8 million and $23.5 million in 2004 and
2003, respectively. Due almost entirely to unfavourable
translation adjustments, the impact from translation and other
adjustments decreased comprehensive income by $0.9 million
and $25.6 million in 2004 and 2003, respectively. There was
strengthening in the Canadian dollar in fiscal 2004 and an even
more significant improvement in the Canadian dollar in fiscal
2003 versus 2002.
Liquidity and Capital Resources
Overview
Our primary source of liquidity has historically been cash
provided by our Canadian operating activities, which has been
used to fund continued growth in restaurants, other capital
expenditures, acquisitions and investments. We have also
historically received significant financing from Wendy's.
Historically, our Canadian operations have managed their own
cash on a centralized basis and independent of Wendy's. Our
U.S. operations' cash was managed by Wendy's.
U.S. cash receipts were transferred to Wendy's on a
regular basis and Wendy's provided funds to cover the
disbursements. To the extent receipts were less than
disbursements, the U.S. operations obtained borrowings from
Wendy's. Wendy's has informed us that they intend that
notes and trade balances outstanding as of October 2, 2005,
between Wendy's and us, other than the
US$960.0 million of indebtedness, which will be repaid by
us with the net proceeds from this offering and the term loan
agreement, will be distributed by us to Wendy's or
contributed as equity to us in the fourth quarter of 2005,
forming a continuing part of our equity.
Our primary liquidity and capital requirements are for new store
construction and general corporate needs. Historically, our
working capital needs have not been significant because of our
focused management of accounts receivable and inventory. We
believe we will have sufficient cash flows from operations to
fund our working capital requirements.
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Table of Contents
If additional funds are needed for strategic initiatives or
other corporate purposes, we believe we could borrow additional
funds while maintaining a strong capital structure. Our ability
to issue additional equity is constrained because our issuance
of additional shares may cause the spin-off to be taxable, and
under the tax sharing agreement we would be required to
indemnify Wendy's against the tax.
We are committed to a strong capital structure and financial
profile. In connection with our separation from Wendy's, we
and Wendy's determined the amount of debt that we would
incur after considering our ability to service the debt, our
leasing arrangements, our ability to finance current and future
growth initiatives and the capital structure of comparable
companies.
Total borrowings, as well as cash and cash equivalents, as
presented in our historical consolidated financial statements
are not representative of the debt or cash and cash equivalents
that we will have following our separation from Wendy's.
Historically, Wendy's has centrally managed its capital
structure in order to optimize its costs of funding and
financial flexibility at the corporate level. Consequently, the
debt being carried in our historical financial statements does
not necessarily reflect our debt capacity and financing
requirements. See "Unaudited Pro Forma Consolidated
Financial Information."
Loan Agreements
As of October 2, 2005, we have a $25.0 million
revolving credit facility which is guaranteed by Wendy's
and undrawn. Prior to the completion of this offering we expect
to enter into a term loan agreement, under which we will incur
new long-term indebtedness of approximately $500.0 million
in aggregate principal amount. We also intend to enter into two
revolving credit facilities: a $200.0 million revolving
credit facility in Canada and a US$100.0 million revolving
credit facility in the U.S. The terms of these new
borrowing arrangements have not yet been finalized.
In September 2005 we distributed, as a dividend on our common
shares, a promissory note to Wendy's in the principal
amount of US$960.0 million. The note is payable within
30 days of demand and bears an interest rate of
3.0% per annum. We intend to use the net proceeds from this
offering and the term loan agreement to repay our obligations
under this note. We have hedged most of the U.S. dollar
foreign currency risk to align with the expected repayment.
Comparative Cash Flows
Operating Activities.
Net cash provided from operating
activities was $277.5 million for the first nine months of
2004 as compared to $168.2 million for the first nine
months of 2005. Net cash provided from operating activities was
$146.9 million in fiscal 2002, compared to
$147.2 million in fiscal 2003 and $400.6 million in
fiscal 2004. Operating cash flows for the first nine months of
2005 declined $109.3 million due primarily to timing
differences in working capital relating to payments of accounts
payable and accrued expenses and lower net cash inflows relating
to amounts due from and to Wendy's. In addition, interest
and tax payments for the first nine months of 2005 were higher
than in the comparative prior year period. Partially offsetting
these operating cash flow declines, net income, net of
amortization and depreciation expense, was higher for the first
nine months of 2005 compared to the first nine months of 2004.
Net operating cash flows in fiscal 2003 were $0.3 million
higher than fiscal 2002 and $253.4 million lower than
fiscal 2004. Cash flows in fiscal 2003 compared to fiscal 2002
benefited from higher net income, net of amortization and
depreciation expense, which was substantially offset by higher
interest and tax payments due to timing. Compared to fiscal
2003, fiscal 2004 cash flows benefited from higher net income,
net of amortization and depreciation expense, increases in
accounts payable and accrued expenses relating primarily to the
timing of vendor payments and also benefited from lower interest
payments. In addition, in fiscal 2004 we received more than
$120.0 million in additional amounts from Wendy's. See
"— Financing Activities" below for a
description of the cash flows between us and Wendy's.
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Table of Contents
Investing Activities.
Net cash used in investing
activities for the first nine months of 2004 was
$255.4 million as compared to $151.7 million for the
first nine months of 2005. Net cash used in investing activities
was $597.3 million in 2002, $108.0 million in 2003 and
$357.0 million in 2004. Capital expenditures is typically
the largest ongoing component of our investing activities and
includes expenditures for new restaurants, improvements to
existing restaurants and other capital expenditures. A summary
of capital expenditures for fiscal 2002, 2003 and 2004 and for
the first nine months of 2004 and 2005 is as follows:
Fiscal Years
First Nine Months
Capital expenditures
2002
2003
2004
2004
2005
(in millions)
New restaurants
$
82.7
$
89.1
$
132.5
$
65.8
$
52.6
Store improvements
6.5
29.9
25.7
20.8
30.0
Other capital needs
22.6
12.9
39.6
39.7
49.3
Total capital expenditures
$
111.8
$
131.9
$
197.8
$
126.3
$
131.9
In fiscal 2004, new restaurant capital expenditures were
$68.9 million in Canada and $63.6 million in the U.S.,
both of which increased over the prior year. We expect fiscal
2005 capital expenditures to be in the range of
$225.0 million to $250.0 million for new restaurant
development, remodeling, maintenance, technology initiatives and
other capital needs. Capital spending in fiscal 2005 is expected
to be higher than the last several years due primarily to our
new distribution and warehousing facility to be completed in
2006 to better serve our distribution needs. The expected
investment in the new facility is in excess of
$70.0 million, of which approximately 25.0% was spent in
fiscal 2004. It is currently estimated that approximately 70.0%
will be spent in 2005 and 5.0% in 2006. We anticipate fiscal
2006 systemwide new restaurant growth will be similar to 2005 in
the range of 180 to 200.
Other significant items impacting our investing cash flows in
the nine month comparative periods included net short term loans
made to Wendy's of $103.9 million for the first nine
months of 2004 compared to $21.9 million in the first nine
months of 2005, the $60.9 million acquisition of
42 restaurants in New England in 2004 compared to no
restaurant acquisitions made in 2005 and the 2004 maturity of
short term investments of $31.9 million compared to no
similar investments or maturities in 2005.
The $489.3 million difference between fiscal 2002 and 2003
investing activity is primarily related to a $544.8 million
change in our investing cash flows with Wendy's. (See also
"Financing Activities" below for a description of the
cash flows between us and Wendy's.) Also, in fiscal 2002 we
received proceeds of $31.5 million from the sale of our cup
business and made investments primarily in our joint venture
with IAWS totaling $33.5 million, compared to
$9.0 million invested in fiscal 2003. The
$249.0 million increase in investing cash used in fiscal
2004 compared to 2003 was primarily driven by a
$197.6 million net increase in cash outflows for loans made
to Wendy's. Other significant differences included
short-term investments of $31.9 million made in fiscal 2003
which matured in 2004 and $60.9 million used for the 2004
acquisition of 42 restaurants in New England. As in prior
years, we may invest in new business opportunities and expand
our joint venture with IAWS. We will also evaluate other
opportunities as they arise.
Financing Activities.
Financing activities provided cash
of $18.6 million for the first nine months of 2004 and used
cash of $26.2 million for the first nine months of 2005.
Financing activities provided cash of $460.3 million, used
cash of $39.4 million and provided cash of
$0.5 million in 2002, 2003 and 2004, respectively. The
primary differences impacting the comparability of financing
activities between years are net cash flows related to debt
between us and Wendy's.
Since 1995 we have been a wholly-owned subsidiary of
Wendy's. Accordingly, we did not seek significant external
financing as we received funding in various forms from
Wendy's. Wendy's primarily uses a worldwide
centralized approach to cash management and the financing of
60
Table of Contents
operations. Types of transactions between us and Wendy's
include (1) transfers of cash from our U.S. operations
to Wendy's bank account on a regular basis, (2) net
cash borrowings from Wendy's used to fund operations,
capital expenditures, acquisitions and for other purposes,
(3) payment of related party dividends and interest to
Wendy's on a regular basis and (4) allocations of
corporate expenses.
Contractual Obligations
Our significant contractual obligations and commitments as of
January 2, 2005 are shown in the following table. Purchase
obligations primarily include commitments for advertising
expenditures and purchases for certain food-related ingredients.
These contractual obligations for long-term debt reflect our
historical debt level, which is not representative of the debt
repayments that will actually be due under our capital structure
at the completion of this offering.
Payments Due by Period
Less than
After
Contractual Obligations
1 Year
1-3 Years
3-5 Years
5 Years
Total
(in thousands)
Long-term debt, including current
    maturities
$
283
$
465
$
721
$
16,876
$
18,345
Capital leases
9,097
16,857
12,751
49,813
88,518
Operating leases
52,406
94,452
86,006
326,023
558,887
Purchase obligations
155,055
7,464
389
200
163,108
Total contractual
    obligations
$
216,841
$
119,238
$
99,867
$
392,912
$
828,858
As of
Other Commercial Commitments
January 2, 2005
(in thousands)
Franchisee lease and loan guarantees
$
1,461
Letters of credit
4,959
Total other commercial
    commitments
$
6,420
As of January 2, 2005, we have guaranteed certain leases
and debt payments of franchisees amounting to $1.5 million.
In the event of default by a franchisee, we generally retain the
right to acquire possession of the related restaurants. We are
also the guarantor on $5.0 million in letters of credit
with various parties; however, we do not expect any material
loss to result from these instruments because we do not believe
performance will be required. Effective January 1, 2003, we
adopted FIN 45, "Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others." In accordance with
FIN 45 and based on available information, we have accrued
for certain guarantees and indemnities as of October 2,
2005 and January 2, 2005 in amounts which, in total, are
not material.
Certain of our U.S. employees participate in two
Wendy's-sponsored U.S. domestic defined benefit
pension plans. Wendy's manages those plans on a
consolidated basis and makes contributions to those plans in
amounts sufficient, on an actuarial basis, to fund, at a
minimum, its portion of the plans' normal cost on a current
basis, and to fund its portion of the actuarial liability for
past service costs in accordance with Department of Treasury
Regulations. Obligations to persons who are participants as of
the date of this prospectus will remain the responsibility of
Wendy's. See "Agreements Between Wendy's and
Us." We do not intend to adopt a new U.S. defined
benefit pension plan. Based on a headcount allocation approach,
our pro rata expense related to the Wendy's plans was not
significant.
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Table of Contents
At January 2, 2005, our reserves for doubtful receivables
and possible losses on notes receivable totalled
$3.1 million. These reserves are included in accounts
receivable. As of October 2, 2005, the reserve for doubtful
receivables and possible losses on notes receivable declined to
$1.7 million as our Canadian operations improved processes
related to collections for franchisee and other accounts.
In addition, as of October 2, 2005 we were obligated to
Wendy's on a promissory note in the principal amount of
US$960.0 million. The note is payable within 30 days
of demand and bears an interest rate of 3.0% per annum. We
intend to use the net proceeds from this offering and the term
loan agreement to repay our obligations under this note. We have
hedged most of the U.S. dollar foreign currency risk to
align with the expected repayment.
Off-Balance Sheet Arrangements
We do not have "off-balance sheet" arrangements as of
October 2, 2005 and January 2, 2005 as that term is
described by the SEC.
Quantitative and Qualitative Disclosures about Market Risk
Inflation
Financial statements determined on a historical cost basis may
not accurately reflect all the effects of changing prices on an
enterprise. Several factors tend to reduce the impact of
inflation for our business. Inventories approximate current
market prices, there is some ability to adjust prices and
liabilities are repaid with dollars of reduced purchasing power.
Foreign Exchange Risk
Our exposure to foreign exchange risk is primarily related to
fluctuations in the Canadian dollar relative to the
U.S. dollar. The impact of foreign exchange rates on our
income statement has predominantly been related to our
U.S. operations. In addition to the foreign currency
exposure from ongoing operations, we have identified exposure to
Canadian dollar exchange rates related to certain intercompany
cross-border notes. In connection with the completion of this
offering, these intercompany notes are now expected to be repaid
and, accordingly, were marked-to-market in 2005. Previously, the
translation of these intercompany notes was recorded as a
component of comprehensive income, rather than in income, in
accordance with FAS 52,
Foreign Currency
Translation
. To manage this additional exposure, we entered
into forward currency contracts to sell $500.0 million and
buy US$427.4 million. Under Statement of Financial
Accounting Standards (SFAS) No. 133, these forward
currency contracts are designated as highly effective cash flow
hedges. In accordance with SFAS No. 133, we defer
unrealized gains and losses arising from these contracts until
the impact of the related transactions occur. The fair value
unrealized losses on these contracts as of October 2, 2005
was $5.0 million. During the first nine months of 2005,
$5.1 million was recorded as a net transaction gain related
to the intercompany notes prior to entering into the forward
currency contracts.
Also, in the fourth quarter of 2005 we entered into forward
currency contracts to sell $578.0 million and buy
US$490.5 million in order to hedge certain net investment
positions in Canadian subsidiaries. Under
SFAS No. 133, these forward currency contracts are
designated as highly effective hedges and changes in the fair
value of these instruments will be immediately recognized in
other comprehensive income, to offset the change in the value of
the net investment being hedged.
The ongoing operational exposure to U.S. dollar exchange
rates on our cash flows primarily includes purchases paid for by
Canadian operations in U.S. dollars and payments from our
Canadian operations to our U.S. operations and to
Wendy's. Net cash flows between the Canadian and
U.S. dollar currencies were in excess of
$100.0 million for the first nine months of 2005 and for
fiscal
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2004. Forward currency contracts to sell Canadian dollars and
buy US$34.9 million and US$38.8 million were
outstanding as of October 2, 2005 and January 2, 2005,
respectively, to hedge purchases from third parties and
intercompany payments. The contracts outstanding at
October 2, 2005 and January 2, 2005 mature at various
dates through April 2006 and June 2005. The fair value
unrealized losses on these forward contracts was
$6.6 million as of October 2, 2005 and
$6.0 million as of January 2, 2005.
Wendy's has historically managed certain of our hedging
arrangements. After the completion of this offering, we will
manage all hedging arrangements. We intend to manage our cash
flows and balance sheet exposure to changes in the value of
foreign currencies. We may use derivative products to reduce the
risk of a significant negative impact on our U.S. dollar
cash flows or income. We do not hedge foreign currency exposure
in a manner that would entirely eliminate the effect of changes
in foreign currency exchange rates on net income and cash flows.
We have a policy forbidding trading or speculating in foreign
currency. By their nature, derivative financial instruments
involve risk including the credit risk of non-performance by
counterparties, and our maximum potential loss may exceed the
amount recognized in our balance sheet. To minimize this risk,
we limit the notional amount per counterparty to a maximum of
$100.0 million except in special circumstances for which
board approval is obtained.
Changes in the fair value of the cash flow hedges and net
investment hedges due to changes in U.S. and Canadian dollar
exchange rates are offset by the underlying transaction with
little or no impact to our net income.
At the current level of annual operating income generated from
our U.S. operations, if the U.S. currency rate changes
by $0.05, or 4.0%, compared to the
average 2005 year-to-date exchange rate, for an entire
year, the annual impact on our net income would be immaterial.
Interest Rate Risk
Historically, we have had insignificant external borrowings. We
will become exposed to interest rate risk impacting our net
borrowing costs if our new long-term borrowings of
$500.0 million bear a floating rate of interest. We will
seek to manage our exposure to interest rate risk and to lower
our net borrowing costs by managing the mix of fixed and
floating rate instruments based on capital markets and business
conditions. We will not enter into speculative swaps or other
speculative financial contracts.
Commodity Risk
We purchase certain products in the normal course of business,
the prices of which are affected by commodity prices. Therefore,
we are exposed to some price volatility related to weather and
various other market conditions outside of our control. However,
we do employ various purchasing and pricing contract techniques
in an effort to minimize volatility. Generally these techniques
include setting fixed prices with suppliers, setting in advance
the price for products, such as green coffee, to be delivered in
the future and unit pricing based on an average of commodity
prices over the corresponding period of time. We do not
generally make use of financial instruments to hedge commodity
prices, partly because of these contract pricing techniques.
While price volatility can occur, which would impact profit
margins, we have the ability to increase selling prices to
offset a rise in commodity prices.
Concentration of Credit Risk
We have cash in various Canadian bank accounts above amounts
guaranteed by the Canada Deposit Insurance Corporation (CDIC).
The amount in Canadian banks above CDIC limits was approximately
$114.6 million and $129.5 million as of
October 2, 2005 and January 2, 2005, respectively. We
utilize only high-grade banks in Canada for accounts that might
exceed CDIC limits. We also have cash balances in various
U.S. bank accounts above the Federal Deposit Insurance
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Corporation (FDIC) guarantee limits. We subscribe to a bank
rating system and only utilize high-grade banks for accounts
that might exceed these limits. The amount in U.S. banks
above FDIC limits was approximately $1.9 million as of
October 2, 2005 and was not material as of January 2,
2005.
The Application of Critical Accounting Policies
We describe our significant accounting policies, including our
critical accounting policies, in Note 1 of our audited
historical consolidated financial statements. Critical
accounting policies are those that we believe are both
significant and may require us to make difficult, subjective or
complex judgments, often because we need to estimate the effect
of inherently uncertain matters. The preparation of financial
statements in conformity with accounting principles generally
accepted in the U.S. requires us to make assumptions and
estimates that can have a material impact on the results of our
operations. The earnings reporting process is covered by our
system of internal controls, and generally does not require
significant estimates and judgments. However, estimates and
judgments are inherent in the calculations of royalty and other
franchise-related revenue collections, legal obligations, income
taxes, various other commitments and contingencies, valuations
used when assessing potential impairment of goodwill, other
intangibles and other long lived assets and the estimation of
the useful lives of fixed assets and other long-lived assets.
While we apply our judgment based on historical experience,
current economic and industry conditions and various assumptions
believed to be reasonable under the circumstances, actual
results could vary from these assumptions. Materially different
amounts may be reported using different assumptions.
Revenue Recognition
Revenue at company-operated restaurants is recognized as
customers pay for products at the time of sale. We operate
warehouses in Canada to distribute coffee and other dry goods to
an extensive franchise system. Revenues from these sales are
recorded when the product is delivered to the franchisee.
Franchise revenues consist of royalties, rents and various
franchisee fees. Royalties and rent revenues are recognized in
the month earned at estimated realizable amounts, and fee
revenues are recognized when the related services have been
performed and when the related franchise restaurant is opened.
We provide for estimated losses for revenues that are not likely
to be collected. Although we generally enjoy a good relationship
with our franchisees, and collection rates are currently high,
if average sales or the financial health of our franchisees were
to deteriorate, we might have to increase reserves against
collection of franchise revenues.
Income Taxes
We have accounted for, and currently account for, income taxes
in accordance with SFAS No. 109,
Accounting for
Income Taxes
. We record both Canadian and U.S. income
tax liabilities utilizing known obligations and estimates of
potential obligations. A deferred tax asset or liability is
recognized whenever there are future tax effects from existing
temporary differences and operating loss and tax credit
carryforwards. When considered necessary, we record a valuation
allowance to reduce deferred tax assets to the balance that is
more likely than not to be realized. Management must make
estimates and judgments on future taxable income, considering
feasible tax planning strategies and taking into account
existing facts and circumstances, to determine the proper
valuation allowance. When we determine that deferred tax assets
could be realized in greater or lesser amounts than recorded,
the asset balance and income statement reflect the change in the
period such determination is made. Due to changes in facts and
circumstances and the estimates and judgments that are involved
in determining the proper valuation allowance, differences
between actual future events and prior estimates and judgments
could result in adjustments to this valuation
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allowance. We use an estimate of our annual effective tax rate
at each interim period based on the facts and circumstances
available at that time while the actual effective tax rate is
calculated at year-end. As a subsidiary of Wendy's, we are
not a separate taxable entity for U.S. federal and certain
state income tax purposes. Consequently, Wendy's includes
our results of operations in its combined U.S. federal and
state income tax returns. Our U.S. tax provision is
computed on a separate return basis.
Property and Equipment, and Leasehold Improvements
Depreciation and amortization are recognized using the
straight-line method in amounts adequate to amortize costs over
the following estimated useful lives: buildings, up to
40 years; restaurant equipment, up to 15 years; other
equipment, up to 10 years; and leasehold improvements and
property under capital leases, the lesser of the useful life of
the asset or the lease term, as that term is defined in
SFAS No. 13, "Accounting for Leases," as
amended. We estimate useful lives on buildings and equipment
based on historical data and industry trends. We capitalize
certain internally developed software costs which are amortized
over a period of up to 10 years. We monitor our
capitalization and amortization policies to ensure they remain
appropriate. Intangibles separate from goodwill are amortized on
a straight-line basis over periods of up to 30 years. Lives
may be related to legal or contractual lives or must be
estimated by management based on specific circumstances.
Impairment of Long-Lived Assets
Long-lived assets are grouped into operating markets and tested
for impairment whenever an event occurs that indicates that
impairment may exist. We test for impairment using the cash
flows of the operating markets. A significant deterioration in
the cash flows of an operating market or other circumstances may
trigger impairment testing. If impairment is indicated, the fair
value of the fixed assets is estimated using the discounted cash
flows of the market or third party appraisals. The interest rate
used in preparing discounted cash flows is management's
estimate of the weighted average cost of capital.
Goodwill
Goodwill resulted primarily from our acquisition of 42
restaurants in New England in 2004. Goodwill is not subject to
amortization. We test goodwill for impairment annually in the
fourth quarter (or in interim periods if events or changes in
circumstances indicate that its carrying amount may not be
recoverable) by comparing the fair value of each reporting unit,
as measured by discounted cash flows and market multiples based
on earnings, to the carrying value, to determine if there is an
indication that a potential impairment may exist. Our reporting
units are Canada and the U.S. Each constitutes a business
and has discrete financial information available that is
regularly reviewed by management. One of the most significant
assumptions is the projection of future sales. We review our
assumptions each time goodwill is tested for impairment and make
appropriate adjustments, if any, based on facts and
circumstances available at that time. We tested for goodwill
impairment as of year-end 2004, and no impairment was indicated.
Reserves Contingencies for Litigation and Other
Matters
In the normal course of business, we must make continuing
estimates of potential future legal obligations and liabilities,
which requires the use of management's judgment on the
outcome of various issues. Management may also use outside legal
advice to assist in the estimating process. However, the
ultimate outcome of various legal issues could be different than
management estimates, and adjustments to income could be
required.
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Variable Interest Entities
We adopted FIN 46R in 2004. We enter into flexible lease
arrangements with certain franchisees who are not required to
invest a significant amount of equity. Because the legal entity
within which such a franchise operates is considered to not be
adequately capitalized, that entity is considered a variable
interest entity (VIE). Based on our review of the financial
statements received from these franchisees, our mathematical
projections indicate we are the primary beneficiary of these
VIEs and, accordingly, we have consolidated approximately 80
franchise restaurants as of 2004, or approximately 3.0% of our
total franchise restaurants. The related minority interest is
not considered material and is classified in other income, net
on the statement of income and other long-term liabilities on
the balance sheet.
We have no equity interest in any of our franchisees and have no
"off-balance sheet" exposures relative to any of our
franchisees. None of our assets serves as collateral for the
consolidated franchisees, and creditors of these franchisees
have no recourse to us. The only exposure to us related to these
VIEs relates to the collection of amounts due to us, which are
collected weekly and which were recorded net of uncollectible
amounts in our financial statements prior to the adoption of
FIN 46R. The agreements governing the lease arrangements
can be cancelled by either the franchisee or us with
30 days notice, further reducing our potential exposure.
Franchisee VIEs for which we are determined to be the primary
beneficiary have no impact on our reported net income. The
impact of consolidating these VIEs to our balance sheet is also
not significant. There is a small percentage of franchise
restaurants considered to be VIEs in which we hold a significant
variable interest, but for which we are not the primary
beneficiary. Our maximum exposure to loss as a result of its
involvement with this small percentage of franchise restaurants
is also not material.
Recently Issued Accounting Standards
In December 2004, the FASB issued SFAS No. 123R,
"Share-Based Payment," which requires an entity to
measure the cost of employee services received in exchange for
an award of equity instruments based on the grant-date fair
value of the award using an option-pricing model. The cost of
the awards, including the related tax effects, will be
recognized in income. This statement eliminates the alternative
to use the intrinsic value method for valuing stock based
compensation, which typically resulted in recognition of no
compensation cost. This statement was to become effective for
interim or annual periods beginning after June 15, 2005,
with early adoption encouraged. On April 15, 2005, the SEC
issued Release No. 33-8568, which amended the date for
compliance with SFAS No. 123R to the first interim or
annual period of the first fiscal year beginning after
June 15, 2005, with early adoption permitted. On
October 27, 2005, Wendy's announced that its
compensation committee, after discussion with its board of
directors, approved accelerated vesting of all outstanding stock
options, except those held by the independent directors of
Wendy's. The decision to accelerate vesting of stock
options was made primarily to reduce non-cash compensation
expense that would have been recorded in future periods
following adoption of SFAS No. 123R. and is expected
to have a positive effect on employee morale and retention. The
Wendy's compensation committee imposed a holding period
that will require all executive officers to refrain from selling
net shares acquired upon any exercise of these accelerated
options, until the date on which the exercise would have been
permitted under the option's original vesting terms or, if
earlier, the executive officer's death, disability or
termination of employment. Under SFAS No. 123R, the
classification of cash flows between operating and financing
activities will be affected due to a change in treatment for tax
benefits realized. As a result of the acceleration of vesting on
the majority of Wendy's outstanding stock options, we do
not expect the adoption of SFAS No. 123R to have a
significant impact on our financial statements.
SFAS No. 123R requires recognition of compensation
cost under a non-substantive vesting period approach, which
requires recognition of compensation expense when an employee is
eligible
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to retire. We have historically recognized this cost under the
nominal vesting approach, generally over the normal vesting
period of the award. When we adopt SFAS No. 123R in
the first quarter of 2006, we will change to the non-substantive
approach.
In June 2005, the Emerging Issues Task Force (EITF) reached a
consensus on Issue No. 05-06, "Determining the
Amortization Period for Leasehold Improvements." The
consensus requires that the amortization period for leasehold
improvements acquired in a business combination or acquired
subsequent to lease inception should be based on the lesser of
the useful life of the leasehold improvements or the period of
the lease including all renewal periods that are reasonably
assured of exercise at the time of the acquisition. The
consensus is to be applied prospectively to leasehold
improvements acquired subsequent to June 29, 2005. This
consensus is consistent with our accounting policy and thus had
no impact upon adoption.
In October 2005, the FASB issued FSP FAS 123(R)-2,
"Practical Accommodation to the Application of Grant Date
as Defined in FASB Statement No. 123(R)," which
provides clarification of the concept of mutual understanding
between employer and employee with respect to the grant date of
a share-based payment award. This FSP provides that a mutual
understanding of the key terms and conditions of an award shall
be presumed to exist at the date the award is approved by
management if the recipient does not have the ability to
negotiate the key terms and conditions of the award and those
key terms and conditions will be communicated to the individual
recipient within a relatively short time period from the date of
approval. This guidance shall be applied upon initial adoption
of SFAS No. 123R. We do not expect adoption to have a
significant impact on our financial statements.
In October 2005, the FASB issued FSP FAS 13-1,
"Accounting for Rental Costs Incurred during a Construction
Period," which addresses the accounting for rental costs
associated with operating leases that are incurred during a
construction period. This FSP requires that rental costs
associated with ground or building operating leases that are
incurred during a construction period be recognized as rental
expense and included in income from continuing operations. The
guidance in this FSP shall be applied to the first reporting
period beginning after December 15, 2005, with early
adoption permitted. We are currently evaluating the impact of
adopting FSP FAS 13-1, but do not expect it to have a
significant impact on our financial statements.
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BUSINESS
Overview
We are the largest QSR chain in Canada based on systemwide sales
and number of restaurants open, with a menu spanning a broad
range of categories that appeal to customers throughout the day,
such as premium blend coffee, flavoured cappuccinos, specialty
and steeped teas, home-style soups, fresh sandwiches and freshly
baked goods. According to the CRFA and Statistics Canada, in
2004 our system represented 22.6% of the $14.0 billion QSR
segment of the Canadian foodservice industry based on sales
dollars, almost 25.0% larger than McDonald's, our nearest
competitor. According to a tracking study we conducted in 2003,
approximately 46.0% of our Canadian customers visit our
restaurants four or more times per week. We believe we have
achieved this outstanding customer loyalty by offering a varied
menu of products with superior quality and consistency in a
convenient and friendly environment at an exceptional value and
by being very involved in the communities we serve. The appeal
of our menu and our commitment to convenience also allow most of
our restaurants to operate 24 hours each day with no
two-hour period accounting for more than 20.0% of our average
daily sales.
Our restaurants operate under a variety of formats. A standard
Tim Hortons restaurant is a free-standing building ranging in
size from 1,400 to 3,090 square feet with a convenient
drive-thru window and featuring innovative merchandising
techniques designed to capture our customers' senses and
generate incremental sales. As of October 2, 2005, we had a
system of 2,801 restaurants in Canada and the U.S. Our 2,529
restaurants across Canada include 660 non-standard, smaller
restaurants in locations such as universities, hospitals and
office buildings. We have a significant and long-standing
strategic partnership with Exxon-Mobil's Canadian
subsidiary, with more than 325 kiosks located within their
Esso
®
convenience stores in Canada. In the U.S., we have a regional
presence in the Northeast and Midwest with 272 restaurants
in 10 states, concentrated in three major markets. As of
October 2, 2005, franchisees operated 2,705, or 98.8%, of
the restaurants in Canada and 207, or 76.1%, of the restaurants
in the U.S.
We have developed what we believe to be a superior business
model characterized by financial stability and scalability,
operational excellence and flexibility. Our diverse revenue and
operating income base is generated from franchisee royalties and
fees, rental income, warehouse sales and company-operated
stores, limiting our exposure to commodity price fluctuations.
Franchisee royalties are typically paid weekly based on a
percentage of gross sales. We have a rigorous restaurant site
selection and development process and differentiate ourselves
from most restaurant companies by controlling the real estate of
most of our franchise restaurants. Our vertically-integrated
manufacturing and distribution capabilities include a joint
venture bakery and a coffee roasting plant. These operations
improve product quality, variety and consistency, expand our
product offering capabilities, ensure availability and timely
delivery of products and provide economies of scale and labour
efficiencies. We have distributed dry goods and other items to
our franchisees for over 30 years and have generated
consistent income from our product distribution and warehouse
operations.
Since our founding in 1964, we have been committed to a strategy
of earning the trust of our customers through product quality
and price value. This focus has built Tim Hortons into one of
the most widely-recognized consumer brands in Canada, delivering
consistent revenue growth and increasing profits. Since the end
of 1995, our systemwide sales have grown at an 18.5% CAGR and
our revenues have grown at a 17.1% CAGR. This growth is a result
of expanding the number of restaurants annually by a 9.6% CAGR
and increasing average annual same-store sales by 7.0% and 10.0%
in Canada and the U.S., respectively, over that period. In
fiscal 2004, we had total revenues of $1.3 billion,
operating income of $319.3 million and net income of
$205.1 million, representing increases from fiscal 2003 of
14.2%, 14.5% and 31.2%, respectively. In the nine months ended
October 2, 2005, we had total revenues of
$1.1 billion, operating income of $259.3 million and
net income of $174.7 million, representing increases from
the first nine months of fiscal 2004 of 13.1%, 11.7% and 15.8%,
respectively.
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Our History
In May 1964, Tim Horton, a National Hockey League All-Star
defenseman, opened his first coffee and donut shop on Ottawa
Street in Hamilton, Ontario. In 1967, Ron Joyce, then the
operator of three Tim Hortons restaurants, became partners with
Tim Horton and together they opened 37 new restaurants over
the next seven years. After Tim Horton's death in 1974,
Mr. Joyce continued to expand the chain, becoming its sole
owner in 1975. In the early 1990s, Tim Hortons and Wendy's
entered into a partnership to develop real estate and
combination restaurants containing Wendy's and Tim Hortons
under the same roof. In 1995, Wendy's purchased
Mr. Joyce's ownership of the Tim Hortons system.
Initially a coffee and donut chain, Tim Hortons restaurant
offerings have evolved to meet changing consumer tastes. We have
added sandwiches, soups, specialty coffees and additional baked
goods to our staple coffee and donut offerings, and our
restaurant formats have adapted to meet our customers'
growing demand for convenience and comfort. In 1996, the
addition of bagels to the Tim Hortons menu began a key shift in
our focus to the use of par-baked products— products that
are baked almost to completion at a baking facility,
flash-frozen and shipped to system restaurants, where the baking
process is completed using proprietary ovens. In 2002, our joint
venture with IAWS commissioned the construction of the Maidstone
Bakeries facility, which manufactures par-baked donuts, Timbits
and other bread products for system restaurants. This facility
allows Tim Hortons restaurants to provide our signature Always
Fresh products.
Our Industry
We compete in the QSR segment in Canada and the U.S. Our
industry in both countries is large, growing and characterized
by change due to shifting demographic, economic and consumer
taste trends. Over the past decade, rising household income and
an increase in desire for convenience have led to growth in
total expenditures for food-away-from-home and the proportion of
total food expenditures allocated to spending on
food-away-from-home. The growth in real disposable income
combined with the increased time commitments of dual income
families is expected to continue.
Foodservice sales in Canada grew by 2.6% in 2004 to
$46.8 billion and are expected to surpass
$50.0 billion in 2006, according to the CRFA. The QSR
segment represents 30.0% of the total Canadian foodservice
industry and its sales are projected to grow 4.1% in 2006. From
2000 to 2005, the Canadian QSR segment grew at a 4.1% CAGR.
In the U.S., the QSR segment is the largest segment of the
restaurant industry. According to the 2005 Technomic Information
Service
Top-500 Chain Restaurant Report
, sales at QSRs in
the U.S. were approximately US$159.6 billion in 2004,
up 7.5% over 2003, and are projected to increase at a 5.4% CAGR
between 2004 and 2009.
Our Competitive Strengths
Iconic brand status in Canada.
Tim Hortons was
recognized as the best managed brand in Canada, according to
annual surveys published by
Canadian Business
magazine in
2004 and 2005. In addition, in an internal 2005 national study
conducted for us by Segmentation Marketing Limited, when
consumers were asked which fast service chain, convenience store
or gas station they stop at to have a coffee, snack or meal most
often, Tim Hortons was named 37.0% of the time, nearly three
times higher than the nearest competitor. We believe our leading
position in terms of market share, number of system restaurants
open and systemwide sales volume demonstrates our unparalleled
level of consumer acceptance. We believe the strength of our
brand and culture is a result of our ongoing systemwide
commitment to product quality, continuous innovation, superior
customer service, exceptional value and successful relationships
with our franchisees. Our brand has been further strengthened
over the past 30 years by our close involvement and
participation in the communities we serve, including our
association with The Tim Horton Children's Foundation, a
non-
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profit charitable organization that provides a fun-filled camp
environment for children from economically disadvantaged homes.
We were also named one of Canada's most admired corporate
cultures for 2005 by
Canadian Business
magazine. We will
continue to leverage our brand name as we execute our growth
strategy in Canada and the U.S.
Leading market positions in Canada.
According to
the 2005 NPD foodservice industry report, our system represented
74.0% of the coffee and baked goods sector of the Canadian QSR
segment, based on the number of customers served over the
12 months ended August 31, 2005. In addition, we have
the leading market position in the Canadian QSR segment, based
on systemwide sales, and a very strong presence in every
province. We believe our presence in key markets and our ability
to leverage our scale in advertising will help us maintain and
extend our market leadership position.
Systemwide focus on operational excellence.
We are
an operations-driven organization. We invest substantial
resources in developing programs, processes, technology and
field support for our system of franchised and company-operated
restaurants. We focus on continuous improvement in operations so
we can consistently serve high quality food while providing
exceptional customer courtesy, order accuracy and speed of
service, thereby enhancing our customers' overall
experience.
Energized and committed franchisee base.
Since our
founding, we have been committed to working closely with our
franchisees. Our over 1,000 franchisees in North America
are critical to our success, delivering exceptional hands-on
customer service every day. Our franchisees are strongly
committed to our system growth, having collectively invested
over $75.0 million of their capital in infrastructure
support during 2002 and 2003 for our proprietary Always Fresh
baking system. The average Tim Hortons franchisee in Canada has
been a franchisee for almost nine years and owns three
restaurants. Our unique franchise model, whereby we typically
acquire rights to control and develop restaurant real estate,
provides us access to a broader franchisee base and encourages
consistent execution of our growth and profitability strategy.
We actively manage and share information with our franchisees
through an advisory board, operations and business committees,
regional and national in-person meetings and annual surveys.
Integrated and scalable business model.
We have
invested substantial resources and capital in developing an
integrated and scalable business model. Our vertically
integrated manufacturing and distribution platforms enable us to
realize economies of scale and offer customers innovative
products. Our Always Fresh system enables us to bake and serve
fresh and consistent products throughout the day, as well as to
open restaurants in a variety of formats, sizes and locations.
We control the site selection, design and construction of our
restaurants, which enables us to increase penetration in
existing and new markets by improving customer convenience. We
control the real estate for approximately 80.0% of our system
restaurants, which generates a recurring stream of rental income.
Proven, experienced management team with track record of
exceptional growth.
Our executive management team has an
average tenure with us of more than 12 years. Together with
our dedicated team of employees, they have significantly
contributed to our strong financial performance. Between 1995
and 2004, we increased our average sales per standard Canadian
restaurant from $878,000 to $1.7 million. Our financial
performance is a result of our focus on restaurant operations,
coordination among employees and franchisees and the performance
of our vertically integrated manufacturing and distribution
platforms. We believe the strength and stability of our senior
management team will continue to be a competitive advantage as
we execute our growth strategies.
Our Business Strategy
Our goal is to increase our revenues and profitability through a
combination of increased same-store sales, new restaurant growth
and continuous improvement in our operations with new products,
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processes and technologies. We intend to achieve this goal
through the continued execution of our business strategy, which
includes the following key elements:
Drive sales growth at existing restaurants through
continued innovation.
We have achieved average annual
systemwide sales growth of 18.5% since the end of 1995. This
reflects our strong and increasing brand awareness, emphasis on
customer service and continuous product and process innovation.
We strive to foster a culture of innovation among our employees
and franchisees, challenging the organization to constantly
monitor and respond to the changing tastes and needs of
consumers. We believe we have a unique assortment of fresh
signature products that meet our customers' needs across
all parts of the day. We plan to expand our menu to offer more
quality items under our beverage, soup, sandwich and baked goods
categories to drive sales throughout the day and attract new
customers. In addition, we intend to continue to use effective
national, regional and local advertising and promotions, as well
as our involvement in our communities, to increase our brand
awareness with consumers. We also intend to continue improving
restaurant efficiency levels and expanding each
restaurant's capacity for customer transactions to drive
incremental sales, while investing in technology to improve
customer service.
Sustain the health and viability of our franchisee
base.
We have developed a large, diversified, and, we
believe, highly committed franchisee base, which is a critical
component of our systemwide success. We intend to continue
strengthening our franchise system by building the Tim Hortons
brand, attracting and retaining experienced and motivated
franchisees whose interests are aligned with ours, providing new
and innovative menu offerings, providing real estate and
operational support and being involved in our franchisee
communities. We believe these measures will enhance the overall
strength of our system and provide both us and our franchisees
with attractive returns, allowing both of us to reinvest in the
business.
Increase penetration of the Canadian market.
We
will continue leveraging our brand strength to further penetrate
the Canadian market using our franchise business model. Although
we have a leading market position in the Canadian QSR segment,
based on systemwide sales, and a very strong presence in every
province, there are numerous growth opportunities in the Western
provinces, Quebec and select high-traffic metropolitan areas.
Our "we fit anywhere" strategy of non-standard formats
gives us the flexibility to add restaurants in high-traffic
consumer locations without over-saturating any individual
market. Further, our rigorous restaurant location and franchisee
selection processes are integral to the successful execution of
our growth strategy. Our long-term goal is to have between 3,500
and 4,000 system restaurants open in Canada.
Pursue long-term profitable expansion in the United
States.
We have become a strong regional player in the
U.S., with locations in 10 states, primarily in the
Northeast and Midwest regions. Tim Hortons restaurants in the
U.S. have experienced an average annual same-store sales
growth of 9.8% from 1999 to 2004, even as we have expanded our
U.S. system during that period from 108 to 251 restaurants.
We intend to continue our efforts to profitably expand our
system's U.S. presence by further penetrating existing
markets, entering adjacent markets and selectively pursuing
other strategic initiatives. Our goal is to have 500 system
restaurants open in the U.S. by the end of 2008.
Our Menu
Our menu spans a broad range of categories designed to appeal to
customers throughout the day, such as premium blend coffee,
flavoured cappuccinos, specialty and steeped teas, home-style
soups, fresh sandwiches and freshly baked goods, including
donuts, bagels, muffins, cookies, croissants and pastries.
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While the largest portion of systemwide sales are generated in
the morning daypart, we generate sales throughout the day.
According to NPD's May 2005 report:
•
we lead the breakfast/a.m. snack category in the QSR segment
    with a 60.7% share of eater occasions, while McDonald's is
    second with a 10.3% share;
•
we rank second in Canada in the lunch category in the QSR
    segment with a 12% share of eater occasions, compared to 23.5%
    for McDonald's; and
•
we lead the p.m. snack category (which excludes dinner) in the
    QSR segment with a 44.7% share of eater occasions, with
    McDonald's second at 11.6%.
The following chart shows the percent of revenues generated by
product category during the first nine months of 2005 in Canada
and the U.S.:
Product
Canada
U.S.
Coffee
47
%
31
%
Baked goods
23
%
29
%
Soup and sandwiches
11
%
16
%
Hot beverages
11
%
10
%
Cold beverages
7
%
13
%
Miscellaneous hardware and gifts
1
%
1
%
Coffee.
46.0% of our Canadian customers visit our
restaurants an average of four or more times per week. We
believe our high quality coffee, made only from 100% Arabica
beans, is a major reason for the high volume of return visits.
Our commitment to the quality of our coffee is evidenced by
strict guidelines that, as part of our Always Fresh strategy,
Tim Hortons coffee must be sold within 20 minutes of being
brewed. We also provide a coffee-specific training course for
franchisees and operations field personnel, and maintain a
"coffee lab" in our national research and development
centre to monitor coffee quality. In addition, in 2001 we
purchased our Maidstone Coffee roasting facility in Rochester,
New York. This facility now supplies one-third of the Tim
Hortons system, with the balance provided by third-party
roasters.
Baked goods.
Tim Hortons restaurants sell a wide variety
of donuts, as well as Timbits (bite-sized donuts), danishes,
cookies, muffins and more. Every month we market a new donut
variety as our "product of the month," such as
"melt-in-your-mouth" toffee glazed, caramel
cappuccino, triple berry and pumpkin spiced glazed donuts. These
limited-time products help drive repeat visits by our customers.
We introduced bagels as a menu item in 1996. Today, according to
NPD's August 2005 report, we sell four of every five bagels
sold in the QSR segment in Canada. Introducing bagels showed us
the quality and taste that a par-baked product could provide and
provided an opportunity for further innovation; to maintain
speed of service for bagels, we developed higher-speed
"turbo toasters" that allow us to toast a bagel in
under 20 seconds.
Soups and sandwiches.
We originally introduced soup and
sandwiches as lunch products in the late 1980s and early 1990s,
and launched our branded line called "Tim's
Own"® soups and sandwiches in 1998. According to
NPD's August 2005 report, 45.9% of all soup occasions in
the Canadian QSR segment occur at our system restaurants. Our
nearest competitor has a 3.0% share.
Hot and cold beverages.
In addition to coffee, other hot
beverages we sell include flavoured cappuccinos, specialty and
steeped teas, hot chocolate, "Café Mocha" (hot
chocolate, coffee and whipped cream) and "Hot
Smoothees" (flavoured caffeine-free hot drinks). Our cold
drink offerings range from juices to sodas and iced cappuccinos.
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Restaurant Operations Support
The ability of our system to consistently deliver on our
customer promise—delivering high quality food and excellent
service at a compelling value—has been and will continue to
be critical to our success. Because our franchisees operate the
vast majority of our restaurants, we have invested substantial
resources in developing programs, processes, technologies and
field support personnel to support our franchisees. Our
franchisees are committed to maintaining the highest caliber of
operations and customer satisfaction, and together we
continuously look for improvement in all facets of the
operations, with high levels of focus on speed of service,
consistency of product quality, overall restaurant appeal and
dining experience.
We are an operations-driven business, as evidenced by the
substantial investments we have made in our proprietary Always
Fresh baking system, our innovative store designs, our
restaurant equipment packages and the ongoing training and
development of our people. Our field management is in regular
contact with our franchisees, frequently visiting the
restaurants and providing support and consultation on all facets
of the business, including:
•
ongoing new product research and process innovation;
•
identifying and evaluating restaurant sites and managing the
    real estate development, financing, design and construction
    process with our franchisees;
•
providing initial training to new franchisees and ongoing
    training for existing franchisees; and
•
analyzing, sharing and instituting best practices across the
    system in all areas of operations and recognizing top performers.
In 1993 we instituted the Always Fresh appraisal program to
measure restaurant compliance with our high standards. The
appraisal, which focuses on product quality, freshness and
availability, speed of service and hospitality, restaurant
cleanliness, product merchandising and housekeeping, is designed
to promote a consistent customer experience across the system.
We award cash prizes to the top three restaurants in each of 16
regions and designate as "Platinum Award Restaurants"
those restaurants that score at least 92.0% on the appraisal.
Product and Process Innovation
New product development is critical to our long-term success and
is a significant factor behind our average same-store sales
growth. As we have expanded from a coffee and donut chain to a
provider of breakfast, lunch and snack products, we have
maintained our focus on high quality products. Product
innovation begins with an intensive research and development
process that analyzes each potential new menu item, including
small market tests to gauge consumer taste preferences, and
concludes with an analysis of the economics of food cost and
margin and final price point.
In 2002, our joint venture with IAWS commissioned the
construction of the Maidstone Bakeries facility, which
manufactures par-baked donuts, Timbits (bite-sized donuts) and
selected breads, following our traditional recipes. Those
products are then flash frozen and shipped to system
restaurants, each of which contains an Always Fresh oven with
our proprietary technology. The restaurant completes the baking
process with this oven, allowing the product to be served warm
to the customer within a few minutes of baking.
The Always Fresh baking system allows our restaurants to prepare
and serve products more often and in smaller batches, which
allows customers to purchase fresh baked goods throughout the
day and night. It also provides products of more consistent
quality from restaurant to restaurant. In addition, this system
provides operational efficiencies: food waste is reduced because
product volumes can be managed more closely, and the limited
space required for the Always Fresh oven permits even our
non-standard kiosk locations to provide fresh baked goods. Our
franchisees
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collectively invested over $75.0 million of their capital
in infrastructure support during 2002 and 2003 for our Always
Fresh baking system.
Our Real Estate Operations
Overseeing and directing all aspects of real estate for system
restaurants is a critical core competency for us. Before we
approve a location for development, we review that
location's demographics, site access, visibility, traffic
counts, mix of residential/retail/commercial surroundings,
competitive activity and proposed rental structure. We also
assess the performance of nearby Tim Hortons locations, project
the location's ability to meet financial return targets and
consider whether an existing or new franchisee should operate
the location. Once a specific location is approved for
development, it usually takes 10 to 12 months until
construction of the restaurant is completed.
The following chart shows our real estate operations as of
October 2, 2005.
Canada
U.S.
Total
Owned restaurant properties
451
158
609
Leased restaurant properties
1,549
109
1,658
Restaurant properties owned or
    leased from third parties by franchisees
529
5
534
We lease land generally for initial terms of 10 to
20 years, sometimes with an option for us to purchase the
real estate. Leases covering approximately 30.0% of our total
leased properties at October 2, 2005, primarily
non-standard locations, require us to pay all or a component of
the rent as a percentage (ranging from 2.0% to 13.0%) of annual
sales.
Restaurant Designs, Atmosphere and Layout
The décor, layout and overall feel of Tim Hortons
restaurants have evolved to meet changing customer needs and
tastes, as well as to respond to operational growth and
innovation. While we have a standard—and highly
recognizable—stand-alone restaurant design, we vary our
design to fit into unique situations. Ultimately, we control the
design and building of our restaurants to cater to the market
and the neighbourhood in which they are located.
Choosing and Training our Franchisees
Finding exceptional franchisee candidates is critical to our
system's successful growth and development. Accordingly, we
value our comprehensive franchise screening and recruitment
process, which employs multi-level interviews with our senior
operations management and requires candidates to work two to
three different shifts in an existing franchisee's
restaurant.
Each new franchisee participates in a mandatory eight-week
intensive training program to learn all aspects of operating a
Tim Hortons restaurant in accordance with our standards. We also
provide ongoing training and education to franchisees and their
staff.
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Quality Control and Food Safety
Our quality control procedures are rigorous and include several
systemwide programs designed to maintain an excellent, safe and
consistent environment for our customers and employees. Our
district managers implement the following quality control
programs in every Tim Hortons restaurant:
Program
Quality Control Programs
Frequency
Areas of Focus
Always Fresh Appraisal
Nine times
annually
Product quality, freshness,
    availability, speed of service, hospitality, merchandising and
    cleanliness
Always Fresh Back of the House
Six times
annually
Restaurant condition, appearance,
    cleanliness and procedural compliance
Security Audit
Annual
Physical security,
    interior/exterior lighting, cash handling protocols and
    surveillance and security systems
Always Fair Evaluation
Annual
Employee incentive programs and
    performance management, documentation, compliance with regulated
    employee standards
Hospitality Evaluation
Ongoing
Customer service via anonymous
    feedback over the Internet or toll-free telephone line
Because our brand is so closely linked to the public's
perception of our food quality and safety, we require all of our
franchisees, as well as their managers and our operations
personnel, to complete the ServSafe® food safety training
program. ServSafe is the most widely accepted food safety
program among local, provincial, state and federal health
departments in Canada and the U.S. Each participant must
complete this program with a passing grade and be re-certified
every five years. We also conduct site visits and unscheduled
food safety audits, and require that all restaurant staff
complete a multi-level food safety training module as part of
their mandatory training. Each element of this training program
has been assessed by different levels of government in different
jurisdictions for content and accuracy.
Our Locations
At October 2, 2005, our system was comprised of 2,801
restaurants in a variety of standard and non-standard formats.
Standard.
Our standard restaurant measures between 1,400
to 3,090 square feet, with a dining room, a counter for
placing orders and, in 71.0% of our standard restaurants,
drive-thru service. Standard restaurants comprised 78.0% of our
system as of October 2, 2005. Typically, we construct
single or double drive-thru restaurants if seating is not
required or property size is an issue. We have "combination
stores," which offer Tim Hortons and Wendy's products
at one location. Our combination stores have a common area
dining room and separate counters. Today we have
168 combination stores in Canada and 42 in the U.S.
Non-Standard.
We design our non-standard restaurants to
fit anywhere. They are kiosks located in office towers,
hospitals, colleges, airports, gas station convenience stores
and on smaller pieces of property. These units can average from
150 square feet to 900 square feet. These non-standard
restaurants allow us to further penetrate regions where
significant numbers of our standard restaurants already exist.
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The following table illustrates our system restaurant locations
as of October 2, 2005 and the market penetration by
restaurant type.
Non-
Location by Province/Territory
Standard
standard
Alberta
141
53
British Columbia
141
62
Manitoba
36
14
New Brunswick
99
22
Newfoundland
45
9
Nova Scotia
144
35
Northwest Territories
1
0
Ontario
988
392
Prince Edward Island
11
6
Quebec
237
57
Saskatchewan
24
10
Yukon
2
0
Total
1,869
660
Non-
Location by State
Standard
standard
Connecticut
13
0
Kentucky
2
0
Massachusetts
3
0
Maine
10
2
Michigan
71
2
New York
62
6
Ohio
65
1
Pennsylvania
3
0
Rhode Island
22
7
West Virginia
3
0
Total
254
18
Our Franchisees
As of October 2, 2005, over 1,000 franchisees operated
2,498 Tim Hortons restaurants in Canada and 207 restaurants in
10 U.S. states. In Canada, our average franchisee operates
three restaurants and has been a franchisee in our system for
almost nine years. In the U.S., the average franchisee operates
two restaurants and has been a franchisee for about four years.
Our long-term goal is to have franchisees own most Tim Hortons
restaurants and to maintain a small number of company-operated
restaurants for franchisee training and new product testing. As
of October 2, 2005, franchisees owned 98.8% of our Canadian
restaurants, and we expect to follow the same approach over the
long term in the U.S. As of October 2, 2005,
franchisees owned 76.1% of our U.S. restaurants.
Our franchisees operate under several types of license
agreements, with a typical term for a standard restaurant of
10 years plus aggregate renewal period(s) of approximately
10 years.
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In Canada, franchisees generally are required to pay us:
(i) between 3.0% and 4.5% of weekly gross sales of the
restaurant as a royalty; plus, if the franchisee leases land
and/or buildings from us (ii) a monthly rental equal to
(a) a minimum monthly rental payment or (b) a
percentage (usually 10%) of monthly gross sales, whichever is
greater.
In the U.S., franchisees generally are required to pay us:
(i) 4.5% of weekly gross sales of the restaurant as a
royalty; plus (ii) if the franchisee leases land and/or
buildings from us, a monthly rental equal to a percentage
(usually 8.5%) of monthly gross sales.
Generally, we retain the right to reacquire a franchisee's
interest in a restaurant, at a pre-agreed price formula based on
a depreciated value, if the franchisee receives an offer to
purchase the franchisee's interest during the first five
years of the license agreement. After that period, we retain a
right of first refusal regarding any proposed transfer of the
franchisee's interest, together with the right to consent
to any proposed new franchisee.
Under the license agreement, each franchisee is required to make
contributions to an advertising fund based on a percentage of
restaurant gross sales.
To keep system restaurants up-to-date both aesthetically and
operationally, our license agreements require a full scale
renovation of each system restaurant at least every
10 years. Each franchisee invests a majority of the capital
required for these renovations.
In Canada, and generally in the U.S., we do not grant an
exclusive or protected area or territory to the franchisee. The
license is a "location" license only, and we reserve
the right to grant additional licenses for Tim Hortons
restaurants at any location.
We may terminate the license agreement if, among other things,
the franchisee: does not pay fees or royalties owing when due;
breaches obligations relating to health, hygiene or safety
standards that are not adequately remedied; becomes bankrupt;
fails to maintain adequate insurance; understates gross sales;
transfers any rights or obligations contrary to the license
agreement; or commits or permits the commission of any criminal
offense or violation of the franchisee's obligations that
may have an adverse effect on our system or the Tim Hortons
trademarks or goodwill.
In certain circumstances, we will enter into arrangements,
typically called operator agreements, in which the operator
acquires the right to operate a Tim Hortons restaurant, but we
continue to be the owner of the equipment, signage and trade
fixtures. Such arrangements usually require the operator to pay
20.0% of weekly gross sales to us. If the restaurant is a single
drive-thru or double drive-thru, the operator is required to pay
21.5% of weekly gross sales. Additionally, the operator will be
responsible for paying all trade debts, wages and salary
expenses, maintenance and repair costs, all real property and
business taxes levied against the restaurant and any other
expenses incurred in connection with the operation of the
restaurant. In any such arrangement, the operator does not own
or have any rights to the equipment, signage and trade fixtures
provided by us to operate the restaurant, and we or the operator
each have the option of terminating the agreement upon
30 days notice. For purposes of this prospectus, references
to franchisees include these operators, and references to
license agreements include these operator agreements.
We have developed a franchise incentive program for some of our
U.S. franchisees, which provides short-term financing for both
the initial franchise fee and the purchase of certain restaurant
equipment, furniture, trades fixtures, and interior signs. The
purchase of those assets is deferred for a period of
130 weeks from the date of opening, and the franchisee has
the right to finance the initial franchise fee over a period of
104 weeks from the opening. During the initial 130-week
period, the royalty payments are typically reduced from 4.5% to
2.5% and rent is typically reduced from 8.5% to 8.0%. After the
130 week initial period, the royalty rate and rental rate
return to the standard amount referred to above for U.S.
restaurants. In addition, payment for the equipment package is
due and owing at that time. Recognition of franchise fee revenue
from this program is deferred until
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the restaurants achieve certain sales volume levels. This
program is limited in scope, and its parameters will continue to
evolve.
Marketing Our Brand Image
Our marketing is designed to create and extend our brand image
as "your neighbourhood Tims" that offers "quality
products at reasonable prices." We use radio, television
and outdoor advertising and event sponsorship, as well as our
highly visible community caring programs, to reinforce this
brand image to our customers. Our customer base is diverse, with
an equal mix of male and female customers and customers from all
socio-economic levels.
National Marketing Program
Franchisees fund substantially all of our national marketing
programs by making contributions to the Canadian or
U.S. "adfunds." In fiscal 2004, franchisees and
company-operated restaurants in Canada contributed
$109.7 million (approximately 3.5% of sales), and
franchisees and company-operated restaurants in the
U.S. contributed US$7.5 million (approximately 4.0% of
sales) to the respective adfunds. Each adfund is independently
audited and has a national advisory board of elected franchisees.
Regional Marketing Programs
Regional marketing groups (approximately 280 in Canada and 18 in
the U.S.), to which each franchisee and company-operated
restaurant contributes 0.025% to 0.5% of its sales as part of
its national marketing program contribution, sponsor and support
locally-targeted marketing programs. We support these regional
marketing groups with market strategy and regional plans and
programs.
Our Manufacturing and Distribution Platforms
In addition to being a franchisor, we are a key supplier to our
franchised restaurants. We own and operate five distribution
centres that supply system restaurants with non-perishable food
supplies, packaging and equipment. These centres are located in
Langley, British Columbia; Calgary, Alberta; Kingston, Ontario;
Guelph, Ontario; and Debert, Nova Scotia. We also own and
operate a fleet of 62 trucks and 118 trailers that deliver to
our Canadian restaurants on a weekly and bi-weekly basis. We use
third-party logistics providers to deliver products to our
U.S. restaurants and limited areas of Canada.
We completed our newest, 157,000 square foot distribution
centre in Guelph, Ontario, in December 2005. By the end of 2006,
we expect for the first time to be able to deliver many frozen
foods to approximately 85.0% our restaurants in Ontario. We
believe this facility, which combines high-density storage and
an automated storage/retrieval system, will be one of the most
advanced food service distribution facilities in Canada and will
allow us to improve our distribution efficiency and create
additional economies of scale.
Our Maidstone Coffee facility, located in Rochester, New York,
roasts coffee for approximately one-third of our restaurants,
and roasts a separate blend for many Wendy's restaurants.
We acquired this plant in 2001 as part of our
U.S. expansion, and we believe it will generate additional
distribution efficiencies.
In 2001, we formed a 50-50 joint venture with a subsidiary of
IAWS to commission the construction of the Maidstone Bakeries
facility, a 320,000 square foot par-baking facility located in
Brantford, Ontario. The Maidstone Bakeries facility manufactures
donuts, Timbits and other par-baked breads that are supplied to
system restaurants in Canada and the U.S., allowing us to
achieve consistency of product, economies of scale and labour
efficiencies. The Maidstone Bakeries facility also produces
bread products for IAWS subsidiary companies.
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The agreements governing the joint venture contemplate various
procedures relating to the termination of the joint venture,
including a compulsory buy/sell procedure. After March 6,
2006, either party may initiate the compulsory buy/sell
procedure. A party choosing to initiate the compulsory buy/sell
procedure must offer to either purchase all of the other
shareholder's shares or to sell all of its shares, both at
the same price. The other shareholder then must choose to
control the joint venture by purchasing the offering
shareholder's shares, or to exit the joint venture by
electing to have its shares purchased at the specified price.
If IAWS were to initiate this compulsory buy/sell procedure, and
we were to elect to have IAWS purchase all of our shares in the
joint venture, our right to buy par-baked donuts and Timbits
from the Maidstone Bakeries facility would be limited to the
longer of our obligation to buy donuts and Timbits and the joint
venture's corresponding obligation to continue to supply
donuts and Timbits to us, extending for 12 years from the
last date on which the development of a new donut production
line at the joint venture facility was commissioned for us by
the joint venture and seven years from the date of sale of our
shares. We would also be able to purchase other par-baked
products from the joint venture during the seven-year period
following a sale. If IAWS were to initiate the compulsory
buy/sell procedure and we were to purchase IAWS' shares,
and the buy-out price was less than 85% of a specified formula
amount, then IAWS would have the right to build its own
par-baked goods manufacturing facility using its independent
rights to the par-baking technology, and manufacture and sell
par-baked donuts to competitors of ours, provided it did not use
our recipes.
In addition, certain of the technology used at the Maidstone
Bakeries facility is owned by a third party, Irish Bakery
Inventions Limited (IBIL), and is licensed to the joint venture
on an exclusive basis. This license terminates no later than
April 2012. A wholly-owned subsidiary of the joint venture has
the option to acquire this technology from IBIL by June 2011 for
nominal consideration, which option must be exercised and the
technology acquired from IBIL for the Maidstone Bakeries
facility to continue to use this technology after April 2012 and
to secure our independent right to use this technology at any
other par-baking facility that we may develop. If this option is
not exercised and the rights to the technology are not acquired
from IBIL, we would be forced to negotiate with IBIL separately
to obtain rights to this technology and, if we are not
successful, to seek out alternative products and design
processes.
Our Suppliers
Our system restaurants purchase par-baked products manufactured
at the Maidstone Bakeries facility, and many of our system
restaurants purchase coffee that is roasted and blended at our
Maidstone Coffee plant. We sell most other raw materials and
supplies, including coffee, sugar, paper goods and other
restaurant supplies, to system restaurants. We purchase those
raw materials and supplies from multiple suppliers and generally
have alternative sources of supply for each.
While we have many suppliers and alternate suppliers, the
available supply and price for high quality coffee beans can
fluctuate dramatically. Accordingly, we monitor world market
conditions for green coffee and contract for future supply
volumes to ensure an available supply and a stable price. See
"Risk Factors— Risks Relating to Our Business and
Industry— Termination of our Maidstone Bakery joint venture
could adversely affect our business" and "Risk
Factors— Risks Relating to Our Business and Industry—
We are affected by commodity market fluctuations, particularly
with respect to high-quality coffee beans, which could reduce
our profitability or sales."
Management Information Systems
We have developed information technology systems to generate
further efficiencies in our supply chain and in our
relationships with our franchisees. For example, our Internet
portal allows franchisees and their store managers to place
online orders with our distribution centre and report their
daily sales. The portal also provides system restaurants with
up-to-date news and quality assurance alerts, and permits
franchisees to view their order status and accounts receivable
online
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and keep their payables current. We have also instituted
standardized internal management software for system restaurants.
We have standardized our restaurant management software with an
application service provider to give our restaurants the ability
to manage their day-to-day management functions, staff
scheduling, inventory control and daily cash accounting.
Corporate Social Responsibility
We and our franchisees support several community outreach
projects and programs. We dedicate time and resources toward
three major areas of corporate social responsibility:
The Tim Horton Children's Foundation, local
regional marketing programs like the Timbits Minor Sports
program and our sustainable coffee project.
The Tim Horton Children's Foundation
Our most notable community outreach project is The Tim Horton
Children's Foundation, an independent non-profit charitable
organization established in 1974 that provides a
professionally-operated, fun-filled camp environment for
children from economically disadvantaged homes. Every year,
local children are selected from the communities in which our
restaurants operate to attend various programs throughout the
year at one of our camps, including a ten-day summer residence
camp experience.
The camp experience is designed to give children confidence in
their abilities, pride in their accomplishments, and the chance
to gain a positive view of this world and their future in it.
The camps are unique in that children are flown to regions where
they do not live, so as to experience travel and diversity of
geography and culture. The foundation has camps located in
Kananaskis, Alberta; Parry Sound, Ontario; St. George, Ontario;
Quyon, Quebec; Tatamagouche, Nova Scotia; and Campbellsville,
Kentucky. Last year over 10,000 children from Canada and
the U.S. attended one of these camps.
Timbits Minor Sports Program
Regional Tim Hortons restaurant groups (280 across Canada and 18
in the U.S.) participate in a variety of marketing programs that
benefit their community at a local level. One successful example
of this regional approach is the Timbits Minor Sports program,
which provides annual support to sports teams for over 140,000
children, ages four through eight.
Coffee Sustainability
In 2005 we launched a sustainable coffee partnership pilot
project to make a meaningful contribution in the fight against
poverty among the people who provide one of our most important
products, and to play a meaningful role in providing for the
future supply of quality green coffee. This pilot project
includes approximately 1,000 coffee producers and their
families, and is intended to directly improve the living
conditions of about 5,000 people. Under the program small coffee
producers will be provided with technical support and training
to help them increase the amount and quality of coffee they
produce and help them get their coffee to market, while
emphasizing the need to respect and protect the environment. The
program also aims to improve the social conditions of the
farmers and their families by identifying and addressing the
pressing needs of the families, especially youth education.
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Our Employees
Corporate employees
We encourage our employees to be innovative, achieve excellence
in everything that they do, act fairly and ethically, and
demonstrate a "can do" attitude. Tim Hortons has been
voted as one of the "100 Best Employers" in Canada for
the past several years in
Maclean's Magazine
.
Our head office is in Oakville, Ontario, and we have six
regional offices, located in Langley, British Columbia; Calgary,
Alberta; Kingston, Ontario; Montreal, Quebec; Debert, Nova
Scotia; and Columbus, Ohio. We have approximately 1,600
corporate employees in our regional offices and distribution
centres. None of our employees are covered by collective
bargaining agreements.
Restaurant-level employees
We believe that it is important for our system to be the
employer of choice in the QSR segment, a business noted for
first-time employment. To encourage this, we have developed a
restaurant-level human resources strategy that focuses on
providing an enjoyable work experience. The program is designed
to provide training and advice, including staff incentive
program ideas, to franchisees on how to recruit, retain,
compensate and treat employees so as to be clearly positioned as
an "employer of choice."
Our Competition
We face intense competition with a wide variety of restaurants
on a national, regional and local level, including QSRs,
fast-casual restaurants focused on specialty coffee, baked goods
and sandwiches, as well as convenience stores that sell food and
beverages. The size and strength of our competitors vary by
region, and there are numerous competitors in nearly every
market in which we conduct business or expect to enter. We
believe competition within the QSR segment is based on, among
other things, product quality, concept, atmosphere, customer
service, convenience and price. Additionally, we compete with
restaurants and other specialty restaurants for personnel,
suitable restaurant locations and qualified franchisees.
In 2002, we surpassed McDonald's as the number one
restaurant chain in Canada in terms of sales and number of
restaurants, according to
Food Service and Hospitality
magazine (FSH). We are also significantly larger in Canada than
our other competitors in the QSR segment based on systemwide
sales, including, for example, Subway®, KFC®,
A&W®, and in the coffee and baked goods segment,
Starbucks®, Second Cup® and Coffee Time. In Canada, we
also compete with multiple QSRs and specialty coffee restaurants
that operate on a regional basis.
In the U.S., we have developed into a strong regional player in
certain markets in the Northeast and Midwest. We currently
compete with specialty coffee retailers, baked goods retailers,
sandwich shops and convenience stores, ranging from small local
independent operators to well-capitalized national and regional
chains, such as McDonald's, Starbucks, Subway and
Dunkin' Donuts®. Many of our competitors in the U.S.
are significantly larger than us.
Seasonality
Our business is moderately seasonal. Sales and operating income
are generally lower in the first quarter due, in part, to a low
number of new restaurant openings and post-holiday spending
patterns, and typically higher in the fourth quarter due, in
part, to a higher number of restaurant openings and sales of
holiday packaged coffee and other merchandise. Because our
business is moderately seasonal, results for any quarter are not
necessarily indicative of the results that may be achieved for
any other quarter or for the full fiscal year.
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Trademarks and Service Marks
We have registered various trademarks and service marks in
Canada, the U.S. and certain other jurisdictions. We have also
registered various Internet domain names, including
www.timhortons.com. Our registered marks include:
•
Tim Hortons signature
•
Tim Hortons & Always Fresh Oval Background Design
•
Roll Up The Rim To Win®
•
Timbits
We believe our trademarks, service marks and other proprietary
rights have significant value and are important to our
brand-building efforts and the marketing of our restaurant
system. We intend to protect and vigorously defend our rights to
this intellectual property.
Environmental
We own or lease most of our approximately 2,800 restaurant
properties in Canada and the U.S. and also own and operate five
distribution facilities in Canada and a coffee plant in New York
state. Our joint venture with IAWS owns and operates a baking
facility in Ontario, Canada. In addition to utilizing
third-party distributors, we distribute products to our system
restaurants through our trucking fleet. Each of these activities
is subject to complex environmental, health and safety
regulatory regimes, and involves the risk of environmental
liability. There are also potential risks for road and on-site
releases and accidents that could result in environmental
contamination that is not within our control. Where those
activities involve the known use of hazardous substances and
petroleum compounds, we undertake to comply with regulatory
requirements in connection with our use of such substances and
compounds.
Our restaurants have not been the subject of any material
environmental investigations or claims during our ownership,
lease or operation; however, we have not conducted a
comprehensive environmental review of all of our properties or
operations. We have conducted investigations of many of our
owned and leased properties, including in connection with our
1995 merger with Wendy's. We also conduct environmental due
diligence when considering potential new restaurant locations,
which typically includes a Phase I Environmental Site
Assessment, although such an assessment will not necessarily
identify all environmental conditions associated with any such
property. When the Phase I Environmental Site Assessment
indicates a potential environmental problem at a particular
location, we carry out a Phase II Environmental Site
Assessment to specifically test that location for contaminants.
We have identified contamination caused by third-party
operations not material to us individually or in the aggregate
and have in many cases given third parties notice that it is
their obligation to address the contamination. If the relevant
third party is insolvent, has not addressed the identified
contamination properly or completely or our rights against the
third party have otherwise expired, then under certain
environmental, health and safety laws, or otherwise at law, we
could be held liable as an owner, operator or occupant to
address any remaining contamination. Further, we may not have
identified all of the potential environmental liabilities at our
owned and leased properties, and any such liabilities identified
in the future could have a material adverse effect on our
operations or results of operations. See also the discussion of
environmental, health and safety laws in "Risk
Factors—We are subject to government regulation, and our
failure to comply with existing or future regulations could
adversely affect our business and operating results."
Government Affairs
We track ongoing government activity that may have an impact on
our business or operations. In particular, we monitor government
activity and our compliance in the areas of zoning, employment
standards, workplace health and safety, food safety and
handling, human rights, income and other
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taxes, the environment and franchise legislation. We comply in
all material respects with any applicable franchise disclosure
legislation as it pertains to the offer and sale of franchises.
Governments and consumer advocacy groups are encouraging
alternative food processing methods that will result in
significant reductions in trans-fatty acids (TFA) and
legislation has recently been enacted in Canada that will
introduce new nutritional labeling requirements for foods
containing TFAs. We are studying the process required to lower
TFA content. In this regard, we have examined possible
alternatives to our current baking and frying shortenings. We
continue to research approaches to allow us to reduce the amount
of TFA in our products while still maintaining the taste and
quality that our consumers require. We are also monitoring new
oilseed technology, which may provide an opportunity to reduce
the saturated fat content in some of our products.
Litigation
From time to time we are a defendant in litigation arising in
the normal course of business. Claims typically pertain to
"slip and fall" accidents, employment claims and
claims from customers alleging illness, injury or other food
quality, health or operational concerns. These types of claims,
which are referred to and generally covered by insurance, have
not had a material effect on us. As of the date of this
prospectus, we are not party to any litigation that we believe
is material to our business.
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MANAGEMENT
Directors and Executive Officers
Set forth below is certain information regarding our current
executive officers and our current and prospective directors.
Currently, two individuals, John Schuessler and Kerrii Anderson,
are officers of Wendy's and are serving as directors for us
and for Wendy's. David Lauer serves as a director for us
and for Wendy's. Contemporaneously with the completion of
this offering, we will add up
to                     additional
directors who are currently unaffiliated with us or Wendy's
and who qualify as independent directors. None of these
prospective directors is listed below.
Years
Name and Municipality of Residence
Age
Position(s)
with us
John T. Schuessler
Dublin, Ohio
54
Director
Kerrii B. Anderson
Columbus, Ohio
48
Director
David P. Lauer
Dublin, Ohio
62
Director
Paul D. House
Stoney Creek, Ontario
62
Chief Executive Officer and
    President; Director
20
Cynthia J. Devine
Mississauga, Ontario
41
Executive Vice President and Chief
    Financial Officer; Director
2
David F. Clanachan
Burlington, Ontario
43
Executive Vice President: Training,
    Operations Standards, Research and Development
13
William A. Moir
Mississauga, Ontario
57
Executive Vice President, Marketing
15
Donald B. Schroeder
Burlington, Ontario
59
Executive Vice President,
    Administration
14
Roland M. Walton
Oakville, Ontario
50
Executive Vice President, Operations
8
Our Non-Employee Directors
John T. Schuessler
is Chairman of the Board, Chief
Executive Officer and President of Wendy's.
Mr. Schuessler joined Wendy's in 1976. He was
Executive Vice President, U.S. Operations of Wendy's
from 1995 until 1997, when he became Wendy's President and
Chief Operating Officer, U.S. Operations. He became
Wendy's Chief Executive Officer and President in March 2000.
Kerrii B. Anderson
is Executive Vice President and Chief
Financial Officer, as well as a director, of Wendy's. She
joined Wendy's in September 2000. From 1987 until September
2000, Mrs. Anderson was Senior Vice President and Chief
Financial Officer of M/ I Schottenstein Homes, Inc.
David P. Lauer
has been a director of Wendy's since
2000. Mr. Lauer was President and Chief Operating Officer
of Bank One NA, Columbus, from 1997 until 2001 and was Office
Managing Partner of the Columbus office of Deloitte &
Touche LLP from 1989 until 1997. Mr. Lauer was also a
member of the Board of Directors of Deloitte & Touche
LLP from 1988 to 1995. He has been a
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Certified Public Accountant since 1968. Mr. Lauer also
serves as a director of AirNet Systems, Inc., Diamond Hill
Investment Group, Huntington Bancshares Incorporated and R.G.
Barry Corporation.
Our Executive Officers
Paul D. House
joined us as Vice-President of Marketing in
1985. In January of 1993, Mr. House was named Chief
Operating Officer, and then President and Chief Operating
Officer in 1995. Mr. House sits on the Board of Directors
of Wendy's and on the Board of Directors of
The Tim Horton Children's Foundation.
Mr. House joined Dairy Queen Canada in 1972 and held
various management positions until his promotion to
Vice-President of Canadian Operations, responsible for the
business in Canada. Mr. House holds a B.A. in Economics
from McMaster University.
Cynthia J. Devine
joined us in November 2003 as Senior
Vice President of Finance and Chief Financial Officer,
responsible for overseeing accounting, financial reporting,
financial planning and analysis, tax and information systems,
for the Tim Hortons brand. She was promoted to Executive Vice
President of Finance and Chief Financial Officer in April 2005.
Prior to joining us, Mrs. Devine served as Senior
Vice-President Finance for Maple Leaf Foods, a large Canadian
food processing company and from 1999 to 2001 held the position
of Chief Financial Officer for Pepsi-Cola® Canada.
Mrs. Devine, a Chartered Accountant, holds an Honors
Business Administration degree from the University of Western
Ontario.
David F. Clanachan
joined us in 1992 and held various
positions in the Operations Department until he was promoted to
the position of Vice President, Operations—Western Ontario
in 1997. Prior to that time, he was a Director of Operations for
an international food company, with approximately 12 years
of experience in the industry. In August 2001, he was promoted
to the position of Executive Vice President of Training,
Operations Standards and Research & Development.
Mr. Clanachan is also our operations lead in our joint
venture with IAWS. Mr. Clanachan holds a Bachelor of
Commerce degree from the University of Windsor.
William A. Moir
joined us in 1990 as Vice President of
Marketing, and was promoted to Executive Vice President of
Marketing in 1997. Prior to joining us, Mr. Moir gained
extensive marketing management experience, holding key positions
with K-Tel, Shell Oil and Labatt Breweries. He is a Director and
past Chairman of the Coffee Association of Canada, as well as a
member of the Board of Directors of The Tim Horton
Children's Foundation. Mr. Moir holds an Honors
Business degree from the University of Manitoba.
Donald B. Schroeder
joined us in 1991 as Vice President
of Human Resources and International Development. He was named
Executive Vice President of Administration in 1995, responsible
for Human Resources, Administration, Manufacturing, Distribution
and Purchasing. Mr. Schroeder is the President of The Tim
Horton Children's Foundation, a position he has held since
1991. Mr. Schroeder holds a Bachelor of Laws degree from
the University of Western Ontario and a Master of Laws degree
from Osgoode Hall Law School.
Roland M. Walton
joined us in 1997 as Executive Vice
President of Operations, responsible for operations in both
Canada and the U.S. His restaurant industry experience
includes Wendy's Canada, Pizza Hut® Canada and Pizza
Hut USA. In 1995 Mr. Walton held the position of Division
Vice President for Pizza Hut USA's Central Division.
Mr. Walton holds a Bachelor of Commerce degree from the
University of Guelph.
Board Composition
Our board of directors will, contemporaneously with the closing
of this offering, consist
of                     directors.
Pursuant to our regulations, when the authorized number of
directors is  or more, up to a maximum
of                     ,
the directors will be divided into three classes, designated as
Class I, Class II and Class III. The members of
each class will serve for a staggered, three-year
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term, except that Class I directors in the initial term
immediately following this offering will serve for one year and
Class II directors in the initial term immediately
following this offering will serve for two years. Each director
will be elected to serve until the election of the
director's successor at an annual meeting of shareholders
for the election of directors for the year in which the
director's term expires or at a special meeting called for
that purpose. As of the date of this prospectus, we do not
anticipate increasing or decreasing the authorized number of
directors.
Audit Committee
Upon completion of this offering, our board of directors will
establish an audit committee. Because we will be a
"controlled company" within the meaning of the NYSE
corporate governance standards, we will not be required to, and
will not, have a compensation or nominating and governance
committee. The audit committee will be comprised
of                     .
The audit committee's functions will include providing
assistance to the board of directors in fulfilling its oversight
responsibility relating to our financial statements and the
financial reporting process, compliance with legal and
regulatory requirements, the qualifications and independence of
our independent registered public accounting firm, our system of
internal controls, the internal audit function, our code of
ethical conduct, retaining and, if appropriate, terminating the
independent registered public accounting firm, and approving
audit and non-audit services to be performed by the independent
registered public accounting firm.
Board of Directors' Compensation and Relationships
Compensation of Non-Employee Directors
We intend to adopt a board compensation package that provides
appropriate compensation to our non-employee directors, using
both cash and equity-based compensation.
Interlocks and Insider Participation
Initially, compensation recommendations regarding our executive
officers will be made by the Wendy's compensation
committee. Our board of directors may appoint a successor
compensation committee after the completion of this offering.
Except for Paul D. House, who serves as a director of
Wendy's, none of our executive officers serve on the
compensation committee or board of directors of any other
company of which any of the members of our board of directors is
an executive officer.
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Share Ownership of Directors and Executive Officers
All of our common shares are currently owned by Wendy's,
and thus none of our executive officers or directors currently
owns our common shares. The treatment of all Wendy's stock
options, restricted stock units and other equity awards held by
our employees is discussed below. See "—Treatment of
Wendy's Options, Restricted Stock and Restricted Stock
Units."
The following table sets forth the beneficial ownership of
Wendy's common shares held by our directors, the executive
officers named in the Summary Compensation Table and all of our
directors and executive officers as a group, as of
November 21, 2005. Each director owns less than 1.0% of the
outstanding Wendy's common shares. All of our current
directors and executive officers as a group own less than 2.0%
of Wendy's outstanding common shares. Except as otherwise
noted, the individual director or executive officer (including
his or her family members) had sole voting and investment power
with respect to the Wendy's common shares.
Amount and
Nature of Beneficial
Title of Class
Name of Beneficial Owner
Ownership
(1)(2)
Percent of Class
Common Shares of Wendy's
John T. Schuessler
698,403
*
Kerrii B. Anderson
306,836
*
David P. Lauer
152,746
*
Paul D. House
190,000
*
Cynthia J. Devine
30,612
*
William A. Moir
153,454
*
Donald B. Schroeder
110,083
*
Roland M. Walton
124,250
*
All directors and executive
    officers as a group (9 persons)
1,766,384
1.5%
*
Less than 1%.
(1)
The amounts reflected in this table include common shares in
    which there is shared voting and investment power.
(2)
Includes stock options exercisable within 60 days following
    November 21, 2005 and restricted shares. Amounts do not
    include holdings of restricted stock units.
The information regarding beneficial ownership is based on
information furnished by each director or executive officer, or
information contained in filings made with the SEC.
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Executive Compensation
The following table summarizes the compensation awarded or paid
to, or earned by, the named executive officers during each of
the last three fiscal years.
Summary Compensation Table
Long-Term
Compensation
Awards
Annual Compensation
Number of
Shares
Other Annual
Underlying
All Other
Name and Principal Positions
Year
Salary
Bonus
Compensation
Options
(1)
Compensation
(2)
Paul D. House
2004
$
406,860
$
927,000
(3)
66,000
$
331,367
Chief Executive Officer and
2003
$
386,505
$
1,109,225
(3)
72,000
$
290,699
President
2002
$
374,985
$
948,468
(3)
88,000
$
246,289
Cynthia J. Devine
2004
$
229,125
$
257,500
(3)
29,600
$
17,495
Executive Vice President
2003
$
24,231
$
101,000
(3)
—
$
1,022
and Chief Financial
    Officer
(4)
2002
$
—
$
—
(3)
—
$
—
Alfred Lane
2004
$
269,692
$
489,250
(3)
35,750
$
165,109
Executive Vice President,
2003
$
257,875
$
494,869
(3)
39,000
$
168,974
Development and
2002
$
249,200
$
516,325
(3)
54,833
$
146,860
General
    Counsel
(5)
William A. Moir
2004
$
265,588
$
489,250
(3)
35,750
$
178,586
Executive Vice President,
2003
$
250,513
$
559,869
(3)
39,000
$
164,918
Marketing
2002
$
241,339
$
516,325
(3)
54,833
$
144,955
Donald B. Schroeder
2004
$
265,964
$
489,250
(3)
35,750
$
165,537
Executive Vice President,
2003
$
252,007
$
494,869
(3)
39,000
$
167,687
Administration
2002
$
243,527
$
516,325
(3)
54,833
$
145,369
Roland M. Walton
2004
$
265,588
$
489,250
(3)
35,750
$
98,440
Executive Vice President,
2003
$
250,513
$
579,869
(3)
39,000
$
89,179
Operations
2002
$
241,340
$
516,325
(3)
54,833
$
77,963
(1)
Options to acquire common shares of Wendy's.
(2)
The amounts shown in this column for each named executive
    officer consist of (i) contributions or other allocations
    to our defined contribution pension plan, (ii) the amount
    allocated to the account of each of the named executive officers
    under our supplemental executive retirement plan (SERP),
    (iii) executive health benefits paid by us for coverage for
    the named executive officers and (iv) life and accidental
    death or dismemberment insurance premiums, each as follows:
Defined Contribution
Defined Contribution SERP
Pension Plan
Allocation
Name
2004
2003
2002
2004
2003
2002
Paul D. House
$
11,000
$
10,333
$
9,000
$
317,039
$
278,194
$
235,216
Cynthia J. Devine
$
9,113
$
969
$
0
$
6,138
$
0
$
0
Alfred Lane
$
10,798
$
10,321
$
9,000
$
152,007
$
154,843
$
136,180
William A. Moir
$
10,637
$
10,026
$
9,000
$
165,645
$
153,665
$
133,882
Donald B. Schroeder
$
10,651
$
10,086
$
9,000
$
151,407
$
153,904
$
134,615
Roland M. Walton
$
10,637
$
10,026
$
9,000
$
85,499
$
76,981
$
66,890
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Life and Accidental
Death or
Executive Health
Dismemberment
Benefits Paid by Us
Insurance Premiums
Name
2004
2003
2002
2004
2003
2002
Paul D. House
$
1,969
$
945
$
895
$
1,359
$
1,227
$
1,178
Cynthia J. Devine
$
945
$
0
$
0
$
1,299
$
53
$
0
Alfred Lane
$
945
$
2,954
$
895
$
1,359
$
856
$
785
William A. Moir
$
945
$
0
$
895
$
1,359
$
1,227
$
1,178
Donald B. Schroeder
$
2,120
$
2,470
$
576
$
1,359
$
1,227
$
1,178
Roland M. Walton
$
945
$
945
$
895
$
1,359
$
1,227
$
1,178
(3)
The aggregate amount of perquisites and other benefits received
    by each individual did not exceed the lesser of US$50,000 or
    10.0% of the total annual salary and bonus of such individuals
    in 2002, 2003 or 2004.
(4)
Mrs. Devine joined us in November 2003 as Senior Vice
    President of Finance and Chief Financial Officer. She was
    promoted to her current position in April 2005.
(5)
Mr. Lane died on September 13, 2005.
Options Granted in Last Fiscal Year
The following table sets forth information regarding options
granted by Wendy's during the previous fiscal year to each
of the named executive officers with respect to Wendy's
common shares.
Individual Grants
% of Total
Number of
Options
Securities
Granted to
Underlying
Employees
Exercise
Grant Date
Options
in
Price
Expiration
Present
Name
Granted
(1)
Fiscal Year
(US$/share)
(2)
Date
Value (US$)
(3)
Paul D. House
66,000
4.86
%
$
40.6150
4/21/2014
$
784,740
Cynthia J. Devine
9,250
(4)
0.68
%
$
39.4050
1/28/2014
$
106,384
20,350
1.50
%
$
40.6150
4/21/2014
$
241,962
Alfred Lane
35,750
2.63
%
$
40.6150
4/21/2014
$
425,068
William A. Moir
35,750
2.63
%
$
40.6150
4/21/2014
$
425,068
Donald B. Schroeder
35,750
2.63
%
$
40.6150
4/21/2014
$
425,068
Roland M. Walton
35,750
2.63
%
$
40.6150
4/21/2014
$
425,068
(1)
Except as noted in footnote 4 below, as originally granted
    25.0% of the options listed in this column became exercisable on
    April 22, 2005. An additional 25.0% would become
    exercisable on each successive April 22. The Wendy's
    Compensation Committee approved accelerating the vesting of all
    outstanding, unvested options, including options listed in this
    column, effective October 27, 2005. As a result, all of
    these options are currently exercisable. If the executive
    officer's employment is terminated by reason of death or
    disability, the options may be exercised at any time during the
    12-month period after his or her death or date of becoming
    disabled, subject to the stated term of the options. If the
    executive officer's employment is terminated by reason of
    his or her retirement, the options may be exercised during the
    48-month period after the retirement date, subject to the stated
    term of the options.
(2)
The exercise price is the mean of the high and low prices at
    which Wendy's common shares are traded on the NYSE on the
    date of grant.
(3)
All values shown are pretax. Values shown for grants expiring in
    April 2014 were calculated using the Black-Scholes option
    pricing model and the following assumptions: expected volatility
    31.0%; risk-free rate of return 3.3%; dividend yield 1.2%; and
    an expected time of exercise of 4.9 years. Values shown for
    the grant expiring in January 2014 were calculated using the
    same assumptions except that the risk-free rate of return was
    calculated at 3.3%. No adjustments were made for the
    non-transferability of the options or for the risk of
    forfeiture. We are not aware of any model which will determine
    with reasonable accuracy a present value based on future unknown
    or volatile factors. No gain to the optionees is possible
    without an increase in the market price of Wendy's common
    shares above the market price on the date of grant. If such
    increase
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occurs, all Wendy's
    shareholders will benefit commensurately. If no increase in the
    market price occurs, optionees will realize no value from stock
    options.
(4)
As originally granted, 25.0% of
    these options became exercisable on January 27, 2005. An
    additional 25.0% would become exercisable on each successive
    January 27. The other terms of these options are as described
    above in footnote 1.
Aggregated Option Exercises in Last Fiscal Year and Fiscal
Year-End Option Values
The following table sets forth information regarding each
individual exercise of options with respect to Wendy's
common shares made during the last fiscal year by each of the
named executive officers.
Number of Securities
Underlying Unexercised
Value of Unexercised
Options at
In-the-Money Options at
Shares
Value
Fiscal Year-end
Fiscal Year-end(US$)
(2)(3)
Acquired on
Realized
Name
Exercise
(1)
(US$)
Exercisable
Unexercisable
Exercisable
Unexercisable
Paul D. House
0
$
—
257,623
179,575
$
3,095,174
$
864,959
Cynthia J. Devine
0
$
—
—
29,600
$
—
$
—
Alfred Lane
5,931
$
103,051
66,065
98,292
$
432,022
$
458,025
William A. Moir
0
$
—
127,858
98,271
$
1,341,856
$
457,762
Donald B. Schroeder
26,387
$
358,930
77,696
98,275
$
577,918
$
457,812
Roland M. Walton
0
$
—
115,805
98,271
$
1,302,663
$
457,762
(1)
Common shares of Wendy's.
(2)
Based on the fiscal year-end closing price of US$39.26 per
    share.
(3)
All values as shown are pretax.
Treatment of Wendy's Options, Restricted Stock and
Restricted Stock Units
Our employees will have the right to exercise their vested
Wendy's stock options in accordance with the terms of the
Wendy's stock option plan under which they were granted and
the terms of their respective grants. Restricted stock and
restricted stock units granted in 2005 under Wendy's plans
will continue to vest while the respective employee remains
employed by us.
Wendy's restricted stock units can be settled only in
Wendy's common shares and include dividend equivalent
rights. These units generally vest on May 1, 2006,
May 1, 2007 and November 1, 2007. These vesting dates
may be accelerated if Wendy's is involved in certain
change-in-control transactions. If a grantee's employment
is terminated for any reason other than death, disability or
retirement, the units will be canceled as of the date of such
termination. If the grantee's employment is terminated by
reason of his or her death, disability or retirement, the units
will immediately vest.
2006 Stock Incentive Plan
Prior to the closing of this offering, we will adopt the Tim
Hortons Inc. 2006 Stock Incentive Plan (the 2006 Plan). The plan
is an omnibus plan, designed to allow for a broad range of
equity-based compensation awards, which will afford our board
flexibility to compensate management and employees in the
future. It is the current intention of the board to primarily
use restricted stock units with dividend equivalent rights. We
believe equity compensation aligns the interests of employees
and non-employee directors with the interests of our other
shareholders. The 2006 Plan is intended to accomplish three
major objectives:
•
encourage the judgment, initiative and efforts of employees and
    non-employee directors toward our continuing success;
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•
increase stock ownership levels of key employees and
    non-employee directors; and
•
assist us in attracting, retaining and motivating key employees
    and non-employee directors.
Key employees may include not only our executive officers but
also may include other officers or employees who are able to
contribute significantly to our success and growth.
The following is a brief summary of the material provisions of
the 2006 Plan, which summary is qualified in its entirety by
reference to the full text of the 2006 Plan, which is attached
as an exhibit to the registration statement of which this
prospectus is a part.
The 2006 Plan provides for equity compensation awards in the
form of stock options, restricted stock, stock units, stock
appreciation rights, dividend equivalent rights, performance
awards and share awards (collectively, "Awards") to
eligible employees and directors of us or our subsidiaries.
The 2006 Plan authorizes up
to                      common
shares for grants of Awards. The common shares offered under the
2006 Plan may be authorized but unissued shares, treasury shares
or any combination thereof. To the extent any Award based on
common shares expires or terminates without having been
exercised in full, is forfeited or is settled in cash, the
common shares subject to that Award will be available for other
Awards. Also, to the extent an option is exercised by tendering
common shares as payment of the exercise price and/or required
tax withholding, the maximum number of shares available under
the 2006 Plan will be increased by the number of shares so
tendered. The 2006 Plan provides that the maximum number of
common shares for which Awards may be granted to any single
participant in any calendar year may not
exceed                     for
performance shares
and                     for
options and stock appreciation rights, collectively. The dollar
amount of cash or the fair market value of common shares that
any single participant may receive in any calendar year for
performance units denominated in dollars may not
exceed $               .
Fair market value under the 2006 Plan is equal to the mean of
the high and low prices at which our common shares were traded
on the TSX on the relevant date.
The 2006 Plan will initially be administered by the Wendy's
compensation committee. Our board of directors will have the
right to appoint a successor committee, which will consist of
not less than three members of our board (the Wendy's
compensation committee and any successor committee are
referenced in this description as the "Committee").
Each member of the successor Committee will be a non-employee
director (within the meaning of Securities and Exchange
Commission Rule 16b-3) and will satisfy any applicable
stock exchange requirements.
The Committee has the authority to select the individuals,
including foreign nationals, to whom, and the time or times at
which, Awards will be granted, the number of common shares to be
subject to each grant, the terms and conditions of each Award,
and the duration of leaves of absence that may be granted to
participants without constituting a termination of their
employment for purposes of the 2006 Plan.
The Committee cannot make any adjustment (other than in
connection with a stock dividend, recapitalization or other
transaction where an adjustment is permitted or required under
the terms of the 2006 Plan) or amendment where the adjustment or
amendment would reduce or have the effect of reducing the
exercise price of an option or stock appreciation right
previously granted under the 2006 Plan, whether through
amendment, cancellation, replacement grants or other means,
unless our shareholders have approved the adjustment or
amendment.
Awards Available Under the 2006 Plan
Restricted Stock.
The 2006 Plan provides for
Awards of restricted stock, which will contain such
restrictions, terms and conditions as the Committee shall
determine. Unless the Committee determines otherwise, the
grantee of an Award of restricted stock will have the right to
vote the shares and to receive all dividends and other
distributions on the shares prior to vesting. However, the
Committee may, in its discretion, determine that dividends on
the restricted stock will be deferred
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until the lapsing of the restrictions imposed on the shares and
either held in cash or reinvested in shares of restricted stock.
Formula Restricted Stock Units.
Beginning in 2006,
each non-employee director will be
granted                     restricted
stock units under the 2006 Plan on the date on which the
regularly scheduled board meeting is held during our second
fiscal quarter (the "Formula Restricted Stock Units").
One-third of the shares of each Formula Restricted Stock Unit
grant will vest on each of the first two anniversaries of the
grant date of the Formula Restricted Stock Units and the
remainder will vest on November 1 following the second
anniversary of the grant date. The grantee of an award of
Formula Restricted Stock Units will have the right to receive
dividends and other distributions on the shares prior to
vesting. However, any dividends or distributions paid in cash
will be reinvested in our common shares, and all such reinvested
dividends and distributions will be deferred until the lapsing
of the restrictions imposed on the Formula Restricted Stock
Units in respect of which the dividends and distributions were
paid.
Stock Units.
The Committee may make Awards of
stock units under the 2006 Plan, which will represent the right
of the grantee to receive a payment upon vesting or on any later
date specified by the Committee equal to the fair market value
of common shares as of the date the stock unit was granted, the
vesting date or any other date as determined by the Committee.
The Committee may place a limitation on the amount payable in
respect of each stock unit at the time of grant and may provide
for the settlement of stock units in cash or in common shares.
Stock Options.
The 2006 Plan provides for both
incentive stock options as defined under Section 422 of the
Internal Revenue Code ("ISOs") and non-qualified stock
options ("Non-Qualified Options" and collectively with
ISOs, "Options"). The 2006 Plan provides that the
purchase price for all common shares covered by each Option
granted cannot be less than 100.0% of the fair market value of
the common shares on the date of grant. In the case of any ISO
granted to an individual who, on the effective date of grant,
owns shares possessing more than 10.0% of our total combined
voting power, the exercise price per share must be at least
110.0% of the fair market value of the common shares on the date
of grant.
The purchase price for common shares covered by an Option must
be paid in full at the time of exercise of the Option by cash or
cheque, by the delivery of our common shares having a fair
market value on the date of exercise equal to the exercise price
or by tender of other property acceptable to the Committee.
No individual may be granted ISOs under the 2006 Plan if the
grant would cause the aggregate fair market value (determined as
of the date the ISOs are granted) of the common shares with
respect to which ISOs are exercisable for the first time by the
optionee during any calendar year under all stock option plans
maintained by us and our subsidiaries to exceed US$100,000.
The Committee has the authority to determine the term of an
Option, up to a maximum of 10 years, and each Option will
be exercisable as determined by the Committee. The Committee may
accelerate the exercisability of an Option at any time.
At any time after an Option granted under the 2006 Plan becomes
exercisable, the Committee has the right, in its sole discretion
and without the consent of an optionee, to cancel the Option and
pay to the optionee the excess of the fair market value of the
common shares covered by the Option over the option exercise
price at the date the Committee provides written notice of its
intention to exercise the right. Such amount may be paid in
cash, our common shares or a combination thereof, as the
Committee may determine. To the extent payment is made in common
shares, the number of such common shares will be determined by
dividing the amount of the payment to be made by the fair market
value of the common shares on the date of the notice of election
to the optionee.
Stock Appreciation Rights.
A stock appreciation
right ("SAR") may be granted under the 2006 Plan
either alone or in conjunction with an Option. A SAR related to
an Option generally terminates upon the expiration, forfeiture
or exercise of the related Option, and is exercisable only to
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the extent that the related Option is exercisable. The Committee
will determine the exercisability, vesting and duration of a SAR
unrelated to an Option, provided that the maximum term of a SAR
may not exceed 10 years.
Upon the exercise of a SAR related to an Option, the related
Option will be canceled to the extent of the number of shares
for which the SAR is exercised. Upon exercise of a SAR, the
grantee will receive cash, common shares, or a combination of
both equal to (1) the excess of the fair market value of
common shares on the date the SAR was granted or, if the SAR is
related to an Option, the option price, times (2) the
number of shares as to which the SAR is being exercised. At the
time of grant, the Committee may place a limitation on the
amount payable upon exercise of a SAR.
Performance Shares.
Performance shares are common
shares issued to eligible individuals under the 2006 Plan, which
shares will become vested on the terms, conditions and
satisfaction of Performance Objectives (as defined and described
below) as the Committee may determine. Unless the Committee
determines otherwise, the grantee of an award of performance
shares will have the right to vote the performance shares and to
receive all dividends and other distributions on the performance
shares prior to vesting. However, the Committee may, in its
discretion, determine that dividends on the performance shares
will be deferred until the lapsing of the restrictions imposed
on the performance shares and either held in cash or reinvested
in performance shares.
Performance Units.
The value of a performance unit
may be denominated in common shares or a specified dollar
amount. Each performance unit will represent the right to
receive, in the case of share-denominated units, the fair market
value of a share (or a percentage thereof (which may be more
than 100.0%) depending on the level of Performance Objective
attainment) on the date the performance unit was granted, the
date the performance unit became vested or any other date
specified by the Committee or, in the case of dollar-denominated
units, the specified dollar amount (or a percentage thereof
(which may be more than 100.0%) depending on the level of
Performance Objective attainment). At the time of grant, the
Committee may place a limitation on the maximum amount payable
in respect of a vested performance unit. Payment may be made in
common shares, cash, or a combination thereof, including
restricted stock if the Committee so determines at the time of
grant.
Performance Objectives.
Performance Objectives
applicable to performance shares or performance units may be
expressed in terms of earnings per share, earnings (which may be
expressed as earnings before specified items), return on assets,
return on invested capital, revenue, operating income, cash
flow, total shareholder return or any combination thereof and
may be in respect of the performance of the Company, any of its
subsidiaries, operating units or combination thereof (the
"Performance Objectives"). The Committee has the power
to modify the Performance Objectives after they have been
established as may be appropriate, including, for example, to
reflect specified corporate transactions, accounting or tax law
changes and other extraordinary or nonrecurring events. However,
no modification may be made if it would adversely affect the
treatment of any performance award designated by the Committee
as "performance-based compensation" within the meaning
of Section 162(m) of the Internal Revenue Code and the
regulations thereunder. Prior to the lapse of restrictions on
performance shares or the payout in respect of performance units
designated as performance-based compensation, the Committee must
certify the extent to which the Performance Objectives have been
satisfied.
Dividend Equivalent Rights.
Dividend equivalent
rights may be granted in conjunction with another Award or as a
separate Award. Grantees of dividend equivalent rights will be
entitled to receive payments in single or multiple installments,
as determined by the Committee, equivalent to all or some
portion of the cash dividends payable with respect to common
shares (as specified in the applicable Award agreement).
Payments may be made in cash, common shares or a combination
thereof. Amounts payable in respect of dividend equivalent
rights may be payable currently or, if applicable, deferred
until the lapsing of restrictions on the dividend equivalent
rights or
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until the vesting, exercise, payment, settlement or other lapse
of restrictions on the Award to which the dividend equivalent
rights relate. If the amounts payable are deferred, the
Committee will determine whether the deferred amounts are to be
held in cash, reinvested in shares or deemed notionally to be
reinvested in shares.
Share Awards
The Committee may grant an Award of common shares as additional
compensation for services rendered or in lieu of cash or other
compensation to which an eligible employee or non-employee
director is entitled. Grants of share awards will be made on the
terms and conditions as the Committee may determine in its
discretion.
Performance-Based Compensation
Unless otherwise provided in an Award agreement, each Option and
SAR, and if designated in an Award agreement, each
performance share and performance unit granted under the 2006
Plan is intended to constitute "performance-based
compensation" within the meaning of
Section 162(m)(4)(c) of the Code and the regulations
thereunder. The Committee will not be entitled to exercise any
discretion otherwise authorized under the 2006 Plan with respect
to Awards intended to constitute performance-based compensation
if the ability to exercise or the exercise of the discretion
would cause the compensation attributable to the Awards to fail
to qualify as performance-based compensation.
Deferral of Payments or Vesting
The Committee may provide for the deferral of the issuance or
vesting in common shares or the payment of cash in respect of an
Award granted under the Plan. The terms of any such deferral
will be set forth in the applicable Award agreement.
Amendment and Termination
Our board of directors may amend or terminate the 2006 Plan
at any time. However, the board cannot change any Award in a
manner that will impair the rights of the grantee therein
without the consent of that grantee.
Change in Control
The 2006 Plan provides that in the event of a "Change
in Control" (as defined in the 2006 Plan), all Options
and SARs will become immediately exercisable, the restrictions
applicable to outstanding restricted stock will lapse, and stock
units will become fully vested. In addition, unless the
Committee determines otherwise, all restrictions on outstanding
performance shares will lapse, and outstanding performance units
will become vested, in each case as if all Performance
Objectives had been satisfied at the highest level by us and the
grantee. In addition, regarding performance units, unless the
Committee determines otherwise, the grantee will be entitled to
receive a cash payment within 10 days after the Change in
Control in respect of the performance units that become vested
as a result of a Change in Control.
Adjustments
The 2006 Plan provides that the Committee will determine
the appropriate adjustments, if any, to outstanding Awards and
the shares available for future Awards in connection with a
reclassification, recapitalization, merger, consolidation,
reorganization, spin-off, split-up, issuance of warrants or
rights or debentures, stock dividend, stock split, reverse stock
split, cash dividend, property dividend, combination or exchange
of shares, repurchase of shares, change in corporate structure
or otherwise (a "Change in Capitalization").
Adjustments may be made to the number and class of our common
shares or other stock or securities which are subject to
outstanding Awards
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granted under the 2006 Plan, the maximum number and class
of our common shares or other stock or securities which may be
granted under the 2006 Plan or to any individual in any
calendar year, and the Performance Objectives applicable to
performance shares and performance units. If the grantee of an
Award is entitled to new, additional or different shares of our
securities or any other corporation by reason of a Change in
Capitalization, the new, additional or different shares will be
subject to all of the conditions, restrictions and performance
criteria that were applicable to the common shares subject to
the Award prior to the Change in Capitalization.
In the event we are involved in a liquidation, dissolution,
merger or consolidation (a "Transaction"),
outstanding Awards will be treated as provided for in the
agreement entered into in connection with the Transaction or, if
not so provided in the agreement, grantees will be entitled to
receive the same consideration that each holder of one of our
common shares was entitled to receive in the Transaction in
respect of a common share. However, the consideration will
remain subject to all of the conditions, restrictions and
performance criteria which were applicable to the Awards prior
to the transaction.
Transferability
Awards granted under the 2006 Plan are generally
non-transferable and, in the case of Options and SARs, may be
exercised, during a grantee's lifetime, only by the
grantee. However, in the case of Options, if the grantee becomes
incapacitated or if the option agreement so provides, the
optionee's legal representative or estate may exercise the
Option or SAR.
Termination of Employment
The 2006 Plan contains provisions concerning the treatment
of Awards upon termination of employment. These provisions will
apply unless the Committee determines otherwise in an applicable
Award agreement.
Under these provisions, if a grantee dies or becomes disabled,
the grantee's Options and SARs will become immediately
exercisable and may be exercised for a period of one year
following death or disability (but in no event beyond the
maximum term of the Option or SAR). The grantee's
performance shares and performance units will remain
outstanding, and the grantee will be entitled to a pro rata
portion of the payment otherwise payable in respect of the
performance shares or units on the date the performance shares
or units would have been paid if the grantee had remained
employed with us or a subsidiary. Finally, the grantee's
restricted stock, stock units and Formula Restricted Stock Units
will become immediately vested.
If a grantee who is a non-employee director retires after
attaining age 55 with at least three years of service as a
director, the grantee's Formula Restricted Stock Units will
become immediately vested. The Committee will have the authority
to provide for accelerated vesting of equity compensation awards
made under the 2006 Plan to employees who retire and to
establish the definition of retirement.
If a grantee's employment with us is terminated without
cause in connection with a disposition of one or more
restaurants or other assets by us or our subsidiaries, or in
connection with a sale or other disposition of a subsidiary, the
grantee's Options and SARs will remain outstanding for one
year (but in no event beyond the maximum term of the Option or
SAR) and unvested Options and SARs will continue to vest in
accordance with the applicable vesting schedule. The
grantee's performance shares and performance units will
remain outstanding, and the grantee will be entitled to a pro
rata portion of the payment otherwise payable in respect of the
performance shares or units on the date the performance shares
or units would have been paid if the grantee had remained
employed with the Company or a subsidiary. Finally, the
grantee's restricted stock and stock units will become
immediately vested.
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If a grantee's employment with us or our subsidiaries
terminates for any reason other than those described above, all
Awards the grantee holds will be forfeited immediately unless
otherwise determined by the Committee at any time prior to or
after termination with the grantee's consent, except any
vested Options or SARs the grantee holds will remain exercisable
for a period of 30 days following termination of employment.
Forfeiture for Misconduct
If a grantee has used for profit or disclosed to unauthorized
persons our or our subsidiaries' confidential information
or trade secrets, breached any contract with or violated any
fiduciary obligation to us or our subsidiaries, engaged in
unlawful trading in our securities or securities of another
company based on information gained as a result of that
grantee's employment or directorship with us or our
subsidiaries, all Awards the grantee holds will automatically be
forfeited, unless the Committee determines otherwise.
Tax Withholding
If a grantee recognizes taxable income in connection with the
receipt of common shares or cash under the 2006 Plan, the
grantee will pay the federal, state, provincial and local income
taxes and other amounts required by law to be withheld by us in
connection with the receipt prior to the issuance of the shares
or payment of the cash. The grantee may elect to have us
withhold a portion of the common shares issuable with a fair
market value equal to the amount of withholding taxes in
satisfaction of the obligation to pay the withholding taxes.
Tax Treatment Upon a Change in Control.
If Options under the 2006 Plan vest or are paid on an
accelerated basis upon a Change in Control, some or all of the
value of that acceleration may be considered an "excess
parachute payment" under 280G of the Code, which would
result in the imposition of a 20.0% federal excise tax on the
recipients of the excess parachute payments and a loss of the
Company's deduction for the excess parachute payments.
Performance Based Compensation.
Section 162(m) of the Internal Revenue Code disallows a
federal income tax deduction for certain compensation in excess
of US$1.0 million per year paid to each of the
Company's chief executive officer and its four other most
highly compensated executive officers. Compensation that
qualifies as "performance-based compensation" is not
subject to the US$1.0 million limit. It is anticipated
that, in general, the Committee will operate the 2006 Plan in a
manner designed to avoid loss of the Company's tax
deduction relating to Options because of Section 162(m).
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Total Anticipated Share Option Grants and Stock Ownership
The following table sets forth the number of our common shares
and restricted share units that are expected to be beneficially
owned after the completion of this offering (without giving
effect to vesting schedules or any shares purchased in this
offering) by each of our directors, the executive officers named
in the Summary Compensation Table and all of our directors and
executive officers as a group.
Restricted
Shares
Shares
Share Units
Issued Upon
Under Options
Issued Upon
Completion
Issued Upon
Completion
of This
Completion of
of This
Directors and Executive Officers
Offering
This Offering
Offering
Total
Executive Agreements
We have not entered into any employment agreements with any
executive officers.
Limitation of Liability and Indemnification Matters
As permitted by applicable Ohio law, we have included in our
code of regulations a provision to generally eliminate the
personal liability of our directors for monetary damages for
breach or alleged breach of their fiduciary duties as directors.
However, this provision does not eliminate or limit liability of
a director for a director's breach of the duty of loyalty,
for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, for any
transaction from which a director derived an improper personal
benefit and for other specified actions. In addition, our
articles of incorporation and code of regulations provide that
we are required to indemnify our officers and directors under a
number of circumstances, including those circumstances in which
indemnification would otherwise be discretionary, and we are
required to pay expenses to our officers and directors as
incurred in connection with proceedings against them for which
they may be indemnified in advance of a final determination of
their entitlement to indemnification. At present, we are not
aware of any pending or threatened litigation or proceeding
involving a director, officer, employee or agent of ours in
which indemnification would be required or permitted. We believe
these indemnification provisions are necessary to attract and
retain qualified persons as directors and officers.
Insofar as indemnification for liabilities arising under the
Securities Act may be granted to directors, officers or persons
controlling us under the foregoing provisions, we have been
informed that in the opinion of the Securities and Exchange
Commission this indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
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PRINCIPAL SHAREHOLDER
After completion of this offering, Wendy's will own
approximately      % of our outstanding
common shares, or approximately      %
if the underwriters exercise their over-allotment option
in full.
Under applicable provisions of the Ohio General Corporation Law
and our articles of incorporation, Wendy's will be able,
acting alone, to elect our entire board of directors and approve
any action requiring shareholder approval. Except for
Wendy's, we are not aware of any person or group that will
beneficially own more than 5.0% of the outstanding shares of our
common shares following this offering. The address of
Wendy's principal executive office is
P.O. Box 256, 4288 West Dublin-Granville
Road, Dublin, Ohio 43017-0256.
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OUR RELATIONSHIP WITH WENDY'S
General
Prior to this offering, we were operated as a wholly-owned
subsidiary of Wendy's. Immediately following this offering,
Wendy's will continue to own
approximately      % of our common
shares. If the underwriters exercise their option to purchase
additional shares in full, immediately following this offering,
Wendy's will own      % of our
common shares. Wendy's will continue to have the power
acting alone to approve any action requiring a vote of the
majority of our voting shares and to elect all of our directors.
Historical Relationship With Wendy's
We have been a wholly-owned subsidiary of Wendy's since our
merger with Wendy's in December 1995. As a result, in the
ordinary course of our business, we have received various
services provided by Wendy's, including insurance, risk
management, information technology, tax, financial services,
shared benefits administration, payroll and external financial
reporting. Wendy's has also provided us with the services
of a number of its executives and employees. Our historical
consolidated financial statements include allocations to us by
Wendy's of its costs related to these services. These cost
allocations have been determined on a basis that we and
Wendy's consider to be reasonable reflections of the use of
services provided or the benefit received by us. On a pre-tax
basis, these allocations totalled $12.7 million in fiscal
2002, $12.9 million in fiscal 2003, $13.3 million in
fiscal 2004 and $13.8 million for the nine months ended
October 2, 2005.
Wendy's as Our Controlling Shareholder
As long as Wendy's continues to control more than 50.0% of
the combined voting power of our common shares, Wendy's
will be able to direct the election of all of the members of our
board and exercise a controlling influence over our business and
affairs, including any determinations with respect to mergers or
other business combinations involving us, our acquisition or
disposition of assets, our incurrence of indebtedness, our
issuance of any additional common shares or other equity
securities, and the payment of dividends with respect to our
common shares. Similarly, Wendy's will have the power to
determine matters submitted to a vote of our shareholders
without the consent of our other shareholders, will have the
power to prevent a change in control of our company and will
have the power to take other actions that might be favourable to
Wendy's but unfavourable to us.
If the Wendy's board of directors determines to take such
action, Wendy's could spin-off its remaining ownership
interest in us to its common shareholders by means of a special
dividend to its common shareholders. Beneficial ownership of at
least 80.0% of the total voting power and value of our
outstanding common shares is required for Wendy's to
continue to include us in its consolidated group for federal
income tax purposes, and beneficial ownership of at least 80.0%
of the total voting power and 80.0% of each class of nonvoting
capital stock is required for Wendy's to effect a tax-free
spin-off or certain other tax-free transactions relating to us.
As a result, we cannot be sure how long Wendy's will own
our common shares following this offering.
Agreements Between Wendy's and Us
This section provides a summary description of agreements
between Wendy's and us relating to this offering and our
relationship with Wendy's after this offering. The
description of the agreements is not complete and, with respect
to each such agreement, is qualified by reference to the terms
of the agreement, each of which will be filed as an exhibit to
the registration statement of which this prospectus is a part.
We encourage you to read the full text of these agreements. We
will enter into these agreements with Wendy's immediately
prior to the completion of this offering; accordingly, we have
entered or will enter into these agreements with Wendy's in
the context of our
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relationship as a wholly-owned subsidiary of Wendy's. The
prices and other terms of these agreements may be less
favourable to us than those we could have obtained in
arm's-length negotiations with unaffiliated third parties
for similar services or under similar agreements.
Master Separation Agreement
The master separation agreement contains the key provisions
related to our separation from Wendy's, this offering and
the spin-off (if it occurs) of our common shares held by
Wendy's to its stockholders following completion of this
offering.
The Spin-off (if it occurs).
Wendy's has
advised us that, subject to the determination of its board of
directors, it may in the future determine to spin-off all of our
common shares that it owns to its stockholders. Wendy's has
the sole discretion to determine the form, structure and all
other terms of any transactions to effect the spin-off. Any
spin-off would be subject to several conditions that must either
be satisfied or waived by Wendy's, in its sole discretion,
including:
•
receipt of an opinion of tax counsel to the effect that, among
    other things, the spin-off should qualify as a tax-free
    distribution for federal income tax purposes under
    Section 355 of the Internal Revenue Code;
•
receipt of any necessary government approvals and material
    consents; and
•
lack of any order, injunction, decree or regulation issued by
    any court or agency of competent jurisdiction or other legal
    restraint or prohibition preventing the completion of the
    spin-off.
See "Risk Factors—Risks Related to Our Relationship
with Wendy's—Our business and your investment in our
common shares may be adversely affected if Wendy's does not
spin-off our shares."
If Wendy's determines to effect the spin-off, we are
required by the master separation agreement to cooperate with
Wendy's in all respects to accomplish the spin-off and to
promptly take any and all actions necessary or desirable to
effect the spin-off.
Expenses.
We and Wendy's generally will be
responsible for our own costs (including all third-party costs)
incurred in connection with the transactions contemplated by the
master separation agreement.
Other Provisions.
In addition to the terms and
provisions described above, the master separation agreement
provides for the sharing of information and dispute resolution.
Shared Services Agreement
The shared services agreement will govern the provision by
Wendy's to us of certain support services and the provision
by us to Wendy's of certain other support services.
Tax Sharing Agreement
The tax sharing agreement will govern Wendy's and our
respective rights, responsibilities and obligations after this
offering with respect to taxes for tax periods ending on or
before this offering. Generally, taxes incurred or accrued prior
to this offering that are attributable to the business of one
party will be borne solely by that party. In addition, the tax
sharing agreement addresses the allocation of liability for
taxes incurred as a result of restructuring activities
undertaken to implement this offering and the spin-off (if it
occurs). We are required to indemnify Wendy's for certain
tax liabilities incurred in connection with the spin-off, if it
occurs. We also will be limited in our ability to issue shares
and our ability to enter into transactions involving
acquisitions of our common shares because of potential adverse
tax consequences.
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Registration Rights Agreement
The registration rights agreement will provide Wendy's with
certain rights relating to our common shares held by
Wendy's. These registration rights generally become
effective if Wendy's informs us that it no longer intends
to complete the spin-off of our common shares to its
shareholders. Under the agreement, Wendy's will have the
right to require us to register for offer and sale all or a
portion of the common shares covered by the agreement, so long
as the shares Wendy's requires us to register represent at
least      % of the aggregate common
shares then issued and outstanding and Wendy's holds at
least      % of our then-outstanding
common shares on the date the registration request is made.
We will bear all registration expenses if these registration
rights are exercised, other than underwriting discounts and
commissions. These registration rights terminate as to
Wendy's shares when Wendy's may sell those shares
under Rule 144(k) of the Securities Act (which will only
occur when Wendy's is no longer our affiliate).
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
A trust for the benefit of Paul D. House is the sole shareholder
of a corporation which purchased a shopping centre property in
Tottenham, Ontario, Canada from an unrelated third party in
1998. As part of that purchase, the corporation now leases a Tim
Hortons restaurant to one of our subsidiaries, which lease has a
remaining term of nine years. The amounts of rent paid to the
corporation in fiscal 2004 and the first nine months of 2005
were $55,000 and $44,013, respectively. In our opinion, the
terms of this lease are no less favourable than we could have
obtained from an unrelated third party.
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DESCRIPTION OF CAPITAL STOCK
As of the date of the initial filing of the registration
statement, of which this prospectus is a part, Tim Hortons Inc.
is a Delaware corporation. Before the completion of this
offering, we intend to merge into a newly-formed Ohio
corporation named Tim Hortons Inc. We are, and from that merger
until the completion of this offering, will be, a wholly-owned
subsidiary of Wendy's. Although the merger has not been
completed as of the date of this initial filing of the
registration statement of which this prospectus is a part, we
have made certain disclosures in this prospectus as if the
merger had been completed and we were an Ohio corporation.
Our articles of incorporation provide that we may issue up
to                     common
shares, no stated value,
and                     preferred
shares, no stated value. Upon completion of this offering, we
will
have                     common
shares outstanding
(                     shares
if the underwriters' option to purchase additional shares
is exercised is full) and preferred shares outstanding. The
number of common shares outstanding assumes the issuance
of                     pursuant
to the terms of our equity incentive plan. We expect to issue
these                     immediately
following the pricing of, but prior to, the consummation of this
offering; however, the issuances remain subject to approval by
our board of directors prior to the consummation of this
offering.
The following description of our capital stock does not purport
to be complete and is subject to, and is qualified by, our
articles of incorporation and code of regulations, which will be
filed as exhibits to the registration statement of which this
prospectus is part.
Common Shares
As of the date of this prospectus, and before giving effect to
this offering, all of our outstanding common shares were owned
by Wendy's.
Holders of common shares are entitled to one vote per share on
all matters to be voted on by the shareholders. The holders of
common shares are not entitled to cumulative voting rights.
Generally, all matters to be voted on by shareholders must be
approved by a majority (or, in the case of election of
directors, by a plurality) of the votes entitled to be cast by
all common shareholders present in person or represented by
proxy, voting together as a single class, subject to any voting
rights granted to holders of any preferred shares.
Holders of common shares have no preemptive rights, and the
common shares are not subject to further calls or assessments by
us. There are no redemptive or sinking fund provisions
applicable to the common shares.
Holders of common shares will share in an equal amount per share
in any dividend declared by the board of directors, subject to
any preferential rights of any outstanding preferred shares.
Upon liquidation, dissolution or winding up of our affairs, our
creditors and any holders of preferred shares will be paid
before any distribution to holders of common shares. The holders
of common shares would be entitled to receive a pro rata
distribution of any excess amount. All outstanding common shares
are, and the common shares offered in this offering when issued
and paid for will be, fully paid and nonassessable.
The rights, preferences and privileges of holders of common
shares are subject to, and may be adversely affected by, the
rights of holders of shares of any series of preferred shares
which our board of directors may designate and issue in the
future.
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Preferred Shares
The board may fix by resolution the designations, preferences
and relative, participating, optional or other rights and the
qualifications, limitations or restrictions of our preferred
shares, including the number of shares in any series,
liquidation preferences, dividend rates, voting rights,
conversion rights and redemption provisions. The issuance of
preferred shares and the terms selected by the board could
decrease the amount of earnings and assets available for
distribution to holders of our common shares or adversely affect
the rights and powers, including voting rights, of the holders
of our common shares without any further vote or action by the
common shareholders. Any series of preferred shares issued by
the board could have priority over the common shares in terms of
dividend or liquidation rights or both. The issuance of
preferred shares, or the issuance of rights to purchase
preferred shares, could make it more difficult for a third party
to acquire a majority of our outstanding voting shares and
thereby have the effect of delaying, deferring or preventing a
change of control of the company or an unsolicited acquisition
proposal or of making the removal of management more difficult.
Additionally, the issuance of preferred shares may have the
effect of decreasing the market price of our common shares.
There are currently no outstanding preferred shares and we have
no present intention to issue any preferred shares.
Provisions of Our Articles of Incorporation Governing
Corporate Opportunities and Related Party Transactions
After this offering, Wendy's will remain a substantial
shareholder of ours. We and Wendy's are engaged in the same
or similar activities or lines of business and have interests in
the same areas of corporate opportunities. Our articles of
incorporation will provide that Wendy's is under no
obligation to communicate or offer any corporate opportunity to
us. See "Risk Factors—Risks Related to Our
Relationship with Wendy's—Wendy's will not be
required to offer corporate opportunities to us, and our
articles of incorporation will permit some of our directors to
offer some corporate opportunities to Wendy's before
us."
Anti-Takeover Effects of Certain Provisions of our Articles
of Incorporation, our Code of Regulations and Ohio Law.
Provisions of our articles of incorporation and regulations and
of the Ohio General Corporation Law summarized below may be
deemed to have an anti-takeover effect and may delay, defer or
prevent a tender offer or takeover attempt that a shareholder
might consider in its best interest, including those attempts
that might result in a premium over the market price for the
shares held by shareholders.
No Cumulative Voting.
Where cumulative voting is
permitted, each share is entitled to as many votes as there are
directors to be elected and each shareholder may cast all of his
or her votes for a single candidate or distribute such votes
among two or more candidates. Cumulative voting makes it easier
for a minority shareholder to elect a director. Our articles of
incorporation expressly deny shareholders the right to
cumulative voting.
Supermajority Vote to Remove Directors.
Our
regulations will provide that the shareholders may remove a
director only by the vote of the holders of not less than
three-fourths of the voting power of the corporation entitling
them to elect directors in place of those to be removed. This
provision, when coupled with the voting power of the common
shares held by Wendy's (     %
following this offering), will preclude any other shareholder or
shareholders from removing incumbent directors and
simultaneously gaining control of the board of directors by
filling the vacancies.
Classified Board.
Our regulations provide for the
board of directors to be divided
into                     classes.
Because the regulations will
authorize           directors,
approximately  of the board of directors will be elected
each year. This provision, when coupled with the vote required to
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remove directors, can preclude even a majority shareholder from
gaining control of the board of directors in one election.
Authorized But Unissued Shares.
Our authorized but
unissued common shares and preferred shares are available for
future issuance without shareholder approval. These additional
shares may be utilized for a variety of corporate purposes,
including future public offerings to raise additional capital,
corporate acquisitions and employee benefit plans. Our articles
of incorporation authorize our board of directors to issue up
to                 preferred
shares and to determine the powers, preferences, privileges,
rights, including voting rights, qualifications, limitations and
restrictions on those shares, without any further vote or action
by the shareholders. The existence of authorized but unissued
common shares and preferred shares could have the effect of
delaying, deterring or preventing an attempt to obtain control
of us by means of a proxy contest, tender offer, merger or
otherwise.
Special Meeting of Shareholders.
Our regulations
provide that special meetings of our shareholders may be called
only by:
•
the chairman of the board, the president, or in case of the
    president's death or disability, the vice president
    authorized to exercise the authority of the president;
•
the directors by action at a meeting, or a majority of the
    incumbent directors acting without a meeting; or
•
the holders of at least      % of all
    shares outstanding and entitled to vote thereat.
Actions by Written Consent.
Section 1701.54
of the Ohio General Corporation Law requires that an action by
written consent of the shareholders in lieu of a meeting be
unanimous, except that under Section 1701.11 of the Ohio
General Corporation Law, the regulations may be amended by an
action by written consent of holders of two-thirds of the voting
power of the corporation or, if the articles of incorporation or
regulations otherwise provide, such greater or lesser amount,
but not less than a majority. Our regulations provide that the
regulations may be amended by an action by written consent of
holders of a majority of our total voting power. Based on its
ownership after the proposed offering, Wendy's will have
enough shares to amend our regulations. This provision coupled
with Wendy's ownership may have the effect of delaying,
deferring or preventing a tender offer or takeover attempt that
a shareholder might consider in its best interest.
Advance Notice Requirements for Shareholder Proposals and
Director Nominations.
Our regulations provide that
shareholders seeking to nominate candidates for election as
directors at an annual or special meeting of shareholders must
provide timely notice to us in writing. To be timely, a
shareholder's notice must be received at our principal
executive offices not less than 60 days nor more than
90 days prior to the first anniversary of the date of the
previous year's annual meeting (or, if the date of the
annual meeting is changed by more than 30 days from the
anniversary date of the preceding year's annual meeting, or
in the case of a special meeting, within 10 days after we
mail the notice of the date of the meeting or otherwise publicly
disclose the date of the meeting). The regulations also
prescribe the proper written form for a shareholder's
notice. These provisions may preclude shareholders from making
nominations for directors at an annual or special meeting.
We Are Subject to the Ohio Control Share Acquisition
Statute.
We are subject to Section 1701.831 of the
Ohio Revised Code, known as the "Ohio Control Share
Acquisition Statute." This statute provides that, unless a
corporation's articles of incorporation or code of
regulations provide that such section does not apply, notice and
information filings, and special shareholder meeting and voting
procedures, must occur prior to any person's acquisition of
an issuer's shares
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that would entitle the acquirer to exercise or direct the voting
power of the issuer in the election of directors within any of
the following ranges:
•
one-fifth or more but less than one-third of the voting power;
•
one-third or more but less than a majority of the voting
    power; and
•
a majority of the voting power.
We Are Subject to the Merger Moratorium Statute.
We are subject to Chapter 1704 of the Ohio Revised Code,
known as the "Merger Moratorium Statute." This statute
prohibits certain transactions if they involve both the issuer
and either a person who became the beneficial owner of 10.0% or
more of the issuer's shares without the prior approval of
its board of directors or anyone affiliated or associated with
such person, unless a corporation's articles of
incorporation or code of regulations provide that such statute
does not apply. The prohibition imposed by Chapter 1704 is
absolute for at least three years and continues indefinitely
thereafter unless the transaction is approved by the holders of
at least two-thirds of the voting power of the issuer or
satisfies statutory conditions relating to the fairness of the
consideration to be received by the shareholders.
Transfer Agent and Registrar
The transfer agent and registrar for our common shares
is                                         .
The transfer agent's telephone number
is                            .
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SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for our
common shares. The sale of a substantial amount of our common
shares in the public market after this offering, or the
perception that such sales may occur, could adversely affect the
prevailing market price of our common shares. Furthermore,
because some of our shares will not be available for sale
shortly after this offering due to the contractual and legal
restrictions on resale described below, the sale of a
substantial amount of common shares in the public market after
these restrictions lapse could adversely affect the prevailing
market price of our common shares and our ability to raise
equity capital in the future.
Upon the closing of this offering, we expect to have a total
of                     outstanding
common shares, which includes
the                      common
shares sold by us in this offering. If the underwriters exercise
their over-allotment in full, we expect to
have                      common
shares outstanding upon the closing of this offering.
All of the common shares sold in this offering will be freely
tradable without restriction or further registration under the
Securities Act or applicable Canadian securities laws, except
for "restricted" shares held by persons who may be
deemed our "affiliates," as that term is defined under
Rule 144 of the Securities Act. An "affiliate" is
a person that directly, or indirectly through one or more
intermediaries, controls or is controlled by us or is under
common control with us.
The common shares held by Wendy's are deemed
"restricted securities" as that term is defined in
Rule 144 under the Securities Act and will be deemed to be
held by Wendy's for more than two years. These restricted
securities may be sold in the public market by Wendy's only
if they are registered or if they qualify for an exemption from
registration under Rule 144 or Rule 144(k) under the
Securities Act. These rules are summarized below.
Rule 144
Affiliates will be permitted to sell common shares that they
purchase in this offering only through registration under the
Securities Act or pursuant to an exemption from registration
under the Securities Act, such as the exemption available by
complying with Rule 144 of the Securities Act. In general,
under Rule 144 in effect as of the date of this prospectus,
beginning 90 days after the date of this prospectus, an
affiliate who has beneficially owned our common shares for at
least one year would be entitled to sell in brokers'
transactions a number of such shares within any three-month
period that does not exceed the greater of:
•
1.0% of the number of common shares then outstanding, which is
    approximately                      common
    shares upon the closing of this offering; and
•
the average weekly trading volume of our common shares on the
    New York Stock Exchange during the four calendar weeks preceding
    each such sale, subject to certain restrictions.
Sales under Rule 144 are also subject to other requirements
regarding the manner of sale, notice filing and the availability
of current public information about us.
Lock-up Agreements
We, our directors and officers and Wendy's have agreed with
the underwriters not to sell, dispose of or hedge any common
shares, subject to specified exceptions, during the period from
the date of this prospectus continuing through the date that is
180 days after the date of this prospectus, except with the
prior written consent of the representatives of the
underwriters. In addition, Wendy's lock-up agreement will
not restrict its ability to spin-off all of our common shares
that it owns to its common shareholders as described below under
"— Spin-off."
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Shares Issued Under Employee Plans
We intend to file registration statements on Form S-8 under
the Securities Act to register approximately common shares
issuable, with respect to common shares to be granted, or
otherwise, under our employee plans. Currently, there are no
outstanding options to purchase common shares. These
registration statements are expected to be filed following the
effective date of the registration statement of which this
prospectus is a part and will be effective upon filing. Shares
issued upon the exercise of share options or restricted stock
units after the effective date of the Form S-8 registration
statements will be eligible for resale in the public market
without restriction, subject to Rule 144 limitations
applicable to affiliates.
Registration Rights
After the closing of this offering and the expiration of the
lock-up period described above, Wendy's will be entitled to
certain rights with respect to the registration of our common
shares under the Securities Act, under the terms of a
registration rights agreement between us and Wendy's. See
"Our Relationship With Wendy's—Agreements Between
Wendy's and Us—Registration Rights Agreement."
Spin-off
If Wendy's board of directors determines to take such
action, Wendy's could spin-off its remaining ownership
interest in us to its common shareholders by means of a special
dividend to its common shareholders. Completion of the spin-off
would be contingent upon the satisfaction or waiver of a variety
of conditions, including the receipt of a favourable tax ruling
from the Internal Revenue Service and/or a favourable opinion of
Wendy's tax advisor as to the tax-free nature of the
distribution for U.S. federal income tax purposes. Common
shares distributed to Wendy's shareholders in the spin-off
transaction generally would be freely transferable, except for
common shares received by persons who may be deemed to be our
affiliates and except to the extent such common shares are
subject to the lock-up agreements described under
"Underwriting."
Additional Restrictions for Sales in Canada
The sale of any of our common shares in the public market in
Canada by Wendy's (as our controlling shareholder) will be
subject to restrictions under applicable Canadian securities
laws in addition to those restrictions noted above, unless the
sale is qualified under a prospectus filed with Canadian
securities regulatory authorities or if the following conditions
are fulfilled:
•
such sale occurs only after four months have lapsed from the
    date of a final receipt issued by Canadian securities regulatory
    authorities in respect of the final Canadian prospectus relating
    to the offering; and
•
prior notice of the sale must be filed with Canadian securities
    regulatory authorities at least seven days before any sale.
Sales under the procedure noted above are also subject to other
requirements and restrictions regarding the manner of sale,
payment of commissions, reporting and availability of current
public information about us and compliance with applicable
Canadian securities laws.
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CERTAIN U.S. FEDERAL TAX CONSIDERATIONS
FOR NON U.S. HOLDERS
The following is a summary of certain United States federal
income and estate tax consequences of the purchase, ownership
and disposition of our common shares as of the date hereof.
Except where noted, this summary deals only with common shares
that are held as a capital asset by a non-U.S. holder.
A "non-U.S. holder" means a person (other than a
partnership) that is not for United States federal income tax
purposes any of the following:
•
an individual U.S. citizen or resident;
•
a corporation (or any other entity treated as a corporation for
    U.S. federal income tax purposes) created or organized in
    or under the laws of the U.S., any state thereof or the District
    of Columbia;
•
an estate the income of which is subject to U.S. federal
    income taxation regardless of its source; or
•
a trust if it (1) is subject to the primary supervision of
    a court within the U.S. and one or more U.S. persons have
    the authority to control all substantial decisions of the trust
    or (2) has a valid election in effect under applicable
    United States Treasury regulations to be treated as a
    U.S. person.
This summary is based upon provisions of the Internal Revenue
Code of 1986 (the "Code"), and regulations, rulings
and judicial decisions as of the date hereof. Those authorities
may be changed, perhaps retroactively, so as to result in
U.S. federal income and estate tax consequences different
from those summarized below. This summary does not address all
aspects of U.S. federal income and estate taxes and does
not deal with foreign, state, local or other tax considerations
that may be relevant to non-U.S. holders in light of their
personal circumstances. In addition, it does not represent a
detailed description of the U.S. federal income and estate
tax consequences applicable to you if you are subject to special
treatment under the U.S. federal income tax laws (including
if you are a U.S. expatriate, "controlled foreign
corporation," "passive foreign investment
company," corporation that accumulates earnings to avoid
U.S. federal income tax or an investor in a pass-through
entity). We cannot assure you a change in law will not alter
significantly the tax considerations described in this summary.
If a partnership holds common shares, the tax treatment of a
partner will generally depend upon the status of the partner and
the activities of the partnership. If you are a partner of a
partnership holding common shares, you should consult your tax
advisors.
If you are considering the purchase of common shares, you
should consult your own tax advisors concerning the particular
U.S. federal income and estate tax consequences to you of
the ownership of common shares, as well as the consequences to
you arising under the laws of any other taxing jurisdiction.
Dividends
Dividends paid to a non-U.S. holder of common shares
generally will be subject to withholding of U.S. federal
income tax at a 30.0% rate or such lower rate as may be
specified by an applicable income tax treaty. The rate of
withholding tax on dividends pursuant to the
Canada-U.S. Income Tax Convention is generally 15.0%.
However, dividends that are effectively connected with the
conduct of a trade or business by the non-U.S. holder
within the U.S. (and, where a tax treaty applies, are
attributable to a U.S. permanent establishment of the
non-U.S. holder) are not subject to the withholding tax,
provided certain certification and disclosure requirements are
satisfied. Instead, such
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dividends are subject to U.S. federal income tax on a net
income basis in the same manner as if the non-U.S. holder
were a U.S. person as defined under the Code. Any such
effectively connected dividends received by a foreign
corporation may be subject to an additional "branch profits
tax" at a 30.0% rate or such lower rate as may be specified
by an applicable income tax treaty.
A non-U.S. holder of common shares who wishes to claim the
benefit of an applicable treaty rate for dividends will be
required to complete Internal Revenue Service Form W-8BEN
(or other applicable form) and certify under penalty of perjury
that such holder is eligible for benefits under the applicable
treaty. Special certification and other requirements apply to
certain non-U.S. holders that are pass-through entities
rather than corporations or individuals. In addition, Treasury
regulations provide special procedures for payments of dividends
through certain intermediaries.
A non-U.S. holder of common shares eligible for a reduced
rate of U.S. withholding tax pursuant to an income tax
treaty may obtain a refund of any excess amounts withheld by
filing an appropriate claim for refund with the Internal Revenue
Service.
Gain on Disposition of Common Shares
Any gain realized on the disposition of common shares generally
will not be subject to United States federal income tax unless:
•
the gain is effectively connected with a trade or business of
    the non-U.S. holder in the United States (and, if required
    by an applicable income tax treaty, is attributable to a United
    States permanent establishment of the non-U.S. holder);
•
the non-U.S. holder is an individual who is present in the
    U.S. for 183 days or more in the taxable year of that
    disposition, and certain other conditions are met; or
•
we are or have been a "United States real property holding
    corporation" for U.S. federal income tax purposes and
    certain other conditions are met.
An individual non-U.S. holder described in the first bullet
point immediately above will be subject to tax on the net gain
derived from the sale under regular graduated U.S. federal
income tax rates. An individual non-U.S. holder described
in the second bullet point immediately above will be subject to
a flat 30.0% tax on the gain derived from the sale, which may be
offset by U.S. source capital losses, even though the
individual is not considered a resident of the U.S. If a
non-U.S. holder that is a foreign corporation falls under
the first bullet point immediately above, it will be subject to
tax on its net gain in the same manner as if it were a
U.S. person as defined under the Code and, in addition, may
be subject to the branch profits tax equal to 30.0% of its
effectively connected earnings and profits or at such lower rate
as may be specified by an applicable income tax treaty.
We believe we are not and do not anticipate becoming a
"United States real property holding corporation" for
U.S. federal income tax purposes.
Federal Estate Tax
Common shares held by an individual non-U.S. holder at the
time of death will be included in such holder's gross
estate for U.S. federal estate tax purposes, unless an
applicable estate tax treaty provides otherwise.
Information Reporting and Backup Withholding
We must report annually to the Internal Revenue Service and to
each non-U.S. holder the amount of dividends paid to such
holder and the tax withheld with respect to such dividends,
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regardless of whether withholding was required. Copies of the
information returns reporting such dividends and withholding may
also be made available to the tax authorities in the country in
which the non-U.S. holder resides under the provisions of
an applicable income tax treaty.
A non-U.S. holder will be subject to backup withholding for
dividends paid to such holder unless such holder certifies under
penalty of perjury that it is a non-U.S. holder (and the
payor does not have actual knowledge or reason to know that such
holder is a U.S. person as defined under the Code), or such
holder otherwise establishes an exemption.
Information reporting and, depending on the circumstances,
backup withholding will apply to the proceeds of a sale of
common shares within the U.S. or conducted through certain
U.S.-related financial intermediaries, unless the beneficial
owner certifies under penalty of perjury that it is a
non-U.S. holder (and the payor does not have actual
knowledge or reason to know that the beneficial owner is a
U.S. person as defined under the Code) or such owner
otherwise establishes an exemption. Certain shareholders,
including all corporations, are exempt from the backup
withholding rules.
Any amounts withheld under the backup withholding rules may be
allowed as a refund or a credit against a
non-U.S. holder's U.S. federal income tax
liability provided the required information is furnished to the
Internal Revenue Service.
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UNDERWRITING
We, Wendy's and the underwriters named below have entered
into an underwriting agreement with respect to the common shares
being offered. Subject to certain conditions, each underwriter
has severally agreed to purchase the number of common shares
indicated in the following table. Goldman, Sachs & Co.
and RBC Capital Markets Corporation are the representatives of
the underwriters.
Underwriters
Number of Shares
Goldman, Sachs &
    Co.
RBC Capital Markets Corporation
Total
The offering is being made concurrently in the United States and
in each of the provinces and territories of Canada. The common
shares will be offered in the United States through those
underwriters who are registered to offer the common shares for
the sale in the United States and such other registered dealers
as may be designated by the underwriters. The common shares will
be offered in each of the provinces and territories of Canada
through those underwriters or their Canadian affiliates who are
registered to offer the common shares for sale in such provinces
and territories and such other registered dealers as may be
designated by the underwriters. Subject to applicable law, the
underwriters may offer the common shares outside of the United
States and Canada.
The underwriters are committed to take and pay for all of the
common shares being offered, if any are taken, other than the
common shares covered by the option described below unless and
until this option is exercised.
If the underwriters sell more common shares than the total
number set forth in the table above, the underwriters have an
option to buy up to an
additional                 common
shares from us to cover such sales. They may exercise that
option for 30 days after the date of completion of this
offering. If any common shares are purchased pursuant to this
option, the underwriters will severally purchase common shares
in approximately the same proportion as set forth in the table
above.
The following table shows the per common share and total
underwriting discounts and commissions to be paid to the
underwriters by us. Such amounts are shown assuming both no
exercise and full exercise of the underwriters' option to
purchase                additional
common shares.
Paid by us
No Exercise
Full Exercise
Per Share
US$
US$
Total
US$
US$
Common shares sold by the underwriters to the public will
initially be offered at the initial public offering price set
forth on the cover of this prospectus. Any common shares sold by
the underwriters to securities dealers may be sold at a discount
of up to
$           per
common share from the initial public offering price. Any such
securities dealers may resell any common shares purchased from
the underwriters to certain other brokers or dealers at a
discount of up to
$           per
common share from the initial public offering price. If all the
common shares are not sold at the initial public offering price,
the representatives may change the offering price and the other
selling terms.
We and our executive officers and directors and Wendy's
have agreed with the underwriters, subject to limited
exceptions, not to dispose of or hedge any Tim Hortons Inc.
common shares or securities convertible into or exchangeable for
such common shares during the period from the date of this
prospectus continuing through the date 180 days after the
date of this prospectus, except with the prior written consent
of the representatives. This agreement does not apply to any
existing
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Table of Contents
employee benefit plans or Wendy's right to spin-off all of
our common shares that it owns to its shareholders. See
"Shares Available for Future Sale" for a discussion of
certain transfer restrictions.
The 180-day restricted period described in the preceding
paragraph will be automatically extended if: (1) during the
last 17 days of the 180-day restricted period we issue an
earnings release or announce material news or a material event;
or (2) prior to the expiration of the 180-day restricted
period, we announce that we will release earnings results during
the 15-day period following the last day of the 180-day period,
in which case the restrictions described in the preceding
paragraph will continue to apply until the expiration of the
18-day period beginning on the issuance of the earnings release
or the announcement of the material news or material event.
Prior to the offering, there has been no public market for our
common shares. The initial public offering price has been
negotiated among us, Wendy's and the representatives. Among
the factors to be considered in determining the initial public
offering price of the common shares, in addition to prevailing
market conditions, will be our historical performance, estimates
of our business potential and earnings prospects, an assessment
of our management and the consideration of the above factors in
relation to market valuation of companies in related businesses.
In connection with our intended application to list the common
shares on the New York Stock Exchange, in order to meet one of
the requirements for listing, the underwriters will undertake to
sell lots of 100 or more shares to a minimum of
2,000 beneficial holders.
The underwriting agreement provides that the obligations of the
underwriters to purchase the common shares included in this
offering are subject to approval of legal matters by counsel and
to other conditions. The obligations of the underwriters under
the underwriting agreement may be terminated at their discretion
on the basis of their assessment of the financial markets and
may also be terminated upon the occurrence of certain stated
events. The underwriters are obligated to purchase all the
common shares (other than those covered by the over-allotment
option described below) if they purchase any of the common
shares. In connection with this offering, the underwriters may
purchase and sell common shares in the open market. These
transactions may include short sales, stabilizing transactions
and purchases to cover positions created by short sales. Short
sales involve the sale by the underwriters of a greater number
of shares than they are required to purchase in the offering.
"Covered" short sales are sales made in an amount not
greater than the underwriters' option to purchase
additional shares from us in the offering. The underwriters may
close out any covered short position by either exercising their
option to purchase additional shares or purchasing shares in the
open market. In determining the source of shares to close out
the covered short position, the underwriters will consider,
among other things, the price of shares available for purchase
in the open market as compared to the price at which they may
purchase additional shares pursuant to the option granted to
them. "Naked" short sales are any sales in excess of
such option. The underwriters must close out any naked short
position by purchasing shares in the open market. A naked short
position is more likely to be created if the underwriters are
concerned that there may be downward pressure on the price of
the common shares in the open market after pricing that could
adversely affect investors who purchase in the offering.
Stabilizing transactions consist of various bids for or
purchases of common shares made by the underwriters in the open
market prior to the completion of the offering.
In accordance with policy statements of the Ontario Securities
Commission and the Autorité des marchés financiers,
the underwriters may not throughout the period of distribution,
bid for or purchase common shares. Exceptions, however, exist
where the bid or purchase is not made to create the appearance
of active trading in, or rising prices of, the common shares.
These exceptions include a bid or purchase permitted under the
by-laws and rules of applicable regulatory authorities and the
Toronto Stock Exchange relating to market stabilization and
passive market making activities and a bid or purchase made for
and on behalf of a customer where the order was not solicited
during the period of distribution. Subject to the foregoing and
applicable laws, in connection with the
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Table of Contents
offering and pursuant to the first exception mentioned above,
the underwriters may over-allot or effect transactions that
stabilize or maintain the market price of the share at levels
other than those which might otherwise prevail on the open
market. Any of these activities may have the effect of
preventing or retarding a decline in the market price of the
common shares. They may also cause the price of the common
shares to be higher than the price that would otherwise exist in
the open market in the absences of these transactions. The
underwriters may conduct these transactions on the NYSE, the TSX
or in the over-the-counter market, or otherwise. If the
underwriters commence any of these transactions, they may
discontinue them at any time.
The underwriters may also impose a penalty bid. This occurs when
a particular underwriter repays to the underwriters a portion of
the underwriting discount received by it because the
representatives have repurchased shares sold by or for the
account of such underwriter in stabilizing or short covering
transactions.
Purchases to cover a short position and stabilizing transactions
may have the effect of preventing or retarding a decline in the
market price of the our common shares, and together with the
imposition of the penalty bid, may stabilize, maintain or
otherwise affect the market price of the common shares. As a
result, the price of the common shares may be higher than the
price that otherwise might exist in the open market. If these
activities are commenced, they may be discontinued at any time.
These transactions may be effected on the NYSE, on the TSX, in
the over-the-counter market or otherwise.
Each of the underwriters has represented and agreed that:
(1) it has not made or will not make an offer of shares to
    the public in the United Kingdom within the meaning of
    section 102B of the Financial Services and Markets Act 2000
    (as amended) (FSMA) except to legal entities that are
    authorized or regulated to operate in the financial markets or,
    if not so authorized or regulated, whose corporate purpose is
    solely to invest in securities or otherwise in circumstances
    which do not require the publication by the company of a
    prospectus pursuant to the Prospectus Rules of the Financial
    Services Authority (FSA);
(2) it has only communicated or caused to be communicated
    and will only communicate or cause to be communicated an
    invitation or inducement to engage in investment activity
    (within the meaning of section 21 of FSMA) to persons who
    have professional experience in matters relating to investments
    falling within Article 19(5) of the Financial Services and
    Markets Act 2000 (Financial Promotion) Order 2005 or in
    circumstances in which section 21 of FSMA does not apply to
    the company; and
(3) it has complied with, and will comply with all
    applicable provisions of FSMA with respect to anything done by
    it in relation to the common shares in, from or otherwise
    involving the United Kingdom.
In relation to each Member State of the European Economic Area
which has implemented the Prospectus Directive (each, a Relevant
Member State), each underwriter has represented and agreed that
with effect from and including the date on which the Prospectus
Directive is implemented in that Relevant Member State (the
Relevant Implementation Date) it has not made and will not make
an offer of shares to the public in that Relevant Member State
prior to the publication of a prospectus in relation to the
shares which has been approved by the competent authority in
that Relevant Member State or, where appropriate, approved in
another Relevant Member State and notified to the competent
authority in that Relevant Member State, all in accordance with
the Prospectus Directive, except that it may, with effect from
and including the Relevant Implementation Date, make an offer of
shares to the public in that Relevant Member State at any time
113
Table of Contents
(1) to legal entities which are authorized or regulated to
    operate in the financial markets or, if not so authorized or
    regulated, whose corporate purpose is solely to invest in
    securities;
(2) to any legal entity which has two or more of
    (a) an average of at least 250 employees during the last
    financial year; (b) a total balance sheet of more than
€
43,000,000 and
    (c) an annual net turnover of more than
€
50,000,000, as shown
    in its last annual or consolidated accounts; or
(3) in any other circumstances which do not require the
    publication by the Issuer of a prospectus pursuant to
    Article 3 of the Prospectus Directive.
For the purposes of this provision, the expression an
"offer of shares to the public" in relation to any
shares in any Relevant Member State means the communication in
any form and by any means of sufficient information on the terms
of the offer and the shares to be offered so as to enable an
investor to decide to purchase or subscribe the shares, as the
same may be varied in that Relevant Member State by any measure
implementing the Prospectus Directive in that Relevant Member
State and the expression Prospectus Directive means Directive
2003/71/ EC and includes any relevant implementing measure in
each Relevant Member State.
The shares may not be offered or sold by means of any document
other than to persons whose ordinary business is to buy or sell
shares or debentures, whether as principal or agent, or in
circumstances which do not constitute an offer to the public
within the meaning of the Companies Ordinance (Cap. 32) of
Hong Kong, and no advertisement, invitation or document
relating to the shares may be issued, whether in Hong Kong
or elsewhere, which is directed at, or the contents of which are
likely to be accessed or read by, the public in Hong Kong
(except if permitted to do so under the securities laws of
Hong Kong) other than with respect to shares which are or
are intended to be disposed of only to persons outside
Hong Kong or only to "professional investors"
within the meaning of the Securities and Futures Ordinance
(Cap. 571) of Hong Kong and any rules made thereunder.
This prospectus has not been registered as a prospectus with the
Monetary Authority of Singapore. Accordingly, this prospectus
and any other document or material in connection with the offer
or sale, or invitation for subscription or purchase, of the
common shares may not be circulated or distributed, nor may the
common shares be offered or sold, or be made the subject of an
invitation for subscription or purchase, whether directly or
indirectly, to persons in Singapore other than (1) to an
institutional investor under Section 274 of the Securities
and Futures Act, Chapter 289 of Singapore (the
"SFA"), (2) to a relevant person, or any person
pursuant to Section 275(1A), and in accordance with the
conditions, specified in Section 275 of the SFA or
(3) otherwise pursuant to, and in accordance with the
conditions of, any other applicable provision of the SFA.
Where the common shares are subscribed or purchased under
Section 275 by a relevant person which is: (a) a
corporation (which is not an accredited investor) the sole
business of which is to hold investments and the entire share
capital of which is owned by one or more individuals, each of
whom is an accredited investor; or (b) a trust (where the
trustee is not an accredited investor) whose sole purpose is to
hold investments and each beneficiary is an accredited investor,
shares, debentures and units of shares and debentures of that
corporation or the beneficiaries' rights and interest in
that trust shall not be transferable for 6 months after
that corporation or that trust has acquired the common shares
under Section 275 except: (1) to an institutional
investor under Section 274 of the SFA or to a relevant
person, or any person pursuant to Section 275(1A), and in
accordance with the conditions, specified in Section 275 of
the SFA; (2) where no consideration is given for the
transfer; or (3) by operation of law.
Our common shares have not been and will not be registered under
the Securities and Exchange Law of Japan (the Securities and
Exchange Law) and each underwriter has agreed that it will not
offer or sell any of our common shares, directly or indirectly,
in Japan or to, or for the benefit
114
Table of Contents
of, any resident of Japan (which term as used herein means any
person resident in Japan, including any corporation or other
entity organized under the laws of Japan), or to others for
re-offering or resale, directly or indirectly, in Japan or to a
resident of Japan, except pursuant to an exemption from the
registration requirements of, and otherwise in compliance with,
the Securities and Exchange Law and any other applicable laws,
regulations and ministerial guidelines of Japan.
At our request, the underwriters have reserved up
to                      common shares
for sale, at the initial public offering price, through a
directed share program to persons that we believe have
contributed to our growth, including franchisees, members of our
management and our employees and directors. There can be no
assurance that any of the reserved common shares will be so
purchased. The number of common shares available for sale to the
general public in this offering will be reduced to the extent
the reserved common shares are purchased in the directed share
program. Any reserved common shares not purchased through the
directed share program will be offered to the general public on
the same basis as the other common shares offered hereby.
The underwriters do not expect sales to discretionary accounts
to exceed five percent of the total number of common shares
offered.
We estimate that our share of the total expenses of this
offering, excluding underwriting discounts and commissions, will
be approximately
$          .
We have agreed to indemnify the several underwriters against
certain liabilities, including liabilities under the Securities
Act of 1933 and applicable Canadian securities laws.
Certain of the underwriters and their respective affiliates
have, from time to time, performed, and may in the future
perform, various financial advisory and investment banking
services for Wendy's and/or us, for which they received or
will receive customary fees and expenses.
115
Table of Contents
LEGAL MATTERS
The validity of the common shares offered hereby will be passed
upon for us by Vorys, Sater, Seymour and Pease LLP, Columbus,
Ohio, and for the underwriters by Sullivan & Cromwell
LLP, New York, New York. Certain matters regarding Canadian law
will be passed upon for us by Lang Michener LLP, and for the
underwriters by Torys LLP. Certain other matters will be passed
upon for us by Akin Gump Strauss Hauer & Feld LLP,
Washington, D.C.
EXPERTS
The consolidated financial statements as of December 28,
2003 and January 2, 2005, and for the years ended
December 29, 2002, December 28, 2003 and
January 2, 2005 included in this prospectus have been so
included in reliance on the report of PricewaterhouseCoopers
LLP, an independent registered public accounting firm, given on
the authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on
Form S-1 under the Securities Act with respect to the
issuance of our common shares being offered hereby. This
prospectus, which forms a part of the registration statement,
does not contain all of the information set forth in the
registration statement. For further information with respect to
us and our common shares, reference is made to the registration
statement. Statements contained in this prospectus as to the
contents of any contract or other document are not necessarily
complete, and, where such contract or other document is an
exhibit to the registration statement, each such statement is
qualified by the provisions in such exhibit, to which reference
is hereby made. We are not currently subject to the
informational requirements of the Exchange Act. As a result of
this offering, we will become subject to the informational
requirements of the Exchange Act and, in accordance therewith,
will file reports and other information with the SEC. The
registration statement, such reports and other information can
be inspected and copied at the Public Reference Room of the SEC
located at 100 F Street, N.E., Washington D.C. 20549. Copies of
such materials, including copies of all or any portion of the
registration statement, can be obtained from the Public
Reference Room of the SEC at prescribed rates. You can call the
SEC at 1-800-SEC-0330 to obtain information on the operation of
the Public Reference Room. Such materials may also be accessed
electronically by means of the SEC's home page on the
Internet (
http://www.sec.gov
).
116
TIM HORTONS INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial
    Statements
Report of
    Independent Registered Public Accounting Firm
F-2
Consolidated
    Statements of Operations for fiscal 2002, 2003 and 2004
F-3
Consolidated
    Balance Sheets at December 28, 2003 and January 2,
    2005
F-4
Consolidated
    Statements of Cash Flows for fiscal 2002, 2003, and 2004
F-5
Consolidated
    Statements of Shareholder's Equity for fiscal 2002, 2003
    and 2004
F-6
Consolidated
    Statements of Comprehensive Income for fiscal 2002, 2003 and
    2004
F-7
Notes to the
    Consolidated Financial Statements
F-8
Interim Condensed Consolidated
    Financial Statements (Unaudited)
Condensed
    Consolidated Statements of Operations for the nine months ended
    September 26, 2004 and October 2, 2005
F-34
Condensed
    Consolidated Balance Sheets at January 2, 2005 and
    October 2, 2005
F-35
Condensed
    Consolidated Statements of Cash Flows for the nine months ended
    September 26, 2004 and October 2, 2005
F-36
Notes to the
    Condensed Consolidated Financial Statements
F-37
Schedule II —
    Valuation and Qualifying Accounts
F-45
EX-23.2: CONSENT OF PRICEWATERHOUSECOOPERS LLP
EX-24.1: POWERS OF ATTORNEY
F-1
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholder of Tim Hortons Inc.:
In our opinion, the accompanying consolidated balance sheets and
the related consolidated statements of operations,
shareholder's equity, comprehensive income and cash flows
present fairly, in all material respects, the financial position
of Tim Hortons Inc. and its subsidiaries at January 2, 2005
and December 28, 2003 and the results of their operations
and their cash flows for each of the years ended January 2,
2005, December 28, 2003, and December 29, 2002 in
conformity with accounting principles generally accepted in the
United States of America. In addition, in our opinion, the
financial statement schedule listed in the accompanying index
presents fairly, in all material respects, the information set
forth therein when read in conjunction with the related
consolidated financial statements. These financial statements
and financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements and financial statement
schedule based on our audits. We conducted our audits of these
statements in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles
used and significant estimates made by management, and
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for
our opinion.
/s/
PricewaterhouseCoopers
LLP
Columbus, Ohio
November 30, 2005
F-2
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Years ended December 29, 2002,
December 28, 2003 and
January 2, 2005
2002
2003
2004
(in thousands,
except number of shares)
Revenues
Sales
$
656,833
$
727,508
$
845,231
Franchise revenues
402,738
444,272
493,035
Total revenues
1,059,571
1,171,780
1,338,266
Costs and expenses
Cost of sales
575,337
636,311
741,198
Operating expenses
191,749
202,314
223,451
General and administrative expenses
71,851
80,394
85,744
Equity income
(5,056
)
(23,057
)
(32,548
)
Other (income) expense, net
(7,623
)
(3,079
)
1,116
Total costs and expenses,
    net
826,258
892,883
1,018,961
Operating income
233,313
278,897
319,305
Interest expense
(5,425
)
(7,022
)
(6,911
)
Interest income
2,871
2,098
2,802
Affiliated interest expense, net
(17,786
)
(11,110
)
(9,410
)
Income before income
    taxes
212,973
262,863
305,786
Income taxes
80,161
106,601
100,735
Net income
$
132,812
$
156,262
$
205,051
Basic earnings per common
    share
$
190
$
223
$
293
Basic shares
700
700
700
See accompanying Notes to the Consolidated Financial Statements.
F-3
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Consolidated Balance Sheets
December 28, 2003 and
January 2, 2005
2003
2004
(in thousands)
Assets
Current assets
Cash and cash equivalents
$
86,151
$
129,301
Accounts receivable, net
92,054
80,889
Notes receivable, net
9,404
8,627
Deferred income taxes
1,644
3,269
Inventories and other
25,786
35,150
Short-term investments
32,210
—
Amounts receivable from Wendy's
138,580
52,192
Notes receivable from Wendy's
59,210
173,747
Advertising fund restricted assets
20,309
21,333
Total current assets
465,348
504,508
Property and equipment,
    net
789,995
909,624
Notes receivable, net
18,151
11,959
Goodwill
—
30,527
Deferred income taxes
7,633
9,151
Intangible assets, net
6,865
5,777
Equity investments
128,207
146,415
Note receivable from
    Wendy's
128,000
128,000
Other assets
2,824
10,908
Total assets
$
1,547,023
$
1,756,869
Liabilities and
    Shareholder's Equity
Current liabilities
Accounts payable
$
69,425
$
94,702
Accrued expenses
Salaries and wages
2,585
4,102
Taxes
61,016
72,214
Other
51,114
55,624
Deferred income taxes
2,567
529
Advertising fund restricted
    liabilities
20,309
21,333
Notes payable to Wendy's
84,167
185,725
Current portion of long-term
    obligations
4,431
4,757
Total current
    liabilities
295,614
438,986
Long-term obligations
Term debt
14,721
18,062
Notes payable to Wendy's
304,488
181,090
Capital leases
48,465
47,689
Total long-term
    obligations
367,674
246,841
Deferred income taxes
15,968
23,325
Other long-term
    liabilities
24,989
26,028
Commitments and
    contingencies
Shareholder's
    equity
Common stock, no stated value per
    share, Authorized: 1,000 shares,
Issued 700 shares
233,707
233,707
Retained earnings
628,575
833,626
Accumulated other comprehensive
    expense:
Cumulative translation adjustments
    and other
(19,504
)
(45,644
)
Total shareholder's
    equity
842,778
1,021,689
Total liabilities and
    shareholder's equity
$
1,547,023
$
1,756,869
See accompanying Notes to the Consolidated Financial Statements.
F-4
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended
December 29, 2002,
December 28, 2003 and
January 2, 2005
2002
2003
2004
(in thousands)
Cash flows from operating
    activities
Net income
$
132,812
$
156,262
$
205,051
Adjustments to reconcile net income
    to net cash provided by operating activities
Depreciation and amortization
49,109
58,801
69,008
Equity income, net of dividends
(2,056
)
(15,557
)
(19,248
)
Deferred income taxes
1,652
32,794
2,049
Gain from sale
(4,966
)
Changes in operating assets and
    liabilities
Accounts and notes receivable
(1,444
)
(28,680
)
18,262
Inventories and other
(1,087
)
(206
)
(8,734
)
Accounts payable and accrued
    expenses
33,061
16,216
40,464
Amounts receivable from (payable
    to) Wendy's
(44,671
)
(50,745
)
86,388
Increase (decrease) in other assets
1,820
(1,049
)
483
Other, net
(17,345
)
(20,648
)
6,848
Net cash provided by operating
    activities
146,885
147,188
400,571
Cash flows from investing
    activities
Capital expenditures
(111,788
)
(131,865
)
(197,810
)
Acquisition of New England
    restaurants
—
—
(60,874
)
Proceeds from sale of cup business
31,486
—
—
Principal payments on notes
    receivable
6,997
4,158
7,770
Investments in joint ventures and
    other investments
(38,718
)
(9,018
)
(1,982
)
Short-term investments
—
(31,924
)
31,924
Short-term (loans to) repayments by
    Wendy's, net
(476,679
)
68,083
(129,518
)
Other investing activities
(8,578
)
(7,475
)
(6,465
)
Net cash used in investing
    activities
(597,280
)
(108,041
)
(356,955
)
Cash flows from financing
    activities
Proceeds from issuance of debt
3,709
3,195
2,812
Short-term debt (repayments to)
    borrowings from
Wendys, net
14,774
(38,064
)
—
Long-term borrowings from
    Wendy's
—
—
54,377
Repayment of long-term borrowings
    from Wendy's
—
—
(52,552
)
Capital contributions from
    Wendy's
443,884
—
—
Principal payments on other
    long-term debt obligations
(2,059
)
(4,487
)
(4,130
)
Net cash provided by (used in)
    financing activities
460,308
(39,356
)
507
Effect of exchange rate changes on
    cash
(364
)
(2,978
)
(973
)
Increase (decrease) in cash and
    cash equivalents
9,549
(3,187
)
43,150
Cash and cash equivalents at
    beginning of period
79,789
89,338
86,151
Cash and cash equivalents at end
    of period
$
89,338
$
86,151
$
129,301
Supplemental disclosures of cash
    flow information:
Interest paid
13,464
25,790
15,424
Income taxes paid
72,382
92,152
92,712
Non-cash investing and financing
    activities:
Capital lease obligations incurred
$
13,051
$
21,921
$
5,381
See also Note 15
See accompanying Notes to the Consolidated Financial Statements.
F-5
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Consolidated Statements of Shareholder's Equity
Years ended
December 29, 2002,
December 28, 2003 and
January 2, 2005
2002
2003
2004
(in thousands, except number of
shares)
Common stock
Balance at beginning of period
$
—
$
443,884
$
233,707
Capital contribution from
    Wendy's
443,884
37,498
—
Acquisition and retirement of
    exchangeable shares
—
(247,675
)
—
Balance at end of period
$
443,884
$
233,707
$
233,707
Retained earnings
Balance at beginning of period
$
339,501
$
472,313
$
628,575
Net income
132,812
156,262
205,051
Balance at end of period
$
472,313
$
628,575
$
833,626
Accumulated other comprehensive
    income (expense)
$
5,760
$
(19,504
)
$
(45,644
)
Shareholder's
    equity
$
921,957
$
842,778
$
1,021,689
Common shares issued and
    outstanding
700
700
700
See accompanying Notes to the Consolidated Financial Statements.
F-6
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
Years ended
December 29, 2002,
December 28, 2003 and
January 2, 2005
2002
2003
2004
(in thousands)
Net income
$
132,812
$
156,262
$
205,051
Other comprehensive income
    (expense)
Translation adjustments and other
318
(25,264
)
(26,140
)
Comprehensive income
$
133,130
$
130,998
$
178,911
See accompanying Notes to the Consolidated Financial Statements.
F-7
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of business
Tim Hortons Inc. (together with its subsidiaries, referred to
herein as the "Company") is a wholly-owned subsidiary
of Wendy's International, Inc. (together with its other
subsidiaries "Wendy's"). The Company anticipates
completing an initial public offering ("IPO") in the
quarter ending April 2, 2006.
The Company's principal business is the operation,
development and franchising of quick-service restaurants serving
high-quality food including hot and cold coffee, baked goods,
sandwiches and soups. As of January 2, 2005 the Company and
its franchisees operated 2,470 restaurants in Canada and
251 units in the United States ("U.S.") under the
name "Tim Hortons".
Fiscal year
The Company's fiscal year ends on the Sunday nearest to
December 31. The 2002 and 2003 fiscal years consisted of
52 weeks, and the 2004 fiscal year consisted of
53 weeks.
Basis of presentation
The functional currency of the Company is the U.S. dollar
primarily because of its historical financial inter-relatedness
with Wendy's. The majority of the Company's
operations, restaurants and cash flows are based in Canada and
the Company is primarily managed in Canadian dollars. As a
result, the reporting currency is the Canadian dollar. The
Consolidated Financial Statements and notes are prepared in
conformity with accounting principles generally accepted in the
United States of America.
The Consolidated Financial Statements include the results and
balances of the Company, its wholly-owned subsidiaries and
certain franchisees consolidated according to Financial
Accounting Standards Board ("FASB") Interpretation No.
("FIN") 46R,
Consolidation of Variable
Interest Entities— an interpretation of ARB 51
(revised December 2003)
. The Company's Consolidated
Financial Statements have been derived from the consolidated
financial statements and accounting records of Wendy's,
principally representing the Hortons Segment in the Wendy's
financial statements, using the historical results of
operations, and historical basis of assets and liabilities of
the business. Management believes the assumptions underlying the
Consolidated Financial Statements are reasonable. However, the
Consolidated Financial Statements included herein may not
necessarily reflect the Company's results of operations,
financial position and cash flows in the future or what its
results of operations, financial position and cash flows would
have been had the Company been a stand-alone company during the
periods presented. Amounts due to and receivable from
Wendy's, including related party debt, are shown separately
on the balance sheets. All significant intercompany accounts and
transactions have been eliminated in consolidation (see also
Note 13 to the Consolidated Financial Statements for
consolidation of the Company's advertising funds).
Investments in unconsolidated affiliates over which the Company
exercises significant influence but is not the primary
beneficiary and does not have control are accounted for using
the equity method. The Company's share of the net income or
loss of these unconsolidated affiliates is included in equity
income, which is included as part of operating income because
investees are operating ventures closely integrated in the
Company's business operations (see also Note 16 to the
Consolidated Financial Statements).
F-8
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements —
(Continued)
Cash and cash equivalents
The Company considers short-term investments with original
maturities of three months or less as cash equivalents.
Accounting estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management to make assumptions and estimates.
These affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues
and expenses during the reporting periods. Estimates and
judgments are inherent in the calculations of royalty and other
franchise-related revenue collections, legal obligations, income
taxes, insurance liabilities, various other commitments and
contingencies, valuations used when assessing potential
impairment of goodwill, other intangibles and fixed assets and
the estimation of the useful lives of fixed assets and other
long-lived assets. While management applies its judgment based
on assumptions believed to be reasonable under the
circumstances, actual results could vary from these assumptions.
It is possible that materially different amounts would be
reported using different assumptions.
In the normal course of business, the Company must make
continuing estimates of potential future legal obligations and
liabilities, which requires the use of management's
judgment on the outcome of various issues. Management may also
use outside legal advice to assist in the estimating process.
However, the ultimate outcome of various legal issues could be
different than management estimates, and adjustments to income
could be required.
Inventories
Inventories, amounting to $27.0 million and
$31.3 million, net of reserves of $1.3 million and
$1.3 million, at December 28, 2003, and
January 2, 2005 respectively, are stated at the lower of
cost (first-in, first-out) or market, and consist primarily of
restaurant food items, new equipment and parts and paper
supplies.
Property and equipment
Depreciation and amortization are recognized using the
straight-line method in amounts adequate to amortize costs over
the following estimated useful lives: buildings, up to
40 years; restaurant and operating equipment, up to
15 years; other equipment, up to 10 years; leasehold
improvements and property under capital leases, the lesser of
the useful life of the asset or the lease term as that term is
defined in Statement of Financial Accounting Standards
("SFAS") No. 13, "Accounting for
Leases," as amended. Interest and other costs associated
with the construction of new restaurants are capitalized. Major
improvements are capitalized, while maintenance and repairs are
expensed when incurred. Long-lived assets are grouped into
operating markets and tested for impairment whenever an event
occurs that indicates an impairment may exist. The Company tests
for impairment using the cash flows of the operating markets.
A significant deterioration in the cash flows of an
operating market or other circumstances may trigger impairment
testing. Gains and losses on the disposition of fixed assets are
classified in other (income) expense, net.
F-9
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements —
(Continued)
Property and equipment, at cost, at each year-end consisted of
the following:
2003
2004
(in thousands)
Land
$
154,174
$
183,521
Buildings
359,802
443,736
Leasehold improvements
262,617
271,738
Restaurant equipment
92,980
100,428
Capital leases
76,938
81,247
Computer hardware and software
40,380
44,334
Vehicles
18,073
18,194
Other
16,423
33,497
Construction in progress
22,005
38,683
1,043,392
1,215,378
Accumulated depreciation and
    amortization
(253,397
)
(305,754
)
$
789,995
$
909,624
The Company capitalizes certain internally developed software
costs, which are amortized over a period of up to 10 years.
At December 28, 2003 and January 2, 2005, capitalized
software development costs, net of accumulated amortization,
amounted to $16.2 million and $22.8 million,
respectively.
Leases
For operating leases, minimum lease payments, including minimum
scheduled rent increases, are recognized as rent expense on a
straight line basis over the lease term as that term is defined
in SFAS No. 13, as amended, including any option
periods considered in the lease term and any periods during
which the Company has use of the property but is not charged
rent by a landlord ("rent holiday"). Contingent
rentals are generally based on either a percentage of restaurant
sales or as a percentage of restaurant sales in excess of
stipulated amounts, and thus are not included in minimum lease
payments but are included in rent expense when incurred. Rent is
capitalized during the construction of a restaurant. Leasehold
improvement incentives paid to the Company by a landlord are
recorded as a liability and amortized as a reduction of rent
expense over the lease term. No individual lease is material to
the Company.
When determining the lease term for purposes of recording
depreciation and rent or for evaluating whether a lease is
capital or operating, the Company includes option periods for
which failure to renew the lease imposes an economic penalty on
the Company of such an amount that a renewal appears, at the
inception of the lease, to be reasonably assured. For example,
such an economic penalty would exist if the Company were to
choose not to exercise an option on leased land upon which the
Company had constructed a restaurant and, as a result, the
Company would lose the ability to use the restaurant.
In the case of property that is leased or sub-leased by the
Company to franchisees, minimum lease receipts are recorded as
rent revenue on a straight-line basis. Contingent rent revenue
is generally based on a percentage of franchisee restaurant
sales and is recorded as earned.
F-10
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements —
(Continued)
'
Goodwill and other intangibles
Goodwill is the excess of the cost of an acquired entity over
the fair value of acquired net assets. For purposes of testing
goodwill for impairment, the Company has determined that its
reporting units are Canada and the U.S. Each constitutes a
business and has discrete financial information available which
is regularly reviewed by management. The Company tests goodwill
for impairment at least annually by comparing the reporting unit
fair value, using discounted cash flows, to the carrying value
to determine if there is an indication that a potential
impairment may exist. Intangibles separate from goodwill are
amortized on a straight-line basis over periods of up to
12 years. Lives are generally related to legal or
contractual lives, but in some cases must be estimated by
management based on specific circumstances. The Company tests
intangible assets for impairment whenever events or
circumstances indicate that an impairment may exist.
Notes receivable
Notes receivable arise primarily from the sale of certain
product and equipment to franchisees as well as agreements by
the Company, under certain circumstances, to a structured
repayment plan for certain franchise fees and past due
franchisee obligations. Most of these notes are generally
non-interest bearing and are payable in full at the end of
thirty months. The need for a reserve for uncollectible amounts
is reviewed on a specific franchisee basis using information
available to the Company, including past due balances and the
financial strength of the franchisee. Uncollectible amounts for
both principal and interest are provided for as those amounts
are identified and were $0.7 million and $0.5 million
at December 28, 2003 and January 2, 2005,
respectively. The carrying amount of notes receivable
approximates fair value.
Other accrued expenses
Included within other accrued expenses is $17.6 million and
$21.5 million related to gift certificates at
December 28, 2003 and January 2, 2005, respectively.
Revenue recognition
The Company operates warehouses in Canada to distribute coffee
and other dry goods to an extensive franchise system. Revenues
from warehouse sales are recorded when the product is delivered
to the franchisee. Franchise revenues consist of royalties,
rents and various franchise fees. Normally all revenue is
collected within a month after a period ends. The timing of
revenue recognition for both sales and franchise revenues does
not involve significant contingencies and judgments other than
providing adequate reserves against collections of
franchise-related revenues. Also, see discussion of
"Franchise operations" below for further information
regarding franchise revenues.
Franchise operations
The Company is predominately franchised. The Company grants
franchises to independent operators who in turn pay franchise
fees and other payments, which may include equipment, royalties
and, in some cases, rents for each restaurant opened. Franchise
fees and equipment sales generally are recorded as income when
each restaurant commences operations. Royalties, based upon a
percent of monthly sales, are recognized as income on the
accrual basis. The Company has
F-11
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements —
(Continued)
established reserves related to the collection of franchise
royalties and other franchise-related receivables and
commitments (see Note 11 to the Consolidated Financial
Statements).
The Company generally controls, either through ownership or by
renting, a significant majority of the real estate on which the
Company's restaurants are located and leases the real
estate to its franchisees. Rental income is recorded on the
accrual basis, generally based upon a percent of monthly sales.
Rental income included in franchise revenues is shown in
Note 5 to the Consolidated Financial Statements.
Franchise owners receive assistance in such areas as real estate
site selection, construction consulting, purchasing and
marketing from company personnel. These franchise expenses are
included in operating costs. Revenues from the sale of equipment
related to establishing a franchisee's business are
included in franchise revenues.
Variable interest entities
The Company enters into flexible lease arrangements with certain
franchisees who are not required to invest a significant amount
of equity. Because the legal entity within which such a
franchise operates is considered to not be adequately
capitalized, that entity is considered a variable interest
entity ("VIE"). Based on review of the financial
statements it receives from these franchisees, the mathematical
projections performed by the Company indicate the Company is the
primary beneficiary, as that term is defined by FIN 46R, of
these VIEs and, accordingly, the Company has consolidated
approximately 80 franchised restaurants as of 2004, or
approximately 3% of the Company's total franchise
restaurants and systemwide restaurants. The related minority
interest is classified in other (income) expense, net on the
statement of income and other long-term liabilities on the
balance sheet and is not material.
The Company has no equity interest in any of its franchisees and
has no "off-balance sheet" exposures relative to any
of its franchisees as that term is described by the Securities
and Exchange Commission. None of the Company's assets
serves as collateral for the consolidated franchisees and
creditors of these franchisees have no recourse to the Company.
The only exposure to the Company related to these VIEs relates
to the collection of amounts due to the Company, which are
collected weekly and which were recorded net of uncollectible
amounts in the Company's financial statements prior to the
adoption of FIN 46R. The agreements governing the lease
arrangements can be cancelled by either the franchisee or the
Company with 30 days notice, further reducing potential
exposure to the Company.
Franchisee VIEs for which the Company is determined to be the
primary beneficiary have no impact on net income reported by the
Company. The impact of consolidating these VIEs to the
Company's balance sheet is also not significant. There is a
small percentage of franchise restaurants considered to be VIEs
for which the Company holds a significant variable interest, but
for which the Company is not the primary beneficiary. The
Company's maximum exposure to loss as a result of its
involvement with this small percentage of franchise restaurants
is also not material.
Advertising costs
The Company expenses advertising costs as incurred with the
exception of media development costs that are expensed beginning
in the month that the advertisement is first communicated (see
Note 13 to the Consolidated Financial Statements).
F-12
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements —
(Continued)
Foreign operations
Assets and liabilities from the U.S. operations and certain
legal entities have a U.S. dollar functional currency and
are translated at the year-end Canadian dollar exchange rates
and U.S. revenues and expenses are translated at average
Canadian dollar exchange rates for the period. Resulting
translation adjustments are recorded as a component of
shareholder's equity and in other comprehensive income.
Total translation adjustments included in accumulated other
comprehensive income (expense) at December 28, 2003
and January 2, 2005 were $(17.3) million and
$(47.6) million, respectively. Total transaction gains
(losses) included in other expense, net, were
$(0.4) million, $3.8 million and $1.4 million for
2002, 2003 and 2004, respectively. The functional currency of
each of the Company's subsidiaries and legal entities is
the local currency in which each subsidiary operates, which is
either the Canadian or the U.S. dollar.
Derivative instruments
In 2003 and 2004, the Company entered into forward currency
contracts that reduce the Company's cash flow exposure to
changes in the U.S. and Canada exchange rates. In addition,
Wendy's corporate treasury has entered into forward
currency contracts for the benefit of the Company. Forward
currency contracts entered into by the Company and by
Wendy's for the benefit of the Company to sell Canadian
dollars and buy U.S. dollars of $77.3 million and
$38.8 million were outstanding as of December 28, 2003
and January 2, 2005, respectively, to hedge inter-company
payments and purchases from third parties. The contracts
outstanding at December 28, 2003 and January 2, 2005
matured at various dates through January 2005 and June 2005,
respectively, and are considered to be highly effective cash
flow hedges according to criteria specified in
SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". Accordingly, the
Company defers unrealized gains and losses arising from these
contracts until the impact of the related transactions occur.
The fair value unrealized losses on the contracts as of
December 28, 2003 and January 2, 2005 of
$5.5 million and $6.0 million, respectively, are based
on quoted market prices and offset the impact of the underlying
transactions. See also Note 17 to the Consolidated
Financial Statements for other derivatives entered into in 2005.
Net income per share
Basic earnings per common share are computed by dividing net
income available to common shareholders by the weighted average
number of common shares outstanding. No potentially dilutive
options or shares have been issued.
Stock options and other equity-based compensation
Certain employees of the Company participate in the stock option
plans of Wendy's which provide stock options to acquire
common shares of Wendy's. Grants of options to employees
and the periods during which such options can be exercised are
at the discretion of the Compensation Committee of the
Wendy's Board of Directors. All options expire at the end
of the exercise period. Wendy's uses the intrinsic value
method to account for stock-based compensation grants as defined
in Accounting Principles Board ("APB") Opinion
No. 25, "Accounting for Stock Issued to
Employees." The Company uses APB Opinion No. 25 to
account for stock compensation expense as allowed for a
subsidiary under FIN 44. Options are granted with exercise
prices equal to the fair market value of the Wendy's common
shares on the date of grant, and, accordingly, no amounts
applicable at the date of grant are charged to net income. The
Company recognizes options in the
F-13
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements —
(Continued)
financial statements as expense when the original terms of
certain options are modified requiring a new measurement date.
The pro forma disclosures below are provided as if the Company
adopted the cost recognition requirements under
SFAS No. 123 — "Accounting for
Stock-Based Compensation", as amended by
SFAS No. 148. The fair value of each option granted is
estimated on the date of grant using the Black-Scholes
option-pricing model. This model requires the use of subjective
assumptions that can materially affect fair value estimates, and
therefore, this model does not necessarily provide a reliable
single measure of the fair value of Wendy's stock options.
In calculating the fair value of options issued, the underlying
characteristics of grants made under the Wendy's WeShare
Plan and the 1990 Plan are unique enough to warrant using
different assumptions for these calculations because the
different employee groups exhibit different exercise patterns
(see Note 8 to the Consolidated Financial Statements for a
description of these plans).
In calculating the fair value of options issued to Company
employees that received grants under the Wendy's WeShare
Plan in 2002 and 2003 and under the 2003 Plan in 2004, the
following assumptions were used for the years indicated:
Assumption
2002
2003
2004
Dividend yield
0.8%
0.8%
1.2%
Expected volatility
32.0%
30.0%
27.0%
Risk-free interest rate
3.8%
2.1%
2.8%
Expected lives
2.7 years
2.7 years
3.1 years
Per share weighted average fair
    value of options granted (expressed in U.S. dollars)
$8.93
$5.10
$8.22
In calculating the fair value of options issued to Company
employees under the Wendy's 1990 Plan for key employees,
the following assumptions were used for the years indicated:
Assumption
2002
2003
2004
Dividend yield
0.8%
0.8%
1.2%
Expected volatility
33.0%
34.0%
31.0%
Weighted average risk-free interest
    rate
4.7%
3.0%
3.5%
Expected lives
4.9 years
4.9 years
4.9 years
Per share weighted average fair
    value of options granted (expressed in U.S. dollars)
$12.87
$8.88
$11.89
F-14
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements —
(Continued)
Had compensation expense been recognized for stock-based
compensation plans in accordance with provisions of
SFAS No. 123, as amended by SFAS No. 148,
the Company would have recorded net income and earnings per
share as follows:
2002
2003
2004
(in thousands)
Net income, as reported
$
132,812
$
156,262
$
205,051
Add: Stock compensation cost
    recorded under APB Opinion No. 25, net of tax
—
398
—
Deduct: Stock compensation cost
    calculated under SFAS No. 123, net of tax
(6,166
)
(6,480
)
(6,739
)
Pro forma net income
$
126,646
$
150,180
$
198,312
Earnings per share:
Basic as reported
$
190
$
223
$
293
Basic pro forma
$
181
$
215
$
283
The above stock compensation cost calculated under
SFAS No. 123, net of tax, is based on costs generally
computed over the vesting period of the award.
SFAS No. 123R requires compensation cost for
stock-based compensation awards to be recognized immediately for
new awards granted to retirement eligible employees and over the
period from the grant date to the date retirement eligibility is
achieved, if that period is shorter than the normal vesting
period.
If the guidance on recognition of stock compensation expense for
retirement eligible employees were applied to the periods
reflected in the financial statements, the impact on the
Company's pro-forma net income would have been a reduction
of $4.3 million, $0.7 million and $0.1 million
for the years ended December 29, 2002, December 28,
2003 and January 2, 2005, respectively.
The impact of applying SFAS No. 123 in this pro-forma
disclosure is not necessarily indicative of future results.
NOTE 2
EXPENSE ALLOCATIONS
The consolidated statements of operations and balance sheets
include certain amounts related to Wendy's, including:
General Corporate Expenses
General corporate expense allocations represent costs related to
corporate functions such as executive oversight, risk
management, information technology, accounting, legal, investor
relations, human resources, tax, other services and employee
benefits and incentives Wendy's provides to the Company.
The allocations are primarily based on specific identification
and the relative percentage of the Company's revenues and
headcount to the respective total Wendy's costs.
Substantially all of these allocations are reflected in general
and administrative expenses in the Company's consolidated
statements of operations and totalled $12.7 million,
$12.9 million and $13.3 million on a pre-tax basis for
2002, 2003 and 2004, respectively.
The Company and Wendy's considered these general corporate
expense allocations to be a reasonable reflection of the
utilization of services provided. The allocations may not,
however, reflect the expense the Company would have incurred as
a stand-alone company.
F-15
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements —
(Continued)
Interest Expense
Affiliated interest expense, net in the consolidated statements
of operations reflects interest costs related to specific net
borrowings by the Company, in the form of promissory notes, from
Wendy's. Notes receivable from and payable to Wendy's
are shown on the Company's consolidated balance sheets. No
amount is included in affiliated interest expense, net for other
amounts receivable from and payable to Wendy's which were
not in the form of a promissory note and for which no interest
rate was specified. Also, Wendy's has not allocated a
portion of its external debt interest cost to the Company. As a
result, net interest expense recorded by the Company does not
reflect the expense the Company would have incurred as a
stand-alone company.
Amounts Receivable from and Payable to Wendy's
Wendy's uses primarily a worldwide centralized approach to
cash management and the financing of its operations with all
related activity between the Company and Wendy's reflected
as amounts receivable from Wendy's and notes payable and
receivable from Wendy's in the Company's consolidated
balance sheets. Types of transactions between the Company and
Wendy's include (1) cash from the Company's
U.S. operations which are transferred to Wendy's bank
account on a regular basis, (2) net cash borrowings from
Wendy's used to fund operations, capital expenditures,
acquisitions and for other purposes, (3) payment of related
party dividends and interest to Wendy's on a regular basis,
and (4) allocations of corporate expenses identified above.
Under the terms of the shared services agreement with
Wendy's, the amounts receivable from Wendy's and notes
receivable from and payable to Wendy's are expected to be
contributed to the Company by Wendy's or distributed by the
Company to Wendy's in 2005, forming a part of the
continuing equity of the Company.
F-16
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements —
(Continued)
NOTE 3
GOODWILL AND OTHER INTANGIBLE ASSETS
The table below presents amortizable and unamortizable
intangible assets as of December 28, 2003 and
January 2, 2005:
Gross
Net
Carrying
Accumulated
Carrying
Amount
Amortization
Amount
(In thousands)
2003
Amortizable intangible assets:
Trademarks
$
6,456
$
(1,159
)
$
5,297
Other
2,787
(1,219
)
1,568
$
9,243
$
(2,378
)
$
6,865
Unamortizable intangible assets:
Goodwill
$
—
2004
Amortizable intangible assets:
Trademarks
$
6,455
$
(1,696
)
$
4,759
Other
2,784
(1,766
)
1,018
$
9,239
$
(3,462
)
$
5,777
Unamortizable intangible assets:
Goodwill
$
30,527
Included in Other above are $1.6 million and
$1.0 million in 2003 and 2004, respectively, in intangible
assets, net of accumulated amortization of $1.2 million and
$1.7 million, related to the use of the name and likeness
of Ronald V. Joyce, a former director of the Company. The name
and likeness are being amortized over a period of 5 years.
Total intangibles amortization expense was $1.1 million for
each of the years-ended December 28, 2003 and
January 2, 2005. The estimated annual intangibles
amortization expense for 2005 and 2006 is approximately
$1.0 million and for the years 2007 through 2009 is
approximately $0.5 million.
The changes in the carrying amount of goodwill for the year
ended 2003, are as follows:
Canada
U.S.
(In thousands)
Balance as of December 29, 2002
$
660
$
43
Goodwill related to dispositions
(660
)
(43
)
Balance as of December 28, 2003
$
—
$
—
F-17
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements —
(Continued)
The changes in the carrying amount of goodwill for the year
ended 2004 are as follows:
Canada
U.S.
(In thousands)
Balance as of December 28, 2003
$
—
$
—
Goodwill recorded in connection
    with acquisitions
—
34,984
Translation adjustments
—
(4,457
)
Balance as of January 2, 2005
$
—
$
30,527
NOTE 4
TERM DEBT
Since 1995 the Company has been a wholly-owned subsidiary of
Wendy's. Accordingly, the Company did not seek significant
external financing as it was funded primarily by Wendy's.
Notes payable to and receivable from Wendy's are described
in Note 15 to the Consolidated Financial Statements.
Excluding amounts owed to Wendy's, the Company's total
debt at December 28, 2003 and January 2, 2005 was
$14.8 million and $18.3 million, respectively. All of
the Company's debt at December 28, 2003 and
$17.5 million of the Company's debt at January 2,
2005 was recorded in accordance with EITF 97-10, The Effect
of Lessee Involvement in Asset Construction. Under
EITF 97-10, the Company is considered the owner of certain
restaurants leased by the Company from an unrelated lessor
because the Company helped to construct some of the structural
elements of those restaurants. Accordingly, the Company has
included the restaurant construction costs for these restaurants
in fixed assets and recorded the lessor's contributions to
the construction costs for these certain restaurants as debt.
The average imputed interest rate for the debt recorded in
accordance with EITF 97-10 is approximately 17%. In
addition to debt recorded in accordance with EITF 97-10,
the Company had debt at January 2, 2005 of
$0.8 million. Based on cash flows and market interest
rates, the estimated fair value of the Company's recorded
debt, excluding amounts owed to Wendy's, was approximately
$42 million and $48 million at December 28, 2003
and January 2, 2005, respectively.
Future maturities for the Company's recorded debt,
excluding notes payable to Wendy's and certain Wendy's
subsidiaries, at January 2, 2005 are as follows:
(In thousands)
2005
$
283
2006
198
2007
267
2008
338
2009
383
Later years
16,876
Total
18,345
Current portion
(283
)
$
18,062
At January 2, 2005, the Company had a revolving credit
facility of $25.0 million, all of which was unused at
January 2, 2005.
F-18
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements —
(Continued)
NOTE 5
LEASES
The Company occupies land and buildings and uses equipment under
terms of numerous lease agreements expiring on various dates
through 2043 (except for two leases that expire in 2086 and
2100). Terms of land and building leases are generally equal to
the initial lease period of 10 to 20 years while 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 to pay the cost of
maintenance, insurance and property taxes.
Assets leased under capital leases, excluding leasehold
improvements, consisted of the following:
2003
2004
(In thousands)
Buildings
$
68,244
$
77,156
Other
8,694
4,091
Accumulated depreciation
(27,194
)
(22,197
)
$
49,744
$
59,050
At January 2, 2005, future minimum lease payments for all
leases, and the present value of the net minimum lease payments
for capital leases, were as follows:
Capital Leases
Operating Leases
(In thousands)
2005
$
9,097
$
52,406
2006
10,234
46,537
2007
6,623
47,915
2008
6,468
44,696
2009
6,283
41,310
Later years
49,813
326,023
Total minimum lease payments
88,518
$
558,887
Amount representing interest
(36,355
)
Present value of net minimum lease
    payments
52,163
Current portion
(4,474
)
$
47,689
Total minimum lease payments have not been reduced by minimum
sublease rentals of $69.9 million under capital leases, and
$453.1 million under operating leases due in the future
under non-cancelable subleases.
Rent expense for each year is included in operating expenses and
amounted to:
2002
2003
2004
(In thousands)
Minimum rents
$
45,185
$
47,962
$
52,859
Contingent rents
16,666
19,898
24,090
$
61,851
$
67,860
$
76,949
F-19
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements —
(Continued)
In connection with the franchising of certain restaurants, the
Company has leased or subleased land, buildings and equipment to
the related franchise owners. Most leases provide for fixed
payments with contingent rent when sales exceed certain levels,
while others provide for monthly rentals based on a percentage
of sales. Lease terms are generally 10 years with one or
more five-year renewal options. The franchise owners bear the
cost of maintenance, insurance and property taxes.
At each year-end, company assets leased under operating leases,
including leasehold improvements under operating and capital
leases, consisted of the following:
2003
2004
(In thousands)
Land
$
136,742
$
145,413
Buildings
651,976
708,427
Equipment
75,092
69,196
863,810
923,036
Accumulated depreciation
(189,041
)
(226,978
)
$
674,769
$
696,058
At January 2, 2005, future minimum lease receipts were as
follows:
Operating Leases
(In thousands)
2005
$
144,694
2006
134,937
2007
124,358
2008
111,628
2009
95,745
Later years
215,559
$
826,921
Rental income for each period is included in franchise revenues
and amounted to:
2002
2003
2004
(In thousands)
Minimum rents
$
100,629
$
116,004
$
136,268
Contingent rents
137,976
157,203
180,399
$
238,605
$
273,207
$
316,667
F-20
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements —
(Continued)
NOTE 6
INCOME TAXES
The Company's income tax provision and related deferred
income tax amounts are determined as if the Company filed tax
returns on a stand alone basis. The Company's
U.S. entities currently join in the filing of a
consolidated U.S. tax return with Wendy's and its
other U.S. subsidiaries. The provision for income taxes
each period consisted of the following:
2002
2003
2004
(In thousands)
Current
U.S. Federal
$
(4,330
)
$
(1,207
)
$
(6,482
)
U.S. State and local
(206
)
(173
)
266
Canadian
83,045
75,187
104,902
78,509
73,807
98,686
Deferred
U.S. Federal
8,063
25,278
1,642
U.S. State and local
112
668
247
Canadian
(6,523
)
6,848
160
1,652
32,794
2,049
$
80,161
$
106,601
$
100,735
The effective income tax rate for 2002 was 37.6% compared to
40.6% for 2003 and 32.9% for 2004. The rate was higher in 2003
compared to 2002 primarily due to the increase to the valuation
allowance for deferred taxes associated with foreign tax credits
that occurred in 2003. The rate was lower in 2004 as a result of
the reduction in Canadian tax rates and the non-recurrence of
the aforementioned change to the valuation allowance.
The provision for Canadian taxes includes withholding taxes.
Income before income taxes for Canadian operations was
$204.6 million, $226.8 million and $266.3 million
for the years ended 2002, 2003 and 2004, respectively.
The temporary differences which give rise to deferred tax assets
and liabilities at each year-end consisted of the following:
2003
2004
(In thousands)
Deferred tax assets
Lease transactions
$
1,347
$
1,587
Canadian operations
9,277
12,406
Foreign tax credit carryforwards
26,012
33,304
All other
46
20
36,682
47,317
Valuation allowance
(26,012
)
(33,304
)
$
10,670
$
14,013
F-21
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements —
(Continued)
2003
2004
(In thousands)
Deferred tax liabilities
Lease transactions
$
25
$
116
Property and equipment basis
    differences
10,234
13,349
Intangible assets basis differences
—
1,791
Canadian operations
7,493
10,191
All other
2,176
—
$
19,928
$
25,447
A deferred tax asset has been established for foreign tax credit
carryforwards. A portion of the credits previously scheduled to
expire in 2006 will now expire in 2011 as a result of the
American Jobs Creation Act of 2004. The balance of the credits
expire in 2014. A valuation allowance in the amount of
$33.3 million has been established as a result of
management's determination that it is more likely than not
that these foreign tax credit carryforwards will not be realized.
A reconciliation of the statutory U.S. federal income tax
rate of 35% to the Company's effective tax rate for each
year is shown below:
2002
2003
2004
(In thousands)
Income taxes at statutory rate
$
74,541
$
92,002
$
107,059
Taxes on non-U.S. earnings,
    net of related tax credits
4,398
14,473
(6,964
)
State and local taxes, net of
    federal benefit
(61
)
321
352
Other
1,283
(195
)
288
Income taxes at effective rate
$
80,161
$
106,601
$
100,735
The determination of annual income tax expense takes into
consideration amounts which may be needed to cover exposures for
open tax years. The Internal Revenue Service is currently
conducting an examination of the Wendy's federal income tax
returns for the years 2001 through 2004. The Canada Revenue
Agency is currently conducting an examination of various
Canadian subsidiaries of the Company for the years 1999 and
2000. The Company does not expect any material impact on
earnings to result from the resolution of matters related to
open tax years; however, actual settlements may differ from
amounts accrued.
U.S. income taxes and foreign withholding taxes are not
provided on undistributed earnings of foreign subsidiaries which
are considered to be indefinitely reinvested in the operations
of such subsidiaries. The amount of these earnings was
approximately $45.4 million at January 2, 2005. The
Company has provided deferred taxes at January 2, 2005 on
$132.2 million of unremitted earnings, which are not
considered to be indefinitely reinvested. The additional taxes
payable on earnings considered indefinitely reinvested would
approximate $2.3 million, consisting primarily of
additional foreign withholding taxes.
NOTE 7
CAPITAL STOCK
The Company has issued and outstanding 700 shares of common
stock with one vote per share. All of the Company's common
shares are held by Wendy's.
F-22
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements —
(Continued)
On December 29, 1995, Wendy's acquired, in a
transaction accounted for as a pooling of interests, all of the
stock of 1052106 Ontario Limited, formerly 632687 Alberta
Ltd., the parent company of the Tim Hortons restaurant chain,
for 16.45 million shares of a Canadian subsidiary of the
Company exchangeable for 16.45 million common shares of
Wendy's International, Inc. Mr. Ronald V. Joyce, a
former director of Wendy's, held all of the exchangeable
shares. The Company purchased and retired 1.0 million
exchangeable shares from Mr. Joyce for $21.21 per
share in 1998 and 9.7 million exchangeable shares for
$25.75 per share in 2001. On December 19, 2002,
Mr. Joyce transferred, with Wendy's consent, all of
the remaining 5.7 million exchangeable shares to an entity
that was wholly-owned by him. On January 2, 2003, the
5.7 million exchangeable shares were exchanged into common
shares of Wendy's and the exchangeable shares were retired.
In 2002, the Company received capital contributions in the form
of cash from Wendy's totaling $443.9 million. In 2003,
the Company received an additional capital contribution from
Wendy's in the form of Wendy's shares totaling
$37.5 million. Also in 2003, Wendy's settled certain
debt obligations to the Company in exchange for an equivalent
value of Wendy's shares. The total Wendy's shares
received as a capital contribution and in settlement of debt
totalled 5.7 million shares, were valued at
$247.7 million and were used in the above 5.7 million
share exchange.
NOTE 8
STOCK COMPENSATION
Certain employees of the Company participate in various stock
option plans of Wendy's to acquire Wendy's common
stock. The following is a description of the Wendy's plans
and tables summarizing stock option activity, outstanding
options and exercisable options for the Company's employees.
On August 2, 1990, the Wendy's Board of Directors
adopted the WeShare Stock Option Plan ("WeShare
Plan"), a non-qualified stock option plan that provided for
grants of options equal to 10 percent of each eligible
employee's earnings, with a minimum of 20 options to be
granted to each eligible employee annually. Beginning in 2002,
options equal to 8 to 12 percent of each eligible
employee's earnings could be granted under the WeShare
Plan. The percentage of each eligible employee's earnings
was determined by Wendy's annual performance as measured by
earnings per share growth and Wendy's three-year average
total shareholder return relative to the Standard &
Poor's 500 Index.
On both April 29, 2002 and April 23, 2003,
approximately 0.1 million options were granted under the
WeShare Plan to eligible Company employees at an exercise price
of US$37.87 per share and US$27.99 per share,
respectively. No options were awarded under the WeShare Plan
in 2004.
On August 2, 1990, the Wendy's Board of Directors
adopted the 1990 Stock Option Plan ("1990 Plan").
A total of 0.7 million, 0.5 million and
0.5 million options were granted to the Company's
employees under the 1990 Plan in 2002, 2003 and 2004,
respectively. These options were primarily granted on
April 29, 2002, April 23, 2003 and April 22,
2004, at an exercise price of US$37.87 per share,
US$27.99 per share and US$40.62 per share,
respectively.
Both the WeShare Plan and 1990 Plan options have a term of
10 years from the grant date and become exercisable in
installments of 25 percent on each of the first four
anniversaries of the grant date.
On April 22, 2004, Wendy's shareholders approved the
2003 Stock Incentive Plan ("2003 Plan"). The 2003
Plan provides for equity compensation awards in the form of
stock options, restricted stock, stock units, stock appreciation
rights, dividend equivalent rights, performance awards
F-23
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements —
(Continued)
and share awards (collectively, "Awards") to eligible
employees and Directors of the Company or its subsidiaries.
A total of 0.1 million options were granted to the
Company's employees under the 2003 Plan during 2004. These
options were primarily granted on April 22, 2004 at an
exercise price of US$40.62.
The following is a summary of stock option activity for the
Company's employees for the last three years:
Wendy's Shares
Weighted Average
Under Option
Price Per Share
(Shares in thousands)
(in U.S. Dollars)
Balance at December 30, 2001
1,805
$
24.39
Granted
769
37.54
Exercised
(280
)
22.02
Canceled
(27
)
25.83
Balance at December 29, 2002
2,267
29.08
Granted
622
28.01
Exercised
(488
)
24.28
Canceled
(63
)
30.45
Balance at December 28, 2003
2,338
29.80
Granted
597
40.55
Exercised
(121
)
23.40
Canceled
(79
)
32.64
Balance at January 2, 2005
2,735
$
32.35
Options exercisable to purchase Wendy's common shares
totalled 0.8 million, 0.8 million and 1.2 million
at December 29, 2002, December 28, 2003 and
January 2, 2005, respectively.
The following tables summarize stock options for Wendy's
shares held by the Company's employees which were
outstanding and exercisable at January 2, 2005:
Options Outstanding
Shares Under
Weighted Average
Options
Remaining
Weighted Average
Range of Exercise Prices
Outstanding
Contractual Life
Exercise Price
(In U.S. dollars)
(in thousands)
(in years)
(in U.S. Dollars)
$17.38 - $23.03
257
4.7
$
19.65
$23.04 -  28.58
998
7.3
27.48
$28.59 -  34.36
238
5.0
30.97
$34.37 -  40.62
1,242
8.4
39.15
$17.38 - $40.62
2,735
7.4
$
32.35
F-24
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements —
(Continued)
Options Exercisable
Options
Weighted Average
Exercisable
Exercise Price
(Shares in
(in U.S. dollars)
(Range of Exercise Prices In U.S. dollars)
thousands)
$17.38 - $23.03
257
$
19.65
$23.04 -  28.58
444
27.17
$28.59 -  34.36
222
30.90
$34.37 -  40.62
323
37.87
$17.38 - $40.62
1,246
$
29.05
NOTE 9
ACQUISITIONS AND INVESTMENTS
On May 5, 2004, the Company completed its purchase of
certain real and personal assets of Bess Eaton Donut
Flour Co., Inc. and Louis A. Gencarelli, Sr. for
$60.9 million. The assets relate to 42 coffee and
donut restaurants formerly operated under the Bess Eaton name
throughout Rhode Island, Connecticut and Massachusetts. The
sites have been converted and are operating as Tim Hortons
restaurants. The Company recorded $35.0 million of goodwill
related to this acquisition.
In 2001, the Company formed a joint venture between the Company
and IAWS to build a par-baked goods manufacturing facility in
Canada. The joint venture is owned and jointly-controlled on a
fifty-fifty basis by the Company and IAWS Group plc and supplies
the Company's entire restaurant system with par-baked
donuts. The Company has committed to invest approximately
$87 million in this joint venture, of which approximately
$73 million has been invested as of January 2, 2005.
At December 28, 2003 and January 2, 2005, the
Company's investment in this joint venture was
$74.7 million and $89.1 million, respectively, which
includes amounts invested and equity earnings less distributions.
NOTE 10
DISPOSITIONS
In 2002, the Company sold its cup manufacturing business to
Dopaco. The sale, which closed in July 2002, resulted from a
strategic business review by the Company's management team.
The sale generated approximately $31 million in cash and a
one-time pretax gain of $5.0 million for the Company. Under
a supply agreement with Dopaco, the Company has agreed to
purchase a minimum of 50% of its cup and lid supplies from
Dopaco, at independently-derived competitive prices, over the
period from July 15, 2002 through July 15, 2007.
NOTE 11
COMMITMENTS AND CONTINGENCIES
Reserves related to possible losses on accounts receivable,
notes receivable, real estate, guarantees, claims and
contingencies involving franchisees totalled $3.9 million
at December 28, 2003 and $3.1 million at
January 2, 2005. These reserves are included in accounts
receivable, notes receivable and other accrued expenses.
The Company has guaranteed certain leases and debt payments,
primarily related to franchisees, amounting to $1.0 million
and $1.5 million at December 28, 2003 and
January 2, 2005, respectively. In the event of default by a
franchise owner, the Company generally retains the right to
acquire possession of the related restaurants. At
December 28, 2003 and January 2, 2005, the Company is
also the guarantor on $3.9 million and $5.0 million,
respectively, in letters of credit with
F-25
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements —
(Continued)
various parties, however, management does not expect any
material loss to result from these instruments because it does
not believe performance will be required. The length of the
lease, loan and other arrangements guaranteed by the Company or
for which the Company is contingently liable varies, but
generally does not exceed nine years.
The Company participates in the Wendy's self-insurance
programs for most U.S. workers' compensation, general
liability and automotive liability losses subject to per
occurrence and aggregate annual liability limitations. The
Company also participates in the Wendy's self-insurance
programs for health care claims for eligible participating
employees subject to certain deductibles and limitations. The
Company is allocated cost from Wendy's to participate in
these programs on a per head count basis.
The Company has entered into purchase arrangements with some of
its suppliers for terms which generally do not exceed one year.
The range of prices and volume of purchases under the agreements
may vary according to the Company's demand for the products
and fluctuations in market rates. These agreements help the
Company secure pricing and product availability. The Company
does not believe these agreements expose the Company to
significant risk.
In addition to the guarantees described above, the Company is
party to many agreements executed in the ordinary course of
business that provide for indemnification of third parties,
under specified circumstances, such as lessors of real property
leased by the Company, distributors, service providers for
various types of services (including commercial banking,
investment banking, tax, actuarial and other services), software
licensors, marketing and advertising firms, securities
underwriters and others. Generally, these agreements obligate
the Company to indemnify the third parties only if certain
events occur or claims are made, as these contingent events or
claims are defined in each of these agreements. The Company
believes that the resolution of any claims that might arise in
the future, either individually or in the aggregate, would not
materially affect the earnings or financial condition of the
Company. Effective January 1, 2003, the Company adopted
FIN 45, "Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others." In accordance with FIN 45 and
based on available information, the Company has accrued for
certain guarantees and indemnities as of December 28, 2003
and January 2, 2005 which, in total, are not significant.
The Company and its subsidiaries are parties to various legal
actions and complaints arising in the ordinary course of
business. The Company participates in the Wendy's
self-insurance programs and many of these actions are covered by
either Wendy's self-insurance or other insurance programs.
Reserves related to the resolution of legal proceedings are
included in accrued expenses other. It is the opinion of the
Company that the ultimate resolution of such matters will not
materially affect the Company's financial condition or
earnings.
NOTE 12
RETIREMENT PLANS
Certain Company employees participate in various defined
contribution plans of Wendy's. Costs allocated for Company
employees participating in these plans were approximately
$3.0 million for 2002, $2.0 million for 2003 and
$4.0 million for 2004.
Certain U.S. employees of the Company participate in two
Wendy's-sponsored U.S. domestic defined benefit
pension plans (the "Plans"). Wendy's manages the
Plans on a consolidated basis and makes contributions to the
Plans in amounts sufficient, on an actuarial basis, to fund at a
minimum, its portion of the Plans' normal cost on a current
basis, and to fund its portion of the actuarial liability for
past service costs in accordance with U.S. Department of
Treasury Regulations.
F-26
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements —
(Continued)
Obligations related to vested participants will remain the
responsibility of Wendy's. The Company does not intend to
adopt a new U.S. defined benefit pension plan. Based on a
headcount allocation approach, the Company's pro rata
expense related to the Wendy's Plans was not significant.
NOTE 13
ADVERTISING COSTS
The Company participates in advertising funds established to
collect and administer funds contributed for use in advertising
and promotional programs designed to increase sales and enhance
the reputation of the Company and its franchise owners. Separate
advertising funds are administered for Canada and the
U.S. In accordance with SFAS No. 45,
"Accounting for Franchisee Fee Revenue," the revenue,
expenses and cash flows of the advertising funds are not
included in the Company's consolidated statements of
operations and cash flows because the contributions to these
advertising funds are designated for specific purposes, and the
Company acts as an, in substance, agent with regard to these
contributions. The assets held by these advertising funds are
considered restricted. These restricted assets and related
restricted liabilities are identified on the Company's
balance sheets.
Contributions to the advertising funds are required to be made
from both company operated and franchise restaurants and are
based on a percent of restaurant retail sales. In addition to
the contributions to the various advertising funds, Company and
franchise restaurants make additional contributions for local
and regional advertising programs.
The Company may collect up to 4.0% of restaurant sales from
franchisees and company operated restaurants for contribution to
the advertising funds. The following table summarizes actual
contribution rates to the advertising funds for franchise and
company operated restaurants:
Advertising Fund
Contribution Rate
as of
Year-End
2002
2003
2004
Canada
3.5%
3.5%
3.5%
U.S.
4.0%
4.0%
4.0%
Company contributions to its various advertising funds totalled
$4.2 million, $4.7 million and $3.8 million in
2002, 2003 and 2004, respectively. The total amount spent by the
advertising funds in 2002, 2003 and 2004 amounted to
$100.4 million, $107.7 million and
$119.1 million, respectively.
Total advertising expense of the Company, net of reimbursements
and including amounts contributed to all of the advertising
funds, local advertising costs and other marketing and
advertising expenses, amounted to $4.6 million,
$5.2 million and $5.8 million for 2002, 2003 and 2004,
respectively.
NOTE 14
SEGMENT REPORTING
The Company operates exclusively in the food-service industry
and has determined that its reportable segments are those that
are based on the Company's methods of internal reporting
and management structure. The Company's reportable segments
are Canada and the U.S. There were no material amounts of
revenues or transfers between reportable segments.
F-27
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements —
(Continued)
The table below presents information about reportable segments:
Canada
U.S.
Total
(In thousands)
2002
Revenues
$
946,737
$
112,834
$
1,059,571
% of total
89
%
11
%
100
%
Operating income (loss)
$
256,027
$
(2,827
)
$
253,200
% of total
101
%
(1
%)
100
%
% of revenues
27
%
(3
%)
24
%
Capital expenditures
$
70,515
$
41,273
$
111,788
Total assets
$
828,218
$
241,121
$
1,069,339
2003
Revenues
$
1,079,682
$
92,098
$
1,171,780
% of total
92
%
8
%
100
%
Operating income (loss)
$
292,526
$
(27
)
$
292,499
% of total
100
%
0
%
100
%
% of revenues
27
%
0
%
25
%
Capital expenditures
$
90,478
$
41,387
$
131,865
Total assets
$
973,698
$
241,425
$
1,215,123
2004
Revenues
$
1,218,781
$
119,485
$
1,338,266
% of total
91
%
9
%
100
%
Operating income (loss)
$
344,476
$
(981
)
$
343,495
% of total
100
%
0
%
100
%
% of revenues
28
%
(1
%)
26
%
Capital expenditures
$
132,498
$
65,312
$
197,810
Total assets
$
1,043,950
$
340,331
$
1,384,281
A reconciliation of reportable segment operating income to
consolidated operating income follows:
2002
2003
2004
(In thousands)
Reportable segment operating income
$
253,200
$
292,499
$
343,495
Corporate
    charges
(1)
(19,887
)
(13,602
)
(24,190
)
Consolidated operating income
$
233,313
$
278,897
$
319,305
(1)
Corporate charges include certain overhead costs which are not
    allocated to individual segments.
A reconciliation of total reportable segment assets to
consolidated total assets follows:
2003
2004
(In thousands)
Total assets
$
1,215,123
$
1,384,281
Corporate assets
331,900
372,588
Consolidated total assets
$
1,547,023
$
1,756,869
F-28
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements —
(Continued)
Significant non-cash items included in reportable segment
operating income follows:
Canada
U.S.
Total
(In thousands)
2002
Depreciation and amortization
$
38,526
$
10,583
$
49,109
2003
Depreciation and amortization
$
48,123
$
10,678
$
58,801
2004
Depreciation and amortization
$
56,225
$
12,727
$
68,952
A reconciliation of total reportable segment depreciation and
amortization expense to consolidated depreciation and
amortization expense follows:
2002
2003
2004
(In thousands)
Depreciation and amortization
$
49,109
$
58,801
$
68,952
Corporate charges
—
—
56
Consolidated depreciation and
    amortization expense
$
49,109
$
58,801
$
69,008
Revenues and long-lived asset information by geographic area
follows:
Canada
U.S.
Total
(In thousands)
2002
Revenues
$
946,737
$
112,834
$
1,059,571
Long-lived assets
$
521,979
$
212,349
$
734,328
2003
Revenues
$
1,079,682
$
92,098
$
1,171,780
Long-lived assets
$
581,044
$
208,951
$
789,995
2004
Revenues
$
1,218,781
$
119,485
$
1,338,266
Long-lived assets
$
646,533
$
263,091
$
909,624
NOTE 15
RELATED PARTY
In addition to the functions historically provided by
Wendy's to the Company as described in Note 2 to the
Consolidated Financial Statements, certain Tim Hortons
restaurants are located in sites in which a Wendy's
restaurant is also located (the "Combo Stores"). In
Canada, approximately 100 Combo Stores are controlled by a 50-50
joint venture between the Company and Wendy's. Accordingly,
the joint venture is accounted for using the equity method, and
income from the Company's portion of income from the joint
venture is classified in equity income on the Company's
consolidated statements of operations. In 2003 and 2004 the
Company received distributions from the 50-50 joint venture with
Wendy's of $7.5 million and $7.3 million,
respectively. At December 28, 2003 and January 2,
2005, the Company's investment in this joint venture was
$47.1 million and $50.3 million, respectively (see
also Note 16 to the Consolidated Financial Statements). In
the U.S. the Company controls the approximate 30 Combo
Stores, either through acquisition or lease, and leases the
Wendy's portion of the Combo Store to Wendy's or a
Wendy's franchisee at a rate of 8.5% of the Wendy's
restaurant sales.
F-29
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements —
(Continued)
The Company enters into financing arrangements with Wendy's
that include both borrowings from Wendy's, in the form of
notes payable, and lending of amounts to Wendy's, in the
form of notes receivable. A summary of these notes and related
outstanding balances is shown in the following tables. The notes
contain no significant restrictions on either the Company or
Wendy's related to financial ratios, levels of
indebtedness, asset sales or dispositions, liens or other such
covenants. Also, the notes do not include a prepayment penalty.
Notes payable from the Company to Wendy's are denominated
primarily in U.S. dollars and at each year end consisted of
the following:
2003
2004
(In thousands)
Various notes payable due within
    30 days on demand from Wendy's with an average
    interest rate of 7.0%
$
84,167
$
185,725
7.25% Note due
    December 29, 2005
108,468
—
5.5% Note due October 22,
    2011
196,020
149,303
6.25% Note due
    November 15, 2011
—
31,787
388,655
366,815
Current portion
(84,167
)
(185,725
)
$
304,488
$
181,090
Notes receivable by the Company from Wendy's are
denominated primarily in U.S. dollars and at each year end
consisted of the following:
2003
2004
(In thousands)
Various notes receivable due within
    30 days on demand from the Company with an average interest
    rate of 3.3%
$
59,210
$
173,747
7.25% Note due
    November 30, 2013
128,000
128,000
187,210
301,747
Current portion
(59,210
)
(173,747
)
$
128,000
$
128,000
Notes payable between the Company and Wendy's may be
settled other than in cash. In 2003, Wendy's settled
approximately $210.0 million in notes payable to the
Company in Wendy's shares (see also Note 7 to the
Consolidated Financial Statements). Also, in 2002 approximately
$231.0 million of notes payable by the Company to
Wendy's were settled in exchange for other amounts owed by
Wendy's to the Company.
See also Note 2 to the Consolidated Financial Statements
for a description of other amounts receivable from Wendy's.
Wendy's has provided a guarantee of all of the obligations
under the Company's U.S. franchise agreement and
U.S. state franchise registrations. Wendy's has also
guaranteed payment of the Company's U.S. obligations
that may arise related to the Company's pool loan guarantee
of certain franchisee borrowings. As of January 2, 2005,
the Company's total pool loan guarantee was
$0.6 million.
F-30
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements —
(Continued)
NOTE 16
EQUITY INVESTMENTS
Combined summarized financial information for the Company's
investments accounted for using the equity method is shown
below. These investments almost exclusively are in operating
ventures closely integrated into the Company's operations,
such as the joint venture investments described in Notes 9
and 16 to the Consolidated Financial Statements. These amounts
are in aggregate at 100.0% levels. The net income amounts shown
below include income tax expense (benefit) of
($1.0) million, $5.6 million and $8.3 million for
2002, 2003 and 2004, respectively. Fifty percent of these income
tax amounts are included as part of equity income shown on the
consolidated statement of operations.
2002
2003
2004
(In thousands)
Income Statement
    Information
Revenues
$
50,236
$
148,147
$
198,726
Expenses attributable to revenues
$
(29,751
)
$
(77,788
)
$
(100,959
)
Net Income
$
15,393
$
52,650
$
74,194
2003
2004
(In thousands)
Balance Sheet
    Information
Current assets
$
47,220
$
74,085
Noncurrent assets
$
284,448
$
290,705
Current liabilities
$
30,971
$
21,106
Noncurrent liabilities
$
8,310
$
15,438
Retained earnings
$
115,391
$
177,565
NOTE 17
SUBSEQUENT EVENTS
In September 2005, the Company distributed a note to
Wendy's in the amount of $960.0 million in
U.S. dollars ($1.1 billion in Canadian dollars). As a
result, retained earnings was reduced to zero and the common
stock value was reduced by $99.3 million. The outstanding
principal of the note bears interest at an annual rate of 3.0%.
Both the outstanding principal and accrued interest are due
within 30 days of a demand for payment by Wendy's and
may be prepaid by the Company at any time.
In addition to its foreign currency exposure from ongoing
operations, the Company has identified exposure to Canadian
dollar exchange rates related to certain intercompany
cross-border notes. In connection with the planned IPO of the
Company, the Company determined in the third quarter 2005 that
these intercompany notes are expected to be repaid and,
accordingly, were marked-to-market beginning in the third
quarter 2005. Previously, the translation of these intercompany
notes was recorded into comprehensive income, rather than in the
statement of operations, in accordance with
SFAS No. 52, "Foreign Currency Translation."
To manage this additional exposure, the Company entered into
forward currency contracts to sell $500.0 million Canadian
dollars and buy $427.4 million U.S. dollars. Under
SFAS No. 133, these forward currency contracts are
designated as highly effective cash flow hedges and the Company
defers unrealized gains and losses arising from these contracts
until the impact of the related transactions occur. The fair
value unrealized loss on these contracts as of October 2,
2005 was $5.0 million. During the third quarter of 2005,
$5.1 million was recorded as a transaction gain related to
the mark-to-market of the intercompany notes before entering
into the forward currency contracts.
F-31
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements —
(Continued)
Also, in the fourth quarter of 2005 the Company entered in
forward currency contracts to sell $578.0 million Canadian
dollars and buy $490.5 million U.S. dollars in order
to hedge certain net investment positions in Canadian
subsidiaries. Under SFAS No. 133, these forward
currency contracts are designated as highly effective hedges and
changes in the fair value of these instruments will be
immediately recognized in other comprehensive income, to offset
the change in the value of the net investment being hedged.
In the fourth quarter of 2005, Wendy's accelerated the
vesting of all of its remaining unvested stock options,
including all stock options held by the Company's
employees. As a result, all Wendy's stock options held by
Company employees became fully vested in October 2005. The
decision to accelerate vesting of stock options was made
primarily to reduce non-cash compensation expense that would
have been recorded in future periods following the adoption of
SFAS No. 123R in the first quarter of 2006 and is also
expected to have a positive effect on employee moral and
retention.
NOTE 18
RECENTLY ISSUED ACCOUNTING STANDARDS
In December 2004, the Financial Accounting Standards Board
("FASB") issued SFAS No. 123R,
"Share-Based Payment," which requires an entity to
measure the cost of employee services received in exchange for
an award of equity instruments based on the grant-date fair
value of the award using an option-pricing model. The cost of
the awards, including the related tax effects, will be
recognized in the consolidated statement of operations. This
statement eliminates the alternative to use the intrinsic value
method for valuing stock based compensation, which typically
resulted in recognition of no compensation cost. This statement
was to become effective for interim or annual periods beginning
after June 15, 2005, with early adoption encouraged. On
April 15, 2005, the Securities and Exchange Commission
issued Release No. 33-8568, which amended the date for
compliance with SFAS No. 123R to the first interim or
annual period of the first fiscal year beginning after
June 15, 2005, with early adoption permitted. On
October 27, 2005, Wendy's announced that its
Compensation Committee, after discussion with its Board of
Directors, approved accelerated vesting of all outstanding stock
options, except those held by the independent Directors of
Wendy's. The decision to accelerate vesting of stock
options was made primarily to reduce non-cash compensation
expense that would have been recorded in future periods
following adoption of SFAS No. 123R and is expected to
have a positive effect on employee morale and retention. The
Wendy's Compensation Committee imposed a holding period
that will require all executive officers to refrain from selling
net shares acquired upon any exercise of these accelerated
options, until the date on which the exercise would have been
permitted under the option's original vesting terms or, if
earlier, the executive officer's death, disability or
termination of employment. Under SFAS No. 123R, the
classification of cash flows between operating and financing
activities will be affected due to a change in treatment for tax
benefits realized. As a result of the acceleration of vesting on
the majority of Wendy's outstanding stock options, the
Company does not expect the adoption of SFAS No. 123R
to have a significant impact on its financial statements.
SFAS No. 123R requires recognition of compensation
cost under a non-substantive vesting period approach, which
requires recognition of compensation expense when an employee is
eligible to retire. The Company has historically recognized this
cost under the nominal vesting approach, generally over the
normal vesting period of the award. When the Company adopts
SFAS No. 123R in the first quarter of 2006, it will
change to the non-substantive approach. See Note 1 to the
Consolidated Financial Statements for a discussion of the impact
of this change when the Company adopts SFAS No. 123R.
F-32
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements —
(Continued)
In June 2005, the Emerging Issues Task Force ("EITF")
reached a consensus on Issue No. 05-06, "Determining
the Amortization Period for Leasehold Improvements." The
consensus requires that the amortization period for leasehold
improvements acquired in a business combination or acquired
subsequent to lease inception should be based on the lesser of
the useful life of the leasehold improvements or the period of
the lease including all renewal periods that are reasonably
assured of exercise at the time of the acquisition. The
consensus is to be applied prospectively to leasehold
improvements acquired subsequent to June 29, 2005. This
consensus is consistent with the accounting policy followed by
the Company and thus had no impact upon adoption.
In October 2005, the FASB issued FSP FAS 123(R)-2,
"Practical Accommodation to the Application of Grant Date
as Defined in FASB Statement No. 123(R)," which
provides clarification of the concept of mutual understanding
between employer and employee with respect to the grant date of
a share-based payment award. This FSP provides that a mutual
understanding of the key terms and conditions of an award shall
be presumed to exist at the date the award is approved by
management if the recipient does not have the ability to
negotiate the key terms and conditions of the award and those
key terms and conditions will be communicated to the individual
recipient within a relatively short time period from the date of
approval. This guidance shall be applied upon initial adoption
of SFAS No. 123R. The Company does not expect adoption
to have a significant impact on its financial statements.
In October 2005, the FASB issued FSP FAS 13-1,
"Accounting for Rental Costs Incurred during a Construction
Period," which addresses the accounting for rental costs
associated with operating leases that are incurred during a
construction period. This FSP requires that rental costs
associated with ground or building operating leases that are
incurred during a construction period be recognized as rental
expense and included in income from continuing operations. The
guidance in this FSP shall be applied to the first reporting
period beginning after December 15, 2005, with early
adoption permitted. The Company is currently in the process of
evaluating the impact of adopting FSP FAS 13-1, but does
not expect it to have a significant impact on its financial
statements.
F-33
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
Nine Months Ended
Nine Months Ended
September 26,
October 2,
2004
2005
(Unaudited)
(in thousands,
except share data)
Revenues
Sales
$
602,978
$
703,484
Franchise revenues
350,081
374,684
Total revenues
953,059
1,078,168
Costs and expenses
Cost of sales
527,818
613,245
Operating expenses
154,501
162,685
General and administrative expenses
61,893
73,728
Equity income
(23,089
)
(23,281
)
Other income
(302
)
(7,530
)
Total costs and expenses,
    net
720,821
818,847
Operating income
232,238
259,321
Interest expense
(5,015
)
(3,283
)
Interest income
1,650
2,300
Affiliated interest expense, net
(7,536
)
(4,910
)
Income before income
    taxes
221,337
253,428
Income taxes
70,505
78,767
Net income
$
150,832
$
174,661
Basic earnings per common
    share
$
215
$
250
Basic shares
700
700
See accompanying Notes to the Condensed Consolidated Financial
Statements.
F-34
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
January 2,
October 2,
2005
2005
(Unaudited)
(in thousands)
ASSETS
Current assets
Cash and cash equivalents
$
129,301
$
119,248
Accounts receivable, net
80,889
85,397
Notes receivable, net
8,627
8,912
Deferred income taxes
3,269
2,137
Inventories and other
35,150
34,673
Amounts receivable from Wendy's
52,192
34,069
Notes receivable from Wendy's
173,747
189,111
Advertising fund restricted assets
21,333
19,274
Total current assets
504,508
492,821
Property and equipment,
    net
909,624
1,009,197
Notes receivable, net
11,959
15,491
Goodwill
30,527
29,877
Deferred income taxes
9,151
9,013
Intangible assets, net
5,777
4,960
Equity investments
146,415
142,291
Note receivable from
    Wendy's
128,000
—
Other assets
10,908
12,646
Total assets
$
1,756,869
$
1,716,296
LIABILITIES AND
    SHAREHOLDER'S EQUITY
Current liabilities
Accounts payable
$
94,702
$
78,920
Accrued expenses
Salaries and wages
4,102
10,865
Taxes
72,214
62,787
Other
55,624
39,058
Deferred income taxes
529
538
Advertising fund restricted
    liabilities
21,333
30,979
Notes payable to Wendy's
185,725
1,186,293
Current portion of long-term
    obligations
4,757
5,334
Total current
    liabilities
438,986
1,414,774
Long-term obligations
Term debt
18,062
19,890
Notes payable to Wendy's
181,090
100,283
Advertising fund restricted debt
—
19,216
Capital leases
47,689
48,635
Total long-term
    obligations
246,841
188,024
Deferred income taxes
23,325
22,155
Other long-term
    liabilities
26,028
31,199
Commitments and
    contingencies
Shareholder's
    equity
Common stock, no stated value per
    share, Authorized: 1,000 shares, Issued: 700 shares
233,707
134,363
Retained earnings
833,626
—
Accumulated other comprehensive
    income (expense):
Cumulative translation adjustments
    and other
(45,644
)
(67,716
)
1,021,689
66,647
Unearned compensation —
    restricted stock
—
(6,503
)
Total shareholder's
    equity
1,021,689
60,144
Total liabilities and
    shareholder's equity
$
1,756,869
$
1,716,296
See accompanying Notes to the Condensed Consolidated Financial
Statements.
F-35
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
Nine Months Ended
Nine Months Ended
September 26,
October 2,
2004
2005
(Unaudited)
(In thousands)
Net cash provided from operating
    activities
$
277,515
$
168,195
Cash flows from investing
    activities
Capital expenditures
(126,343
)
(131,866
)
Acquisition of New England
    restaurants
(60,874
)
—
Proceeds from sale
—
2,884
Principal payments on notes
    receivable
7,195
3,482
Investments in joint ventures and
    other investments
991
1,732
Short-term investments
31,924
—
Short-term loans to Wendy's,
    net
(103,946
)
(21,910
)
Other investing activities
(4,333
)
(6,011
)
Net cash used in investing
    activities
(255,386
)
(151,689
)
Cash flows from financing
    activities
Proceeds from issuance of debt
2,141
2,166
Long-term borrowings from
    Wendy's
54,377
—
Repayment of long-term borrowings
    from Wendy's
(34,832
)
(25,565
)
Principal payments on long-term
    obligations
(3,114
)
(2,765
)
Net cash provided by (used in)
    financing activities
18,572
(26,164
)
Effect of exchange rate changes on
    cash
(1,109
)
(395
)
Increase (decrease) in cash and
    cash equivalents
39,592
(10,053
)
Cash and cash equivalents at
    beginning of period
86,151
129,301
Cash and cash equivalents at end
    of period
$
125,743
$
119,248
Supplemental disclosures of cash
    flow information:
Interest paid
$
5,097
$
12,876
Income taxes paid
66,684
84,161
Non-cash investing and financing
    activities:
Capital lease obligations incurred
$
2,355
$
5,327
See also Note 11
See accompanying Notes to the Condensed Consolidated Financial
Statements.
F-36
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
NOTE 1
MANAGEMENT'S STATEMENT
In the opinion of management, the accompanying Condensed
Consolidated Financial Statements contain all adjustments (all
of which are normal and recurring in nature) necessary to state
fairly the financial position of Tim Hortons Inc. and
subsidiaries (the "Company") as of January 2,
2005 and October 2, 2005, and the results of operations,
cash flows and comprehensive income (see Note 5) for the
nine month periods ended September 26, 2004 and
October 2, 2005. All of these financial statements are
unaudited. The Notes to the audited Consolidated Financial
Statements, which are included elsewhere in this prospectus,
should be read in conjunction with these Condensed Consolidated
Financial Statements. The Company is a wholly-owned subsidiary
of Wendy's International, Inc. (together with its other
subsidiaries "Wendy's").
NOTE 2
EXPENSE ALLOCATIONS
The condensed consolidated statements of operations include
expense allocations for certain functions historically provided
by Wendy's. These allocations include costs related to
corporate functions such as executive oversight, risk
management, information technology, accounting, legal, investor
relations, human resources, tax, other services and employee
benefits and incentives. The allocations are primarily based on
specific identification and the relative percentage of the
Company's revenues and headcount to the respective total
Wendy's costs. Substantially all of these allocations are
reflected in general and administrative expenses in the
Company's condensed consolidated statements of operations
and totalled $8.8 million and $13.8 million on a
pre-tax basis for the nine month periods ended
September 26, 2004 and October 2, 2005, respectively.
The Company and Wendy's considered these general corporate
expense allocations to be a reasonable reflection of the
utilization of services provided. The allocations may not,
however, reflect the expense the Company would have incurred as
a stand-alone company.
NOTE 3
NET INCOME PER SHARE
Basic earnings per common share are computed by dividing net
income available to common shareholders by the weighted average
number of common shares outstanding. No potentially dilutive
options or shares have been issued.
NOTE 4
STOCK OPTIONS AND RESTRICTED STOCK
Certain employees of the Company participate in various stock
option plans of Wendy's to acquire common shares of
Wendy's. Wendy's uses the intrinsic value method to
account for stock-based compensation grants as defined in
Accounting Principles Board ("APB") Opinion
No. 25, "Accounting for Stock Issued to
Employees." The Company uses APB Opinion No. 25 to
account for stock compensation expense as allowed for a
subsidiary under FIN 44. Beginning in 2005, certain Company
employees began receiving Wendy's restricted stock units,
in lieu of stock options. The Company recorded $1.8 million
in compensation expense, pre-tax, for restricted stock units
representing the amount allocated to the Company from
Wendy's based on a specific employee basis for the nine
month period ended October 2, 2005.
The pro forma disclosures below are provided as if the
Company had adopted the cost recognition requirements under
Statement of Financial Accounting Standards ("SFAS")
No. 123— "Accounting for Stock-Based
Compensation," as amended by SFAS No. 148. Under
SFAS No. 123, the fair value of each stock option
granted is estimated on the date of grant using the Black-Scholes
F-37
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
— (Continued)
option-pricing model. This model requires the use of subjective
assumptions that can materially affect fair value estimates, and
therefore, this model does not necessarily provide a reliable
single measure of the fair value of Wendy's stock options.
Had compensation expense been recognized for stock-based
compensation plans in accordance with provisions of
SFAS No. 123, the Company would have recorded net
income and earnings per share as follows:
Nine Months Ended
September 26,
October 2,
2004
2005
(In thousands)
Net income, as reported
$
150,832
$
174,661
Add: Stock compensation cost
    recorded under APB Opinion No. 25, net of tax
—
1,138
Deduct: Stock compensation cost
    calculated under SFAS 123, net of tax
(5,026
)
(5,804
)
Pro forma net income
$
145,806
$
169,995
Earnings per share:
Basic as reported
$
215
$
250
Basic pro forma
$
208
$
243
The above stock compensation cost calculated under
SFAS No. 123, net of tax is generally based on costs
over the vesting period of the award. SFAS No. 123R
requires compensation cost for stock-based compensation awards
to be recognized immediately for new awards granted to
retirement eligible employees and over the period from the grant
date to the date retirement eligibility is achieved, if that
period is shorter than the normal vesting period.
If the guidance on recognition of stock compensation expense for
retirement eligible employees was applied to the periods
reflected in the financial statements, the impact on the
Company's reported net income would have been a reduction
of $1.7 million for the nine month period ended
October 2, 2005. There would have been no impact to the
reported net income for the nine month period ended
September 26, 2004. The impact on the Company's
pro-forma net income would have been a reduction of
$1.0 million, and an increase of $0.6 million for the
nine month periods ended September 26, 2004 and
October 2, 2005, respectively.
The impact of applying SFAS No. 123 and
SFAS No. 123R in this pro-forma disclosure is not
necessarily indicative of future results.
F-38
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
— (Continued)
NOTE 5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
The components of other comprehensive income (expense) and
total comprehensive income are show below:
Year-to-Date Ended
September 26,
October 2,
2004
2005
(In thousands)
Net income
$
150,832
$
174,661
Other comprehensive income:
Translation adjustments and other,
    net
(9,447
)
(22,072
)
Comprehensive income
$
141,385
$
152,589
Other comprehensive expense is primarily comprised of
translation adjustments related to fluctuations in the Canadian
dollar. There was a strengthening in the Canadian dollar during
the nine month periods ending September 26, 2004 and
October 2, 2005. At the end of the third quarter 2005, the
Canadian exchange rate was $1.16 versus $1.20 at January 2,
2005. At the end of the third quarter 2004, the Canadian
exchange rate was $1.28 versus $1.31 at December 28, 2003.
NOTE 6
SEGMENT REPORTING
The Company operates exclusively in the food-service industry
and has determined that its reportable segments are those that
are based on the Company's methods of internal reporting
and management structure. The Company's reportable segments
are Canada and the U.S. There were no material amounts of
revenues or transfers between reportable segments.
The table below presents information about reportable segments:
Canada
U.S.
Total
(In thousands, except where noted)
Nine Months Ended
    September 26, 2004
Revenues
$
869,955
$
83,104
$
953,059
% of total
91
%
9
%
100
%
Operating income (loss)
$
248,478
$
415.0
$
248,893
% of total
100
%
—
%
100
%
% of revenues
29
%
—
%
26
%
Capital expenditures
$
77,048
$
49,295
$
126,343
Nine Months Ended October 2,
    2005
Revenues
$
978,026
$
100,142
$
1,078,168
% of total
91
%
9
%
100
%
Operating income (loss)
$
279,300
$
(2,110
)
$
277,190
% of total
101
%
(1
%)
100
%
% of revenues
29
%
(2
%)
26
%
Capital expenditures
$
92,309
$
39,557
$
131,866
F-39
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
— (Continued)
A reconciliation of reportable segment operating income to
consolidated operating income follows:
Nine Months Ended
September 26,
October 2,
2004
2005
(In thousands)
Reportable segment operating income
$
248,893
$
277,190
Corporate
    charges
(1)
(16,655
)
(17,869
)
Consolidated operating income
$
232,238
$
259,321
(1)
Corporate charges include certain overhead costs which are not
    allocated to individual segments.
NOTE 7
GOODWILL AND OTHER INTANGIBLE ASSETS
The table below presents amortizable and unamortizable
intangible assets as of January 2, 2005 and October 2,
2005:
Gross
Net
Carrying
Accumulated
Carrying
Amount
Amortization
Amount
(In thousands)
January 2, 2005
Amortizable intangible assets:
Trademarks
$
6,455
$
(1,696
)
$
4,759
Other
2,784
(1,766
)
1,018
$
9,239
$
(3,462
)
$
5,777
Unamortizable intangible assets:
Goodwill
$
30,527
October 2, 2005
Amortizable intangible assets:
Trademarks
$
6,455
$
(2,099
)
$
4,356
Other
2,784
(2,180
)
604
$
9,239
$
(4,279
)
$
4,960
Unamortizable intangible assets:
Goodwill
$
29,877
Included in Other above are $1.0 million and
$0.6 million in intangible assets, net of accumulated
amortization of $1.7 million and $2.2 million at
January 2, 2005 and October 2, 2005, respectively,
related to the use of the name and likeness of Ronald V. Joyce,
a former director of the Company. The name and likeness are
being amortized over a period of 5 years.
Total intangibles amortization expense was $0.8 million for
the year-to-date periods ended September 26, 2004 and
October 2, 2005. The estimated annual intangibles
amortization expense
F-40
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
— (Continued)
for 2006 is approximately $1.0 million and for the years
2007 through 2010 is approximately $0.5 million.
All of the Company's goodwill is assigned to the
U.S. segment.
In accordance with SFAS No. 142, the Company tests
goodwill for impairment in the fourth quarter of each year (or
in interim periods if events indicate possible impairment). The
calculation used to test for impairment depends upon a number of
estimates and assumptions, including future business results and
interest rates.
NOTE 8
COMMITMENTS AND CONTINGENCIES
The Company has guaranteed certain lease and debt payments
primarily for franchisees, amounting to $1.0 million. In
the event of default by a franchise owner, the Company generally
retains the right to acquire possession of the related
restaurants. The Company is also the guarantor on
$5.3 million in letters of credit with various parties;
however, management does not expect any material loss to result
from these instruments because it does not believe performance
will be required. The length of the lease, loan and other
arrangements guaranteed by the Company or for which the Company
is contingently liable varies, but generally does not exceed
nine years.
The following table summarizes guarantees of the Company
(in
thousands):
Balance as of
October 2, 2005
Franchisee and other lease and loan
    guarantees:
Canada
$
371
U.S.
636
Total
$
1,007
Letters of credit:
Canada
$
5,129
U.S.
214
Total
$
5,343
Total guarantees and
    indemnifications
$
6,350
In addition to the above guarantees, the Company is party to
many agreements executed in the ordinary course of business that
provide for indemnification of third parties, under specified
circumstances, such as lessors of real property leased by the
Company, distributors, service providers for various types of
services (including commercial banking, investment banking, tax,
actuarial and other services), software licensors, marketing and
advertising firms, securities underwriters and others.
Generally, these agreements obligate the Company to indemnify
the third parties only if certain events occur or claims are
made, as these contingent events or claims are defined in each
of these agreements. The Company believes that the resolution of
any claims that might arise in the future, either individually
or in the aggregate, would not materially affect the earnings or
financial condition of the Company. The liability recorded
related to the above indemnity agreements is not material.
F-41
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
— (Continued)
NOTE 9
RETIREMENT PLANS
Certain U.S. employees of the Company participate in two
Wendy's-sponsored U.S. domestic defined benefit
pension plans (the "Plans"). Wendy's manages the
Plans on a consolidated basis and makes contributions to the
Plans in amounts sufficient, on an actuarial basis, to fund at a
minimum, its portion of the Plans' normal cost on a current
basis, and to fund its portion of the actuarial liability for
past service costs in accordance with Department of Treasury
Regulations. Obligations related to vested participants will
remain the responsibility of Wendy's. The Company does not
intend to adopt a new U.S. pension plan. Based on a
headcount allocation approach, the Company's pro rata
expense related to the Wendy's Plans was not significant.
NOTE 10
ADVERTISING FUND
The Company participates in various advertising funds
established to collect and administer funds contributed for use
in advertising and promotional programs designed to increase
sales and enhance the reputation of the Company and its
franchise owners. Separate advertising funds are administered
for Canada and the U.S. In accordance with
SFAS No. 45, "Accounting for Franchisee Fee
Revenue", the revenue, expenses and cash flows of the
advertising funds are not included in the Company's
condensed consolidated statements of operations or cash flows
because the contributions to these advertising funds are
designated for specific purposes, and the Company acts as an, in
substance, agent with regard to these contributions. The assets
held by these advertising funds are considered restricted. The
current restricted assets, current restricted liabilities and
advertising fund debt are identified on the Company's
balance sheets. The current portion of advertising fund debt is
included in restricted liabilities. In addition, at
October 2, 2005, property and equipment, net includes
$30.9 million of advertising fund assets.
NOTE 11
RELATED PARTY
In September 2005, the Company distributed a note to
Wendy's in the amount of $960.0 million in
U.S. dollars ($1.1 billion in Canadian dollars). As a
result, retained earnings was reduced to zero and the common
stock value was reduced by $99.3 million. The outstanding
principal of the note bears interest at an annual rate of 3.0%.
Both the outstanding principal and accrued interest are due
within 30 days of a demand for payment by Wendy's and
may be prepaid by the Company at any time. It is expected that
this note will be repaid by the Company to Wendy's. In 2005
the Company settled a $128.0 million note receivable from
Wendy's net of a $108.5 million note payable to
Wendy's and other amounts with Wendy's.
NOTE 12
FOREIGN CURRENCY DERIVATIVES
In addition to its foreign currency exposure from ongoing
operations, the Company has identified exposure to Canadian
dollar exchange rates related to certain intercompany
cross-border notes that were marked-to-market beginning in the
third quarter of 2005. In connection with the planned initial
public offering of the Company, the Company determined in the
third quarter 2005 that these intercompany notes are expected to
be repaid and, accordingly, were marked-to-market in the third
quarter 2005. Previously, the translation of these intercompany
notes was recorded into comprehensive income, rather than in the
statement of operations, in accordance with FAS 52,
"Foreign Currency Translation." To manage this
additional exposure, the Company entered into forward currency
contracts to sell $500.0 million Canadian dollars and buy
$427.4 million U.S. dollars. Under
SFAS No. 133, these forward currency contracts are
designated as highly
F-42
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
— (Continued)
effective cash flow hedges. In accordance with
SFAS No. 133, the Company defers unrealized gains and
losses arising from these contracts until the impact of the
related transactions occur. The fair value unrealized loss on
these contracts as of October 2, 2005 was
$5.0 million. During the third quarter of 2005,
$5.1 million was recorded as a transaction gain related to
the intercompany notes prior to entering into the forward
currency contracts.
Also, in the fourth quarter 2005 the Company entered into
forward currency contracts to sell $578.0 million Canadian
dollars and buy $490.5 million U.S. dollars in order
to hedge certain net investment positions in Canadian
subsidiaries. Under SFAS No. 133, these forward
currency contracts are designated as highly effective hedges and
changes in the fair value of these instruments will be
immediately recognized in other comprehensive income, to offset
the change in the value of the net investment being hedged.
NOTE 13
RECENTLY ISSUED ACCOUNTING STANDARDS
In December 2004, the Financial Accounting Standards Board
("FASB") issued SFAS No. 123R,
"Share-Based Payment," which requires an entity to
measure the cost of employee services received in exchange for
an award of equity instruments based on the grant-date fair
value of the award using an option-pricing model. The cost of
the awards, including the related tax effects, will be
recognized in the consolidated statement of operations. This
statement eliminates the alternative to use the intrinsic value
method for valuing stock based compensation, which typically
resulted in recognition of no compensation cost. This statement
was to become effective for interim or annual periods beginning
after June 15, 2005, with early adoption encouraged. On
April 15, 2005, the Securities and Exchange Commission
issued Release No. 33-8568, which amended the date for
compliance with SFAS No. 123R to the first interim or
annual period of the first fiscal year beginning after
June 15, 2005, with early adoption permitted. On
October 27, 2005, Wendy's announced its Compensation
Committee, after discussion with its Board of Directors,
approved accelerated vesting of all outstanding stock options,
except those held by the independent Directors of Wendy's.
The decision to accelerate vesting of stock options was made
primarily to reduce non-cash compensation expense that would
have been recorded in future periods following adoption of
SFAS No. 123R and is expected to have a positive
effect on employee morale and retention. The Wendy's
Compensation Committee imposed a holding period that will
require all executive officers to refrain from selling net
shares acquired upon any exercise of these accelerated options,
until the date on which the exercise would have been permitted
under the option's original vesting terms or, if earlier,
the executive officer's death, disability or termination of
employment. Under SFAS No. 123R, the classification of
cash flows between operating and financing activities will be
affected due to a change in treatment for tax benefits realized.
As a result of the acceleration of vesting on the majority of
Wendy's outstanding stock options, the Company does not
expect the adoption of SFAS No. 123R to have a
significant impact on its financial statements.
SFAS No. 123R requires recognition of compensation
cost under a non-substantive vesting period approach, which
requires recognition of compensation expense when an employee is
eligible to retire. The Company has historically recognized this
cost under the nominal vesting approach, generally over the
normal vesting period of the award. When the Company adopts
SFAS No. 123R in the first quarter of 2006, it will
change to the non-substantive approach. See Note 4, Stock
Options and Restricted Stock, for a discussion of the impact of
this change when the Company adopts SFAS No. 123R.
In June 2005, the EITF reached a consensus on Issue
No. 05-06, "Determining the Amortization Period for
Leasehold Improvements." The consensus requires that the
amortization
F-43
Table of Contents
TIM HORTONS INC. AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
— (Continued)
period for leasehold improvements acquired in a business
combination or acquired subsequent to lease inception should be
based on the lesser of the useful life of the leasehold
improvements or the period of the lease including all renewal
periods that are reasonably assured of exercise at the time of
the acquisition. The consensus is to be applied prospectively to
leasehold improvements acquired subsequent to June 29,
2005. This consensus is consistent with the accounting policy
followed by the Company and thus had no impact upon adoption.
In October 2005, the FASB issued FSP FAS 123(R)-2,
"Practical Accommodation to the Application of Grant Date
as Defined in FASB Statement No. 123(R)," which
provides clarification of the concept of mutual understanding
between employer and employee with respect to the grant date of
a share-based payment award. This FSP provides that a mutual
understanding of the key terms and conditions of an award shall
be presumed to exist at the date the award is approved by
management if the recipient does not have the ability to
negotiate the key terms and conditions of the award and those
key terms and conditions will be communicated to the individual
recipient within a relatively short time period from the date of
approval. This guidance shall be applied upon initial adoption
of SFAS No. 123R. The Company does not expect adoption
to have a significant impact on its financial statements.
In October 2005, the FASB issued FSP FAS 13-1,
"Accounting for Rental Costs Incurred during a Construction
Period," which addresses the accounting for rental costs
associated with operating leases that are incurred during a
construction period. This FSP requires rental costs associated
with ground or building operating leases that are incurred
during a construction period be recognized as rental expense and
included in income from continuing operations. The guidance in
this FSP shall be applied to the first reporting period
beginning after December 15, 2005, with early adoption
permitted. The Company is currently in the process of evaluating
the impact of adopting FSP FAS 13-1, however, we do not
expect it to have a significant impact on the Company's
financial statements.
F-44
Table of Contents
SCHEDULE II — VALUATION AND QUALIFYING
ACCOUNTS
Charged
Balance at
(Credited)
Balance at
Beginning
to Costs &
Additions
End of
Classification
of Year
Expenses
(Deductions)(1)
Year
(in thousands)
Fiscal year ended December 29,
    2002:
Deferred tax asset valuation
    allowance
$
19,517
$
13,475
$
(242
)
$
32,750
Allowance for doubtful accounts
7,902
(1,586
)
(374
)
5,942
$
27,419
$
11,889
$
(616
)
$
38,692
Fiscal year ended December 28,
    2003:
Deferred tax asset valuation
    allowance
$
32,750
$
(1,341
)
$
(5,397
)
$
26,012
Allowance for doubtful accounts
5,942
116
(2,193
)
3,865
$
38,692
$
(1,225
)
$
(7,590
)
$
29,877
Fiscal year ended January 2,
    2005:
Deferred tax asset valuation
    allowance
$
26,012
$
10,223
$
(2,931
)
$
33,304
Allowance for doubtful accounts
3,865
(191
)
(526
)
3,148
$
29,877
$
10,032
$
(3,457
)
$
36,452
(1)
Primarily represents reserves written off or reversed due to the
    resolution of certain franchise situations and translation
    adjustments.
Year-end balances are reflected in the Consolidated Balance
Sheet as follows:
December 29,
December 28,
January 2,
2002
2003
2005
(in thousands)
Deducted from accounts and notes
    receivable, net
$
5,942
$
3,865
$
3,148
Deducted from deferred income
    taxes — long-term
32,750
26,012
33,304
$
38,692
$
29,877
$
36,452
F-45
Table of Contents
No dealer, salesperson or
other person is authorized to give any information or to
represent anything not contained in this prospectus. You must
not rely on any unauthorized information or representations.
This prospectus is an offer to sell only the shares offered
hereby, but only under circumstances and in jurisdictions where
it is lawful to do so. The information contained in this
prospectus is current only as of its date.
TABLE OF CONTENTS
Page
Prospectus
    Summary
1
Risk
    Factors
10
Special
    Note Regarding Forward Looking Statements
28
Use of
    Proceeds
29
Dividend
    Policy
29
Capitalization
30
Dilution
31
Selected
    Historical Consolidated Financial and Other Data
32
Unaudited Pro
    Forma Consolidated Financial Information
35
Management's
    Discussion And Analysis of Financial Condition And Results of
    Operations
41
Business
68
Management
84
Principal
    Shareholder
98
Our
    Relationship With Wendy's
99
Certain
    Relationships and Related Transactions
101
Description Of
    Capital Stock
102
Shares
    Eligible For Future Sale
106
Certain
    U.S. Federal Tax Considerations for Non U.S. Holders
108
Underwriting
111
Legal
    Matters
116
Experts
116
Where You Can
    Find Additional Information
116
Index To
    Consolidated Financial Statements
F-1
Through and
including                     ,
2006 (the 25th day after the date of this prospectus), all
dealers effecting transactions in these securities, whether or
not participating in this offering, may be required to deliver a
prospectus. This is in addition to a dealer's obligation to
deliver a prospectus when acting as an underwriter and with
respect to an unsold allotment or subscription.
Common
Shares
Tim Hortons Inc.
Common Shares
Goldman, Sachs & Co.
RBC Capital Markets
Representatives of the Underwriters
Table of Contents
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13.
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth our estimated costs and expenses
(other than underwriting discounts) payable in connection with
this offering.
SEC Registration and Canadian
    Filing Fees
$
80,000
Printing and Engraving Expenses
*
Legal Fees and Expenses
*
Accounting Fees and Expenses
*
NYSE and TSX Listing Fees
*
Blue Sky Qualification Fees and
    Expenses
*
Transfer Agent and Registrar Fees
*
Miscellaneous
*
Total
$
*
*
To be filed by amendment.
ITEM 14.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Division (E) of Section 1701.13 of the Ohio Revised
Code governs indemnification by a corporation and provides as
follows:
(E)(1) A corporation may indemnify or agree to indemnify
    any person who was or is a party, or is threatened to be made a
    party, to any threatened, pending, or completed action, suit, or
    proceeding, whether civil, criminal, administrative, or
    investigative, other than an action by or in the right of the
    corporation, by reason of the fact that he is or was a director,
    officer, employee, or agent of the corporation, or is or was
    serving at the request of the corporation as a director,
    trustee, officer, employee, member, manager, or agent of another
    corporation, domestic or foreign, nonprofit or for profit, a
    limited liability company, or a partnership, joint venture,
    trust, or other enterprise, against expenses, including
    attorney's fees, judgments, fines, and amounts paid in
    settlement actually and reasonably incurred by him in connection
    with such action, suit, or proceeding if he acted in good faith
    and in a manner he reasonably believed to be in or not opposed
    to the best interests of the corporation, and, with respect to
    any criminal action or proceeding, if he had no reasonable cause
    to believe his conduct was unlawful. The termination of any
    action, suit, or proceeding by judgment, order, settlement, or
    conviction, or upon a plea of nolo contendere or its equivalent,
    shall not, of itself, create a presumption that the person did
    not act in good faith and in a manner he reasonably believed to
    be in or not opposed to the best interests of the corporation,
    and, with respect to any criminal action or proceeding, he had
    reasonable cause to believe that his conduct was unlawful.
(2) A corporation may indemnify or agree to indemnify any
    person who was or is a party, or is threatened to be made a
    party, to any threatened, pending, or completed action or suit
    by or in the right of the corporation to procure a judgment in
    its favor, by reason of the fact that he is or was a director,
    officer, employee, or agent of the corporation, or is or was
    serving at the request of the corporation as a director,
    trustee, officer, employee, member, manager, or agent of another
    corporation, domestic or foreign, nonprofit or for profit, a
    limited liability company, or a partnership, joint venture,
    trust, or other enterprise, against expenses, including
    attorney's fees, actually and reasonably incurred by him in
    connection with the defense or settlement of
II-1
Table of Contents
such action or suit, if he acted in good faith and in a manner
    he reasonably believed to be in or not opposed to the best
    interests of the corporation, except that no indemnification
    shall be made in respect of any of the following:
(a) Any claim, issue, or matter as to which such person is
    adjudged to be liable for negligence or misconduct in the
    performance of his duty to the corporation unless, and only to
    the extent that, the court of common pleas or the court in which
    such action or suit was brought determines, upon application,
    that, despite the adjudication of liability, but in view of all
    the circumstances of the case, such person is fairly and
    reasonably entitled to indemnity for such expenses as the court
    of common pleas or such other court shall deem proper;
(b) Any action or suit in which the only liability asserted
    against a director is pursuant to section 1701.95 of the
    Revised Code.
(3) To the extent that a director, trustee, officer,
    employee, member, manager, or agent has been successful on the
    merits or otherwise in defense of any action, suit, or
    proceeding referred to in division (E)(1) or (2) of
    this section, or in defense of any claim, issue, or matter
    therein, he shall be indemnified against expenses, including
    attorney's fees, actually and reasonably incurred by him in
    connection with the action, suit, or proceeding.
(4) Any indemnification under division (E)(1)
    or (2) of this section, unless ordered by a court, shall be
    made by the corporation only as authorized in the specific case,
    upon a determination that indemnification of the director,
    trustee, officer, employee, member, manager, or agent is proper
    in the circumstances because he has met the applicable standard
    of conduct set forth in division (E)(1) or (2) of this
    section. Such determination shall be made as follows:
(a) By a majority vote of a quorum consisting of directors
    of the indemnifying corporation who were not and are not parties
    to or threatened with the action, suit or proceeding referred to
    in division (E)(1) or (2) of this section;
(b) If the quorum described in division (E)(4)(a) of
    this section is not obtainable or if a majority vote of a quorum
    of disinterested directors so directs, in a written opinion by
    independent legal counsel other than an attorney, or a firm
    having associated with it an attorney, who has been retained by
    or who has performed services for the corporation or any person
    to be indemnified within the past five years;
(c) By the shareholders;
(d) By the court of common pleas or the court in which the
    action, suit, or proceeding referred to in division (E)(1) or
    (2) of this section was brought.
Any determination made by the disinterested directors under
    division (E)(4)(a) or by independent legal counsel under
    division (E)(4)(b) of this section shall be promptly
    communicated to the person who threatened or brought the action
    or suit by or in the right of the corporation under
    division (E)(2) of this section, and, within 10 days
    after receipt of such notification, such person shall have the
    right to petition the court of common pleas or the court in
    which such action or suit was brought to review the
    reasonableness of such determination.
(5)(a) Unless at the time of a director's act or
    omission that is the subject of an action, suit, or proceeding
    referred to in division (E)(1) or (2) of this section,
    the articles or the regulations of a corporation state, by
    specific reference to this division, that the provisions of this
    division do not apply to the corporation and unless the only
    liability asserted against a director in an action, suit or
    proceeding referred to in division (E)(1) or (2) of
    this section is pursuant to section 1701.95 of the Revised
    Code, expenses, including attorney's fees, incurred
II-2
Table of Contents
by a director in defending the action, suit, or proceeding shall
    be paid by the corporation as they are incurred, in advance of
    the final disposition of the action, suit, or proceeding, upon
    receipt of an undertaking by or on behalf of the director in
    which he agrees to do both of the following:
(i) Repay such amount if it is proved by clear and
    convincing evidence in a court of competent jurisdiction that
    his action or failure to act involved an act or omission
    undertaken with deliberate intent to cause injury to the
    corporation or undertaken with reckless disregard for the best
    interests of the corporation;
(ii) Reasonably cooperate with the corporation concerning
    the action, suit or proceeding.
(b) Expenses, including attorney's fees, incurred by a
    director, trustee, officer, employee, member, manager, or agent
    in defending any action, suit, or proceeding referred to in
    division (E)(1) or (2) of this section, may be paid by
    the corporation as they are incurred, in advance of the final
    disposition of the action, suit, or proceeding, as authorized by
    the directors in the specific case, upon receipt of an
    undertaking by or on behalf of the director, trustee, officer,
    employee, member, manager, or agent to repay such amount, if it
    ultimately is determined that he is not entitled to be
    indemnified by the corporation.
(6) The indemnification authorized by this section shall
    not be exclusive of, and shall be in addition to, any other
    rights granted to those seeking indemnification under the
    articles, the regulations, any agreement, a vote of shareholders
    or disinterested directors, or otherwise, both as to action in
    their official capacities and as to action in another capacity
    while holding their offices or positions, and shall continue as
    to a person who has ceased to be a director, trustee, officer,
    employee, member, manager, or agent and shall inure to the
    benefit of the heirs, executors, and administrators of such a
    person.
(7) A corporation may purchase and maintain insurance or
    furnish similar protection, including, but not limited to, trust
    funds, letters of credit, or self-insurance, on behalf of or for
    any person who is or was a director, officer, employee, or agent
    of the corporation, or is or was serving at the request of the
    corporation as a director, trustee, officer, employee, member,
    manager, or agent of another corporation, domestic or foreign,
    nonprofit or for profit, a limited liability company, or a
    partnership, joint venture, trust, or other enterprise, against
    any liability asserted against him and incurred by him in any
    such capacity, or arising out of his status as such, whether or
    not the corporation would have the power to indemnify him
    against such liability under this section. Insurance may be
    purchased from or maintained with a person in which the
    corporation has a financial interest.
(8) The authority of a corporation to indemnify persons
    pursuant to division (E)(1) or (2) of this section
    does not limit the payment of expenses as they are incurred,
    indemnification, insurance, or other protection that may be
    provided pursuant to divisions (E)(5), (6) and (7) of
    this section. Divisions (E)(1) and (2) of this section
    do not create any obligation to repay or return payments made by
    the corporation pursuant to division (E)(5), (6),
    or (7).
(9) As used in division (E) of this section,
    "corporation" includes all constituent entities in a
    consolidation or merger and the new or surviving corporation, so
    that any person who is or was a director, officer, employee,
    trustee, member, manager, or agent of such a constituent entity,
    or is or was serving at the request of such constituent entity
    as a director, trustee, officer, employee, member, manager, or
    agent of another corporation, domestic or foreign, nonprofit or
    for profit, a limited liability company, or a partnership, joint
    venture, trust, or other enterprise, shall stand in the same
    position under this section with respect to the new or
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surviving corporation as he would if he had served the new or
    surviving corporation in the same capacity.
The Registrant's Regulations governing indemnification by
the Registrant provide as follows:
Section 5.01. Indemnification. The corporation shall indemnify
    each director and officer, each former director and officer, and
    each person who may have served at its request as an officer,
    and each person who may have served at its request as a
    director, trustee, or officer of any other corporation,
    partnership, joint venture, trust or other enterprise, to the
    greatest extent permitted by Ohio law, with respect to any
    threatened, pending or completed action, suit or proceeding,
    whether civil, criminal, administrative or investigative, to
    which such person was or is a party by reason of the fact that
    he is or was a director or officer of the corporation or is or
    was serving at its request as aforesaid. Indemnification
    hereunder shall include all expenses, including attorneys'
    fees, judgments, fines and amounts paid in settlement if
    actually and reasonably incurred by him in connection with such
    action, suit or proceeding. Such expenses shall be paid in
    advance of the final disposition of such action, suit or
    proceeding upon receipt of an undertaking by or on behalf of
    such person to repay such amount if it shall ultimately be
    determined that he is not entitled to be indemnified by the
    corporation. In addition, the corporation may indemnify or agree
    to indemnify any person who was or is a party or is threatened
    to be made a party to any threatened, pending, or completed
    action, suit or proceeding, whether civil, criminal,
    administrative or investigative, by reason of the fact that he
    is or was an employee or agent of the corporation or is or was
    serving as an employee or agent of another enterprise at the
    request of the corporation; subject, however, to the limitations
    imposed by Ohio law. The indemnification provided by this
    section shall not be deemed exclusive of any other rights to
    which those seeking indemnification may be entitled under the
    Articles or any agreement, vote of shareholders, or
    disinterested directors or otherwise (including, without
    limitation, any insurance), both as to action in his official
    capacity and as to action in another capacity while holding such
    office, and shall continue as to a person who has ceased to be a
    director, trustee, officer, employee or agent and shall inure to
    the benefit of the heirs, executors, administrators and
    successors of such a person.
In addition, the Registrant has purchased insurance coverage
under policies issued
by                     that
insure directors and officers against certain liabilities that
might be incurred by them in such capacity.
ITEM 15.
RECENT SALES OF UNREGISTERED SECURITIES
Except for the issuance of common shares to Wendy's, Tim
Hortons has not issued any securities in unregistered
transactions. The issuance of such securities was exempt from
the registration requirements of the Securities Act pursuant to
Section 4(2) thereof.
ITEM 16.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibit Index
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A list of exhibits filed with this registration statement on
Form S-1 is set forth on the Exhibit Index and is
incorporated in this Item 16(a) by reference.
(b) Financial Statement Schedules
See Schedule II — Valuation and Qualifying
Accounts in Part I of this prospectus.
ITEM 17.
UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) That for purposes of determining any liability under
    the Securities Act of 1933, the information omitted from the
    form of prospectus filed as part of this Registration Statement
    in reliance upon Rule 430A and contained in a form of
    prospectus filed by the Registrant pursuant to
    Rule 424(b)(1) or (4) or 497(h) under the
    Securities Act of 1933 shall be deemed to be part of this
    Registration Statement as of the time it was declared effective.
(2) That for the purpose of determining any liability under
    the Securities Act of 1933, each post-effective amendment that
    contains a form of prospectus shall be deemed to be a new
    registration statement relating to the securities offered
    therein, and the offering of such securities at that time shall
    be deemed to be the initial bona fide offering thereof.
(3) To provide to the underwriters at the closing specified
    in the underwriting agreement certificates in such denominations
    and registered in such names as required by the underwriters to
    permit prompt delivery to each purchaser.
(4) Insofar as indemnification for liabilities arising
    under the Securities Act of 1933 may be permitted to directors,
    officers and controlling persons of the Registrant pursuant to
    the foregoing provisions, or otherwise, the Registrant has been
    advised that in the opinion of the Securities and Exchange
    Commission such indemnification is against public policy as
    expressed in the Securities Act of 1933 and is, therefore,
    unenforceable. In the event that a claim for indemnification
    against such liabilities (other than the payment by the
    Registrant of expenses incurred or paid by a director, officer
    or controlling person of the Registrant in the successful
    defense of any action, suit or proceeding) is asserted by such
    director, officer or controlling person in connection with the
    securities being registered, the Registrant will, unless in the
    opinion of its counsel the matter has been settled by
    controlling precedent, submit to a court of appropriate
    jurisdiction the question whether such indemnification by it is
    against public policy as expressed in the Securities Act of 1933
    and will be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Oakville, Ontario, on
December 1, 2005.
Tim Hortons Inc.
By:
/s/
Cynthia J. Devine
Name: Cynthia J. Devine
Title:
Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons
in the capacities indicated on December 1, 2005.
Signature
Title
*
Paul
    D. House
Chief Executive Officer and
    President (principal executive officer); Director
/s/
Cynthia J. Devine
Cynthia
    J. Devine
Executive Vice President and Chief
    Financial Officer (principal financial officer and principal
    accounting officer); Director
*
John
    T. Schuessler
Director
*
Kerrii B.
    Anderson
Director
*
David P.
    Lauer
Director
*By
/s/
Cynthia J. Devine
Cynthia
    J. Devine
Attorney-in-fact
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EXHIBIT INDEX
Exhibit No.
Description of Exhibit
1
.1*
Form of Underwriting Agreement
3
.1*
Articles of Incorporation of Tim
    Hortons Inc.
3
.2*
Code of Regulations of Tim Hortons
    Inc.
4
.1*
Form of Specimen Certificate of
    Common Shares
5
.1*
Opinion of Vorys, Sater, Seymour
    and Pease LLP
10
.1*
Form of Master Separation Agreement
10
.2*
Form of Shared Services Agreement
10
.3*
Form of Tax Sharing Agreement
10
.4*
Form of Registration Rights
    Agreement
11
.1*
Statement regarding computation of
    per share earnings
21
.1*
List of Subsidiaries
23
.1*
Consent of Vorys, Sater, Seymour
    and Pease LLP (included as part of its opinion filed as
    Exhibit 5.1 hereto)
23
.2
Consent of PricewaterhouseCoopers
    LLP
24
.1
Powers of Attorney
*
To be filed by amendment.
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