Fair Values (Tables)

3 Months Ended

Mar. 31, 2013

Fair Value of Derivative Instruments on Condensed Consolidated Balance Sheet

Financial assets and liabilities measured at fair value

	As at
	March 31, 2013							December 30, 2012
	Notional value		Fair value hierarchy		Fair value asset (liability) (1)			Notional value		Fair value hierarchy		Fair value asset (liability)(1)
Derivatives:
Forward currency contracts(2)	$	165,318		Level 2	$	2,009		$	195,081		Level 2	$	(2,014	)
Interest rate swap(3)		33,750		Level 2		(482	)		0		Level 2		0
Total return swaps (“TRS”)(4 )		41,403		Level 2		14,257			41,403		Level 2		7,504
Total Derivatives	$	240,471			$	15,784		$	236,484			$	5,490

⁽¹⁾  The Company values its derivatives using valuations that are calibrated to the initial trade prices. Subsequent valuations are based on observable inputs to the valuation model.

⁽²⁾  The fair value of forward currency contracts is determined using prevailing exchange rates.

⁽³⁾  In February 2013, the Tim Hortons Advertising and Promotion Fund (Canada) Inc. (“Ad Fund”) entered into an amortizing interest rate swap to fix a portion of the interest expense on its term debt. The fair value is estimated using discounted cash flows and market-based observable inputs, including interest rate yield curves and discount rates.

⁽⁴⁾  The fair value of the TRS is determined using the Company’s closing common share price on the last business day of the fiscal period, as quoted on the Toronto Stock Exchange (“TSX”).

Fair Value and Carrying Value of Other Financial Assets and Liabilities

The following table summarizes the fair value and carrying value of other financial assets and liabilities that are not recognized at fair value on a recurring basis on the Condensed Consolidated Balance Sheet:

	As at
	March 31, 2013								December 30, 2012
	Fair value hierarchy		Fair value asset (liability)			Carrying value			Fair value hierarchy		Fair value asset (liability)			Carrying value
Cash and cash equivalents(1)		Level 1	$	74,641		$	74,641			Level 1	$	120,139		$	120,139
Restricted cash and cash equivalents(1)		Level 1		104,021			104,021			Level 1		150,574			150,574
Bearer deposit notes(2)		Level 2		41,403			41,403			Level 2		41,403			41,403
Notes receivable, net(3)		Level 3		11,604			11,604			Level 3		8,777			8,777
Senior unsecured notes, series 1(4)		Level 2		(325,725	)		(301,457	)		Level 2		(325,857	)		(301,544	)
Advertising fund term debt(5)		Level 3		(54,482	)		(54,482	)		Level 3		(56,500	)		(56,500	)
Other debt(6)		Level 3		(123,286	)		(59,223	)		Level 3		(125,000	)		(60,223	)

⁽¹⁾  The carrying values approximate fair values due to the short-term nature of these investments.

⁽²⁾  The Company holds these notes as collateral to reduce the carrying costs of the TRS. The interest rate on these notes resets every 90 days; therefore, the fair value of these notes, using a market approach, approximates the carrying value.

⁽³⁾  Management estimates the current value, using a cost approach, based primarily on the estimated depreciated replacement cost of the underlying equipment held as collateral.

⁽⁴⁾  The fair value of the senior unsecured notes, using a market approach, is based on publicly disclosed trades between arm’s length institutions as documented on Bloomberg LP.

⁽⁵⁾  Management estimates the fair value of this variable rate debt using a market approach, based on prevailing interest rates plus an applicable margin.

⁽⁶⁾  Management estimates the fair value of its Other debt, primarily consisting of contributions received related to the construction costs of certain restaurants, using an income approach, by discounting future cash flows using a Company risk-adjusted rate, over the remaining term of the debt.