Dear Fellow Shareholders,
Our record earnings in 2010 were significantly influenced by the sale of our 50% joint-venture interest in Maidstone Bakeries, which generated a pre-tax $402 million gain, with $361 million recognized in 2010. Approximately $41 million of this gain will be amortized over five years of the ongoing supply agreement. We allocated $30 million of the proceeds to Restaurant Owners, related to the sale, in recognition of our unique relationship and our owners' past contributions to the success of the bakery as its primary customer. The net bakery gain more than offset the negative $28 million asset impairment and restaurant closure charges incurred relating to the New England region.
This key decision, to close restaurants in the New England region, allows our management team to focus on our core growth markets across the U.S., where we are accelerating development as part of our strategy to increase density and reach critical mass on a shorter time horizon. We are also targeting a significant improvement in our U.S. segment earnings contributions in 2011.
During 2010 we opened 245 locations, including 149 restaurants in Canada and 96 in the U.S., including self-serve kiosks. We invested $133 million to grow our business in North America, including $67 million in new restaurants and $39 million in renovations and replacements to keep our image fresh.
Once again, our strong cash flow generation allowed us to fund all of our growth investment needs while also enabling us to return value to shareholders. In addition to funding growth, we allocated $90 million to dividends, and $243 million to share repurchases using cash flow provided from operations and a portion of the net bakery proceeds.
In early 2011, we subsequently announced a 31% increase in our quarterly dividend payments to $0.17 per common share, which is our fourth increase since going public in 2006, and a new share repurchase program of up to $445 million. This new program, our fifth since becoming a public company, consists of $200 million from cash flow and cash-on-hand, including up to $245 million from the remaining undistributed bakery net proceeds.
During 2010, we also refinanced our long-term debt which was set to expire early in 2011, by entering the bond markets for the first time. We successfully executed two bond offerings with two tranches at attractive coupon rates of 4.2%, which were significantly oversubscribed, indicating strong market support for the Company.
Tim Hortons is built on solid fundamentals. Our business model creates several quality income streams and greater scale than many other restaurant companies with larger footprints. Our effective business model allows us to reinvest back in the business with the objective of creating long-term value for our Restaurant Owners and, ultimately, for shareholders, and in 2010 we certainly once again demonstrated the effectiveness of our business model.
Sincerely,
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