OAKVILLE, ONT. — Net income for Tim Hortons in the fiscal year ended Dec. 28, 2008, rose 5.6% even though fourth-quarter earnings fell 8.6%. While reporting earnings on Feb. 20, the quick-service restaurant chain made several other announcements: Tim Hortons will consider converting its parent company to a Canadian corporation from a U.S. corporation; Tim Hortons plans to commence its previously announced 12-month share repurchase program in March; and the board of directors has approved an 11.1% increase in the quarterly dividend to C$0.10 per share.

Fiscal-year net income of C$284,678,000 ($226,051,000), equal to C$1.55 per share on the common stock, compared with C$269,551,000, or C$1.43 per share, in the previous fiscal year. Total revenues for fiscal year 2008 were C$2,043,693,000 ($1,622,444,000), up from C$1,895,850,000 in the previous fiscal year.

Same-store sales for the year increased 4.4% in Canada and 0.8% in the United States. The company opened 130 restaurants in Canada and 136 in the United States over the course of the year.

Fourth-quarter net income and total revenues slipped after Tim Hortons closed 11 underperforming restaurants in southern New England. Fourth-quarter net income of C$69,127,000, or C$0.38 per share, was down from C$75,670,000, or C$0.40c per share, in the previous year’s fourth quarter. The decrease resulted from $15.4 million in after-tax costs associated with previously announced restaurant closures and the related asset impairment charge.

Fourth-quarter sales rose more than 9% to C$563,689,000 from C$515,444,000. Fourth-quarter same-store sales were up 4.4% in Canada but down 0.1% in the United States.

"Sales growth in our core Canadian business was quite strong in the fourth quarter considering the challenging economic circumstances," said Don Schroeder, president and chief executive officer. "At the same time, we took decisive steps to improve profitability in our developing U.S. business by closing a number of underperforming restaurants in southern New England, as announced last year."

The company will take a prudent approach to U.S. operations in 2009 as it expects same-store sales growth of 0% to 2% in the United States and 3% to 5% in Canada. Tim Hortons set 2009 performance targets of growing operating income 11% to 13%, which will include a positive impact of a 53rd week, and opening 150 to 180 new restaurants.

"In 2009, we plan to maximize opportunities presented in the current economic conditions to expand our Canadian restaurant footprint in successful growth markets while we take a prudent approach to U.S. development given the significant economic challenges," Mr. Schroeder said. "We are focusing our efforts on more established U.S. markets and complementing our approach with strategic opportunities to create additional brand penetration and scale with reduced capital requirements."

Tim Hortons, with the support of external advisers, is assessing opportunities related to corporate structure. Reorganization may include converting the parent company to a Canadian corporation.

"Tim Hortons has its heritage in Canada," the company said. "Based on the evaluations that we have conducted thus far, and which are ongoing, we believe that such an event would be in the best interests of our shareholders, driving long-term value by bringing our effective tax rates closer to Canadian statutory rates."

Tim Hortons shifted its 12-month share repurchase program to the first quarter of 2009 to fully align the company’s capital allocation decisions, including capital expenditures, dividends and share repurchases. A notice of intention to make a normal course issuer bid will be filed with the Toronto Stock Exchange for a stock repurchase program authorizing the repurchase of up to C$200 million in common shares, not to exceed the regulatory maximum of 9,077,438 shares, or 5% of the outstanding common shares.

"The company’s continued strong financial position and cash flows were key factors in the decision to commence the new share repurchase program, which represents our third C$200 million program," Mr. Schroeder said.

The new rate of C$0.10 per share in the quarterly dividend is payable on March 17 to shareholders of record as of March 3.

In one other move, the board of directors appointed Catherine L. Williams as a director of the company effective March 1. She has been a managing director of Options Capital Limited, a private investment company, since 2007.