OAKVILLE, Ont. -- Profits weakened at Tim Hortons Inc. in the fourth quarter as the restaurant chain logged fewer customer transactions, and booked costs related to a lengthy search for a new chief executive -- who is expected to be in place by this summer.

The coffee, doughnut and fast food company said its net income dropped 2.5 per cent to $100.3 million or 65 cents per share. That compared with $103 million or 65 cents per share a year earlier.

Average analyst expectations had been for earnings of 71 cents per share, according to a survey by Thomson Reuters.

Adjusted operating income, which excludes the reorganization costs, was $157.4 million, up 4.4 per cent from $150.8 million a year earlier.

Tim Hortons (TSX:THI) said revenue for the three months ended Dec. 31 was up 4.1 per cent at $811.6 million.

The company said the profit was five cents per share lower than it would have been without $9 million of reorganization expenses recorded in the quarter tied to both termination costs and professional fees.

Part of the costs were also related to the hunt for a replacement of interim CEO Paul House, who has been in the job nearly two years.

"The board has made significant progress in its external CEO search," the company said in a release.

"Although the process is not yet complete, the board currently anticipates appointing a new CEO by early summer."

House has held the top position at Tim Hortons since May 2011 when Don Schroeder made a surprise exit from the CEO position.

For the full year, Tim Hortons net income was up 5.2 per cent to $402.9 million or $2.59 per share -- below the company's 2012 guidance.

"Our 2012 earnings outlook communicated in February 2012 of $2.65 to $2.75 per share did not contemplate the 10 cents per share corporate reorganization charge taken during the fiscal year," the company said.

The company said it planned to increase its quarterly dividend by 23.8 per cent. Starting with the March payout, the quarterly dividend will rise to 26 cents per share.

The Canadian restaurant company also announced it will buy back up to $250 million of its shares, a move that tends to push up per share earnings over time.

Shares of Tim Hortons fell 3.5 per cent, or $1.79, to $49.01 near midday on the Toronto Stock Exchange.