A leaner Wendy's International Inc. said on Friday that earnings fell nearly 90 per cent in the fourth quarter following the spinoff of its iconic Canadian Tim Hortons coffee-and-doughnut chain. Its shares fell more than two per cent.

The third-largest U.S. hamburger chain said it earned $3 million US, or three cents per share, for the quarter ended Dec. 31, compared with $30 million US, or 25 cents per share, a year ago.

Revenue fell one per cent to $596.4 million US in the quarter from $602.9 million US a year ago.

Wendy's completed the spinoff of Tim Hortons in September and sold its Baja Fresh Mexican Grill chain in November as it returns its focus to its core business. The company also has been trying to cut costs by $100 million US, including cutting jobs at its corporate offices.

The company, citing seven consecutive months of rising same-store sales, was upbeat, despite the drop in earnings.

"We ended 2006 with strong momentum, positive same-store sales and significantly reduced costs," said Kerrii Anderson, president and chief executive. "We intend to build on this momentum and drive even stronger results in 2007 and beyond."

Sales at stores open at least a year — considered a key indicator of a retailer's strength — rose 3.1 per cent at U.S. company-owned restaurants and 2.7 per cent at U.S. franchised restaurants during the quarter, continuing a turnaround after Wendy's said same-store sales fell in 2005 for the first time in 18 years.

Shares of Wendy's fell 73 cents US, or 2.2 per cent, to close at $33.11 US on the New York Stock Exchange.

Since reaching a record of $67.19 US on Sept. 29, just before the Tim Hortons spinoff, Wendy's stock has traded between $31.95 US and $35.95 US on the New York Stock Exchange.

Wendy's operates about 6,600 restaurants in the United States and abroad. It trails McDonald's Corp. and Burger King Holdings Inc. in the burger business.