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McDonald's 3Q slips
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October 18, 2001: 2:08 p.m. ET
The world's biggest fast-food chain falls a penny short of estimates.
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NEW YORK (CNNmoney) - McDonald's Corp. reported lower third-quarter results Thursday that missed Wall Street forecasts due to the softening economy and a decline in consumer spending, and said it expects fourth-quarter earnings will match estimates.
Excluding one-time items, the world's largest restaurant chain reported earnings of $493 million, or 38 cents a share, down from $549 million, or 41 cents a share, a year earlier. Analysts on average anticipated a profit of 39 cents a share, according to earnings tracker First Call.
Including one-time items, McDonald's reported net income of $545.5 million, or 42 cents a share.
Those items include an after-tax gain of $137 million related to the initial public offering of McDonald's Japan, and an $84 million charge from closing 154 underperforming stores, the company said.
Revenue rose to $3.9 billion from $3.7 billion, matching First Call's forecast of $3.9 billion in the quarter.
The company also said it anticipates a restructuring charge to fourth-quarter results as it reviews its businesses for efficiencies, and that it would report the charge in the near future.
Excluding the charge, McDonald's (MCD: down $0.35 to $29.05, Research, Estimates) anticipates fourth-quarter earnings of 36 cents a share, in line with Wall Street forecasts, according to First Call.
The company, based in Oak Brook, Ill., said that if currency levels remain where they are for rest of the year, exchange effects will shave 4 to 5 cents off full-year earnings.
"This has been a challenging year for many global companies, including McDonald's," CEO Jack Greenberg said. "While I am not pleased with our overall results, I am proud of how our system has responded to the many difficult conditions we've faced."
The company warned Sept. 19 that it would miss expected earnings of 40 cents a share, saying the continuing slowdown in the U.S. economy and a mad cow disease scare had hurt its results.
McDonald's said sales in Europe, its second-largest market after the United States, were improving, led by France and Germany. Reported European sales rose 3 percent in the quarter to $2.52 billion from $2.45 billion last year.
McDonald's has struggled with the effect of mad cow outbreaks in Europe since late last year, when sales in the region began to fall. The brain-wasting disorder is not linked to any McDonald's hamburgers. A strong U.S. dollar against weaker overseas currencies such as the euro, British pound, Japanese yen and Australian dollar also hampered this year's results.
In the United States, McDonald's said it faced difficult same-store sales comparisons against last year, the result of running its highly popular Teenie Beanie Babies and Olympic Taste Trials promotions last year. Reported U.S. sales rose 3 percent to $5.21 billion from $5.05 billion.
Last week, McDonald's began efforts to restructure its U.S. business, paring down its divisions to three from five. Wednesday it said it would cut 500 to 700 field and home-office positions, and broadened the roles of senior managers to provide more support to its domestic franchisees, who are trying to improve the level of service in their restaurants. 
from staff and wire reports
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