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Updated from 9:47 a.m. EST


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earnings fell for the fifth quarter in a row, as rising sales in Europe weren't enough to offset problems in Asia and Latin America.

The fast-food chain earned $271.9 million, or 21 cents a share, including items in the fourth quarter. The results were down 40% from a year ago, when it made $452 million, or 34 cents a share, but were in line with analyst expectations.

"The year 2001 was difficult for the company largely because of external forces, particularly weak economies and mad cow disease," said Jack Greenberg, McDonald's chief executive, in a statement. The company reaffirmed its guidance for the full year for earnings per share between $1.47 and $1.52.

McDonald's closed down $1, or 3.65%, to $26.40; it's off 22% since the beginning of 2001.

Sales in the U.S., where a restructuring program is under way, were modestly higher, up 3% in the quarter and 2% for the year. "Ideally, you'd like to see sales growth improving," said Mark Kalinowski, an analyst at Salomon Smith Barney. "But it's been lackluster in the United States."

In October, McDonald's set plans to improve U.S. same store sales by streamlining its business. The company said it would cut its workforce, reduce the number of regions it served, and combine personnel functions, amid concerns about customer satisfaction.

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Meanwhile, sales in Europe were up 9% in the quarter and 5% for the year, as fears of mad cow disease subsided on the continent. But they were down 8% in Asia for the quarter, amid concerns about the Japanese beef supply. And Argentina's economic woes helped knock Latin America sales down 4% for the quarter.

"Our renewed focus on the basics -- providing consistent quality, service, cleanliness and value -- will help us achieve stronger results going forward," said Greenberg of McDonald's.

"It's too early to gauge the impact of the restructuring program," said Kalinowski. "I think it was the right thing to do, but the benefits from it might not accrue as soon as Wall Street expected." In 2000, the company's customer satisfaction rating was down, according to a University of Michigan survey.

In the fourth quarter, McDonald's results included a $200 million charge for the restructuring. The company also took charges of $45 million for a promotional Monopoly-game scandal and the anticipated disposing of Aroma Caf¿ in London, and $7.1 million charge for closing nine restaurants.

Excluding charges, the company's earnings were 34 cents a share, flat with a year ago.

Looking ahead, McDonald's said it plans to add 1,300 to 1,400 new restaurants. It also plans to add to the number "partner" restaurants, Aroma Caf¿, Boston Market, Chipotle and Donatos Pizza.

"I don't think they're growing too quickly in the U.S.," said Kalinowski. "But they should shift their resources in other regions to improving operations."

In 2002, McDonald's is still at risk of potential external forces, such as mad cow disease and a weak economy. Says Kalinowski: "How they navigate those things in the future will be interesting to watch."

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