700 Lose Jobs; 37 U.S. Regions Reorganized to 21

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CHICAGO (AdAge.com0 -- McDonald's Corp., Oak Brook, Ill., today said the cutbacks it announced Oct. 17 will cost the company $175 million to $200 million in special charges during the fourth quarter.

The cost will cover severance and outplacement for the almost 700 staffers expected to lose their jobs, as well as the expense of consolidating five divisions to three and 37 U.S. regions to 21.

McDonald's also said it would open 200 fewer restaurants than planned and buy back $5 billion in stock.

"Our goal is to improve results in 2002 and put ourselves in position to return to double-digit earnings growth," said Jack Greenberg, McDonald's chairman-CEO.

The fast-food giant's shares fell almost 6% to $27.28 today, down $1.67 from its previous close.

Without citing a specific earnings estimate, McDonald's said its profits would grow by 5% to 10%, far below the fast feeder's typical 10% to 15% growth. First Call consensus estimates figure 2002 earnings per share to be $1.54, up 12% from the $1.37 originally estimated. McDonald's 2000 earnings per share was $1.46.

Separately, McDonald's also will launch its Boston Market concept in Canada with three units scheduled to open in Toronto during fall 2002.

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