affirmed its outlook for the year on Tuesday, but its earnings fell victim to a legal dispute over the talking Chihuahua in Taco Bell's commercials.
Sales for the operator of Taco Bell, KFC and Pizza Hut fast-food chains rose 9.6% to $1.94 billion, but earnings declined due to $35 million in legal costs after being ordered to pay two Michigan men who claim that they created the talking dog.
The company posted $122 million in net income, or 40 cents per share, down from last year's $140 million, or 45 cents a share. The charge from the legal dispute totaled 8 cents a share, so the company, citing earnings of 48 cents a share on a pro forma basis, claimed that the quarter was an improvement.
The consensus estimate of 13 analysts polled by Thomson First Call was for 46 cents a share. The company said that it will meet its expectations for the full year, earning $1.92 a share including the charge.
Shares of Yum! sank 2.3%, or 70 cents, to $29.65 on Tuesday.