Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Anton Brenner - Roth Capital Partners LLC.
Anton Brenner - Roth Capital Partners LLC
What are your intentions with respect to price as the Benihana renewal program is rolled out?
Richard Stockinger
Hi, Tony. It’s Rich Stockinger. We will not raise any prices of any of our entrées, despite the increase in the quality of the ingredients.
Anton Brenner - Roth Capital Partners LLC
What will you raise?
Richard Stockinger
There will be some spot increases on some side orders available to guests, as well as desserts such as ice cream. And there may be some spot pricing taken on beverages.
Anton Brenner - Roth Capital Partners LLC
And that’ll be enough to mostly offset the higher ingredient costs?
Richard Stockinger
Again, where we’re going to end up is that the cost of sales margins will revert from where we are today back to the results we were achieving during the prior fiscal year.
Anton Brenner - Roth Capital Partners LLC
For the full year, Juan, what is a good number to use for the effective tax rate?
Juan Garcia
We are currently experiencing an effective tax rate of about 31%.
Anton Brenner - Roth Capital Partners LLC
And that can be extrapolated to the full year as well?
Juan Garcia
Yes.
Anton Brenner - Roth Capital Partners LLC
And lastly, regarding your guidance for an 18.7 million share count for the full year, that’s a function I guess of the price of the stock, isn’t it?
Juan Garcia
It’s a function of two items. Primarily it’s a function of the price of the stock. The fact that the market cap of the company has rebounded, we are to take into account the additional shares that would be issue able upon redemption. But because of the EPS guidelines and the accounting rules, you also have to take a look at the impact of the add back of the preferred stock dividend. For the current quarter, the earnings were less than the dividend per share earned by the preferred stock holders. So for the current quarter, those preferred dividends were not taken back and increase in the shares. But again the view is the forecast is for a full year, where the view is that the earnings would exceed the dividend per share as well as maintain the current market cap that we have. So we’re keeping the denominator at the 18 plus million shares.
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