One Time Charge

A one time charge is a charge against earnings that is unusual in nature and not expected to reoccur. An example of a one time charge is the costs of closing a plant damaged by an earthquake. Unlike a one-time charge, normal expenses -- like cost of goods sold and SG&A -- are part and parcel of the regular, ongoing activities of the business. A one-time charge is distinguished from such normal expenses by presenting it as an extraordinary item on the income statement. Companies thus have a strong incentive to present expenses as a one time charge: If investors consider an item a one-time charge, they will discount it and exclude it from their earnings estimates for future periods. In this fashion, classifying an item as a one-time charge can increase EPS estimates and valuations. It's not surprising firms sometimes attempt to classify expenses that are part of their normal business activities and may indeed reoccur such as an inventory write-downs -- as a one-time charge. Note that a one-time charge is also called a nonrecurring charge.