One-Time Charge

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A one-time charge is an expense a company reports that it considers unusual and unlikely to recur, such as restructuring costs, a legal settlement or an asset write-down.

Companies often highlight one-time charges so investors can see underlying performance without the effect of unusual events. Examples include closing a factory, settling a major lawsuit, writing down goodwill after a poor acquisition or costs from a natural disaster.

For example, a company might report net income of 4,000,000 after a one-time restructuring charge of 6,000,000, and point out that, excluding the charge, its profit would have been considerably higher.

One-time charges can be genuinely unusual, but they can also be abused. Some companies report restructuring charges year after year, suggesting these costs are actually part of normal operations. Grouping many costs into a large one-time charge can also make future results look better, a practice sometimes called big bath accounting.

Analysts should check whether so-called one-time charges recur, whether they are cash or non-cash and whether the company excludes one-time gains as well as charges. Accounting standards do not define the term.

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