From Briefing.com:
"This is not a charge that can simply be ignored. First of all,there would have been an amortization cost that would have impacted operating earnings if they had not taken the change. Previously, these costs, as stated in the quote from the press release above, would have been spread over four quarters instead of one. That means that about two cents of this charge normally would have appeared in this quarter's number. Second, this is a permanent change. It illuminates previous amortization charges, but will charge all costs now each quarter. Third, this is a legitimate operating cost. BKS now has to "charge costs as incurred." Sounds reasonable to Briefing.com. So, to ignore the charge entirely is wrong. It (to an uncertain degree) reflects true operating costs that will be in the numbers in the future as well."
At the risk of beating this to death, I have two comments. First, the actual first quarter numbers and the analyst estimates probably included the normal amortization charge for the pre-opening costs. Assuming that the analysts did not factor the effects of the accounting change in their estimates, Briefing.com was wrong in not highlighting what is clearly a one time event. Secondly, going forward, BKS will be writing these expenses off as incurred, probably at the same level ($.02 per share) that they have been doing for God knows how long. This has been the proverbial tempest in a teapot. |
