re: Stocks...

Wow. Okay, thank you for the very detailed response. My knowledge of this stuff is confined mainly to what I need in order to be a successful trader, so a lot of the transactional issues you speak of are WAY over my head. When I get into business school, I'll be able to have a much more in depth conversation with you about some of this applied knowledge (or at least that's the hope).

If you don't mind, I may just kind of pick at your response over the course of a few posts as this really is a lot to think about all at once. Two things I'd like to talk about first: Earnings v. Revenues; Taxes

It just seems to me that earnings are what equity investors are most concerned with. How often do you here someone say, "Hey, fizz, when does GOOG report revenues?" Maybe in your line of work you do legitimately hear that. But IME individual investors are fixated on earnings as they are below the line. Revenues mean nothing in and of themselves. It's profit that counts for individual investors. As investopedia says and I agree with:

quote:

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Earnings are perhaps the single most studied number in a company's financial statements because they show a company's profitability.

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On to taxes. I was off on my thinking the increase in taxes was due to expansion. I'm going off of memory here and it's been a few weeks since they reported. Here is the exact phraseology from the filings:

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We account for income taxes pursuant to the provisions of ASC 740 “Income Taxes” (formerly known as SFAS No. 109, Accounting for Income Taxes ). The effective tax rate was 48 percent for the first quarter of 2010 compared to 15 percent in the first quarter of 2009. In 2009, our valuation allowance that was recorded against deferred tax assets was fully released, resulting in a net tax benefit of $20,291,000. For fiscal 2010, no valuation allowance is necessary as we believe our deferred tax assets will be fully realized. Further, the effective tax rate differs from the statutory corporate tax rate in part due to permanent book/tax differences related to the costs of acquiring a trademark and due to state taxes for various jurisdictions where we are subject to taxation. These factors were the primary drivers resulting in a higher effective tax rate for the first quarter of fiscal 2010.

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Any insight into this would be very much appreciated.

Here's another snippet:

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"We generated net income of $694,000 in the first quarter of fiscal 2010 compared to $800,000 for the first quarter of fiscal 2009. Our income before taxes increased by $388,000 or 41 percent. This increase in income before taxes was offset by additional income taxes of $494,000."

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As you can see, the increase in taxes really hurt us, but not nearly as much as the expenses incurred from relocating corporate and from increased advertising and marketing fees due to moving into 9 new stores/markets. These expenses will be nonexistent and minimized, respectively, next quarter, in my opinion.

Here are some more snippets:

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Net sales increased 41% to $23.2 million over the prior year comparative period

Gross profit increased 38% to $11.4 million over the prior year
comparative period

Operating income increased 36% to $1.4 million over the prior year comparative period


gross margins decreased 1%, 49 to 50

sg&a increased from 7.1 to 9.7mil or 37%

net income went down to 694k from 800k, ~106k, or 13%

taxes on operating income increased 352%

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Am I missing anything? Our margins are fine. Our SG&A will be reduced. Taxes will still be around. But sales, gross profit, operating income, and net income should all be in good shape for next quarter if the past quarter is any indication. Remember that the company does better in Q2 than Q1, better in Q3 than Q2, and best in Q4. It seems the first quarter was a good quarter to hash out a bunch of these one-time expenses as there is more room for outstanding results in later quarters anyway.