Pretty sneaky.

Read through the first few lines of the earnings release published yesterday from tax advisor Jackson Hewitt (NYSE:JTX), and you might get the impression that all is well. After all, as the release states:

"The net loss in the current quarter of $13.2 million ($0.35 per share), as compared to a net loss of $11.4 million ($0.30 per share) in the prior year period, included a $2.7 million charge ($0.04 per share) related to the Company's debt refinancing as well as a $2.1 million decline ($0.03 per share) in revenue associated with the change in the Company's agreement with Santa Barbara Bank & Trust."

And it's hardly fair to compare the company's year-ago quarter, where the loss was just $0.30 per share, with the quarter just ended, in which the loss expanded to $0.35. Right? Because, after all, without those $0.07 in charges, the loss this quarter would have been just $0.28. The fact is that Jackson Hewitt should have lost just $0.28 per share but for those niggling charges, so the company really did better this quarter than last. Right?



This, fellow Fools, is why it pays to read the whole press release. Because while Jackson Hewitt has to tell you all of the numbers that materially affected its results in the first quarter of fiscal 2006, it doesn't necessarily have to tell you this all in one place, or even in an apples-to-apples manner. Read a little lower down the press release, and you'll see what I'm talking about. Four paragraphs down, you'll find this note: "The results for the prior year period also included a $4.5 million stock-based compensation charge related to the Company's initial public offering." This gets repeated five paragraphs later, and again in footnote (a) to the Consolidated Statement of Operations.

Nowhere does the company make clear that this $4.5 million charge equates to $0.07 on a per diluted share basis -- a fact the company made sure to emphasize last year -- or, more to the point, that absent the charge, fiscal Q1 2005 losses would have amounted to only $0.23 per share.

So, if we want to run a true apples-to-apples comparison on Jackson Hewitt's results, netting out all the sizeable -- if niggling -- charges, what we truly come up with is this: Last year, Jackson Hewitt incurred a pro forma loss of $0.23. One year later, it's now reporting a pro forma loss of $0.28.

See now why the company didn't tell you all this up front?

If so, I'll bet you also see why it pays to mind the footnotes.

Jackson Hewitt's clever math tricks may be good for its clients, but is it as good for the company's investors? Find out in:

Fool contributor Rich Smith has no interest, short or long, in Jackson Hewitt.