BBSI Announces Second Quarter 2008 Operating Results, Financial Guidance for 3Q08 and Conference Call

VANCOUVER, Wash., Jul 29, 2008 (PrimeNewswire via COMTEX News Network) -- Barrett Business Services, Inc. (Nasdaq:BBSI) reported today net income of $3.3 million for the second quarter ended June 30, 2008, a decline of $1.6 million or 33.4% from net income of $4.9 million for the second quarter of 2007. Diluted earnings per share for the 2008 second quarter were $.29, as compared to diluted earnings per share of $.42 for the same quarter a year ago.

Net revenues for the second quarter ended June 30, 2008 totaled $72.2 million, an increase of approximately $8.3 million or 13.0% over the $63.9 million for the same quarter in 2007.

($ in thousands, except per (Unaudited) (Unaudited)

share amounts) Second Quarter Six Months

Ended June 30, Ended June 30,

------------------ ------------------

Results of Operations 2008 2007 2008 2007

--------------------------- -------- -------- -------- --------

Revenues:

Staffing services $ 40,604 $ 29,747 $ 76,423 $ 57,762

Professional employer

service fees 31,579 34,139 61,954 66,712

-------- -------- -------- --------

Total revenues 72,183 63,886 138,377 124,474

-------- -------- -------- --------

Cost of revenues:

Direct payroll costs 29,943 22,416 56,326 43,558

Payroll taxes and benefits 20,721 20,542 45,166 44,453

Workers' compensation 7,465 5,964 14,269 11,808

-------- -------- -------- --------

Total cost of revenues 58,129 48,922 115,761 99,819

-------- -------- -------- --------

Gross margin 14,054 14,964 22,616 24,655

Selling, general and

administrative expenses 9,165 7,727 17,834 15,115

Depreciation and

amortization 382 316 758 665

-------- -------- -------- --------

Income from operations 4,507 6,921 4,024 8,875

Other income, net 587 790 1,213 1,575

-------- -------- -------- --------

Income before taxes 5,094 7,711 5,237 10,450

Provision for income taxes 1,844 2,830 1,896 3,841

-------- -------- -------- --------

Net income $ 3,250 $ 4,881 $ 3,341 $ 6,609

======== ======== ======== ========

Basic earnings per share $ .30 $ .43 $ .30 $ .58

======== ======== ======== ========

Weighted average basic

shares outstanding 10,937 11,263 11,012 11,259

======== ======== ======== ========

Diluted earnings per share $ .29 $ .42 $ .30 $ .57

======== ======== ======== ========

Weighted average diluted

shares outstanding 11,221 11,690 11,322 11,686

======== ======== ======== ========

The Company reports its Professional Employer Organization services ("PEO") revenues on a net basis because it is not the primary obligor for the services provided by the Company's PEO clients to their customers. The gross revenues and cost of revenues information below, although not in accordance with generally accepted accounting principles ("GAAP"), is presented for comparison purposes and because management believes such information is more informative as to the level of the Company's business activity and more useful in managing its operations.

(Unaudited) (Unaudited)

Second Quarter Six Months

(in thousands) Ended June 30, Ended June 30,

------------------ ------------------

2008 2007 2008 2007

-------- -------- -------- --------

Revenues:

Staffing services $ 40,604 $ 29,747 $ 76,423 $ 57,762

Professional employer

services 228,891 237,957 452,652 467,470

-------- -------- -------- --------

Total revenues 269,495 267,704 529,075 525,232

-------- -------- -------- --------

Cost of revenues:

Direct payroll costs 225,887 224,605 443,740 441,233

Payroll taxes and benefits 20,721 20,542 45,166 44,453

Workers' compensation 8,833 7,593 17,553 14,891

-------- -------- -------- --------

Total cost of revenues 255,441 252,740 506,459 500,577

-------- -------- -------- --------

Gross margin $ 14,054 $ 14,964 $ 22,616 $ 24,655

======== ======== ======== ========

Gross revenues of $269.5 million for the second quarter ended June 30, 2008 rose 0.7% over the similar period in 2007. For the six months of 2008, gross revenues of $529.1 million increased 0.7% over the comparable 2007 period.

A reconciliation of non-GAAP gross revenues to net revenues is as follows:

For the second quarters ended June 30, 2008 and 2007:

(Unaudited)

(in thousands) Three Months Ended June 30,

-------------------------------------------------------

Gross Revenue Net Revenue

Reporting Reporting

Method Reclassification Method

----------------- -------------------- ---------------

2008 2007 2008 2007 2008 2007

-------- -------- --------- --------- ------- -------

Revenues:

Staffing

services $ 40,604 $ 29,747 $ -- $ -- $40,604 $29,747

Professional

employer

services 228,891 237,957 (197,312) (203,818) 31,579 34,139

-------- -------- --------- --------- ------- -------

Total

revenues $269,495 $267,704 $(197,312) $(203,818) $72,183 $63,886

======== ======== ========= ========= ======= =======

Cost of

revenues $255,441 $252,740 $(197,312) $(203,818) $58,129 $48,922

======== ======== ========= ========= ======= =======

For the six months ended June 30, 2008 and 2007:

(Unaudited)

(in thousands) Six Months Ended June 30,

---------------------------------------------------------

Gross Revenue Net Revenue

Reporting Reporting

Method Reclassification Method

----------------- -------------------- -----------------

2008 2007 2008 2007 2008 2007

-------- -------- --------- --------- -------- --------

Revenues:

Staffing

serv-

ices $ 76,423 $ 57,762 $ -- $ -- $ 76,423 $ 57,762

Profes-

sional

employer

serv-

ices 452,652 467,470 (390,698) (400,758) 61,954 66,712

-------- -------- --------- --------- -------- --------

Total

reve-

nues $529,075 $525,232 $(390,698) $(400,758) $138,377 $124,474

======== ======== ========= ========= ======== ========

Cost of

reve-

nues $506,459 $500,577 $(390,698) $(400,758) $115,761 $ 99,819

======== ======== ========= ========= ======== ========

The following summarizes the unaudited consolidated balance sheets at June 30, 2008 and December 31, 2007.

June 30, December 31,

(in thousands) 2008 2007

--------- ---------

Assets

------

Current assets:

Cash and cash equivalents $ 16,640 $ 9,777

Marketable securities 30,098 50,364

Trade accounts receivable, net 45,296 36,673

Prepaid expenses and other 1,994 2,336

Deferred income taxes 3,271 3,138

Workers' compensation receivables

for insured claims 225 225

--------- ---------

Total current assets 97,524 102,513

Marketable securities 7,755 4,772

Goodwill, net 45,316 41,508

Property, equipment and software, net 15,863 16,136

Restricted marketable securities and

workers' compensation deposits 3,896 2,750

Other assets 1,671 1,649

Workers' compensation receivables for

insured claims 3,490 3,896

--------- ---------

$ 175,515 $ 173,224

========= =========

Liabilities and Stockholders' Equity

------------------------------------

Current liabilities:

Accounts payable $ 1,212 $ 1,516

Accrued payroll, payroll taxes and

related benefits 37,855 33,553

Income taxes payable 527 --

Other accrued liabilities 713 1,064

Workers' compensation claims

liabilities 7,037 6,031

Workers' compensation claims

liabilities for insured claims 225 225

Safety incentives liabilities 4,663 5,911

--------- ---------

Total current liabilities 52,232 48,300

Customer deposits 687 752

Long-term workers' compensation claims

liabilities 4,926 4,021

Long-term workers' compensation

liabilities for insured claims 2,372 2,464

Deferred income taxes 3,269 3,268

Deferred gain on sale and leaseback 610 671

Stockholders' equity 111,419 113,748

--------- ---------

$ 175,515 $ 173,224

========= =========

Outlook for Third Quarter 2008

The Company also disclosed today limited financial guidance with respect to its operating results for the third quarter ending September 30, 2008. The Company expects gross revenues for the third quarter of 2008 to range from $277 million to $282 million, as compared to $296.8 million for the third quarter of 2007, and anticipates diluted earnings per share for the third quarter of 2008 to range from $.34 to $.36 per share, as compared to $.54 per share for the same period a year ago. A reconciliation of estimated gross revenues to estimated GAAP net revenues for the third quarter of 2008 is not included because PEO revenues and cost of PEO revenues for the period are not reasonably estimable.

Conference Call

On July 30 at 9:00 a.m. Pacific Time, William W. Sherertz and James D. Miller will host an investor telephone conference call to discuss second quarter 2008 operating results. To participate in the call, dial (877) 356-3717. The call identification number is 57362314. The conference call will also be webcast live at www.barrettbusiness.com. To access the webcast, click on the Investor Relations section of the Web site and select Webcast. A replay of the call will be available beginning Wednesday, July 30, 2008 at 12:00 p.m. PT and ending on Wednesday, August 6, 2008. To listen to the recording, dial (800) 642-1687 and enter conference identification code 57362314.

Statements in this release about future events or performance, including gross revenues and earnings expectations for the third quarter of 2008, are forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause the actual results of the Company to be materially different from any future results expressed or implied by such forward-looking statements. Factors that could affect future results include economic conditions in the Company's service areas, the effect of changes in the Company's mix of services on gross margin, the Company's ability to successfully integrate acquired businesses with its existing operations, future workers' compensation claims experience, the effect of changes in the workers' compensation regulatory environment in one or more of its primary markets, the collectibility of accounts receivable and the effect of conditions in the global capital markets on the Company's investment portfolio, among others. Other important factors that may affect the Company's future prospects are described in the Company's 2007 Annual Report on Form 10-K. Although forward-looking statements help to provide complete information about the Company, readers should keep in mind that forward-looking statements may be less reliable than historical information. The Company undertakes no obligation to update or revise forward-looking statements in this release to reflect events or changes in circumstances that occur after the date of this release.

BBSI provides a comprehensive range of human resource management solutions to large and small companies throughout many regions of the United States.

This news release was distributed by PrimeNewswire, www.primenewswire.com

SOURCE: Barrett Business Services, Inc.

Barrett Business Services, Inc.

William W. Sherertz, President and Chief Executive Officer

(360) 828-0700