Barrett Business Services, Inc. Announces Fourth Quarter 2003 Operating Results and Schedules Investor Conference Call

PORTLAND, Ore., Feb. 5 /PRNewswire-FirstCall/ -- Barrett Business

Services, Inc. (Nasdaq: BBSI) reported today net income of $1,318,000 for the

fourth quarter ended December 31, 2003, an improvement of $2.3 million over a

net loss of $993,000 for the fourth quarter of 2002. Diluted income per share

for the 2003 fourth quarter was $.22, as compared to a diluted loss per share

of $(.17) for the 2002 fourth quarter.

Net revenues for the fourth quarter ended December 31, 2003 totaled $36.6

million, an increase of approximately $10.9 million or 42.5% over the $25.7

million for the same quarter in 2002. Total net revenues for 2003 amounted to

$122.7 million, an increase of 12.3% over 2002.

                                 (Unaudited)               (Unaudited)

Fourth Quarter Ended Year Ended

December 31, December 31,

Results of Operations 2003 2002 2003 2002

(in thousands, except

per share amounts)

Revenues:

Staffing services $ 23,661 $ 22,561 $ 93,544 $ 96,750

Professional

employer service

fees 12,988 3,153 29,177 12,558

Total revenues 36,649 25,714 122,721 109,308

Cost of revenues:

Direct payroll costs 17,482 16,674 69,099 71,515

Payroll taxes and

benefits 8,545 3,223 22,916 14,062

Workers' compensation 3,425 3,364 9,333 8,766

Total cost of

revenues 29,452 23,261 101,348 94,343

Gross margin 7,197 2,453 21,373 14,965

Selling, general and

administrative

expenses 5,139 3,753 17,186 16,008

Depreciation and

amortization 251 280 1,058 1,162

Income (loss) from

operations 1,807 (1,580) 3,129 (2,205)

Other (expense)

income, net (18) (46) (154) (40)

Income (loss) before

taxes 1,789 (1,626) 2,975 (2,245)

Provision for (benefit

from) income taxes 471 (633) 890 (892)

Net income (loss) $1,318 $(993) $2,085 $ (1,353)

Basic income (loss)

per share $.23 $(.17) $.36 $(.23)

Weighted average basic

shares outstanding 5,660 5,787 5,690 5,804

Diluted income (loss)

per share $.22 $(.17) $.35 $(.23)

Weighted average diluted

shares outstanding 6,088 5,787 5,876 5,804

The Company changed its reporting of PEO revenues from a gross basis to a

net basis in 2002 because it was determined that the Company was not the

primary obligor for the services provided by employees pursuant to its PEO

contracts. 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)

Fourth Quarter Ended Year Ended

($ in thousands) December 31, December 31,

2003 2002 2003 2002

Revenues:

Staffing services $23,661 $22,561 $93,544 $96,750

Professional

employer services 77,366 18,683 173,134 73,952

Total revenues $101,027 $ 41,244 $266,678 $170,702

Cost of revenues:

Direct payroll

costs $ 80,510 $ 32,204 $210,785 $132,909

Payroll taxes

and benefits 8,545 3,223 22,916 14,062

Workers' compensation 4,775 3,364 11,604 8,766

Total cost of

revenues 93,830 38,791 245,305 155,737

Gross margin $7,197 $2,453 $ 21,373 $14,965

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

For the fourth quarters ended December 31, 2003 and 2002 (in thousands):

Gross Revenue Net Revenue

Reporting Method Reclassification Reporting Method

2003 2002 2003 2002 2003 2002

Revenues:

Staffing

services $23,661 $22,561 $-- $-- $23,661 $22,561

Professional

employer

services 77,366 18,683 (64,378) (15,530) 12,988 3,153

Total

revenues $101,027 $41,244 $(64,378) $(15,530) $36,649 $25,714

Cost of

revenues: $93,830 $38,791 $(64,378) $(15,530) $29,452 $23,261

For the years ended December 31, 2003 and 2002 (in thousands):

Gross Revenue Net Revenue

Reporting Method Reclassification Reporting Method

2003 2002 2003 2002 2003 2002

Revenues:

Staffing

services $93,544 $96,750 $-- $-- $93,544 $96,750

Professional

employer

services 173,134 73,952 (143,957) (61,394) 29,177 12,558

Total

revenues $266,678 $170,702 $(143,957) $(61,394) $122,721 $109,308

Cost of

revenues: $245,305 $155,737 $(143,957) $(61,394) $101,348 $94,343

William W. Sherertz, President and Chief Executive Officer, commented

that: "We are very pleased with achieving a new milestone for the Company with

$101 million in total gross revenues for the fourth quarter. We believe that

the momentum generated by our expanding customer base portends improved

operating results in 2004."

The following summarizes the unaudited balance sheets at December 31, 2003

and December 31, 2002.

    ($ in thousands)                               December 31, December 31,

2003 2002

Assets

Current assets:

Cash and cash equivalents $7,785 $96

Income taxes receivable -- 1,923

Trade accounts receivable, net 18,381 11,357

Prepaid expenses and other 958 1,040

Deferred income taxes 2,125 2,111

Total current assets 29,249 16,527

Goodwill, net 18,749 18,749

Intangibles, net 13 59

Property, equipment and software, net 3,367 5,167

Restricted marketable securities and workers'

compensation deposits 1,647 4,286

Deferred income taxes 1,041 1,445

Other assets 436 1,064

$54,502 $47,297

Liabilities and Stockholders' Equity

Current liabilities:

Current portion of long-term debt $88 $434

Line of credit payable -- 3,513

Income taxes payable 297 --

Accounts payable 727 834

Accrued payroll, payroll taxes and related

benefits 13,881 4,897

Workers' compensation claims liabilities 3,555 3,903

Safety incentives payable 2,007 406

Other accrued liabilities 361 305

Current portion of deferred gain on sale

and leaseback 122 --

Total current liabilities 21,038 14,292

Long-term debt, net of current portion 400 488

Customer deposits 455 443

Long-term workers' compensation claims

liabilities 1,031 2,492

Other long-term liabilities 45 797

Long-term deferred gain on sale and leaseback 1,036 --

Stockholders' equity 30,497 28,785

$54,502 $47,297

On February 6, 2004 at 9:00 a.m. Pacific Time, William W. Sherertz and

Michael D. Mulholland will host an investor telephone conference call to

discuss fourth quarter 2003 operating results. To participate in the call,

dial 877-356-3717 shortly before 9:00 a.m. Pacific Time on February 6, 2004.

The call identification number is 5399009. A recording of the call will be

available beginning February 6, 2004 at 11:00 a.m. and ending February 13,

2004. To listen to the recording, dial 800-642-1687 and enter conference

identification code 5399009.

Barrett Business Services, Inc. is a human resource management company

with offices in eight states, which serve customers in approximately 18

states.

Statements in this release about future events or performance, including

earnings expectations for 2004, 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, future workers' compensation claims experience, collectibility of

accounts receivable, and availability of funding for working capital purposes,

among others. Other important factors that may affect the Company's future

prospects are described in the Company's 2002 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.

SOURCE Barrett Business Services, Inc.