Barrett Business Services, Inc. Announces Fourth Quarter 2002 Operating Results, Restatement of Revenues, Progress Towards Bank Credit Facility Renewal and Schedules Investor Conference Call
PORTLAND, Ore., March 19 /PRNewswire-FirstCall/ --
Barrett Business Services, Inc. (Nasdaq: BBSI) reported today a net loss of
$993,000 for the fourth quarter ended December 31, 2002, an improvement of
$1,276,000 from a net loss of $2,269,000 for the fourth quarter of 2001. The
diluted loss per share for the 2002 fourth quarter was $(.17) as compared to a
diluted loss per share of $(.38) for the same quarter a year ago. The net
loss for 2002 totaled $1,353,000, an improvement of $1,069,000 over the 2001
net loss of $2,422,000.
The Company and several other publicly-traded PEO companies have
determined to restate PEO revenues based upon Emerging Issues Task Force Issue
No. 99-19, "Reporting Revenues Gross as a Principal versus Net as an Agent"
("EITF 99-19"). The restatement is predicated upon the determination that a
PEO company is not the primary obligor of the direct payroll costs of its PEO
employees. Under the Company's new "net revenue" reporting for PEO services,
the salaries and wages of PEO employees are no longer recognized as revenue
components by "netting" such costs against PEO revenues. The Company will
provide comparative financial information within its future public filings and
disclosures. Pursuant to this restatement, total revenues for the fourth
quarter ended December 31, 2002 amounted to $25.7 million, a decrease of
approximately $6.5 million or 20.2% from the $32.2 million for the same
quarter in 2001. Total revenues for 2002 were $109.3 million, a decrease of
approximately $30.1 million or 21.6% from the $139.4 million for 2001. The
new application of EITF 99-19 has no effect on gross margin dollars, net
income, cash flows, working capital and shareholders' equity amounts
previously reported, and will not affect such amounts in future periods.
The following statements of operations are based upon the Company's newly
adopted revenue recognition accounting policy of "net revenue" reporting for
PEO revenues pursuant to EITF 99-19:
(Unaudited) (Unaudited)Fourth Quarter Ended Year Ended
December 31, December 31,
Results of Operations Restated Restated
2002 2001 2002 2001
(in thousands, except per share amounts)
Revenues:
Staffing services $22,561 $28,351 $96,750 $123,110
Professional employer
service fees 3,153 3,889 12,558 16,281
Total revenues 25,714 32,240 109,308 139,391
Cost of revenues:
Direct payroll costs 16,674 20,931 71,515 90,750
Payroll taxes
and benefits 3,223 3,841 14,062 17,635
Workers' compensation 3,364 5,927 8,766 12,971
Total cost
of revenues 23,261 30,699 94,343 121,356
Gross margin 2,453 1,541 14,965 18,035
Selling, general and
administrative expenses 3,753 4,468 16,008 18,737
Depreciation and
amortization 280 808 1,162 3,277
Loss from operations (1,580) (3,735) (2,205) (3,979)
Other (expense) income, net (46) 6 (40) (17)
Loss before taxes (1,626) (3,729) (2,245) (3,996)
Benefit from income taxes (633) (1,460) (892) (1,574)
Net loss $(993) $(2,269) $(1,353) $ (2,422)
Basic loss per share $(.17) $(.38) $(.23) $(.39)
Weighted average
basic shares outstanding 5,787 5,969 5,804 6,193
Diluted loss per share $(.17) $(.38) $(.23) $(.39)
Weighted average
diluted shares outstanding 5,787 5,969 5,804 6,193
As noted above, the Company has changed its reporting of PEO revenues to a
net basis. A reconciliation of the restated amounts to the amounts previously
reported is as follows.
(Unaudited)Fourth (Unaudited)
Quarter Ended Year Ended
December 31, December 31,
2001 2002 2001
Revenues:
Restated professional
employer service fees $3,889 $12,558 $16,281
Adjustment 18,437 61,394 77,272
Professional employer services,
as previously reported $22,326 $73,952 $93,553
Cost of revenues:
Restated direct payroll costs $20,931 $71,515 $90,750
Adjustment 18,437 61,394 77,272
Direct payroll costs,
as previously reported $39,368 $132,909 $168,022
As a result of the Company's adoption of Statement of Financial Accounting
Standard No. 142 - Goodwill and Other Intangible Assets, as of January 1,
2002, the Company ceased the amortization of goodwill. Operating results for
the fourth quarter and the full year of 2001 included $454,000 and $1,783,000
of goodwill amortization, respectively.
William W. Sherertz, President and Chief Executive Officer, commented
that: "In spite of the reduction in workers' compensation expense in the 2002
fourth quarter both in terms of dollars and as a percent of revenues, as
compared to last year, we continue to be negatively affected by significantly
higher claims costs in California. On a positive note, our strengthened
branch management team is beginning to achieve increases in market share
leading to improved revenue trends thus far in 2003, particularly in
California."
The Company also announced that it has reached an agreement in principle
with its primary bank in connection with the scheduled renewal of its existing
credit facility on April 30, 2003.
The following summarizes the unaudited balance sheets at December 31, 2002
and December 31, 2001.
($ in thousands)December 31, December 31,
2002 2001
Assets
Current assets:
Cash and cash equivalents $96 $1,142
Income taxes receivable 1,923 --
Trade accounts receivable, net 11,357 13,760
Prepaid expenses and other 1,040 1,022
Deferred tax assets 2,111 2,841
Total current assets 16,527 18,765
Goodwill, net 18,749 18,749
Intangibles, net 59 129
Property, equipment and software, net 5,167 6,084
Restricted marketable securities
and workers' compensation deposits 4,286 5,425
Deferred tax assets 1,445 2,268
Other assets 1,064 1,146
$47,297 $52,566
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt $434 $708
Line of credit payable 3,513 3,424
Accounts payable 834 686
Accrued payroll, payroll taxes
and related benefits 4,897 5,165
Workers' compensation claim
and safety incentive liabilities 4,309 5,735
Other accrued liabilities 305 389
Total current liabilities 14,292 16,107
Long-term debt, net of current portion 488 922
Customer deposits 443 520
Long-term workers' compensation
liabilities 2,492 3,515
Other long-term liabilities 797 968
Stockholders' equity 28,785 30,534
$47,297 $52,566
On March 20, 2003, at 10:00 a.m. Pacific Time, William W. Sherertz will
host an investor telephone conference call to discuss fourth quarter 2002
operating results. To participate in the call, dial 877-356-3717 shortly
before 10:00 a.m. Pacific Time on March 20, 2003. A recording of the call
will be available beginning March 20, 2003 at 12 noon and ending
March 27, 2003 at 12 midnight. To listen to the recording, dial 800-642-1687
and enter conference identification code 9327905.
Barrett Business Services, Inc. is a human resource management company with
offices in seven states, which serve customers in approximately 15 states.
Statements in this release about future events or performance 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. 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.
SOURCE Barrett Business Services, Inc.
Released March 19, 2003