Barrett Business Services, Inc. Announces Amended Operating Results for Fourth Quarter and 12-Months Ended December 31, 2001 and Schedules Investor Conference Call
PORTLAND, Ore., April 3 /PRNewswire-FirstCall/ --
Barrett Business Services, Inc. (Nasdaq: BBSI) reported today that it has
amended its previously announced operating results for the 2001 fourth quarter
and 12-months ended December 31, 2001 by recognizing a $1,837,000 after-tax
charge in connection with post-year end adverse development of the estimated
future expense of workers' compensation claims and, to a lesser extent, an
increased provision for estimated bad debt expense related to one customer.
Of the total after-tax charge of $1,837,000 ($3,000,000 pretax),
$1,745,000 ($2,850,000 pretax) was attributable to higher workers'
compensation expense and $92,000 ($150,000 pretax) was related to an increased
estimate for bad debt expense. For the fourth quarter ended December 31,
2001, the Company's amended net loss totaled $2,269,000, an increase of
$1,837,000 from the February 6, 2002 reported net loss of $432,000. The basic
and diluted net loss per share for the 2001 fourth quarter were $.38. Cash
flow per share (defined as net (loss) income plus depreciation and
amortization divided by weighted average diluted shares outstanding) for the
2001 fourth quarter was a negative $.24. The amended net loss for the year
ended December 31, 2001 amounted to $2,422,000, an increase of $1,837,000 from
the previously reported net loss of $585,000. The basic and diluted net loss
per share for 2001 were $.39. Cash flow per share for 2001 was a positive
$.14.
Revenues for the 2001 fourth quarter and 12-months ended December 31, 2001
were unchanged at $50.7 million and $216.7 million, respectively.
During February and March 2002, the Company's third party administrator
("TPA") for California workers' compensation claims reported significant
increases in the estimated future costs of claims to the Company. The
increases in estimated future costs were due in part to adverse development of
previous estimates for future claims costs, the TPA's recent completion of a
review of all claims files it had assumed from the Company's predecessor TPA
during 2001, and a change in claims reserving practices mandated by the State
of California. Due to the increased estimates for future claims costs, the
Company engaged its outside actuary to analyze the financial effect of the
revised costs estimates, which in turn resulted in the Company's recognition
of the additional charge for workers' compensation expense for 2001.
William W. Sherertz, President and Chief Executive Officer, commented
that, "I believe this charge will have minimal, if any, effect on the future
cash flow of the Company, as the increased estimated future claims expense is
primarily related to older claims. It has been our experience that the newer
or current year injury claims precipitate greater cash needs because of the
medical attention required by our injured employees. From an operational
standpoint, a significant number of the older claims originated from two
customers served by one branch office. We have made personnel changes at the
branch and corporate offices, changed customer service procedures to ensure
that we have a more appropriate match between the customers' personnel needs
and our available employees, and improved communications with our new
California TPA firm. Although the cost of workers' compensation claims in
California is far higher than any other zone within the Company, we believe
that our management team has effectively addressed the operational issues. On
a more positive note, we are encouraged that the burden of these increased
cost estimates for prior year claims will not affect current and future year
earnings."
(Unaudited) (Unaudited)Results of Operations Fourth Quarter Ended Year Ended
(in thousands, except December 31, December 31,
per share amounts) 2001 2000 2001 2000
Revenues:
Staffing services $28,351 $39,154 $123,110 $188,500
Professional employer
services 22,326 28,944 93,553 133,966
Total revenues 50,677 68,098 216,663 322,466
Cost of revenues:
Direct payroll costs 39,368 52,991 168,022 251,015
Payroll taxes and
benefits 3,841 5,219 17,635 27,007
Workers' compensation 5,927 3,378 12,971 12,639
Total cost of
revenues 49,136 61,588 198,628 290,661
Gross margin 1,541 6,510 18,035 31,805
Selling, general and
administrative
expenses 4,468 5,506 18,737 24,583
Depreciation and
amortization 808 819 3,277 3,192
(Loss) income
from operations (3,735) 185 (3,979) 4,030
Other income
(expense), net 6 (78) (17) (483)
(Loss) income
before taxes (3,729) 107 (3,996) 3,547
(Benefit from)
provision for income
taxes (1,460) 44 (1,574) 1,446
Net (loss) income $(2,269) $63 $(2,422) $2,101
Basic (loss) earnings
per share $(.38) $.01 $(.39) $.29
Weighted average basic
shares outstanding 5,969 6,838 6,193 7,237
Diluted (loss)
earnings per share $(.38) $.01 $(.39) $.29
Weighted average
diluted shares
outstanding 5,969 6,864 6,193 7,277
Cash flow per share $(.24) $.13 $.14 $.73
The following summarizes the unaudited balance sheets at December 31, 2001
and December 31, 2000.
December 31,($ in thousands) 2001 2000
Assets
Current assets:
Cash and cash equivalents $1,142 $516
Trade accounts receivable, net 13,760 20,660
Prepaid expenses and other 1,022 1,222
Deferred tax assets 2,841 2,702
Total current assets 18,765 25,100
Intangibles, net 18,878 20,982
Property, equipment and software, net 6,084 7,177
Restricted marketable securities and workers'
compensation deposits 5,425 4,254
Unrestricted marketable securities -- 1,386
Deferred tax assets 2,268 839
Other assets 1,146 1,127
$52,566 $60,865
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt $708 $2,939
Line of credit payable 3,424 2,628
Accounts payable 686 1,013
Accrued payroll, payroll taxes and
related benefits 5,165 7,893
Workers' compensation claim and safety
incentive liabilities 5,735 5,274
Other accrued liabilities 389 1,622
Total current liabilities 16,107 21,369
Long-term debt, net of current portion 922 2,283
Customer deposits 520 614
Long-term workers' compensation liabilities 3,515 682
Other long-term liabilities 968 1,000
Stockholders' equity 30,534 34,917
$52,566 $60,865
On Thursday, April 4, 2002, at 8:00 a.m. Pacific Time, William W. Sherertz
will host an investor telephone conference call to discuss the amended
operating results. To participate in the call, dial 800-399-3080 shortly
before 8:00 a.m. Pacific Time on Thursday, April 4, 2002. A recording of the
call will be available beginning April 4, 2002 at 12 noon and ending April 11,
2002 at 12 noon. To listen to the recording, dial 800-642-1687 and enter
conference identification code 3742987.
Barrett Business Services, Inc. is a human resource management company
with offices in ten 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, and future
workers' compensation claims experience, 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.
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SOURCE Barrett Business Services, Inc.
Web site: http: //www.barrettbusiness.com
CONTACT: William W. Sherertz, President and Chief Executive Officer of Barrett Business Services, Inc., +1-503-220-0988
Released April 3, 2002