BBSI Announces Fourth Quarter 2007 Operating Results, Financial Guidance for 1Q08 and Conference Call

VANCOUVER, Wash., Feb. 8, 2008 (PRIME NEWSWIRE) -- Barrett Business Services, Inc. (Nasdaq:BBSI) reported today net income of $3.9 million for the fourth quarter ended December 31, 2007, a decline of $1.3 million or 25.1% from net income of $5.2 million for the fourth quarter of 2006. Diluted earnings per share for the 2007 fourth quarter were $.34, as compared to diluted earnings per share of $.45 for the same quarter a year ago.

Net revenues for the fourth quarter ended December 31, 2007 totaled $81.8 million, an increase of approximately $15.0 million or 22.5% over the $66.8 million for the same quarter in 2006.


 ($ in thousands, except      (Unaudited)             (Unaudited)
  per share amounts)      Fourth Quarter Ended        Year Ended
                              December 31,            December 31,
                          --------------------    --------------------
 Results of Operations      2007        2006        2007        2006
 -----------------------  --------    --------    --------    --------
 Revenues:
   Staffing services      $ 45,548    $ 32,766    $147,221    $123,500
   Professional employer
    service fees            36,283      34,055     141,992     135,684
                          --------    --------    --------    --------
     Total revenues         81,831      66,821     289,213     259,184
                          --------    --------    --------    --------
 Cost of revenues:
   Direct payroll costs     34,250      24,849     113,450      92,676
   Payroll taxes and
    benefits                21,534      20,079      87,822      83,756
   Workers' compensation    10,590       6,240      29,031      27,199
                          --------    --------    --------    --------
     Total cost of
      revenues              66,374      51,168     230,303     203,631
                          --------    --------    --------    --------
 Gross margin               15,457      15,653      58,910      55,553
 Selling, general and
  administrative
  expenses                  10,043       8,140      34,688      31,604
 Depreciation and
  amortization                 372         341       1,387       1,306
                          --------    --------    --------    --------
 Income from operations      5,042       7,172      22,835      22,643
 Other income, net             732         812       3,083       2,847
                          --------    --------    --------    --------
 Income before taxes         5,774       7,984      25,918      25,490
 Provision for income
  taxes                      1,859       2,755       9,112       9,154
                          --------    --------    --------    --------
 Net income               $  3,915    $  5,229    $ 16,806    $ 16,336
                          ========    ========    ========    ========
 Basic earnings per
  share                   $    .35    $    .46    $   1.49    $   1.46
                          ========    ========    ========    ========
 Weighted average basic
  shares outstanding        11,193      11,251      11,247      11,194
                          ========    ========    ========    ========
 Diluted earnings per
  share                   $    .34    $    .45    $   1.44    $   1.40
                          ========    ========    ========    ========
 Weighted average
  diluted shares
  outstanding               11,555      11,680      11,654      11,671
                          ========    ========    ========    ========

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)
                      Fourth Quarter Ended           Year Ended
 (in thousands)            December 31,             December 31,
                      --------------------    ------------------------
                        2007        2006         2007          2006
                      --------    --------    ----------    ----------
 Revenues:
   Staffing services  $ 45,548    $ 32,766    $  147,221    $  123,500
   Professional
    employer
    services           248,251     241,065       968,576       916,898
                      --------    --------    ----------    ----------
     Total revenues    293,799     273,831     1,115,797     1,040,398
                      --------    --------    ----------    ----------
 Cost of revenues:
   Direct payroll
    costs              246,530     230,555       935,697       869,410
   Payroll taxes
    and benefits        21,534      20,079        87,822        83,756
   Workers'
    compensation        10,278       7,544        33,368        31,679
                      --------    --------    ----------    ----------
     Total cost of
      revenues         278,342     258,178     1,056,887       984,845
                      --------    --------    ----------    ----------
 Gross margin         $ 15,457    $ 15,653    $   58,910    $   55,553
                      ========    ========    ==========    ==========

Gross revenues of $293.8 million for the fourth quarter ended December 31, 2007 rose 7.3% over the similar period in 2006. For the year ended December 31, 2007, gross revenues of $1.12 billion increased 7.2% over the comparable 2006 period.

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

For the fourth quarters ended December 31, 2007 and 2006:


                                  (Unaudited)
                          Three Months Ended December 31,
               -------------------------------------------------------
                 Gross Revenue                          Net Revenue
 (in thousands) Reporting Method   Reclassification   Reporting Method
               ----------------- --------------------  ---------------
                 2007     2006     2007       2006       2007    2006
               -------- -------- ---------  ---------  ------- -------
 Revenues:
  Staffing
   services    $ 45,548 $ 32,766 $      --  $      --  $45,548 $32,766
  Professional
   employer
   services     248,251  241,065  (211,968)  (207,010)  36,283  34,055
               -------- -------- ---------  ---------  ------- -------
   Total
   revenues    $293,799 $273,831 $(211,968) $(207,010) $81,831 $66,821
               ======== ======== =========  =========  ======= =======
 Cost of
  revenues     $278,342 $258,178 $(211,968) $(207,010) $66,374 $51,168
               ======== ======== =========  =========  ======= =======

For the years ended December 31, 2007 and 2006:


                                  (Unaudited)
                              Year Ended December 31,
         -------------------------------------------------------------
 (in         Gross Revenue                              Net Revenue
 thousands) Reporting Method     Reclassification     Reporting Method
         --------------------- --------------------  -----------------
            2007       2006      2007       2006       2007     2006
         ---------- ---------- ---------  ---------  -------- --------
 Revenues:
  Staffing
   serv-
   ices  $  147,221 $  123,500 $      --  $      --  $147,221 $123,500
  Profess-
   ional
   employer
   serv-
   ices     968,576    916,898  (826,584)  (781,214)  141,992  135,684
         ---------- ---------- ---------  ---------  -------- --------
   Total
    reve-
    nues $1,115,797 $1,040,398 $(826,584) $(781,214) $289,213 $259,184
         ========== ========== =========  =========  ======== ========
 Cost of
  reve-
  nues   $1,056,887 $  984,845 $(826,584) $(781,214) $230,303 $203,631
         ========== ========== =========  =========  ======== ========

The following summarizes the unaudited consolidated balance sheets at December 31, 2007 and December 31, 2006.


                                                  Dec. 31,    Dec. 31,
 (in thousands)                                     2007        2006
                                                  --------    --------
                      Assets
                      ------
 Current assets:
   Cash and cash equivalents                      $ 62,779    $ 69,874
   Marketable securities                             1,717       3,159
   Trade accounts receivable, net                   36,673      31,328
   Prepaid expenses and other                        1,773       1,940
   Deferred income taxes                             5,471       4,699
   Workers' compensation receivables for
    insured claims                                     225         225
                                                  --------    --------
     Total current assets                          108,638     111,225
 Marketable securities                                 417         406
 Goodwill, net                                      41,508      27,536
 Intangibles, net                                      119          75
 Property, equipment and software, net              16,136      13,502
 Restricted marketable securities and workers'
  compensation deposits                              2,750       2,616
 Other assets                                        1,530       2,143
 Workers' compensation receivables for insured
  claims                                             3,896       4,678
                                                  --------    --------
                                                  $174,994    $162,181
                                                  ========    ========

        Liabilities and Stockholders' Equity
        ------------------------------------
 Current liabilities:
   Accounts payable                               $  1,516    $  1,545
   Accrued payroll, payroll taxes and related
    benefits                                        33,553      33,372
   Other accrued liabilities                         1,064         516
   Workers' compensation claims liabilities          6,031       3,843
   Workers' compensation claims liabilities
    for insured claims                                 225         225
   Safety incentives liabilities                     5,911       7,519
                                                  --------    --------
     Total current liabilities                      48,300      47,020
 Customer deposits                                     752         817
 Long-term workers' compensation claims
  liabilities                                        4,021       5,295
 Long-term workers' compensation liabilities
  for insured claims                                 2,464       3,011
 Deferred income taxes                               5,038       1,545
 Deferred gain on sale and leaseback                   671         793
 Stockholders' equity                              113,748     103,700
                                                  --------    --------
                                                  $174,994    $162,181
                                                  ========    ========

Outlook for First Quarter 2008

The Company also disclosed today limited financial guidance with respect to its operating results for the first quarter ending March 31, 2008. The Company expects gross revenues for the first quarter of 2008 to range from $263 million to $268 million, as compared to $257.5 million for the first quarter of 2007, and anticipates diluted earnings per share for the first quarter of 2008 to range from $.08 to $.12 per share, as compared to $.15 per share for the same period a year ago. A reconciliation of estimated gross revenues to estimated GAAP net revenues for the first quarter of 2008 is not included because PEO revenues and cost of PEO revenues for the period are not reasonably estimable.

Conference Call

On February 8 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 2007 operating results. To participate in the call, dial (877) 356-3717. The call identification number is 34721913. 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 Friday, February 8, 2008 at 12:00 p.m. PT and ending on February 15, 2008. To listen to the recording, dial (800) 642-1687 and enter conference identification code 34721913.

Statements in this release about future events or performance, including gross revenues and earnings expectations for the first 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 and the collectibility of accounts receivable, among others. Other important factors that may affect the Company's future prospects are described in the Company's 2006 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.

CONTACT:  Barrett Business Services, Inc.
          William W. Sherertz, President and Chief Executive Officer
          (360) 828-0700