Form: 8-K

Current report filing

August 1, 2003

Documents

99.1

Published on August 1, 2003

EXHIBIT 99.1

11:10 AM
NEWS RELEASE

For Immediate Release Contact: William W. Sherertz
President and
Chief Executive Officer

Telephone: (503) 220-0988

BARRETT BUSINESS SERVICES, INC.
ANNOUNCES SECOND QUARTER 2003 OPERATING RESULTS AND
SCHEDULES INVESTOR CONFERENCE CALL

PORTLAND, OREGON, JULY 30, 2003 - Barrett Business Services, Inc. (Nasdaq
trading symbol: BBSI) reported today net income of $167,000 for the second
quarter ended June 30, 2003, an improvement of $166,000 over net income of
$1,000 for the second quarter of 2002. The diluted income per share for the 2003
second quarter was $.03.

Revenues for the second quarter ended June 30, 2003 totaled $27.9 million,
an increase of approximately $136,000 or 0.5% over the $27.8 million for the
same quarter in 2002.



(Unaudited) (Unaudited)
Second Quarter Ended Six Months Ended
June 30, June 30,
--------------------- ----------------------
Results of Operations 2003 2002 2003 2002
- ------------------------------------------- --------- --------- ---------- ----------
(in thousands, except per share amounts)
Revenues:

Staffing services $23,046 $24,684 $43,156 $47,254
Professional employer service fees 4,856 3,082 8,143 6,250
--------- --------- ---------- ----------
Total revenues 27,902 27,766 51,299 53,504
--------- --------- ---------- ----------
Cost of revenues:
Direct payroll costs 17,079 18,175 31,877 34,809
Payroll taxes and benefits 4,385 3,520 8,190 7,212
Workers' compensation 1,982 1,719 3,407 3,344
--------- --------- ---------- ----------
Total cost of revenues 23,446 23,414 43,474 45,365
--------- --------- ---------- ----------
Gross margin 4,456 4,352 7,825 8,139
Selling, general and administrative expenses 3,869 4,072 7,465 8,271
Depreciation and amortization 271 288 551 600
--------- --------- ---------- -----------
Income (loss) from operations 316 (8) (191) (732)
Other (expense) income, net (68) 9 (74) 20
--------- --------- ---------- ----------
Income (loss) before taxes 248 1 (265) (712)
Provision for (benefit from) income taxes 81 - (89) (296)
--------- --------- ---------- ----------
Net income (loss) $ 167 $ 1 $ (176) $ (416)
========= ========= ========== ==========
Basic income (loss) per share $ .03 $ - $ (.03) $ (.07)
========= ========= ========== ==========
Weighted average basic shares outstanding 5,708 5,806 5,728 5,814
========= ========= ========== ==========
Diluted income (loss) per share $ .03 $ - $ (.03) $ (.07)
========= ========= ========== ==========
Weighted average diluted shares outstanding 5,726 5,826 5,728 5,814
========= ========= ========== ==========





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,


-1-


Barrett Business Services, Inc.
News Release - Second Quarter 2003
July 30, 2003

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 Ended Six Months Ended
($ in thousands) June 30, June 30,
---------------------- ---------------------
2003 2002 2003 2002
---------- ---------- --------- ---------
Revenues:

Staffing services $23,046 $24,684 $43,156 $47,254
Professional employer services 28,342 18,164 48,881 36,559
---------- ---------- --------- ---------
Total revenues 51,388 42,848 92,037 83,813
---------- ---------- --------- ---------
Cost of revenues:
Direct payroll costs 40,565 33,257 72,615 65,118
Payroll taxes and benefits 4,385 3,520 8,190 7,212
Workers' compensation 1,982 1,719 3,407 3,344
---------- ---------- --------- ---------
Total cost of revenues 46,932 38,496 84,212 75,674
---------- ---------- --------- ---------
Gross margin $ 4,456 $ 4,352 $ 7,825 $ 8,139
========== ========== ========= =========



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

For the second quarters ended June 30, 2003 and 2002 (in thousands):




Gross Revenue Net Revenue
Reporting Method Reclassification Reporting Method
----------------------- ------------------------ -----------------------
2003 2002 2003 2002 2003 2002
---------- ---------- ----------- ----------- ---------- ----------
Revenues:

Staffing services $23,046 $24,684 $ - $ - $23,046 $24,684
Professional
employer services 28,342 18,164 (23,486) (15,082) 4,856 3,082
--------- --------- ----------- ---------- --------- ---------
Total revenues $51,388 $42,848 $(23,486) $(15,082) $27,902 $27,766
========= ========= =========== ========== ========= =========
Cost of revenues:
Direct payroll
costs $40,565 $33,257 $(23,486) $(15,082) $17,079 $18,175
========= ========= =========== ========== ========= =========


For the six months ended June 30, 2003 and 2002 (in thousands):




Gross Revenue Net Revenue
Reporting Method Reclassification Reporting Method
---------------------- ------------------------ -----------------------
2003 2002 2003 2002 2003 2002
---------- ---------- ----------- ----------- ---------- ----------
Revenues:

Staffing services $43,156 $47,254 $ - $ - $43,156 $47,254
Professional
employer services 48,881 36,559 (40,738) (30,309) 8,143 6,250
-------- -------- ---------- ---------- -------- --------
Total revenues $92,037 $83,813 $(40,738) $(30,309) $51,299 $53,504
======== ======== ========== ========== ======== ========
Cost of revenues:
Direct payroll
costs $72,615 $65,118 $(40,738) $(30,309) $31,877 $34,809
======== ======== ========== ========== ======== ========

-2-


Barrett Business Services, Inc.
News Release - Second Quarter 2003
July 30, 2003

William W. Sherertz, President and Chief Executive Officer, commented
that: "As we noted last quarter, we continue to be encouraged by our prospects
for continued growth in revenues and profitability. Our PEO business is
particularly strong in California and we do not see, at the present time, any
issues that would impede our momentum in the foreseeable future. This leads us
to anticipate earnings in the range of $.10 to $.13 per diluted share for each
of the two remaining quarters of 2003. We are also pleased with the June 30
completion of a $2 million sale-leaseback transaction of two office buildings,
which will provide additional liquidity to fund our future growth. This
transaction eliminated our long-term bank debt."

The following summarizes the unaudited balance sheets at June 30, 2003 and
December 31, 2002.

($ in thousands) June 30, December 31,
2003 2002
------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 1,977 $ 96
Income taxes receivable - 1,923
Trade accounts receivable, net 14,827 11,357
Prepaid expenses and other 1,893 1,040
Deferred income taxes 1,839 2,111
------- -------
Total current assets 20,536 16,527
Goodwill, net 18,749 18,749
Intangibles, net 35 59
Property, equipment and software, net 3,611 5,167
Restricted marketable securities and workers'
compensation deposits 4,142 4,286
Deferred income taxes 1,445 1,445
Other assets 937 1,064
------- -------
$49,455 $47,297
======= =======

Liabilities and Stockholders' Equity

Current liabilities:
Current portion of long-term debt $ 88 $ 434
Line of credit payable 4,056 3,513
Accounts payable 712 834
Accrued payroll, payroll taxes and related benefits 8,229 4,897
Workers' compensation claims liabilities 1,783 3,903
Safety incentives payable 439 406
Other accrued liabilities 587 305
Current portion of deferred gain on sale and leaseback 122 -
------- -------
Total current liabilities 16,016 14,292
Long-term debt, net of current portion 400 488
Customer deposits 441 443
Long-term workers' compensation claims liabilities 2,481 2,492
Other long-term liabilities 673 797
Long-term deferred gain on sale and leaseback 1,097 -
Stockholders' equity 28,347 28,785
------- -------
$49,455 $47,297
======= =======
-3-


Barrett Business Services, Inc.
News Release - Second Quarter 2003
July 30, 2003

The Company also announced that its board of directors had recently
approved an increase of $500,000 in the capital available for the Company's
share repurchase program, under which the Company repurchases shares in the open
market from time to time when deemed appropriate, taking into consideration
price and other factors.

On July 31, 2003 at 9:00 a.m. Pacific Time, William W. Sherertz will host
an investor telephone conference call to discuss second quarter 2003 operating
results. To participate in the call, dial (877)356-3717 shortly before 9:00 a.m.
Pacific Time on July 31, 2003. The call identification number is 1961120. A
recording of the call will be available beginning July 31, 2003 at 12:00 p.m.
and ending Thursday, August 7, 2003. To listen to the recording, dial
(800)642-1687 and enter conference identification code 1961120.

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, including
earnings expectations for the remaining two quarters of 2003, 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.

#####