Form: 8-K

Current report filing

July 28, 2004

Documents

99.1 PR

Published on July 28, 2004

Exhibit 99.1

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 2004 OPERATING RESULTS AND
FINANCIAL GUIDANCE FOR 3Q04

PORTLAND, OREGON, July 28, 2004 - Barrett Business Services, Inc. (Nasdaq:
BBSI) reported today net income of $1,840,000 for the second quarter ended June
30, 2004, an improvement of $1,673,000 over net income of $167,000 for the
second quarter of 2003. Diluted earnings per share for the 2004 second quarter
was $.30, as compared to diluted earnings per share of $.03 for the same quarter
a year ago.

Net revenues for the second quarter ended June 30, 2004 totaled $47.7
million, an increase of approximately $19.8 million or 71% over the $27.9
million for the same quarter in 2003.




(Unaudited) (Unaudited)
Second Quarter Ended Six Months Ended
June 30, June 30,
------------------- -------------------
Results of Operations 2004 2003 2004 2003
- ------------------------------------------- ------- ------- ------- -------
(in thousands, except per share amounts)

Revenues:
Staffing services $30,470 $23,046 $55,524 $43,156
Professional employer service fees 17,234 4,856 32,790 8,143
------- ------- ------- -------
Total revenues 47,704 27,902 88,314 51,299
------- ------- ------- -------
Cost of revenues:
Direct payroll costs 22,551 17,079 40,871 31,877
Payroll taxes and benefits 10,649 4,385 22,180 8,190
Workers' compensation 5,644 1,982 9,680 3,407
------- ------- ------- -------
Total cost of revenues 38,844 23,446 72,731 43,474
------- ------- ------- -------
Gross margin 8,860 4,456 15,583 7,825
Selling, general and administrative expenses 5,701 3,869 11,233 7,465
Depreciation and amortization 253 271 495 551
------- ------- ------- -------
Income (loss) from operations 2,906 316 3,855 (191)
Other income (expense), net 38 (68) 59 (74)
------- ------- ------- -------
Income (loss) before taxes 2,944 248 3,914 (265)
Provision for (benefit from) income taxes 1,104 81 1,468 (89)
------- ------- ------- -------
Net income (loss) $ 1,840 $ 167 $ 2,446 $ (176)
======= ======= ======= =======
Basic earnings (loss) per share $ .32 $ .03 $ .43 $ (.03)
======= ======= ======= =======
Weighted average basic shares outstanding 5,716 5,708 5,710 5,728
======= ======= ======= =======
Diluted earnings (loss) per share $ .30 $ .03 $ .40 $ (.03)
======= ======= ======= =======
Weighted average diluted shares outstanding 6,134 5,726 6,138 5,728
======= ======= ======= =======


The Company changed its reporting of PEO revenues from a gross basis to a
net basis in 2002. 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

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Barrett Business Services, Inc.
News Release - Second Quarter 2004
July 28, 2004


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,
-------------------- --------------------
2004 2003 2004 2003
-------- ------- -------- -------

Revenues:
Staffing services $ 30,470 $23,046 $ 55,524 $43,156
Professional employer services 97,984 28,342 189,704 48,881
-------- ------- -------- -------
Total revenues 128,454 51,388 245,228 92,037
-------- ------- -------- -------

Cost of revenues:
Direct payroll costs 102,390 40,565 195,757 72,615
Payroll taxes and benefits 10,648 4,385 22,179 8,190
Workers' compensation 6,556 1,982 11,709 3,407
-------- ------- -------- -------
Total cost of revenues 119,594 46,932 229,645 84,212
-------- ------- -------- -------
Gross margin $ 8,860 $ 4,456 $ 15,583 $ 7,825
======== ======= ======== =======


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

For the second quarters ended June 30, 2004 and 2003 (in thousands):




Gross Revenue Net Revenue
Reporting Method Reclassification Reporting Method
-------------------- ---------------------- ---------------------
2004 2003 2004 2003 2004 2003
-------- ------- --------- -------- -------- -------

Revenues:
Staffing services $ 30,470 $23,046 $ - $ - $ 30,470 $23,046
Professional
employer services 97,984 28,342 (80,750) (23,486) 17,234 4,856
-------- ------- --------- -------- -------- -------
Total revenues $128,454 $51,388 $ (80,750) $(23,486) $ 47,704 $27,902
======== ======= ========= ======== ======== =======

Cost of revenues: $119,594 $46,932 $ (80,750) $(23,486) $ 38,844 $23,446
======== ======= ========= ======== ======== =======

For the six months ended June 30, 2004 and 2003 (in thousands):

Gross Revenue Net Revenue
Reporting Method Reclassification Reporting Method
-------------------- ---------------------- ---------------------
2004 2003 2004 2003 2004 2003
-------- ------- --------- -------- -------- -------
Revenues:
Staffing services $ 55,524 $43,156 $ - $ - $ 55,524 $43,156
Professional
employer services 189,704 48,881 (156,914) (40,738) 32,790 8,143
-------- ------- --------- -------- -------- -------
Total revenues $245,228 $92,037 $(156,914) $(40,738) $ 88,314 $51,299
======== ======= ========= ======== ======== =======

Cost of revenues: $229,645 $84,212 $(156,914) $(40,738) $ 72,731 $43,474
======== ======= ========= ======== ======== =======



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Barrett Business Services, Inc.
News Release - Second Quarter 2004
July 28, 2004

William W. Sherertz, President and Chief Executive Officer, commented
that: "We are very pleased with our continuing growth in earnings and revenues,
both of which portend a strong second half of the year. During the second
quarter, we achieved strong revenue growth in all of our operating regions,
particularly in California, and we expect these trends to continue in the
foreseeable future."

The following summarizes the unaudited consolidated balance sheets at June
30, 2004 and December 31, 2003.

($ in thousands) June 30, December 31,
2004 2003
------- -------
Assets
------

Current assets:
Cash and cash equivalents $ 5,374 $ 7,785
Marketable securities 4,337 -
Trade accounts receivable, net 27,952 18,481
Prepaid expenses and other 1,805 958
Deferred income taxes 3,057 2,196
------- -------

Total current assets 42,525 29,420
Goodwill, net 21,738 18,749
Intangibles, net 35 13
Property, equipment and software, net 4,575 3,367
Restricted marketable securities and workers'
compensation deposits 1,854 1,647
Deferred income taxes 833 1,041
Other assets 412 436
------- -------
$71,972 $54,673
======= =======

Liabilities and Stockholders' Equity
------------------------------------

Current liabilities:
Current portion of long-term debt $ 348 $ 88
Income taxes payable 1,438 -
Accounts payable 470 727
Accrued payroll, payroll taxes and related benefits 21,471 13,881
Workers' compensation claims liabilities 6,185 3,886
Safety incentives liabilities 3,787 2,007
Other accrued liabilities 1,166 361
------- -------
Total current liabilities 34,865 20,950
Long-term debt, net of current portion 1,515 400
Customer deposits 514 455
Long-term workers' compensation claims liabilities 1,020 1,031
Other long-term liabilities - 45
Deferred gain on sale and leaseback 1,097 1,158
Stockholders' equity 32,961 30,634
------- -------
$71,972 $54,673
======= =======


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Outlook for Third Quarter 2004
- ------------------------------

The Company also disclosed today limited financial guidance with respect
to its operating results for the third quarter ending September 30, 2004. The
Company expects gross revenues for the third quarter to range from $135 million
to $137 million and anticipates diluted earnings per share to range from $.33 to
$.36 per share for the same period. A reconciliation of estimated gross revenues
to estimated GAAP net revenues for the third quarter of 2004 is not included
because PEO revenues and cost of PEO revenues for the period are not reasonably
estimable.

On July 29, 2004 at 9:00 a.m. Pacific Time, William W. Sherertz and
Michael D. Mulholland will host an investor telephone conference call to discuss
second quarter 2004 operating results. To participate in the call, dial
(877)356-3717. The call identification number is 8656923. 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 July 29, 2004 at 11:00 a.m. and
ending August 6, 2004. To listen to the recording, dial (800)642-1687 and enter
conference identification code 8656923.

BBSI provides human resource management solutions to large and small
companies throughout many regions of the United States.

Statements in this release about future events or performance, including
earnings expectations for the third quarter of 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, the
effect of changes in the workers' compensation regulatory environment in one or
more of our primary markets, 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 2003 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.

#####



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