Form: 8-K

Current report filing

October 27, 2004

Documents

99.1

Published on October 27, 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 THIRD QUARTER 2004 OPERATING RESULTS AND
FINANCIAL GUIDANCE FOR 4Q04

PORTLAND, OREGON, OCTOBER 27, 2004 - Barrett Business Services, Inc.
(Nasdaq: BBSI) reported today net income of $2,448,000 for the third quarter
ended September 30, 2004, an improvement of $1,505,000 over net income of
$943,000 for the third quarter of 2003. Diluted earnings per share for the 2004
third quarter was $.40, as compared to diluted earnings per share of $.16 for
the same quarter a year ago.

Net revenues for the third quarter ended September 30, 2004 totaled $54.7
million, an increase of approximately $19.9 million or 57.2% over the $34.8
million for the same quarter in 2003.



(Unaudited) (Unaudited)
Third Quarter Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
Results of Operations 2004 2003 2004 2003
- ------------------------------------------- -------- -------- -------- --------
(in thousands, except per share amounts)
Revenues:

Staffing services $ 35,673 $ 26,727 $ 91,197 $ 69,883
Professional employer service fees 19,006 8,046 51,796 16,189
-------- -------- -------- --------
Total revenues 54,679 34,773 142,993 86,072
-------- -------- -------- --------
Cost of revenues:
Direct payroll costs 26,436 19,740 67,307 51,617
Payroll taxes and benefits 11,376 6,181 33,556 14,371
Workers' compensation 6,094 2,622 15,774 6,029
-------- -------- -------- --------
Total cost of revenues 43,906 28,543 116,637 72,017
-------- -------- -------- --------
Gross margin 10,773 6,230 26,356 14,055
Selling, general and administrative expenses 6,404 4,461 17,637 11,926
Depreciation and amortization 257 256 752 807
-------- -------- -------- --------
Income from operations 4,112 1,513 7,967 1,322
Other income (expense), net 73 (62) 132 (136)
-------- -------- -------- --------
Income before taxes 4,185 1,451 8,099 1,186
Provision for income taxes 1,737 508 3,205 419
-------- -------- -------- --------
Net income $ 2,448 $ 943 $ 4,894 $ 767
======== ======== ======== ========
Basic earnings per share $ .43 $ .17 $ .86 $ .13

======== ======== ======== ========
Weighted average basic shares outstanding 5,739 5,645 5,720 5,700
======== ======== ======== ========
Diluted earnings per share $ .40 $ .16 $ .80 $ .13
======== ======== ======== ========
Weighted average diluted shares outstanding 6,144 5,927 6,140 5,805
======== ======== ======== ========



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 - Third Quarter 2004
October 27, 2004


level of the Company's business activity and more useful in managing its
operations.




(Unaudited) (Unaudited)
Third Quarter Ended Nine Months Ended
($ in thousands) September 30, September 30,
-------------------- --------------------
2004 2003 2004 2003
-------- --------- -------- --------
Revenues:

Staffing services $ 35,673 $ 26,727 $ 91,197 $ 69,883
Professional employer services 109,435 46,886 299,139 95,767
-------- --------- -------- --------
Total revenues 145,108 73,613 390,336 165,650
-------- --------- -------- --------

Cost of revenues:
Direct payroll costs 115,580 57,977 311,337 130,592
Payroll taxes and benefits 11,376 6,181 33,555 14,371
Workers' compensation 7,379 3,225 19,088 6,632
-------- --------- -------- --------
Total cost of revenues 134,335 67,383 363,980 151,595
-------- --------- -------- --------
Gross margin $ 10,773 $ 6,230 $ 26,356 $ 14,055
======== ========= ======== ========



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

For the third quarters ended September 30, 2004 and 2003 (in thousands):




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

Staffing services $ 35,673 $ 26,727 $ - $ - $ 35,673 $ 26,727
Professional
employer services 109,435 46,886 (90,429) (38,840) 19,006 8,046
-------- -------- -------- -------- -------- --------
Total revenues $145,108 $ 73,613 $(90,429) $(38,840) $ 54,679 $ 34,773
======== ======== ======== ======== ======== ========

Cost of revenues: $134,335 $ 67,383 $(90,429) $(38,840) $ 43,906 $ 28,543
======== ======== ======== ======== ======== ========


For the nine months ended September 30, 2004 and 2003 (in thousands):

Gross Revenue Net Revenue
Reporting Method Reclassification Reporting Method
--------------------- --------------------- ----------------------
2004 2003 2004 2003 2004 2003
-------- -------- --------- -------- -------- --------
Revenues:
Staffing services $ 91,197 $ 69,883 $ - $ - $ 91,197 $ 69,883
Professional
employer services 299,139 95,767 (247,343) (79,578) 51,796 16,189
-------- -------- --------- -------- -------- --------
Total revenues $390,336 $165,650 $(247,343) $(79,578) $142,993 $ 86,072
======== ======== ========= ======== ======== ========

Cost of revenues: $363,980 $151,595 $(247,343) $(79,578) $116,637 $ 72,017
======== ======== ========= ======== ======== ========



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William W. Sherertz, President and Chief Executive Officer, commented
that: "We are very pleased with the continued momentum of our earnings and
revenue growth, as well as the strengthening of our balance sheet. Our third
quarter represents the eighth consecutive quarter in which our operating results
improved over the comparable period."

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





($ in thousands) September 30, December 31,
2004 2003
------- ------
Assets
Current assets:

Cash and cash equivalents $10,009 $ 7,785
Marketable securities 4,503 -
Trade accounts receivable, net 30,523 18,481
Prepaid expenses and other 1,243 958
Deferred income taxes 5,168 2,196
------- -------
Total current assets 51,446 29,420
Goodwill, net 21,738 18,749
Intangibles, net 30 13
Property, equipment and software, net 4,439 3,367
Restricted marketable securities and workers'
compensation deposits 1,775 1,647
Deferred income taxes 758 1,041
Other assets 399 436
------- -------
$80,585 $54,673
======= =======

Liabilities and Stockholders' Equity

Current liabilities:
Current portion of long-term debt $ 348 $ 88
Income taxes payable 2,685 -
Accounts payable 430 727
Accrued payroll, payroll taxes and related benefits 23,829 13,881
Workers' compensation claims liabilities 4,977 3,886
Safety incentives liabilities 4,534 2,007
Other accrued liabilities 606 361
------- -------
Total current liabilities 37,409 20,950
Long-term debt, net of current portion 1,478 400
Customer deposits 501 455
Long-term workers' compensation claims liabilities 4,576 1,031
Other long-term liabilities - 45
Deferred gain on sale and leaseback 1,067 1,158
Stockholders' equity 35,554 30,634
------- -------
$80,585 $54,673
======= =======



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Outlook for Fourth Quarter 2004

The Company also disclosed today limited financial guidance with respect
to its operating results for the fourth quarter ending December 31, 2004. The
Company expects gross revenues for the fourth quarter to range from $144 million
to $146 million and anticipates diluted earnings per share to range from $.35 to
$.38 per share for the same period. A reconciliation of estimated gross revenues
to estimated GAAP net revenues for the fourth quarter of 2004 is not included
because PEO revenues and cost of PEO revenues for the period are not reasonably
estimable.

On October 28, 2004 at 9:00 a.m. Pacific Time, William W. Sherertz and
Michael D. Mulholland will host an investor telephone conference call to discuss
third quarter 2004 operating results. To participate in the call, dial
(877)356-3717. The call identification number is 1430173. 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 October 28, 2004 at 11:00 a.m.
and ending November 4, 2004. To listen to the recording, dial (800)642-1687 and
enter conference identification code 1430173.

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 fourth 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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