Form: 8-K

Current report filing

February 11, 2005

Documents

Published on February 11, 2005

Exhibit 99.1

NEWS RELEASE

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

Telephone: (503) 220-0988

BBSI
ANNOUNCES FOURTH QUARTER 2004 OPERATING RESULTS AND
FINANCIAL GUIDANCE FOR 1Q05

PORTLAND, OREGON, February 10, 2005 - Barrett Business Services, Inc.
(Nasdaq: BBSI) reported today net income of $2,477,000 for the fourth quarter
ended December 31, 2004, an improvement of $1,159,000 over net income of
$1,318,000 for the fourth quarter of 2003. Diluted earnings per share for the
2004 fourth quarter were $.40, as compared to diluted earnings per share of $.22
for the same quarter a year ago. For 2004, diluted earnings per share were
$1.19, as compared to $.35 for 2003.

Net revenues for the fourth quarter ended December 31, 2004 totaled $52.0
million, an increase of approximately $15.4 million or 42.1% over the $36.6
million for the same quarter in 2003. For 2004, net revenues were $195 million,
an increase of 58.9% over 2003.




(Unaudited) (Unaudited)
Fourth Quarter Ended Year Ended
December 31, December 31,
-------------------- --------------------
Results of Operations 2004 2003 2004 2003
- ------------------------------------------- -------- -------- -------- --------
(in thousands, except per share amounts)


Revenues:
Staffing services $ 32,317 $ 23,661 $123,514 $ 93,544
Professional employer service fees 19,651 12,988 71,447 29,177
-------- -------- -------- --------
Total revenues 51,968 36,649 194,961 122,721
-------- -------- -------- --------
Cost of revenues:
Direct payroll costs 23,883 17,482 91,190 69,099
Payroll taxes and benefits 11,988 8,545 45,544 22,916
Workers' compensation 5,783 3,680 21,557 9,709
-------- -------- -------- --------
Total cost of revenues 41,654 29,707 158,291 101,724
-------- -------- -------- --------
Gross margin 10,314 6,942 36,670 20,997
Selling, general and administrative expenses 6,207 4,884 23,844 16,810
Depreciation and amortization 256 251 1,008 1,058
-------- -------- -------- --------
Income from operations 3,851 1,807 11,818 3,129
Other income (expense), net 300 (18) 432 (154)
-------- -------- -------- --------
Income before taxes 4,151 1,789 12,250 2,975
Provision for income taxes 1,674 471 4,879 890
-------- -------- -------- --------
Net income $ 2,477 $ 1,318 $ 7,371 $ 2,085
-------- -------- -------- --------
Basic earnings per share $ .43 $ .23 $ 1.29 $ .36
-------- -------- -------- --------
Weighted average basic shares outstanding 5,741 5,660 5,725 5,690
-------- -------- -------- --------
Diluted earnings per share $ .40 $ .22 $ 1.19 $ .35
-------- -------- -------- --------
Weighted average diluted shares outstanding 6,192 6,088 6,193 5,876
-------- -------- -------- --------


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

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Barrett Business Services, Inc.
News Release - Fourth Quarter 2004
February 10, 2005


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

Revenues:
Staffing services $ 32,317 $ 23,661 $123,514 $ 93,544
Professional employer services 119,871 77,366 419,010 173,134
-------- -------- -------- --------
Total revenues 152,188 101,027 542,524 266,678
-------- -------- -------- --------

Cost of revenues:
Direct payroll costs 122,697 80,510 434,034 211,102
Payroll taxes and benefits 11,988 8,545 45,544 22,916
Workers' compensation 7,189 5,030 26,276 11,663
-------- -------- -------- --------
Total cost of revenues 141,874 94,085 505,854 245,681
-------- -------- -------- --------
Gross margin $ 10,314 $ 6,942 $ 36,670 $ 20,997
======== ======== ======== ========



Gross revenues of $152.2 million for the 2004 fourth quarter rose 50.6%
over the comparable 2003 period. For 2004, gross revenues of $542.5 million
increased 103.4% over 2003.

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

For the fourth quarters ended December 31, 2004 and 2003 (in thousands):




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

Revenues:
Staffing services $ 32,317 $ 23,661 $ -- $ -- $ 32,317 $ 23,661
Professional
employer services 119,871 77,366 (100,220) (64,378) 19,651 12,988
-------- -------- --------- -------- -------- --------
Total revenues $152,188 $101,027 $(100,220) $(64,378) $ 51,968 $ 36,649
======== ======== ========= ======== ======== ========

Cost of revenues: $141,874 $ 94,085 $(100,220) $(64,378) $ 41,654 $ 29,707
======== ======== ========= ======== ======== ========

For the years ended December 31, 2004 and 2003 (in thousands):

Gross Revenue Net Revenue
Reporting Method Reclassification Reporting Method
--------------------- --------------------- ---------------------
2004 2003 2004 2003 2004 2003
-------- -------- --------- --------- -------- --------
Revenues:
Staffing services $123,514 $ 93,544 $ -- $ -- $123,514 $ 93,544
Professional
employer services 419,010 173,134 (347,563) (143,957) 71,447 29,177
-------- -------- --------- --------- -------- --------
Total revenues $542,524 $266,678 $(347,563) $(143,957) $194,961 $122,721
======== ======== ========= ========= ======== ========

Cost of revenues: $505,854 $245,681 $(347,563) $(143,957) $158,291 $101,724
======== ======== ========= ========= ======== ========


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William W. Sherertz, President and Chief Executive Officer, commented
that: "We are very pleased with another quarter of strong earnings and revenues,
both of which results in 2004 being a record year. The continuing expansion of
our PEO and staffing services with a high quality customer base bodes well for
an even stronger year in 2005."

The following summarizes the unaudited consolidated balance sheets at
December 31, 2004 and December 31, 2003. Please note that the Company is
currently analyzing, but no determination has been made as to the effect, if
any, on long-term assets and long-term liabilities related to an accounting
principle under which the Company would gross up its balance sheet to include
(1) estimated future receivables from the Company's excess workers' compensation
insurance carriers for the estimated future reimbursements to the Company
relating to claims that such insurers are obligated to pay pursuant to insurance
policies in effect at the time of the insured losses and (2) identical estimated
future liabilities for payments to claimants relating to such insured losses.





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

Current assets:
Cash and cash equivalents $12,153 $ 7,785
Marketable securities 4,630 --
Trade accounts receivable, net 23,840 18,481
Prepaid expenses and other 1,364 958
Deferred income taxes 4,100 2,196
------- ------
Total current assets 46,087 29,420
Goodwill, net 22,516 18,749
Intangibles, net 25 13
Property, equipment and software, net 4,301 3,367
Restricted marketable securities and workers'
compensation deposits 1,702 1,647
Deferred income taxes 582 1,041
Other assets 401 436
------- ------
$75,614 $54,673
======= =======

Liabilities and Stockholders' Equity

Current liabilities:
Current portion of long-term debt $ 348 $ 88
Accounts payable 994 727
Accrued payroll, payroll taxes and related benefits 17,427 13,881
Workers' compensation claims liabilities 4,946 3,886
Safety incentives liabilities 4,807 2,007
Other accrued liabilities 414 361
------- -------
Total current liabilities 28,936 20,950
Long-term debt, net of current portion 1,441 400
Customer deposits 608 455
Long-term workers' compensation claims liabilities 4,840 1,031
Other long-term liabilities -- 45
Deferred gain on sale and leaseback 1,036 1,158
Stockholders' equity 38,753 30,634
------- ------
$75,614 $54,673
======= =======



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Outlook for First Quarter 2005

The Company also disclosed today limited financial guidance with respect
to its operating results for the first quarter ending March 31, 2005. The
Company expects gross revenues for the first quarter of 2005 to range from $152
million to $154 million, an increase of approximately 30% over the first quarter
of 2004, and anticipates diluted earnings per share for the first quarter of
2005 to range from $.13 to $.14 per share, an increase of 30% to 40% over the
same period a year ago. A reconciliation of estimated gross revenues to
estimated GAAP net revenues for the first quarter of 2005 is not included
because PEO revenues and cost of PEO revenues for the period are not reasonably
estimable.

On February 11, 2005 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 2004 operating results. To participate in the call, dial
(877)356-3717. The call identification number is 3986981. 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 February 11, 2005 at 11:00 a.m.
and ending February 18, 2005. To listen to the recording, dial (800)642-1687 and
enter conference identification code 3986981.

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 first quarter of 2005, 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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