Form: 8-K

Current report filing

August 4, 2005

Documents

99.1

Published on August 4, 2005

Exhibit 99.1

NEWS RELEASE

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

Telephone: (503) 220-0988

BBSI
ANNOUNCES SECOND QUARTER 2005 OPERATING RESULTS AND
FINANCIAL GUIDANCE FOR 3Q05

PORTLAND, OREGON, August 3, 2005 - Barrett Business Services, Inc.
(Nasdaq: BBSI) reported today net income of $2,905,000 for the second quarter
ended June 30, 2005, an improvement of $1,065,000 or 57.9% over net income of
$1,840,000 for the second quarter of 2004. Diluted earnings per share for the
2005 second quarter were $.31, as compared to diluted earnings per share of $.20
for the same quarter a year ago, which have been adjusted for a 3-for-2 stock
split effected on May 19, 2005.

Net revenues for the second quarter ended June 30, 2005 totaled $59.6
million, an increase of approximately $11.9 million or 24.9% over the $47.7
million for the same quarter in 2004.




(Unaudited) (Unaudited)
($ in thousands) Second Quarter Ended Six Months Ended
June 30, June 30,
------------------- --------------------
Results of Operations 2005 2004 2005 2004
- -------------------------------------------- -------- -------- -------- --------

Revenues:
Staffing services $ 35,637 $ 30,470 $ 64,179 $55,524
Professional employer service fees 23,994 17,234 44,696 32,790
-------- -------- -------- --------
Total revenues 59,631 47,704 108,875 88,314
-------- -------- -------- --------
Cost of revenues:
Direct payroll costs 26,598 22,551 47,615 40,871
Payroll taxes and benefits 15,303 10,649 31,000 22,180
Workers' compensation 6,295 5,978 11,701 10,332
-------- -------- -------- --------
Total cost of revenues 48,196 39,178 90,316 73,383
-------- -------- -------- --------
Gross margin 11,435 8,526 18,559 14,931
Selling, general and administrative
expenses 6,251 5,367 11,721 10,581
Depreciation and amortization 217 253 453 495
-------- -------- -------- --------
Income from operations 4,967 2,906 6,385 3,855
Other income, net (205) 38 (97) 59
-------- -------- -------- --------
Income before taxes 4,762 2,944 6,288 3,914
Provision for income taxes 1,857 1,104 2,452 1,468
-------- -------- -------- --------
Net income $ 2,905 $ 1,840 $ 3,836 $ 2,446
======== ======== ======== ========
Basic earnings per share $ .33 $ .21 $ .44 $ .29
======== ======== ======== ========
Weighted average basic shares
outstanding 8,717 8,573 8,681 8,565
======== ======== ======== ========
Diluted earnings per share $ .31 $ .20 $ .41 $ .26
======== ======== ======== ========
Weighted average diluted shares
outstanding 9,398 9,279 9,375 9,286
======== ======== ======== ========


-1-



Barrett Business Services, Inc.
News Release - Second Quarter 2005
August 3, 2005


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"), are 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 Six Months Ended
(in thousands) June 30, June 30,
------------------- -------------------
2005 2004 2005 2004
-------- -------- -------- --------
Revenues:
Staffing services $ 35,637 $ 30,470 $ 64,179 $ 55,524
Professional employer services 147,945 97,984 276,496 189,704
-------- -------- -------- --------
Total revenues 183,582 128,454 340,675 245,228
-------- -------- -------- --------
Cost of revenues:
Direct payroll costs 148,927 102,390 276,324 195,757
Payroll taxes and benefits 15,303 10,648 31,000 22,179
Workers' compensation 7,917 6,890 14,792 12,361
-------- -------- -------- --------
Total cost of revenues 172,147 119,928 322,116 230,297
-------- -------- -------- --------
Gross margin $ 11,435 $8,526 $ 18,559 $ 14,931
======== ======== ======== ========

Gross revenues of $183.6 million for the second quarter ended June 30,
2005 rose 42.9% over the similar period in 2004. For the six months ended June
30, 2005, gross revenues of $340.7 million increased 38.9% over the comparable
period in 2004.

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

For the second quarters ended June 30, 2005 and 2004 (in thousands):



(Unaudited)
Three Months Ended June 30,
--------------------------------------------------------------
Gross Revenue Net Revenue
(in thousands) Reporting Method Reclassification Reporting Method
------------------ -------------------- -----------------
2005 2004 2005 2004 2005 2004

Revenues:
Staffing services $ 35,637 $ 30,470 $ -- $ -- $35,637 $30,470
Professional
employer
services 147,945 97,984 (123,951) (80,750) 23,994 17,234
-------- -------- --------- -------- ------- -------
Total revenues $183,582 $128,454 $(123,951) $(80,750) $59,631 $47,704
======== ======== ========= ======== ======= =======
Cost of revenues: $172,147 $119,928 $(123,951) $(80,750) $48,196 $39,178
======== ======== ========= ======== ======= =======





-2-


Barrett Business Services, Inc.
News Release - Second Quarter 2005
August 3, 2005


For the six months ended June 30, 2005 and 2004 (in thousands):




(Unaudited)
Six Months Ended June 30,
----------------------------------------------------------------
Gross Revenue Net Revenue
(in thousands) Reporting Method Reclassification Reporting Method
------------------- -------------------- -------------------
2005 2004 2005 2004 2005 2004
-------- -------- --------- --------- -------- --------

Revenues:
Staffing services $ 64,179 $ 55,524 $ -- $ -- $ 64,179 $ 55,524
Professional
employer
services 276,496 189,704 (231,800) (156,914) 44,696 32,790
-------- -------- --------- --------- -------- --------
Total revenues $340,675 $245,228 $(231,800) $(156,914) $108,875 $ 88,314
======== ======== ========= ========= ======== ========
Cost of revenues: $322,116 $230,297 $(231,800) $(156,914) $ 90,316 $ 73,383
======== ======== ========= ========= ======== ========



William W. Sherertz, President and Chief Executive Officer, commented
that: "We had a great quarter and our business continues to grow. Our management
team is proud that we were recently named the number one company in The Seattle
Times's Northwest Top 100, as well as of our recent inclusion in the new Russell
Microcap Index."

The following summarizes the unaudited consolidated balance sheets at June
30, 2005 and December 31, 2004.



-3-


Barrett Business Services, Inc.
News Release - Second Quarter 2005
August 3, 2005



June 30, December 31,
($ in thousands) 2005 2004
-------- --------

Assets
------

Current assets:
Cash and cash equivalents $ 21,662 $ 12,153
Marketable securities 5,568 4,630
Trade accounts receivable, net 36,420 23,840
Prepaid expenses and other 2,074 1,364
Deferred income taxes 5,588 4,100
Workers' compensation receivables for insured claims 213 213
-------- --------
Total current assets 71,525 46,300
Goodwill, net 22,516 22,516
Intangibles, net 16 25
Property, equipment and software, net 4,161 4,301
Restricted marketable securities and workers'
compensation deposits 2,060 1,702
Unrestricted marketable securities 391 --
Deferred income taxes 336 582
Other assets 405 401
Workers' compensation receivables for insured claims 4,019 4,158
-------- --------
$105,429 $ 79,985
======== ========
Liabilities and Stockholders' Equity
------------------------------------

Current liabilities:
Current portion of long-term debt $ 348 $ 348
Income taxes payable 1,264 --
Accounts payable 585 994
Accrued payroll, payroll taxes and related benefits 32,200 17,427
Workers' compensation claims liabilities 5,648 4,946
Workers' compensation claims liabilities for insured claims 213 213
Safety incentives liabilities 6,758 4,807
Other accrued liabilities 1,255 414
-------- --------
Total current liabilities 48,271 29,149
Long-term debt, net of current portion 1,168 1,441
Customer deposits 670 608
Long-term workers' compensation claims liabilities 6,712 4,840
Long-term workers' compensation liabilities for insured claims 4,019 4,158
Deferred gain on sale and leaseback 976 1,036
Stockholders' equity 43,613 38,753
-------- --------
$105,429 $ 79,985
======== ========



Outlook for Third Quarter 2005

The Company also disclosed today limited financial guidance with respect
to its operating results for the third quarter ending September 30, 2005. The
Company expects gross revenues for the third quarter of 2005 to range from $198
million to $201 million, an increase of approximately 38% over the third quarter
of 2004, and anticipates diluted earnings per share for the third quarter of
2005, including the approximate effect of its recent follow-on equity offering,
to range from $.35 to $.37 per share, an increase of approximately 33% over $.27
per share for the same period a year ago, on a split-adjusted basis. Excluding
the approximate effect of its recent follow-on equity offering, anticipated
diluted earnings per share for the third quarter of 2005 would

-4-


Barrett Business Services, Inc.
News Release - Second Quarter 2005
August 3, 2005


range from $.40 to $.42 per share, an increase of approximately 52% over $.27
per share for the same period last year, on a split-adjusted basis. Calculation
of the approximate effect of the Company's recent follow-on equity offering is
based on the issuance of 1,864,000 shares of common stock on August 2, 2005, as
well as the issuance of an additional 320,850 shares assuming exercise of the
underwriters' over-allotment option prior to its expiration on August 26, 2005.
A reconciliation of estimated gross revenues to estimated GAAP net revenues for
the third quarter of 2005 is not included because PEO revenues and cost of PEO
revenues for the period are not reasonably estimable.

On August 4, 2005 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 2005 operating results. To participate in the call, dial (877)
356-3717. The call identification number is 8219159. 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 August 4, 2005 at 11:00 a.m. and ending on
August 11, 2005. To listen to the recording, dial (800) 642-1687 and enter
conference identification code 8219159.

BBSI provides a comprehensive range of 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 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 the
effect of our recent follow-on equity offering, among others. Other important
factors that may affect the Company's future prospects are described in the
Company's 2004 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.

#####