Form: 10-Q

Quarterly report pursuant to Section 13 or 15(d)

August 15, 2005

10-Q: Quarterly report pursuant to Section 13 or 15(d)

Published on August 15, 2005

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549


FORM 10-Q


[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2005
Commission File No. 0-21886


BARRETT BUSINESS SERVICES, INC.
(Exact name of registrant as specified in its charter)

Maryland 52-0812977
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)

4724 SW Macadam Avenue
Portland, Oregon 97239
(Address of principal executive offices) (Zip Code)

(503) 220-0988
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes [ X ] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ]

Number of shares of common stock, $.01 par value, outstanding at August 10, 2005
was 11,000,379 shares.






BARRETT BUSINESS SERVICES, INC.

INDEX

Part I - Financial Information Page
----

Item 1.Unaudited Interim Consolidated Financial Statements

Consolidated Balance Sheets - June 30, 2005 and
December 31, 2004................................................3

Consolidated Statements of Operations - Three Months
Ended June 30, 2005 and 2004.....................................4

Consolidated Statements of Operations - Six Months
Ended June 30, 2005 and 2004.....................................5

Consolidated Statements of Cash Flows - Six Months
Ended June 30, 2005 and 2004.....................................6

Notes to Unaudited Interim Consolidated Financial Statements.....7

Item 2.Management's Discussion and Analysis of
Financial Condition and Results of
Operations......................................................13

Item 3.Quantitative and Qualitative Disclosures About
Market Risk.....................................................21

Item 4.Controls and Procedures.........................................22


Part II - Other Information

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.....23

Item 4.Submission of Matters to Vote of Security Holders...............23

Item 5.Other Information...............................................23

Item 6.Exhibits........................................................24


Signatures ................................................................25


Exhibit Index...............................................................26



-2-


Part I - Financial Information
Item 1. Financial Statements

BARRETT BUSINESS SERVICES, INC.
Consolidated Balance Sheets
(Unaudited)
(In thousands, except per share amounts)





June 30, December 31,
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 and equipment, net 4,161 4,301
Restricted marketable securities and workers' compensation
deposits 2,060 1,702
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 liability 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 claims liabilities for insured claims 4,019 4,158
Deferred gain on sale and leaseback 976 1,036

Commitments and contingencies

Stockholders' equity:
Preferred stock, $.01 par value; 500,000 shares authorized;
no shares issued and outstanding -- --
Common stock, $.01 par value; 20,500 shares authorized, 8,720
and 8,611 shares issued and outstanding 87 86
Additional paid-in capital 4,724 3,874
Other comprehensive loss (181) (354)
Retained earnings 38,983 35,147
--------- --------
43,613 38,753
--------- --------
$ 105,429 $ 79,985
========= ========




The accompanying notes are an integral part of these consolidated financial
statements.

-3-




BARRETT BUSINESS SERVICES, INC.
Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)

Three Months Ended
June 30,
---------------------
2005 2004
------- -------
Revenues:
Staffing services $35,637 $30,470
Professional employer service fees 23,994 17,234
------- -------

Total revenues 59,631 47,704
------- -------

Cost of revenues:
Direct payroll costs 26,598 22,551
Payroll taxes and benefits 15,303 10,649
Workers' compensation 6,295 5,978
------- -------

Total cost of revenues 48,196 39,178
------- -------

Gross margin 11,435 8,526

Selling, general and administrative expenses 6,251 5,367
Depreciation and amortization 217 253
------- -------

Income from operations 4,967 2,906
------- -------

Other (expense) income:
Interest expense (27) (23)
Interest income 200 61
Unrealized loss on marketable securities (350) --
Other (28) --
------- -------

Other (expense) income (205) 38
------- -------

Income before provision for income taxes 4,762 2,944
Provision for income taxes 1,857 1,104
------- -------

Net income $ 2,905 $ 1,840
======= =======

Basic earnings per share $ .33 $ .21
======= =======

Weighted average number of basic shares outstanding 8,717 8,573
======= =======

Diluted earnings per share $ .31 $ .20
======= =======

Weighted average number of diluted shares outstanding 9,398 9,279
======= =======




The accompanying notes are an integral part of these consolidated financial
statements.

-4-





BARRETT BUSINESS SERVICES, INC.
Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)


Six Months Ended
June 30,
-----------------------
2005 2004
-------- --------
Revenues:
Staffing services $ 64,179 $ 55,524
Professional employer service fees 44,696 32,790
-------- --------

Total revenues 108,875 88,314
-------- --------

Cost of revenues:
Direct payroll costs 47,615 40,871
Payroll taxes and benefits 31,000 22,180
Workers' compensation 11,701 10,332
-------- --------

Total cost of revenues 90,316 73,383
-------- --------

Gross margin 18,559 14,931

Selling, general and administrative expenses 11,721 10,581
Depreciation and amortization 453 495
-------- --------

Income from operations 6,385 3,855
-------- --------

Other (expense) income:
Interest expense (54) (55)
Interest income 347 82
Unrealized loss on marketable securities (350) --
Other (40) 32
-------- --------

Other (expense) income (97) 59
-------- --------

Income before provision for income taxes 6,288 3,914
Provision for income taxes 2,452 1,468
-------- --------

Net income $ 3,836 $ 2,446
======== ========
Basic earnings per share $ .44 $ .29
======== ========

Weighted average number of basic shares outstanding 8,681 8,565
======== ========

Diluted earnings per share $ .41 $ .26
======== ========

Weighted average number of diluted shares outstanding 9,375 9,286
======== ========





The accompanying notes are an integral part of these consolidated financial
statements.

-5-




BARRETT BUSINESS SERVICES, INC.
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)




Six Months Ended
June 30,
------------------
2005 2004
------- -------


Cash flows from operating activities:
Net income $ 3,836 $ 2,446
Reconciliations of net income to net cash provided by (used in)
operating activities:
Depreciation and amortization 453 495
Purchases of marketable securities (20) --
Losses recognized on marketable securities 364 --
Gain recognized on sale and leaseback (60) (61)
Deferred income taxes (1,242) (653)
Changes in certain assets and liabilities, net of amounts purchased
in acquisitions:
Trade accounts receivable, net (12,580) (9,471)
Prepaid expenses and other (710) (847)
Income taxes payable 1,264 1,577
Accounts payable (409) (257)
Accrued payroll, payroll taxes and related benefits 14,773 7,590
Other accrued liabilities 841 805
Workers' compensation claims liabilities 2,574 2,288
Safety incentives liability 1,951 1,780
Customer deposits and other assets, net 58 83
Other long-term liabilities -- (45)
------- -------
Net cash provided by operating activities 11,093 5,730
------- -------
Cash flows from investing activities:
Cash paid for acquisition, including other direct costs -- (3,044)
Purchase of equipment, net of amounts purchased in acquisitions (304) (1,670)
Purchase of marketable securities (1,500) (4,724)
Proceeds from maturities of restricted marketable securities 1,400 1,155
Purchase of restricted marketable securities (1,758) (1,362)
------- -------
Net cash used in investing activities (2,162) (9,645)
------- -------
Cash flows from financing activities:
Proceeds from issuance of debt -- 1,475
Proceeds from credit-line borrowings 700 --
Payments on credit-line borrowings (700) --
Payments on long-term debt (273) (100)
Proceeds from the exercise of stock options 345 129
Tax benefit of stock option exercises 506 --
------- -------
Net cash provided by financing activities 578 1,504
------- -------
Net increase (decrease) in cash and cash equivalents 9,509 (2,411)
Cash and cash equivalents, beginning of period 12,153 7,785
------- -------
Cash and cash equivalents, end of period $21,662 $ 5,374
======= =======
Supplemental schedule of noncash investing activities: Acquisition of other
businesses:
Cost of acquisition in excess of fair market value of net assets acquired $ -- $ 3,807
Tangible assets acquired -- 15
Less stock issued in connection with acquisition -- (778)
------- -------
Net cash paid for acquisition $ -- $ 3,044
======= =======




The accompanying notes are an integral part of these consolidated financial
statements.

-6-



BARRETT BUSINESS SERVICES, INC.
Notes to Consolidated Financial Statements (Unaudited)


Note 1 - Basis of Presentation of Interim Period Statements

Barrett Business Services, Inc. ("Barrett" or the "Company"), a Maryland
corporation, is engaged in providing both staffing and professional employer
services to a diversified group of customers through a network of branch offices
throughout California, Oregon, Washington, Idaho, Arizona, Maryland, Delaware
and North Carolina. Staffing services are engaged by customers to meet
short-term and long-term personnel needs. Professional employer organization
("PEO") services are normally used by organizations to satisfy ongoing human
resource management needs and typically involve contracts with a minimum term of
one year, renewable annually, which cover all employees at a particular work
site.

The accompanying consolidated financial statements are unaudited and have
been prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and note disclosures
typically included in financial statements prepared in accordance with
accounting principles generally accepted in the United States of America have
been condensed or omitted pursuant to such rules and regulations. In the opinion
of management, the consolidated financial statements include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair statement
of the results for the interim periods presented. The preparation of financial
statements in conformity with generally accepted accounting principles ("GAAP")
requires management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual results may
differ from such estimates and assumptions. The consolidated financial
statements should be read in conjunction with the audited financial statements
and notes thereto included in the Company's 2004 Annual Report on Form 10-K at
pages F1 - F25. The results of operations for an interim period are not
necessarily indicative of the results of operations for a full year. Certain
prior year amounts have been reclassified to conform with the current year
presentation. Such reclassifications had no impact on net income or
stockholders' equity.

During May 2004, the Company formed a wholly-owned subsidiary which
acquired an aircraft. The subsidiary incurred debt of $1.5 million to finance
the purchase of the aircraft. The consolidated financial statements include the
accounts of the subsidiary, after elimination of intercompany accounts and
transactions.

Allowance for doubtful accounts

The Company had an allowance for doubtful accounts of $323,000 and
$273,000 at June 30, 2005 and at December 31, 2004, respectively. The Company
must make estimates of the collectibility of accounts receivables. Management
analyzes historical bad debts, customer concentrations, customer
credit-worthiness, current economic conditions and changes in customers' payment
trends when evaluating the adequacy of the allowance for doubtful accounts.

Workers' compensation claims

The Company is a self-insured employer with respect to workers'
compensation coverage for all its employees (including employees subject to PEO
contracts) working in California, Oregon, Maryland, and Delaware. In the state
of Washington, state law allows only the Company's staffing services and
management employees to be covered under the


-7-


BARRETT BUSINESS SERVICES, INC.
Notes to Consolidated Financial Statements (Unaudited) (Continued)


Note 1 - Basis of Presentation of Interim Period Statements (Continued)

Workers' Compensation Claims (Continued)

Company's self-insured workers' compensation program. The Company maintains
excess workers' compensation insurance to limit its self-insurance exposure to
$1.0 million per occurrence in all states.

The Company has provided a total of $16.6 million and $14.2 million at
June 30, 2005 and December 31, 2004, respectively, as an estimated liability for
unsettled workers' compensation claims liabilities. Included in the liability
above are insured claims that will be paid by the Company's excess workers'
compensation insurer. The Company has reported a corresponding receivable for
the insured claims liability. Insured claims total $4.2 million and $4.4 million
at June 30, 2005 and December 31, 2004, respectively. The estimated liability
for unsettled workers' compensation claims represents management's best
estimate, which includes, in part, an evaluation of information provided by the
Company's third-party administrators for workers' compensation claims and the
Company's independent actuary, who annually assist management to estimate the
total future costs of all claims, including potential future adverse loss
development. Included in the claims liabilities are case reserve estimates for
reported losses, plus additional amounts based on projections for incurred but
not reported claims, anticipated increases in case reserve estimates and
additional claims administration expenses. These estimates are continually
reviewed and adjustments to liabilities are reflected in current operating
results as they become known.

Safety incentives liability

Safety incentives represent cash incentives paid to certain PEO client
companies for maintaining safe-work practices in order to minimize workplace
injuries. The Company has provided $6.8 million and $4.8 million at June 30,
2005 and December 31, 2004, respectively, as an estimated liability for safety
incentives. The incentive is based on a percentage of annual payroll and is paid
annually to customers who meet predetermined workers' compensation claims cost
objectives. Safety incentive payments are made only after closure of all
workers' compensation claims incurred during the customer's contract period. The
liability is estimated and accrued each month based upon the then-current amount
of the customer's estimated workers' compensation claims reserves as established
by the Company's third party administrator.

Comprehensive income (loss)

Comprehensive income (loss) includes all changes in equity during a period
except those that resulted from investments by or distributions to a company's
stockholders. Other comprehensive income (loss) refers to revenues, expenses,
gains and losses that under GAAP are included in comprehensive income (loss),
but excluded from net income as these amounts are recorded directly as an
adjustment to stockholders' equity. Barrett's other comprehensive income (loss)
is comprised of unrealized holding gains and losses on its publicly-traded
marketable securities, net of realized gains included in net income.



-8-


BARRETT BUSINESS SERVICES, INC.
Notes to Consolidated Financial Statements (Unaudited) (Continued)

Note 2 - Recent Accounting Pronouncements

On December 16, 2004, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard ("SFAS") 123(R), "Share-Based
Payment," which is a revision of SFAS 123, "Accounting for Stock-Based
Compensation." SFAS 123(R) supersedes APB Opinion No. 25, "Accounting for Stock
Issued to Employees," and amends SFAS No. 95, "Statement of Cash Flows."
Generally, the approach in SFAS 123(R) is similar to the approach described in
SFAS 123, however, SFAS 123(R) requires all share-based payments to employees,
including grants of employee stock options, to be expensed in the income
statement over the requisite service period based on their grant-date fair
values. Pro forma disclosure is no longer an alternative. SFAS 123(R) allows for
either prospective or retrospective adoption and requires that the unvested
portion of all outstanding awards upon adoption be recognized using the same
fair value and attribution methodologies previously determined under SFAS 123.
The Company is currently evaluating transition alternatives and valuation
methodologies for future grants. As a result, proforma compensation expense, as
described in Note 6, may not be indicative of future expense to be recognized
under SFAS 123(R). SFAS 123(R) must be adopted no later than January 1, 2006 and
the Company expects to adopt SFAS 123(R) by such date. The effect of adoption of
SFAS 123(R) on the Company's financial position or results of operations has not
yet been determined.


Note 3 - Acquisition

Effective January 1, 2004, the Company acquired certain assets of Skills
Resource Training Center ("SRTC"), a staffing services company with offices in
Central Washington, Eastern Oregon and Southern Idaho. The acquisition provided
the Company with the opportunity to geographically expand and diversify its
business, particularly in the agricultural, food packing and processing
industries. The Company paid $3.0 million in cash for the assets of SRTC and the
selling shareholders' noncompete agreements and agreed to issue up to 203,597
shares of its common stock ("Earnout Shares"), with the actual number of Earnout
Shares to be issued based upon the level of financial performance achieved by
the SRTC offices during calendar 2004. Certain contingencies remain unresolved,
precluding a final calculation of the number of Earnout Shares to be issued.
Effective July 12, 2005, the Company issued 76,222 Earnout Shares to SRTC in
partial resolution of the remaining contingencies. Management expects that the
final number of Earnout Shares to be issued will be resolved during the third
quarter ending September 30, 2005. The Company has recorded estimated total
Earnout Shares of 79,200 with a value of $778,000 on its consolidated balance
sheet as of June 30, 2005 and December 31, 2004.

The transaction resulted in $3.8 million of goodwill, $40,000 of
intangible assets and $15,000 of fixed assets. The Company's consolidated income
statements include SRTC's results of operations since January 1, 2004.


Note 4 - Basic and Diluted Earnings Per Share

On April 15, 2005, the Company declared a 3-for-2 stock split payable as a
50% stock dividend on May 19, 2005. All share and per share amounts have been
adjusted to retroactively give effect to the stock split.

-9-


BARRETT BUSINESS SERVICES, INC.
Notes to Consolidated Financial Statements (Unaudited) (Continued)


Note 4 - Basic and Diluted Earnings Per Share (Continued)

Basic earnings per share are computed based on the weighted average number of
common shares outstanding during the period. Diluted earnings per share reflect
the potential effects of the exercise of outstanding stock options. Basic and
diluted shares outstanding are summarized as follows:




Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ----------------------
2005 2004 2005 2004
--------- --------- --------- ---------


Weighted average number of basic shares
outstanding 8,716,646 8,573,273 8,681,008 8,564,376

Acquisition earnout shares 79,200 79,200 79,200 79,200

Stock option plan shares to be issued at prices
ranging from $0.97 to $11.83 per share 761,480 921,611 796,074 906,594

Less: Assumed purchase at average market
price during the period using proceeds
received upon exercise of options and
purchase of stock, and using tax benefits
of compensation due to premature
dispositions (159,803) (294,621) (181,738) (263,805)
--------- --------- --------- ---------

Weighted average number of diluted shares
outstanding 9,397,523 9,279,463 9,374,544 9,286,365
========= ========= ========= =========





Note 5 - Stock Incentive Plans

The Company's 2003 Stock Incentive Plan (the "2003 Plan"), which provides
for stock-based awards to Company employees, non-employee directors and outside
consultants or advisors, was approved by shareholders on May 14, 2003. No
options have been issued to outside consultants or advisors. The number of
shares of common stock reserved for issuance under the 2003 Plan is 600,000. No
new grants of stock options may be made under the Company's 1993 Stock Incentive
Plan (the "1993 Plan"). At June 30, 2005, there were option awards covering
471,283 shares outstanding under the 1993 Plan, which, to the extent they are
terminated unexercised, will be carried over to the 2003 Plan as shares
authorized to be issued under the 2003 Plan. Outstanding options under both
plans generally become exercisable in four equal annual installments beginning
one year after the date of grant and expire ten years after the date of grant.
The exercise price of incentive stock options must not be less than the fair
market value of the Company's stock on the date of grant.

-10-



BARRETT BUSINESS SERVICES, INC.
Notes to Consolidated Financial Statements (Unaudited) (Continued)

Note 5 - Stock Incentive Plans (Continued)

The following table summarizes options activity in 2005:

Number
of Options Grant Prices
---------- -----------------
Outstanding at December 31, 2004 867,104 $0.97 to $ 11.83

Options granted --
Options exercised (109,139) $1.40 to $9.83
Options cancelled or expired --
--------

Outstanding at June 30, 2005 757,965 $0.97 to $ 11.83
========

Exercisable at June 30, 2005 316,478
========

Available for grant at June 30, 2005 327,105
========



Note 6 - Stock Option Compensation

The Company applies APB Opinion No. 25 and related interpretations in
accounting for its stock incentive plan. Accordingly, no compensation expense
has been recognized for its stock option grants issued at market price because
the exercise price of the Company's employee stock options equals the market
price of the underlying stock on the date of the grant.

If compensation expense for the Company's stock-based compensation plan
had been determined based on the fair market value at the grant date for awards
under the 2003 Plan consistent with the method of SFAS No. 123, "Accounting for
Stock-Based Compensation," the Company's net income and income per share would
have been adjusted to the pro forma amounts indicated below:



Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
(in thousands, except per share amounts) 2005 2004 2005 2004
------- ------- ------- -------

Net income, as reported $ 2,905 $ 1,840 $ 3,836 $ 2,446
Add back compensation expense recognized
under APB No. 25 -- -- -- --
Deduct: Total stock-based compensation
expense determined under fair value based
method for all awards, net of related tax
effects (50) (53) (100) (98)
------- ------- ------- -------
Net income, pro forma $ 2,855 $ 1,787 $ 3,736 $ 2,348
======= ======= ======= =======
Basic income per share, as reported $ .33 $ .21 $ .44 $ .29
Basic income per share, pro forma .33 .21 .43 .27
Diluted income per share, as reported .31 .20 .41 .26
Diluted income per share, pro forma .30 .19 .40 .25






-11-

BARRETT BUSINESS SERVICES, INC.
Notes to Consolidated Financial Statements (Unaudited) (Continued)

Note 6 - Stock Option Compensation (Continued)

The effects of applying SFAS No. 123 for providing pro forma disclosures
for the periods presented above are not likely to be representative of the
effects on reported net income for future periods because options vest over
several years and additional awards generally are made each year.


Note 7 - Subsequent Events

The Company entered into a new Credit Agreement (the "Credit Agreement")
with its principal bank effective July 1, 2005. The Credit Agreement provides
for an unsecured revolving credit facility of up to $4.0 million, which includes
a subfeature under the line of credit for standby letters of credit up to $4.0
million. The interest rate on advances, if any, will be, at the Company's
discretion, either (i) equal to the prime rate or (ii) LIBOR plus 1.50%. The
financial covenants are less restrictive than the prior credit agreement.

On August 2, 2005, the Company completed a follow-on public offering of
1,864,000 shares of common stock priced to the public at $16.25 per share. On
August 8, 2005, the Company completed the sale of an additional 320,850 shares
priced to the public at $16.25 per share pursuant to the exercise of the
underwriters' over-allotment option. In all, the Company sold a total of
2,184,850 shares of common stock in the offering and received total net proceeds
of approximately $33.1 million after deducting underwriting discounts,
commissions, and estimated offering expenses.

On August 9, 2005, the Company entered into an agreement providing for
purchase by the Company of an office building in the greater metropolitan area
of Portland, Oregon for a purchase price of $8.85 million. If the transaction is
completed, the Company intends to relocate its corporate headquarters to the
building.





-12-



BARRETT BUSINESS SERVICES, INC.


Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Results of Operations

The following table sets forth the percentages of total revenues
represented by selected items in the Company's Consolidated Statements of
Operations for the three and six months ended June 30, 2005 and 2004.




Percentage of Total Revenues
-----------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
---------------- -----------------
2005 2004 2005 2004
----- ----- ----- -----

Revenues:
Staffing services 59.8 % 63.9 % 58.9 % 62.9 %
Professional employer service fees 40.2 36.1 41.1 37.1
----- ----- ----- -----

Total revenues 100.0 100.0 100.0 100.0
----- ----- ----- -----

Cost of revenues:
Direct payroll costs 44.6 47.3 43.7 46.3
Payroll taxes and benefits 25.6 22.3 28.4 25.1
Workers' compensation 10.6 12.5 10.8 11.7
----- ----- ----- -----

Total cost of revenues 80.8 82.1 82.9 83.1
----- ----- ----- -----

Gross margin 19.2 17.9 17.1 16.9

Selling, general and administrative expenses 10.5 11.3 10.8 12.0
Depreciation and amortization 0.4 0.5 0.4 0.6
----- ----- ----- -----

Income from operations 8.3 6.1 5.9 4.3

Other (expense) income (0.3) 0.1 (0.1) 0.1
----- ----- ----- -----

Pretax income 8.0 6.2 5.8 4.4

Provision for income taxes 3.1 2.3 2.3 1.6
----- ----- ----- -----

Net income 4.9 % 3.9 % 3.5 % 2.8 %
===== ===== ===== =====






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
with its customers. Gross revenue information, although not in accordance with
GAAP, is presented below 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.




-13-


BARRETT BUSINESS SERVICES, INC.


Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (Continued)

Results of Operations (Continued)




Unaudited Unaudited
Three Months Ended 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
======== ======== ======== ========





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





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
======== ======== ========= ======== ======= =======




-14-

BARRETT BUSINESS SERVICES, INC.

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (Continued)

Results of Operations (Continued)




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
======== ======== ========= ========= ======== =======




Three months ended June 30, 2005 and 2004

Net income for the second quarter of 2005 amounted to $2.9 million, an
improvement of 61.1% or $1.1 million over net income of $1.8 million for the
second quarter of 2004. The improvement for the second quarter of 2005 was
primarily due to higher gross margin dollars as a result of significant growth
in professional employer ("PEO") services business, partially offset by higher
selling, general and administrative expenses. Diluted earnings per share for the
second quarter of 2005 was $.31 compared to $.20 for the comparable 2004 period.
The Company's improved operating results continue to reflect, in part, growing
market acceptance of the business process outsourcing model, market share gains
owing to strong branch-level management and to the competitive advantage of
offering a broad array of human resource management services through its PEO
arrangements. The Company expects this favorable trend to continue for the
foreseeable future, particularly in California, principally due to business
opportunities available as a qualified self-insured employer for workers'
compensation coverage resulting from ongoing adverse conditions in the workers'
compensation insurance market in that state.

Revenues for the second quarter of 2005 totaled $59.6 million, an increase
of approximately $11.9 million or 24.9%, which reflects significant growth in
the Company's PEO service fee revenue, combined with an increase in staffing
services revenue.

PEO service fee revenue increased approximately $6.7 million or 39.0% over
the 2004 second quarter primarily due to increased demand for the Company's
broad array of competitively priced human resource management services that
satisfy customers' needs. At June 30, 2005, the Company had approximately 740
PEO clients as compared to approximately 515 PEO clients at June 30, 2004.
Management believes that the favorable trend in PEO revenues will continue for
the foreseeable future.


-15-


BARRETT BUSINESS SERVICES, INC.

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (Continued)

Results of Operations (Continued)

Three months ended June 30, 2005 and 2004 (Continued)

Staffing services revenue increased approximately $5.2 million or 17.0%
over the comparable 2004 quarter primarily due to improved economic conditions
for such services in the majority of areas in which the Company operates. During
the three months ended June 30, 2005, the Company served approximately 1,000
staffing services customers, which compares to approximately 1,000 customers
during the comparable period of 2004. Although the number of customers remained
at a similar level in the 2005 period as compared to the comparable period of
2004, the increase in staffing services revenues reflects increased business
activity with certain customers owing to their size of operation, as well as
with the customers whose demand for the Company's services increased. Management
expects demand for the Company's staffing services will continue to reflect
overall economic conditions in its market areas.

Gross margin for the second quarter of 2005 totaled approximately $11.4
million, which represented an increase of $2.9 million or 34.1% over the second
quarter of 2004, primarily due to the 24.9% increase in revenues. The gross
margin percent increased from 17.9% of revenues for the second quarter of 2004
to 19.2% for the second quarter of 2005. The increase in the gross margin
percentage was due to lower direct payroll costs and lower workers' compensation
expense, offset in part by higher payroll taxes and benefits, all expressed as a
percent of revenues. The decline in direct payroll costs, as a percentage of
revenues, from 47.3 for the second quarter of 2004 to 44.6% for the second
quarter of 2005 reflects the shift from staffing services to PEO services in the
relative mix of services to the Company's customer base and the effect of each
customer's unique mark-up percent. Workers' compensation expense, as a percent
of revenues, declined from 12.5% in the second quarter of 2004 to 10.6% in the
second quarter of 2005. Workers' compensation expense for the second quarter of
2005 totaled $6.3 million, which compares to $6.0 million for the second quarter
of 2004. The increase in workers' compensation expense in total dollars was
generally due to increased business activity in California, where injury claims
are more costly as compared to other states in which the Company operates as
well as to the effect from an increased provision for the future estimated costs
of existing claims. The increase in payroll taxes and benefits, as a percentage
of revenues, from 22.3% for the second quarter of 2004 to 25.6% for the second
quarter of 2005, was largely due to the effect of significant growth in PEO
services, offset in part by slightly lower effective state unemployment tax
rates in various states in which the Company operates as compared to the second
quarter of 2004.

Selling, general and administrative ("SG&A") expenses for the second
quarter of 2005 amounted to approximately $6.3 million, an increase of $884,000
or 16.5% over the second quarter of 2004. The increase over the second quarter
of 2004 was primarily attributable to increases in branch management personnel
and related expenses as a result of growth in the Company's PEO business. SG&A
expenses, as a percent of revenues, declined from 11.3% in the second quarter of
2004 to 10.5% in the second quarter of 2005.


-16-

BARRETT BUSINESS SERVICES, INC.

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (Continued)

Results of Operations (Continued)

Three months ended June 30, 2005 and 2004 (Continued)

Other expense for the second quarter of 2005 was $205,000 compared to
other income of $38,000 for the second quarter of 2004. During second quarter
2005, the Company recognized a $350,000 other than temporary impairment loss on
a bond fund it owns, which fund is comprised of treasury inflation protected
securities, commonly known as TIPS.


Six months ended June 30, 2005 and 2004

Net income for the six months ended June 30, 2005 was $3.8 million an
improvement of 58.3% or $1.4 million over net income of $2.4 million for the
first six months of 2004. The improvement for first six months of 2005 was
primarily due to higher gross margin dollars as a result of significant growth
in PEO services business, partially offset by higher SG&A expenses. Diluted
earnings per share for the first six months of 2005 was $.41 compared to $.26
for the comparable 2004 period.

Revenues for the six months ended June 30, 2005 totaled $108.9 million, an
increase of approximately $20.6 million or 23.3%, which reflects significant
growth in the Company's PEO service fee revenue, combined with an increase in
staffing services revenue.

PEO service fee revenue increased approximately $11.9 million or 36.3%.
Staffing services revenue increased approximately $8.7 million or 15.7% over the
comparable 2004 quarter. Management believes that the trends driving PEO service
fee revenue and staffing services revenue for the six months ended June 30, 2005
are consistent with the trends driving such revenues for the three months ended
June 30, 2005, as described above.

Gross margin for the six months ended June 30, 2005 totaled approximately
$18.6 million, which represented an increase of $3.6 million or 24.2% over the
similar period of 2004, primarily due to the 23.3% increase in revenues. The
gross margin percent increased from 16.9% of revenues for the first six months
of 2004 to 17.1% for the first six months of 2005. The increase in the gross
margin percentage was due to lower direct payroll costs and lower workers'
compensation expense, offset in part by higher payroll taxes and benefits, all
expressed as a percent of revenues. The decline in direct payroll costs, as a
percentage of revenues, from 46.3% for the first six months of 2004 to 43.7% for
the first six months of 2005 reflects the shift in the relative mix of services
to the Company's customer base and the effect of each customer's unique mark-up
percent. Workers' compensation expense, as a percentage of revenues, declined
from 11.7% for the first six months of 2004 to 10.8% for the first six-months of
2005. Workers' compensation expense for the six months ended June 30, 2005
totaled $11.7 million, which compares to $10.3 million for the first six months
of 2004. The increase in workers' compensation expense in terms of total dollars
was generally due to an increased provision for the future estimated costs of
existing claims, as well as to the effect from increased business activity in
California, where injury claims are more costly as compared to other states

-17-


BARRETT BUSINESS SERVICES, INC.

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (Continued)

Results of Operations (Continued)

Six months ended June 30, 2005 and 2004 (Continued)

in which the Company operates. The increase in payroll taxes and benefits, as a
percentage of revenues, from 25.1% for the first six months of 2004 to 28.4% for
the first six months of 2005, was due primarily to the effect of significant
growth in PEO services, partially offset by slightly lower effective state
unemployment tax rates in various states in which the Company operates as
compared to the first six months of 2004.

SG&A expenses for the six months ended June 30, 2005 amounted to
approximately $11.7 million, an increase of $1.1 million or 10.4% over the
similar period of 2004. The increase over the first six months of 2004 was
primarily attributable to increases in branch management personnel and related
expenses as a result of growth in the Company's PEO business. SG&A expenses, as
a percent of revenues, declined from 12.0% in the first six months of 2004 to
10.8% in the first six months of 2005.

Other expense for the six months ended June 30, 2005 was $97,000 compared
to other income of $59,000 for the comparable period of 2004.

Factors Affecting Quarterly Results

The Company has historically experienced significant fluctuations in its
quarterly operating results and expects such fluctuations to continue in the
future. The Company's operating results may fluctuate due to a number of factors
such as seasonality, wage limits on statutory payroll taxes, claims experience
for workers' compensation, demand and competition for the Company's services and
the effect of acquisitions. The Company's revenue levels may fluctuate from
quarter to quarter primarily due to the impact of seasonality on its staffing
services business and on certain of its PEO clients in the agriculture, food
processing and forest products-related industries. As a result, the Company may
have greater revenues and net income in the third and fourth quarters of its
fiscal year. Payroll taxes and benefits fluctuate with the level of direct
payroll costs, but tend to represent a smaller percentage of revenues and direct
payroll later in the Company's fiscal year as federal and state statutory wage
limits for unemployment and social security taxes are exceeded on a per employee
basis. Workers' compensation expense varies with both the frequency and severity
of workplace injury claims reported during a quarter and the estimated future
costs of such claims. Adverse loss development of prior period claims during a
subsequent quarter may also contribute to the volatility in the Company's
estimated workers' compensation expense.

Liquidity and Capital Resources

The Company's cash position of $21.7 million at June 30, 2005, increased
by $9.5 million over December 31, 2004, which compares to a decrease of $2.4
million for the comparable period in 2004. The increase in cash at June 30,
2005, as compared to December 31, 2004, was primarily due to net cash provided
by operating activities.

-18-

BARRETT BUSINESS SERVICES, INC.


Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (Continued)

Liquidity and Capital Resources (Continued)

Net cash provided by operating activities for the six months ended June
30, 2005 amounted to $11.1 million, as compared to net cash provided by
operating activities of $5.7 million for the comparable 2004 period. For the six
months ended June 30, 2005, cash flow was provided by net income of $3.8
million, together with increases in accrued payroll and related benefits of
$14.8 million and increases in workers' compensation claims liabilities and
safety incentives liabilities totaling $4.5 million, offset in part by an
increase of $12.6 million in trade accounts receivable.

Net cash used in investing activities totaled $2.2 million for the six
months ended June 30, 2005, compared to net cash used in investing activities of
$9.6 million for the similar 2004 period. For the 2005 period, the principal
uses of cash for investing activities were net purchases of restricted
marketable securities of $1.8 million, purchases of marketable securities of
$1.5 million and purchases of equipment of $304,000, offset in part by net
proceeds totaling $1.4 million from maturities of restricted marketable
securities. The transactions related to restricted marketable securities were
scheduled maturities and the related replacement of such securities held for
workers' compensation surety deposit purposes. The Company presently has no
material long-term capital commitments, other than its agreement to purchase,
subject to a due diligence review, an office building for $8.85 million as
described in Note 7 to the unaudited interim consolidated financial statements
included in this report.

Net cash provided by financing activities for the six-month period ended
June 30, 2005 was $578,000 compared to net cash used in financing activities of
$1.5 million for the similar 2004 period. For the 2005 period, the principal
source of cash from financing activities was $851,000 in proceeds from exercise
of stock options and the related tax benefit of stock option exercises,
partially offset by payments on long-term debt of $273,000.

As disclosed in Note 3 to the unaudited interim consolidated financial
statements included in this report, the Company acquired certain assets of
Skills Resource Training Center ("SRTC"), a staffing services company
headquartered in Central Washington state, effective January 1, 2004. As
consideration for the acquisition, the Company paid $3.0 million in cash and
agreed to issue up to 203,597 shares of its common stock ("Earnout Shares"),
with the actual number of Earnout Shares to be issued based upon the level of
financial performance achieved by the SRTC offices during calendar year 2004.
Certain contingencies remain unresolved, precluding a final calculation of the
number of Earnout Shares to be issued. Effective July 12, 2005, the Company
issued 76,222 Earnout Shares to SRTC in partial resolution of the remaining
contingencies. Management expects that the final number of Earnout Shares to be
issued will be resolved during the third quarter ending September 30, 2005. The
Company has recorded estimated Earnout Shares of 79,200 with a value of $778,000
on its consolidated balance sheet as of June 30, 2005 and December 31, 2004.

The Company's business strategy continues to focus on growth through the
expansion of operations at existing offices, together with the selective
acquisition of additional personnel-related business, both in its existing
markets and other strategic geographic markets. The Company periodically
evaluates proposals for various acquisition opportunities, but there can be no
assurance that any additional transactions will be consummated.

-19-

BARRETT BUSINESS SERVICES, INC.

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (Continued)

Liquidity and Capital Resources (Continued)

The Company was in compliance with all covenants at June 30, 2005 for the
bank credit agreement that expired on the same date. The Company entered into a
new Credit Agreement (the "Credit Agreement") with its principal bank effective
July 1, 2005. The Credit Agreement provides for an unsecured revolving credit
facility of up to $4.0 million, which includes a subfeature under the line of
credit for standby letters of credit up to $4.0 million. The interest rate on
advances, if any, will be, at the Company's discretion, either (i) equal to the
prime rate or (ii) LIBOR plus 1.50%. The Credit Agreement expires July 1, 2006.

Pursuant to the Credit Agreement, the Company is required to maintain
compliance with the following covenants: (1) a Current Ratio not less than 1.10
or 1.0 with "Current Ratio" defined as total current assets divided by total
current liabilities; (2) net income after taxes not less than $1.00 on an annual
basis, determined as of each fiscal year end, and (3) pre-tax profit of not less
than $1.00 on a quarterly basis, determined as of each fiscal quarter end.

In August 2005, the Company completed its follow-on public offering of a
total of 2,184,850 shares of its common stock at a price to the public of $16.25
per share, resulting in net proceeds to the Company of approximately $33.1
million after deducting underwriting discounts, commissions and estimated
offering expenses.

In addition, on August 9, 2005, the Company entered into a purchase and
sale agreement pursuant to which it has agreed to acquire an office building for
a purchase price of $8.85 million. If the transaction is completed, the Company
plans to move its headquarters to the new building. The acquisition will be
funded from available liquid assets.

Management expects that current liquid assets, the funds anticipated to be
generated from operations, proceeds from the Company's recent follow-on equity
offering and credit available under the Credit Agreement will be sufficient in
the aggregate to fund the Company's working capital needs for the foreseeable
future.

Stock Repurchase Program

During 1999, the Company's board of directors (the "Board") authorized a
stock repurchase program to repurchase common shares from time to time in open
market purchases. From time to time, since inception, the Board has approved
increases in the total number of shares or dollars authorized to be repurchased
under the program. The Company has made no share repurchases since August 2003.
Since the inception of the repurchase program in 1999, the Company has
repurchased 3,080,333 shares for an aggregate price of $9.2 million and an
average price of $2.98 per share. In July 2005, the Board terminated the
repurchase program.

-20-

BARRETT BUSINESS SERVICES, INC.

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (Continued)

Inflation

Inflation generally has not been a significant factor in the Company's
operations during the periods discussed above. The Company has taken into
account the impact of escalating medical and other costs in establishing
reserves for future expenses for self-insured workers' compensation claims.

Forward-Looking Information

Statements in this report which are not historical in nature, including
discussion of economic conditions in the Company's market areas and effect on
revenue growth, the potential for and effect of recent and future acquisitions,
the effect of changes in the Company's mix of services on gross margin, the
adequacy of the Company's workers' compensation reserves and allowance for
doubtful accounts, the effectiveness of the Company's management information
systems, and the availability of financing and working capital to meet the
Company's funding requirements, are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the Company or industry to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. Such factors with respect to the Company include difficulties
associated with integrating acquired businesses and clients into the Company's
operations, economic trends in the Company's service areas, material deviations
from expected future workers' compensation claims experience, collectibility of
accounts receivable, the carrying values of deferred income tax assets and
goodwill, which may be affected by the Company's future operating results, the
availability of capital or letters of credit necessary to meet state-mandated
surety deposit requirements for maintaining the Company's status as a qualified
self-insured employer for workers' compensation coverage, and the effect of the
Company's recent follow-on equity offering. The Company disclaims any obligation
to update any such factors or to publicly announce the result of any revisions
to any of the forward-looking statements contained herein to reflect future
events or developments.


Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company's exposure to market risk for changes in interest rates
primarily relates to the Company's short-term and long-term debt obligations. As
of June 30, 2005, the Company had interest-bearing debt obligations of
approximately $1.5 million, of which approximately $1.3 million bears interest
at a variable rate and approximately $0.2 million at a fixed rate of interest.
The variable rate debt is comprised of a $1.475 million note payable with a
10-year term, which bears interest at the three-month LIBOR rate plus 240 basis
points. Based on the Company's overall interest exposure at June 30, 2005, a 100
basis point increase in market interest rates would not have a material effect
on the fair value of the Company's long-term debt or its results of operations.
As of June 30, 2005, the Company had not entered into any interest rate
instruments to reduce its exposure to interest rate risk.


-21-

BARRETT BUSINESS SERVICES, INC.

Item 4. Controls and Procedures

The Company carried out an evaluation, under the supervision and with the
participation of the Company's management, including the Company's Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
Company's disclosure controls and procedures, as defined in Rules 13a-15(e) and
15d-15(e) of the Securities Exchange Act of 1934. Based on that evaluation, the
Chief Executive Officer and Chief Financial Officer have concluded that the
Company's disclosure controls and procedures as of June 30, 2005 were effective
in providing a reasonable level of assurance that information required to be
disclosed by the Company in reports that it files or submits under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported
within the time periods specified in the Securities and Exchange Commission's
rules and forms.

There were no changes in the Registrant's internal control over financial
reporting that occurred during the quarter ended June 30, 2005 that have
materially affected, or are reasonably likely to materially affect, the
Registrant's internal control over financial reporting.











-22-

BARRETT BUSINESS SERVICES, INC.

Part II - Other Information


Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Effective July 12, 2005, the Company issued 76,222 shares of its Common
Stock (the "SRTC Shares") to Skills Resource Training Center ("SRTC") in partial
resolution of the Company's obligations to SRTC under the purchase agreement
pursuant to which the Company acquired certain assets of SRTC. The SRTC Shares
were issued to SRTC in a transaction that was exempt from the registration
requirements of the Securities Act of 1933 under Section 4(2) of such act.
Because the shares were issued in partial consideration for the acquisition of
business, the Company received no cash proceeds from the issuance of the SRTC
Shares.


Item 4. Submission of Matters to a Vote of Security Holders

The Company held its 2005 annual meeting of stockholders on May 12, 2005.
The following directors were elected at the annual meeting:

For Withheld Exception
---------- ---------- -----------

Thomas J. Carley 5,540,877 109,520
James B. Hicks, Ph.D. 5,540,737 109,660
Jon L. Justesen 5,646,477 3,920
Anthony Meeker 5,598,677 51,720
Nancy B. Sherertz 5,526,249 124,148
William W. Sherertz 5,573,949 76,448


Item 5. Other Information

On August 9, 2005, the board of directors approved amendments to the
Company's bylaws intended to modernize the meeting notice provisions of the
bylaws, as permitted by amendments to the Maryland General Corporation Law, and
to reduce to 24 hours the amount of advance notice required to be given to
directors in the event of a special meeting. Other changes reduced the required
number of members of a board committee from two to one and otherwise conformed
bylaw language to that of the Maryland General Corporation Law, as amended. The
text of amendments to the bylaws are included as Exhibit 3.1 to this report and
incorporated herein by reference.

Effective as of August 9, 2005, the Company entered into a Real Estate
Purchase and Sale Agreement with Schnitzer Investment Corp. pursuant to which it
has agreed to purchase an office building located in the greater Portland,
Oregon metropolitan area. The purchase price for the building is $8.85 million.
Under the terms of the purchase and sale agreement, the Company has up to 30
days to complete its due diligence review of the property. If due diligence is
completed to the Company's satisfaction and the building purchase is completed,
the Company intends to move its corporate headquarters to the new location.


-23-


Item 6. Exhibits

The exhibits filed with this report are listed in the Exhibit Index
following the signature page of this report.







-24-




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

BARRETT BUSINESS SERVICES, INC.
(Registrant)






Date: August 15, 2005 /s/ Michael D. Mulholland
---------------------------------
Michael D. Mulholland
Vice President - Finance
(Principal Financial Officer)







-25-







EXHIBIT INDEX

Exhibit


3.1 Amendments to Bylaws of the Company.

3.2 Bylaws of the Company, as amended.

10.1 Real Estate Purchase and Sale Agreement dated August 9, 2005, between
Schnitzer Investment Corp. and the Company.

31.1 Certification of the Chief Executive Officer under Rule 13a-14(a).

31.2 Certification of the Chief Financial Officer under Rule 13a-14(a).

32 Certification pursuant to 18 U.S.C. Section 1350.



-26-