July 26, 2007 - EXHIBIT 99.1 - 8-K: Current report filing | Barrett Business Services, Inc. (BBSI)

Exhibit 99.1

NEWS RELEASE

For Immediate Release

Contact:

William W. Sherertz

President and

Chief Executive Officer

Telephone:

(360) 828-0700

BBSI

ANNOUNCES SECOND QUARTER 2007 OPERATING RESULTS,

FINANCIAL GUIDANCE FOR 3Q07 AND CONFERENCE CALL

VANCOUVER, WASHINGTON, July 25, 2007 - Barrett Business Services, Inc. (Nasdaq: BBSI) reported today net income of $4.9 million for the second quarter ended June 30, 2007, an improvement of $693,000 or 16.5% over net income of $4,188,000 for the second quarter of 2006. Diluted earnings per share for the 2007 second quarter were $.42, as compared to diluted earnings per share of $.36 for the same quarter a year ago.

Net revenues for the second quarter ended June 30, 2007 totaled $63.9 million, a decrease of approximately $769,000 or 1.2% from the $64.7 million for the same quarter in 2006.

	(Unaudited)				(Unaudited)
($ in thousands, except per share amounts)	Second Quarter Ended				Six Months Ended
	June 30,				June 30,
Results of Operations	2007		2006		2007		2006
Revenues:
Staffing services	$	29,747	$	30,567	$	57,762	$	57,228
Professional employer service fees		34,139		34,088		66,712		65,712
Total revenues		63,886		64,655		124,474		122,940
Cost of revenues:
Direct payroll costs		22,416		22,831		43,558		42,682
Payroll taxes and benefits		20,542		20,437		44,453		43,274
Workers compensation		5,964		7,198		11,808		13,752
Total cost of revenues		48,922		50,466		99,819		99,708
Gross margin		14,964		14,189		24,655		23,232
Selling, general and administrative
expenses		7,727		7,882		15,115		15,102
Depreciation and amortization		316		329		665		630
Income from operations		6,921		5,978		8,875		7,500
Other income, net		790		670		1,575		1,302
Income before taxes		7,711		6,648		10,450		8,802
Provision for income taxes		2,830		2,460		3,841		3,257
Net income	$	4,881	$	4,188	$	6,609	$	5,545
Basic earnings per share	$	.43	$	.37	$	.58	$	.50
Weighted average basic shares
outstanding		11,263		11,203		11,259		11,140
Diluted earnings per share	$	.42	$	.36	$	.57	$	.48
Weighted average diluted shares
outstanding		11,690		11,683		11,686		11,672

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Barrett Business Services, Inc.

News Release Second Quarter 2007

July 25, 2007

The Company reports its Professional Employer Organization services (PEO) revenues on a net basis because it is not the primary obligor for the services provided by the Companys PEO clients to their customers. 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 level of the Companys business activity and more useful in managing its operations.

	(Unaudited)				(Unaudited)
	Second Quarter Ended				Six Months Ended
(in thousands)	June 30,				June 30,
	2007		2006		2007		2006
Revenues:
Staffing services	$	29,747	$	30,567	$	57,762	$	57,228
Professional employer services		237,957		226,845		467,470		435,519
Total revenues		267,704		257,412		525,232		492,747
Cost of revenues:
Direct payroll costs		224,605		214,247		441,233		410,212
Payroll taxes and benefits		20,542		20,437		44,453		43,274
Workers compensation		7,593		8,539		14,891		16,029
Total cost of revenues		252,740		243,223		500,577		469,515
Gross margin	$	14,964	$	14,189	$	24,655	$	23,232

Gross revenues of $267.7 million for the second quarter ended June 30, 2007 rose 4.0% over the similar period in 2006. For the first six months of 2007, gross revenues of $525.2 million increased 6.6% over the comparable 2006 period.

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

For the second quarters ended June 30, 2007 and 2006:

	(Unaudited) Three Months Ended June 30,
(in thousands)	Gross Revenue Reporting Method				Reclassification						Net Revenue Reporting Method
	2007		2006		2007			2006			2007		2006
Revenues:
Staffing services	$	29,747	$	30,567	$			$			$	29,747	$	30,567
Professional
employer services		237,957		226,845		(203,818	)		(192,757	)		34,139		34,088
Total revenues	$	267,704	$	257,412	$	(203,818	)	$	(192,757	)	$	63,886	$	64,655
Cost of revenues	$	252,740	$	243,223	$	(203,818	)	$	(192,757	)	$	48,922	$	50,466

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Barrett Business Services, Inc.

News Release Second Quarter 2007

July 25, 2007

For the six months ended June 30, 2007 and 2006:

	(Unaudited) Six Months Ended June 30,
(in thousands)	Gross Revenue Reporting Method				Reclassification						Net Revenue Reporting Method
	2007		2006		2007			2006			2007		2006
Revenues:
Staffing services	$	57,762	$	57,228	$			$			$	57,762	$	57,228
Professional
employer services		467,470		435,519		(400,758	)		(369,807	)		66,712		65,712
Total revenues	$	525,232	$	492,747	$	(400,758	)	$	(369,807	)	$	124,474	$	122,940
Cost of revenues	$	500,577	$	469,515	$	(400,758	)	$	(369,807	)	$	99,819	$	99,708

William W. Sherertz, President and Chief Executive Officer, commented: We are pleased with our record second quarter earnings and anticipate a stronger performance in the third quarter.

The following summarizes the unaudited consolidated balance sheets at June 30, 2007 and December 31, 2006.

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Barrett Business Services, Inc.

News Release Second Quarter 2007

July 25, 2007

(in thousands)	June 30, 2007		December 31, 2006
Assets
Current assets:
Cash and cash equivalents	$	71,025	$	69,874
Marketable securities		3,625		3,159
Trade accounts receivable, net		36,906		31,328
Prepaid expenses and other		2,109		1,940
Deferred income taxes		4,182		4,699
Workers compensation receivables for insured claims		225		225
Total current assets		118,072		111,225
Marketable securities		411		406
Goodwill, net		28,036		27,536
Intangibles, net		62		75
Property, equipment and software, net		13,279		13,502
Restricted marketable securities and workers compensation deposits		2,656		2,616
Other assets		1,893		2,143
Workers compensation receivables for insured claims		4,295		4,678
	$	168,704	$	162,181

Liabilities and Stockholders Equity
Current liabilities:
Accounts payable	$	1,327	$	1,545
Accrued payroll, payroll taxes and related benefits		34,788		33,372
Income taxes payable		847
Other accrued liabilities		937		516
Workers compensation claims liabilities		3,253		3,843
Workers compensation claims liabilities for insured claims		225		225
Safety incentives liabilities		7,815		7,519
Total current liabilities		49,192		47,020
Customer deposits		689		817
Long-term workers compensation claims liabilities		3,976		5,295
Long-term workers compensation liabilities for insured claims		2,931		3,011
Deferred income taxes		2,449		1,545
Deferred gain on sale and leaseback		732		793
Stockholders equity		108,735		103,700
	$	168,704	$	162,181

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Barrett Business Services, Inc.

News Release Second Quarter 2007

July 25, 2007

Outlook for Third Quarter 2007

The Company also disclosed today limited financial guidance with respect to its operating results for the third quarter ending September 30, 2007. The Company expects gross revenues for the third quarter of 2007 to range from $296 million to $302 million, an increase of approximately 9.2% over the third quarter of 2006, and anticipates diluted earnings per share for the third quarter of 2007 to range from $.56 to $.59 per share, an increase of approximately 19.8% over the $.48 per share for the same period a year ago. These projected operating results include the effect of the July 2, 2007 acquisition of Strategic Staffing, Inc. A reconciliation of estimated gross revenues to estimated GAAP net revenues for the third quarter of 2007 is not included because PEO revenues and cost of PEO revenues for the period are not reasonably estimable.

Conference Call

On July 26 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 2007 operating results. To participate in the call, dial (877) 356-3717. The call identification number is 7359648. 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 Thursday, July 26, 2007 at 12:00 p.m. PT and ending on August 2, 2007. To listen to the recording, dial (800) 642-1687 and enter conference identification code 7359648.

Statements in this release about future events or performance, including earnings expectations for the third quarter of 2007, 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, the Company's ability to successfully integrate acquired businesses with its existing operations, future workers' compensation claims experience, the effect of changes in the workers compensation regulatory environment in one or more of its primary markets and the collectibility of accounts receivable, among others. Other important factors that may affect the Companys future prospects are described in the Companys 2006 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.

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

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Form: 8-K

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