October 25, 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 THIRD QUARTER 2007 OPERATING RESULTS,

FINANCIAL GUIDANCE FOR 4Q07 AND CONFERENCE CALL

VANCOUVER, WASHINGTON, October 24, 2007 - Barrett Business Services, Inc. (Nasdaq: BBSI) reported today net income of $6.3 million for the third quarter ended September 30, 2007, an improvement of $720,000 or 12.9% over net income of $5.6 million for the third quarter of 2006. Diluted earnings per share for the 2007 third quarter were $.54, as compared to diluted earnings per share of $.48 for the same quarter a year ago.

Net revenues for the third quarter ended September 30, 2007 totaled $82.9 million, an increase of approximately $13.5 million or 19.5% from the $69.4 million for the same quarter in 2006.

	(Unaudited)				(Unaudited)
($ in thousands, except per share amounts)	Third Quarter Ended				Nine Months Ended
	September 30,				September 30,
Results of Operations	2007		2006		2007		2006
Revenues:
Staffing services	$	43,911	$	33,506	$	101,673	$	90,734
Professional employer service fees		38,997		35,917		105,709		101,629
Total revenues		82,908		69,423		207,382		192,363
Cost of revenues:
Direct payroll costs		35,642		25,145		79,200		67,827
Payroll taxes and benefits		21,835		20,403		66,288		63,677
Workers compensation		6,633		7,207		18,441		20,959
Total cost of revenues		64,110		52,755		163,929		152,463
Gross margin		18,798		16,668		43,453		39,900

Selling, general and administrative expenses		9,530		8,362		24,645		23,464
Depreciation and amortization		350		335		1,015		965
Income from operations		8,918		7,971		17,793		15,471
Other income, net		776		733		2,351		2,035
Income before taxes		9,694		8,704		20,144		17,506
Provision for income taxes		3,412		3,142		7,253		6,399
Net income	$	6,282	$	5,562	$	12,891	$	11,107
Basic earnings per share	$	.56	$	.49	$	1.14	$	.99

Weighted average basic shares outstanding		11,276		11,247		11,265		11,176
Diluted earnings per share	$	.54	$	.48	$	1.10	$	.95

Weighted average diluted shares outstanding		11,691		11,659		11,687		11,668

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Barrett Business Services, Inc.

News Release Third Quarter 2007

October 24, 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)
	Third Quarter Ended				Nine Months Ended
	September 30,				September 30,
	2007		2006		2007		2006
Revenues:
Staffing services	$	43,911	$	33,506	$	101,673	$	90,734
Professional employer services		252,855		240,314		720,325		675,833
Total revenues		296,766		273,820		821,998		766,567
Cost of revenues:
Direct payroll costs		247,934		228,643		689,167		638,855
Payroll taxes and benefits		21,835		20,403		66,288		63,677
Workers compensation		8,199		8,106		23,090		24,135
Total cost of revenues		277,968		257,152		778,545		726,667
Gross margin	$	18,798	$	16,668	$	43,453	$	39,900

Gross revenues of $296.8 million for the third quarter ended September 30, 2007 rose 8.4% over the similar period in 2006. For the first nine months of 2007, gross revenues of $822.0 million increased 7.2% over the comparable 2006 period.

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

For the third quarters ended September 30, 2007 and 2006:

	(Unaudited)
	Three Months Ended September 30,
	Gross Revenue										Net Revenue
	Reporting Method				Reclassification						Reporting Method
	2007		2006		2007			2006			2007		2006
Revenues:
Staffing services	$	43,911	$	33,506	$			$			$	43,911	$	33,506

Professional employer services		252,855		240,314		(213,858	)		(204,397	)		38,997		35,917
Total revenues	$	296,766	$	273,820	$	(213,858	)	$	(204,397	)	$	82,908	$	69,423
Cost of revenues	$	277,968	$	257,152	$	(213,858	)	$	(204,397	)	$	64,110	$	52,755

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Barrett Business Services, Inc.

News Release Third Quarter 2007

October 24, 2007

For the nine months ended September 30, 2007 and 2006:

	(Unaudited)
	Nine Months Ended September 30,
	Gross Revenue										Net Revenue
(in thousands)	Reporting Method				Reclassification						Reporting Method
	2007		2006		2007				2006			2007		2006
Revenues:
Staffing services	$	101,673	$	90,734	$			$			$	101,673	$	90,734

Professional employer services		720,325		675,833		(614,616	)		(574,204	)		105,709		101,629
Total revenues	$	821,998	$	766,567	$	(614,616	)	$	(574,204	)	$	207,382	$	192,363
Cost of revenues	$	778,545	$	726,667	$	(614,616	)	$	(574,204	)	$	163,929	$	152,463

William W. Sherertz, President and Chief Executive Officer, commented: Our third quarter operating results represent record-level performance in terms of both revenues and earnings.

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

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Barrett Business Services, Inc.

News Release Third Quarter 2007

October 24, 2007

	September 30,			December 31,
(in thousands)	2007			2006
Assets
Current assets:
Cash and cash equivalents		$	57,638	$	69,874
Marketable securities			2,591		3,159
Trade accounts receivable, net			45,339		31,328
Prepaid expenses and other			1,903		1,940
Deferred income taxes			4,251		4,699
Workers compensation receivables for insured claims			225		225
Total current assets			111,947		111,225
Marketable securities			414		406
Goodwill, net			39,859		27,536
Intangibles, net			111		75
Property, equipment and software, net			16,039		13,502
Restricted marketable securities and workers compensation deposits			3,096		2,616
Other assets			1,506		2,143
Workers compensation receivables for insured claims			4,270		4,678
		$	177,242	$	162,181

Liabilities and Stockholders Equity
Current liabilities:
Accounts payable		$	968	$	1,545
Accrued payroll, payroll taxes and related benefits			38,262		33,372
Income taxes payable			890
Other accrued liabilities			1,037		516
Workers compensation claims liabilities			3,690		3,843
Workers compensation claims liabilities for insured claims			225		225
Safety incentives liabilities			8,065		7,519
Total current liabilities			53,137		47,020
Customer deposits			711		817
Long-term workers compensation claims liabilities			3,020		5,295
Long-term workers compensation liabilities for insured claims			2,906		3,011
Deferred income taxes			2,965		1,545
Deferred gain on sale and leaseback			701		793
Stockholders equity			113,802		103,700
		$	177,242	$	162,181

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Barrett Business Services, Inc.

News Release Third Quarter 2007

October 24, 2007

Outlook for Fourth Quarter 2007

The Company also disclosed today limited financial guidance with respect to its operating results for the fourth quarter ending December 31, 2007. The Company expects gross revenues for the fourth quarter of 2007 to range from $285 million to $290 million, as compared to $274 million for the fourth quarter of 2006, and anticipates diluted earnings per share for the fourth quarter of 2007 to range from $.45 to $.48 per share, as compared to $.45 per share for the same period a year ago. A reconciliation of estimated gross revenues to estimated GAAP net revenues for the fourth quarter of 2007 is not included because PEO revenues and cost of PEO revenues for the period are not reasonably estimable.

Conference Call

On October 25 at 9:00 a.m. Pacific Time, William W. Sherertz and Michael D. Mulholland will host an investor telephone conference call to discuss third quarter 2007 operating results. To participate in the call, dial (877) 356-3717. The call identification number is 21000117. 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, October 25, 2007 at 12:00 p.m. PT and ending on November 1, 2007. To listen to the recording, dial (800) 642-1687 and enter conference identification code 21000117.

Statements in this release about future events or performance, including earnings expectations for the fourth 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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