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

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

--------------

FORM 10-Q

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

For the Quarterly Period Ended June 30, 1996

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 97201

(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 report), and (2) has been subject to such
filing requirements for the past 90 days.

Yes [ X ] No [ ]

Number of shares of Common Stock, $.01 par value outstanding at July 31, 1996
was 6,783,452 shares.


BARRETT BUSINESS SERVICES, INC.

INDEX


Page

Part I - Financial Information

Item 1. Financial Statements

Balance Sheets - June 30, 1996 and
December 31, 1995..........................................3

Statements of Operations - Three Months
Ended June 30, 1996 and 1995...............................4

Statements of Operations - Six Months
Ended June 30, 1996 and 1995...............................5

Statements of Cash Flows - Six Months
Ended June 30, 1996 and 1995...............................6

Notes to Financial Statements..............................7

Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................................10

Part II - Other Information

Item 4. Submission of Matters to a Vote of Security
Holders...................................................16

Item 6. Exhibits and Reports on Form 8-K..........................16

Signatures ..........................................................17


Exhibit Index ..........................................................18

PART I - Financial Information

Item 1. Financial Statements

BARRETT BUSINESS SERVICES, INC.
Balance Sheets
(Unaudited)
(In thousands)
June 30, December 31,
1996 1995
-------- ------------
Assets

Current assets:
Cash and cash equivalents $ 3,909 $ 3,218
Trade accounts receivable, net 16,177 13,151
Note receivable 324 -
Prepaid expenses and other 619 478
Deferred tax asset (Note 3) 664 937
------ ------
Total current assets 21,693 17,784
Intangibles, net 8,981 6,452
Property and equipment, net 2,400 2,261
Restricted marketable securities
and workers' compensation deposits 5,817 4,681
Other assets 107 95
------ ------
$38,998 $31,273
====== ======
Liabilities and Stockholders' Equity

Current liabilities:
Current portion of long-term debt $ 35 $ 33
Income taxes payable (Note 3) 443 -
Accounts payable 116 378
Accrued payroll, payroll taxes
and related benefits 8,248 5,797
Accrued workers' compensation claims
liabilities 1,606 2,383
Customer safety incentives payable 981 776
------ ------
Total current liabilities 11,429 9,367
Long-term debt, net of current portion 857 875
Customer deposits 813 675
Long-term workers' compensation
liabilities 419 322
------ ------
13,518 11,239
------ ------
Commitments and contingencies

Redeemable common stock, 159 shares issued
and outstanding (Note 2) 2,825 -

Nonredeemable stockholders' equity:
Common stock, $.01 par value; 20,500
shares authorized, 6,585 and 6,551
shares issued and outstanding, respectively 66 66

Additional paid-in capital 10,926 10,437
Retained earnings 11,663 9,531
------ ------
22,655 20,034
------ ------
$38,998 $31,273
====== ======

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



BARRETT BUSINESS SERVICES, INC.

Statements of Operations
(Unaudited)
(In thousands, except per share amounts)


Three Months Ended
June 30,
------------------
1996 1995
---- ----
Revenues:

Staffing services $27,091 $24,333
Professional employer services 24,780 20,231
------ ------
51,871 44,564
Cost of revenues:
Direct payroll costs 39,160 33,659
Payroll taxes and benefits 4,989 4,044
Workers' compensation 1,213 1,707
Safety incentives 362 235
------ ------
45,724 39,645
------ ------
Gross margin 6,147 4,919

Selling, general and administrative
expenses 3,939 3,226
Amortization of intangibles 209 138
------ ------

Income from operations 1,999 1,555

Other income (expense):
Interest expense (21) (20)
Interest income 126 95
Other, net 1 28
------ ------
106 103
------ ------

Income before provision for income taxes 2,105 1,658
Provision for income taxes 800 619
------ ------

Net income $ 1,305 $ 1,039
====== ======

Primary earnings per share (Note 5) $ .19 $ .16
====== ======

Primary weighted average number of common
stock equivalent shares outstanding 6,978 6,639
====== ======

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




BARRETT BUSINESS SERVICES, INC.

Statements of Operations
(Unaudited)
(In thousands, except per share amounts)


Six Months Ended
June 30,
-----------------
1996 1995
---- ----
Revenues:
Staffing services $49,719 $44,937
Professional employer serv ices 45,337 38,926
------ ------
95,056 83,863
Cost of revenues:
Direct payroll costs 71,878 63,403
Payroll taxes and benefits 9,322 7,626
Workers' compensation 1,983 4,014
Safety incentives 709 422
------ ------
83,892 75,465
------ ------
Gross margin 11,164 8,398
Selling, general and administrative
expenses 7,567 6,101
Amortization of intangibles 369 284
------ ------

Income from operations 3,228 2,013

Other income (expense):
Interest expense (42) (33)
Interest income 252 202
Other, net - 30
------ ------
210 199
------ ------

Income before provision for income taxes 3,438 2,212
Provision for income taxes 1,306 829
------ ------

Net income $ 2,132 $ 1,383
====== ======

Primary earnings per share (Note 5) $ .31 $ .21
====== ======

Primary weighted average number of common
stock equivalent shares outstanding 6,883 6,653
====== ======


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


BARRETT BUSINESS SERVICES, INC.

Statements of Cash Flows
(Unaudited)
(In thousands)
Six Months Ended
June 30,
-----------------
1996 1995
---- ----
Cash flows from operating activities:
Net income $ 2,132 $ 1,383
Reconciliation of net income to cash
from operations:
Depreciation and amortization 512 398
Gain on sale of marketable securities - (25)

Changes in certain assets and liabilities, net
of assets acquired and liabilities assumed:
Trade accounts receivable, net (2,954) (3,854)
Prepaid expenses and other (153) 9
Deferred tax asset 273 (287)
Accounts payable (262) 328
Accrued payroll, payroll taxes and related
benefits 2,451 1,365
Accrued workers' compensation claims
liabilities (777) 783
Customer safety incentives payable 205 25
Income taxes payable 443 272
Customer deposits and long-term workers'
compensation liabilities 183 9
------ -----
Net cash provided by operating activities 2,053 406
------ -----

Cash flows from investing activities:
Cash paid for acquisitions, including other
direct costs (Note 2) (113) -
Purchases of fixed assets, net of amounts
purchased in acquisitions (206) (199)
Proceeds from sales of marketable
securities 3,244 1,035
Purchases of marketable securities (4,380) (1,718)
------ ------
Net cash used in investing activities (1,455) (882)
------ ------

Cash flows from financing activities:
Payments on long-term debt (16) (13)
Proceeds from exercise of stock
options and warrants 109 496
------ -----
Net cash provided by financing activities 93 483
------ -----

Net increase in cash and cash equivalents 691 7

Cash and cash equivalents, beginning of period 3,218 2,214
------ ------

Cash and cash equivalents, end of period $ 3,909 $ 2,221
====== ======


Supplemental schedule of noncash activities:
Acquisition of other businesses:
Cost of acquisitions in excess of fair market
value of net assets acquired $ 2,898 $ -
Tangible assets acquired 472 -
Liabilities assumed 52 -
Common stock issued in connection with acquisitions 3,205 -


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




BARRETT BUSINESS SERVICES, INC.

Notes to Financial Statements


NOTE 1 - BASIS OF PRESENTATION OF INTERIM PERIOD STATEMENTS:

The accompanying financial statements are unaudited and have been
prepared by Barrett Business Services, Inc. (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 generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. In the opinion of
management, the 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 financial statements should be read in
conjunction with the audited financial statements and notes thereto included
in the Company's 1995 Annual Report on Form 10-K at pages 22-41. The results
of operations for an interim period are not necessarily indicative of the
results of operations for a full year.


NOTE 2 - ACQUISITIONS:

On April 1, 1996, the Company acquired certain assets and the
business of StaffAmerica, Inc., pursuant to a Plan and Agreement of
Reorganization. StaffAmerica provides both temporary staffing and staff
leasing services through its two offices located in Santa Barbara and Oxnard,
California. In 1995, StaffAmerica had revenues of approximately $6.7 million.
In exchange for the StaffAmerica assets and business operations, the Company
issued 157,464 shares of its common stock valued at $2,795,000, assumed a
StaffAmerica liability of $50,000 for customer deposits and issued to each of
the two owners of StaffAmerica, 845 shares of Company common stock for their
covenants not to compete and incurred $84,000 in acquisition related costs.
The acquisition was accounted for under the purchase method of accounting
which resulted in $2,579,000 of intangible assets, a promissory note
receivable from seller of $324,000 and $56,000 in fixed assets. The $324,000
promissory note is due and payable no later than March 31, 1997.

The Plan and Agreement of Reorganization between StaffAmerica and
the Company allows StaffAmerica and the former owners to require the Company
to repurchase the shares issued to them on April 1, 1996. There are certain
conditions and restrictions imposed on StaffAmerica, and the former owners
with regard to the Company's obligation to repurchase its stock. The Company's
obligation to repurchase such shares commenced on May 1, 1996, and expires on
March 31, 1997. Upon redemption, and to the extent the note receivable from
the seller remains outstanding, the price per share shall be the lower of
$17.75 per share or the then current market value of the common stock.

If the note receivable has been fully retired, then the price per share of the
common stock shall be $17.75. The total 159,154 shares of common stock is
shown as redeemable common stock in the accompanying balance sheet as of
June 30, 1996, at its recorded value of $2,825,000.

On April 8, 1996, the Company acquired certain assets and the
business of JobWorks Agency, Inc., by way of a Plan and Agreement of
Reorganization. JobWorks provides both temporary staffing and staff leasing
services through its two offices located in Hood River and The Dalles, Oregon.
JobWorks had revenues of approximately $1.2 million in 1995. The Company
issued 20,446 shares of its common stock with a then-fair value of $380,000
for the assets and business of JobWorks and assumed a customer deposit
liability of $2,000 and incurred $9,000 in acquisition related costs. The
Company paid $15,000 in cash for the selling shareholder's agreement of
noncompetition. The acquisition was accounted for under the purchase method of
accounting which resulted in $314,000 of intangible assets, $72,000 in
accounts receivable and $20,000 in fixed assets.

NOTE 3 - PROVISION FOR INCOME TAXES:

Deferred tax assets (liabilities) are comprised of the following
components (in thousands):

June 30, 1996 December 31, 1995
------------- -----------------
Accrued workers' compensation claims
liabilities $ 775 $1,053

Allowance for doubtful accounts 10 10

Tax depreciation in excess of book
depreciation (141) (126)

Book amortization of intangibles in excess
of tax amortization 20 -
---- ----

$ 664 $ 937
==== ====

The provision for income taxes for the six months ended June 30, 1996 and
1995, is as follows (in thousands):

Six Months Six Months
Ended Ended
June 30, 1996 June 30, 1995
------------- -------------

Current:
Federal $ 843 $ 913
State 190 203
----- -----
1,033 1,116
Deferred:
Federal 228 (239)
State 45 (48)
----- -----
273 (287)
----- -----
Provision for income taxes $1,306 $ 829
===== =====




NOTE 4 - STOCK INCENTIVE PLAN:

In 1993, the Company adopted a stock incentive plan (the "Plan")
which provides for stock-based awards to the Company's employees, directors
and outside consultants or advisers. The number of shares of common stock
reserved for issuance under the Plan is 800,000.

The following table summarizes options granted under the Plan in
1996:


Outstanding at December 31, 1995 496,625 $ 3.50 to $16.36

Options granted 102,000 $15.06 to $18.69
Options exercised (12,875) $ 3.50 to $ 9.50
Options canceled or expired (58,500) $ 3.50 to $18.69
-------

Outstanding at June 30, 1996 527,250 $ 3.50 to $18.00
=======

Exercisable at June 30, 1996 143,250
=======

Available for grant at
June 30, 1996 219,750
=======


The options listed in the table generally become exercisable in four equal
annual installments beginning one year after the date of grant.



NOTE 5- NET INCOME PER SHARE:

Net income per share is computed based on the weighted average
number of common stock and common stock equivalent shares outstanding during
the period.




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 Statements of Operations for
the three and six-month periods ended June 30, 1996 and 1995.

Percentage of Total Revenues
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1996 1995 1996 1995
---- ---- ---- ----
Revenues:
Staffing services 52.2% 54.6% 52.3% 53.6%
Professional employer services 47.8 45.4 47.7 46.4
----- ----- ----- -----
Total revenues 100.0 100.0 100.0 100.0
----- ----- ----- -----

Cost of revenues:
Direct payroll costs 75.5 75.5 75.6 75.6
Payroll taxes and benefits 9.6 9.2 9.8 9.1
Workers' compensation 2.3 3.8 2.1 4.8
Safety incentives .7 .5 .8 .5
----- ----- ----- -----
Total cost of revenues 88.1 89.0 88.3 90.0
----- ----- ----- -----

Gross margin 11.9 11.0 11.7 10.0
Selling, general and administrative
expenses 7.6 7.2 8.0 7.3
Amortization of intangibles .4 .3 .3 .3
----- ----- ----- -----
Income from operations 3.9 3.5 3.4 2.4
Other income (expense) .2 .2 .2 .2
----- ----- ----- -----
Pretax income 4.1 3.7 3.6 2.6
Provision for income taxes 1.6 1.4 1.4 1.0
----- ----- ----- -----
Net income 2.5 2.3 2.2 1.6
===== ===== ===== =====


Three months ended June 30, 1996 and 1995

Net income for the second quarter of 1996 was $1,305,000, an
increase of $266,000 or 25.6% over the same period in 1995. The increase in
net income was attributable to higher revenues, combined with an increased
gross margin percent, offset in part by higher selling, general and
administrative expenses, expressed as a percentage of revenues. Earnings per
share for the second quarter of 1996 were $.19 as compared to $.16 for the
second quarter of 1995.

Revenues for the second quarter of 1996 totaled approximately
$51.9 million, an increase of approximately $7.3 million or 16.4% over the
second quarter of 1995. The quarter-over-quarter internal growth rate of
revenues was 4.8%. The percentage increase in total revenues exceeded the
internal growth rate of revenues primarily due to the acquisition of four
temporary staffing businesses in July 1995, one such business in December
1995, and two temporary staffing and staff leasing services businesses in
April 1996, as discussed in Note 2 to the financial statements included in
Item 1. The lower internal growth rate of revenues of 4.8% for the 1996 second
quarter compared to the Company's second quarter 1995 internal growth rate of
25.6% is believed to be attributable to an ongoing slowdown in the high-tech
industry which continues to have a negative effect on the growth rate of the
Company's Santa Clara, California operations. The mix of professional employer
services as a percent of revenues increased to 47.8%, up from 45.4% of total
revenues for the comparable 1995 period due to the growth in the number of new
PEO clients primarily in Oregon and California. Staffing services had a
corresponding decline in sales mix for the second quarter of 1996 to 52.2% of
total revenues as compared to 54.6% of total revenues for the same period in
1995.

Gross margin for the second quarter of 1996 totaled approximately
$6.1 million, which represented an increase of $1.2 million or 24.5% over the
same period of 1995. The gross margin percent increased to 11.9% of revenues
for the second quarter of 1996 from 11.0% for the second quarter of 1995 as a
result of significantly lower workers' compensation expense both in terms of
total dollars and as a percentage of revenues. The Company's workers'
compensation expense for the second quarter of 1996 declined to 2.3% of
revenues as compared to 3.8% of revenues for the second quarter of 1995. The
decrease in workers' compensation expense, as a percentage of revenues, was
offset in part by an increase in payroll taxes and benefits as a percentage of
revenues resulting from higher state unemployment tax rates in various states.


The following table summarizes certain indicators of performance
regarding the Company's self-insured workers' compensation program for each of
the first two quarters of 1996 and 1995.




Self-Insured Workers' Compensation Profile

Total Workers' "Reserve"1
Total Workers' Comp Expense as a % of
No. of Injury Comp Expense as a % of "At Risk
Claims (in thousands) Total Payroll Claims"2
------------- ------------- ------------- -------------
1996 1995 1996 1995 1996 1995 1996 1995
---- ---- ---- ---- ---- ---- ---- ----

Q1 193 266 $ 770 $2,307 2.4% 7.8% 41.0% 33.0%
Q2 312 309 1,213 1,707 3.1 5.1 41.0 40.6
--- --- ----- ----- --- ---
YTD 505 575 $1,983 $4,014 2.8% 6.3%
=== === ===== ===== === ===

1 "Reserve" in this context is defined as an additional expense provision
for the unexpected future adverse development of claims expense (commonly
referred to as "IBNR").
2 "At Risk Claims" are defined as the dollar amount of all injury claims
submitted under self-insured payroll less amounts covered by excess
reinsurance.

The preceding table illustrates the 1996 first and second quarter
improvement over the similar 1995 first and second quarters in the Company's
total workers' compensation expense both in terms of total dollars and, more
importantly, as a percent of total payroll dollars. Concurrent with the
improved expense level and percentage, the Company has increased its reserves
for future adverse claim development to 41.0% of "at risk claims" as of June
30, 1996, as compared to 40.6% at June 30, 1995.

Selling, general and administrative expenses (excluding the
amortization of intangibles) amounted to approximately $3.9 million, an
increase of $713,000 or 22.1% over the comparable period in 1995. Selling,
general and administrative expenses, expressed as a percentage of revenues,
increased from 7.2% for the second quarter of 1995 to 7.6% of revenues for the
second quarter of 1996. The increase was primarily attributable to the
acquisition of seven temporary staffing and staff leasing companies between
July 1995 and April 1996.

The Company offers various employee benefit plans, including a
savings plan pursuant to Internal Revenue Code ("Code") Section 401(k) and a
cafeteria plan pursuant to Code Section 125, to its employees, including its
worksite employees. In order to qualify for favorable tax treatment under the
Code, such plans must be established and maintained by an employer for the
exclusive benefit of its employees. The Internal Revenue Service (the "IRS")
has reportedly adopted or is considering the adoption of a position that
Professional Employer Organizations ("PEOs"), such as the Company, are not
employers for ERISA purposes, at least in certain factual situations. The
universal application of this position to all PEO situations could potentially
disqualify from favorable tax treatment all the employee benefit plans of all
PEOs. However, the precise nature, scope, and effect of the IRS's
determinations on this issue, which to the best of the Company's knowledge
have not yet been published, are not known at this time. Accordingly, the
Company has not recorded any provision in connection with the potential
disqualification of its benefit plans, as neither the likelihood of
disqualification nor the resulting range of loss, if any, is currently
estimable. Reference is made to pages 17-18 of the Company's 1995 Annual
Report on Form 10-K for a more detailed discussion of this issue.

Six Months Ended June 30, 1996 and 1995

Net income for the six months ended June 30, 1996 was $2,132,000,
an increase of $749,000 or 54.2% over the same period in 1995. The increase in
net income was primarily due to continued growth in revenues and a higher
gross margin percentage owing to improved workers' compensation expense. Net
income per share for the six months ended June 30, 1996 was $.31 as compared
to $.21 for the six months ended June 30, 1995.

Revenues for the six months ended June 30, 1996 totaled
approximately $95.1 million, an increase of approximately $11.2 million or
13.3% over the comparable period of 1995. The internal growth rate of revenues
was 5.1%. The growth rate of total revenues exceeded the internal growth rate
of revenues primarily due to the acquisition of seven temporary staffing and
staff leasing businesses between July 1995 and April 1996. The lower internal
growth rate of revenues of 5.1% for the six-month period ended June 30, 1996
compared to the internal growth rate of 24.7% for the similar period of 1995
is believed to be attributable to the first quarter of 1996 inclement weather
conditions in Oregon, Maryland and Delaware, as well as to an ongoing slowdown
in the high-tech industry which continues to have a negative effect on the
growth rate of the Company's Santa Clara, California operations.

Gross margin for the six months ended June 30, 1996 totaled
approximately $11.2 million or 11.7% of revenues, which compares to $8.4
million or 10.0% of revenues for the same period of 1995. The improvement in
gross margin dollars and percent from the 1995 comparable period was primarily
attributable to improved workers' compensation experience, offset in part by
higher payroll taxes and benefits expressed as a percentage of revenues
resulting from higher state unemployment tax rates in various states.

Selling, general and administrative expenses (excluding the
amortization of intangibles) amounted to approximately $7.6 million, an
increase of $1.5 million or 24.0% over the comparable period in 1995. Selling,
general and administrative expenses, expressed as a percentage of revenues,
increased from 7.3% for the first six months of 1995 to 8.0% for the first six
months of 1996. The increase was primarily attributable to: (i) the
acquisition of seven temporary staffing and staff leasing businesses between
July 1995 and April 1996, which have had higher administrative overhead
requirements and (ii) additional branch office staffing to support increased
business activity and additional workers' compensation loss control branch
personnel to strengthen the administration of the Company's self-insured
workers' compensation programs.




Seasonal Fluctuations

The Company's revenues historically have been subject to some
seasonal fluctuation, particularly in its staffing services business. Demand
for the Company's staffing services and certain staff leasing clients decline
during the year-end holiday season and periods of inclement weather.
Correspondingly, demand for staffing services, and the operations of some
staff leasing clients, particularly agricultural and forest products-related
companies, increase during the second and third quarters.


Liquidity and Capital Resources

The Company's cash position of $3,909,000 at June 30, 1996
increased by $691,000 from December 31, 1995. The increase was primarily due
to cash provided by operating activities, offset in part by the use of cash
for net purchases of restricted marketable securities.

Net cash provided by operating activities for the six months ended
June 30, 1996 amounted to $2,053,000 as compared to $406,000 for the
comparable 1995 period. For the 1996 period, cash flow generated by net income
and an increase in accrued payroll and benefits was offset in part by a $3.0
million increase in accounts receivable and a $777,000 decrease in accrued
workers' compensation claims liabilities.

Net cash used in investing activities totaled $1,455,000 for the
six months ended June 30, 1996 as compared to $882,000 for the similar 1995
period. For the 1996 period, the principal use of cash for investing
activities was the purchase of restricted marketable securities to satisfy
various state self-insured workers' compensation surety deposit requirements.
The Company presently has no material long-term capital commitments.

Net cash provided by financing activities for the three-month
period ended June 30, 1996 was $93,000, which compares to $483,000 for the
comparable 1995 period. For the 1995 period, the principal source of cash
provided by financing activities arose from the exercise of warrants by
underwriters to purchase 110,000 shares of the Company's common stock at $4.20
per share. Such warrants were received by the Company's underwriters in
connection with its June 1993 initial public offering of common stock. As of
the date of this filing, an underwriter continues to hold warrants to purchase
90,000 shares of common stock at $4.20 per share.

The Company's business strategy continues to focus on growth
through the acquisition of additional personnel-related businesses, both in
its existing markets and other strategic geographic areas, and the expansion
of operations at existing offices. As disclosed in Note 2 to the financial
statements included herein, the Company purchased, during April 1996, certain
assets of two temporary staffing and staff leasing companies located in
California and Oregon for a combination of cash and shares of the Company's
common stock. The Company actively explores proposals for various acquisition
opportunities on an ongoing basis, but there can be no assurance that any
additional transactions will be consummated.

During the second quarter ended June 30, 1996, the Company renewed
its unsecured $4.0 million revolving credit facility through May 30, 1997.
There was no outstanding balance at June 30, 1996. The renewal of the credit
facility was on terms and conditions more favorable than the prior credit
arrangement which expired May 30, 1996. Such favorable terms and conditions
for the new credit facility included a reduction in fees and the elimination
of certain financial covenants. Management also believes the funds anticipated
to be generated from operations, together with the renewed credit facility and
other potential sources of financing, will be sufficient in the aggregate to
fund the Company's working capital needs for the foreseeable future.

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 appearing in this report which are not historical in
nature, including the discussions of economic conditions in the Company's
market areas, the tax-qualified status of the Company's 401(k) savings plan,
and the adequacy of the Company's capital resources, are forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements are subject to risks and uncertainties
that may cause actual future results to differ materially. Such risks and
uncertainties with respect to the Company include economic trends in the
Company's service areas, uncertainties regarding government regulation of PEOs
and the staff leasing industry, including the possible adoption by the
Internal Revenue Service of an unfavorable position as to the tax-qualified
status of employee benefit plans maintained by PEOs, future workers'
compensation claims experience, and the availability of and costs associated
with potential sources of financing.



Part II - Other Information

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

The Company held its 1996 annual meeting of stockholders on
May 16, 1996. The following directors were elected at the annual meeting:

ABSTENTIONS AND
FOR WITHHELD BROKER NON-VOTES
--- -------- ----------------
Robert R. Ames 6,105,997 1,200
Jeffrey L. Beaudoin 6,105,797 1,400
Stephen A. Gregg 6,105,797 1,400
Anthony Meeker 6,105,797 1,400
Stanley G. Renecker 6,105,897 1,300
William W. Sherertz 6,106,997 200

The other matter presented for action at the annual meeting was
approved by the following vote:

ABSTENTIONS AND
FOR AGAINST BROKER NON-VOTES
--- ------- ----------------
Approval of the 6,104,797 1,500 900
appointment of Price
Waterhouse LLP as
independent accountants


Item 6. Exhibits and Reports on Form 8-K

(a) The exhibits filed herewith are listed in the Exhibit Index
following the signature page of this report.

(b) No Current Reports on Form 8-K were filed by the Registrant during
the quarter ended June 30, 1996.





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 9, 1996 By: /s/ Michael D. Mulholland
Michael D. Mulholland
Vice President-Finance
(Principal Financial Officer)





EXHIBIT INDEX



EXHIBIT

4.4 Fifth Amendment to Loan Agreement between the Registrant and First
Interstate Bank of Oregon, N.A. dated May 31, 1996.

11 Statement of Calculation of Average
Common Shares Outstanding

27 Financial Data Schedule