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Barrett Business Services, Inc. Announces Net Income and Revenues for Second Quarter 1998

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PORTLAND, Ore., Aug. 5 /PRNewswire/ -- Barrett Business Services, Inc.

(Nasdaq: BBSI) reported today net earnings for the second quarter ended

June 30, 1998, of $935,000 or $.14 per diluted share, before a one-time charge

for merger-related expenses and the effect of the June 29, 1998 merger with a

Southern California staffing company. After a one-time charge for

merger-related expenses of $750,000 ($450,000 after-tax or $.06 per diluted

share) and the effect of the merger (on a pooling-of-interests basis), net

earnings for the 1998 second quarter were $600,000 or $0.08 per diluted share.

On this same basis, net earnings for the six-month period ended June 30, 1998,

were $987,000 or $0.13 per diluted share.

Revenues for the second quarter ended June 30, 1998 were $68.6 million,

before the effect of the merger, as compared to $69.6 million a year ago, a

decline of 1.4 percent. After the effect of the merger, revenues for the

1998 second quarter were $76.7 million, as compared to $75.7 million for the

comparable 1997 period. For the six-month period ended June 30, 1998,

revenues totaled $145.9 million, after the effect of the merger, an increase

of 2.3 percent over revenues of $142.7 million for the similar 1997 period.

As previously reported, on June 29, 1998, Barrett completed its

acquisition of Western Industrial Management, Inc., and of a related company,

Catch 55, Inc. (together "WIMI"), in a stock-for-stock merger. Barrett issued

894,642 shares of its common stock and paid a dissenting shareholder

$519,000 in cash. The parties valued the transaction at approximately

$10.7 million or $11.375 per share. The one-time charge of $750,000 for

merger-related expenses was primarily for professional fees, of which

approximately $425,000 were attributable to WIMI.

The merger with WIMI has been accounted for as a pooling-of-interests

under Accounting Principles Board Opinion No. 16. Accordingly, all prior

period financial statements have been restated to include WIMI as though it

had always been a part of Barrett. Results of operations for the second

quarter ended June 30, 1998 and 1997, however, have been reported both with

and without giving effect to the merger.

                                   (Unaudited)                 (Unaudited)

Second Quarter Ended Six Months Ended

June 30, June 30,

1998 1997 Post-

Pre- Post- Pre- merger

merger merger merger with

Barrett with Barrett (Restated) WIMI (Restated)

Results of Operations WIMI Operations Barrett 1998 1997

Operations

(in thousands,

except per

share amounts)

Revenues:

Staffing services $35,383 $42,786 $37,947 $43,387 $83,090 $80,136

Professional

employer services 33,187 33,865 31,621 32,273 62,802 62,535

Total revenues 68,570 76,651 69,568 75,660 145,892 142,671

Cost of revenues:

Direct payroll

costs 53,450 59,348 53,859 58,349 113,015 109,787

Payroll taxes

and benefits 5,882 6,629 6,212 6,781 13,069 13,265

Workers' compensation 1,936 2,211 1,973 2,175 4,207 4,226

Safety incentives 336 336 381 381 700 704

Total cost of

revenues 61,604 68,524 62,425 67,686 130,991 127,982

Gross margin 6,966 8,127 7,143 7,974 14,901 14,689

Selling, general and

administrative

expenses 5,168 6,035 4,857 5,641 11,851 10,750

Merger expenses -- 750 -- -- 750 --

Amortization of

intangibles 313 329 275 285 682 612

Income from operations 1,485 1,013 2,011 2,048 1,618 3,327

Other income 74 41 45 25 110 83

Income before taxes 1,559 1,054 2,056 2,073 1,728 3,410

Provision for income

taxes 624 454 802 819 741 1,333

Net income $935 $600 $1,254 $1,254 $987 $2,077

Basic earnings per

share $.14 $.08 $.19 $.16 $.13 $.27

Weighted average basic

shares 6,772 7,666 6,736 7,630 7,652 7,663

Diluted earnings per

share $.14 $.08 $.18 $.16 $.13 $.27

Weighted average

diluted shares 6,828 7,722 6,832 7,727 7,707 7,809

The following summarizes the unaudited balance sheets at June 30, 1998 and

December 31, 1997, as restated:

    ($ in thousands)                       Post-merger        (Restated)

June 30, December 31,

1998 1997

Assets

Cash $1,076 $3,439

Receivables, net 23,946 21,051

Prepaids and other 1,808 1,231

Deferred tax asset 2,281 2,086

Total current assets 29,111 27,807

Intangibles, net 12,130 12,133

Property and equipment, net 4,968 4,574

Restricted marketable securities 5,857 6,095

Other assets 386 206

$52,452 $50,815

Liabilities and Stockholders' Equity

Current portion of long-term debt $488 $731

Line of credit payable 252 887

Income taxes payable 48 --

Accounts payable 688 1,136

Accrued payroll and benefits 11,613 10,034

Accrued workers' compensation claims 3,260 3,140

Customer safety incentives 1,125 1,073

Other accrued liabilities 821 414

Total current liabilities 18,295 17,415

Long-term debt, net 550 573

Customer deposits 898 934

Long-term workers' compensation

liabilities 722 632

Other long-term liabilities 1,120 1,030

Stockholders' equity 30,867 30,231

$52,452 $50,815

Barrett Business Services, Inc. is a human resource management company

with offices in Washington, Oregon, Idaho, California, Arizona, Michigan,

Maryland and Delaware. For 1997, as restated, Barrett reported revenues of

$305.5 million and net income of $3.8 million.
SOURCE Barrett Business Services, Inc.
Company News On-Call: http: //www.prnewswire.com or fax, 800-758-5804, ext. 082187
CONTACT: William W. Sherertz, President and Chief Executive Officer of Barrett Business Services, Inc., 503-220-0988