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Barrett Business Services, Inc. Reports 56% Increase in Net Income For Fourth Quarter 1998 and Pending Acquisition

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PORTLAND, Ore., Feb. 10 /PRNewswire/ -- Barrett Business Services, Inc.

(Nasdaq: BBSI) reported today net income of $1,235,000 for the fourth quarter

ended December 31, 1998, an increase of $443,000 or 55.9% over the fourth

quarter of 1997. Diluted earnings per share for the 1998 fourth quarter were

$.16, compared to $.10 for the same quarter a year ago. Net income for the

year ended December 31, 1998 amounted to $3,821,000. Diluted earnings per

share for 1998 were $.50, compared to diluted earnings per share of $.49 for

1997.

Revenues for the fourth quarter ended December 31, 1998 totaled

$75.2 million, a decrease of approximately $1.7 million or 2.2% from the

$76.9 million for the same quarter in 1997. Revenues for the year ended

December 31, 1998 were $303.0 million, a decrease of $2.5 million or 0.8% from

1997.

    Results of Operations

Fourth Quarter

(in thousands, except Ended Year Ended

per share amounts) December 31, December 31,

1998 1997 1998 1997

Revenues:

Staffing services $38,154 $45,170 $165,443 $177,263

Professional employer

services 37,014 31,695 137,586 128,268

Total revenues 75,168 76,865 303,029 305,531

Cost of revenues:

Direct payroll costs 58,482 59,803 235,265 236,307

Payroll taxes

and benefits 5,894 6,373 25,550 27,226

Workers' compensation 2,262 2,360 8,670 9,075

Safety incentives 374 341 1,520 1,509

Total cost of

revenues 67,012 68,877 271,005 274,117

Gross margin 8,156 7,988 32,024 31,414

Selling, general and

administrative expenses 5,804 6,373 23,481 24,011

Merger expenses -- -- 750 --

Amortization of intangibles 312 359 1,316 1,332

Income from operations 2,040 1,256 6,477 6,071

Other income, net 89 33 267 116

Income before taxes 2,129 1,289 6,744 6,187

Provision for

income taxes 894 497 2,923 2,342

Net income $1,235 $792 $3,821 $3,845

Basic earnings per share $.16 $.10 $.50 $.50

Weighted average basic

shares outstanding 7,676 7,633 7,664 7,646

Diluted earnings per share $.16 $.10 $.50 $.49

Weighted average diluted

shares outstanding 7,714 7,706 7,711 7,780

Certain 1997 amounts have been reclassified to conform with the 1998

presentation. Such reclassifications had no impact on gross margin, net

income or stockholders' equity.

The following summarizes the audited balance sheets at December 31, 1998

and 1997:

    ($ in thousands)                                  December 31

1998 1997

Assets

Current assets:

Cash and cash equivalents $4,029 $3,439

Trade accounts receivable, net 21,907 21,051

Prepaid expenses and other 1,103 1,231

Deferred tax assets 1,857 1,895

Total current assets 28,896 27,616

Intangibles, net 11,508 12,133

Property and equipment, net 5,184 4,574

Restricted marketable securities

and workers' compensation deposits 6,004 6,095

Deferred tax assets 552 191

Other assets 626 206

$52,770 $50,815

Liabilities and Stockholders' Equity

Current liabilities:

Current portion of long-term debt $129 $731

Line of credit payable -- 887

Income taxes payable 438 --

Accounts payable 948 1,136

Accrued payroll, payroll taxes

and related benefits 9,246 10,034

Accrued workers' compensation claim

liabilities 3,244 3,140

Customer safety incentives payable 1,173 1,073

Other accrued liabilities 446 414

Total current liabilities 15,624 17,415

Long-term debt, net of current portion 435 573

Customer deposits 829 934

Long-term workers' compensation liabilities 714 632

Other long-term liabilities 1,466 1,030

19,068 20,584

Commitments and contingencies

Stockholders' equity:

Common stock, $.01 par value; 20,500 shares

authorized, 7,676 and 7,638 shares issued

and outstanding 77 76

Additional paid-in capital 11,409 11,760

Retained earnings 22,216 18,395

33,702 30,231

$52,770 $50,815

Barrett also announced that it has reached an agreement in principle to

acquire certain assets of TPM Staffing Services, Inc. The all-cash

transaction will be effective February 15, 1999.

TPM, a privately-held staffing services company, operates three offices in

Southern California - Lake Forest, Santa Ana and Anaheim. TPM's revenues for

the year ended December 31, 1998 were approximately $5.7 million. TPM is

Barrett's second acquisition in the first quarter of 1999.

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

with offices in ten states.
SOURCE Barrett Business Services, Inc.
Web site: http: //www.barrettbusiness.com
Company News On-Call: http: //www.prnewswire.com/comp/082187.html or fax, 800-758-5804, ext. 082187
CONTACT: William W. Sherertz, President and Chief Executive Officer of Barrett Business Services, Inc., 503-220-0988