Barrett Business Services, Inc. Announces Second Quarter Earnings

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PORTLAND, Ore., Aug. 2 /PRNewswire/ --

Barrett Business Services, Inc. (Nasdaq: BBSI) reported today net income of

$794,000 for the second quarter ended June 30, 2000, a decrease of $422,000 or

34.7% from the second quarter of 1999. Basic and diluted earnings per share

for the 2000 second quarter were $.11 as compared to basic and diluted

earnings per share of $.16 for the 1999 second quarter. The operating results

reported for the second quarter ended June 30, 2000 were consistent with the

Company's expectations, as previously reported on July 20, 2000.

Revenues for the second quarter ended June 30, 2000 totaled $86.5 million,

an increase of approximately $1.8 million or 2.1% over the $84.7 million for

the same quarter in 1999. The internal growth rate for revenues yielded a

decline of 4.5% for the 2000 second quarter.

William W. Sherertz, President and CEO, stated that: "The decline in net

income compared to the same period a year ago was attributable primarily to a

slowing in the Company's revenue growth rate compared to recent quarters,

combined with higher workers' compensation expense, depreciation and

amortization, and interest expense."

Mr. Sherertz commented further that: "The Company's revenue growth rate

was affected in part by a new, comprehensive pre-employment screening system,

which helps ensure that applicants are appropriately qualified. Although the

new pre-employment screening system may result in lower revenues, we believe

that in the long term the system will enhance the quality of our employees and

thus strengthen our competitive position in a low unemployment economy. We

have also increased the Company's rates for services to reflect the continuing

imbalance between the demand for and supply of qualified employees for our


The Company attributed the increase in workers' compensation expense over

the same quarter a year ago to an increase in the expected total costs of

claims and an increase in the number of claims. Higher comparable

depreciation and amortization expense was due to a May 1999 acquisition,

combined with costs associated with the Company's new information system,

implementation of which was completed in the first quarter of 2000. The

increase in net interest expense was attributable to higher debt levels

necessary to finance three 1999 acquisitions.

(in thousands, except per share amounts)

                                        (Unaudited)            (Unaudited)

Second Quarter Ended Six Months Ended

June 30, June 30,

Results of Operations 2000 1999 2000 1999


Staffing services $51,698 $46,185 $ 99,465 $ 83,414

Professional employer

services 34,804 38,522 74,159 72,308

Total revenues 86,502 84,707 173,624 155,722

Cost of revenues:

Direct payroll costs 67,155 65,575 135,159 120,738

Payroll taxes and benefits 7,306 7,142 15,224 13,393

Workers' compensation

and safety incentives 3,263 2,848 5,860 5,134

Total cost of revenues 77,724 75,565 156,243 139,265

Gross margin 8,778 9,142 17,381 16,457

Selling, general and

administrative expenses 6,464 6,403 12,949 11,976

Depreciation and amortization 822 582 1,553 1,093

Income from operations 1,492 2,157 2,879 3,388

Other (expense) income, net (151) (15) (283) 57

Income before taxes 1,341 2,142 2,596 3,445

Provision for income taxes 547 926 1,058 1,489

Net income $794 $ 1,216 $1,538 $1,956

Basic earnings per share $.11 $.16 $.21 $.26

Weighted average basic shares

outstanding 7,416 7,581 7,438 7,624

Diluted earnings per share $.11 $.16 $.21 $.26

Weighted average diluted

shares outstanding 7,459 7,624 7,484 7,666

Certain 1999 amounts have been reclassified to conform with the 2000

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

income or stockholders' equity.

The following summarizes the unaudited balance sheets at June 30, 2000 and

December 31, 1999.

             ($ in thousands)                       June 30,   December 31,

2000 1999


Current assets:

Cash and cash equivalents $332 $550

Trade accounts receivable, net 29,451 30,216

Prepaid expenses and other 1,218 1,219

Deferred tax assets 2,350 1,658

Total current assets 33,351 33,643

Intangibles, net 20,958 21,945

Property, equipment and software, net 7,439 7,027

Restricted marketable securities and

workers' compensation deposits 4,481 6,281

Unrestricted marketable securities 1,584 --

Deferred tax assets 773 712

Other assets 1,294 1,132

$69,880 $70,740

Liabilities and Stockholders' Equity

Current liabilities:

Notes payable $-- $865

Current portion of long-term debt 2,762 2,783

Line of credit payable 4,992 4,882

Accounts payable 619 1,356

Accrued payroll, payroll taxes and

related benefits 12,014 11,437

Workers' compensation claim and

safety incentive liabilities 4,701 4,219

Other accrued liabilities 703 413

Total current liabilities 25,791 25,955

Long-term debt, net of current portion 2,864 4,232

Customer deposits 698 815

Long-term workers' compensation liabilities 691 699

Other long-term liabilities 1,905 1,710

Stockholders' equity 37,931 37,329

$69,880 $70,740

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

with offices in ten states. For 1999, Barrett reported net income of

$5.1 million and revenues of $347.9 million.

Statements in this release about future events or performance 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, and future

workers' compensation claims experience, among others. 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.
SOURCE Barrett Business Services, Inc.
Web site: http: //
Company News On-Call: http: // or fax, 800-758-5804, ext. 082187
CONTACT: William W. Sherertz, President and Chief Executive Officer of Barrett Business Services, Inc., 503-220-0988