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Barrett Business Services, Inc. Announces Third Quarter Earnings

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PORTLAND, Ore., Nov. 1 /PRNewswire/ -- Barrett Business Services, Inc.

(Nasdaq: BBSI) reported today net income of $500,000 for the third quarter

ended September 30, 2000, a decrease of $1,335,000 or 72.8% from the third

quarter of 1999. Basic and diluted earnings per share for the 2000 third

quarter were $.07, as compared to basic and diluted earnings per share of

$.24 for the 1999 third quarter. The operating results reported for the third

quarter ended September 30, 2000 were consistent with the Company's

expectations reported on October 23, 2000.

The decrease in net income compared to the same period a year ago was

attributable primarily to a decline in the Company's revenues, combined with

higher workers' compensation expense and depreciation and amortization, offset

in part by lower selling, general and administrative expenses. Revenues for

the third quarter ended September 30, 2000 totaled $80.7 million, a decrease

of approximately $15.2 million or 15.8% from the $95.9 million for the same

quarter in 1999.

The Company's revenues continue to be adversely affected by the reduced

availability of qualified employees in a low unemployment economy, as well as

the Company's decision to terminate its relationship with certain customers

due to unacceptable profit margins or risks associated with credit or

workplace safety. In an effort to improve future operating results,

management is continuing to increase the Company's rates for services to

reflect the current imbalance between the demand for and supply of qualified

employees for its customers. In addition, selling, general and administrative

expenses for the 2000 third quarter were reduced by 14% compared to the same

quarter a year ago.

The Company attributed the increase in workers' compensation expense in

the 2000 third quarter over the same quarter a year ago to an increase in the

expected total costs of claims. Higher comparable depreciation and

amortization expense was due to costs associated with the Company's new

information system, which was implemented in the first quarter of 2000.

    (in thousands, except                (Unaudited)          (Unaudited)

per share amounts) Third Quarter Ended Nine Months Ended

September 30, September 30,

Results of Operations 2000 1999 2000 1999

Revenues:

Staffing services $49,881 $56,434 $149,346 $139,848

Professional employer services 30,863 39,441 105,022 111,749

Total revenues 80,744 95,875 254,368 251,597

Cost of revenues:

Direct payroll costs 62,865 74,285 198,024 195,025

Payroll taxes and benefits 6,564 7,620 21,788 21,013

Workers' compensation and

safety incentives 3,401 3,022 9,261 8,157

Total cost of revenues 72,830 84,927 229,073 224,195

Gross margin 7,914 10,948 25,295 27,402

Selling, general and

administrative expenses 6,128 7,116 19,077 19,376

Depreciation and amortization 820 532 2,373 1,339

Income from operations 966 3,300 3,845 6,687

Other (expense) income, net (122) (138) (405) (80)

Income before taxes 844 3,162 3,440 6,607

Provision for income taxes 344 1,327 1,402 2,817

Net income $500 $1,835 $2,038 $3,790

Basic earnings per share $.07 $.24 $.28 $.50

Weighted average basic shares

outstanding 7,236 7,581 7,371 7,609

Diluted earnings per share $.07 $.24 $.27 $.50

Weighted average diluted shares

outstanding 7,276 7,634 7,415 7,655

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 September 30,

2000 and December 31, 1999.

                 ($ in thousands)                 September 30,  December 31,

2000 1999

Assets

Current assets:

Cash and cash equivalents $351 $550

Trade accounts receivable, net 25,967 30,216

Prepaid expenses and other 863 1,219

Deferred tax assets 2,875 1,658

Total current assets 30,056 33,643

Intangibles, net 20,434 21,945

Property, equipment and software, net 7,332 7,027

Restricted marketable securities and workers'

compensation deposits 4,400 6,281

Unrestricted marketable securities 1,559 --

Deferred tax assets 818 712

Other assets 1,392 1,132

$65,991 $70,740

Liabilities and Stockholders' Equity

Current liabilities:

Notes payable $-- $865

Current portion of long-term debt 2,748 2,783

Line of credit payable 2,915 4,882

Income taxes payable 268 --

Accounts payable 1,073 1,356

Accrued payroll, payroll taxes and

related benefits 10,166 11,437

Workers' compensation claim and safety

incentive liabilities 4,718 4,219

Other accrued liabilities 1,099 413

Total current liabilities 22,987 25,955

Long-term debt, net of current portion 2,408 4,232

Customer deposits 658 815

Long-term workers' compensation liabilities 687 699

Other long-term liabilities 1,949 1,710

Stockholders' equity 37,302 37,329

$65,991 $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: //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