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Barrett Business Services, Inc. Announces Amended Operating Results for Fourth Quarter and 12-Months Ended December 31, 2001 and Schedules Investor Conference Call

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PORTLAND, Ore., April 3 /PRNewswire-FirstCall/ --

Barrett Business Services, Inc. (Nasdaq: BBSI) reported today that it has

amended its previously announced operating results for the 2001 fourth quarter

and 12-months ended December 31, 2001 by recognizing a $1,837,000 after-tax

charge in connection with post-year end adverse development of the estimated

future expense of workers' compensation claims and, to a lesser extent, an

increased provision for estimated bad debt expense related to one customer.

Of the total after-tax charge of $1,837,000 ($3,000,000 pretax),

$1,745,000 ($2,850,000 pretax) was attributable to higher workers'

compensation expense and $92,000 ($150,000 pretax) was related to an increased

estimate for bad debt expense. For the fourth quarter ended December 31,

2001, the Company's amended net loss totaled $2,269,000, an increase of

$1,837,000 from the February 6, 2002 reported net loss of $432,000. The basic

and diluted net loss per share for the 2001 fourth quarter were $.38. Cash

flow per share (defined as net (loss) income plus depreciation and

amortization divided by weighted average diluted shares outstanding) for the

2001 fourth quarter was a negative $.24. The amended net loss for the year

ended December 31, 2001 amounted to $2,422,000, an increase of $1,837,000 from

the previously reported net loss of $585,000. The basic and diluted net loss

per share for 2001 were $.39. Cash flow per share for 2001 was a positive

$.14.

Revenues for the 2001 fourth quarter and 12-months ended December 31, 2001

were unchanged at $50.7 million and $216.7 million, respectively.

During February and March 2002, the Company's third party administrator

("TPA") for California workers' compensation claims reported significant

increases in the estimated future costs of claims to the Company. The

increases in estimated future costs were due in part to adverse development of

previous estimates for future claims costs, the TPA's recent completion of a

review of all claims files it had assumed from the Company's predecessor TPA

during 2001, and a change in claims reserving practices mandated by the State

of California. Due to the increased estimates for future claims costs, the

Company engaged its outside actuary to analyze the financial effect of the

revised costs estimates, which in turn resulted in the Company's recognition

of the additional charge for workers' compensation expense for 2001.

William W. Sherertz, President and Chief Executive Officer, commented

that, "I believe this charge will have minimal, if any, effect on the future

cash flow of the Company, as the increased estimated future claims expense is

primarily related to older claims. It has been our experience that the newer

or current year injury claims precipitate greater cash needs because of the

medical attention required by our injured employees. From an operational

standpoint, a significant number of the older claims originated from two

customers served by one branch office. We have made personnel changes at the

branch and corporate offices, changed customer service procedures to ensure

that we have a more appropriate match between the customers' personnel needs

and our available employees, and improved communications with our new

California TPA firm. Although the cost of workers' compensation claims in

California is far higher than any other zone within the Company, we believe

that our management team has effectively addressed the operational issues. On

a more positive note, we are encouraged that the burden of these increased

cost estimates for prior year claims will not affect current and future year

earnings."

                                 (Unaudited)               (Unaudited)

Results of Operations Fourth Quarter Ended Year Ended

(in thousands, except December 31, December 31,

per share amounts) 2001 2000 2001 2000

Revenues:

Staffing services $28,351 $39,154 $123,110 $188,500

Professional employer

services 22,326 28,944 93,553 133,966

Total revenues 50,677 68,098 216,663 322,466

Cost of revenues:

Direct payroll costs 39,368 52,991 168,022 251,015

Payroll taxes and

benefits 3,841 5,219 17,635 27,007

Workers' compensation 5,927 3,378 12,971 12,639

Total cost of

revenues 49,136 61,588 198,628 290,661

Gross margin 1,541 6,510 18,035 31,805

Selling, general and

administrative

expenses 4,468 5,506 18,737 24,583

Depreciation and

amortization 808 819 3,277 3,192

(Loss) income

from operations (3,735) 185 (3,979) 4,030

Other income

(expense), net 6 (78) (17) (483)

(Loss) income

before taxes (3,729) 107 (3,996) 3,547

(Benefit from)

provision for income

taxes (1,460) 44 (1,574) 1,446

Net (loss) income $(2,269) $63 $(2,422) $2,101

Basic (loss) earnings

per share $(.38) $.01 $(.39) $.29

Weighted average basic

shares outstanding 5,969 6,838 6,193 7,237

Diluted (loss)

earnings per share $(.38) $.01 $(.39) $.29

Weighted average

diluted shares

outstanding 5,969 6,864 6,193 7,277

Cash flow per share $(.24) $.13 $.14 $.73

The following summarizes the unaudited balance sheets at December 31, 2001

and December 31, 2000.

                                                         December 31,

($ in thousands) 2001 2000

Assets

Current assets:

Cash and cash equivalents $1,142 $516

Trade accounts receivable, net 13,760 20,660

Prepaid expenses and other 1,022 1,222

Deferred tax assets 2,841 2,702

Total current assets 18,765 25,100

Intangibles, net 18,878 20,982

Property, equipment and software, net 6,084 7,177

Restricted marketable securities and workers'

compensation deposits 5,425 4,254

Unrestricted marketable securities -- 1,386

Deferred tax assets 2,268 839

Other assets 1,146 1,127

$52,566 $60,865

Liabilities and Stockholders' Equity

Current liabilities:

Current portion of long-term debt $708 $2,939

Line of credit payable 3,424 2,628

Accounts payable 686 1,013

Accrued payroll, payroll taxes and

related benefits 5,165 7,893

Workers' compensation claim and safety

incentive liabilities 5,735 5,274

Other accrued liabilities 389 1,622

Total current liabilities 16,107 21,369

Long-term debt, net of current portion 922 2,283

Customer deposits 520 614

Long-term workers' compensation liabilities 3,515 682

Other long-term liabilities 968 1,000

Stockholders' equity 30,534 34,917

$52,566 $60,865

On Thursday, April 4, 2002, at 8:00 a.m. Pacific Time, William W. Sherertz

will host an investor telephone conference call to discuss the amended

operating results. To participate in the call, dial 800-399-3080 shortly

before 8:00 a.m. Pacific Time on Thursday, April 4, 2002. A recording of the

call will be available beginning April 4, 2002 at 12 noon and ending April 11,

2002 at 12 noon. To listen to the recording, dial 800-642-1687 and enter

conference identification code 3742987.

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

with offices in ten states, which serve customers in approximately 15 states.

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.

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SOURCE Barrett Business Services, Inc.
Web site: http: //www.barrettbusiness.com
CONTACT: William W. Sherertz, President and Chief Executive Officer of Barrett Business Services, Inc., +1-503-220-0988