News

Barrett Business Services, Inc. Announces Fourth Quarter 2002 Operating Results, Restatement of Revenues, Progress Towards Bank Credit Facility Renewal and Schedules Investor Conference Call

3/19/2003 Print Version

PORTLAND, Ore., March 19 /PRNewswire-FirstCall/ --

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

$993,000 for the fourth quarter ended December 31, 2002, an improvement of

$1,276,000 from a net loss of $2,269,000 for the fourth quarter of 2001. The

diluted loss per share for the 2002 fourth quarter was $(.17) as compared to a

diluted loss per share of $(.38) for the same quarter a year ago. The net

loss for 2002 totaled $1,353,000, an improvement of $1,069,000 over the 2001

net loss of $2,422,000.

The Company and several other publicly-traded PEO companies have

determined to restate PEO revenues based upon Emerging Issues Task Force Issue

No. 99-19, "Reporting Revenues Gross as a Principal versus Net as an Agent"

("EITF 99-19"). The restatement is predicated upon the determination that a

PEO company is not the primary obligor of the direct payroll costs of its PEO

employees. Under the Company's new "net revenue" reporting for PEO services,

the salaries and wages of PEO employees are no longer recognized as revenue

components by "netting" such costs against PEO revenues. The Company will

provide comparative financial information within its future public filings and

disclosures. Pursuant to this restatement, total revenues for the fourth

quarter ended December 31, 2002 amounted to $25.7 million, a decrease of

approximately $6.5 million or 20.2% from the $32.2 million for the same

quarter in 2001. Total revenues for 2002 were $109.3 million, a decrease of

approximately $30.1 million or 21.6% from the $139.4 million for 2001. The

new application of EITF 99-19 has no effect on gross margin dollars, net

income, cash flows, working capital and shareholders' equity amounts

previously reported, and will not affect such amounts in future periods.

The following statements of operations are based upon the Company's newly

adopted revenue recognition accounting policy of "net revenue" reporting for

PEO revenues pursuant to EITF 99-19:

                                    (Unaudited)              (Unaudited)

Fourth Quarter Ended Year Ended

December 31, December 31,

Results of Operations Restated Restated

2002 2001 2002 2001

(in thousands, except per share amounts)

Revenues:

Staffing services $22,561 $28,351 $96,750 $123,110

Professional employer

service fees 3,153 3,889 12,558 16,281

Total revenues 25,714 32,240 109,308 139,391

Cost of revenues:

Direct payroll costs 16,674 20,931 71,515 90,750

Payroll taxes

and benefits 3,223 3,841 14,062 17,635

Workers' compensation 3,364 5,927 8,766 12,971

Total cost

of revenues 23,261 30,699 94,343 121,356

Gross margin 2,453 1,541 14,965 18,035

Selling, general and

administrative expenses 3,753 4,468 16,008 18,737

Depreciation and

amortization 280 808 1,162 3,277

Loss from operations (1,580) (3,735) (2,205) (3,979)

Other (expense) income, net (46) 6 (40) (17)

Loss before taxes (1,626) (3,729) (2,245) (3,996)

Benefit from income taxes (633) (1,460) (892) (1,574)

Net loss $(993) $(2,269) $(1,353) $ (2,422)

Basic loss per share $(.17) $(.38) $(.23) $(.39)

Weighted average

basic shares outstanding 5,787 5,969 5,804 6,193

Diluted loss per share $(.17) $(.38) $(.23) $(.39)

Weighted average

diluted shares outstanding 5,787 5,969 5,804 6,193

As noted above, the Company has changed its reporting of PEO revenues to a

net basis. A reconciliation of the restated amounts to the amounts previously

reported is as follows.

                                        (Unaudited)

Fourth (Unaudited)

Quarter Ended Year Ended

December 31, December 31,

2001 2002 2001

Revenues:

Restated professional

employer service fees $3,889 $12,558 $16,281

Adjustment 18,437 61,394 77,272

Professional employer services,

as previously reported $22,326 $73,952 $93,553

Cost of revenues:

Restated direct payroll costs $20,931 $71,515 $90,750

Adjustment 18,437 61,394 77,272

Direct payroll costs,

as previously reported $39,368 $132,909 $168,022

As a result of the Company's adoption of Statement of Financial Accounting

Standard No. 142 - Goodwill and Other Intangible Assets, as of January 1,

2002, the Company ceased the amortization of goodwill. Operating results for

the fourth quarter and the full year of 2001 included $454,000 and $1,783,000

of goodwill amortization, respectively.

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

that: "In spite of the reduction in workers' compensation expense in the 2002

fourth quarter both in terms of dollars and as a percent of revenues, as

compared to last year, we continue to be negatively affected by significantly

higher claims costs in California. On a positive note, our strengthened

branch management team is beginning to achieve increases in market share

leading to improved revenue trends thus far in 2003, particularly in

California."

The Company also announced that it has reached an agreement in principle

with its primary bank in connection with the scheduled renewal of its existing

credit facility on April 30, 2003.

The following summarizes the unaudited balance sheets at December 31, 2002

and December 31, 2001.

                   ($ in thousands)

December 31, December 31,

2002 2001

Assets

Current assets:

Cash and cash equivalents $96 $1,142

Income taxes receivable 1,923 --

Trade accounts receivable, net 11,357 13,760

Prepaid expenses and other 1,040 1,022

Deferred tax assets 2,111 2,841

Total current assets 16,527 18,765

Goodwill, net 18,749 18,749

Intangibles, net 59 129

Property, equipment and software, net 5,167 6,084

Restricted marketable securities

and workers' compensation deposits 4,286 5,425

Deferred tax assets 1,445 2,268

Other assets 1,064 1,146

$47,297 $52,566

Liabilities and Stockholders' Equity

Current liabilities:

Current portion of long-term debt $434 $708

Line of credit payable 3,513 3,424

Accounts payable 834 686

Accrued payroll, payroll taxes

and related benefits 4,897 5,165

Workers' compensation claim

and safety incentive liabilities 4,309 5,735

Other accrued liabilities 305 389

Total current liabilities 14,292 16,107

Long-term debt, net of current portion 488 922

Customer deposits 443 520

Long-term workers' compensation

liabilities 2,492 3,515

Other long-term liabilities 797 968

Stockholders' equity 28,785 30,534

$47,297 $52,566

On March 20, 2003, at 10:00 a.m. Pacific Time, William W. Sherertz will

host an investor telephone conference call to discuss fourth quarter 2002

operating results. To participate in the call, dial 877-356-3717 shortly

before 10:00 a.m. Pacific Time on March 20, 2003. A recording of the call

will be available beginning March 20, 2003 at 12 noon and ending

March 27, 2003 at 12 midnight. To listen to the recording, dial 800-642-1687

and enter conference identification code 9327905.
Barrett Business Services, Inc. is a human resource management company with

offices in seven 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, future workers'

compensation claims experience, collectibility of accounts receivable, and

availability of funding for working capital purposes, 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.