NEWS RELEASE
For Immediate Release Contact: William W. Sherertz
President and
Chief Executive Officer
Telephone: (503) 220-0988
BARRETT BUSINESS SERVICES, INC. ANNOUNCES
AMENDED OPERATING RESULTS FOR FOURTH QUARTER AND
12-MONTHS ENDED DECEMBER 31, 2001 AND
SCHEDULES INVESTOR CONFERENCE CALL
PORTLAND, OREGON, April 3, 2002 - Barrett Business Services, Inc. (Nasdaq
trading symbol: "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
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Barrett Business Services, Inc.
News Release
April 3, 2002
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)
Fourth Quarter Ended Year Ended
December 31, December 31,
-------------------- ---------------------
Results of Operations 2001 2000 2001 2000
- ------------------------------------------- --------- --------- --------- ---------
(in thousands, except per share amounts)
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
========= ========= ========= =========
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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.
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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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