NEWS RELEASE
For Immediate Release Contact: William W. Sherertz
President and
Chief Executive Officer
Telephone: (503) 220-0988
BARRETT BUSINESS SERVICES, INC.
ANNOUNCES FOURTH QUARTER 2002 OPERATING RESULTS,
RESTATEMENT OF REVENUES,
PROGRESS TOWARDS BANK CREDIT FACILITY RENEWAL
AND SCHEDULES INVESTOR CONFERENCE CALL
PORTLAND, OREGON, March 19, 2003 - Barrett Business Services, Inc. (Nasdaq
trading symbol: "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:
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Barrett Business Services, Inc.
News Release - 4th Quarter 2002
March 19, 2003
(Unaudited) (Unaudited)
Fourth Quarter Ended Year Ended
December 31, December 31,
------------------------------ -------------------------------
Restated Restated
Results of Operations 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 Quarter (Unaudited)
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.
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Barrett Business Services, Inc.
News Release - 4th Quarter 2002
March 19, 2003
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
================ ================
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Barrett Business Services, Inc.
News Release - 4th Quarter 2002
March 19, 2003
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.
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