VANCOUVER, Wash., July 27, 2010 (GLOBE NEWSWIRE) -- Barrett Business Services, Inc. (Nasdaq:BBSI) reported today net income of $2.3 million for the second quarter ended June 30, 2010 compared to a net loss of $6.7 million for the second quarter of 2009. Diluted income per share for the 2010 second quarter was $.22, as compared to diluted loss per share of $.65 for the same quarter a year ago. The 2009 second quarter included an $11.8 million increase in workers' compensation expense resulting from the Company's change in estimate of its workers' compensation reserves.

Net revenues for the second quarter ended June 30, 2010 totaled $67.4 million, an increase of approximately $10.1 million or 17.6% over the $57.3 million for the same quarter in 2009. 
  (Unaudited) (Unaudited)
(in thousands, except per share amounts) Second Quarter Ended Six Months Ended
  June 30, June 30,
Results of Operations 2010 2009 2010 2009
Revenues:        
Staffing services $ 31,975 $ 28,002 $ 59,037 $ 52,044
Professional employer service fees 35,457 29,263 66,655 56,293
Total revenues 67,432 57,265 125,692 108,337
Cost of revenues:        
Direct payroll costs 24,237 21,127 44,673 39,196
Payroll taxes and benefits 22,861 19,434 47,489 42,061
Workers' compensation 8,589 18,927 16,408 25,614
Total cost of revenues 55,687 59,488 108,570 106,871
Gross margin 11,745 (2,223) 17,122 1,466
Selling, general and administrative expenses 8,407 8,336 16,631 16,376
Depreciation and amortization 333 410 710 796
Income (loss) from operations 3,005 (10,969) (219) (15,706)
Other income, net 380 293 665 408
Income (loss) before taxes 3,385 (10,676) 446 (15,298)
Provision for (benefit from) income taxes 1,107 (3,944) (146) (5,392)
Net income (loss) $ 2,278 $ (6,732) $ 592 $ (9,906)
Basic income (loss) per share $ .22 $ (.65) $ .06 $ (.95)
Weighted average basic shares outstanding 10,446 10,355 10,456 10,426
Diluted income (loss) per share $ .22 $ (.65) $ .06 $ (.95)
Weighted average diluted shares outstanding 10,485 10,355 10,490 10,426

The Company reports its Professional Employer Organization services ("PEO") revenues on a net basis because it is not the primary obligor for the services provided by the Company's PEO clients to their customers. The gross revenues and cost of revenues information below, although not in accordance with generally accepted accounting principles ("GAAP"), is presented for comparison purposes and because management believes such information is more informative as to the level of the Company's business activity and more useful in managing its operations.
  (Unaudited) (Unaudited)
  Second Quarter Ended Six Months Ended
(in thousands) June 30, June 30,
  2010 2009 2010 2009
Revenues:        
Staffing services  $ 31,975  $ 28,002  $ 59,037  $ 52,044
Professional employer services   265,121  220,150  500,616  423,975
Total revenues  297,096  248,152  559,653  476,019
Cost of revenues:        
Direct payroll costs  252,722  210,720  476,269  404,276
Payroll taxes and benefits  22,861  19,434  47,489  42,061
Workers' compensation   9,768  20,221  18,773  28,216
Total cost of revenues  285,351  250,375  542,531  474,553
Gross margin  $ 11,745  $ (2,223)  $ 17,122  $ 1,466

Gross revenues of $297.1 million for the second quarter ended June 30, 2010 increased 19.7% over the similar period in 2009. 

A reconciliation of non-GAAP gross revenues to net revenues is as follows:

For the second quarters ended June 30, 2010 and 2009:
  (Unaudited)
  Three Months Ended June 30,
  Gross Revenue   Net Revenue
(in thousands) Reporting Method Reclassification Reporting Method
  2010 2009 2010 2009 2010 2009
Revenues:            
Staffing services  $ 31,975  $ 28,002  $ --  $ --  $ 31,975  $ 28,002
Professional             
employer services   265,121  220,150  (229,664)  (190,887)  35,457  29,263
Total revenues  $ 297,096  $ 248,152  $ (229,664)  $ (190,887)  $ 67,432  $ 57,265
Cost of revenues  $ 285,351  $ 250,375  $ (229,664)  $ (190,887)  $ 55,687  $ 59,488

For the six months ended June 30, 2010 and 2009:
  (Unaudited)
  Six Months Ended June 30,
  Gross Revenue   Net Revenue
(in thousands) Reporting Method Reclassification Reporting Method
  2010 2009 2010 2009 2010 2009
Revenues:            
Staffing services  $ 59,037  $ 52,044  $ --  $ --  $ 59,037  $ 52,044
Professional             
employer services   500,616  423,975  (433,961)  (367,682)  66,655  56,293
Total revenues  $ 559,653  $ 476,019  $ (433,961)  $ (367,682)  $ 125,692  $ 108,337
Cost of revenues  $ 542,531  $ 474,553  $ (433,961)  $ (367,682)  $ 108,570  $ 106,871

The following summarizes the unaudited consolidated balance sheets at June 30, 2010 and December 31, 2009.
  June 30, December 31,
(in thousands) 2010 2009
Assets    
Current assets:    
Cash and cash equivalents $ 17,444 $ 36,671
Marketable securities 23,914 13,766
Trade accounts receivable, net 50,301 33,070
Income taxes receivable 3,887 4,274
Prepaid expenses and other 2,265 979
Deferred income taxes 4,283 4,071
Total current assets 102,094 92,831
Marketable securities 7,012 7,473
Property, equipment and software, net 14,861 14,795
Restricted marketable securities and workers' compensation deposits 8,933 2,666
Other assets 3,103 3,104
Workers' compensation receivables for insured claims 3,639 3,865
Goodwill, net 47,820 47,338
  $ 187,462 $ 172,072
     
Liabilities and Stockholders' Equity    
Current liabilities:    
Accounts payable $ 702 $ 1,117
Accrued payroll, payroll taxes and related benefits 47,853 30,244
Other accrued liabilities 649 499
Workers' compensation claims liabilities  10,484 10,509
Safety incentives liabilities 4,241 4,437
Total current liabilities 63,929 46,806
Long-term workers' compensation claims liabilities  16,106 14,560
Long-term workers' compensation liabilities for insured claims 2,684 2,729
Deferred income taxes 6,323 6,323
Customer deposits and other long-term liabilities 1,488 1,527
Stockholders' equity 96,932 100,127
  $ 187,462 $ 172,072

Outlook for Third Quarter 2010

The Company also disclosed today limited financial guidance with respect to its operating results for the third quarter ending September 30, 2010. The Company expects gross revenues for the third quarter of 2010 to range from $313 million to $317 million, as compared to $273.1 million for the third quarter of 2009, and anticipates diluted earnings for the third quarter of 2010 to range from $.33 to $.36 per share, as compared to diluted income per share of $.28 for the same period a year ago. A reconciliation of estimated gross revenues to estimated GAAP net revenues for the third quarter of 2010 is not included because PEO revenues and cost of PEO revenues for the period are not reasonably estimable.

Conference Call

On Wednesday, July 28 at 9:00 a.m. Pacific Time, William W. Sherertz and James D. Miller will host an investor telephone conference call to discuss second quarter 2010 operating results. To participate in the call, dial (877) 356-3717. The call identification number is 89607191. The conference call will also be webcast live at www.barrettbusiness.com. To access the webcast, click on the Investor Relations section of the Web site and select Webcast. A replay of the call will be available beginning Wednesday, July 28, 2010 at 12:00 p.m. PT and ending on Wednesday, August 4, 2010. To listen to the recording, dial (800) 642-1687 and enter conference identification code 89607191.

Statements in this release about future events or performance, including gross revenues and earnings expectations for the third quarter of 2010, 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, the Company's ability to retain current customers and to successfully integrate acquired businesses with its existing operations, future workers' compensation claims experience, the effect of changes in the workers' compensation regulatory environment in one or more of its primary markets, the collectibility of accounts receivable and the effect of conditions in the global capital markets on the Company's investment portfolio, among others. Other important factors that may affect the Company's future prospects are described in the Company's 2009 Annual Report on Form 10-K. 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. The Company undertakes no obligation to update or revise forward-looking statements in this release to reflect events or changes in circumstances that occur after the date of this release.

BBSI provides a comprehensive range of human resource management solutions to large and small companies throughout many regions of the United States.

CONTACT:  Barrett Business Services, Inc.          William W. Sherertz, President and Chief Executive Officer          (360) 828-0700

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