FOOL CONFERENCE CALL SYNOPSIS*
By Debora Tidwell (MF Debit)

Barrett Business Services, Inc.
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4724 SW Macadam Avenue
Portland, OR 97201
(503) 220-0988

UNION CITY, Ca., October 21, 1996/FOOLWIRE/ --- Barrett Business Services reported their third quarter 1996 results earlier this week. Net income for the quarter was up 9.8% to almost $1.7 million. Earnings per share were $0.24 compared to $0.23 per share last year. Revenues for the third quarter were up 21.4% to $60.3 million.

Looking at the various components of the revenues, staffing services was up 15.1% and professional employer services were up 29.8% over the same quarter last year.

Margin for the quarter was 10.9%, down from last year which principally reflects the increase they experienced in Worker's Compensation expense which increased to 3.6% of revenues.

EXPENSES. Their SG&A for the quarter was down to 6.8% of revenue compared to 7.6% last year. Looking at the increase in absolute dollars of $4.1 million compared to $3.7 million, it simply reflects 7 new branches that have come online since a year ago. They are satisfied with expense levels on a comparable branch basis. Comparable branch SG&A expenses were down 1% compared to a year ago. With the branches, they went through a budgetary process and are fairly tough on it. If the branch wants a call from the CEO all they have to do is blow up one part of their budget. They don't have an understanding of branches that can't manage their supply orders or their telephone costs or their management payroll. They have told Barrett what the number is going to be and Barrett expects it to be that number.

WORKER'S COMP CLAIMS. Barrett had kind of a rough quarter in the Worker's Comp area. It boiled down to a couple of weeks in late August and early September. Their comment on that is that they take risks and those things are going to happen to them from time to time. Certainly when they looked at those issues having to do with Worker's Comp, unlike a year and a half ago, there was no way for them to prevent the series of accidents that happened and they are very comfortable with the job their branches are doing and are very confident going forward that they have made the workplace safer and that it would be substantially less safe out there without them.

The quarter was a record all the way around for them and they are very happy with the way the company is going. They are extremely happy with a lot of their smaller branches. The Boise branch has moved up very nicely, they are at about $1.5 million run-rate now. The acquisition of Cascade is going extremely well for them they feel they made a great acquisition.

HUMAN RESOURCES MANAGEMENT. An acquisition they just made in Orange County California was even better than they thought once they started to talk to the customer base. It's what they've always known about some of the PEO companies is that they are basically a paper company in which they deliver nowhere near any level of service in terms of helping the small customer run his business better. When they started talking to the customers and explain what they do and how they do it, they were welcomed with open arms and they were supplying Barrett with names of friends, neighbors, and other people they should be talking to. They are very happy with that acquisition. It establishes a beach-head in Orange County California and they like that. They think it will help them build business toward San Diego and the Inland Empire in the future. They will do that with the same model as in all their other branches, offering the staffing and the human resource management side which has been a really good base of business. They paid $660,000 for between $600,000-700,000 margin and they think another $300,000 of Worker's Comp. They are very low risk and they fully expect to capture some of them launching on the Worker's Comp front as well.

WORKER'S COMP TRENDS. Their pipeline is full. Worker's Comp has been running within targets during the month of October and really all year with the exception of the couple weeks noted. As they are growing, they will probably take a little less risk than they have in the past and that is not an overt issue they deal with. Across the country now they are seeing a significant decline in Worker's Comp rates. Where it once was that there was a lot of low-hanging fruit in terms of customers who had major problems with Worker's Comp numbers, a lot of people have learned the wisdom of running a safer workplace. Moving more into the Human Resource management area, they are finding that is just as viable a field for them and that there is a great deal of hunger from small business people to have human resource management delivered to their company in terms of the turnover of all the people they hire, the interaction and communications they have with people, and Barrett is set up very well to handle that and is finding a great deal of acceptance in the marketplace from that kind of thing. It is not to say that the Worker's Comp self-insured's gun that they use to make the workplace safer is not a viable one, but Barrett's maturing as a company and it is just one of the things they bring to the party.

STAFFING. On the staffing side it is still excellent. The Golden West branch remains at consistent levels. Even though this branch is down 20% in the quarter it is still the largest branch and they have picked it up in all the other areas. Those comparable numbers will fall off the top of the charts about the second week of January so they will have some very favorable number coming in January to compare against.

RISK MANAGEMENT. The risk management business is really a training issue and a culture issue of how they do businesses. Since April of 1995 it really puts the consequences to the actions of people in place. They finally understood what Barrett was talking about in terms of making the workplace safer as opposed to just signing them up, doing a paper transaction and hoping people do better. They think the quality of people and the skill level of people coming into Barrett has vastly improved over the last year. They think that is a real key component to the risk management side. Their basic structure of incentives in the workplace and the ergonomic improvement and the follow-up on sites are all just sort of perfunctory things they do. But, Barrett feels they have to deliver something inside of those other than just show up and shake hands and ask if everything's okay. And they think they are doing a great job in that area.

* A Fool conference call synopsis represents an effort to highlight the salient points of a conference call and should not be taken as an authoritative accounting or transcription of the entire event. Note: Statements made by a company other than historical information may constitute forward-looking statements for which the company can claim protection under the Safe Harbor Act. Please consult the company's filings with the SEC for information on risk factors which might cause actual results to differ materially from the information contained in these forward-looking statements.