<PAGE>
THIS DOCUMENT IS A COPY OF THE FORM 10-Q
FOR THE PERIOD ENDED JUNE 30, 1994,
FILED ON AUGUST 16, 1994, PURSUANT TO
RULE 201 TEMPORARY HARDSHIP EXEMPTION.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period Ended June 30, 1994
Commission File No. 0-21886
BARRETT BUSINESS SERVICES, INC.
(Exact name of registrant as specified in its charter)
Maryland 52-0812977
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
4724 SW Macadam Avenue
Portland, Oregon 97201
(Address of principal executive offices) (Zip Code)
(503) 220-0988
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such report), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [ X ] No [ ]
Number of shares of Common Stock, $.01 par value outstanding at
June 30, 1994: 6,328,000 shares.
<PAGE>
BARRETT BUSINESS SERVICES, INC.
INDEX
Page
Part I - Financial Information
Item 1. Financial Statements
Balance Sheet - June 30, 1994 and December 31, 1993 . 3
Statement of Operations - Three Months and Six
Months Ended June 30, 1994 and 1993. . . . . . . . 4
Statement of Cash Flows - Six Months
Ended June 30, 1994 and 1993 . . . . . . . . . . . 5
Notes to Financial Statements . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . 9
Part II - Other Information
Item 4. Submission of Matters to a Vote
of Security Holders . . . . . . . . . . . . . . . . .14
Item 6. Exhibits and Reports on Form 8-K . . . . . . .14
Signatures . . . . . . . . . . . . . . . . . . . . . . . . .15
Exhibit Index. . . . . . . . . . . . . . . . . . . . . . . .16
<PAGE>
<TABLE>
BARRETT BUSINESS SERVICES, INC.
BALANCE SHEET
<CAPTION>
June 30, Dec. 31,
1994 1993
-------- -------
Unaudited
(In thousands)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $2,010 $1,127
Marketable securities --- 6,374
Accounts receivable, net 10,133 4,954
Prepaid expenses and other 344 145
Deferred tax asset (Note 3) 866 894
------ ------
Total current assets 13,353 13,494
Intangibles, net 4,839 294
Property and equipment, net 2,075 1,876
Restricted marketable securities
and workers' compensation deposits 3,187 2,728
Other assets 45 33
------ ------
$23,499 $18,425
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 30 $123
Income taxes payable (Note 3) 94 79
Accounts payable 248 91
Accrued payroll and related benefits 6,480 3,223
Accrued workers' compensation claims 2,366 2,434
Customer safety incentives payable 682 527
------ ------
Total current liabilities 9,900 6,477
Long-term debt, net of current portion 923 946
Customer deposits 595 522
------ ------
11,418 7,945
Stockholders' equity:
Common stock 63 32
Additional paid-in capital 8,698 8,469
Retained earnings 3,320 1,979
------ ------
12,081 10,480
------ ------
$23,499 $18,425
====== ======
The accompanying notes are an integral part of this financial statement.
</TABLE>
<PAGE>
<TABLE>
BARRETT BUSINESS SERVICES, INC.
STATEMENT OF OPERATIONS
<CAPTION>
Unaudited
------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
------------------- ----------------
1994 1993 1994 1993
---- ---- ---- ----
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
Revenues:
Temporary services $ 18,661$10,662 $30,421$18,876
Staff leasing services 16,475 14,724 31,782 27,045
-------------- --------------
35,136 25,386 62,203 45,921
-------------- --------------
Cost of revenues:
Direct payroll costs 26,213 18,793 46,609 34,214
Payroll taxes and benefits 3,246 2,622 5,812 4,725
Workers' compensation 1,511 1,337 2,396 2,173
Safety incentives 247 179 497 320
-------------- --------------
31,217 22,931 55,314 41,432
-------------- --------------
Gross margin 3,919 2,455 6,889 4,489
Selling, general and administrative expenses2,5311,5664,4852,964
Provision for doubtful accounts 29 9 58 9
Amortization of intangibles 113 92 180 195
-------------- --------------
Income from operations 1,246 788 2,166 1,321
Other income (expense):
Interest expense (35) (17) (63) (27)
Interest income 29 9 85 9
Other, net 1 22 32 136
-------------- --------------
(5) 14 54 118
-------------- --------------
Income before tax benefit (provision for taxes)1,2418022,2201,439
Income tax benefit (provision for income taxes) (Note 3) (476)315 (847)315
-------------- --------------
Net income $ 765 $1,117 $1,373$1,754
============== ==============
Pro forma data (Note 3):
Income before provision for income taxes$1,241$ 802$2,220$1,439
Provision for income taxes 476 314 847 563
-------------- --------------
Net income $ 765 488 $1,373$ 876
============== ==============
Primary earnings per share (Note 5)$0.12$0.11 $0.21 $ 0.21
============== ==============
Primary weighted average number of common
and common stock equivalent shares outstanding6,6224,4186,5804,210
============== ==============
The accompanying notes are an integral part of this financial statement.
</TABLE>
<PAGE>
<TABLE>
BARRETT BUSINESS SERVICES, INC.
STATEMENT OF CASH FLOWS
<CAPTION>
Unaudited
---------------------------
Six Months Ended
June 30,
---------------------------
1994 1993
---- ----
(In thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income $1,373 $1,754
Reconciliation of net income to cash from operations:
Depreciation and amortization 276 268
Gain on sales of securities --- (108)
Provision for doubtful accounts 58 9
Changes in certain assets and liabilities:
Accounts receivable (5,237) (2,332)
Prepaid expenses and other (199) (40)
Deferred tax asset 28 (665)
Accounts payable 157 68
Accrued payroll and benefits 3,257 1,939
Accrued workers' compensation claims (68) 481
Customer safety incentives payable 155 19
Due to stockholders --- (98)
Income taxes payable 15 338
Customer deposits and other, net 61 (50)
----- -----
Net cash (used for) provided by operating activities (124) 1,583
----- -----
Cash flows from investing activities:
Increase in intangibles through acquisitions (4,498) (10)
Purchases of fixed assets (294) (995)
Proceeds from sales of marketable securities 6,416 161
Purchases of marketable securities (501) (53)
----- -----
Net cash (used for) provided by investing activities 1,123 (897)
----- -----
Cash flows from financing activities:
Distributions to stockholders --- (869)
Proceeds from debt issued --- 38
Payments on long-term debt (116) (100)
Proceeds from issuance of stock, net --- 5,879
----- -----
Net cash used for financing activities (116) 4,948
----- -----
Net increase in cash and cash equivalents 883 5,634
Cash and cash equivalents, beginning of period 1,127 12
----- -----
Cash and cash equivalents, end of period $ 2,010 $ 5,646
===== =====
Issuance of common stock to acquire intangibles$ 228$ ---
===== =====
The accompanying notes are an integral part of this financial statement.
</TABLE>
<PAGE>
BARRETT BUSINESS SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION OF INTERIM PERIOD STATEMENTS:
The accompanying financial statements are unaudited and
have been prepared by Barrett Business Services, Inc. ("Company")
pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote
disclosures typically included in financial statements prepared
in accordance with generally accepted accounting principles have
been condensed or omitted pursuant to such rules and regulations.
In the opinion of management, the financial statements include
all adjustments, consisting only of normal recurring adjustments,
necessary for a fair statement of the results for the interim
periods presented. The financial statements should be read in
conjunction with the audited financial statements and notes
thereto included in 1993 Form 10-K filed with the Securities and
Exchange Commission. The results of operations for an interim
period are not necessarily indicative of the results of
operations for a full year.
NOTE 2 - ACQUISITIONS:
On February 27, 1994, the Company purchased
substantially all of the assets of Personnel Management
Consulting, Inc., a company engaged in the temporary services
business in Maryland and Delaware. Of the $270,000 purchase
price, the Company paid $42,000 in cash and issued 12,000 shares
of its common stock with a fair market value of $228,000 at date
of purchase. The acquisition was accounted for under the
purchase method of accounting resulting in approximately $241,000
of intangible assets and $29,000 in fixed assets.
On March 7, 1994, the Company purchased certain assets
of Golden West Temporary Services (Golden West), a company in the
temporary services business with offices in Santa Clara, San
Jose, Fremont, and Mountain View, California. The purchase price
of $4,514,000 was paid by liquidating a portion of the Company's
short-term marketable securities. The Company accounted for the
acquisition under the purchase method of accounting resulting in
approximately $4,425,000 of intangible assets and $89,000 of
fixed assets.
Intangible assets related to the acquisition are being
amortized over their estimated useful lives of fifteen years.
<PAGE>
NOTE 3 - INCOME TAX BENEFIT, PROVISION FOR INCOME TAXES AND PRO
FORMA PROVISION FOR INCOME TAXES:
A pro forma provision for income taxes that would have
been recorded if the Company had been a C corporation for all
periods presented is provided for comparative purposes. The
benefit from income taxes includes benefits arising from net
cumulative temporary differences in the timing of reporting
certain deductible items for financial statement and income tax
purposes in accordance with Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes." In
conjunction with the termination of the Company's S corporation
status on April 30, 1993, a cumulative net deferred tax asset of
$505,000 was established with an offsetting credit to the income
tax benefit.
Deferred tax assets (liabilities) are comprised of the
following components (in thousands):
<TABLE>
<CAPTION>
June 30, Dec. 31,
1994 1993
-------- --------
<S> <C> <C>
Accrued workers' compensation claim liabilities$922$ 949
Allowance for doubtful accounts. . 25 10
Tax depreciation in excess of book depreciation (81)(65)
--- ---
$866 $ 894
=== ===
</TABLE>
The provision for income taxes for the six months ended
June 30, 1994, is as follows (in thousands):
<TABLE>
<CAPTION>
Six Months
Ended
June 30,
1994
----------
<S> <C>
Current:
Federal. . . . . . . . . . . . . . $ 673
State. . . . . . . . . . . . . . . 145
---
818
---
Deferred:
Federal. . . . . . . . . . . . . . 24
State. . . . . . . . . . . . . . . 5
---
29
---
Provision for income taxes . . . $ 847
===
</TABLE>
<PAGE>
NOTE 4 - STOCK INCENTIVE PLAN:
As of March 1, 1993, the Company adopted a stock
incentive plan ("Plan") which provides for stock-based awards to
the Company's employees, directors and outside consultants or
advisers. As of April 20, 1994, the Company increased the number
of shares reserved from 500,000 to 800,000 shares of common stock
for issuance under the Plan. An award of 4,000 restricted shares
was granted under the Plan in June 1993.
The following table summarizes options granted under the
Plan in 1994:
<TABLE>
<CAPTION>
SharesRange of Prices
----------------------
<S> <C> <C>
Outstanding at December 31, 1993160,500$3.50 to $4.6875
Options granted 213,500$9.50 to $13.5625
Options exercised ---
Options canceled or expired (8,000)
-------
Outstanding at June 30, 1994 366,000
=======
Available for grant at
June 30, 1994 430,000
=======
</TABLE>
The options listed in the table will become exercisable in four
equal annual installments beginning one year after the date of
grant.
NOTE 5 - NET INCOME PER SHARE AND STOCK SPLIT:
Net income per share is computed based on the weighted
average number of shares outstanding during the period after
giving effect to stock options and warrants which are considered
to be common stock equivalents as such securities aggregate more
than 3% of shares outstanding and thus are considered dilutive.
On April 20, 1994, the board of directors of the Company
approved a 2-for-1 stock split in the form of a stock dividend
payable May 23, 1994, to holders of record of its shares at the
close of business on May 2, 1994, ("Record Date"), at the rate of
one new share for each share outstanding on the Record Date.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth the percentages of total
revenues represented by selected items in the Company's statement
of operations for the periods indicated.
<TABLE>
<CAPTION>
Percentage of Total Revenues
--------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Temporary services revenues. 53.1% 42.0%48.9% 41.1%
Staff leasing services revenues46.9 58.0 51.1 58.9
Direct payroll costs . . . . 74.6 74.0 74.9 74.5
Payroll taxes and benefits . 9.3 10.3 9.4 10.3
Workers' compensation. . . . 4.3 5.3 3.8 4.7
Safety incentives. . . . . . .7 .7 .8 .7
Gross margin . . . . . . . . 11.1 9.7 11.1 9.8
Selling, general and administrative expenses7.66.67.6 6.9
(Including provision for doubtful accounts
and amortization of intangibles)
Income from operations . . . 3.5 3.1 3.5 2.9
Other income . . . . . . . . -.- .1 .1 .2
Pretax income. . . . . . . . 3.5 3.2 3.6 3.1
Income tax benefit (provision for income taxes)(1.3)1.2(1.4).7
Net income . . . . . . . . . 2.2 4.4 2.2 3.8
Pro forma provision for income taxes1.31.2 1.4 1.2
Pro forma net income . . . . 2.2 1.9 2.2 1.9
</TABLE>
SIX MONTHS ENDED JUNE 30, 1994 AND 1993
TEMPORARY AND STAFF LEASING SERVICES REVENUES. Total
revenues increased $16,282,000 (35.5%) to $62,203,000 for the six
months ended June 30, 1994, compared to the comparable period of
the prior year. The increase in total revenues was attributable
to growth in temporary services revenues and staff leasing
services revenues of $11,545,000 (61.2%) and $4,737,000 (17.5%),
respectively.
Approximately 70% of the increase in temporary services
revenues was due to the acquisition of two temporary services
businesses, and the balance to the Company's ongoing internal
sales program. The acquired companies had total revenues of
approximately $25,000,000 during 1993.
The increase in staff leasing services revenues for the
six months ended June 30, 1994, compared to the same period of
1993, is primarily attributable to the addition of new clients in
Oregon. The Company markets its staff leasing services through
its Oregon and Maryland branches using its branch office sales
staff.
The Company plans to begin offering staff leasing
services in Washington during the third quarter of 1994.
PAYROLL COSTS, PAYROLL TAXES, AND BENEFITS. Payroll
costs, payroll taxes, and benefits for the Company's temporary
services and staff leasing services employees increased by
$13,482,000 (34.6%) in the first six months of 1994 compared to
the same period in 1993, primarily as a result of growth in the
number of employees. As a percentage of revenues, such costs
decreased from 84.8% in the first six months of 1993 to 84.3% in
the 1994 period, reflecting a decrease in the Company's statutory
payroll taxes for 1994.
WORKERS' COMPENSATION AND SAFETY INCENTIVES EXPENSE.
The Company has been a self-insured employer for workers'
compensation coverage in Oregon since August 1987 and became
self-insured in Maryland in November 1993. Workers' compensation
expense currently includes the cost of self-insurance for the
Company's employees in Oregon and Maryland and third party
insurance coverage for such employees in Washington and
California. As a percentage of revenues, workers' compensation
and safety incentives expense decreased from 5.4% in the first
six months of 1993 to 4.6% in the comparable period of 1994, due
primarily to a decrease in the number of claims reported under
the Company's self-insured workers' compensation programs.
The Company's self-insured workers' compensation expense
is tied directly to the incidence and severity of workplace
injuries to its employees. Significant elements affecting the
performance of the self-insured workers' compensation program
include the regulatory climate surrounding workers' compensation,
the Company's workplace safety program and the claims management
approach taken by the Company and its third party administrators.
In April 1994 the Company incurred a self-insured
workers' compensation fatality claim in Oregon. The present
value of the future benefits payable to the beneficiary of the
fatally injured employee is estimated to be $418,000. The
Company maintains excess workers' compensation insurance to limit
its self-insurance liability to $350,000 per occurrence.
Effective July 1, 1994, the Company received a
Certificate of Qualification from the State of Washington
qualifying the Company as a self-insurer for workers'
compensation.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling,
general and administrative expenses (including the provision for
doubtful accounts and the amortization of intangibles) consists
of compensation and other expenses incident to the operation of
the Company's headquarters and branch offices and marketing its
services. As a percentage of total revenues, selling, general
and administrative expenses increased from 6.9% during the first
six months of 1993 to 7.6% during 1994, due primarily to the
acquisition of two temporary services businesses in early 1994.
Temporary services have higher overhead requirements as compared
to staff leasing services.
OTHER (EXPENSE) INCOME. Other income decreased from
$118,000 in the first six months in 1993 to $54,000 in 1994, due
primarily to the discontinuation of investment in commodities
futures contracts, which resulted in a net gain of $108,000 in
the first six months of 1993.
PROVISION AND PRO FORMA PROVISION FOR INCOME TAXES. The
Company was exempt from taxation as an S corporation until its S
corporation election was terminated on April 30, 1993. The pro
forma effective tax rate of 39.1% is the effective tax rate that
would have been applicable if the Company had been a C
corporation for the first six months of 1993. The effective tax
rate for the first six months of 1994 was 38.2%.
THREE MONTHS ENDED JUNE 30, 1994 AND 1993
TEMPORARY AND STAFF LEASING SERVICES REVENUES. Total
revenues increased $9,750,000 (38.4%) to $35,136,000 for the
second quarter of 1994, compared to the comparable period of the
prior year. The increase in total revenues was attributable to
growth in temporary services revenues and staff leasing services
revenues of $7,999,000 (75.0%) and $1,751,000 (11.9%),
respectively.
The increase in temporary services revenues for the
second quarter was due primarily to the Company's acquisition of
two temporary services businesses during the first quarter of
1994.
PAYROLL COSTS, PAYROLL TAXES AND BENEFITS. Payroll
costs, payroll taxes and benefits for the Company's staff leasing
and temporary services employees increased by $8,044,000 (37.6%)
in the second quarter of 1994 compared to the same period of
1993, primarily as a result of growth in the number of employees.
As a percentage of revenues, such costs decreased from 84.3% in
the second quarter of 1993 to 83.9% in the 1994 period,
reflecting a decrease in the Company's statutory payroll taxes
for 1994.
WORKERS' COMPENSATION AND SAFETY INCENTIVES EXPENSE.
Workers' compensation expense increased $174,000 (13.0%) in the
second quarter of 1994 compared to the same period of 1993
primarily attributable to the fatality claim in Oregon in 1994
and the increase in the number of employees. As a percentage of
revenue, workers' compensation and safety incentives expense
decreased to 5.0% for the second quarter of 1994 compared to 6.0%
for the same period of 1993 due to a decrease in the number of
claims reported under the Company's self-insured workers'
compensation programs.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling,
general and administrative expenses (including the provision for
doubtful accounts and the amortization of intangibles) increased
by $1,006,000 (60.0%) to $2,673,000 in the second quarter of 1994
as compared to the same period of 1993.
As a percentage of revenues, selling, general and
administrative expenses increased from 6.6% in the 1993 second
quarter to 7.6% in the same period of 1994. The increase was due
primarily to the acquisition of two temporary services businesses
and additional administrative staffing necessary to support
continued growth of the Company.
PRO FORMA PROVISION FOR INCOME TAXES. The pro forma
effective tax rate in the second quarter of 1994 was 38.4%
compared to 39.2% for the same period of 1993.
SEASONAL FLUCTUATIONS
The Company's revenues historically have been subject to
some seasonal fluctuation, particularly in its temporary services
business. Demand for the Company's temporary employees and its
payroll requirements (and associated mark-ups) for certain of its
staff leasing clients decline during the year-end holiday season
and periods of bad weather. Correspondingly, demand for
temporary services and the operations of some staff leasing
clients, particularly agricultural and forest products-based
companies, increase during the second and third quarters.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations and met its
liquidity needs during the first six months of 1994 primarily
from the sales of short-term marketable securities previously
held for investment of $6,416,000. The principal use of funds
during the period was for the acquisition of two temporary
services businesses in the amount of $4,556,000.
In February 1994, the Company acquired the assets of
Personnel Management and Consulting, Inc. ("PMC"), a Maryland
corporation, for $270,000, of which $42,000 was paid in cash and
$228,000 was paid in the form of 12,000 shares of common stock of
the Company. PMC had unaudited revenues of approximately
$800,000 for the year ended December 31, 1993, primarily from
sales of temporary services provided through three branch
offices, one in each of Salisbury and Easton, Maryland, and
Seaford, Delaware.
In March 1994, the Company acquired the assets of Golden
West Temporary Services ("Golden West"), a California
corporation, for $4,514,000 in cash from working capital. Golden
West had total revenues of $24,533,000 for the year ended
December 31, 1993, from the sales of temporary services provided
through four branch offices, one in each of San Jose, Santa
Clara, Mountain View and Fremont, California.
The Company has an unsecured bank line of credit for a
maximum amount of $4,000,000, expiring subject to renewal on
May 31, 1995. Outstanding balances against the line of credit
accrue interest at the bank's prime rate. The highest borrowing
against the line during 1994 and 1993 was $1,500,069 and
$1,189,000, respectively. The average balance outstanding against
the line for the six months ended June 30, 1994 was $331,975,
compared to $5,444 during 1993. There was a zero balance
outstanding under the credit line at June 30, 1994, and 1993.
Under the amended loan agreement for the line of credit, the
Company is required to maintain (i) a ratio of total liabilities
to tangible net worth of not more than 2.0 to 1.0, (ii) positive
quarterly net income before taxes, (iii) tangible net worth of at
least $6,000,000, and (iv) a zero outstanding balance against the
line for a minimum of sixty (60) consecutive days during each
year. The Company is also prohibited from pledging any of its
assets other than existing mortgages on its real property.
The Company hopes to expand its self-insured workers'
compensation and staff leasing program to Washington and
California during the second half of 1994. If self-insured
status is obtained in California, the required surety deposit is
expected to be at least $2,000,000 to be paid from cash or other
funding sources, potentially including letters of credit from the
Company's lender and surety bonds from providers of third party
insurance. The surety deposit for the State of Washington has
been set at $345,000 to be paid from cash.
A key part of the Company's business strategy is
continued growth through the expansion of operations at existing
offices and the acquisition of additional personnel related
businesses, both in its existing markets and other geographic
areas. The Company actively explores proposals for various
acquisition opportunities on an ongoing basis, but there can be
no assurance that any additional transactions will be
consummated. The Company believes that the available credit
lines and other sources of financing and anticipated funds to be
generated from operations will be sufficient in the aggregate to
provide funds for its working capital needs for the foreseeable
future.
INFLATION
Inflation generally has not been a significant factor in
the Company's operations during the periods discussed above. The
Company has taken into account the impact of escalating medical
and other costs in establishing reserves for future expenses for
self-insured workers' compensation claims in Oregon and Maryland.
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders
The Company held a special meeting of stockholders on
August 10, 1994. A proposal to amend Article III of the
Company's Charter to increase the number of authorized shares of
common stock of the Company from 7,500,000 to 20,500,000 was
approved as follows:
<TABLE>
<CAPTION>
ABSTENTION AND
FOR AGAINST BROKER NON-VOTES
--- -------- ----------------
<C> <C> <C>
5,690,961.444 221,738.8292,367.629
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) The exhibits filed herewith are listed in the Exhibit
Index on page 16 of this report.
(b) No reports on Form 8-K were filed by the registrant
during the quarter ended June 30, 1994.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
BARRETT BUSINESS SERVICES, INC.
(Registrant)
Date: August 15, 1994 By: /s/ William W. Sherertz
William W. Sherertz
President
(Principal Executive and
Principal Financial
Officer)
<PAGE>
EXHIBIT INDEX
Exhibit
- - -------
3 Charter of the Registrant, as amended.
4 Second Amendment to Loan Agreement Between
the Registrant and First Interstate Bank
of Oregon, N.A., dated May 31, 1994, together
with Optional Advance Note dated May 31, 1994.
11 Statement Showing Calculation of Average
Common Shares Outstanding.
99 Description of Capital Stock of the Registrant.
<PAGE>
<PAGE>
EXHIBIT 3
BARRETT BUSINESS SERVICES, INC.
CHARTER
as amended August 15, 1994
ARTICLE I
The name of this corporation (the "Corporation") is
Barrett Business Services, Inc.
ARTICLE II
The purposes for which the Corporation is formed are:
(a) To engage generally in the business of
supplying temporary and long-term employees to others.
(b) To engage in any other business deemed by it to
be desirable to facilitate, directly or indirectly the
business referred to above or to enhance the value of its
property, business, or rights.
(c) To engage in any lawful activity for which a
corporation may be formed under the Maryland General
Corporation Law.
ARTICLE III
(a) The aggregate number of shares which the
Corporation shall have authority to issue is 21,000,000 which
shall be divided into classes as follows:
Title of Class No. of Shares
Preferred Stock, $.01 par value
per share 500,000
Common Stock, $.01 par value
per share 20,500,000
When this amendment and restatement shall become effective and
without the necessity of any further action of any kind, each
previously issued and outstanding share of stock of the
Corporation of the par value of ten dollars a share shall be
reclassified and changed into and shall constitute
7,968.1274 shares of the Common Stock, $.01 par value, of the
Corporation, provided that any resulting fraction of share shall
be rounded to the nearest full share with fractions of .5 rounded
up. There shall be transferred from surplus to stated capital on
the Corporation's books at the time this amendment and
restatement becomes effective an amount equal to the difference
between the aggregate par value of the shares of Common Stock,
$.01 par value, issued and outstanding immediately after such
effective time and the aggregate par value of the shares of stock
of the par value of ten dollars a share issued and outstanding
immediately prior to such effective time.
(b) The preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends,
qualifications, and terms or conditions of redemption of each
class of stock of the Corporation shall be as follows:
(1) Preferred Stock:
The Board of Directors of the Corporation (the "Board of
Directors") may classify or reclassify any unissued Preferred
Stock from time to time by setting or changing the preferences,
conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, or terms or
conditions of redemption of such Preferred Stock. Without
limiting the generality of the foregoing, the Board of Directors
shall have authority to classify and reclassify any unissued
Preferred Stock into as many series as the Board of Directors
shall from time to time determine, and to issue the Preferred
Stock in such series.
The description of shares of each series of Preferred
Stock shall be set forth in resolutions adopted by the Board of
Directors and in Articles Supplementary filed as required by law
from time to time prior to the issuance of any shares of such
series.
The Board of Directors is expressly authorized, prior to
issuance, by adopting resolutions providing for the issuance of,
or providing for a change in the number of, shares of any
particular series of Preferred Stock and, if and to the extent
from time to time required by law, by filing Articles
Supplementary to set or change the number of shares to be
included in each series of Preferred Stock and to set or change
in any one or more respects the designations, preferences,
conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, or terms and
conditions of redemption relating to the shares of each such
series. Notwithstanding the foregoing, the Board of Directors
shall not be authorized to change the right of the Common Stock
of the Corporation to vote one vote per share on all matters
submitted for stockholder action.
(2) Common Stock:
Except for and subject to the preferences, conversion or
other rights, voting powers, restrictions, limitations as to
dividends, qualifications, or terms or conditions of redemption
of the Preferred Stock or any series thereof, as may be granted
pursuant to Section (b)(1) of this Article or except as may be
provided by the laws of Maryland, the holders of the Common Stock
shall have all other rights of stockholders including, without
limitation, (i) voting rights on all corporate matters on the
basis of one vote per share and the right to notices of meetings
and other corporate actions, (ii) the right to receive dividends
and other distributions when and as declared by the Board of
Directors out of assets legally available therefor, and (iii) in
the event of any liquidation, dissolution or winding up of the
Corporation, the right to receive the assets available for
distributions to stockholders.
(c) The Board of Directors may authorize the issuance
or sale from time to time of shares of stock by the Corporation
of any class, whether now or hereafter authorized, or securities
convertible into shares of its stock of any class, whether now or
hereafter authorized, for such consideration as the Board of
Directors may deem advisable, subject to such restrictions or
limitations, if any, as may be set forth in the Charter or bylaws
of the Corporation.
(d) No holder of any shares of any class of stock or
other security of the Corporation now or hereafter authorized
shall have any preemptive right or be entitled as a matter of
right as such holder to purchase, subscribe for or otherwise
acquire any shares of any stock of the Corporation of any class
now or hereafter authorized or any securities convertible into or
exchangeable for any such shares, or any warrants or other
instruments evidencing rights or options to subscribe for,
purchase or otherwise acquire any such shares, whether such
shares, securities, warrants or other instruments are now or
hereafter authorized or issued or issued and thereafter
reacquired by the Corporation, other than such, if any, as may be
fixed from time to time by the Board of Directors in its
discretion.
ARTICLE IV
The number of directors constituting the Board of
Directors shall be as fixed by the bylaws.
ARTICLE V
The Corporation shall indemnify each of its officers and
directors to the fullest extent permissible under the Maryland
General Corporation Law, as the same exists or may hereafter be
amended, against all liabilities, losses, judgments, penalties,
fines, settlements and reasonable expenses (including, without
limitation, attorneys' fees) incurred or suffered by such person
by reason of or arising from the fact that such person is or was
an officer or director of the Corporation, or is or was serving
at the request of the Corporation as a director, officer,
partner, trustee, employee, or agent of another foreign or
domestic corporation, partnership, joint venture, trust, employee
benefit plan, or other enterprise, and such indemnification shall
continue as to a person who has ceased to be a director, officer,
partner, trustee, employee, or agent and shall inure to the
benefit of his or her heirs, executors, and administrators. The
Corporation may, by action of the Board of Directors, provide
indemnification to employees and agents of the Corporation who
are not officers or directors with the same scope and effect as
the indemnification provided in this Article to officers and
directors. The indemnification provided in this Article shall
not be exclusive of any other rights, by indemnification or
otherwise, to which any officer or director may be entitled under
any statute, bylaw, agreement, resolution of stockholders or
directors, or otherwise, both as to action in an official
capacity and as to action in another capacity while holding such
office.
ARTICLE VI
Officers and directors of the Corporation shall not be
liable to the Corporation or its stockholders for monetary
damages for conduct in their capacities as officers and directors
except to the extent that section 5-349 of the Courts and
Judicial Proceedings Article of the Annotated Code of Maryland,
as it now exists or may hereafter be amended, prohibits
elimination or limitation of officer and director liability. No
repeal or amendment of this Article or of section 5-349 of the
Courts and Judicial Proceedings Article of the Annotated Code of
Maryland shall adversely affect any right or protection of an
officer or director for actions or omissions prior to the repeal
or amendment.
ARTICLE VII
The power to adopt, alter and repeal the bylaws of the
Corporation shall be vested solely in the Board of Directors.
ARTICLE VIII
The affirmative vote of a majority of all votes of all
classes or any class of stock entitled to be cast on any matter
required to be submitted for consideration by the stockholders of
the Corporation including, without limitation, any proposed
merger, consolidation, share exchange, transfer, Charter
amendment, or dissolution required to be so submitted, shall
constitute approval by the stockholders of such matter
notwithstanding any provision of the Maryland General Corporation
Law requiring a greater proportion of the votes of all classes or
any class of stock on such matter.
<PAGE>
<PAGE>
EXHIBIT 4
SECOND AMENDMENT TO LOAN AGREEMENT
THIS AMENDMENT TO LOAN AGREEMENT, made and entered into
as of the 31st day of May, 1994, by and between FIRST INTERSTATE
BANK OF OREGON, N.A. (hereinafter referred to as "Bank"), and
BARRETT BUSINESS SERVICES, INC. (hereinafter referred to as
"Borrower").
RECITALS:
The parties entered into a loan agreement dated as of
August 12, 1993 (as amended from time to time the "Agreement"),
and the parties now desire to amend the Agreement as hereinafter
provided. Capitalized terms not otherwise defined herein shall
have the meanings assigned to them in the Agreement.
NOW, THEREFORE, the parties mutually agree as follows:
1. Section 1 of the Agreement is hereby amended and
restated as follows:
"1. LOAN(S). Subject to the terms and conditions of this
Agreement, Bank agrees to make (a) a loan or loans on a
revolving basis up to and including May 31, 1995, in the
maximum aggregate amount outstanding at any one time of Four
Million and No/100 Dollars ($4,000,000.00) to Borrower for
the purpose of working capital support ('Revolving Loan'),
and (b) a term real estate loan in the maximum amount of Six
Hundred Ninety-three Thousand Seven Hundred Fifty and No/100
Dollars ($693,750.00) ('Real Estate Loan'). The Revolving
Loan and Real Estate Loan shall be referred to collectively
as the 'Loans'. The Loans shall be evidenced by promissory
notes substantially in the form of Exhibits A and B attached
hereto and by this reference incorporated herein ('Notes')."
The attached Exhibit A which is by this reference incorporated
herein shall replace the current Exhibit A, and Exhibit B shall
remain the same.
2. The obligation of Bank under this Amendment is
subject to the condition that, on or prior to May 31, 1994 (the
"Amendment Closing Date"), there shall have been delivered to
Bank, in form and substance satisfactory to Bank and its counsel:
(a) A copy of a resolution or resolutions passed
by the Board of Directors of Borrower, certified by the Secretary
or Assistant Secretary of Borrower as being in full force and
effect on the Amendment Closing Date, authorizing the Borrowings
herein provided for and the execution, delivery, and performance
of this Amendment, the Notes, and any other instrument or
agreement required hereunder.
(b) A certificate, signed by the Secretary or
Assistant Secretary of Borrower and dated the Amendment Closing
Date, as to the incumbency of the person or persons authorized to
execute and deliver this Amendment, the Notes, or any other
instrument or agreement required hereunder on behalf of Borrower.
(c) Certificate, signed by the Secretary or
Assistant Secretary of Borrower and dated the Amendment Closing
Date, substantially in the form of Attachment 1 attached hereto
and by this reference incorporated herein.
(d) A new revolving Note, duly executed, which is
hereinafter included in the definition of "Loan Documents."
(e) Payment of a fee of Twenty Thousand and No/100
Dollars ($20,000.00).
3. Except as herein amended, each and all of the terms
and provisions of the Agreement shall be and remain in full force
and effect during the term thereof.
IN WITNESS WHEREOF, the parties hereto have executed
this Amendment to the Agreement, in duplicate, as of the date
first hereinabove written.
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND
COMMITMENTS MADE BY THE BANK AFTER OCTOBER 3, 1989,
CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE
NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR
SECURED SOLELY BY THE BORROWER'S RESIDENCE MUST BE IN
WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY THE BANK
TO BE ENFORCEABLE.
Borrower hereby acknowledges receipt of a copy of this
Amendment.
BARRETT BUSINESS SERVICES, INC. FIRST INTERSTATE BANK OF
OREGON, N.A.
By /s/ Jack D. Williamson, Jr. By /s/ Larry Ellis
Title Secretary/Treasurer Title AVP
<PAGE>
May 31, 1994
OPTIONAL ADVANCE NOTE
On May 31, 1995, the undersigned promises to pay in
lawful money of the United States of America, to the order of
FIRST INTERSTATE BANK OF OREGON, N.A. ("Bank"), at its Oregon
Corporate Division ("OCD"), 1300 S.W. Fifth Avenue, P.O. Box
3131, Portland, Oregon 97208, the principal sum of Four Million
and No/100 Dollars ($4,000,000.00), or so much thereof as shall
have been advanced by Bank to undersigned and not repaid,
together with interest thereon from the date of such advance.
This Note is given to avoid the execution by undersigned
of an individual note for each advance by Bank to undersigned.
In consideration thereof, undersigned agrees that Bank's record
entries of transactions pursuant to this Note, together with
Bank's written advice of charges, shall be conclusive evidence of
borrowings, charges, and payments made pursuant hereto.
Interest shall accrue on the daily outstanding principal
owing hereon at the per annum rate of Bank's Prime Rate of
interest in effect from time to time. Bank's Prime Rate refers
to Bank's publicly announced prime rate which is a base rate used
to price some loans. It may not be the lowest rate at which Bank
makes any loan. Each change in said rate is to become effective
on the effective date of each change announced by Bank. Interest
shall be computed on the basis of a 365-day year or 366-day year,
as applicable, and actual days elapsed.
Interest shall be payable on the last business day of
each month, beginning June 30, 1994, based on the daily
outstanding unpaid principal balances during the preceding month.
The unpaid balance of this obligation at any time shall be the
aggregate amount advanced hereunder, plus accrued interest, less
the amount of payments made hereon by or for the undersigned.
Advances hereunder may be made by Bank at the oral or
written request of William W. Sherertz or Jack Williamson, who
are each authorized to request advances until written notice of
the revocation of such authority is received by Bank at its OCD.
Any such advances or advances made by Bank in the good faith
belief that William W. Sherertz or Jack Williamson made such
request, shall be conclusively presumed to have been made to or
for the benefit of undersigned when such amounts are deposited to
the credit of account number 003 0181390 of undersigned at Bank's
Head Office Branch ("Branch"), regardless of the fact that
persons other than those authorized hereunder may have authority
to draw against such account or may have made such requests.
Payment of interest hereunder shall be made when due.
Bank is hereby authorized to charge undersigned's account number
003 0181390 for the amount of interest due on the due dates.
Repayments of principal shall be made by charging undersigned's
account number 003 0181390 at the oral or written request of
William W. Sherertz or Jack Williamson. Bank shall send
undersigned an advice of any such charges when made.
All communications, instructions or directions by
telephone or otherwise to Bank are to be directed to Bank's OCD.
Upon the occurrence of an Event of Default (as defined
in the Loan Agreement), then, at the option of the holder of this
Note, without prior notice, the entire indebtedness represented
hereby shall immediately become due and payable. Failure or
delay of the holder to exercise this option shall not constitute
a waiver of the right to exercise the same in the event of
subsequent default, or in the event of continuance of any
existing default after demand for the performance of the terms
hereof.
Undersigned shall pay upon demand any and all expenses,
including reasonable attorneys fees, incurred or paid by the
holder of this Note without suit or action in attempting to
collect funds due under this Note. In any suit or action
instituted for the collection of any sums due hereunder, the
prevailing party shall be entitled to recover such sum as the
court may adjudge reasonable for its attorneys fees, both in the
trial court and any appellate court.
This Note is subject to the terms and conditions of that
certain loan agreement dated August 12, 1993, between the
undersigned and Bank, as amended from time to time ("Loan
Agreement").
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND
COMMITMENTS MADE BY THE BANK AFTER OCTOBER 3, 1989
CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE
NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR
SECURED SOLELY BY THE BORROWER'S RESIDENCE MUST BE IN
WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY THE BANK
TO BE ENFORCEABLE. UNDERSIGNED HEREBY ACKNOWLEDGES
RECEIPT OF A COPY OF THIS NOTE.
BARRETT BUSINESS SERVICES, INC.
By /s/ Jack D. Williamson, Jr.
Title Secretary/Treasurer
<PAGE>
<PAGE>
EXHIBIT 11
BARRETT BUSINESS SERVICES, INC.
STATEMENT SHOWING CALCULATION OF AVERAGE
COMMON SHARES OUTSTANDING
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
June 30, 1994 June 30, 1994
------------- -------------
<S> <C> <C>
Primary Earnings Per Share:
Weighted average number of shares 6,328,000 6,321,238
Stock option plan shares to be issued at prices
of $3.50 to $13.563 per share 370,527 314,707
Warrant issues at a price of $4.20 per share200,000200,000
Less:Assumed purchase at average market price
during the period using proceeds received
upon exercise of options and purchase of
stock, and using tax benefits of compensation
due to premature dispositions (276,452) (255,595)
----------- -----------
Total Primary Shares 6,622,075 6,580,350
=========== ===========
Fully Diluted Earnings Per Share:
Weighted average number of shares 6,328,000 6,321,238
Stock option plan shares to be issued at a
price of $3.50 to $13.563 per share370,527 314,707
Warrant issues at a price of $4.20 per share200,000200,000
Less:Assumed purchase at the higher of ending
or average market price during the period
using proceeds received upon exercise of
options and purchase of stock, and using
tax benefits of compensation due to pre-
mature dispositions (276,452) (255,595)
----------- -----------
Total Diluted Shares 6,622,075 6,580,350
=========== ===========
Note:As the effect of common stock equivalents upon the weighted average common stock earnings per share
calculation is greater than 3%, earnings per share are based on the weighted average number of common stock
and common stock equivalents outstanding during the period.
</TABLE>
<PAGE>
<PAGE>
EXHIBIT 99
BARRETT BUSINESS SERVICES, INC.
DESCRIPTION OF CAPITAL STOCK
Barrett Business Services, Inc. (the "Company"), is
authorized to issue 500,000 shares of Preferred Stock, $.01 par
value, issuable in series and 20,500,000 shares of Common Stock,
$.01 par value.
Common Stock
Voting Rights. Shares of Common Stock are entitled to
one vote per share. Voting for directors is not cumulative. The
affirmative vote of a majority of the outstanding shares of the
voting capital stock of the Company is required for the removal
of a member of the Board of Directors.
Dividends. Holders of Common Stock are entitled to
dividends when, as and if declared by the Board of Directors out
of funds legally available therefor (subject to the rights of
holders of any preferred stock).
Liquidation Rights. Upon liquidation of the Company,
after payment or provision for all liabilities and payment of any
preferential amount in respect of Preferred Stock, holders of
Common Stock are entitled to receive liquidating distributions of
any remaining assets on a pro rata basis.
Other. Common Stock is not convertible into any other
class of security, is not entitled to the benefit of any sinking
fund provision and does not have any preemptive rights. All
outstanding shares of Common Stock are fully paid and
nonassessable.
Preferred Stock
The Board of Directors of the Company is authorized to
issue Preferred Stock in one or more series, and to determine the
preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and
terms or conditions of redemption of each series without any vote
or action of the stockholders of the Company. The issuance of
Preferred Stock in certain circumstances may have the effect of
delaying or preventing a change in control of the Company. The
issuance of Preferred Stock with voting and conversion rights may
adversely affect the voting power of the holders of Common Stock.
Anti-Takeover Provisions
The Company's Charter and bylaws contain provisions that
may have the effect of discouraging, delaying or preventing a
change in control of the Company. Under these provisions,
(i) the Board of Directors has the authority to issue up to
500,000 shares of Preferred Stock, with such rights and
preferences, including voting rights, as it may establish,
without further approval by the Company's stockholders and
(ii) the power to adopt, alter or repeal the Company's bylaws is
vested solely in the Board of Directors.
Maryland Control Share and Business Combination Statutes
The Company is subject to the Maryland control share act
(the "Control Share Act"). Under the Control Share Act, a person
(an "Acquiring Person") who acquires voting stock in a
transaction (a "Control Share Acquisition") which results in its
holding voting power within specified ranges cannot vote the
shares it acquires in the Control Share Acquisition ("control
shares") unless voting rights are accorded to such control shares
by the holders of two-thirds of the outstanding voting shares,
excluding the Acquiring Person and the Company's officers and
inside directors. The term Acquiring Person is broadly defined
to include persons acting as a group.
An Acquiring Person may, but is not required to, submit
to the Company an "Acquiring Person Statement" which delineates
certain information about the Acquiring Person and its plans for
acquiring the Company's stock and request the Company to call a
special meeting of stockholders to act on the question of its
voting rights.
If an Acquiring Person Statement is not delivered to the
Company within ten days after a Control Share Acquisition or if
the control shares are not accorded voting rights, the Company
will have the right, subject to certain conditions, to redeem the
control shares at fair value determined without regard to the
absence of voting rights. If an Acquiring Person's control
shares are accorded voting rights and its shares represent a
majority or more of all voting power, all stockholders of the
Company, other than the Acquiring Person, will have the right to
receive "fair value" for their shares, which may not be less than
the highest price paid per share by the Acquiring Person for its
shares in the Control Share Acquisition.
The Company is also subject to the provisions of the
Maryland General Corporation Law limiting the ability of certain
Maryland corporations to engage in specified business
combinations. Subject to certain exceptions, such provisions
prohibit a Maryland corporation from engaging in a business
combination with a stockholder who, with its affiliates, owns 10%
or more of the corporation's voting stock (an "Interested
Stockholder") unless (i) the corporation's board of directors
recommends the combination, (ii) stockholders holding 80% of the
voting stock approve the business combination, and
(iii) stockholders holding two-thirds of the voting stock not
owned by the Interested Stockholder approve the business
combination. In addition, an Interested Stockholder may not
engage in a business combination with the corporation for a
period of five years following the date he becomes an Interested
Stockholder. "Business combination" is defined to include any
merger with, any transfer of assets to, the provision of
financial assistance to, and certain transactions involving the
issuance of shares to, the Interested Stockholder. These
provisions do not apply, however, to business combinations that
are approved or exempted by the corporation's board of directors
before the stockholder became an Interested Stockholder.
<PAGE>
