8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

April 26, 2006

BARRETT BUSINESS SERVICES, INC.
(Exact name of registrant as specified in charter)

Maryland
(State or other jurisdiction of incorporation)

0-21886
(SEC File Number)

52-0812977
(IRS Employer Identification No.)

8100 N.E. Parkway Drive, Suite 200 Vancouver, Washington	98662
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code:

(360) 828-0700

        Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

|_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On April 26, 2006, Barrett Business Services, Inc. (the "Company"), issued a press release announcing its financial results for the first quarter ended March 31, 2006, and limited financial guidance for the second quarter of 2006. A copy of the press release is furnished as Exhibit 99.1 to this report and incorporated by reference.

Item 9.01. Financial Statements and Exhibits.

(c)     Exhibits: The following exhibit is furnished with this Form 8-K:

99.1 Press Release dated April 26, 2006.

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.
Dated:   April 26, 2006	By: /s/ Michael D. Mulholland        Michael D. Mulholland        Vice President - Finance

EX-99

Exhibit 99.1

NEWS RELEASE

For Immediate Release	Contact:	William W. Sherertz
		President and
		Chief Executive Officer
	Telephone:	(360) 828-0700

BBSI
ANNOUNCES FIRST QUARTER 2006 OPERATING RESULTS AND
FINANCIAL GUIDANCE FOR 2Q06

        VANCOUVER, WASHINGTON, April 26, 2006 — Barrett Business Services, Inc. (Nasdaq: BBSI) reported today net income of $1,357,000 for the first quarter ended March 31, 2006, an improvement of $426,000 or 45.8% over net income of $931,000 for the first quarter of 2005. Diluted earnings per share for the 2006 first quarter were $.12, as compared to diluted earnings per share of $.10 for the same quarter a year ago.

        Net revenues for the first quarter ended March 31, 2006 totaled $58.3 million, an increase of approximately $9.1 million or 18.5% over the $49.2 million for the same quarter in 2005.

($ in thousands, except per share amounts)	(Unaudited) First Quarter Ended March 31,
Results of Operations	2006		2005
Revenues:
Staffing services	$	26,661	$	28,542
Professional employer service fees		31,624		20,702
Total revenues		58,285		49,244
Cost of revenues:
Direct payroll costs		19,851		21,017
Payroll taxes and benefits		22,837		15,697
Workers' compensation		6,554		5,406
Total cost of revenues		49,242		42,120
Gross margin		9,043		7,124
Selling, general and administrative expenses		7,220		5,470
Depreciation and amortization		301		236
Income from operations		1,522		1,418
Other income, net		632		108
Income before taxes		2,154		1,526
Provision for income taxes		797		595
Net income	$	1,357	$	931
Basic earnings per share	$	.12	$	.11
Weighted average basic shares outstanding		11,076		8,645
Diluted earnings per share	$	.12	$	.10
Weighted average diluted shares outstanding		11,661		9,352

- 1 -

Barrett Business Services, Inc.
News Release — First Quarter 2006
April 26, 2006

        We report our PEO revenues on a net basis because we are not the primary obligor for the services provided by our 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.

(in thousands)	(Unaudited) First Quarter March 31,
	2006		2005
Revenues:
Staffing services	$	26,661	$	28,542
Professional employer services		208,674		128,551
Total revenues		235,335		157,093
Cost of revenues:
Direct payroll costs		195,965		127,397
Payroll taxes and benefits		22,837		15,697
Workers' compensation		7,490		6,875
Total cost of revenues		226,292		149,969
Gross margin	$	9,043	$	7,124

        Gross revenues of $235.3 million for the 2006 first quarter rose 49.8% over the comparable 2005 period.

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

For the first quarters ended March 31, 2006 and 2005 (in thousands):

	(Unaudited) Three Months Ended March 31,
(in thousands)	Gross Revenue Reporting Method				Reclassification						Net Revenue Reporting Method
	2006		2005		2006			2005			2006		2005
Revenues:
Staffing services	$	26,661	$	28,542	$	—		$	—		$	26,661	$	28,542
Professional
employer
services		208,674		128,551		(177,050	)		(107,849	)		31,624		20,702
Total revenues	$	235,335	$	157,093	$	(177,050	)	$	(107,849	)	$	58,285	$	49,244
Cost of revenues:	$	226,292	$	149,969	$	(177,050	)	$	(107,849	)	$	49,242	$	42,120

- 2 -

Barrett Business Services, Inc.
News Release — First Quarter 2006
April 26, 2006

        The following summarizes the unaudited consolidated balance sheets at March 31, 2006 and December 31, 2005.

	(Unaudited)
(in thousands)	March 31, 2006		December 31, 2005
Assets
Current assets:
Cash and cash equivalents	$	59,357	$	61,361
Marketable securities		3,664		3,548
Trade accounts receivable, net		29,353		26,328
Prepaid expenses and other		4,755		2,514
Deferred income taxes		6,175		5,864
Workers' compensation receivables for insured claims		242		242
Total current assets		103,546		99,857
Marketable securities		399		396
Goodwill, net		26,536		22,516
Intangibles, net		96		5
Property, equipment and software, net		13,538		13,071
Restricted marketable securities and workers'
compensation deposits		2,133		2,041
Deferred income taxes		141		341
Other assets		3,034		1,528
Workers' compensation receivables for insured claims		4,496		4,546
	$	153,919	$	144,301
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	1,809	$	1,366
Accrued payroll, payroll taxes and related benefits		33,733		28,650
Other accrued liabilities		3,559		360
Workers' compensation claims liabilities		5,399		5,729
Workers' compensation claims liabilities for insured claims		242		242
Safety incentives liability		7,516		7,687
Current portion of long-term debt		148		348
Total current liabilities		52,406		44,382
Long-term debt, net of current portion		1,057		1,094
Customer deposits		782		663
Long-term workers' compensation claims liabilities		8,114		8,532
Long-term workers' compensation liabilities for insured claims		2,816		2,866
Deferred gain on sale and leaseback		884		914
Stockholders' equity		87,860		85,850
	$	153,919	$	144,301

Outlook for Second Quarter 2006

        The Company also disclosed today limited financial guidance with respect to its operating results for the second quarter ending June 30, 2006. The Company expects gross revenues for the second quarter of 2006 to range from $250 million to $255 million, an increase of approximately 37.5% over the second quarter of 2005, and anticipates diluted earnings per share for the second quarter of 2006 to range from $.33 to $.35 per share. Management expectations for diluted earnings per share for the second quarter of 2006 equate to increases over the second quarter of 2005 of approximately 36.9% in net income and approximately 9.7% in diluted earnings per share. The percentage increase in expected net income for the 2006 second quarter exceeds the percentage increase in expected diluted earnings per share due to the dilutive effect of the July 2005 follow-on equity offering. A reconciliation of estimated gross revenues to estimated GAAP net revenues for the second quarter of 2006 is not included because PEO revenues and cost of PEO revenues for the period are not reasonably estimable.

- 3 -

Barrett Business Services, Inc.
News Release — First Quarter 2006
April 26, 2006

        On April 27, 2006 at 9:00 a.m. Pacific Time, William W. Sherertz and Michael D. Mulholland will host an investor telephone conference call to discuss first quarter 2006 operating results. To participate in the call, dial (877) 356-3717. The call identification number is 8171396. 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 April 27, 2006 at 12:00 p.m. and ending May 3, 2006. To listen to the recording, dial (800) 642-1687 and enter conference identification code 8171396.

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

        Statements in this release about future events or performance, including earnings expectations for the second quarter of 2006, 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 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 our primary markets, collectibility of accounts receivable, and the use of net proceeds of approximately $33 million and other effects of the Company’s recent follow-on equity offering, among others. Other important factors that may affect the Company’s future prospects are described in the Company’s 2005 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.

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