BBSI Barrett Business Services Inc.

Risks

• Risks Relating to Our Business and Industry
• Our ability to continue our business operations under our present service model is dependent on maintaining workers' compensation insurance coverage.
• Collateral requirements could increase beyond our ability to satisfy those requirements.
• Failure to manage the severity and frequency of workplace injuries will increase our workers’ compensation expenses.
• We may be unable to draw on our revolving credit facility in the future.
• Our business is subject to risks associated with geographic market concentration.
• In order to continue to grow revenues, we are dependent on retaining current clients and attracting new clients.
• Our business is subject to risks associated with healthcare reforms.
• Changes in our income tax positions or adverse outcomes resulting from on-going or future tax audits could harm our business, operating results, financial condition and prospects.
• If we are unable to maintain our brand image and corporate reputation, our business may suffer.
• Because we assume the obligation to make wage, tax and regulatory payments in respect of some employees, we are exposed to client credit risks.
• Increases in unemployment claims could raise our state and federal unemployment tax rates which we may not be able to pass on to our customers.
• If we are determined not to be an “employer” under certain laws and regulations, our clients may stop using our services, and we may be subject to additional liabilities.
• We are dependent upon technology services, and if we experience damage, service interruptions or failures in our computer and telecommunications systems, our client relationships and our ability to attract new clients may be adversely affected.
• We depend on third-party software in order to provide our services and support our operations.
• We operate in a complex regulatory environment, and failure to comply with applicable laws and regulations could adversely affect our business.
• The tax status of our insurance subsidiaries could be challenged by taxing authorities resulting in increased or accelerated income tax payments.
• Our wholly owned insurance companies are subject to substantial government regulation.
• We may find it difficult to expand our business into additional states due to varying state regulatory requirements.
• To succeed, we must constantly improve our technology to meet the expectations of our clients. If we fail to meet those expectations, we may lose clients and harm our business.
• We are dependent upon certain key personnel and recruitment and retention of key employees may be difficult and expensive.
• We depend on attracting and retaining qualified employees; during periods of economic growth, our costs to do so increase and attracting and retaining people becomes more difficult.
• Our service agreements may be terminated on short notice, leaving us vulnerable to a significant loss of customers in a short period of time, if business or regulatory conditions change or events occur that negatively affect our reputation.
• Changes in federal and state unemployment tax laws and regulations could adversely affect our business.
• Maryland law and our Charter and bylaws contain provisions that could make the takeover of the Company more difficult.