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Adecco SA Reports 21% Increase in Revenues and 28% Increase in Operating Income for 1999


Adecco SA, the world's leading provider of personnel services, today announced excellent financial results for the 1999 fiscal year that once again confirm the success of the company's global growth strategy.

Chéserex, Suisse, Jan 27, 2000 

Adecco's results for 1999 include revenues of CHF 18.5 billion, a 21% increase over the CHF 15.3 billion reported in 1998. Measured at constant exchange rates, revenue increased by 19%, which indicates a 2% positive currency translation impact on revenues. Operating income for the period showed sustained growth rising from CHF 647 million in 1998 to CHF 829 million in 1999, a 28% increase, with a pleasing improvement in operating margins from 4.2% to 4.5%. Income before amortization of goodwill for the 52 weeks in1999 was CHF 526 million, a 29% increase over the CHF 406 million in the 53 weeks of 1998. On a like for like basis of 52 weeks for each year, the increase is above 30%.
The 1999 results include 9 months of operations of the Delphi Group plc acquired in April 1999, and 8 months of operations of Career Staff Co. Ltd. of Japan acquired in May 1999. Delphi is a leading provider of information technology staffing, training and consulting with operations in the United Kingdom, Continental Europe and the United States. Career Staff is one of the largest personnel service firms in Japan.
John Bowmer, Adecco's Chief Executive Officer, commented on the results, saying, "Our 1999 performance was excellent. We continue to improve our operating profit percentage while at the same time showing substantial organic sales growth. The accelerated total and organic growth we reported in September continued in the 4th quarter, resulting in an increase in sales of 29% and in operating profit increase of 42% in the 4th quarter, substantially above the increases posted in the first three quarters. We are also continuing to see excellent results from Delphi and Career Staff, the most recent additions to the Adecco family."
 
Progress Across the Globe
 
Adecco's 1999 results are a measure of the Company's continuing position of industry leadership and growth in the major employment market countries that collectively account for over 90% of staffing industry revenues. A local currency comparison of 1999 to 1998 showed revenue growth of 20% or more in Germany, Spain and Switzerland. In Belgium revenues increased over 30%, while France and the United States showed steady growth of 12% and 5%, respectively. Both the United Kingdom and Japan continue to post strong results that benefit from revenues generated by Delphi and Career Staff, Adecco's recent additions.
Reviewing the 1999 performance, Mr. Bowmer stated, "In France, we have successfully implemented a strategy to improve operating margins, and revenues in local currency increased at about 12%. In the US, revenues grew at 5% in local currency in 1999, but after restatement for businesses sold, discontinued unprofitable contracts arising from the TAD acquisition, and including acquisitions growth in the US was 6% in local currency in 1999. In addition, we have successfully continued our program to substantially enhance US operating margin. We have achieved, including acquisitions and after restatements, 29% growth in operating profit, while operating margin has increased over 1% in 1999. These results make us confident that we have the right strategy, the right network, the right systems, and the right people in place to achieve continued success."
Commenting on Adecco's prospects for the future, Mr. Bowmer noted, "In 1999 we've completed and successfully integrated two major acquisitions: Delphi and Career Staff. We added, through acquisitions and expansion, over 400 new branches, expanding our capacity and building a foundation for future organic growth. Also in 1999, Italy has become a major Adecco country. Relying on an aggressive expansion strategy since we started operations at the beginning of 1998, we have now over 200 branches spread across the country, and annualized sales run rate continues to accelerate. Italy will be one of the key markets for our business over the next few years. In addition, our pending acquisition of Olsten Corporation, which is nearing completion with an expected final shareholder vote in February or early March, has set the stage for additional growth in the US, Europe and Latin America. We will continue to focus on the fundamental drivers of our business: our client relationships, our management team, and service staff. Adecco's strategy is clear, and we have the global network systems, and talented people to make it work."
 
Board of Directors to Propose a CHF 8.40 Per Share Dividend
 
The Annual General Meeting of the Shareholders of Adecco is scheduled for April 19, 2000. At this meeting, Adecco's Board of Directors will propose for the approval of the Shareholders, a dividend of CHF 8.40 per share (CHF 1.68 per participation certificate), representing a 20 % increase over the CHF 7.00 per share (CHF 1.40 per participation certificate) paid in 1999.
 
US GAAP Results
 
For the fiscal year ended January 2, 2000 Adecco reported under US Generally Accepted Accounting Principles (GAAP) revenues of CHF 18.5 billion and a net loss of CHF 174 million after charging goodwill amortization of CHF 699 million.
According to Chief Financial Officer Felix Weber, "this net result is due to the accounting principles of US GAAP and Adecco's chosen goodwill amortization schedule of five years. For evaluating the company's financial performance, we believe operating income and income before amortization of goodwill are the most relevant benchmarks, as they measure our ability to create profitability and cash for future growth of our business".
 
ADECCO SA
Financial Highlights
In CHF Millions
Year Ended January 2, 2000 (52 weeks)
Year Ended January 3, 1999 (53 weeks)
Change
Net Service Revenues
18,471
15,308
21 %
Operating Income
829
647
28 %
Income Before
Amortization of Goodwill
526
406
29 %
Amortization of Goodwill
699
601
 
Net Loss
174
195
 
Net Service Revenues by Region
In CHF Billions
Year Ended January 2, 2000 (52 weeks)
Year Ended January 3, 1999 (53 weeks)
Change
France
7.0
6.3
11 %
Rest of Europe
4.8
3.6
32 %
North America
4.9
4.5
8 %
Rest of the World
1.8
0.9
111 %
 
18.5
15.3
21 %
Specialist/Career
Services Brands
(included in geographic regions.)
2.7
1.7
58 %
Income before amortization of goodwill is not meant to portray net income or cash flow in accordance with U.S. generally accepted accounting principles. Goodwill amortization is a non-cash charge to operating income (loss); however, income before amortization of goodwill does not represent cash available to shareholders. This may not be comparable to similarly entitled items reported by other companies. Adecco amortizes goodwill over its estimated life of five years. Further, statements made in this press release, other than those concerning historical information, should be considered forward-looking and subject to various risks and uncertainties. The Company's actual results may differ materially from the results anticipated in these forward looking statements as a result of certain factors as set forth in the Company's reports on Form 20-F made pursuant to the Securities Exchange Act of 1934. For instance, the Company's results of operations may differ materially from those anticipated in the forward-looking statements due to, among other things: management's ability to effectively integrate Delphi Group and Career Staff Co. Ltd., of Japan into the Company's existing operations; the impact of the proposed merger with Olsten Corporation; the Company's ability to continue to mitigate the effects of legislation in France upon gross margins; increased price competition, the general level of economic health and activity in the markets and countries in which the Company operates; the impact of changes in foreign currency exchange rates; changes in interest rates; the impact of the year 2000 on customers and suppliers; and the continued availability of qualified personnel. In addition, the market price of the Company's stock may be volatile from time to time as a result of, among other things: the Company's operating results, the operating results of other staffing service providers, and changes in the performance of global stock markets in general.
Adecco SA is the global leader in personnel services, connecting up to 450,000 associates with business clients each day through its network of over 20,000 employees and over 3,200 offices in 55 countries around the world. Registered in Switzerland, and managed by a multinational team with expertise in markets spanning the globe, Adecco delivers an unparalleled range of flexible staffing and career resources to corporate clients and qualified associates.
Adecco provides clients with staffing services and solutions covering all major industries as well as specific professions. The worldwide Adecco Brand network focuses on global industries in transition, including automotive, banking, electronics, logistics, and telecommunications. Adecco is also positioned as a worldwide leader in each of the major professional staffing segments with several world-class business lines: aoc (Accountants on Call) and Jonathan Wren for Finance, Banking and Accounting; Ajilon and Computer People for high-end Information Technology, TAD and Roevin for Engineering and Technical. These Adecco businesses provide their clients with a broad range of staffing solutions, from temporary work to permanent placement, to consulting and managed services. Adecco also offers a range of HR solutions with Econova/Lee Hecht Harrison, offering outplacement and career management services.
Adecco clients retain this unique range of services through local, national and multinational contracts.
Adecco SA is listed on The Swiss Exchange [ADECCO N (ADEN 700'939)], the Bourse de Paris [RM 12819] and NASDAQ [ADECY]. Further information can be found at www.adecco.com.
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