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Q4 2000 Adecco SA Reports 44% Increase in Revenues and 49% Increase in Operating Income for 2000


Strong organic and external growth boosts 2000 results. Board of Directors to Propose Dividend, Capital Increase, and Stock-Split.

Chéserex, Suisse, Jan 31, 2001 

Adecco SA, the world's leading provider of personnel services, today announced strong financial results for the fiscal year 2000. Year-over-year, revenues increased by 44% to CHF 26.6 billion, operating income by 49% to CHF 1.2 billion and income before amortization and restructuring charges by 42% to CHF 746 million. Since 1996, when Adia and Ecco merged to form Adecco, the company has demonstrated outstanding growth. Revenues and income before amortization and restructuring charges have increased more than fourfold during this period.

In these five years, Adecco became the undisputed world leader in the staffing industry through a strategy combining organic growth with mergers and acquisitions. Today, Adecco has attained a number one or number two position in 11 of the world's 13 largest regions, which account for over 95% of the world market.

Key figures as reported for the year show strong growth of the total business, both organically and through mergers and acquisitions. These results are in line with Adecco's multi-year strategy to grow organically 50% faster than the market, supplemented by external growth equivalent to 50% of organic revenue growth.

Year-over-year, operating margin improved by 10 basis points from 4.5% to 4.6% despite the incursion of approximately CHF 55 million one-time integration expenses as a part of our ordinary operating expenses. These expenses were incurred to secure fast and complete merger integration during last year. Excluding these non-recurring integration expenses, the operating margin increased to over 4.8%, close to Adecco's 2003 target of 5%. As in the first three quarters of 2000, the impact of currency exchange rate movements was minimal with 4% on sales and approximately 2% on income before amortization and restructuring charges.

"I'm absolutely delighted with our results in 2000", said John Bowmer, Adecco's Chief Executive Officer. "In this challenging year, we managed to grow our business organically while completing the largest merger ever in our industry within 12 months. This major and complex merger with Olsten is scheduled for completion by the end of the first quarter 2001. The new North America headquarters close to New York is fully operational with only a handful of staff left in the old California headquarters, the IT system integration is finished and the management restructuring finalized. We now have a stronger than ever company to serve our clients better. The financial results of this excellent year were far beyond expectations, and I congratulate the Adecco team worldwide for their commitment, initiative and drive to excel and be the best. This dedication has allowed us not only to merge with Olsten, but to concurrently achieve strong organic growth and enhance our operating margin. These figures demonstrate that we are on the right track to achieve our ambitious goals over the next few years."

Progress Across the Globe

All countries around the globe have contributed to this outstanding result. In all markets, we have significantly increased sales and over-proportionally increase operating profits.

Areas with highest year-over-year percentage growth were Italy, Japan, Belgium and Latin America, while the development in Netherlands and in the IT sector were below expectations. Unfortunately, the IT staffing market has not recovered as predicted. While we have experienced month-over-month revenue increase in 2000, monthly revenues remained below 1999 levels throughout the year, reaching last year's monthly levels only by year-end.

Reviewing the 2000 performance by region, Mr. Bowmer stated, "Overall, I'm extremely pleased with our performance. Except for the IT sector, which fell short of expectations, all our business lines and geographic regions posted excellent organic as well as total revenue growth with equally strong increases in profitability. Our market penetration increased in Scandinavia, Asia and Latin America, all promising emerging regions with huge potential for growth. The broad geographical and business diversification we have put in place over the last two years reduced our volatility dramatically. We are not dependent on one market or one single business line. We are a true global player with the necessary resources and positioning to counter market adversities and take advantage of changes in our business environment. We have delivered the results we promised, and I feel confident that we have the talent, the expertise and the financial power to reinforce our industry leadership and business growth into the new millennium."

Board of Directors to Propose Dividend, Capital Increase, and Stock-Split

The Annual General Meeting of the Shareholders of Adecco is scheduled to take place on May 2, 2001, when Adecco's Board of Directors will propose for the approval of shareholders a dividend of CHF 10 per share (CHF 2 per participation certificate). This represents a 19% increase over the CHF 8.40 per share (CHF 1.68 per participation certificate) paid in 2000. The Board of Directors will further submit for shareholder approval an increase of the company's authorized capital by 2 million shares, earmarked to be used primarily for financing mergers and acquisitions.

The Board of Directors will also propose a 1:10 stock-split subject to the condition that the minimum nominal value of CHF 10 required under the Swiss Code of Obligations be abolished as expected.

US GAAP Results

For the fiscal year ended December 31, 2000 Adecco reported under US Generally Accepted Accounting Principles (GAAP) revenues of CHF 26.6 billion and a net loss of CHF 428 million after charging goodwill amortization of CHF 1,109 million and restructuring charges of CHF 65 million.

According to Chief Financial Officer, Felix Weber, "This net result reflects the accounting principles of US GAAP and Adecco's chosen goodwill amortization schedule of five years. Adecco considers operating income and income before amortization of goodwill and restructuring charges to be the most relevant benchmarks of the company's financial performance, as they measure our operational performance and our ability to fund growth and to distribute dividends."

In 1998, the Financial Accounting Standards Board issued Statement No. 133, amended, "Accounting for Derivative Instruments and Hedging Activity". This new standard requires that all derivative instruments be recognized in the balance sheet as either assets or liabilities measured at their fair value. Changes in fair value must be recognized in earnings unless specific criteria are met. This new standard is required to be implemented by Adecco effective as of January 1, 2001.

Adecco has reviewed the provisions of this required new standard and determined that adoption will result in a one time, after tax non-cash charge of CHF 8 million in the first quarter of fiscal 2001. This transition adjustment will be reported as a "change in accounting principle" as required by the new standard, a one-time non-operating charge.
 

Adecco SA is the global leader in personnel services. With the addition of Olsten, the Adecco network connects up to 700,000 associates with business clients each day through its network of over 30,000 employees and over 5,000 offices in 60 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, delivering 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)], NYSE [ADO], the Bourse de Paris [RM 12819].

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