Adecco Sees First Signs of Improvement in Europe and North America; Results For the First Quarter Ended March 31, 2002 In Line With Expectations.Business & Technology Editors CHESEREX, Switzerland--(BUSINESS WIRE)--April 17, 2002 Adecco NYSE NYSE See: New York Stock Exchange :ADO Highlights: -- Revenues of CHF 6.0 billion, down 11% in CHF and 9% in local currency -- Operating income of CHF 186 million, down 32% in CHF and 31% in local currency -- Income before amortisation of intangibles and one-time items of CHF 101 million, down 38% in CHF and 36% in local currency -- First signs of recovery - diminishing volume decline year over year in February and March, in particular in the USA and in the UK IT sector -- Career Services, e-Business & Others division with continuing strong results -- Jobpilot acquisition heading towards completion on schedule Adecco SA, (NYSE:ADO) the worldwide leader in HR solutions, announced today its results for the first quarter ended March 31, 2002. The company reported revenues of CHF CHF In currencies, this is the abbreviation for the Swiss Franc. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 6.0 billion, down 11% on last year's first quarter, and operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of CHF 186 million, down 32% on first quarter 2001. In local currency, revenues were down 9% with an operating income decline of 31%, indicating a slightly unfavorable currency fluctuation Fluctuation A price or interest rate change. impact on Adecco's consolidated results. The company reported income before amortisation Noun 1. amortisation - the reduction of the value of an asset by prorating its cost over a period of years amortization reduction, step-down, diminution, decrease - the act of decreasing or reducing something 2. of intangibles and one-time items of CHF 101 million, down 38% on last year's figures (36% decline in local currency). "As expected this has been a difficult quarter, but we are very pleased that the declines in both sales and profits were similar to the fourth quarter 2001 level. This suggests that we have reached the low point of the economic downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. ," said John Bowmer, Adecco's CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "We expanded our branch network in the first quarter and may build it further if the encouraging signs of improvement in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and in Europe prove to be sustainable. The Ajilon division also saw some positive signs with substantially higher new contract wins in March compared to end of last year. Career Services remains a strong counter-cyclical business. Since, in recent weeks, sales are down less year over year in North America and in much of Europe, we feel confident that the worst of the downturn is past. We do however expect that the 2nd quarter will still be difficult, as we will compare the next quarter against a strong 2001 performance." Divisional Performance Adecco Staffing revenues were down 9%, a 7% drop in local currency. Profits were depressed in most regions, particularly in North America, where the decline in profits reflected a sharp drop in permanent placement. Ajilon Staffing & Managed Services An umbrella term for third-party monitoring and maintaining of computers, networks and software. The actual equipment may be inhouse or at the third-party's facilities, but the "managed" implies an ongoing effort; for example, making sure the equipment is running at a certain quality posted a revenue decline of 26%, both in CHF and local currency. These results reflect the continuing weakness of permanent placement, especially in Accounting and Finance. Career Services, e-Business & Others reported 50% revenue growth in CHF, a 49% increase in local currency. The division continued to benefit from the counter-cyclical effects of Outplacement out·place·ment n. The process of facilitating a terminated employee's search for a new job by provision of professional services, such as counseling, paid for by the former employer. , mitigating mit·i·gate v. mit·i·gat·ed, mit·i·gat·ing, mit·i·gates v.tr. To moderate (a quality or condition) in force or intensity; alleviate. See Synonyms at relieve. v.intr. To become milder. the drops in revenues and profits in other divisions. "Economically difficult times offer great opportunities in particular for the leaders," said Jerome Caille, appointed CEO of Adecco. "We are determined to capture this opportunity, roll out our proven organic growth approach and strengthen our market position. Aggressive sales efforts are starting to bring results in some areas, such as Adecco Benelux, where we have clearly outperformed competition and gained further market share. We have recently won new customers and now serve as many clients as in March 2001. Today, the key ingredients to gain share in the upturn are in place: A strong client base, an outstanding, new leadership team with high aspirations aspirations npl → aspiraciones fpl (= ambition); ambición f aspirations npl (= hopes, ambition) → aspirations fpl , and excellent systems to serve clients and associates best. These elements combined make me feel confident of the future success of Adecco." Outlook In line with economists in the USA and Europe, Management remains confident that macroeconomic mac·ro·ec·o·nom·ics n. (used with a sing. verb) The study of the overall aspects and workings of a national economy, such as income, output, and the interrelationship among diverse economic sectors. signs point towards a recovery in 2002. Although it continues to be difficult to predict the exact time frame for the recovery to take place, Management feels confident that this recovery could take place in the second half of 2002. jobpilot AG Acquisition Update On February 6, Adecco SA announced a recommended cash offer to acquire all of the issued and outstanding share capital of jobpilot AG, which would create a leading European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. online staffing, recruiting and service company by combining jobpilot's internet platform with the physical assets of Adecco. The process for the acquisition of jobpilot AG is progressing according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. schedule. The deal is now pending regulatory review in two of the four required markets. US GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). Results ---------------------------------------------------------------------- For the three months ended March 31, 2002, Adecco reported under US Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (US GAAP) revenues of CHF 6.0 billion and a net income of CHF 100 million, including CHF 1 million amortisation of other intangibles. According to Chief Financial Officer, Felix Weber Weber, river, United States Weber (wē`bər), river, c.125 mi (200 km) long, rising in the Uinta Mts., N central Utah, and flowing north and northwest to join the Ogden River at Ogden. The combined stream flows to the Great Salt Lake. , "Adecco continues to consider operating income and income before amortisation of intangibles and one-time items 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 distribute dividends." Effective from fiscal year 2002, Adecco has adopted SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No 142, which requires that goodwill and other intangibles with indefinite/infinite lives no longer be amortised, but be subject to an annual impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. test. However, intangibles with definite lives continue to be amortised over the related lifetime. About Adecco Adecco SA is a Forbes 500 company and the global leader in HR Solutions. The Adecco network connects up to 700,000 associates with business clients each day through its network of over 30,000 employees and over 6,000 offices in 58 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. The Group comprises of three Divisions, Adecco Staffing, Ajilon Staffing & Managed Services, and Career Services, e-Business & Others. In Adecco Staffing, the Adecco staffing network focuses on flexible staffing solutions for global industries in transition, including automotive, banking, electronics, logistics and telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. ; Ajilon Staffing and Managed Services offers an unrivalled range of specialised Adj. 1. specialised - developed or designed for a special activity or function; "a specialized tool" specialized specific - (sometimes followed by `to') applying to or characterized by or distinguishing something particular or special or unique; "rules with branded businesses; Career Services, e-Business & Other encompasses our portfolio of outplacement, e-recruiting, and executive search businesses. Adecco SA is registered in Switzerland and is listed on the Swiss Exchange Swiss Exchange The major securities market of Switzerland. (ADEN / trading on Virt-x: 1213860), NYSE (ADO), Euronext Premier Marche Marche, region, Italy Marche (mär`kā) or the Marches, region (1991 pop. 1,429,205), 3,742 sq mi (9,692 sq km), E central Italy, extending from the eastern slopes of the Apennines to the Adriatic Sea. (12819). Further information can be found at the Investor Relations Investor relations The process by which the corporation communicates with its investors. page at www.adecco.com. Statements made in this press release, other than those concerning historical information, should be considered forward-looking and subject to risks and uncertainties. The Company's actual results may differ materially from the results anticipated in these forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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: our ability to successfully implement our growth and operating strategies, fluctuations in interest rates or foreign currency exchange rates, changes in economic conditions, changes in the law or government regulations in the countries in which Adecco operates, instability instability /in·sta·bil·i·ty/ (-stah-bil´i-te) lack of steadiness or stability. detrusor instability in domestic and foreign markets, our ability to obtain commercial credit, and changes in general political, economic and business conditions in the countries or regions in which Adecco operates. 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.
Selected Financial Highlights (Unaudited)
Three Months Ended
-------------------------------- %
CHF Millions March 31, 2002 April 1, 2001 Change
--------------- --------------
Net service revenues 5,994 6,728 -11%
Operating income 186 276 -32%
Income before amortisation
of intangibles
and one-time items (1) 101 161 -38%
Net income (loss) (2) 100 (182)
-----------------------
Income per share before
amortisation of intangibles
and one-time items (1)
Basic 0.54 0.87 -38%
Diluted 0.53 0.85 -38%
Weighted average shares 186,255,710 185,494,520 (3)
Diluted shares 193,495,159 192,771,740 (3)
(1) One-time items include internet investment write-down of CHF
15 million and the cumulative effect of accounting changes,
net of tax, of CHF 8 million in the first quarter of 2001.
(2) In 2001, net income (loss) includes goodwill amortisation. The
2001 adjusted net income (under SFAS No. 142) is CHF 114
million.
(3) After 10:1 share split.
Income before amortisation of intangibles and one-time items is
not meant to portray net income or cash flow in accordance with U.S.
generally accepted accounting principles. Amortisation is a non-cash
charge to operating income; however, income before amortisation of
intangibles and one-time items does not represent cash available to
shareholders. This may not be comparable to similarly entitled items
reported by other companies. Up to December 30, 2001, Adecco amortised
goodwill over its estimated life of five years. In fiscal year 2002,
goodwill is no longer amortised.
Net Service Revenues by Division
Three Months Ended
-------------------------------- %
CHF Millions March 31, 2002 April 1, 2001 Change
--------------- -------------
Adecco Staffing 5,179 5,721 -9%
Ajilon Staffing &
Managed Services 678 916 -26%
Career Services,
e-Business & Others 137 91 50%
------------------------ ------------- -------------
Total 5,994 6,728 -11%
------------------------ ------------- -------------
Net Service Revenues by Geographical Segment
Three Months Ended
-------------------------------- %
CHF Millions March 31, 2002 April 1, 2001 Change
--------------- -------------
Europe 3,542 4,003 -11%
North America 1,695 1,975 -14%
Asia/Pacific 568 560 1%
Rest of World 189 190 0%
------------------------ --------------- ------------- ----------
Total 5,994 6,728 -11%
------------------------ --------------- ------------- ----------
Additional Information Available Upon Request |
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