Adecco Staffing Restores Operational Gearing; Productivity Gains Improve Group Profit; Strong Cash Flow Reduces Net Debt.

Business Editors

CHESEREX, Switzerland--(BUSINESS WIRE)--April 15, 2003

Adecco (NYSE:ADO)

Highlights:

- Group Sales down 6% at Euro 3.8 billion (up 2% in local

currency); operating income before amortisation down 11% at

Euro 113 million (unchanged from last year in local currency);

NIBA(1) down 4% at Euro 65 million (up 7% in local currency)

- Group costs down 10% (-2% in local currency) due to tight cost

control in all operational areas resulting in productivity

improvements

- Operational gearing restored at Adecco Staffing demonstrated

by growth in sales of 3% and growth in operating income before

amortisation of 8%, all in local currency

- Net debt reduced by Euro 492 million year-over year, a

reduction of 28%, to Euro 1.3 billion

- Ajilon achieves sequential sales growth against the last

quarter for the first time in eight quarters

- LHH contributes 15% of group profit on just 2% of group sales

- Currency effects reduce reported sales, operating income

before amortisation and NIBA by -8%, -11% and -11%

respectively

Commenting on the results Jerome Caille, Adecco Group Chief Executive Officer said:

"I am pleased with the results we have achieved this quarter. In particular, in the most important division, Adecco Staffing, we restored our operational gearing: sales growth of 3% in local currency was converted into a profit improvement of 8%.

We have worked on what we could influence regardless of the economic environment: extending the client base from our network of 5,800 branches improving productivity and reducing costs at every level. We are strengthening the company with a focus on profitable sales growth and rollout of our new web-based technology.

And we have invested in our people through extension of our Adecco University training programs."

Sales

Group sales increased by 2% in local currency to Euro 3,832 million, but sales were down 6% in Euro due to adverse exchange rate movements.

In the Adecco Staffing division, which represents 87% of group sales, sales grew by 3% in local currency. Overall sales in Europe were stable, with unchanged sales in France and sales increases in Germany, the UK and Belgium and 8% sales growth in Spain.

In North America sales were up 9%, principally due to the USA where sales grew by 10%.

In Asia/Pacific sales were up 11%, with a 10% increase in Japan.

Sales from the Ajilon Division, which represents 11% of group sales, were down by 8% in local currency, but for the first time in eight quarters Ajilon showed a quarter over quarter growth in sales of +2%.

Sales of the LHH/Career Services Division, which represent 2% of group sales, mostly in the USA, were down by 8% in local currency.

Gross Margin

Overall, gross margins were under pressure this quarter. At the group level gross margin was down by almost 1.0% to 17.7% from 18.7% in the first quarter of 2002.

Of this difference 0.2% was due to currency mix changes and 0.1% was due to business mix changes, principally Adecco Staffing growing more than LHH and Ajilon.

Lower average fees for permanent placement accounted for 0.1% of difference and lower temporary staffing margins accounted for 0.6%.

Of the temporary staffing margin difference 0.4% is attributable to US Adecco Staffing, where additional costs for worker's compensation and state unemployment insurance were incurred.

The remaining temporary staffing margin difference of 0.2% was due to all other changes, including the mix of higher and lower margin business and price pressure.

Operating Costs

The Group reduced operating costs this quarter by 2% when measured in local currency and by 10% when measured in Euro. On a like-for-like basis, excluding the operating costs of jobpilot which were not present in the first quarter of 2002, operating costs were reduced by 3% in local currency. The ratio of operating costs to sales this quarter improved to 14.8% of sales compared with 15.6% last year. Headcount was reduced by around 1,500 full time equivalents (FTE) since last November despite servicing a higher volume of business and thus improving productivity. Tight control over all other operating costs was also maintained. Bad debt provisions have normalized this quarter to 0.2% of sales, down from 0.6% of sales last quarter.

Operating Income before amortisation

Operating income before amortisation was Euro 113 million this quarter representing a return on sales of 2.9%, which is similar to last year's level. Operating income before amortisation measured in Euro was down 11% due to currency changes.

NIBA(2)

NIBA increased in the quarter by 7% in local currency over last year to Euro 65 million.

Interest expense reduced by Euro 8 million mainly due to the reduced level of debt.

The tax rate provision in this quarter was reduced to 27% compared with 29% in the first quarter of 2002.

NIBA measured in Euro was down 4% because of the currency effect of -11%.

Net Debt and Cash Flow

Net debt at the end of the quarter was Euro 1,291 million, including off-balance sheet debt. This represents a reduction of Euro 119 million during the quarter and a reduction of Euro 492 million or 28% from the level a year ago.

Strong cash flow from operations of Euro 88 million in Q1 2003 contributed to this reduction.

Currency Impact

Adecco is presenting its results in Euro for the first time this quarter. These have been negatively impacted by currency fluctuations due to the strengthening of the Euro against most currencies except the Swiss Franc, but especially the US Dollar, compared with the first quarter of last year. This reduced sales by 8% and operating income before amortisation and NIBA by 11% each.

Felix Weber, Adecco Group Chief Financial Officer, commented: "Strong operating cash flow contributed to the reduction of net debt this quarter. We also successfully launched a new syndicated loan facility of Euro 580 million at favorable conditions, which provides us the liquidity to fund future growth."

Adecco Staffing Division

Adecco Staffing is number 1 in the world, with number 1 positions in 11 of the 13 most important staffing markets.

The major accomplishment this quarter was the restoration of operating gearing in this division: we converted sales growth of 3% in local currency into a profit improvement of 8% in local currency (-4% and +2% in Euro, respectively), despite the pressure on gross margin.

- Sales level at Adecco France was maintained despite a tough

comparison to last year due to the euro conversion projects,

and improved profitability.

- Sales in Adecco USA grew by 10% in local currency (-10% in

Euro), but profitability was affected by higher costs for

workers compensation and unemployment insurance.

- Adecco UK sales were up 1% and profit was ahead 79% in local

currency (-7% and +57% in Euro, respectively) thanks to branch

openings, which brought many new smaller clients and higher

gross margins.

- Adecco Japan gained market share with sales growth of 10% in

local currency (+2% in Euro) and demonstrated operational

gearing with 17% growth in profit in local currency (+8% in

Euro).

- Adecco Italy sales were down 1% in Euro, while profitability

and market share remained at a high level.

- In Germany, one of the key markets for the future, sales grew

by 2% in Euro and increased profitability and we continued to

lead industry efforts towards a more favorable regulatory

environment.

- Adecco Spain, with a 28% market share, was the best in class

with sales up 8%; gross margin up 10%; costs down 11% and

profit up by 111%, in Euro.

Ajilon Professional Division

Ajilon Professional is ranked world number 3 today in the professional staffing market.

Sales for the quarter were Euro 413 million and operating income before amortisation was Euro 13 million, a 3.2% return on sales.

The first quarter performance demonstrated the significant potential for continued increase in profitability, as a result of our focus over the past year on gross margin improvement and aggressive cost reduction initiatives, which have reduced division costs by 10% measured in local currency.

LHH/Career Services Division

Lee Hecht Harrison (LHH) is ranked number 2 in the world outplacement and career services market.

Employment market evolution in the USA has caused a downturn in the outplacement industry resulting in sales being down by 8% in local currency (-23% in Euro).

Operating costs were cut by 3% (-19% in Euro) but the profit was down by 16% in local currency (-30% in Euro) to Euro 20 million. This division contributes 15% of group profit on only 2% of group sales.

jobpilot /e-HR Services Division

jobpilot is the number 2 on-line job board in Europe.

At jobpilot we continued with the integration of services, particularly in Germany where jobpilot's access to candidates is now successfully used by Adecco. jobpilot operations were at breakeven this quarter.

Technology Update

This quarter we completed the rollout of our new web based technology to France and the UK, which is one of the key drivers behind our increased productivity. The rollout is also planned for most of the rest of our European operations by the end of the year.

This technology allows direct online access to clients and candidates. It also enables our branches to exchange in real time client and candidate information transforming our branch model: The Group now manage over 4.5 million candidates in our shared databases.

This system was initially implemented in Italy where 14,000 candidates were exchanged between our 500 branches during the first quarter 2003.

Outlook

In a still uncertain market environment, the Group will continue to focus on its objectives to reduce the cost base and improve operating performance across all of our businesses, having everything in place, the people, the network and the technology, to take advantage of any upturn.

US GAAP Results

For the three months ended March 30, 2003, the Adecco Group reported under US Generally Accepted Accounting Principles (US GAAP) revenues of Euro 3.8 billion, operating income of Euro 112 million, which includes Euro 1 million amortisation of intangibles and a net income of Euro 64 million.

According to Chief Financial Officer, Felix Weber, "Adecco continues to consider operating income before amortisation and net income before amortisation to be the most relevant benchmarks of the Adecco Group's financial performance, as management believes that this represents a better measurement of the operational performance.

Statements made in this press release, other than those concerning historical information, should be considered forward-looking and subject to risks and uncertainties. The Adecco Group'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 Adecco Group's reports on Form 20-F made pursuant to the Securities Exchange Act of 1934. For instance, the Adecco Group'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 the Adecco Group operates, 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 the Adecco Group 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 Adecco Group's operating results, the operating results of other staffing service providers, and changes in the performance of global stock markets in general.

About Adecco

Adecco S.A. is a Forbes 500 company and the global leader in HR Solutions. The Adecco Group network connects over 650,000 associates with business clients each day through its network of over 28,000 employees and over 5,800 offices in 63 countries around the world. Registered in Switzerland, and managed by a multinational team with expertise in markets spanning the globe, the Adecco Group delivers an unparalleled range of flexible staffing and career resources to corporate clients and qualified associates.

The Adecco Group comprises four Divisions, Adecco Staffing, Ajilon Professional, LHH Career Services and jobpilot e-HR Services. In Adecco Staffing, the Adecco staffing network focuses on flexible staffing solutions for global industries in transition, including automotive, banking, electronics, logistics and telecommunications; Ajilon Professional offers an unrivalled range of specialized branded businesses; LHH Career Services encompasses our portfolio of outplacement and coaching; jobpilot e-HR focuses on online recruiting activities for the Adecco Group.

Adecco S.A. is registered in Switzerland and is listed on the Swiss Exchange (ADEN / trading on Virt-x: 1213860), NYSE (ADO), Euronext Premier Marche (12819).

Further information can be found at the Investor Relations page at www.adecco.com.

(1) Net income before amortisation

(2) Net income before amortisation

                     Selected Financial Highlights

                            Three months ended          % change
                         ------------------------  -------------------
                          March 30,    March 31,      As      Constant
EURO millions                2003         2002     reported   exchange
                                                                rate
                         -----------  -----------  --------   --------

Net service revenues           3,832        4,061      -6%        2%
Operating income before
 amortisation                    113          126     -11%        0%
Net income before
 amortisation                     65           68      -4%        7%
Net income                        64           68      -6%

------------------------

Net income per share
 before amortisation
      Basic                     0.35         0.37      -5%
      Diluted                   0.35         0.36      -3%

Net income per share
      Basic                     0.34         0.36      -6%
      Diluted                   0.34         0.36      -6%

Weighted average shares  186,697,246  186,255,710
Diluted shares           192,069,919  193,495,159

Net income before amortisation 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
before amortisation; however, net income before amortisation does not
represent cash available to shareholders. This may not be comparable
to similarly entitled items reported by other companies.

    Revenues and Contribution* by Division and Geographical Segment

                                     Net Services Revenues
                         ---------------------------------------------
                            Three months ended          % change
                         ------------------------  -------------------
                          March 30,    March 31,      As      Constant
                             2003         2002     reported   exchange
                                                                rate
                         -----------  -----------  --------   --------
By Division
Adecco Staffing                3,349        3,473      -4%        3%
Ajilon Professional              413          506     -18%       -8%
Career Services                   64           82     -23%       -8%
e - HR & Others                    6            0     n.m.      n.m.

By Region
Europe                         2,365        2,401      -1%        0%
North America                    981        1,148     -15%        4%
Asia Pacific                     391          384       2%       10%
Rest of World                     95          128     -25%       12%

Corporate expenses
------------------------ -----------  -----------  --------   --------
      Total                    3,832        4,061      -6%        2%
======================== ===========  ===========  ========   ========


                                            Contribution*
                         ---------------------------------------------
                            Three months ended          % change
                         ------------------------  -------------------
                          March 30,    March 31,      As      Constant
                             2003         2002     reported   exchange
                                                                rate
                         -----------  -----------  --------   --------
By Division
Adecco Staffing                  100           99       2%        8%
Ajilon Professional               13           16     -21%       -6%
Career Services                   20           29     -30%      -16%
e - HR & Others                    0           -1     n.m.      n.m.

By Region
Europe                            94           76      25%       26%
North America                     25           49     -48%      -36%
Asia Pacific                      15           13       8%       16%
Rest of World                     -1            5     n.m.      n.m.

Corporate expenses               -20          -17
------------------------ -----------  -----------  --------   --------
      Total                      113          126     -11%        0%
======================== ===========  ===========  ========   ========

* Operating income before amortisation at Group level

Additional information available upon request.