Adecco Increases Sales and Profits in 2004

Adecco Increases Sales and Profits in 2004

    Business Editors/Human Resources Writers

    CHESEREX, Switzerland--(BUSINESS WIRE)--March 16, 2005--The Adecco Group:

    "2004: A Tough Start of the Year Ended Positively," CEO Says

    2004 Full Year Highlights:

--	Revenues of EUR 17.2 billion, with a 6% growth for the year and acceleration to 14% in Q4
--	Gross margin stabilization for the year with improvements in Q4 at Adecco Staffing and Ajilon
--	Net income of EUR 332 million, up 9% above last year, up 20% on an underlying basis
--	Adecco US: profit turnaround, normalised audit and SEC investigation terminated
--	Net debt(1) reduced by EUR 625 million to EUR 299 million; regained investment grade status
--	Dividend increase of 43% to CHF 1.00 per share proposed (2003: CHF 0.70)

    Q4 2004 Highlights (Q4 04 vs Q4 03):

    -- Revenues of EUR 4.7 billion, up 14% (16% in constant currency)

    -- Gross margin increases at Adecco Staffing by 20bp and Ajilon
    Professional by 60bp

    -- Operating income margin increases to 3.9% (2003: 2.4%)

    -- Net income of EUR 105 million, up 105% (2003: EUR 51 million)

    The Adecco Group, the worldwide leader in Human Resources services, announced today results for the fourth quarter and full year 2004.
    Jerome Caille, Adecco Group Chief Executive Officer, said: "In the fourth quarter, our double-digit sales growth combined with improved gross margins at Adecco Staffing and Ajilon brings the year 2004 to a successful end. In the full-year, we achieved satisfactory sales growth in parallel with stabilizing margins in the business units, despite handling the additional challenges of the 2003 reporting delay. This result reflects our strong relationships with our clients, our own people, and our associates. In addition, we have substantially improved our internal controls - in particular at Adecco US - and further reduced net debt, providing a solid foundation to support our business expansion going forward. We enter 2005 with confidence and momentum. All three of Adecco's divisions are well placed for future growth," said Caille.

    Sales

    Group sales for the fiscal year of 2004 were EUR 17.2 billion, a 6% increase compared to the fiscal year of 2003. Sales for the fourth quarter of 2004 were EUR 4.7 billion, a 14% increase over the fourth quarter of 2003.

    Gross Margin

    Fourth quarter gross margin increased at our two major divisions: Adecco Staffing (15.2% vs. 15.0% in 2003) and Ajilon (24.1% vs 23.5% in 2003). Full year gross margin was stable at Adecco Staffing (15.0%) and increased at Ajilon (24.2% vs 23.7% in 2003). The business mix effect of lower LHH Career Services division revenues was the driver of the group gross margin decline by 10bp (16.7% vs. 16.8% in 2003) in the fourth quarter and by 30 bp for the full year (16.7% vs. 17.0% in 2003). Provision releases in France for social charges affecting gross margin in the fourth quarter were EUR 26 million (2003: EUR 55 million) and for the full year were EUR 38 million (2003: EUR 61 million). In North America there were no significant changes in provisions affecting gross margin in the fourth quarter or the year (vs. EUR 34 million increase in Q4 2003).

    Operating Costs

    As a percentage of sales, operating costs were reduced to 12.8% (2003: 14.2%) in the fourth quarter including expensing of costs associated with the financial reporting delay of EUR 2 million (2003: EUR 6 million) and expensing of stock options of EUR 5 million (2003: EUR 6 million).

    Operating Income

    Operating margin improved by 150bp to 3.9% in the fourth quarter (2003: 2.4%). For the full year operating income margin was stable at 3.1% (2003: 3.1%). The costs of the 2003 financial reporting delay reduced operating income margin by 40bp for the year. Before these costs, operating income margin increased to 3.6% (2003: 3.2%) for the full year.

    Provision for income taxes

    The effective tax rate for the full year was 36.5% compared with 29.2% last year. The provision for income taxes increased by EUR 46 million to EUR 174 million this year. The increase in the 2004 effective tax rate was mainly due to expenses associated with the 2003 financial reporting delay receiving a lower tax benefit, and changes in the mix of income being taxed at higher tax rates.

    Net income and EPS

    Net income was up 9% to EUR 332 million in 2004, a basic EPS of EUR 1.77 for 2004 compared to EUR 1.63 for 2003. Net income and basic EPS figures include EUR 30 million gain on sale of jobpilot in April 2004 and EUR 83 million of costs related to the 2003 financial reporting delay. Excluding these two principal effects underlying net income increased by 20%.

    Balance sheet, cash-flow, and net debt

    The Group balance sheet was significantly strengthened during the year. Cash-flow for the year was strongly positive principally due to higher cash inflows from operations during the fourth quarter, which benefited from an extra week of trading. The Group repaid EUR 300 million of gross debt in the fourth quarter and ended the year with cash and short term investments of EUR 1.2 billion. Net debt was significantly reduced by EUR 625 million to EUR 299 million during the year. Both Standard & Poor's and Moody's rate Adecco's debt as investment grade.

    Currency impact(2)

    Currency fluctuations in the fourth quarter reduced reported sales by 2% but increased operating income by 5% due to the strengthening of the Euro against the US Dollar together with the turnaround in the Adecco US from a loss to a profit. Over the full year, the currency impact reduced sales and operating income by 3% and 1%, respectively.

    53rd accounting week impact

    The fiscal year 2004 includes 53 weeks compared to 52 weeks in 2003. The additional sales of the extra week were EUR 214 million which generated operating income of approximately EUR 10 million. Excluding the extra week and in constant currency, sales increased 11% and 8% for the quarter and full-year respectively.

    Divisional performance

    Adecco Staffing Division

    For the year the division accounted for EUR 15.3 billion or 89% of group revenue and 85% of total contribution generated by operating units. The seven geographical regions discussed below account for over 84% of the division's revenues. Overall, the division achieved revenue growth of 5% for the full year, and 9% for Q4, excluding the impact of the 53rd week. The division's operating income rose 24% and operating margins for the year increased by 60bp to 4.1%, and in Q4 by 130bp to 4.5%.
    Q404 sales growth in constant currency for key Adecco Staffing business units were as follows:

14 weeks 13 weeks -------- --------

Adecco France 17% 12% Adecco North America 11% 6% Adecco Japan 18% 14% Adecco Italy 17% 14% Adecco Benelux 21% 15% Adecco UK 6% 3% Adecco Germany 30% 24%
    Ajilon Professional Division

    In the Ajilon Professional Division, which represented 10% of group revenues and 12% of total contribution generated by operating units, sales for the year were up 7% to EUR 1.8 billion with a 51% increase in operating income reflecting improving gross margins and operational gearing.
    This good operating performance continued in Q4 with Ajilon Professional revenues increasing by 16% and operating income ahead by 191%. Q404 sales growth in constant currency for key Ajilon Professional business units were as follows:

14 weeks 13 weeks -------- -------- Ajilon North America 21% 15% Ajilon UK 17% 11%
    LHH Career Services Division

    In the LHH Career Services Division, which represented 1% of group sales and 3% of total contribution generated by operating units, revenues fell by 27% over the year, but the rate of decline slowed in Q4 to -13% (-15% on a 13-week basis), showing improvement over prior periods. This reflects general market conditions. Operating margins at 17.0% remained the highest in the Group.

    Dividend and AGM

    The Board of Directors will propose a dividend increase of 43% to CHF 1.00 per share (2003: CHF 0.70) for the approval by shareholders at the Annual General Meeting, which is scheduled for May 26, 2005 in Lausanne. The proposal implies a dividend payout ratio on Net Income before extraordinary costs of the 2003 financial reporting delay and the gain on sale of jobpilot of 32%, in line with historic payout ratios. The dividend for the shares is planned to be paid on June 8, 2005, and the dividend for the ADRs is planned to be paid on July 12, 2005.

    Litigation and regulatory matters; termination of SEC investigation

    The staff of the US Securities and Exchange Commission recently notified Adecco that its investigation has been terminated and that no enforcement action has been recommended. In addition, the SWX Swiss Stock Exchange closed its preliminary investigation into Adecco's compliance with applicable accounting and regular reporting requirements without any sanctions, while Adecco has appealed a reprimand, the lowest level of sanction without monetary penalty, issued in relation to the ad hoc publicity rules. Class action lawsuits in the USA are still pending, although Adecco believes that there is no merit to the allegations, has filed a motion to dismiss, and will continue to defend itself vigorously. The previously announced US state unemployment tax review and French antitrust investigation are also ongoing.
    There can be no assurance that the resolution of any of these matters will not have a material adverse effect on Adecco's consolidated financial position, results of operations, or cash flows.

    Outlook

    The key drivers for the industry are global GDP trends in developed and emerging markets and labour market flexibility as a result of more favourable regulation. These indicators are at present broadly positive for the staffing services market in 2005. With our continuing focus on profitable sales growth through the expansion of our branch network and extension of our service lines, we look for further organic sales growth and margin improvements at or above market levels in 2005.

    Forward-looking statements

    Information in this release may involve guidance, expectations, beliefs, plans, intentions or strategies regarding the future. These forward-looking statements involve risks and uncertainties. All forward-looking statements included in this release are based on information available to Adecco S.A. (the "Company") as of the date of this release, and we assume no duty to update any such forward-looking statements. Factors that could affect the Company's forward-looking statements include, among other things: global GDP trends; the demand for and changes in legislation of temporary work; the assertion and resolution of US unemployment tax assessments and the French anti-trust investigation; the resolution of the US class action litigation; other regulatory enquiries relating to the 2003 financial reporting delay; any adverse developments in existing commercial relationships, disputes or legal proceedings; and intense competition in the markets in which the Company competes.
    The forward-looking statements in this release are not guarantees of future performance and actual results could differ materially from our current expectations. Numerous factors could cause or contribute to such differences. Please refer to the Company's Annual Report on Form 20-F for the year ended December 28, 2003, and other reports filed with or submitted to the U.S. Securities and Exchange Commission from time to time, for a further discussion of the factors and risks associated with our business.

    About Adecco

    Adecco S.A. is a Fortune Global 500 company and the global leader in HR Solutions. The Adecco Group network connects up to 700,000 associates with business clients each day through its network of 30,000 employees and over 6,000 offices in 71 territories 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 three Divisions: Adecco Staffing, Ajilon Professional and LHH Career Services. In Adecco Staffing, the Adecco 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 specialised branded businesses; LHH Career Services encompasses our portfolio of outplacement and coaching consultancy businesses.
    Adecco S.A. is registered in Switzerland (ISIN: CH0012138605) and listed on the Swiss Stock Exchange with trading on Virt-x (SWX/VIRT-X:ADEN), the New York Stock Exchange (NYSE:ADO) and Euronext Paris - Premier Marche (EURONEXT: ADE).

    There will be an audio webcast of the analyst conference at 1500 CET, details of which can be found at our Investor Relations section at http://webcast.adecco.com.

    (1) Net debt is a non-US GAAP measure and comprises short-term and long-term debt (and off balance sheet debt in 2003 only of EUR 36 million relating to the UK securitisation) less cash and cash equivalents and short-term investments.
    (2) All percentage comparisons are expressed in Euro unless stated otherwise.

Consolidated Statements of Operations

EUR millions Three months ended --------------------------------------- January December % change 2, 2005 28, 2003 -------------- EUR Constant ----------- ---------- ----- --------

Net service revenues 4,691 4,130 14% 16% Direct costs of services (3,906) (3,438) ----------- ---------- Gross margin 785 692 13% 15% 16.7% 16.8%

Selling, general & administrative expenses (602) (588) Amortisation of intangibles - (4) ----------- ---------- Operating income 183 100 83% 78% 3.9% 2.4%

Interest and other expenses (15) (12) Provision for income taxes (63) (33) ----------- ---------- Income from continuing operations and before 105 55 91% cumulative effect of change in accounting principle 2.2% 1.3% Income (loss) from discontinued operations - (1) Cumulative effect of change in accounting principle, net of tax - (3)

----------- ---------- Net income 105 51 105% =========== ========== 2.2% 1.2%

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

Basic earnings per share: Continuing operations 0.56 0.29 Discontinued operations - - Cumulative effect of change in accounting principle - (0.02) ----------- ---------- Net income 0.56 0.27

Diluted earnings per share: Continuing operations 0.53 0.29 Discontinued operations - - Cumulative effect of change in accounting principle - (0.02) ----------- ---------- Net income 0.53 0.27

Weighted average shares 187,290,558 186,859,606 Diluted shares 199,682,972 202,819,869

Consolidated Statements of Operations

EUR millions Twelve months ended --------------------------------------- January December % change 2, 2005 28, 2003 ------------- EUR Constant ----------- ---------- ----- --------

Net service revenues 17,239 16,226 6% 9% Direct costs of services (14,365) (13,469) ----------- ---------- Gross margin 2,874 2,757 4% 7% 16.7% 17.0%

Selling, general & administrative expenses (2,343) (2,242) Amortisation of intangibles (1) (6) ----------- ---------- Operating income 530 509 4% 5% 3.1% 3.1%

Interest and other expenses (54) (70) Provision for income taxes (174) (128) ----------- ---------- Income from continuing operations and before 302 311 -3% cumulative effect of change in accounting principle 1.7% 1.9% Income (loss) from discontinued operations 30 (3) Cumulative effect of change in accounting principle, net of tax - (3)

----------- ---------- Net income 332 305 9% =========== ========== 1.9% 1.9%

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

Basic earnings per share: Continuing operations 1.61 1.66 Discontinued operations 0.16 (0.01) Cumulative effect of change in accounting principle - (0.02) -------------------------- Net income 1.77 1.63

Diluted earnings per share: Continuing operations 1.54 1.63 Discontinued operations 0.15 (0.01) Cumulative effect of change in accounting principle - (0.01) -------------------------- Net income 1.69 1.61

Weighted average shares 187,074,416 186,744,214 Diluted shares 201,328,174 195,777,267

Net Service Revenues and Operating Income by Division & Geographical Segment

Q4 2004 Net Services Revenues Operating Income(1) ----------------------- ---------------------- EUR millions 2004 2003 Variance % 2004 2003 Variance % ----------- ------------ EUR Constant EUR Constant ==============================================

Adecco Staffing Europe 2,855 2,436 17 17 152 169 -11 -11 North America 756 732 3 11 17 -66 n.m. n.m. Asia Pacific 449 399 12 17 19 15 29 34 Rest of World 110 101 8 16 0 -3 n.m. n.m. ----------------------- ----------------------- ---------------------- Total 4,170 3,668 14 16 188 115 61 55 ======================= ----------------------- ----------------------

Ajilon Professional Europe 233 199 17 16 12 2 617 602 North America 189 166 14 21 12 6 96 111 Asia Pacific 61 51 21 24 2 1 104 116 Rest of World ----------------------- ----------------------- ---------------------- Total 483 416 16 19 26 9 191 207 ======================= ----------------------- ----------------------

LHH Career Services Europe 7 7 -3 -3 0 0 n.m. n.m. North America 31 39 -20 -14 5 17 -69 -66 Asia Pacific Rest of World ----------------------- ----------------------- ---------------------- Total 38 46 -18 -13 5 17 -70 -67 ======================= ----------------------- ----------------------

----------------------- ----------------------- ---------------------- Total Operating Units 4,691 4,130 14 16 219 141 54 51 ======================= ----------------------- ----------------------

Adecco Group Summary

By Division

Adecco Staffing 4,170 3,668 14 16 188 115 61 55 Ajilon Professional 483 416 16 19 26 9 191 207 LHH Career Services 38 46 -18 -13 5 17 -70 -67

By Region

Europe 3,095 2,642 17 17 164 171 -5 -5 North America 976 937 4 12 34 -43 n.m. n.m. Asia Pacific 510 450 13 18 21 16 34 40 Rest of World 110 101 8 16 0 -3 n.m. n.m.

Corporate Expenses -36 -37 Amortisation of Intangibles - -4 ----------------------- ----------------------- ---------------------- Adecco Group 4,691 4,130 14 16 183 100 83 78 ======================= ----------------------- ----------------------

1) Contribution (Operating income before amortisation) on the division level

Net Service Revenues and Operating Income by Division & Geographical Segment

Dec YTD 2004 Net Services Revenues Operating Income(1) ------------------------- ----------------------- EUR millions 2004 2003 Variance % 2004 2003 Variance % ----------- ------------- EUR Constant EUR Constant =================================================

Adecco Staffing Europe 10,399 9,529 9 9 513 497 3 3 North America 2,871 2,964 -3 7 43 -53 n.m. n.m. Asia Pacific 1,619 1,453 11 13 59 58 2 3 Rest of World 398 390 2 12 7 0 n.m. n.m. -------------------- ------------------------- ----------------------- Total 15,287 14,336 7 9 622 502 24 23 ==================== ------------------------- -----------------------

Ajilon Professional Europe 873 774 13 12 37 17 118 110 North America 698 704 -1 8 39 33 19 31 Asia Pacific 226 200 13 12 10 7 36 37 Rest of World -------------------- ------------------------- ----------------------- Total 1,797 1,678 7 10 86 57 51 57 ==================== ------------------------- -----------------------

LHH Career Services Europe 26 31 -17 -17 -1 5 -115 -115 North America 129 181 -28 -20 27 63 -57 -52 Asia Pacific Rest of World -------------------- ------------------------- ----------------------- Total 155 212 -27 -20 26 68 -61 -57 ==================== ------------------------- -----------------------

-------------------- ------------------------- ----------------------- Total Operating Units 17,239 16,226 6 9 734 627 17 18 ==================== ------------------------- -----------------------

Adecco Group Summary

By Division

Adecco Staffing 15,287 14,336 7 9 622 502 24 23 Ajilon Professional 1,797 1,678 7 10 86 57 51 57 LHH Career Services 155 212 -27 -20 26 68 -61 -57

By Region

Europe 11,298 10,334 9 9 549 519 6 6 North America 3,698 3,849 -4 6 109 43 157 190 Asia Pacific 1,845 1,653 12 13 69 65 5 7 Rest of World 398 390 2 12 7 0 n.m. n.m.

Corporate Expenses -203 -112 Amortisation of Intangibles -1 -6 -------------------- ------------------------- ----------------------- Adecco Group 17,239 16,226 6 9 530 509 4 5 ==================== ------------------------- -----------------------

1) Contribution (Operating income before amortisation) on the division level

Net Service Revenues by Division & Geographical Segment (Adjusted to 13 weeks for comparative purposes)

Q4 2004 Net Services Revenues ----------------------------- ------------- EUR millions 2004 2003 Variance % 14th Week --------------- Revenue EUR Constant 2004 ============================= =============

Adecco Staffing Europe 2,855 2,436 17 17 131 North America 756 732 3 11 34 Asia Pacific 449 399 12 17 18 Rest of World 110 101 8 16 5 ------------------------- ----------------------------- ------------- Total 4,170 3,668 14 16 188 ========================= ----------------------------- -------------

Ajilon Professional Europe 233 199 17 16 11 North America 189 166 14 21 11 Asia Pacific 61 51 21 24 3 Rest of World ------------------------- ----------------------------- ------------- Total 483 416 16 19 25 ========================= ----------------------------- -------------

LHH Career Services Europe 7 7 -3 -3 North America 31 39 -20 -14 1 Asia Pacific Rest of World ------------------------- ----------------------------- ------------- Total 38 46 -18 -13 1 ========================= ----------------------------- -------------

------------------------- ----------------------------- ------------- Total Operating Units 4,691 4,130 14 16 214 ========================= ----------------------------- -------------

Adecco Group Summary

By Division

Adecco Staffing 4,170 3,668 14 16 188 Ajilon Professional 483 416 16 19 25 LHH Career Services 38 46 -18 -13 1

By Region

Europe 3,095 2,642 17 17 142 North America 976 937 4 12 46 Asia Pacific 510 450 13 18 21 Rest of World 110 101 8 16 5

------------------------- ----------------------------- ------------- Adecco Group 4,691 4,130 14 16 214 ========================= ----------------------------- -------------

Q4 2004 Net Services Revenues ----------------------------------- EUR millions 2004 2003 Variance % Adjusted * --------------- EUR Constant ===================================

Adecco Staffing Europe 2,724 2,436 12 12 North America 722 732 -1 6 Asia Pacific 431 399 8 12 Rest of World 105 101 3 10 ------------------------- ----------------------------------- Total 3,982 3,668 9 11 ========================= -----------------------------------

Ajilon Professional Europe 222 199 11 11 North America 178 166 8 15 Asia Pacific 58 51 15 19 Rest of World ------------------------- ----------------------------------- Total 458 416 10 13 ========================= -----------------------------------

LHH Career Services Europe 7 7 -9 -9 North America 30 39 -22 -16 Asia Pacific Rest of World ------------------------- ----------------------------------- Total 37 46 -20 -15 ========================= -----------------------------------

------------------------- ----------------------------------- Total Operating Units 4,477 4,130 8 11 ========================= -----------------------------------

Adecco Group Summary

By Division

Adecco Staffing 3,982 3,668 9 11 Ajilon Professional 458 416 10 13 LHH Career Services 37 46 -20 -15

By Region

Europe 2,953 2,642 12 12 North America 930 937 -1 6 Asia Pacific 489 450 8 13 Rest of World 105 101 3 10

------------------------- ----------------------------------- Adecco Group 4,477 4,130 8 11 ========================= -----------------------------------

(*) Adjusted to 13 weeks for comparability

Net Service Revenues by Division & Geographical Segment (Adjusted to 52 weeks for comparative purposes)

Dec YTD 2004 Net Services Revenues ---------------------------- ------------- EUR millions 2004 2003 Variance % 53rd Week --------------- Revenue EUR Constant 2004 ===========================================

Adecco Staffing Europe 10,399 9,529 9 9 131 North America 2,871 2,964 -3 7 34 Asia Pacific 1,619 1,453 11 13 18 Rest of World 398 390 2 12 5 ----------------------- ---------------------------- ------------- Total 15,287 14,336 7 9 188 ======================= ---------------------------- -------------

Ajilon Professional Europe 873 774 13 12 11 North America 698 704 -1 8 11 Asia Pacific 226 200 13 12 3 Rest of World ----------------------- ---------------------------- ------------- Total 1,797 1,678 7 10 25 ======================= ---------------------------- -------------

LHH Career Services Europe 26 31 -17 -17 North America 129 181 -28 -20 1 Asia Pacific Rest of World ----------------------- ---------------------------- ------------- Total 155 212 -27 -20 1 ======================= ---------------------------- -------------

----------------------- ---------------------------- ------------- Total Operating Units 17,239 16,226 6 9 214 ======================= ---------------------------- -------------

Adecco Group Summary By Division Adecco Staffing 15,287 14,336 7 9 188 Ajilon Professional 1,797 1,678 7 10 25 LHH Career Services 155 212 -27 -20 1

By Region Europe 11,298 10,334 9 9 142 North America 3,698 3,849 -4 6 46 Asia Pacific 1,845 1,653 12 13 21 Rest of World 398 390 2 12 5

----------------------- ---------------------------- ------------- Adecco Group 17,239 16,226 6 9 214 ======================= ---------------------------- -------------

Dec YTD 2004 Net Services Revenues ------------------------------------ EUR millions Variance % 2004 2003 -------------- Adjusted * EUR Constant ====================================

Adecco Staffing Europe 10,268 9,529 8 8 North America 2,837 2,964 -4 5 Asia Pacific 1,601 1,453 10 12 Rest of World 393 390 1 10 ----------------------- ------------------------------------ Total 15,099 14,336 5 8 ======================= ------------------------------------

Ajilon Professional Europe 862 774 11 10 North America 687 704 -2 7 Asia Pacific 223 200 12 10 Rest of World ----------------------- ---------------------------------- Total 1,772 1,678 6 9 ======================= ----------------------------------

LHH Career Services Europe 26 31 -19 -18 North America 128 181 -29 -21 Asia Pacific Rest of World ----------------------- ---------------------------------- Total 154 212 -27 -20 ======================= ----------------------------------

----------------------- ---------------------------------- Total Operating Units 17,025 16,226 5 8 ======================= ----------------------------------

Adecco Group Summary

By Division

Adecco Staffing 15,099 14,336 5 8 Ajilon Professional 1,772 1,678 6 9 LHH Career Services 154 212 -27 -20

By Region

Europe 11,156 10,334 8 8 North America 3,652 3,849 -5 4 Asia Pacific 1,824 1,653 10 12 Rest of World 393 390 1 10

----------------------- ---------------------------------- Adecco Group 17,025 16,226 5 8 ======================= ----------------------------------

(*) Adjusted to 52 weeks for comparability

Sales Performance Main Business Units (53 weeks and adjusted 52 weeks)

Q4 2004 53 weeks Adj 52 weeks ---------------------------------------- Q404/Q403 Variance Q404/Q403 Variance (%) (%) ---------------------------------------- In Euro In In Euro In Constant Constant Currency Currency -------------------------------------------------------------------- Adecco France 17 17 12 12 -------------------------------------------------------------------- Adecco North America 3 11 (1) 6 -------------------------------------------------------------------- Adecco Japan 13 18 8 14 -------------------------------------------------------------------- Adecco Italy 17 17 14 14 -------------------------------------------------------------------- Adecco Benelux 21 21 15 15 -------------------------------------------------------------------- Adecco UK 7 6 3 3 -------------------------------------------------------------------- Ajilon North America 14 21 7 14 -------------------------------------------------------------------- Adecco Iberia 10 10 2 2 -------------------------------------------------------------------- Ajilon UK 18 17 12 11 -------------------------------------------------------------------- Adecco Nordics 33 34 26 27 -------------------------------------------------------------------- Adecco Germany 30 30 24 24 -------------------------------------------------------------------- Adecco Switzerland 17 16 11 10 -------------------------------------------------------------------- LHH (18) (13) (20) (15) --------------------------------------------------------------------

FY 2004 53 weeks Adj 52 weeks ----------------------------------------- Q404/Q403 variance Q404/Q403 variance (%) (%) ----------------------------------------- In Euro In In Euro In Constant Constant Currency Currency ---------------------------------------------------------------------- Adecco France 7 7 6 6 ---------------------------------------------------------------------- Adecco North America (3) 7 (4) 5 ---------------------------------------------------------------------- Adecco Japan 11 14 9 12 ---------------------------------------------------------------------- Adecco Italy 15 15 14 14 ---------------------------------------------------------------------- Adecco Benelux 13 13 12 12 ---------------------------------------------------------------------- Adecco UK 7 6 6 5 ---------------------------------------------------------------------- Ajilon North America (1) 8 (2) 7 ---------------------------------------------------------------------- Adecco Iberia 7 7 5 5 ---------------------------------------------------------------------- Ajilon UK 14 12 12 11 ---------------------------------------------------------------------- Adecco Nordics 15 18 13 16 ---------------------------------------------------------------------- Adecco Germany 16 16 14 14 ---------------------------------------------------------------------- Adecco Switzerland 10 11 8 10 ---------------------------------------------------------------------- LHH (27) (20) (27) (20) ----------------------------------------------------------------------

Consolidated Balance Sheets

EUR millions January 2, December 28, 2005 2003 ------------ ------------- ASSETS Current Assets Cash and cash equivalents 879 565 Short-term investments 324 403 Trade accounts receivable, net 3,149 2,947 Other current assets 260 308 Current assets from discontinued operations - 14 ------------ ------------- Total current assets 4,612 4,237

Property, equipment and leasehold improvements, net 261 327 Other assets 364 448 Intangibles, net 8 3 Goodwill, net 1,196 1,241 Other assets from discontinued operations - 60 ------------ ------------- Total assets 6,441 6,316 ============ =============

LIABILITIES Current liabilities Short-term debt and current maturities of long-term debt 230 377 Accounts payable and accrued expenses 3,025 2,772 Current liabilities from discontinued operations - 12 ------------ ------------- Total current liabilities 3,255 3,161

Long-term debt 1,272 1,479 Other liabilities 139 125 Other liabilities from discontinued operations - 4 ------------ ------------- Total liabilities 4,666 4,769 ------------ -------------

Minority interests 2 0 ------------ -------------

SHAREHOLDERS' EQUITY Common shares 116 116 Additional paid-in capital 2,027 1,993 Accumulated deficit (357) (602) Accumulated other comprehensive income (deficit) (12) 45 ------------ ------------- 1,774 1,552 Less: Treasury stock, at cost (1) (5) ------------ ------------- Total shareholders' equity 1,773 1,547 ------------ -------------

Total liabilities and shareholders' equity 6,441 6,316 ============ =============

Consolidated Statements of Cash Flows

EUR millions Twelve months ended --------------------

January 2, December 28, 2005 2003 ------------ ------------

CASH FLOWS FROM OPERATING ACTIVITIES Net income 332 305 Adjustments to reconcile net income (loss) to net cash and cash equivalents from operating activities of continuing operations: (Income) / loss from discontinued operations (30) 3 Depreciation 119 136 Stock-based compensation 20 6 Allowance for doubtful accounts 25 43 Amortisation of intangibles 1 7 Deferred income tax (3) 65 Other charges 14 25 Changes in operating assets and liabilities of acquisitions: Trade accounts receivable (281) (219) Accounts payable and accrued expenses 331 94 Other current assets 16 18 Non-current assets and liabilities (2) (30)

------------ ------------ Cash flows from operating activities of continuing operations 542 453 ------------ ------------

CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures, net of proceeds (67) (52) Purchase of short-term investments (168) (403) Proceeds from sale of short-term investments 278 - Other investing activities 62 15

------------ ------------ Cash flows from (used in) investing activities of continuing operations 105 (440) ------------ ------------

CASH FLOW FROM FINANCING ACTIVITIES Net decrease in short-term debt (11) (167) Increase in long-term debt 0 580 Repayment of long-term debt (336) (74) Dividends paid to shareholders (86) (75) Common stock options exercised 7 9 Other financing activities 27 92

------------ ------------ Cash flows from (used in) financing activities of continuing operations (399) 365 ------------ ------------

Effect of exchange rate changes on cash 2 (21)

Net proceeds from sale of discontinued operations 64 - ------------ ------------

Net increase in cash and cash equivalents 314 357

Cash and cash equivalents: Beginning of period 565 208 ------------ ------------

End of period 879 565 ============ ============

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

Supplemental disclosure of non-cash investing activities: ---------------------------------------------------------

Stock received in the sale of jobpilot 24 -

--30--NB/ny*

CONTACT: Adecco Corporate Investor Relations 41-(0)-44-878-8884 Investor.relations@adecco.com or Adecco Corporate Press Office 41-(0)-44-878-8832 Press.office@adecco.com or Cubitt Consulting 44-(0)-207-367-5100 kate.martens@cubitt.com

KEYWORD: SWITZERLAND INTERNATIONAL EUROPE INDUSTRY KEYWORD: HUMAN RESOURCES EARNINGS CONFERENCE CALLS SOURCE: The Adecco Group

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