The Board of Directors of Adecco SA convened an extraordinary meeting on January 15 to discuss the Companyís current situation and the expected delay, announced January 12, in the scheduled announcement of audited results for the year ended December 28, 2003.
Concerns relating to this delay have led to considerable insecurity among investors and the general public. The Board of Directors regrets this particularly as, after considering the information available to it, it firmly believes that while certain material weaknesses in the Adeccoís internal controls and practices, have been brought to light, the Board remains strongly confident about the Company and its future.
Chairman of the Board, John Bowmer, declared: ìAt the end of 2003, the groupís cash and cash equivalents and short term investments were some CHF1.4 billion (Ä900 million, Adeccoís reporting currency), one basis for the Boardís confidence in the solidity of the company. Moreover, the Board believes firmly in the continuing long-term success of Adecco and is taking energetic measures to cooperate with its auditors, regulators and other stakeholders to resolve the current uncertainties.î
Material weaknesses, related to Adecco Staffing North America, include IT system security; reconciliation of payroll bank accounts; application of accounts receivable; and several issues affecting revenue recognition including lack of systematic documentation of agreed rates and hours; billing errors not timely identified and corrected; and lack of segregation of duties in the branches increasing the likelihood of undetected errors. Of the foregoing, some have already been corrected, and the balance are being actively addressed. The Audit and Finance Committee of the Board initiated certain measures to help to identify any further weaknesses and permanently to resolve them. The chief focus of these measures is to investigate accounting, control and compliance issues in the US and in certain other countries, as well as to investigate accusations made by ëwhistleblowersí in the US. Outside of the US, these other countries together accounted for less than 10% of the groupís reported 2002 net service revenues.
In addition, the Audit and Finance Committee of the Board has mandated the New York law firm Paul Weiss, Rifkind, Wharton & Garrison LLP as independent experts to conduct an investigation into the foregoing and related matters.
Following the Companyís statement of January 12, the US Securities and Exchange Commission and the US Attorneyís Office for the Southern District of New York opened investigations into this matter. Adecco has assured both authorities of its strong cooperation.
In a further development, the Board acknowledges the resignation of the Group CFO Felix Weber and thanks him for his years of service to Adecco. Felix will be available to help the Chairman of the Board until the General Assembly of 2004. The current Group Financial Controller, Andres Cano, will take over the function of CFO on an interim basis. The Board has already begun work on a permanent appointment to this position.
The Board also acknowledges the resignation of Julio Arrieta from his position as CEO of Adecco Staffing North America and thanks him for his years of service to Adecco. Philippe Marcel, Board member and Chairman of Adecco France, the Groupís largest national operation, has agreed to serve as the Boardís special delegate in the US.
John Bowmer, Chairman of the Board, will lead the Companyís efforts with regard to the pending enquiries and has agreed to serve as Executive Chairman with immediate effect. Jrme Caille, Group CEO, will concentrate fully on managing day-to-day business and on further enhancing Adeccoís leading position worldwide.
Working together, the Board and management will do everything possible to resolve the outstanding issues quickly and comprehensively.
Jrme Caille, Group CEO said:
ìAdecco continues actively to focus on providing jobs to over half a million associates on a daily basis, reflecting continuing recognition by more than 100,000 clients in all 68 of the Groupís territories, of the excellence of the service delivered from our 5,800 branches.î
Adecco Board statement
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