Originally created 01/13/04

Adecco shares tumble on audit and accounting problems news

CHESEREX, Switzerland -- Shares of Adecco, the world's largest employment company, tumbled Monday after it revealed audit and accounting problems in the United States and perhaps elsewhere.

The problems will delay closing the company's books on 2003. The company said it could not predict when results for the year would be published.

The company said its audit and finance committee has appointed an independent counsel to resolve the issues.

Adecco shares sank 41 percent to 47.6 Swiss francs ($39) in Zurich. Its U.S. shares dropped $6.68, or 39.5 percent, to $10.25 in early trading on the New York Stock Exchange.

Adecco said it was looking "material weaknesses in internal controls in the company's North American operations of Adecco Staffing" and "the resolution of possible accounting, control and compliance issues in the company's operations in certain countries."

The U.S. operation is based in Melville, N.Y., the former headquarters of Olsten Corp., which Adecco bought in 2000 for $1.55 billion.

"The company isn't yet able to predict when the 2003 audit of its consolidated financial statements will be completed," Adecco spokesman Francois Vassard said. The publication was originally scheduled for Feb. 4.

"We are legally restricted to make further comments. But we will inform the markets as soon as possible," Vassard said.

Adecco said it earned 362 million Swiss francs ($261 million) in 2002. It directly employs 28,000 people in 68 countries and claims to connect 650,000 jobseekers and temporary staff with businesses every day. It is the market leader in general staffing - the business that is being investigated and which contributes about 90 percent of its overall revenue.

Adecco's current auditor is Ernst & Young. It switched to that firm after previously working with Arthur Andersen, the company that audited the figures of Enron Corp., the U.S. energy company that collapsed.

An Ernst & Young spokesman in Zurich said he could make no comment on Adecco because of the investigation.

Juerg von Arx, spokesman for the Swiss Exchange, said the exchange has no plans to launch its own probe into Adecco at the moment. The company has until the end of June to file its annual report, he said.


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