Press Room

FORT LAUDERDALE, Fla. , July 28, 2003 — Spherion Corporation (NYSE: SFN) today announced revenues of $501.9 million and a loss from continuing operations of ($3.3) million or ($0.05) on a per share basis for the quarter ended June 27, 2003. This compares with revenues of $529.7 million in the second quarter 2002, a decline of 5.2 percent year over year, and a loss from continuing operations of ($0.9) million or ($0.01) per share. The Company’s net loss for the second quarter 2003 was ($6.5) million or ($0.11) per share. In the second quarter 2002, the Company reported a net loss of ($8.6) million or ($0.14) per share.

Spherion president and COO Roy Krause commented, “Our results for the second quarter are reflective of slow business activity early in the quarter related to concerns about the impact of war in on the economy. However, revenue trends within our staffing operations improved modestly on a week-to-week basis throughout the month of June and the first three weeks of July. This, combined with continued strength in our professional recruiting business, makes us cautiously optimistic about sequential recruitment revenue growth in the third quarter. I am pleased with the commitment of our team members at all levels to accelerate Spherion’s return to profitable revenue growth.”

For the six month period ended June 27, 2003, revenues were $986.5 million compared to $1,061.0 million in the same period last year. The loss from continuing operations for the year to date period was ($7.5) million or ($0.13) per share in 2003 and ($3.0) million or ($0.05) per share in 2002. The net loss for the first six months of 2003 and 2002, including discontinued operations and the cumulative effect of a change in accounting principle, was ($11.3) million and ($627.8) million, respectively. The net loss per share for the six-month periods was ($0.19) in 2003 and ($10.58) in 2002.

Other Items

The net loss from discontinued operations includes tax expense of $3.2 million, attributable to a change in tax estimates resulting from the sale of the Company’s technology consulting business in The Netherlands, in the second quarter.

In July, the Company entered into a new four-year credit facility, secured by accounts receivable, which replaces the existing 364-day working capital facility.  The new facility allows the Company to borrow up to $200 million against eligible accounts receivable, increasing the Company’s ability to fund working capital requirements over the longer-term.

Effective with the start of the third quarter 2003, the Company successfully implemented the financial phase of its new enterprise-wide information system.  Upon completion, the system will provide a fully integrated, Web-enabled technology platform across all of the Company’s business lines.  In addition, the Company identified incremental cost reduction opportunities by centralizing business support functions. The Company anticipates that this technology investment and the standardization of business processes will significantly enhance productivity and reduce operating expenses in future periods. As a result of both of these efforts, the Company will incur restructuring costs, principally severance, over the next several quarters to realize these benefits. 

Outlook

Krause commented, “Profitable revenue growth remains our highest priority.  Our guidance for the third quarter assumes continued modest improvement in our recruiting operations, ongoing stability in our technology segment, partially offset by continued weakness in our outsourcing and outplacement businesses.” He added, “I am confident that we will continue to make solid progress on our internal technology and infrastructure initiatives. Based on current trends, I anticipate our loss per share, including restructuring costs, will be roughly in the same range as the second quarter.”

The Company currently anticipates revenue for the third quarter 2003 to be between $505 and $525 million and results from continuing operations to be between ($0.02) and ($0.07) per share. This guidance includes a pre-tax charge of approximately $3 million for the restructuring actions expected during the third quarter and assumes a 30% effective tax rate. 

About Spherion
Spherion Corporation provides recruitment, technology and outsourcing services. Founded in 1946, with operations in North America , Central America , Europe and Asia/Pacific, Spherion helps companies efficiently plan, acquire and optimize talent to improve their bottom line. To learn more, visit www.spherion.com.

This release contains statements that are forward looking in nature and, accordingly, are subject to risks and uncertainties. Factors that could cause future results to differ from current expectations include risks associated with:  Competition - our business operates in highly competitive markets with low barriers to entry; Economic conditions - a significant economic downturn could result in our clients using fewer flexible employees or the loss or bankruptcy of a significant client could materially adversely affect our business results; Changing market conditions - our business is dependent upon the availability of qualified personnel; Corporate strategy - we may not achieve the intended effect of our business strategy; Technology demand – lack of client investments in new technology may result in reduced demand for our Technology services; Technology Investments – our investment in technology initiatives may not yield their intended results; Tax filings – regulatory challenges to our tax filing positions could result in additional taxes; Credit Rating – further reduction in the Company’s credit rating may affect our ability to borrow and increase future borrowing costs; Litigation - we are a defendant in a variety of litigation and other actions from time to time and we may be exposed to employment–related claims and costs; Other - government regulation may increase our costs; business risks associated with international operations could make those operations more costly; failure or inability to complete our outsourcing projects could result in damage to our reputation and give rise to legal claims; managing or integrating any future acquisitions may strain our resources, and certain contracts contain termination provisions and pricing risks. These and additional factors discussed in this release and in Spherion’s filings with the Securities and Exchange Commission could cause the Company’s actual results to differ materially from any projections contained in this release.