Press Room

FORT LAUDERDALE, Fla. , February 5, 2003 — Spherion Corporation (NYSE: SFN) today announced results for the quarter and full year ended December 27, 2002. 

Revenues for the fourth quarter 2002 were $526.5 million, compared with $581.4 million in the fourth quarter 2001, a decline of 9.4% year over year. The loss from continuing operations in the fourth quarter was ($274.2) million or ($4.60) on a per share basis, including net charges of approximately ($276.7) million after-tax or ($4.65) per share for goodwill impairment, net asset impairments and other charges and the repurchase of debt securities. Excluding these items, earnings from continuing operations were $2.6 million or $0.04 per share for the fourth quarter 2002. For the fourth quarter 2001, the Company reported a loss from continuing operations of ($1.0) million or ($0.02) per share, including  ($2.3) million after-tax or ($0.04) per share for restructuring and other charges, net of a gain on the sale of Michael Page. Earnings from continuing operations for the fourth quarter 2001, excluding these items were $1.3 million or $0.02 per share. The Company’s net loss for the fourth quarter was ($277.7) million in 2002 and ($5.4) million in 2001 or ($4.66) and ($0.09) per share, respectively.

Spherion President and CEO Cinda A. Hallman commented, “Our fourth quarter results reflect the third consecutive quarter of sequential revenue growth in the Recruitment segment, led by our staffing and professional recruiting businesses. These gains were offset by the impact of the holiday season on our technology business and weaker international results. The pace of revenue growth in our recruiting businesses is indicative of a very modest recovery. However, we are confident in the financial strength of our company and the long-term opportunities in our industry. As a result, we continue to make important investments in sales and technology initiatives which will further our progress toward improved productivity and profitability in 2003.

For the year ended December 27, 2002, revenues were $2.1 billion compared to $2.7 billion in 2001, including $180 million from Michael Page, which was sold in the second quarter of 2001. The net loss for the full year 2002, including discontinued operations and the cumulative effect of accounting changes, was ($903.3) million or ($15.20) per share. In 2001, earnings for the year were $107.0 million and diluted earnings per share were $1.72, including first quarter operating results and the gain on the sale of Michael Page.

OTHER ITEMS

As previously announced, the Company recorded a non-cash goodwill impairment charge in the fourth quarter 2002 of $291.5 million on a pre-tax basis, as a result of the required annual review of intangible asset balances in accordance with SFAS No. 142. In addition, the Company recorded net asset impairment and other charges totaling $5.3 million on a pre-tax basis (including a charge of $3.5 million for the Company’s obligations under an employment contract with a former executive).

During the fourth quarter the Company repurchased $66.3 million face value of its 4.5% Convertible Subordinated Notes. The debt was purchased at a discount, resulting in a pre-tax gain on the retirement of debt of $6.5 million, which is included in other gains for the fourth quarter. These purchases were all privately negotiated transactions. Additional repurchases, if any, will depend on factors such as the prevailing market price of the Notes, overall market conditions and alternative uses of the Company’s liquidity.

OUTLOOK

The impact of seasonal trends in the Company’s business have historically resulted in a 5%-8% sequential decline in revenue in the first quarter when compared with the previous quarter. Consistent with this trend, the Company expects revenue for the first quarter 2003 to be between $480-$500 million and anticipates a loss per share from continuing operations of between ($0.07) and ($0.12). This guidance assumes a 40% effective tax rate. 

In addition, the Company estimates that capital expenditures will be approximately $55 million to $65 million in 2003, including $35 million to $40 million for investment in enterprise-wide information systems.

Hallman added, “Our first quarter 2003 expectations are indicative of normal seasonal trends and an expectation of limited improvement in near term market conditions. However, during 2003 we expect to expand our customer base, grow revenue and further improve financial performance through the value we deliver to customers and the investments we are making.”

Spherion Corporation provides recruitment, technology and outsourcing services.  Founded in 1946, with operations in North America , Europe and Asia/Pacific, Spherion helps companies efficiently plan, acquire and optimize talent to improve their bottom line. Visit the Company’s Web site at 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 Transformation Strategy; Technology investments-our investment in technology initiatives may not yield their intended results; Tax planning-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. Additional repurchases, if any, of our Convertible Subordinated Notes are subject to the prevailing market price for the Notes, overall market conditions, the Company’s liquidity and other factors. No assurance can be given that the Company will repurchase any additional Convertible Subordinated Notes. 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.