Adecco Group –
Notes to consolidated financial statements
in millions, except share and per share information

The summary of the components of authorised shares as of December 31, 2010, December 31, 2009, and December 31, 2008 and changes during those years are as follows:

[1]Shares at CHF 1 par value.

Authorised shares and appropriation of available earnings

Adecco S.A. had 4,166,804 shares of conditional capital reserved for issuance of common shares to employees and members of the Board of Directors upon the exercise of stock options as of December 31, 2010 and December 31, 2009. In addition, as of December 31, 2010 and December 31, 2009, Adecco S.A. was authorised by its shareholders to issue up to 15,400,000 shares of conditional capital in connection with the issuance of financial instruments, principally convertible bonds. The shares represent conditional capital authorised without time limitation and remain available for share issuance upon conversion of financial instruments issued or to be issued in the future.

Adecco S.A. may only pay dividends from unappropriated available earnings, the general reserve or other reserves distributable in accordance with art. 675 of the Swiss Code of Obligations.

Companies whose principal purpose consists of participations in other companies may freely use the general reserve to the extent it does exceed 20% of the paid-in share capital. Pursuant to art. 671 para. 1 of the Swiss Code of Obligations, 5% of the annual profits shall be allocated to the general reserve until it has reached 20% of the paid-in share capital. In addition, pursuant to art. 671 para. 2 and para. 4 of the Swiss Code of Obligations, companies whose principal purpose consists of participations in other companies shall allocate to the general reserve the following: (1) any surplus over par value upon the issue of new shares after deduction of the issue cost, to the extent such surplus is not used for depreciation or welfare purposes; (2) the excess of the amount which was paid-in on cancelled shares over any reduction on the issue price of replacement shares. The general reserves are CHF 2,103 as of December 31, 2010 and December 31, 2009, thereby exceeding 20% of the paid-in share capital in both years.

In 2010, cash dividends for 2009 of CHF 0.75 per share, totalling EUR 91, were paid from unappropriated available earnings. For 2010, the Board of Directors of Adecco S.A. will propose a dividend of CHF 1.10 per share outstanding for the approval of shareholders at the Annual General Meeting of Shareholders to be paid out of the reserve from capital contributions which is a sub-account of the general reserve.

Additional paid-in capital

During 2009, the Company sold a prepaid forward on Adecco S.A. shares for EUR 587 (CHF 887), net of costs and purchased a call spread option for EUR 108 (CHF 164) from its wholly-owned, non-consolidated subsidiary Adecco Investment as described in Note 1. The prepaid forward and the call spread option are indexed to and settled in the Company’s own shares and therefore are accounted for as equity instruments included in additional paid-in capital. The strike prices of both instruments are reduced whenever the Company makes a dividend distribution by a fraction determined as follows: (share price excluding dividend minus dividend per share) divided by (share price excluding dividend). In 2010, the strike prices of both instruments were reduced due to the dividend distribution made by the Company in the second quarter of 2010.

The initial and current terms of these contracts are as follows:

Treasury shares

Under the completed share buyback programmes approved by the Board of Directors of Adecco S.A., the Company acquired 116,487 and 8,458,891 treasury shares for a total consideration of EUR 3 and EUR 279 in 2009 and 2008, respectively. The Company intends to acquire up to an additional 2% of issued shares of Adecco S.A., if and when opportune.

As of December 31, 2010, the treasury shares are intended to be used for the settlement of the prepaid forward and the Company’s outstanding employees stock option plans and long-term incentive plans (for further details refer to Note 9) as well as to minimise potential dilution related to the issuance of future financial instruments.

In December 2010, 580,624 treasury shares were used upon the exercise of call options on Adecco S.A. shares which were entered into in connection with employee tradable stock option programme. In 2010 and 2009, the Company awarded 5,356 and 7,516 treasury shares, respectively to the Chairman of the Board of Directors as part of his compensation package (refer to section 3.1.1 “Board of Directors compensation” within the Remuneration Report). In addition, in 2010, 33,529 shares were used to settle stock option exercises and 3,086 treasury shares were sold.

Under Swiss law, treasury shares are not entitled to dividend distribution.

Accumulated other comprehensive income/(loss), net

The components of accumulated other comprehensive income/(loss), net of tax, are as follows: