Annual Report 2011

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

Note 8 – Shareholders’ equity

The summary of the components of authorised shares as of December 31, 2011, December 31, 2010, and December 31, 2009 and changes during those years are as follows:

 

Outstanding
shares

Treasury
shares

Issued
shares [1]

Conditional capital

Authorised shares

 

 

 

 

 

 

Changes in components of authorised shares

 

 

 

 

 

January 1, 2009

174,188,402

15,075,104

189,263,506

19,566,804

208,830,310

Treasury shares transactions

(108,971)

108,971

 

 

 

December 31, 2009

174,079,431

15,184,075

189,263,506

19,566,804

208,830,310

Treasury shares transactions

622,595

(622,595)

 

 

 

December 31, 2010

174,702,026

14,561,480

189,263,506

19,566,804

208,830,310

Treasury shares transactions

(4,253,625)

4,253,625

 

 

 

December 31, 2011

170,448,401

18,815,105

189,263,506

19,566,804

208,830,310

[1]Shares at CHF 1 par value.

Authorised shares and appropriation of available earnings

As of December 31, 2011 and December 31, 2010, 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. In addition, as of December 31, 2011 and December 31, 2010, 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 based on the requirements of the Swiss Code of Obligations, Articles of Incorporation and based on the shareholders’ equity reflected in the stand-alone financial statements of Adecco S.A., the holding company of the Adecco Group, prepared in accordance with Swiss law. As of December 31, 2011, the stand-alone financial statements of Adecco S.A. included shareholders’ equity of CHF 6,646 (EUR 5,464), of which CHF 189 represent share capital and CHF 6,457 represent reserves and retained earnings. Of the CHF 6,457 balance, the statutory legal reserve for treasury shares of CHF 1,092 as well as an amount of CHF 38 representing 20% of share capital are restricted based on the Swiss Code of Obligations and cannot be distributed as dividend.

In 2011, upon approval at the Annual General Meeting of Shareholders, dividends for 2010 of CHF 1.10 per share, totalling EUR 149, were allocated from Adecco S.A.’s reserve from capital contributions (subaccount of general reserves) to free reserves and subsequently distributed to shareholders. For 2011, the Board of Directors of Adecco S.A. will propose a dividend of CHF 1.80 per share outstanding for the approval of shareholders at the Annual General Meeting of Shareholders to be allocated from Adecco S.A.’s reserve from capital contributions to the free reserves and subsequently distributed to shareholders. The statutory reserve from capital contributions is classified as additional paid-in capital in the consolidated balance sheet.

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 2011 and 2010, the strike prices of both instruments were reduced due to the dividend distributions made by the Company.

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

 

Sold prepaid forward

Purchased call spread option

 

Initial

31.12.2011

Initial

31.12.2011

Forward/Strike Price

CHF 50.50, received on
November 26, 2009

CHF 48.95

 Lower call price = CHF 50.50 
 Upper call price = CHF 60.60

Lower call price = CHF 48.95
Upper call price = CHF 58.74

Number of shares
to which the contract
is indexed

17,821,782 initial
underlying shares

18,386,108 underlying
shares

 17,821,782 initial
 underlying shares

18,386,108 underlying
shares

Maximum number of
shares to be delivered

17,821,782 subject to
dividend and other anti-
dilution adjustments

18,386,108 subject to
dividend and other anti-
dilution adjustments

 2,970,297 subject to
 dividend and other anti-
 dilution adjustments

3,064,351 subject to
dividend and other anti-
dilution adjustments 

Treasury shares

In 2011, the Company acquired 4,355,000 treasury shares for a total consideration of EUR 178. Furthermore in 2009, the Company acquired 116,487 treasury shares for a total consideration of EUR 3.

As of December 31, 2011, the treasury shares are intended to be used for the settlement of the prepaid forward and the Company’s outstanding employee stock option plans and long-term incentive plan (for further details refer to Note 9).

In 2011 and 2010, the Company awarded 4,697 and 5,356 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 and shareholding” within the Remuneration Report). In addition, in 2011, 96,506 shares were used to settle restricted share unit (”RSU”) awards under the long-term incentive plan and 172 shares were used to settle stock option exercises. 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 the employee tradable stock option programme. In 2010, 33,529 shares were used to settle stock option exercises and 3,086 treasury shares were sold.

No dividends are distributed in relation to treasury shares.

Accumulated other comprehensive income/(loss), net

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

in EUR

31.12.2011

31.12.2010

 

 

 

Currency translation adjustment

(110)

(166)

Unrealised gain on cash flow hedging activities

2

 

Pension-related adjustments

(35)

(18)

Accumulated other comprehensive income/(loss), net

(143)

(184)