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

Note 3 • Shareholders’ equity

Authorised shares and appropriation of available earnings

The Company 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 June 30, 2011 and December 31, 2010. In addition, as of June 30, 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.

During the six months ended June 30, 2011, the Company purchased 3,073,000 treasury shares for a consideration of EUR 138 (including EUR 4 paid in July 2011) and used 96,506 treasury shares to fulfil its obligations under the employee long-term incentive plan. In addition, during the six months ended June 30, 2011 and June 30, 2010, 172 and 33,333 stock options were exercised, respectively. Furthermore, in the first six months of 2011 and in the first six months of 2010, 4,697 and 5,356 treasury shares, respectively were awarded to the Chairman of the Board of Directors as part of his compensation package.

The Annual General Meeting of Shareholders of Adecco S.A. was held on April 19, 2011. The shareholders approved a dividend of CHF 1.10 per common share in respect of the fiscal year 2010. EUR 149 was reallocated from Adecco S.A.’s capital contribution reserves to the free reserves and subsequently paid to shareholders in the second quarter of 2011. The statutory capital contribution reserves are 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, the strike prices of both instruments were reduced due to the dividend distribution made by the Company in the second quarter.

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

 

Sold prepaid forward

Purchased call spread option

 

 Initial

 30.06.2011

 Initial

 30.06.2011

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

Accumulated other comprehensive income/(loss), net

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

in EUR

30.06.2011

31.12.2010

 

 

 

Currency translation adjustment

(336)

(166)

Unrealised gain on cash flow hedging activities

2

 

Pension related adjustments

(18)

(18)

Accumulated other comprehensive income/(loss), net

(352)

(184)