The Dow Approach

Dow Dividend Strategy | What's Here | The Statistics Center | Spin-Off Help | The Archives
Friday, January 03, 1997
The Daily Dow FOOL GLOBAL WIRE by Robert Sheard LEXINGTON, KY. (January 3) -- Since the AT&T spin-off of NCR, which was completed on Tuesday at the closing bell, we've received a number of inquiries about how to calculate the new cost basis for both AT&T shares and NCR shares. The distribution breakdown was announced some time ago, and it amounts to 1 share of NCR stock for every 16 shares of AT&T you held. So, take the number of shares of AT&T you own and multiply that by 0.0625. That's how many shares of NCR you now own. Now let's go through the new cost basis calculations. AT&T just released these percentages today, so you'll receive details in the mail later this month if you're a current AT&T shareholder. Assume you held 100 shares of AT&T before the spin-off. According to the company, you would receive 1 share of NCR for every 16 shares you held of AT&T. After the spin-off, then, you still hold 100 shares of AT&T and are entitled to get 6.25 shares of NCR. (Fractional shares are not being paid out in cash unless you had fewer than 16 shares of T to begin with. You'll get the whole 6.25 shares in this example.) To calculate the new cost basis for AT&T and NCR, you need the two percentages supplied by AT&T as attributable to each company. According to AT&T, the amount of your original investment now attributable to AT&T is 95.23% of your original investment. The other 4.77% of your original investment is attributable to your newly acquired NCR shares. So, let's do the math. You bought 100 shares of AT&T at $40 per share, a total investment of $4,000. To find the new cost basis for the AT&T shares, multiply the original cost ($4,000) times 0.9523. That gives you a new cost basis for those 100 shares of $3,809.20. The new cost per share, then, is $38.09. The remaining $190.80 (your original investment minus the new AT&T cost basis) is the cost basis for the 6.25 shares of NCR. Per share, then, the cost of your NCR shares is $30.528. The official purchase date for your NCR shares is the same date you bought the original investment in AT&T. Hope this helps, I'll post this explanation permanently in the Dow Statistics Center in the file called Dow Spin-Off Calculations if you need to refer to it again. Fool on!	The Current BTD 10 1. International Paper <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:IP)") else Response.Write("(NYSE:IP)") end if %> 2. AT&T (NYSE:T) 3. General Motors <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:GM)") else Response.Write("(NYSE:GM)") end if %> 4. Chevron Corp <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:CHV)") else Response.Write("(NYSE:CHV)") end if %> 5. Minnesota Mining & Mfg <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:MMM)") else Response.Write("(NYSE:MMM)") end if %> 6. Du Pont de Nemours & Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:DD)") else Response.Write("(NYSE:DD)") end if %> 7. Exxon <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:XON)") else Response.Write("(NYSE:XON)") end if %> 8. J.P. Morgan <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:JPM)") else Response.Write("(NYSE:JPM)") end if %> 9. Texaco <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:TX)") else Response.Write("(NYSE:TX)") end if %> 10. Philip Morris <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:MO)") else Response.Write("(NYSE:MO)") end if %> ***NOTE: FOOLISH FOUR STOCKS ARE ITALICISED Last Update: 01/03/97
Today's Dow Numbers Stock Change Bid ------------------- T - 1/8 41.63 GM - 3/4 57.75 CHV + 5/8 66.13 MMM -1 1/8 84.75 Day Month Year History FOOL-4 -0.46% 1.14% 1.14% 30.77% DJIA +1.58% 1.49% 1.49% 27.89% S&P 500 +1.50% 0.98% 0.98% 21.45% NASDAQ +2.34% 1.52% 1.52% 24.57% Rec'd # Security In At Now Change 1/2/96 155 3M 64.50 84.75 31.39% 1/2/96 198 Chevron 52.38 66.13 26.25% 1/2/97 231 Gen. Motors 55.75 57.75 3.59% 1/2/97 618 AT&T 41.75 41.63 -0.30% Rec'd # Security In At Value Change 1/2/96 155 3M 9998.09 13136.25 $3138.16 1/2/96 198 Chevron 10370.25 13092.75 $2722.50 1/2/97 231 Gen. Motors 12878.25 13340.25 $462.00 1/2/97 618 AT&T 25801.50 25724.25 -$77.25 CASH $91.60 TOTAL $65385.10 Transmitted: 1/3/97

Main Page Fool Wire Hall of Portfolios Fool's School Daily News Fool Mart Foolish Games Copyright©1997, The Motley Fool, All Rights Reserved. This material is for personal use only. Republication and redissemination, including posting to news groups, is expressly prohibited without the prior written consent of The Motley Fool, Inc. Legal Disclaimer, in fine print of course! Questions or Comments? [email protected]