McDermott Provides Tax Basis Allocation Methodology Following B&W Spin-Off
04 August 2010 - 4:30PM
Business Wire
McDermott International, Inc. (NYSE:MDR) (“McDermott” or the
“Company”) today provided information relating to tax basis
allocation methodology for shareholders of McDermott following the
Company’s spin-off distribution of the common stock of The Babcock
& Wilcox Company (NYSE:BWC) (“B&W”).
Tax Basis Allocation
Methodology
As a consequence of the spin-off, a shareholder must allocate
the tax basis in its shares of McDermott common stock immediately
before the spin-off among its shares of McDermott common stock and
its newly received shares of B&W common stock (including any
fractional share for which the shareholder received cash). The
allocation of tax basis among shares of McDermott common stock and
the shares of B&W common stock that a shareholder received in
the spin-off (including any fractional share for which the
shareholder received cash) is based on the relative fair market
values of the McDermott stock and B&W stock immediately after
the spin-off.
U.S. federal income tax law does not specify how to determine
these relative fair market values. Fair market value generally is
the price at which property would change hands between a willing
buyer and a willing seller, neither being under any compulsion to
buy or sell and both having reasonable knowledge of the facts. For
this purpose, the trading prices of McDermott common stock and
B&W common stock on the New York Stock Exchange will be used,
but it is uncertain which trading prices should be used for this
purpose. The following are several alternative trading prices for
determining the fair market values of the McDermott common stock
and the B&W common stock, although other trading prices might
be used:
- The closing trading prices of
the McDermott and B&W “when-issued” common stock as quoted on
the NYSE Consolidated Transactions Reporting System on July 30,
2010, the last day of “when-issued” trading before the
spin-off;
- The opening trading prices of
McDermott and B&W common stock as quoted on the NYSE
Consolidated Transactions Reporting System on August 2, 2010, the
first day of “regular way” trading for B&W common stock after
the spin-off;
- The closing trading prices of
McDermott and B&W common stock as quoted on the NYSE
Consolidated Transactions Reporting System on August 2, 2010, the
first day of “regular way” trading for B&W common stock after
the spin-off; and
- The average of the high and low
trading prices of McDermott and B&W common stock as quoted on
the NYSE Consolidated Transactions Reporting System on August 2,
2010, the first day of “regular way” trading for B&W common
stock after the spin-off.
A comparison of these alternatives is in the following tables,
with an indicative example.
Trading Prices
Common Stock
July 30When-Issued
Closing Price
Aug. 2Opening
Price
Aug. 2Closing
Price
Aug. 2Avg. of
High & Low Price
McDermott $ 12.05 $ 12.56 $ 12.54 $ 12.73 B&W $
22.75 $ 23.01 $ 23.15 $ 23.31
Tax
Basis Allocation Percentages (1)
Common Stock
July 30When-Issued
Closing Price
Aug. 2Opening
Price
Aug. 2Closing
Price
Aug. 2Avg. of
High &Low Price
McDermott 51.44 % 52.19 % 52.00 % 52.19 % B&W
48.56 % 47.81 % 48.00 % 47.81 %
(1) Determined by computing the ratio of (a) the per share
trading price of McDermott or ½ of the per share trading price of
B&W stock, as applicable, in the table above and (b) the sum of
the per share trading price of McDermott stock and ½ of the per
share trading price of B&W stock.
Indicative Example
Assumptions
Shares of McDermott owned before B&W spin-off:
1,000 Per share tax basis in McDermott shares owned before the
B&W spin off: $10 Aggregate tax basis of McDermott shares
before B&W spin-off: $10,000 Shares of B&W received in
B&W spin-off: 500
Aggregate Tax Basis
(2)
Common Stock
July 30When-Issued
Closing Price
Aug.
2OpeningPrice
Aug.
2ClosingPrice
Aug. 2Avg. of
High &Low Price
McDermott $ 5,144.08 $ 5,219.20 $ 5,200.08
$
5,219.44
B&W $ 4,855.92 $ 4,780.80 $ 4,799.92
$
4,780.56
(2) Determined by multiplying $10,000 by the applicable tax
basis allocation percentage in the table above.
Per Share Tax Basis (3)
CommonStock
July
30When-IssuedClosing Price
Aug.
2OpeningPrice
Aug.
2ClosingPrice
Aug. 2Avg. ofHigh
& LowPrice
McDermott $ 5.144 $ 5.22 $ 5.20 $ 5.22 B&W
$ 9.712 $ 9.56 $ 9.60 $
9.56
(3) Determined, in the case of the McDermott stock, by dividing
the aggregate tax basis allocable to the McDermott shares in the
table above by 1,000 (the number of McDermott shares owned before
the spin-off) and, in the case of the B&W stock, by dividing
the aggregate tax basis allocable to the B&W shares in the
table above by 500 (the number of B&W shares received in the
spin-off).
This information is not a complete analysis of all of the
potential U.S. federal income tax consequences relating to the
spin-off of B&W or each shareholder’s particular
circumstances. McDermott stockholders are encouraged to
consult their own tax advisors regarding the tax consequences of
the spin-off in light of their specific circumstances.
This information does not apply to McDermott shareholders (i)
who did not receive their B&W common stock in the spin-off on
July 30, 2010, (ii) who were not record holders of McDermott common
stock as of the close of business on July 9, 2010, (iii) who did
not continuously hold their shares from the record date through the
time of the spin-off, or (iv) who acquired blocks of McDermott
common stock at different times and prices.
To comply with Internal Revenue Service Circular 230, you are
hereby notified that this notice is not intended or written by
McDermott to be used, and cannot be used, (i) for the purpose of
avoiding penalties that may be imposed under the Internal Revenue
Code or (ii) to promote, market or recommend to another party any
transaction or matter addressed herein.
About McDermott
McDermott is a leading engineering, procurement, construction
and installation (“EPCI”) company focused on executing complex
offshore oil and gas projects worldwide. Providing fully integrated
EPCI services for upstream field developments, the Company delivers
fixed and floating production facilities, pipelines and subsea
systems from concept to commissioning. McDermott’s customers
include national and major energy companies. Operating in more than
20 countries across the Atlantic, Middle East and Asia Pacific, the
Company’s integrated resources include more than 16,000 employees
and a diversified fleet of marine vessels, fabrication facilities
and engineering offices. McDermott has served the energy industry
since 1923. To learn more, please visit McDermott’s Web site on the
Internet at www.mcdermott.com
McDermott (NYSE:MDR)
Historical Stock Chart
Von Jun 2024 bis Jul 2024
McDermott (NYSE:MDR)
Historical Stock Chart
Von Jul 2023 bis Jul 2024