Methodology for Providing Cost Basis Allocations and Fair Market Values 

Spin-Offs and Stock Distributions 

General: 
ICE Data Services, Inc. will release a Cost Basis allocation for nontaxable spin-offs and stock distributions either the day after the payable date or the day after the ex-date, depending on each specific issue.  This allocation will have been calculated by ICE Data Services, Inc. using the average price of the high and the low from the payable or ex-date.  ICE Data Services, Inc. will then update this factor at a later date with the allocation factor that has been released by the Company.  There have been instances where ICE Data Services, Inc. has received the Company's allocation factor so quickly (i.e. on the payable or ex-date) that it was unnecessary for ICE Data Services, Inc. to calculate its own allocation factor.  However, most companies require sufficient time to release these factors, which is why ICE Data Services, Inc. offers its own factor until the company releases their "official" calculations.  

ICE Data Services, Inc. also closely monitors the Company’s likely method of calculation.  If, prior to publication, the Company has indicated to ICE Data Services, Inc. that it will be using a certain method of calculation, ICE Data Services, Inc. will most likely use this same method when calculating its “default” allocation.  This allows the user to obtain accurate information prior to its publication by the Company. On all spin-off announcements, ICE Data Services, Inc. displays a note to its users telling them whether the allocation was received by the Company or whether ICE Data Services, Inc. did the calculation based on the standard outlined above.  
 

Taxable spin-offs and stock distributions will be updated with the relevant market value for the resulting security after the first day of trading for that security – normally, the payable or ex-date.  This information will be calculated by ICE Data Services, Inc. using the mean of the high and low traded price from either payable date or ex-date, depending on the action.  The Company’s determination on the market value will always override ICE Data Services, Inc.’s “default” calculation.  

Company’s Cost Basis Allocation:
 

ICE Data Services, Inc. will monitor for a published cost allocation from the company and will release those percentages as soon as they are available.  The Company’s Cost Basis allocation will override ICE Data Services, Inc.’s calculated allocation, except in the rare instance that the Company has published an inaccurate calculation. 
 

ICE Data Services, Inc.’s Calculation Method for Nontaxable Spin-offs and Distributions:
 

The following is an example of the way in which ICE Data Services, Inc. calculates its Cost Basis allocation for spin-offs and distributions.  These allocations are calculated and released by ICE Data Services, Inc. if the Company has yet to provide its holders with a Cost Basis allocation by the day after the ex-date.  It uses the industry standard for calculation, which is demonstrated below.   
 

Any Cost Basis allocation that is subsequently released by the Company will override and update ICE Data Services, Inc.’s allocation.  On all ICE Data Services, Inc. Cost Basis announcements that contain an allocation factor or market value (for taxable actions), ICE Data Services, Inc. will indicate the source (ICE Data Services, Inc. or the Company) from which the allocation was derived.  
 

Please Note: ICE Data Services, Inc. uses the market values for both securities on either the payable date or the ex-date.  More often than not, the values from the ex-date are used, but this will differ with each specific issue.  
 

Example:        Company A spins off Company B 
For every 1 Company A share held, holders will receive 0.5 of Company B shares 
(1 Company B share for every 2 Company A shares held).  
 

The average of the high and low prices for Company A’s shares on the payable or ex-date was $10.00 (high of $11.00; low of $9.00). 
 

The average of the high and low prices for Company B’s shares on the payable or ex-date was $5.00 (high of $6.00; low of $4.00).  
 

Multiply the Company A shares by the 1 exchange rate ($10.00 times 1 = $10.00).  
 

Multiply the Company B shares by the 0.5 exchange rate ($5.00 times 0.5 = $2.50).  
 

Add the value of the two shares together ($10 + $2.50 = $12.50).  
 

Divide Company A’s adjusted market value ($10.00) by that total ($12.50) = .80 (this is the allocation for the A shares). 
 

Divide Company B’s adjusted market value ($2.50) by that total ($12.50) = .20 (this is the allocation for the B shares).  
 

ALLOCATION:         Company A = 0.80 
                                Company B = 0.20 

Methodology for Providing Cost Basis Allocations and Fair Market Values  

Methodology for Providing Cost Basis Allocations and Fair Market Values: 

Mergers, Merger Elections, Exchanges, Conversions and Recapitalizations 

Taxable mergers, merger elections, exchanges, conversions and recapitalizations will be updated with the relevant market value(s) for the resulting security(ies) from the effective date.  This information will be calculated by ICE Data Services, Inc. using the mean of the high and low traded price from the effective date.  The Company’s determination on the market value will always override ICE Data Services, Inc.’s “default” calculation.   

Nontaxable actions in which the holder is receiving more than one security will follow the same method outlined above for nontaxable spin-offs and stock distributions.  

Fair Market Value:

The fair market value methodology that ICE Data Services, Inc. uses to calculate the cost allocation is the mean of the high and low traded price from either pay date or ex-date depending on the action.  (In addition, ICE Data Services, Inc. normally does not use "when-issue" traded prices to calculate their cost allocation percentages.  However, there are specific instances that warrant the use of “when-issued” prices).