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Reference example for the HPAA Stock Purchase Spreadsheet

Here's a reference example to help illustrate the information compiled in the HP Alumni Association's "HP Stock Purchase Plan and Service Award Valuation Prices" spreadsheet, available from http://www.hpalumni.org/stock.htm (Currently version 09, 4/7/2009)

That spreadsheet does have a good deal of internal explanation, but perhaps a "one share walk-through" can help cut through the complexity.

1. Participants as of October 31, 1990 purchased one or more shares with an original valuation (and cost basis) of $26.00 per share.
We consider one share purchased, and its basis shown in cell [B.173].

2. On 3/25/1995, HP split 2-for-1, creating 2 shares,
each with $13.00 basis. [H.173]

3. On 6/22/1996, HP split 2-for-1, creating 4 shares,
each with $6.50 basis. [I.173]

4. On 6/2/2000, each HP share was divided into "post-spinoff" HP,
and 0.3814 of a share of Agilent. (Described at [A.246])
The original basis was split 78/22% to new-HP and Agilent. Now you have
4 shares new HP, ea. $5.07/sh basis [J.173]
1.5256 shares Agilent, $3.75/sh basis [K.173]

5. On 10/27/2000, there was a 2-for-1 split of (new) HP.
That doubles your HP share count, halves their basis, and has no effect on Agilent.
8 shares new HP, ea. $2.54/sh basis [M.173]
1.5256 shares Agilent, $3.75/sh basis [K.173]

6. On 10/31/2006, Agilent spun off Verigy. [A.262].
94.22% of the basis in old Agilent stayed with new Agilent, and 5.78% went to Verigy.
Each Agilent share produced 0.122435 share of Verigy. No effect on HP.
8 shares new HP, ea. $2.54/sh basis [M.173]
1.5256 shares Agilent, $3.53/sh basis [N.173]
0.186786836 shares Verigy, $1.77/sh basis [O.173]

At each step, the TOTAL basis is $26.00, allocated over the varying quantity and types of stock.

--end of example--

There are additional complications not tackled by this one example -- including HP's option-based Share Ownership Plan (starting in 2000) and the associated tax reporting requirements.

--Tom von Alten, March 29, 2014

 

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