SPINOFF: Harris Corporation [HRS] and Harris Stratex Corporation [HSTX]

Issue:

On 5/27/2009 Harris Corporation [HRS] distributed 0.248418 shares of Harris Stratex Corporation [HSTX] for each share of HRS owned. This was a taxable spinoff in which only whole shares were issued. Cash was paid in lieu of fractional shares.

Cause:

This is not a normal spinoff, and will be treated in Club Accounting as a taxable dividend from HRS followed by a purchase of HSTX shares.
Pertinent information for this transaction can be found on the company's website at:
http://www.harris.com/HSTXspinoff/pdf/Shareholder_Tax_Information.pdf

Resolution:

Since this is not a normal spinoff, it will need to be entered as two separate transactions in Club Accounting

Before making any entries, there are three calculations to make

1. Note the number of shares of whole shares of HSTX that the club received here: ____________

2. Multiply the number of whole shares of HSTX by 5.366 to get the value of the shares received:
____________ X 5.366 = ____________

3. Add any cash received in lieu of fractional shares to the value of the shares of HSTX that were calculated above.
Note the new figure here_____________

With these calculations complete, the Dividend and Buy transactions can be entered:

First, the dividend transaction
On 05/27/09, enter a cash dividend for HRS
Use the dollar amount calculated from step 3, listed above, as the dividend amount.
Make sure to enter an ex-dividend date of 05/09/2009

Second, enter the Buy transaction:
Enter a Buy of HSTX on 05/27/2009
Enter the number of whole shares calculated in step 1 of the calculations.
Use the dollar amount from step 2 of the calculation as the amount to buy the shares for.
Don't forget to select the same account that you used when entering the dividend.