SPINOFF: Diana Shipping and Diana Container Ships

Issue: How do I enter the spinoff of Diana Containerships (DCIX) from Diana Shipping (DSX)?

Cause: Diana Shipping split the company into Diana Shipping and Diana Containerships. The structure of the spinoff was the distribution of Diana Containerships as a taxable dividend.

The SEC filing for this spinoff can be found through the press release on the Diana Shipping web site at the following URL:

http://www.dianashippinginc.com////UserFiles/File/PR/153201_DSX_Release_re_DCI_spin_off_231210.pdf

Resolution:

This action will need two entries in the accounting software, first a dividend entry and then a buy transaction. The information below is based on the information available from Diana Shipping.

The Dividend Entry

Go to Transactions > Dividend or Distribution or Accounting > Securities > Cash Dividend depending on the version of the software being used. Here is the information you need to complete the dividend entry.

Date: 1/19/2011

Select Transaction Type: Dividend or Distribution

Amount: [13.82 x .0325 x (# of DSX shares owned)

# of DCIX shares = .0325 x (# of DSX shares)

13.82 = opening price of DCIX shares on the distribution date, 1/19/2011

For example if you owned 100 shares of DSX your amount would be

13.82 x .0325 x 100 = 44.915. Round up to 44.92

This amount includes the cash received in-lieu of fractional shares of DCIX

Ex-Dividend date: 1/19/2011

Type : Dividend

Select Security: Diana Shipping (DSX)

Save the transaction and the dividend has been entered.

The Buy Entry

Go to Transactions > Buy or Accounting > Securities > Buy depending on the version of the software being used.

Here is the information you need to complete the buy.

Date: 1/19/2011

Select Security: Diana Containerships (DCIX)

Number of Shares Bought: The whole number part of .0325 x (# of DSX shares owned). Check this with your broker statement.

Net Total of Purchase: Subtract your cash-in-lieu received from the Amount calculated in the Dividend entry above. Use the result as the total purchase price. Find the cash-in-lieu amount on your broker statement. Using the example above for 100 shares of DSX owned and cash-in-lieu received of 3.41, the purchase price would be 44.92 – 3.41 = 41.51.

Save the buy transaction and you have completed the spinoff of DCIX from DSX.