Wisconsin Energy completed its merger with Intregrys on 6/29/2015 for cash and WEC stock.
The SEC filing for this merger (S-4/A filing of 9/22/2014) was found in the Investor Relations portion of the WEC web site.
This merger is a cash-plus-stock reorganization. All the information below is from the information available from the S-4/A filed with the SEC.
First, if you have made any entries for this transaction in the Club Accounting software, you should delete them. These instructions are primarily for users of Club Accounting 3, the desktop version of the software.
To record this merger will require multiple entries in the accounting software. The basic outline of these entries is given below:
The capital gain realized is limited to the actual cash received so some clubs may need to adjust the capital gain amounts before entering the capital gain distributions. Instructions for doing this are included. The total merger consideration is $70.5884 per Integrys share. Your capital gain will be based on this total consideration with a limit that the total capital gain cannot exceed the total cash received, excluding cash-in-lieu of fractional shares.
1. Calculate the capital gain.
The total merger consideration is $70.5884 per Intregrys share. This is $18.58 in cash and $52.0084 in WEC shares. Calculate the total value received for your Integrys shares by multiplying 70.5884 by the total shares of Integrys owned. This must be done on a block by block basis.
Total Proceeds = [70.5884 x (# of Integrys shares owned in each block)]. (Do this calculation for each block of shares.)
Write down the total proceeds amount on paper or spreadsheet for each block of Integrys shares owned. From the total proceeds subtract the cost basis of that particular block. This will give you the gain for each block of Integrys shares using the total proceeds for each block. Ignore any blocks with a loss. The cost basis can be found by starting a partial sale of Integrys. A block selection screen will appear with the date purchased, number of shares and current cost basis for each block. Copy this information then cancel the sale.
Next calculate the cash received for each block, for those blocks with a capital gain. The equation for this is [18.58 x (# of Integrys shares owned in each block)]. For each block compare the cash received for that block with the capital gain calculated previously for that block. The smaller of the numbers is your gain from that block. Remember to ignore any blocks with a calculated loss using the total proceeds equation. Once you have the adjusted capital gain for each block with a gain, which is the smaller of a) the cash received or b) the total proceeds gain, add all the gains from each block with a gain. This will be your total capital gain for this merger. Remember to differentiate between short term and long-term gains. (Check the purchase date of each block and compare it to the merger completion date of 6/29/2015.)
You should now have a figure for long-term and short-term capital gains recognized from this merger. If this amount is less than the total cash received, not including cash-in-lieu for fractional shares, then subtract the sum of your capital gains from the total cash received. This will be [18.58 x (total # of Integrys shares owned)] – (sum of capital gains). This amount will be entered as a return of capital.
2. Accounting for Cash Received
All of the following entries use the cash dividend screen, in CA3 this is Transactions > Cash Dividend or Distribution.
Date these transactions 6/29/2015
The security should be Integrys
Change the “type” field to Long-term capital gain.
Amount should be your LTCG as calculated above.
Next repeat the process for your short-term capital gain.
Change the “type” field to Short-term capital gain.
Amount should be your STCG as calculated above.
Finally, enter a return of capital entry, if needed.
Change the “type” field to Return of capital.
Amount should be: (Total Cash received) – (LTCG + STCG)
If your LTCG + STCG = Total Cash Received, no return of capital entry is needed.
Continue to step 3, The Merger.
3. The Merger
Go to Transactions > Merger. If you are unfamiliar with merger transactions you can get help at this URL: https://www.iclub.com/support/kb/default.asp?page=normal_merger
Here is the information you need to complete the merger.
Old Security or Merging Company: Integrys (TEG)
Price per share of old Security /Integrys: Use the last valuation price
Cash received: See your broker statement for cash-in-lieu
New Security: Wisconsin Energy Group (WEC)
Shares received: 1.128 x (# of TEG shares owned)
(Remember to include fractional shares.)
Price Per share of New Security: 46.1067 (weighted average price on merger date.)
Save the transaction and this is finally done.
A worksheet is provided below to record the items that need to be calculated.
A. Total Proceeds received.
70.5884 x (# of Integrys shares in block) = ____________________________
B. Total cash received.
[18.58 x (# of Integrys shares in block)] = ________________
C. Cost Basis of this block of Integrys shares _______________ (from accounting records)
D. Total Proceeds LTCG = _____________________ (A-B) fill-in D or E as appropriate
E. Total Proceeds STCG = ____________________(A-B) fill-in D or E as appropriate
F. Actual LTCG ___________________ (the lessor of B or D.)
G. Actual STCG ____________________(the lessor of B or E.)
H. LTCG + STCG = __________________.
I. Return of Capital amount = (Total Cash Received) – (LTCG + STCG) = ______________
Use this if (LTCG + STCG) is less than Total Cash received.
J. Shares of WEC Received = 1.128 x (# total of Integrys shares owned) = ________________.
(For the merger transaction)