Frequently Asked Questions about IBM, our stock, finances and investing in the company.
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Stock certificates for shares of IBM common stock that you are currently holding can be deposited with Computershare for safekeeping. The shares will be added to your balance of shares being held in book entry form. Call Computershare to obtain more information before sending your certificates to EquiServe. The phone numbers are 1-888-IBM-6700 or (781) 575-2727. You may also contact Computershare via email at email@example.com.
IBM delivered stock split shares in 1997 and 1999 (the last two stock splits) using book entry. For stock splits prior to 1997, shares were delivered in certificate form and the stock certificates were mailed directly to the address of record for each stockholder. Stock split shares are credited to stockholder accounts on the payable date for the stock split. For example, the stock split record date for our last stock split was May 10, 1999 and split shares were credited to stockholders via book entry on the payable date of May 26, 1999. If a stockholder preferred a stock certificate instead of a book entry stock split credit, the stockholder could request one anytime after a split payable date.
- You may sell your shares directly through the transfer agent. The service charge per sale is $15.00 plus brokerage commission (currently $0.10 per share). Sale requests are usually processed on the day of receipt, provided receipt is received before 12 p.m. (ET).
- You may request a stock certificate for your shares. You may then make arrangements with your broker, bank, credit union, or other financial entity to sell your certificate.
- If you wish to sell or have your shares held by your bank, broker or other financial entity, you can arrange to electronically transfer your shares to your bank, broker or other financial entity by first calling Computershare and requesting an Authorization Form and instructions. The Form, properly completed and signed by all registered holders with the signature(s) guaranteed should be returned to Computershare, formerly known as EquiServe, at the address show on the book entry statement you will received on or near May 26, 1999 Your financial institution will be able to assist you in completing the Form. Your shares will be electronically transferred to the Financial Institution generally within 48 hours of the receipt of your Authorization Form, properly completed.
- Computershare, formerly known as EquiServe, phone numbers and an Internet email address for the above services will be provided on the stock split statement you will receive on or near May 26, 1999.
To determine the cost of full and fractional shares issued as a result of a stock split, a portion of the cost basis of the underlying shares on which the split was paid should be allocated to the new shares received. The cost basis of the underlying shares will then be reduced by the amount allocated to the new shares received.
For example, if the cost of one share of stock acquired prior to the record date for the 2 for 1 stock split was $100, the cost of that original one share is reduced by 50% as a result of the 2 for 1 stock split. That portion of the cost is then assigned to the one share received from the stock split. As a result of the stock split and the cost adjustment, the stockholder now has two shares, each with a cost basis of $50 a share. A cost adjustment should be made each time the stock splits.
Computershare Trust Company, N.A., fomerly EquiServe, can be contacted by writing to P.O. box 43072, Providence, Rhode Island 02940-3072, by phoning (888) IBM-6700 or (781) 575-2727, or by e-mail at firstname.lastname@example.org
All stockholders at the close of business on May 10, 1999 will receive one (1) additional share for each share of IBM stock owned. Book entry statements for the additional shares will be mailed to stockholders of record to be received on or near May 26, 1999. (For example: if you own 50 shares, you will receive a book entry statement for another 50 shares for a total of 100 shares).
To determine the cost of full and fractional shares issued as a result of stock splits and stock dividends, a portion of the cost basis of the underlying shares on which the split or dividend was paid should be allocated to the new shares received using the figures on the list of stock dividends and stock splits. The cost basis of the underlying shares will then be reduced by the amount allocated to the new shares received.
For example, if the cost of one share of stock acquired prior to the effective date for the 2 for 1 stock split was $100, the cost of the original one share is reduced by 50% as a result of the 2 for 1 stock split and the cost assigned to the one share received from the stock split is 50% of the original cost of the one share. As a result of the stock split and the cost adjustment the stockholder now has two shares, each with a cost basis of $50 a share. A cost adjustment should be made each time the stock splits.
From just prior to the stock split record date, through the stock split distribution date, two separate markets will exist for IBM. The "regular way" market will continue to trade at the higher, pre-split price. Since sellers in the market at the "regular way" price will receive full value for the shares they sell, they are not entitled to the split shares they will receive by virtue of their being holders on the record date, so they transfer the split shares to their buyers by means of "due bills." The redemption date for due bills is June 1, 1999.
Stockholders might alternatively want to sell shares before the split distribution date at the lower post stock split price, and this is accomplished by the establishment of a "when issued" post-split price. The "when issued" price is approximately one-half of the regular pre-split price, to reflect the pending 2 for 1 split . "When issued" trading ceases after the market closes on the distribution date. When you sell shares at the lower "when issued" price you normally are entitled to receive the stock split shares on the shares you sold.
If you buy stock at the "regular way" price, you normally are entitled to receive the stock split shares. If you buy stock at the "when issued" price, you normally are not entitled to receive the stock split shares.
From May 6 through May 26, IBM stock will trade at both the "regular way" and "when issued" prices and these prices will be reflected in the stock tables found in many newspapers and through other quote services. IBM will again trade at only one price on May 27, the day after the stock split share distribution.
IBM's stock split is not subject to U.S. Federal income tax. However, when you sell stock split shares or any other shares of IBM common stock owned as of a stock split record date, you must adjust your cost basis to properly reflect this split in order to determine your gain or loss. You should contact your tax advisor with any questions you have about calculating your cost basis.
Book entry allows share ownership without stock certificates. This system is similar to that used with investments in a mutual fund or a corporate dividend reinvestment plan. You do not need to be enrolled in a dividend reinvestment plan to have book entry ownership.
Registered stockholders hold their book entry shares with the transfer agent, Computershare, which serves as the recordkeeper. When there is a transaction on the stockholder's account, the transfer agent records the transaction and mails a statement to the stockholder reflecting the transaction and the total number of shares owned. Stockholders may also request a book entry statement at any time.
When shares are held in book entry, you are relieved of the responsibility of storing a certificate and the risk of, and replacement cost associated with, the potential loss of the certificate. You can also sell book entry stock directly through the transfer agent or you can request a stock certificate at any time. Most IBM stockholders of record already have a book entry position at Computershare, formerly known as EquiServe. The 1997 two-for-one stock split was also handled with book entry.
Book entry ownership provides these benefits to stockholders: