1. Used to refer to a security that trades after the date of issue but before the time at which the certificates are delivered.
2. Of or relating to a security on which a distribution is scheduled but has not yet occurred.
Case Study AT&T's divestiture of its operating companies, the Baby Bells, was followed a decade later by a second major divestiture, this time of its computer and equipment operations. The firm sold 20% of its equipment subsidiary, Lucent Technologies, early in 1996. In the fall of the same year, the parent company distributed the remaining 80% of Lucent Technologies stock to AT&T stockholders on the basis of approximately 1 new Lucent share for each 3 shares of AT&T that were owned. In other words, the owner of 100 shares of AT&T received approximately 33 shares of stock in Lucent Technologies. Because AT&T distributed the 525 million remaining shares of Lucent without receiving any compensation in return, the distribution caused the value of AT&T common stock to decline by the value of the distribution. The New York Stock Exchange, the major secondary market for AT&T stock, commenced trading the new AT&T stock (AT&T without Lucent) on a when-distributed basis September 13, 1996, a month before the actual distribution. The new shares were listed on stock pages just below the regular AT&T shares. The new shares closed the first day at a price of $42.75, a discount of $12.50 compared with regular AT&T shares' closing price of $55.25. Listing AT&T stock on a when-distributed basis allowed investors to trade the stock on the basis of the company as it would be after the distribution was completed, even though the new Lucent Technologies shares would not be distributed for another month. The new shares were listed as AT&T Cp wd while the regular shares were listed as AT&T Cp.