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S&P 500 Index

Bermuda, Eh?
Tim Reason, CFO Magazine
September 1, 2002

Poor Canada. It's bad enough that it's viewed in the United States as a sort of prudish neighbor. Now, five of its biggest companies--including Nortel Networks Ltd. and gold-mining giant Barrick Gold Corp.--have been booted off the S&P 500, which is enforcing its U.S.-only rule for firms in the index.

"We are one of the largest gold companies in the world," argues Jamie Sokalsky, CFO of Barrick Gold, "and we were arbitrarily ignored on a geographic basis because we have our head office in Toronto."

But what about the U.S. companies that made news recently by moving their headquarters to Bermuda to lower their taxes? If giants such as Nortel and Barrick Gold got iced for geographic reasons, why do such newly minted Bermudians as Ingersoll-Rand and Tyco International still have a place on the index?

"We're not a tax policeman," explains S&P spokesman Michael Privitera. Some 10 companies with Caribbean headquarters remain on the S&P 500.

Sokalsky says he was initially shocked by S&P's move, but takes comfort in research by the firm, which predicts no long-term impact on his company's stock. And that's not his only source of comfort. The day it was yanked from the S&P 500, Barrick discovered that its most recent exploratory site--believed to hold 3.5 million ounces of gold--actually contains more than twice that amount. Maybe S&P will call back. -- Tim Reason

What About These Hosers?

S&P 500 firms with offshore registration.

CompanyAdded to S&P 500HeadquartersTax Registration
Schlumberger1965New YorkNetherlands Antilles
Carnival1998FloridaPanama
Transocean1999TexasCayman Islands
Ingersoll-Rand1956New JerseyBermuda
McDermott Int'l1971LouisianaPanama
Tyco Int'l1989BermudaBermuda
Noble Drilling2001TexasCayman Islands
Cooper Industries1956TexasBermuda
XL Capital2001BermudaCayman Islands
Ace Limited2001BermudaCayman Islands

Source: Standard & Poor's




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