Earnings Per Share

6 Months Ended

Jul. 02, 2022

EARNINGS PER SHARE

The Company computes EPS in accordance with ASC 260, Earnings per Share. Basic EPS is computed by dividing net income available to common shareholders by the weighted-average number of shares of common stock outstanding.

Diluted EPS is computed using the weighted average number of shares of common stock, plus the effect of potentially dilutive securities. The Company applies the treasury method to calculate the dilution impact of share-based awards—stock options, non-vested restricted shares with forfeitable dividend rights, restricted stock units, and employee stock purchase plan deferrals. The Company applies the if-converted method to calculate the dilution impact of the Series A convertible preferred stock (the “Series A Preferred Stock”), if dilutive in the period. For the 13 weeks ended July 2, 2022 and July 3, 2021, share-based awards representing 3 million and 1 million underlying common shares, respectively, were not included in the computation because the effect would have been anti-dilutive. For the 26 weeks ended July 2, 2022 and July 3, 2021, share-based awards representing 3 million and 2 million underlying common shares, respectively, were not included in the computation because the effect would have been anti-dilutive. Additionally, for both the 13 weeks and 26 weeks ended July 2, 2022 and July 3, 2021, Series A Preferred Stock representing 25 million of underlying common shares was not included in the computation because the effect would have been anti-dilutive.

The following table sets forth the computation of basic and diluted EPS:


	13 Weeks Ended				26 Weeks Ended
	July 2, 2022		July 3, 2021		July 2, 2022		July 3, 2021
Numerator:
Net Income	$	70	$	55	$	63	$	31
Less: Series A Preferred Stock Dividends (1)	(9)		(9)		(18)		(24)
Net income available to common shareholders	$	61	$	46	$	45	$	7
Denominator:
Weighted-average common shares outstanding—basic	224		222		224		221
Effect of dilutive share-based awards	2		3		2		4
Effect of dilutive underlying shares of the Series A Preferred Stock (2)	—		—		—		—
Weighted-average common shares outstanding—diluted	226		225		226		225
Net income per share
Basic	$	0.27	$	0.21	$	0.20	$	0.03
Diluted	$	0.27	$	0.20	$	0.20	$	0.03

(1) Series A Preferred Stock dividends for the first quarter of 2021 were paid in kind on March 31, 2021 in the form of shares of Series A Preferred Stock. Series A Preferred Stock dividends for the second quarter of 2021 were paid in cash on June 30, 2021. Preferred Stock dividends for the first and second quarters of 2022 were paid in cash on March 31, 2022, and June 30, 2022, respectively.

(2) Under the if-converted method, outstanding shares of the Series A Preferred Stock are converted to common shares for inclusion in the calculation of the weighted-average common shares outstanding—diluted. Once converted, there would be no preferred stock outstanding and therefore no Series A Preferred Stock dividend.