Earnings Per Share (EPS)

12 Months Ended

Jan. 31, 2014

Earnings Per Share (EPS)

Earnings Per Share (EPS):

The Company is required to allocate a portion of its earnings to its unvested stock awards containing nonforfeitable rights to dividends or dividend equivalents (participating securities) in calculating EPS using the two-class method.

Unvested stock awards granted prior to fiscal 2013 are participating securities requiring application of the two-class method. In fiscal 2013, the Company began issuing unvested stock awards that have forfeitable rights to dividends or dividend equivalents. These stock awards are not participating securities requiring application of the two-class method but are dilutive common share equivalents subject to the treasury stock method. Basic EPS is computed by dividing income less earnings allocable to participating securities by the basic weighted average number of shares outstanding. Diluted EPS is computed similar to basic EPS, except the weighted average number of shares outstanding is increased to include the dilutive effect of outstanding stock options and other stock-based awards.

A reconciliation of the income used to compute basic and diluted EPS for the years presented was as follows:

	Year Ended January 31
	2014			2013			2012
	(in millions)
Basic EPS:
Income (loss) from continuing operations, as reported	$	84		$	324		$	(235	)
Less: allocation of distributed and undistributed earnings to participating securities	(3		)	(7		)	—
Income (loss) from continuing operations, for computing basic EPS	$	81		$	317		$	(235	)
Net income, as reported	$	164		$	525		$	59
Less: allocation of distributed and undistributed earnings to participating securities	(3		)	(11		)	(2		)
Net income, for computing basic EPS	$	161		$	514		$	57
Diluted EPS:
Income (loss) from continuing operations, as reported	$	84		$	324		$	(235	)
Less: allocation of distributed and undistributed earnings to participating securities	(3		)	(7		)	—
Income (loss) from continuing operations, for computing diluted EPS	$	81		$	317		$	(235	)
Net income, as reported	$	164		$	525		$	59
Less: allocation of distributed and undistributed earnings to participating securities	(3		)	(11		)	(2		)
Net income, for computing diluted EPS	$	161		$	514		$	57

The following table provides a reconciliation of the weighted average number of shares outstanding used to compute basic and diluted EPS for the years presented. The presentation gives effect to the one-for-four reverse stock split which occurred after market close on September 27, 2013.

	Year Ended January 31
	2014	2013	2012
	(in millions)
Basic weighted average number of shares outstanding	83	83	84
Dilutive common share equivalents—stock options and other stock awards	—	—	—
Diluted weighted average number of shares outstanding	83	83	84

Basic and diluted EPS for the years presented was as follows:

	Year Ended January 31
	2014		2013		2012
Basic:
Income (loss) from continuing operations	$	0.98	$	3.82	$	(2.80	)
Income from discontinued operations	0.96		2.37		3.48
	$	1.94	$	6.19	$	0.68
Diluted:
Income (loss) from continuing operations	$	0.98	$	3.82	$	(2.80	)
Income from discontinued operations	0.96		2.37		3.48
	$	1.94	$	6.19	$	0.68

For the year ended January 31, 2014, the declared dividends exceeded current year earnings.Therefore, the Company was in a loss position for computing diluted (loss) per share and all outstanding common stock equivalents were excluded in the computation because their effect would have been anti-dilutive.

The following anti-dilutive stock-based awards were excluded from the weighted average number of shares outstanding used to compute basic and diluted EPS for the years presented:

	Year Ended January 31
	2014	2013	2012
	(in millions)
Antidilutive stock options excluded	5	5	5
Vesting stock awards excluded	4	—	—

In December 2013, the Company entered into an Accelerated Share Repurchase ("ASR") agreement with a financial institution to repurchase shares of its outstanding common stock for an aggregate purchase price of $300 million. During the fourth quarter, the Company paid $300 million to the financial institution and received an initial delivery of 5.6 million shares of its outstanding shares of common stock. All shares delivered were immediately retired. The final delivery of the remaining shares under the program was completed during the first quarter of fiscal 2015. The final value of the initial shares received on the date of purchase represented 85% of the total shares repurchased under the ASR or approximately $255 million which was allocated between additional paid in capital and retained earnings. The Company recorded the remaining $45 million as a forward contract indexed to its common stock in additional paid in capital. The total amount of shares delivered by the financial institution were adjusted by the volume weighted average price of the Company’s stock over the valuation period specified in the ASR.

The Company has determined it has a sufficient amount of authorized and unissued shares available to settle the forward contract taking into consideration the maximum number of shares to be delivered. The forward contract meets the requirements to be classified as permanent equity and will not require derivative accounting treatment and the Company will not record any future changes in its fair value.

The initial delivery of 5.6 million shares of Leidos common stock reduced the Company's outstanding shares used to determine the weighted average shares outstanding for purposes of calculating basic and diluted EPS at January 31, 2014.

Leidos, Inc.

Earnings Per Share (EPS)

Earnings Per Share (EPS):

The Company is required to allocate a portion of its earnings to its unvested stock awards containing nonforfeitable rights to dividends or dividend equivalents (participating securities) in calculating EPS using the two-class method.

Unvested stock awards granted prior to fiscal 2013 are participating securities requiring application of the two-class method. In fiscal 2013, the Company began issuing unvested stock awards that have forfeitable rights to dividends or dividend equivalents. These stock awards are not participating securities requiring application of the two-class method but are dilutive common share equivalents subject to the treasury stock method. Basic EPS is computed by dividing income less earnings allocable to participating securities by the basic weighted average number of shares outstanding. Diluted EPS is computed similar to basic EPS, except the weighted average number of shares outstanding is increased to include the dilutive effect of outstanding stock options and other stock-based awards.

A reconciliation of the income used to compute basic and diluted EPS for the years presented was as follows:

	Year Ended January 31
	2014			2013			2012
	(in millions)
Basic EPS:
Income (loss) from continuing operations, as reported	$	84		$	324		$	(235	)
Less: allocation of distributed and undistributed earnings to participating securities	(3		)	(7		)	—
Income (loss) from continuing operations, for computing basic EPS	$	81		$	317		$	(235	)
Net income, as reported	$	164		$	525		$	59
Less: allocation of distributed and undistributed earnings to participating securities	(3		)	(11		)	(2		)
Net income, for computing basic EPS	$	161		$	514		$	57
Diluted EPS:
Income (loss) from continuing operations, as reported	$	84		$	324		$	(235	)
Less: allocation of distributed and undistributed earnings to participating securities	(3		)	(7		)	—
Income (loss) from continuing operations, for computing diluted EPS	$	81		$	317		$	(235	)
Net income, as reported	$	164		$	525		$	59
Less: allocation of distributed and undistributed earnings to participating securities	(3		)	(11		)	(2		)
Net income, for computing diluted EPS	$	161		$	514		$	57

The following table provides a reconciliation of the weighted average number of shares outstanding used to compute basic and diluted EPS for the years presented. The presentation gives effect to the one-for-four reverse stock split which occurred after market close on September 27, 2013.

	Year Ended January 31
	2014	2013	2012
	(in millions)
Basic weighted average number of shares outstanding	83	83	84
Dilutive common share equivalents—stock options and other stock awards	—	—	—
Diluted weighted average number of shares outstanding	83	83	84

Basic and diluted EPS for the years presented was as follows:

	Year Ended January 31
	2014		2013		2012
Basic:
Income (loss) from continuing operations	$	0.98	$	3.82	$	(2.80	)
Income from discontinued operations	0.96		2.37		3.48
	$	1.94	$	6.19	$	0.68
Diluted:
Income (loss) from continuing operations	$	0.98	$	3.82	$	(2.80	)
Income from discontinued operations	0.96		2.37		3.48
	$	1.94	$	6.19	$	0.68

For the year ended January 31, 2014, the declared dividends exceeded current year earnings.Therefore, the Company was in a loss position for computing diluted (loss) per share and all outstanding common stock equivalents were excluded in the computation because their effect would have been anti-dilutive.

The following anti-dilutive stock-based awards were excluded from the weighted average number of shares outstanding used to compute basic and diluted EPS for the years presented:

	Year Ended January 31
	2014	2013	2012
	(in millions)
Antidilutive stock options excluded	5	5	5
Vesting stock awards excluded	4	—	—

In December 2013, the Company entered into an Accelerated Share Repurchase ("ASR") agreement with a financial institution to repurchase shares of its outstanding common stock for an aggregate purchase price of $300 million. During the fourth quarter, the Company paid $300 million to the financial institution and received an initial delivery of 5.6 million shares of its outstanding shares of common stock. All shares delivered were immediately retired. The final delivery of the remaining shares under the program was completed during the first quarter of fiscal 2015. The final value of the initial shares received on the date of purchase represented 85% of the total shares repurchased under the ASR or approximately $255 million which was allocated between additional paid in capital and retained earnings. The Company recorded the remaining $45 million as a forward contract indexed to its common stock in additional paid in capital. The total amount of shares delivered by the financial institution were adjusted by the volume weighted average price of the Company’s stock over the valuation period specified in the ASR.

The Company has determined it has a sufficient amount of authorized and unissued shares available to settle the forward contract taking into consideration the maximum number of shares to be delivered. The forward contract meets the requirements to be classified as permanent equity and will not require derivative accounting treatment and the Company will not record any future changes in its fair value.

The initial delivery of 5.6 million shares of Leidos common stock reduced the Company's outstanding shares used to determine the weighted average shares outstanding for purposes of calculating basic and diluted EPS at January 31, 2014.