Earnings (Loss) Per Share (EPS)

11 Months Ended

Jan. 01, 2016

Earnings (Loss) Per Share (EPS)

Earnings (Loss) 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. Undistributed earnings allocated to participating securities are subtracted from income (loss) in determining the income (loss) for computing basic and diluted EPS. For fiscal 2014, the earnings allocable to participating securities that were subtracted from income (loss) for computing basic and diluted EPS were $3 million. For the 11-month period ended January 1, 2016, and fiscal 2015, earnings allocable to participating securities were not material.

Basic EPS is computed by dividing income (loss) 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.

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.

	11 Months Ended		12 Months Ended
	January 1, 2016	January 2, 2015	January 30, 2015	January 31, 2014
		(unaudited)
	(in millions)
Basic weighted average number of shares outstanding	73	74	74	83
Dilutive common share equivalents—stock options and other stock awards	1	—	—	—
Diluted weighted average number of shares outstanding	74	74	74	83

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

	11 Months Ended						12 Months Ended
	January 1, 2016			January 2, 2015			January 30, 2015			January 31, 2014
				(unaudited)
Basic:
Income (loss) from continuing operations	$	3.33		$	(4.36	)	$	(4.46	)	$	0.98
(Loss) income from discontinued operations	(0.01		)	(0.15		)	0.10			0.96
	$	3.32		$	(4.51	)	$	(4.36	)	$	1.94
Diluted:
Income (loss) from continuing operations	$	3.28		$	(4.36	)	$	(4.46	)	$	0.98
(Loss) income from discontinued operations	(0.01		)	(0.15		)	0.10			0.96
	$	3.27		$	(4.51	)	$	(4.36	)	$	1.94

For the 11-month period ended January 2, 2015, and the year ended January 30, 2015, all outstanding common stock equivalents were excluded in the computation of diluted income (loss) per share because their effect would have been anti-dilutive due to the net loss for the period.

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 income (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:

	11 Months Ended		12 Months Ended
	January 1, 2016	January 2, 2015	January 30, 2015	January 31, 2014
		(unaudited)
	(in millions)
Stock options excluded	1	4	4	5
Vesting stock awards excluded	—	3	3	3

In the 11-month period ended January 1, 2016, 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 $100 million. During the second quarter of the 11-month period ended January 1, 2016, the Company paid $100 million to the financial institution and received a total delivery of 2.4 million shares of its outstanding shares of common stock. The purchase was allocated between additional paid in capital and retained earnings. All shares delivered were immediately retired. The total amount of shares delivered by the financial institution was adjusted by the volume weighted average price of the Company's stock over the valuation period specified in the ASR.

In fiscal 2015, the Company entered into an Accelerated Share Repurchase agreement with a financial institution to repurchase shares of its outstanding common stock for an aggregate purchase price of $200 million. The Company paid $200 million to the financial institution and received an initial delivery of 4.5 million shares of its outstanding shares of common stock for an aggregate value of approximately $168 million. The final delivery consisted of approximately 0.8 million shares for a total value of approximately $32 million under the program and was completed in fiscal 2015. The purchase was allocated between additional paid in capital and retained earnings. All shares delivered were immediately retired. The total amount of shares delivered by the financial institution was adjusted by the volume weighted average price of the Company's stock over the valuation period specified in the ASR.

In fiscal 2014, the Company entered into an Accelerated Share Repurchase 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 of fiscal 2014, 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 for an aggregate value of $255 million. The remaining $45 million was recorded as a forward contract at January 31, 2014, indexed to the Company's common stock in additional paid in capital. The final delivery of approximately 1.0 million shares for a total value of $45 million under the program was completed during the first quarter of fiscal 2015. The purchase was allocated between additional paid in capital and retained earnings. All shares delivered were immediately retired. The total amount of shares delivered by the financial institution was adjusted by the volume weighted average price of the Company's stock over the valuation period specified in the ASR.

The delivery of 2.4 million, 6.3 million and 5.6 millionshares of Leidos common stock related to ASR purchases for the 11-month period ended January 1, 2016, and the years ended January 30, 2015, and January 31, 2014, respectively, reduced the Company's outstanding shares used to determine the weighted average shares outstanding for purposes of calculating basic and diluted EPS for the periods presented.

Leidos, Inc.

Earnings (Loss) Per Share (EPS)

Earnings (Loss) 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. Undistributed earnings allocated to participating securities are subtracted from income (loss) in determining the income (loss) for computing basic and diluted EPS. For fiscal 2014, the earnings allocable to participating securities that were subtracted from income (loss) for computing basic and diluted EPS were $3 million. For the 11-month period ended January 1, 2016, and fiscal 2015, earnings allocable to participating securities were not material.

Basic EPS is computed by dividing income (loss) 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.

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.

	11 Months Ended		12 Months Ended
	January 1, 2016	January 2, 2015	January 30, 2015	January 31, 2014
		(unaudited)
	(in millions)
Basic weighted average number of shares outstanding	73	74	74	83
Dilutive common share equivalents—stock options and other stock awards	1	—	—	—
Diluted weighted average number of shares outstanding	74	74	74	83

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

	11 Months Ended						12 Months Ended
	January 1, 2016			January 2, 2015			January 30, 2015			January 31, 2014
				(unaudited)
Basic:
Income (loss) from continuing operations	$	3.33		$	(4.36	)	$	(4.46	)	$	0.98
(Loss) income from discontinued operations	(0.01		)	(0.15		)	0.10			0.96
	$	3.32		$	(4.51	)	$	(4.36	)	$	1.94
Diluted:
Income (loss) from continuing operations	$	3.28		$	(4.36	)	$	(4.46	)	$	0.98
(Loss) income from discontinued operations	(0.01		)	(0.15		)	0.10			0.96
	$	3.27		$	(4.51	)	$	(4.36	)	$	1.94

For the 11-month period ended January 2, 2015, and the year ended January 30, 2015, all outstanding common stock equivalents were excluded in the computation of diluted income (loss) per share because their effect would have been anti-dilutive due to the net loss for the period.

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 income (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:

	11 Months Ended		12 Months Ended
	January 1, 2016	January 2, 2015	January 30, 2015	January 31, 2014
		(unaudited)
	(in millions)
Stock options excluded	1	4	4	5
Vesting stock awards excluded	—	3	3	3

In the 11-month period ended January 1, 2016, 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 $100 million. During the second quarter of the 11-month period ended January 1, 2016, the Company paid $100 million to the financial institution and received a total delivery of 2.4 million shares of its outstanding shares of common stock. The purchase was allocated between additional paid in capital and retained earnings. All shares delivered were immediately retired. The total amount of shares delivered by the financial institution was adjusted by the volume weighted average price of the Company's stock over the valuation period specified in the ASR.

In fiscal 2015, the Company entered into an Accelerated Share Repurchase agreement with a financial institution to repurchase shares of its outstanding common stock for an aggregate purchase price of $200 million. The Company paid $200 million to the financial institution and received an initial delivery of 4.5 million shares of its outstanding shares of common stock for an aggregate value of approximately $168 million. The final delivery consisted of approximately 0.8 million shares for a total value of approximately $32 million under the program and was completed in fiscal 2015. The purchase was allocated between additional paid in capital and retained earnings. All shares delivered were immediately retired. The total amount of shares delivered by the financial institution was adjusted by the volume weighted average price of the Company's stock over the valuation period specified in the ASR.

In fiscal 2014, the Company entered into an Accelerated Share Repurchase 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 of fiscal 2014, 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 for an aggregate value of $255 million. The remaining $45 million was recorded as a forward contract at January 31, 2014, indexed to the Company's common stock in additional paid in capital. The final delivery of approximately 1.0 million shares for a total value of $45 million under the program was completed during the first quarter of fiscal 2015. The purchase was allocated between additional paid in capital and retained earnings. All shares delivered were immediately retired. The total amount of shares delivered by the financial institution was adjusted by the volume weighted average price of the Company's stock over the valuation period specified in the ASR.

The delivery of 2.4 million, 6.3 million and 5.6 millionshares of Leidos common stock related to ASR purchases for the 11-month period ended January 1, 2016, and the years ended January 30, 2015, and January 31, 2014, respectively, reduced the Company's outstanding shares used to determine the weighted average shares outstanding for purposes of calculating basic and diluted EPS for the periods presented.