COPT Defense Properties Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Earnings Per Share ("EPS")

Earnings Per Share ("EPS")

12 Months Ended

Dec. 31, 2023

Earnings Per Share (“EPS”)

We present both basic and diluted EPS. We compute basic EPS by dividing net (loss) income available to common shareholders allocable to unrestricted common shares by the weighted average number of unrestricted common shares outstanding during the period after allocating undistributed earnings between common shareholders and participating securities under the two-class method. Our participating securities include restricted shares and PIUs and deferred share awards not previously settled by common share issuances. Our computation of diluted EPS is similar except that:

>the denominator is increased to include: (1) the weighted average number of potential additional common shares that would have been outstanding if securities that are convertible into common shares were converted; and (2) the effect of dilutive potential common shares outstanding during the period attributable to redeemable noncontrolling interests and share-based compensation awards using the if-converted or treasury stock methods; and

>the numerator is adjusted to add back any changes in income or loss that would result from the assumed conversion into common shares that we add to the denominator.

We compute diluted EPS using the treasury stock method for unvested restricted shares, TB-PIUs and deferred share awards and the if-converted method for common units, redeemable noncontrolling interests, PB-PIUs and vested PIUs and deferred share awards not previously settled by common share issuances.

Summaries of the numerator and denominator for purposes of basic and diluted EPS calculations are set forth below (in thousands, except per share data):


	For the Years Ended December 31,
	2023		2022		2021
Numerator:
(Loss) income from continuing operations	$	(74,347)	$	149,249	$	78,220


Loss (income) from continuing operations attributable to noncontrolling interests	878		(5,372)		(4,994)
Income from continuing operations attributable to share-based compensation awards for basic EPS	(1,199)		(451)		(467)
Numerator for basic EPS from continuing operations attributable to common shareholders	$	(74,668)	$	143,426	$	72,759
Redeemable noncontrolling interests	—		(169)		(128)
Adjustment to income from continuing operations attributable to share-based compensation awards for diluted EPS	—		78		44
Numerator for diluted EPS from continuing operations attributable to common shareholders	$	(74,668)	$	143,335	$	72,675
Discontinued operations	—		29,573		3,358
Discontinued operations attributable to noncontrolling interests	—		(421)		(43)
Income from discontinued operations attributable to share-based compensation awards for diluted EPS	—		(90)		6
Numerator for diluted EPS on net (loss) income attributable to common shareholders	$	(74,668)	$	172,397	$	75,996

Denominator (all weighted averages):
Denominator for basic EPS (common shares)	112,178		112,073		111,960
Dilutive effect of redeemable noncontrolling interests	—		116		128
Dilutive effect of share-based compensation awards	—		431		330


Denominator for diluted EPS (common shares)	112,178		112,620		112,418

Basic EPS attributable to common shareholders:
(Loss) income from continuing operations	$	(0.67)	$	1.28	$	0.65
Discontinued operations	—		0.26		0.03
Net (loss) income	$	(0.67)	$	1.54	$	0.68
Diluted EPS attributable to common shareholders:
(Loss) income from continuing operations	$	(0.67)	$	1.27	$	0.65
Discontinued operations	—		0.26		0.03
Net (loss) income	$	(0.67)	$	1.53	$	0.68

Our diluted EPS computations do not include the effects of the following securities since the conversions of such securities would increase diluted EPS for the respective periods (in thousands):


	Weighted Average Shares Excluded from Denominator for the Years Ended December 31,
	2023	2022	2021
Conversion of common units	1,509	1,454	1,257
Conversion of redeemable noncontrolling interests	969	866	804

The following securities were also excluded from the computation of diluted EPS because their effect was antidilutive:

>weighted average restricted shares and deferred share awards of 416,000 for 2023, 399,000 for 2022 and 412,000 for 2021;

>weighted average TB-PIUs of 175,000 for 2023, 187,000 for 2022 and 158,000 for 2021;

>weighted average vested PIUs of 154,000 for 2023; and

>weighted average PB-PIUs of 629,000 for 2023.

As discussed in Note 8, our 5.25% Notes issued on September 12, 2023 have an exchange settlement feature under which the principal amount of notes exchanged is payable in cash, with the remainder of the exchange obligation, if any, as determined based on the exchange price per common share at the time of settlement, payable in cash, common shares or a combination

thereof at our election. These notes did not affect our diluted EPS reported above since the weighted average closing price of our common shares for the year ended December 31, 2023 was less than the exchange price applicable to that period.