Both. Technically, the formula includes sleep, but a lot of us who have been using for a while have found that our calories and loss over time gel more closely if we log out sleep. Try both ways and see what works best for you.
"If you drop an egg, you don't say, 'Oh, shoot' and drop the other 11, do you?"
-Source unknown, but obviously brilliant
Reached goal 4/16/2010...but kind of afraid to look these days