Net Income Per Share

3 Months Ended

Apr. 30, 2017

Notes to financial statements [Abstract]

The following is a reconciliation of the numerator and denominator of the basic and diluted net income per share computations for the periods presented:



	Three Months Ended
	April 30,		May 1,
	2017		2016
	(In millions, except per share data)
Numerator:
Net income	$	507	$	208
Denominator:
Basic weighted average shares	592		537
Dilutive impact of outstanding securities:
Equity awards	26		20
1% Convertible Senior Notes	14		29
Warrants issued with the 1% Convertible Senior Notes	9		13
Diluted weighted average shares	641		599
Net income per share:
Basic (1)	$	0.86	$	0.39
Diluted (2)	$	0.79	$	0.35
Equity awards excluded from diluted net income per share because their effect would have been anti-dilutive	2		3


(1)	Calculated as net income divided by basic weighted average shares.


(2)	Calculated as net income divided by diluted weighted average shares.

The 1.00% Convertible Senior Notes, or the Convertible Notes, are included in the calculation of diluted net income per share. The Convertible Notes have a dilutive impact on net income per share if our average stock price for the reporting period exceeds the adjusted conversion price of $20.0562 per share. The warrants associated with our Convertible Notes, or the Warrants, outstanding are also included in the calculation of diluted net income per share. The Warrants have a dilutive impact on net income per share if our average stock price for the quarter exceeds the adjusted strike price of $26.9988 per share.

The denominator for diluted net income per share does not include any effect from the convertible note hedge transactions, or the Note Hedges, that we entered into concurrently with the issuance of the Convertible Notes, as this effect would be anti-dilutive. In the event of conversion of the Convertible Notes, the shares delivered to us under the Note Hedges will offset the dilutive effect of the shares that we would issue under the Convertible Notes.

In the fourth quarter of fiscal year 2017, we contracted with a counterparty bank to terminate 63 million of the 75 million Warrants outstanding. In consideration for the termination of these Warrants, we delivered a total of 48 million shares of common stock to the counterparty bank.

For the first quarter of fiscal years 2018 and 2017, our average stock price was $105.22 and $32.63, respectively, which exceeded both the adjusted conversion price and the adjusted strike price, causing the Convertible Notes and the Warrants to have a dilutive impact for these periods.

Please refer to Note 11 of these Notes to Condensed Consolidated Financial Statements for additional discussion regarding the Convertible Notes, Note Hedges, and Warrants.