Net Income Per Share

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



	Three Months Ended				Nine Months Ended
	October 29,		October 30,		October 29,		October 30,
	2017		2016		2017		2016
	(In millions, except per share data)
Numerator:
Net income	$	838	$	542	$	1,928	$	1,012
Denominator:
Basic weighted average shares	603		538		597		536
Dilutive impact of outstanding securities:
Equity awards	23		27		24		25
1.00% Convertible Senior Notes	2		45		7		42
Warrants issued with the 1.00% Convertible Senior Notes	—		43		5		33
Diluted weighted average shares	628		653		633		636
Net income per share:
Basic (1)	$	1.39	$	1.01	$	3.23	$	1.89
Diluted (2)	$	1.33	$	0.83	$	3.05	$	1.59
Equity awards excluded from diluted net income per share because their effect would have been anti-dilutive	3		7		4		9


(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 $20.0410 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.

For the third quarter and first nine months of fiscal year 2018, our average stock price was $176.20 and $142.18, respectively, which exceeded the adjusted conversion price, causing the Convertible Notes to have a dilutive impact for these periods. Our average stock price for the first nine months of fiscal year 2018 also exceeded the adjusted strike price, causing the Warrants to have a dilutive impact. All outstanding Warrants were terminated by the second quarter of fiscal year 2018.

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.

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