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Earnings Per Share
 6 Months Ended
Jun. 30, 2012
Earnings Per Share [Abstract]  
Earnings Per Share
C. Earnings per Share
Basic net income per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted net income per share is computed by dividing net income by the weighted-average number of common shares outstanding and potentially dilutive securities outstanding during the period, as calculated using the treasury stock method. Potentially dilutive securities primarily include stock options, unvested restricted stock units, and purchase options under VMware’s employee stock purchase plan. Securities are excluded from the computations of diluted net income per share if their effect would be anti-dilutive. VMware uses the two-class method to calculate earnings per share as both classes share the same rights in dividends, therefore basic and diluted earnings per share are the same for both classes.
The following table sets forth the computations of basic and diluted net income per share for the three and six months ended June 30, 2012 and 2011 (table in thousands, except per share data):
 
For the Three Months
Ended June 30,
 
For the Six Months
Ended June 30,
 
2012
 
2011
 
2012
 
2011
Net income
$
191,729

 
$
220,158

 
$
383,165

 
$
345,970

Weighted-average shares, basic for Class A and Class B
427,223

 
419,657

 
426,106

 
418,557

Effect of dilutive securities
7,424

 
10,816

 
7,908

 
11,427

Weighted-average shares, diluted for Class A and Class B
434,647

 
430,473

 
434,014

 
429,984

Net income per weighted-average share, basic for Class A and Class B
$
0.45

 
$
0.52

 
$
0.90

 
$
0.83

Net income per weighted-average share, diluted for Class A and Class B
$
0.44

 
$
0.51

 
$
0.88

 
$
0.80


For the three months ended June 30, 2012 and 2011, stock options to purchase 0.4 million and 0.9 million shares, respectively, of VMware Class A common stock were excluded from the diluted earnings per share calculations because their effect would have been anti-dilutive. For the three months ended June 30, 2012, 2.7 million shares of restricted stock were excluded from the diluted earnings per share calculations. For the three months ended June 30, 2011, no shares of restricted stock were excluded from the diluted earnings per share calculations.
For the six months ended June 30, 2012 and 2011, stock options to purchase 0.4 million and 1.2 million shares, respectively, of VMware Class A common stock were excluded from the diluted earnings per share calculations because their effect would have been anti-dilutive. For the six months ended June 30, 2012 and 2011, 1.5 million and 0.4 million shares of restricted stock were excluded from the diluted earnings per share calculations because their effect would have been anti-dilutive.