Net Income per Share

6 Months Ended

Jun. 30, 2015

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 unvested restricted stock units, performance stock units, stock options 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 net income 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 during the three and six months ended June 30, 2015 and 2014 (net income in millions, shares in thousands):



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
Net income	$	172	$	167	$	368	$	366
Weighted-average shares, basic for Class A and Class B	424,169		430,216		426,055		430,050
Effect of dilutive securities	2,628		3,983		2,717		4,168
Weighted-average shares, diluted for Class A and Class B	426,797		434,199		428,772		434,218
Net income per weighted-average share, basic for Class A and Class B	$	0.41	$	0.39	$	0.86	$	0.85
Net income per weighted-average share, diluted for Class A and Class B	$	0.40	$	0.38	$	0.86	$	0.84

The following table sets forth the weighted-average common share equivalents of Class A common stock that were excluded from the diluted net income per share calculations during the three and six months ended June 30, 2015 and 2014, because their effect would have been anti-dilutive (shares in thousands):



	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2015	2014	2015	2014
Anti-dilutive securities:
Employee stock options	2,100	1,085	2,206	1,007
Restricted stock units	90	2	399	4
Total	2,190	1,087	2,605	1,011