Net Earnings Per Share

The Company calculates basic net EPS using net earnings and the weighted-average number of shares outstanding during the reporting period. Diluted net EPS includes the weighted-average dilutive effect of restricted stock awards, stock options, and performance-based awards.

For periods prior to fiscal 2015, the Company calculated basic net EPS using the net earnings and number of Hewlett-Packard Company shares outstanding as of October 31, 2015. On November 1, 2015, the distribution date, Hewlett-Packard Company shareholders received one share of HPE common stock for every share of Hewlett-Packard Company common stock held as of the record date, October 21, 2015.

The reconciliations of the numerators and denominators of each of the basic and diluted net EPS calculations were as follows:



	Fiscal years ended October 31,
	2016		2015		2014
	In millions, except per share amounts
Numerator:
Net earnings	$	3,161	$	2,461	$	1,648
Denominator:⁽¹⁾⁽²⁾
Weighted-average shares used to compute basic net EPS	1,715		1,804		1,804
Dilutive effect of employee stock plans⁽³⁾	24		30		30
Weighted-average shares used to compute diluted net EPS	1,739		1,834		1,834
Net earnings per share:
Basic	$	1.84	$	1.36	$	0.91
Diluted	$	1.82	$	1.34	$	0.90
Anti-dilutive weighted-average stock awards⁽⁴⁾	32		28		28

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(1)

The Company considers restricted stock awards that provide the holder with a non-forfeitable right to receive dividends to be participating securities. As of October 31, 2016 and 2015, there were no shares outstanding of restricted stock that provided the holder with a non-forfeitable right to receive dividends. For fiscal 2014, net earnings allocated to participating securities were not significant.

(2)

On November 1, 2015, the Separation and distribution date, HP Inc. stockholders received one share of Hewlett Packard Enterprise common stock for every share of HP Inc. common stock held as of the record date, October 21, 2015. For comparative purposes, the same number of shares used to compute basic and diluted net earnings per share for the fiscal year ended October 31, 2015 is used in the calculation of basic and diluted net earnings per share for fiscal 2015 and 2014.

(3)

For fiscal 2015 and 2014, the Company calculated the weighted-average dilutive effect of employee stock plans after conversion by multiplying the dilutive Hewlett-Packard Company stock-based awards attributable to Hewlett Packard Enterprise employees for the fiscal year ended October 31, 2015 by the price conversion ratio used to convert those awards to equivalent units of Hewlett Packard Enterprise awards on the Separation date. The price conversion ratio was calculated using the closing price of Hewlett-Packard Company common shares on October 31, 2015 divided by the opening price of Hewlett Packard Enterprise common shares on November 2, 2015.

(4)

The Company excludes stock awards where the assumed proceeds exceed the average market price from the calculation of diluted net EPS, because their effect would be anti-dilutive. The assumed proceeds of a stock award include the sum of its exercise price (if the award is an option), average unrecognized compensation cost and excess tax benefit. For the fiscal years ended October 31, 2015 and 2014, the Company's anti-dilutive shares were calculated by multiplying the anti-dilutive Hewlett-Packard Company stock-based awards attributable to Hewlett Packard Enterprise employees for the fiscal year ended October 31, 2015 by the price conversion ratio used to convert those awards to equivalent units of Hewlett Packard Enterprise awards on the Separation date. The price conversion ratio was calculated using the closing price of Hewlett-Packard Company common shares on October 31, 2015 divided by the opening price of Hewlett Packard Enterprise common shares on November 2, 2015.