Net Income Per Share

3 Months Ended

Feb. 02, 2020

Basic net income per share is computed by dividing net income attributable to common stock by the weighted-average number of shares of common stock outstanding during the period. Diluted net income per share is computed by dividing net income attributable to common stock by the weighted-average number of shares of common stock and potentially dilutive shares of common stock outstanding during the period.

Diluted shares outstanding include the dilutive effect of in-the-money stock options, unvested restricted stock units (“RSUs”), and employee stock purchase plan rights under the Broadcom Inc. Employee Stock Purchase Plan, as amended (“ESPP”), collectively referred to as “equity awards,” as well as Mandatory Convertible Preferred Stock, as defined in Note 9. “Stockholders’ Equity.” Potentially dilutive shares whose effect would have been antidilutive are excluded from the computation of diluted net income per share.

The dilutive effect of equity awards is calculated based on the average stock price for each fiscal period, using the treasury stock method. Under the treasury stock method, the amount the employee must pay for exercising stock options and purchasing shares under the ESPP and the amount of compensation cost for future service that we have not yet recognized are collectively assumed to be used to repurchase shares. The dilutive effect of Mandatory Convertible Preferred Stock is calculated using the if-converted method. The if-converted method assumes that these securities were converted at the beginning of the reporting period to the extent that the effect is dilutive.

For the fiscal quarter ended February 2, 2020, diluted net income per share excluded the potentially dilutive effect of 12 million shares of common stock issuable upon the conversion of Mandatory Convertible Preferred Stock as their effect was antidilutive.

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



	Fiscal Quarter Ended
	February 2, 2020		February 3, 2019

	(In millions, except per share data)
Numerator:
Income from continuing operations	$	380	$	481
Less: Dividends on preferred stock	74		—
Income from continuing operations attributable to common stock	306		481
Income (loss) from discontinued operations, net of income taxes, attributable to common stock	5		(10		)
Net income attributable to common stock	$	311	$	471



Denominator:
Weighted-average shares outstanding - basic	398		401
Dilutive effect of equity awards	22		18
Weighted-average shares outstanding - diluted	420		419

Basic income per share attributable to common stock:
Income per share from continuing operations	$	0.77	$	1.20
Income (loss) per share from discontinued operations	0.01		(0.03		)
Net income per share	$	0.78	$	1.17

Diluted income per share attributable to common stock:
Income per share from continuing operations	$	0.73	$	1.15
Income (loss) per share from discontinued operations	0.01		(0.03		)
Net income per share	$	0.74	$	1.12