HP calculates basic earnings per share ("EPS") using net earnings and the weighted-average number of shares outstanding during the reporting period. Diluted EPS includes any dilutive effect of outstanding stock options, PRUs, restricted stock units and restricted stock.

The reconciliation of the numerators and denominators of the basic and diluted EPS calculations was as follows:

	Three months ended January 31

	2012		2011
	In millions, except per share amounts
Numerator:
Net earnings⁽¹⁾	$	1,468	$	2,605

Denominator:
Weighted-average shares used to compute basic EPS		1,981		2,182
Dilutive effect of employee stock plans		17		44

Weighted-average shares used to compute diluted EPS		1,998		2,226

Net earnings per share:
Basic	$	0.74	$	1.19
Diluted	$	0.73	$	1.17

⁽¹⁾: Net earnings available to participating securities were not significant for the first quarter of fiscal 2012 and 2011. HP considers restricted stock that provides the holder with a non-forfeitable right to receive dividends to be a participating security.

HP excludes options with exercise prices that are greater than the average market price from the calculation of diluted EPS because their effect would be anti-dilutive. In the first quarter of fiscal 2012 and 2011, HP excluded from the calculation of diluted EPS options to purchase 51 million shares and 7 million shares, respectively. In addition, HP also excluded from the calculation of diluted EPS options to purchase an additional 10 million shares and 1 million shares in the first quarter of fiscal 2012 and 2011, respectively, whose combined exercise price, unamortized fair value and excess tax benefits were greater in each of those periods than the average market price for HP's common stock because their effect would be anti-dilutive.