Earnings Per Share

Basic earnings per share is determined using the weighted average number of common shares outstanding during the period. Diluted earnings per share is determined using the weighted average number of common shares and potential common shares (representing the dilutive effect of stock options, restricted stock units, and employee stock purchase plan shares) outstanding during the period. Applied’s net income has not been adjusted for any period presented for purposes of computing basic or diluted earnings per share due to the Company’s non-complex capital structure.



Fiscal Year	2017		2016		2015

	(In millions, except per share amounts)
Numerator:
Net income	$	3,434	$	1,721	$	1,377
Denominator:
Weighted average common shares outstanding	1,073		1,107		1,214
Effect of dilutive stock options, restricted stock units and employee stock purchase plan shares	11		9		12
Denominator for diluted earnings per share	1,084		1,116		1,226
Basic earnings per share	$	3.20	$	1.56	$	1.13
Diluted earnings per share	$	3.17	$	1.54	$	1.12
Potentially dilutive securities	—		—		—

Potentially dilutive securities attributable to outstanding stock options and restricted stock units are excluded from the calculation of diluted earnings per share where the combined exercise price, average unamortized fair value and assumed tax benefits upon the exercise of options and the vesting of restricted stock units are greater than the average market price of Applied common stock, and therefore their inclusion would be anti-dilutive.