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Table of Contents VMware, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
longer aligned with VMware’s core business priorities. The gain recognized in connection with these dispositions were recorded to other income
(expense), net on the consolidated statements of income for the year ended December 31, 2013 .
D. Net Income per Share
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, 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 years ended December 31, 2014 , 2013
and 2012 (net income in millions, shares in thousands):
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 years ended December 31, 2014 , 2013 and 2012 , because their effect would have been anti-
dilutive (shares in thousands):
78
For the Year Ended December 31,
2014
2013
2012
Net income
$
886
$
1,014
$
746
Weighted-average shares, basic for Class A and Class B
430,355
429,093
426,658
Effect of dilutive securities
4,158
4,322
7,316
Weighted-average shares, diluted for Class A and Class B
434,513
433,415
433,974
Net income per weighted-average share, basic for Class A and Class B
$
2.06
$
2.36
$
1.75
Net income per weighted-average share, diluted for Class A and Class B
$
2.04
$
2.34
$
1.72
For the Year Ended December 31,
2014
2013
2012
Anti-dilutive securities:
Employee stock options
1,440
1,023
388
Restricted stock units
16
167
2,338
Total
1,456
1,190
2,726