NET INCOME PER SHARE

9 Months Ended

Jul. 31, 2020

6. NET INCOME PER SHARE

The following is a reconciliation of the numerator and denominator of the basic and diluted net income per share computations for the periods presented below:



	Three Months Ended				Nine Months Ended
	July 31,				July 31,
	2020		2019		2020		2019
	(in millions)
Numerator:
Net income	$	176	$	159	$	410	$	426
Denominator:
Basic weighted-average shares	187		188		187		188
Potential common shares— stock options and other employee stock plans	3		3		3		3
Diluted weighted-average shares	190		191		190		191

The dilutive effect of share-based awards is reflected in diluted net income per share by application of the treasury stock method, which includes consideration of unamortized share-based compensation expense and the dilutive effect of in-the-money options and non-vested restricted stock units. Under the treasury stock method, the amount the employee must pay for exercising stock options and unamortized share-based compensation expense are collectively assumed to be used to repurchase hypothetical shares.

We exclude stock options with exercise prices greater than the average market price of our common stock from the calculation of diluted earnings per share because their effect would be anti-dilutive. For both the three and nine months ended July 31, 2020 and 2019, we excluded zero options from the calculation of diluted earnings per share. In addition, we also exclude from the calculation of diluted earnings per share, stock options, ESPP, LTP Program and restricted stock awards, whose combined exercise price and unamortized fair value collectively were greater than the average market price of our common stock because their effect would also be anti-dilutive. The number of shares excluded was not material for the three and nine months ended July 31, 2020. For the three and nine months ended July 31, 2019, we excluded approximately 336,000 shares and 253,000 shares, respectively.