NET INCOME (LOSS) PER SHARE

12 Months Ended

Oct. 31, 2016

6. NET INCOME PER SHARE

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



	Years Ended October 31,
	2016		2015			2014
	(in millions)
Numerator:
Income from continuing operations	$	462	$	438		$	232
Income (loss) from discontinued operations	$	—	$	(37	)	$	317
Net income	462		401			549
Denominators:
Basic weighted average shares	326		333			333
Potential common shares — stock options and other employee stock plans	3		2			5
Diluted weighted average shares	329		335			338

In connection with the separation of Keysight on November 1, 2014 and in accordance with the Employee Matters Agreement we made certain adjustments to the exercise price and number of our share-based compensation awards. These adjustments to our share-based awards did not have a material impact on our dilutive weighted average shares.

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 collectively are assumed proceeds to be used to repurchase hypothetical shares. An increase in the fair market value of the company's common stock can result in a greater dilutive effect from potentially dilutive awards. The total number of share-based awards issued in 2016, 2015 and 2014 were 3 million, 3 million and 6 million, respectively.

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 2016, 2015 and 2014, options to purchase 842,200, 1.2 million and 1,500 shares respectively were excluded from the calculation of diluted earnings per share. In addition, we also exclude from the calculation of diluted earnings per share, stock options, ESPP, LTPP 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. For the year ended 2016, 2015 and 2014, options to purchase 229,600, 368,900 and 383,200 shares respectively were excluded from the calculation of diluted earnings per share.