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Net Income Per Share
 6 Months Ended
Jul. 31, 2013
Earnings Per Share [Abstract]  
Net Income Per Share
Net Income Per Share—We compute basic net income per share using the weighted average number of common shares outstanding during the period. We compute diluted net income per share using the weighted average number of common shares and potentially dilutive common shares outstanding during the period. Potentially dilutive common shares consist of common shares issuable upon vesting of restricted stock units, common shares issuable upon exercise of stock options and purchase rights from ESPPs using the treasury stock method, and common shares issuable upon conversion of the convertible subordinated debentures, if dilutive.

The following provides the computation of basic and diluted net income per share:
 
 
Three months ended July 31,
 
Six months ended July 31,
 
2013
 
2012
 
2013
 
2012
Net income attributable to Mentor Graphics shareholders
$
23,982

 
$
18,167

 
$
24,187

 
$
46,349

Noncontrolling interest adjustment to redemption value
(2,349
)
 
—

 
(1,881
)
 
—

Adjusted net income attributable to Mentor Graphics shareholders
$
21,633

 
$
18,167

 
$
22,306

 
$
46,349

Weighted average common shares used to calculate basic net income per share
112,988

 
109,875

 
112,851

 
109,891

Employee stock options, restricted stock units, and employee stock purchase plan
3,307

 
3,171

 
3,163

 
3,187

Weighted average common and potential common shares used to calculate diluted net income per share
116,295

 
113,046

 
116,014

 
113,078

Net income per share attributable to Mentor Graphics shareholders:
 
 
 
 
 
 
 
Basic
$
0.19

 
$
0.17

 
$
0.20

 
$
0.42

Diluted
$
0.19

 
$
0.16

 
$
0.19

 
$
0.41



We excluded from the computation of diluted net income per share stock options, restricted stock units, and ESPP purchase rights for 531 shares of common stock for the three months ended July 31, 2013 and 674 shares of common stock for the six months ended July 31, 2013 compared to 1,946 for the three months ended July 31, 2012 and 1,959 for the six months ended July 31, 2012. These stock options, restricted stock units, and ESPP purchase rights were determined to be anti-dilutive as a result of applying the treasury stock method.

We have decreased the numerator of our basic and diluted earnings per share calculation by $2,349 for the three months ended July 31, 2013 and $1,881 for the six months ended July 31, 2013 for the adjustment to increase the noncontrolling interest with redemption feature to its calculated redemption value at July 31, 2013, recorded directly to retained earnings. For the three and six months ended July 31, 2012, we excluded a similar adjustment from the calculation of basic and diluted earnings per share, as the amount was not significant.

We assume that the 4.00% Debentures will be settled in common stock for purposes of calculating the dilutive effect of the 4.00% Debentures. The effect of the assumed conversion of the 4.00% Debentures was anti-dilutive and therefore excluded from the computation of diluted net income per share.

The conversion features of the 4.00% Debentures, which allow for settlement in cash or a combination of cash and common stock, are further described in Note 7. “Notes Payable.”