Net Income Per Share

12 Months Ended

Jan. 31, 2016

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, exercise of stock options and ESPP purchase rights, and conversion of the 4.00% Debentures using the treasury stock method.

The following provides the computation of basic and diluted net income per share:



Year ended January 31,	2016		2015		2014
Net income attributable to Mentor Graphics shareholders	$	96,277	$	147,139	$	155,258
Adjustment to redemption value of noncontrolling interest with redemption feature	258		121		(4,486		)
Adjusted net income attributable to Mentor Graphics shareholders	$	96,535	$	147,260	$	150,772

Weighted average common shares used to calculate basic net income per share	116,701		114,635		113,671
Employee stock options, restricted stock units and employee stock purchase plan	2,562		2,443		3,031
Weighted average common and potential common shares used to calculate diluted net income per share	119,263		117,078		116,702

Net income per share attributable to Mentor Graphics shareholders:
Basic net income per share	$	0.83	$	1.28	$	1.33
Diluted net income per share	$	0.81	$	1.26	$	1.29

We have adjusted the numerator of our basic and diluted earnings per share calculation for the adjustment of the noncontrolling interest with redemption feature to its calculated redemption value, recorded directly to retained earnings.

The effect of the conversion of the 4.00% Debentures was anti-dilutive for the twelve months ended January 31, 2016, 2015 and 2014 and therefore excluded from the computation of diluted net income per share. The conversion feature of the 4.00% Debentures, which allows for settlement in cash or a combination of cash and common stock, is further described in Note 7. “Notes Payable.”

The following details adjustments to net income excluded from the computation of diluted net income:



Year ended January 31,	2016		2015		2014
Adjustment for convertible debt interest, net of tax to be forfeited upon conversion of 4.00% Debentures	$	2,074	$	2,075	$	2,075

The following details shares excluded from the computation of diluted net income:



Year ended January 31,	2016	2015	2014
Shares of common stock for restricted stock units	—	18	566
Shares of common stock for stock options	—	14	518
Shares of common stock for ESPP purchase rights	—	887	111
Shares of common stock for convertible debt	2,046	612	—
Total anti-dilutive shares excluded	2,046	1,531	1,195

These restricted stock units, stock options, ESPPs, and convertible debt were determined to be anti-dilutive as a result of applying the treasury stock method.