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, using the treasury stock method, 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.

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



Fiscal year ended January 31,	2017		2016		2015
Net income attributable to Mentor Graphics shareholders	$	154,866	$	96,277	$	147,139
Adjustment to redemption value of noncontrolling interest with redemption feature	—		258		121
Adjusted net income attributable to Mentor Graphics shareholders, basic	154,866		96,535		147,260
Adjustment for convertible debt interest, net of tax to be forfeited upon conversion of 4.00% Debentures	2,074		—		—
Adjusted net income attributable to Mentor Graphics shareholders, diluted	$	156,940	$	96,535	$	147,260

Weighted average common shares used to calculate basic net income per share	108,795		116,701		114,635
Potentially dilutive common shares	5,527		2,562		2,443
Weighted average common and potentially dilutive common shares used to calculate diluted net income per share	114,322		119,263		117,078

Net income per share attributable to Mentor Graphics shareholders:
Basic net income per share	$	1.42	$	0.83	$	1.28
Diluted net income per share	$	1.37	$	0.81	$	1.26

The effect of the conversion of the 4.00% Debentures was dilutive for the twelve months ended January 31, 2017. We assume that the excess of the value of the converted shares over the principal amount of the 4.00% Debentures will be settled in common stock for the purposes of calculating the dilutive effect of net income per share. We have adjusted the numerator of our diluted earnings per share calculation for the forfeited interest, net of tax, resulting from the assumed conversion. We have adjusted the numerator of our basic and diluted net income per share calculation for the twelve months ended January 31, 2016 and January 31, 2015 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 and January 31, 2015 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:



Fiscal year ended January 31,	2017		2016		2015
Adjustment for convertible debt interest, net of tax to be forfeited upon conversion of 4.00% Debentures	$	—	$	2,074	$	2,075

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



Fiscal year ended January 31,	2017	2016	2015
Shares of common stock for restricted stock units	12	—	18
Shares of common stock for stock options	—	—	14
Shares of common stock for ESPP purchase rights	—	—	887
Shares of common stock for convertible debt	—	2,046	612
Total anti-dilutive shares excluded	12	2,046	1,531

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.