Net Income (Loss) Per Share

6 Months Ended

Jul. 31, 2012

Notes To Financial Statements [Abstract]

Net Income (Loss) 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,
	2012		2011		2012		2011
Net income attributable to Mentor Graphics shareholders	$	18,167	$	4,334	$	46,349	$	1,981
Weighted average common shares used to calculate basic net income per share	109,875		110,027		109,891		110,888
Employee stock options, restricted stock units, and employee stock purchase plan	3,171		2,817		3,187		3,004
Weighted average common and potential common shares used to calculate diluted net income per share	113,046		112,844		113,078		113,892
Basic net income per share attributable to Mentor Graphics shareholders	$	0.17	$	0.04	$	0.42	$	0.02
Diluted net income per share attributable to Mentor Graphics shareholders	$	0.16	$	0.04	$	0.41	$	0.02

We excluded from the computation of diluted net income per share stock options, restricted stock units, and ESPP purchase rights to purchase 1,946 shares of common stock for the three months ended July 31, 2012 and 1,959 shares of common stock for the six months ended July 31, 2012 compared to 4,050 for the three months ended July 31, 2011 and 3,992 for the six months ended July 31, 2011. The stock options, restricted stock units, and ESPP purchase rights were anti-dilutive either because we incurred a net loss for the period or the stock options or ESPP purchase rights were determined to be anti-dilutive as a result of applying the treasury stock method.

The effect of the conversion of the 4.00% Debentures was anti-dilutive and therefore excluded from the computation of diluted net income per share. 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 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 6. “Notes Payable.”