Net Income Per Share

9 Months Ended

Oct. 31, 2012

Notes To Financial Statements [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 October 31,				Nine months ended October 31,
	2012		2011		2012		2011
Net income attributable to Mentor Graphics shareholders	$	30,641	$	24,071	$	76,990	$	26,052
Weighted average common shares used to calculate basic net income per share	111,575		109,501		110,454		110,423
Employee stock options, restricted stock units, and employee stock purchase plan	3,146		2,062		3,130		2,758
Weighted average common and potential common shares used to calculate diluted net income per share	114,721		111,563		113,584		113,181
Basic net income per share attributable to Mentor Graphics shareholders	$	0.27	$	0.22	$	0.70	$	0.24
Diluted net income per share attributable to Mentor Graphics shareholders	$	0.27	$	0.22	$	0.68	$	0.23

We excluded from the computation of diluted net income per share stock options, restricted stock units, and ESPP purchase rights to purchase 1,205 shares of common stock for the three months ended October 31, 2012 and 2,626 shares of common stock for the nine months ended October 31, 2012 compared to 7,704 for the three months ended October 31, 2011 and 4,613 for the nine months ended October 31, 2011. 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 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 6. “Notes Payable.”