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Net Income Per Share
 9 Months Ended
Oct. 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, purchase rights from ESPPs, and common shares issuable upon conversion of the convertible subordinated debentures using the treasury stock method, 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,
 
2013
 
2012
 
2013
 
2012
Net income attributable to Mentor Graphics shareholders
$
25,535

 
$
30,641

 
$
49,722

 
$
76,990

Noncontrolling interest adjustment to redemption value
(2,032
)
 
—

 
(3,913
)
 
—

Adjusted net income attributable to Mentor Graphics shareholders
$
23,503

 
$
30,641

 
$
45,809

 
$
76,990

Weighted average common shares used to calculate basic net income per share
113,986

 
111,575

 
113,232

 
110,454

Employee stock options, restricted stock units, and employee stock purchase plan
3,092

 
3,146

 
3,163

 
3,130

Weighted average common and potential common shares used to calculate diluted net income per share
117,078

 
114,721

 
116,395

 
113,584

Net income per share attributable to Mentor Graphics shareholders:
 
 
 
 
 
 
 
Basic
$
0.21

 
$
0.27

 
$
0.40

 
$
0.70

Diluted
$
0.20

 
$
0.27

 
$
0.39

 
$
0.68



We excluded from the computation of diluted net income per share stock options, restricted stock units, and ESPP purchase rights for 73 shares of common stock for the three months ended October 31, 2013 and 1,238 shares of common stock for the nine months ended October 31, 2013 compared to 1,205 for the three months ended October 31, 2012 and 2,626 for the nine months ended October 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 $2,032 for the three months ended October 31, 2013 and $3,913 for the nine months ended October 31, 2013 for the adjustment to increase the noncontrolling interest with redemption feature to its calculated redemption value at October 31, 2013, recorded directly to retained earnings. For the three and nine months ended October 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.”