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Net Income (Loss) Per Share
 6 Months Ended
Jul. 31, 2014
Earnings Per Share [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, exercise of stock options and ESPP purchase rights, and conversion of the 4.00% Debentures using the treasury stock method, 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,
 
2014
 
2013
 
2014
 
2013
Net income attributable to Mentor Graphics shareholders
$
14,172

 
$
23,982

 
$
11,621

 
$
24,187

Noncontrolling interest adjustment to redemption value
895

 
(2,349
)
 
1,562

 
(1,881
)
Adjusted net income attributable to Mentor Graphics shareholders
$
15,067

 
$
21,633

 
$
13,183

 
$
22,306

Weighted average common shares used to calculate basic net income per share
113,868

 
112,988

 
114,396

 
112,851

Employee stock options, restricted stock units and employee stock purchase plan
2,683

 
3,307

 
2,564

 
3,163

Weighted average common and potential common shares used to calculate diluted net income per share
116,551

 
116,295

 
116,960

 
116,014

Net income per share attributable to Mentor Graphics shareholders:
 
 
 
 
 
 
 
Basic net income per share
$
0.13

 
$
0.19

 
$
0.12

 
$
0.20

Diluted net income per share
$
0.13

 
$
0.19

 
$
0.11

 
$
0.19



We excluded from the computation of diluted net income per share 20 shares of common stock for stock options for the three months ended July 31, 2014 and 701 shares of common stock for stock options and ESPP purchase rights for the six months ended July 31, 2014 compared to 531 shares of common stock for stock options for the three months ended July 31, 2013 and 674 shares of common stock for stock options, restricted stock units and ESPP purchase rights for the six months ended July 31, 2013. 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 increased the numerator of our basic and diluted earnings per share calculation by $895 for the three months ended July 31, 2014 and $1,562 for the six months ended July 31, 2014 for the decrease of the noncontrolling interest with redemption feature to its calculated redemption value, recorded directly to retained earnings. We decreased the numerator of our basic and diluted earnings per share calculation by $(2,349) for the three months ended July 31, 2013 and $(1,881) for the six months ended July 31, 2013 for the increase of the noncontrolling interest with redemption feature to its calculated redemption value, recorded directly to retained earnings.

We assume that the 4.00% Debentures will be settled in common stock for purposes of calculating their dilutive effect. 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 feature 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.”