Net Income Per Common Share

3 Months Ended

Apr. 01, 2012

Net Income Per Common Share [Abstract]

Net Income Per Common Share

L. Net Income per Common Share

The following table sets forth the computation of basic and diluted net income per common share:

	For the Three Months Ended
	April 1, 2012		April 3, 2011
	(in thousands, except per share amounts)
Income from continuing operations	$	33,564	$	69,938
Income from discontinued operations		—		1,703
Gain on disposal of discontinued operations		—		25,203
Net income for basic and diluted net income per share	$	33,564	$	96,844
Weighted average common shares-basic		185,838		184,720
Effect of dilutive potential common shares:
Incremental shares from assumed conversion of convertible notes (1)		23,000		23,360
Convertible notes hedge warrant shares (2)		18,319		18,822
Restricted stock units		1,647		3,512
Stock options		2,325		1,605
Employee stock purchase rights		24		61
Dilutive potential common shares		45,315		47,360
Weighted average common shares-diluted		231,153		232,080
Net income per common share-basic:
Continuing operations	$	0.18	$	0.38
Discontinued operations		—		0.14
	$	0.18	$	0.52
Net income per common share-diluted:
Continuing operations	$	0.15	$	0.30
Discontinued operations		—		0.12
	$	0.15	$	0.42

(1) Incremental shares from assumed conversion of the convertible notes for the three months ended April 1, 2012 and April 3, 2011 are calculated using the difference between the average Teradyne stock price for the period and the conversion price of $5.48, multiplied by the 34.7 million shares that would be issued upon conversion. The result of this calculation, representing total intrinsic value of the convertible debt, is divided by the average Teradyne stock price for the period.

(2) Convertible notes hedge warrant shares for the three months ended April 1, 2012 and April 3, 2011 are calculated using the difference between the average Teradyne stock price for the period and the warrant price of $7.67, multiplied by the 34.7 million shares that would be issued upon conversion. The result of this calculation, representing total intrinsic value of the warrant, is divided by the average Teradyne stock price for the period.

The computation of diluted net income per common share for the three months ended April 1, 2012 excludes the effect of the potential exercise of stock options to purchase approximately 0.3 million shares and restricted stock units of 1.0 million because the effect would have been anti-dilutive.

The computation of diluted net income per common share for the three months ended April 3, 2011 excludes the effect of the potential exercise of stock options to purchase approximately 1.6 million shares because the effect would have been anti-dilutive.

With respect to the Teradyne's convertible debt, Teradyne intends to settle its conversion spread (i.e., the intrinsic value of the embedded option feature contained in the convertible debt) in shares. Teradyne accounts for its conversion spread using the treasury stock method.