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				For the Nine Months Ended
	September 30, 2012		October 2, 2011		September 30, 2012		October 2, 2011
	(in thousands, except per share amounts)
Income from continuing operations	$	88,641	$	56,706	$	233,592	$	214,728
Income from discontinued operations		—		—		—		1,703
Gain on disposal of discontinued operations		—		—		—		24,371

Net income for basic net income per share	$	88,641	$	56,706	$	233,592	$	240,802

Weighted average common shares-basic		187,364		185,102		186,592		185,063
Effect of dilutive potential common shares:
Incremental shares from assumed conversion of convertible Note(1)		21,890		19,540		22,397		21,870
Convertible note hedge warrant shares(2)		16,765		13,475		17,474		16,737
Restricted stock units		1,423		3,377		1,413		3,942
Stock options		1,735		346		2,075		454
Employee stock purchase rights		33		52		52		75

Dilutive potential common shares		41,846		36,790		43,411		43,078

Weighted average common shares-diluted		229,210		221,892		230,003		228,141

Net income per common share-basic
Continuing operations	$	0.47	$	0.31	$	1.25	$	1.16
Discontinued operations		—		—		—		0.14

	$	0.47	$	0.31	$	1.25	$	1.30

Net income per common share-diluted
Continuing operations	$	0.39	$	0.26	$	1.02	$	0.94
Discontinued operations		—		—		—		0.12

	$	0.39	$	0.26	$	1.02	$	1.06

(1)

Incremental shares from assumed conversion of the convertible notes for the three and nine months ended September 30, 2012 and October 2, 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 the total intrinsic value of the convertible debt, is divided by the average Teradyne stock price for the period.

(2)

Convertible note hedge warrant shares for the three and nine months ended September 30, 2012 and October 2, 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 the 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 and nine months ended September 30, 2012 excludes the effect of the potential exercise of stock options to purchase approximately 0.3 million shares, and the computation of the three and nine months ended September 30, 2012 excludes the effect of the potential exercise of restricted stock units of 0.1 million and 0.4 million, because the effect would have been anti-dilutive.

The computation of diluted net income per common share for the three and nine months ended October 2, 2011 excludes the effect of the potential exercise of stock options to purchase approximately 0.5 million and 0.8 million shares and restricted stock units of 1.4 million and 0.5 million, respectively, because the effect would have been anti-dilutive.

With respect to 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.