| 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 from continuing and discontinued
operations:
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2013 |
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2012 |
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2011 |
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(in thousands, except per share amounts) |
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Income from continuing
operations
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$ |
164,947 |
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$ |
217,049 |
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$ |
343,957 |
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Income from discontinued
operations
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— |
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— |
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1,545 |
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Gain on disposal of
discontinued operations
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— |
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— |
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24,371 |
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Net income for basic and
diluted net income per share
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$ |
164,947 |
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$ |
217,049 |
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$ |
369,873 |
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Weighted average common
shares-basic
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190,772 |
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186,878 |
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184,683 |
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Effect of dilutive
potential common shares:
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Incremental shares from
assumed conversion of convertible notes (1)
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23,341 |
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22,367 |
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21,504 |
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Convertible note hedge
warrant shares (2)
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18,795 |
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17,433 |
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16,224 |
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Restricted stock
units
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1,127 |
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2,291 |
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3,773 |
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Stock options
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1,528 |
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1,213 |
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|
566 |
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Employee stock purchase
rights
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|
36 |
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|
64 |
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|
70 |
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Dilutive potential common
shares
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44,827 |
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43,368 |
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42,137 |
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Weighted average common
shares-diluted
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235,599 |
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230,246 |
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226,820 |
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Net income per common
shares-basic:
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Continuing
operations
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$ |
0.86 |
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$ |
1.16 |
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$ |
1.86 |
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Discontinued
operations
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— |
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— |
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0.14 |
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$ |
0.86 |
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$ |
1.16 |
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$ |
2.00 |
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Net income per common
shares-diluted:
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Continuing
operations
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$ |
0.70 |
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$ |
0.94 |
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$ |
1.52 |
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Discontinued
operations
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— |
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— |
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0.11 |
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$ |
0.70 |
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$ |
0.94 |
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$ |
1.63 |
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| (1) |
Incremental shares from
assumed conversion of the convertible notes 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 will 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 notes hedge
warrant shares 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 will be
issued upon exercise. The result of this calculation, representing
the total intrinsic value of the warrant, is divided by the average
Teradyne stock price for the period. Teradyne’s call option
on its common stock (convertible note hedge transaction) is
excluded from the calculation of diluted shares because the effect
would be anti-dilutive. See Note H: “Debt” regarding
convertible note hedge transaction. |
The computation
of diluted net income per common share for 2013 excludes the effect
of the potential exercise of stock options to purchase
approximately 0.4 million shares because the effect would have
been anti-dilutive.
The computation
of diluted net income per common share for 2012 excludes the effect
of the potential exercise of stock options to purchase
approximately 0.3 million shares and restricted stock units to
purchase approximately 0.3 million shares because the effect
would have been anti-dilutive.
The computation
of diluted net income per common share for 2011 excludes the effect
of the potential exercise of stock options to purchase
approximately 0.7 million shares 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.
Teradyne determined that it had the ability and intent to settle
the principal amount of the convertible debt in cash; accordingly,
the principal amount has been excluded from the determination of
diluted earnings per share.
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