Net Income per Common Share

3 Months Ended

Mar. 30, 2014

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
	March 30, 2014		March 31, 2013
	(in thousands, except per share amounts)
Net income for basic and diluted net income per share	$	929	$	6,589
Weighted average common shares-basic		193,311		189,686
Effect of dilutive potential common shares:
Incremental shares from assumed conversion of convertible notes(1)		20,052		23,386
Convertible note hedge warrant shares(2)		20,942		18,859
Restricted stock units		1,051		1,123
Stock options		1,106		1,676
Employee stock purchase plan		22		27
Dilutive potential common shares		43,173		45,071
Weighted average common shares-diluted		236,484		234,757
Net income per common share-basic	$	0.00	$	0.03
Net income per common share-diluted	$	0.00	$	0.03

(1) Incremental shares from conversion of the convertible notes for the three months ended March 30, 2014 were calculated using the difference between the average Teradyne stock price from January 1, 2014 through March 12, 2014 and the conversion price of $5.4750, multiplied by 34.7 million shares. The result of this calculation, representing the total intrinsic value of the convertible debt, was divided by the average Teradyne stock price for the period from January 1, 2014 to March 12, 2014 and adjusted for the number of days the convertible notes were outstanding during the three months ended March 30, 2014. Incremental shares from assumed conversion of the convertible notes for the three months ended March 31, 2013 were calculated using the difference between the average Teradyne stock price for the period and the conversion price of $5.4750, multiplied by the 34.7 million shares to be issued upon conversion. The result of this calculation, representing the total intrinsic value of the convertible debt, was divided by the average Teradyne stock price for the period.

(2) Convertible note hedge warrant shares for the three months ended March 30, 2014 and March 31, 2013 are calculated using the difference between the average Teradyne stock price for the period and the warrant price of $7.6650, multiplied by 34.7 million shares. 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 months ended March 30, 2014 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 the three months ended March 31, 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.