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 Six Months Ended
	June 29, 2014		June 30, 2013		June 29, 2014		June 30, 2013
	(in thousands, except per share amounts)
Net income for basic and diluted net income per share	$	101,205	$	66,556	$	102,134	$	73,145

Weighted average common shares-basic		194,408		190,569		193,860		190,128
Effect of dilutive potential common shares:
Incremental shares from assumed conversion of convertible notes (1)		—		23,266		10,026		23,326
Convertible note hedge warrant shares (2)		20,406		18,689		20,674		18,774
Restricted stock units		705		772		878		947
Stock options		1,006		1,554		1,056		1,615
Employee stock purchase rights		43		59		32		43

Dilutive potential common shares		22,160		44,340		32,666		44,705

Weighted average common shares-diluted		216,568		234,909		226,526		234,833

Net income per common share-basic	$	0.52	$	0.35	$	0.53	$	0.38

Net income per common share-diluted	$	0.47	$	0.28	$	0.45	$	0.31

(1)

Incremental shares from conversion of the convertible notes for the six months ended June 29, 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 six months ended June 29, 2014. Incremental shares from assumed conversion of the convertible notes for the three and six months ended June 30, 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 and six months ended June 29, 2014 and June 30, 2013 are calculated using the difference between the average Teradyne stock price for the period and the warrant price of $7.6389, multiplied by the weighted average warrant shares outstanding. 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 six months ended June 29, 2014 excludes the effect of the potential exercise of stock options 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 the three and six months ended June 30, 2013 excludes the effect of the potential exercise of stock options to purchase approximately 0.5 million shares because the effect would have been anti-dilutive.