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 28, 2014		September 29, 2013		September 28, 2014		September 29, 2013
	(in thousands, except per share amounts)
Net income for basic and diluted net income per share	$	82,949	$	69,459	$	185,083	$	142,604

Weighted average common shares-basic		207,381		191,307		198,367		190,521
Effect of dilutive potential common shares:
Incremental shares from assumed conversion of convertible notes (1)		—		23,257		6,684		23,303
Convertible note hedge warrant shares (2)		8,885		18,678		16,744		18,742
Restricted stock units		1,167		1,102		975		1,000
Stock options		879		1,465		997		1,564
Employee stock purchase rights		21		19		28		35

Dilutive potential common shares		10,952		44,521		25,428		44,644

Weighted average common shares-diluted		218,333		235,828		223,795		235,165

Net income per common share-basic	$	0.40	$	0.36	$	0.93	$	0.75

Net income per common share-diluted	$	0.38	$	0.29	$	0.83	$	0.61

(1)

Incremental shares from conversion of the convertible notes for the nine months ended September 28, 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. Incremental shares from assumed conversion of the convertible notes for the three and nine months ended September 29, 2013 were calculated using the difference between the average Teradyne stock price for the period the convertible notes were outstanding and the conversion price of $5.48, 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 nine months ended September 28, 2014 are calculated using the difference between the average Teradyne stock price for the period the warrants were outstanding and the warrant price of $7.63 and $7.64, respectively, 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 warrants were outstanding. Convertible note hedge warrant shares for the three and nine months ended September 29, 2013 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 28, 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 nine months ended September 29, 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.