Net Income per Common Share

9 Months Ended

Oct. 04, 2015

Net Income per Common Share

M. 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
	October 4, 2015		September 28, 2014		October 4, 2015		September 28, 2014
	(in thousands, except per share amounts)
Net income for basic and diluted net income per share	$	71,453	$	82,949	$	207,118	$	185,083
Weighted average common shares-basic		210,032		207,381		213,688		198,367
Effect of dilutive potential common shares:
Incremental shares from assumed conversion of convertible notes (1)		—		—		—		6,684
Convertible note hedge warrant shares (2)		—		8,885		—		16,744
Restricted stock units		1,103		1,167		994		975
Stock options		578		879		626		997
Employee stock purchase plan		23		21		40		28
Dilutive potential common shares		1,704		10,952		1,660		25,428
Weighted average common shares-diluted		211,736		218,333		215,348		223,795
Net income per common share-basic	$	0.34	$	0.40	$	0.97	$	0.93
Net income per common share-diluted	$	0.34	$	0.38	$	0.96	$	0.83

(1) Incremental shares from the assumed conversion of the convertible notes were calculated using the difference between the average Teradyne stock price for the period and the conversion price of $5.48, 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.

(2) Convertible note hedge warrant shares were 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, was divided by the average Teradyne stock price for the period. Teradyne’s call option on its common stock (convertible note hedge transaction) was excluded from the calculation of diluted shares because the effect was anti-dilutive. See Note F: “Debt” regarding the convertible note hedge transaction.

The computation of diluted net income per common share for the three and nine months ended October 4, 2015 excludes the effect of the potential exercise of stock options to purchase approximately 0.2 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 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.