N. 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
	July 1, 2018		July 2, 2017		July 1, 2018		July 2, 2017
	(in thousands, except per share amounts)
Net income for basic and diluted net income per share	$	101,037	$	174,976	$	188,010	$	260,197

Weighted average common shares-basic		190,730		198,774		192,992		199,390
Effect of dilutive potential common shares:
Incremental shares from assumed conversion of convertible notes (1)		2,643		752		3,520		376
Convertible note hedge warrant shares (2)		—		—		915		—
Restricted stock units		1,219		1,622		1,444		1,576
Stock options		274		318		298		354
Employee stock purchase plan		43		63		28		36

Dilutive potential common shares		4,179		2,755		6,205		2,342

Weighted average common shares-diluted		194,909		201,529		199,197		201,732

Net income per common share-basic	$	0.53	$	0.88	$	0.97	$	1.30

Net income per common share-diluted	$	0.52	$	0.87	$	0.94	$	1.29

(1)

Incremental shares from assumed conversion of the convertible notes was calculated using the difference between the average Teradyne stock price for the period and the conversion price of $31.80, multiplied by 14.5 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 notes hedge warrant shares were calculated using the difference between the average Teradyne stock price for the period and the warrant price of $39.91, multiplied by 14.5 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.

The computation of diluted net income per common share for the three and six months ended July 1, 2018 excludes the effect of the potential vesting of 0.7 million and 0.6 million shares of restricted stock units because the effect would have been anti-dilutive.

The computation of diluted net income per common share for the three and six months ended July 2, 2017 excludes the effect of the potential exercise of stock options to purchase approximately 0.1 million shares because the effect would have been anti-dilutive.