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NET INCOME PER COMMON SHARE | 62 Months Ended
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Dec. 31, 2012
NET INCOME PER COMMON SHARE | M. NET INCOME PER COMMON SHARE The following table sets forth the computation of basic and diluted net income (loss) per common share from continuing and discontinued operations:
|  | 2012 |  |  | 2011 |  |  | 2010 |
|  | (in thousands, except per share amounts) |
Income from continuing operations |  | $ | 217,049 |  |  | $ | 343,957 |  |  | $ | 379,692 |
Income from discontinued operations |  |  | — |  |  |  | 1,545 |  |  |  | 5,128 |
Gain on disposal of discontinued operations |  |  | — |  |  |  | 24,371 |  |  |  | — |
Net income or basic net income per share |  |  | 217,049 |  |  |  | 369,873 |  |  |  | 384,820 |
Income impact of assumed conversion of convertible notes (1) |  |  | — |  |  |  | — |  |  |  | 13,203 |
Net income for diluted net income per share |  | $ | 217,049 |  |  | $ | 369,873 |  |  | $ | 398,023 |
Weighted average common shares-basic |  |  | 186,878 |  |  |  | 184,683 |  |  |  | 179,924 |
Effect of dilutive potential common shares: |  |  |  |  |  |  |  |  |  |  |  |
Incremental shares from assumed conversion of convertible notes (2) |  |  | 22,367 |  |  |  | 21,504 |  |  |  | 30,848 |
Convertible note hedge warrant shares (3) |  |  | 17,433 |  |  |  | 16,224 |  |  |  | 10,492 |
Restricted stock units |  |  | 2,291 |  |  |  | 3,773 |  |  |  | 5,001 |
Stock options |  |  | 1,213 |  |  |  | 566 |  |  |  | 443 |
Employee stock purchase rights |  |  | 64 |  |  |  | 70 |  |  |  | 99 |
Dilutive potential common shares |  |  | 43,368 |  |  |  | 42,137 |  |  |  | 46,883 |
Weighted average commons shares-diluted |  |  | 230,246 |  |  |  | 226,820 |  |  |  | 226,807 |
Net income per common shares-basic: |  |  |  |  |  |  |  |  |  |  |  |
Continuing operations |  | $ | 1.16 |  |  | $ | 1.86 |  |  | $ | 2.11 |
Discontinued operations |  |  | — |  |  |  | 0.14 |  |  |  | 0.03 |
|  | $ | 1.16 |  |  | $ | 2.00 |  |  | $ | 2.14 |
Net income per common shares-diluted: |  |  |  |  |  |  |  |  |  |  |  |
Continuing operations |  | $ | 0.94 |  |  | $ | 1.52 |  |  | $ | 1.73 |
Discontinued operations |  |  | — |  |  |  | 0.11 |  |  |  | 0.02 |
|  | $ | 0.94 |  |  | $ | 1.63 |  |  | $ | 1.75 |
(1) | Income impact of convertible notes for 2010 represents interest expense that would have not been recorded if the notes converted at the beginning of the period.
(2) | Incremental shares from assumed conversion of the convertible notes for 2012 and 2011 are calculated using the difference between the average Teradyne stock price for the period and the conversion price of $5.48, multiplied by the 34.7 million shares that will be issued upon conversion. The result of this calculation, representing the total intrinsic value of the convertible debt, is divided by the average Teradyne stock price for the period. For 2010, incremental shares from assumed conversion of the convertible notes represent the 34.7 million of shares that will be issued upon conversion.
(3) | Convertible notes hedge warrant shares for 2012, 2011 and 2010 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 will 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. Teradyne’s call option on its common stock (convertible note hedge transaction) is excluded from the calculation of diluted shares because the effect would be anti-dilutive. See Note I: “Debt” regarding convertible note hedge transaction.
The computation of diluted net income per common share for 2012 excludes the effect of the potential exercise of stock options to purchase approximately 0.3 million shares and restricted stock units 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 2011 excludes the effect of the potential exercise of stock options to purchase approximately 0.7 million shares because the effect would have been anti-dilutive. The computation of diluted net income per common share for 2010 excludes the effect of the potential exercise of stock options to purchase approximately 5.3 million shares because the effect would have been anti-dilutive. With respect to Teradyne’s convertible debt, Teradyne intends to settle its conversion spread (i.e., the intrinsic value of the embedded option feature contained in the convertible debt) in shares. Teradyne accounts for its conversion spread using the treasury stock method. In the fourth quarter of 2010, Teradyne determined that it had the ability and intent to settle the principal amount of the convertible debt in cash, accordingly as of the fourth quarter of 2010, the principal amount has been excluded from the determination of diluted earnings per share.

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- Definition The entire disclosure for earnings per share. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 260 -SubTopic 10 -Section 45 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=7655603&loc=d3e1252-109256 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 260 -SubTopic 10 -Section 55 -Paragraph 52 -URI http://asc.fasb.org/extlink&oid=16381557&loc=d3e4984-109258 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 260 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6371337&loc=d3e3550-109257 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 260 -SubTopic 10 -Section 45 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=7655603&loc=d3e1278-109256 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 128 -Paragraph 40 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 225 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SX 210.5-03.21) -URI http://asc.fasb.org/extlink&oid=6880815&loc=d3e20235-122688 + Details
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