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Net Income per Common Share | 9 Months Ended
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Sep. 29, 2013
Net Income per Common Share | K. 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 29, 2013 |  |  | September 30, 2012 |  |  | September 29, 2013 |  |  | September 30, 2012 |
|  | (in thousands, except per share amounts) |
Net income for basic and diluted net income per share |  | $ | 69,459 |  |  | $ | 88,641 |  |  | $ | 142,604 |  |  | $ | 233,592 |
Weighted average common shares-basic |  |  | 191,307 |  |  |  | 187,364 |  |  |  | 190,521 |  |  |  | 186,592 |
Effect of dilutive potential common shares: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Incremental shares from assumed conversion of convertible notes(1) |  |  | 23,257 |  |  |  | 21,890 |  |  |  | 23,303 |  |  |  | 22,397 |
Convertible note hedge warrant shares(2) |  |  | 18,678 |  |  |  | 16,765 |  |  |  | 18,742 |  |  |  | 17,474 |
Restricted stock units |  |  | 1,102 |  |  |  | 1,423 |  |  |  | 1,000 |  |  |  | 1,413 |
Stock options |  |  | 1,465 |  |  |  | 1,735 |  |  |  | 1,564 |  |  |  | 2,075 |
Employee stock purchase rights |  |  | 19 |  |  |  | 33 |  |  |  | 35 |  |  |  | 52 |
Dilutive potential common shares |  |  | 44,521 |  |  |  | 41,846 |  |  |  | 44,644 |  |  |  | 43,411 |
Weighted average common shares-diluted |  |  | 235,828 |  |  |  | 229,210 |  |  |  | 235,165 |  |  |  | 230,003 |
Net income per common share-basic |  | $ | 0.36 |  |  | $ | 0.47 |  |  | $ | 0.75 |  |  | $ | 1.25 |
Net income per common share-diluted |  | $ | 0.29 |  |  | $ | 0.39 |  |  | $ | 0.61 |  |  | $ | 1.02 |
(1) | Incremental shares from assumed conversion of the convertible notes for the three and nine months ended September 29, 2013 and September 30, 2012 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 would 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.
(2) | Convertible note hedge warrant shares for the three and nine months ended September 29, 2013 and September 30, 2012 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 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. The computation of diluted net income per common share for the three and nine months ended September 30, 2012 excludes the effect of the potential exercise of stock options to purchase approximately 0.3 million shares, and the computation of the three and nine months ended September 30, 2012 excludes the effect of the potential exercise of restricted stock units of 0.1 million and 0.4 million, 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.

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