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Net Income per Common Share | 12 Months Ended
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Dec. 31, 2013
Net Income per Common Share | L. NET INCOME PER COMMON SHARE The following table sets forth the computation of basic and diluted net income per common share from continuing and discontinued operations:
|  | 2013 |  |  | 2012 |  |  | 2011 |
|  | (in thousands, except per share amounts) |
Income from continuing operations |  | $ | 164,947 |  |  | $ | 217,049 |  |  | $ | 343,957 |
Income from discontinued operations |  |  | — |  |  |  | — |  |  |  | 1,545 |
Gain on disposal of discontinued operations |  |  | — |  |  |  | — |  |  |  | 24,371 |
Net income for basic and diluted net income per share |  | $ | 164,947 |  |  | $ | 217,049 |  |  | $ | 369,873 |
Weighted average common shares-basic |  |  | 190,772 |  |  |  | 186,878 |  |  |  | 184,683 |
Effect of dilutive potential common shares: |  |  |  |  |  |  |  |  |  |  |  |
Incremental shares from assumed conversion of convertible notes (1) |  |  | 23,341 |  |  |  | 22,367 |  |  |  | 21,504 |
Convertible note hedge warrant shares (2) |  |  | 18,795 |  |  |  | 17,433 |  |  |  | 16,224 |
Restricted stock units |  |  | 1,127 |  |  |  | 2,291 |  |  |  | 3,773 |
Stock options |  |  | 1,528 |  |  |  | 1,213 |  |  |  | 566 |
Employee stock purchase rights |  |  | 36 |  |  |  | 64 |  |  |  | 70 |
Dilutive potential common shares |  |  | 44,827 |  |  |  | 43,368 |  |  |  | 42,137 |
Weighted average common shares-diluted |  |  | 235,599 |  |  |  | 230,246 |  |  |  | 226,820 |
Net income per common shares-basic: |  |  |  |  |  |  |  |  |  |  |  |
Continuing operations |  | $ | 0.86 |  |  | $ | 1.16 |  |  | $ | 1.86 |
Discontinued operations |  |  | — |  |  |  | — |  |  |  | 0.14 |
|  | $ | 0.86 |  |  | $ | 1.16 |  |  | $ | 2.00 |
Net income per common shares-diluted: |  |  |  |  |  |  |  |  |  |  |  |
Continuing operations |  | $ | 0.70 |  |  | $ | 0.94 |  |  | $ | 1.52 |
Discontinued operations |  |  | — |  |  |  | — |  |  |  | 0.11 |
|  | $ | 0.70 |  |  | $ | 0.94 |  |  | $ | 1.63 |
(1) | Incremental shares from assumed conversion of the convertible notes 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.
(2) | Convertible notes hedge warrant shares 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 exercise. 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 H: “Debt” regarding convertible note hedge transaction.
The computation of diluted net income per common share for 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 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. 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. Teradyne determined that it had the ability and intent to settle the principal amount of the convertible debt in cash; accordingly, 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 50 -Paragraph 1 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6371337&loc=d3e3550-109257 Reference 2: 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 3: 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 4: 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=32703322&loc=d3e4984-109258 Reference 5: 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=26872669&loc=d3e20235-122688 + Details
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