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Net Income per Common Share
 12 Months Ended
Dec. 31, 2014
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 from operations:

 

     2014      2013      2012  
     (in thousands, except per share amounts)  

Net income for basic and diluted net income per share

    $ 81,272       $ 164,947       $ 217,049   
  

 

 

     

 

 

     

 

 

  

Weighted average common shares-basic

      202,908         190,772         186,878   

Effect of dilutive potential common shares:

         

Incremental shares from assumed conversion of convertible notes (1)

      5,013         23,341         22,367   

Convertible note hedge warrant shares (2)

      12,562         18,795         17,433   

Restricted stock units

      1,092         1,127         2,291   

Stock options

      944         1,528         1,213   

Employee stock purchase rights

      31         36         64   
  

 

 

     

 

 

     

 

 

  

Dilutive potential common shares

      19,642         44,827         43,368   
  

 

 

     

 

 

     

 

 

  

Weighted average common shares-diluted

      222,550         235,599         230,246   
  

 

 

     

 

 

     

 

 

  

Net income per common share-basic

    $ 0.40       $ 0.86       $ 1.16   
  

 

 

     

 

 

     

 

 

  

Net income per common share-diluted

    $ 0.37       $ 0.70       $ 0.94   
  

 

 

     

 

 

     

 

 

  

 

(1) Incremental shares from the 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 $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 notes hedge warrant shares were calculated using the difference between the average Teradyne stock price for the period and the warrant price of $7.67, 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 G: “Debt” regarding the convertible note hedge transaction.

 

The computation of diluted net income per common share for 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.

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.