Net Income (Loss) per Common Share

12 Months Ended

Dec. 31, 2018

NET INCOME (LOSS) PER COMMON SHARE

The following table sets forth the computation of basic and diluted net income (loss) per common share:


	2018		2017		2016
	(in thousands, except per share amounts)
Net income (loss) for basic and diluted net income per share	$	451,779	$	257,692	$	(43,421	)
Weighted average common shares-basic		187,672		198,069		202,578
Effect of dilutive potential common shares:
Incremental shares from assumed conversion of convertible notes (1)		2,749		1,298		—
Convertible note hedge warrant shares (2)		485		112		—
Restricted stock units		1,385		1,800		—
Stock options		278		335		0
Employee stock purchase rights		36		27		0
Dilutive potential common shares		4,933		3,572		—
Weighted average common shares-diluted		192,605		201,641		202,578
Net income (loss) per common share-basic	$	2.41	$	1.30	$	(0.21	)
Net income (loss) per common share-diluted	$	2.35	$	1.28	$	(0.21	)

(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 $31.70, 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 $39.78, 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 2018 excludes the effect of the potential exercise of stock options to purchase approximately 0.1

million shares and restricted stock units to purchase approximately 0.5 million shares because the effect would have been anti-dilutive.

The computation of diluted net income per common share for 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.

The computation of diluted net loss per common share for 2016 excludes the effect of the potential exercise of all outstanding stock options and restricted stock units because Teradyne had a net loss and inclusion would be anti-dilutive.