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Net Income Per Common Share
 12 Months Ended
Dec. 31, 2020
Net Income per Common Share
N.    NET INCOME PER COMMON SHARE
The following table sets forth the computation of basic and diluted net income per common share:
 
 
  
      2020      
 
  
      2019      
 
  
      2018      
 
 
  
(in thousands, except per share amounts)
 
Net income for basic and diluted net income per share
  
$
784,147
 
  
$
467,468
 
  
$
451,779
 
    
 
 
     
 
 
     
 
 
  
Weighted average common shares-basic
  
 
166,120
 
  
 
170,425
 
  
 
187,672
 
Effect of dilutive potential common shares:
  
      
  
      
  
      
Incremental shares from assumed conversion of convertible notes (1)
  
 
8,528
 
  
 
4,909
 
  
 
2,749
 
Convertible note hedge warrant shares (2)
  
 
6,989
 
  
 
2,698
 
  
 
485
 
Restricted stock units
  
 
1,264
 
  
 
1,236
 
  
 
1,385
 
Stock options
  
 
131
 
  
 
178
 
  
 
278
 
Employee stock purchase rights
  
 
10
 
  
 
13
 
  
 
36
 
    
 
 
     
 
 
     
 
 
  
Dilutive potential common shares
  
 
16,922
 
  
 
9,034
 
  
 
4,933
 
    
 
 
     
 
 
     
 
 
  
Weighted average common shares-diluted
  
 
183,042
 
  
 
179,459
 
  
 
192,605
 
    
 
 
     
 
 
     
 
 
  
Net income per common share-basic
  
$
4.72
 
  
$
2.74
 
  
$
2.41
 
    
 
 
     
 
 
     
 
 
  
Net income per common share-diluted
  
$
4.28
 
  
$
2.60
 
  
$
2.35
 
    
 
 
     
 
 
     
 
 
  
 
(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 $31.56, multiplied by 14.6 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 $39.60, multiplied by 14.6 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 2020 excludes the effect of the potential exercise of stock options to purchase approximately 0.1 million shares and restricted stock units to purchase approximately 0.1 million shares because the effect would have been anti-dilutive.
The computation of diluted net income per common share for 2018 excludes the effect of the potential exercise of restricted stock units to purchase approximately 0.5 million shares because the effect would have been anti-dilutive.