Net Income per Common Share

6 Months Ended

Jul. 05, 2015

Net Income per Common Share

M. 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 Six Months Ended
	July 5, 2015		June 29, 2014		July 5, 2015		June 29, 2014
	(in thousands, except per share amounts)
Net income for basic and diluted net income per share	$	102,879	$	101,205	$	135,666	$	102,134
Weighted average common shares-basic		213,845		194,408		215,516		193,860
Effect of dilutive potential common shares:
Incremental shares from assumed conversion of convertible notes (1)		—		—		—		10,026
Convertible note hedge warrant shares (2)		—		20,406		—		20,674
Restricted stock units		978		705		940		878
Stock options		603		1,006		649		1,056
Employee stock purchase plan		70		43		49		32
Dilutive potential common shares		1,651		22,160		1,638		32,666
Weighted average common shares-diluted		215,496		216,568		217,154		226,526
Net income per common share-basic	$	0.48	$	0.52	$	0.63	$	0.53
Net income per common share-diluted	$	0.48	$	0.47	$	0.62	$	0.45

(1) Incremental shares from the assumed conversion of the convertible notes were 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 note hedge warrant shares were calculated using the difference between the average Teradyne stock price for the period and the warrant price of $7.6650, 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 F: “Debt” regarding the convertible note hedge transaction.

The computation of diluted net income per common share for the three and six months ended July 5, 2015 excludes the effect of the potential exercise of stock options to purchase approximately 0.2 million shares because the effect would have been anti-dilutive.

The computation of diluted net income per common share for the three and six months ended June 29, 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.