Pro Forma net income (earnings) per share
Management believes that net income per share before the impact of foreign currency translation gain or loss and income tax adjustments that materially impact the effective tax rate, as discussed below, is an important measure. The majority of the Company’s consolidated foreign currency gain or loss result from transactions involving the Euro, the British Pound Sterling and the Taiwan Dollar and from the exchange rate impact of the significant cash and marketable securities, receivables and payables held in U.S. dollars at the end of each reporting period by the Company’s various non-U.S. subsidiaries. Such gain or loss is required under GAAP because the functional currency of the subsidiaries differs from the currency in which various assets and liabilities are held. However, there is minimal cash impact from such foreign currency gain or loss. The Company’s income tax expense is periodically impacted by material net releases of reserves primarily related to completion of audits and/or the expiration of statutes effecting prior periods. Thus, reported income tax expense is not reflective of the income tax expense that is incurred related to the current period earnings. The net release of other uncertain tax position reserves, amounting to approximately $11 million in both 2014 and 2013, respectively, have not been included as pro forma adjustments in the following presentation of pro forma net income as such amounts have been considered immaterial, tend to be more recurring in nature and are comparable between periods. In the third quarter of 2014, the company incurred tax expense of $308 million associated with an inter-company restructuring. As this is a one-time transaction and not reflective of income tax expense incurred related to the current period earnings, it has been excluded from pro forma net income (earnings) per share. Accordingly, earnings per share before the impact of foreign currency translation gain or loss and income tax adjustments that materially impact the effective tax rate permits a consistent comparison of the Company’s operating performance between periods.
Net income per share (Pro Forma) | |||||||||||||||||
(in thousands, except per share information) | |||||||||||||||||
13-Weeks Ended | 52-weeks Ended | ||||||||||||||||
Dec 27, | Dec 28, | Dec 27, | Dec 28, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Net Income (Loss) (GAAP) | $ | 210,245 | $ | 163,585 | $ | 364,211 | $ | 612,412 | |||||||||
Foreign currency (gain) / loss, net of tax effects | ($12,917 | ) | ($13,802 | ) | $ | 3,557 | ($29,564 | ) | |||||||||
Income tax benefit due to completion of tax audits | |||||||||||||||||
and/or expiration of statutes | ($48,542 | ) | - | ($72,942 | ) | ($68,716 | ) | ||||||||||
Tax due to inter-company restructuring | - | - | $ | 307,635 | - | ||||||||||||
Net income (Pro Forma) | $ | 148,786 | $ | 149,783 | $ | 602,461 | $ | 514,132 | |||||||||
Net income (loss) per share (GAAP): | |||||||||||||||||
Basic | $ | 1.10 | $ | 0.84 | $ | 1.89 | $ | 3.13 | |||||||||
Diluted | $ | 1.09 | $ | 0.83 | $ | 1.88 | $ | 3.12 | |||||||||
Net income per share (Pro Forma): | |||||||||||||||||
Basic | $ | 0.78 | $ | 0.77 | $ | 3.12 | $ | 2.63 | |||||||||
Diluted | $ | 0.77 | $ | 0.76 | $ | 3.10 | $ | 2.62 | |||||||||
Weighted average common shares outstanding: | |||||||||||||||||
Basic | 191,322 | 195,181 | 193,106 | 195,411 | |||||||||||||
Diluted | 192,356 | 196,338 | 194,165 | 196,339 | |||||||||||||