ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL ITEMS DISCLOSURES

(Unaudited)

Three Months Ended

September 26,

June 27, 

September 27,

2015

2015

2014

(in thousands, except per share data)

Reconciliation of GAAP gross profit to GAAP gross profit excluding special items:

GAAP gross profit

$            286,351

$           303,701

$            338,821

GAAP gross profit %

50.9%

52.1%

58.4%

Special items:

Intangible asset amortization

16,638

18,116

18,750

Accelerated depreciation (1)

43,631

32,765

-

 Total special items 

60,269

50,881

18,750

 GAAP gross profit excluding special items 

$            346,620

$           354,582

$            357,571

 GAAP gross profit % excluding special items 

61.6%

60.9%

61.6%

Reconciliation of GAAP operating expenses to GAAP operating expenses excluding special items:

GAAP operating expenses

$            362,116

$           208,753

$            237,863

Special items:

Intangible asset amortization

3,591

3,618

4,327

Impairment of long-lived assets (2)

157,697

549

10,226

Severance and restructuring (3)

7,126

12,798

1,385

Other operating expenses (income), net  (4)

315

(2,296)

1,574

 Total special items 

168,729

14,669

17,512

 GAAP operating expenses excluding special items 

$            193,387

$           194,084

$            220,351

Reconciliation of GAAP net income (loss) to GAAP net income excluding special items:

GAAP net income (loss)

$            (72,143)

$             98,659

$              99,980

Special items:

Intangible asset amortization

20,229

21,734

23,077

Accelerated depreciation (1)

43,631

32,765

-

Impairment of long-lived assets (2)

157,697

549

10,226

Severance and restructuring (3)

7,126

12,798

1,385

Other operating expenses (income), net (4)

315

(2,296)

1,574

Interest and other expense (income), net (5)

(109)

(35,849)

-

 Pre-tax total special items 

228,889

29,701

36,262

Reversal of tax reserves (6)

-

-

(21,747)

Other income tax effects and adjustments (7)

(36,434)

(4,267)

(5,873)

 GAAP net income excluding special items 

$           120,312

$           124,093

$           108,622

 GAAP net income per share excluding special items: 

Basic

$                 0.42

$                0.44

$                0.38

Diluted

$                 0.42

$                0.43

$                0.38

Shares used in the calculation of earnings per share excluding special items: 

Basic

284,588

284,202

284,086

Diluted (8)

288,897

289,346

289,430

(1)

Building and equipment accelerated depreciation related to San Jose and Dallas manufacturing facilities.

(2)

Includes impairment charges related to the San Antonio wafer manufacturing facility, and other impairment of wafer manufacturing equipment, end of line test equipment, and software.

(3)

Includes severance charges associated with several reorganizations, primarily various business units and manufacturing operations.

(4)

Other operating expenses (income), net are primarily for loss (gain) relating to sale of assets, and expected loss on lease abandonment.

(5)

Includes sale of a business and impairment of investments in privately-held companies.

(6)

Includes reversal of tax reserves related to the favorable settlement of a foreign tax issue.

(7)

Includes tax effect of pre-tax special items and miscellaneous tax adjustments.

(8)

Shares used in diluted earnings per share excluding special items differs from GAAP loss per share due to net income on a non-GAAP basis.