ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL ITEMS DISCLOSURES

(Unaudited)

Three Months Ended

December 26, 

September 26, 

December 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

$        292,169

$         286,351

$        314,077

GAAP gross profit %

57.2%

50.9%

55.4%

Special items:

Intangible asset amortization

14,734

16,638

18,750

Accelerated depreciation (1)

2,032

43,631

8,895

 Total special items 

16,766

60,269

27,645

 GAAP gross profit excluding special items 

$        308,935

$         346,620

$        341,722

 GAAP gross profit % excluding special items 

60.5%

61.6%

60.3%

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

GAAP operating expenses

$        202,636

$         362,116

$        378,153

Special items:

Intangible asset amortization

3,538

3,591

4,155

Impairment of long-lived assets (2)

1,950

157,697

50,745

Impairment of goodwill and intangible assets (3)

-

-

93,010

Severance and restructuring (4)

10,652

7,126

13,635

Other operating expenses (income), net 

(247)

315

885

 Total special items 

15,893

168,729

162,430

 GAAP operating expenses excluding special items 

$        186,743

$         193,387

$        215,723

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

GAAP net income (loss)

$          67,469

$         (72,143)

$        (72,034)

Special items:

Intangible asset amortization

18,272

20,229

22,905

Accelerated depreciation (1)

2,032

43,631

8,895

Impairment of long-lived assets (2)

1,950

157,697

50,745

Impairment of goodwill and intangible assets (3) 

-

-

93,010

Severance and restructuring (4)

10,652

7,126

13,635

Other operating expenses (income), net 

(247)

315

885

Interest and other expense (income), net 

595

(109)

(217)

 Pre-tax total special items 

33,254

228,889

189,858

Fiscal year 2015 & 2014 research & development tax credits

(2,475)

-

(2,863)

Other income tax effects and adjustments (5)

(5,428)

(36,434)

(21,283)

 GAAP net income excluding special items 

$          92,820

$         120,312

$          93,678

 GAAP net income per share excluding special items: 

Basic

$              0.33

$               0.42

$              0.33

Diluted

$              0.32

$               0.42

$              0.33

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

Basic

285,526

284,588

282,992

Diluted (6)

290,521

288,897

287,954

(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, MEMS wafer manufacturing equipment, end of line test equipment and certain research and development equipment.

(3) Includes impairment of goodwill and write-off of in-process research and development related to MEMS business unit.

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

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

(6) 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.