ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL ITEMS DISCLOSURES

(Unaudited)

Three Months Ended

Year Ended

June 25,

March 26,

June 27,

June 25,

June 27,

2016

2016

2015

2016

2015

(in thousands, except per share data)

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

GAAP gross profit

$           347,027

$              318,841

$           303,701

$     1,244,388

$     1,271,867

GAAP gross profit %

61.3%

57.4%

52.1%

56.7%

55.1%

Special items:

Intangible asset amortization

11,829

11,829

18,116

55,030

74,366

Accelerated depreciation (1)

4,098

4,066

32,765

53,827

51,494

Other cost of goods sold (2)

-

6,123

-

6,123

-

 Total special items 

15,927

22,018

50,881

114,980

125,860

 GAAP gross profit excluding special items 

$           362,954

$              340,859

$           354,582

$     1,359,368

$     1,397,727

 GAAP gross profit % excluding special items 

64.1%

61.4%

60.9%

61.9%

60.6%

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

GAAP operating expenses

$           224,654

$              141,133

$           208,753

$        930,539

$     1,034,587

Special items:

Intangible asset amortization 

2,538

2,538

3,618

12,205

16,077

Impairment of long-lived assets (3)

429

506

549

160,582

67,042

Impairment of goodwill and intangible assets 

27,602

-

-

27,602

93,010

 Severance and restructuring  

4,149

2,552

12,798

24,479

30,642

 Other operating expenses (income), net (4) 

4,962

(55,419)

(2,296)

(50,389)

(2,021)

 Total special items 

39,680

(49,823)

14,669

174,479

204,750

 GAAP operating expenses excluding special items 

$           184,974

$              190,956

$           194,084

$        756,060

$        829,837

Reconciliation of GAAP net income to GAAP net income excluding special items:

GAAP net income (loss)

$             92,339

$              139,810

$             98,659

$        227,475

$        206,038

Special items:

Intangible asset amortization 

14,367

14,367

21,734

67,235

90,443

Accelerated depreciation (1)

4,098

4,066

32,765

53,827

51,494

Other cost of goods sold (2)

-

6,123

-

6,123

-

Impairment of long-lived assets (3)

429

506

549

160,582

67,042

Impairment of goodwill and intangible assets 

27,602

-

-

27,602

93,010

Severance and restructuring

4,149

2,552

12,798

24,479

30,642

Other operating expenses (income), net (4)

4,962

(55,419)

(2,296)

(50,389)

(2,021)

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

(247)

(45)

(35,849)

194

(36,066)

 Pre-tax total special items 

55,360

(27,850)

29,701

289,653

294,544

 Reversal of tax reserves (6) 

-

-

-

-

(21,747)

 Fiscal year 2015 & 2014 research & development tax credits 

-

-

-

(2,475)

(2,863)

 Other income tax effects and adjustments (7) 

(7,228)

5,698

(4,267)

(43,392)

(35,333)

 GAAP net income excluding special items 

$           140,471

$              117,658

$           124,093

$        471,261

$        440,639

 GAAP net income per share excluding special items: 

Basic 

$             0.49

$                0.41

$             0.44

$          1.65

$          1.55

Diluted 

$             0.49

$                0.41

$             0.43

$          1.63

$          1.52

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

Basic

284,354

285,854

284,202

285,081

283,675

Diluted 

288,544

289,783

289,346

289,479

288,949

(1) Includes building and equipment accelerated depreciation related to San Jose and Dallas manufacturing facilities.

(2) Includes expense related to patent license settlement.

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

(4) Includes gain on sale of energy metering business during the third quarter of fiscal year 2016, loss (gain) relating to sale of assets, and expected loss on lease abandonment.

(5) Includes sale of a business and impairment of investment in privately-held companies.

(6) 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.