ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL ITEMS DISCLOSURES

(Unaudited)

Three Months Ended

Year Ended

June 27,

March 28,

June 28,

June 27,

June 28,

2015

2015

2014

2015

2014

(in thousands, except per share data)

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

GAAP gross profit

$           303,701

$              315,268

$           368,960

$     1,271,867

$     1,384,765

GAAP gross profit %

52.1%

54.6%

57.4%

55.1%

56.4%

Special items:

      Intangible asset amortization

18,116

18,750

18,750

74,366

64,483

      Accelerated depreciation (1)

32,765

9,834

-

51,494

-

      Acquisition-related inventory write-up

-

-

371

-

18,955

 Total special items 

50,881

28,584

19,121

125,860

83,438

 GAAP gross profit excluding special items 

$           354,582

$              343,852

$           388,081

$     1,397,727

$     1,468,203

 GAAP gross profit % excluding special items 

60.9%

59.6%

60.4%

60.6%

59.8%

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

GAAP operating expenses

$           208,753

$              209,818

$           252,410

$     1,034,587

$        962,474

Special items:

      Intangible asset amortization 

3,618

3,977

4,423

16,077

17,690

      Impairment of long-lived assets (2)

549

5,522

6,447

67,042

11,644

      Impairment of goodwill and intangible assets (3)

-

-

-

93,010

2,580

      Severance and restructuring (4) 

12,798

2,824

5,790

30,642

24,902

      Acquisition-related costs 

-

-

-

-

6,983

      Other operating expenses (income), net (5) 

(2,296)

(2,184)

8,795

(2,021)

15,773

 Total special items 

14,669

10,139

25,455

204,750

79,572

 GAAP operating expenses excluding special items 

$           194,084

$              199,679

$           226,955

$        829,837

$        882,902

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

GAAP net income

$             98,659

$                79,433

$             84,793

$        206,038

$        354,810

Special items:

      Intangible asset amortization 

21,734

22,727

23,173

90,443

82,173

      Accelerated depreciation (1)

32,765

9,834

-

51,494

-

      Acquisition-related inventory write-up 

-

-

371

-

18,955

      Impairment of long-lived assets (2)

549

5,522

6,447

67,042

11,644

      Impairment of goodwill and intangible assets (3)

-

-

-

93,010

2,580

      Severance and restructuring (4) 

12,798

2,824

5,790

30,642

24,902

      Acquisition-related costs 

-

-

-

-

6,983

      Other operating expenses (income), net (5) 

(2,296)

(2,184)

8,795

(2,021)

15,773

      Interest and other expense, net (6) 

(35,849)

-

2,432

(36,066)

6,155

              Pre-tax total special items 

29,701

38,723

47,008

294,544

169,165

      Tax effect of special items 

(4,267)

(3,910)

(6,850)

(35,333)

(19,383)

      Fixed asset tax basis adjustment (7) 

-

-

(1,041)

-

(35,603)

      Reversal of tax reserves (8) 

-

-

-

(21,747)

-

      Fiscal year 2014 research & development tax credits 

-

-

-

(2,863)

-

 GAAP net income excluding special items 

$           124,093

$              114,246

$           123,910

$        440,639

$        468,989

 GAAP net income per share excluding special items: 

    Basic 

$                 0.44

$                    0.40

$                0.44

$             1.55

$             1.66

    Diluted 

$                 0.43

$                    0.40

$                0.43

$             1.52

$             1.62

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

    Basic

284,202

283,418

283,431

283,675

283,344

    Diluted 

289,346

288,840

289,487

288,949

289,108

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

(2) Includes impairment charges relating to wafer manufacturing equipment, end of line test equipment, and software.

(3) Impairment of goodwill and write-off of in-process research and development primarily related to MEMS business.

(4) Includes severance charges primarily associated with the reorganization of various business units and manufacturing operations.

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

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

(7) Includes one-time fixed asset tax basis adjustments relating to prior year depreciation expense.

(8) Reversal of tax reserves related to the favorable settlement of a foreign tax issue.