ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL ITEMS DISCLOSURES

(Unaudited)

Three Months Ended

September 26, 2020

June 27, 2020

September 28, 2019

(in thousands, except per share data)

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

GAAP gross profit

$                         417,014

$                    362,368

$                       343,323

GAAP gross profit %

67.3%

66.4%

64.4%

Special items:

Intangible asset amortization

4,363

3,528

3,111

Merger related expenses ⁽¹⁾

1,335

—

—

Cost of COVID-19 response programs

938

1,591

—

 Total special items 

6,636

5,119

3,111

 GAAP gross profit excluding special items 

$                         423,650

$                    367,487

$                       346,434

 GAAP gross profit % excluding special items 

68.4%

67.4%

65.0%

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

GAAP operating expenses

$                         215,580

$                    184,381

$                       187,319

Special items:

Merger related expenses ⁽¹⁾

6,607

—

—

Intangible asset amortization

918

810

756

Severance and restructuring

8,813

678

1,434

Other operating expenses (income), net ⁽¹⁾

7,428

(173)

25

 Total special items 

1,315

2,215

 GAAP operating expenses excluding special items 

$                    183,066

$                       185,104

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

GAAP net income

$                         169,514

$                    207,298

$                       140,156

Special items:

Intangible asset amortization

5,281

4,338

3,867

Merger related expenses ⁽¹⁾

7,942

—

—

Cost of COVID-19 response programs

938

1,591

—

Severance and restructuring

8,813

678

1,434

Other operating expenses (income), net ⁽¹⁾

7,428

(173)

25

Interest and other expense (income), net

(535)

1,484

(207)

Pre-tax total special items

29,867

7,918

5,119

Other income tax effects and adjustments ⁽²⁾

(4,272)

(14,378)

(3,506)

Impact of U.S. tax legislation ⁽³⁾

—

6,486

—

Impact of income tax audit settlements ⁽⁴⁾

—

(51,197)

—

GAAP net income excluding special items

$                         195,109

$                    156,127

$                       141,769

GAAP net income per share excluding special items:

Basic

$                               0.73

$                          0.59

$                             0.52

Diluted

$                               0.72

$                          0.58

$                             0.52

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

Basic

266,831

266,639

271,388

Diluted

269,529

268,777

274,436

(1) Includes ADI merger related expenses such as accelerated stock-based compensation expense resulting from the acceleration of certain RSAs for tax withholding purposes, as well as other legal and professional services.

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

(3) Includes effect of U.S. tax legislation enacted on December 22, 2017.

(4) Includes effect of income tax audit settlements.