ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL ITEMS DISCLOSURES

(Unaudited)

Three Months Ended

December 27,

September 27,

December 28,

2014

2014

2013

(in thousands, except per share data)

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

GAAP gross profit

$       314,077

$        338,821

$       328,672

GAAP gross profit %

55.4%

58.4%

53.0%

Special items:

      Intangible asset amortization

18,750

18,750

19,098

      Accelerated depreciation (1)

8,895

-

-

      Acquisition-related inventory write-up

-

-

13,066

 Total special items 

27,645

18,750

32,164

 GAAP gross profit excluding special items 

$       341,722

$        357,571

$       360,836

 GAAP gross profit % excluding special items 

60.3%

61.6%

58.2%

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

GAAP operating expenses

$       378,153

$        237,863

$       258,278

Special items:

      Intangible asset amortization 

4,155

4,327

4,968

      Impairment of long-lived assets (2)

50,745

10,226

5,197

      Impairment of goodwill and intangible assets (3)

93,010

-

-

     Severance and restructuring (4) 

13,635

1,385

10,227

 Acquisition-related costs 

-

-

4,137

     Other operating expenses (income), net (5) 

885

1,574

7,307

 Total special items 

162,430

17,512

31,836

 GAAP operating expenses excluding special items 

$       215,723

$        220,351

$       226,442

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

GAAP net income (loss)

$       (72,034)

$          99,980

$         44,353

Special items:

      Intangible asset amortization 

22,905

23,077

24,066

      Accelerated depreciation (1)

8,895

-

-

 Acquisition-related inventory write-up

-

-

13,066

      Impairment of long-lived assets (2)

50,745

10,226

5,197

      Impairment of goodwill and intangible assets (3)

93,010

-

-

     Severance and restructuring (4) 

13,635

1,385

10,227

 Acquisition-related costs 

-

-

4,137

     Other operating expenses (income), net (5) 

885

1,574

7,307

     Interest and other expense (income), net 

(217)

-

-

              Pre-tax total special items 

189,858

36,262

64,000

     Tax effect of special items  

(21,283)

(5,873)

(5,894)

 Reversal of tax reserves (6) 

-

(21,747)

-

 Fiscal year 2014 research & development tax credits 

(2,863)

-

-

 GAAP net income excluding special items 

$         93,678

$        108,622

$       102,459

 GAAP net income per share excluding special items: 

    Basic 

$             0.33

$              0.38

$             0.36

    Diluted 

$             0.33

$              0.38

$             0.36

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

    Basic

282,992

284,086

282,664

    Diluted 

287,954

289,430

288,565

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

(2) Includes impairment charges related to MEMS and non-MEMS wafer manufacturing equipment and end of line test 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 closure of San Jose wafer manufacturing facility and  reorganization of various business units, and severance & retention and lease abandonment charges related to Volterra acquisition.

(5) Includes loss related to sale of land & buildings, expected loss on rent expense for vacated office space, legal settlement,  and contingent consideration adjustments related to certain acquisitions.

(6) Includes reversal of tax reserves related to a favorable settlement of a foreign tax issue.