CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Three Months Ended

March 28,

December 27,

March 29,

2015

2014

2014

(in thousands)

Cash flows from operating activities: 

Net income (loss)

$     79,433

$    (72,034)

$   122,544

Adjustments to reconcile net income to net cash provided by operating activities: 

      Stock-based compensation 

18,586

20,776

22,057

      Depreciation and amortization 

71,439

71,625

64,665

      Deferred taxes 

(15,658)

(30,849)

(36,482)

      Loss (gain) from sale of property, plant and equipment

(441)

1,844

818

      Tax benefit (shortfall) related to stock-based compensation 

7,635

(229)

3,204

      Impairment of long-lived assets

5,522

50,745

-

      Impairment of goodwill and intangible assets

-

93,010

2,580

      Impairment of investments in privately-held companies

-

-

3,723

      Excess tax benefit from stock-based compensation

(5,997)

(1,931)

(5,139)

      Changes in assets and liabilities: 

          Accounts receivable 

(19,921)

23,426

(15,566)

          Inventories 

9,194

(1,486)

7,717

          Other current assets 

(156)

1,009

7,194

          Accounts payable 

477

(12,007)

(4,044)

          Income taxes payable 

22,587

12,835

14,244

          Deferred revenue on shipments to distributors 

3,447

282

(1,283)

          All other accrued liabilities 

5,917

15,839

25,466

Net cash provided by (used in) operating activities 

182,064

172,855

211,698

Cash flows from investing activities: 

          Purchase of property, plant and equipment

(10,185)

(18,585)

(26,407)

          Proceeds from sales of property, plant and equipment

1,615

24,467

618

          Payments in connection with business acquisition, net of cash acquired

-

-

(5,750)

          Purchases of investments in privately-held companies securities

(200)

-

-

          Proceeds from maturity of debt investment in privately-held companies

500

-

-

Net cash provided by (used in) investing activities 

(8,270)

5,882

(31,539)

Cash flows from financing activities: 

         Excess tax benefit from stock-based compensation

5,997

1,931

5,139

-

-

(104)

         Repayment of notes payable

-

-

(439)

         Net issuance of restricted stock units

(8,369)

(6,822)

(8,390)

         Proceeds from stock options exercised

31,098

8,323

29,538

         Issuance of ESPP shares under employee stock purchase program

-

18,653

-

         Repurchase of common stock

(36,774)

(59,666)

(51,083)

         Dividends paid

(79,419)

(79,169)

(73,481)

Net cash provided by (used in) financing activities 

(87,467)

(116,750)

(98,820)

Net increase (decrease) in cash and cash equivalents 

86,327

61,987

81,339

Cash and cash equivalents: 

          Beginning of period

1,305,870

1,243,883

1,149,909

          End of period

$1,392,197

$1,305,870

$1,231,248

Total cash, cash equivalents and short-term investments

$1,467,339

$1,380,882

$1,231,248

ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL ITEMS DISCLOSURES

(Unaudited)

Three Months Ended

March 28,

December 27,

March 29,

2015

2014

2014

(in thousands, except per share data)

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

GAAP gross profit

$ 315,268

$       314,077

$ 339,937

GAAP gross profit %

54.6%

55.4%

56.1%

Special items:

      Intangible asset amortization

18,750

18,750

18,542

      Accelerated depreciation (1)

9,834

8,895

-

      Acquisition-related inventory write-up

-

-

5,518

 Total special items 

28,584

27,645

24,060

 GAAP gross profit excluding special items 

$ 343,852

$       341,722

$ 363,997

 GAAP gross profit % excluding special items 

59.6%

60.3%

60.1%

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

GAAP operating expenses

$ 209,818

$       378,153

$ 233,199

Special items:

      Intangible asset amortization 

3,977

4,155

4,863

      Impairment of long-lived assets (2)

5,522

50,745

-

      Impairment of goodwill and intangible assets (3)

-

93,010

2,580

      Severance and restructuring (4) 

2,824

13,635

3,338

     Acquisition-related costs 

-

-

(88)

      Other operating expenses (income), net  

(2,184)

885

333

 Total special items 

10,139

162,430

11,026

 GAAP operating expenses excluding special items 

$ 199,679

$       215,723

$ 222,173

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

GAAP net income (loss)

$   79,433

$       (72,034)

$ 122,544

Special items:

      Intangible asset amortization 

22,727

22,905

23,405

      Accelerated depreciation (1)

9,834

8,895

-

    Acquisition-related inventory write-up

-

-

5,518

      Impairment of long-lived assets (2)

5,522

50,745

-

      Impairment of goodwill and intangible assets (3)

-

93,010

2,580

      Severance and restructuring (4) 

2,824

13,635

3,338

     Acquisition-related costs 

-

-

(88)

      Other operating expenses (income), net 

(2,184)

885

333

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

-

(217)

3,723

              Pre-tax total special items 

38,723

189,858

38,809

     Tax effect of special items  

(3,910)

(21,283)

(3,658)

     Fixed Asset Tax Basis Adjustment (6) 

-

-

(34,562)

    Fiscal year 2014 research & development tax credits 

-

(2,863)

-

 GAAP net income excluding special items 

$ 114,246

$         93,678

$ 123,133

 GAAP net income per share excluding special items: 

    Basic 

$   0.40

$         0.33

$   0.44

    Diluted 

$   0.40

$         0.33

$   0.43

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

    Basic

283,418

282,992

282,627

    Diluted 

288,840

287,954

288,575

(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 and other business units.

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

(5) Includes impairment of investments in privately-held companies.

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