The Company presents “Adjusted EBITDA” as a supplemental measure of its performance. Adjusted EBITDA for the Company is determined by adjusting GAAP net income for interest expense, other (income) expense, net, income tax provision (benefit), equity income in investee, stock-based compensation, depreciation and amortization expense, amortization of acquisition-related intangibles, inventory loss at contract manufacturer, and acquisition-related and other costs. The Company calculates and presents Adjusted EBITDA because management believes it is of importance to investors and lenders in relation to its overall capital structure and its ability to borrow additional funds. In addition, the Company presents Adjusted EBITDA because it believes this measure assists investors in comparing its performance across reporting periods on a consistent basis by excluding items that the Company does not believe are indicative of its core operating performance. The Company’s calculation of Adjusted EBITDA may or may not be consistent with the calculation of this measure by other companies in the same industry. Investors should not view Adjusted EBITDA as an alternative to the GAAP operating measure of income or GAAP liquidity measures of cash flows from operating, investing and financing activities. In addition, Adjusted EBITDA does not take into account changes in certain assets and liabilities that can affect cash flows.
| (3) | |
Reconciliation of GAAP Net Cash Provided by Operating Activities to Free Cash Flow |
| | Three Months Ended | | Nine Months Ended |
| (Millions except percentages) (Unaudited) | September 28,
2024 | | June 29,
2024 | | September 30,
2023 | | September 28,
2024 | | September 30,
2023 |
| GAAP net cash provided by operating activities | $ | 628 | | | $ | 593 | | | $ | 421 | | | $ | 1,742 | | | $ | 1,286 | |
| Operating cash flow margin % | | 9 | % | | | 10 | % | | | 7 | % | | | 10 | % | | | 8 | % |
| Purchases of property and equipment | | (132 | ) | | | (154 | ) | | | (124 | ) | | | (428 | ) | | | (407 | ) |
| Free cash flow | $ | 496 | | | $ | 439 | | | $ | 297 | | | $ | 1,314 | | | $ | 879 | |
| Free cash flow margin % | | 7 | % | | | 8 | % | | | 5 | % | | | 7 | % | | | 5 | % |
| |
