Earnings Per Share

6 Months Ended

Jun. 26, 2021

NOTE 15: EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income attributable to McAfee Corp. for the periods subsequent to the Reorganization Transactions by the weighted average number of shares of Class A common stock outstanding for the same period. Shares issued during the period and shares reacquired during the period are weighted for the portion of the period in which the shares were outstanding. Diluted earnings per share has been computed in a manner consistent with that of basic net income per share while giving effect to shares of potentially dilutive common stock that were outstanding during the period.

Prior to the Reorganization Transactions, the FTW capital structure primarily included FTW LLC Units. Certain holders of these units exchanged their FTW LLC units for Class A common stock of the Corporation in the Reorganization Transactions with the remaining FTW LLC Units reflecting RNCI in the Corporation. The completion of the Reorganization Transactions created the Corporation’s current capital structure, which is not reflective of the capital structure of FTW’s business prior to the Reorganization Transactions. Therefore, earnings per share information has not been presented for the three and six months ended June 27, 2020.

Shares of Class B common stock do not share in the earnings or losses attributable to McAfee Corp. and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Class B common stock under the two-class method has not been presented. Shares of Class B common stock are, however, considered potentially dilutive shares of Class A common stock because shares of Class B common stock, together with the related FTW LLC Units, are exchangeable into shares of Class A common stock on a one-for-one basis.

The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock for the three and six months ended June 26, 2021, the periods wherein the Corporation had outstanding Class A common stock.


	Three Months Ended						Six Months Ended
(in millions except per share data)	June 26, 2021						June 26, 2021
	Continuing Operations		Discontinued Operations		Total		Continuing Operations		Discontinued Operations		Total
Numerator:
Net income attributable to McAfee Corp., basic	$	23	$	13	$	36	$	50	$	16	$	66
Net income attributable to change in ownership percentage due to dilutive equity awards		2		—		2		4		—		4
Less: Provision for income tax expense(1)		—		—		—		—		—		—
Net income attributable to McAfee Corp., diluted	$	25	$	13	$	38	$	54	$	16	$	70
Denominator:
Weighted average shares of Class A common stock outstanding, basic		165.0		165.0		165.0		163.7		163.7		163.7
Dilutive impact of equity awards(2)		17.8		17.8		17.8		15.8		15.8		15.8
Weighted average shares of Class A common stock outstanding, diluted		182.8		182.8		182.8		179.5		179.5		179.5

Earnings per share attributable to McAfee Corp., basic
Earnings per share, basic(3)	$	0.14	$	0.08	$	0.22	$	0.31	$	0.10	$	0.40
Earnings per share attributable to McAfee Corp., diluted
Earnings per share, diluted(4)	$	0.14	$	0.07	$	0.21	$	0.30	$	0.09	$	0.39

(1)

Represents incremental income tax provision we would have recognized due to change in ownership.

(2)

Represents the dilutive impact of equity awards.

(3)

Amounts may not add due to rounding.

(4)

For the three and six months ended June 26, 2021, 271.5 million and 272.7 million weighted average units were excluded from dilution, respectively. The excluded units consist primarily of RNCI that is excluded from dilution because its effects would have been anti-dilutive.