Variable Interest Entities

6 Months Ended

Jun. 26, 2021

Organization Consolidation And Presentation Of Financial Statements [Abstract]

NOTE 16: VARIABLE INTEREST ENTITIES

Upon completion of our IPO, McAfee Corp. became the sole managing member of FTW with 100% of the management and voting power in FTW. In its capacity as managing member, McAfee Corp. has the sole authority to make decisions on behalf of FTW and bind FTW to signed agreements. Further, FTW maintains separate capital accounts for its investors as a mechanism for tracking earnings and subsequent distribution rights. Accordingly, management concluded that FTW is a limited partnership or similar legal entity as contemplated in ASC 810, Consolidation.

Further, management concluded that McAfee Corp. is FTW’s primary beneficiary based on two conditions. First, McAfee Corp., in its capacity as managing member with sole voting rights, has the power to direct the activities of FTW that most significantly impact its economic performance, including selecting, terminating and setting the compensation of management responsible for FTW’s policies and procedures, as well as establishing the strategic, operating and capital decisions of FTW in the ordinary course of business. Second, McAfee Corp. has an obligation to absorb potential losses of FTW or the right to receive potential benefits from FTW in proportion to its equity interest. As the primary beneficiary, McAfee Corp. consolidates the results of FTW for financial reporting purposes under the variable interest consolidation model guidance in ASC 810.

The following table reflects the balance sheet of FTW that is consolidated within the condensed consolidated balance sheets, including Receivable from Parent, net and McAfee Corp.’s interest in the variable interest entity (“VIE”) that are eliminated upon consolidation.


(in millions)	June 26, 2021			December 26, 2020
Assets
Current assets:
Cash and cash equivalents	$	416		$	231
Accounts receivable, net		95			102
Deferred costs		163			137
Other current assets		44			42
Current assets of discontinued operations		317			402
Total current assets		1,035			914
Property and equipment, net		103			115
Goodwill		1,018			1,018
Identified intangible assets, net		631			729
Deferred tax assets		25			25
Receivable from Parent, net		—			46
Other long-term assets		93			67
Long-term assets of discontinued operations		2,528			2,560
Total assets	$	5,433		$	5,474
Liabilities and deficit
Current liabilities:
Accounts payable and other current liabilities	$	236		$	211
Accrued compensation and benefits		117			179
Accrued marketing		94			118
Income taxes payable		18			14
Long-term debt, current portion		44			44
Lease liabilities, current portion		9			10
Liability to Parent, net		3			—
Deferred revenue		926			823
Current liabilities of discontinued operations		925			970
Total current liabilities		2,372			2,369
Long-term debt, net		3,904			3,943
Deferred tax liabilities		7			5
Other long-term liabilities		126			153
Deferred revenue, less current portion		93			80
Long-term liabilities of discontinued operations		609			662
Total liabilities		7,111			7,212
Members’ deficit:
Deficit attributable to Continuing LLC Owners		(1,041	)		(1,092	)
Deficit attributable to McAfee Corp.		(637	)		(646	)
Total deficit		(1,678	)		(1,738	)
Total liabilities and deficit	$	5,433		$	5,474