Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| x | Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended September 30, 2009
OR
| ¨ | Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the Transition Period from to
Commission File Number 001-32871
COMCAST CORPORATION
(Exact name of registrant as specified in its charter)
| PENNSYLVANIA | 27-0000798 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| One Comcast Center, Philadelphia, PA | 19103-2838 | |
| (Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code: (215) 286-1700
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such period that the registrant was required to submit and post such files).
Yes x No ¨
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ¨
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes ¨ No x
As of September 30, 2009, there were 2,062,064,242 shares of our Class A common stock, 783,174,865 shares of our Class A Special common stock and 9,444,375 shares of our Class B common stock outstanding.
Table of Contents
This Quarterly Report on Form 10-Q is for the three and nine months ended September 30, 2009. This Quarterly Report modifies and supersedes documents filed prior to this Quarterly Report. The Securities and Exchange Commission (“SEC”) allows us to “incorporate by reference” information that we file with it, which means that we can disclose important information to you by referring you directly to those documents. Information incorporated by reference is considered to be part of this Quarterly Report. In addition, information that we file with the SEC in the future will automatically update and supersede information contained in this Quarterly Report. Throughout this Quarterly Report, we refer to Comcast Corporation as “Comcast;” Comcast and its consolidated subsidiaries as “we,” “us” and “our;” and Comcast Holdings Corporation as “Comcast Holdings.”
You should carefully review the information contained in this Quarterly Report and particularly consider any risk factors that we set forth in this Quarterly Report and in other reports or documents that we file from time to time with the SEC. In this Quarterly Report, we state our beliefs of future events and of our future financial performance. In some cases, you can identify these so-called “forward-looking statements” by words such as “may,” “will,” “should,” “expects,” “believes,” “estimates,” “potential,” or “continue,” or the negative of those words, and other comparable words. You should be aware that those statements are only our predictions. In evaluating those statements, you should specifically consider various factors, including the risks outlined below and in other reports we file with the SEC. Actual events or our actual results may differ materially from any of our forward-looking statements. We undertake no obligation to update any forward-looking statements.
Our businesses may be affected by, among other things, the following:
| • | all of the services offered by our cable systems face a wide range of competition that could adversely affect our future results of operations |
| • | we may face increased competition because of technological advances and new regulatory requirements, which could adversely affect our future results of operations |
| • | programming expenses are increasing, which could adversely affect our future results of operations |
| • | we are subject to regulation by federal, state and local governments, which may impose additional costs and restrictions |
| • | weakening economic conditions may have a negative impact on our results of operations and financial condition |
| • | we rely on network and information systems and other technology, and a disruption or failure of such networks, systems or technology may disrupt our business |
| • | we may be unable to obtain necessary hardware, software and operational support |
| • | our business depends on certain intellectual property rights and on not infringing the intellectual property rights of others |
| • | we face risks arising from the outcome of various litigation matters |
| • | acquisitions and other strategic transactions present many risks, and we may not realize the financial and strategic goals that were contemplated at the time of any transaction |
| • | our Class B common stock has substantial voting rights and separate approval rights over several potentially material transactions, and our Chairman and CEO has considerable influence over our operations through his beneficial ownership of our Class B common stock |
1
Table of Contents
Condensed Consolidated Balance Sheet
(Unaudited)
| (in millions, except share data) | September 30, 2009 |
December 31, 2008 |
||||||
| ASSETS |
||||||||
| Current Assets: |
||||||||
| Cash and cash equivalents |
$ | 862 | $ | 1,195 | ||||
| Investments |
56 | 59 | ||||||
| Accounts receivable, less allowance for doubtful accounts of $188 and $190 |
1,639 | 1,626 | ||||||
| Other current assets |
849 | 836 | ||||||
| Total current assets |
3,406 | 3,716 | ||||||
| Investments |
5,699 | 4,783 | ||||||
| Property and equipment, net of accumulated depreciation of $26,716 and $23,235 |
23,605 | 24,444 | ||||||
| Franchise rights |
59,442 | 59,449 | ||||||
| Goodwill |
14,934 | 14,889 | ||||||
| Other intangible assets, net of accumulated amortization of $8,624 and $8,160 |
4,209 | 4,558 | ||||||
| Other noncurrent assets, net |
1,168 | 1,178 | ||||||
| Total assets |
$ | 112,463 | $ | 113,017 | ||||
| LIABILITIES AND EQUITY |
||||||||
| Current Liabilities: |
||||||||
| Accounts payable and accrued expenses related to trade creditors |
$ | 3,133 | $ | 3,393 | ||||
| Accrued expenses and other current liabilities |
3,005 | 3,268 | ||||||
| Current portion of long-term debt |
954 | 2,278 | ||||||
| Total current liabilities |
7,092 | 8,939 | ||||||
| Long-term debt, less current portion |
28,493 | 30,178 | ||||||
| Deferred income taxes |
27,566 | 26,982 | ||||||
| Other noncurrent liabilities |
6,763 | 6,171 | ||||||
| Commitments and Contingencies (Note 11) |
||||||||
| Redeemable noncontrolling interests |
168 | 171 | ||||||
| Equity: |
||||||||
| Preferred stock—authorized, 20,000,000 shares; issued, zero |
— | — | ||||||
| Class A common stock, $0.01 par value—authorized, 7,500,000,000 shares; issued, 2,427,524,992 and 2,426,443,484; outstanding, 2,062,064,242 and 2,060,982,734 |
24 | 24 | ||||||
| Class A Special common stock, $0.01 par value—authorized, 7,500,000,000 shares; issued, 854,109,629 and 881,145,954; outstanding 783,174,865 and 810,211,190 |
9 | 9 | ||||||
| Class B common stock, $0.01 par value—authorized, 75,000,000 shares; issued and outstanding, 9,444,375 |
— | — | ||||||
| Additional paid-in capital |
40,451 | 40,620 | ||||||
| Retained earnings |
9,416 | 7,427 | ||||||
| Treasury stock—365,460,750 Class A common shares and 70,934,764 Class A Special common shares |
(7,517 | ) | (7,517 | ) | ||||
| Accumulated other comprehensive income (loss) |
(72 | ) | (113 | ) | ||||
| Total Comcast Corporation stockholders’ equity |
42,311 | 40,450 | ||||||
| Noncontrolling interests |
70 | 126 | ||||||
| Total equity |
42,381 | 40,576 | ||||||
| Total liabilities and equity |
$ | 112,463 | $ | 113,017 | ||||
See notes to condensed consolidated financial statements.
2
Table of Contents
Condensed Consolidated Statement of Operations
(Unaudited)
| Three Months Ended September 30 |
Nine Months Ended September 30 |
|||||||||||||||
| (in millions, except per share data) | 2009 | 2008 | 2009 | 2008 | ||||||||||||
| Revenue |
$ | 8,802 | $ | 8,549 | $ | 26,575 | $ | 25,491 | ||||||||
| Costs and Expenses: |
||||||||||||||||
| Operating (excluding depreciation and amortization) |
3,490 | 3,345 | 10,600 | 10,040 | ||||||||||||
| Selling, general and administrative |
1,986 | 1,967 | 5,670 | 5,689 | ||||||||||||
| Depreciation |
1,362 | 1,332 | 4,148 | 4,093 | ||||||||||||
| Amortization |
253 | 235 | 760 | 694 | ||||||||||||
| 7,091 | 6,879 | 21,178 | 20,516 | |||||||||||||
| Operating income |
1,711 | 1,670 | 5,397 | 4,975 | ||||||||||||
| Other Income (Expense): |
||||||||||||||||
| Interest expense |
(707 | ) | (601 | ) | (1,828 | ) | (1,840 | ) | ||||||||
| Investment income (loss), net |
148 | 74 | 218 | 83 | ||||||||||||
| Equity in net income (losses) of affiliates, net |
(17 | ) | 3 | (44 | ) | (36 | ) | |||||||||
| Other income (expense) |
2 | 11 | 13 | 295 | ||||||||||||
| (574 | ) | (513 | ) | (1,641 | ) | (1,498 | ) | |||||||||
| Income before income taxes |
1,137 | 1,157 | 3,756 | 3,477 | ||||||||||||
| Income tax expense |
(203 | ) | (401 | ) | (1,088 | ) | (1,364 | ) | ||||||||
| Net income from consolidated operations |
934 | 756 | 2,668 | 2,113 | ||||||||||||
| Net (income) loss attributable to noncontrolling interests |
10 | 15 | 15 | 22 | ||||||||||||
| Net income attributable to Comcast Corporation |
$ | 944 | $ | 771 | $ | 2,683 | $ | 2,135 | ||||||||
| Basic earnings per common share attributable to Comcast Corporation stockholders |
$ | 0.33 | $ | 0.26 | $ | 0.93 | $ | 0.72 | ||||||||
| Diluted earnings per common share attributable to Comcast Corporation stockholders |
$ | 0.33 | $ | 0.26 | $ | 0.93 | $ | 0.72 | ||||||||
| Dividends declared per common share attributable to Comcast Corporation stockholders |
$ | 0.07 | $ | 0.06 | $ | 0.20 | $ | 0.19 | ||||||||
See notes to condensed consolidated financial statements.
3
Table of Contents
Condensed Consolidated Statement of Cash Flows
(Unaudited)
| Nine Months Ended September 30 |
||||||||
| (in millions) | 2009 | 2008 | ||||||
| Net cash provided by operating activities |
$ | 7,725 | $ | 7,373 | ||||
| Financing Activities |
||||||||
| Proceeds from borrowings |
1,843 | 3,513 | ||||||
| Repurchases and repayments of debt |
(4,709 | ) | (1,143 | ) | ||||
| Repurchases of common stock |
(438 | ) | (2,800 | ) | ||||
| Dividends paid |
(568 | ) | (367 | ) | ||||
| Issuances of common stock |
1 | 53 | ||||||
| Other |
(186 | ) | (148 | ) | ||||
| Net cash provided by (used in) financing activities |
(4,057 | ) | (892 | ) | ||||
| Investing Activities |
||||||||
| Capital expenditures |
(3,508 | ) | (4,037 | ) | ||||
| Cash paid for intangible assets |
(383 | ) | (376 | ) | ||||
| Acquisitions, net of cash acquired |
(36 | ) | (700 | ) | ||||
| Proceeds from sales of investments |
31 | 452 | ||||||
| Purchases of investments |
(142 | ) | (67 | ) | ||||
| Other |
37 | (2 | ) | |||||
| Net cash provided by (used in) investing activities |
(4,001 | ) | (4,730 | ) | ||||
| Increase (decrease) in cash and cash equivalents |
(333 | ) | 1,751 | |||||
| Cash and cash equivalents, beginning of period |
1,195 | 963 | ||||||
| Cash and cash equivalents, end of period |
$ | 862 | $ | 2,714 | ||||
See notes to condensed consolidated financial statements.
4
Table of Contents
Condensed Consolidated Statement of Changes in Equity (Unaudited)
| Comcast Corporation Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||
| Common Stock | ||||||||||||||||||||||||||||||||||||||
| (in millions) | Redeemable Noncontrolling Interests |
A | A Special |
B | Additional Paid-In Capital |
Retained Earnings |
Treasury Stock at Cost |
Accumulated Other Comprehensive Income (Loss) |
Noncontrolling Interests |
Total Equity |
||||||||||||||||||||||||||||
| Balance, December 31, 2007 |
$ | 101 | $ | 24 | $ | 10 | $ | — | $ | 41,688 | $ | 7,191 | $ | (7,517 | ) | $ | (56 | ) | $ | 149 | $ | 41,489 | ||||||||||||||||
| Cumulative effect related to change in accounting principle on January 1, 2008 |
(132 | ) | (132 | ) | ||||||||||||||||||||||||||||||||||
| Stock compensation plans |
215 | (48 | ) | 167 | ||||||||||||||||||||||||||||||||||
| Repurchase and retirement of common stock |
(1 | ) | (1,562 | ) | (1,237 | ) | (2,800 | ) | ||||||||||||||||||||||||||||||
| Employee stock purchase plan |
49 | 49 | ||||||||||||||||||||||||||||||||||||
| Share exchange |
166 | (166 | ) | — | ||||||||||||||||||||||||||||||||||
| Dividends declared |
(547 | ) | (547 | ) | ||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) |
(8 | ) | (8 | ) | ||||||||||||||||||||||||||||||||||
| Sale (purchase) of subsidiary shares to (from) noncontrolling interests, net |
88 | |||||||||||||||||||||||||||||||||||||
| Contributions from and (distributions to) noncontrolling interests |
(1 | ) | (17 | ) | (17 | ) | ||||||||||||||||||||||||||||||||
| Net income (loss) |
(19 | ) | 2,135 | (3 | ) | 2,132 | ||||||||||||||||||||||||||||||||
| Balance, September 30, 2008 |
$ | 169 | $ | 24 | $ | 9 | $ | — | $ | 40,556 | $ | 7,196 | $ | (7,517 | ) | $ | (64 | ) | $ | 129 | $ | 40,333 | ||||||||||||||||
| Balance, December 31, 2008 |
$ | 171 | $ | 24 | $ | 9 | $ | — | $ | 40,620 | $ | 7,427 | $ | (7,517 | ) | $ | (113 | ) | $ | 126 | $ | 40,576 | ||||||||||||||||
| Stock compensation plans |
108 | 108 | ||||||||||||||||||||||||||||||||||||
| Repurchase and retirement of common stock |
(353 | ) | (112 | ) | (465 | ) | ||||||||||||||||||||||||||||||||
| Employee stock purchase plan |
46 | 46 | ||||||||||||||||||||||||||||||||||||
| Dividends declared |
(582 | ) | (582 | ) | ||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) |
41 | 41 | ||||||||||||||||||||||||||||||||||||
| Purchases of subsidiary shares from noncontrolling interests |
30 | (35 | ) | (5 | ) | |||||||||||||||||||||||||||||||||
| Contributions from and (distributions to) noncontrolling interests |
10 | (19 | ) | (19 | ) | |||||||||||||||||||||||||||||||||
| Net income (loss) |
(13 | ) | 2,683 | (2 | ) | 2,681 | ||||||||||||||||||||||||||||||||
| Balance, September 30, 2009 |
$ | 168 | $ | 24 | $ | 9 | $ | – | $ | 40,451 | $ | 9,416 | $ | (7,517 | ) | $ | (72 | ) | $ | 70 | $ | 42,381 | ||||||||||||||||
See notes to condensed consolidated financial statements.
5
Table of Contents
Condensed Consolidated Statement of Comprehensive Income (Unaudited)
| Three Months Ended September 30 |
Nine Months Ended September 30 |
|||||||||||||
| (in millions) | 2009 | 2008 | 2009 | 2008 | ||||||||||
| Net income from consolidated operations |
$ | 934 | $ | 756 | $ | 2,668 | $ | 2,113 | ||||||
| Holding gains (losses) during the period, net of deferred taxes of $(1), $3, $(2) and $9 |
2 | (6 | ) | 6 | (16 | ) | ||||||||
| Reclassification adjustments for losses (gains) included in net income attributable to Comcast Corporation, net of deferred taxes of $(3), $(2), $(17) and $(5) |
6 | 4 | 31 | 10 | ||||||||||
| Employee benefit obligations, net of deferred taxes |
— | 1 | — | — | ||||||||||
| Cumulative translation adjustments |
— | (4 | ) | 4 | (2 | ) | ||||||||
| Comprehensive income |
942 | 751 | 2,709 | 2,105 | ||||||||||
| Net (income) loss attributable to noncontrolling interests |
10 | 15 | 15 | 22 | ||||||||||
| Comprehensive income attributable to Comcast Corporation |
$ | 952 | $ | 766 | $ | 2,724 | $ | 2,127 | ||||||
See notes to condensed consolidated financial statements.
6
Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 1: Condensed Consolidated Financial Statements
Basis of Presentation
We have prepared these unaudited condensed consolidated financial statements based on Securities and Exchange Commission (“SEC”) rules that permit reduced disclosure for interim periods. These financial statements include all adjustments that are necessary for a fair presentation of our results of operations and financial condition for the periods shown, including normal, recurring accruals and other items. We also evaluate events or transactions that occur after the balance sheet date but before the financial statements are issued (“subsequent events”) to determine if financial statement recognition or additional disclosure is required. The results of operations for the interim periods presented are not necessarily indicative of results for the full year.
The year-end condensed consolidated balance sheet was derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles in the United States (“GAAP”). For a more complete discussion of our accounting policies and certain other information, refer to our annual financial statements for the preceding fiscal year as filed with the SEC.
Reclassifications have been made to the prior year’s condensed consolidated financial statements primarily between operating expenses and selling, general and administrative expenses to conform to classifications used in 2009.
Note 2: Recent Accounting Pronouncements
Noncontrolling Interests in Consolidated Financial Statements
In November 2007, the Financial Accounting Standards Board (“FASB”) issued a new accounting standard that provides guidance on the accounting and reporting requirements for noncontrolling interests in consolidated financial statements. The guidance requires noncontrolling interests (previously referred to as minority interests) that are not redeemable to be separately reported in the equity section of an entity’s consolidated balance sheet. Redeemable noncontrolling interests continue to be presented outside of equity. The guidance establishes accounting and reporting standards for (i) ownership interests in subsidiaries held by parties other than the parent, (ii) the amount of consolidated net income attributable to the parent and to the noncontrolling interests, (iii) changes in a parent’s ownership interest and (iv) the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. In addition, it establishes disclosure requirements, including new financial statement captions that clearly distinguish between controlling and noncontrolling interests. These include a separate presentation of net income attributable to controlling and noncontrolling interests with the combined amounts labeled as “Net income from consolidated operations” in our statement of operations. Under the guidance, “Net income from consolidated operations” is comparable to what was previously presented as “Income from continuing operations before minority interest” and “Net income attributable to Comcast Corporation” is comparable to what was previously presented as “Net income.” We adopted the standard on January 1, 2009, at which time we applied the new presentation and disclosure requirements.
The new accounting standard requires the retrospective application of the new financial statement captions. The tables below reflect the revised presentations for our balance sheets as of December 31, 2008 and 2007 and consolidated statements of operations for the years ended December 31, 2008, 2007 and 2006.
Revised Balance Sheet Captions
| December 31 (in millions) | 2008 | 2007 | ||||
| Redeemable noncontrolling interests |
$ | 171 | $ | 101 | ||
| Noncontrolling interests (in equity) |
$ | 126 | $ | 149 | ||
7
Table of Contents
Revised Statement of Operations Captions
| Year Ended December 31 (in millions, except per share data) | 2008 | 2007 | 2006 | |||||||
| Net income from consolidated operations |
$ | 2,525 | $ | 2,549 | $ | 2,545 | ||||
| Net (income) loss attributable to noncontrolling interests |
22 | 38 | (12 | ) | ||||||
| Net income attributable to Comcast Corporation |
$ | 2,547 | $ | 2,587 | $ | 2,533 | ||||
| Basic earnings per common share attributable to Comcast Corporation stockholders |
$ | 0.87 | $ | 0.84 | $ | 0.80 | ||||
| Diluted earnings per common share attributable to Comcast Corporation stockholders |
$ | 0.86 | $ | 0.83 | $ | 0.79 | ||||
See Note 7 for further details on our noncontrolling interests.
Consolidation of Variable Interest Entities
In June 2009, the FASB updated the accounting standard related to the consolidation of variable interest entities. The updated standard (i) requires ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity, (ii) eliminates the quantitative approach previously required for determining the primary beneficiary of a variable interest entity and replaces it with a qualitative approach and (iii) requires additional disclosure about an enterprise’s involvement in variable interest entities. The updated standard will be effective for us as of January 1, 2010. We are currently assessing the impact this standard will have on our consolidated financial statements.
Subsequent Events
In May 2009, the FASB issued a new accounting standard on the accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued (“subsequent events”). The standard requires disclosure of the date through which an entity has evaluated subsequent events and whether that date represents the date the financial statements were issued or were available to be issued. This disclosure is intended to alert all users of the financial statements that an entity has not evaluated subsequent events after that date in the set of financial statements being presented. The standard was effective for us as of June 30, 2009. Accordingly, we have evaluated subsequent events through the issuance of these financial statements on November 4, 2009. The adoption of this standard did not have an impact on our consolidated financial statements.
Note 3: Earnings Per Share
Basic earnings per common share attributable to Comcast Corporation stockholders (“Basic EPS”) is computed by dividing net income attributable to Comcast Corporation by the weighted-average number of common shares outstanding during the period.
Our potentially dilutive securities include potential common shares related to our stock options and our restricted share units (“RSUs”). Diluted earnings per common share attributable to Comcast Corporation stockholders (“Diluted EPS”) considers the impact of potentially dilutive securities using the treasury stock method, except in periods in which there is a loss, because the inclusion of the potential common shares would have an antidilutive effect.
Diluted EPS for the three and nine months ended September 30, 2009 excluded approximately 199 million and 196 million, respectively, of potential common shares related to our share-based compensation plans, because their inclusion would have had an antidilutive effect. For the three and nine months ended September 30, 2008, Diluted EPS excluded approximately 142 million and 127 million potential common shares, respectively.
8
Table of Contents
Computation of Diluted EPS
| Three Months Ended September 30 | ||||||||||||||||
| 2009 | 2008 | |||||||||||||||
| (in millions, except per share data) | Net Income Attributable to Comcast Corporation |
Shares | Per Share Amount |
Net Income Attributable to Comcast Corporation |
Shares | Per Share Amount | ||||||||||
| Basic EPS attributable to Comcast Corporation stockholders |
$ | 944 | 2,872 | $ | 0.33 | $ | 771 | 2,909 | $ | 0.26 | ||||||
| Effect of dilutive securities: |
||||||||||||||||
| Assumed exercise or issuance of shares related to stock plans |
5 | 11 | ||||||||||||||
| Diluted EPS attributable to Comcast Corporation stockholders |
$ | 944 | 2,877 | $ | 0.33 | $ | 771 | 2,920 | $ | 0.26 | ||||||
| Nine Months Ended September 30 | ||||||||||||||||
| 2009 | 2008 | |||||||||||||||
| (in millions, except per share data) | Net Income Attributable to Comcast Corporation |
Shares | Per Share Amount |
Net Income Attributable to Comcast Corporation |
Shares | Per Share Amount | ||||||||||
| Basic EPS attributable to Comcast Corporation stockholders |
$ | 2,683 | 2,882 | $ | 0.93 | $ | 2,135 | 2,958 | $ | 0.72 | ||||||
| Effect of dilutive securities: |
||||||||||||||||
| Assumed exercise or issuance of shares related to stock plans |
8 | 15 | ||||||||||||||
| Diluted EPS attributable to Comcast Corporation stockholders |
$ | 2,683 | 2,890 | $ | 0.93 | $ | 2,135 | 2,973 | $ | 0.72 | ||||||
Note 4: Investments
| (in millions) | September 30, 2009 |
December 31, 2008 | ||||
| Fair value method |
$ | 1,773 | $ | 943 | ||
| Equity method, primarily SpectrumCo and Clearwire |
2,189 | 2,177 | ||||
| Cost method, primarily AirTouch redeemable preferred shares |
1,793 | 1,722 | ||||
| Total investments |
5,755 | 4,842 | ||||
| Less: Current investments |
56 | 59 | ||||
| Noncurrent investments |
$ | 5,699 | $ | 4,783 | ||
As of September 30, 2009 and December 31, 2008, the estimated fair value of the AirTouch preferred stock was $1.541 billion and $1.357 billion, respectively.
Components of Investment Income (Loss), Net
| Three Months Ended September 30 |
Nine Months Ended September 30 |
|||||||||||||||
| (in millions) | 2009 | 2008 | 2009 | 2008 | ||||||||||||
| Gains on sales and exchanges of investments, net |
$ | 10 | $ | — | $ | 14 | $ | 14 | ||||||||
| Investment impairment losses |
(2 | ) | (3 | ) | (21 | ) | (5 | ) | ||||||||
| Unrealized gains (losses) on securities underlying prepaid forward sale agreements |
456 | (122 | ) | 836 | (413 | ) | ||||||||||
| Mark to market adjustments on derivative component of prepaid forward sale agreements |
(357 | ) | 138 | (697 | ) | 411 | ||||||||||
| Mark to market adjustments on derivative component of ZONES |
2 | 49 | 6 | 27 | ||||||||||||
| Interest and dividend income |
25 | 35 | 79 | 108 | ||||||||||||
| Other |
14 | (23 | ) | 1 | (59 | ) | ||||||||||
| Investment income (loss), net |
$ | 148 | $ | 74 | $ | 218 | $ | 83 | ||||||||
9
Table of Contents
Note 5: Long-Term Debt
Borrowings
In June 2009, we issued $700 million principal amount of 5.70% notes due 2019 and $800 million principal amount of 6.55% notes due 2039. During the nine months ended September 30, 2009, we issued $300 million face amount of commercial paper, net of repayments. The net proceeds of these issuances, together with cash on hand, were used for the purchase of notes included in the cash tender offer, as described below, as well as for the repayment of outstanding borrowings under our revolving credit facility, the repayment of debt at its maturity as well as working capital and general corporate purposes.
Redemptions and Repayments
In June 2009, we repaid at maturity $750 million principal amount of our 6.875% notes due 2009. In July 2009, we repaid at maturity $1.2 billion principal amount of our floating rate notes due 2009.
In July 2009, we completed a cash tender to purchase $1.3 billion aggregate principal amount of certain of our outstanding notes consisting of approximately $621 million principal amount of our 8.375% notes due 2013, $367 million principal amount of our 7.125% notes due 2013 and $312 million principal amount of our 7.875% senior debentures due 2013. During the three months ended September 30, 2009, we recognized approximately $180 million of interest expense primarily associated with the premiums incurred in the tender offer.
During the nine months ended September 30, 2009, we repaid all $1.0 billion of amounts outstanding under our revolving credit facility due 2013.
Note 6: Derivative Financial Instruments and Fair Value Measurements
We use derivative financial instruments to manage our exposure to the risks associated with fluctuations in interest rates and equity prices. Our objective is to manage the financial and operational exposures arising from these risks by offsetting gains and losses on the underlying exposures with gains and losses on the derivatives used to economically hedge them. Our risk management control system is used to assist us in monitoring the hedging program, derivative positions and hedging strategies. Hedges that receive designated hedge accounting treatment are evaluated for effectiveness at the time they are designated, as well as throughout the hedging period. We do not engage in any speculative or leveraged derivative transactions. All derivative transactions must comply with a derivatives policy authorized by our Board of Directors.
We manage the credit risks associated with our derivative financial instruments through the evaluation and monitoring of the creditworthiness of the counterparties. Although we may be exposed to losses in the event of nonperformance by the counterparties, we do not expect such losses, if any, to be significant. The valuation adjustments we recorded against the derivative assets to reflect counterparty credit risk are not significant.
We periodically examine the instruments we use to hedge exposure to interest rate and equity price risks to ensure that the instruments are matched with underlying assets or liabilities, to reduce our risks related to changes in interest rates or equity prices and, through market value and sensitivity analysis, to maintain a high correlation to the risk inherent in the hedged item. For those instruments that do not meet the above conditions, and for those derivative instruments that are not designated as a hedge, changes in fair value are recognized on a current basis in earnings.
As of September 30, 2009, our derivatives designated as hedges included (i) the derivative component of our prepaid forward sale agreements, which are recorded to other noncurrent liabilities, and (ii) our interest rate swap agreements, which are recorded to other current or noncurrent assets or liabilities. Changes in the fair value of the derivative component of our prepaid forward sale agreements are recorded to investment income (loss). Changes in the fair value of our interest rate swap agreements are recorded to interest expense. These amounts are completely offset by changes in the fair value of the related debt because the swaps are deemed to be 100% effective. The difference between variable and fixed rates to be paid or received under the terms of the interest rate swap agreements is accrued as interest rates change and recognized as an adjustment to interest expense for the related debt.
As of September 30, 2009, our derivatives not designated as hedges included the derivative component of our ZONES debt, which is recorded to long-term debt.
10
Table of Contents
As of September 30, 2009, our debt had an estimated fair value of $32.153 billion. The estimated fair value of our publicly traded debt is based on quoted market values for the debt. To estimate the fair value of debt for which there are no quoted market prices, we use interest rates available to us for debt with similar terms and remaining maturities.
Recurring Fair Value Measures
| Fair Value as of September 30, 2009 | December 31, 2008 | |||||||||||||||
| (in millions) | Level 1 | Level 2 | Level 3 | Total | Total | |||||||||||
| Assets |
||||||||||||||||
| Trading securities |
$ | 1,769 | $ | — | $ | — | $ | 1,769 | $ | 932 | ||||||
| Available-for-sale securities |
3 | — | — | 3 | 10 | |||||||||||
| Equity warrants |
— | — | 1 | 1 | 1 | |||||||||||
| Interest rate swap agreements |
— | 184 | — | 184 | 291 | |||||||||||
| $ | 1,772 | $ | 184 | $ | 1 | $ | 1,957 | $ | 1,234 | |||||||
| Liabilities |
||||||||||||||||
| Derivative component of ZONES |
$ | — | $ | 16 | $ | — | $ | 16 | $ | 23 | ||||||
| Derivative component of prepaid forward sale agreements |
— | 231 | — | 231 | (466 | ) | ||||||||||
| Interest rate swap agreements |
— | 2 | — | 2 | 1 | |||||||||||
| $ | — | $ | 249 | $ | — | $ | 249 | $ | (442 | ) | ||||||
Amount of Gain (Loss) Recognized in Income on Derivative Instruments
| (in millions) | Three Months Ended September 30, 2009 |
Nine Months Ended September 30, 2009 |
||||||
| Designated Fair Value Hedging Relationships |
||||||||
| Interest Income (Expense): |
||||||||
| Interest rate swap agreements (fixed-to-variable) |
$ | 43 | $ | (108 | ) | |||
| Long-term debt—interest rate swap agreements (fixed-to-variable) |
(43 | ) | 108 | |||||
| Investment Income (Expense): |
||||||||
| Mark to market adjustments on derivative component of prepaid forward sale agreements |
(357 | ) | (697 | ) | ||||
| Unrealized gains (losses) on securities underlying prepaid forward sale agreements |
456 | 836 | ||||||
| Gain (Loss) on Fair Value Hedging Relationships |
99 | 139 | ||||||
| Nondesignated |
||||||||
| Investment Income (Expense): |
||||||||
| Mark to market adjustments on derivative component of ZONES |
2 | 6 | ||||||
| Total Gain (Loss) |
$ | 101 | $ | 145 | ||||
The difference between variable and fixed rates received under the terms of our interest rate swap agreements reduced interest expense by approximately $26 million and $74 million during the three and nine months ended September 30, 2009, respectively.
Note 7: Noncontrolling Interests
Certain of our subsidiaries that we consolidate are not wholly owned. Some of the agreements with the minority partners of these subsidiaries contain redemption features whereby interests held by the minority partners are redeemable either (i) at the option of the holder or (ii) upon the occurrence of an event that is not solely within our control. If interests were to be redeemed under these agreements, we would generally be required to purchase the interests at fair value on the date of redemption. In accordance with the accounting guidance for the classification and measurement of redeemable interests, these interests are presented on the balance sheet outside of equity under the caption “Redeemable noncontrolling interests.” Noncontrolling interests that do not contain such redemption features are presented in equity.
11
Table of Contents
During the nine months ended September 30, 2009, we purchased all of the noncontrolling interest of one of our technology ventures, which had a carrying value of approximately $35 million, for approximately $5 million and rights to existing intellectual property. The difference between the amount paid and the carrying value of the noncontrolling interest resulted in an increase of approximately $30 million to additional paid-in capital of Comcast Corporation.
The table below presents the changes in equity resulting from net income attributable to Comcast Corporation and transfers to or from noncontrolling interests.
| (in millions) | Nine Months Ended September 30, 2009 | ||
| Net income attributable to Comcast Corporation |
$ | 2,683 | |
| Transfers from (to) noncontrolling interests: |
|||
| Increase in Comcast Corporation additional paid-in capital resulting from the purchase of noncontrolling interest |
30 | ||
| Changes from net income attributable to Comcast Corporation and transfers from (to) noncontrolling interests |
$ | 2,713 | |
Note 8: Equity
Share-Based Compensation
Our Board of Directors may grant share-based awards, in the form of stock options and RSUs, to certain employees and directors. Additionally, through our employee stock purchase plan, employees are able to purchase shares of Comcast Class A common stock at a discount through payroll deductions.
In March 2009, we granted 29.5 million stock options and 10.0 million RSUs related to our annual management grant program. The fair values associated with these grants were $4.94 per stock option and $13.48 per RSU.
Recognized Share-Based Compensation Expense
| Three Months Ended September 30 |
Nine Months Ended September 30 | |||||||||||
| (in millions) | 2009 | 2008 | 2009 | 2008 | ||||||||
| Stock options |
$ | 28 | $ | 29 | $ | 75 | $ | 73 | ||||
| Restricted share units |
29 | 27 | 69 | 70 | ||||||||
| Employee stock purchase plan |
3 | 4 | 10 | 12 | ||||||||
| Total |
$ | 60 | $ | 60 | $ | 154 | $ | 155 | ||||
As of September 30, 2009, there was $344 million and $318 million of unrecognized pretax compensation cost related to nonvested stock options and nonvested RSUs, respectively.
The employee cost associated with participation in the employee stock purchase plan was satisfied with payroll deductions of approximately $11 million and $38 million for the three and nine months ended September 30, 2009, respectively. For the three and nine months ended September 30, 2008, the employee cost was approximately $12 million and $40 million, respectively.
Accumulated Other Comprehensive Income (Loss)
The table below presents our accumulated other comprehensive income (loss), net of deferred taxes.
| September 30 (in millions) | 2009 | 2008 | ||||||
| Unrealized gains (losses) on marketable securities |
$ | 23 | $ | 12 | ||||
| Deferred gains (losses) on cash flow hedges |
(64 | ) | (100 | ) | ||||
| Unrealized gains (losses) on employee benefit obligations |
(31 | ) | 23 | |||||
| Cumulative translation adjustments |
— | 1 | ||||||
| Accumulated other comprehensive income (loss) |
$ | (72 | ) | $ | (64 | ) | ||
12
Table of Contents
Deferred losses on cash flow hedges in the table above relate primarily to previous interest rate lock agreements. As of September 30, 2009, we expect $16 million of unrealized losses, $10 million net of deferred taxes, to be reclassified as an adjustment to interest expense over the next 12 months.
Note 9: Income Taxes
Income tax expense for the three and nine months ended September 30, 2009 was reduced by approximately $251 million and $436 million, respectively, primarily due to the recognition of tax benefits associated with uncertain tax positions and related interest and certain corporate reorganizations (see Note 13). The primary impacts of these adjustments were reductions to our deferred income tax and other long-term liabilities. These adjustments also reduced our unrecognized tax benefits, which were approximately $1.2 billion as of September 30, 2009.
In October 2009, we reached tentative settlements with various taxing authorities that are expected to result in recognition of additional tax benefits and a further reduction of our unrecognized tax benefits in 2009.
Note 10: Statement of Cash Flows—Supplemental Information
The table below presents our adjustments to reconcile net income from consolidated operations to net cash provided by operating activities.
| Nine Months Ended September 30 |
||||||||
| (in millions) | 2009 | 2008 | ||||||
| Net income from consolidated operations |
$ | 2,668 | $ | 2,113 | ||||
| Adjustments to reconcile net income from consolidated operations to net cash provided by operating activities: |
||||||||
| Depreciation |
4,148 | 4,093 | ||||||
| Amortization |
760 | 694 | ||||||
| Share-based compensation |
192 | 195 | ||||||
| Noncash interest expense (income), net |
125 | 164 | ||||||
| Equity in net (income) losses of affiliates, net |
44 | 36 | ||||||
| (Gains) losses on investments and noncash other (income) expense, net |
(146 | ) | (287 | ) | ||||
| Deferred income taxes |
572 | 609 | ||||||
| Changes in operating assets and liabilities, net of effects of acquisitions and divestitures: |
||||||||
| Change in accounts receivable, net |
(11 | ) | 4 | |||||
| Change in accounts payable and accrued expenses related to trade creditors |
(73 | ) | (21 | ) | ||||
| Change in other operating assets and liabilities |
(554 | ) | (227 | ) | ||||
| Net cash provided by operating activities |
$ | 7,725 | $ | 7,373 | ||||
Cash Payments for Interest and Income Taxes
| Three Months Ended September 30 |
Nine Months Ended September 30 | |||||||||||
| (in millions) | 2009 | 2008 | 2009 | 2008 | ||||||||
| Interest |
$ | 615 | $ | 679 | $ | 1,678 | $ | 1,795 | ||||
| Income taxes |
$ | 194 | $ | 234 | $ | 940 | $ | 589 | ||||
Noncash Financing and Investing Activities
During the nine months ended September 30, 2009, we:
| • | recorded a liability of approximately $193 million for a quarterly cash dividend of $0.0675 per common share paid in October 2009, which is a noncash financing activity |
| • | recorded a liability of approximately $27 million for share repurchases that settled in October 2009, which is a noncash financing activity |
| • | acquired approximately $381 million of property and equipment and software that was accrued but unpaid, which is a noncash investing activity |
13
Table of Contents
Note 11: Commitments and Contingencies
Commitments
One of our subsidiaries supports debt compliance with respect to obligations of a cable system in which we hold an ownership interest. The obligation expires March 2011. Although there can be no assurance, we believe that we will not be required to meet our obligation under this commitment. The total notional amount of our commitment was $410 million as of September 30, 2009, at which time there were no quoted market prices for similar agreements.
Contingencies
Antitrust Cases
We are defendants in two purported class actions originally filed in December 2003 in the United States District Courts for the District of Massachusetts and the Eastern District of Pennsylvania. The potential class in the Massachusetts case, which has been transferred to the Eastern District of Pennsylvania, is our subscriber base in the “Boston Cluster” area, and the potential class in the Pennsylvania case is our subscriber base in the “Philadelphia and Chicago Clusters,” as those terms are defined in the complaints. In each case, the plaintiffs allege that certain subscriber exchange transactions with other cable providers resulted in unlawful horizontal market restraints in those areas and seek damages under antitrust statutes, including treble damages.
Classes of Philadelphia Cluster and Chicago Cluster subscribers were certified in May 2007 and October 2007, respectively. In March 2009, as a result of a Third Circuit Court of Appeals decision clarifying the standards for class certification, the order certifying the Philadelphia Cluster class was vacated without prejudice to the plaintiffs filing a new motion. A hearing on the plaintiffs’ new motion, which was filed in April 2009, took place in October 2009, and a decision is pending. The plaintiffs’ claims concerning the other two clusters are stayed pending determination of the Philadelphia Cluster claims.
In addition, we are among the defendants in a purported class action filed in the United States District Court for the Central District of California (“Central District”) in September 2007. The potential class is comprised of all persons residing in the United States who have subscribed to an expanded basic level of video service provided by one of the defendants. The plaintiffs allege that the defendants who produce video programming have entered into agreements with the defendants who distribute video programming via cable and satellite (including us), which preclude the distributor defendants from reselling channels to subscribers on an “unbundled” basis in violation of federal antitrust laws. The plaintiffs seek treble damages and injunctive relief requiring each distributor defendant to resell certain channels to its subscribers on an “unbundled” basis. In October 2009, the Central District issued an order dismissing the plaintiffs’ complaint with prejudice. Plaintiffs have appealed that order to the Ninth Circuit Court of Appeals.
ERISA Litigation
We and several of our current officers have been named as defendants in a purported class action lawsuit filed in the United States District Court for the Eastern District of Pennsylvania in February 2008. The alleged class comprises participants in our retirement investment (401(k)) plan that invested in the plan’s company stock account. The plaintiff asserts that the defendants breached their fiduciary duties under the Employee Retirement Income Security Act of 1974 (ERISA) in managing the plan by allowing participants to continue to invest in the company stock account during a time in 2007 when we allegedly knew (but had not disclosed) that we would not meet our forecasted results. The plaintiff seeks unspecified damages. In June 2009, the plaintiff filed a motion to have the case certified as a class action and we filed a response opposing that motion.
* * *
We believe the claims in each of the actions described above in this item are without merit and intend to defend the actions vigorously. Although we cannot predict the outcome of any of the actions described above or how the final resolution of any such actions would impact our results of operations or cash flows for any one period or our consolidated financial condition, the final disposition of any of the above actions is not expected to have a material adverse effect on our consolidated financial position, but could possibly be material to our consolidated results of operations or cash flows for any one period.
14
Table of Contents
Other
We are a defendant in several unrelated lawsuits claiming infringement of various patents relating to various aspects of our businesses. In certain of these cases, other industry participants are also defendants, and also in certain of these cases, we expect that any potential liability would be in part or in whole the responsibility of our equipment and technology vendors under applicable contractual indemnification provisions.
We are subject to other legal proceedings and claims that arise in the ordinary course of our business. While the amount of ultimate liability with respect to such actions is not expected to materially affect our financial position, results of operations or cash flows, any litigation resulting from any such legal proceedings or claims could be time consuming, costly and injure our reputation.
Note 12: Financial Data by Business Segment
Our reportable segments consist of our Cable and Programming businesses. In evaluating the profitability of our segments, the components of net income (loss) below operating income (loss) before depreciation and amortization are not separately evaluated by our management. Assets are not allocated to segments for management reporting, although approximately 95% of our assets relate to our Cable segment. Our financial data by business segment is presented in the table below.
| (in millions) | Cable(a)(b) | Programming(c) | Corporate and Other(d)(e) |
Eliminations(e)(f) | Total | ||||||||||||
| Three months ended September 30, 2009 |
|||||||||||||||||
| Revenue(g) |
$ | 8,356 | $ | 383 | $ | 156 | $ | (93 | ) | $ | 8,802 | ||||||
| Operating income (loss) before depreciation and amortization(h) |
3,314 | 118 | (107 | ) | 1 | 3,326 | |||||||||||
| Depreciation and amortization |
1,541 | 49 | 30 | (5 | ) | 1,615 | |||||||||||
| Operating income (loss) |
1,773 | 69 | (137 | ) | 6 | 1,711 | |||||||||||
| Capital expenditures |
1,212 | 9 | 6 | — | 1,227 | ||||||||||||
| Three months ended September 30, 2008 |
|||||||||||||||||
| Revenue(g) |
$ | 8,131 | $ | 347 | $ | 128 | $ | (57 | ) | $ | 8,549 | ||||||
| Operating income (loss) before depreciation and amortization(h) |
3,251 | 105 | (119 | ) | — | 3,237 | |||||||||||
| Depreciation and amortization |
1,502 | 46 | 27 | (8 | ) | 1,567 | |||||||||||
| Operating income (loss) |
1,749 | 59 | (146 | ) | 8 | 1,670 | |||||||||||
| Capital expenditures |
1,268 | 12 | 26 | — | 1,306 | ||||||||||||
| Nine months ended September 30, 2009 |
|||||||||||||||||
| Revenue(g) |
$ | 25,181 | $ | 1,128 | $ | 517 | $ | (251 | ) | $ | 26,575 | ||||||
| Operating income (loss) before depreciation and amortization(h) |
10,221 | 343 | (258 | ) | (1 | ) | 10,305 | ||||||||||
| Depreciation and amortization |
4,698 | 146 | 86 | (22 | ) | 4,908 | |||||||||||
| Operating income (loss) |
5,523 | 197 | (344 | ) | 21 | 5,397 | |||||||||||
| Capital expenditures |
3,450 | 23 | 35 | — | 3,508 | ||||||||||||
| Nine months ended September 30, 2008 |
|||||||||||||||||
| Revenue(g) |
$ | 24,147 | $ | 1,076 | $ | 453 | $ | (185 | ) | $ | 25,491 | ||||||
| Operating income (loss) before depreciation and amortization(h) |
9,755 | 307 | (299 | ) | (1 | ) | 9,762 | ||||||||||
| Depreciation and amortization |
4,587 | 145 | 78 | (23 | ) | 4,787 | |||||||||||
| Operating income (loss) |
5,168 | 162 | (377 | ) | 22 | 4,975 | |||||||||||
| Capital expenditures |
3,877 | 22 | 138 | — | 4,037 | ||||||||||||
| (a) | For the three and nine months ended September 30, 2009 and 2008, Cable segment revenue was derived from the following services: |
15
Table of Contents
| Three Months Ended September 30 |
Nine Months Ended September 30 |
|||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||
| Video |
57.2 | % | 58.6 | % | 57.9 | % | 59.4 | % | ||||
| High-speed Internet |
23.1 | 22.4 | 22.9 | 22.2 | ||||||||
| Phone |
9.9 | 8.5 | 9.6 | 7.9 | ||||||||
| Advertising |
3.8 | 4.7 | 3.6 | 4.7 | ||||||||
| Franchise fees |
2.8 | 2.8 | 2.8 | 2.8 | ||||||||
| Other |
3.2 | 3.0 | 3.2 | 3.0 | ||||||||
| Total |
100 | % | 100 | % | 100 | % | 100 | % | ||||
Subscription revenue received from customers who purchase bundled services at a discounted rate is allocated proportionately to each service based on the individual service’s price on a stand-alone basis.
| (b) | Our Cable segment includes our regional sports networks. |
| (c) | Our Programming segment consists primarily of our consolidated national programming networks, including E!, Golf Channel, VERSUS, G4 and Style. |
| (d) | Corporate and Other activities include Comcast Interactive Media, Comcast Spectacor, a portion of the operating results of our less than wholly owned technology development ventures (see “(e)” below), corporate activities and all other businesses not presented in our Cable or Programming segments. |
| (e) | We consolidate our less than wholly owned technology development ventures that we control or of which we are considered the primary beneficiary. These ventures are with various corporate partners, such as Motorola and Gemstar. The ventures have been created to share the costs of development of new technologies for set-top boxes and other devices. The results of these entities are included within Corporate and Other except for cost allocations, which are made to the Cable segment based on our percentage ownership in each entity. |
| (f) | Included in the Eliminations column are transactions that our segments enter into with one another. The most common types of transactions are the following: |
| • | our Programming segment generates revenue by selling cable network programming to our Cable segment, which represents a substantial majority of the revenue elimination amount |
| • | our Cable segment receives incentives offered by our Programming segment when negotiating programming contracts that are recorded as a reduction to programming expenses |
| • | our Cable segment generates revenue by selling advertising and by selling the use of satellite feeds to our Programming segment |
| • | our Cable segment generates revenue by providing network services to Comcast Interactive Media |
| (g) | Non-U.S. revenue was not significant in any period. No single customer accounted for a significant amount of our revenue in any period. |
| (h) | To measure the performance of our operating segments, we use operating income (loss) before depreciation and amortization, excluding impairments related to fixed and intangible assets, and gains or losses from the sale of assets, if any. This measure eliminates the significant level of noncash depreciation and amortization expense that results from the capital-intensive nature of our businesses and from intangible assets recognized in business combinations. It is also unaffected by our capital structure or investment activities. We use this measure to evaluate our consolidated operating performance and the operating performance of our operating segments, and to allocate resources and capital to our operating segments. It is also a significant performance measure in our annual incentive compensation programs. We believe that this measure is useful to investors because it is one of the bases for comparing our operating performance with other companies in our industries, although our measure may not be directly comparable to similar measures used by other companies. This measure should not be considered a substitute for operating income (loss), net income (loss) attributable to Comcast Corporation, net cash provided by operating activities or other measures of performance or liquidity reported in accordance with GAAP. |
16
Table of Contents
Note 13: Condensed Consolidating Financial Information
Comcast Corporation and four of our wholly owned cable holding company subsidiaries, Comcast Cable Communications, LLC (“CCCL”), Comcast MO Group, Inc. (“Comcast MO Group”), Comcast Cable Holdings, LLC (“CCH”) and Comcast MO of Delaware, LLC (“Comcast MO of Delaware”), have fully and unconditionally guaranteed each other’s debt securities. Comcast MO Group, CCH and Comcast MO of Delaware are collectively referred to as the “Combined CCHMO Parents.”
On August 31, 2009, we merged our wholly owned subsidiary Comcast Cable Communications Holdings, Inc. (“CCCH”), a guarantor prior to the merger, with and into CCCL. Accordingly, the financial information for the CCCL parent reflects both the former CCCH parent and the CCCL parent for all periods presented.
Comcast Corporation unconditionally guarantees the $211 million principal amount currently outstanding of Comcast Holdings’ ZONES due October 2029 and the $202 million principal amount currently outstanding of Comcast Holdings’ 10 5/8% senior subordinated debentures due 2012. Comcast Corporation does not guarantee the $71 million principal amount outstanding of Comcast Holdings’ ZONES due November 2029. We have included Comcast Holdings’ condensed consolidating financial information for all periods presented. Our condensed consolidating financial information is presented in the tables below.
Comcast Corporation
Condensed Consolidating Balance Sheet
September 30, 2009
| (in millions) | Comcast Parent |
CCCL Parent |
Combined CCHMO Parents |
Comcast Holdings |
Non- Guarantor Subsidiaries |
Elimination and Consolidation Adjustments |
Consolidated Comcast Corporation | |||||||||||||||
| ASSETS |
||||||||||||||||||||||
| Cash and cash equivalents |
$ | — | $ | — | $ | — | $ | — | $ | 862 | $ | — | $ | 862 | ||||||||
| Investments |
— | — | — | — | 56 | — | 56 | |||||||||||||||
| Accounts receivable, net |
— | — | — | — | 1,639 | — | 1,639 | |||||||||||||||
| Other current assets |
188 | 2 | — | — | 659 | — | 849 | |||||||||||||||
| Total current assets |
188 | 2 | — | — | 3,216 | — | 3,406 | |||||||||||||||
| Investments |
— | — | — | — | 5,699 | — | 5,699 | |||||||||||||||
| Investments in and amounts due from subsidiaries eliminated upon consolidation |
73,639 | 79,245 | 46,299 | 27,635 | 5,355 | (232,173 | ) | — | ||||||||||||||
| Property and equipment, net |
307 | — | — | — | 23,298 | — | 23,605 | |||||||||||||||
| Franchise rights |
— | — | — | — | 59,442 | — | 59,442 | |||||||||||||||
| Goodwill |
— | — | — | — | 14,934 | — | 14,934 | |||||||||||||||
| Other intangible assets, net |
11 | — | — | — | 4,198 | — | 4,209 | |||||||||||||||
| Other noncurrent assets, net |
406 | 15 | — | 9 | 738 | — | 1,168 | |||||||||||||||
| Total assets |
$ | 74,551 | $ | 79,262 | $ | 46,299 | $ | 27,644 | $ | 116,880 | $ | (232,173 | ) | $ | 112,463 | |||||||
| LIABILITIES AND EQUITY |
||||||||||||||||||||||
| Accounts payable and accrued expenses related to trade creditors |
$ | 198 | $ | — | $ | — | $ | — | $ | 2,935 | $ | — | $ | 3,133 | ||||||||
| Accrued expenses and other current liabilities |
758 | 257 | 29 | 125 | 1,836 | — | 3,005 | |||||||||||||||
| Current portion of long-term debt |
902 | — | — | — | 52 | — | 954 | |||||||||||||||
| Total current liabilities |
1,858 | 257 | 29 | 125 | 4,823 | — | 7,092 | |||||||||||||||
| Long-term debt, less current portion |
20,629 | 4,925 | 2,356 | 326 | 257 | — | 28,493 | |||||||||||||||
| Deferred income taxes |
8,068 | — | — | 688 | 18,810 | — | 27,566 | |||||||||||||||
| Other noncurrent liabilities |
1,685 | — | — | 171 | 4,907 | — | 6,763 | |||||||||||||||
| Redeemable noncontrolling interests |
— | — | — | — | 168 | — | 168 | |||||||||||||||
| Equity: |
||||||||||||||||||||||
| Common stock |
33 | — | — | — | — | — | 33 | |||||||||||||||
| Other stockholders’ equity |
42,278 | 74,080 | 43,914 | 26,334 | 87,845 | (232,173 | ) | 42,278 | ||||||||||||||
| Total Comcast Corporation stockholders’ equity |
42,311 | 74,080 | 43,914 | 26,334 | 87,845 | (232,173 | ) | 42,311 | ||||||||||||||
| Noncontrolling interests |
— | — | — | — | 70 | — | 70 | |||||||||||||||
| Total equity |
42,311 | 74,080 | 43,914 | 26,334 | 87,915 | (232,173 | ) | 42,381 | ||||||||||||||
| Total liabilities and equity |
$ | 74,551 | $ | 79,262 | $ | 46,299 | $ | 27,644 | $ | 116,880 | $ | (232,173 | ) | $ | 112,463 | |||||||
17
Table of Contents
Comcast Corporation
Condensed Consolidating Balance Sheet
December 31, 2008
| (in millions) | Comcast Parent |
CCCL Parent |
Combined CCHMO Parents |
Comcast Holdings |
Non- Guarantor Subsidiaries |
Elimination and Consolidation Adjustments |
Consolidated Comcast Corporation | |||||||||||||||
| ASSETS |
||||||||||||||||||||||
| Cash and cash equivalents |
$ | — | $ | — | $ | — | $ | — | $ | 1,195 | $ | — | $ | 1,195 | ||||||||
| Investments |
— | — | — | — | 59 | — | 59 | |||||||||||||||
| Accounts receivable, net |
— | — | — | — | 1,626 | — | 1,626 | |||||||||||||||
| Other current assets |
171 | 8 | — | — | 657 | — | 836 | |||||||||||||||
| Total current assets |
171 | 8 | — | — | 3,537 | — | 3,716 | |||||||||||||||
| Investments |
— | — | — | — | 4,783 | — | 4,783 | |||||||||||||||
| Investments in and amounts due from subsidiaries eliminated upon consolidation |
70,076 | 78,035 | 46,314 | 26,519 | 4,471 | (225,415 | ) | — | ||||||||||||||
| Property and equipment, net |
306 | — | — | — | 24,138 | — | 24,444 | |||||||||||||||
| Franchise rights |
— | — | — | — | 59,449 | — | 59,449 | |||||||||||||||
| Goodwill |
— | — | — | — | 14,889 | — | 14,889 | |||||||||||||||
| Other intangible assets, net |
1 | — | — | — | 4,557 | — | 4,558 | |||||||||||||||
| Other noncurrent assets, net |
603 | 21 | — | 17 | 537 | — | 1,178 | |||||||||||||||
| Total assets |
$ | 71,157 | $ | 78,064 | $ | 46,314 | $ | 26,536 | $ | 116,361 | $ | (225,415 | ) | $ | 113,017 | |||||||
| LIABILITIES AND EQUITY |
||||||||||||||||||||||
| Accounts payable and accrued expenses related to trade creditors |
$ | 196 | $ | — | $ | — | $ | — | $ | 3,197 | $ | — | $ | 3,393 | ||||||||
| Accrued expenses and other current liabilities |
810 | 297 | 87 | 129 | 1,945 | — | 3,268 | |||||||||||||||
| Current portion of long-term debt |
1,242 | 1,006 | — | — | 30 | — | 2,278 | |||||||||||||||
| Total current liabilities |
2,248 | 1,303 | 87 | 129 | 5,172 | — | 8,939 | |||||||||||||||
| Long-term debt, less current portion |
19,839 | 6,756 | 2,691 | 610 | 282 | — | 30,178 | |||||||||||||||
| Deferred income taxes |
7,160 | — | — | 656 | 19,166 | — | 26,982 | |||||||||||||||
| Other noncurrent liabilities |
1,460 | — | — | 119 | 4,592 | — | 6,171 | |||||||||||||||
| Redeemable noncontrolling interests |
— | — | — | — | 171 | — | 171 | |||||||||||||||
| Equity: |
||||||||||||||||||||||
| Common stock |
33 | — | — | — | — | — | 33 | |||||||||||||||
| Other stockholders’ equity |
40,417 | 70,005 | 43,536 | 25,022 | 86,852 | (225,415 | ) | 40,417 | ||||||||||||||
| Total Comcast Corporation stockholders’ equity |
40,450 | 70,005 | 43,536 | 25,022 | 86,852 | (225,415 | ) | 40,450 | ||||||||||||||
| Noncontrolling interests |
— | — | — | — | 126 | — | 126 | |||||||||||||||
| Total equity |
40,450 | 70,005 | 43,536 | 25,022 | 86,978 | (225,415 | ) | 40,576 | ||||||||||||||
| Total liabilities and equity |
$ | 71,157 | $ | 78,064 | $ | 46,314 | $ | 26,536 | $ | 116,361 | $ | (225,415 | ) | $ | 113,017 | |||||||
18
Table of Contents
Comcast Corporation
Condensed Consolidating Statement of Operations
For the Three Months Ended September 30, 2009
| (in millions) | Comcast Parent |
CCCL Parent |
Combined CCHMO Parents |
Comcast Holdings |
Non- Guarantor Subsidiaries |
Elimination and Consolidation Adjustments |
Consolidated Comcast Corporation |
|||||||||||||||||||||
| Revenue: |
||||||||||||||||||||||||||||
| Service revenue |
$ | — | $ | — | $ | — | $ | — | $ | 8,802 | $ | — | $ | 8,802 | ||||||||||||||
| Management fee revenue |
192 | 168 | 108 | — | — | (468 | ) | — | ||||||||||||||||||||
| 192 | 168 | 108 | — | 8,802 | (468 | ) | 8,802 | |||||||||||||||||||||
| Costs and Expenses: |
||||||||||||||||||||||||||||
| Operating (excluding depreciation and amortization) |
— | — | — | — | 3,490 | — | 3,490 | |||||||||||||||||||||
| Selling, general and administrative |
92 | 168 | 108 | 15 | 2,071 | (468 | ) | 1,986 | ||||||||||||||||||||
| Depreciation |
7 | — | — | — | 1,355 | — | 1,362 | |||||||||||||||||||||
| Amortization |
— | — | — | — | 253 | — | 253 | |||||||||||||||||||||
| 99 | 168 | 108 | 15 | 7,169 | (468 | ) | 7,091 | |||||||||||||||||||||
| Operating income (loss) |
93 | — | — | (15 | ) | 1,633 | — | 1,711 | ||||||||||||||||||||
| Other Income (Expense): |
||||||||||||||||||||||||||||
| Interest expense |
(335 | ) | (254 | ) | (79 | ) | (8 | ) | (31 | ) | — | (707 | ) | |||||||||||||||
| Investment income (loss), net |
1 | — | — | 2 | 145 | — | 148 | |||||||||||||||||||||
| Equity in net income (losses) of affiliates, net |
1,101 | 1,267 | 853 | 629 | (234 | ) | (3,633 | ) | (17 | ) | ||||||||||||||||||
| Other income (expense) |
— | — | — | — | 2 | — | 2 | |||||||||||||||||||||
| 767 | 1,013 | 774 | 623 | (118 | ) | (3,633 | ) | (574 | ) | |||||||||||||||||||
| Income (loss) before income taxes |
860 | 1,013 | 774 | 608 | 1,515 | (3,633 | ) | 1,137 | ||||||||||||||||||||
| Income tax (expense) benefit |
84 | 89 | 28 | 7 | (411 | ) | — | (203 | ) | |||||||||||||||||||
| Net income (loss) from consolidated operations |
944 | 1,102 | 802 | 615 | 1,104 | (3,633 | ) | 934 | ||||||||||||||||||||
| Net (income) loss attributable to noncontrolling interests |
— | — | — | — | 10 | — | 10 | |||||||||||||||||||||
| Net income (loss) attributable to Comcast Corporation |
$ | 944 | $ | 1,102 | $ | 802 | $ | 615 | $ | 1,114 | $ | (3,633 | ) | $ | 944 | |||||||||||||
19
Table of Contents
Comcast Corporation
Condensed Consolidating Statement of Operations
For the Three Months Ended September 30, 2008
| (in millions) | Comcast Parent |
CCCL Parent |
Combined CCHMO Parents |
Comcast Holdings |
Non- Guarantor Subsidiaries |
Elimination and Consolidation Adjustments |
Consolidated Comcast Corporation |
|||||||||||||||||||||
| Revenue: |
||||||||||||||||||||||||||||
| Service revenue |
$ | — | $ | — | $ | — | $ | — | $ | 8,549 | $ | — | $ | 8,549 | ||||||||||||||
| Management fee revenue |
184 | 161 | 104 | — | — | (449 | ) | — | ||||||||||||||||||||
| 184 | 161 | 104 | — | 8,549 | (449 | ) | 8,549 | |||||||||||||||||||||
| Costs and Expenses: |
||||||||||||||||||||||||||||
| Operating (excluding depreciation and amortization) |
— | — | — | — | 3,345 | — | 3,345 | |||||||||||||||||||||
| Selling, general and administrative |
95 | 161 | 104 | 14 | 2,042 | (449 | ) | 1,967 | ||||||||||||||||||||
| Depreciation |
7 | — | — | — | 1,325 | — | 1,332 | |||||||||||||||||||||
| Amortization |
— | — | — | — | 235 | — | 235 | |||||||||||||||||||||
| 102 | 161 | 104 | 14 | 6,947 | (449 | ) | 6,879 | |||||||||||||||||||||
| Operating income (loss) |
82 | — | — | (14 | ) | 1,602 | — | 1,670 | ||||||||||||||||||||
| Other Income (Expense): |
||||||||||||||||||||||||||||
| Interest expense |
(333 | ) | (158 | ) | (52 | ) | (26 | ) | (32 | ) | — | (601 | ) | |||||||||||||||
| Investment income (loss), net |
(13 | ) | — | — | 49 | 38 | — | 74 | ||||||||||||||||||||
| Equity in net income (losses) of affiliates, net |
940 | 1,122 | 719 | 375 | 17 | (3,170 | ) | 3 | ||||||||||||||||||||
| Other income (expense) |
— | — | — | — | 11 | — | 11 | |||||||||||||||||||||
| 594 | 964 | 667 | 398 | 34 | (3,170 | ) | (513 | ) | ||||||||||||||||||||
| Income (loss) before income taxes |
676 | 964 | 667 | 384 | 1,636 | (3,170 | ) | 1,157 | ||||||||||||||||||||
| Income tax (expense) benefit |
95 | 54 | 18 | (3 | ) | (565 | ) | — | (401 | ) | ||||||||||||||||||
| Net income (loss) from consolidated operations |
771 | 1,018 | 685 | 381 | 1,071 | (3,170 | ) | 756 | ||||||||||||||||||||
| Net (income) loss attributable to noncontrolling interests |
— | — | — | — | 15 | — | 15 | |||||||||||||||||||||
| Net income (loss) attributable to Comcast Corporation |
$ | 771 | $ | 1,018 | $ | 685 | $ | 381 | $ | 1,086 | $ | (3,170 | ) | $ | 771 | |||||||||||||
20
Table of Contents
Comcast Corporation
Condensed Consolidating Statement of Operations
For the Nine Months Ended September 30, 2009
| (in millions) | Comcast Parent |
CCCL Parent |
Combined CCHMO Parents |
Comcast Holdings |
Non- Guarantor Subsidiaries |
Elimination and Consolidation Adjustments |
Consolidated Comcast Corporation |
|||||||||||||||||||||
| Revenue: |
||||||||||||||||||||||||||||
| Service revenue |
$ | — | $ | — | $ | — | $ | — | 26,575 | $ | — | $ | 26,575 | |||||||||||||||
| Management fee revenue |
576 | 504 | 323 | — | — | (1,403 | ) | — | ||||||||||||||||||||
| 576 | 504 | 323 | — | 26,575 | (1,403 | ) | 26,575 | |||||||||||||||||||||
| Costs and Expenses: |
||||||||||||||||||||||||||||
| Operating (excluding depreciation and amortization) |
— | — | — | — | 10,600 | — | 10,600 | |||||||||||||||||||||
| Selling, general and administrative |
252 | 504 | 323 | 43 | 5,951 | (1,403 | ) | 5,670 | ||||||||||||||||||||
| Depreciation |
21 | — | — | — | 4,127 | — | 4,148 | |||||||||||||||||||||
| Amortization |
— | — | — | — | 760 | — | 760 | |||||||||||||||||||||
| 273 | 504 | 323 | 43 | 21,438 | (1,403 | ) | 21,178 | |||||||||||||||||||||
| Operating income (loss) |
303 | — | — | (43 | ) | 5,137 | — | 5,397 | ||||||||||||||||||||
| Other Income (Expense): |
||||||||||||||||||||||||||||
| Interest expense |
(969 | ) | (562 | ) | (179 | ) | (18 | ) | (100 | ) | — | (1,828 | ) | |||||||||||||||
| Investment income (loss), net |
(6 | ) | — | — | 7 | 217 | — | 218 | ||||||||||||||||||||
| Equity in net income (losses) of affiliates, net |
3,120 | 3,592 | 2,436 | 1,430 | (329 | ) | (10,293 | ) | (44 | ) | ||||||||||||||||||
| Other income (expense) |
— | — | — | — | 13 | — | 13 | |||||||||||||||||||||
| 2,145 | 3,030 | 2,257 | 1,419 | (199 | ) | (10,293 | ) | (1,641 | ) | |||||||||||||||||||
| Income (loss) before income taxes |
2,448 | 3,030 | 2,257 | 1,376 | 4,938 | (10,293 | ) | 3,756 | ||||||||||||||||||||
| Income tax (expense) benefit |
235 | 197 | 63 | 19 | (1,602 | ) | — | (1,088 | ) | |||||||||||||||||||
| Net income (loss) from consolidated operations |
2,683 | 3,227 | 2,320 | 1,395 | 3,336 | (10,293 | ) | 2,668 | ||||||||||||||||||||
| Net (income) loss attributable to noncontrolling interests |
— | — | — | — | 15 | — | 15 | |||||||||||||||||||||
| Net income (loss) attributable to Comcast Corporation |
$ | 2,683 | $ | 3,227 | $ | 2,320 | $ | 1,395 | $ | 3,351 | $ | (10,293 | ) | $ | 2,683 | |||||||||||||
21
Table of Contents
Comcast Corporation
Condensed Consolidating Statement of Operations
For the Nine Months Ended September 30, 2008
| (in millions) | Comcast Parent |
CCCL Parent |
Combined CCHMO Parents |
Comcast Holdings |
Non- Guarantor Subsidiaries |
Elimination and Consolidation Adjustments |
Consolidated Comcast Corporation |
|||||||||||||||||||||
| Revenue: |
||||||||||||||||||||||||||||
| Service revenue |
$ | — | $ | — | $ | — | $ | — | $ | 25,491 | $ | — | $ | 25,491 | ||||||||||||||
| Management fee revenue |
544 | 472 | 306 | — | — | (1,322 | ) | — | ||||||||||||||||||||
| 544 | 472 | 306 | — | 25,491 | (1,322 | ) | 25,491 | |||||||||||||||||||||
| Costs and Expenses: |
||||||||||||||||||||||||||||
| Operating (excluding depreciation and amortization) |
— | — | — | — | 10,040 | — | 10,040 | |||||||||||||||||||||
| Selling, general and administrative |
272 | 472 | 306 | 40 | 5,921 | (1,322 | ) | 5,689 | ||||||||||||||||||||
| Depreciation |
17 | — | — | — | 4,076 | — | 4.093 | |||||||||||||||||||||
| Amortization |
— | — | — | — | 694 | — | 694 | |||||||||||||||||||||
| 289 | 472 | 306 | 40 | 20,731 | (1,322 | ) | 20,516 | |||||||||||||||||||||
| Operating income (loss) |
255 | — | — | (40 | ) | 4,760 | — | 4,975 | ||||||||||||||||||||
| Other Income (Expense): |
||||||||||||||||||||||||||||
| Interest expense |
(976 | ) | (479 | ) | (162 | ) | (121 | ) | (102 | ) | — | (1,840 | ) | |||||||||||||||
| Investment income (loss), net |
(22 | ) | — | — | 27 | 78 | — | 83 | ||||||||||||||||||||
| Equity in net income (losses) of affiliates, net |
2,616 | 3,197 | 2,088 | 1,065 | (38 | ) | (8,964 | ) | (36 | ) | ||||||||||||||||||
| Other income (expense) |
(1 | ) | — | — | — | 296 | — | 295 | ||||||||||||||||||||
| 1,617 | 2,718 | 1,926 | 971 | 234 | (8,964 | ) | (1,498 | ) | ||||||||||||||||||||
| Income (loss) before income taxes |
1,872 | 2,718 | 1,926 | 931 | 4,994 | (8,964 | ) | 3,477 | ||||||||||||||||||||
| Income tax (expense) benefit |
263 | 167 | 57 | 47 | (1,898 | ) | — | (1,364 | ) | |||||||||||||||||||
| Net income (loss) from consolidated operations |
2,135 | 2,885 | 1,983 | 978 | 3,096 | (8,964 | ) | 2,113 | ||||||||||||||||||||
| Net (income) loss attributable to noncontrolling interests |
— | — | — | — | 22 | — | 22 | |||||||||||||||||||||
| Net income (loss) attributable to Comcast Corporation |
$ | 2,135 | $ | 2,885 | $ | 1,983 | $ | 978 | $ | 3,118 | $ | (8,964 | ) | $ | 2,135 | |||||||||||||
22
Table of Contents
Comcast Corporation
Condensed Consolidating Statement of Cash Flows
For the Nine Months Ended September 30, 2009
| (in millions) | Comcast Parent |
CCCL Parent |
Combined CCHMO Parents |
Comcast Holdings |
Non- Guarantor Subsidiaries |
Elimination and Consolidation Adjustments |
Consolidated Comcast Corporation |
||||||||||||||||||||
| Net cash provided by (used in) operating activities |
$ | 22 | $ | (330 | ) | $ | (197 | ) | $ | 6 | $ | 8,224 | — | $ | 7,725 | ||||||||||||
| Financing Activities: |
|||||||||||||||||||||||||||
| Proceeds from borrowings |
1,792 | — | — | — | 51 | — | 1,843 | ||||||||||||||||||||
| Repurchases and repayments of debt |
(1,241 | ) | (2,836 | ) | (312 | ) | (262 | ) | (58 | ) | — | (4,709 | ) | ||||||||||||||
| Repurchases of common stock |
(438 | ) | — | — | — | — | — | (438 | ) | ||||||||||||||||||
| Dividends paid |
(568 | ) | — | — | — | — | — | (568 | ) | ||||||||||||||||||
| Issuances of common stock |
1 | — | — | — | — | — | 1 | ||||||||||||||||||||
| Other |
(10 | ) | (130 | ) | (42 | ) | — | (4 | ) | — | (186 | ) | |||||||||||||||
| Net cash provided by (used in) financing activities |
(464 | ) | (2,966 | ) | (354 | ) | (262 | ) | (11 | ) | — | (4,057 | ) | ||||||||||||||
| Investing Activities: |
|||||||||||||||||||||||||||
| Net transactions with affiliates |
472 | 3,296 | 551 | 256 | (4,575 | ) | — | — | |||||||||||||||||||
| Capital expenditures |
(24 | ) | — | — | — | (3,484 | ) | — | (3,508 | ) | |||||||||||||||||
| Cash paid for intangible assets |
(6 | ) | — | — | — | (377 | ) | — | (383 | ) | |||||||||||||||||
| Acquisitions, net of cash acquired |
— | — | — | — | (36 | ) | — | (36 | ) | ||||||||||||||||||
| Proceeds from sales of investments |
— | — | — | — | 31 | — | 31 | ||||||||||||||||||||
| Purchases of investments |
— | — | — | — | (142 | ) | — | (142 | ) | ||||||||||||||||||
| Other |
— | — | — | — | 37 | — | 37 | ||||||||||||||||||||
| Net cash provided by (used in) investing activities |
442 | 3,296 | 551 | 256 | (8,546 | ) | — | (4,001 | ) | ||||||||||||||||||
| Increase (decrease) in cash and cash equivalents |
— | — | — | — | (333 | ) | — | (333 | ) | ||||||||||||||||||
| Cash and cash equivalents, beginning of period |
— | — | — | — | 1,195 | — | 1,195 | ||||||||||||||||||||
| Cash and cash equivalents, end of period |
$ | — | $ | — | $ | — | $ | — | 862 | $ | — | $ | 862 | ||||||||||||||
23
Table of Contents
Comcast Corporation
Condensed Consolidating Statement of Cash Flows
For the Nine Months Ended September 30, 2008
| (in millions) | Comcast Parent |
CCCL Parent |
Combined CCHMO Parents |
Comcast Holdings |
Non- Guarantor Subsidiaries |
Elimination and Consolidation Adjustments |
Consolidated Comcast Corporation |
||||||||||||||||||||
| Net cash provided by (used in) operating activities |
$ | (172 | ) | $ | (356 | ) | $ | (187 | ) | $ | 25 | $ | 8,063 | $ | — | $ | 7,373 | ||||||||||
| Financing Activities: |
|||||||||||||||||||||||||||
| Proceeds from borrowings |
1,998 | 1,500 | — | — | 15 | — | 3,513 | ||||||||||||||||||||
| Retirement and repayments of debt |
(300 | ) | (350 | ) | (300 | ) | (154 | ) | (39 | ) | — | (1,143 | ) | ||||||||||||||
| Repurchases of common stock |
(2,800 | ) | — | — | — | — | — | (2,800 | ) | ||||||||||||||||||
| Dividends paid |
(367 | ) | — | — | — | — | — | (367 | ) | ||||||||||||||||||
| Issuances of common stock |
53 | — | — | — | — | — | 53 | ||||||||||||||||||||
| Other |
(3 | ) | — | — | (53 | ) | (92 | ) | — | (148 | ) | ||||||||||||||||
| Net cash provided by (used in) financing activities |
(1,419 | ) | 1,150 | (300 | ) | (207 | ) | (116 | ) | — | (892 | ) | |||||||||||||||
| Investing Activities: |
|||||||||||||||||||||||||||
| Net transactions with affiliates |
1,753 | (794 | ) | 487 | 182 | (1,628 | ) | — | — | ||||||||||||||||||
| Capital expenditures |
(124 | ) | — | — | — | (3,913 | ) | — | (4,037 | ) | |||||||||||||||||
| Cash paid for intangible assets |
— | — | — | — | (376 | ) | — | (376 | ) | ||||||||||||||||||
| Acquisitions, net of cash acquired |
— | — | — | — | (700 | ) | — | (700 | ) | ||||||||||||||||||
| Proceeds from sales of investments |
— | — | — | — | 452 | — | 452 | ||||||||||||||||||||
| Purchases of investments |
— | — | — | — | (67 | ) | — | (67 | ) | ||||||||||||||||||
| Other |
(38 | ) | — | — | — | 36 | — | (2 | ) | ||||||||||||||||||
| Net cash provided by (used in) investing activities |
1,591 | (794 | ) | 487 | 182 | (6,196 | ) | — | (4,730 | ) | |||||||||||||||||
| Increase (decrease) in cash and cash equivalents |
— | — | — | — | 1,751 | — | 1,751 | ||||||||||||||||||||
| Cash and cash equivalents, beginning of period |
— | — | — | — | 963 | — | 963 | ||||||||||||||||||||
| Cash and cash equivalents, end of period |
$ | — | $ | — | $ | — | $ | — | $ | 2,714 | $ | — | $ | 2,714 | |||||||||||||
24
Table of Contents
ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
We are the nation’s leading provider of cable services, offering a variety of entertainment, information and communications services to residential and commercial customers. As of September 30, 2009, our cable systems served approximately 23.8 million video customers, 15.7 million high-speed Internet customers and 7.4 million phone customers and passed over 51 million homes in 39 states and the District of Columbia. We report the results of these operations as our Cable segment, which generates approximately 95% of our revenue. Our Cable segment generates revenue primarily through subscriptions to our video, high-speed Internet and phone services (“cable services”). Other Cable segment revenue sources include advertising and the operation of our regional sports networks. Our other reportable segment, Programming, consists primarily of our consolidated national programming networks, including E!, Golf Channel, VERSUS, G4 and Style. Revenue from our Programming segment is generated primarily from the sale of advertising, from monthly per subscriber license fees paid by multichannel video providers and from licensing our programming internationally.
Highlights and business developments for the nine months ended September 30, 2009 include the following:
| • | an increase in consolidated revenue of 4.3% to approximately $26.6 billion and an increase in consolidated operating income of 8.5% to approximately $5.4 billion compared to the same period in 2008 |
| • | an increase in Cable segment revenue of 4.3% to approximately $25.2 billion and an increase in operating income before depreciation and amortization of 4.8% to approximately $10.2 billion compared to the same period in 2008 |
| • | the addition of approximately 755,000 high-speed Internet customers, approximately 906,000 digital phone customers, and a net decrease of approximately 424,000 video customers with the addition or upgrade from analog of approximately 1.0 million digital video customers |
| • | a reduction in Cable segment capital expenditures of 11.0% to approximately $3.4 billion compared to the same period in 2008 |
| • | the repurchase of approximately 31.6 million shares of our Class A and Class A Special common stock under our share repurchase authorization for approximately $465 million |
| • | a decrease in our total debt primarily due to approximately $2.0 billion of scheduled debt maturities and approximately $1.3 billion related to the completion of a cash tender offer |
25
Table of Contents
Consolidated Operating Results
| Three Months Ended September 30 |
Increase/ (Decrease) |
Nine Months Ended September 30 |
Increase/ (Decrease) |
|||||||||||||||||||
| (in millions) | 2009 | 2008 | 2009 | 2008 | ||||||||||||||||||
| Revenue |
$ | 8,802 | $ | 8,549 | 3.0 | % | $ | 26,575 | $ | 25,491 | 4.3 | % | ||||||||||
| Costs and Expenses: |
||||||||||||||||||||||
| Operating, selling, general and administrative (excluding depreciation and amortization) |
5,476 | 5,312 | 3.1 | 16,270 | 15,729 | 3.4 | ||||||||||||||||
| Depreciation |
1,362 | 1,332 | 2.2 | 4,148 | 4,093 | 1.3 | ||||||||||||||||
| Amortization |
253 | 235 | 8.1 | 760 | 694 | 9.6 | ||||||||||||||||
| Operating income |
1,711 | 1,670 | 2.4 | 5,397 | 4,975 | 8.5 | ||||||||||||||||
| Other income (expense) items, net |
(574 | ) | (513 | ) | 11.8 | (1,641 | ) | (1,498 | ) | 9.5 | ||||||||||||
| Income before income taxes |
1,137 | 1,157 | (1.7 | ) | 3,756 | 3,477 | 8.0 | |||||||||||||||
| Income tax expense |
(203 | ) | (401 | ) | (49.4 | ) | (1,088 | ) | (1,364 | ) | (20.2 | ) | ||||||||||
| Net income from consolidated operations |
934 | 756 | 23.6 | 2,668 | 2,113 | 26.3 | ||||||||||||||||
| Net (income) loss attributable to noncontrolling interests |
10 | 15 | (33.4 | ) | 15 | 22 | (33.5 | ) | ||||||||||||||
| Net income attributable to Comcast Corporation |
$ | 944 | $ | 771 | 22.5 | % | $ | 2,683 | $ | 2,135 | 25.7 | % | ||||||||||
All percentages are calculated based on actual amounts. Minor differences may exist due to rounding.
Consolidated Revenue
Our Cable segment and Programming segment accounted for substantially all of the increases in consolidated revenue for the three and nine months ended September 30, 2009 compared to the same periods in 2008. Our other business activities consist primarily of Comcast Interactive Media and Comcast Spectacor. Cable segment revenue and Programming segment revenue are discussed separately in “Segment Operating Results.”
Consolidated Operating, Selling, General and Administrative Expenses
Our Cable segment and Programming segment accounted for substantially all of the increases in consolidated operating, selling, general and administrative expenses for the three and nine months ended September 30, 2009 compared to the same periods in 2008. The remaining changes related to our other business activities, primarily growth in our Comcast Interactive Media business and Comcast Spectacor. Cable segment and Programming segment operating, selling, general and administrative expenses are discussed separately in “Segment Operating Results.”
Consolidated Depreciation and Amortization
Depreciation expense for the three and nine months ended September 30, 2009 increased slightly compared to the same periods in 2008 primarily due to increases in property and equipment.
The increases in amortization expense for the three and nine months ended September 30, 2009 compared to the same periods in 2008 were primarily due to increases in software intangibles.
Segment Operating Results
Our segment operating results are presented based on how we assess operating performance and internally report financial information. To measure the performance of our operating segments, we use operating income (loss) before depreciation and amortization, excluding impairments related to fixed and intangible assets, and gains or losses from the sale of assets, if any. This measure eliminates the significant level of noncash depreciation and amortization expense that results from the capital-intensive nature of our businesses and from intangible assets recognized in business combinations. Additionally, it is unaffected by our capital structure or investment activities. We use this measure to evaluate our consolidated operating performance and the operating performance of our operating segments, and to allocate resources and capital to our operating segments. It is also a significant performance measure in our annual incentive compensation programs. We believe that this measure is useful to investors because it is one of the bases for comparing our operating performance with that of other
26
Table of Contents
companies in our industries, although our measure may not be directly comparable to similar measures used by other companies. Because we use this metric to measure our segment profit or loss, we reconcile it to operating income, the most directly comparable financial measure calculated and presented in accordance with generally accepted accounting principles in the United States (“GAAP”) in the business segment footnote to our consolidated financial statements (see Note 12 to our condensed consolidated financial statements). This measure should not be considered a substitute for operating income (loss), net income (loss) attributable to Comcast Corporation, net cash provided by operating activities, or other measures of performance or liquidity we have reported in accordance with GAAP.
Cable Segment Operating Results
| Three Months Ended September 30 |
Increase/(Decrease) | ||||||||||||
| (in millions) | 2009 | 2008 | $ | % | |||||||||
| Video(a) |
$ | 4,777 | $ | 4,767 | $ | 10 | 0.2 | % | |||||
| High-speed Internet |
1,930 | 1,822 | 108 | 5.9 | |||||||||
| Phone |
829 | 690 | 139 | 20.2 | |||||||||
| Advertising(a) |
321 | 381 | (60 | ) | (15.6 | ) | |||||||
| Other(a) |
261 | 243 | 18 | 7.0 | |||||||||
| Franchise fees |
238 | 228 | 10 | 4.2 | |||||||||
| Revenue |
8,356 | 8,131 | 225 | 2.8 | |||||||||
| Operating expenses(a) |
3,340 | 3,182 | 158 | 5.0 | |||||||||
| Selling, general and administrative expenses(a) |
1,702 | 1,698 | 4 | 0.2 | |||||||||
| Operating income before depreciation and amortization |
$ | 3,314 | $ | 3,251 | $ | 63 | 2.0 | % | |||||
| Nine Months Ended September 30 |
Increase/(Decrease) | ||||||||||||
| (in millions) | 2009 | 2008 | $ | % | |||||||||
| Video(a) |
$ | 14,590 | $ | 14,345 | $ | 245 | 1.7 | % | |||||
| High-speed Internet |
5,768 | 5,364 | 404 | 7.5 | |||||||||
| Phone |
2,407 | 1,917 | 490 | 25.6 | |||||||||
| Advertising(a) |
908 | 1,132 | (224 | ) | (19.8 | ) | |||||||
| Other(a) |
798 | 710 | 88 | 12.3 | |||||||||
| Franchise fees |
710 | 679 | |||||||||||