COMCAST CORPORATION
Table 1
Condensed Consolidated Statement of Operations (Unaudited)
(amounts in millions, except per share data)
Three Months Ended
March 31,
2005 2004
Revenues $5,363 $4,908
Operating expenses 1,957 1,869
Selling, general and
administrative expenses 1,376 1,306
3,333 3,175
Operating Cash Flow 2,030 1,733
Depreciation expense 874 798
Amortization expense 290 276
1,164 1,074
Operating Income 866 659
Other Income (Expense)
Interest expense (444) (500)
Investment loss, net (36) (9)
Equity in net income (losses) of affiliates 12 (17)
Other income 62 7
(406) (519)
Income before Income Taxes and Minority Interest 460 140
Income tax expense (140) (76)
Income Before Minority Interest 320 64
Minority interest (7) 1
Net Income $313 $65
Diluted earnings per common share $0.14 $0.03
Diluted weighted average number of
common shares outstanding 2,222 2,268
COMCAST CORPORATION
TABLE 2
Condensed Consolidated Balance Sheet (Unaudited)
(dollars in millions)
March 31, December 31,
ASSETS 2005 2004
CURRENT ASSETS
Cash and cash equivalents $636 $452
Investments 950 1,555
Accounts receivable, net 883 959
Other current assets 461 569
Total current assets 2,930 3,535
INVESTMENTS 12,945 12,812
PROPERTY AND EQUIPMENT, NET 18,738 18,711
FRANCHISE RIGHTS 51,088 51,071
GOODWILL 14,014 14,020
OTHER INTANGIBLE ASSETS, net 3,824 3,851
OTHER NONCURRENT ASSETS, net 699 694
$104,238 $104,694
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued
expenses related to trade
creditors $1,998 $2,041
Accrued expenses and other
current liabilities 2,607 2,735
Deferred income taxes 166 360
Current portion of long-term debt 2,638 1,854
Current portion of exchangeable debt 1,217 1,645
Total current liabilities 8,626 8,635
LONG-TERM DEBT, less current portion 19,264 20,039
LONG-TERM EXCHANGEABLE DEBT, less
current portion 53 54
DEFERRED INCOME TAXES 26,930 26,815
OTHER NONCURRENT LIABILITIES 7,237 7,261
MINORITY INTEREST 602 468
STOCKHOLDERS' EQUITY 41,526 41,422
$104,238 $104,694
COMCAST CORPORATION
TABLE 3
Condensed Consolidated Statement of Cash Flows (Unaudited)
(dollars in millions)
Three Months Ended
March 31,
2005 2004
OPERATING ACTIVITIES
Net cash provided by operating activities $1,332 $774
FINANCING ACTIVITIES
Proceeds from borrowings 225 4
Retirements and repayments of debt (112) (273)
Repurchases of common stock and stock options (326) (12)
Issuances of common stock and sales
of options and put options on common stock 40 22
Other, net 38 8
Net cash used in financing activities (135) (251)
INVESTING ACTIVITIES
Capital expenditures (892) (828)
Proceeds from sales and restructuring
of investments 100 4
Purchases of investments (40) (60)
Acquisitions, net of cash acquired - (41)
Additions to intangible and other
noncurrent assets (180) (305)
(Purchases of) proceeds from sales of
short-term investments, net (1) 6
Proceeds from settlement of contract
of acquired company - 26
Net cash used in investing activities (1,013) (1,198)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 184 (675)
CASH AND CASH EQUIVALENTS, beginning of period 452 1,550
CASH AND CASH EQUIVALENTS, end of period $636 $875
TABLE 4
Calculation of Free Cash Flow (Unaudited) (1)
(dollars in millions)
Three Months Ended
March 31,
2005 2004
Operating Cash Flow $2,030 $1,733
Interest, Net (2) (404) (447)
Cash Paid for Income Taxes (12) (61)
Capital Expenditures (892) (828)
FREE CASH FLOW $722 $397
Changes in Working Capital and Other Items (3) (282) (451)
Net Cash Provided by (Used in) Operating
Activities Less Capital Expenditures $440 ($54)
(1) Free Cash Flow is defined as Operating Cash Flow less net interest,
cash paid for taxes, and capital expenditures. It is unaffected by
fluctuations in working capital levels from period to period and cash
payments associated with intangible and other noncurrent assets. Cash
payments for intangible and other noncurrent assets include long-term
technology license agreements including computer software, long-term
rights to service multi-dwelling properties and programming content for
our cable networks. In 2004, cash payments for intangible assets also
included a long-term strategic license agreement with Gemstar of
approximately $250 million.
(2) Includes interest expense net of interest income and excludes
non-cash interest and subsidiary preferred dividends.
(3) Free Cash Flow excludes amounts necessary to reconcile Free Cash Flow
to "Net Cash Provided by Operating Activities Less Capital Expenditures."
In 2005, this amount includes $92 million in cash payments for
liabilities recorded as part of the acquisition of AT&T Broadband with the
remainder substantially related to reductions in accruals associated with
payments of interest and employee compensation and bonuses. In 2004, this
amount includes $149 million in cash payments for liabilities recorded as
part of the acquisition of AT&T Broadband with the remainder substantially
related to reductions in accruals associated with payments of interest and
employee compensation and bonuses.
COMCAST CORPORATION
TABLE 5
Pro Forma Financial Data by Business Segment (Unaudited) (1)
(dollars in millions)
Corporate and
Cable (2) Content (3) Other (4) Total
Three Months Ended
March 31, 2005
Revenues $5,103 $213 $47 $5,363
Operating Cash Flow $1,995 $77 ($42) $2,030
Operating Income (Loss) $891 $32 ($57) $866
Operating Cash Flow Margin 39.1% 36.1% NM 37.9%
Capital Expenditures (5) $883 $4 $5 $892
Three Months Ended
March 31, 2004
Revenues $4,650 $176 $86 $4,912
Operating Cash Flow $1,721 $69 ($55) $1,735
Operating Income (Loss) $704 $34 ($77) $661
Operating Cash Flow Margin 37.0% 39.0% NM 35.3%
Capital Expenditures (5) $814 $4 $10 $828
(1) See Non-GAAP and Other Financial Measures in Table 7. Historical
financial data by business segment, as required under generally accepted
accounting principles, is available in the Company's quarterly report on
Form 10-Q. All percentages are calculated based on actual amounts. Minor
differences may exist due to rounding.
(2) Pro forma financial data includes the results of the 30,000 cable
subscribers acquired from US Coastal Cable in April 2004.
(3) Content includes our national networks E! Entertainment Television
and Style Network (E! Networks), The Golf Channel, Outdoor Life Network,
G4 and AZN Television.
(4) Corporate and Other includes Comcast-Spectacor, Corporate activities
and all other businesses not presented in the Cable or Content segments
and elimination entries. Beginning in the third quarter of 2004,
Comcast-Spectacor includes the operating results of its investment in a
sports-event related business.
(5) Our Cable segment's capital expenditures are comprised of the
following categories:
1Q05 1Q04
New Service Offerings
Customer Premise Equipment (CPE) $463 $292
Scalable Infrastructure 209 121
672 413
Recurring Capital Projects
Line Extensions 64 60
Support Capital 47 89
111 149
Upgrades 100 252
Total $883 $814
CPE includes costs incurred at the customer residence to secure new
customers, revenue units and additional bandwidth revenues (e.g. digital
converters). Scalable infrastructure includes costs, not CPE or network
related, to secure growth of new customers, revenue units and additional
bandwidth revenues or provide service enhancements (e.g. headend
equipment). Line extensions include network costs associated with
entering new service areas (e.g. fiber/coaxial cable). Support capital
includes costs associated with the replacement or enhancement of
non-network assets due to obsolescence and wear out (e.g. non-network
equipment, land, buildings and vehicles). Upgrades include costs to
enhance or replace existing fiber/coaxial cable networks, including
recurring betterments.
COMCAST CORPORATION
TABLE 6
Pro Forma Data - Cable Segment Components (Unaudited) (1) (2)
(dollars in millions, except average monthly revenue per subscriber data)
Three Months Ended
March 31,
2005 2004
Revenues:
Video (3) $3,362 $3,184
High-Speed Internet 925 698
Phone 173 179
Advertising 296 269
Other (4) 180 161
Franchise Fees 167 159
Total Revenues $5,103 $4,650
Operating Cash Flow $1,995 $1,721
Operating Income $891 $704
Operating Cash Flow Margin 39.1% 37.0%
Capital Expenditures $883 $814
Operating Cash Flow, Net of Capital Expenditures $1,112 $907
1Q05 1Q04 4Q04
Video
Homes Passed (000's) 41,000 40,100 40,800
Basic Subscribers (000's) 21,525 21,581 21,553
Basic Penetration 52.6% 53.8% 52.8%
Quarterly Net Basic Subscriber
Additions (000's) (29) 35 60
Digital Subscribers (000's) 8,856 7,859 8,656
Digital Penetration 41.1% 36.4% 40.2%
Quarterly Net Digital Subscriber
Additions (000's) 200 192 251
Digital Set-Top Boxes 13,365 11,542 12,960
Monthly Average Video Revenue per
Basic Subscriber $52.04 $49.22 $50.20
Monthly Average Total Revenue per
Basic Subscriber $78.99 $71.89 $77.27
High-Speed Internet
"Available" Homes (000's) 40,483 36,167 40,010
Subscribers (000's) 7,408 5,680 6,994
Penetration 18.3% 15.7% 17.5%
Quarterly Net Subscriber
Additions (000's) 414 394 438
Monthly Average Revenue per
Subscriber $42.81 $42.44 $42.06
Phone
"Available" Homes (000's) (5) 11,277 9,657 10,437
Subscribers (000's) 1,228 1,247 1,223
Penetration 10.9% 12.9% 11.7%
Quarterly Net Subscriber
Additions (000's) 4 (20) 10
Monthly Average Revenue per Subscriber $47.07 $47.34 $47.30
Total Revenue Generating Units
(000's) (6) 39,017 36,367 38,426
Quarterly Net Additions 589 601 759
(1) See Non-GAAP and Other Financial Measures in Table 7. All
percentages are calculated based on actual amounts. Minor differences
may exist due to rounding.
(2) Pro forma financial and subscriber data includes the results of the
30,000 cable subscribers acquired from US Coastal Cable in April 2004.
Pro forma subscriber data includes 60,000 subscribers acquired in various
small acquisitions during the periods presented. The impact of these
acquisitions on our segment operating results was not material.
(3) Video revenues consist of our basic, expanded basic, premium,
pay-per-view, equipment and digital services.
(4) Other revenues include installation revenues, guide revenues,
commissions from electronic retailing, other product offerings,
commercial data services and revenues of our digital media center and
regional sports programming networks.
(5) Available homes includes circuit switched and Comcast Digital Voice
homes.
(6) The sum total of all basic video, digital video, high-speed
Internet and phone subscribers, excluding additional outlets.
TABLE 7
Non-GAAP and Other Financial Measures
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Operating Cash Flow is the primary basis used to measure the operational
strength and performance of our businesses. Free Cash Flow is an additional
performance measure used as an indicator of our ability to repay debt, make
investments and return capital to investors, principally through stock
repurchases. We use Debt Excluding Exchangeables as a measure of debt that
will require cash from future operations or financings. We also adjust
certain historical data on a pro forma basis following significant
acquisitions or dispositions to enhance comparability.
Operating Cash Flow is defined as operating income before depreciation and
amortization and impairment charges, if any, related to fixed and intangible
assets and gains or losses from the sale of assets, if any. As such, it
eliminates the significant level of non-cash depreciation and amortization
expense that results from the capital intensive nature of our businesses and
intangible assets recognized in business combinations, and is unaffected by
our capital structure or investment activities. Our management and Board of
Directors use this measure in evaluating our consolidated operating
performance and the operating performance of all of our operating segments.
This metric is used to allocate resources and capital to our operating
segments and is a significant component of our annual incentive compensation
programs. We believe that Operating Cash Flow is also useful to investors as
it is one of the bases for comparing our operating performance with other
companies in our industries, although our measure of Operating Cash Flow may
not be directly comparable to similar measures used by other companies.
As Operating Cash Flow is the measure of 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 (GAAP), in the business segment footnote of our
quarterly and annual financial statements. Therefore, we believe our measure
of Operating Cash Flow for our business segments is not a "non-GAAP financial
measure" as contemplated by Regulation G adopted by the Securities and
Exchange Commission. Consolidated Operating Cash Flow is a non-GAAP financial
measure.
Free Cash Flow, which is a non-GAAP financial measure, is defined as
Operating Cash Flow less net interest, cash paid for taxes, and capital
expenditures. As such, it is unaffected by fluctuations in working capital
levels from period to period and cash payments associated with intangible and
other non-current assets which are detailed in our quarterly and annual
reports on Forms 10Q/K. We believe that Free Cash Flow is also useful to
investors as it is one of the bases for comparing our operating performance
with other companies in our industries, although our measure of Free Cash Flow
is accrual-based and may not be comparable to similar measures used by other
companies.
Debt Excluding Exchangeables, which is a non-GAAP financial measure,
refers to the aggregate amount of our consolidated debt and capital lease
obligations less the amount of notes that are collateralized by securities
that we own.
Pro forma data is used by management to evaluate performance when
significant acquisitions or dispositions occur. Historical data reflects
results of acquired businesses only after the acquisition dates while pro
forma data enhances comparability of financial information between periods by
adjusting the data as if the acquisitions (or dispositions) occurred at the
beginning of the prior year. Our pro forma data is only adjusted for the
timing of acquisitions and does not include adjustments for costs related to
integration activities, cost savings or synergies that have been or may be
achieved by the combined businesses. We believe our pro forma data is not a
non-GAAP financial measure as contemplated by Regulation G.
Operating Cash Flow and Free Cash Flow should not be considered as
substitutes for operating income (loss), net income (loss), net cash provided
by operating activities or other measures of performance or liquidity reported
in accordance with GAAP. Debt Excluding Exchangeables should not be
considered as a substitute for Total Debt. Additionally, in the opinion of
management, our pro forma data is not necessarily indicative of future results
or what results would have been had the acquired businesses been operated by
us after the assumed earlier date.
Following are quantitative reconciliations of Free Cash Flow, Debt
Excluding Exchangeables, Consolidated Operating Cash Flow, and, although not
required by Regulation G, reconciliations of business segment Operating Cash
Flow and pro forma data.
COMCAST CORPORATION
TABLE 7-A continued
Reconciliation of Historical and Pro Forma Data by Business Segment
(Unaudited)
(dollars in millions)
Historical
Adjustments (1)
Corporate Corporate
Three Months Ended and and Pro
March 31, 2005 Cable Content Other Total Cable Other forma
Revenues $5,103 $213 $47 $5,363 - - $5,363
Operating expenses
(excluding
depreciation and
amortization) 3,108 136 89 3,333 - - 3,333
Operating
Cash Flow $1,995 $77 ($42) $2,030 - - $2,030
Depreciation and
amortization 1,104 45 15 1,164 - - 1,164
Operating
income (loss) $891 $32 ($57) $866 - - $866
Capital
expenditures $883 $4 $5 $892 - - $892
Adjustments (1)
Corporate Corporate
Three Months Ended and and Pro
March 31, 2004 Cable Content Other Total Cable Other forma
Revenues $4,647 $176 $85 $4,908 $3 $1 $4,912
Operating expenses
(excluding
depreciation and
amortization) 2,928 107 140 3,175 1 1 3,177
Operating
Cash Flow $1,719 $69 ($55) $1,733 $2 - $1,735
Depreciation and
amortization 1,017 35 22 1,074 - - 1,074
Operating
income (loss) $702 $34 ($77) $659 $2 - $661
Capital
expenditures $814 $4 $10 $828 - - $828
Reconciliation of Operating Cash Flow to Free Cash Flow (Unaudited)
(dollars in millions)
Three Months Ended
March 31,
2005 2004
Operating Cash Flow $2,030 $2,030 $1,733 $1,733
Less:
Interest, net (2) (404) (404) (447) (447)
Cash Paid for Income Taxes (12) (12) (61) (61)
Change in Operating Assets and
Liabilities, net of acquisitions (88) (439)
Other (3) (194) (12)
Net Cash Provided by Operating
Activities $1,332 $774
Less: Capital Expenditures (892) (828)
Free Cash Flow $722 $397
Calculation of 2005 Estimated Free Cash Flow
(dollars in billions)
Free Cash Flow
2004 Operating Income $2.9
Add: Depreciation and Amortization 4.6
2004 Operating Cash Flow 7.5
Less: 2004 Capital Expenditures 3.7
2004 Consolidated Interest, net 1.7
2004 Consolidated Cash Paid for Income Taxes 0.2
2004 Free Cash Flow $1.9
2005 Free Cash Flow Growth 35% to 45%
Projected 2005 Free Cash Flow $2.6 to $2.8
Reconciliation of Total Debt to Debt Excluding Exchangeables (Unaudited)
(dollars in millions)
March 31, 2005 December 31, 2004
Current portion of long-term debt $3,855 $3,499
Long-term debt 19,317 20,093
Total Debt $23,172 $23,592
Exchangeable debt 1,270 1,699
Debt excluding exchangeables $21,902 $21,893
(1) Pro forma data is only adjusted for timing of the acquisitions (or
dispositions) and does not include adjustments for costs related to
integration activities, cost savings or synergies that have been or
may be achieved by the combined businesses. Minor differences may exist
due to rounding.
(2) Includes interest expense net of interest income and excludes
non-cash interest and subsidiary preferred dividends.
(3) Includes non-cash expense included in Operating Cash Flow, cash
related to other (income) expense, dividends, and the net effect of
changes in accrued income taxes.
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