COMCAST CORPORATION
Table 1
Condensed Consolidated Statement of Operations (Unaudited)
(amounts in millions, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
Revenues $5,598 $5,066 $10,961 $9,974
Operating expenses 1,944 1,794 3,901 3,663
Selling, general and
administrative expenses 1,445 1,320 2,821 2,626
3,389 3,114 6,722 6,289
Operating Cash Flow 2,209 1,952 4,239 3,685
Depreciation expense 891 813 1,765 1,611
Amortization expense 270 287 560 563
1,161 1,100 2,325 2,174
Operating Income 1,048 852 1,914 1,511
Other Income (Expense)
Interest expense (467) (484) (911) (984)
Investment income, net 176 151 140 142
Equity in net losses of
affiliates (16) (20) (4) (37)
Other income (expense) 30 12 (78) 19
(277) (341) (853) (860)
Income before Income Taxes
and Minority Interest 771 511 1,061 651
Income tax expense (331) (234) (471) (310)
Income Before Minority Interest 440 277 590 341
Minority interest (10) (15) (17) (14)
Net Income $430 $262 $573 $327
Net Income per common share $0.19 $0.12 $0.26 $0.14
Basic weighted average number of
common shares 2,207 2,257 2,211 2,257
Diluted weighted average number of
common shares 2,221 2,267 2,224 2,268
COMCAST CORPORATION
TABLE 2
Condensed Consolidated Balance Sheet (Unaudited)
(dollars in millions)
June 30, December 31,
ASSETS 2005 2004
CURRENT ASSETS
Cash and cash equivalents $1,335 $452
Investments 848 1,555
Accounts receivable, net 1,031 959
Other current assets 570 569
Total current assets 3,784 3,535
INVESTMENTS 13,208 12,812
PROPERTY AND EQUIPMENT, NET 18,797 18,711
FRANCHISE RIGHTS 51,075 51,071
GOODWILL 14,118 14,020
OTHER INTANGIBLE ASSETS, net 3,658 3,851
OTHER NONCURRENT ASSETS, net 707 694
$105,347 $104,694
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued
expenses related to trade
creditors $2,042 $2,041
Accrued expenses and other
current liabilities 2,663 2,735
Deferred income taxes 110 360
Current portion of long-term
debt 3,367 1,854
Current portion of
exchangeable debt 1,017 1,645
Total current liabilities 9,199 8,635
LONG-TERM DEBT, less current
portion 19,697 20,039
LONG-TERM EXCHANGEABLE DEBT, less
current portion 49 54
DEFERRED INCOME TAXES 26,995 26,815
OTHER NONCURRENT LIABILITIES 7,310 7,261
MINORITY INTEREST 679 468
STOCKHOLDERS' EQUITY 41,418 41,422
$105,347 $104,694
COMCAST CORPORATION
TABLE 3
Condensed Consolidated Statement of Cash Flows (Unaudited)
(dollars in millions)
Six Months Ended
June 30,
2005 2004
OPERATING ACTIVITIES
Net cash provided by operating
activities $2,517 $2,633
FINANCING ACTIVITIES
Proceeds from borrowings 1,495 1,058
Retirements and repayments of debt (279) (1,617)
Repurchases of common stock and
stock options (660) (511)
Issuances of common stock 59 38
Other, net 83 8
Net cash provided by (used in)
financing activities 698 (1,024)
INVESTING ACTIVITIES
Capital expenditures (1,842) (1,732)
Proceeds from sales and
restructuring of investments 317 51
Purchases of investments (305) (106)
Acquisitions, net of cash acquired (134) (336)
Additions to intangible and other
noncurrent assets (305) (453)
Purchases of short-term
investments, net (63) (15)
Proceeds from settlement of contract
of acquired company - 26
Net cash used in investing
activities (2,332) (2,565)
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 883 (956)
CASH AND CASH EQUIVALENTS, beginning
of period 452 1,550
CASH AND CASH EQUIVALENTS, end of
period $1,335 $594
TABLE 4
Calculation of Free Cash Flow (Unaudited) (1)
(dollars in millions)
Six Months Ended
June 30,
2005 2004
Operating Cash Flow $4,239 $3,685
Interest, Net (2) (826) (906)
Cash Paid for Income Taxes (427) (150)
Capital Expenditures (1,842) (1,732)
FREE CASH FLOW $1,144 $897
Changes in Working Capital and Other
Items (3) (469) 4
Net Cash Provided by (Used in)
Operating Activities Less Capital
Expenditures $675 $901
(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 2005, cash payments
for intangibles and other noncurrent assets of $305 million included
licenses and software intangibles of approximately $105 million,
multiple dwelling unit contracts of approximately $67 million and
acquisitions of additional ownership interests in certain of our
majority owned subsidiaries. In 2004, cash payments for intangible
assets of $453 million included a long-term strategic license
agreement with Gemstar of approximately $250 million, other licenses
and software intangibles of $104 million and multiple dwelling unit
contracts of $69 million. In 2005, cash payments for acquisitions
and investments totaling $439 million included MGM Inc., Liberate
Technologies, and MetaTV. In 2004, cash payments for acquisitions
primarily related to the acquisition of TechTV.
(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 $383 million in cash
payments for liabilities incurred as part of the acquisition of AT&T
Broadband, including $220 million in payments representing our share
of the settlement payments related to certain AT&T litigation. In
2004, this amount includes income tax refunds of $536 million offset
by $199 million in cash payments for liabilities recorded as part of
the acquisition of AT&T Broadband.
COMCAST CORPORATION
TABLE 5
Pro Forma Financial Data by Business Segment (Unaudited) (1)
(dollars in millions)
Corporate and
Content Other
Cable (2) (3) (4) Total
Three Months Ended June 30, 2005
Revenues $5,328 $234 $36 $5,598
Operating Cash Flow $2,175 $97 ($63) $2,209
Operating Income (Loss) $1,054 $68 ($74) $1,048
Operating Cash Flow Margin 40.8% 41.2% NM 39.4%
Capital Expenditures (5) $936 $3 $11 $950
Three Months Ended June 30, 2004
Revenues $4,840 $199 $28 $5,067
Operating Cash Flow $1,920 $77 ($45) $1,952
Operating Income (Loss) $877 $38 ($63) $852
Operating Cash Flow Margin 39.7% 38.7% NM 38.5%
Capital Expenditures (5) $893 $6 $5 $904
Six Months Ended June 30, 2005
Revenues $10,431 $447 $83 $10,961
Operating Cash Flow $4,170 $174 ($105) $4,239
Operating Income (Loss) $1,945 $100 ($131) $1,914
Operating Cash Flow Margin 40.0% 38.8% NM 38.7%
Capital Expenditures (5) $1,819 $7 $16 $1,842
Six Months Ended June 30, 2004
Revenues $9,490 $375 $114 $9,979
Operating Cash Flow $3,641 $146 ($100) $3,687
Operating Income (Loss) $1,581 $72 ($140) $1,513
Operating Cash Flow Margin 38.4% 38.8% NM 37.0%
Capital Expenditures (5) $1,707 $10 $15 $1,732
(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:
YTD YTD
2Q05 2Q04 2Q05 2Q04
New Service Offerings
Customer Premise Equipment (CPE) $469 $338 $932 $630
Scalable Infrastructure 227 110 436 231
696 448 1,368 861
Recurring Capital Projects
Line Extensions 81 81 145 141
Support Capital 92 76 139 165
173 157 284 306
Upgrades 67 288 167 540
Total $936 $893 $1,819 $1,707
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 Six Months Ended
June 30, June 30,
2005 2004 2005 2004
Revenues:
Video (3) $3,441 $3,249 $6,803 $6,433
High-Speed Internet 982 763 1,907 1,461
Phone 170 176 343 355
Advertising 362 330 658 599
Other (4) 203 159 383 320
Franchise Fees 170 163 337 322
Total Revenues $5,328 $4,840 $10,431 $9,490
Operating Cash Flow $2,175 $1,920 $4,170 $3,641
Operating Income $1,054 $877 $1,945 $1,581
Operating Cash Flow Margin 40.8% 39.7% 40.0% 38.4%
Capital Expenditures $936 $893 $1,819 $1,707
Operating Cash Flow, Net of Capital
Expenditures $1,239 $1,027 $2,351 $1,934
2Q05 2Q04 1Q05
Video
Homes Passed (000's) 41,200 40,300 41,000
Basic Subscribers (000's) 21,448 21,485 21,525
Basic Penetration 52.1% 53.3% 52.6%
Quarterly Net Basic Subscriber
Additions (000's) (77) (96) (29)
Digital Subscribers (000's) 9,140 8,065 8,856
Digital Penetration 42.6% 37.5% 41.1%
Quarterly Net Digital Subscriber
Additions (000's) 284 206 200
Digital Set-Top Boxes 13,859 11,926 13,365
Monthly Average Video Revenue per
Basic Subscriber $53.38 $50.29 $52.04
Monthly Average Total Revenue per
Basic Subscriber $82.67 $74.91 $78.99
High-Speed Internet
"Available" Homes (000's) 40,758 37,323 40,483
Subscribers (000's) 7,705 6,007 7,408
Penetration 18.9% 16.1% 18.3%
Quarterly Net Subscriber Additions
(000's) 297 327 414
Monthly Average Revenue per
Subscriber $43.34 $43.50 $42.81
Phone
"Available" Homes (000's) (5) 12,227 9,766 11,277
Subscribers (000's) 1,230 1,225 1,228
Penetration 10.1% 12.5% 10.9%
Quarterly Net Subscriber Additions
(000's) 3 (22) 4
Monthly Average Revenue per
Subscriber $46.06 $47.71 $47.07
Total Revenue Generating Units
(000's) (6) 39,523 36,782 39,017
Quarterly Net Additions 507 415 589
(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 also 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.
COMCAST CORPORATION
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) (1)
(dollars in millions)
Historical
Adjustments (1)
Corporate Corporate
Three Months Ended June and and Pro
30, 2004 Cable Content Other Total Cable Other forma
Revenues $4,838 $199 $29 $5,066 $2 ($1) $5,067
Operating expenses
(excluding depreciation
and amortization) 2,918 122 74 3,114 2 (1) 3,115
Operating Cash Flow $1,920 $77 ($45) $1,952 - - $1,952
Depreciation and
amortization 1,043 39 18 1,100 - - 1,100
Operating income (loss) $877 $38 ($63) $852 - - $852
Capital expenditures $893 $6 $5 $904 - - $904
Corporate Corporate
Six Months Ended June 30, and and Pro
2004 Cable Content Other Total Cable Other forma
Revenues $9,485 $375 $114 $9,974 $5 - $9,979
Operating expenses
(excluding depreciation
and amortization) 5,846 229 214 6,289 3 - 6,292
Operating Cash Flow $3,639 $146 ($100) $3,685 $2 - $3,687
Depreciation and
amortization 2,060 74 40 2,174 - - 2,174
Operating income (loss) $1,579 $72 ($140) $1,511 $2 - $1,513
Capital expenditures $1,707 $10 $15 $1,732 - - $1,732
Reconciliation of Operating Cash Flow to Free
Cash Flow (Unaudited)
(dollars in millions)
Three Months Ended
June 30,
2005 2004
Operating Cash Flow $2,209 $2,209 $1,952 $1,952
Less:
Interest, net (2) (422) (422) (459) (459)
Cash Paid for Income Taxes (415) (415) (89) (89)
Change in Operating Assets and
Liabilities, net of acquisitions (103) 442
Other (3) (84) 13
Net Cash Provided by Operating
Activities $1,185 $1,859
Less: Capital Expenditures (950) (904)
Free Cash Flow $422 $500
Reconciliation of Operating Cash Flow to Free
Cash Flow (Unaudited)
(dollars in millions)
Six Months Ended
June 30,
2005 2004
Operating Cash Flow $4,239 $4,239 $3,685 $3,685
Less:
Interest, net (2) (826) (826) (906) (906)
Cash Paid for Income Taxes (427) (427) (150) (150)
Change in Operating Assets and
Liabilities, net of acquisitions (191) 3
Other (3) (278) 1
Net Cash Provided by Operating
Activities $2,517 $2,633
Less: Capital Expenditures (1,842) (1,732)
Free Cash Flow $1,144 $897
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)
June 30, December 31,
2005 2004
Current portion of long-term debt $4,384 $3,499
Long-term debt 19,746 20,093
Total Debt $24,130 $23,592
Exchangeable debt 1,066 1,699
Debt excluding exchangeables $23,064 $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. There were no pro forma
adjustments to the three and six months ending June 30, 2005. 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 interest 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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