COMCAST CORPORATION
TABLE 1
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Ended Six Months Ended
(in millions, except per share data) June 30, June 30,
2008 2007 2008 2007
Revenues $8,553 $7,712 $16,942 $15,100
Operating expenses 3,091 2,754 6,198 5,513
Selling, general and administrative
expenses 2,111 1,946 4,219 3,812
5,202 4,700 10,417 9,325
Operating cash flow 3,351 3,012 6,525 5,775
Depreciation expense 1,371 1,252 2,761 2,477
Amortization expense 230 292 459 569
1,601 1,544 3,220 3,046
Operating income 1,750 1,468 3,305 2,729
Other income (expense)
Interest expense (618) (550) (1,239) (1,118)
Investment income (loss), net (70) 126 9 300
Equity in net (losses) income of
affiliates, net (13) (16) (48) (37)
Other income (expense) 25 1 293 514
(676) (439) (985) (341)
Income before income taxes and minority
interest 1,074 1,029 2,320 2,388
Income tax expense (455) (453) (963) (979)
Income before minority interest 619 576 1,357 1,409
Minority interest 13 12 7 16
Net income $632 $588 $1,364 $1,425
Diluted earnings per common share $0.21 $0.19 $0.46 $0.45
Adjusted earnings per common share(1) $0.21 $0.19 $0.41 $0.36
Dividends declared per common share $0.0625 $ - $0.1250 $ -
Diluted weighted-average number of
common shares 2,970 3,147 2,995 3,155
(1) Please refer to Table 7-B for a reconciliation of adjusted net income
and earnings per share.
COMCAST CORPORATION
TABLE 2
Condensed Consolidated Balance Sheet
(Unaudited)
(in millions) June 30, December 31,
2008 2007
ASSETS
Current Assets
Cash and cash equivalents $1,767 $963
Investments 295 98
Accounts receivable, net 1,665 1,645
Other current assets 920 961
Total current assets 4,647 3,667
Investments 5,366 7,963
Property and equipment, net 23,833 23,624
Franchise rights 59,449 58,077
Goodwill 15,074 14,705
Other intangible assets, net 4,614 4,739
Other noncurrent assets, net 914 642
$113,897 $113,417
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses
related to trade creditors $3,027 $3,336
Accrued expenses and other current
liabilities 3,173 3,121
Current portion of long-term debt 1,889 1,495
Total current liabilities 8,089 7,952
Long-term debt, less current portion 30,624 29,828
Deferred income taxes 27,292 26,880
Other noncurrent liabilities 7,207 7,167
Minority interest 348 250
Stockholders' equity 40,337 41,340
$113,897 $113,417
COMCAST CORPORATION
TABLE 3
Condensed Consolidated Statement of Cash Flows
(Unaudited)
(in millions) Six Months Ended
June 30,
2008 2007
OPERATING ACTIVITIES
Net cash provided by operating activities $4,928 $3,907
FINANCING ACTIVITIES
Proceeds from borrowings 2,009 590
Retirements and repayments of debt (831) (1,320)
Repurchases of common stock (1,979) (1,252)
Dividends paid (185) -
Issuances of common stock 42 334
Other (135) 52
Net cash provided by (used in) financing
activities (1,079) (1,596)
INVESTING ACTIVITIES
Capital expenditures (2,731) (3,058)
Cash paid for software and other intangible
assets (245) (229)
Acquisitions, net of cash acquired (331) (770)
Proceeds from sales of investments 320 1,288
Purchases of investments (41) (52)
Proceeds from sales (purchases) of
short-term investments - 56
Other (17) 43
Net cash provided by (used in) investing
activities (3,045) (2,722)
Increase (decrease) in cash and cash equivalents 804 (411)
Cash and cash equivalents, beginning of period 963 1,239
Cash and cash equivalents, end of period $1,767 $828
TABLE 4
Calculation of Free Cash Flow and Unlevered Free Cash Flow
(Unaudited)(1)
(in millions) Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Net Cash Provided by Operating
Activities $2,669 $1,942 $4,928 $3,907
Capital Expenditures (1,300) (1,604) (2,731) (3,058)
Cash Paid for Capitalized Software (88) (86) (187) (174)
Cash Paid for Other Intangible
Assets (31) (25) (58) (55)
Nonoperating and Nonrecurring items,
net of tax:
Payment of Tax on Nonoperating Items 228 141 228 190
Impact of Economic Stimulus package(2) (315) - (315) -
Free Cash Flow 1,163 368 1,865 810
Cash Paid Interest 408 416 1,116 1,078
Unlevered Free Cash Flow $1,571 $784 $2,981 $1,888
(1) See Non-GAAP and Other Financial Measures in Table 7 for the
definition of Free Cash Flow and Unlevered Free Cash Flow.
(2) Our definition of Free Cash Flow remains unchanged and specifically
eliminates any impact from the Economic Stimulus package. For the 2nd
quarter 2008, Net Cash Provided by Operating Activities included a
$315 million benefit from the Economic Stimulus package. This amount
has been excluded from Free Cash Flow to provide an appropriate
comparison.
COMCAST CORPORATION
TABLE 5
Pro Forma Financial Data by Business Segment
(Unaudited)(1)
(dollars in millions) Corporate
and
Cable Programming(2) Other Total
Three Months Ended June 30, 2008
Revenues $8,100 $366 $87 $8,553
Operating Cash Flow $3,362 $89 ($100) $3,351
Operating Income (Loss) $1,825 $44 ($119) $1,750
Operating Cash Flow Margin 41.5% 24.2% NM 39.2%
Capital Expenditures (3) $1,254 $6 $40 $1,300
Three Months Ended June 30, 2007
Revenues $7,557 $334 $48 $7,939
Operating Cash Flow $3,124 $75 ($93) $3,106
Operating Income (Loss) $1,614 $29 ($119) $1,524
Operating Cash Flow Margin 41.3% 22.7% NM 39.1%
Capital Expenditures (3) $1,615 $10 $8 $1,633
Six Months Ended June 30, 2008
Revenues $16,016 $729 $197 $16,942
Operating Cash Flow $6,504 $202 ($181) $6,525
Operating Income (Loss) $3,419 $103 ($217) $3,305
Operating Cash Flow Margin 40.6% 27.7% NM 38.5%
Capital Expenditures (3) $2,609 $10 $112 $2,731
Six Months Ended June 30, 2007
Revenues $14,769 $636 $136 $15,541
Operating Cash Flow $6,000 $140 ($189) $5,951
Operating Income (Loss) $3,013 $47 ($230) $2,830
Operating Cash Flow Margin 40.6% 22.0% NM 38.3%
Capital Expenditures (3) $3,095 $14 $15 $3,124
(1) See Non-GAAP and Other Financial Measures in Table 7. Historical
financial data by business segment, in accordance with generally
accepted accounting principles in the United States (GAAP), 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) Programming includes our national networks E! Entertainment Television
and Style Network (E! Networks), The Golf Channel, VERSUS and G4.
(3) Our Cable segment's capital expenditures are comprised of the
following categories:
2Q08 2Q07 YTD 2Q08 YTD 2Q07
Growth
Customer Premise Equipment
(CPE) $687 $804 $1,506 $1,555
Scalable Infrastructure 55 113 114 221
Line Extensions 52 100 100 188
Support Capital 57 110 111 180
Upgrades (Capacity Expansion) 25 27 45 49
Business Services 48 21 99 38
924 1,175 1,975 2,231
Maintenance
CPE (Drop Replacements) 73 77 132 144
Scalable Infrastructure 115 151 217 326
Support Capital 58 99 101 162
Upgrades 58 90 118 199
304 417 568 831
Discretionary 26 23 66 33
Total $1,254 $1,615 $2,609 $3,095
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 network improvements. Business Services includes
fiber/coax extension, electronics, CPE and costs to secure new
customers.
Management evaluates capital expenditures by categorizing investments
into three groups: Growth, Maintenance and Discretionary. Growth is
directly tied to revenue generation and represents the costs required
to secure new customers, revenue units or additional bandwidth
revenues. Maintenance includes investments that allow the company to
maintain its competitive position and provide a foundation for growth.
Discretionary includes investments that lay the groundwork for future
products and services, such as our investments in interactive
advertising, cross-platform product development or switched digital
video.
COMCAST CORPORATION
TABLE 6
Pro Forma Data - Cable Segment Components
(Unaudited) (1)(2)
(dollars in millions, except per Three Months Ended Six Months Ended
subscriber data) June 30, June 30,
2008 2007 2008 2007
Revenues:
Video (3) $4,726 $4,597 $9,432 $9,088
High-speed Internet 1,792 1,632 3,542 3,201
Phone 640 425 1,227 781
Advertising 399 410 743 732
Other (4) 316 281 621 549
Franchise fees 227 212 451 418
Total Revenues * $8,100 $7,557 $16,016 $14,769
Operating Cash Flow $3,362 $3,124 $6,504 $6,000
Operating Income $1,825 $1,614 $3,419 $3,013
Operating Cash Flow Margin 41.5% 41.3% 40.6% 40.6%
Capital Expenditures $1,254 $1,615 $2,609 $3,095
* Total Revenues include revenue from Business Services of $131 million in
2Q08 and $95 million in 2Q07, and $251 million in YTD 2008 and $182
million in YTD 2007.
2Q08 1Q08 2Q07
Video
Homes Passed (000's) 50,096 49,902 49,232
Basic Subscribers (000's) 24,553 24,691 24,904
Basic Penetration 49.0% 49.5% 50.6%
Quarterly Net Basic Subscriber
Additions (000's) (138) (57) (101)
Digital Subscribers (000's) 16,335 16,015 14,489
Digital Penetration 66.5% 64.9% 58.2%
Quarterly Net Digital Subscriber
Additions (000's) 320 494 823
Digital Set-Top Boxes 26,345 25,856 23,185
Monthly Average Video Revenue per
Basic Subscriber $63.98 $63.46 $61.40
High-Speed Internet
"Available" Homes (000's) 49,548 49,548 48,767
Subscribers (000's) 14,357 14,078 12,771
Penetration of "Available" Homes 28.9% 28.4% 26.2%
Quarterly Net Subscriber Additions
(000's) 278 492 339
Monthly Average Revenue per
Subscriber $42.01 $42.18 $43.19
Phone
Comcast Digital Voice
"Available" Homes (000's) 45,143 44,082 38,873
Subscribers (000's) 5,643 5,088 3,150
Penetration of "Available" Homes 12.5% 11.5% 8.1%
Quarterly Net Subscriber Additions
(000's) 555 639 692
Monthly Average Revenue per
Subscriber $39.48 $40.24 $42.66
Circuit Switched Phone
"Available" Homes (000's) 2,000 5,029 8,995
Subscribers (000's) 10 66 443
Penetration of "Available" Homes 0.5% 1.3% 4.9%
Quarterly Net Subscriber Additions
(000's) (56) (110) (117)
Monthly Average Revenue per
Subscriber $36.64 $40.61 $44.38
Total Revenue Generating Units
(000's) (5) 60,899 59,939 55,756
Total Quarterly Net Additions (000's) 960 1,458 1,636
Total Monthly Average Revenue per
Basic Subscriber $109.66 $106.74 $100.94
(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 data includes the results of Comcast SportsNet Bay
Area and Comcast SportsNet New England acquired on June 30, 2007, the
cable system acquired from Patriot Media Holdings, LLC on August 31,
2007, and the cable systems resulting from the dissolution of the
Insight Midwest Partnership on January 1, 2008. Pro forma results are
presented as if the acquisitions and dispositions were effective on
January 1, 2007. The net impact of these transactions was an increase
of 765,000 basic cable subscribers.
(3) Video revenues consist of our basic, expanded basic, digital,
premium, pay-per-view and equipment services.
(4) Other revenues include regional sports programming networks,
residential video installation revenues, guide revenues, commissions
from electronic retailing, other product offerings and revenues of our
digital media center.
(5) Represents the sum of basic and digital video, high-speed Internet and
net phone subscribers, excluding additional outlets. Subscriptions to
DVR and/or HDTV services do not result in additional RGUs.
COMCAST CORPORATION
TABLE 7
Non-GAAP and Other Financial Measures
Operating Cash Flow is the primary basis used to measure the operational
strength and performance of our businesses. Free Cash Flow and Unlevered Free
Cash Flow are additional performance measures used as indicators of our
ability to service and repay debt, make investments and return capital to
investors, through stock repurchases and dividends. We also adjust certain
historical data on a pro forma basis following certain acquisitions or
dispositions to enhance comparability.
Operating Cash Flow is defined as operating income before depreciation and
amortization, excluding impairment charges related to fixed and intangible
assets and gains or losses on 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 financial 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 performance measure in 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 in the United States (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 "Net
Cash Provided by Operating Activities" (as stated in our Consolidated
Statement of Cash Flows) reduced by capital expenditures and cash paid for
intangible assets; and adjusted for any payments related to certain
nonoperating items, net of estimated tax benefits (such as income taxes on
investment sales, and nonrecurring payments related to income tax and
litigation contingencies of acquired companies). Unlevered Free Cash Flow is
Free Cash Flow before cash paid interest. We believe that Free Cash Flow and
Unlevered Free Cash Flow are also useful to investors as the basis for
comparing our performance and coverage ratios with other companies in our
industries, although our measure of Free Cash Flow and Unlevered Free Cash
Flow may not be comparable to similar measures used by other companies.
Pro forma data is used by management to evaluate performance when certain
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 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. We believe our pro forma data is
not a non-GAAP financial measure as contemplated by Regulation G.
In certain circumstances we also present "adjusted" data, to exclude
certain gains, losses or other charges, net of tax (such as from the sales of
investments or dispositions of businesses). This "adjusted" data is a non-GAAP
financial measure. We believe, among other things, that the "adjusted" data
may help investors evaluate our ongoing operations and can assist in making
meaningful period-over-period comparisons.
Non-GAAP financial measures 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. 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.
We provide reconciliations of Consolidated Operating Cash Flow in Table 1,
Free Cash Flow and Unlevered Free Cash Flow in Table 4, Pro Forma in Table 7-A
and Adjusted Data in Table 7-B.
COMCAST CORPORATION
TABLE 7-A
Reconciliation of GAAP to Pro Forma(1) Financial Data by Business Segment
(Unaudited)
GAAP
(in millions) Corporate,
Other and
Cable Programming Eliminations Total
Three Months Ended June 30, 2008
Revenue $8,100 $366 $87 $8,553
Operating Expenses (excluding
depreciation and amortization) 4,738 277 187 5,202
Operating Cash Flow $3,362 $89 ($100) $3,351
Depreciation and Amortization 1,537 45 19 1,601
Operating Income (Loss) $1,825 $44 ($119) $1,750
Capital Expenditures $1,254 $6 $40 $1,300
Three Months Ended June 30, 2007
Revenue $7,330 $334 $48 $7,712
Operating Expenses (excluding
depreciation and amortization) 4,299 259 142 4,700
Operating Cash Flow $3,031 $75 ($94) $3,012
Depreciation and Amortization 1,471 46 27 1,544
Operating Income (Loss) $1,560 $29 ($121) $1,468
Capital Expenditures $1,586 $10 $8 $1,604
Six Months Ended June 30, 2008
Revenue $16,016 $729 $197 $16,942
Operating Expenses (excluding
depreciation and amortization) 9,512 527 378 10,417
Operating Cash Flow $6,504 $202 ($181) $6,525
Depreciation and Amortization 3,085 99 36 3,220
Operating Income (Loss) $3,419 $103 ($217) $3,305
Capital Expenditures $2,609 $10 $112 $2,731
Six Months Ended June 30, 2007
Revenue $14,328 $636 $136 $15,100
Operating Expenses (excluding
depreciation and amortization) 8,504 496 325 9,325
Operating Cash Flow $5,824 $140 ($189) $5,775
Depreciation and Amortization 2,911 93 42 3,046
Operating Income (Loss) $2,913 $47 ($231) $2,729
Capital Expenditures $3,029 $14 $15 $3,058
Cable Total
(in millions) Pro Forma Pro Forma Total
Adjustments Pro Forma Adjustments Pro
(1) (2) Cable (1) (2) Forma
Three Months Ended June 30, 2008
Revenue $- $8,100 $- $8,553
Operating Expenses (excluding
depreciation and amortization) - 4,738 - 5,202
Operating Cash Flow $- $3,362 $- $3,351
Depreciation and Amortization - 1,537 - 1,601
Operating Income (Loss) $- $1,825 $- $1,750
Capital Expenditures $- $1,254 $- $1,300
Three Months Ended June 30, 2007
Revenue $227 $7,557 $227 $7,939
Operating Expenses (excluding
depreciation and amortization) 134 4,433 133 4,833
Operating Cash Flow $93 $3,124 $94 $3,106
Depreciation and Amortization 39 1,510 38 1,582
Operating Income (Loss) $54 $1,614 $56 $1,524
Capital Expenditures $29 $1,615 $29 $1,633
Six Months Ended June 30, 2008
Revenue $0 $16,016 $0 $16,942
Operating Expenses (excluding
depreciation and amortization) - 9,512 - 10,417
Operating Cash Flow $0 $6,504 $0 $6,525
Depreciation and Amortization - 3,085 - 3,220
Operating Income (Loss) $0 $3,419 $0 $3,305
Capital Expenditures $0 $2,609 $0 $2,731
Six Months Ended June 30, 2007
Revenue $441 $14,769 $441 $15,541
Operating Expenses (excluding
depreciation and amortization) 265 8,769 265 9,590
Operating Cash Flow $176 $6,000 $176 $5,951
Depreciation and Amortization 76 2,987 75 3,121
Operating Income (Loss) $100 $3,013 $101 $2,830
Capital Expenditures $66 $3,095 $66 $3,124
(1) Pro forma data is adjusted only for timing of 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. Pro forma results are
presented as if the acquisitions and dispositions were effective on
January 1, 2007. Minor differences may exist due to rounding.
(2) Total Pro Forma adjustments and Cable Pro Forma adjustments for 2007
include the results of Comcast SportsNet Bay Area and Comcast
SportsNet New England, the cable system acquired from Patriot Media
Holdings, LLC and the cable systems resulting from the dissolution of
the Insight Midwest Partnership.
COMCAST CORPORATION
TABLE 7-B
Reconciliation of Net Income to Adjusted Net Income
(Unaudited)
Three Months Ended
June 30,
2008 vs.
2007
2008 2007 Growth(%)
(in millions, except per
share data)
$ EPS(1) $ EPS(1) $ EPS(1)
Net Income $632 $0.21 $588 $0.19 8% 11%
Adjustments - - - - - -
Adjusted Net Income $632 $0.21 $588 $0.19 8% 11%
Six Months Ended
June 30,
2008 vs.
2007
2008 2007 Growth(%)
$ EPS(1) $ EPS(1) $ EPS(1)
Net Income $1,364 $0.46 $1,425 $0.45 (4%) 2%
Adjustments:
Gain related to the dissolution
of the Texas/Kansas City Cable
Partnership, net of tax(2) - - (300) (0.09) NM NM
Gain related to the dissolution
of the Insight Midwest
partnership, net of tax(3) (144) (0.05) - - NM NM
Adjusted Net Income $1,220 $0.41 $1,125 $0.36 9% 14%
(1) Based on diluted average number of common shares for the respective
periods as presented in Table 1.
(2) 2007 Net Income includes a one-time gain, net of tax, related to the
dissolution of the Texas/Kansas City Cable Partnership.
(3) 2008 Net Income includes a one-time gain, net of tax, related to the
dissolution of the Insight Midwest Partnership.
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