COMCAST CORPORATION
TABLE 1
Condensed Consolidated Statement of Operations (Unaudited)
(amounts in millions, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
Revenues $5,578 $5,098 $16,539 $15,072
Operating expenses 2,007 1,837 5,908 5,500
Selling, general and
administrative expenses 1,472 1,401 4,293 4,027
3,479 3,238 10,201 9,527
Operating Cash Flow 2,099 1,860 6,338 5,545
Depreciation expense 914 869 2,679 2,480
Amortization expense 302 305 862 868
1,216 1,174 3,541 3,348
Operating Income 883 686 2,797 2,197
Other Income (Expense)
Interest expense (423) (435) (1,334) (1,419)
Investment income (loss), net (104) 89 36 231
Equity in net losses of
affiliates (18) (29) (22) (66)
Other income (expense) 17 63 (61) 82
(528) (312) (1,381) (1,172)
Income before Income Taxes
and Minority Interest 355 374 1,416 1,025
Income tax expense (143) (156) (614) (466)
Income Before Minority Interest 212 218 802 559
Minority interest 10 2 (7) (12)
Net Income $222 $220 $795 $547
Net Income per common share $0.10 $0.10 $0.36 $0.24
Basic weighted average number of
common shares 2,196 2,234 2,206 2,249
Diluted weighted average number of
common shares 2,209 2,243 2,219 2,259
COMCAST CORPORATION
TABLE 2
Condensed Consolidated Balance Sheet (Unaudited)
(dollars in millions)
September 30, December 31,
ASSETS 2005 2004
CURRENT ASSETS
Cash and cash equivalents $579 $452
Investments 207 1,555
Accounts receivable, net 990 959
Other current assets 587 569
Total current assets 2,363 3,535
INVESTMENTS 13,018 12,812
PROPERTY AND EQUIPMENT, net 18,781 18,711
FRANCHISE RIGHTS 51,111 51,071
GOODWILL 14,111 14,020
OTHER INTANGIBLE ASSETS, net 3,378 3,851
OTHER NONCURRENT ASSETS, net 635 694
$103,397 $104,694
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued
expenses related to trade
creditors $1,980 $2,041
Accrued expenses and other
current liabilities 2,667 2,735
Deferred income taxes 17 360
Current portion of long-term
debt 2,498 3,499
Total current liabilities 7,162 8,635
LONG-TERM DEBT, less current
portion 20,107 20,093
DEFERRED INCOME TAXES 27,130 26,815
OTHER NONCURRENT LIABILITIES 7,388 7,261
MINORITY INTEREST 605 468
STOCKHOLDERS' EQUITY 41,005 41,422
$103,397 $104,694
COMCAST CORPORATION
TABLE 3
Condensed Consolidated Statement of Cash Flows (Unaudited)
(dollars in millions)
Nine Months Ended
September 30,
2005 2004
OPERATING ACTIVITIES
Net cash provided by operating
activities $3,940 $4,435
FINANCING ACTIVITIES
Proceeds from borrowings 2,333 1,354
Retirements and repayments of debt (1,942) (2,289)
Repurchases of common stock and
stock options (1,291) (1,007)
Issuances of common stock 76 50
Other, net 27 14
Net cash used in financing
activities (797) (1,878)
INVESTING ACTIVITIES
Capital expenditures (2,753) (2,610)
Proceeds from sales and
restructuring of investments 626 200
Purchases of investments (310) (118)
Acquisitions, net of cash acquired (196) (296)
Additions to intangible and other
noncurrent assets (317) (572)
Purchases of short-term
investments, net (66) (20)
Proceeds from settlement of
contract of acquired company - 26
Net cash used in investing
activities (3,016) (3,390)
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 127 (833)
CASH AND CASH EQUIVALENTS,
beginning of period 452 1,550
CASH AND CASH EQUIVALENTS, end of
period $579 $717
TABLE 4
Calculation of Free Cash Flow (Unaudited) (1)
(dollars in millions)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
Operating Cash Flow $2,099 $1,860 $6,338 $5,545
Interest, Net (2) 417 403 1,243 1,309
Cash Paid for Income Taxes 48 39 475 189
Capital Expenditures 911 878 2,753 2,610
FREE CASH FLOW $723 $540 $1,867 $1,437
Changes in Working Capital and Other
Items (3) (211) 384 (680) 388
Net Cash Provided by Operating
Activities Less Capital
Expenditures $512 $924 $1,187 $1,825
(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,
acquisitions and investments. Cash payments for intangible and other
noncurrent assets include long-term technology license agreements
including computer software and long-term contract rights to service
multi-dwelling properties. For the nine months ended September 30, 2005,
cash payments for intangibles and other noncurrent assets of $317 million
included licenses and software intangibles of $129 million and multiple
dwelling unit contracts of $53 million. For the nine months ended
September 30, 2004, cash payments for intangible assets and other
noncurrent assets of $572 million included a long-term strategic license
agreement with Gemstar of approximately $250 million, other licenses and
software intangibles of $126 million and multiple dwelling unit contracts
of $157 million. For the nine months ended September 30, 2005, cash
payments for acquisitions and investments totaling $506 million included
MGM Inc., Liberate Technologies, and MetaTV. In 2004, cash payments for
acquisitions and investments totaling $414 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."
For the nine months ended September 30, 2005, this amount includes $418
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. For the nine months ended September 30, 2004, this amount
includes income tax refunds of $536 million offset by $271 million in cash
payments for liabilities recorded as part of the acquisition of AT&T
Broadband. For the three months ended September 30, 2005, this amount
includes $35 million in cash payments for liabilities incurred as part of
the acquisition of AT&T Broadband. For the three months ended September
30, 2004, this amount includes $72 million in cash payments for
liabilities recorded as part of the acquisition of AT&T Broadband. The
remaining changes for both periods substantially relate to reductions in
accruals associated with the timing of payments of interest.
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 September 30, 2005
Revenues $5,319 $237 $22 $5,578
Operating Cash Flow $2,116 $74 ($91) $2,099
Operating Income (Loss) $948 $36 ($101) $883
Operating Cash Flow Margin 39.8% 31.4% NM 37.6%
Capital Expenditures (5) $899 $4 $8 $911
Three Months Ended September 30, 2004
Revenues $4,844 $207 $47 $5,098
Operating Cash Flow $1,858 $62 ($60) $1,860
Operating Income (Loss) $746 $20 ($80) $686
Operating Cash Flow Margin 38.4% 30.2% NM 36.5%
Capital Expenditures (5) $871 $4 $3 $878
Nine Months Ended September 30, 2005
Revenues $15,750 $684 $105 $16,539
Operating Cash Flow $6,286 $248 ($196) $6,338
Operating Income (Loss) $2,893 $136 ($232) $2,797
Operating Cash Flow Margin 39.9% 36.2% NM 38.3%
Capital Expenditures (5) $2,718 $11 $24 $2,753
Nine Months Ended September 30, 2004
Revenues $14,334 $582 $161 $15,077
Operating Cash Flow $5,499 $208 ($160) $5,547
Operating Income (Loss) $2,327 $92 ($220) $2,199
Operating Cash Flow Margin 38.4% 35.8% NM 36.8%
Capital Expenditures (5) $2,578 $14 $18 $2,610
(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, OLN, 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
3Q05 3Q04 3Q05 3Q04
New Service Offerings
Customer Premise Equipment (CPE) $484 $392 $1,416 $1,022
Scalable Infrastructure 204 152 640 383
688 544 2,056 1,405
Recurring Capital Projects
Line Extensions 83 84 228 225
Support Capital 75 45 214 210
158 129 442 435
Upgrades 53 198 220 738
Total $899 $871 $2,718 $2,578
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 Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
Revenues:
Video (3) $3,406 $3,222 $10,209 $9,655
High-Speed Internet 1,020 808 2,927 2,269
Phone 171 173 514 528
Advertising 333 319 991 918
Other (4) 216 161 599 481
Franchise Fees 173 161 510 483
Total Revenues $5,319 $4,844 $15,750 $14,334
Operating Cash Flow $2,116 $1,858 $6,286 $5,499
Operating Income $948 $746 $2,893 $2,327
Operating Cash Flow Margin 39.8% 38.4% 39.9% 38.4%
Capital Expenditures $899 $871 $2,718 $2,578
Operating Cash Flow, Net of Capital
Expenditures $1,217 $987 $3,568 $2,921
3Q05 3Q04 2Q05
Video
Homes Passed (000's) 41,400 40,500 41,200
Basic Subscribers (000's) 21,409 21,501 21,455
Basic Penetration 51.8% 53.0% 52.1%
Quarterly Net Basic Subscriber
Additions (000's) (46) 9 (77)
Digital Subscribers (000's) 9,447 8,406 9,140
Digital Penetration 44.1% 39.1% 42.6%
Quarterly Net Digital Subscriber
Additions (000's) 307 341 284
Digital Set-Top Boxes 14,398 12,482 13,859
Monthly Average Video Revenue per
Basic Subscriber $52.98 $49.97 $53.37
Monthly Average Total Revenue per
Basic Subscriber $82.70 $75.10 $82.64
High-Speed Internet
"Available" Homes (000's) 40,980 38,060 40,758
Subscribers (000's) 8,142 6,556 7,705
Penetration 19.9% 17.2% 18.9%
Quarterly Net Subscriber Additions
(000's) 437 549 297
Monthly Average Revenue per
Subscriber $42.88 $42.90 $43.34
Phone
"Available" Homes (000's) (5) 16,524 9,978 11,454
Subscribers (000's) 1,242 1,213 1,230
Penetration 7.5% 12.2% 10.7%
Quarterly Net Subscriber Additions
(000's) 12 (12) 2
Monthly Average Revenue per
Subscriber $46.03 $47.18 $46.06
Total Revenue Generating Units
(000's) (6) 40,240 37,676 39,530
Quarterly Net Additions 710 887 506
(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 67,000 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
Reconciliation of Historical and Pro Forma Data by Business Segment
(Unaudited) (1)
(dollars in millions)
Historical
Adjustments (1)
Corporate Corporate
Three Months Ended and and
September 30, 2004 Cable Content Other Total Cable Other Pro forma
Revenues $4,844 $207 $47 $5,098 - - $5,098
Operating expenses
(excluding
depreciation and
amortization) 2,986 145 107 3,238 - - 3,238
Operating Cash Flow $1,858 $62 ($60) $1,860 - - $1,860
Depreciation and
amortization 1,112 42 20 1,174 - - 1,174
Operating Income
(loss) $746 $20 ($80) $686 - - $686
Capital expenditures $871 $4 $3 $878 - - $878
Corporate Corporate
Nine Months Ended and and
September 30, 2004 Cable Content Other Total Cable Other Pro forma
Revenues $14,329 $582 $161 $15,072 $5 - $15,077
Operating expenses
(excluding
depreciation and
amortization) 8,832 374 321 9,527 3 - 9,530
Operating Cash Flow $5,497 $208 ($160) $5,545 $2 - $5,547
Depreciation and
amortization 3,172 116 60 3,348 - - 3,348
Operating Income
(loss) $2,325 $92 ($220) $2,197 $2 - $2,199
Capital expenditures $2,578 $14 $18 $2,610 - - $2,610
Reconciliation of Operating Cash Flow to Free Cash Flow (Unaudited)
(dollars in millions)
Three Months Ended
September 30,
2005 2004
Operating Cash Flow $2,099 $2,099 $1,860 $1,860
Less:
Interest, net (2) (417) (417) (403) (403)
Cash Paid for Income Taxes (48) (48) (39) (39)
Change in Operating Assets and
Liabilities,
net of acquisitions (138) (114)
Other (3) (73) 498
Net Cash Provided by Operating
Activities $1,423 $1,802
Less: Capital Expenditures (911) (878)
Free Cash Flow $723 $540
Nine Months Ended
September 30,
2005 2004
Operating Cash Flow $6,338 $6,338 $5,545 $5,545
Less:
Interest, net (2) (1,243) (1,243) (1,309) (1,309)
Cash Paid for Income Taxes (475) (475) (189) (189)
Change in Operating Assets and
Liabilities,
net of acquisitions (329) (111)
Other (3) (351) 499
Net Cash Provided by Operating
Activities $3,940 $4,435
Less: Capital Expenditures (2,753) (2,610)
Free Cash Flow $1,867 $1,437
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
Operating Cash Flow Growth of 13% 1.0
Less: Projected 2005 Capital Expenditures (3.5)
Projected 2005 Consolidated Interest,
net and Cash Paid for Income Taxes (2.5)
Projected 2005 Free Cash Flow $2.5
2004 Free Cash Flow $1.9
2005 Free Cash Flow Growth approximately 30%
Reconciliation of Total Debt to Debt Excluding Exchangeables (Unaudited)
(dollars in millions)
September 30, 2005 December 31, 2004
Current portion of long-term debt $2,498 $3,499
Long-term debt 20,107 20,093
Total Debt $22,605 $23,592
Exchangeable debt 115 1,699
Debt excluding exchangeables $22,490 $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 nine months ending September 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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