COMCAST CORPORATION
TABLE 1
Condensed Consolidated Statement of Operations (Unaudited)
(amounts in millions, except per share data)
Three Months Ended
March 31,
2004 2003
Revenues $4,908 $4,466
Operating, selling, general and
administrative expenses 3,175 3,038
Operating Cash Flow 1,733 1,428
Depreciation and amortization 1,074 1,134
Operating Income 659 294
Interest expense (500) (524)
Investment loss, net (9) (223)
Other expense, net (10) (4)
(519) (751)
Income (Loss) from Continuing
Operations before Income Taxes
and Minority Interest 140 (457)
Income tax (expense) benefit (76) 141
Minority interest 1 (39)
Income (Loss) from Continuing Operations 65 (355)
Income from discontinued operations,
net of tax (1) - 58
Net Income (Loss) $65 ($297)
Basic and Diluted earnings (loss) per
common share
Income (loss) from continuing operations $0.03 ($0.16)
Income from discontinued operations - 0.03
Net Income (Loss) per common share $0.03 ($0.13)
Basic weighted average number of
common shares outstanding 2,258 2,255
Diluted weighted average number of
common shares outstanding 2,268 2,255
(1) On September 17, 2003, the Company completed the sale of its
approximate 57% interest in QVC, Inc. Accordingly, the results of
QVC have been presented as discontinued operations.
COMCAST CORPORATION
TABLE 2
Condensed Consolidated Balance Sheet (Unaudited)
(dollars in millions)
March 31, December 31,
ASSETS 2004 2003
CURRENT ASSETS
Cash and cash equivalents $875 $1,550
Investments 2,782 2,493
Accounts receivable, net 776 907
Other current assets 827 453
Total current assets 5,260 5,403
INVESTMENTS 14,270 14,818
PROPERTY AND EQUIPMENT, NET 18,495 18,473
FRANCHISE RIGHTS AND GOODWILL 65,890 65,891
OTHER NONCURRENT ASSETS - including
other intangible assets, net 4,652 4,574
$108,567 $109,159
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable, accrued
expenses and other current
liabilities $5,906 $6,493
Current portion of long-term debt 785 734
Current portion of
exchangeable debt 2,601 2,427
Total current liabilities 9,292 9,654
LONG-TERM DEBT, less current portion 21,836 21,944
LONG-TERM EXCHANGEABLE DEBT, less
current portion 1,404 1,891
OTHER NONCURRENT LIABILITIES AND
MINORITY INTEREST 34,297 34,008
STOCKHOLDERS' EQUITY 41,738 41,662
$108,567 $109,159
COMCAST CORPORATION
TABLE 3
Condensed Consolidated Statement of Cash Flows (Unaudited)
(dollars in millions)
Three Months Ended
March 31,
2004 2003
OPERATING ACTIVITIES
Net cash provided by operating
activities from continuing operations $774 $653
FINANCING ACTIVITIES
Proceeds from borrowings 4 3,900
Retirements and repayments of debt (273) (6,077)
Other, net 18 (16)
Net cash used in financing activities
from continuing operations (251) (2,193)
INVESTING ACTIVITIES
Capital expenditures (828) (958)
Proceeds from restructuring of TWE investment 2,100
Proceeds from sales of investments
and assets held for sale 10 659
Other, net (380) (138)
Net cash (used in) provided by investing
activities from continuing operations (1,198) 1,663
(DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS (675) 123
CASH AND CASH EQUIVALENTS, beginning
of period 1,550 505
CASH AND CASH EQUIVALENTS, end of period $875 $628
COMCAST CORPORATION
TABLE 4
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, 2004
Revenues $4,647 $176 $85 $4,908
Operating Cash Flow $1,719 $69 ($55) $1,733
Operating Income (Loss) $702 $34 ($77) $659
Operating Cash Flow Margin 37.0% 39.0% NM 35.3%
Capital Expenditures (5) $814 $4 $10 $828
Three Months Ended
March 31, 2003
Revenues $4,231 $145 $89 $4,465
Operating Cash Flow $1,421 $41 ($34) $1,428
Operating Income (Loss) $341 $9 ($56) $294
Operating Cash Flow Margin 33.6% 28.2% NM 32.0%
Capital Expenditures (5) $953 $3 $2 $958
(1) See Non-GAAP and Other Financial Measures in Table 6. 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.
(2) Pro forma financial data excludes the results of the 314,000 cable
subscribers sold to Bresnan Communications in March 2003 and
excludes the results of the net reduction of 16,000 subscribers
associated with the cable system exchange with Insight
Communications in February 2003.
(3) Content includes our national networks E! Entertainment Television
and Style Network (E! Networks), The Golf Channel, Outdoor Life
Network and G4.
(4) Corporate and Other includes Comcast-Spectacor, the Company's
domestic wireline telecommunications business, international
wireless operations, Corporate and elimination entries. Prior to
the first quarter of 2004, Comcast-Spectacor was included in
Content, which now only consists of our national networks. For all
periods presented, Comcast-Spectacor is included in Corporate and
Other.
(5) Our Cable segment's capital expenditures are comprised of the
following categories:
1Q04 1Q03
Customer Premise Equipment (CPE) $292 $386
Scalable Infrastructure 121 54
Line Extensions 60 54
Upgrades 252 342
Support Capital 89 117
Total $814 $953
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). Upgrades include costs to enhance or replace
existing fiber/coaxial cable networks, including recurring
betterments. 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).
COMCAST CORPORATION
TABLE 5
Pro Forma Data - Cable Segment Components (Unaudited) (1) (2)
(dollars in millions, except average monthly revenue per subscriber data)
Three Months Ended March 31,
2004 2003
Three Months Ended March 31
Revenues:
Video (3) $3,181 $2,982
High-Speed Internet 698 492
Phone 178 224
Advertising 269 235
Other (4) 162 147
Franchise Fees 159 151
Total Revenues $4,647 $4,231
Operating Cash Flow $1,719 $1,421
Operating Income $702 $341
Operating Cash Flow Margin 37.0% 33.6%
Capital Expenditures $814 $953
Operating Cash Flow, Net of Capital
Expenditures $905 $468
Growth Growth
1Q04 4Q03 1Q03 vs. 4Q03 vs. 1Q03
Video
Homes Passed (000's) 40,000 39,900 39,400 0.4% 1.5%
Basic Subscribers (000's) 21,518 21,483 21,399 0.2% 0.6%
Basic Penetration 53.7% 53.9% 54.2%
Quarterly Net Basic
Subscriber
Additions (000's) 35 70 58 (50.9%) (39.8%)
Digital Subscribers
(000's) 7,854 7,662 6,797 2.5% 15.5%
Digital Penetration 36.5% 35.7% 31.8%
Quarterly Net Digital
Subscriber
Additions (000's) 192 384 169 (50.1%) 13.4%
Monthly Average Video
Revenue per
Basic Subscriber $49.31 $47.52 $46.50 3.8% 6.0%
Monthly Average Total
Revenue per
Basic Subscriber $72.04 $70.04 $65.99 2.9% 9.2%
High-Speed Internet
"Available" Homes (000's) 36,167 34,731 31,107 4.1% 16.3%
Subscribers (000's) 5,678 5,284 4,038 7.5% 40.6%
Penetration 15.7% 15.2% 13.0%
Quarterly Net Subscriber
Additions (000's) 394 423 417 (6.9%) (5.6%)
Monthly Average Revenue
per Subscriber $42.46 $41.33 $42.82 2.7% (0.8%)
Phone
"Available" Homes (000's) 9,657 9,414 8,995 2.6% 7.4%
Subscribers (000's) 1,247 1,267 1,419 (1.6%) (12.1%)
Penetration 12.9% 13.5% 15.8%
Quarterly Net Subscriber
Additions (000's) (20) (45) (20) 56.1% (1.0%)
Monthly Average Revenue per
Subscriber $47.34 $47.13 $52.29 0.4% (9.5%)
Total Revenue
Generating Units
(000's) (5) 36,297 35,696 33,653 1.7% 7.9%
(1) See Non-GAAP and Other Financial Measures in Table 6.
(2) Pro forma financial and subscriber data excludes the results of the
314,000 cable subscribers sold to Bresnan Communications in March
2003 and excludes the results of the net reduction of 16,000
subscribers associated with the cable systems exchange with Insight
Communications in February 2003. Pro forma subscriber data includes
54,000 subscribers acquired in various small acquisitions between
June 2003 and March 2004. 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) The sum total of all primary analog video, digital video, high-speed
Internet and phone customers, but excluding additional outlets.
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COMCAST CORPORATION
TABLE 6
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 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. It can also be computed as cash provided by
operating activities less capital expenditures adjusted for the change in
operating assets and liabilities, net of acquisitions. 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.
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COMCAST CORPORATION
TABLE 6-A continued
Reconciliation of Historical and Pro Forma Data by Business Segment
(Unaudited)
(dollars in millions)
Historical (1)
Adjustments (2)
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 - - $4,908
Operating
expenses
(excluding
depreciation &
amortization) 2,928 107 140 3,175 - - 3,175
Operating
Cash Flow $1,719 $69 ($55) $1,733 - - $1,733
Depreciation and
amortization 1,017 35 22 1,074 - - 1,074
Operating
income (loss) $702 $34 ($77) $659 - - $659
Capital
expenditures $814 $4 $10 $828 - - $828
Adjustments (2)
Corporate Corporate
Three Months Ended and and Pro
March 31, 2003 Cable Content Other Total Cable Other forma
Revenues $4,232 $145 $89 $4,466 ($1) - $4,465
Operating
expenses
(excluding
depreciation &
amortization) 2,811 104 123 3,038 (1) - 3,037
Operating
Cash Flow $1,421 $41 ($34) $1,428 - - $1,428
Depreciation and
amortization 1,080 32 22 1,134 - - 1,134
Operating
income (loss) $341 $9 ($56) $294 - - $294
Capital
expenditures $953 $3 $2 $958 - - $958
Reconciliation of Total Debt to Debt Excluding Exchangeables (Unaudited)
(dollars in millions)
March 31, 2004 December 31, 2003
Current portion of long-term debt $3,386 $3,161
Long-term debt 23,240 23,835
Total Debt $26,626 $26,996
Exchangeable debt 4,005 4,318
Debt excluding exchangeables $22,621 $22,678
Calculation of 2004 Estimated Free Cash Flow
(dollars in billions)
2003 Operating Income $2.0
Add: Depreciation & Amortization 4.4
2003 Operating Cash Flow 6.4
2004 Operating Cash Flow Growth (3) 16%
Projected 2004 Operating Cash Flow 7.4
Less: Projected Capital Expenditures (4) 3.4
Projected 2004 Consolidated Interest, net (5) 1.85
Projected 2004 Consolidated Cash Paid for Income Taxes (6) 0.15
Free Cash Flow $2.0
(1) Historical amounts have been adjusted to reflect QVC as discontinued
operations.
(2) Pro forma data is only adjusted for timing of the acquisitions (or
dispositions) and for acquisitions 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.
(3) Mid point of 2004 Cable division Operating Cash Flow guidance of 15%
to 17%.
(4) Mid point of 2004 Cable capital expenditures guidance plus projected
2004 Content and Other segment's capital expenditures.
(5) Mid point of 2004 Consolidated interest expense guidance of $1.8 to
$1.9 billion.
(6) Mid point of 2004 expected Consolidated cash paid for income taxes
guidance of $100 to $200 million.
COMCAST CORPORATION
TABLE 6-B continued
Reconciliation of Net Income (Loss) to Free Cash Flow (Unaudited)
(dollars in millions, except per share data)
Three Months Ended
March 31,
2004 2003
per per
$ share (3) $ share (3)
Net Income (Loss) as reported $65 $0.03 ($297) ($0.13)
Discontinued Operations, net of tax - - (58) (0.03)
Non-operating items, net of tax (1) 12 - 173 0.08
Net Income (Loss) as adjusted $77 $0.03 ($182) ($0.08)
Items to reconcile net income (loss)
as adjusted to Operating Cash Flow:
Depreciation and amortization 1,074 0.47 1,134 0.50
Interest expense 500 0.22 524 0.23
Income tax expense 82 0.04 (48) (0.02)
Operating Cash Flow $1,733 $0.76 $1,428 $0.63
2004 2003
Operating Cash Flow $1,733 $1,733 $1,428 $1,428
Less:
Interest, net (2) (447) (447) (541) (541)
Cash Paid for Income Taxes (61) (61) (15) (15)
Change in Operating Assets and
Liabilities, net of acquisitions (451) (219)
Net Cash Provided by Operating
Activities $774 $653
Less: Capital Expenditures (828) (958)
Free Cash Flow $397 ($86)
Three Months Ended
March 31,
(1) Detail of non-operating items: 2004 2003
per per
$ share (3) $ share (3)
Investment expense -
mark to market adjustments
on trading securities,
derivatives and hedged items,
net $28 $- $224 $0.10
Investment income -
gain on sales and
exchanges of investments (2) - (22) (0.01)
Investment expense - investment
impairment losses (4) - - 55 0.02
All other, net (5) (8) - 9 0.01
Total non-operating items 18 - 266 0.12
Tax Effect (6) - (93) (0.04)
Non-operating items,
net of tax $12 $- $173 $0.08
(2) Includes interest expense net of interest income and excludes
non-cash interest and subsidiary preferred dividends.
(3) Diluted weighted average shares outstanding for the three months
ended March 31, 2004 and 2003 were 2.268 billion and 2.255 billion,
respectively.
(4) We record losses on our investments for which we have determined
that a decline in value of the investment is other than temporary.
(5) Includes investment, interest and dividend income, equity in net
(income) losses of affiliates, other income (expense) and minority
interest.
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