10-Q 1 d525898d10q.htm FORM 10-Q Form 10-Q
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x

Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2013

OR

 

¨

Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period from                      to                     

Commission File Number 001-32871

 

 

 

LOGO

COMCAST CORPORATION

(Exact name of registrant as specified in its charter)

 

PENNSYLVANIA   27-0000798

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

One Comcast Center, Philadelphia, PA   19103-2838
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (215) 286-1700

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ¨

 

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such period that the registrant was required to submit and post such files).

Yes x No ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x        Accelerated filer ¨        Non-accelerated filer ¨        Smaller reporting company ¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ¨ No x

As of March 31, 2013, there were 2,129,486,037 shares of our Class A common stock, 494,484,616 shares of our Class A Special common stock and 9,444,375 shares of our Class B common stock outstanding.

 

 

 


Table of Contents

TABLE OF CONTENTS

           Page
Number
 
PART I. FINANCIAL INFORMATION   

Item 1.

  Financial Statements      1   
  Condensed Consolidated Balance Sheet as of March 31, 2013 and December 31, 2012 (Unaudited)      1   
  Condensed Consolidated Statement of Income for the Three Months Ended March 31, 2013 and 2012 (Unaudited)      2   
  Condensed Consolidated Statement of Comprehensive Income for the Three Months Ended March 31, 2013 and 2012 (Unaudited)      3   
  Condensed Consolidated Statement of Cash Flows for the Three Months Ended March 31, 2013 and 2012 (Unaudited)      4   
  Condensed Consolidated Statement of Changes in Equity for the Three Months Ended March 31, 2013 and 2012 (Unaudited)      5   
  Notes to Condensed Consolidated Financial Statements (Unaudited)      6   

Item 2.

  Management’s Discussion and Analysis of Financial Condition and Results of Operations      25   

Item 3.

  Quantitative and Qualitative Disclosures About Market Risk      35   

Item 4.

  Controls and Procedures      35   
PART II. OTHER INFORMATION   

Item 1.

  Legal Proceedings      36   

Item 1A.

  Risk Factors      36   

Item 2.

  Unregistered Sales of Equity Securities and Use of Proceeds      36   

Item 6.

  Exhibits      37   
SIGNATURES        38   

 

 

This Quarterly Report on Form 10-Q is for the three months ended March 31, 2013. This Quarterly Report modifies and supersedes documents filed prior to this Quarterly Report. The Securities and Exchange Commission (“SEC”) allows us to “incorporate by reference” information that we file with it, which means that we can disclose important information to you by referring you directly to those documents. Information incorporated by reference is considered to be part of this Quarterly Report. In addition, information that we file with the SEC in the future will automatically update and supersede information contained in this Quarterly Report. Throughout this Quarterly Report, we refer to Comcast Corporation as “Comcast;” Comcast and its consolidated subsidiaries, including NBCUniversal Media, LLC (“NBCUniversal”), as “we,” “us” and “our;” Comcast Cable Communications, LLC and its subsidiaries as “Comcast Cable;” Comcast Holdings Corporation as “Comcast Holdings;” and NBCUniversal, LLC as “NBCUniversal Holdings.”

You should carefully review the information contained in this Quarterly Report and particularly consider any risk factors set forth in this Quarterly Report and in other reports or documents that we file from time to time with the SEC. In this Quarterly Report, we state our beliefs of future events and of our future financial performance. In some cases, you can identify these so-called “forward-looking statements” by words such as “may,” “will,” “should,” “expects,” “believes,” “estimates,” “potential,” or “continue,” or the negative of those words, and other comparable words. You should be aware that these statements are only our predictions. In evaluating these statements, you should specifically consider various factors, including the risks outlined below and in other reports we file with the SEC. Actual events or our actual results may differ materially from any of our forward-looking statements. We undertake no obligation to update any forward-looking statements.

Our businesses may be affected by, among other things, the following:

 

   

our businesses currently face a wide range of competition, and our businesses and results of operations could be adversely affected if we do not compete effectively

 

 

   

changes in consumer behavior driven by new technologies may adversely affect our businesses

 

 

   

programming expenses for our video services are increasing, which could adversely affect our businesses

 

 

   

we are subject to regulation by federal, state, local and foreign authorities, which may impose additional costs and restrictions on our businesses

 

 

   

weak economic conditions may have a negative impact on our businesses

 

 

   

a decline in advertising expenditures or changes in advertising markets could negatively impact our businesses

 

 

   

NBCUniversal’s success depends on consumer acceptance of its content, which is difficult to predict, and its businesses may be adversely affected if its content fails to achieve sufficient consumer acceptance or our costs to acquire content increase

 

 

   

the loss of NBCUniversal’s programming distribution agreements, or the renewal of these agreements on less favorable terms, could adversely affect its businesses

 

 

   

our businesses depend on keeping pace with technological developments

 

 

   

we rely on network and information systems and other technologies, as well as key properties, and a disruption, cyber attack, failure or destruction of such networks, systems, technologies or properties may disrupt our businesses

 

 

   

our businesses depend on using and protecting certain intellectual property rights and on not infringing the intellectual property rights of others

 

 

   

we may be unable to obtain necessary hardware, software and operational support

 

 

   

labor disputes, whether involving employees or sports organizations, may disrupt our operations and adversely affect our businesses

 

 

   

the loss of key management personnel or popular on-air and creative talent could have an adverse effect on our businesses

 

 

   

sales of DVDs have been declining

 

 

   

we face risks arising from the outcome of various litigation matters

 

 

   

we face risks relating to doing business internationally that could adversely affect our businesses

 

 

   

acquisitions and other strategic transactions present many risks, and we may not realize the financial and strategic goals that were contemplated at the time of any transaction

 

 

   

our Class B common stock has substantial voting rights and separate approval rights over several potentially material transactions, and our Chairman and CEO has considerable influence over our company through his beneficial ownership of our Class B common stock

 


Table of Contents

PART I: FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheet

(Unaudited)

 

(in millions, except share data)   March 31,
2013
    December 31,
2012
 

Assets

   

Current Assets:

   

Cash and cash equivalents

  $ 1,839      $ 10,951   

Investments

    2,841        1,464   

Receivables, net

    5,063        5,521   

Programming rights

    901        909   

Other current assets

    1,139        1,146   

Total current assets

    11,783        19,991   

Film and television costs

    4,653        5,054   

Investments

    5,433        6,325   

Property and equipment, net of accumulated depreciation of $40,277 and $39,425

    28,219        27,232   

Franchise rights

    59,364        59,364   

Goodwill

    26,996        26,985   

Other intangible assets, net of accumulated amortization of $7,965 and $7,662

    17,584        17,840   

Other noncurrent assets, net

    2,332        2,180   

Total assets

  $ 156,364      $ 164,971   

Liabilities and Equity

   

Current Liabilities:

   

Accounts payable and accrued expenses related to trade creditors

  $ 5,750      $ 6,206   

Accrued participations and residuals

    1,469        1,350   

Deferred revenue

    903        851   

Accrued expenses and other current liabilities

    7,719        5,931   

Current portion of long-term debt

    2,177        2,376   

Total current liabilities

    18,018        16,714   

Long-term debt, less current portion

    45,049        38,082   

Deferred income taxes

    31,152        30,110   

Other noncurrent liabilities

    12,640        13,271   

Commitments and contingencies (Note 12)

   

Redeemable noncontrolling interests and redeemable subsidiary preferred stock

    854        16,998   

Equity:

   

Preferred stock—authorized, 20,000,000 shares; issued, zero

             

Class A common stock, $0.01 par value—authorized, 7,500,000,000 shares; issued, 2,494,946,787 and 2,487,739,385; outstanding, 2,129,486,037 and 2,122,278,635

    25        25   

Class A Special common stock, $0.01 par value—authorized, 7,500,000,000 shares; issued, 565,419,380 and 578,704,227; outstanding, 494,484,616 and 507,769,463

    6        6   

Class B common stock, $0.01 par value—authorized, 75,000,000 shares; issued and outstanding, 9,444,375

             

Additional paid-in capital

    38,957        40,547   

Retained earnings

    16,730        16,280   

Treasury stock, 365,460,750 Class A common shares and 70,934,764 Class A Special common shares

    (7,517     (7,517

Accumulated other comprehensive income (loss)

    (11     15   

Total Comcast Corporation shareholders’ equity

    48,190        49,356   

Noncontrolling interests

    461        440   

Total equity

    48,651        49,796   

Total liabilities and equity

  $ 156,364      $ 164,971   

See accompanying notes to condensed consolidated financial statements.

 

1


Table of Contents

Condensed Consolidated Statement of Income

(Unaudited)

 

    Three Months Ended
March 31
 
(in millions, except per share data)       2013             2012      

Revenue

  $ 15,310      $ 14,878   

Costs and Expenses:

   

Programming and production

    4,663        4,737   

Other operating and administrative

    4,466        4,244   

Advertising, marketing and promotion

    1,147        1,209   

Depreciation

    1,566        1,529   

Amortization

    401        401   
      12,243        12,120   

Operating income

    3,067        2,758   

Other Income (Expense):

   

Interest expense

    (653     (640

Investment income (loss), net

    72        92   

Equity in net income (losses) of investees, net

    11        3   

Other income (expense), net

    73        (16
      (497     (561

Income before income taxes

    2,570        2,197   

Income tax expense

    (925     (750

Net income

    1,645        1,447   

Net (income) loss attributable to noncontrolling interests and redeemable subsidiary preferred stock

    (208     (223

Net income attributable to Comcast Corporation

  $ 1,437      $ 1,224   

Basic earnings per common share attributable to Comcast Corporation shareholders

  $ 0.55      $ 0.45   

Diluted earnings per common share attributable to Comcast Corporation shareholders

  $ 0.54      $ 0.45   

Dividends declared per common share attributable to Comcast Corporation shareholders

  $ 0.195      $ 0.1625   

See accompanying notes to condensed consolidated financial statements.

 

2


Table of Contents

Condensed Consolidated Statement of Comprehensive Income

(Unaudited)

 

    Three Months Ended
March 31
 
(in millions)       2013             2012      

Net income

  $ 1,645      $ 1,447   

Unrealized gains (losses) on marketable securities, net of deferred taxes of $(12) and $—

    20          

Deferred gains (losses) on cash flow hedges, net of deferred taxes of $21 and $(11)

    (36     20   

Amounts reclassified to net income:

   

Realized (gains) losses on marketable securities, net of deferred taxes of $12 and $—

    (23       

Realized (gains) losses on cash flow hedges, net of deferred taxes of $(27) and $9

    46        (16

Employee benefit obligations, net of deferred taxes of $(1) and $—

    1        (2

Currency translation adjustments, net of deferred taxes of $5 and $—

    (17     2   

Comprehensive income

    1,636        1,451   

Net (income) loss attributable to noncontrolling interests and redeemable subsidiary preferred stock

    (208     (223

Other comprehensive (income) loss attributable to noncontrolling interests

    9          

Comprehensive income attributable to Comcast Corporation

  $ 1,437      $ 1,228   

See accompanying notes to condensed consolidated financial statements.

 

3


Table of Contents

Condensed Consolidated Statement of Cash Flows

(Unaudited)

 

   

Three Months Ended

March 31

 
(in millions)       2013               2012        

Net cash provided by (used in) operating activities

  $ 4,369      $ 4,393   

Investing Activities

   

Capital expenditures

    (1,361     (1,174

Cash paid for intangible assets

    (182     (184

Acquisition of 30 Rockefeller Plaza properties

    (1,311       

Proceeds from sales of businesses and investments

    74        35   

Return of capital from investees

    16          

Purchases of investments

    (88     (62

Other

    89        36   

Net cash provided by (used in) investing activities

    (2,763     (1,349

Financing Activities

   

Proceeds from (repayments of) short-term borrowings, net

    491        (407

Proceeds from borrowings

    2,933          

Repurchases and repayments of debt

    (1,811     (1,125

Repurchases and retirements of common stock

    (500     (750

Dividends paid

    (429     (304

Issuances of common stock

    13        150   

Purchase of NBCUniversal noncontrolling common equity interest

    (10,747       

Distributions to noncontrolling interests

    (49     (58

Settlement of Station Venture liability

    (602       

Other

    (17     37   

Net cash provided by (used in) financing activities

    (10,718     (2,457

Increase (decrease) in cash and cash equivalents

    (9,112     587   

Cash and cash equivalents, beginning of period

    10,951        1,620   

Cash and cash equivalents, end of period

  $ 1,839      $ 2,207   

See accompanying notes to condensed consolidated financial statements.

 

4


Table of Contents

Condensed Consolidated Statement of Changes in Equity

(Unaudited)

 

   

Redeemable
Noncontrolling
Interests and
Redeemable
Subsidiary
Preferred

Stock

        Common Stock    

Additional
Paid-In
Capital

   

Retained
Earnings

   

Treasury
Stock at
Cost

   

Accumulated
Other
Comprehensive
Income (Loss)

   

Non-

controlling
Interests

   

Total
Equity

 
(in millions)          A     A Special     B              

Balance, January 1, 2012

  $ 16,014          $ 25      $ 7      $  —      $ 40,940      $ 13,971      $ (7,517   $ (152   $ 381      $ 47,655   

Stock compensation plans

                224        (82           142   

Repurchases and retirements of common stock

            (1       (292     (457           (750

Employee stock purchase
plans

                19                19   

Dividends declared

                  (439           (439

Other comprehensive
income (loss)

                      4          4   

Contributions from (distributions to) noncontrolling interests, net

    (8                       (39     (39

Purchase of subsidiary shares from noncontrolling interests

    (44               2                2   

Other

                        (24     (24

Net income (loss)

    196                                            1,224                        27        1,251   

Balance, March 31, 2012

  $ 16,158          $ 25      $ 6      $      $ 40,893      $ 14,217      $ (7,517   $ (148   $ 345      $ 47,821   

Balance, January 1, 2013

  $ 16,998          $ 25      $ 6      $      $ 40,547      $ 16,280      $ (7,517   $ 15      $ 440      $ 49,796   

Stock compensation plans

                146        (125           21   

Repurchases and retirements of common stock

                (152     (348           (500

Employee stock purchase
plans

                22                22   

Dividends declared

                  (514           (514

Other comprehensive
income (loss)

    (9                                

Purchase of NBCUniversal noncontrolling common equity interest

    (17,006               (1,482         (26       (1,508

Redeemable subsidiary preferred stock

    725                         

Contributions from (distributions to) noncontrolling interests, net

    (9                       (31     (31

Other

    (4               (124           3        (121

Net income (loss)

    159                                            1,437                        49        1,486   

Balance, March 31, 2013

  $ 854          $ 25      $ 6      $      $ 38,957      $ 16,730      $ (7,517   $ (11   $ 461      $ 48,651   

See accompanying notes to condensed consolidated financial statements.

 

5


Table of Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1: Condensed Consolidated Financial Statements

Basis of Presentation

We have prepared these unaudited condensed consolidated financial statements based on Securities and Exchange Commission (“SEC”) rules that permit reduced disclosure for interim periods. These financial statements include all adjustments that are necessary for a fair presentation of our consolidated results of operations, financial condition and cash flows for the periods shown, including normal, recurring accruals and other items. The consolidated results of operations for the interim periods presented are not necessarily indicative of results for the full year.

The year-end condensed consolidated balance sheet was derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles in the United States (“GAAP”). For a more complete discussion of our accounting policies and certain other information, refer to our consolidated financial statements included in our 2012 Annual Report on Form 10-K.

Reclassifications have been made to our condensed consolidated financial statements for the prior year to conform to classifications used in the current period.

Note 2: Earnings Per Share

Computation of Diluted EPS

 

    Three Months Ended March 31  
    2013      2012  
(in millions, except per share data)   Net Income
Attributable to
Comcast
Corporation
     Shares      Per Share
Amount
     Net Income
Attributable to
Comcast
Corporation
     Shares      Per Share
Amount
 

Basic EPS attributable to Comcast Corporation shareholders

  $ 1,437         2,634       $ 0.55       $ 1,224         2,708       $ 0.45   

Effect of dilutive securities:

                

Assumed exercise or issuance of shares relating to stock plans

             41                           36            

Diluted EPS attributable to Comcast Corporation shareholders

  $    1,437         2,675       $ 0.54       $    1,224         2,744       $ 0.45   

Our potentially dilutive securities include potential common shares related to our stock options and our restricted share units (“RSUs”). Diluted earnings per common share attributable to Comcast Corporation shareholders (“diluted EPS”) considers the impact of potentially dilutive securities using the treasury stock method. Diluted EPS excludes the impact of potential common shares related to our stock options in periods in which the option exercise price is greater than the average market price of our Class A common stock or our Class A Special common stock, as applicable.

Diluted EPS for the three months ended March 31, 2013 and 2012 excludes 2 million and 26 million, respectively, of potential common shares related to our share-based compensation plans, because the inclusion of the potential common shares would have had an antidilutive effect.

Note 3: Significant Transactions

On March 19, 2013, we acquired GE’s 49% common equity interest in NBCUniversal Holdings for approximately $16.7 billion (the “Redemption Transaction”). In addition to this transaction, NBCUniversal purchased from GE certain properties it occupies at 30 Rockefeller Plaza in New York City and CNBC’s headquarters in Englewood Cliffs, New Jersey for approximately $1.4 billion.

 

6


Table of Contents

The total consideration for these transactions consisted of $11.4 billion of cash on hand; $4 billion of senior debt securities issued by NBCUniversal Enterprise, Inc. (“NBCUniversal Enterprise”), a holding company whose principal assets are its interests in NBCUniversal Holdings; $750 million of cash funded through our commercial paper program; $1.25 billion of borrowings under NBCUniversal Enterprise’s credit facility, which has replaced NBCUniversal’s credit facility; and $725 million aggregate liquidation preference of Series A cumulative preferred stock of NBCUniversal Enterprise. See Note 6 for additional information on NBCUniversal Enterprise’s senior debt securities and credit facility.

Following the close of the Redemption Transaction, we control and consolidate NBCUniversal Enterprise and own all of its capital stock other than its preferred stock. NBCUniversal Enterprise’s senior debt securities and credit facility are guaranteed by us and four of our wholly owned cable holding company subsidiaries, but are not guaranteed by NBCUniversal. In March 2013, NBCUniversal became a part of our existing cross-guarantee structure. See Note 14 for additional information on our guarantor structure.

After the close of the transaction, GE sold the interests in NBCUniversal Enterprise’s senior debt securities and preferred stock it acquired in the Redemption Transaction to unaffiliated third parties. The preferred stock pays dividends at a fixed rate of 5.25% and the holders have the right to cause NBCUniversal Enterprise to redeem their shares at a price equal to the liquidation preference plus accrued but unpaid dividends for a thirty day period beginning on March 19, 2020 and thereafter on every third anniversary of such date (each such date, a “put date”). Shares of preferred stock can be called for redemption by NBCUniversal Enterprise at a price equal to the liquidation preference plus accrued but unpaid dividends one year following each put date applicable to such shares. Because certain of these redemption provisions are outside of our control, the NBCUniversal Enterprise preferred stock is presented outside of equity under the caption “redeemable noncontrolling interests and redeemable subsidiary preferred stock” in our condensed consolidated balance sheet. Its initial value was based on the liquidation preference of the preferred stock and is adjusted for accrued but unpaid dividends.

We recognized an increase to our deferred tax liabilities of $1.5 billion primarily due to the increase in our financial reporting basis in the consolidated net assets of NBCUniversal Holdings in excess of the tax basis following the Redemption Transaction. In addition, our condensed consolidated balance sheet now includes certain tax liabilities of NBCUniversal Enterprise related to periods prior to our acquisition of the common stock of NBCUniversal Enterprise, for which we have been indemnified by GE and have recorded a related indemnification asset. We also expect to realize additional tax benefits in the future as a result of the Redemption Transaction, which are expected to increase the amounts we have agreed to share with GE. Our expected future payments to GE are accounted for as contingent consideration. See Note 7 for additional information on the fair value of this contingent consideration as of March 31, 2013.

Because we have maintained control of NBCUniversal Holdings, the difference between the consideration transferred and the recorded value of GE’s 49% redeemable noncontrolling common equity interest, and the related tax impacts, were recorded to additional paid-in capital.

Note 4: Film and Television Costs

 

(in millions)   March 31,
2013
     December 31,
2012
 

Film Costs:

    

Released, less amortization

  $ 1,362       $ 1,472   

Completed, not released

    151         99   

In production and in development

    849         1,048   
    2,362         2,619   

Television Costs:

    

Released, less amortization

    1,065         1,124   

In production and in development

    320         334   
    1,385         1,458   

Programming rights, less amortization

    1,807         1,886   
    5,554         5,963   

Less: Current portion of programming rights

    901         909   

Film and television costs

  $ 4,653       $ 5,054   

 

7


Table of Contents

Note 5: Investments

 

(in millions)   March 31,
2013
     December 31,
2012
 

Fair Value Method

  $ 4,939       $ 4,493   

Equity Method:

    

The Weather Channel

    474         471   

Other

    714         693   
    1,188         1,164   

Cost Method:

    

AirTouch

    1,541         1,538   

Other

    606         594   
    2,147         2,132   

Total investments

    8,274         7,789   

Less: Current investments

    2,841         1,464   

Noncurrent investments

  $ 5,433       $ 6,325   

Investment Income (Loss), Net

 

    Three Months Ended
March 31
 
(in millions)       2013             2012      

Gains on sales and exchanges of investments, net

  $ 35      $ 7   

Investment impairment losses

    (9     (12

Unrealized gains (losses) on securities underlying prepaid forward sale agreements

    605        516   

Mark to market adjustments on derivative component of prepaid forward sale agreements and indexed debt instruments

    (602     (470

Interest and dividend income

    30        29   

Other, net

    13        22   

Investment income (loss), net

  $ 72      $ 92   

Fair Value Method

As of March 31, 2013, substantially all of our fair value method investments were equity securities held as collateral that were related to our obligations under prepaid forward sale agreements.

Prepaid Forward Sale Agreements

 

(in millions)   March 31,
2013
     December 31,
2012
 

Assets:

    

Fair value equity securities held

  $ 4,540       $ 4,143   

Liabilities:

    

Obligations under prepaid forward sale agreements

  $ 1,125       $ 1,248   

Derivative component of prepaid forward sale agreements

    2,888         2,302   

Total liabilities

  $ 4,013       $ 3,550   

As of March 31, 2013, our prepaid forward sale obligations had an estimated fair value of $4.1 billion. The estimated fair values are based on Level 2 inputs using pricing models whose inputs are derived primarily from or corroborated by observable market data through correlation or other means for substantially the full term of the financial instrument.

Cost Method

We hold two series of preferred stock of AirTouch Communications, Inc. (“AirTouch”), a subsidiary of Vodafone, which are redeemable in April 2020. As of March 31, 2013, the estimated fair values of the AirTouch preferred stock and the associated liability related to redeemable preferred shares issued by one of our

 

8


Table of Contents

consolidated subsidiaries were $1.8 billion. The estimated fair value is based on Level 2 inputs using pricing models whose inputs are derived primarily from or corroborated by observable market data through correlation or other means for substantially the full term of the financial instrument.

Note 6: Long-Term Debt

Long-Term Debt Outstanding

 

(in millions)   Weighted-Average Interest
Rate as of March 31, 2013
    March 31,
2013
     December 31,
2012
 

Commercial paper

    0.336   $ 500       $   

Revolving credit facilities

    1.280     1,250           

Senior notes with maturities of 5 years or less

    4.802     15,787         12,991   

Senior notes with maturities between 6 and 10 years

    4.558     11,534         10,334   

Senior notes with maturities greater than 10 years

    6.000     17,922         16,801   

Other, including capital lease obligations

           233         332   

Total debt

    4.89 %(a)      47,226         40,458   

Less: Current portion

            2,177         2,376   

Long-term debt

          $  45,049       $  38,082   

 

(a)

Includes the effects of our derivative financial instruments.

As of March 31, 2013, our debt had an estimated fair value of $54.3 billion. The estimated fair value of our publicly traded debt is based on quoted market values for the debt. To estimate the fair value of debt for which there are no quoted market prices, we use interest rates available to us for debt with similar terms and remaining maturities.

Redemption Transaction

The Redemption Transaction resulted in an additional $4 billion aggregate principal amount of senior notes issued by NBCUniversal Enterprise and $1.25 billion of borrowings under the NBCUniversal Enterprise credit facility. The total consideration for the Redemption Transaction also included $750 million of cash funded through our commercial paper program.

The NBCUniversal Enterprise senior notes are comprised of $1.1 billion aggregate principal amount of 1.662% senior notes due 2018, $1.5 billion aggregate principal amount of 1.974% senior notes due 2019, $700 million aggregate principal amount of floating rate senior notes due 2016 and $700 million aggregate principal amount of floating rate senior notes due 2018. The floating rate senior notes due 2016 and 2018 will accrue interest for each quarterly interest period at a rate equal to three-month London Interbank Offered Rate (“LIBOR”) plus 0.537% and 0.685%, respectively.

On March 19, 2013, NBCUniversal Enterprise amended and restated the existing credit agreement of NBCUniversal to, among other things, substitute NBCUniversal Enterprise for NBCUniversal as the sole borrower and revise the borrowing capacity of the facility from $1.5 billion to $1.35 billion, extend the term of the facility to March 2018 and revise the interest rate on borrowings. The interest rate on the credit facility consists of a base rate plus a borrowing margin that is determined based on our credit rating. As of March 31, 2013, the interest rate on this credit facility was 1.28%.

Debt Borrowings

In January 2013, we issued $750 million aggregate principal amount of 2.850% senior notes due 2023, $1.7 billion aggregate principal amount of 4.250% senior notes due 2033 and $500 million aggregate principal amount of 4.500% senior notes due 2043.

Commercial Paper Program

During the three months ended March 31, 2013, borrowings, net of repayments of commercial paper under our commercial paper program, were $500 million. Following the amendments to the NBCUniversal credit agreement, NBCUniversal’s commercial paper program was terminated.

 

9


Table of Contents

Revolving Credit Facilities

As of March 31, 2013, amounts available under our consolidated revolving credit facilities, net of amounts outstanding under our commercial paper program and undrawn letters of credit, was $5.5 billion, which included $100 million available under NBCUniversal Enterprise’s credit facility.

Note 7: Fair Value Measurements

The accounting guidance related to financial assets and financial liabilities (“financial instruments”) establishes a hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques (market approach, income approach and cost approach). Level 1 consists of financial instruments whose values are based on quoted market prices for identical financial instruments in an active market. Level 2 consists of financial instruments that are valued using models or other valuation methodologies. These models use inputs that are observable either directly or indirectly. Level 3 consists of financial instruments whose values are determined using pricing models that use significant inputs that are primarily unobservable, discounted cash flow methodologies or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. Our financial instruments that are accounted for at fair value on a recurring basis are presented in the table below.

Recurring Fair Value Measures

 

    Fair Value as of  
    March 31, 2013      December 31,
2012
 
(in millions)   Level 1      Level 2      Level 3      Total      Total  

Assets

             

Trading securities

  $  4,535       $       $       $ 4,535       $ 4,027   

Available-for-sale securities

    288         99         17         404         464   

Interest rate swap agreements

            180                 180         210   

Foreign exchange contracts

            17                 17         6   

Cross-currency swap agreements

                                    30   

Equity warrants

                                    2   

Total

  $ 4,823       $ 296       $ 17       $ 5,136       $ 4,739   

Liabilities

             

Derivative component of prepaid forward sale agreements and indexed debt instruments

  $       $ 2,894       $       $ 2,894       $ 2,305   

Contractual obligations

                    1,080         1,080         1,055   

Contingent consideration

                    699         699         587   

Cross-currency swap agreements

            28                 28           

Foreign exchange contracts

            18                 18         14   

Total

  $       $  2,940       $  1,779       $  4,719       $  3,961   

Contractual Obligations and Contingent Consideration

The fair values of the contractual obligations and contingent consideration in the table above are primarily based on certain expected future discounted cash flows, the determination of which involves the use of significant unobservable inputs. The most significant unobservable inputs we use are our estimates of the future revenue we expect to generate from certain NBCUniversal entities, which are related to our contractual obligations, and future net tax benefits that will affect payments to GE, which are related to contingent consideration. The discount rates used in the measurements of fair value were between 5% and 14% and are based on the underlying risk associated with our estimate of future revenue, as well as the terms of the respective contracts, and the uncertainty in the timing of our payments to GE. The fair value adjustments to contractual obligations and contingent consideration are sensitive to the assumptions related to future revenue and tax benefits, respectively, as well as to current interest rates, and therefore, the adjustments are recorded to other income (expense), net in our condensed consolidated statement of income.

 

10


Table of Contents

Changes in Contractual Obligations and Contingent Consideration

 

(in millions)   Contractual
Obligations
    Contingent
Consideration
 

Balance, December 31, 2012

  $ 1,055      $ 587   

Fair value adjustments

    45        8   

Payments

    (20     (67

Redemption Transaction

           171   

Balance, March 31, 2013

  $ 1,080      $ 699   

Nonrecurring Fair Value Measures

We have assets and liabilities that we are required to record at fair value on a nonrecurring basis when certain circumstances occur. In the case of film or stage play production costs, upon the occurrence of an event or change in circumstance that may indicate that the fair value of a production is less than its unamortized costs, we determine the fair value of the production and record an adjustment for the amount by which the unamortized capitalized costs exceed the production’s fair value. The estimate of fair value of a production is determined using Level 3 inputs, primarily an analysis of future expected cash flows. Adjustments to capitalized film production costs of $66 million and $25 million were recorded during the three months ended March 31, 2013 and 2012, respectively.

Note 8: Noncontrolling Interests

Certain of the subsidiaries that we consolidate are not wholly owned. Some of the agreements with the minority partners of these subsidiaries contain redemption features whereby interests held by the minority partners are redeemable either (i) at the option of the holder or (ii) upon the occurrence of an event that is not solely within our control. If interests were to be redeemed under these agreements, we would generally be required to purchase the interest at fair value on the date of redemption. These interests are presented on the balance sheet outside of equity as a component of the caption “redeemable noncontrolling interests and redeemable subsidiary preferred stock.” Noncontrolling interests and subsidiary preferred stock that do not contain such redemption features are presented in equity.

We acquired GE’s 49% common equity interest in NBCUniversal Holdings, which had previously been presented as a redeemable noncontrolling interest in our condensed consolidated balance sheet. See Note 3 for additional information on the Redemption Transaction. The difference between the consideration transferred and the recorded value of GE’s 49% redeemable noncontrolling common equity interest and the related tax impacts were recorded to additional paid-in capital. The table below includes the impact of that transaction to our changes in equity.

Changes in Equity

 

    Three Months Ended
March 31
 
(in millions)       2013             2012      

Net income attributable to Comcast Corporation

  $ 1,437      $ 1,224   

Transfers from (to) noncontrolling interests:

   

Decrease in Comcast Corporation additional paid-in capital resulting from the purchase of GE’s redeemable noncontrolling common equity interest

    (1,482       

Other

    (1     2   

Changes in equity resulting from net income attributable to Comcast Corporation and transfers from (to) noncontrolling interests

  $ (46   $ 1,226   

Note 9: Share-Based Compensation

Our share-based compensation primarily consists of awards of stock options and RSUs to certain employees and directors and is awarded as part of our approach to long-term incentive compensation. Additionally, through our employee stock purchase plans, employees are able to purchase shares of Comcast Class A common stock at a discount through payroll deductions.

 

11


Table of Contents

In March 2013, we granted 18.4 million stock options and 5.2 million RSUs related to our annual management awards. The weighted-average fair values associated with these grants were $8.80 per stock option and $37.85 per RSU.

Recognized Share-Based Compensation Expense

 

    Three Months Ended
March 31
 
(in millions)       2013              2012      

Stock options

  $ 32       $ 29   

Restricted share units

    38         35   

Employee stock purchase plans

    6         5   

Total

  $ 76       $ 69   

As of March 31, 2013, we had unrecognized pretax compensation expense of $418 million and $480 million related to nonvested stock options and nonvested RSUs, respectively.

Note 10: Supplemental Financial Information

Receivables

 

(in millions)   March 31,
2013
     December 31,
2012
 

Receivables, gross

  $ 5,545       $ 6,026   

Less: Allowance for returns and customer incentives

    289         307   

Less: Allowance for doubtful accounts

    193         198   

Receivables, net

  $ 5,063       $ 5,521   

Accumulated Other Comprehensive Income (Loss)

 

(in millions)   March 31,
2013
    March 31,
2012
 

Unrealized gains (losses) on marketable securities

  $ 180      $ 22   

Deferred gains (losses) on cash flow hedges

    (57     (107

Unrecognized gains (losses) on employee benefit obligations

    (109     (58

Cumulative translation adjustments

    (25     (5

Accumulated other comprehensive income (loss), net of deferred taxes

  $ (11   $ (148

 

12


Table of Contents

Net Cash Provided by Operating Activities

 

    Three Months Ended
March 31
 
(in millions)       2013             2012      

Net income

  $ 1,645      $ 1,447   

Adjustments to reconcile net income to net cash provided by operating activities:

   

Depreciation and amortization

    1,967        1,930   

Amortization of film and television costs

    1,972        2,153   

Share-based compensation

    102        89   

Noncash interest expense (income), net

    42        48   

Equity in net (income) losses of investees, net

    (11     (3

Cash received from investees

    23        73   

Net (gain) loss on investment activity and other

    (132     (74

Deferred income taxes

    (373     (59

Changes in operating assets and liabilities, net of effects of acquisitions and divestitures:

   

Change in current and noncurrent receivables, net

    465        (60

Change in film and television costs

    (1,577     (2,061

Change in accounts payable and accrued expenses related to trade creditors

    (281     234   

Change in other operating assets and liabilities

    527        676   

Net cash provided by operating activities

  $ 4,369      $ 4,393   

Cash Payments for Interest and Income Taxes

 

    Three Months Ended
March 31
 
(in millions)       2013              2012      

Interest

  $ 617       $ 614   

Income taxes

  $ 461       $ 118   

Noncash Investing and Financing Activities

During the three months ended March 31, 2013:

 

   

we acquired GE’s 49% common equity interest in NBCUniversal Holdings for total consideration of $16.7 billion, which included noncash consideration of $6 billion from the consolidation of NBCUniversal Enterprise which was comprised of $4 billion aggregate principal amount of senior notes, $1.25 billion of borrowings under its credit facility and $725 million aggregate liquidation preference of its Series A cumulative preferred stock (see Note 3 for additional information on the Redemption Transaction)

 

 

   

we acquired $515 million of property and equipment and intangible assets that were accrued but unpaid

 

 

   

we recorded a liability of $514 million for a quarterly cash dividend of $0.195 per common share paid in April 2013

 

Note 11: Receivables Monetization

NBCUniversal monetizes certain of its accounts receivable under programs with a syndicate of banks. We account for receivables monetized through these programs as sales in accordance with the appropriate accounting guidance. We receive deferred consideration from the assets sold in the form of a receivable, which is funded by residual cash flows after the senior interests have been fully paid. The deferred consideration is included in receivables, net at its initial fair value, which reflects the net cash flows we expect to receive related to these interests. The accounts receivable we sold that underlie the deferred consideration are generally short-term in nature and, therefore, the fair value of the deferred consideration approximated its carrying value as of March 31, 2013 and December 31, 2012.

 

13


Table of Contents

NBCUniversal is responsible for servicing the receivables and remitting collections to the purchasers under the monetization programs. NBCUniversal performs this service for a fee that is equal to the prevailing market rate for such services. As a result, no servicing asset or liability has been recorded on our condensed consolidated balance sheet as of March 31, 2013 and December 31, 2012. The servicing fees are recorded as a component of net (loss) gain on sale.

The net cash payments on transfers that are included within net cash provided by operating activities in our condensed consolidated statement of cash flows were $339 million and $90 million for the three months ended March 31, 2013 and 2012, respectively. The receivables monetization program did not have a material effect on our condensed consolidated statement of income for the periods presented.

Receivables Monetized and Deferred Consideration

 

(in millions)   March 31,
2013
     December 31,
2012
 

Monetized receivables sold

  $ 681       $ 791   

Deferred consideration

  $ 239       $ 274   

In addition to the amounts presented above, we had $620 million and $882 million payable to our monetization programs as of March 31, 2013 and December 31, 2012, respectively. These amounts represent cash receipts that were not yet remitted to the monetization programs as of the balance sheet date and are recorded to accounts payable and accrued expenses related to trade creditors.

Note 12: Commitments and Contingencies

Commitments

Station Venture

NBCUniversal previously held an equity interest in Station Venture Holdings, LLC (“Station Venture”), a nonconsolidated variable interest entity, and the remaining equity interests in Station Venture were held by LIN TV, Corp. Station Venture was the obligor on an $816 million senior secured note (the “Station Venture note”) that was due in 2023 to General Electric Capital Corporation (“GECC”) as servicer. The Station Venture note, among other things, was collateralized by substantially all of the assets of Station Venture and Station Venture Operations, LP (“Station LP”). Station LP was a less than wholly owned consolidated subsidiary of NBCUniversal. In connection with the acquisition of our controlling interest in NBCUniversal Holdings on January 28, 2011, a liability of $482 million was recorded to noncurrent liabilities in our allocation of purchase price, which represented the fair value of the net assets of Station LP. In February 2013, we closed our agreement with GE, GECC and LIN TV under which, among other things, NBCUniversal purchased the Station Venture note from GECC for $602 million, representing the agreed upon fair value of the assets of Station LP. As of the closing date of the transaction, the $482 million recorded liability was effectively settled and Station Venture and Station LP became wholly owned subsidiaries of NBCUniversal. We now consolidate Station Venture, and the Station Venture note is eliminated in consolidation. Due to the related party nature of this transaction, the excess of the purchase price of the Station Venture note over the recorded amount of the liability was recorded to additional paid-in capital.

Contingencies

Antitrust Cases

We are defendants in two purported class actions originally filed in December 2003 in the United States District Courts for the District of Massachusetts and the Eastern District of Pennsylvania. The potential class in the Massachusetts case, which has been transferred to the Eastern District of Pennsylvania, is our customer base in the “Boston Cluster” area, and the potential class in the Pennsylvania case is our customer base in the “Philadelphia and Chicago Clusters,” as those terms are defined in the complaints. In each case, the plaintiffs allege that certain customer exchange transactions with other cable providers resulted in unlawful horizontal market restraints in those areas and seek damages under antitrust statutes, including treble damages.

 

14


Table of Contents

Classes of Chicago Cluster and Philadelphia Cluster customers were certified in October 2007 and January 2010, respectively. We appealed the class certification in the Philadelphia Cluster case to the Third Circuit Court of Appeals, which affirmed the class certification in August 2011 and denied our petition for a rehearing en banc in September 2011. In March 2010, we moved for summary judgment dismissing all of the plaintiffs’ claims in the Philadelphia Cluster. In April 2012, the District Court issued a decision dismissing some of the plaintiffs’ claims, but allowing two claims to proceed to trial. The plaintiffs’ claims concerning the other two clusters are stayed pending determination of the Philadelphia Cluster claims. In June 2012, the U.S. Supreme Court granted our petition to review the Third Circuit Court of Appeals’ ruling and in September 2012, the trial court stayed all proceedings pending resolution of the Supreme Court appeal. In March 2013, the Supreme Court ruled that the class had been improperly certified and reversed the judgment of the Third Circuit.

In addition, we are the defendant in 22 purported class actions filed in federal district courts throughout the country. All of these actions have been consolidated by the Judicial Panel on Multidistrict Litigation in the United States District Court for the Eastern District of Pennsylvania for pre-trial proceedings. In a consolidated complaint filed in November 2009 on behalf of all plaintiffs in the multidistrict litigation, the plaintiffs allege that we improperly “tie” the rental of set-top boxes to the provision of premium cable services in violation of Section 1 of the Sherman Antitrust Act, various state antitrust laws and unfair/deceptive trade practices acts in California, Illinois and Alabama. The plaintiffs also allege a claim for unjust enrichment and seek relief on behalf of a nationwide class of our premium cable customers and on behalf of subclasses consisting of premium cable customers from California, Alabama, Illinois, Pennsylvania and Washington. In January 2010, we moved to compel arbitration of the plaintiffs’ claims for unjust enrichment and violations of the unfair/deceptive trade practices acts of Illinois and Alabama. In September 2010, the plaintiffs filed an amended complaint alleging violations of additional state antitrust laws and unfair/deceptive trade practices acts on behalf of new subclasses in Connecticut, Florida, Minnesota, Missouri, New Jersey, New Mexico and West Virginia. In the amended complaint, plaintiffs omitted their unjust enrichment claim, as well as their state law claims on behalf of the Alabama, Illinois and Pennsylvania subclasses. In June 2011, the plaintiffs filed another amended complaint alleging only violations of Section 1 of the Sherman Antitrust Act, antitrust law in Washington and unfair/deceptive trade practices acts in California and Washington. The plaintiffs seek relief on behalf of a nationwide class of our premium cable customers and on behalf of subclasses consisting of premium cable customers from California and Washington. In July 2011, we moved to compel arbitration of most of the plaintiffs’ claims and to stay the remaining claims pending arbitration.

The West Virginia Attorney General also filed a complaint in West Virginia state court in July 2009 alleging that we improperly “tie” the rental of set-top boxes to the provision of digital cable services in violation of the West Virginia Antitrust Act and the West Virginia Consumer Credit and Protection Act. The Attorney General also alleges a claim for unjust enrichment/restitution. We removed the case to the United States District Court for West Virginia, and it was subsequently transferred to the United States District Court for the Eastern District of Pennsylvania and consolidated with the multidistrict litigation described above. In March 2010, the Eastern District of Pennsylvania denied the Attorney General’s motion to remand the case back to West Virginia state court. In June 2010, the Attorney General moved to sever and remand the portion of the claims seeking civil penalties and injunctive relief back to West Virginia state court. We filed a brief in opposition to the motion in July 2010.

We believe the claims in each of the pending actions described above in this item are without merit and intend to defend the actions vigorously. We cannot predict the outcome of any of the actions described above, including a range of possible loss, or how the final resolution of any such actions would impact our results of operations or cash flows for any one period or our consolidated financial position. In addition, as any action nears a trial, there is an increased possibility that the action may be settled by the parties. Nevertheless, the final disposition of any of the above actions is not expected to have a material adverse effect on our consolidated financial position, but could possibly be material to our consolidated results of operations or cash flows for any one period.

Other

We are a defendant in several unrelated lawsuits claiming infringement of various patents relating to various aspects of our businesses. In certain of these cases other industry participants are also defendants, and also in certain of these cases we expect that any potential liability would be in part or in whole the responsibility of our

 

15


Table of Contents

equipment and technology vendors under applicable contractual indemnification provisions. We are also subject to other legal proceedings and claims that arise in the ordinary course of our business. While the amount of ultimate liability with respect to such actions is not expected to materially affect our financial position, results of operations or cash flows, any litigation resulting from any such legal proceedings or claims could be time consuming, costly and injure our reputation.

Note 13: Financial Data by Business Segment

We present our operations in five reportable business segments:

 

   

Cable Communications: Consists of the operations of Comcast Cable, which is the nation’s largest provider of video, high-speed Internet and voice services (“cable services”) to residential customers under the XFINITY brand, and we also provide these services to businesses and sell advertising.

 

 

   

Cable Networks: Consists primarily of our national cable networks, our regional sports and news networks, our international cable networks, our cable television production operations, and our related digital media properties.

 

 

   

Broadcast Television: Consists primarily of the NBC and Telemundo broadcast networks, our NBC and Telemundo owned local broadcast television stations, our broadcast television production operations, and our related digital media properties.

 

 

   

Filmed Entertainment: Consists primarily of the operations of Universal Pictures, which produces, acquires, markets and distributes filmed entertainment worldwide.

 

 

   

Theme Parks: Consists primarily of our Universal theme parks in Orlando and Hollywood.

 

In evaluating the profitability of our operating segments, the components of net income (loss) below operating income (loss) before depreciation and amortization are not separately evaluated by our management. Our financial data by business segment is presented in the tables below.

 

    Three Months Ended March 31, 2013  
(in millions)   Revenue(d)     Operating Income (Loss)
Before Depreciation and
Amortization(e)
    Depreciation and
Amortization
     Operating Income
(Loss)
    Capital
Expenditures
 

Cable Communications(a)

  $ 10,217      $ 4,219      $ 1,608       $ 2,611      $ 1,094   

NBCUniversal

          

Cable Networks

    2,225        859        184         675        24   

Broadcast Television

    1,517        (35     25         (60     8   

Filmed Entertainment

    1,216        69        4         65        2   

Theme Parks

    462        173        72         101        138   

Headquarters and Other(b)

    9        (112     59         (171     91   

Eliminations(c)

    (89     (1             (1       

NBCUniversal

    5,340        953        344         609        263   

Corporate and Other

    162        (83     15         (98     4   

Eliminations(c)

    (409     (55             (55       

Comcast Consolidated

  $ 15,310      $ 5,034      $ 1,967       $ 3,067      $ 1,361   

 

16


Table of Contents
    Three Months Ended March 31, 2012  
(in millions)   Revenue(d)     Operating Income (Loss)
Before Depreciation and
Amortization(e)
    Depreciation and
Amortization
    Operating Income
(Loss)
    Capital
Expenditures
 

Cable Communications(a)

  $ 9,599      $ 3,955      $ 1,602      $ 2,353      $ 1,056   

NBCUniversal

         

Cable Networks

    2,128        809        176        633        9   

Broadcast Television

    1,861        (14     23        (37     8   

Filmed Entertainment

    1,192        6        4        2        1   

Theme Parks

    412        157        62        95        47   

Headquarters and Other(b)

    12        (146     48        (194     46   

Eliminations(c)

    (133     1        (1     2          

NBCUniversal

    5,472        813        312        501        111   

Corporate and Other

    174        (64     14        (78     7   

Eliminations(c)

    (367     (16     2        (18       

Comcast Consolidated

  $ 14,878      $ 4,688      $ 1,930      $ 2,758      $ 1,174   

 

(a)

For the three months ended March 31, 2013 and 2012, Cable Communications segment revenue was derived from the following sources:

 

     Three Months Ended
March 31
 
          2013              2012      

Residential:

     

Video

     50.0%         51.4%   

High-speed Internet

     24.7%         24.2%   

Voice

     8.8%         9.1%   

Business services

     7.2%         6.1%   

Advertising

     4.8%         5.0%   

Other

     4.5%         4.2%   

Total

     100%         100%   

Subscription revenue received from customers who purchase bundled services at a discounted rate is allocated proportionally to each service based on the individual service’s price on a stand-alone basis. Beginning in 2013, revenue from certain business customers, such as hotels, restaurants and bars, is now presented in business services revenue rather than in the video revenue line item. Reclassifications have been made for the prior year to conform to this new presentation.

For the three months ended March 31, 2013 and 2012, 2.9% and 2.8%, respectively, of Cable Communications revenue was derived from franchise and other regulatory fees.

 

(b)

NBCUniversal Headquarters and Other activities included costs associated with overhead, personnel costs and headquarter initiatives.

 

(c)

Included in Eliminations are transactions that our segments enter into with one another. The most common types of transactions are the following:

 

   

our Cable Networks and Broadcast Television segments generate revenue by selling programming to our Cable Communications segment, which represents a substantial majority of the revenue elimination amount

 

 

   

our Cable Communications segment generates revenue by selling advertising and by selling the use of satellite feeds to our Cable Networks segment

 

 

   

our Filmed Entertainment and Broadcast Television segments generate revenue by licensing content to our Cable Networks segment

 

 

   

our Cable Communications segment receives incentives offered by our Cable Networks segment in connection with its distribution of the Cable Networks’ content that are recorded as a reduction to programming expenses

 

 

(d)

No single customer accounted for a significant amount of revenue in any period.

 

(e)

We use operating income (loss) before depreciation and amortization, excluding impairment charges related to fixed and intangible assets and gains or losses from the sale of assets, if any, as the measure of profit or loss for our operating segments. This measure eliminates the significant level of noncash depreciation and amortization expense that results from the capital-intensive nature of certain of our businesses and from intangible assets recognized in business combinations. Additionally, it is unaffected by our capital structure or investment activities. We use this measure to evaluate our consolidated operating performance and the operating performance of our operating segments and to allocate resources and capital to our operating segments. It is also a significant performance measure in our annual incentive compensation programs. We believe that this measure is useful to investors because it is one of the bases for comparing our operating performance with that of other companies in our industries, although our measure may not be directly comparable to similar measures used by other companies. This measure should not be considered a substitute for operating income (loss), net income (loss) attributable to Comcast Corporation, net cash provided by operating activities, or other measures of performance or liquidity we have reported in accordance with GAAP.

 

17


Table of Contents

Note 14: Condensed Consolidating Financial Information

Comcast Corporation (“Comcast Parent”) and four of our 100% owned cable holding company subsidiaries, Comcast Cable Communications, LLC (“CCCL Parent”), Comcast MO Group, Inc. (“Comcast MO Group”), Comcast Cable Holdings, LLC (“CCH”) and Comcast MO of Delaware, LLC (“Comcast MO of Delaware”) (collectively, the “cable guarantors”), have fully and unconditionally guaranteed each other’s debt securities. Comcast MO Group, CCH and Comcast MO of Delaware are collectively referred to as the “Combined CCHMO Parents.”

On March 27, 2013, Comcast Parent, the cable guarantors and NBCUniversal Media, LLC (referred to as “NBCUniversal Media Parent” in the tables below) entered into a series of agreements and supplemental indentures to include NBCUniversal Media, LLC as part of our existing cross-guarantee structure. As members of the cross-guarantee structure, Comcast Parent and the cable guarantors fully and unconditionally guarantee NBCUniversal Media, LLC’s public debt securities, and NBCUniversal Media, LLC fully and unconditionally guarantees all of Comcast’s and the cable guarantors’ public debt securities, as well as the Comcast and Comcast Cable Communications, LLC $6.25 billion revolving credit facility.

Comcast Parent and the cable guarantors also fully and unconditionally guarantee NBCUniversal Enterprise’s $4 billion of senior notes and its $1.35 billion credit facility due March 2018. NBCUniversal Media, LLC does not guarantee the NBCUniversal Enterprise senior notes or credit facility.

Comcast Parent provides an unconditional subordinated guarantee of the $185 million principal amount currently outstanding of Comcast Holdings’ ZONES due October 2029. Neither the cable guarantors nor NBCUniversal Media, LLC guarantee the Comcast Holdings ZONES due October 2029. None of Comcast Parent, the cable guarantors nor NBCUniversal Media, LLC guarantee the $62 million principal amount currently outstanding of Comcast Holdings’ ZONES due November 2029.

 

18


Table of Contents

Condensed Consolidating Balance Sheet

March 31, 2013

 

(in millions)   Comcast
Parent
    Comcast
Holdings
    CCCL
Parent
    Combined
CCHMO
Parents
    NBCUniversal
Media Parent
    Non-
Guarantor
Subsidiaries
    Elimination
and
Consolidation
Adjustments
    Consolidated
Comcast
Corporation
 

Assets

               

Cash and cash equivalents

  $      $      $      $      $ 313      $ 1,526      $      $ 1,839   

Investments

                                       2,841               2,841   

Receivables, net

                                       5,063               5,063   

Programming rights

                                       901               901   

Other current assets

    224               4        2        47        862               1,139   

Total current assets

    224               4        2        360        11,193               11,783   

Film and television costs

                                       4,653               4,653   

Investments

    8                             527        4,898               5,433   

Investments in and amounts due from subsidiaries eliminated upon consolidation

    76,651        90,959        96,939        50,775        40,360        77,765        (433,449       

Property and equipment, net

    235                                    27,984               28,219   

Franchise rights

                                       59,364               59,364   

Goodwill

                                       26,996               26,996   

Other intangible assets, net

    11                                    17,573               17,584   

Other noncurrent assets, net

    1,045        146                      116        1,898        (873     2,332   

Total assets

  $ 78,174      $ 91,105      $ 96,943      $ 50,777      $ 41,363      $ 232,324      $ (434,322   $ 156,364   

Liabilities and Equity

               

Accounts payable and accrued expenses related to trade creditors

  $ 8      $      $      $      $      $ 5,742      $      $ 5,750   

Accrued participations and residuals

                                       1,469               1,469   

Accrued expenses and other current liabilities

    1,355        277        303        24        346        6,317               8,622   

Current portion of long-term debt

    1,530               384        240        2        21               2,177   

Total current liabilities

    2,893        277        687        264        348        13,549               18,018   

Long-term debt, less current portion

    25,122        117        1,827        1,510        11,134        5,339               45,049   

Deferred income taxes

           760                      121        31,001        (730     31,152   

Other noncurrent liabilities

    1,969                             957        9,857        (143     12,640   

Redeemable noncontrolling interests and redeemable subsidiary preferred stock

                                       854               854   

Equity:

               

Common stock

    31                                                  31   

Other shareholders’ equity

    48,159        89,951        94,429        49,003        28,803        171,263        (433,449     48,159   

Total Comcast Corporation shareholders’ equity

    48,190        89,951        94,429        49,003        28,803        171,263        (433,449     48,190   

Noncontrolling interests

                                       461               461   

Total equity

    48,190        89,951        94,429        49,003        28,803        171,724        (433,449     48,651   

Total liabilities and equity

  $ 78,174      $ 91,105      $ 96,943      $ 50,777      $ 41,363      $ 232,324      $ (434,322   $ 156,364   

 

19


Table of Contents

Condensed Consolidating Balance Sheet

December 31, 2012

 

(in millions)   Comcast
Parent
    Comcast
Holdings
    CCCL
Parent
    Combined
CCHMO
Parents
    NBCUniversal
Media Parent
    Non-
Guarantor
Subsidiaries
    Elimination
and
Consolidation
Adjustments
    Consolidated
Comcast
Corporation
 

Assets

               

Cash and cash equivalents

  $      $      $      $      $ 5,129      $ 5,822      $      $ 10,951   

Investments

                                       1,464               1,464   

Receivables, net

                                3        5,518               5,521   

Programming rights

                                       909               909   

Other current assets

    233               14        4        51        844               1,146   

Total current assets

    233               14        4        5,183        14,557               19,991   

Film and television costs

                                       5,054               5,054   

Investments

                                529        5,796               6,325   

Investments in and amounts due from subsidiaries eliminated upon consolidation

    74,227        87,630        96,853        50,242        38,464        73,298        (420,714       

Property and equipment, net

    242                                    26,990               27,232   

Franchise rights

                                       59,364               59,364   

Goodwill

                                       26,985               26,985   

Other intangible assets, net

    12                                    17,828               17,840   

Other noncurrent assets, net

    1,130        147        1               152        1,650        (900     2,180   

Total assets

  $ 75,844      $ 87,777      $ 96,868      $ 50,246      $ 44,328      $ 231,522      $ (421,614   $ 164,971   

Liabilities and Equity

               

Accounts payable and accrued expenses related to trade creditors

  $ 8      $      $      $      $      $ 6,198      $      $ 6,206   

Accrued participations and residuals

                                       1,350               1,350   

Accrued expenses and other current liabilities

    1,290        275        210        54        263        4,690               6,782   

Current portion of long-term debt

                  2,105        241        7        23               2,376   

Total current liabilities

    1,298        275        2,315        295        270        12,261               16,714   

Long-term debt, less current portion

    23,306        113        1,827        1,512        11,219        105               38,082   

Deferred income taxes

           754                      78        30,035        (757     30,110   

Other noncurrent liabilities

    1,884                             926        10,604        (143     13,271   

Redeemable noncontrolling interests and redeemable subsidiary preferred stock

                                       16,998               16,998   

Equity:

               

Common stock

    31                                                  31   

Other shareholders’ equity

    49,325        86,635        92,726        48,439        31,835        161,079        (420,714     49,325   

Total Comcast Corporation shareholders’ equity

    49,356        86,635        92,726        48,439        31,835        161,079        (420,714     49,356   

Noncontrolling interests

                                       440               440   

Total equity

    49,356        86,635        92,726        48,439        31,835        161,519        (420,714     49,796   

Total liabilities and equity

  $ 75,844      $ 87,777      $ 96,868      $ 50,246      $ 44,328      $ 231,522      $ (421,614   $ 164,971   

 

20


Table of Contents

Condensed Consolidating Statement of Income

For the Three Months Ended March 31, 2013

 

(in millions)   Comcast
Parent
    Comcast
Holdings
    CCCL
Parent
    Combined
CCHMO
Parents
    NBCUniversal
Media Parent
    Non-
Guarantor
Subsidiaries
    Elimination
and
Consolidation
Adjustments
    Consolidated
Comcast
Corporation
 

Revenue:

               

Service revenue

  $      $      $      $      $      $ 15,310      $      $ 15,310   

Management fee revenue

    218               212        133                      (563       
      218               212        133               15,310        (563     15,310   

Costs and Expenses:

               

Programming and production

                                       4,663               4,663   

Other operating and administrative

    98               212        133        225        4,361        (563     4,466   

Advertising, marketing and promotion

                                       1,147               1,147   

Depreciation

    7                                    1,559               1,566   

Amortization

    1                                    400               401   
      106               212        133        225        12,130        (563     12,243   

Operating income (loss)

    112                             (225     3,180               3,067   

Other Income (Expense):

               

Interest expense

    (376     (3     (78     (33     (120     (43            (653

Investment income (loss), net

    1        (3                   (4     78               72   

Equity in net income (losses) of investees, net

    1,608        1,742        1,763        1,262        709        366        (7,439     11   

Other income (expense), net

    (1                                 74               73   
      1,232        1,736        1,685        1,229        585        475        (7,439     (497

Income (loss) before income taxes

    1,344        1,736        1,685        1,229        360        3,655        (7,439     2,570   

Income tax (expense) benefit

    93        2        27        11        (5     (1,053            (925

Net income (loss)

    1,437        1,738        1,712        1,240        355        2,602        (7,439     1,645   

Net (income) loss attributable to noncontrolling interests and redeemable subsidiary preferred stock

                                       (208            (208

Net income (loss) attributable to Comcast Corporation

  $ 1,437      $ 1,738      $ 1,712      $ 1,240      $ 355      $ 2,394      $ (7,439   $ 1,437   

Comprehensive income (loss) attributable to Comcast Corporation

  $ 1,437      $ 1,738      $ 1,714      $ 1,240      $ 333      $ 2,407      $ (7,432   $ 1,437   

 

21


Table of Contents

Condensed Consolidating Statement of Income

For the Three Months Ended March 31, 2012

 

(in millions)   Comcast
Parent
    Comcast
Holdings
    CCCL
Parent
    Combined
CCHMO
Parents
    NBCUniversal
Media Parent
    Non-
Guarantor
Subsidiaries
    Elimination
and
Consolidation
Adjustments
    Consolidated
Comcast
Corporation
 

Revenue:

               

Service revenue

  $      $      $      $      $      $ 14,878      $      $ 14,878   

Management fee revenue

    204               200        125                      (529       
      204               200        125               14,878        (529     14,878   

Costs and Expenses:

               

Programming and production

                                       4,737               4,737   

Other operating and administrative

    92               200        125        253        4,103        (529     4,244   

Advertising, marketing and promotion

                                       1,209               1,209   

Depreciation

    7                                    1,522               1,529   

Amortization

    1                                    400               401   
      100               200        125        253        11,971        (529     12,120   

Operating income (loss)

    104                             (253     2,907               2,758   

Other Income (Expense):

               

Interest expense

    (367     (8     (82     (36     (102     (45            (640

Investment income (loss), net

    1                                    91               92   

Equity in net income (losses) of investees, net

    1,394        1,504        1,543        1,049        743        388        (6,618     3   

Other income (expense), net

                                (1     (15            (16
      1,028        1,496        1,461        1,013        640        419        (6,618     (561

Income (loss) before income taxes

    1,132        1,496        1,461        1,013        387        3,326        (6,618     2,197   

Income tax (expense) benefit

    92        3        29        13        (2     (885            (750

Net income (loss)

    1,224        1,499        1,490        1,026        385        2,441        (6,618     1,447   

Net (income) loss attributable to noncontrolling interests and redeemable subsidiary preferred stock

                                       (223            (223

Net (income) loss attributable to Comcast Corporation

  $ 1,224      $ 1,499      $ 1,490      $ 1,026      $ 385      $ 2,218      $ (6,618   $ 1,224   

Comprehensive income (loss) attributable to Comcast Corporation

  $ 1,227      $ 1,499      $ 1,492      $ 1,026      $ 386      $ 2,216      $ (6,618   $ 1,228   

 

22


Table of Contents

Condensed Consolidating Statement of Cash Flows

For the Three Months Ended March 31, 2013

 

(in millions)   Comcast
Parent
    Comcast
Holdings
    CCCL
Parent
    Combined
CCHMO
Parents
    NBCUniversal
Media Parent
    Non-Guarantor
Subsidiaries
    Elimination
and
Consolidation
Adjustments
    Consolidated
Comcast
Corporation
 

Net cash provided by (used in) operating activities

  $ (112   $ 3      $ 49      $ (53   $ (227   $ 4,709      $  —      $ 4,369   

Investing Activities:

               

Net transactions with affiliates

    (2,480     (6     1,665        53        (1,251     2,019                 

Capital expenditures

                                       (1,361            (1,361

Cash paid for intangible assets

                                       (182            (182

Acquisition of 30 Rockefeller Plaza properties

                                       (1,311            (1,311

Proceeds from sales of businesses and investments

                                       74               74   

Return of capital from investees

                                       16               16   

Purchases of investments

                                (1     (87            (88

Other

           3                      (10     96               89   

Net cash provided by (used in) investing activities

    (2,480     (3     1,665        53        (1,262     (736            (2,763

Financing Activities:

               

Proceeds from (repayments of) short-term borrowings, net

    500                                    (9            491   

Proceeds from borrowings

    2,933                                                  2,933   

Repurchases and repayments of debt

                  (1,714            (87     (10            (1,811

Repurchases and retirements of common stock

    (500                                               (500

Dividends paid

    (429                                               (429

Issuances of common stock

    13                                                  13   

Purchase of NBCUniversal noncontrolling common equity interest

                                (3,200     (7,547            (10,747

Distributions (to) from noncontrolling interests

                                       (49            (49

Settlement of Station Venture liability

                   (602       (602

Other

    75                             (40     (52            (17

Net cash provided by (used in) financing activities

    2,592               (1,714            (3,327     (8,269            (10,718

Increase (decrease) in cash and cash equivalents

                                (4,816     (4,296            (9,112

Cash and cash equivalents, beginning of period

                                5,129        5,822               10,951   

Cash and cash equivalents, end of period

  $      $  —      $      $      $ 313      $ 1,526      $      $ 1,839   

 

23


Table of Contents

Condensed Consolidating Statement of Cash Flows

For the Three Months Ended March 31, 2012

 

(in millions)   Comcast
Parent
    Comcast
Holdings
    CCCL
Parent
    Combined
CCHMO
Parents
    NBCUniversal
Media Parent
   

Non-

Guarantor
Subsidiaries

    Elimination
and
Consolidation
Adjustments
     Consolidated
Comcast
Corporation
 

Net cash provided by (used in) operating activities

  $ (242   $ (9   $ 53      $ (77   $ (301   $ 4,969      $  —       $ 4,393   

Investing Activities:

                

Net transactions with affiliates

    1,639        9        (53     630        742        (2,967               

Capital expenditures

    (2                                 (1,172             (1,174

Cash paid for intangible assets

    (1                                 (183             (184

Proceeds from sales of businesses and investments

                                       35                35   

Purchases of investments

                                (3     (59             (62

Other

                                (12     48                36   

Net cash provided by (used in) investing activities

    1,636        9        (53     630        727        (4,298             (1,349

Financing Activities:

                

Proceeds from (repayments of) short-term borrowings, net

                                (400     (7             (407

Repurchases and repayments of debt

    (563                   (553            (9             (1,125

Repurchases and retirements of common stock

    (750                                                (750

Dividends paid

    (304                                                (304

Issuances of common stock

    150                                                   150   

Distributions (to) from noncontrolling interests

                                       (58             (58

Other

    73                                    (36             37   

Net cash provided by (used in) financing activities

    (1,394                   (553     (400     (110             (2,457

Increase (decrease) in cash and cash equivalents

                                26        561                587   

Cash and cash equivalents, beginning of period

                                238        1,382                1,620   

Cash and cash equivalents, end of period

  $      $  —      $      $      $ 264      $ 1,943      $       $ 2,207   

 

24


Table of Contents

ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS