10-Q 1 d915216d10q.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, 2015

OR

 

¨

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

For the Transition Period from                     to                    

 

 

 

LOGO

 

Commission File Number  

Registrant; State of

Incorporation; Address and Telephone

Number

  I.R.S. Employer Identification No.
001-32871   COMCAST CORPORATION   27-0000798
 

PENNSYLVANIA

One Comcast Center

Philadelphia, PA 19103-2838

(215) 286-1700

 
001-36438   NBCUNIVERSAL MEDIA, LLC   14-1682529
 

DELAWARE

30 Rockefeller Plaza

New York, NY 10112-0015

(212) 664-4444

 

 

 

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.

 

Comcast Corporation

 

Yes x

 

No ¨

NBCUniversal Media, LLC

 

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).

 

Comcast Corporation

 

Yes x

 

No ¨

NBCUniversal Media, LLC

 

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.

 

Comcast Corporation

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

NBCUniversal Media, LLC

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

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

 

Comcast Corporation

 

Yes ¨

 

No x

NBCUniversal Media, LLC

 

Yes ¨

 

No x

Indicate the number of shares outstanding of each of the registrant’s classes of stock, as of the latest practical date:

As of March 31, 2015, there were 2,122,916,309 shares of Comcast Corporation Class A common stock, 381,182,478 shares of Comcast Corporation Class A Special common stock and 9,444,375 shares of Comcast Corporation Class B common stock outstanding.

Not applicable for NBCUniversal Media, LLC.

NBCUniversal Media, LLC meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format.

 

 

 


Table of Contents

TABLE OF CONTENTS

          Page
Number
 
PART I. FINANCIAL INFORMATION   

Item 1.

  Comcast Corporation Financial Statements     1   
  Condensed Consolidated Balance Sheet as of March 31, 2015 and December 31, 2014 (Unaudited)     1   
  Condensed Consolidated Statement of Income for the Three Months Ended March 31, 2015 and 2014 (Unaudited)     2   
  Condensed Consolidated Statement of Comprehensive Income for the Three Months Ended March 31, 2015 and 2014 (Unaudited)     3   
  Condensed Consolidated Statement of Cash Flows for the Three Months Ended March 31, 2015 and 2014 (Unaudited)     4   
  Condensed Consolidated Statement of Changes in Equity for the Three Months Ended March 31, 2015 and 2014 (Unaudited)     5   
  Notes to Condensed Consolidated Financial Statements (Unaudited)     6   

Item 2.

  Management’s Discussion and Analysis of Financial Condition and Results of Operations     22   

Item 3.

  Quantitative and Qualitative Disclosures About Market Risk     34   

Item 4.

  Controls and Procedures     34   
PART II. OTHER INFORMATION  

Item 1.

  Legal Proceedings     35   

Item 1A.

  Risk Factors     35   

Item 2.

  Unregistered Sales of Equity Securities and Use of Proceeds     36   

Item 6.

  Exhibits     36   
SIGNATURES       38   
NBCUniversal Media, LLC Financial Statements     39   

 

 

Explanatory Note

This Quarterly Report on Form 10-Q is a combined report being filed separately by Comcast Corporation (“Comcast”) and NBCUniversal Media, LLC (“NBCUniversal”). Comcast owns all of the common equity interests in NBCUniversal, and NBCUniversal meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing its information within this Form 10-Q with the reduced disclosure format. Each of Comcast and NBCUniversal is filing on its own behalf the information contained in this report that relates to itself, and neither company makes any representation as to information relating to the other company. Where information or an explanation is provided that is substantially the same for each company, such information or explanation has been combined in this report. Where information or an explanation is not substantially the same for each company, separate information and explanation has been provided. In addition, separate condensed consolidated financial statements for each company, along with notes to the condensed consolidated financial statements, are included in this report. Unless indicated otherwise, throughout this Quarterly Report on Form 10-Q, we refer to Comcast and its consolidated subsidiaries, including NBCUniversal and its consolidated subsidiaries, as “we,” “us” and “our;” Comcast Cable Communications, LLC and its consolidated subsidiaries as “Comcast Cable;” Comcast Holdings Corporation as “Comcast Holdings;” and NBCUniversal, LLC as “NBCUniversal Holdings.”

This Quarterly Report on Form 10-Q is for the three months ended March 31, 2015. 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.

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 products and services may adversely affect our businesses and challenge existing business models

 

 

   

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

 

 

   

our businesses depend on keeping pace with technological developments

 

 

   

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

 

 

   

changes to existing statutes, rules, regulations, or interpretations thereof, or adoption of new ones, could have an adverse effect on our businesses

 

 

   

programming expenses for our video services are increasing, which could adversely affect our Cable Communications segment’s businesses

 

 

   

NBCUniversal’s success depends on consumer acceptance of its content and its businesses may be adversely affected if its content fails to achieve sufficient consumer acceptance or the costs to create or 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

 

 

   

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

 

 

   

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

 

 

   

weak economic conditions may have a negative impact on our businesses

 

 

   

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

 

 

   

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

 

 

   

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

 

 

   

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

 

 

   

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

Comcast Corporation

Condensed Consolidated Balance Sheet

(Unaudited)

 

(in millions, except share data)   March 31,
2015
    December 31,
2014
 

Assets

   

Current Assets:

   

Cash and cash equivalents

  $ 3,937      $ 3,910   

Investments

    158        602   

Receivables, net

    6,144        6,321   

Programming rights

    945        839   

Other current assets

    1,737        1,859   

Total current assets

    12,921        13,531   

Film and television costs

    5,637        5,727   

Investments

    3,235        3,135   

Property and equipment, net of accumulated depreciation of $46,037 and $45,410

    31,127        30,953   

Franchise rights

    59,364        59,364   

Goodwill

    27,302        27,316   

Other intangible assets, net of accumulated amortization of $10,507 and $10,170

    16,852        16,980   

Other noncurrent assets, net

    2,319        2,333   

Total assets

  $ 158,757      $ 159,339   

Liabilities and Equity

   

Current Liabilities:

   

Accounts payable and accrued expenses related to trade creditors

  $ 6,157      $ 5,638   

Accrued participations and residuals

    1,387        1,347   

Deferred revenue

    970        915   

Accrued expenses and other current liabilities

    5,808        5,293   

Current portion of long-term debt

    4,180        4,217   

Total current liabilities

    18,502        17,410   

Long-term debt, less current portion

    42,953        44,017   

Deferred income taxes

    32,855        32,959   

Other noncurrent liabilities

    10,837        10,819   

Commitments and contingencies (Note 11)

   

Redeemable noncontrolling interests and redeemable subsidiary preferred stock

    1,099        1,066   

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, 2,488,377,059 and 2,496,598,612; outstanding, 2,122,916,309 and 2,131,137,862

    25        25   

Class A Special common stock, $0.01 par value—authorized, 7,500,000,000 shares; issued, 452,117,242 and 471,419,601; outstanding, 381,182,478 and 400,484,837

    5        5   

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

             

Additional paid-in capital

    38,660        38,805   

Retained earnings

    21,186        21,539   

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)

    (188     (146

Total Comcast Corporation shareholders’ equity

    52,171        52,711   

Noncontrolling interests

    340        357   

Total equity

    52,511        53,068   

Total liabilities and equity

  $ 158,757      $ 159,339   

See accompanying notes to condensed consolidated financial statements.

 

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Comcast Corporation

Condensed Consolidated Statement of Income

(Unaudited)

 

    Three Months Ended
March 31
 
(in millions, except per share data)       2015             2014      

Revenue

  $ 17,853      $ 17,408   

Costs and Expenses:

   

Programming and production

    5,463        5,908   

Other operating and administrative

    5,079        4,749   

Advertising, marketing and promotion

    1,355        1,213   

Depreciation

    1,634        1,569   

Amortization

    432        401   
      13,963        13,840   

Operating income

    3,890        3,568   

Other Income (Expense):

   

Interest expense

    (656     (642

Investment income (loss), net

    33        113   

Equity in net income (losses) of investees, net

    33        32   

Other income (expense), net

    102        (15
      (488     (512

Income before income taxes

    3,402        3,056   

Income tax expense

    (1,261     (1,118

Net income

    2,141        1,938   

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

    (82     (67

Net income attributable to Comcast Corporation

  $ 2,059      $ 1,871   

Basic earnings per common share attributable to Comcast Corporation shareholders

  $ 0.82      $ 0.72   

Diluted earnings per common share attributable to Comcast Corporation shareholders

  $ 0.81      $ 0.71   

Dividends declared per common share

  $ 0.25      $ 0.225   

See accompanying notes to condensed consolidated financial statements.

 

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Comcast Corporation

Condensed Consolidated Statement of Comprehensive Income

(Unaudited)

 

    Three Months Ended
March 31
 
(in millions)       2015             2014      

Net income

  $ 2,141      $ 1,938   

Unrealized gains (losses) on marketable securities, net of deferred taxes of $— and $(17)

           30   

Deferred gains (losses) on cash flow hedges, net of deferred taxes of $23 and $1

    (39     (2

Amounts reclassified to net income:

   

Realized (gains) losses on marketable securities, net of deferred taxes of $— and $30

           (50

Realized (gains) losses on cash flow hedges, net of deferred taxes of $(22) and $2

    37        (3

Currency translation adjustments, net of deferred taxes of $23 and $(1)

    (40     2   

Comprehensive income

    2,099        1,915   

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

    (82     (67

Comprehensive income attributable to Comcast Corporation

  $ 2,017      $ 1,848   

See accompanying notes to condensed consolidated financial statements.

 

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Comcast Corporation

Condensed Consolidated Statement of Cash Flows

(Unaudited)

 

    Three Months Ended
March 31
 
(in millions)       2015             2014      

Net cash provided by operating activities

  $ 5,245      $ 4,486   

Investing Activities

   

Capital expenditures

    (1,726     (1,448

Cash paid for intangible assets

    (273     (217

Acquisitions and construction of real estate properties

    (24       

Proceeds from sales of businesses and investments

    180        300   

Purchases of investments

    (32     (37

Other

    181        (103

Net cash provided by (used in) investing activities

    (1,694     (1,505

Financing Activities

   

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

    (150     (364

Proceeds from borrowings

           2,187   

Repurchases and repayments of debt

    (909     (2,260

Repurchases and retirements of common stock

    (2,000     (750

Dividends paid

    (572     (508

Issuances of common stock

    28        20   

Distributions to noncontrolling interests and dividends for redeemable subsidiary preferred stock

    (62     (66

Other

    141        96   

Net cash provided by (used in) financing activities

    (3,524     (1,645

Increase (decrease) in cash and cash equivalents

    27        1,336   

Cash and cash equivalents, beginning of period

    3,910        1,718   

Cash and cash equivalents, end of period

  $ 3,937      $ 3,054   

See accompanying notes to condensed consolidated financial statements.

 

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Comcast Corporation

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, December 31, 2013

  $ 957              $ 25      $ 5      $  —      $ 38,890      $ 19,235      $ (7,517   $ 56      $ 364      $ 51,058   

Stock compensation plans

                  242        (206           36   

Repurchases and retirements of common stock

                  (172     (578           (750

Employee stock purchase plans

                  26                26   

Dividends declared

                    (585           (585

Other comprehensive income (loss)

                        (23       (23

Issuance of subsidiary shares to noncontrolling interests

    82                           

Contributions from (distributions to) noncontrolling interests, net

    (5                         (37     (37

Other

    (5                 (1           (6     (7

Net income (loss)

    24                                                1,871                        43        1,914   

Balance, March 31, 2014

  $ 1,053              $ 25      $ 5      $      $ 38,985      $ 19,737      $ (7,517   $ 33      $ 364      $ 51,632   

Balance, December 31, 2014

  $ 1,066            $ 25      $ 5      $      $ 38,805      $ 21,539      $ (7,517   $ (146   $ 357      $ 53,068   

Stock compensation plans

                  232        (189           43   

Repurchases and retirements of common stock

                  (407     (1,593           (2,000

Employee stock purchase plans

                  30                30   

Dividends declared

                    (630           (630

Other comprehensive income (loss)

                        (42       (42

Contributions from (distributions to) noncontrolling interests, net

                          (34     (34

Other

    7                            (39     (39

Net income (loss)

    26                                                2,059                        56        2,115   

Balance, March 31, 2015

  $ 1,099              $ 25      $ 5      $      $ 38,660      $ 21,186      $ (7,517   $ (188   $ 340      $ 52,511   

See accompanying notes to condensed consolidated financial statements.

 

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Comcast Corporation

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 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 2014 Annual Report on Form 10-K.

Reclassifications

Reclassifications have been made to our condensed consolidated financial statements for the prior year period to conform to classifications used in 2015.

Note 2: Recent Accounting Pronouncements

Revenue Recognition

In May 2014, the Financial Accounting Standards Board (“FASB”) and the International Accounting Standards Board updated the accounting guidance related to revenue recognition. The updated accounting guidance provides a single, contract-based revenue recognition model to help improve financial reporting by providing clearer guidance on when an entity should recognize revenue, and by reducing the number of standards to which entities have to refer. In April 2015, the FASB voted to propose deferring the effective date by one year to December 15, 2017 for annual reporting periods beginning after that date. The FASB also proposed permitting early adoption of the updated accounting guidance, but not before the original effective date of December 15, 2016. The updated accounting guidance provides companies with alternative methods of adoption. We are currently in the process of determining the impact that the updated accounting guidance will have on our consolidated financial statements and our method of adoption.

Debt Issuance Costs

In April 2015, the FASB updated the accounting guidance related to the balance sheet presentation of debt issuance costs. The updated accounting guidance requires that debt issuance costs be presented as a direct deduction from the associated debt liability. The updated accounting guidance will be effective for us on January 1, 2016, and early adoption is permitted. The updated accounting guidance will be applied retrospectively to all prior periods presented. We do not currently expect that the updated accounting guidance will have a material impact on our consolidated balance sheet.

 

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Comcast Corporation

 

Note 3: Earnings Per Share

Computation of Diluted EPS

 

    Three Months Ended March 31  
    2015      2014  
(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

  $ 2,059         2,520       $ 0.82       $ 1,871         2,603       $ 0.72   

Effect of dilutive securities:

                

Assumed exercise or issuance of shares relating to stock plans

             36                           42            

Diluted EPS attributable to Comcast Corporation shareholders

  $ 2,059         2,556       $ 0.81       $ 1,871         2,645       $ 0.71   

Diluted earnings per common share attributable to Comcast Corporation shareholders (“diluted EPS”) considers the impact of potentially dilutive securities using the treasury stock method. Our potentially dilutive securities include potential common shares related to our stock options and our restricted share units (“RSUs”).

The amount of potential common shares related to our share-based compensation plans that were excluded from diluted EPS because their effect would have been antidilutive was not material for the three months ended March 31, 2015 and 2014.

Note 4: Significant Transactions

Time Warner Cable Merger and Related Divestiture Transactions

On February 12, 2014, we entered into an agreement and plan of merger (the “merger agreement”) with Time Warner Cable Inc. (“Time Warner Cable”), which contemplated that Time Warner Cable would become our wholly owned subsidiary. On April 24, 2015, we and Time Warner Cable entered into a termination agreement, which terminated the merger agreement.

On April 25, 2014, we entered into an agreement with Charter Communications, Inc. (“Charter”), which contemplated three transactions: (1) a spin-off of certain of our existing cable systems into a newly formed public entity, (2) an exchange of certain former Time Warner Cable cable systems for Charter cable systems, and (3) a sale to Charter of certain former Time Warner Cable cable systems for cash (collectively, the “divestiture transactions”). In accordance with the terms of this agreement, the divestiture transactions became terminable upon termination of the merger agreement. On April 24, 2015, we delivered a notice of termination of the agreement to Charter.

In connection with the Time Warner Cable merger and the divestiture transactions, we incurred incremental expenses of $99 million and $17 million for the three months ended March 31, 2015 and 2014, respectively. The transaction-related expenses included legal, accounting and valuation services and advisory fees, all of which are reflected in other operating and administrative expenses.

 

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Comcast Corporation

 

Note 5: Film and Television Costs

 

(in millions)   March 31,
2015
     December 31,
2014
 

Film Costs:

    

Released, less amortization

  $ 1,244       $ 1,371   

Completed, not released

    444         71   

In production and in development

    952         1,189   
    2,640         2,631   

Television Costs:

    

Released, less amortization

    1,361         1,273   

In production and in development

    407         505   
    1,768         1,778   

Programming rights, less amortization

    2,174         2,157   
    6,582         6,566   

Less: Current portion of programming rights

    945         839   

Film and television costs

  $ 5,637       $ 5,727   

Note 6: Investments

 

(in millions)   March 31,
2015
     December 31,
2014
 

Fair Value Method

  $ 182       $ 662   

Equity Method:

    

The Weather Channel

    336         335   

Hulu

    279         167   

Other

    534         517   
    1,149         1,019   

Cost Method:

    

AirTouch

    1,572         1,568   

Other

    490         488   
      2,062         2,056   

Total investments

    3,393         3,737   

Less: Current investments

    158         602   

Noncurrent investments

  $ 3,235       $ 3,135   

Investment Income (Loss), Net

 

    Three Months Ended
March 31
 
(in millions)       2015             2014      

Gains on sales and exchanges of investments, net

  $      $ 83   

Investment impairment losses

    (15     (5

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

    42        (113

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

    (38     117   

Interest and dividend income

    28        28   

Other, net

    16        3   

Investment income (loss), net

  $ 33      $ 113   

 

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Comcast Corporation

 

Fair Value Method

During the three months ended March 31, 2015, we settled $517 million of our obligations under prepaid forward sale agreements by delivering equity securities. As of March 31, 2015, we have no remaining liabilities related to obligations under prepaid forward sale agreements.

Cost Method

AirTouch

We hold two series of preferred stock of AirTouch Communications, Inc. (“AirTouch”), a subsidiary of Verizon Communications Inc., which are redeemable in April 2020. As of March 31, 2015, the estimated fair values of the AirTouch preferred stock and the associated liability related to the redeemable subsidiary preferred shares issued by one of our consolidated subsidiaries were each $1.7 billion. The estimated fair values are based on Level 2 inputs that use 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 7: Long-Term Debt

As of March 31, 2015, our debt had a carrying value of $47.1 billion and an estimated fair value of $54.9 billion. The estimated fair value of our publicly traded debt is primarily based on Level 1 inputs that use quoted market values for the debt. The estimated fair value of debt for which there are no quoted market prices is based on Level 2 inputs that use interest rates available to us for debt with similar terms and remaining maturities.

Debt Repayments

In January 2015, we repaid at maturity $900 million aggregate principal amount of 6.50% senior notes due 2015. In April 2015, we repaid at maturity $1 billion aggregate principal amount of 3.65% senior notes due 2015.

Revolving Credit Facilities

As of March 31, 2015, amounts available under our consolidated revolving credit facilities, net of amounts outstanding under our commercial paper programs and outstanding letters of credit, totaled $6.6 billion, which included $650 million available under NBCUniversal Enterprise Inc.’s (“NBCUniversal Enterprise”) revolving credit facility.

Commercial Paper Programs

As of March 31, 2015, NBCUniversal Enterprise had $700 million face amount of commercial paper outstanding.

 

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Note 8: 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,

2015

    

December 31,

2014

 
(in millions)   Level 1      Level 2      Level 3      Total      Total  

Assets

             

Trading securities

  $ 42       $       $       $ 42       $ 523   

Available-for-sale securities

    1         121         10         132         132   

Interest rate swap agreements

            91                 91         84   

Other

            48         8         56         71   

Total

  $ 43       $ 260       $ 18       $ 321       $ 810   

Liabilities

             

Derivative component of prepaid forward sale agreements and indexed debt instruments

  $       $ 3       $       $ 3       $ 361   

Contractual obligations

                    904         904         883   

Contingent consideration

                    632         632         644   

Other

            50                 50         8   

Total

  $       $ 53       $ 1,536       $ 1,589       $ 1,896   

Contractual Obligations and Contingent Consideration

The estimated 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 include our estimates of the future revenue we expect to generate from certain NBCUniversal businesses, which are related to our contractual obligations, and future net tax benefits that will affect payments to General Electric Company (“GE”), which are related to our contingent consideration. The discount rates used in the measurements of fair value were between 5% and 13% and are based on the underlying risk associated with our estimate of future revenue, 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.

 

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Changes in Contractual Obligations and Contingent Consideration

 

(in millions)   Contractual
Obligations
    Contingent
Consideration
 

Balance, December 31, 2014

  $ 883      $ 644   

Fair value adjustments

    40        7   

Payments

    (19     (19

Balance, March 31, 2015

  $ 904      $ 632   

Fair Value of Redeemable Subsidiary Preferred Stock

As of March 31, 2015, the fair value of the NBCUniversal Enterprise redeemable subsidiary preferred stock was $764 million. The estimated fair value is based on Level 2 inputs that use 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 9: Share-Based Compensation

Our share-based compensation primarily consists of awards of stock options and RSUs to certain employees and directors 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.

In March 2015, we granted 17.6 million stock options and 5.1 million RSUs related to our annual management awards. The weighted-average fair values associated with these grants were $11.79 per stock option and $59.50 per RSU.

Recognized Share-Based Compensation Expense

 

    Three Months Ended
March 31
 
(in millions)       2015              2014      

Stock options

  $ 35       $ 36   

Restricted share units

    58         48   

Employee stock purchase plans

    8         6   

Total

  $ 101       $ 90   

As of March 31, 2015, we had unrecognized pretax compensation expense of $461 million and $725 million related to nonvested stock options and nonvested RSUs, respectively.

Note 10: Supplemental Financial Information

Receivables

 

(in millions)   March 31,
2015
     December 31,
2014
 

Receivables, gross

  $ 6,634       $ 6,885   

Less: Allowance for returns and customer incentives

    297         359   

Less: Allowance for doubtful accounts

    193         205   

Receivables, net

  $ 6,144       $ 6,321   

 

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Accumulated Other Comprehensive Income (Loss)

 

(in millions)   March 31,
2015
    March 31,
2014
 

Unrealized gains (losses) on marketable securities

  $ 1      $ 47   

Deferred gains (losses) on cash flow hedges

    (6     (50

Unrecognized gains (losses) on employee benefit obligations

    (68     71   

Cumulative translation adjustments

    (115     (35

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

  $ (188   $ 33   

Net Cash Provided by Operating Activities

 

    Three Months Ended
March 31
 
(in millions)       2015             2014      

Net income

  $ 2,141      $ 1,938   

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

   

Depreciation and amortization

    2,066        1,970   

Share-based compensation

    135        119   

Noncash interest expense (income), net

    51        42   

Equity in net (income) losses of investees, net

    (33     (32

Cash received from investees

    22        18   

Net (gain) loss on investment activity and other

    (121     (59

Deferred income taxes

    (119     (226

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

   

Current and noncurrent receivables, net

    119        195   

Film and television costs, net

    (38     154   

Accounts payable and accrued expenses related to trade creditors

    372        82   

Other operating assets and liabilities

    650        285   

Net cash provided by operating activities

  $ 5,245      $ 4,486   

Cash Payments for Interest and Income Taxes

 

    Three Months Ended
March 31
 
(in millions)       2015              2014      

Interest

  $ 691       $ 623   

Income taxes

  $ 118       $ 186   

Noncash Investing and Financing Activities

During the three months ended March 31, 2015:

 

   

we acquired $978 million of property and equipment and intangible assets that were accrued but unpaid

 

 

   

we recorded a liability of $630 million for a quarterly cash dividend of $0.25 per common share paid in April 2015

 

 

   

we used $517 million of equity securities to settle our obligations under prepaid forward sale agreements

 

 

   

we recorded a liability of $123 million for a capital contribution for an investment that was accrued but unpaid

 

 

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Note 11: Commitments and Contingencies

Contingencies

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 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 results of operations, cash flows or financial position, any litigation resulting from any such legal proceedings or claims could be time-consuming and injure our reputation.

Note 12: 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; we also provide similar and other services to small and medium-sized businesses and sell advertising.

 

 

   

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

 

 

   

Broadcast Television: Consists primarily of the NBC and Telemundo broadcast networks, our NBC and Telemundo owned local broadcast television stations, the NBC Universo national cable network, and our broadcast television production operations.

 

 

   

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

 

 

   

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

 

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, 2015  
(in millions)   Revenue(d)     Operating Income (Loss)
Before Depreciation and
Amortization(e)
    Depreciation
and
Amortization
     Operating
Income
(Loss)
    Capital
Expenditures
 

Cable Communications(a)

  $ 11,430      $ 4,674      $ 1,675       $ 2,999      $ 1,445   

NBCUniversal

          

Cable Networks

    2,359        898        184         714        6   

Broadcast Television

    2,248        182        29         153        11   

Filmed Entertainment

    1,446        293        5         288        1   

Theme Parks

    651        263        66         197        162   

Headquarters and Other(b)

    4        (140     80         (220     88   

Eliminations(c)

    (104     (2             (2       

NBCUniversal

    6,604        1,494        364         1,130        268   

Corporate and Other

    204        (225     27         (252     13   

Eliminations(c)

    (385     13                13          

Comcast Consolidated

  $ 17,853      $ 5,956      $ 2,066       $ 3,890      $ 1,726   

 

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    Three Months Ended March 31, 2014  
(in millions)   Revenue(d)     Operating Income (Loss)
Before Depreciation and
Amortization(e)
    Depreciation
and
Amortization
     Operating
Income
(Loss)
    Capital
Expenditures
 

Cable Communications(a)

  $ 10,757      $ 4,400      $ 1,584       $ 2,816      $ 1,145   

NBCUniversal

          

Cable Networks

    2,505        895        189         706        11   

Broadcast Television

    2,621        122        27         95        11   

Filmed Entertainment

    1,351        288        5         283        1   

Theme Parks

    487        170        69         101        144   

Headquarters and Other(b)

    2        (163     75         (238     124   

Eliminations(c)

    (90     (1             (1       

NBCUniversal

    6,876        1,311        365         946        291   

Corporate and Other

    174        (153     21         (174     12   

Eliminations(c)

    (399     (20             (20       

Comcast Consolidated

  $ 17,408      $ 5,538      $ 1,970       $ 3,568      $ 1,448   

 

(a)

For the three months ended March 31, 2015 and 2014, Cable Communications segment revenue was derived from the following sources:

 

    Three Months Ended
March 31
 
         2015             2014      

Residential:

   

Video

    46.6     48.1

High-speed Internet

    26.6     25.6

Voice

    7.9     8.5

Business services

    9.7     8.5

Advertising

    4.4     4.7

Other

    4.8     4.6

Total

    100.0     100.0

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.

For both the three months ended March 31, 2015 and 2014, 2.8% of Cable Communications segment revenue was derived from franchise and other regulatory fees.

 

(b)

NBCUniversal Headquarters and Other activities include costs associated with overhead, allocations, 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 on 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.

 

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Note 13: Condensed Consolidating Financial Information

Comcast (“Comcast Parent”), 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”) and NBCUniversal (“NBCUniversal Media Parent”) have fully and unconditionally guaranteed each other’s debt securities. In addition, the Comcast and Comcast Cable Communications, LLC $6.25 billion revolving credit facility due June 2017 and the Comcast commercial paper program are also fully and unconditionally guaranteed by NBCUniversal Media Parent. The Comcast commercial paper program is supported by the Comcast and Comcast Cable Communications, LLC revolving credit facility. Comcast MO Group, CCH and Comcast MO of Delaware are collectively referred to as the “Combined CCHMO Parents.”

Comcast Parent and the cable guarantors also fully and unconditionally guarantee NBCUniversal Enterprise’s $4 billion senior notes, as well as its $1.35 billion revolving credit facility due March 2018 and the associated commercial paper program. NBCUniversal Media Parent does not guarantee the NBCUniversal Enterprise senior notes, credit facility or commercial paper program.

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 Parent guarantee the Comcast Holdings’ ZONES due October 2029. None of Comcast Parent, the cable guarantors nor NBCUniversal Media Parent guarantee the $62 million principal amount currently outstanding of Comcast Holdings’ ZONES due November 2029.

 

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Comcast Corporation

Condensed Consolidating Balance Sheet

March 31, 2015

 

(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

  $      $      $      $      $ 339      $ 3,598      $      $ 3,937   

Investments

                                       158               158   

Receivables, net

                                       6,144               6,144   

Programming rights

                                       945               945   

Other current assets

    279                             64        1,394               1,737   

Total current assets

    279                             403        12,239               12,921   

Film and television costs

                                       5,637               5,637   

Investments

    31                             372        2,832               3,235   

Investments in and amounts due from subsidiaries eliminated upon consolidation

    82,713        105,551        112,432        60,289        41,900        101,682        (504,567       

Property and equipment, net

    200                                    30,927               31,127   

Franchise rights

                                       59,364               59,364   

Goodwill

                                       27,302               27,302   

Other intangible assets, net

    10                                    16,842               16,852   

Other noncurrent assets, net

    1,201        148                      97        1,970        (1,097     2,319   

Total assets

  $ 84,434      $ 105,699      $ 112,432      $ 60,289      $ 42,772      $ 258,795      $ (505,664   $ 158,757   

Liabilities and Equity

               

Accounts payable and accrued expenses related to trade creditors

  $ 7      $      $      $      $      $ 6,150      $      $ 6,157   

Accrued participations and residuals

                                       1,387               1,387   

Accrued expenses and other current liabilities

    1,534        283        343        21        407        4,190               6,778   

Current portion of long-term debt

    1,761                      676        1,003        740               4,180   

Total current liabilities

    3,302        283        343        697        1,410        12,467               18,502   

Long-term debt, less current portion

    26,566        126        1,828        822        9,217        4,394               42,953   

Deferred income taxes

           682                      67        33,059        (953     32,855   

Other noncurrent liabilities

    2,395                             1,103        7,483        (144     10,837   

Redeemable noncontrolling interests and redeemable subsidiary preferred stock

                                       1,099               1,099   

Equity:

               

Common stock

    30                                                  30   

Other shareholders’ equity

    52,141        104,608        110,261        58,770        30,975        199,953        (504,567     52,141   

Total Comcast Corporation shareholders’ equity

    52,171        104,608        110,261        58,770        30,975        199,953        (504,567     52,171   

Noncontrolling interests

                                       340               340   

Total equity

    52,171        104,608        110,261        58,770        30,975        200,293        (504,567     52,511   

Total liabilities and equity

  $ 84,434      $ 105,699      $ 112,432      $ 60,289      $ 42,772      $ 258,795      $ (505,664   $ 158,757   

 

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Comcast Corporation

Condensed Consolidating Balance Sheet

December 31, 2014

 

(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

  $      $      $      $      $ 385      $ 3,525      $      $ 3,910   

Investments

                                       602               602   

Receivables, net

                                       6,321               6,321   

Programming rights

                                       839               839   

Other current assets

    267                             41        1,551               1,859   

Total current assets

    267                             426        12,838               13,531   

Film and television costs

                                       5,727               5,727   

Investments

    36                             378        2,721               3,135   

Investments in and amounts due from subsidiaries eliminated upon consolidation

    84,142        103,420        110,323        58,677        41,239        98,152        (495,953       

Property and equipment, net

    199                                    30,754               30,953   

Franchise rights

                                       59,364               59,364   

Goodwill

                                       27,316               27,316   

Other intangible assets, net

    11                                    16,969               16,980   

Other noncurrent assets, net

    1,224        148                      92        1,949        (1,080     2,333   

Total assets

  $ 85,879      $ 103,568      $ 110,323      $ 58,677      $ 42,135      $ 255,790      $ (497,033   $ 159,339   

Liabilities and Equity

               

Accounts payable and accrued expenses related to trade creditors

  $ 19      $      $      $ 1      $      $ 5,618      $      $ 5,638   

Accrued participations and residuals

                                       1,347               1,347   

Accrued expenses and other current liabilities

    1,547        283        233        47        331        3,767               6,208   

Current portion of long-term debt

    1,650                      677        1,006        884               4,217   

Total current liabilities

    3,216        283        233        725        1,337        11,616               17,410   

Long-term debt, less current portion

    27,616        126        1,827        822        9,218        4,408               44,017   

Deferred income taxes

           701                      67        33,127        (936     32,959   

Other noncurrent liabilities

    2,336                             1,143        7,484        (144     10,819   

Redeemable noncontrolling interests and redeemable subsidiary preferred stock

                                       1,066               1,066   

Equity:

               

Common stock

    30                                                  30   

Other shareholders’ equity

    52,681        102,458        108,263        57,130        30,370        197,732        (495,953     52,681   

Total Comcast Corporation shareholders’ equity

    52,711        102,458        108,263        57,130        30,370        197,732        (495,953     52,711   

Noncontrolling interests

                                       357               357   

Total equity

    52,711        102,458        108,263        57,130        30,370        198,089        (495,953     53,068   

Total liabilities and equity

  $ 85,879      $ 103,568      $ 110,323      $ 58,677      $ 42,135      $ 255,790      $ (497,033   $ 159,339   

 

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Comcast Corporation

Condensed Consolidating Statement of Income

For the Three Months Ended March 31, 2015

 

(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

  $      $      $      $      $      $ 17,853      $      $ 17,853   

Management fee revenue

    244               237        150                      (631       
      244               237        150               17,853        (631     17,853   

Costs and Expenses:

               

Programming and production

                                       5,463               5,463   

Other operating and administrative

    226               237        150        237        4,860        (631     5,079   

Advertising, marketing and promotion

                                       1,355               1,355   

Depreciation

    8                                    1,626               1,634   

Amortization

    1                                    431               432   
      235               237        150        237        13,735        (631     13,963   

Operating income (loss)

    9                             (237     4,118               3,890   

Other Income (Expense):

               

Interest expense

    (410     (3     (44     (29     (120     (50            (656

Investment income (loss), net

    1        2                      (6     36               33   

Equity in net income (losses) of investees, net

    2,322        2,226        1,973        1,646        1,231        885        (10,250     33   

Other income (expense), net

    (5                          (11     118               102   
      1,908        2,225        1,929        1,617        1,094        989        (10,250     (488

Income (loss) before income taxes

    1,917        2,225        1,929        1,617        857        5,107        (10,250     3,402   

Income tax (expense) benefit

    142               15        10        (5     (1,423            (1,261

Net income (loss)

    2,059        2,225        1,944        1,627        852        3,684        (10,250     2,141   

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

                                       (82            (82

Net income (loss) attributable to Comcast Corporation

  $ 2,059      $ 2,225      $ 1,944      $ 1,627      $ 852      $ 3,602      $ (10,250   $ 2,059   

Comprehensive income (loss) attributable to Comcast Corporation

  $ 2,017      $ 2,209      $ 1,943      $ 1,626      $ 801      $ 3,601      $ (10,180   $ 2,017   

 

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Comcast Corporation

Condensed Consolidating Statement of Income

For the Three Months Ended March 31, 2014

 

(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

  $      $      $      $      $      $ 17,408      $      $ 17,408   

Management fee revenue

    230               223        141                      (594       
      230               223        141               17,408        (594     17,408   

Costs and Expenses:

               

Programming and production

                                       5,908               5,908   

Other operating and administrative

    93               223        141        257        4,629        (594     4,749   

Advertising, marketing and promotion

                                       1,213               1,213   

Depreciation

    7                                    1,562               1,569   

Amortization

    1                                    400               401   
      101               223        141        257        13,712        (594     13,840   

Operating income (loss)

    129                             (257     3,696               3,568   

Other Income (Expense):

               

Interest expense

    (387     (3     (45     (29     (124     (54            (642

Investment income (loss), net

    1        3                      1        108               113   

Equity in net income (losses) of investees, net

    2,038        2,267        2,165        1,511        1,071        714        (9,734     32   

Other income (expense), net

                                (4     (11            (15
      1,652        2,267        2,120        1,482        944        757        (9,734     (512

Income (loss) before income taxes

    1,781        2,267        2,120        1,482        687        4,453        (9,734     3,056   

Income tax (expense) benefit

    90               16        10        (5     (1,229            (1,118

Net income (loss)

    1,871        2,267        2,136        1,492        682        3,224        (9,734     1,938   

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

                                       (67            (67

Net income (loss)attributable to Comcast Corporation

  $ 1,871      $ 2,267      $ 2,136      $ 1,492      $ 682      $ 3,157      $ (9,734   $ 1,871   

Comprehensive income (loss) attributable to Comcast Corporation

  $ 1,848      $ 2,269      $ 2,138      $ 1,493      $ 685      $ 3,134      $ (9,719   $ 1,848   

 

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Comcast Corporation

Condensed Consolidating Statement of Cash Flows

For the Three Months Ended March 31, 2015

 

(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

  $ (294   $ (1   $ 82      $ (48   $ (361   $ 5,867      $  —      $ 5,245   

Investing Activities

               

Net transactions with affiliates

    3,609        1        (82     48        321        (3,897              

Capital expenditures

    (6                                 (1,720            (1,726

Cash paid for intangible assets

                                       (273            (273

Acquisitions and construction of real estate properties

                                       (24            (24

Proceeds from sales of businesses and investments

                                       180               180   

Purchases of investments

                                       (32            (32

Other

                                (5     186               181   

Net cash provided by (used in) investing activities

    3,603        1        (82     48        316        (5,580            (1,694

Financing Activities

               

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

                                       (150            (150

Proceeds from borrowings

                                                       

Repurchases and repayments of debt

    (900                          (1     (8            (909

Repurchases and retirements of common stock

    (2,000                                               (2,000

Dividends paid

    (572                                               (572

Issuances of common stock

    28                                                  28   

Distributions to noncontrolling interests and dividends for redeemable subsidiary preferred stock

                                       (62            (62

Other

    135                                    6               141   

Net cash provided by (used in) financing activities

    (3,309                          (1     (214            (3,524

Increase (decrease) in cash and cash equivalents

                                (46     73               27   

Cash and cash equivalents, beginning of period

                                385        3,525               3,910   

Cash and cash equivalents, end of period

  $      $  —      $      $      $ 339      $ 3,598      $      $ 3,937   

 

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Comcast Corporation

Condensed Consolidating Statement of Cash Flows

For the Three Months Ended March 31, 2014

 

(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

  $ (96   $ (2   $ 110      $ (47   $ (306   $ 4,827      $  —      $ 4,486   

Investing Activities

               

Net transactions with affiliates

    1,370        2        (110     47        483        (1,792              

Capital expenditures

                                       (1,448            (1,448

Cash paid for intangible assets

                                       (217            (217

Acquisitions and construction of real estate properties

                                                       

Proceeds from sales of businesses and investments

                                       300               300   

Purchases of investments

    (10                          (6     (21            (37

Other

                                       (103            (103

Net cash provided by (used in) investing activities

    1,360        2        (110     47        477        (3,281            (1,505

Financing Activities

               

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

    (1,350                                 986               (364

Proceeds from borrowings

    2,184                                    3               2,187   

Repurchases and repayments of debt

    (1,000                          (1     (1,259            (2,260

Repurchases and retirements of common stock

    (750                                               (750

Dividends paid

    (508                                               (508

Issuances of common stock

    20                                                  20   

Distributions to noncontrolling interests and dividends for redeemable subsidiary preferred stock

                                       (66            (66

Other

    140                                    (44            96   

Net cash provided by (used in) financing activities

    (1,264                          (1     (380            (1,645

Increase (decrease) in cash and cash equivalents

                                170        1,166               1,336   

Cash and cash equivalents, beginning of period

                                336        1,382               1,718   

Cash and cash equivalents, end of period

  $      $  —      $      $      $ 506      $ 2,548      $      $ 3,054   

 

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

Overview

We are a global media and technology company with two primary businesses, Comcast Cable and NBCUniversal. We present our operations for Comcast Cable in one reportable business segment, referred to as Cable Communications, and our operations for NBCUniversal in four reportable business segments.

Cable Communications Segment

Comcast Cable 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 similar and other services to small and medium-sized businesses. As of March 31, 2015, our cable systems had 27.2 million total customer relationships, served 22.4 million video customers, 22.4 million high-speed Internet customers and 11.3 million voice customers, and passed more than 54 million homes and businesses. Our Cable Communications segment generates revenue primarily from subscriptions to our cable services, which we market individually and in bundled service packages, and from the sale of advertising. During the three months ended March 31, 2015, our Cable Communications segment generated 64% of our consolidated revenue and 78% of our operating income before depreciation and amortization.

NBCUniversal Segments

NBCUniversal is one of the world’s leading media and entertainment companies that develops, produces and distributes entertainment, news and information, sports, and other content for global audiences. The Cable Networks, Broadcast Television, Filmed Entertainment and Theme Parks segments comprise the NBCUniversal businesses (collectively, the “NBCUniversal segments”).

Cable Networks

Our Cable Networks segment consists primarily of a diversified portfolio of cable television networks. Our cable networks are comprised of our national cable networks, which provide a variety of entertainment, news and information, and sports content, our regional sports and news networks, various international cable networks, our cable television production operations, and related digital media properties. Our Cable Networks segment generates revenue primarily from the distribution of our cable network programming to multichannel video providers, from the sale of advertising on our cable networks and related digital media properties, from the licensing of our owned programming through distribution to subscription video on demand services and various other distribution platforms, and from the sale of our owned programming electronically through digital distributors such as iTunes.

Broadcast Television

Our Broadcast Television segment consists primarily of the NBC and Telemundo broadcast networks, our NBC and Telemundo owned local broadcast television stations, the NBC Universo national cable network, our broadcast television production operations, and related digital media properties. Our Broadcast Television segment generates revenue primarily from the sale of advertising on our broadcast networks, owned local broadcast television stations and related digital media properties, from the licensing of our owned programming through various distribution platforms, including to cable and broadcast networks and to subscription video on demand services, and from fees received under retransmission consent agreements.

Filmed Entertainment

Our Filmed Entertainment segment primarily produces, acquires, markets and distributes filmed entertainment worldwide, and it also develops, produces and licenses live stage plays. Our films are produced primarily under the Universal Pictures, Focus Features and Illumination names. Our Filmed Entertainment segment generates revenue primarily from the worldwide distribution of our produced and acquired films for exhibition in movie theaters, from the licensing of our owned and acquired films through various distribution platforms, and from

 

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the sale of our owned and acquired films on standard-definition video discs and Blu-ray discs (together, “DVDs”) and electronically through digital distributors. Our Filmed Entertainment segment also generates revenue from the production and licensing of live stage plays, from the distribution of filmed entertainment produced by third parties, and from Fandango, our movie ticketing and entertainment business.

Theme Parks

Our Theme Parks segment consists primarily of our Universal theme parks in Orlando, Florida and Hollywood, California. Our Theme Parks segment generates revenue primarily from theme park attendance and per capita spending. Per capita spending includes ticket price and in-park spending on food, beverages and merchandise. Our Theme Parks segment also receives fees from third parties that own and operate Universal Studios Japan and Universal Studios Singapore for intellectual property licenses and other services.

Other

Our other business interests primarily include Comcast-Spectacor, which owns the Philadelphia Flyers and the Wells Fargo Center arena in Philadelphia, Pennsylvania and operates arena management-related businesses.

Time Warner Cable Merger and Related Divestiture Transactions

On February 12, 2014, we entered into an agreement and plan of merger (the “merger agreement”) with Time Warner Cable Inc. (“Time Warner Cable”), which contemplated that Time Warner Cable would become our wholly owned subsidiary. On April 24, 2015, we and Time Warner Cable entered into a termination agreement, which terminated the merger agreement.

On April 25, 2014, we entered into an agreement with Charter Communications, Inc. (“Charter”), which contemplated three transactions: (1) a spin-off of certain of our existing cable systems into a newly formed public entity, (2) an exchange of certain former Time Warner Cable cable systems for Charter cable systems, and (3) a sale to Charter of certain former Time Warner Cable cable systems for cash (collectively, the “divestiture transactions”). In accordance with the terms of this agreement, the divestiture transactions became terminable upon termination of the merger agreement. On April 24, 2015, we delivered a notice of termination of the agreement to Charter.

Competition

The results of operations of our reportable business segments are affected by competition, as all of our businesses operate in intensely competitive, consumer-driven and rapidly changing environments and compete with a growing number of companies that provide a broad range of communications products and services and entertainment, news and information content to consumers.

Competition for our bundled cable services that include video, high-speed Internet and/or voice services consists primarily of direct broadcast satellite (“DBS”) providers, which have a national footprint and compete in all of our service areas, and phone companies with fiber-based networks, which overlap approximately 55% of our service areas and are continuing to expand their fiber-based networks. Our high-speed Internet services primarily compete with phone companies with fiber-based networks, which overlap approximately 60% of our service areas and also are continuing to expand their fiber-based networks. Many of these DBS and phone company competitors offer features, pricing and packaging for these services, individually and in bundles, comparable to what we offer. In May 2014, AT&T, our largest phone company competitor, announced its intention to acquire DirecTV, the nation’s largest DBS provider. If completed, this transaction will create an even larger competitor for our cable services that will have the ability to expand its cable service offerings to include bundled wireless offerings.

There also continue to be new companies, some with significant financial resources, that potentially may compete on a larger scale with some or all of our cable services. For example, companies continue to emerge that provide Internet streaming and downloading of video programming, and existing companies have launched or announced plans to launch online video services that involve both linear and on-demand programming, some of which charge a lower, or even a nominal or no, fee. Google is providing high-speed Internet and video services in a limited number of areas in which we operate and recently announced plans to expand into additional

 

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geographical areas. Moreover, wireless technology, such as 3G and 4G wireless broadband services and Wi-Fi networks, may compete with our video and high-speed Internet services, and our voice services are facing increased competition as customers replace landline phones with mobile phones and Internet-based phone services such as Skype.

Each of NBCUniversal’s businesses also faces substantial and increasing competition from providers of similar types of content, as well as from other forms of entertainment and recreational activities. NBCUniversal also must compete to obtain talent, programming and other resources required in operating these businesses.

Technological changes are further intensifying and complicating the competitive landscape for all of our businesses by challenging existing business models and affecting consumer behavior. Services and devices that enable online digital distribution of movies, television shows, and other cable and broadcast video programming continue to gain consumer acceptance and evolve. Two traditional providers of video services have begun to offer smaller packages of programming networks, including one that is providing video services directly to customers over the Internet, at prices lower than our traditional video services. These services and devices may negatively affect demand for our video services, as well as demand for content from our cable networks, broadcast television and filmed entertainment businesses, as the number of entertainment choices available to consumers increases and the challenges posed by audience fragmentation intensify and audience ratings are pressured. In addition, delayed viewing and advertising skipping have become more common as the penetration of digital video recorders (“DVRs”) and similar products has increased and as content has become increasingly available via video on demand services and Internet sources, which may have a negative impact on our advertising revenue.

In our Cable Communications segment, we believe that adding more content and delivering through an increasing variety of platforms will assist in attracting and retaining customers for our cable services. To further enhance our video and high-speed Internet services, we continue to develop and launch new technology initiatives, such as our X1 platform and Cloud DVR technology, and deploy wireless gateway devices. In our NBCUniversal segments, to compete for consumers of our content and for customers at our theme parks, we have invested, and will continue to invest, substantial amounts in acquiring content and producing original content for our cable networks and broadcast television networks and our owned local broadcast television stations, including the acquisition of sports rights. We will also continue to invest in our film productions and in the development of new theme park attractions.

Seasonality and Cyclicality

Each of our businesses is subject to seasonal and cyclical variations. In our Cable Communications segment, our results are impacted by the seasonal nature of customers receiving our cable services in college and vacation markets. This generally results in a reduction in net customer additions in the second quarter and an increase in net customer additions in the third and fourth quarters of each year.

Revenue in our Cable Communications, Cable Networks and Broadcast Television segments is subject to cyclical advertising patterns and changes in viewership levels. Our U.S. advertising revenue is generally higher in the second and fourth quarters of each year, due in part to increases in consumer advertising in the spring and in the period leading up to and including the holiday season. U.S. advertising revenue is also cyclical, with a benefit in even-numbered years due to advertising related to candidates running for political office and issue-oriented advertising. Revenue in our Cable Networks and Broadcast Television segments fluctuates depending on the timing of when our programming is aired on television, which typically results in higher advertising revenue in the second and fourth quarters of each year. Our revenue and operating costs and expenses are cyclical as a result of our periodic broadcasts of major sporting events such as the Olympic Games, which affects our Cable Networks and Broadcast Television segments, and the Super Bowl, which affects our Broadcast Television segment. Our advertising revenue generally increases in the period of these broadcasts due to increased demand for advertising time, and our operating costs and expenses also increase as a result of our production costs and the amortization of the related rights fees.

Revenue in our Filmed Entertainment segment fluctuates due to the timing of the release of films in movie theaters, on DVD and electronically through digital distributors. Release dates are determined by several factors, including competition and the timing of vacation and holiday periods. As a result, revenue tends to be seasonal,

 

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with increases experienced each year during the summer months and around the holidays. Revenue in our Cable Networks, Broadcast Television and Filmed Entertainment segments also fluctuates due to the timing of when our content is made available to licensees.

Revenue in our Theme Parks segment fluctuates with changes in theme park attendance that result from the seasonal nature of vacation travel, local entertainment offerings and seasonal weather variations. Our theme parks generally experience peak attendance during the summer months when schools are closed and during early winter and spring holiday periods.

Consolidated Operating Results

 

    Three Months Ended
March 31
    Increase/
(Decrease)
 
(in millions)       2015             2014             

Revenue

  $ 17,853      $ 17,408        2.6

Costs and Expenses:

     

Programming and production

    5,463        5,908        (7.5

Other operating and administrative

    5,079        4,749        6.9   

Advertising, marketing and promotion

    1,355        1,213        11.8   

Depreciation

    1,634        1,569        4.1   

Amortization

    432        401        7.9   

Operating income

    3,890        3,568        9.0   

Other income (expense) items, net