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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): February 27, 2003
-----------------
COMCAST CORPORATION
-----------------------------------------------
(Exact Name of Registrant Specified in Charter)
Pennsylvania 000-50093 27-0000798
- ----------------- ------------------- ------------------
(State or Other (Commission File (I.R.S. Employer
Jurisdiction of Number) Identification No.)
Incorporation)
1500 Market Street
Philadelphia, Pennsylvania 19102-2148
- ---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (215) 665-1700
--------------
Not Applicable
--------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events.
On February 27, 2003, Comcast Corporation (the "Company") issued a
press release reporting the results of its operations for the year ended
December 31, 2002. The press release is attached hereto as Exhibit 99.1. The
information related to the press release posted on the Company's website is not
incorporated into this Form 8-K.
On March 3, 2003, the Company issued a press release reporting that
Liberty Media Corporation has delivered a notice to the Company that triggers an
exit rights process with respect to QVC, Inc., a consolidated subsidiary of the
Company. The press release is attached hereto as Exhibit 99.2.
ITEM 7(C). EXHIBITS.
Exhibit
Number Description
- ------ -----------
99.1 Comcast Corporation press release dated February 27, 2003.
99.2 Comcast Corporation press release announcing Liberty Media
Corporation triggers exit rights process for QVC, Inc.,
dated March 3, 2003.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: March 6, 2003 COMCAST CORPORATION
By: /s/ Lawrence J. Salva
------------------------
Lawrence J. Salva
Senior Vice President
and Controller
Exhibit 99.1
[COMCAST LOGO] PRESS RELEASE
Comcast Corporation
1500 Market Street
Philadelphia, PA 19102
www.comcast.com
- --------------------------------------------------------------------------------
Contact:
Marlene S. Dooner, Vice President, Investor Relations (215) 981-7392
Daniel J. Goodwin, Director, Investor Relations (215) 981-7518
COMCAST FULL YEAR AND FOURTH QUARTER RESULTS MEET OR EXCEED
ALL OPERATING AND FINANCIAL GOALS
Early Integration Success Sets Base for 2003 Growth
Company Targets Significant Debt Reduction During 2003
Philadelphia, PA - February 27, 2003...Comcast Corporation today reported
results for the fourth quarter and the year ended December 31, 2002, including
the results of AT&T Broadband, acquired on November 18, 2002.
"We are pleased to report that we have met or exceeded all our operating and
financial goals for 2002," said Brian L. Roberts, president and CEO of Comcast
Corporation. "Cable revenues and EBITDA growth accelerated and our commerce and
content segments delivered outstanding results and audience growth."
"In November, we more than doubled our customer base through the acquisition of
AT&T Broadband, and the significant amount of integration planning and budgeting
is already yielding substantial results," added Roberts. "While we've been
operating the company for only three months, we're extremely encouraged by the
performance of our newly acquired cable systems."
"We also remain committed to debt reduction through non-strategic asset sales
and expect to report year-end 2003 debt, net of exchangeables, of $25 to $26
billion. Maintaining strong investment grade ratings remains one of our
principal goals."
Stephen B. Burke, president of Comcast Cable said, "After 100 days of operating
as a combined company, we are more confident than ever of our ability to
successfully integrate the AT&T Broadband systems. Since closing the
acquisition, we have dramatically slowed subscriber losses and accelerated plant
rebuilds, so that 90% of the newly acquired systems will be upgraded to deliver
two-way digital and high-speed Internet services by year-end.
We could not be off to a stronger start."
Combined Cable Division Results
- -------------------------------
Cable division results for the quarter and the year ended December 31, 2002 are
presented on a pro forma basis. Pro forma results are presented as if the
acquisition of AT&T Broadband completed in November 2002 and the acquisition of
cable systems serving 585,000 and 112,000 subscribers in April 2001 and June
2001, respectively, were effective on January 1, 2001. Pro forma results exclude
the results of operations from the expected disposition of
1
317,000 cable subscribers under definitive agreement with Bresnan Communications
announced in February 2003.
Pro forma cable revenues for the quarter ended December 31, 2002 were $4.152
billion, an increase of 11.0% from the $3.740 billion for 2001. Pro forma
operating income before depreciation and amortization (EBITDA) for the quarter
was $1.047 billion, an 8.9% increase over the $962 million for the same period
of 2001. Pro forma results include an estimated $7 to $10 million of acquisition
related costs incurred by Comcast in connection with the AT&T Broadband
acquisition, $130 million of acquisition and other costs incurred by AT&T
Broadband prior to closing of the AT&T Broadband acquisition in the fourth
quarter of 2002, and $140 million of non-recurring expenses incurred in the
transition of Comcast high-speed Internet subscribers from At Home's to
Comcast's network in the fourth quarter of 2001.
Pro forma cable revenues for the year ended December 31, 2002 were $16.043
billion, representing an 11.3% increase from the $14.410 billion for 2001. Pro
forma EBITDA for the year 2002 was $4.468 billion, a 16.0% increase from the
$3.853 billion for 2001. Pro forma results include an estimated $15 to $20
million of acquisition related costs incurred by Comcast in connection with the
AT&T Broadband acquisition, $425 million of acquisition and other costs incurred
by AT&T Broadband prior to closing of the AT&T Broadband acquisition in November
2002, $140 million of non-recurring expenses incurred in the transition of
Comcast high-speed Internet customers from At Home's to Comcast's network in the
fourth quarter of 2001 and $156 million of restructuring and other costs
incurred by AT&T Broadband during the first half of 2001.
In the fourth quarter of 2002, pro forma video revenues increased 4.5% over the
prior year quarter to $2.882 billion, reflecting the impact of continuing strong
demand for Digital Cable, offset by subscriber losses in the newly acquired
cable systems. Pro forma high-speed Internet service revenue increased 67% over
the prior year quarter to $434 million, as a result of a 50% increase in the
customer base and an 11.1% increase in average revenue per subscriber. Pro forma
cable phone revenue totaled $225 million, a 36% increase from the fourth quarter
of 2001 reflecting significant unit growth. Pro forma advertising revenue
increased 15% over the prior year quarter to $297 million, the result of a
stronger advertising market and the success of regional interconnects in
historical Comcast systems.
In the fourth quarter of 2002, the Company lost 9,100 cable subscribers
reflecting growth in Comcast historical cable systems of 40,600 subscribers, a
twelve-month trailing growth rate of 0.8%, offset by a loss of 49,700
subscribers in the newly acquired systems. This improvement represents a
significant reduction in the rate of subscriber losses in these systems that
occurred after the acquisition closed in November. Cable subscribers totaled
21.305 million at year-end 2002, a pro forma twelve-month trailing loss of 1.9%
reflecting subscriber losses of 481,300 in the newly acquired systems.
At year-end 2002, Digital Cable service was available to substantially all of
the Company's cable subscribers. In 2002, the Company added nearly 1.5 million
Digital Cable subscribers to finish 2002 with more than 6.6 million Digital
Cable subscribers, a pro forma increase of 29% over year-end 2001, representing
a penetration rate of more than 31%. Digital Cable subscriber additions were
389,400 during the fourth quarter, a weekly average of 30,000 net additions. In
the fourth quarter of 2002, each Digital Cable subscriber contributed, on
average, $14.48 in revenue per month.
The cable division continues to build its Digital Cable offering as it expands
the availability of video-on-demand (VOD) and high-definition television (HDTV).
Today, VOD is available to
2
nearly 7.5 million homes and HDTV is available to more than 11 million homes. By
year-end 2003, nearly 50% of Comcast customers will have access to VOD and HDTV.
At year-end 2002, high-speed Internet service was available to 30 million homes,
more than 75% of Comcast's footprint. In 2002, the Company added nearly 1.2
million high-speed Internet subscribers to finish 2002 with more than 3.6
million high-speed Internet subscribers, a pro forma increase of nearly 50% over
year-end 2001, representing a penetration rate of 12.0%. In the fourth quarter
of 2002, the Company added high-speed Internet subscribers at a pro forma
average weekly rate of more than 28,200, adding a total of 367,000 high-speed
Internet subscribers during the quarter. This represents a pro forma 36%
increase over the prior year quarter and a pro forma sequential increase of 8%.
In the fourth quarter, each high-speed Internet subscriber contributed, on
average, $42.11 in revenue per month.
The rapid rebuild of the newly acquired cable systems is an important aspect of
Comcast's integration plans over the next two years. In 2003, Comcast will
invest $1.2 billion to upgrade the newly acquired properties out of a total $4.0
billion in cable capital investment. This investment will mean 90% of newly
acquired systems will be upgraded to deliver two-way services like digital cable
and high-speed Internet service by the end of 2003.
Historical Cable Results and 2002 Financial Guidance
- ----------------------------------------------------
Comcast's historical cable operations met or exceeded all financial guidance for
2002. The Company's 2002 guidance specifically excluded the results and any
costs associated with the AT&T Broadband acquisition. In the fourth quarter of
2002, Comcast's historical cable operations reported revenue of $1.601 billion
and EBITDA of $645 million, pro forma increases of 12.4% and 10.6%, respectively
over the fourth quarter of 2001, including an estimated $7 to $10 million in
acquisition related costs incurred by Comcast in connection with the AT&T
Broadband acquisition in the fourth quarter of 2002 and excluding $140 million
of non-recurring expenses incurred in the transition of Comcast high-speed
Internet customers from At Home's to Comcast's network in the fourth quarter of
2001.
For the year 2002, Comcast's historical cable operations generated revenue of
$6.159 billion, a 12.2% pro forma increase from 2001, exceeding the guidance
range of between 10% and 12% revenue growth. Comcast's historical cable
operations reported EBITDA of $2.542 billion, a 12.9% pro forma increase over
2001, including an estimated $15 to $20 million in acquisition related costs
incurred by Comcast in connection with the AT&T Broadband acquisition in 2002
and excluding $140 million of non-recurring expenses incurred in the transition
of Comcast high-speed Internet customers from At Home's to Comcast's network in
the fourth quarter of 2001. Comcast met EBITDA guidance of between 12% and 14%
for the year including the referenced acquisition related costs.
o Comcast's historical cable operations added 819,200 Digital Cable
units in 2002 compared to guidance of 700,000 to 800,000 Digital Cable
unit additions.
o Comcast's historical cable operations added 577,800 high-speed
Internet subscribers in 2002 versus guidance of between 400,000 and
500,000 high-speed Internet subscriber additions.
o In 2002, Comcast's historical cable operations invested $1.3 billion
in capital expenditures, in line with guidance, to maintain and
upgrade its cable systems and to
3
deploy new services. At year-end 2002, nearly 95% of Comcast's
historical cable systems were upgraded to provide two-way digital and
high-speed Internet services.
The Company presented its 2003 financial guidance in a separate press release
today, the first time the Company has reported its outlook for 2003 since
announcing its acquisition of AT&T Broadband.
Commerce: QVC
- -------------
QVC's consolidated revenues for the fourth quarter of 2002 were $1.381 billion,
a 9.5% increase from the $1.262 billion reported for the same period in 2001. In
the fourth quarter, QVC's domestic business generated 5.9% revenue growth over a
strong fourth quarter in 2001 that included a record-setting $80 million
computer sales day. International operations generated revenue growth of 39%
with significant revenue growth in all markets. QVC's consolidated EBITDA for
the fourth quarter was $286 million, an increase of 20.8% from the $236 million
reported in the fourth quarter of 2001. EBITDA increases reflect higher gross
margins, continuing operating improvements and increased scale in the
international businesses. Higher gross margins and operating efficiencies drove
the domestic EBITDA margin improvement to 22.9% from 21.3%.
For the year ended December 31, 2002, QVC's consolidated revenues were $4.381
billion, an 11.8% increase from the $3.917 billion reported in 2001. QVC's
consolidated EBITDA in 2002 was $858 million, an increase of 18.7% over the $722
million reported in 2001.
Mr. Roberts said, "After 16 years in business, QVC delivered another year of
double-digit revenue and EBITDA growth, powered by its strong combination of
domestic and international channels. In 2002, QVC-Germany reached its first full
year of EBITDA contribution and QVC-Japan, in its second year of operations, is
performing well above our expectations."
Content
- -------
Comcast's content businesses include E! Networks, Comcast-Spectacor, The Golf
Channel, Outdoor Life Network, and G4. Results are presented on a pro forma
basis, assuming that the consolidation of The Golf Channel, effective June 2001,
and the acquisition of Outdoor Life Network, effective October 2001, occurred on
January 1, 2001.
Comcast's content business segment reported pro forma revenue and EBITDA growth
of 14.7% and 51.2%, respectively, over the fourth quarter of the prior year.
Content segment results benefited from increases in carriage and a stronger
advertising market.
For the year ended December 31, 2002, Comcast's content business segment
reported pro forma revenue and EBITDA growth of 9.4% and 25.7%, respectively.
Excluding the results of the Company's developing networks, Outdoor Life and G4,
pro forma revenue and EBITDA increased 7.5% and 40.1%, respectively.
New Accounting Standard
- -----------------------
On January 1, 2002, Comcast adopted Statement of Financial Accounting Standards
No. 142 (SFAS 142), an accounting standard that addresses how intangible assets,
including goodwill, should be accounted for in financial statements upon and
subsequent to their acquisition. As a result of adoption, the Company no longer
amortizes goodwill and other indefinite lived intangible assets, which consist
primarily of cable franchise rights.
4
Consolidated Results
- --------------------
The Company's consolidated results include all acquisitions as of the dates of
their closing. The Company acquired AT&T Broadband in November 2002 adding over
13 million cable subscribers to our customer base. The Company acquired Home
Team Sports in February 2001, consolidated The Golf Channel, effective in June
2001, acquired cable systems serving 585,000 and 112,000 subscribers in April
2001 and June 2001, respectively, and acquired Outdoor Life Network in October
2001. Results of operations from 317,000 cable subscribers under definitive
agreement of sale to Bresnan Communications are not included in consolidated
results for any periods. All per share amounts are reported on a diluted basis.
For the three months ended December 31, 2002, the Company reported consolidated
revenues of $4.374 billion, a 52.7% increase from the $2.864 billion reported in
the fourth quarter of 2001 while consolidated EBITDA increased 85.2% to $1.190
billion from the $642 million reported in the fourth quarter of 2001. Increases
in revenue and EBITDA primarily reflect the acquisition of AT&T Broadband in
November 2002. For the three months ended December 31, 2002, the Company
reported EBITDA per share of $0.75 up from the $0.68 of EBITDA per share
reported in the prior year quarter. For the three months ended December 31,
2002, the Company reported operating income of $329 million or $0.21 per share,
as compared to an operating loss of $334 million or $0.35 per share, reflecting
the adoption of SFAS 142 on January 1, 2002. The Company reported a consolidated
net loss of $51 million or $0.03 per share as compared to net loss of $321
million or $0.34 per share in the same period of the prior year.
For the year ended December 31, 2002, the Company reported consolidated revenues
of $12.460 billion, a 26.7% increase from the $9.836 billion reported in 2001.
Consolidated EBITDA increased 38.2% to $3.691 billion from the $2.670 billion
reported in 2001. For the year ended December 31, 2002, the Company reported
EBITDA per share of $3.33 up from the $2.77 of EBITDA per share reported in the
prior year. The Company reported operating income of $1.659 billion or $1.49 per
share, as compared to an operating loss of $746 million or $0.77 per share,
reflecting the adoption of SFAS 142 on January 1, 2002. The Company reported a
consolidated net loss of $274 million or $0.25 per share as compared to net
income of $609 million or $0.63 per share in the prior year. Please refer to
Table 7 "Reconciliation of Diluted EPS to EBITDA per Share" at the end of this
release for further details regarding non-operating items.
###
This press release contains forward-looking statements. Readers are cautioned
that such forward-looking statements involve risks and uncertainties that could
significantly affect actual results from those expressed in any such
forward-looking statements. Readers are directed to Comcast's Annual Report on
Form 10-K for a description of such risks and uncertainties.
Comcast Corporation will host a conference call with the financial community
today February 27, 2003 at 10:30 a.m. Eastern Time (ET).
The conference call and accompanying slides will be available on the Company's
Investor Relations website at www.cmcsk.com. A recording of the call will be
available on the Investor Relations website starting at 12:30 p.m. ET on
February 27, 2003.
Those parties interested in participating via telephone should dial (847)
413-3156. A telephone replay will begin immediately following the call until
February 28, 2003 at midnight ET. To access the rebroadcast, please dial (630)
652-3000 and enter code 6715417.
5
To automatically receive Comcast financial news by email, please visit
www.cmcsk.com and subscribe to e-mail Alerts.
Comcast Corporation (www.comcast.com) is principally involved in the
development, management and operation of broadband cable networks, and in the
provision of electronic commerce and programming content. The Company is the
largest cable company in the United States, serving approximately 21.3 million
cable subscribers. The Company's commerce and content businesses include
majority ownership of QVC, Comcast Spectacor, Comcast SportsNet, E!
Entertainment Television, Style, The Golf Channel, Outdoor Life Network and G4.
Comcast Class A common stock and Class A Special common stock trade on The
NASDAQ Stock Market under the symbols CMCSA and CMCSK, respectively.
6
[COMCAST LOGO]
TABLE 1
Condensed Consolidated Statement of Operations (Unaudited)
(in millions, except per share data)
Three Months Ended Year Ended
December 31, December 31,
2002 2001 2002 2001
-------- -------- -------- --------
Service revenues $ 2,993 $ 1,602 $ 8,079 $ 5,919
Net sales from electronic retailing 1,381 1,262 4,381 3,917
-------- -------- -------- --------
4,374 2,864 12,460 9,836
Cost of goods sold from electronic retailing 890 828 2,793 2,514
Operating, selling, general and administrative expenses 2,294 1,394 5,976 4,652
-------- -------- -------- --------
Operating income before depreciation and amortization 1,190 642 3,691 2,670
Depreciation expense 759 381 1,775 1,211
Amortization expense 102 595 257 2,205
-------- -------- -------- --------
Operating income (loss) 329 (334) 1,659 (746)
Interest expense (340) (182) (884) (734)
Investment income (expense) 155 16 (605) 1,062
Equity in net losses of affiliates (43) (3) (103) (29)
Other income 14 120 3 1,301
-------- -------- -------- --------
(214) (49) (1,589) 1,600
-------- -------- -------- --------
Income (loss) from continuing operations before income taxes,
minority interest and cumulative effect of accounting change 115 (383) 70 854
Income tax (expense) benefit (82) 132 (134) (470)
Minority interest (86) (70) (212) (160)
-------- -------- -------- --------
Income (loss) from continuing operations before
cumulative effect of accounting change (53) (321) (276) 224
Discontinued operations, net of income tax
expense of $1 2 2
-------- -------- -------- --------
Income (loss) before cumulative effect of accounting change (51) (321) (274) 224
Cumulative effect of accounting change 385
-------- -------- -------- --------
Net income (loss) for common stockholders ($ 51) ($ 321) ($ 274) $ 609
======== ======== ======== ========
Basic earnings (loss) per common share
Income (loss) from continuing operations
before cumulative effect of accounting change ($ 0.03) ($ 0.34) ($ 0.25) $ 0.24
Discontinued operations
Cumulative effect of accounting change 0.40
-------- -------- -------- --------
Net income (loss) ($ 0.03) ($ 0.34) ($ 0.25) $ 0.64
======== ======== ======== ========
Basic weighted average number of common shares outstanding 1,583 951 1,110 950
======== ======== ======== ========
Diluted earnings (loss) per common share
Income (loss) from continuing operations
before cumulative effect of accounting change ($ 0.03) ($ 0.34) ($ 0.25) $ 0.23
Discontinued operations
Cumulative effect of accounting change 0.40
-------- -------- -------- --------
Net income (loss) ($ 0.03) ($ 0.34) ($ 0.25) $ 0.63
======== ======== ======== ========
Diluted weighted average number of common shares outstanding 1,583 951 1,110 965
======== ======== ======== ========
7
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TABLE 2
Condensed Consolidated Balance Sheet (Unaudited)
(in millions)
December 31, December 31,
2002 (1) 2001
--------- ---------
ASSETS
CURRENT ASSETS
Cash, cash equivalents and short-term investments $ 4,015 $ 2,973
Other current assets, including assets held for sale 3,100 1,705
--------- ---------
Total current assets 7,115 4,678
--------- ---------
INVESTMENTS 15,422 1,679
--------- ---------
OTHER NONCURRENT ASSETS - including property and
equipment, and intangible assets 94,801 31,904
--------- ---------
$ 117,338 $ 38,261
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable, accrued expenses and other current liabilities $ 8,430 $ 2,763
Short-term debt and current portion of long-term debt 6,953 460
--------- ---------
Total current liabilities 15,383 3,223
--------- ---------
LONG-TERM DEBT, less current portion 27,957 11,742
--------- ---------
OTHER NONCURRENT LIABILITIES & MINORITY INTEREST 35,669 8,823
--------- ---------
STOCKHOLDERS' EQUITY
Common stock 23 9
Additional capital 38,231 12,688
Retained earnings 1,340 1,632
Treasury stock, at cost (1,126)
Accumulated other comprehensive income (loss) (139) 144
--------- ---------
Total stockholders' equity 38,329 14,473
--------- ---------
$ 117,338 $ 38,261
========= =========
(1) Given the size of the Broadband acquisition and close proximity to year-end, the value of
certain assets and liabilities are based on preliminary valuations and are subject to adjustment
as additional information is obtained, including reports from valuation specialists and
information related to the cost of terminating or meeting contractual obligations.
8
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TABLE 3
Pro Forma Financial Data by Business Segment (Unaudited) (1)
(dollars in millions)
(2) (3) (4)
Cable Commerce Content Other Total
Three Months Ended December 31, 2002
Revenues $ 4,152 $ 1,381 $ 220 ($ 25) $ 5,728
EBITDA (5) $ 1,047 $ 286 $ 47 ($ 43) $ 1,337
EBITDA Margin (5) 25.2% 20.7% 21.3% NM 23.3%
Capital Expenditures (7) (8) $ 803 $ 12 $ 5 $ 9 $ 829
Three Months Ended December 31, 2001
Revenues $ 3,740 $ 1,262 $ 192 ($ 23) $ 5,171
EBITDA (5) $ 962 $ 236 $ 31 ($ 69) $ 1,160
EBITDA Margin (5) 25.7% 18.7% 16.1% NM 22.4%
Capital Expenditures (7) $ 454 $ 36 $ 8 $ 3 $ 501
Twelve Months Ended December 31, 2002
Revenues $16,043 $ 4,381 $ 767 ($ 79) $21,112
EBITDA (6) $ 4,468 $ 858 $ 192 ($ 161) $ 5,357
EBITDA Margin (6) 27.8% 19.6% 25.0% NM 25.4%
Capital Expenditures (7) (8) $ 1,814 $ 123 $ 18 $ 20 $ 1,975
Twelve Months Ended December 31, 2001
Revenues $14,410 $ 3,917 $ 701 ($ 59) $18,969
EBITDA (6) $ 3,853 $ 722 $ 153 ($ 239) $ 4,489
EBITDA Margin (6) 26.7% 18.4% 21.8% NM 23.7%
Capital Expenditures (7) $ 1,855 $ 143 $ 26 $ 158 $ 2,182
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Pro forma financial data is presented as if acquisitions occurred at the beginning of 2001. The
information presented above is not necessarily indicative of what the results would have been had the
Company operated the acquired businesses since the beginning of 2001. Historical financial data by
business segment, as required under generally accepted accounting principles, is available in the
Company's Annual Report on Form 10-K.
(2) In November 2002, the Company acquired AT&T Broadband, in February 2001, Home Team Sports and in
April 2001 and June 2001, cable systems serving 585,000 and 112,000 subscribers, respectively. Pro
forma financial data excludes the results of the 317,000 cable subscribers under definitive agreement
of sale to Bresnan Communications.
(3) Content includes E! Networks, Comcast-Spectacor, The Golf Channel, Outdoor Life Network and G4. The
Company consolidated The Golf Channel and acquired Outdoor Life Network in June 2001 and October
2001, respectively.
(4) Other includes the Company's domestic wireline telecommunications business, international wireless
operations, Corporate and elimination entries related to the segments presented.
(5) Included for the three months ended December 31, 2002 are acquisition & other costs of $130 million
incurred by AT&T Broadband prior to the acquisition of AT&T Broadband by Comcast and $7 to $10
million of acquisition related costs incurred by Comcast in connection with the AT&T Broadband
acquisition. Included for the three months ended December 31, 2001 are incremental expenses of $140
million incurred by Comcast in the transition of Comcast high-speed Internet customers from At Home's
to Comcast's network.
(6) Included for the year ended December 31, 2002 are acquisition & other costs of $369 million incurred
by AT&T Broadband prior to the acquisition of AT&T Broadband by Comcast, restructuring and other
charges of $56 million incurred by AT&T Broadband in the first quarter of 2002 and $15 to $20 million
of acquisition related costs incurred by Comcast in connection with the AT&T Broadband acquisition.
Included for the year ended December 31, 2001 are incremental expenses of $140 million incurred by
Comcast in the transition of Comcast high-speed Internet customers from At Home's to Comcast's
network in the fourth quarter of 2001 and restructuring and other charges of $156 million incurred by
AT&T Broadband in the first half of 2001.
(7) For acquired businesses, includes capital expenditures made by the Company subsequent to the date of
acquisition by the Company.
(8) Our Cable segment's capital expenditures are comprised of the following categories:
Recurring
YTD Capital
4Q02 12/31/02 Percentage*
Customer Premise Equipment (CPE) $306 $723 15%-25%
Scalable Infrastructure 62 185 2%-10%
Line Extensions 100 209 -
Upgrade/Rebuild 256 526 20%-30%
Support Capital 79 171 100%
-------------- -----------
Total $803 $1,814
============== ===========
CPE includes costs incurred at the customer residence to secure new customers, revenue units and
additional bandwidth revenues (e.g. digital converters). Scalable infrastructure includes costs, not CPE
or network related, to secure growth of new customers, revenue units and additional bandwidth revenues or
provide service enhancements (e.g. headend equipment). Line extensions include network costs associated
with entering new service areas (e.g. fiber/coaxial cable). Upgrade/rebuild includes costs to enhance or
replace existing fiber/coaxial cable networks, including recurring betterments. Support capital includes
costs associated with the replacement or enhancement of non-network assets due to obsolescence and wear
out (e.g. non-network equipment, land, buildings and vehicles).
* Represents an estimate of the recurring capital expenditures for each of the above components.
9
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TABLE 4
Pro Forma Data - Cable Segment Components (Unaudited) (1)(2) (dollars in millions, except
average revenue per basic subscriber data)
Historical Newly Acquired
Systems (3) Systems (3) Total
------------------------ ------------------------- -------------------------
Three Months Ended December 31 2002 2001 2002 2001 2002 2001
Revenues
Video (4) $1,194 $1,124 $1,688 $1,633 $2,882 $2,757
High-Speed Internet 175 91 259 169 434 260
Phone 7 6 218 159 225 165
Advertising 109 90 188 168 297 258
Other (5) 66 64 107 98 173 162
Franchise Fees 50 50 91 88 141 138
------------------------ ------------------------- -------------------------
Total Revenues $1,601 $1,425 $2,551 $2,315 $4,152 $3,740
Average Total Revenue per Basic Subscriber $62.63 $56.14 $66.44 $58.08 $64.84 $57.15
EBITDA (6) $645 $444 $402 $518 $1,047 $962
EBITDA Margin (6) 40.3% 31.1% 15.8% 22.4% 25.2% 25.7%
Historical Newly Acquired
Systems (3) Systems (3) Total
------------------------ ------------------------- -------------------------
Year Ended December 31 2002 2001 2002 2001 2002 2001
Revenues
Video (4) $4,710 $4,418 $6,758 $6,553 $11,468 $10,971
High-Speed Internet 590 294 897 581 1,487 875
Phone 24 20 794 485 818 505
Advertising 383 333 652 600 1,035 933
Other (5) 251 224 415 374 666 598
Franchise Fees 201 199 368 329 569 528
------------------------ ------------------------- -------------------------
Total Revenues $6,159 $5,488 $9,884 $8,922 $16,043 $14,410
Average Total Revenue per Basic Subscriber $60.34 $54.23 $63.56 $55.79 $62.11 $55.02
EBITDA (7) $2,542 $2,112 $1,926 $1,741 $4,468 $3,853
EBITDA Margin (7) 41.3% 38.5% 19.5% 19.5% 27.8% 26.7%
Capital Expenditures (8) $1,317 $1,855 $3,923 $3,501 $5,240 $5,356
EBITDA, Net of Capital Expenditures $1,225 $257 ($1,997) ($1,760) ($772) ($1,503)
- --------------------------------------------------------------------------------------------------------------------------------
(1) Pro forma data is presented as if acquisitions occurred at the beginning of 2001. The information
presented above is not necessarily indicative of what the results would have been had the Company
operated the acquired businesses since the beginning of 2001.
(2) In November 2002, the Company acquired AT&T Broadband, in February 2001, Home Team Sports and in
April 2001 and June 2001, cable systems serving 585,000 and 112,000 subscribers, respectively. Pro
forma data excludes the results of the 317,000 cable subscribers under definitive agreement of sale
to Bresnan Communications.
(3) Historical systems represent those cable businesses operated by the Company prior to the acquisition
of AT&T Broadband in November 2002. The newly acquired systems represent those cable businesses
acquired from AT&T.
(4) Video revenues consist of our basic, expanded basic, premium, pay-per-view, equipment, and digital
services.
(5) Other Cable subscriber revenues include installation revenues, guide revenues, commissions from
electronic retailing, other product offerings and revenues of our digital media center and regional
sports programming networks.
(6) Included for the three months ended December 31, 2002 are acquisition & other costs of $130 million
incurred by AT&T Broadband prior to the acquisition of AT&T Broadband by Comcast and $7 to $10
million of acquisition related costs incurred by Comcast in connection with the AT&T Broadband
acquisition. Included in the three months ended December 31, 2001 are incremental expenses of $140
million incurred by Comcast in the transition of Comcast high-speed Internet customers from At Home's
to Comcast's network.
(7) Included for the year ended December 31, 2002 are acquisition & other costs of $369 million incurred
by AT&T Broadband prior to the acquisition of AT&T Broadband by Comcast, restructuring and other
charges of $56 million incurred by AT&T Broadband in the first quarter of 2002 and $15 to $20 million
of acquisition related costs incurred by Comcast in connection with the AT&T Broadband acquisition.
Included for the year ended December 31, 2001 are incremental expenses of $140 million incurred by
Comcast in the transition of Comcast high-speed Internet customers from At Home's to Comcast's
network in the fourth quarter of 2001 and restructuring and other charges of $156 million incurred by
AT&T Broadband in the first half of 2001.
(8) For acquired businesses made by historical systems, includes capital expenditures made by the Company
subsequent to the date of acquisition by the Company. For newly acquired systems, includes capital
expenditures made since January 1, 2001.
10
[COMCAST LOGO]
TABLE 5
Pro Forma Data - Cable Segment (Unaudited) (1) (2)
Historical Systems (3) Newly Acquired Systems (3)
4Q02 3Q02 4Q01 4Q02 3Q02 4Q01
Cable
Homes Passed (000's) 14,188.4 14,128.0 13,932.8 24,961.3 24,598.8 24,108.1
Subscribers (000's) 8,539.4 8,498.8 8,471.1 12,765.7 12,815.4 13,247.0
Penetration 60.2% 60.2% 60.8% 51.1% 52.1% 54.9%
Quarterly Net Subscriber Additions (000's) 40.6 (2.5) 34.1 (49.7) (130.8) (87.1)
Digital Cable
"Digital Ready" Subscribers (000's) 8,539.4 8,478.4 8,375.3 12,765.7 12,815.4 13,247.0
Subscribers (000's) 2,245.4 2,112.5 1,740.8 4,374.1 4,117.6 3,389.2
Penetration 26.3% 24.9% 20.8% 34.3% 32.1% 25.6%
Quarterly Net Subscriber Additions (000's) 132.9 131.4 120.2 256.5 277.9 328.8
Monthly Average Revenue per Digital Subscriber $15.00 $15.52 $14.22 $14.20 $14.08 $14.15
High-Speed Internet
"Marketable" Homes Passed (000's) 12,611.3 12,061.1 10,399.6 17,460.5 16,830.0 14,936.7
Subscribers (000's) 1,525.9 1,338.7 948.1 2,094.4 1,914.6 1,473.1
Penetration 12.1% 11.1% 9.1% 12.0% 11.4% 9.9%
Quarterly Net Subscriber Additions (000's) 187.2 169.7 155.4 179.8 169.3 115.3
Monthly Average Revenue per Subscriber $40.80 $41.34 $34.81 $43.07 $42.82 $39.82
Phone
"Marketable" Homes Passed (000's) 273.8 274.6 243.2 8,438.4 8,039.0 6,833.0
Subscribers (000's) 39.5 38.7 40.8 1,398.9 1,322.9 1,004.5
Penetration 14.4% 14.1% 16.8% 16.6% 16.5% 14.7%
Quarterly Net Subscriber Additions (000's) 0.8 (1.9) 2.3 76.0 102.7 104.2
Monthly Average Revenue per Subscriber $55.47 $50.47 $50.38 $52.56 $53.74 $55.51
Total Revenue Generating Units (000's) (4) 12,350.2 11,988.7 11,200.8 20,633.1 20,170.5 19,113.8
Total
4Q02 3Q02 4Q01
Cable
Homes Passed (000's) 39,149.7 38,726.8 38,040.9
Subscribers (000's) 21,305.1 21,314.2 21,718.1
Penetration 54.4% 55.0% 57.1%
Quarterly Net Subscriber Additions (000's) (9.1) (133.3) (53.0)
Digital Cable
"Digital Ready" Subscribers (000's) 21,305.1 21,293.8 21,622.3
Subscribers (000's) 6,619.5 6,230.1 5,130.0
Penetration 31.1% 29.3% 23.7%
Quarterly Net Subscriber Additions (000's) 389.4 409.3 449.0
Monthly Average Revenue per Digital Subscriber $14.48 $14.57 $14.17
High-Speed Internet
"Marketable" Homes Passed (000's) 30,071.8 28,891.1 25,336.3
Subscribers (000's) 3,620.3 3,253.3 2,421.2
Penetration 12.0% 11.3% 9.6%
Quarterly Net Subscriber Additions (000's) 367.0 339.0 270.7
Monthly Average Revenue per Subscriber $42.11 $42.22 $37.91
Phone
"Marketable" Homes Passed (000's) 8,712.2 8,313.6 7,076.2
Subscribers (000's) 1,438.4 1,361.6 1,045.3
Penetration 16.5% 16.4% 14.8%
Quarterly Net Subscriber Additions (000's) 76.8 100.8 106.5
Monthly Average Revenue per Subscriber $52.66 $53.64 $55.27
Total Revenue Generating Units (000's) (4) 32,983.3 32,159.2 30,314.6
- ------------------------------------------------------------------------------------------------------------------------------------
Supplemental Information - Pro Forma Historical Data
(dollars in millions)
Revenue 4Q02 3Q02 2Q02 1Q02
Historical Systems $ 1,601 $ 1,548 $ 1,541 $ 1,469
Newly Acquired Systems 2,551 2,488 2,470 2,375
----------------------------------------------------------
Total $ 4,152 $ 4,036 $ 4,011 $ 3,844
EBITDA
Historical Systems $ 645 $ 646 $ 654 $ 597
Newly Acquired Systems 402 551 525 448
----------------------------------------------------------
EBITDA (5) $ 1,047 $ 1,197 $ 1,179 $ 1,045
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(1) Pro forma data is presented as if acquisitions occurred at the beginning of 2001. The information presented above is not
necessarily indicative of what the results would have been had the Company operated the acquired businesses since the
beginning of 2001.
(2) In November 2002, the Company acquired AT&T Broadband, in February 2001, Home Team Sports and in April 2001 and June 2001,
cable systems serving 585,000 and 112,000 subscribers, respectively. Pro forma data excludes the results of the 317,000
cable subscribers under definitive agreement of sale to Bresnan Communications.
(3) Historical systems represent those cable businesses operated by the Company prior to the acquisition of AT&T Broadband in
November 2002. The newly acquired systems represent those cable businesses acquired from AT&T.
(4) The sum total of all primary analog video, digital video, high-speed Internet and phone customers, but excluding additional
outlets.
(5) Included for the three months ended December 31, 2002 are acquisition & other costs of $130 million incurred by AT&T
Broadband prior to the acquisition of AT&T Broadband by Comcast and $7 to $10 million of acquisition related costs incurred
by Comcast in connection with the AT&T Broadband acquisition. Included for the year ended December 31, 2002 are acquisition
related costs of $369 million incurred by AT&T Broadband prior to the acquisition of AT&T Broadband by Comcast and
restructuring and other charges of $56 million incurred by AT&T Broadband in the first quarter of 2002 and $15 to $20
million of acquisition related costs incurred by Comcast in connection with the AT&T Broadband acquisition.
11
[COMCAST LOGO]
TABLE 6
Pro Forma Data - Commerce Segment (QVC) (Unaudited)
(dollars and homes in millions)
Base (1) UK Germany Other (2) (3) Total
Three Months Ended December 31, 2002
Revenue $1,153 $94 $87 $47 $1,381
Gross Margin 35.5% 37.6% 31.7% 39.7% 35.6%
EBITDA $263 $14 $5 $4 $286
EBITDA Margin 22.9% 14.6% 6.3% 5.9% 20.7%
Average Homes (4) 75.3 11.1 25.7 N/A N/A
Revenue per Average Home (in local currency) $15.31 (pound)5.49 (euro) 3.36 N/A N/A
Three Months Ended December 31, 2001
Revenue $1,088 $80 $64 $30 $1,262
Gross Margin 34.1% 38.4% 31.0% 39.6% 34.4%
EBITDA $231 $12 ($1) ($6) $236
EBITDA Margin 21.3% 15.6% (1.5%) (22.6%) 18.7%
Average Homes (4) 72.9 9.4 23.6 N/A N/A
Revenue per Average Home (in local currency) $14.93 (pound)5.86 (euro) 2.99 N/A N/A
Twelve Months Ended December 31, 2002
Revenue $3,672 $297 $275 $137 $4,381
Gross Margin 36.5% 35.8% 30.8% 40.6% 36.3%
EBITDA $827 $28 $6 ($3) $858
EBITDA Margin 22.5% 9.5% 2.4% (2.9%) 19.6%
Average Homes (4) 74.4 10.4 25.0 N/A N/A
Revenue per Average Home (in local currency) $49.32 (pound)18.95 (euro) 11.54 N/A N/A
Twelve Months Ended December 31, 2001
Revenue $3,373 $272 $198 $74 $3,917
Gross Margin 36.0% 35.9% 29.9% 41.9% 35.8%
EBITDA $726 $25 ($7) ($22) $722
EBITDA Margin 21.5% 9.2% (3.5%) (29.7%) 18.4%
Average Homes (4) 71.9 9.1 23.3 N/A N/A
Revenue per Average Home (in local currency) $46.92 (pound)20.44 (euro) 9.44 N/A N/A
(1) Base Business includes domestic channel and QVC.com.
(2) Other includes domestic and international infomercial businesses and QVC Japan.
(3) For the three months ended December 31, 2002, QVC Japan's revenues and EBITDA were $33 million and $1 million, respectively.
For the year ended December 31, 2002, QVC Japan's revenues and EBITDA were $86 million and $(3) million, respectively.
(4) Note that while QVC has the potential to serve this many homes in Germany, it is estimated that only approximately 40% of the
homes in Germany are programmed to receive the QVC channel.
12
[COMCAST LOGO]
TABLE 7
Reconciliation of Diluted EPS to EBITDA per share (Unaudited) (1)
(amounts in millions, except per share data)
Three Months Ended
December 31,
2002 2001
per per
$ share $ share
Net Income (Loss) as reported ($51) ($0.03) ($321) ($0.34)
Non-operating items, net of tax (2) (27) (0.02) (41) (0.04)
Adoption of SFAS 142 accounting standard, net of tax - - 373 0.39
------------------------------- ----------------------------
Net Income (Loss) as adjusted (78) (0.05) 11 0.01
Items to reconcile net income (loss) as adjusted to EBITDA (1):
Depreciation & amortization 861 0.54 457 0.48
Interest expense 340 0.21 182 0.19
Income tax expense 67 0.05 (8) 0.00
------------------------------- ----------------------------
EBITDA as reported $1,190 $0.75 $642 $0.68
=============================== ============================
Less cash payments for:
Capital expenditures (829) (501)
Interest, net (3) (347) (158)
Income taxes (76) (424)
---------------- ---------------
Free Cash Flow ($62) ($441)
================ ===============
Diluted weighted average shares outstanding 1,583 951
=============== =============
Year Ended
December 31,
2002 2001
per per
$ share $ share
Net Income (Loss) as reported ($274) ($0.25) $609 $0.63
Non-operating items, net of tax (2) 595 0.54 (1,738) (1.80)
Adoption of SFAS 142 accounting standard, net of tax - - 1,434 1.49
------------------------------- ----------------------------
Net Income (Loss) as adjusted 321 0.29 305 0.32
Items to reconcile net income (loss) as adjusted to EBITDA (1):
Depreciation & amortization 2,032 1.83 1,399 1.45
Interest expense 884 0.80 734 0.76
Income tax expense 454 0.41 232 0.24
------------------------------- ----------------------------
EBITDA as reported $3,691 $3.33 $2,670 $2.77
=============================== ============================
Less cash payments for:
Capital expenditures (1,975) (2,182)
Interest, net (3) (838) (620)
Income taxes (288) (561)
---------------- ---------------
Free Cash Flow $590 ($693)
================ ===============
Diluted weighted average shares outstanding 1,110 965
=============== =============
(1) Operating income before depreciation and amortization is commonly referred to in our businesses as "EBITDA." EBITDA is a
measure of a company's ability to generate cash to service its obligations, including debt service obligations, and to finance
capital and other expenditures. In part due to the capital intensive nature of our businesses and the resulting significant
level of non-cash depreciation and amortization expense, EBITDA is frequently used as one of the bases for comparing businesses
in our industries, although our measure of EBITDA may not be comparable to similarly titled measures of other companies. EBITDA
is the primary basis used by our management to measure the operating performance of our businesses. EBITDA does not purport to
represent net income or net cash provided by operating activities, as those terms are defined under generally accepted
accounting principles, and should not be considered as an alternative to such measurements as an indicator of our performance.
- -----------------------------------------------------------------------------------------------
(2) Detail of non-operating items:
Three Months Ended
December 31,
2002 2001
Investment (income) expense - mark to market adjustments on
trading securities, derivatives and hedged items, net ($84) ($0.05) ($9) ($0.01)
Investment (income) expense - (gain) loss on sales and exchanges of investments (52) (0.03) (8) (0.01)
Investment expense - investment impairment losses (4) 19 0.01 18 0.02
Investment income - reclassification of unrealized gains (5) - - - -
Other income - gain on Adelphia systems exchange (6) - - - -
Cumulative effect of accounting change, net of tax (7) - - - -
All other, net (8) 75 0.04 (64) (0.07)
------- ----- ------- -----
Total non-operating items (42) (0.03) (63) (0.07)
Tax effect 15 0.01 22 0.03
------- ----- ------- -----
Non-operating items, net of tax ($27) ($0.02) ($41) ($0.04)
======= ===== ======= =====
Year Ended
December 31,
2002 2001
Investment (income) expense - mark to market adjustments on
trading securities, derivatives and hedged items, net $374 $0.34 ($142) ($0.15)
Investment (income) expense - (gain) loss on sales and exchanges of investments 48 0.04 (485) (0.50)
Investment expense - investment impairment losses (4) 247 0.22 972 1.01
Investment income - reclassification of unrealized gains (5) - - (1,330) (1.38)
Other income - gain on Adelphia systems exchange (6) - - (1,198) (1.24)
Cumulative effect of accounting change, net of tax (7) - - (385) (0.40)
All other, net (8) 246 0.22 10 0.01
------- ----- ------- -----
Total non-operating items 915 0.82 (2,558) (2.65)
Tax effect (320) (0.28) 820 0.85
------- ----- ------- -----
Non-operating items, net of tax $595 $0.54 ($1,738) ($1.80)
======= ===== ======= =====
(3) Includes interest expense net of interest income and excludes non-cash interest.
(4) The Company records losses on its investments for which the Company has determined that a decline in value of the investment
was considered other than temporary. The Company's losses for the twelve months ended December 31, 2002 and 2001 relate
principally to the Company's investment in AT&T.
(5) In the third quarter of 2001, the Company reclassified to investment income the accumulated unrealized gain relating to the
Company's investment in At Home. The Company recorded the accumulated unrealized gain prior to the Company's designation of its
right under a stockholders agreement as a hedge of the Company's investment in At Home. In connection with the adoption of a
new accounting standard for the accounting of derivative instruments and hedging activities in the first quarter of 2001, the
Company reclassified its investment in Sprint PCS from an available for sale security to a trading security.
(6) Represents the gain recognized upon the completion of the Company's cable systems exchange with Adelphia Communications
Corporation in January 2001.
(7) Represents the effect of adopting the new accounting standard for the accounting of derivative instruments and hedging
activities.
(8) Includes investment, interest and dividend income, equity in net (income) losses of affiliates, other income (expense),
minority interest and discontinued operations.
13
Exhibit 99.2
[COMCAST LOGO] PRESS RELEASE
Comcast Corporation
1500 Market Street
Philadelphia, PA 19102
www.comcast.com
- --------------------------------------------------------------------------------
Contact:
Karen Dougherty Buchholz - 215-981-8520
karen_buchholz@comcast.com
Tim Fitzpatrick - 215-981-8515
tim_fitzpatrick@comcast.com
FOR IMMEDIATE RELEASE
COMCAST ANNOUNCES LIBERTY MEDIA CORPORATION TRIGGERS
EXIT RIGHTS PROCESS FOR QVC, INC.
Philadelphia, PA (Monday, March 3, 2003) - Comcast Corporation (NASDAQ: CMCSA;
CMCSK) today reported that Liberty Media Corporation has delivered a notice to
Comcast that triggers an exit rights process with respect to QVC, Inc., a
consolidated subsidiary of Comcast. Pursuant to the stockholders agreement
between Comcast and Liberty, the parties shall seek in good faith to negotiate
the fair market value of QVC prior to March 31, 2003. If the parties cannot
agree, an appraisal process will determine the value of QVC. Comcast will then
have the right to purchase Liberty's approximately 42% interest in QVC at the
determined value. If Comcast elects not to purchase Liberty's interest in QVC,
Liberty then will have a similar right to purchase Comcast's interest in QVC. If
neither party elects to purchase the interest of the other, then Comcast and
Liberty are required to use their best efforts to sell QVC; either company is
permitted to be a purchaser in any such sale. There can be no assurance that the
parties will not agree to a transaction relating to the parties' interests in
QVC other than that specified in the agreement, or that any transaction will
occur involving Comcast's or Liberty's interest in QVC.
Comcast Corporation (www.comcast.com) is principally involved in the
development, management and operation of broadband cable networks, and in the
provision of electronic commerce and programming content. The Company is the
largest cable company in the United States, serving approximately 21.3 million
cable subscribers. The Company's commerce and content businesses include
majority ownership of QVC, Comcast Spectacor, Comcast SportsNet, E!
Entertainment Television, Style, The Golf Channel, Outdoor Life Network and G4.
Comcast Class A common stock and Class A Special common stock trade on The
NASDAQ Stock Market under the symbols CMCSA and CMCSK, respectively.
This press release contains forward-looking statements. Readers are cautioned
that such forward-looking statements involve risks and uncertainties that could
significantly affect actual results from those expressed in any such
forward-looking statements. Readers are directed to Comcast's filings with the
SEC for a description of such risks and uncertainties.
###