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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): July 31, 2003
COMCAST CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 000-50093 27-0000798
- ---------------- ---------------- -------------
(State or other (Commission file (IRS employer
jurisdiction of number) identification no.)
incorporation)
1500 Market Street, Philadelphia, PA 19102-2148
--------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 665-1700
--------------
Item 7(c). Exhibits
Exhibit 99.1 Comcast Corporation press release dated July 31, 2003.
Item 9. Regulation FD Disclosure
The following information is furnished pursuant to Item 9, "Regulation
FD Disclosure," and Item 12, "Results of Operations and Financial Condition."
On July 31, 2003, Comcast Corporation ("Comcast") issued a press release
reporting the results of its operations for the three and six months ended June
30, 2003. The press release is attached hereto as Exhibit 99.1. Comcast does not
intend for this Item 9 or Exhibit 99.1 to be treated as "filed" under the
Securities Exchange Act of 1934, as amended, or incorporated by reference into
its filings under the Securities Act of 1933, as amended.
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.
Dated: August 1, 2003 COMCAST CORPORATION
By: /s/ Lawrence J. Salva
------------------------
Lawrence J. Salva
Senior Vice President and
Controller
(Principal Accounting Officer)
Comcast
[GRAPHIC OMITTED] PRESS RELEASE
________________________________________________________________________________
Contact:
- --------
Marlene S. Dooner, Vice President, Investor Relations (215) 981-7392
Leslie A. Arena, Director, Investor Relations (215) 981-8511
Daniel J. Goodwin, Director, Investor Relations (215) 981-7518
COMCAST REPORTS SECOND QUARTER 2003 RESULTS
Consolidated Revenue Increased to $5.685 Billion
Consolidated Operating Cash Flow Increased to $1.831 Billion
Consolidated Operating Income Increased to $611 Million
INTEGRATION OF NEWLY ACQUIRED CABLE SYSTEMS AHEAD OF SCHEDULE
Basic Cable Subscribers Increased by 12,100
Pro Forma Cable Operating Cash Flow Increased 35.7% to $1.597 Billion
Operating Cash Flow Margin Reached 36.5%
Pro Forma Cable Operating Income Increased to $464 Million
COMCAST INCREASES 2003 GUIDANCE FOR BASIC CABLE SUBSCRIBERS AND FOR CABLE
OPERATING CASH FLOW AND REAFFIRMS ALL OTHER FULL YEAR GUIDANCE
Philadelphia, PA - July 31, 2003...Comcast Corporation (Nasdaq: CMCSA, CMCSK)
today reported results for the quarter ended June 30, 2003. Comcast will discuss
second quarter results on a conference call and webcast today at 10:30 AM
Eastern Time. A live broadcast of the conference call will be available on the
investor relations website at www.cmcsa.com or www.cmcsk.com.
Brian L. Roberts, president and CEO of Comcast Corporation said, "Our
integration is continuing to exceed all of our previous expectations. In this
quarter, we have delivered outstanding financial and operational performance.
Every one of our key integration initiatives - basic subscriber and operating
cash flow growth, operating margin improvement and the pace of our cable system
upgrades - is proceeding beyond our original schedule."
"In the second quarter, we added 12,100 basic subscribers, a significant
accomplishment in a seasonally slow quarter and a remarkable turnaround from the
loss of 133,300 subscribers in the second quarter of 2002. As a result, we are
again increasing our guidance for basic cable subscriber additions for 2003. We
now expect to add 125,000 to 150,000 basic cable subscribers, significantly
above our expectation of flat subscriber growth at the beginning of this year."
1
"We are also continuing to realize significant operating efficiencies in our
cable operations, driving our cable cash flow margin up to 36.5% and our
annualized cable operating cash flow per subscriber to nearly $300. As a result,
we are increasing our guidance for full year cable operating cash flow by $100
million to between $6.3 and $6.4 billion. We continue to see significant
opportunities to accelerate revenue and cash flow growth from the newly-acquired
cable systems to match the performance of our historical cable systems as well
as to maximize the performance of all our cable systems."
Mr. Roberts continued, "At the same time, we continue to attract new customers
to our digital and high-speed Internet products and to expand the range of our
new product offerings to consumers. Our Digital Cable service is being enhanced
with broader availability of Comcast-on-Demand and HDTV, and later this year,
DVR. We introduced a new broadband portal to our high-speed Internet customers
in July and continue to extend availability of the service and our retail
distribution capability."
"We recently announced our agreement to sell our 57% ownership stake in QVC. The
sale will solidify our balance sheet and provide significant financial
flexibility to support future growth."
Comcast Cable Results
- ---------------------
Comcast Cable results for the quarter ended June 30, 2003 are presented on a pro
forma basis. Pro forma results adjust only for acquisitions and are presented as
if the acquisition of AT&T Broadband completed in November 2002 was effective on
January 1, 2002. Please refer to Table 8-A and B for reconciliation of
historical and pro forma data.
Pro forma Comcast Cable revenue for the quarter ended June 30, 2003 was $4.379
billion, representing a 9.2% increase over the $4.009 billion in the second
quarter of 2002. Pro forma operating income before depreciation and amortization
(Operating Cash Flow) for the quarter was $1.597 billion, an increase of 35.7%
over the $1.177 billion for the same period of 2002. Pro forma results include
$100 million of acquisition and employee termination-related costs incurred by
AT&T Broadband in the second quarter of 2002. Excluding these costs, pro forma
cable operating cash flow grew 25.0%. Pro forma operating cash flow margins
reached 36.5% as overhead reductions and other cost cutting measures took
effect. Pro forma cable operating income was $464 million in the second quarter
compared to a pro forma operating loss of $16.4 billion in the second quarter of
2002 reflecting AT&T Broadband's write-down of goodwill and cable franchise
rights prior to our acquisition.
Pro forma cable video revenue increased 5.1% in the second quarter of 2003
compared with the prior year quarter driven by continuing increases in average
monthly revenue per basic subscriber and growth in Digital Cable revenue. Our
Digital Cable customer base grew by 19.4% to 6.950 million subscribers and our
average monthly revenue per digital subscriber grew 5.7% to $15.28 during the
second quarter of 2003. These increases were offset by lower pay-per-view
revenue due to the absence of major boxing events in the second quarter of 2003
and the continuing impact of pre-acquisition basic subscriber losses in the
newly-acquired cable systems. Pro forma high-speed Internet service revenue for
the second quarter of 2003 increased 56.6% over the prior year quarter to $548
million, reflecting a 50.6% increase in the customer base and average revenue
per subscriber of $43.34 in the second quarter, a 3.6% increase over the prior
year period. Pro forma cable phone revenue declined 1.9% from the second quarter
of 2002 to $205 million, reflecting a decrease in net subscriber additions as a
result of our reduced marketing efforts. Pro forma advertising revenue increased
8.3% over the prior year quarter to $285 million, reflecting 17% growth in
regional/national advertising as a
2
result of the continuing success of our regional interconnects, and growth of 3%
in a soft local advertising market.
In the second quarter of 2003, Comcast Cable added 12,100 basic cable
subscribers, a dramatic improvement over the combined loss of 133,300
subscribers in 2002. The increase reflects basic subscriber gains of 35,200 in
the newly-acquired cable systems, as the Company continues to focus on these
markets with successful new customer initiatives including expanded Hispanic
video offerings. The second quarter results represent a marked turnaround from
the second quarter of 2002 when those systems lost 122,800 subscribers.
Comcast Cable added 162,100 Digital Cable subscribers to end the second quarter
with 6.950 million Digital Cable subscribers, a pro forma increase of 19.4% over
the same prior year period, representing a subscriber penetration rate of 32.5%.
Digital Cable subscriber additions slowed primarily reflecting the continuing
impact of digital repackaging and re-pricing in the newly-acquired cable systems
as the Company focuses on improving the profitability of the Digital Cable
service in those systems. In the second quarter of 2003, each Digital Cable
subscriber contributed, on average, $15.28 in revenue per month, up 5.7% from
the second quarter of 2002. The Company reaffirms its previous guidance for
Digital Cable subscriber additions of between 950,000 and 1 million in 2003.
Comcast Cable continued to enhance its Digital Cable offering as it expanded the
availability of video-on-demand (VOD) and high-definition television (HDTV). VOD
is now available to 20% of our subscribers and is expected to increase to 50% by
the end of this year as we accelerate the deployment into new markets during the
second half of 2003. HDTV is available to 54% of our customer base at the end of
the second quarter and is expected to increase to 65% by year end.
Comcast Cable added 350,900 high-speed Internet customers, a pro forma increase
in net additions of 32.8% over the same prior year period, to finish the second
quarter with nearly 4.4 million subscribers, representing a penetration rate of
13.7%. In the second quarter of 2003, each Comcast High-Speed Internet
subscriber contributed, on average, $43.34 in revenue per month, up 3.6% from
the second quarter of 2002. More than 81% of the homes in Comcast's footprint,
or 32.1 million homes, now have access to high-speed Internet service. This
represents the addition of over 1.0 million homes to the service's footprint
during the second quarter. Growth in the second half of 2003 is expected to be
driven by continuing expansion of the service's footprint, to 34 million homes,
expanded retail distribution through more than 3,800 retail outlets and creative
marketing initiatives including "Instant Install." The Company reaffirms its
guidance for high-speed Internet customer additions of 1.6 million in 2003.
Capital expenditures totaled $1.05 billion as Comcast Cable completed the
upgrade of nearly 16,000 miles of plant to end the quarter with more than 89% of
its footprint upgraded to provide two-way digital and high-speed Internet
services. The newly-acquired systems are now 85% upgraded to deliver two-way
digital cable and high-speed Internet service, up from 80% at March 31, 2003.
With more than 28,100 miles upgraded this year, the Company expects to
comfortably meet its target of upgrading approximately 94% of all its cable
systems to provide two-way digital and high-speed Internet services by year-end
2003.
Commerce: QVC
- ---------------
QVC's consolidated revenues for the quarter ended June 30, 2003 were $1.101
billion, an 11.3% increase from the $990 million reported in the second quarter
of 2002. Consolidated operating cash flow for the quarter was $219 million, an
increase of 13.2% over the $194 million
3
reported in the prior year quarter. Consolidated operating income was $185
million, an 11.8% increase over operating income of $165 million in the second
quarter of 2002.
QVC's international operations contributed significantly to the double-digit
growth in QVC's consolidated results in the second quarter of 2003.
International revenue grew 63.3% to $239 million for the quarter while
international operating cash flow grew from $2 million in the second quarter of
2002 to $23 million in the second quarter of 2003. QVC's domestic revenue of
$862 million increased 2.3% and operating cash flow of $196 million increased
2.6% from the second quarter of 2002.
On July 3, 2003, Comcast announced its decision to sell its 57% stake in QVC to
Liberty Media for approximately $7.9 billion in the form of $2.6 billion of
Liberty Media stock and a $5.3 billion three-year note. Comcast expects that the
transaction will close before year-end and plans to report QVC's results as
discontinued operations beginning in the third quarter of 2003.
Content and Other
- -----------------
Content and Other includes the Company's content businesses, corporate overhead
and eliminations. Content businesses include E! Networks (E! Entertainment and
Style), Comcast-Spectacor, The Golf Channel, Outdoor Life Network, and G4.
Comcast's content and other segment reported second quarter 2003 revenue of $205
million, a 26.8% increase over the second quarter of 2002 and operating cash
flow of $15 million, down from the $19 million reported in the second quarter of
2002. Operating cash flow for the segment reflected continuing investments in
Outdoor Life and G4, as well as an increase in corporate overhead as a result of
the AT&T Broadband acquisition.
E! Networks, The Golf Channel and Comcast-Spectacor each reported revenue growth
above 17% and operating cash flow growth above 25%, reflecting increases in
distribution and advertising revenues at each of the cable channels and
additional playoff activity at Comcast-Spectacor.
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 its customer base. Results of operations from
314,000 cable subscribers sold to Bresnan Communications on March 20, 2003 are
not included in operating results for any periods.
For the three months ended June 30, 2003, the Company reported consolidated
revenues of $5.685 billion, as compared to $2.704 billion reported in the second
quarter of 2002. Consolidated operating cash flow increased to $1.831 billion
from the $866 million reported in the second quarter of 2002. Increases in
revenue, operating cash flow, depreciation and amortization and interest expense
primarily reflect the acquisition of AT&T Broadband in November 2002. For the
three months ended June 30, 2003, the Company reported operating income of $611
million compared to operating income of $478 million in the second quarter of
2002. The Company reported a consolidated net loss of $22 million or $0.01 per
share as compared to a net loss of $210 million or $0.22 per share in the second
quarter of 2002. Please refer to Table 8-A, B and C of this release for a
reconciliation of historical and pro forma data and for details regarding
non-operating items.
4
Pro forma consolidated results are presented as if the acquisition of AT&T
Broadband were effective on January 1, 2002. For the second quarter of 2003, the
Company reported pro forma consolidated revenues of $5.685 billion, a 10.2%
increase from the $5.159 billion in the second quarter of 2002. Pro forma
consolidated operating cash flow for the second quarter of 2003 was $1.831
billion, a 31.7% increase from the $1.390 billion in the prior year quarter.
Included in the second quarter of 2002 is $100 million of acquisition and
employee termination related costs. Excluding these costs, pro forma
consolidated operating cash flow grew 22.9%. Pro forma consolidated operating
income was $611 million, as compared to an operating loss of $16.3 billion in
the second quarter of 2002 reflecting AT&T Broadband's write-down of goodwill
and cable franchise rights prior to our acquisition.
Balance Sheet and Liquidity
- ---------------------------
During the second quarter, the Company continued to make significant progress to
improve its balance sheet and liquidity position. At June 30, 2003, the
Company's total debt was $32.3 billion, including $5.6 billion of exchangeable
notes collateralized by equity securities that the Company owns. Debt excluding
exchangeables was $26.7 billion. The Company reduced total debt by over $500
million during the quarter primarily through the use of cash proceeds from the
sale of our interest in a cable joint venture to Paul Allen, the Chairman of
Charter Communications, Inc., for $728 million.
Financial Guidance 2003
- -----------------------
The Company is increasing its guidance for basic cable subscribers and for cable
operating cash flow for 2003. The Company is increasing guidance for basic
subscribers to 125,000 to 150,000 net additions from previous guidance of 75,000
to 100,000 net additions. Cable operating cash flow guidance is increasing by
$100 million to $6.3 to $6.4 billion from previous guidance of $6.2 to $6.3
billion. The Company reaffirms all other guidance for 2003 for its cable and
content businesses.
###
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 July 31, 2003 at 10:30 a.m. Eastern Time (ET). The conference call will be
available on the Company's Investor Relations website at www.cmcsa.com or
www.cmcsk.com. A recording of the call will be available on the Investor
Relations website starting at 12:30 p.m. ET on July 31, 2003.
Those parties interested in participating via telephone should dial (847)
413-3237. A telephone replay will begin immediately following the call until
August 1, 2003 at midnight ET. To access the rebroadcast, please dial (630)
652-3000 and enter passcode number 7404164.
To automatically receive Comcast financial news by email, please visit
www.cmcsa.com or 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 over 21 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.
5
[COMCAST LOGO OMITTED]
TABLE 1
Condensed Consolidated Statement of Operations (Unaudited)
(amounts in millions, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
----------------- ----------------- --------------- --------------
Service revenues $4,584 $1,714 $9,040 $3,393
Net sales from electronic retailing 1,101 990 2,163 1,978
----------------- ----------------- --------------- --------------
5,685 2,704 11,203 5,371
Cost of goods sold from electronic retailing 697 626 1,370 1,255
Operating, selling, general and administrative expenses 3,157 1,212 6,364 2,442
----------------- ----------------- --------------- --------------
Operating cash flow 1,831 866 3,469 1,674
Depreciation and amortization 1,220 388 2,385 775
----------------- ----------------- --------------- --------------
Operating income 611 478 1,084 899
Interest expense (492) (182) (1,017) (369)
Investment income (loss), net 9 (459) (221) (707)
Other income (expense), net 23 (35) 21 (63)
----------------- ----------------- --------------- --------------
(460) (676) (1,217) (1,139)
----------------- ----------------- --------------- --------------
Income (loss) before income taxes and minority interest 151 (198) (133) (240)
Income tax benefit (expense) (77) 33 (9) 30
Minority interest (96) (45) (177) (89)
----------------- ----------------- --------------- --------------
Net loss ($22) ($210) ($319) ($299)
================= ================= =============== ==============
Basic net loss per common share ($0.01) ($0.22) ($0.14) ($0.31)
================= ================= =============== ==============
Diluted net loss per common share ($0.01) ($0.22) ($0.14) ($0.31)
================= ================= =============== ==============
Basic and Diluted weighted average number of
common shares outstanding 2,255 952 2,255 952
================= ================= =============== ==============
6
[COMCAST LOGO OMITTED
]
TABLE 2
Condensed Consolidated Balance Sheet (Unaudited)
(dollars in millions)
June 30, December 31,
2003 2002
------------------ ---------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,324 $ 781
Investments 2,161 3,266
Accounts receivable, net 1,376 1,408
Inventories, net 506 479
Other current assets 526 1,142
------------------ -----------------------
Total current assets 5,893 7,076
------------------ -----------------------
INVESTMENTS 13,386 15,207
PROPERTY AND EQUIPMENT, NET 19,079 18,866
FRANCHISE RIGHTS AND GOODWILL 65,514 65,619
OTHER NONCURRENT ASSETS - including other intangible assets, net 5,650 6,337
------------------ -----------------------
$ 109,522 $ 113,105
================== =======================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable, accrued expenses and other current liabilities $ 7,124 $ 8,430
Short-term debt and current portion of long-term debt 2,416 6,953
------------------ -----------------------
Total current liabilities 9,540 15,383
------------------ -----------------------
LONG-TERM DEBT, less current portion 29,923 27,957
OTHER NONCURRENT LIABILITIES & MINORITY INTEREST 31,978 31,436
STOCKHOLDERS' EQUITY 38,081 38,329
------------------ -----------------------
$ 109,522 $ 113,105
================== =======================
Note:
The value of certain assets and liabilities in the November 2002
AT&T Broadband acquisition 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.
7
TABLE 3
Condensed Consolidated Statement of Cash Flows (Unaudited)
(dollars in millions)
Six Months Ended
June 30,
2003 2002
------------------ -------------------
OPERATING ACTIVITIES
Net cash provided by operating activities $1,994 $1,050
------------------ -------------------
FINANCING ACTIVITIES
Proceeds from borrowings 8,848 632
Retirements and repayments of debt (11,545) (1,169)
Other, net (3) 66
------------------ -------------------
Net cash used in financing activities (2,700) (471)
------------------ -------------------
INVESTING ACTIVITIES
Capital expenditures (2,041) (789)
Proceeds from restructuring of TWE investment 2,100 -
Proceeds from sales of investments and assets held for sale 1,492 596
Other, net (302) (178)
------------------ -------------------
Net cash provided by (used in) investing activities 1,249 (371)
------------------ -------------------
INCREASE IN CASH AND CASH EQUIVALENTS 543 208
CASH AND CASH EQUIVALENTS, beginning of period 781 350
------------------ -------------------
CASH AND CASH EQUIVALENTS, end of period $1,324 $558
================== ===================
8
[COMCAST LOGO OMITTED]
TABLE 4
Pro Forma Financial Data by Business Segment (Unaudited) (1)
------------------------------------------------------------
(dollars in millions)
(4)
Content and
(2) (3) -----------
Cable Commerce Other Total
----- -------- ----- -----
Three Months Ended June 30, 2003
- --------------------------------
Revenues $4,379 $1,101 $205 $5,685
Operating Cash Flow $1,597 $219 $15 $1,831
Operating Income (Loss) $464 $185 ($38) $611
Operating Cash Flow Margin 36.5% 19.9% 7.2% 32.2%
Capital Expenditures (8) $1,047 $16 $7 $1,070
Three Months Ended June 30, 2002
- --------------------------------
Revenues $4,009 $990 $160 $5,159
Operating Cash Flow (5) $1,177 $194 $19 $1,390
Operating Income (Loss) (6) ($16,431) $165 ($42) ($16,308)
Operating Cash Flow Margin (5) 29.4% 19.6% 11.5% 26.9%
Capital Expenditures (7) $1,281 $51 $8 $1,340
Six Months Ended June 30, 2003
- --------------------------------
Revenues $8,610 $2,163 $429 $11,202
Operating Cash Flow $3,018 $430 $21 $3,469
Operating Income (Loss) $805 $365 ($86) $1,084
Operating Cash Flow Margin 35.1% 19.9% 4.9% 31.0%
Capital Expenditures (8) $2,000 $29 $12 $2,041
Six Months Ended June 30, 2002
- --------------------------------
Revenues $7,853 $1,978 $359 $10,190
Operating Cash Flow (5) $2,223 $386 $34 $2,643
Operating Income (Loss) (6) ($16,437) $330 ($94) ($16,201)
Operating Cash Flow Margin (5) 28.3% 19.5% 9.3% 25.9%
Capital Expenditures (7) $2,378 $83 $17 $2,478
(1) See Non-GAAP and Other Financial Measures in Table 8. Historical financial
data by business segment, as required under generally accepted accounting
principles, is available in the Company's quarterly report on Form 10-Q.
(2) Pro forma financial data includes the results of AT&T Broadband acquired in
November 2002 (newly acquired systems). Pro forma financial data excludes
the results of the 314,000 cable subscribers sold to Bresnan Communications
in March 2003 and excludes the results of the net reduction of 16,000
subscribers associated with the cable system exchange with Insight
Communications in February 2003.
(3) Pro forma financial data excludes the results of QVC's infomercial
operations in Mexico which were sold in February 2003.
(4) Content and Other includes segments not meeting quantitative guidelines for
reporting, including our content and business communications operations,
and corporate expenses. It also includes elimination entries related to the
segments presented. Content includes E! Networks (E! Entertainment and
Style), Comcast-Spectacor, The Golf Channel, Outdoor Life Network and G4.
Revenues and Operating Cash Flow of our content businesses for the three
and six months ended June 30, 2003 and 2002 were as follows:
Three Months Six Months
Ended June 30, Ended June 30,
2003 2002 2003 2002
---- ---- ---- ----
Revenue $220 $180 $462 $399
Operating Cash Flow $ 69 $ 56 $119 $112
Operating Cash Flow Margin 31.5% 30.9% 25.7% 28.0%
(5) Included for the three and six months ended June 30, 2002 are acquisition &
employee termination related costs of $100 and $188 million, respectively,
incurred by AT&T Broadband prior to the acquisition of AT&T Broadband by
Comcast.
(6) Includes $16.525 billion impairment charge related to the write down of
AT&T Broadband goodwill and cable franchise rights.
(7) For newly acquired systems, includes capital expenditures made since
January 1, 2002.
(8) Our Cable segment's capital expenditures are comprised of the following
categories:
Recurring
YTD Capital
2Q03 06/30/03 Percentage*
---- -------- -----------
Customer Premise Equipment (CPE) $381 $767 15%-25%
Scalable Infrastructure 81 135 2%-10%
Line Extensions 57 111 -
Upgrade/Rebuild 417 759 20%-30%
Support Capital 111 228 100%
----------------------------------------------
Total $1,047 $2,000
==============================================
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
[COMCAST LOGO OMITTED]
TABLE 5
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 June 30 2003 2002 2003 2002 2003 2002
---- ---- ---- ---- ---- ----
Revenues:
Video (4) $1,257 $1,186 $1,780 $1,702 $3,037 $2,888
High-Speed Internet 229 140 319 209 548 349
Phone 5 6 200 202 205 208
Advertising 109 100 176 164 285 264
Other (5) 63 58 90 103 153 161
Franchise Fees 53 51 98 88 151 139
------------------------- ----------------------------- -------------------------
Total Revenues $1,716 $1,541 $2,663 $2,468 $4,379 $4,009
Average Total Revenue per Basic Subscriber $66.93 $60.39 $69.30 $63.33 $68.35 $61.95
Operating Cash Flow (6) $738 $653 $859 $524 $1,597 $1,177
Operating Income (Loss) (7) $413 $355 $51 ($16,786) $464 ($16,431)
Operating Cash Flow Margin (6) 43.0% 42.4% 32.3% 21.2% 36.5% 29.4%
Capital Expenditures (8) $350 $331 $697 $950 $1,047 $1,281
Operating Cash Flow (Deficit),
Net of Capital Expenditures $388 $322 $162 ($426) $550 ($104)
Historical Newly Acquired
Systems (3) Systems (3) Total
------------------------- ----------------------------- -------------------------
Six Months Ended June 30 2003 2002 2003 2002 2003 2002
---- ---- ---- ---- ---- ----
Revenues:
Video (4) $2,486 $2,335 $3,532 $3,380 $6,018 $5,715
High-Speed Internet 433 259 607 402 1,040 661
Phone 12 12 418 371 430 383
Advertising 202 181 319 300 521 481
Other (5) 124 121 175 205 299 326
Franchise Fees 104 102 198 185 302 287
------------------------- ----------------------------- -------------------------
Total Revenues $3,361 $3,010 $5,249 $4,843 $8,610 $7,853
Average Total Revenue per Basic Subscriber $65.54 $59.02 $68.40 $61.79 $67.24 $60.47
Operating Cash Flow (6) $1,413 $1,250 $1,605 $973 $3,018 $2,223
Operating Income (Loss) (7) $789 $659 $16 ($17,096) $805 ($16,437)
Operating Cash Flow Margin (6) 42.0% 41.5% 30.6% 20.1% 35.1% 28.3%
Capital Expenditures (8) $685 $689 $1,315 $1,689 $2,000 $2,378
Operating Cash Flow (Deficit),
Net of Capital Expenditures $728 $561 $290 ($716) $1,018 ($155)
- ------------------------------------------------------------------------------------------------------------------------------------
(1) See Non-GAAP and Other Financial Measures in Table 8.
(2) Pro forma financial data includes the results of AT&T Broadband acquired in
November 2002 (newly acquired systems). Pro forma financial data excludes
the results of the 314,000 cable subscribers sold to Bresnan Communications
in March 2003 and excludes the results of the net reduction of 16,000
subscribers associated with the cable system exchange with Insight
Communications in February 2003.
(3) Historical systems represent those cable businesses operated by the Company
prior to the acquisition of AT&T Broadband. 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 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 and six months ended June 30, 2002 are acquisition &
employee termination related costs of $100 and $188 million, respectively,
incurred by AT&T Broadband prior to the acquisition of AT&T Broadband by
Comcast.
(7) Includes $16.525 billion impairment charge related to the write down of
AT&T Broadband goodwill and cable franchise rights.
(8) For newly acquired systems, includes capital expenditures made since
January 1, 2002.
10
[COMCAST LOGO OMITTED]
TABLE 6
Pro Forma Data - Cable Segment (Unaudited) (1)(2)
-------------------------------------------------
Historical Systems (3) Newly Acquired Systems (3) Total
---------------------- -------------------------- -----
2Q03 1Q03 2Q02 2Q03 1Q03 2Q02 2Q03 1Q03 2Q02
---- ---- ---- ---- ---- ---- ---- ---- ----
Cable
Homes Passed (000's) 14,364.2 14,281.3 14,067.6 25,144.3 25,042.1 24,536.8 39,508.5 39,323.4 38,604.4
Subscribers (000's) 8,536.5 8,559.6 8,507.5 12,827.6 12,792.4 12,930.5 21,364.1 21,352.0 21,438.0
Penetration 59.4% 59.9% 60.5% 51.0% 51.1% 52.7% 54.1% 54.3% 55.5%
Quarterly Net Subscriber
Additions (000's) (23.1) 14.1 (10.5) 35.2 42.6 (122.8) 12.1 56.7 (133.3)
Digital Cable
"Digital Ready"
Subscribers (000's) 8,536.5 8,559.6 8,476.1 12,827.6 12,792.4 12,930.5 21,364.1 21,352.0 21,406.6
Subscribers (000's) 2,417.6 2,322.7 1,982.2 4,532.6 4,465.4 3,841.1 6,950.2 6,788.1 5,823.3
Penetration 28.3% 27.1% 23.4% 35.3% 34.9% 29.7% 32.5% 31.8% 27.2%
Quarterly Net Subscriber
Additions (000's) 94.9 76.4 125.7 67.2 92.1 198.6 162.1 168.5 324.3
Monthly Average Revenue
per Subscriber $15.47 $15.42 $14.84 $15.18 $14.73 $14.26 $15.28 $14.96 $14.46
High-Speed Internet
"Available" Homes (000's) 13,424.7 13,026.2 11,574.9 18,698.9 18,080.7 15,977.0 32,123.6 31,106.9 27,551.9
Subscribers (000's) 1,881.8 1,718.2 1,169.1 2,506.5 2,319.2 1,745.3 4,388.3 4,037.4 2,914.4
Penetration 14.0% 13.2% 10.1% 13.4% 12.8% 10.9% 13.7% 13.0% 10.6%
Quarterly Net Subscriber
Additions (000's) 163.6 192.2 128.6 187.3 224.8 135.6 350.9 417.0 264.2
Monthly Average Revenue
per Subscriber $42.31 $41.97 $42.23 $44.11 $43.44 $41.59 $43.34 $42.82 $41.85
Phone
"Available" Homes (000's) 355.5 320.9 272.8 8,808.4 8,674.2 7,617.0 9,163.9 8,995.1 7,889.8
Subscribers (000's) 38.5 38.0 40.6 1,328.0 1,380.8 1,220.2 1,366.5 1,418.8 1,260.8
Penetration 10.8% 11.8% 14.9% 15.1% 15.9% 16.0% 14.9% 15.8% 16.0%
Quarterly Net Subscriber
Additions (000's) 0.5 (1.5) (1.2) (52.8) (18.1) 105.3 (52.3) (19.6) 104.1
Monthly Average Revenue
per Subscriber $49.58 $50.18 $51.14 $49.16 $52.35 $57.56 $49.17 $52.29 $57.34
Total Revenue Generating
Units (000's) (4) 12,874.4 12,638.5 11,699.4 21,194.7 20,957.8 19,737.1 34,069.1 33,596.3 31,436.5
- ------------------------------------------------------------------------------------------------------------------------------------
Supplemental Information - Pro Forma Historical Data
(dollars in millions)
Revenue 2Q03 1Q03 4Q02 3Q02 2Q02 1Q02
---- ---- ---- ---- ---- ----
Historical Systems $ 1,716 $ 1,645 $ 1,601 $ 1,548 $ 1,541 $ 1,469
Newly Acquired Systems 2,663 2,586 2,548 2,487 2,468 2,375
----------------------------------------------------------------------------------
Total $ 4,379 $ 4,231 $ 4,149 $ 4,035 $ 4,009 $ 3,844
Operating Cash Flow
Historical Systems $ 738 $ 675 $ 645 $ 647 $ 653 $ 597
Newly Acquired Systems 859 746 403 551 524 449
----------------------------------------------------------------------------------
Operating Cash Flow (5) $ 1,597 $ 1,421 $ 1,048 $ 1,198 $ 1,177 $ 1,046
Acquisition & employee termination related costs 130 107 100 88
included in Operating Cash Flow (5)
-------------------------------------------------------
Adjusted Operating Cash Flow $ 1,178 $ 1,305 $ 1,277 $ 1,134
=======================================================
- ------------------------------------------------------------------------------------------------------------------------------------
(1) See Non-GAAP and Other Financial Measures in Table 8.
(2) Pro forma financial data includes the results of AT&T Broadband acquired in
November 2002 (newly acquired systems). Pro forma financial data excludes
the results of the 314,000 cable subscribers sold to Bresnan Communications
in March 2003 and excludes the results of the net reduction of 16,000
subscribers associated with the cable system exchange with Insight
Communications in February 2003. Pro forma subscriber data includes the
results of 6,100 subscribers from Telemedia, Inc. in June 2003.
(3) Historical systems represent those cable businesses operated by the Company
prior to the acquisition of AT&T Broadband. 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 four quarters ended December 31, 2002 are acquisition &
employee termination related costs incurred by AT&T Broadband prior to the
acquisition of AT&T Broadband by the Company.
11
COMCAST
TABLE 7
Pro Forma Data - Commerce Segment (QVC) (Unaudited) (1)
-------------------------------------------------------
(dollars and homes in millions)
Domestic (2) Germany UK Japan Total
------------ ------- ------- ------- -----
Three Months Ended June 30, 2003
Revenue $862 $100 $83 $56 $1,101
Gross Margin 37.0% 34.4% 35.7% 37.7% 36.7%
Operating Cash Flow $196 $7 $7 $9 $219
Operating Income $172 $2 $4 $7 $185
Operating Cash Flow Margin 22.7% 7.3% 8.5% 16.1% 19.9%
Average Homes (3) 76.0 26.3 12.1 7.4 N/A
Revenue per Average Home (in local currency) $11.34 (euro) 3.34 (pound)4.24 Y896.26 N/A
Three Months Ended June 30, 2002
Revenue $844 $63 $66 $17 $990
Gross Margin 37.5% 28.6% 34.4% 35.2% 36.7%
Operating Cash Flow (Deficit) $192 $0 $4 ($2) $194
Operating Income (Loss) $169 ($1) $2 ($5) $165
Operating Cash Flow Margin 22.7% 0.0% 5.9% (8.1%) 19.6%
Average Homes (3) 74.2 25.0 10.4 4.5 N/A
Revenue per Average Home (in local currency) $11.29 (euro) 2.72 (pound)4.33 Y483.41 N/A
Six Months Ended June 30, 2003
Revenue $1,710 $195 $162 $96 $2,163
Gross Margin 37.0% 33.5% 36.2% 37.4% 36.7%
Operating Cash Flow $389 $13 $14 $14 $430
Operating Income $341 $4 $9 $11 $365
Operating Cash Flow Margin 22.8% 6.6% 8.8% 14.7% 19.9%
Average Homes (3) 75.8 26.2 11.8 7.1 N/A
Revenue per Average Home (in local currency) $22.50 (euro) 6.78 (pound)8.50 Y1,627.41 N/A
Six Months Ended June 30, 2002
Revenue $1,692 $123 $134 $29 $1,978
Gross Margin 37.2% 29.8% 34.8% 34.8% 36.5%
Operating Cash Flow (Deficit) $380 $0 $10 ($4) $386
Operating Income (Loss) $334 ($3) $6 ($7) $330
Operating Cash Flow Margin 22.4% 0.4% 7.2% (13.1%) 19.5%
Average Homes (3) 73.8 24.7 10.0 4.1 N/A
Revenue per Average Home (in local currency) $22.74 (euro) 5.53 (pound)9.14 Y901.13 N/A
(1) Financial data excludes the results of QVC's infomercial operations in
Mexico which were sold in February 2003.
(2) Domestic includes the U.S. channel, infomercial business and QVC.com.
(3) Note that while QVC has the potential to serve this many homes in Germany,
it is estimated that approximately 50% of the services homes are programmed to
receive the QVC channel.
12
COMCAST
TABLE 8
Non-GAAP and Other Financial Measures
Prior to the first quarter of 2003, we described the performance measure,
operating income before depreciation and amortization, as Operating Cash Flow.
In the first quarter of 2003, we referred to the same measure as EBITDA
(earnings before interest, taxes, depreciation and amortization) in response to
new guidance on Non-GAAP measures provided by the SEC in Regulation G and
amendments to Item 10 of Regulation S-K. In the second quarter, we reverted back
to describing this measure as Operating Cash Flow based on additional guidance
provided by the SEC staff. This is only a change in terminology. We have not
changed the calculation of this measure.
Operating Cash Flow is the primary basis used to measure the operational
strength and performance of our businesses. Free Cash Flow is an additional
performance measure used as an indicator of our ability to service debt and make
strategic investments. We use Debt Excluding Exchangeables as a measure of debt
that will require cash from future operations or financings. We also adjust
certain historical data on a pro forma basis following significant acquisitions
or dispositions to enhance comparability.
Operating Cash Flow is defined as operating income before depreciation and
amortization and impairment charges, if any, related to fixed and intangible
assets. As such, it eliminates the significant level of non-cash depreciation
and amortization expense that results from the capital intensive nature of our
businesses and intangible assets recognized in business combinations, and is
unaffected by our capital structure or investment activities. Our management and
Board of Directors uses this measure in evaluating our consolidated operating
performance and the operating performance of all of our operating segments. This
metric is used to allocate resources and capital to our operating segments and
is a significant component of our annual incentive compensation programs. We
believe that Operating Cash Flow is also useful to investors as it is one of the
bases for comparing our operating performance with other companies in our
industries, although our measure of Operating Cash Flow may not be directly
comparable to similar measures used by other companies.
As Operating Cash Flow is the measure of our segment profit or loss, we
reconcile it to operating income, the most directly comparable financial measure
calculated and presented in accordance with Generally Accepted Accounting
Principles (GAAP), in the business segment footnote of our quarterly and annual
financial statements. Therefore, we believe our measure of Operating Cash Flow
is not a "non-GAAP financial measure" as contemplated by Regulation G adopted by
the Securities and Exchange Commission.
Free Cash Flow, which is a non-GAAP financial measure, is defined as Operating
Cash Flow less net interest, cash paid for taxes, and capital expenditures. As
such, it is unaffected by fluctuations in working capital levels from period to
period. It can also be computed as cash provided by operating activities less
capital expenditures adjusted for the change in operating assets and
liabilities, net of acquisitions.
Debt Excluding Exchangeables, which is a non-GAAP financial measure, refers to
the aggregate amount of our consolidated debt and capital lease obligations less
the amount of notes that are collateralized by securities that we own.
Pro Forma data is used by management to evaluate performance when significant
acquisitions or dispositions occur. Historical data reflects results of acquired
businesses only after the acquisition dates while pro forma data enhances
comparability of financial information between periods by adjusting the data as
if the acquisitions (or dispositions) occurred at the beginning of the prior
year. Our pro forma data is only adjusted for the timing of acquisitions and
does not include adjustments for costs related to integration activities, cost
savings or synergies that have been or may be achieved by the combined
businesses. We believe our pro forma data is not a non-GAAP financial measure as
contemplated by Regulation G.
Operating Cash Flow and Free Cash Flow should not be considered as substitutes
for operating income (loss), net income (loss), net cash provided by operating
activities or other measures of performance or liquidity reported in accordance
with GAAP. Debt Excluding Exchangeables should not be considered as a substitute
for Total Debt. Additionally, in the opinion of management, our pro forma data
is not necessarily indicative of future results or what results would have been
had the acquired businesses been operated by us after the assumed earlier date.
Following are quantitative reconciliations of Free Cash Flow and Debt Excluding
Exchangeables, and, although not required by Regulation G, reconciliations of
Operating Cash Flow and pro forma data.
13
TABLE 8-A continued
Reconciliations of Historical and Pro Forma Data by Business Segment (Unaudited)
--------------------------------------------------------------------------------
(dollars in millions)
Historical
----------------------------------
Adjustments (1)
---------------------------------------
Content and
Three Months Ended June 30, 2003 Cable Commerce Other Total Cable Content and Other Pro forma
- -------------------------------- -------- -------- -------- -------- -------- ----------------- --------
Revenues $ 4,379 $ 1,101 $ 205 $ 5,685 -- -- $ 5,685
Operating expenses
(excluding depreciation & amortization) 2,782 882 190 3,854 -- -- 3,854
-------- -------- -------- -------- -------- ----------------- --------
Operating Cash Flow $ 1,597 $ 219 $ 15 $ 1,831 -- -- $ 1,831
Depreciation and amortization 1,133 34 53 1,220 -- -- 1,220
-------- -------- -------- -------- -------- ----------------- --------
Operating income (loss) $ 464 $ 185 ($ 38) $ 611 -- -- $ 611
======== ======== ======== ======== ======== ================= ========
Capital expenditures $ 1,047 $ 16 $ 7 $ 1,070 -- -- $ 1,070
======== ======== ======== ======== ======== ================= ========
Adjustments (1)
---------------------------------------
Content and
Three Months Ended June 30, 2002 Cable Commerce Other Total Cable Content and Other Pro forma
- -------------------------------- -------- -------- -------- -------- -------- ----------------- --------
Revenues $ 1,541 $ 990 $ 173 $ 2,704 $ 2,468 ($ 13) $ 5,159
Operating expenses
(excluding depreciation & amortization) 887 796 155 1,838 1,945 (14) 3,769
-------- -------- -------- -------- -------- ----------------- --------
Operating Cash Flow $ 654 $ 194 $ 18 $ 866 $ 523 $ 1 $ 1,390
Depreciation and amortization 298 29 61 388 785 -- 1,173
Impairment charge -- -- -- -- 16,525 -- 16,525
-------- -------- -------- -------- ----------------- --------
Operating income (loss) $ 356 $ 165 ($ 43) $ 478 ($16,787) $ 1 ($16,308)
======== ======== ======== ======== ======== ================= ========
Capital expenditures $ 331 $ 51 $ 8 $ 390 $ 950 -- $ 1,340
======== ======== ======== ======== ======== ================= ========
Adjustments (1)
---------------------------------------
Content and
Six Months Ended June 30, 2003 Cable Commerce Other Total Cable Content and Other Pro forma
- ------------------------------ -------- -------- -------- -------- -------- ----------------- --------
Revenues $ 8,611 $ 2,163 $ 429 $ 11,203 ($ 1) -- $ 11,202
Operating expenses
(excluding depreciation & amortization) 5,593 1,733 408 7,734 (1) -- 7,733
-------- -------- -------- -------- -------- ----------------- --------
Operating Cash Flow $ 3,018 $ 430 $ 21 $ 3,469 -- -- $ 3,469
Depreciation and amortization 2,213 65 107 2,385 -- -- 2,385
-------- -------- -------- -------- -------- ----------------- --------
Operating income (loss) $ 805 $ 365 ($ 86) $ 1,084 -- -- $ 1,084
======== ======== ======== ======== ======== ================= ========
Capital expenditures $ 2,000 $ 29 $ 12 $ 2,041 -- -- $ 2,041
======== ======== ======== ======== ======== ================= ========
Adjustments (1)
---------------------------------------
Content and
Six Months Ended June 30, 2002 Cable Commerce Other Total Cable Content and Other Pro forma
- ------------------------------ -------- -------- -------- -------- -------- ----------------- --------
Revenues $ 3,010 $ 1,978 $ 383 $ 5,371 $ 4,843 ($ 24) $ 10,190
Operating expenses
(excluding depreciation & amortization) 1,759 1,592 346 3,697 3,871 (21) 7,547
-------- -------- -------- -------- -------- ----------------- --------
Operating Cash Flow $ 1,251 $ 386 $ 37 $ 1,674 $ 972 ($ 3) $ 2,643
Depreciation and amortization 591 56 128 775 1,544 -- 2,319
Impairment charge -- -- -- -- 16,525 -- 16,525
-------- -------- -------- -------- -------- ----------------- --------
Operating income (loss) $ 660 $ 330 ($ 91) $ 899 ($17,097) ($ 3) ($16,201)
======== ======== ======== ======== ======== ================= ========
Capital expenditures $ 689 $ 83 $ 17 $ 789 $ 1,689 -- $ 2,478
======== ======== ======== ======== ======== ================= ========
Reconciliation of Total Debt to Debt Excluding Exchangeables (Unaudited)
------------------------------------------------------------------------
(dollars in millions)
As of June 30, 2003
- -------------------
Current portion of long-term debt $2,416
Long-term debt 29,923
---------------
Total Debt $32,339
Exchangeable debt 5,613
---------------
Debt excluding exchangeables $26,726
===============
(1) Pro forma data is only adjusted for timing of the acquisitions (or
dispositions) and for acquisitions does not include adjustments for costs
related to integration activities, cost savings or synergies that have
been or may be achieved by the combined businesses.
14
COMCAST
TABLE 8-B continued
Reconciliations of Cable Segment Historical and Pro Forma Data (Unaudited)
--------------------------------------------------------------------------
(dollars in millions)
Three Months Ended December 31, 2002
- ------------------------------------- Historical Adjustments (1) Pro forma
Revenues $2,792 $1,357 $4,149
Operating expenses (excluding depreciation & amortization) 1,890 1,211 3,101
--------------- ------------------ ------------------
Operating Cash Flow 902 146 1,048
Depreciation and amortization 770 421 1,191
--------------- ------------------ ------------------
Operating income (loss) $132 ($275) ($143)
=============== ================== ==================
Three Months Ended September 30, 2002
- ------------------------------------- Historical Adjustments (1) Pro forma
Revenues $1,548 $2,487 $4,035
Operating expenses (excluding depreciation & amortization) 901 1,936 2,837
--------------- ------------------ ------------------
Operating Cash Flow 647 551 1,198
Depreciation and amortization 309 777 1,086
--------------- ------------------ ------------------
Operating income (loss) $338 ($226) $112
=============== ================== ==================
Three Months Ended June 30, 2002
- ------------------------------------- Historical Adjustments (1) Pro forma
Revenues $1,541 $2,468 $4,009
Operating expenses (excluding depreciation & amortization) 888 1,944 2,832
--------------- ------------------ ------------------
Operating Cash Flow 653 524 1,177
Depreciation and amortization 298 785 1,083
Impairment charge - 16,525 16,525
--------------- ------------------ ------------------
Operating income (loss) $355 ($16,786) ($16,431)
=============== ================== ==================
Three Months Ended March 31, 2002
- ------------------------------------- Historical Adjustments (1) Pro forma
Revenues $1,469 $2,375 $3,844
Operating expenses (excluding depreciation & amortization) 872 1,926 2,798
--------------- ------------------ ------------------
Operating Cash Flow 597 449 1,046
Depreciation and amortization 293 759 1,052
--------------- ------------------ ------------------
Operating income (loss) $304 ($310) ($6)
=============== ================== ==================
(1) Pro forma data is only adjusted for timing of the acquisitions (or
dispositions) and for acquisitions does not include adjustments for costs
related to integration activities, cost savings or synergies that have
been or may be achieved by the combined businesses.
15
TABLE 8-C continued
Reconciliation of Net Income (Loss) to Free Cash Flow (Unaudited)
------------------------------------------------------------------
(dollars in millions, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
---- ---- ---- ----
$ per share(3) $ per share(3) $ per share(3) $ per share(3)
--------- -------- ------ -------- -------- --------- --------- --------
Net Income (Loss) as reported ($22) ($0.01) ($210) ($0.22) ($319) ($0.14) ($299) ($0.31)
Non-operating items, net of tax (1) 42 0.02 350 0.37 245 0.11 559 0.58
--------- -------- ------ -------- -------- --------- --------- --------
Net Income (Loss) as adjusted $20 $0.01 $140 $0.15 ($74) ($0.03) $260 $0.27
Items to reconcile net income (loss)
as adjusted to Operating Cash Flow:
Depreciation & amortization 1,220 0.54 388 0.41 2,385 1.06 775 0.81
Interest expense 492 0.22 182 0.19 1,017 0.45 369 0.39
Income tax expense 99 0.04 156 0.16 141 0.06 270 0.29
--------- -------- ------ -------- -------- --------- --------- --------
Operating Cash Flow $1,831 $0.81 $866 $0.91 $3,469 $1.54 $1,674 $1.76
========= ======== ====== ======== ======== ========= ========= ========
2003 2002 2003 2002
---- ---- ---- ----
Operating Cash Flow $1,831 $1,831 $866 $866 $3,469 $3,469 $1,674 $1,674
Less:
Interest, net (2) (526) (526) (164) (164) (1,066) (1,066) (335) (335)
Cash Paid for Income Taxes (156) (156) (129) (129) (197) (197) (159) (159)
Change in Operating Assets &
Liabilities, net of acquisitions 45 (42) (212) (130)
--------- ------ -------- ---------
Net Cash Provided by Operating Activities $1,194 $531 $1,994 $1,050
========= ====== ======== =========
Less: Capital Expenditures (1,070) (390) ($2,041) (789)
-------- -------- --------- --------
Free Cash Flow $79 $183 $165 $391
======== ======== ========= ========
- ------------------------------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
---- ---- ---- ----
$ per share(3) $ per share(3) $ per share(3) $ per share(3)
--------- -------- ------ -------- -------- --------- --------- --------
(1) Detail of non-operating items:
Investment (income) expense -
mark to market adjustments on
trading securities, derivatives
and hedged items, net $25 $0.01 $159 $0.17 $255 $0.11 $403 $0.42
Investment (income) expense -
(gain) loss on sales and
exchanges of investments - - 103 0.11 (22) (0.01) 101 0.11
Investment expense -
investment impairment losses (4) 15 0.01 208 0.22 70 0.03 221 0.23
All other, net (5) 24 0.01 69 0.07 74 0.04 135 0.14
-------- -------- ------ -------- ------- ---------- - ------ --------
Total non-operating items 64 0.03 539 0.57 377 0.17 860 0.90
Tax effect (22) (0.01) (189) (0.20) (132) (0.06) (301) (0.32)
-------- -------- ------ -------- ------- ---------- - ------ --------
Non-operating items, net of tax $42 $0.02 $350 $0.37 $245 $0.11 $559 $0.58
========= ========== ================= ====== ========== ======= =========
(2) Includes interest expense net of interest income and excludes non-cash
interest.
(3) Diluted weighted average shares outstanding for the three and six months
ended June 30, 2003 were 2.255 billion and for the three and six months ended
June 30, 2002 were 952 million, respectively.
(4) We record losses on our investments for which we have determined that a
decline in value of the investment was considered other than temporary.
(5) Includes investment, interest and dividend income, equity in net (income)
losses of affiliates, other income (expense) and minority interest.
16