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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): October 30, 2003
COMCAST CORPORATION
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(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 October 30, 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 October 30, 2003, Comcast Corporation ("Comcast") issued a press
release reporting the results of its operations for the three and nine months
ended September 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: October 30, 2003 COMCAST CORPORATION
By: /s/ Lawrence J. Salva
------------------------
Lawrence J. Salva
Senior Vice President and
Controller
(Principal Accounting Officer)
Exhibit 99.1
Comcast Reports Third Quarter 2003 Results
Consolidated Revenue Increased to $4.546 Billion
Consolidated Operating Income Increased to $493 Million
Consolidated Operating Cash Flow Increased to $1.632 Billion
Comcast Cable Reports Pro Forma Operating Cash Flow
Growth of 35.3% to $1.6 Billion
Cable Operating Cash Flow Margin Reached 37%
Cable Operating Income Increased to $534 Million
Comcast Increases Guidance for High-Speed Internet Subscriber Additions for
2003 to 1.7 Million From 1.6 Million
High-Speed Internet Subscribers Increased 472,700 to 4.9 Million
Digital Cable Subscribers Increased 318,300 to 7.3 Million
Exceptional Progress Made In Debt Reduction
Debt Reduced by Nearly $5 Billion Year to Date
PHILADELPHIA, Oct. 30 /PRNewswire-FirstCall/ -- Comcast Corporation
(Nasdaq: CMCSA, CMCSK) today reported results for the quarter ended
September 30, 2003. Comcast will discuss third 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, "As we
approach the one year anniversary of our acquisition of AT&T Broadband we
cannot be more excited about the progress we have made in integrating the new
cable systems and the potential for continued growth from our unparalleled
cable footprint. We delivered another quarter of exceptional financial and
operational results. Operating cash flow from our cable business exceeded $1.6
billion this quarter, a 35% increase over the prior year and our operating
cash flow margin continues its rapid improvement from 30% last year to 37%
this quarter. Our business strategy is producing better than expected results.
"Demand for our high-speed Internet service is stronger than ever. In the
third quarter, we added more than 472,000 new high-speed Internet customers, a
terrific result representing an over 39% increase from last year's third
quarter. We had more new customer additions during the first nine months of
this year than in the entire year of 2002. We are, once again, increasing our
guidance for high-speed Internet subscribers for 2003, from 1.6 million to 1.7
million net additions and expect to end 2003 with approximately 5.3 million
high speed Internet subscribers."
Mr. Roberts continued, "Our video business is also strong as we continue
to add basic subscribers and to enhance our video offering with digital
services such as video on demand, high-definition television and soon, digital
video recorders. We added more than 318,000 Comcast Digital Cable customers in
the quarter, nearly doubling the number of new digital customer additions from
the second quarter of 2003."
Mr. Roberts concluded, "While the performance of our operating team has
been impressive, we have also made significant progress in strengthening our
balance sheet and accelerating our debt reduction plan, primarily as a result
of the sale of our interest in QVC. With the upgrade of our networks almost
complete, we have set the stage for continued growth in revenue and operating
cash flow and for significant free cash flow generation."
Comcast Cable Results
Comcast Cable results for the quarter ended September 30, 2003 are
presented on a pro forma basis. Pro forma cable 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 7-A and B for reconciliation of historical and pro forma data.
Pro forma cable revenue for the quarter ended September 30, 2003 was
$4.374 billion, representing an 8.4% increase over the $4.035 billion in the
third quarter of 2002. This increase reflected a 10.9% increase in Comcast's
historical systems and a more modest 6.8% increase in the acquired cable
systems. Pro forma operating income before depreciation and amortization
(Operating Cash Flow) for the quarter was $1.620 billion, an increase of 35.3%
over the $1.198 billion for the same period of 2002. Pro forma results include
$107 million of acquisition and employee termination-related costs incurred by
AT&T Broadband in the third quarter of 2002. Excluding these costs, pro forma
cable operating cash flow grew 24.2%. Pro forma operating cash flow margin
reached 37.0% this quarter, up significantly from the 29.7% in the third
quarter of 2002. Pro forma cable operating income was $534 million in the
third quarter compared to pro forma operating income of $112 million in the
third quarter of 2002.
Pro forma video revenue increased 5.4% in the third quarter of 2003
compared with the prior year quarter driven by increases in average monthly
revenue per basic subscriber and growth in Digital Cable revenue, offset by
basic subscriber losses in the acquired systems during 2002. In the third
quarter, Comcast Cable added 800 basic cable subscribers, a significant
improvement over the combined loss of 133,700 subscribers in the third quarter
of 2002. This increase reflects continued gains in the acquired cable systems
of 22,700 - a marked turnaround from the third quarter of 2002 when those
systems lost 131,100 subscribers. Our Digital Cable customer base grew by
16.6% and average monthly revenue per digital subscriber was $15.09 during the
third quarter of 2003 compared to $14.57 in the third quarter of 2002 as a
result of re-pricing and repackaging of the digital products in the acquired
systems. Pro forma high-speed Internet service revenue for the third quarter
of 2003 increased 48.1% over the prior year quarter to $586 million,
reflecting a nearly 50% increase in the customer base and average revenue per
subscriber of $42.25 in the third quarter, up slightly from $42.22 in the
prior-year period. Pro forma cable phone revenue declined 11.5% from the third
quarter of 2002 to $189 million, reflecting a decrease in subscribers and
average monthly revenue per subscriber as a result of our reduced marketing
efforts. At the same time, Comcast has been successful in achieving
profitability for this product line. Pro forma advertising revenue increased
7.2% over the prior year quarter to $276 million, reflecting 18.7% growth in
regional/national advertising as a result of the continuing success of our
regional interconnects, and growth of 1.5% in a soft local advertising market.
Comcast Cable added over 318,000 Digital Cable subscribers to end the
third quarter with 7.273 million Digital Cable subscribers, a pro forma
increase of 16.6% over the same prior year period, representing a subscriber
penetration rate of 34.0%. Comcast Cable continued to enhance its Digital
Cable offering by expanding availability of video-on-demand (VOD) and high-
definition television (HDTV). VOD is now available to 31% of our subscribers
including customers in Philadelphia, Boston, Baltimore and Los Angeles. VOD
availability is expected to increase to over 50% of our subscribers by the end
of this year. Comcast Cable's HDTV deployment is ahead of schedule, having
already reached the year-end goal to have HDTV available to 65% of our
subscribers. Comcast now plans to have HDTV available to nearly 75% of
subscribers by the end of this year. To further enhance Digital Cable,
Comcast plans to roll out Digital Video Recorder (DVR) service beginning in
the fourth quarter of 2003 and to have DVRs available to all of the Company's
subscribers by the end of 2004.
In the third quarter, Comcast Cable added 472,700 high-speed Internet
customers, a pro forma increase in net additions of 39.4% over the same prior
year period and nearly 35% above the second quarter of 2003, to finish the
third quarter with 4.861 million subscribers, representing a penetration rate
of 14.5%. More than 84% of the homes in Comcast's footprint, or over 33
million homes, now have access to high-speed Internet service. This represents
the addition of over 1.3 million homes to the service's footprint during the
third quarter. Subscriber growth during the fourth quarter is expected to be
driven by continuing increases in penetration, expansion of the service's
footprint to 34 million homes, and expanded retail distribution to more than
4,000 retail outlets.
In the third quarter, cable capital expenditures totaled $1.045 billion as
Comcast Cable completed the rebuild of over 14,800 miles of plant to end the
quarter with nearly 92% of its footprint upgraded to provide two-way digital
and high-speed Internet services. The acquired systems are now 89% upgraded to
deliver two-way digital cable and high-speed Internet service, up from 85% at
June 30, 2003. With nearly 43,000 miles upgraded by September 30, 2003, the
rebuild is well ahead of schedule and the company now expects to upgrade
approximately 53,000 miles of plant this year. By the end of the year,
Comcast will have 95% of its network upgraded, 15% ahead of its original goal.
This accelerated rebuild will be accomplished while maintaining our original
capital expenditure guidance of $4 billion. Comcast expects to complete its
network upgrade in 2004.
Content and Other
Comcast's content businesses include E! Networks (E! Entertainment and
Style), Comcast-Spectacor, The Golf Channel, Outdoor Life Network, and G4. In
the third quarter, Comcast's content businesses reported revenue of $173
million, a 17.5% increase over the third quarter of 2002 and operating cash
flow of $50 million, an increase of 48.8% from the $33 million reported in the
third quarter of 2002. Operating cash flow reflected increases in distribution
and advertising revenues at each of the cable channels offset by continued
funding for expansion of Outdoor Life and G4.
Other primarily includes corporate overhead and eliminations between our
businesses and reported an operating cash flow loss of $38 million in the
third quarter of 2003.
Consolidated Results
The Company's consolidated results include all acquisitions as of the date
of their closing. The Company acquired AT&T Broadband in November 2002 adding
over 13 million cable subscribers to our customer base. Comcast sold its 57%
ownership interest in QVC in September 2003. QVC's results are presented as
discontinued operations for all periods presented.
For the three months ended September 30, 2003, the Company reported
consolidated revenues of $4.546 billion, as compared to $1.698 billion
reported in the third quarter of 2002. Consolidated operating cash flow
increased to $1.632 billion from the $642 million reported in the third
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 September 30, 2003, the
Company reported operating income of $493 million compared to operating income
of $271 million in the third quarter of 2002. The Company reported a
consolidated net loss from continuing operations of $153 million or $0.07 per
share as compared to net income from continuing operations of $24 million or
$0.03 per share in the third quarter of 2002. Contributing to the net loss in
2003 was the impact of the acquisition of AT&T Broadband and $182 million in
investment losses primarily related to the Company's position in Liberty
Media. Please refer to Table 7-A, B and C of this release for a reconciliation
of historical and pro forma data and for details regarding non-operating
items. For the three months ended September 30, 2003, the Company reported
net income of $3.176 billion or $1.41 per share, driven by the gain on the
sale of our 57% stake in QVC.
Pro forma consolidated results are presented as if the acquisition of AT&T
Broadband was effective on January 1, 2002. For the third quarter of 2003, the
Company reported pro forma consolidated revenues of $4.546 billion, an 8.8%
increase from the $4.177 billion in the third quarter of 2002. Pro forma
consolidated operating cash flow for the third quarter of 2003 was $1.632
billion, a 36.9% increase from the $1.192 billion in the prior year quarter.
Included in the third quarter of 2002 is $107 million of acquisition and
employee termination related costs incurred by AT&T Broadband in the third
quarter of 2002. Excluding these costs, pro forma consolidated operating cash
flow grew 25.7%. Pro forma consolidated operating income was $493 million, as
compared to operating income of $44 million in the third quarter of 2002.
Balance Sheet and Liquidity
During the third quarter, Comcast continued to make significant progress
to strengthen its balance sheet and liquidity position. At September 30, 2003,
Comcast's total debt was $30.4 billion, including $5.4 billion of exchangeable
notes collateralized by equity securities that the Company owns, resulting in
debt excluding exchangeables reaching $25.0 billion at September 30, 2003. The
Company reduced total debt by $1.7 billion during the quarter primarily
through the use of cash proceeds from the sale of QVC. On September 17, 2003
Comcast completed the sale of QVC, receiving 217.7 million shares of Liberty
Media common stock and, after a series of transactions, $4.35 billion in cash
and $1 billion of Liberty Media notes. The remaining cash proceeds from the
sale of QVC will be used to pay income taxes and to further reduce the amount
of debt outstanding.
Financial Guidance 2003
The Company is increasing its guidance for high-speed Internet subscriber
net additions to 1.7 million from 1.6 million net additions to finish 2003
with approximately 5.3 million high-speed Internet subscribers. As a result of
the Company's reduced marketing efforts and focus on telephone service
profitability Comcast now expects to lose approximately 175,000 Comcast Cable
phone customers this year, a modest adjustment from the original expectation
of up to a 150,000 telephone customer decline. 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, October 30, 2003 at 10:30 a.m. Eastern Time (ET). The
conference call will be broadcast live 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 websites starting at 12:30 p.m. ET on
October 30, 2003.
Those parties interested in participating via telephone should dial
(847) 619-6818. A telephone replay will begin immediately following the call
until October 31, 2003 at midnight ET. To access the rebroadcast, please dial
(630) 652-3000 and enter passcode number 7746406.
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 programming content. The Company is the largest cable company in
the United States, serving more than 21 million cable subscribers. The
Company's content businesses include majority ownership of 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.
Comcast Corporation
TABLE 1
Condensed Consolidated Statement of Operations (Unaudited)
(amounts in millions, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
Service revenues $4,546 $1,698 $13,606 $5,102
Operating, selling, general and
administrative expenses 2,914 1,056 8,934 3,171
Operating cash flow 1,632 642 4,672 1,931
Depreciation and amortization 1,139 371 3,460 1,091
Operating Income 493 271 1,212 840
Interest expense (565) (172) (1,579) (535)
Investment loss, net (182) (47) (418) (702)
Other income (expense), net 12 (4) 38 (67)
(735) (223) (1,959) (1,304)
Income (Loss) from Continuing
Operations before Income (242) 48 (747) (464)
Taxes and Minority Interest
Income tax benefit (expense) 103 (27) 231 123
Minority interest (14) 3 (85) (23)
Income (Loss) from Continuing
Operations (153) 24 (601) (364)
Income from discontinued operations,
net of tax (1) 39 52 168 141
Gain on discontinued operations, net
of tax (1) 3,290 - 3,290 -
Net Income (Loss) $3,176 $76 $2,857 ($223)
Basic and Diluted earnings (loss) per
common share
Income (loss) from continuing
operations ($0.07) $0.03 ($0.27) ($0.38)
Income from discontinued
operations 0.02 0.05 0.08 0.15
Gain on discontinued operations 1.46 - 1.46 -
Net income (loss) per common
share $1.41 $0.08 $1.27 ($0.23)
Basic weighted average number of
common shares outstanding 2,257 953 2,256 952
Diluted weighted average number of
common shares outstanding 2,257 959 2,256 952
(1) On September 17, 2003 the Company completed the sale of its
approximate 57% interest in QVC, Inc. Accordingly, the results have
been presented as discontinued operations.
Comcast Corporation
TABLE 2
Condensed Consolidated Balance Sheet (Unaudited)
(dollars in millions)
September 30, December 31,
2003 2002
ASSETS
CURRENT ASSETS
Cash and cash equivalents $3,245 $505
Investments 2,982 3,258
Accounts receivable, net 850 862
Other current assets 537 380
Current assets of discontinued
operations and assets held for
sale - 2,094
Total current assets 7,614 7,099
INVESTMENTS 15,463 15,174
PROPERTY AND EQUIPMENT, net 18,194 18,381
FRANCHISE RIGHTS AND GOODWILL 63,586 64,784
OTHER NONCURRENT ASSETS - including
other intangible assets, net 4,959 6,095
NON-CURRENT ASSETS OF DISCONTINUED
OPERATIONS - 1,595
$109,816 $113,128
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable, accrued
expenses and other current
liabilities $7,050 $7,637
Short-term debt and current
portion of long-term debt 1,221 5,398
Current portion of exchangeable
debt 1,844 1,555
Current liabilities of
discontinued operations - 816
Total current liabilities 10,115 15,406
LONG-TERM DEBT, less current portion 23,754 24,052
LONG-TERM EXCHANGEABLE DEBT, less
current portion 3,562 3,904
OTHER NONCURRENT LIABILITIES &
MINORITY INTEREST 31,147 30,514
NON-CURRENT LIABILITIES & MINORITY
INTEREST OF DISCONTINUED OPERATIONS - 923
STOCKHOLDERS' EQUITY 41,238 38,329
$109,816 $113,128
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.
Comcast Corporation
TABLE 3
Condensed Consolidated Statement of Cash Flows (Unaudited)
(dollars in millions)
Nine Months Ended
September 30,
2003 2002
OPERATING ACTIVITIES
Net cash provided by operating
activities from continuing operations $2,519 $1,643
FINANCING ACTIVITIES
Proceeds from borrowings 9,377 876
Retirements and repayments of debt (13,675) (1,801)
Other, net (3) 70
Net cash used in financing activities
from continuing operations (4,301) (855)
INVESTING ACTIVITIES
Capital expenditures (3,093) (1,035)
Proceeds from restructuring of TWE
investment 2,100 -
Proceeds from sales of investments 977 734
Proceeds from sale of Liberty Notes 3,000 -
Proceeds from sale of discontinued
operations and assets held for sale 1,875 -
Other, net (337) (291)
Net cash provided by (used in) investing
activities from continuing operations 4,522 (592)
INCREASE IN CASH AND CASH EQUIVALENTS 2,740 196
CASH AND CASH EQUIVALENTS, beginning
of period 505 214
CASH AND CASH EQUIVALENTS, end of
period $3,245 $410
Comcast Corporation
TABLE 4
Pro Forma Financial Data by Business Segment (Unaudited) (1)
(dollars in millions)
(2)
Cable Content Other Total
Three Months Ended September 30, 2003
Revenues $4,374 $173 ($1) $4,546
Operating Cash Flow $1,620 $50 ($38) $1,632
Operating Income (Loss) $534 $14 ($55) $493
Operating Cash Flow Margin 37.0% 28.9% NM 35.9%
Capital Expenditures (6) $1,045 $4 $32 $1,081
Three Months Ended September 30, 2002
Revenues $4,035 $148 ($6) $4,177
Operating Cash Flow (3) $1,198 $33 ($39) $1,192
Operating Income (Loss) $112 ($7) ($61) $44
Operating Cash Flow Margin (3) 29.7% 22.8% NM 28.5%
Capital Expenditures (5) $1,411 $2 $5 $1,418
Nine Months Ended September 30, 2003
Revenues $12,984 $635 ($14) $13,605
Operating Cash Flow $4,638 $169 ($135) $4,672
Operating Income (Loss) $1,339 $61 ($188) $1,212
Operating Cash Flow Margin 35.7% 26.6% NM 34.3%
Capital Expenditures (6) $3,045 $14 $34 $3,093
Nine Months Ended September 30, 2002
Revenues $11,888 $547 ($25) $12,410
Operating Cash Flow (3) $3,421 $145 ($115) $3,451
Operating Income (Loss) (4) ($16,325) $37 ($198) ($16,486)
Operating Cash Flow Margin (3) 28.8% 26.6% NM 27.8%
Capital Expenditures (5) $3,789 $13 $11 $3,813
(1) See Non-GAAP and Other Financial Measures in Table 7. 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. Financial data has been adjusted to
reflect QVC as discontinued operations.
(2) Pro forma financial data includes the results of AT&T Broadband
acquired in November 2002 (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) Included for the three and nine months ended September 30, 2002 are
acquisition & employee termination related costs of $107 and $295
million, respectively, incurred by AT&T Broadband prior to the
acquisition of AT&T Broadband by Comcast.
(4) Includes $16.525 billion impairment charge related to the write down
of AT&T Broadband goodwill and cable franchise rights.
(5) For acquired systems, includes capital expenditures made since
January 1, 2002.
(6) Our Cable segment's capital expenditures are comprised of the
following categories:
Recurring
YTD Capital
3Q03 09/30/03 Percentage*
Customer Premise Equipment (CPE) $381 $1,148 15%-25%
Scalable Infrastructure 92 227 2%-10%
Line Extensions 62 173 -
Upgrade/Rebuild 376 1,135 20%-30%
Support Capital 134 362 100%
Total $1,045 $3,045
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.
Comcast Corporation
TABLE 5
Pro Forma Data - Cable Segment Components (Unaudited) (1)(2)
(dollars in millions, except average revenue per basic subscriber data)
Historical Acquired
Systems (3) Systems (3) Total
Three Months Ended
September 30 2003 2002 2003 2002 2003 2002
Revenues:
Video (4) $1,249 $1,180 $1,771 $1,685 $3,020 $2,865
High-Speed Internet 244 156 342 235 586 391
Phone 6 6 183 205 189 211
Advertising 102 93 174 165 276 258
Other (5) 65 63 87 106 152 169
Franchise Fees 52 50 99 91 151 141
Total Revenues $1,718 $1,548 $2,656 $2,487 $4,374 $4,035
Average Total Revenue per
Basic Subscriber $67.16 $60.72 $68.80 $64.43 $68.14 $62.74
Average Video Revenue per
Basic Subscriber $48.83 $46.31 $45.87 $43.67 $47.05 $44.71
Operating Cash Flow (6) $742 $647 $878 $551 $1,620 $1,198
Operating Income (Loss) $409 $338 $125 ($226) $534 $112
Operating Cash Flow Margin
(6) 43.2% 41.7% 33.0% 22.2% 37.0% 29.7%
Capital Expenditures (8) $324 $322 $721 $1,089 $1,045 $1,411
Operating Cash Flow
(Deficit), Net of Capital
Expenditures $418 $325 $157 ($538) $575 ($213)
Historical Acquired
Systems (3) Systems (3) Total
Nine Months Ended
September 30 2003 2002 2003 2002 2003 2002
Revenues:
Video (4) $3,735 $3,515 $5,303 $5,065 $9,038 $8,580
High-Speed Internet 677 415 949 637 1,626 1,052
Phone 17 18 601 576 618 594
Advertising 304 274 493 465 797 739
Other (5) 189 184 263 311 452 495
Franchise Fees 157 152 296 276 453 428
Total Revenues $5,079 $4,558 $7,905 $7,330 $12,984 $11,888
Average Total Revenue
per Basic Subscriber $66.08 $59.58 $68.54 $62.67 $67.55 $61.24
Average Video Revenue
per Basic Subscriber $48.60 $45.98 $45.97 $43.29 $47.02 $44.35
Operating Cash Flow
(6) $2,155 $1,897 $2,483 $1,524 $4,638 $3,421
Operating Income
(Loss) (7) $1,198 $997 $141 ($17,322) $1,339 ($16,325)
Operating Cash Flow
Margin (6) 42.4% 41.6% 31.4% 20.8% 35.7% 28.8%
Capital Expenditures
(8) $1,009 $1,011 $2,036 $2,778 $3,045 $3,789
Operating Cash Flow
(Deficit), Net of
Capital
Expenditures $1,146 $886 $447 ($1,254) $1,593 ($368)
(1) See Non-GAAP and Other Financial Measures in Table 7.
(2) Pro forma financial data includes the results of AT&T Broadband
acquired in November 2002 (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 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, regional sports programming
networks, revenues from our digital media center and other product
offerings of AT&T Broadband in 2002.
(6) Included for the three and nine months ended September 30, 2002 are
acquisition & employee termination related costs of $107 and $295
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 acquired systems, includes capital expenditures made since
January 1, 2002.
Comcast Corporation
TABLE 6
Pro Forma Data - Cable Segment (Unaudited) (1)(2)
Historical Systems (3)
3Q03 2Q03 3Q02
Cable
Homes Passed (000's) 14,447.2 14,364.2 14,139.3
Subscribers (000's) 8,514.6 8,536.5 8,504.9
Penetration 58.9% 59.4% 60.2%
Quarterly Net Subscriber
Additions (000's) (21.9) (23.1) (2.6)
Digital Cable
"Digital Ready"
Subscribers (000's) 8,514.6 8,536.5 8,478.4
Subscribers (000's) 2,550.2 2,417.6 2,113.5
Penetration 30.0% 28.3% 24.9%
Quarterly Net Subscriber
Additions (000's) 132.6 94.9 131.3
Monthly Average Revenue
per Subscriber $15.08 $15.47 $15.52
High-Speed Internet
"Available" Homes (000's) 13,631.1 13,424.7 12,061.1
Subscribers (000's) 2,072.0 1,881.8 1,338.8
Penetration 15.2% 14.0% 11.1%
Quarterly Net Subscriber
Additions (000's) 190.2 163.6 169.7
Monthly Average Revenue
per Subscriber $41.22 $42.31 $41.34
Phone
"Available" Homes (000's) 453.7 355.5 274.6
Subscribers (000's) 39.4 38.5 38.7
Penetration 8.7% 10.8% 14.1%
Quarterly Net Subscriber
Additions (000's) 0.9 0.5 (1.9)
Monthly Average Revenue
per Subscriber $51.19 $49.58 $50.03
Total Revenue Generating
Units (000's) (4) 13,176.2 12,874.4 11,995.9
Comcast Corporation
TABLE 6
Pro Forma Data - Cable Segment (Unaudited) (1)(2)
Acquired Systems (3)
3Q03 2Q03 3Q02
Cable
Homes Passed (000's) 25,299.6 25,224.7 24,640.8
Subscribers (000's) 12,883.4 12,860.7 12,831.9
Penetration 50.9% 51.0% 52.1%
Quarterly Net Subscriber
Additions (000's) 22.7 36.2 (131.1)
Digital Cable
"Digital Ready"
Subscribers (000's) 12,883.4 12,860.7 12,831.9
Subscribers (000's) 4,723.2 4,537.5 4,123.6
Penetration 36.7% 35.3% 32.1%
Quarterly Net Subscriber
Additions (000's) 185.7 67.4 277.8
Monthly Average Revenue
per Subscriber $15.10 $15.18 $14.08
High-Speed Internet
"Available" Homes (000's) 19,803.7 18,698.9 16,830.0
Subscribers (000's) 2,789.0 2,506.5 1,914.6
Penetration 14.1% 13.4% 11.4%
Quarterly Net Subscriber
Additions (000's) 282.5 187.3 169.3
Monthly Average Revenue
per Subscriber $43.02 $44.11 $42.83
Phone
"Available" Homes (000's) 8,928.7 8,808.4 8,039.0
Subscribers (000's) 1,272.4 1,328.0 1,322.9
Penetration 14.3% 15.1% 16.5%
Quarterly Net Subscriber
Additions (000's) (55.6) (52.8) 102.7
Monthly Average Revenue
per Subscriber $46.87 $49.16 $53.75
Total Revenue
Generating Units (000's) (4) 21,668.0 21,232.7 20,193.0
Comcast Corporation
TABLE 6
Pro Forma Data - Cable Segment (Unaudited) (1)(2)
Total
3Q03 2Q03 3Q02
Cable
Homes Passed (000's) 39,746.8 39,588.9 38,780.1
Subscribers (000's) 21,398.0 21,397.2 21,336.8
Penetration 53.8% 54.0% 55.0%
Quarterly Net Subscriber
Additions (000's) 0.8 13.1 (133.7)
Digital Cable
"Digital Ready"
Subscribers (000's) 21,398.0 21,397.2 21,310.3
Subscribers (000's) 7,273.4 6,955.1 6,237.1
Penetration 34.0% 32.5% 29.3%
Quarterly Net Subscriber
Additions (000's) 318.3 162.3 409.1
Monthly Average Revenue
per Subscriber $15.09 $15.28 $14.57
High-Speed Internet
"Available" Homes (000's) 33,434.8 32,123.6 28,891.1
Subscribers (000's) 4,861.0 4,388.3 3,253.4
Penetration 14.5% 13.7% 11.3%
Quarterly Net Subscriber
Additions (000's) 472.7 350.9 339.0
Monthly Average Revenue
per Subscriber $42.25 $43.34 $42.22
Phone
"Available" Homes (000's) 9,382.4 9,163.9 8,313.6
Subscribers (000's) 1,311.8 1,366.5 1,361.6
Penetration 14.0% 14.9% 16.4%
Quarterly Net Subscriber
Additions (000's) (54.7) (52.3) 100.8
Monthly Average Revenue
per Subscriber $46.99 $49.17 $53.63
Total Revenue Generating
Units (000's) (4) 34,844.2 34,107.1 32,188.9
(1) See Non-GAAP and Other Financial Measures in Table 7.
(2) Pro forma financial data includes the results of AT&T Broadband
acquired in November 2002 (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 6,100 subscribers acquired from Telemedia,
Inc. in June 2003, 16,600 subscribers acquired from ATM in July 2003
and 16,000 subscribers acquired from Millennium Inc. in September
2003.
(3) Historical systems represent those cable businesses operated by the
Company prior to the acquisition of AT&T Broadband. The 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.
Comcast Corporation
TABLE 7
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 use this measure in evaluating our consolidated
operating performance and the operating performance of all of our operating
segments. This metric is used to allocate resources and capital to our
operating segments and is a significant component of our annual incentive
compensation programs. We believe that Operating Cash Flow is also useful to
investors as it is one of the bases for comparing our operating performance
with other companies in our industries, although our measure of Operating Cash
Flow may not be directly comparable to similar measures used by other
companies.
As Operating Cash Flow is the measure of our segment profit or loss, we
reconcile it to operating income, the most directly comparable financial
measure calculated and presented in accordance with Generally Accepted
Accounting Principles (GAAP), in the business segment footnote of our
quarterly and annual financial statements. Therefore, we believe our measure
of Operating Cash Flow for our business segments is not a "non-GAAP financial
measure" as contemplated by Regulation G adopted by the Securities and
Exchange Commission. Consolidated Operating Cash Flow is a non-GAAP financial
measure.
Free Cash Flow, which is a non-GAAP financial measure, is defined as
Operating Cash Flow less net interest, cash paid for taxes, and capital
expenditures. As such, it is unaffected by fluctuations in working capital
levels from period to period. It can also be computed as cash provided by
operating activities less capital expenditures adjusted for the change in
operating assets and liabilities, net of acquisitions.
Debt Excluding Exchangeables, which is a non-GAAP financial measure,
refers to the aggregate amount of our consolidated debt and capital lease
obligations less the amount of notes that are collateralized by securities
that we own.
Pro forma data is used by management to evaluate performance when
significant acquisitions or dispositions occur. Historical data reflects
results of acquired businesses only after the acquisition dates while pro
forma data enhances comparability of financial information between periods by
adjusting the data as if the acquisitions (or dispositions) occurred at the
beginning of the prior year. Our pro forma data is only adjusted for the
timing of acquisitions and does not include adjustments for costs related to
integration activities, cost savings or synergies that have been or may be
achieved by the combined businesses. We believe our pro forma data is not a
non-GAAP financial measure as contemplated by Regulation G.
Operating Cash Flow and Free Cash Flow should not be considered as
substitutes for operating income (loss), net income (loss), net cash provided
by operating activities or other measures of performance or liquidity reported
in accordance with GAAP. Debt Excluding Exchangeables should not be
considered as a substitute for Total Debt. Additionally, in the opinion of
management, our pro forma data is not necessarily indicative of future results
or what results would have been had the acquired businesses been operated by
us after the assumed earlier date.
Following are quantitative reconciliations of Free Cash Flow, Debt
Excluding Exchangeables, Consolidated Operating Cash Flow, and, although not
required by Regulation G, reconciliations of business segment Operating Cash
Flow and pro forma data.
Comcast Corporation
TABLE 7-A continued
Reconciliations of Historical and Pro Forma Data by Business Segment
(Unaudited)
(dollars in millions)
Historical (1)
Three Months Ended
September 30, 2003 Cable Content Other Total
Revenues $4,374 $173 ($1) $4,546
Operating expenses
(excluding depreciation
& amortization) 2,754 123 37 2,914
Operating Cash Flow $1,620 $50 ($38) $1,632
Depreciation and
amortization 1,086 36 17 1,139
Operating income
(loss) $534 $14 ($55) $493
Capital expenditures $1,045 $4 $32 $1,081
Three Months Ended
September 30, 2002 Cable Content Other Total
Revenues $1,548 $148 $2 $1,698
Operating expenses
(excluding depreciation
& amortization) 903 115 38 1,056
Operating Cash Flow $645 $33 ($36) $642
Depreciation and
amortization 309 40 22 371
Operating income
(loss) $336 ($7) ($58) $271
Capital expenditures $322 $2 $5 $329
Nine Months Ended
September 30, 2003 Cable Content Other Total
Revenues $12,985 $635 ($14) $13,606
Operating expenses
(excluding depreciation
& amortization) 8,347 466 121 8,934
Operating Cash Flow $4,638 $169 ($135) $4,672
Depreciation and
amortization 3,299 108 53 3,460
Operating income
(loss) $1,339 $61 ($188) $1,212
Capital expenditures $3,045 $14 $34 $3,093
Nine Months Ended
September 30, 2002 Cable Content Other Total
Revenues $4,558 $547 ($3) $5,102
Operating expenses
(excluding depreciation
& amortization) 2,662 402 107 3,171
Operating Cash Flow $1,896 $145 ($110) $1,931
Depreciation and
amortization 900 108 83 1,091
Impairment charge - - - -
Operating income
(loss) $996 $37 ($193) $840
Capital expenditures $1,011 $13 $11 $1,035
Comcast Corporation
TABLE 7-A continued
Reconciliations of Historical and Pro Forma Data by Business Segment
(Unaudited)
(dollars in millions)
Adjustments (2)
Three Months Ended
September 30, 2003 Cable Other Pro forma
Revenues - - $4,546
Operating expenses
(excluding depreciation
& amortization) - - 2,914
Operating Cash Flow - - $1,632
Depreciation and amortization - - 1,139
Operating income (loss) - - $493
Capital expenditures - - $1,081
Adjustments (2)
Three Months Ended
September 30, 2002 Cable Other Pro forma
Revenues $2,487 ($8) $4,177
Operating expenses
(excluding depreciation
& amortization) 1,934 (5) 2,985
Operating Cash Flow $553 ($3) $1,192
Depreciation and amortization 777 - 1,148
Operating income (loss) ($224) ($3) $44
Capital expenditures $1,089 - $1,418
Adjustments (2)
Nine Months Ended
September 30, 2003 Cable Other Pro forma
Revenues (1) - $13,605
Operating expenses
(excluding depreciation
& amortization) (1) - 8,933
Operating Cash Flow - - $4,672
Depreciation and amortization - - 3,460
Operating income (loss) - - $1,212
Capital expenditures - - $3,093
Adjustments (2)
Nine Months Ended
September 30, 2002 Cable Other Pro forma
Revenues $7,330 ($22) $12,410
Operating expenses
(excluding depreciation
& amortization) 5,805 (17) 8,959
Operating Cash Flow $1,525 ($5) $3,451
Depreciation and amortization 2,321 - 3,412
Impairment charge 16,525 - 16,525
Operating income (loss) ($17,321) ($5) ($16,486)
Capital expenditures $2,778 - $3,813
Reconciliation of Total Debt to Debt Excluding Exchangeables (Unaudited)
(dollars in millions)
As of September 30, 2003
Current portion of long-term debt $3,065
Long-term debt 27,316
Total Debt $30,381
Exchangeable debt 5,406
Debt excluding exchangeables $24,975
(1) Historical amounts have been adjusted to reflect QVC as discontinued
operations.
(2) Pro forma data is only adjusted for timing of the acquisitions (or
dispositions) and for acquisitions does not include adjustments for
costs related to integration activities, cost savings or synergies
that have been or may be achieved by the combined businesses.
Comcast Corporation
TABLE 7-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.
Comcast Corporation
TABLE 7-C continued
Reconciliation of Net Income (Loss) to Free Cash Flow (Unaudited)
(dollars in millions, except per share data)
Three Months Ended
September 30,
2003 2002
$ per $ per
share (3) share (3)
Net Income (Loss)
as reported $3,176 $1.41 $76 $0.08
Discontinued Operations,
net of tax (3,329) (1.47) (52) (0.05)
Non-operating items,
net of tax (1) 120 0.05 30 0.03
Net Income (Loss)
as adjusted ($33) ($0.01) $54 $0.06
Items to reconcile net
income (loss) as adjusted
to Operating Cash Flow:
Depreciation & amortization 1,139 0.50 371 0.39
Interest expense 565 0.25 172 0.18
Income tax expense (39) (0.02) 45 0.04
Operating Cash Flow $1,632 $0.72 $642 $0.67
2003 2002
Operating Cash Flow $1,632 $1,632 $642 $642
Less:
Interest, net (2) (556) (556) (155) (155)
Cash Paid for Income Taxes (14) (14) (1) (1)
Change in Operating Assets
& Liabilities, net
of acquisitions (254) 329
Net Cash Provided by
Operating Activities $808 $815
Less: Capital
Expenditures (1,081) (329)
Free Cash Flow ($19) $157
Nine Months Ended
September 30,
2003 2002
$ per $ per
share (3) share (3)
Net Income (Loss)
as reported $2,857 $1.27 ($223) ($0.23)
Discontinued Operations,
net of tax (3,458) (1.53) (141) (0.15)
Non-operating items,
net of tax (1) 302 0.13 515 0.54
Net Income (Loss)
as adjusted ($299) ($0.13) $151 $0.16
Items to reconcile
net income (loss)
as adjusted to
Operating Cash Flow:
Depreciation &
amortization 3,460 1.53 1,091 1.15
Interest expense 1,579 0.70 535 0.56
Income tax expense (68) (0.03) 154 0.16
Operating Cash Flow $4,672 $2.07 $1,931 $2.03
2003 2002
Operating Cash Flow $4,672 $4,672 $1,931 $1,931
Less:
Interest, net (2) (1,624) (1,624) (489) (489)
Cash Paid for Income Taxes (67) (67) (11) (11)
Change in Operating Assets
& Liabilities, net
of acquisitions (462) 212
Net Cash Provided by
Operating Activities $2,519 $1,643
Less: Capital
Expenditures (3,093) (1,035)
Free Cash Flow ($112) $396
Three Months Ended
September 30,
(1) Detail of non-operating 2003 2002
items: $ per share (3) $ per share (3)
Investment (income)
expense - mark to market
adjustments on trading
securities, derivatives
and hedged items, net $213 $0.09 $47 $0.05
Investment (income)
expense - (gain) loss on
sales and exchanges of
investments (4) - - -
Investment expense -
investment impairment
losses (4) - - 6 0.01
All other, net (5) (25) (0.01) (5) (0.01)
Total non-operating
items 184 0.08 48 0.05
Tax effect (64) (0.03) (18) (0.02)
Non-operating items,
net of tax $120 $0.05 $30 $0.03
Nine Months Ended
September 30,
(1) Detail of non-operating 2003 2002
items: $ per share (3) $ per share (3)
Investment (income)
expense - mark to market
adjustments on trading
securities, derivatives
and hedged items, net $477 $0.21 $393 $0.41
Investment (income)
expense - (gain) loss on
sales and exchanges of
investments (26) (0.01) 101 0.11
Investment expense -
investment impairment
losses (4) 70 0.03 227 0.24
All other, net (5) (56) (0.02) 71 0.07
Total non-operating
items 465 0.21 792 0.83
Tax effect (163) (0.08) (277) (0.29)
Non-operating items,
net of tax $302 $0.13 $515 $0.54
(2) Includes interest expense net of interest income and excludes non-
cash interest and subsidiary preferred dividends.
(3) Diluted weighted average shares outstanding for the three and nine
months ended September 30, 2003 were 2,257 billion and 2,256 billion,
respectively. Diluted weighted average shares outstanding for the
three and nine months ended September 30, 2002 were 959 million and
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.
SOURCE Comcast Corporation
-0- 10/30/2003
/CONTACT: Marlene S. Dooner, Vice President, Investor Relations,
+1-215-981-7392; Leslie A. Arena, Director, Investor Relations,
+1-215-981-8511; or Daniel J. Goodwin, Director, Investor Relations,
+1-215-981-7518, all of Comcast Corporation/
/Web site: http://www.cmcsa.com
http://www.cmcsk.com /
(CMCSK CMCSA)
CO: Comcast Corporation
ST: Pennsylvania
IN: ENT TVN CPR ITE
SU: ERN CCA MAV