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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 28, 2004
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 28, 2004.
Item 12. Results of Operations and Financial Condition
On July 28, 2004, Comcast Corporation ("Comcast") issued a press release
reporting the results of its operations for the three and six months ended June
30, 2004. The press release is attached hereto as Exhibit 99.1. Comcast does not
intend for this Item 12 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: July 28, 2004 COMCAST CORPORATION
By: /s/ Lawrence J. Salva
------------------------------
Lawrence J. Salva
Senior Vice President,
Chief Accounting Officer and
Controller
(Principal Accounting Officer)
Exhibit 99.1
Comcast Reports Second Quarter 2004 Results
Cable Revenue Increased 10.4% to $4.839 Billion
Cable Operating Cash Flow Increased 20.1% to $1.920 Billion
2004 Guidance for Cable Operating Cash Flow Increased
to Approximately $7.5 Billion or 18% Growth
Consolidated Operating Income Doubled to $852 Million
$750 Million of Stock Repurchased
Stock Repurchase Program Increased by $1 Billion
PHILADELPHIA, July 28 -- Comcast Corporation (Nasdaq: CMCSA, CMCSK) today
reported results for the quarter ended June 30, 2004. Comcast will discuss
second quarter results on a conference call and webcast today at 8:30 AM Eastern
Time. A live broadcast of the conference call will be available on the investor
relations website at http://www.cmcsa.com and http://www.cmcsk.com.
Brian L. Roberts, Chairman and CEO of Comcast Corporation said, "We are
again reporting outstanding results. Our cable division generated
double-digit revenue growth of over 10% and Operating Cash Flow growth of 20%
this quarter. As a result, we expect to report approximately $7.5 billion of
Operating Cash Flow in 2004, a growth rate of 18%.
"Cable's strong second quarter results and improved outlook for the
remainder of the year reflect robust growth in new video and high-speed
Internet services as we deliver compelling video services like Comcast ON
DEMAND and HDTV and as we continue to expand the features offered to our
high-speed Internet customers. We are also generating significant operating
improvements and scale efficiencies that are driving Operating Cash Flow
growth and improving operating margins. We are reporting cable operating
margins of nearly 40% for the second quarter - well ahead of our expectations.
This strong performance demonstrates our continued operational success in the
acquired cable systems and the ability to leverage our scale.
"The content division also posted strong results this quarter with revenue
growth of 25% and almost 38% growth in Operating Cash Flow.
"With the upgrade of our networks now essentially complete, we generated
$500 million of Free Cash Flow this quarter as cable capital expenditures
declined 15% and Operating Cash Flow grew by more than 20%. We remain on
track to reach our goal of $2 billion of Free Cash Flow this year. We will
continue to make investments that support the Company's growth while returning
capital to shareholders. Since the initiation of our $1 billion stock
repurchase program in December 2003, we have repurchased $750 million of our
stock, and I am pleased to announce that our Board of Directors has authorized
a $1 billion increase to our repurchase program.
"We are confident in our ability to continue to provide outstanding
operational and financial performance that leverages our newly-rebuilt
networks, to deliver unmatched products to our customers and value to our
shareholders."
Comcast Cable Results
Cable results for the second quarter and the six months ended June 30,
2004 are presented on a pro forma basis. Pro forma cable results adjust only
for acquisitions and dispositions and are presented as if the acquisitions and
dispositions were effective on January 1, 2003. Please refer to Table 6-A for
a reconciliation of pro forma data.
Comcast Cable reported revenue of $4.839 billion for the quarter ended
June 30, 2004, representing a 10.4% increase from the second quarter of 2003.
Video revenue for the quarter increased 6.9%, driven by a 5.7% increase in
average monthly revenue per basic subscriber and a 20.5% increase in digital
revenue primarily reflecting a 1.1 million increase in the number of digital
cable subscribers. Basic subscribers of 21.5 million are essentially
unchanged from a year ago but down 96,000 or 0.4%, from the prior quarter due
to seasonality and modestly lower gross additions. During the second quarter
of 2004, Comcast Cable added more than 206,000 digital cable subscribers to
finish the quarter with nearly 8.1 million subscribers, or 37.5% of basic
subscribers.
Video revenue growth reflects increasing consumer demand for new digital
features, including Comcast ON DEMAND, high-definition television (HDTV)
programming and digital video recorders (DVRs). During the second quarter,
pay-per-view revenues increased 26.0%, driven by more movie and event
purchases through the Comcast ON DEMAND service. Increasing demand for HDTV
is also contributing to digital growth - at the end of the second quarter,
Comcast had almost 600,000 HDTV set-top boxes in customers' homes.
High-speed Internet service revenues increased 39.2% to $763 million in
the second quarter of 2004, reflecting continuing strong growth in
subscribers. Comcast Cable ended the second quarter of 2004 with more than
6.0 million subscribers, a 36.8% increase from the same quarter last year.
During the second quarter of 2004, Comcast Cable added 327,000 high-speed
Internet subscribers resulting in a penetration rate of 16.1% of available
homes. Comcast Cable added more than 1.1 million homes to the high-speed
Internet service footprint in the second quarter of 2004, and this service is
now available to 37.3 million, or 92.6%, of homes passed. Average monthly
revenue per high-speed Internet subscriber was $43.52 in the second quarter of
2004, in line with the second quarter of 2003 and a $1.07 increase from the
$42.45 reported in the first quarter of 2004.
Advertising revenue for the second quarter of 2004 increased 15.3% to
$330 million, reflecting growth of 6.0% in local advertising and strong growth
of 25.4% in regional/national advertising as a result of the continuing
success of our regional interconnect strategy.
As expected, cable phone revenue declined 13.8% from the second quarter of
2003 to $177 million in the second quarter of 2004, reflecting a 10.4%
decrease in subscribers to 1.2 million and a 3.0% decline in average monthly
revenue per subscriber to $47.71. Excluding telephone revenue, which is
expected to decline throughout 2004, total revenue for Comcast Cable in the
second quarter of 2004 increased 11.6%. Telephone results reflect the
Company's focus on profitability, not unit growth, of the acquired
circuit-switched telephone business as it begins to transition to VoIP phone
service.
Cable operating income before depreciation and amortization (Operating
Cash Flow) grew 20.1% to $1.920 billion for the quarter, an increase from the
$1.598 billion reported for the second quarter of 2003. Operating Cash Flow
increased due to solid revenue growth and lower customer service, phone and
high-speed Internet service expenses. These declining expenses along with a
reduction in the rate of growth in video programming costs contributed to
Operating Cash Flow margins of 39.7% for the second quarter of 2004, an
increase from the 36.5% in the second quarter of 2003.
Cable capital expenditures declined 14.8% to $893 million compared to the
$1.047 billion in the second quarter of the prior year. The decline in cable
capital expenditures reflects the near-completion of the Company's cable
network upgrade. Comcast Cable finished the second quarter with 97% of its
cable network upgraded to provide advanced services.
Content
Comcast's content segment consists of the national networks E!
Entertainment Television and Style Network (E! Networks), The Golf Channel,
Outdoor Life Network and G4techTV.
Comcast's content segment reported second quarter 2004 revenue of
$199 million, a 25.3% increase above the second quarter of 2003 reflecting
increases in distribution and advertising revenue for all the networks. The
Content segment reported Operating Cash Flow of $77 million in the second
quarter of 2004, a 37.6% increase above the second quarter of 2003.
In an agreement with Liberty Media announced on July 21, Comcast will
exchange its 120.3 million shares of Liberty Media common stock for 100%
ownership in a subsidiary of Liberty Media that primarily holds $545 million
in cash, a 100% ownership interest in International Channel Networks and a 10%
ownership interest in E! Entertainment Television. This transaction is
expected to close this week and will result in Comcast owning 60% of E!
Entertainment Television.
Corporate and Other
Corporate and Other includes Comcast-Spectacor, corporate overhead and
other operations and eliminations between Comcast's businesses. In the second
quarter of 2004, we reported Corporate and Other revenue of $29 million and an
Operating Cash Flow loss of $45 million as compared to revenue of $56 million
and an Operating Cash Flow loss of $41 million in the second quarter of 2003.
The decline in revenue in the second quarter reflects fewer playoff games for
teams owned by Comcast-Spectacor.
Consolidated Results
Comcast sold its 57% ownership interest in QVC in September 2003. QVC's
results, prior to its sale, are presented as discontinued operations.
Consolidated amounts primarily reflect the results of the cable division as
discussed above.
For the three months ended June 30, 2004, the Company reported
consolidated revenues of $5.066 billion, a 10.3% increase to the
$4.594 billion reported in the same period of 2003. Consolidated Operating
Cash Flow increased to $1.952 billion or 21.1%, in the second quarter of 2004,
from the $1.612 billion reported in the same prior year period. Operating
income doubled to $852 million in the second quarter of 2004 compared to
operating income of $425 million in the second quarter of 2003.
For the three months ended June 30, 2004, the Company reported
consolidated net income of $262 million or $0.12 per share compared to a
consolidated net loss from continuing operations of $93 million or $0.04 per
share in the second quarter of 2003. This includes the effects of
non-recurring mark-to-market adjustments that are included in investment
income. For the six months ended June 30, 2004, the Company reported
consolidated net income of $327 million or $0.14 per share compared to a
consolidated net loss from continuing operations of $448 million or $0.20 per
share in the six months ended June 30, 2003. Please refer to the
"Reconciliation of Net Income (Loss) to Free Cash Flow" in Table 6-B at the
end of this release and the Company's Form 10-Q for further details on items
affecting net income.
Share Repurchase Program
Comcast's Board of Directors has authorized an increase of $1 billion to
the existing share repurchase program announced on December 18, 2003. The
Company is now authorized to repurchase up to $2 billion of its outstanding
common stock and has current availability to purchase $1.25 billion of its
stock. Comcast expects such repurchases to continue to occur from time to
time in the open market or in private transactions, subject to market
conditions. Through July 2004, the Company has repurchased $750 million of
its Class A Special common stock or 26.7 million shares.
During the second quarter, the Company elected to redeem, for $400 million
in cash, two debt issues that were exchangeable into Comcast Class A Special
common stock, eliminating the need to issue 14.9 million shares. Including
the open market repurchases of $700 million made since the resumption of the
repurchase program in early May, the Company has invested $1.1 billion in its
common stock and related securities.
Financial Guidance 2004
Comcast Cable Reaffirms:
-- Revenue growth of approximately 10%.
-- High-speed Internet subscriber net additions of between 1.5 and 1.6
million and high-speed Internet service revenue growth of more than
30% while generating average monthly revenue per subscriber above
$40.
-- Digital Cable subscriber net additions between 700,000 and
1 million.
-- Cable capital expenditures of between $3.3 and $3.4 billion.
Comcast Cable Updates:
-- Raised OCF guidance to approximately $7.5 billion or a growth rate
of 18%, an increase from original guidance of 15% to 17% growth
reflecting increased revenues as well as a reduction in the rate of
growth in video programming costs and lower customer service, phone
and high-speed Internet service expenses.
-- Expect to maintain basic subscribers of approximately 21.5 million,
modestly below original guidance net additions of 0.5% or
approximately 100,000 subscribers. The revised outlook for basic
subscribers is not expected to have a meaningful impact on revenue,
Operating Cash Flow or Operating Cash Flow margin.
-- Guidance for Cable Phone subscribers is lowered to a net loss of up
to 100,000 subscribers in 2004 from original guidance of up to
50,000 additions. The outlook for Cable Phone subscribers reflects
the Company's focus on profitability, not unit growth, of the
acquired circuit-switched telephone business as it begins to
transition to VoIP.
Comcast Content Reaffirms:
-- On a combined basis, Comcast expects its Content division,
consisting of its national cable networks, to deliver revenue growth
of at least 20% and OCF growth of at least 30% in 2004.
Other Financial Guidance Reaffirmed:
-- Comcast expects to generate consolidated Free Cash Flow of
$2 billion.
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 Quarterly
Report on Form 10-Q for a description of such risks and uncertainties.
In this discussion we sometimes refer to financial measures that are not
presented according to generally accepted accounting principles (GAAP).
Certain of these measures are considered "non-GAAP financial measures" under
the Securities and Exchange Commission (SEC) regulations; those rules require
the supplemental explanation and reconciliation provided in table 6 of this
release.
Comcast Corporation will host a conference call with the financial
community today, July 28, 2004, at 8:30 a.m. Eastern Time (ET). The
conference call will be broadcast live on the Company's Investor Relations
website at http://www.cmcsa.com or http://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 28, 2004.
Those parties interested in participating via telephone should dial (847)
413-2408. A telephone replay will begin immediately following the call until
July 29, 2004 at midnight ET. To access the rebroadcast, please dial (630)
652-3000 and enter passcode number 9196739#.
To automatically receive Comcast financial news by email, please visit
http://www.cmcsa.com or http://www.cmcsk.com and subscribe to e-mail Alerts.
Comcast Corporation (http://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
and is the nation's largest broadband Internet provider with more than
6 million customers. The Company's content businesses include Comcast
SportsNet, Comcast-Spectacor, E! Entertainment Television, Style Network, The
Golf Channel, Outdoor Life Network and G4techTV. 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 Six Months Ended
June 30, June 30,
2004 2003 2004 2003
Revenues $5,066 $4,594 $9,974 $9,060
Operating expenses 1,794 1,753 3,663 3,564
Selling, general and administrative
expenses 1,320 1,229 2,626 2,456
Operating Cash Flow 1,952 1,612 3,685 3,040
Depreciation 813 816 1,611 1,596
Amortization 287 371 563 725
Operating Income 852 425 1,511 719
Interest expense (484) (490) (984) (1,014)
Investment income (loss), net 151 (6) 142 (229)
Equity in net income (losses) of
affiliates (20) 1 (37) (16)
Other income 12 22 19 35
(341) (473) (860) (1,224)
Income (Loss) from Continuing
Operations before Income Taxes
and Minority Interest 511 (48) 651 (505)
Income tax (expense) benefit (234) (13) (310) 128
Minority interest (15) (32) (14) (71)
Income (Loss) from Continuing
Operations 262 (93) 327 (448)
Income from discontinued operations,
net of tax (1) - 71 - 129
Net Income (Loss) $262 ($22) $327 ($319)
Basic and Diluted earnings (loss)
per common share
Income (Loss) from continuing
operations $0.12 ($0.04) $0.14 ($0.20)
Income from discontinued
operations - 0.03 - 0.06
Net Income (Loss) per
common share $0.12 ($0.01) $0.14 ($0.14)
Basic weighted average number of
common shares outstanding 2,257 2,255 2,257 2,255
Diluted weighted average number of
common shares outstanding 2,267 2,255 2,268 2,255
(1) On September 17, 2003, the Company completed the sale of its
approximate 57% interest in QVC, Inc. Accordingly, the results of
QVC have been presented as discontinued operations.
COMCAST CORPORATION
TABLE 2
Condensed Consolidated Balance Sheet (Unaudited)
(dollars in millions)
June 30, December 31,
2004 2003
ASSETS
CURRENT ASSETS
Cash and cash equivalents $594 $1,550
Investments 2,481 2,493
Accounts receivable, net 925 907
Other current assets 418 453
Total current assets 4,418 5,403
INVESTMENTS 14,204 14,818
PROPERTY AND EQUIPMENT, net 18,615 18,473
FRANCHISE RIGHTS 51,070 51,050
GOODWILL 14,816 14,841
OTHER INTANGIBLE ASSETS, net 4,322 3,859
OTHER NONCURRENT ASSETS, net 636 715
$108,081 $109,159
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $988 $1,251
Accrued expenses and other
current liabilities 4,194 4,563
Deferred income taxes 657 679
Current portion of long-term debt 472 734
Current portion of exchangeable debt 2,320 2,427
Total current liabilities 8,631 9,654
LONG-TERM DEBT, less current portion 21,945 21,944
LONG-TERM EXCHANGEABLE DEBT, less
current portion 1,040 1,891
DEFERRED INCOME TAXES 26,644 25,900
OTHER NONCURRENT LIABILITIES 7,922 7,816
MINORITY INTEREST 384 292
STOCKHOLDERS' EQUITY 41,515 41,662
$108,081 $109,159
COMCAST CORPORATION
TABLE 3
Condensed Consolidated Statement of Cash Flows (Unaudited)
(dollars in millions)
Six Months Ended
June 30,
2004 2003
OPERATING ACTIVITIES
Net cash provided by operating activities
from continuing operations $2,633 $1,711
FINANCING ACTIVITIES
Proceeds from borrowings 1,058 8,848
Retirements and repayments of debt (1,617) (11,543)
Repurchases of common stock (511)
Other, net 46 (3)
Net cash used in financing activities
from continuing operations (1,024) (2,698)
INVESTING ACTIVITIES
Capital expenditures (1,732) (2,012)
Proceeds from restructuring of TWE
investment 2,100
Proceeds from sales of investments
and assets held for sale 51 1,492
Acquisitions, net (336) (22)
Other, net (548) (260)
Net cash (used in) provided by investing
activities from continuing operations (2,565) 1,298
(DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS (956) 311
CASH AND CASH EQUIVALENTS, beginning
of period 1,550 505
CASH AND CASH EQUIVALENTS, end of
period $594 $816
COMCAST CORPORATION
TABLE 4
Pro Forma Financial Data by Business Segment (Unaudited) (1)
(dollars in millions)
Corporate and
Cable (2) Content (3) Other (4) Total
Three Months Ended
June 30, 2004
Revenues $4,839 $199 $29 $5,067
Operating Cash Flow $1,920 $77 ($45) $1,952
Operating Income (Loss) $877 $38 ($63) $852
Operating Cash Flow Margin 39.7% 38.7% NM 38.5%
Capital Expenditures (5) $893 $6 $5 $904
Three Months Ended
June 30, 2003
Revenues $4,382 $159 $56 $4,597
Operating Cash Flow $1,598 $56 ($41) $1,613
Operating Income (Loss) $465 $24 ($63) $426
Operating Cash Flow Margin 36.5% 35.2% NM 35.1%
Capital Expenditures (5) $1,047 $4 $3 $1,054
Six Months Ended
June 30, 2004
Revenues $9,490 $375 $114 $9,979
Operating Cash Flow $3,641 $146 ($100) $3,687
Operating Income (Loss) $1,581 $72 ($140) $1,513
Operating Cash Flow Margin 38.4% 38.8% NM 37.0%
Capital Expenditures (5) $1,707 $10 $15 $1,732
Six Months Ended
June 30, 2003
Revenues $8,617 $304 $145 $9,066
Operating Cash Flow $3,021 $97 ($75) $3,043
Operating Income (Loss) $808 $33 ($119) $722
Operating Cash Flow Margin 35.1% 31.9% NM 33.6%
Capital Expenditures (5) $2,000 $7 $5 $2,012
(1) See Non-GAAP and Other Financial Measures in Table 6. 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 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 financial data includes
the results of the 30,000 cable subscribers acquired from US Coastal
Cable in April 2004.
(3) Content includes our national networks E! Entertainment Television
and Style Network (E! Networks), The Golf Channel, Outdoor Life
Network and G4techTV.
(4) Corporate and Other includes Comcast-Spectacor, the Company's
domestic wireline telecommunications business, international
wireless operations, Corporate and elimination entries. Prior to
the first quarter of 2004, Comcast-Spectacor was included in
Content, which now only consists of our national networks. For all
periods presented, Comcast-Spectacor is included in Corporate and
Other.
(5) Our Cable segment's capital expenditures are comprised of the
following categories:
YTD YTD
2Q04 2Q03 6/30/2004 6/30/2003
Customer Premise Equipment
(CPE) $338 $381 630 $767
Scalable Infrastructure 110 81 231 135
Line Extensions 81 57 141 111
Upgrades 288 417 540 759
Support Capital 76 111 165 228
Total $893 $1,047 $1,707 $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). Upgrades include 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).
COMCAST CORPORATION
TABLE 5
Pro Forma Data - Cable Segment Components (Unaudited) (1) (2)
(dollars in millions, except average monthly revenue per basic subscriber
data)
Three Months Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
Revenues:
Video (3) $3,249 $3,040 $6,433 $6,026
High-Speed Internet 763 548 1,461 1,040
Phone 177 206 355 430
Advertising 330 286 599 521
Other (4) 157 151 320 298
Franchise Fees 163 151 322 302
Total Revenues $4,839 $4,382 $9,490 $8,617
Operating Cash Flow $1,920 $1,598 $3,641 $3,021
Operating Income $877 $465 $1,581 $808
Operating Cash Flow Margin 39.7% 36.5% 38.4% 35.1%
Capital Expenditures $893 $1,047 $1,707 $2,000
Operating Cash Flow, Net
of Capital Expenditures $1,027 $551 $1,934 $1,021
Growth Growth
2Q04 1Q04 2Q03 vs. 1Q04 vs. 2Q03
Video
Homes Passed (000's) 40,300 40,100 39,700 0.4% 1.5%
Basic Subscribers (000's) 21,477 21,572 21,467 (0.4%) 0.0%
Basic Penetration 53.3% 53.7% 54.0%
Quarterly Net Basic
Subscriber Additions
(000's) (96) 35 13 NM NM
Digital Subscribers
(000's) 8,064 7,857 6,962 2.6% 15.8%
Digital Penetration 37.5% 36.4% 32.4%
Quarterly Net Digital
Subscriber Additions
(000's) 206 192 163 7.3% 26.6%
Monthly Average Video
Revenue per
Basic Subscriber $50.31 $49.24 $47.22 2.2% 6.5%
Monthly Average Total
Revenue per
Basic Subscriber $74.94 $71.92 $68.08 4.2% 10.1%
High-Speed Internet
"Available Homes" (000's) 37,323 36,167 32,124 3.2% 16.2%
Subscribers (000's) 6,005 5,679 4,389 5.7% 36.8%
Penetration 16.1% 15.7% 13.7%
Quarterly Net Subscriber
Additions (000's) 327 394 351 (17.1%) (7.0%)
Monthly Average Revenue
per Subscriber $43.52 $42.45 $43.33 2.5% 0.4%
Phone
"Available Homes" (000's) 9,766 9,657 9,164 1.1% 6.6%
Subscribers (000's) 1,225 1,247 1,367 (1.8%) (10.4%)
Penetration 12.5% 12.9% 14.9%
Quarterly Net Subscriber
Additions (000's) (22) (20) (52) (13.2%) 57.4%
Monthly Average Revenue
per Subscriber $47.71 $47.34 $49.17 0.8% (3.0%)
Total Revenue Generating
Units (000's) (5) 36,771 36,355 34,185 1.1% 7.6%
(1) See Non-GAAP and Other Financial Measures in Table 6.
(2) Pro forma financial and subscriber 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 systems exchange with Insight
Communications in February 2003. Pro forma financial and subscriber
data includes the results of the 30,000 cable subscribers acquired
from US Coastal Cable in April 2004. Pro forma subscriber data
includes 79,000 additional subscribers acquired in various small
acquisitions between June 2003 and June 2004. The impact of these
various small acquisitions on our financial data was not material.
(3) Video revenues consist of our basic, expanded basic, premium, pay-
per-view, equipment and digital services.
(4) Other revenues include installation revenues, guide revenues,
commissions from electronic retailing, other product offerings,
commercial data services and revenues of our digital media center
and regional sports programming networks.
(5) The sum total of all primary analog video, digital video, high-speed
Internet and phone customers, but excluding additional outlets.
COMCAST CORPORATION
TABLE 6
Non-GAAP and Other Financial Measures
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 repay debt, make
investments and return capital to investors, principally through stock
repurchases. 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 and gains or losses from the sale of assets, if any. 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. We believe that Free
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 Free Cash Flow is accrual-based and may not be comparable to
similar measures used by other companies.
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 6-A continued
Reconciliation of Historical and Pro Forma Data by Business Segment
(Unaudited)
(dollars in millions)
Historical (1)
Adjustments (2)
Corporate Corporate
Three Months Ended and and Pro
June 30, 2004 Cable Content Other Total Cable Other forma
Revenues $4,838 $199 $29 $5,066 $1 - $5,067
Operating
expenses
(excluding
depreciation
& amortization) 2,918 122 74 3,114 1 - 3,115
Operating
Cash Flow $1,920 $77 ($45) $1,952 - - $1,952
Depreciation and
amortization 1,043 39 18 1,100 - - 1,100
Operating
income (loss) $877 $38 ($63) $852 - - $852
Capital
expenditures $893 $6 $5 $904 - - $904
Adjustments (2)
Corporate Corporate
Three Months Ended and and Pro
June 30, 2003 Cable Content Other Total Cable Other forma
Revenues $4,379 $159 $56 $4,594 $3 - $4,597
Operating
expenses
(excluding
depreciation
& amortization) 2,782 103 97 2,982 2 - 2,984
Operating
Cash Flow $1,597 $56 ($41) $1,612 $1 - $1,613
Depreciation and
amortization 1,133 32 22 1,187 - - 1,187
Operating
income (loss) $464 $24 ($63) $425 $1 - $426
Capital
expenditures $1,047 $4 $3 $1,054 - - $1,054
Adjustments (2)
Corporate Corporate
Six Months Ended and and Pro
June 30, 2004 Cable Content Other Total Cable Other forma
Revenues $9,485 $375 $114 $9,974 $5 - $9,979
Operating
expenses
(excluding
depreciation
& amortization) 5,846 229 214 6,289 3 - 6,292
Operating
Cash Flow $3,639 $146 ($100) $3,685 $2 - $3,687
Depreciation and
amortization 2,060 74 40 2,174 - - 2,174
Operating
income (loss) $1,579 $72 ($140) $1,511 $2 - $1,513
Capital
expenditures $1,707 $10 $15 $1,732 - - $1,732
Adjustments (2)
Corporate Corporate
Six Months Ended and and Pro
June 30, 2003 Cable Content Other Total Cable Other forma
Revenues $8,611 $304 $145 $9,060 $6 - $9,066
Operating
expenses
(excluding
depreciation
& amortization) 5,593 207 220 6,020 3 - 6,023
Operating
Cash Flow $3,018 $97 ($75) $3,040 $3 - $3,043
Depreciation and
amortization 2,213 64 44 2,321 - - 2,321
Operating
income (loss) $805 $33 ($119) $719 $3 - $722
Capital
expenditures $2,000 $7 $5 $2,012 - - $2,012
Reconciliation of Total Debt to Debt Excluding Exchangeables (Unaudited)
(dollars in millions)
June 30, 2004 December 31, 2003
Current portion of long-term debt $2,792 $3,161
Long-term debt 22,985 23,835
Total Debt $25,777 $26,996
Exchangeable debt 3,360 4,318
Debt excluding exchangeables $22,417 $22,678
Calculation of 2004 Free Cash Flow
(dollars in billions)
2003 Operating Income $2.0
Add: Depreciation & Amortization 4.4
2003 Operating Cash Flow 6.4
2004 Operating Cash Flow Growth 18%
Projected 2004 Operating Cash Flow 7.5
Less: Projected Capital Expenditures (3) 3.4
Projected 2004 Consolidated Interest, net (4) 1.85
Projected 2004 Consolidated Cash Paid
for Income Taxes (5) 0.25
Free Cash Flow $2.0
(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.
(3) Mid point of 2004 Cable capital expenditures guidance plus projected
2004 Content and Other segment's capital expenditures.
(4) Mid point of 2004 estimated Consolidated interest expense of $1.8 to
$1.9 billion.
(5) Mid point of 2004 estimated Consolidated cash paid for income taxes
of $200 to $300 million.
COMCAST CORPORATION
TABLE 6-B continued
Reconciliation of Net Income (Loss) to Free Cash Flow (Unaudited)
(dollars in millions, except for per share data)
Three Months Ended
June 30,
2004 2003
per per
$ share (3) $ share (3)
Net Income (Loss) as reported $262 $0.12 ($22) ($0.01)
Discontinued Operations,
net of tax - - (71) (0.03)
Non-operating items,
net of tax (1) (83) (0.04) 10 -
Net Income (Loss) as adjusted $179 $0.08 ($83) ($0.04)
Items to reconcile net income
(loss) as adjusted to Operating
Cash Flow:
Depreciation and amortization 1,100 0.49 1,187 0.53
Interest expense 484 0.21 490 0.22
Income tax expense 189 0.08 18 -
Operating Cash Flow $1,952 $0.86 $1,612 $0.71
2004 2003
Operating Cash Flow $1,952 $1,952 $1,612 $1,612
Less:
Interest, net (2) (459) (459) (527) (527)
Cash Paid for Income Taxes (89) (89) (38) (38)
Change in Operating Assets and
Liabilities, net of
acquisitions (7) 442 (19)
Other (6) 13 30
Net Cash Provided by Operating
Activities $1,859 $1,058
Less: Capital Expenditures (904) (1,054)
Free Cash Flow $500 ($7)
Three Months Ended
June 30,
(1) Detail of non-operating items: 2004 2003
per per
$ share (3) $ share (3)
Investment (income) expense
- mark to market adjustments
on trading securities,
derivatives and hedged
items, net ($129) ($0.06) $41 $0.02
Investment (income) expense
- gain (loss) on sales and
exchanges of investments 1 - (1) -
Investment expense -
investment impairment
losses (4) 3 - 15 0.01
All other, net (5) (3) - (40) (0.02)
Total non-operating items (128) (0.06) 15 0.01
Tax Effect 45 0.02 (5) (0.01)
Non-operating items, net
of tax ($83) ($0.04) $10 $-
Six Months Ended
June 30,
2004 2003
per per
$ share (3) $ share (3)
Net Income (Loss) as reported $327 $0.14 ($319) ($0.14)
Discontinued Operations,
net of tax - - (129) (0.06)
Non-operating items,
net of tax (1) (72) (0.03) 183 0.08
Net Income (Loss) as adjusted $255 $0.11 ($265) ($0.12)
Items to reconcile net income
(loss) as adjusted to Operating
Cash Flow:
Depreciation and amortization 2,174 0.96 2,321 1.03
Interest expense 984 0.43 1,014 0.45
Income tax expense 272 0.12 (30) (0.01)
Operating Cash Flow $3,685 $1.62 $3,040 $1.35
2004 2003
Operating Cash Flow $3,685 $3,685 $3,040 $3,040
Less:
Interest, net (2) (906) (906) (1,068) (1,068)
Cash Paid for Income Taxes (150) (150) (53) (53)
Change in Operating Assets and
Liabilities, net of
acquisitions (7) 3 (253)
Other (6) 1 45
Net Cash Provided by Operating
Activities $2,633 $1,711
Less: Capital Expenditures (1,732) (2,012)
Free Cash Flow $897 ($93)
Six Months Ended
June 30,
(1) Detail of non-operating items: 2004 2003
per per
$ share (3) $ share (3)
Investment (income) expense
- mark to market adjustments
on trading securities,
derivatives and hedged
items, net ($101) ($0.04) $265 $0.12
Investment (income) expense
- gain (loss) on sales and
exchanges of investments (1) - (23) (0.01)
Investment expense -
investment impairment
losses (4) 3 - 70 0.03
All other, net (5) (11) (0.01) (31) (0.02)
Total non-operating items (110) (0.05) 281 0.12
Tax Effect 38 0.02 (98) (0.04)
Non-operating items, net
of tax ($72) ($0.03) $183 $0.08
(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 six
months ended June 30, 2004 were 2.267 billion and 2.268 billion,
respectively. Diluted weighted average shares outstanding for the
three and six months ended June 30, 2003 were 2.255 billion.
(4) We record losses on our investments for which we have determined
that a decline in value of the investment is other than temporary.
(5) Includes investment, interest and dividend income, equity in net
(income) losses of affiliates, other (income) expense and minority
interest.
(6) Includes non-cash expenses included in Operating Cash Flow such as
equity compensation, proceeds from sales of trading securities, cash
related to other (income) expense, dividends and the net effect of
changes in accrued income taxes.
(7) Includes $536 million of income tax refund received in the second
quarter of 2004.
SOURCE Comcast Corporation
-0- 07/28/2004
/CONTACT: Investor Contacts: Marlene S. Dooner, +1-215-981-7392, or
Leslie A. Arena, +1-215-981-8511, or Daniel J. Goodwin, +1-215-981-7518, or
Press Contacts: D'Arcy Rudnay, +1-215-981-8582, or Tim Fitzpatrick,
+1-215-981-8515, all of Comcast/
/Web site: http://www.cmcsa.com
http://www.cmcsk.com
http://www.comcast.com /
(CMCSK CMCSA)
CO: Comcast Corporation
ST: Pennsylvania
IN: ENT TVN CPR ITE MLM
SU: ERN MAV CCA