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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 27, 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 2.02. Results of Operations and Financial Condition
On October 27, 2004, Comcast Corporation ("Comcast") issued a press
release reporting the results of its operations for the three and nine months
ended September 30, 2004. The press release is attached hereto as Exhibit 99.1.
Comcast does not intend for this Item 2.02 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.
Item 9.01. Exhibits
Exhibit 99.1 Comcast Corporation press release dated October 27, 2004.
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 27, 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 Third Quarter 2004 Results
Cable Revenue Increased 10.6% to $4.844 Billion
Delivers Record New Product Growth
Led by High-Speed Internet Subscriber Additions of 549,100
Digital Cable Subscribers Increased 341,000 to 8.4 Million
Cable Operating Cash Flow Increased 14.6% to $1.858 Billion
Consolidated Operating Income Increased 39.0% to $686 Million
PHILADELPHIA, Oct. 27 /PRNewswire-FirstCall/ -- Comcast Corporation
(Nasdaq: CMCSA, CMCSK) today reported results for the quarter ended
September 30, 2004. Comcast will discuss third 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
reached record levels of new video and high-speed Internet service additions
this quarter, confirming that we have successfully transformed Comcast into a
new products company. Our high-speed Internet service led the way, adding
over 549,000 subscribers - the highest level of quarterly high-speed Internet
additions in the Company's history. We also posted strong growth in Digital
Cable as we continue to extend our video offering to include ON DEMAND, HDTV
and DVRs. We added 341,000 new digital subscribers this quarter and installed
more than 200,000 HDTV set-top boxes in customers' homes. Interest in our
ON DEMAND service continues to grow. Customers are selecting ON DEMAND
content more than 50 million times each month and early indications suggest
strong demand for our DVR product. Our strong unit growth this quarter
reflects the increasing appeal of our services, as we deliver differentiated
products and a better experience to our customers.
"We are also reporting strong financial results. We generated
$540 million of Free Cash Flow this quarter through the combination of
Operating Cash Flow growth and capital expenditure declines as our two-way
networks are now 98% upgraded. We continue to make investments to support our
growth and product differentiation strategy, while returning capital to
shareholders. This year we have repurchased over $1 billion of our stock and
cash settled more than $600 million of debt securities that were otherwise
exchangeable into our stock. At the same time, in the last quarter alone, we
announced several transactions that will enable us to offer a growing array of
choices for movies, regional and national sports and children's programming,
as well as video mail and other broadband features and applications. All of
these will provide our customers more choice and control - on TV, on
Comcast.net and ON DEMAND."
Comcast Cable Results
Cable results are presented on a pro forma basis. Pro forma cable results
adjust only for significant acquisitions and dispositions and are presented as
if the acquisitions and dispositions were effective on January 1, 2003.
Please refer to Table 7-A for a reconciliation of pro forma data.
For the quarter ended September 30, 2004, Comcast Cable reported revenue
of $4.844 billion representing a 10.6% increase from the third quarter of
2003. Video revenue increased 6.6% from the third quarter of 2003, driven by
a 5.5% increase in average monthly revenue per basic subscriber and an
increase in digital revenue. During the third quarter, Comcast Cable added
341,000 digital cable subscribers to end the period with over 8.4 million
subscribers, or 39.1% of basic subscribers. Basic subscribers of 21.5 million
remained essentially unchanged from a year ago but increased 8,500 from the
prior quarter. Included in the basic subscriber results for the quarter was
the loss of an estimated 10,000 subscribers as a result of the severe
hurricane season experienced in parts of Florida and other Southeastern
states.
Growth in video revenue also reflects increasing consumer demand for new
digital features, including Comcast ON DEMAND, high-definition television
(HDTV) programming and digital video recorders (DVRs). During the third
quarter, pay-per-view revenues increased nearly 32% to more than $100 million,
driven by more movie and event purchases through the Comcast ON DEMAND
service. Increasing demand for HDTV and the accelerating rollout of DVRs is
also contributing to digital growth. At the end of the third quarter, Comcast
had nearly 870,000 set-top boxes in customers' homes offering HDTV and/or DVR
service.
During the third quarter of 2004 Comcast Cable added a record 549,100
High-Speed Internet subscribers to end the quarter with more than 6.5 million
subscribers. Revenues for this service increased 37.9% from the third quarter
of 2003 to $808 million reflecting strong subscriber growth and stable average
monthly revenue per subscriber of $42.91. Comcast High-Speed Internet service
is now available to 94% of the Company's footprint, or 38 million homes.
Advertising revenue increased 15.5% from the third quarter of 2003 to
$319 million, reflecting growth of over 10% in local advertising and growth of
20% in regional/national advertising as a result of an increase in political
advertising during the third quarter and the ongoing success of our regional
interconnect strategy.
As expected, cable phone revenue declined 8.6% from the third quarter of
2003 to $173 million, the result of a 7.5% decrease in subscribers to
1.2 million and stable average monthly revenue per subscriber of $47.18.
Cable phone results continue to reflect the Company's focus on profitability,
not unit growth, of its circuit-switched telephone business as it begins the
transition to offer cable phone service using VoIP. Excluding cable phone
revenue, which is expected to continue to decline through 2004, total revenue
for Comcast Cable increased 11.5% from the third quarter of 2003 to $4.671
billion.
Cable operating income before depreciation and amortization (Operating
Cash Flow) grew 14.6% from the third quarter of 2003 to $1.858 billion,
reflecting strong revenue growth, offset by the impact of hurricane-related
costs estimated at $10-$15 million and higher operating and marketing expenses
associated with the record number of new service additions in the quarter.
Cable capital expenditures declined nearly 17% to $871 million compared to
the $1.045 billion in the third quarter of 2003. The decline in cable capital
expenditures reflects the near-completion of the Company's cable network
upgrade. Comcast Cable finished the third quarter with nearly 98% of its
cable network upgraded to provide advanced services.
For the nine months ended September 30, 2004, Comcast Cable reported
revenue of $14.334 billion, a 10.3% increase from the same period in 2003.
Comcast Cable Operating Cash Flow grew 18.4% from the nine months ended
September 30, 2003 to $5.499 billion. Video revenue increased 6.7% from the
same period in 2003, driven by a 5.7% increase in average monthly revenue per
basic subscriber and an increase in digital revenue, primarily reflecting a
1.1 million increase in the number of digital cable subscribers. Comcast
High-Speed Internet service revenues increased 39.6% from the nine months
ended September 30, 2003 to $2.269 billion reflecting the addition of
1.7 million new subscribers and unchanged average monthly revenue per
subscriber of $42.59. Advertising revenue increased 15.1% from the year-ago
period to $918 million. As expected, cable phone revenue declined 14.6% from
2003 to $528 million, the result of a 7.5% decrease in subscribers and 5.3%
decrease in average monthly revenue per subscriber to $47.31.
Cable capital expenditures for the nine months ended September 30, 2004
declined 15.3% to $2.578 billion compared to the $3.045 billion in the prior
year. The decline in cable capital expenditures reflects the near-completion
of the Company's cable network upgrade.
Content
Comcast's content segment consists of the national networks E!
Entertainment Television and Style Network (E! Networks), The Golf Channel,
Outdoor Life Network, G4techTV and the recently acquired International Channel
Networks.
Comcast's content segment reported third quarter 2004 revenue of
$207 million, a 30.6% increase from the third quarter of 2003 reflecting
increases in distribution and advertising revenue for all the networks. The
Content segment reported Operating Cash Flow of $62 million in the third
quarter of 2004, a 7% increase above the third quarter of 2003 reflecting
higher development and marketing expenses for signature events and other
original programming.
For the nine months ended September 30, 2004, Comcast's content segment
increased revenue 26.0% to $582 million and increased Operating Cash Flow
34.0% to $208 million.
Corporate and Other
Corporate and Other includes Comcast-Spectacor, corporate overhead and
other operations and eliminations between Comcast's businesses. In the third
quarter of 2004, we reported Corporate and Other revenue of $47 million and an
Operating Cash Flow loss of $60 million as compared to revenue of $14 million
and an Operating Cash Flow loss of $46 million in the third quarter of 2003.
Beginning in the third quarter of 2004, Comcast-Spectacor includes the
operating results of its investment in a sports event-related business.
For the nine months ended September 30, 2004, Corporate and Other revenue
remained relatively unchanged at $161 million and Operating Cash Flow loss
increased to $160 million from the nine months ended September 30, 2003.
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 September 30, 2004, the Company reported
consolidated revenues of $5.098 billion, a 12.1% increase from the
$4.546 billion reported in the same period of 2003. Consolidated Operating
Cash Flow increased to $1.860 billion or 14.0%, in the third quarter of 2004,
from the $1.632 billion reported in the same prior year period. Operating
income increased 39.0% to $686 million in the third quarter of 2004 compared
to operating income of $493 million in the third quarter of 2003.
For the three months ended September 30, 2004, the Company reported
consolidated net income of $220 million or $0.10 per share compared to a
consolidated net loss from continuing operations of $153 million or a loss of
$0.07 per share in the third quarter of 2003. For the nine months ended
September 30, 2004, the Company reported consolidated net income of
$547 million or $0.24 per share compared to a consolidated net loss from
continuing operations of $601 million or a loss of $0.27 per share in the nine
months ended September 30, 2003. Please refer to the "Reconciliation of Net
Income to Free Cash Flow" in Table 7-B at the end of this release and the
Company's Form 10-Q for further details on items affecting net income.
As previously announced in July 2004, Comcast exchanged its 120 million
shares of Liberty Media common stock for 100% ownership in a subsidiary of
Liberty Media that primarily held a 100% ownership interest in International
Channel Networks, a 10.4% ownership interest in E! Entertainment Television
and $547 million in cash. This transaction results in Comcast owning 60.5% of
E! Entertainment Television.
Share Repurchase Program
During the third quarter, Comcast repurchased $502 million or 18.4 million
shares of its common stock under its stock repurchase program. Comcast
expects such repurchases to continue to occur from time to time in the open
market or in private transactions, subject to market conditions.
During the third quarter the Company elected to redeem for $209 million in
cash, a debt issue that was exchangeable into Comcast Class A Special Common
Stock, eliminating the need to issue 7.6 million additional shares.
Starting in December 2003, the inception of the program, through October
2004, the Company has repurchased $1.1 billion of its Class A Special Common
Stock or 38.9 million shares under its $2 billion share repurchase program.
Including the $609 million paid in cash to redeem several debt issues
exchangeable into Comcast common stock, the Company has invested $1.7 billion
in its common stock and related securities.
Financial Guidance 2004:
Comcast Cable Reaffirms:
-- Revenue growth of approximately 10%
-- OCF of approximately $7.5 billion or 18% growth
-- The number of basic cable subscribers is expected to remain at
approximately 21.5 million
-- The number of cable phone subscribers may decline by up to 100,000
-- Capital expenditures of between $3.3 and $3.4 billion
Comcast Cable Updates:
-- Digital Cable subscriber net additions of approximately 1 million,
representing the top end of the previous guidance range of between
700,000 and 1 million net additions
-- High-speed Internet subscriber net additions of between 1.6 and
1.7 million, an increase from original guidance of between 1.5 and
1.6 million net additions
Comcast Content Segment Reaffirms:
-- Revenue growth of at least 20%
-- OCF growth of at least 30%
Other Financial Guidance Reaffirmed:
-- 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 cause actual events or our actual results to differ materially from
those expressed in any such forward-looking statements. Readers are directed
to Comcast's periodic and other reports filed with the Securities and Exchange
Commission 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 7 of this
release. All percentages are calculated based on actual amounts. Minor
differences may exist due to rounding.
Comcast Corporation will host a conference call with the financial
community today October 27, 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 October 27, 2004. Those parties interested in participating
via telephone should dial (847) 413-2408. A telephone replay will begin
immediately following the call until October 28, 2004 at midnight ET. To
access the rebroadcast, please dial (630) 652-3000 and enter passcode number
9980173#. 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 provider of
cable and broadband services in the United States, serving more than
21 million cable television subscribers and more than 6 million high-speed
Internet customers. The Company's content businesses include Comcast
SportsNet, Comcast-Spectacor, E! Entertainment Television, Style Network,
G4techTV, The Golf Channel, International Channel Networks and Outdoor Life
Network. 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 Nine Months
Ended Ended
September 30, September 30,
2004 2003 2004 2003
Revenues $5,098 $4,546 $15,072 $13,606
Operating expenses 1,837 1,703 5,500 5,267
Selling, general and administrative
expenses 1,401 1,211 4,027 3,667
Operating Cash Flow 1,860 1,632 5,545 4,672
Depreciation 869 774 2,480 2,370
Amortization 305 365 868 1,090
Operating Income 686 493 2,197 1,212
Interest expense (435) (565) (1,419) (1,579)
Investment income (loss), net 89 (178) 231 (407)
Equity in net losses of affiliates (29) (17) (66) (33)
Other income 63 25 82 60
(312) (735) (1,172) (1,959)
Income (Loss) from Continuing
Operations before Income
Taxes and Minority Interest 374 (242) 1,025 (747)
Income tax (expense) benefit (156) 103 (466) 231
Income (Loss) from Continuing
Operations
Before Minority Interest 218 (139) 559 (516)
Minority interest (income) expense 2 (14) (12) (85)
Income (Loss) from Continuing
Operations 220 (153) 547 (601)
Income from discontinued operations,
net of tax (1) - 39 - 168
Gain on discontinued operations, net
of tax (1) - 3,290 - 3,290
Net Income $220 $3,176 $547 $2,857
Basic and Diluted earnings (loss)
per common share
Income (loss) from continuing
operations $0.10 ($0.07) $0.24 ($0.27)
Income from discontinued
operations - 0.02 - 0.08
Gain on discontinued operations - 1.46 - 1.46
Net Income per common share $0.10 $1.41 $0.24 $1.27
Basic weighted average number of
common shares outstanding 2,234 2,257 2,249 2,256
Diluted weighted average number of
common shares outstanding 2,243 2,257 2,259 2,256
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)
September 30, December 31,
2004 2003
ASSETS
CURRENT ASSETS
Cash and cash equivalents $717 $1,550
Investments 2,256 2,493
Accounts receivable, net 940 907
Other current assets 469 453
Total current assets 4,382 5,403
INVESTMENTS 13,096 14,818
PROPERTY AND EQUIPMENT, NET 18,656 18,473
FRANCHISE RIGHTS 51,071 51,050
GOODWILL 14,334 14,841
OTHER INTANGIBLE ASSETS, net 4,196 3,859
OTHER NONCURRENT ASSETS, net 709 715
$106,444 $109,159
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $1,023 $1,251
Accrued expenses and other
current liabilities 4,152 4,563
Deferred income taxes 614 679
Current portion of long-term
debt 1,116 734
Current portion of
exchangeable debt 2,012 2,427
Total current liabilities 8,917 9,654
LONG-TERM DEBT, less current
portion 21,124 21,944
LONG-TERM EXCHANGEABLE DEBT, less
current portion 979 1,891
DEFERRED INCOME TAXES 26,414 25,900
OTHER NONCURRENT LIABILITIES 7,354 7,716
MINORITY INTEREST 458 392
STOCKHOLDERS' EQUITY 41,198 41,662
$106,444 $109,159
COMCAST CORPORATION
TABLE 3
Condensed Consolidated Statement of Cash Flows (Unaudited)
(dollars in millions)
Nine Months Ended
September 30,
2004 2003
OPERATING ACTIVITIES
Net cash provided by operating
activities from continuing operations $4,435 $2,519
FINANCING ACTIVITIES
Proceeds from borrowings 1,354 9,377
Retirements and repayments of debt (2,289) (13,675)
Repurchases of common stock (1,007)
Other, net 64 (3)
Net cash used in financing activities
from continuing operations (1,878) (4,301)
INVESTING ACTIVITIES
Capital expenditures (2,610) (3,093)
Proceeds from restructuring of TWE
investment 2,100
Proceeds from sales of investments
and assets held for sale 200 5,852
Acquisitions, net of cash acquired (296) (39)
Additions to intangibles and other
noncurrent assets (572) (139)
Other, net (112) (159)
Net cash (used in) provided by
investing activities from
continuing operations (3,390) 4,522
(DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS (833) 2,740
CASH AND CASH EQUIVALENTS, beginning
of period 1,550 505
CASH AND CASH EQUIVALENTS, end of
period $717 $3,245
TABLE 4
Calculation of Free Cash Flow (Unaudited)
(dollars in millions)
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
Operating Cash Flow 1,860 1,632 5,545 4,672
Interest, Net (1) 403 559 1,309 1,627
Cash paid for Income Taxes 39 14 189 67
Capital Expenditures 878 1,081 2,610 3,093
Free Cash Flow (2) $540 ($22) $1,437 ($115)
(1) Includes interest expense net of interest income and excludes non-
cash interest and subsidiary preferred dividends.
(2) Excludes items necessary to reconcile Free Cash Flow to Net Cash
Provided By Operating Activities less capital expenditures. These
items amounted to $384 million and ($251) million for the three
months ended September 30, 2004 and 2003 and $388 million and ($459)
million for the nine months ended September 30, 2004 and 2003.
These items are highlighted in footnotes 4 and 5 on Table 7-B.
COMCAST CORPORATION
TABLE 5
Pro Forma Financial Data by Business Segment (Unaudited) (1)
(dollars in millions)
Corporate
and
Content Other
Cable (2) (3) (4) Total
Three Months Ended September 30, 2004
Revenues $4,844 $207 $47 $5,098
Operating Cash Flow $1,858 $62 ($60) $1,860
Operating Income (Loss) $746 $20 ($80) $686
Operating Cash Flow Margin 38.4% 30.2% NM 36.5%
Capital Expenditures (5) $871 $4 $3 $878
Three Months Ended September 30, 2003
Revenues $4,378 $158 $14 $4,550
Operating Cash Flow $1,622 $58 ($46) $1,634
Operating Income (Loss) $536 $26 ($67) $495
Operating Cash Flow Margin 37.1% 36.9% NM 35.9%
Capital Expenditures (5) $1,045 $3 $33 $1,081
Nine Months Ended September 30, 2004
Revenues $14,334 $582 $161 $15,077
Operating Cash Flow $5,499 $208 ($160) $5,547
Operating Income (Loss) $2,327 $92 ($220) $2,199
Operating Cash Flow Margin 38.4% 35.8% NM 36.8%
Capital Expenditures (5) $2,578 $14 $18 $2,610
Nine Months Ended September 30, 2003
Revenues $12,995 $462 $159 $13,616
Operating Cash Flow $4,643 $155 ($121) $4,677
Operating Income (Loss) $1,344 $59 ($186) $1,217
Operating Cash Flow Margin 35.7% 33.6% NM 34.3%
Capital Expenditures (5) $3,045 $10 $38 $3,093
(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. All percentages are calculated based
on actual amounts. Minor differences may exist due to rounding.
(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, G4techTV and International Channel Networks.
(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. In addition,
beginning in the third quarter of 2004, Comcast-Spectacor includes
the operating results of its investment in a sports-event related
business.
(5) Our Cable segment's capital expenditures are comprised of the
following categories:
YTD YTD
3Q04 3Q03 9/30/04 9/30/03
Customer Premise Equipment (CPE) $392 $381 $1,022 $1,148
Scalable Infrastructure 152 92 383 227
Line Extensions 84 62 225 173
Upgrades 198 376 738 1,135
Support Capital 45 134 210 362
Total $871 $1,045 $2,578 $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). 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 6
Pro Forma Data - Cable Segment Components (Unaudited) (1) (2)
(dollars in millions, except average monthly revenue per
subscriber data)
Three Months Nine Months
Ended Ended
September 30, September 30,
2004 2003 2004 2003
Revenues:
Video (3) $3,222 $3,025 $9,655 $9,051
High-Speed Internet 808 586 2,269 1,626
Phone 173 188 528 618
Advertising 319 276 918 797
Other (4) 161 152 481 450
Franchise Fees 161 151 483 453
Total Revenues $4,844 $4,378 $14,334 $12,995
Operating Cash Flow $1,858 $1,622 $5,499 $4,643
Operating Income $746 $536 $2,327 $1,344
Operating Cash Flow Margin 38.4% 37.1% 38.4% 35.7%
Capital Expenditures $871 $1,045 $2,578 $3,045
Operating Cash Flow, Net of Capital
Expenditures $987 $577 $2,921 $1,598
Growth Growth
vs. vs.
3Q04 2Q04 3Q03 2Q04 3Q03
Video
Homes Passed (000's) 40,500 40,300 39,900 0.5% 1.5%
Basic Subscribers (000's) 21,487 21,479 21,470 - 0.1%
Basic Penetration 53.0% 53.3% 53.9%
Quarterly Net Basic Subscriber
Additions (000's) 9 -96 1 NM NM
Digital Subscribers (000's) 8,405 8,064 7,281 4.2% 15.4%
Digital Penetration 39.1% 37.5% 33.9%
Quarterly Net Digital Subscriber
Additions (000's) 341 206 319 65.5% 6.9%
Monthly Average Video Revenue per
Basic Subscriber $50.00 $50.30 $46.95 -0.6% 6.5%
Monthly Average Total Revenue per
Basic Subscriber $75.15 $74.94 $67.97 0.3% 10.6%
High-Speed Internet
"Available" Homes (000's) 38,060 37,323 33,435 2.0% 13.8%
Subscribers (000's) 6,554 6,005 4,862 9.1% 34.8%
Penetration 17.2% 16.1% 14.5%
Quarterly Net Subscriber Additions
(000's) 549 327 473 68.2% 16.2%
Monthly Average Revenue per
Subscriber $42.91 $43.52 $42.25 -1.4% 1.6%
Phone
"Available" Homes (000's) 9,978 9,766 9,382 2.2% 6.3%
Subscribers (000's) 1,213 1,225 1,312 -1.0% -7.5%
Penetration 12.2% 12.5% 14.0%
Quarterly Net Subscriber Additions
(000's) -12 -22 -55 47.1% 78.4%
Monthly Average Revenue per
Subscriber $47.18 $47.71 $46.99 -1.1% 0.4%
Total Revenue Generating Units
(000's) (5) 37,659 36,773 34,925 2.4% 7.8%
(1) See Non-GAAP and Other Financial Measures in Table 7. All percentages
are calculated based on actual amounts. Minor differences may exist
due to rounding.
(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 54,000 subscribers
acquired in various small acquisitions during the periods presented.
The impact of these acquisitions on our segment operating results 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 basic video, digital video, high-speed Internet
and phone customers, excluding additional outlets.
COMCAST CORPORATION
TABLE 7
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 7-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
September 30, 2004 Cable Content Other Total Cable Other forma
Revenues $4,844 $207 $47 $5,098 - - $5,098
Operating expenses
(excluding
depreciation and
amortization) 2,986 145 107 3,238 - - 3,238
Operating Cash Flow $1,858 $62 ($60) $1,860 - - $1,860
Depreciation and
amortization 1,112 42 20 1,174 - - 1,174
Operating income (loss) $746 $20 ($80) $686 - - $686
Capital expenditures $871 $4 $3 $878 - - $878
Adjustments (2)
Corporate Corporate
Three Months Ended and and Pro
September 30, 2003 Cable Content Other Total Cable Other forma
Revenues $4,374 $158 $14 $4,546 $4 - $4,550
Operating expenses
(excluding
depreciation and
amortization) 2,754 100 60 2,914 2 - 2,916
Operating Cash Flow $1,620 $58 ($46) $1,632 $2 - $1,634
Depreciation and
amortization 1,086 32 21 1,139 - - 1,139
Operating income (loss) $534 $26 ($67) $493 $2 - $495
Capital expenditures $1,045 $3 $33 $1,081 - - $1,081
Adjustments (2)
Corporate Corporate
Nine Months Ended and and Pro
September 30, 2004 Cable Content Other Total Cable Other forma
Revenues $14,329 $582 $161 $15,072 $5 - $15,077
Operating expenses
(excluding
depreciation and
amortization) 8,832 374 321 9,527 3 - 9,530
Operating Cash Flow $5,497 $208 ($160) $5,545 $2 - $5,547
Depreciation and
amortization 3,172 116 60 3,348 - - 3,348
Operating income (loss) $2,325 $92 ($220) $2,197 $2 - $2,199
Capital expenditures $2,578 $14 $18 $2,610 - - $2,610
Adjustments (2)
Corporate Corporate
Nine Months Ended and and Pro
September 30, 2003 Cable Content Other Total Cable Other forma
Revenues $12,985 $462 $159 $13,606 $10 - $13,616
Operating expenses
(excluding
depreciation and
amortization) 8,347 307 280 8,934 5 - 8,939
Operating Cash Flow $4,638 $155 ($121) $4,672 $5 - $4,677
Depreciation and
amortization 3,299 96 65 3,460 - - 3,460
Operating income (loss) $1,339 $59 ($186) $1,212 $5 - $1,217
Capital expenditures $3,045 $10 $38 $3,093 - - $3,093
Reconciliation of Total Debt to Debt Excluding Exchangeables (Unaudited)
(dollars in millions)
September 30, December 31,
2004 2003
Current portion of long-term debt $3,128 $3,161
Long-term debt 22,103 23,835
Total Debt $25,231 $26,996
Exchangeable debt 2,991 4,318
Debt excluding exchangeables $22,240 $22,678
Calculation of 2004 Estimated Free Cash Flow
(dollars in billions)
2003 Operating Income $2.0
Add: Depreciation and 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 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 guidance
of $1.8 to $1.9 billion.
(5) Mid point of 2004 estimated Consolidated cash paid for income taxes
guidance of $200 to $300 million.
COMCAST CORPORATION
TABLE 7-B continued
Reconciliation of Net Income to Free Cash Flow (Unaudited)
(dollars in millions, except per share data)
Three Months Ended
September 30,
2004 2003
per share per share
$ (2) $ (2)
Net Income as reported $220 $0.10 $3,176 $1.41
Discontinued Operations, net of tax - - (3,329) (1.48)
Non-operating items, net of tax (1) (81) (0.04) 120 0.06
Net Income (Loss) as adjusted $139 $0.06 ($33) ($0.01)
Items to reconcile net income (loss)
as adjusted to Operating Cash Flow:
Depreciation and amortization 1,174 0.52 1,139 0.50
Interest expense 435 0.19 565 0.25
Income tax expense (benefit) 112 0.06 (39) (0.02)
Operating Cash Flow $1,860 $0.83 $1,632 $0.72
2004 2003
Operating Cash Flow $1,860 $1,860 $1,632 $1,632
Less:
Interest, net (3) (403) (403) (559) (559)
Cash Paid for Income Taxes (39) (39) (14) (14)
Change in Operating Assets and
Liabilities, net of
acquisitions (4) (114) 551
Other (5) 498 (802)
Net Cash Provided by Operating
Activities $1,802 $808
Less: Capital Expenditures (878) (1,081)
Free Cash Flow $540 ($22)
Three Months Ended
September 30,
(1) Detail of non-operating items: 2004 2003
$ per share $ per share
(2) (2)
Investment (income) expense -
mark to market adjustments
on trading securities,
derivatives and hedged
items, net ($39) ($0.02) $213 $0.09
Investment (income) - gain
on sales and exchanges of
investments (35) (0.02) (4) -
Investment expense - investment
impairment losses (6) 7 - - -
All other, net (7) (58) (0.02) (25) (0.01)
Total non-operating items (125) (0.06) 184 0.08
Tax Effect 44 0.02 (64) (0.02)
Non-operating items, net of
tax ($81) ($0.04) $120 $0.06
Nine Months Ended
September 30,
2004 2003
per share per share
$ (2) $ (2)
Net Income as reported $547 $0.24 $2,857 $1.27
Discontinued Operations, net of tax - - (3,458) (1.54)
Non-operating items, net of tax (1) (153) (0.07) 302 0.14
Net Income (Loss) as adjusted $394 $0.17 ($299) ($0.13)
Items to reconcile net income (loss)
as adjusted to Operating Cash Flow:
Depreciation and amortization 3,348 1.48 3,460 1.53
Interest expense 1,419 0.63 1,579 0.70
Income tax expense (benefit) 384 0.17 (68) (0.03)
Operating Cash Flow $5,545 $2.45 $4,672 $2.07
2004 2004 2003 2003
Operating Cash Flow $5,545 $5,545 $4,672 $4,672
Less:
Interest, net (3) (1,309) (1,309) (1,627) (1,627)
Cash Paid for Income Taxes (189) (189) (67) (67)
Change in Operating Assets and
Liabilities, net of
acquisitions (4) (111) 298
Other (5) 499 (757)
Net Cash Provided by Operating
Activities $4,435 $2,519
Less: Capital Expenditures (2,610) (3,093)
Free Cash Flow $1,437 ($115)
Nine Months Ended
September 30,
(1) Detail of non-operating items: 2004 2003
$ per share $ per share
(2) (2)
Investment (income) expense -
mark to market adjustments on trading
securities, derivatives and
hedged items, net ($140) ($0.06) $478 $0.21
Investment (income) - gain
on sales and exchanges of
investments (36) (0.02) (27) (0.01)
Investment expense - investment
impairment losses (6) 10 - 70 0.03
All other, net (7) (69) (0.02) (56) (0.02)
Total non-operating items (235) (0.10) 465 0.21
Tax Effect 82 0.03 (163) (0.07)
Non-operating items, net of tax ($153) ($0.07) $302 $0.14
2) Diluted weighted average shares outstanding for the three and
nine months ended September 30, 2004 were 2.243 billion and 2.259
billion, respectively. Diluted weighted average shares outstanding
for the three and nine months ended September 30, 2003 were 2.257
billion and 2.256 billion, respectively.
3) Includes interest expense net of interest income and excludes
non-cash interest and subsidiary preferred dividends.
4) Included in the nine months ended September 30, 2004 is $536
million of income tax refund received in the second quarter of 2004.
5) Includes non-cash expenses included in Operating Cash Flow such
as equity compensation, cash proceeds from sales of trading
securities ($85 million related to Sprint PCS year to date 2Q03 and
$547 million related to Liberty Media in 3Q04), cash related to other
(income) expense, dividends and the net effect of changes in
accrued income taxes.
6) We record losses on our investments for which we have determined that
a decline in value of the investment is other than temporary.
7) Includes investment, interest and dividend income, equity in net
(income) losses of affiliates, other (income) expense and minority
interest.
SOURCE Comcast Corporation
-0- 10/27/2004
/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 Corporation/
/Web site: http://www.comcast.com /
/Web site: http://www.cmcsk.com
http://www.cmcsa.com /
(CMCSA CMCSK)
CO: Comcast Corporation
ST: Pennsylvania
IN: ENT TVN CPR ITE MLM
SU: ERN ERP MAV CCA