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Form 10-Q, June 30, 2008
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x

Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2008

OR

 

¨

Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Transition Period from                      to                     .

Commission File Number 001-32871

 

 

LOGO

COMCAST CORPORATION

(Exact name of registrant as specified in its charter)

 

PENNSYLVANIA   27-0000798
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)
One Comcast Center, Philadelphia, PA   19103-2838
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (215) 286-1700

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such requirements for the past 90 days.

Yes x No ¨

 

 

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x                          Accelerated filer ¨                      Non-accelerated filer ¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ¨ No x

As of June 30, 2008, there were 2,058,872,104 shares of our Class A Common Stock, 849,856,706 shares of our Class A Special Common Stock and 9,444,375 shares of our Class B Common Stock outstanding.

 

 

 


Table of Contents

TABLE OF CONTENTS

          

Page

Number

PART I. FINANCIAL INFORMATION   

Item 1.

  Financial Statements    2
  Condensed Consolidated Balance Sheet as of June 30, 2008 and December 31, 2007 (Unaudited)    2
  Condensed Consolidated Statement of Operations for the Three and Six Months Ended June 30, 2008 and 2007 (Unaudited)    3
  Condensed Consolidated Statement of Cash Flows for the Six Months Ended June 30, 2008 and 2007 (Unaudited)    4
  Notes to Condensed Consolidated Financial Statements (Unaudited)    5

Item 2.

  Management’s Discussion and Analysis of Financial Condition and Results of Operations    23

Item 3.

  Quantitative and Qualitative Disclosures About Market Risk    29

Item 4.

  Controls and Procedures    29
PART II. OTHER INFORMATION   

Item 1.

  Legal Proceedings    30

Item 1A.

  Risk Factors    30

Item 2.

  Unregistered Sales of Equity Securities and Use of Proceeds    30

Item 4.

  Submission of Matters to a Vote of Security Holders    31

Item 6.

  Exhibits    32
SIGNATURES    33

 

 

This Quarterly Report on Form 10-Q is for the three and six months ended June 30, 2008. This Quarterly Report modifies and supersedes documents filed prior to this Quarterly Report. The Securities and Exchange Commission (“SEC”) allows us to “incorporate by reference” information that we file with them, which means that we can disclose important information to you by referring you directly to those documents. Information incorporated by reference is considered to be part of this Quarterly Report. In addition, information that we file with the SEC in the future will automatically update and supersede information contained in this Quarterly Report. Throughout this Quarterly Report, we refer to Comcast Corporation as “Comcast;” Comcast and its consolidated subsidiaries as “we,” “us” and “our;” and Comcast Holdings Corporation as “Comcast Holdings.”

You should carefully review the information contained in this Quarterly Report and particularly consider any risk factors that we set forth in this Quarterly Report and in other reports or documents that we file from time to time with the SEC. In this Quarterly Report, we state our beliefs of future events and of our future financial performance. In some cases, you can identify these so-called “forward-looking statements” by words such as “may,” “will,” “should,” “expects,” “believes,” “estimates,” “potential,” or “continue,” or the negative of those words, and other comparable words. You should be aware that those statements are only our predictions. In evaluating those statements, you should specifically consider various factors, including the risks outlined below. Actual events or our actual results may differ materially from any of our forward-looking statements. We undertake no obligation to update any forward-looking statements.

Our businesses may be affected by, among other things, the following:

 

   

all of the services offered by our cable systems face a wide range of competition that could adversely affect our future results of operations

 

 

   

we may face increased competition because of technological advances and new regulatory requirements, which could adversely affect our future results of operations

 

 

   

programming expenses are increasing, which could adversely affect our future results of operations

 

 

   

we are subject to regulation by federal, state and local governments, which may impose additional costs and restrictions

 

 

   

weakening economic conditions may reduce subscriber spending on video, Internet and phone services and may reduce our rate of growth of subscriber additions

 

 

   

we face risks arising from the outcome of various litigation matters

 

 

   

acquisitions and other strategic transactions present many risks, and we may not realize the financial and strategic goals that were contemplated at the time of any transaction

 

 

   

our Class B common stock has substantial voting rights and separate approval rights over several potentially material transactions, and our Chairman and CEO has considerable influence over our operations through his beneficial ownership of our Class B common stock

 

 

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Table of Contents

PART I: FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheet

(Unaudited)

 

(in millions, except share data)  

June 30,

2008

   

December 31,

2007

 

ASSETS

   

Current Assets:

   

Cash and cash equivalents

  $ 1,767     $ 963  

Investments

    295       98  

Accounts receivable, less allowance for doubtful accounts of $183 and $181

    1,665       1,645  

Other current assets

    920       961  

Total current assets

    4,647       3,667  

Investments

    5,366       7,963  

Property and equipment, net of accumulated depreciation of $21,574 and $19,808

    23,833       23,624  

Franchise rights

    59,449       58,077  

Goodwill

    15,074       14,705  

Other intangible assets, net of accumulated amortization of $7,554 and $6,977

    4,614       4,739  

Other noncurrent assets, net

    914       642  

Total assets

  $ 113,897     $ 113,417  

LIABILITIES AND STOCKHOLDERS’ EQUITY

   

Current Liabilities:

   

Accounts payable and accrued expenses related to trade creditors

  $ 3,027     $ 3,336  

Accrued expenses and other current liabilities

    3,173       3,121  

Current portion of long-term debt

    1,889       1,495  

Total current liabilities

    8,089       7,952  

Long-term debt, less current portion

    30,624       29,828  

Deferred income taxes

    27,292       26,880  

Other noncurrent liabilities

    7,207       7,167  

Minority interest

    348       250  

Commitments and Contingencies (Note 11)

   

Stockholders’ Equity:

   

Preferred stock—authorized, 20,000,000 shares; issued, zero

           

Class A common stock, $0.01 par value—authorized, 7,500,000,000 shares; issued, 2,424,332,854 and 2,419,025,659; outstanding, 2,058,872,104 and 2,053,564,909

    24       24  

Class A Special common stock, $0.01 par value—authorized, 7,500,000,000 shares; issued, 920,791,470 and 1,018,960,463; outstanding, 849,856,706 and 948,025,699

    9       10  

Class B common stock, $0.01 par value—authorized, 75,000,000 shares; issued and outstanding, 9,444,375

           

Additional paid-in capital

    40,913       41,688  

Retained earnings

    6,967       7,191  

Treasury stock—365,460,750 Class A common shares and 70,934,764 Class A Special common shares

    (7,517 )     (7,517 )

Accumulated other comprehensive income (loss)

    (59 )     (56 )

Total stockholders’ equity

    40,337       41,340  

Total liabilities and stockholders’ equity

  $ 113,897     $ 113,417  

See notes to condensed consolidated financial statements.

 

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Table of Contents

Condensed Consolidated Statement of Operations

(Unaudited)

 

   

Three Months Ended

    June 30    

   

Six Months Ended

    June 30    

 
(in millions, except per share data)   2008     2007     2008     2007  

Revenue

  $ 8,553     $ 7,712     $ 16,942     $ 15,100  

Costs and Expenses:

       

Operating (excluding depreciation and amortization)

    3,091       2,754       6,198       5,513  

Selling, general and administrative

    2,111       1,946       4,219       3,812  

Depreciation

    1,371       1,252       2,761       2,477  

Amortization

    230       292       459       569  
      6,803       6,244       13,637       12,371  

Operating income

    1,750       1,468       3,305       2,729  

Other Income (Expense):

       

Interest expense

    (618 )     (550 )     (1,239 )     (1,118 )

Investment income (loss), net

    (70 )     126       9       300  

Equity in net (losses) income of affiliates, net

    (13 )     (16 )     (48 )     (37 )

Other income (expense)

    25       1       293       514  
      (676 )     (439 )     (985 )     (341 )

Income before income taxes and minority interest

    1,074       1,029       2,320       2,388  

Income tax expense

    (455 )     (453 )     (963 )     (979 )

Income before minority interest

    619       576       1,357       1,409  

Minority interest

    13       12       7       16  

Net income

  $ 632     $ 588     $ 1,364     $ 1,425  

Basic earnings per common share

  $ 0.21     $ 0.19     $ 0.46     $ 0.46  

Diluted earnings per common share

  $ 0.21     $ 0.19     $ 0.46     $ 0.45  

Dividends declared per common share

  $ 0.0625     $     $ 0.1250     $  

See notes to condensed consolidated financial statements.

 

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Table of Contents

Condensed Consolidated Statement of Cash Flows

(Unaudited)

 

   

Six Months Ended

June 30

 
(in millions)   2008     2007  

Net cash provided by operating activities

  $ 4,928     $ 3,907  

 

Financing Activities:

   

Proceeds from borrowings

    2,009       590  

Retirements and repayments of debt

    (831 )     (1,320 )

Repurchases of common stock

    (1,979 )     (1,252 )

Dividends paid

    (185 )      

Issuances of common stock

    42       334  

Other

    (135 )     52  

Net cash provided by (used in) financing activities

    (1,079 )     (1,596 )

Investing Activities:

   

Capital expenditures

    (2,731 )     (3,058 )

Cash paid for intangible assets

    (245 )     (229 )

Acquisitions, net of cash acquired

    (331 )     (770 )

Proceeds from sales of investments

    320       1,288  

Purchases of investments

    (41 )     (52 )

Proceeds from sales (purchases) of short-term investments

          56  

Other

    (17 )     43  

Net cash provided by (used in) investing activities

    (3,045 )     (2,722 )

Increase (decrease) in cash and cash equivalents

    804       (411 )

Cash and cash equivalents, beginning of period

    963       1,239  

Cash and cash equivalents, end of period

  $ 1,767     $ 828  

See notes to condensed consolidated financial statements.

 

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Table of Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1: Condensed Consolidated Financial Statements

Basis of Presentation

We have prepared these unaudited condensed consolidated financial statements based on Securities and Exchange Commission (“SEC”) rules that permit reduced disclosure for interim periods. These financial statements include all adjustments that are necessary for a fair presentation of our results of operations and financial condition for the periods shown, including normal, recurring accruals and other items. The results of operations for the interim periods presented are not necessarily indicative of results for the full year.

The year-end condensed balance sheet was derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles in the United States (“GAAP”). For a more complete discussion of our accounting policies and certain other information, refer to our annual financial statements for the preceding fiscal year as filed with the SEC.

Note 2: Recent Accounting Pronouncements

SFAS No. 157

In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157, “Fair Value Measurements,” (“SFAS No. 157”). SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands disclosure requirements for fair value measurements. SFAS No. 157 is effective for financial assets and financial liabilities in fiscal years beginning after November 15, 2007 and for nonfinancial assets and nonfinancial liabilities in fiscal years beginning after March 15, 2008. Effective January 1, 2008, we adopted the provisions of SFAS No. 157 that relate to our financial assets and financial liabilities. We are currently evaluating the impact of the provisions of SFAS No. 157 that relate to our nonfinancial assets and nonfinancial liabilities, which are effective for us as of January 1, 2009. See Note 8 for further details regarding the adoption of this standard.

SFAS No. 159

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities,” (“SFAS No. 159”), which provides the option to report certain financial assets and financial liabilities at fair value, with the intent to mitigate the volatility in financial reporting that can occur when related assets and liabilities are recorded on different bases. SFAS No. 159 amends SFAS No. 95, “Statement of Cash Flows,” (“SFAS No. 95”) and SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” (“SFAS No. 115”). SFAS No. 159 specifies that cash flows from trading securities, including securities for which an entity has elected the fair value option, should be classified in the statement of cash flows based on the nature of and purpose for which the securities were acquired. Before this amendment, SFAS No. 95 and SFAS No. 115 specified that cash flows from trading securities must be classified as cash flows from operating activities. Effective January 1, 2008, we adopted SFAS No. 159. We have not elected the fair value option for any financial assets or financial liabilities. Upon adoption, we reclassified for the six months ended June 30, 2007 and the year ended December 31, 2007 approximately $483 million and $603 million, respectively, of proceeds from the sale of trading securities within our statement of cash flows from operating activities to investing activities. The adoption of SFAS No. 159 had no effect on our statement of cash flows for the year ended December 31, 2006. We will classify proceeds from future sales based on the nature of the securities and the purpose for which they were acquired.

 

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SFAS No. 161

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities,” (“SFAS No. 161”). SFAS No. 161 amends and expands the disclosure requirements of SFAS No. 133, “Derivative Instruments and Hedging Activities,” (“SFAS No. 133”). It requires enhanced disclosure about (i) how and why an entity uses derivative instruments, (ii) how derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations, and (iii) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. SFAS No. 161 is effective for us as of January 1, 2009.

EITF Issue No. 06-10

In March 2007, the Emerging Issues Task Force (“EITF”) reached a consensus on EITF Issue No. 06-10, “Accounting for Deferred Compensation and Postretirement Benefit Aspects of Collateral Assignment Split-Dollar Life Insurance Arrangements,” (“EITF 06-10”). EITF 06-10 provides that an employer should recognize a liability for the postretirement benefit related to collateral assignment split-dollar life insurance arrangements. We adopted EITF 06-10 on January 1, 2008, at which time we adjusted beginning retained earnings and recorded a liability of approximately $130 million.

Note 3: Earnings Per Share

Basic earnings per common share (“Basic EPS”) is computed by dividing net income for common stockholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per common share (“Diluted EPS”) considers the impact of potentially dilutive securities except in periods where there is a loss because the inclusion of the potential common shares would have an antidilutive effect. Our potentially dilutive securities include potential common shares related to our stock options and our restricted share units (“RSUs”).

Diluted EPS for the three and six months ended June 30, 2008 excludes approximately 146 million and 165 million potential common shares, respectively, related to our share-based compensation plans, because their inclusion would have had an antidilutive effect. For the three and six months ended June 30, 2007, Diluted EPS excluded approximately 39 million potential common shares.

Computation of Diluted EPS

 

    Three Months Ended June 30
    2008    2007
(in millions, except per share data)   Income    Shares   

Per Share

Amount

   Income    Shares   

Per Share

Amount

Basic EPS

  $ 632    2,957    $ 0.21    $ 588    3,113    $ 0.19

Effect of dilutive securities:

                

Assumed exercise or issuance of shares relating to stock plans

         13                  34       

Diluted EPS

  $ 632    2,970    $ 0.21    $ 588    3,147    $ 0.19
    Six Months Ended June 30
    2008    2007
(in millions, except per share data)   Income    Shares   

Per Share

Amount

   Income    Shares   

Per Share

Amount

Basic EPS

  $ 1,364    2,983    $ 0.46    $ 1,425    3,119    $ 0.46

Effect of dilutive securities:

                

Assumed exercise or issuance of shares relating to stock plans

         12                  36       

Diluted EPS

  $ 1,364    2,995    $ 0.46    $ 1,425    3,155    $ 0.45

 

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Note 4: Acquisitions and Other Significant Events

Insight Midwest Partnership

In April 2007, we and Insight Communications (“Insight”) agreed to divide the assets and liabilities of Insight Midwest, a 50%-50% cable system partnership with Insight (the “Insight transaction”). On December 31, 2007, we contributed approximately $1.3 billion to Insight Midwest for our share of the partnership’s debt. On January 1, 2008, the distribution of the assets of Insight Midwest was completed without the assumption of any of Insight’s debt by us and we received cable systems serving approximately 696,000 video subscribers in Illinois and Indiana (the “Comcast asset pool”). Insight received cable systems serving approximately 652,000 video subscribers, together with approximately $1.24 billion of debt allocated to those cable systems (the “Insight asset pool”). We accounted for our interest in Insight Midwest as an equity method investment until the Comcast asset pool was distributed to us on January 1, 2008. We accounted for the distribution of assets by Insight Midwest as a sale of our 50% interest in the Insight asset pool in exchange for our acquiring an additional 50% interest in the Comcast asset pool. The estimated fair value of the 50% interest of the Comcast asset pool we received was approximately $1.2 billion and resulted in a pretax gain of approximately $235 million, which is included in other income (expense). We recorded our 50% interest in the Comcast Asset Pool as a step acquisition in accordance with SFAS No. 141, “Business Combinations,” (“SFAS No. 141”). The valuation of assets and estimated gain are based on preliminary valuations. Refinements may occur as the valuations are finalized. The exchange of our 50% interest in the Insight asset pool for Insight’s 50% interest in the Comcast asset pool is a noncash investing activity.

Unaudited Pro Forma Information

The following unaudited pro forma information has been presented as if the Insight transaction had occurred on January 1, 2007. It is based on historical results of operations, adjusted for purchase price allocations, and is not necessarily indicative of what the results would have been had we operated the cable systems since January 1, 2007.

 

(in millions, except per share data)  

Three Months Ended

June 30, 2007

  

Six Months Ended

June 30, 2007

Revenue

  $ 7,882    $ 15,432

Net income

  $ 600    $ 1,446

Basic EPS

  $ 0.19    $ 0.46

Diluted EPS

  $ 0.19    $ 0.46

Note 5: Investments

 

(in millions)   June 30,
2008
   December 31,
2007

Fair value method

  $ 2,156    $ 2,701

Equity method, primarily SpectrumCo, LLC at June 30, 2008 and Insight Midwest and SpectrumCo, LLC at December 31, 2007

    1,800      3,682

Cost method, primarily AirTouch

    1,705      1,678

Total investments

    5,661      8,061

Less: Current investments

    295      98

Noncurrent investments

  $ 5,366    $ 7,963

We accounted for our interest in Insight Midwest as an equity method investment until January 1, 2008, the date the Comcast asset pool was distributed to us (see Note 4).

 

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Components of Investment Income (Loss), Net

 

     Three Months Ended
June 30
     Six Months Ended
June 30
 
(in millions)        2008             2007              2008             2007      

Interest and dividend income

   $ 18     $ 34      $ 37     $ 90  

Gains on sales and exchanges of investments, net

     2       57        13       99  

Investment impairment losses

           (2 )      (2 )     (3 )

Unrealized gains (losses) on trading securities and hedged items

     (26 )     277        (290 )     493  

Mark to market adjustments on derivatives related to trading securities and hedged items

     (21 )     (243 )      273       (419 )

Mark to market adjustments on derivatives

     (43 )     3        (22 )     40  

Investment income (loss), net

   $ (70 )   $ 126      $ 9     $ 300  

Note 6: Goodwill

The changes in the carrying amount of goodwill by business segment for the six months ended June 30, 2008 are presented in the table below.

 

(in millions)   Cable    Programming    Corporate
and Other
   Total

Balance, December 31, 2007

  $ 12,842    $ 1,482    $ 381    $ 14,705

Settlements and adjustments

    12           5      17

Acquisitions

    304      38      10      352

Balance, June 30, 2008

  $ 13,158    $ 1,520    $ 396    $ 15,074

Acquisitions for the six months ended June 30, 2008 primarily relate to the Insight transaction, the acquisition of an additional interest in Pacific Regional Programming Partners, which operates the Comcast SportsNet Bay Area network, and various other smaller acquisitions.

Note 7: Long-Term Debt

In May 2008, we issued $1.0 billion principal amount of 5.70% notes due 2018 and $1.0 billion principal amount of 6.40% notes due 2038. We used the net proceeds of this offering for the repayment of certain debt obligations, repurchases of our common stock, working capital and general corporate purposes.

Note 8: Fair Value of Financial Assets and Financial Liabilities

Effective January 1, 2008, we adopted the provisions of SFAS No. 157 that relate to our financial assets and financial liabilities as discussed in Note 2. SFAS No. 157 establishes a hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques (market approach, income approach and cost approach). The levels of the hierarchy are described below:

 

   

Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities

 

 

   

Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active

 

 

   

Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions

 

 

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Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of financial assets and financial liabilities and their placement within the fair value hierarchy. Our financial assets and financial liabilities that are accounted for at fair value on a recurring basis are presented in the table below.

 

Recurring Fair Value Measures
    Fair value as of June 30, 2008
(in millions)   Level 1    Level 2    Level 3    Total

Assets

          

Trading securities

  $ 1,759    $    $  —    $ 1,759

Available-for-sale securities

    16      378           394

Equity warrants

              3      3

Cash surrender value of life insurance policies

         140           140

Interest rate exchange agreements

         31           31
    $ 1,775    $ 549    $ 3    $ 2,327

Liabilities

          

Indexed debt instruments

  $    $ 102    $    $ 102

Prepaid forward sale agreements

         381           381

Interest rate exchange agreements

         17           17
    $    $ 500    $    $ 500

Note 9: Stockholders’ Equity

Share-Based Compensation

Our Board of Directors may grant share-based awards, in the form of stock options and RSUs, to certain employees and directors. Additionally, through our employee stock purchase plan, employees are able to purchase shares of Comcast stock at a discount through payroll deductions.

In March 2008, we granted 21.1 million stock options and 7.3 million RSUs related to our annual management grant program. The fair values associated with these grants were $6.48 per stock option and $18.14 per RSU.

 

Recognized Share-Based Compensation Expense
    Three Months Ended
June 30
   Six Months Ended
June 30
(in millions)       2008            2007            2008            2007    

Stock options

  $ 24    $ 23    $ 44    $ 37

Restricted share units

    23      21      43      34

Employee stock purchase plan

    3      4      8      7

Total share-based compensation expense

  $ 50    $ 48    $ 95    $ 78

As of June 30, 2008, there was $341 million and $330 million of unrecognized pretax compensation cost related to nonvested stock options and nonvested RSUs, respectively.

Comprehensive Income

Our total comprehensive income is presented in the table below.

 

     Three Months Ended
June 30
     Six Months Ended
June 30
 
(in millions)        2008             2007              2008             2007      

Net income

   $ 632     $ 588      $ 1,364     $ 1,425  

Holding (losses) gains during the period

     (5 )     11        (10 )      

Reclassification adjustments for losses (gains) included in net income

     2       (53 )      6       (93 )

Employee benefit obligations

                  (1 )      

Cumulative translation adjustments

     1       1        2       7  

Comprehensive income

   $ 630     $ 547      $ 1,361     $ 1,339  

 

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Note 10: Statement of Cash Flows—Supplemental Information

 

Components of Operating Activities  
    Six Months Ended
June 30
 
(in millions)       2008             2007      

Net income

  $ 1,364     $ 1,425  

Adjustments to reconcile net income to net cash provided by operating activities:

   

Depreciation

    2,761       2,477  

Amortization

    459       569  

Share-based compensation

    123       78  

Noncash interest expense (income), net

    132       49  

Equity in net losses (income) of affiliates, net

    48       37  

(Gains) losses on investments and noncash other (income) expense, net

    (243 )     (746 )

Noncash contribution expense

          8  

Minority interest

    (7 )     (16 )

Deferred income taxes

    403       197  

Changes in operating assets and liabilities, net of effects of acquisitions and divestitures:

   

Change in accounts receivable, net

    (7 )     72  

Change in accounts payable and accrued expenses related to trade creditors

    (69 )     (80 )

Change in other operating assets and liabilities

    (36 )     (163 )

Net cash provided by operating activities

  $ 4,928     $ 3,907  

 

Cash Payments for Interest and Income Taxes
     Three Months Ended
June 30
   Six Months Ended
June 30
(in millions)        2008            2007            2008            2007    

Interest

   $ 408    $ 416    $ 1,116    $ 1,078

Income taxes

   $ 335    $ 613    $ 355    $ 647

Noncash Financing and Investing Activities

During the six months ended June 30, 2008, we:

 

   

exchanged our 50% interest in the Insight asset pool for Insight’s 50% interest in the Comcast asset pool, which is a noncash investing activity

 

 

   

recorded a liability of approximately $182 million for a quarterly cash dividend of $0.0625 per common share paid in July 2008, which is a noncash financing activity

 

 

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Note 11: Commitments and Contingencies

Commitments

Certain of our subsidiaries support debt compliance with respect to obligations of certain cable television partnerships and investments in which we hold an ownership interest. The obligations expire between September 2008 and March 2011. Although there can be no assurance, we believe that we will not be required to meet our obligations under such commitments. The total notional amount of our commitments was $445 million as of June 30, 2008, at which time there were no quoted market prices for similar agreements. This amount reflects a decrease of $520 million from December 31, 2007 as a result of the Insight transaction (see Note 4).

Contingencies

Antitrust Cases

We are defendants in two purported class actions originally filed in the United States District Courts for the District of Massachusetts and the Eastern District of Pennsylvania, respectively. The potential class in the Massachusetts case is our subscriber base in the “Boston Cluster” area, and the potential class in the Pennsylvania case is our subscriber base in the “Philadelphia and Chicago Clusters,” as those terms are defined in the complaints. In each case, the plaintiffs allege that certain subscriber exchange transactions with other cable providers resulted in unlawful horizontal market restraints in those areas and seek damages under antitrust statutes, including treble damages.

Our motion to dismiss the Pennsylvania case on the pleadings was denied and classes of Philadelphia Cluster and Chicago Cluster subscribers were certified. Our motion to dismiss the Massachusetts case, which was subsequently transferred to the Eastern District of Pennsylvania, was also denied. We are proceeding with discovery on plaintiffs’ claims concerning the Philadelphia Cluster. Plaintiffs’ claims concerning the other two clusters are stayed pending determination of the Philadelphia Cluster claims.

In addition, we are among the defendants in a purported class action filed in the United States District Court for the Central District of California (“Central District”) in September 2007. The plaintiffs allege that the defendants who produce video programming have entered into agreements with the defendants who distribute video programming via cable and satellite (including us, among others), which preclude the distributors from reselling channels to subscribers on an “unbundled” basis in violation of federal antitrust laws. The plaintiffs seek treble damages for the loss of their ability to pick and choose the specific “bundled” channels to which they wish to subscribe, and injunctive relief requiring each distributor defendant to resell certain channels to its subscribers on an “unbundled” basis. The potential class is comprised of all persons residing in the United States who have subscribed to an expanded basic level of video service provided by one of the distributor defendants. We and the other defendants filed motions to dismiss an amended complaint in April 2008. In June 2008, the Central District denied the motions to dismiss. In July 2008, we and the other defendants filed motions to certify certain issues decided in the Central District’s June 2008 order for interlocutory appeal to the Ninth Circuit Court of Appeals. The Central District has scheduled a hearing on these motions for August 4, 2008.

Securities and Related Litigation

We and several of our current and former officers were named as defendants in a purported class action lawsuit filed in the United States District Court for the Eastern District of Pennsylvania (“Eastern District”) in January 2008. We filed a motion to dismiss the case in February 2008. The plaintiff did not respond, but instead sought leave to amend the complaint, which the court granted. The plaintiff filed an amended complaint in May 2008 naming only us and two current officers as defendants. The alleged class comprises purchasers of our publicly issued securities between February 1, 2007 and December 4, 2007. The plaintiff asserts that during the alleged class period, the defendants violated federal securities laws through alleged material misstatements and omissions relating to forecast results for 2007. The plaintiff seeks unspecified damages. In June 2008, we filed a motion to dismiss the amended complaint. The court has not yet scheduled a hearing on the motion.

We, our directors and one of our current officers have also been named as defendants in a separate purported class action lawsuit filed in the Eastern District in February 2008. The alleged class comprises participants in our retirement-investment (401(k)) plan that invested in the plan’s company stock account. The plaintiff asserts that

 

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the defendants breached their fiduciary duties in managing the plan. The plaintiff seeks unspecified damages. The plaintiff filed an amended complaint in June 2008, and in July 2008 we filed a motion to dismiss the amended complaint.

Patent Litigation

We are a defendant in several unrelated lawsuits claiming infringement of various patents relating to various aspects of our businesses. In certain of these cases other industry participants are also defendants, and also in certain of these cases we expect that any potential liability would be in part or in whole the responsibility of our equipment vendors under applicable contractual indemnification provisions.

* * *

We believe the claims in each of the actions described above in this item are without merit and intend to defend the actions vigorously. The final disposition of any of the above actions is not expected to have a material adverse effect on our consolidated financial position, but could possibly be material to our consolidated results of operations or cash flows for any one period.

Other

We are subject to other legal proceedings and claims that arise in the ordinary course of our business. The amount of ultimate liability with respect to such actions is not expected to materially affect our financial position, results of operations or cash flows.

 

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Note 12: Financial Data by Business Segment

Our reportable segments consist of our Cable and Programming businesses. In evaluating the profitability of our segments, the components of net income (loss) below operating income (loss) before depreciation and amortization are not separately evaluated by our management. Assets are not allocated to segments for management reporting, although over 95% of our assets relate to our Cable segment. Our financial data by business segment is presented below.

 

(in millions)   Cable(a)(b)    Programming(c)    Corporate and
Other(d)(e)
    Eliminations(e)(f)     Total

Three months ended June 30, 2008

           

Revenue(g)

  $ 8,100    $ 366    $ 142     $ (55 )   $ 8,553

Operating income (loss) before depreciation and amortization(h)

    3,362      89      (98 )     (2 )     3,351

Depreciation and amortization

    1,537      45      27       (8 )     1,601

Operating income (loss)

    1,825      44      (125 )     6       1,750

Capital expenditures

    1,254      6      40             1,300

Three months ended June 30, 2007

           

Revenue(g)

  $ 7,330    $ 334    $ 103     $ (55 )   $ 7,712

Operating income (loss) before depreciation and amortization(h)

    3,031      75      (92 )     (2 )     3,012

Depreciation and amortization

    1,471      46      32       (5 )     1,544

Operating income (loss)

    1,560      29      (124 )     3       1,468

Capital expenditures

    1,586      10      8             1,604

Six months ended June 30, 2008

           

Revenue(g)

  $ 16,016    $ 729    $ 325     $ (128 )   $ 16,942

Operating income (loss) before depreciation and amortization(h)

    6,504      202      (180 )     (1 )     6,525

Depreciation and amortization

    3,085      99      51       (15 )     3,220

Operating income (loss)

    3,419      103      (231 )     14       3,305

Capital expenditures

    2,609      10      112             2,731

Six months ended June 30, 2007

           

Revenue(g)

  $ 14,328    $ 636    $ 258     $ (122 )   $ 15,100

Operating income (loss) before depreciation and amortization(h)

    5,824      140      (187 )     (2 )     5,775

Depreciation and amortization

    2,911      93      52       (10 )     3,046

Operating income (loss)

    2,913      47      (239 )     8       2,729

Capital expenditures

    3,029      14      15             3,058

 

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(a)

For the three and six months ended June 30, 2008 and 2007, Cable segment revenue was derived from the following services:

 

   

Three Months Ended

June 30

   

Six Months Ended

June 30

 
     2008     2007     2008     2007  

Video

  58.4 %   60.9 %   58.9 %   61.6 %

High-speed Internet

  22.1     21.7     22.1     21.7  

Phone

  7.9     5.7     7.7     5.4  

Advertising

  4.9     5.4     4.6     5.0  

Franchise fees

  2.8     2.9     2.8     2.9  

Other

  3.9     3.4     3.9     3.4  

Total

  100 %   100 %   100 %   100 %

Subscription revenue received from subscribers who purchase bundled services at a discounted rate is allocated proportionately to each service based on the individual service’s price on a stand-alone basis.

 

(b)

Our Cable segment includes our regional sports and news networks.

 

(c)

Programming consists primarily of our consolidated national programming networks, including E!, The Golf Channel, VERSUS, G4 and Style.

 

(d)

Corporate and Other includes Comcast Spectacor, Comcast Interactive Media, a portion of the operating results of our less than wholly owned technology development ventures (see “(e)” below), corporate activities and all other businesses not presented in our Cable or Programming segments.

 

(e)

We consolidate our less than wholly owned technology development ventures, which we control or of which we are considered the primary beneficiary. These ventures are with various corporate partners, such as Motorola and Gemstar. The ventures have been created to share the costs of development of new technologies for set-top boxes and other devices. The results of these entities are included within Corporate and Other. Cost allocations are made to the Cable segment based on our percentage ownership in each entity. The remaining net costs related to the minority corporate partners are included in Corporate and Other.

 

(f)

Included in the Eliminations column are transactions that our segments enter into with one another. The most common types of transactions are the following:

 

   

our Programming segment generates revenue by selling cable network programming to our Cable segment, which represents a substantial majority of the revenue elimination amount

 

 

   

our Cable segment receives incentives offered by our Programming segment when negotiating programming contracts that are recorded as a reduction to programming expenses

 

 

   

our Cable segment generates revenue by selling the use of satellite feeds to our Programming segment

 

 

(g)

Non-U.S. revenue was not significant in any period. No single customer accounted for a significant amount of our revenue in any period.

 

(h)

To measure the performance of our operating segments, we use operating income (loss) before depreciation and amortization, excluding impairment charges related to fixed and intangible assets, and gains or losses from the sale of assets, if any. This measure eliminates the significant level of noncash depreciation and amortization expense that results from the capital-intensive nature of our businesses and from intangible assets recognized in business combinations. Additionally, it is unaffected by our capital structure or investment activities. We use this measure to evaluate our consolidated operating performance, the operating performance of our operating segments and to allocate resources and capital to our business segments. It is also a significant performance measure in our annual incentive compensation programs. We believe that this measure is useful to investors because it is one of the bases for comparing our operating performance with that of other companies in our industries, although our measure may not be directly comparable to similar measures used by other companies. This measure should not be considered a substitute for operating income (loss), net income (loss), net cash provided by operating activities, or other measures of performance or liquidity we have reported in accordance with GAAP.

 

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Note 13: Condensed Consolidating Financial Information

Comcast Corporation and five of our cable holding company subsidiaries, Comcast Cable Communications, LLC (“CCCL”), Comcast Cable Communications Holdings, Inc. (“CCCH”), Comcast MO Group, Inc. (“Comcast MO Group”), Comcast Cable Holdings, LLC (“CCH”) and Comcast MO of Delaware, LLC (“Comcast MO of Delaware”), fully and unconditionally guarantee each other’s debt securities. Comcast MO Group, CCH and Comcast MO of Delaware are collectively referred to as the “Combined CCHMO Parents.”

Comcast Corporation unconditionally guarantees Comcast Holdings’ ZONES due October 2029 and its 10 5/8% senior subordinated debentures due 2012, both of which were issued by Comcast Holdings. Accordingly, we have included Comcast Holdings’ condensed consolidated financial information for all periods presented. Our condensed consolidating financial information is presented below.

Comcast Corporation

Condensed Consolidating Balance Sheet

June 30, 2008

 

(in millions)  

Comcast

Parent

 

CCCL

Parent

 

CCCH

Parent

 

Combined

CCHMO

Parents

 

Comcast

Holdings

 

Non-

Guarantor

Subsidiaries

 

Elimination

and

Consolidation

Adjustments

   

Consolidated

Comcast

Corporation

ASSETS

               

Cash and cash equivalents

  $   $   $   $   $   $ 1,767   $     $ 1,767

Investments

                        295           295

Accounts receivable, net

                        1,665           1,665

Other current assets

    174     5                 741           920

Total current assets

    174     5                 4,468           4,647

Investments

                        5,366           5,366

Investments in and amounts due from subsidiaries eliminated upon consolidation

    69,967     33,908     41,342     44,443     26,096     3,457     (219,213 )    

Property and equipment, net

    292                     23,541           23,833

Franchise rights

                        59,449           59,449

Goodwill

                        15,074           15,074

Other intangible assets, net

                        4,614           4,614

Other noncurrent assets, net

    344     9     15         23     523           914

Total assets

  $ 70,777   $ 33,922   $ 41,357   $ 44,443   $ 26,119   $ 116,492   $ (219,213 )   $ 113,897

LIABILITIES AND
STOCKHOLDERS’ EQUITY

Accounts payable and accrued expenses related to trade creditors

  $ 197   $   $   $   $   $ 2,830   $     $ 3,027

Accrued expenses and other current liabilities

    781     273     75     98     153     1,793           3,173

Current portion of long-term debt

        1,553         301         35           1,889

Total current liabilities

    978     1,826     75     399     153     4,658           8,089

Long-term debt, less current portion

    20,814     2,543     3,498     2,702     788     279           30,624

Deferred income taxes

    7,197                 783     19,312           27,292

Other noncurrent liabilities

    1,451                 91     5,665           7,207

Minority interest

                        348           348

Stockholders’ Equity:

               

Common stock

    33                               33

Other stockholders’ equity

    40,304     29,553     37,784     41,342     24,304     86,230     (219,213 )     40,304

Total stockholders’ equity

    40,337     29,553     37,784     41,342     24,304     86,230     (219,213 )     40,337

Total liabilities and stockholders’ equity

  $ 70,777   $ 33,922   $ 41,357   $ 44,443   $ 26,119   $ 116,492   $ (219,213 )   $ 113,897

 

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Comcast Corporation

Condensed Consolidating Balance Sheet

December 31, 2007

 

(in millions)   Comcast
Parent
  CCCL
Parent
  CCCH
Parent
  Combined
CCHMO
Parents
  Comcast
Holdings
  Non-
Guarantor
Subsidiaries
  Elimination
and
Consolidation
Adjustments
    Consolidated
Comcast
Corporation

ASSETS

               

Cash and cash equivalents

  $   $   $   $   $   $ 963   $     $ 963

Investments

                        98           98

Accounts receivable, net

                        1,645           1,645

Other current assets

    100                     861           961

Total current assets

    100                     3,567           3,667

Investments

                        7,963           7,963

Investments in and amounts due from subsidiaries eliminated upon consolidation

    67,903     32,760     40,240     43,356     25,815     2,244     (212,318 )    

Property and equipment, net

    208                     23,416           23,624

Franchise rights

                        58,077           58,077

Goodwill

                        14,705           14,705

Other intangible assets, net

                        4,739           4,739

Other noncurrent assets, net

    281     11     17         30     303           642

Total assets

  $ 68,492   $ 32,771   $ 40,257   $ 43,356   $ 25,845   $ 115,014   $ (212,318 )   $ 113,417

LIABILITIES AND
STOCKHOLDERS’ EQUITY

Accounts payable and accrued expenses related to trade creditors

  $ 10   $ 3   $   $   $   $ 3,323   $     $ 3,336

Accrued expenses and other current liabilities

    694     267     75     98     74     1,913           3,121

Current portion of long-term debt

        1,142         305         48           1,495

Total current liabilities

    704     1,412     75     403     74     5,284           7,952

Long-term debt, less current portion

    19,133     3,294     3,498     2,713     908     282           29,828

Deferred income taxes

    6,256                 1,015     19,609           26,880

Other noncurrent liabilities

    1,059     6             116     5,986           7,167

Minority interest

                        250           250

Stockholders’ Equity:

               

Common stock

    34                               34

Other stockholders’ equity

    41,306     28,059     36,684     40,240     23,732     83,603     (212,318 )     41,306

Total stockholders’ equity

    41,340     28,059     36,684     40,240     23,732     83,603     (212,318 )     41,340

Total liabilities and stockholders’ equity

  $ 68,492   $ 32,771   $ 40,257   $ 43,356   $ 25,845   $ 115,014   $ (212,318 )   $ 113,417

 

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Comcast Corporation

Condensed Consolidating Statement of Operations

For the Three Months Ended June 30, 2008

 

(in millions)  

Comcast

Parent

   

CCCL

Parent

   

CCCH

Parent

   

Combined

CCHMO

Parents

   

Comcast

Holdings

   

Non-

Guarantor

Subsidiaries

   

Elimination

and

Consolidation

Adjustments

   

Consolidated

Comcast

Corporation

 

Revenue:

               

Service revenue

  $     $     $     $     $     $ 8,553     $     $ 8,553  

Management fee revenue

    192       56       103       103                   (454 )      
      192       56       103       103             8,553       (454 )     8,553  

Costs and Expenses:

               

Operating (excluding depreciation and amortization)

                                  3,091             3,091  

Selling, general and administrative

    93       56       103       103       22       2,188       (454 )     2,111  

Depreciation

    5                               1,366             1,371  

Amortization

                                  230             230  
      98       56       103       103       22       6,875       (454 )     6,803  

Operating income (loss)

    94                         (22 )     1,678             1,750  

Other Income (Expense):

               

Interest expense

    (320 )     (77 )     (82 )     (54 )     (52 )     (33 )           (618 )

Investment income (loss), net

    (2 )                       (43 )     (25 )           (70 )

Equity in net (losses) income of affiliates, net

    781       370       639       673       296       13       (2,785 )     (13 )

Other income (expense)

    (1 )                             26             25  
      458       293       557       619       201       (19 )     (2,785 )     (676 )

Income (loss) before income taxes and minority interest

    552       293       557       619       179       1,659       (2,785 )     1,074  

Income tax (expense) benefit

    80       29       29       20       41       (654 )           (455 )

Income (loss) before minority interest

    632       322       586       639       220       1,005       (2,785 )     619  

Minority interest

                                  13             13  

Net Income (loss)

  $ 632     $ 322     $ 586     $ 639     $ 220     $ 1,018     $ (2,785 )   $ 632  

 

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Comcast Corporation

Condensed Consolidating Statement of Operations

For the Three Months Ended June 30, 2007

 

(in millions)  

Comcast

Parent

   

CCCL

Parent

   

CCCH

Parent

   

Combined

CCHMO

Parents

   

Comcast

Holdings

   

Non-

Guarantor

Subsidiaries

   

Elimination

and

Consolidation

Adjustments

   

Consolidated

Comcast

Corporation

 

Revenue:

               

Service revenue

  $     $     $     $     $     $ 7,712     $     $ 7,712  

Management fee revenue

    159       54       84       84                   (381 )      
      159       54       84       84             7,712       (381 )     7,712  

Costs and Expenses:

               

Operating (excluding depreciation and amortization)

                                  2,754             2,754  

Selling, general and administrative

    74       54       84       84       5       2,026       (381 )     1,946  

Depreciation

    2                               1,250             1,252  

Amortization

                                  292             292  
      76       54       84       84       5       6,322       (381 )     6,244  

Operating income (loss)

    83                         (5 )     1,390             1,468  

Other Income (Expense):

               

Interest expense

    (260 )     (91 )     (80 )     (54 )     (23 )     (42 )           (550 )

Investment income (loss), net

    2             5             (38 )     157             126  

Equity in net (losses) income of affiliates, net

    702       474       412       445       418       (19 )     (2,448 )     (16 )

Other income (expense)

    1                                           1  
      445       383       337       391       357       96       (2,448 )     (439 )

Income (loss) before income taxes and minority interest

    528       383       337       391       352       1,486       (2,448 )     1,029  

Income tax (expense) benefit

    60       32       27       21       23       (616 )           (453 )

Income (loss) before minority interest

    588       415       364       412       375       870       (2,448 )     576  

Minority interest

                                  12             12  

Net Income (loss)

  $ 588     $ 415     $ 364     $ 412     $ 375     $ 882     $ (2,448 )   $ 588  

 

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Comcast Corporation

Condensed Consolidating Statement of Operations

For the Six Months Ended June 30, 2008

 

(in millions)   Comcast
Parent
    CCCL
Parent
    CCCH
Parent
    Combined
CCHMO
Parents
    Comcast
Holdings
    Non-
Guarantor
Subsidiaries
    Elimination
and
Consolidation
Adjustments
    Consolidated
Comcast
Corporation
 

Revenue:

               

Service revenue

  $     $     $     $     $     $ 16,942     $     $ 16,942  

Management fee revenue

    360       109       202       202                   (873 )      
      360       109       202       202             16,942       (873 )     16,942  

Costs and Expenses:

               

Operating (excluding depreciation and amortization)

                                  6,198             6,198  

Selling, general and administrative

    177       109       202       202       26       4,376       (873 )     4,219  

Depreciation

    10                               2,751             2,761  

Amortization

                                  459             459  
      187       109       202       202       26       13,784       (873 )     13,637  

Operating income (loss)

    173                         (26 )     3,158             3,305  

Other Income (Expense):

               

Interest expense

    (643 )     (159 )     (162 )     (110 )     (95 )     (70 )           (1,239 )

Investment income (loss), net

    (9 )                       (22 )     40             9  

Equity in net (losses) income of affiliates, net

    1,676       777       1,298       1,369       690       (64 )     (5,794 )     (48 )

Other income (expense)

    (1 )                             294             293  
      1,023       618       1,136       1,259       573       200       (5,794 )     (985 )

Income (loss) before income taxes and minority interest

    1,196       618       1,136       1,259       547       3,358       (5,794 )     2,320  

Income tax (expense) benefit

    168       56       57       39       50       (1,333 )           (963 )

Income (loss) before minority interest

    1,364       674       1,193       1,298       597       2,025       (5,794 )     1,357  

Minority interest

                                  7             7  

Net Income (loss)

  $ 1,364     $ 674     $ 1,193     $ 1,298     $ 597     $ 2,032     $ (5,794 )   $ 1,364  

 

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Table of Contents

Comcast Corporation

Condensed Consolidating Statement of Operations

For the Six Months Ended June 30, 2007

 

(in millions)   Comcast
Parent
    CCCL
Parent
    CCCH
Parent
    Combined
CCHMO
Parents
    Comcast
Holdings
    Non-
Guarantor
Subsidiaries
    Elimination
and
Consolidation
Adjustments
    Consolidated
Comcast
Corporation
 

Revenue:

               

Service revenue

  $     $     $     $     $     $ 15,100     $     $ 15,100  

Management fee revenue

    308       105       163       163                   (739 )      
      308       105       163       163             15,100       (739 )     15,100  

Costs and Expenses:

               

Operating (excluding depreciation and amortization)

                                  5,513             5,513  

Selling, general and administrative

    145       105       163       163       9       3,966       (739 )     3,812  

Depreciation

    3                               2,474             2,477  

Amortization

                                  569             569  
      148       105       163       163       9       12,522       (739 )     12,371  

Operating income (loss)

    160                         (9 )     2,578             2,729  

Other Income (Expense):

               

Interest expense

    (511 )     (189 )     (161 )     (122 )     (47 )     (88 )           (1,118 )

Investment income (loss), net

    2             5             (47 )     340             300  

Equity in net (losses) income of affiliates, net

    1,651       855       1,211       1,291       749       (53 )     (5,741 )     (37 )

Other income (expense)

    2                               512             514  
      1,144       666       1,055       1,169       655       711       (5,741 )     (341 )

Income (loss) before income taxes and minority interest

    1,304       666       1,055       1,169       646       3,289       (5,741 )     2,388  

Income tax (expense) benefit

    121       67       56       42       36       (1,301 )           (979 )

Income (loss) before minority interest

    1,425       733       1,111       1,211       682       1,988       (5,741 )     1,409  

Minority interest

                                  16             16  

Net Income (loss)

  $ 1,425     $ 733     $ 1,111     $ 1,211     $ 682     $ 2,004     $ (5,741 )   $ 1,425  

 

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Table of Contents

Comcast Corporation

Condensed Consolidating Statement of Cash Flows

For the Six Months Ended June 30, 2008

 

(in millions)   Comcast
Parent
    CCCL
Parent
    CCCH
Parent
    Combined
CCHMO
Parents
    Comcast
Holdings
    Non-
Guarantor
Subsidiaries
    Elimination
and
Consolidation
Adjustments
   Consolidated
Comcast
Corporation
 

Net cash provided by (used in) operating activities

  $ 13     $ (103 )   $ (94 )   $ (85 )   $ 61     $ 5,136     $  —    $ 4,928  

Financing Activities:

                

Proceeds from borrowings

    1,998                               11            2,009  

Retirements and repayments of debt

    (300 )     (350 )                 (154 )     (27 )          (831 )

Repurchases of common stock

    (1,979 )                                        (1,979 )

Dividends paid

    (185 )                                        (185 )

Issuances of common stock

    42                                          42  

Other

    (3 )                       (53 )     (79 )          (135 )

Net cash provided by (used in) financing activities

    (427 )     (350 )                 (207 )     (95 )          (1,079 )

Investing Activities:

                

Net transactions with affiliates

    556       453       94       85       146       (1,334 )           

Capital expenditures

    (104 )                             (2,627 )          (2,731 )

Cash paid for intangible assets

                                  (245 )          (245 )

Acquisitions, net of cash acquired

                                  (331 )          (331 )

Proceeds from sales of investments

                                  320            320  

Purchases of investments

                                  (41 )          (41 )

Other

    (38 )                             21            (17 )

Net cash provided by (used in) investing activities

    414       453       94       85       146       (4,237 )          (3,045 )

Increase (decrease) in cash and cash equivalents

                                  804            804  

Cash and cash equivalents, beginning of period

                                  963            963  

Cash and cash equivalents, end of period

  $     $     $     $     $     $ 1,767     $    $ 1,767  

 

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Table of Contents

Comcast Corporation

Condensed Consolidating Statement of Cash Flows

For the Six Months Ended June 30, 2007

 

(in millions)   Comcast
Parent
    CCCL
Parent
    CCCH
Parent
    Combined
CCHMO
Parents
    Comcast
Holdings
   Non-
Guarantor
Subsidiaries
    Elimination
and
Consolidation
Adjustments
   Consolidated
Comcast
Corporation
 

Net cash provided by (used in) operating activities

  $ (246 )   $ (122 )   $ (98 )   $ (100 )   $  —    $ 4,473     $  —    $ 3,907  

Financing Activities:

                 

Proceeds from borrowings

    575                              15            590  

Retirements and repayments of debt

          (600 )           (226 )          (494 )          (1,320 )

Repurchases of common stock

    (1,252 )                                       (1,252 )

Issuances of common stock

    334                                         334  

Other

    6                   (8 )          54            52  

Net cash provided by (used in) financing activities

    (337 )     (600 )           (234 )          (425 )          (1,596 )

Investing Activities:

                 

Net transactions with affiliates

    584       722       98       334            (1,738 )           

Capital expenditures

    (6 )                            (3,052 )          (3,058 )

Cash paid for intangible assets

                                 (229 )          (229 )

Acquisitions, net of cash acquired

                                 (770 )          (770 )

Proceeds from sales of investments

                                 1,288            1,288  

Purchases of investments

                                 (52 )          (52 )

Proceeds from sales (purchases) of short-term investments, net

                                 56            56  

Other

    (36 )                            79            43  

Net cash provided by (used in) investing activities

    542       722       98       334            (4,418 )          (2,722 )

Increase (decrease) in cash and cash equivalents

    (41 )                            (370 )          (411 )

Cash and cash equivalents, beginning of period

    77                              1,162            1,239  

Cash and cash equivalents, end of period

  $ 36     $     $     $     $    $ 792     $    $ 828  

 

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Table of Contents

ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

We are the largest cable operator in the United States and offer a variety of entertainment and communications products and services. As of June 30, 2008, our cable systems served approximately 24.6 million video subscribers, 14.4 million high-speed Internet subscribers and 5.7 million phone subscribers and passed approximately 50.1 million homes in 39 states and the District of Columbia.

We classify our operations in two reportable segments: Cable and Programming. Our Cable segment, which generates approximately 95% of our consolidated revenue, manages and operates our cable systems, including video, high-speed Internet and phone services (“cable services”). The majority of our Cable segment revenue is earned from monthly subscriptions for these cable services. Other revenue sources include advertising and the operation of our regional sports and news networks. Our Programming segment consists primarily of our consolidated national programming networks, including E!, The Golf Channel, VERSUS, G4 and Style. Revenue from our Programming segment is earned primarily from the sale of advertising and from monthly per subscriber programming license fees.

Highlights and business developments for the six months ended June 30, 2008 include the following:

 

   

an increase in consolidated revenue of 12.2% to approximately $16.9 billion and an increase in consolidated operating income of 21.1% to approximately $3.3 billion

 

 

   

an increase in Cable segment revenue of 11.8% to approximately $16.0 billion and an increase in operating income before depreciation and amortization of 11.7% to approximately $6.5 billion, both driven by growth in subscribers, acquisitions and the success of our bundled offerings

 

 

   

the repurchase of approximately 101 million shares of our Class A and Class A Special common stock under our Board-authorized share repurchase program for approximately $2.0 billion

 

 

   

the acquisition of cable systems serving Illinois and Indiana (approximately 696,000 video subscribers), as a result of the dissolution of Insight Midwest, LP (the “Insight transaction”), in January 2008

 

Consolidated Operating Results

 

   

Three Months Ended

June 30

   

Increase/

(Decrease)

   

Six Months Ended

June 30

   

Increase/

(Decrease)

 
(in millions)       2008             2007                2008     2007         

Revenue

  $ 8,553     $ 7,712     10.9 %   $ 16,942     $ 15,100     12.2 %

Costs and expenses:

           

Operating, selling, general and administrative expenses (excluding depreciation and amortization)

    5,202       4,700     10.7       10,417       9,325     11.7  

Depreciation

    1,371       1,252     9.5       2,761       2,477     11.4  

Amortization

    230       292     (21.1 )     459       569     (19.1 )

Operating income

    1,750       1,468     19.1       3,305       2,729     21.1  

Other income (expense) items, net

    (676 )     (439 )   54.0       (985 )     (341 )   189.0  

Income before income taxes and minority interest

    1,074       1,029     4.3       2,320       2,388     (2.9 )

Income tax expense

    (455 )     (453 )   0.5       (963 )     (979 )   (1.6 )

Income before minority interest

    619       576     7.3       1,357       1,409     (3.7 )

Minority interest

    13       12     19.4       7       16     (50.4 )

Net income

  $ 632     $ 588     7.5 %   $ 1,364     $ 1,425     (4.3 )%

All percentages are calculated based on actual amounts. Minor differences may exist due to rounding.

 

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Table of Contents

Consolidated Revenue

Our Cable and Programming segments accounted for substantially all of the increases in consolidated revenue for the three and six months ended June 30, 2008 compared to the same period in 2007. Cable segment revenue and Programming segment revenue are discussed separately below in “Segment Operating Results.” The remaining increases relate to our other business activities, primarily growth in Comcast Interactive Media and playoff game revenue generated by Comcast Spectacor’s professional sports teams.

Consolidated Operating, Selling, General and Administrative Expenses

Our Cable and Programming segments accounted for substantially all of the increases in consolidated operating, selling, general and administrative expenses for the three and six months ended June 30, 2008 compared to the same periods in 2007. Cable segment and Programming segment operating, selling, general and administrative expenses are discussed separately below in “Segment Operating Results.” The remaining increases relate to our other business activities, including expanding our Comcast Interactive Media business, and Comcast Spectacor.

Consolidated Depreciation and Amortization

The increases in depreciation expense for the three and six months ended June 30, 2008 compared to the same periods in 2007 are primarily a result of the increase in property and equipment and the depreciation associated with the cable systems acquired in the Insight transaction.

The decreases in amortization expense for the three and six months ended June 30, 2008 compared to the same periods in 2007 are primarily due to the customer relationship intangible assets associated with the AT&T Broadband acquisition in 2002 being fully amortized.

Segment Operating Results

To measure the performance of our operating segments, we use operating income (loss) before depreciation and amortization, excluding impairment charges related to fixed and intangible assets, and gains or losses from the sale of assets, if any. This measure eliminates the significant level of noncash depreciation and amortization expense that results from the capital-intensive nature of our businesses and from intangible assets recognized in business combinations. Additionally, it is unaffected by our capital structure or investment activities. We use this measure to evaluate our consolidated operating performance, the operating performance of our operating segments and to allocate resources and capital to our business segments. It is also a significant performance measure in our annual incentive compensation programs. We believe that this measure is useful to investors because it is one of the bases for comparing our operating performance with that of other companies in our industries, although our measure may not be directly comparable to similar measures used by other companies. Because we use this metric to measure 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 in the United States (“GAAP”) in the business segment footnote to our consolidated financial statements (see Note 12). This measure should not be considered a substitute for operating income (loss), net income (loss), net cash provided by operating activities, or other measures of performance or liquidity we have reported in accordance with GAAP.

 

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Table of Contents

Cable Segment Operating Results

 

    Three Months Ended
June 30
   Increase/(Decrease)  
(in millions)       2008            2007        $    %  

Video

  $ 4,726    $ 4,465    $ 261    5.8 %

High-speed Internet

    1,792      1,589      203    12.7  

Phone

    640      420      220    52.3  

Advertising

    399      399         0.7  

Other

    316      250      66    25.7  

Franchise fees

    227      207      20    9.2  

Revenue

    8,100      7,330      770    10.5  

Operating expenses

    2,898      2,576      322    12.5  

Selling, general and administrative expenses

    1,840      1,723      117    6.8  

Operating income before depreciation and amortization

  $ 3,362    $ 3,031    $ 331    10.9 %

 

    Six Months Ended
June 30
   Increase/(Decrease)  
(in millions)       2008            2007        $    %  

Video

  $ 9,432    $ 8,827    $ 605    6.9 %

High-speed Internet

    3,542      3,116      426    13.7  

Phone

    1,227      773      454    58.8  

Advertising

    743      712      31    4.6  

Other

    621      492      129    25.8  

Franchise fees

    451      408      43    10.3  

Revenue

    16,016      14,328      1,688    11.8  

Operating expenses

    5,807      5,126      681    13.3  

Selling, general and administrative expenses

    3,705      3,378      327    9.7  

Operating income before depreciation and amortization

  $ 6,504    $ 5,824    $ 680    11.7 %

Cable Segment Revenue

Video

Our video revenue continued to grow due to rate increases, subscriber growth in our digital cable services, including the demand for digital features such as On Demand, DVR and HDTV, and the addition of the cable systems acquired in the Insight transaction. During the six months ended June 30, 2008, we added approximately 814,000 digital cable subscribers. As of June 30, 2008, approximately 67% of our 24.6 million video subscribers subscribed to at least one of our digital cable services. During the six months ended June 30, 2008, the number of basic subscribers decreased by approximately 195,000 primarily due to increased competition in our service areas. Our average monthly video revenue per video subscriber increased during the six months ended June 30, 2008 to approximately $64 from approximately $61 as of December 31, 2007. The rate of this growth has slowed due to an increased number of subscribers participating in our bundled and promotional offers.

High-Speed Internet

The increases in high-speed Internet revenue for the three and six months ended June 30, 2008 compared to the same periods in 2007 reflect an increase in subscribers and the addition of the cable systems acquired in the Insight transaction. During the six months ended June 30, 2008, we added approximately 771,000 high-speed Internet subscribers. Average monthly revenue per subscriber has declined slightly as a result of an increased number of subscribers participating in our bundled offers and the introduction of new promotional offers and speed tiers.

Phone

Our phone revenue increased due to subscriber growth in our digital phone service, which was partially offset by the loss of circuit-switched phone subscribers. During the six months ended June 30, 2008, we added 1.2 million digital phone subscribers. The number of circuit-switched phone subscribers will continue to decrease as we phase out this service during 2008.

 

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Table of Contents

Advertising

Advertising revenue remained flat for the three months ended June 30, 2008 compared to the same period in 2007. The 2008 revenue amount includes revenue from the cable systems acquired in the Insight transaction and increased political advertising revenue. Absent these items, advertising revenue decreased, reflecting softness in the advertising marketplace, particularly in the automobile and housing-related sectors. The increase in advertising revenue for the six months ended June 30, 2008 compared to the same period in 2007 is primarily due to an increase in political advertising related to the U.S. primary elections, the addition of the cable systems acquired in the Insight transaction and an additional week in the broadcast advertising calendar.

Other

We also generate revenue from our regional sports and news networks, our digital media center, residential video installation services, interactive guide advertising, commissions from third-party electronic retailing and fees for other services. The increases in other revenue for the three and six months ended June 30, 2008 compared to the same periods in 2007 are primarily due to the regional sports network acquisitions of Comcast SportsNet Bay Area and Comcast SportsNet New England.

Franchise Fees

The increases in franchise fees collected from our cable subscribers for the three and six months ended June 30, 2008 compared to the same periods in 2007 are primarily due to the increases in our revenue upon which the fees apply.

Cable Segment Operating Expenses

Operating expenses increased during the three and six months ended June 30, 2008 compared to the same periods in 2007 primarily due to growth in the number of subscribers to our cable services and the addition of the cable systems acquired in the Insight transaction. The remaining increases were primarily a result of costs associated with the delivery of these services and additional personnel to handle service calls and provide customer support.

Cable Segment Selling, General and Administrative Expenses

Selling, general and administrative expenses increased during the three and six months ended June 30, 2008 compared to the same periods in 2007 primarily due to growth in the number of subscribers to our cable services. The remaining increase was primarily a result of additional employees needed to provide customer and other administrative services, as well as additional marketing costs associated with attracting new subscribers.

Programming Segment Operating Results

 

    Three Months Ended
June 30
   Increase/(Decrease)  
(in millions)       2008            2007        $    %  

Revenue

  $ 366    $ 334    $ 32    9.6 %

Operating, selling, general and administrative expenses

    277      259      18    7.5  

Operating income before depreciation and amortization

  $ 89    $ 75    $ 14    16.8 %

 

    Six Months Ended
June 30
   Increase/(Decrease)  
(in millions)       2008            2007        $    %  

Revenue

  $ 729    $ 636    $ 93    14.6 %

Operating, selling, general and administrative expenses

    527      496      31    6.4  

Operating income before depreciation and amortization

  $ 202    $ 140    $ 62    43.8 %

 

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Table of Contents

Programming Segment Revenue

The increase in revenue for the three months ended June 30, 2008 compared to the same period in 2007 is primarily a result of increases in advertising revenue, programming license fee revenue and international revenue. The increase in revenue for the six months ended June 30, 2008 compared to the same period in 2007 is primarily a result of increases in advertising revenue, including the impact of an additional week in the 2008 broadcast advertising calendar, programming license fee revenue and international revenue. For the three and six months ended June 30, 2008, approximately 12% of our Programming segment revenue was generated by our Cable segment. For the three and six months ended June 30, 2007, approximately 13% of our Programming segment revenue was generated by our Cable segment. These amounts are eliminated in our consolidated financial statements but are included in the amounts presented in the table above.

Programming Segment Expenses

Expense growth for the three and six months ended June 30, 2008 compared to the same periods in 2007 was favorably impacted by the timing of certain marketing and programming expenses, which are expected to be incurred in the second half of 2008.

Consolidated Other Income (Expense) Items

 

     Three Months Ended
June 30
    

Six Months Ended

June 30

 
(in millions)    2008     2007      2008     2007  

Interest expense

   $ (618 )   $ (550 )    $ (1,239 )   $ (1,118 )

Investment income (loss), net

     (70 )     126        9       300  

Equity in net (losses) income of affiliates, net

     (13 )     (16 )      (48 )     (37 )

Other income (expense)

     25       1        293       514  

Total

   $ (676 )   $ (439 )    $ (985 )   $ (341 )

Interest Expense

The increases in interest expense for the three and six months ended June 30, 2008 compared to the same periods in 2007 are primarily due to an increase in our average debt outstanding and early extinguishment costs associated with the repayment and redemption of certain debt obligations.

Investment Income (Loss), Net

The components of investment income (loss), net for the three and six months ended June 30, 2008 and 2007 are presented in a table in Note 5 to our consolidated financial statements.

Other Income (Expense)

Other income for the six months ended June 30, 2008 includes a gain of approximately $235 million on the sale of our 50% interest in the Insight asset pool in connection with the Insight transaction (see Note 4). Other income for the six months ended June 30, 2007 includes a gain of approximately $500 million on the sale of our 50% interest in the Kansas City asset pool in connection with the dissolution of Texas and Kansas City Cable Partners.

Income Tax Expense

Income tax expense for the three and six months ended June 30, 2008 and 2007 reflects income tax rates higher than the federal statutory rate primarily due to state income taxes and interest on uncertain tax positions. We expect our 2008 annual effective tax rate to be in the range of 40% to 45%.

Liquidity and Capital Resources

Our businesses generate significant cash flows from operating activities. We believe that we will be able to meet our current and long-term liquidity and capital requirements, including fixed charges, through our cash flows from operating activities, existing cash, cash equivalents and investments; through available borrowings under our existing credit facilities; and through our ability to obtain future external financing.

We anticipate continuing to use a substantial portion of our cash flows to fund our capital expenditures, to invest in business opportunities and to return capital to investors through stock repurchases and dividends. The credit markets have been and continue to be volatile primarily due to difficulties in the residential mortgage markets and

 

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also due to the slowing economy. We do not hold any cash equivalents or short-term investments whose liquidity or value has been affected by these negative trends in the financial markets.

Operating Activities

Details of net cash provided by operating activities are presented in the table below.

 

    Six Months Ended
June 30
 
(in millions)   2008     2007  

Operating income

  $ 3,305     $ 2,729  

Depreciation and amortization

    3,220       3,046  

Operating income before depreciation and amortization

    6,525       5,775  

Noncash share-based compensation and contribution expense

    123       86  

Changes in operating assets and liabilities

    (293 )     (287 )

Cash basis operating income

    6,355       5,574  

Payments of interest

    (1,116 )     (1,078 )

Payments of income taxes

    (355 )     (647 )

Proceeds from interest, dividends received and other nonoperating items

    59       81  

Excess tax benefit under SFAS No. 123R presented in financing activities

    (15 )     (23 )

Net cash provided by operating activities

  $ 4,928     $ 3,907  

The increase in interest payments for the six months ended June 30, 2008 compared to the same period in 2007 was primarily due to an increase in our average debt outstanding. The decrease in income tax payments was primarily due to the Economic Stimulus Act of 2008, which resulted in a reduction in our tax payments of approximately $315 million.

Financing Activities

Net cash used in financing activities for the six months ended June 30, 2008 consisted primarily of cash paid for the repurchase of approximately 100 million shares of our Class A and Class A Special common stock for $2.0 billion, which represents the activity on a settlement date or cash basis, debt retirements and repayments of $831 million, and dividend payments of $185 million. These cash outflows were partially offset by cash proceeds from borrowings of $2.0 billion.

We have in the past made and may from time to time in the future make optional repayments on our debt obligations depending on various factors, such as market conditions. These repayments may include repurchases of our outstanding public notes and debentures.

Available Borrowings Under Credit Facilities

We traditionally maintain significant availability under our lines of credit and commercial paper program to meet our short-term liquidity requirements. In January 2008, we entered into an amended and restated revolving bank credit facility which may be used for general corporate purposes. This amendment increased the size of the credit facility from $5.0 billion to $7.0 billion and extended the maturity of the loan commitment from October 2010 to January 2013. As of June 30, 2008, amounts available under our facilities totaled approximately $6.7 billion.

Share Repurchase Program and Dividends

As of June 30, 2008, the maximum dollar value of shares that may be repurchased under our Board-authorized share repurchase program was approximately $4.9 billion. We plan to fully use our remaining share repurchase authorization by the end of 2009, subject to market conditions.

In February and May 2008, our Board of Directors approved quarterly dividends of $0.0625 per share as part of our planned annual dividend of $0.25 per share.

Payments of 2008 Quarterly Dividends

 

(in millions)   Payment Amount    Month of Payment

Three months ended March 31, 2008

  $ 185    April

Three months ended June 30, 2008

  $ 182    July

 

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Investing Activities

Net cash used in investing activities for the six months ended June 30, 2008 consisted primarily of cash paid for capital expenditures of $2.7 billion, acquisitions of $331 million, net of cash acquired, and cash paid for intangible assets of $245 million. These cash outflows were partially offset by proceeds from sales of investments of $320 million. Capital expenditures have been our most significant recurring investing activity and we expect that this will continue in the future.

In May 2008, Sprint Nextel entered into an agreement with Clearwire Corporation and an investor group made up of us, Intel, Google, Time Warner Cable and Bright House. Under this agreement, Sprint Nextel and Clearwire Corporation will combine their next-generation wireless broadband businesses to form an independent, publicly traded company called Clearwire that will focus on the deployment of a nationwide 4G wireless network. We, together with the other members of the investment group, have agreed to invest $3.2 billion in Clearwire. Our portion of the investment is $1.05 billion. This transaction is expected to close in late 2008 or early 2009.

Critical Accounting Judgments and Estimates

The preparation of our consolidated financial statements requires us to make estimates that affect the reported amounts of assets, liabilities, revenue and expenses, and the related disclosure of contingent assets and contingent liabilities. We base our judgments on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making estimates about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We believe our judgments and related estimates associated with the valuation and impairment testing of our cable franchise rights and the accounting for income taxes and legal contingencies are critical in the preparation of our consolidated financial statements. We performed our annual impairment testing as of April 1, 2008 and no impairment charge was recorded.

For a full discussion of the accounting judgments and estimates that we have identified as critical in the preparation of our consolidated financial statements, please refer to our 2007 Annual Report on Form 10-K.

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no significant changes to the information required under this item from what was disclosed in our 2007 Annual Report on Form 10-K.

ITEM 4: CONTROLS AND PROCEDURES

Conclusions Regarding Disclosure Controls and Procedures

Our chief executive officer and our chief financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) or 15d-15(e)) as of the end of the period covered by this report, have concluded, based on the evaluation of these controls and procedures required by paragraph (b) of Exchange Act Rules 13a-15 or 15d-15, that our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II: OTHER INFORMATION

ITEM 1: LEGAL PROCEEDINGS

Refer to Note 11 to our consolidated financial statements of this Quarterly Report on Form 10-Q for a discussion of recent developments related to our legal proceedings.

ITEM 1A: RISK FACTORS

There have been no significant changes from the risk factors previously disclosed in Item 1A of our 2007 Annual Report on Form 10-K.

ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The table below summarizes our repurchases under our Board-authorized share repurchase program during the three months ended June 30, 2008.

Purchases of Equity Securities

 

Period   Total
Number
of Shares
Purchased
   Average Price
Per Share
   Total Number of
Shares Purchased as
Part of Publicly
Announced
Program
   Total
Dollars
Purchased
Under
the Program
   Maximum Dollar Value
of Shares That May
Yet Be Purchased
Under the Program(a)

April 1-30, 2008

     $       $    $ 5,906,133,015

May 1-31, 2008

  15,469,414    $ 20.22    14,874,681    $ 300,000,000    $ 5,606,133,015

June 1-30, 2008

  32,250,556    $ 21.06    33,248,416    $ 700,086,833    $ 4,906,046,182

Total

  48,719,970    $ 20.79    48,123,097    $ 1,000,086,833    $ 4,906,046,182

 

(a)

In 2007, the Board of Directors authorized a $7 billion addition to the existing share repurchase program. Under the authorization, we may repurchase shares in the open market or in private transactions, subject to market conditions. As of June 30, 2008, the maximum dollar value of shares available under our Board-authorized share repurchase program was approximately $4.9 billion. We plan to fully use our remaining share repurchase authorization by the end of 2009, subject to market conditions.

The total number of shares purchased during the three months ended June 30, 2008 includes 596,873 shares received in the administration of employee share-based compensation plans.

 

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ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At our Annual Meeting of Shareholders on May 14, 2008, the shareholders approved, or did not approve, the following proposals, in each case consistent with the unanimous recommendations of our Board of Directors (numbers represent the aggregate votes cast, with holders of our Class A Common Stock entitled to 0.1384 votes per share and holders of our Class B Common Stock entitled to 15 votes per share):

To elect the following nominees to serve as our directors for one-year terms.

 

Director   For    Withheld

S. Decker Anstrom

  368,258,436    11,170,944

Kenneth J. Bacon

  370,901,786    8,527,594

Sheldon M. Bonovitz

  370,777,654    8,651,726

Edward D. Breen

  370,761,472    8,667,908

Julian A. Brodsky

  370,528,773    8,900,607

Joseph J. Collins

  368,750,438    10,678,942

J. Michael Cook

  370,849,780    8,579,600

Gerald L. Hassell

  370,807,795    8,621,585

Jeffrey A. Honickman

  370,919,748    8,509,632

Brian L. Roberts

  370,012,831    9,416,549

Ralph J. Roberts

  370,566,369    8,863,011

Dr. Judith Rodin

  368,711,569    10,717,811

Michael I. Sovern

  368,461,961    10,967,419

To ratify the appointment of Deloitte & Touche LLP as our independent auditors for the 2008 fiscal year.

 

For   Against   Abstain
374,308,528   2,337,480   2,783,372

To approve the amended and restated 2002 Restricted Stock Plan.

 

For   Against   Abstain
331,451,474   14,760,964   2,915,928

To approve the amended and restated 2003 Stock Option Plan.

 

For   Against   Abstain
329,860,280   16,344,582   2,923,504

To adopt a recapitalization plan.

 

For   Against   Abstain
102,437,505   241,091,921   5,598,940

To identify all executive officers who earn in excess of $500,000.

 

For   Against   Abstain
13,065,387   332,245,848   3,817,131

To require the nomination of two directors for every open directorship.

 

For   Against   Abstain
9,696,716   331,338,974   8,092,676

To require a pay differential report.

 

For   Against   Abstain
11,805,899   330,827,694   6,494,773

To provide cumulative voting for Class A shareholders in the election of directors.

 

For   Against   Abstain
101,256,346   244,873,195   2,998,825

 

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To adopt principles for comprehensive health care reform.

 

For   Against   Abstain
8,357,347   306,751,452   34,019,567

To require an annual vote on executive compensation.

 

For   Against   Abstain
70,334,142   270,217,679   8,576,545

ITEM 6: EXHIBITS

(a) Exhibits required to be filed by Item 601 of Regulation S-K:

 

10.1*

 

Comcast Corporation 2005 Deferred Compensation Plan, as amended and restated effective May 13, 2008.

10.2*

 

2002 Employee Stock Purchase Plan, as amended and restated effective January 1, 2008.

31

 

Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32

 

Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

*

Constitutes a management contract or compensatory plan or arrangement.

 

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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.

 

COMCAST CORPORATION

/s/ LAWRENCE J. SALVA

Lawrence J. Salva

Senior Vice President, Chief Accounting Officer

and Controller

(Principal Accounting Officer)

Date: July 30, 2008

 

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2005 Deferred Compensation Plan, as amended

Exhibit 10.1

COMCAST CORPORATION

2005 DEFERRED COMPENSATION PLAN

ARTICLE 1 – BACKGROUND AND COVERAGE OF PLAN

1.1. Background and Adoption of Plan.

1.1.1. Amendment and Restatement of the Plan. In recognition of the services provided by certain key employees and in order to make additional retirement benefits and increased financial security available on a tax-favored basis to those individuals, the Board of Directors of Comcast Corporation, a Pennsylvania corporation (the “Board”), hereby amends and restates the Comcast Corporation 2005 Deferred Compensation Plan (the “Plan”), on December 12, 2007 in light of the enactment of section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) as part of the American Jobs Creation Act of 2004, and the issuance of various Notices, Announcements, Proposed Regulations and Final Regulations thereunder (collectively, “Section 409A”), the rules of the Plan as amended and restated generally apply as of January 1, 2008, except as otherwise specifically stated.

1.1.2. Prior Plan. Prior to the Effective Date, the Comcast Corporation 2002 Deferred Compensation Plan (the “Prior Plan”) was in effect. In order to preserve the favorable tax treatment available to deferrals under the Prior Plan in light of the enactment of Section 409A, the Board has prohibited future deferrals under the Prior Plan of amounts earned and vested on and after January 1, 2005. Amounts earned and vested prior to January 1, 2005 are and will remain subject to the terms of the Prior Plan. Amounts earned and vested on and after the Effective Date will be available to be deferred pursuant to the Plan, subject to its terms and conditions.

1.1.3. Merger of E! Grandfathered Plan with Prior Plan. The Company’s controlled subsidiary, E! Entertainment Television, Inc., (“E!”) has maintained the E! Entertainment Television, Inc. 2002 Deferred Compensation Plan (the “E! Plan”), a non-qualified deferred compensation plan pursuant to which eligible employees have been credited with certain account balances that are credited with earnings at the same rate as the earnings rate for active participants in the Plan. Under the E! Plan, to the extent participants’ account balances are treated as earned and vested as of December 31, 2004 under IRS Notice 2005-1 (the “E! Grandfathered Accounts”), the rules of the E! Plan, as amended and restated, effective May 26, 2004 apply. Effective as of January 1, 2008, that portion of the E! Plan that includes the E! Grandfathered Accounts (the “E! Grandfathered Plan”) is merged with and into the Prior Plan and the separate existence of the E! Grandfathered Plan shall cease, and all undistributed participants’ accounts that had previously been administered pursuant to the E! Grandfathered Plan shall be held under the Prior Plan.

1.1.4. Merger of E! Non-Grandfathered Plan into Plan. Effective as of January 1, 2008, that portion of the E! Plan that includes all participants’ account balances other than the E! Grandfathered Accounts (the “E! Non-Grandfathered Plan”) is merged with and into the Plan, and the separate existence of the E! Non-Grandfathered Plan shall cease, and all undistributed participants’ accounts that had previously been administered pursuant to the E! Non-Grandfathered Plan shall be held under the Plan. Participants’ accounts previously held


under the E! Non-Grandfathered Plan shall be subject to the terms and conditions of this Plan. An individual whose E! Non-Grandfathered Plan Account is held under the Plan as a result of the merger of the E! Non-Grandfathered Plan with and into this Plan shall be a participant in this Plan only for purposes of the such Account, unless such individual is otherwise eligible to participate in the Plan and an Account under the Plan has been established for such individual’s benefit.

1.2. Reservation of Right to Amend to Comply with Section 409A. In addition to the powers reserved to the Board and the Committee under Article 10 of the Plan, the Board and the Committee reserve the right to amend the Plan, either retroactively or prospectively, in whatever respect is required to achieve and maintain compliance with the requirements of the Section 409A.

1.3. Plan Unfunded and Limited to Outside Directors and Select Group of Management or Highly Compensated Employees. The Plan is unfunded and is maintained primarily for the purpose of providing outside directors and a select group of management or highly compensated employees the opportunity to defer the receipt of compensation otherwise payable to such outside directors and eligible employees in accordance with the terms of the Plan.

ARTICLE 2 – DEFINITIONS

2.1. “Account” means the bookkeeping accounts established pursuant to Section 5.1 and maintained by the Administrator in the names of the respective Participants, to which all amounts deferred and earnings allocated under the Plan shall be credited, and from which all amounts distributed pursuant to the Plan shall be debited.

2.2. “Active Participant” means:

(a) Each Participant who is in active service as an Outside Director; and

(b) Each Participant who is actively employed by a Participating Company as an Eligible Employee.

2.3. “Administrator” means the Committee.

2.4. “Affiliate” means, with respect to any Person, any other Person that, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, the term “control,” including its correlative terms “controlled by” and “under common control with,” mean, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

2.5. “Annual Rate of Pay” means, as of any date, an employee’s annualized base pay rate. An employee’s Annual Rate of Pay shall not include sales commissions or other similar payments or awards.

2.6. “Applicable Interest Rate” means: