UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of

The Securities Exchange Act of 1934

Date of report (Date of earliest event reported): April 28, 2010

Comcast Corporation

(Exact Name of Registrant

as Specified in its Charter)

Pennsylvania

(State or Other Jurisdiction of Incorporation)

 

001-32871		27-0000798
(Commission File Number)		(IRS 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

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

£

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

£

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

£

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

£

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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Item 2.02. Results of Operations and Financial Condition

On April 28, 2010, Comcast Corporation (“Comcast”) issued a press release reporting the results of its operations for the three months ended March 31, 2010. The press release is attached hereto as Exhibit 99.1. Exhibit 99.2 sets forth the reasons Comcast believes that presentation of the non-GAAP financial measures contained in the press release provides useful information to investors regarding Comcast’s financial condition and results of operations. To the extent material, Exhibit 99.2 also discloses the additional purposes, if any, for which Comcast’s management uses these non-GAAP financial measures. A reconciliation of these non-GAAP financial measures with the most directly comparable GAAP financial measures is included in the press release itself. Comcast does not intend for this Item 2.02 or Exhibit 99.1 or Exhibit 99.2 to be treated as “filed” under the Securities Exchange Act of 1934, as amended, or incorporated by reference into its filings under the Securities Act of 1933, as amended.

Item 9.01. Exhibits

 

Exhibit Number		Description
99.1		Comcast Corporation press release dated April 28, 2010.
99.2		Explanation of Non-GAAP and Other Financial Measures.

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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 hereunto duly authorized.

 

		COMCAST CORPORATION
Date: April 28, 2010		By:		/s/ Lawrence J. Salva
				Lawrence J. Salva Senior Vice President, Chief Accounting Officer                  and Controller (Principal Accounting Officer)

Exhibit 99.1

 

PRESS RELEASE

 

 

Investor Contacts:						Press Contacts:
Marlene S. Dooner Jane B. Kearns Michael A. Kelman		(215) 286-7392 (215) 286-4794 (215) 286-3035				D’Arcy Rudnay John Demming		(215) 286-8582 (215) 286-8011

COMCAST REPORTS FIRST QUARTER 2010 RESULTS

 

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Consolidated Revenue Increased 3.8%

 

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Consolidated Operating Cash Flow Increased 3.5%

 

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Consolidated Operating Income Increased 6.8%

 

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Earnings Per Share of $0.31 Increased 14.8%

 

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Free Cash Flow of $1.9 Billion Increased 38.1%

 

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Repurchased 19.2 Million Common Shares in 1st Quarter for $300 Million

Philadelphia, PA – April 28, 2010 …Comcast Corporation (NASDAQ: CMCSA, CMCSK) today reported results for the quarter ended March 31, 2010.

Brian L. Roberts, Chairman and Chief Executive Officer of Comcast Corporation, said, “Our healthy operating and financial results for the first quarter mark a solid start to 2010. First quarter results were driven by robust customer growth, a rebound in advertising, momentum in Business Services and our continued focus on expense and capital management. We’ve also made significant progress in deploying All-Digital and DOCSIS 3.0, or wideband. These are strategic initiatives that will further enhance our superior products, strengthen our competitive position and build long term value for our shareholders.”

Consolidated Financial Results

Revenue increased 3.8% in the first quarter of 2010 to $9.2 billion, while Operating Cash Flow increased 3.5% to $3.6 billion. Excluding $14 million of NBC Universal-related transaction costs, Operating Cash Flow grew 3.9%. Operating Income increased 6.8% to $1.9 billion. This growth was due to solid operating results across all segments, partially offset by higher expenses at Corporate and Other.

 

		($ in millions)		1st Quarter
				2009				2010				Growth
		Revenue
		Cable		$	8,383			$	8,677			3.5%
		Programming			361				385			6.7%
		Corporate & Other			122				140			14.5%
		Total Consolidated Revenue		$	8,866			$	9,202			3.8%
		Operating Cash Flow (OCF)
		Cable		$	3,404			$	3,542			4.1%
		Programming			112				121			8.5%
		Corporate & Other			(72	)			(98	)		(37.5%	)
		Total Consolidated OCF		$	3,444			$	3,565			3.5%

For additional detail on revenue and operating expenses, customer metrics, and capital expenditures, please refer to the trending schedules on Comcast’s Investor Relations website at www.cmcsa.com or www.cmcsk.com.

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Earnings per Share¹ (EPS) for the quarter ended March 31, 2010 was $0.31, a 14.8% increase from the $0.27 reported in the first quarter of 2009.

•

First quarter 2010 EPS includes operating expenses and other costs related to the NBC Universal transaction of $29 million or $17 million net of tax.

•

First quarter 2009 EPS includes the recognition of income tax benefits of $48 million or $0.02 per share. Excluding this item, first quarter 2010 EPS would have grown 24.0% over the comparable period in 2009.

Capital Expenditures for the first quarter of 2010 declined 20.3% to $925 million, or 10.1% of total revenue, reflecting timing of equipment purchases and improved pricing, partially offset by growth in Comcast Business Services and advanced services (HD and DVR), as well as the ongoing deployment of wideband and All-Digital.

Free Cash Flow (excluding any impact from the Economic Stimulus packages) increased 38.1% to $1.9 billion in the first quarter of 2010 from $1.4 billion in the first quarter of 2009 and Free Cash Flow per Share increased 42.6% to $0.67 per share. The increase in Free Cash Flow was driven by lower capital expenditures and higher Net Cash Provided by Operating Activities, primarily due to growth in Consolidated Operating Cash Flow and lower cash payments for interest and income taxes.

 

		($ in millions)		1st Quarter
				2009			2010			Growth
		Net Cash Provided by Operating Activities		$2,512			$2,903			15.6%
		Capital Expenditures		(1,160	)		(925	)		(20.3%	)
		Cash Paid for Capitalized Software		(105	)		(80	)		(23.8%	)
		Cash Paid for Other Intangible Assets		(28	)		(37	)		32.1%
		Adjustments for Payment of Tax on Non-operating Items		147			26			(82.3%	)
		Free Cash Flow		$1,366			$1,887			38.1%

Note: The definition of Free Cash Flow remains unchanged and specifically excludes any impact from the 2008 or 2009 Economic Stimulus packages.

Cable Segment Results

For the quarter ended March 31, 2010, Cable segment revenue increased 3.5% to $8.7 billion compared to $8.4 billion in the first quarter of 2009. This increase reflects continued growth in High-Speed Internet (up 9%), Comcast Digital Voice (up 13%) and Comcast Business Services (up 49%), as well as a rebound in advertising revenue (up 24%), partially offset by lower video revenue (down 2%). Reflecting an increasing number of residential customers taking multiple products and a higher contribution from Comcast Business Services, the monthly average total revenue per video customer increased 6.3% to $122.98.

Operating Cash Flow for the first quarter of 2010 increased 4.1% to $3.5 billion compared to $3.4 billion in the first quarter of 2009. Operating Cash Flow margin was 40.8% in the first quarter of 2010 compared to 40.6% in the first quarter of 2009. These results reflect a continued focus on expense management and improved operational efficiencies in Comcast Digital Voice, offset by increases in video programming and marketing expenses.

Customers. As of March 31, 2010, Comcast’s Video, High-Speed Internet and Comcast Digital Voice customers totaled 47.7 million, reflecting 590,000 net additions during the first quarter of 2010.

 

		(in thousands)		Customers							Net Additions
				1Q09		1Q10		Growth			1Q10
		Video Customers		24,104		23,477		(2.6%	)		(82	)
		High-Speed Internet Customers		15,258		16,329		7.0%			399
		Voice Customers		6,771		7,895		16.6%			273
		Combined Video, HSI and Voice Customers		46,133		47,702		3.4%			590
		Digital Video Customers		17,293		18,843		9.0%			427
		Total Revenue Generating Units		63,426		66,544		4.9%			1,017

 

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Programming Segment Results

The Programming segment reported first quarter 2010 revenue of $385 million, a 6.7% increase, while Operating Cash Flow increased 8.5% to $121 million. These results reflect higher advertising and distribution revenue, partially offset by lower distribution revenues for VERSUS during the quarter and an increase in programming expenses.

Corporate and Other

Corporate and Other includes corporate overhead, Comcast Interactive Media (CIM), Comcast-Spectacor, and other operations and eliminations between Comcast’s businesses. For the quarter ended March 31, 2010, Corporate and Other reported revenues of $140 million, a 14.5% increase over the $122 million reported in the first quarter of 2009, reflecting strong results at CIM and Comcast-Spectacor, partially offset by an increase in eliminations. The Operating Cash Flow loss for the first quarter of 2010 was $98 million compared to a loss of $72 million for the same time period in 2009. This quarter’s Operating Cash Flow includes approximately $14 million of expenses related to the NBC Universal transaction.

Share Repurchase and Dividend

During the first quarter of 2010, Comcast repurchased 19.2 million of its common shares for $300 million. As of March 31, 2010, Comcast had approximately $3.0 billion of availability remaining under its share repurchase authorization.

During the first quarter of 2010, Comcast paid cash dividends totaling $268 million.

Notes:

 

1	Earnings per share amounts are presented on a diluted basis.

 

 

All percentages are calculated on whole numbers. Minor differences may exist due to rounding.

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Conference Call Information

Comcast Corporation will host a conference call with the financial community today, April 28, 2010 at 8:30 a.m. Eastern Time (ET). The conference call will be broadcast live on Comcast’s Investor Relations website at www.cmcsa.com or www.cmcsk.com. Those parties interested in participating via telephone should dial (800) 263-8495 with the conference ID number 63736904. A replay of the call will be available starting at 12:30 p.m. ET on April 28, 2010, on the Investor Relations website or by telephone. To access the telephone replay, which will be available until Monday, May 3, 2010 at midnight ET, please dial (800) 642-1687 and enter passcode number 63736904. To automatically receive Comcast financial news by email, please visit www.cmcsa.com or www.cmcsk.com and subscribe to email alerts.

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Caution Concerning Forward-Looking Statements

This press release contains forward-looking statements. Readers are cautioned that such forward-looking statements involve risks and uncertainties that could cause actual events or our actual results to differ materially from those expressed in any such forward-looking statements. Readers are directed to Comcast’s periodic and other reports filed with the Securities and Exchange Commission (SEC) for a description of such risks and uncertainties. We undertake no obligation to update any forward-looking statements.

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Non-GAAP Financial Measures

In this discussion, we sometimes refer to financial measures that are not presented according to generally accepted accounting principles in the U.S. (GAAP). Certain of these measures are considered “non-GAAP financial measures” under the SEC regulations; those rules require the supplemental explanations and reconciliations that are in Comcast’s Form 8-K (Quarterly Earnings Release) furnished to the SEC.

About Comcast Corporation

Comcast Corporation (Nasdaq: CMCSA, CMCSK) (www.comcast.com) is one of the nation’s leading providers of entertainment, information and communication products and services. With 23.5 million video customers, 16.3 million high-speed Internet customers, and 7.9 million Comcast Digital Voice customers, Comcast is principally involved in the development, management and operation of cable systems and in the delivery of programming content.

Comcast’s content networks and investments include E! Entertainment Television, Style Network, Golf Channel, VERSUS, G4, PBS KIDS Sprout, TV One, 11 regional sports networks operated by Comcast Sports Group and Comcast Interactive Media, which develops and operates Comcast’s Internet businesses, including Comcast.net (www.comcast.net). Comcast also has a majority ownership in Comcast-Spectacor, which owns two professional sports teams, the Philadelphia 76ers NBA basketball team and the Philadelphia Flyers NHL hockey team, and a large, multipurpose arena in Philadelphia, the Wachovia Center, and manages other facilities for sporting events, concerts and other events.

 

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TABLE 1 Condensed Consolidated Statement of Operations (Unaudited)

 

 

		(in millions, except per share data)		Three Months Ended March 31,
				2009				2010
		Revenue		$	8,866			$	9,202
		Operating expenses			3,592				3,732
		Selling, general and administrative expenses			1,830				1,905
					5,422				5,637
		Operating cash flow			3,444				3,565
		Depreciation expense			1,380				1,379
		Amortization expense			253				251
					1,633				1,630
		Operating income			1,811				1,935
		Other income (expense)
		Interest expense			(570	)			(524	)
		Investment income (loss), net			13				101
		Equity in net income (losses) of affiliates, net			(14	)			(32	)
		Other income (expense)			(1	)			(10	)
					(572	)			(465	)
		Income before income taxes			1,239				1,470
		Income tax expense			(461	)			(591	)
		Net income from consolidated operations			778				879
		Net (income) loss attributable to noncontrolling interests			(6	)			(13	)
		Net income attributable to Comcast Corporation		$	772			$	866
		Diluted earnings per common share attributable to Comcast Corporation shareholders		$	0.27			$	0.31
		Dividends declared per common share attributable to Comcast Corporation shareholders		$	0.0675			$	0.0945
		Diluted weighted-average number of common shares			2,890				2,837

 

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TABLE 2 Condensed Consolidated Balance Sheet (Unaudited)

 

 

		(in millions)		December 31,         2009			March 31,         2010
		ASSETS
		Current Assets
		Cash and cash equivalents		$	671		$	3,483
		Investments			50			41
		Accounts receivable, net			1,711			1,581
		Other current assets			791			863
		Total current assets			3,223			5,968
		Investments			5,947			6,267
		Property and equipment, net			23,855			23,441
		Franchise rights			59,452			59,452
		Goodwill			14,933			15,029
		Other intangible assets, net			4,105			3,976
		Other noncurrent assets, net			1,218			1,287
				$	112,733		$	115,420
		LIABILITIES AND EQUITY
		Current Liabilities
		Accounts payable and accrued expenses related to trade creditors		$	3,094		$	3,006
		Accrued expenses and other current liabilities			2,999			3,272
		Current portion of long-term debt			1,156			2,337
		Total current liabilities			7,249			8,615
		Long-term debt, less current portion			27,940			28,582
		Deferred income taxes			27,800			27,756
		Other noncurrent liabilities			6,767			7,140
		Redeemable noncontrolling interests			166			148
		Equity
		Comcast Corporation shareholders’ equity			42,721			43,082
		Noncontrolling interests			90			97
		Total Equity			42,811			43,179
				$	112,733		$	115,420

 

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TABLE 3 Consolidated Statement of Cash Flows (Unaudited)

 

 

		(in millions)			Three Months Ended March 31,
					2009				2010
		OPERATING ACTIVITIES
		Net income from consolidated operations		$	778			$	879
		Adjustments to reconcile net income from consolidated operations to net cash provided by operating activities:
		Depreciation			1,380				1,379
		Amortization			253				251
		Share-based compensation			54				82
		Noncash interest expense (income), net			44				35
		Equity in net (income) losses of affiliates, net			14				32
		(Gains) losses on investments and noncash other (income) expense, net			15				(67	)
		Deferred income taxes			214				-
		Changes in operating assets and liabilities, net of effects of acquisitions and divestitures:
		Change in accounts receivable, net			143				143
		Change in accounts payable and accrued expenses related to trade creditors			(94	)			(71	)
		Change in other operating assets and liabilities			(289	)			240
		Net cash provided by operating activities			2,512				2,903
		INVESTING ACTIVITIES
		Capital expenditures			(1,160	)			(925	)
		Cash paid for software and other intangible assets			(133	)			(117	)
		Acquisitions, net of cash acquired			(7	)			(172	)
		Proceeds from sales of investments			7				1
		Purchases of investments			(47	)			(24	)
		Other			24				(19	)
		Net cash provided by (used in) investing activities			(1,316	)			(1,256	)
		FINANCING ACTIVITIES
		Proceeds from borrowings			20				2,408
		Repurchases and repayments of debt			(352	)			(612	)
		Repurchases of common stock			-				(300	)
		Dividends paid			(180	)			(268	)
		Other			-				(63	)
		Net cash provided by (used in) financing activities			(512	)			1,165
		Increase (decrease) in cash and cash equivalents			684				2,812
		Cash and cash equivalents, beginning of period			1,195				671
		Cash and cash equivalents, end of period		$	1,879			$	3,483

 

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TABLE 4 Supplemental Information   Components of Net Cash Provided by Operating Activities (Unaudited)

 

 

		(in millions)		Three Months Ended March 31,
				2009		2010
		Operating income		$1,811		$1,935
		Depreciation and amortization		1,633		1,630
		Operating income before depreciation and amortization		3,444		3,565
		Noncash share-based compensation expense		54		82
		Changes in operating assets and liabilities		(188)		(107)
		Cash basis operating income		3,310		3,540
		Payments of interest		(664)		(615)
		Payments of income taxes		(161)		(46)
		Proceeds from interest, dividends and other nonoperating items		27		24
		Net Cash Provided by Operating Activities		$2,512		$2,903

Reconciliation of Operating Cash Flow excluding Operating Expenses related to the NBC Universal Transaction (Unaudited)

 

 

				Three Months Ended March 31,
		(in millions)		2009		2010		Growth %		Margin %
		Operating Cash Flow		$3,444		$3,565		3.5%		38.7%
		Operating Expenses related to the NBC Universal Transaction		-		14
		Operating Cash Flow excluding Operating Expenses related to the NBC Universal Transaction		$3,444		$3,579		3.9%		38.9%

Reconciliation of EPS Excluding Favorable Income Tax Benefits and the Costs of the NBC Universal Transaction (Unaudited)

 

 

				Three Months Ended March 31,
				2009				2010						2010 vs. 2009 Growth (%)
		(in millions, except per share data)		$		EPS (1)		$		EPS (1)				$		EPS (1)
		Net Income attributable to Comcast Corporation		$772		$0.27		$866		$0.31				12.2%		14.8%
		Favorable income tax benefits (2)		(48)		(0.02)		-		-
		Costs related to the NBC Universal Transaction, net of tax (3)		-		-		17		-
		Net Income attributable to Comcast Corporation (excluding favorable tax adjustments and costs related to the NBC Universal Transaction)		$724		$0.25		$883		$0.31				22.0%		24.0%

 

(1)

Based on diluted weighted-average number of common shares for the respective periods as presented in Table 1.

 

(2)

2009 Net Income attributable to Comcast Corporation includes favorable income tax adjustments related to the settlement of uncertain tax positions and related interest.

 

(3)

2010 Net Income attributable to Comcast Corporation includes $14 million of operating expense, $2 million of interest expense and $13 million of other expense ($29 million in total, $17 million net of tax) related to the NBC Universal Transaction.

Note: Minor differences may exist due to rounding.

Exhibit 99.2 – Explanation of Non-GAAP and Other Financial Measures

This Exhibit 99.2 to the accompanying Current Report on Form 8-K for Comcast Corporation (the “Company”, “we”, “us” or “our”) sets forth the reasons we believe that presentation of financial measures not in accordance with generally accepted accounting principles in the United States (GAAP) contained in the earnings press release filed as Exhibit 99.1 to the Current Report on Form 8-K provides useful information to investors regarding Comcast’s financial condition and results of operations. To the extent material, this Exhibit also discloses the additional purposes, if any, for which Comcast’s management uses these non-GAAP financial measures. A reconciliation of these non-GAAP financial measures with the most directly comparable GAAP financial measures is included in the earnings press release itself.

Operating Cash Flow is the primary basis used to measure the operational strength and performance of our businesses. Free Cash Flow and Unlevered Free Cash Flow are additional performance measures used as indicators of our ability to service and repay debt, make investments and return capital to investors, through stock repurchases and dividends. We also adjust certain historical data on a pro forma basis following certain acquisitions or dispositions to enhance comparability.

Operating Cash Flow is defined as operating income before depreciation and amortization, excluding impairment charges related to fixed and intangible assets and gains or losses on sale of assets, if any. This measure eliminates the significant level of non-cash 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. Our management and Board of Directors use this financial measure to evaluate our consolidated operating performance and the operating performance of our operating segments and to allocate resources and capital to our operating segments. It is also a significant performance measure in our annual incentive compensation programs. We believe that Operating Cash Flow 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 of Operating Cash Flow may not be directly comparable to similar measures used by other companies.

Because we use Operating Cash Flow 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 GAAP, in the business segment footnote to our quarterly and annual consolidated financial statements. Therefore, we believe our measure of Operating Cash Flow for our segments is not a “non-GAAP financial measure” as contemplated by Regulation G adopted by the Securities and Exchange Commission. Consolidated Operating Cash Flow is a non-GAAP financial measure.

Free Cash Flow, which is a non-GAAP financial measure, is defined as “Net Cash Provided by Operating Activities” (as stated in our Consolidated Statement of Cash Flows) reduced by capital expenditures and cash paid for intangible assets; and adjusted for any payments related to certain nonoperating items, net of estimated tax benefits (such as income taxes on investment sales and nonrecurring payments related to income tax and litigation contingencies of acquired companies). Unlevered Free Cash Flow is Free Cash Flow before cash paid interest. We believe that Free Cash Flow and Unlevered Free Cash Flow are also useful to investors as the basis for comparing our performance and coverage ratios with other companies in our industries, although our measure of Free Cash Flow and Unlevered Free Cash Flow may not be comparable to similar measures used by other companies.

Pro forma data is used by management to evaluate performance when certain acquisitions or dispositions occur. Historical data reflects results of acquired businesses only after the acquisition dates while pro forma data enhances comparability of financial information between periods by adjusting the data as if the acquisitions or dispositions occurred at the beginning of the prior year. Our pro forma data is only adjusted for the timing of acquisitions or dispositions and does not include adjustments for costs related to integration activities, cost savings or synergies that have been or may be achieved by the combined businesses. We believe our pro forma data is not a non-GAAP financial measure as contemplated by Regulation G.

In certain circumstances we also present “adjusted” data, to exclude certain gains, losses or other charges, net of tax (such as from the sales of investments or dispositions of businesses). This “adjusted” data is a non-GAAP financial measure. We believe, among other things, that the “adjusted” data may help investors evaluate our ongoing operations and can assist in making meaningful period-over-period comparisons.

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Exhibit 99.2 – Explanation of Non-GAAP and Other Financial Measures, cont’d

Non-GAAP financial measures should not be considered as substitutes for operating income (loss), net income (loss) attributable to Comcast Corporation, net cash provided by operating activities or other measures of performance or liquidity reported in accordance with GAAP.

Additionally, in the opinion of management, our pro forma data is not necessarily indicative of future results or what results would have been had the acquired businesses been operated by us after the assumed earlier date.

We provide reconciliations of Free Cash Flow in Exhibit 99.1 to this current report on Form 8-K and of Consolidated Operating Cash Flow in Table 1 set forth in Exhibit 99.1 to this Current Report on Form 8-K.