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): October 27, 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))

---

 

Item 2.02. Results of Operations and Financial Condition

On October 27, 2010, Comcast Corporation (“Comcast”) issued a press release reporting the results of its operations for the three and nine months ended September 30, 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 October 27, 2010.
99.2		Explanation of Non-GAAP and Other Financial Measures.

---

 

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: October 27, 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 THIRD QUARTER 2010 RESULTS

Third Consecutive Quarter of Accelerating Growth

in Revenue and Operating Cash Flow

Revenue Increased 7%, Operating Cash Flow Increased 8%

and Operating Income Increased 14%

Generated $1 Billion of Free Cash Flow

Dividends and Share Repurchases Totaled $565 Million

Philadelphia, PA – October 27, 2010 …Comcast Corporation (NASDAQ: CMCSA, CMCSK) today reported results for the quarter ended September 30, 2010.

Brian L. Roberts, Chairman and Chief Executive Officer of Comcast Corporation, said, “Our results mark the third consecutive quarter of accelerating growth in revenue and operating cash flow, driven by overall customer growth, a robust advertising market and continued strength in Business Services. As we near completion of our All-Digital and DOCSIS 3.0 deployments, we are increasing the pace of innovation and new product introductions to our customers. We believe this focus on consistently improving the customer experience and on driving profitable growth will further strengthen our competitive position and build long-term value for our shareholders.”

Consolidated Financial Results

Revenue increased 7.3% in the third quarter of 2010 to $9.5 billion, while Operating Cash Flow increased 7.6% to $3.6 billion and Operating Income increased 14.2% to $2.0 billion. This growth was due to solid operating results in the Cable and Programming segments. Excluding $21 million of NBC Universal-related transaction costs, Operating Cash Flow increased 8.2%.

For the nine months ended September 30, 2010, revenue increased 5.7% to $28.2 billion, Operating Cash Flow increased 5.6% to $10.9 billion, and Operating Income increased 10.6% to $6.0 billion. Excluding $57 million of NBC Universal-related transaction costs, Operating Cash Flow increased 6.1%.

 

		($ in millions)		3rd Quarter												Year to Date
				2009				2010				Growth				2009				2010				Growth
		Revenue
		Cable		$	8,402			$	8,981				6.9%			$	25,303			$	26,607				5.2%
		Programming			383				416				8.7%				1,128				1,255				11.3%
		Corporate & Other			60				92				49.8%				258				354				36.8%
		Total Consolidated Revenue		$	8,845			$	9,489				7.3%			$	26,689			$	28,216				5.7%
		Operating Cash Flow (OCF)
		Cable		$	3,312			$	3,546				7.1%			$	10,215			$	10,786				5.6%
		Programming			118				150				26.3%				343				423				23.2%
		Corporate & Other			(104)				(118)				(12.2%)				(253)				(329)				(29.9%)
		Total Consolidated OCF		$	3,326			$	3,578				7.6%			$	10,305			$	10,880				5.6%

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.

---

Earnings per Share¹ (EPS) for the quarter ended September 30, 2010 was $0.31, a 6.1% decrease from the $0.33 reported in the third quarter of 2009. Excluding NBC Universal transaction-related costs, income tax benefits and one-time financing expenses, third quarter 2010 EPS increased 14.3% over the comparable period in 2009 (see Table 4).

•

Third quarter 2010 EPS: Includes $21 million of operating expenses plus $45 million of financing and other costs related to the NBC Universal transaction, resulting in total third quarter transaction costs of $66 million, or $39 million net of tax ($0.01 per share).

•

Third quarter 2009 EPS: Includes the recognition of income tax benefits of $251 million ($0.09 per share), partially offset by one-time financing expenses of $180 million, or $113 million net of tax ($0.04 per share).

EPS for the nine months ended September 30, 2010 was $0.93, stable compared to the prior year. Excluding NBC Universal transaction-related costs, income tax benefits and one-time financing expenses, EPS for the nine months ended September 30, 2010 increased 17.1% over the comparable period in 2009 (see Table 4).

•

Year-to-date 2010 EPS: Includes $57 million of operating expenses plus $97 million of financing and other costs related to the NBC Universal transaction, resulting in total year-to-date transaction costs of $154 million, or $92 million net of tax ($0.03 per share).

•

Year-to-date 2009 EPS: Includes the recognition of income tax benefits of $436 million ($0.15 per share) partially offset by one-time financing expenses of $180 million, or $113 million net of tax ($0.04 per share).

Capital Expenditures for the third quarter of 2010 increased $139 million, or 11.4%, to $1.4 billion, or 14.4% of total revenue, reflecting purchases of advanced (HD and/or DVR) boxes, digital transport adapters (DTAs) and increased investment in Comcast Business Services to support growth in these areas. For the nine months ended September 30, 2010, capital expenditures decreased 2.2% to $3.4 billion, representing 12.2% of total revenue.

Free Cash Flow (excluding any impact from the Economic Stimulus packages) was $1.0 billion in the third quarter of 2010, a 7.8% decline from $1.1 billion in the third quarter of 2009. The decrease in Free Cash Flow reflects higher cash income taxes and a modest increase in capital expenditures. Free Cash Flow for the nine months ended September 30, 2010 totaled $4.3 billion, a 17.0% increase as compared to $3.6 billion in 2009.

 

		($ in millions)		3rd Quarter												Year to Date
				2009				2010				Growth				2009				2010				Growth
		Net Cash Provided by Operating Activities			$2,612				$2,400				(8.1%)				$7,725				$7,732				0.1%
		Capital Expenditures			(1,227)				(1,366)				11.4%				(3,508)				(3,429)				(2.2%)
		Cash Paid for Capitalized Software			(99)				(102)				3.0%				(287)				(277)				(3.5%)
		Cash Paid for Other Intangible Assets			(43)				(33)				(23.3%)				(96)				(95)				(1.0%)
		Adjustments for Payment of Tax on Nonoperating Items			(84)				37				NM				66				68				3.0%
		FCF (Including Economic Stimulus Packages)			$1,159				$936				(19.2%)				$3,900				$3,999				2.5%
		Impact from Economic Stimulus Packages			(47)				89				NM				(252)				268				NM
		Free Cash Flow			$1,112				$1,025				(7.8%)				$3,648				$4,267				17.0%

Note: The definition of Free Cash Flow remains unchanged and specifically excludes any impact from the 2008-2010 Economic Stimulus packages.

Cable Segment Results

For the quarter ended September 30, 2010, Cable segment revenue increased 6.9% to $9.0 billion compared to $8.4 billion in the third quarter of 2009. This increase reflects growth across our Video, High-Speed Internet and Voice residential services, a 55% increase in Business Services and a 27% increase in advertising revenue. Reflecting rate adjustments and a growing number of residential customers taking multiple products, the monthly average total revenue per video customer increased 10.4% to $129.75.

For the nine months ended September 30, 2010, revenue from the Cable segment increased 5.2% to $26.6 billion compared to $25.3 billion in 2009.

 

2

---

Operating Cash Flow for the third quarter of 2010 increased 7.1% to $3.5 billion compared to $3.3 billion in the third quarter of 2009. Operating Cash Flow margin was 39.5% in the third quarter of 2010, a slight increase compared to 39.4% reported in the third quarter of 2009. These results primarily reflect increases in video programming and marketing costs, partially offset by reduced customer service and high-speed Internet expenses.

For the nine months ended September 30, 2010, Operating Cash Flow from the Cable segment increased 5.6% to $10.8 billion compared to $10.2 billion in 2009. Year-to-date Operating Cash Flow margin was 40.5% compared to 40.4% in the first nine months of 2009.

Customers. As of September 30, 2010, Comcast’s Video, High-Speed Internet and Voice customers totaled 48 million, an increase of 1.2 million or 2.5% over the prior year.

 

		(in thousands)		Customers												Net Adds
				3Q09				3Q10				Growth				3Q10				YTD
		Video Customers			23,759				22,937				(3.5%)				(275)				(622)
		High-Speed Internet Customers			15,684				16,696				6.5%				249				766
		Voice Customers			7,379				8,353				13.2%				228				731
		Combined Video, HSI and Voice Customers			46,821				47,987				2.5%				202				875
		Digital Video Customers			18,005				19,456				8.1%				219				1,041
		Total Revenue Generating Units			64,826				67,443				4.0%				421				1,916

Programming Segment Results

The Programming segment reported third quarter 2010 revenue of $416 million, an 8.7% increase, while Operating Cash Flow increased 26.3% to $150 million. These results reflect the impact of a strong advertising market across all networks and ratings strength at E!.

For the nine months ended September 30, 2010, Programming segment revenue increased 11.3% to $1.3 billion compared to the same time period in 2009. Operating Cash Flow increased 23.2% to $423 million compared to the same period last year.

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 September 30, 2010, Corporate and Other reported revenue of $92 million, a 49.8% increase over the $60 million reported in the third quarter of 2009, reflecting revenue growth and the acquisition of Paciolan at Comcast-Spectacor and strong advertising revenue growth at CIM. The Operating Cash Flow loss for the third quarter of 2010 was $118 million compared to a loss of $104 million for the same time period in 2009. Excluding approximately $21 million of expenses related to the NBC Universal transaction, this quarter’s Operating Cash Flow loss would have been $97 million.

For the nine months ended September 30, 2010, Corporate and Other revenue increased 36.8% to $354 million from the $258 million reported in the first nine months of 2009. The Operating Cash Flow loss was $329 million compared to a loss of $253 million for the same time period in 2009. Excluding approximately $57 million of expenses related to the NBC Universal transaction, the year-to-date Operating Cash Flow loss would have been $272 million.

Share Repurchase and Dividend

During the third quarter of 2010, Comcast repurchased 17.5 million of its common shares for $300 million. Year-to-date, Comcast has repurchased 54.0 million of its common shares for $900 million. As of September 30, 2010, Comcast had approximately $2.4 billion of availability remaining under its share repurchase authorization.

During the third quarter of 2010, Comcast paid cash dividends totaling $265 million.

 

3

---

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.

###

Conference Call Information

Comcast Corporation will host a conference call with the financial community today, October 27, 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 10950140. A replay of the call will be available starting at 12:30 p.m. ET on October 27, 2010, on the Investor Relations website or by telephone. To access the telephone replay, which will be available until Monday, November 1^st, 2010 at midnight ET, please dial (800) 642-1687 and enter passcode number 10950140. To automatically receive Comcast financial news by email, please visit www.cmcsa.com or www.cmcsk.com and subscribe to email alerts.

###

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.

###

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 22.9 million cable customers, 16.7 million high-speed Internet customers, and 8.4 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 Wells Fargo Center, and, through Global Spectrum, manages other facilities for sporting events, concerts and other events.

 

4

---

 

TABLE 1 Condensed Consolidated Statement of Operations (Unaudited)

 

 

		(in millions, except per share data)		Three Months Ended September 30,								Nine Months Ended September 30,
				2009				2010				2009				2010
		Revenue		$	8,845			$	9,489			$	26,689			$	28,216
		Operating expenses			3,530				3,792				10,703				11,351
		Selling, general and administrative expenses			1,989				2,119				5,681				5,985
					5,519				5,911				16,384				17,336
		Operating cash flow			3,326				3,578				10,305				10,880
		Depreciation expense			1,362				1,377				4,148				4,167
		Amortization expense			253				247				760				746
					1,615				1,624				4,908				4,913
		Operating income			1,711				1,954				5,397				5,967
		Other income (expense)
		Interest expense			(707	)			(545	)			(1,828	)			(1,612	)
		Investment income (loss), net			148				109				218				210
		Equity in net income (losses) of affiliates, net			(17	)			(40	)			(44	)			(98	)
		Other income (expense)			2				(24	)			13				(69	)
					(574	)			(500	)			(1,641	)			(1,569	)
		Income before income taxes			1,137				1,454				3,756				4,398
		Income tax expense			(203	)			(584	)			(1,088	)			(1,763	)
		Net income from consolidated operations			934				870				2,668				2,635
		Net (income) loss attributable to noncontrolling interests			10				(3	)			15				(18	)
		Net income attributable to Comcast Corporation		$	944			$	867			$	2,683			$	2,617
		Diluted earnings per common share attributable to Comcast Corporation shareholders		$	0.33			$	0.31			$	0.93			$	0.93
		Dividends declared per common share attributable to Comcast Corporation shareholders		$	0.0675			$	0.0945			$	0.2025			$	0.2835
		Diluted weighted-average number of common shares			2,877				2,810				2,890				2,826

 

5

---

 

TABLE 2 Condensed Consolidated Balance Sheet (Unaudited)

 

 

		(in millions)		December 31,         2009				September 30,         2010
		ASSETS
		Current Assets
		Cash and cash equivalents		$	671			$	4,542
		Investments			50				72
		Accounts receivable, net			1,711				1,868
		Other current assets			791				690
		Total current assets			3,223				7,172
		Investments			5,947				6,381
		Property and equipment, net			23,855				23,328
		Franchise rights			59,452				59,452
		Goodwill			14,933				15,029
		Other intangible assets, net			4,105				3,750
		Other noncurrent assets, net			1,218				1,413
				$	112,733			$	116,525
		LIABILITIES AND EQUITY
		Current Liabilities
		Accounts payable and accrued expenses related to trade creditors		$	3,094			$	3,297
		Accrued expenses and other current liabilities			2,999				3,260
		Current portion of long-term debt			1,156				2,300
		Total current liabilities			7,249				8,857
		Long-term debt, less current portion			27,940				28,738
		Deferred income taxes			27,800				27,347
		Other noncurrent liabilities			6,767				7,571
		Redeemable noncontrolling interests			166				144
		Equity
		Comcast Corporation shareholders’ equity			42,721				43,784
		Noncontrolling interests			90				84
		Total Equity			42,811				43,868
				$	112,733			$	116,525

 

6

---

 

TABLE 3 Consolidated Statement of Cash Flows (Unaudited)

 

 

		(in millions)			Nine Months Ended September 30,
					2009				2010
		OPERATING ACTIVITIES
		Net income from consolidated operations		$	2,668			$	2,635
		Adjustments to reconcile net income from consolidated operations to net cash provided by operating activities:
		Depreciation			4,148				4,167
		Amortization			760				746
		Share-based compensation			192				226
		Noncash interest expense (income), net			125				105
		Equity in net (income) losses of affiliates, net			44				98
		(Gains) losses on investments and noncash other (income) expense, net			(146	)			(78	)
		Deferred income taxes			572				(241	)
		Changes in operating assets and liabilities, net of effects of acquisitions and divestitures:
		Change in accounts receivable, net			(11	)			(145	)
		Change in accounts payable and accrued expenses related to trade creditors			(73	)			57
		Change in other operating assets and liabilities			(554	)			162
		Net cash provided by operating activities			7,725				7,732
		INVESTING ACTIVITIES
		Capital expenditures			(3,508	)			(3,429	)
		Cash paid for software and other intangible assets			(383	)			(372	)
		Acquisitions, net of cash acquired			(36	)			(183	)
		Proceeds from sales of investments			31				21
		Purchases of investments			(142	)			(54	)
		Other			37				149
		Net cash provided by (used in) investing activities			(4,001	)			(3,868	)
		FINANCING ACTIVITIES
		Proceeds from borrowings			1,843				2,420
		Repurchases and repayments of debt			(4,709	)			(649	)
		Repurchases of common stock			(438	)			(892	)
		Dividends paid			(568	)			(800	)
		Other			(185	)			(72	)
		Net cash provided by (used in) financing activities			(4,057	)			7
		Increase (decrease) in cash and cash equivalents			(333	)			3,871
		Cash and cash equivalents, beginning of period			1,195				671
		Cash and cash equivalents, end of period		$	862			$	4,542

 

7

---

 

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

 

 

		(in millions)		Three Months Ended September 30,								Nine Months Ended September 30,
				2009				2010				2009				2010
		Operating income		$	1,711			$	1,954			$	5,397			$	5,967
		Depreciation and amortization			1,615				1,624				4,908				4,913
		Operating income before depreciation and amortization			3,326				3,578				10,305				10,880
		Noncash share-based compensation expense			71				73				192				226
		Changes in operating assets and liabilities			(3	)			60				(239	)			(10	)
		Cash basis operating income			3,394				3,711				10,258				11,096
		Payments of interest			(615	)			(661	)			(1,678	)			(1,630	)
		Payments of income taxes			(194	)			(668	)			(940	)			(1,794	)
		Proceeds from interest, dividends and other nonoperating items			27				18				85				63
		Excess tax benefit under share-based compensation presented in financing activities			-				-				-				(3	)
		Net Cash Provided by Operating Activities		$	2,612			$	2,400			$	7,725			$	7,732

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

 

 

		(in millions)		Three Months Ended September 30,																Nine Months Ended September 30,
				2009				2010				Growth %				Margin %				2009				2010				Growth %				Margin %
		Operating Cash Flow		$	3,326			$	3,578				7.6%				37.7%			$	10,305			$	10,880				5.6%				38.6%
		Operating Expenses related to the NBC Universal Transaction			-				21												-				57
		Operating Cash Flow excluding Operating Expenses related to the NBC Universal Transaction		$	3,326			$	3,599				8.2%				37.9%			$	10,305			$	10,937				6.1%				38.8%

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

 

 

				Three Months Ended September 30,																				Nine Months Ended September 30,
				2009								2010												2009								2010
		(in millions, except per share data)		$				EPS (1)				$				EPS (1)								$				EPS (1)				$				EPS (1)
		Net Income attributable to Comcast Corporation		$	944			$	0.33			$	867			$	0.31							$	2,683			$	0.93			$	2,617			$	0.93
		Growth %											(8.2%)				(6.1%)																(2.5%)				0.0%
		Favorable income tax benefits (2)			(251)				(0.09)				-				-								(436)				(0.15)				-				-
		Financing charges, net of tax (3)			113				0.04				-				-								113				0.04				-				-
		Costs related to the NBC Universal Transaction, net of tax (4)			-				-				39				0.01								-				-				92				0.03
		Net Income attributable to Comcast Corporation
		(excluding favorable tax adjustments, financing charges and costs related to the NBC Universal Transaction)		$	806			$	0.28			$	906			$	0.32							$	2,360			$	0.82			$	2,709			$	0.96
		Growth %											12.4%				14.3%																14.8%				17.1%

 

(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)

3rd quarter 2009 Net Income attributable to Comcast Corporation includes financing charges of $180 million in total, $113 million net of tax.

 

(4)

3rd quarter 2010 Net Income attributable to Comcast Corporation includes $21 million of operating expense, $2 million of interest expense and $43 million of other expense ($66 million in total, $39 million net of tax) related to the NBC Universal Transaction. 2010 year to date Net Income attributable to Comcast Corporation includes $57 million of operating expense, $6 million of interest expense and $91 million of other expense ($154 million in total, $92 million net of tax) related to the NBC Universal Transaction.

 

Note: Minor differences may exist due to rounding.

 

8

 

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.

---

 

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.