Disclaimer

The SEC Filings on this page are provided by EDGAR (www.sec.gov), the Electronic Data Gathering, Analysis, and Retrieval System of the U.S. Securities and Exchange Commission (SEC). EDGAR performs automated collection, validation, indexing, acceptance, and forwarding of submissions by companies and others who are required by law to file forms with the SEC. The information here is provided for your convenience only. Comcast has no control over the information provided by EDGAR and cannot guarantee the sequence, accuracy, or completeness of any information or data displayed through EDGAR. Accordingly, Comcast does not accept any responsibility for the content or use of any information obtained through EDGAR.

Consult Your Tax Advisor

The information in this document represents our understanding of federal income tax laws and regulations, but does not constitute personal tax advice based on your specific situation. It does not purport to be complete or to describe the consequences that may apply to you given your particular taxes. You should consult your own tax advisor regarding the applicability of any state, local and foreign tax laws.

Form 10-Q
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 September 30, 2012

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 filing requirements for the past 90 days.

Yes x No ¨

 

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such period that the registrant was required to submit and post such files).

Yes x No ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x         Accelerated filer ¨        Non-accelerated filer ¨         Smaller reporting company ¨

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 September 30, 2012, there were 2,118,906,684 shares of our Class A common stock, 528,911,913 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      1   
  Condensed Consolidated Balance Sheet as of September 30, 2012 and December 31, 2011 (Unaudited)      1   
  Condensed Consolidated Statement of Income for the Three and Nine Months Ended September 30, 2012 and 2011 (Unaudited)      2   
  Condensed Consolidated Statement of Comprehensive Income for the Three and Nine Months Ended September 30, 2012 and 2011 (Unaudited)      3   
  Condensed Consolidated Statement of Cash Flows for the Nine Months Ended September 30, 2012 and 2011 (Unaudited)      4   
  Condensed Consolidated Statement of Changes in Equity for the Nine Months Ended September 30, 2012 and 2011 (Unaudited)      5   
  Notes to Condensed Consolidated Financial Statements (Unaudited)      6   

Item 2.

  Management’s Discussion and Analysis of Financial Condition and Results of Operations      28   

Item 3.

  Quantitative and Qualitative Disclosures About Market Risk      42   

Item 4.

  Controls and Procedures      42   
PART II. OTHER INFORMATION   

Item 1.

  Legal Proceedings      42   

Item 1A.

  Risk Factors      43   

Item 2.

  Unregistered Sales of Equity Securities and Use of Proceeds      43   

Item 6.

  Exhibits      44   
SIGNATURES        45   

 

 

This Quarterly Report on Form 10-Q is for the three and nine months ended September 30, 2012. 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 it, 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, including NBCUniversal, 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 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 these statements are only our predictions. In evaluating these statements, you should specifically consider various factors, including the risks outlined below and in other reports we file with the SEC. 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:

 

   

our businesses currently face a wide range of competition, and our businesses and results of operations could be adversely affected if we do not compete effectively

 

 

   

changes in consumer behavior driven by new technologies may adversely affect our competitive position, businesses and results of operations

 

 

   

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

 

 

   

we are subject to regulation by federal, state, local and foreign authorities, which may impose additional costs and restrictions on our businesses

 

 

   

weak economic conditions may have a negative impact on our businesses, results of operations and financial condition

 

 

   

a decline in advertising expenditures or changes in advertising markets could negatively impact our results of operations

 

 

   

NBCUniversal’s success depends on consumer acceptance of its content, which is difficult to predict, and our results of operations may be adversely affected if our content fails to achieve sufficient consumer acceptance or our costs to acquire content increase

 

 

   

the loss of our programming distribution agreements, or the renewal of these agreements on less favorable terms, could adversely affect our businesses and results of operations

 

 

   

our businesses depend on keeping pace with technological developments

 

 

   

our businesses depend on using and protecting certain intellectual property rights and on not infringing the intellectual property rights of others

 

 

   

sales of DVDs have been declining

 

 

   

we rely on network and information systems and other technologies, as well as key properties, and a disruption, cyber attack, failure or destruction of such networks, systems, technologies or properties may disrupt our businesses

 

 

   

we may be unable to obtain necessary hardware, software and operational support

 

 

   

labor disputes, whether involving employees or sports organizations, may disrupt our operations and adversely affect our businesses

 

 

   

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

 

 

   

the loss of key management personnel or popular on-air and creative talent could have an adverse effect on our businesses

 

 

   

we face risks relating to doing business internationally that could adversely affect our businesses

 

 

   

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 company through his beneficial ownership of our Class B common stock

 


Table of Contents

PART I: FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheet

(Unaudited)

 

(in millions, except share data)   September 30,
2012
    December 31,
2011
 

Assets

   

Current Assets:

   

Cash and cash equivalents

  $ 8,899     $ 1,620  

Investments

    1,401       54  

Receivables, net

    5,123       4,351  

Programming rights

    1,037       987  

Other current assets

    1,606       1,561  

Total current assets

    18,066       8,573  

Film and television costs

    4,946       5,227  

Investments

    5,951       9,854  

Property and equipment, net of accumulated depreciation of $38,688 and $36,528

    26,984       27,559  

Franchise rights

    59,364       59,376  

Goodwill

    27,088       26,874  

Other intangible assets, net of accumulated amortization of $7,573 and $6,665

    17,871       18,165  

Other noncurrent assets, net

    2,184       2,190  

Total assets

  $ 162,454     $ 157,818  

Liabilities and Equity

   

Current Liabilities:

   

Accounts payable and accrued expenses related to trade creditors

  $ 6,250     $ 5,705  

Accrued participations and residuals

    1,282       1,255  

Deferred revenue

    887       790  

Accrued expenses and other current liabilities

    6,117       4,124  

Current portion of long-term debt

    2,799       1,367  

Total current liabilities

    17,335       13,241  

Long-term debt, less current portion

    35,791       37,942  

Deferred income taxes

    30,231       29,932  

Other noncurrent liabilities

    12,860       13,034  

Commitments and contingencies (Note 14)

   

Redeemable noncontrolling interests

    16,896       16,014  

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, 2,484,367,434 and 2,460,937,253; outstanding, 2,118,906,684 and 2,095,476,503

    25       25  

Class A Special common stock, $0.01 par value—authorized, 7,500,000,000 shares; issued, 599,846,677 and 671,947,577; outstanding, 528,911,913 and 601,012,813

    6       7  

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

             

Additional paid-in capital

    40,652       40,940  

Retained earnings

    15,774       13,971  

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)

    (48     (152

Total Comcast Corporation shareholders’ equity

    48,892       47,274  

Noncontrolling interests

    449       381  

Total equity

    49,341       47,655  

Total liabilities and equity

  $ 162,454     $ 157,818  

See accompanying notes to condensed consolidated financial statements.

 

1


Table of Contents

Condensed Consolidated Statement of Income

(Unaudited)

 

    Three Months Ended
September 30
    Nine Months Ended
September 30
 
(in millions, except per share data)       2012             2011             2012             2011      

Revenue

  $ 16,544     $ 14,339     $ 46,633     $ 40,800  

Costs and Expenses:

       

Operating costs and expenses

    11,536       9,765       31,933       27,359  

Depreciation

    1,549       1,540       4,594       4,504  

Amortization

    411       393       1,221       1,134  
      13,496       11,698       37,748       32,997  

Operating income

    3,048       2,641       8,885       7,803  

Other Income (Expense):

       

Interest expense

    (633     (637     (1,898     (1,863

Investment income (loss), net

    70       (147     170       3  

Equity in net income (losses) of investees, net

    911       (40     943       (40

Other income (expense), net

    987       (12     924       (82
      1,335       (836     139       (1,982

Income before income taxes

    4,383       1,805       9,024       5,821  

Income tax expense

    (1,405     (639     (2,966     (2,249

Net income

    2,978       1,166       6,058       3,572  

Net (income) loss attributable to noncontrolling interests

    (865     (258     (1,373     (699

Net income attributable to Comcast Corporation

  $ 2,113     $ 908     $ 4,685     $ 2,873  

Basic earnings per common share attributable to Comcast Corporation shareholders

  $ 0.79     $ 0.33     $ 1.74     $ 1.04  

Diluted earnings per common share attributable to Comcast Corporation shareholders

  $ 0.78     $ 0.33     $ 1.72     $ 1.03  

Dividends declared per common share attributable to Comcast Corporation shareholders

  $ 0.1625     $ 0.1125     $ 0.4875     $ 0.3375  

See accompanying notes to condensed consolidated financial statements.

 

2


Table of Contents

Condensed Consolidated Statement of Comprehensive Income

(Unaudited)

 

    Three Months Ended
September 30
    Nine Months Ended
September 30
 
(in millions)       2012             2011             2012             2011      

Net income

  $ 2,978     $ 1,166     $ 6,058     $ 3,572  

Unrealized gains (losses) on marketable securities, net of deferred taxes of $(44), $—, $(44) and $(3)

    75              75       5  

Deferred gains (losses) on cash flow hedges, net of deferred taxes of $(29), $35, $(20) and $33

    50       (59     35       (57

Amounts reclassified to net income:

       

Realized (gains) losses on marketable securities, net of deferred taxes of $—, $—, $— and $5

                         (9

Realized (gains) losses on cash flow hedges, net of deferred taxes of $9, $(13), $8 and $(7)

    (15     23       (14     13  

Employee benefit obligations, net of deferred taxes of $(3), $—, $(2) and $(1)

    11       (3     6       (4

Currency translation adjustments, net of deferred taxes of $(4), $—, $(2), and $—

    17       (9     10       (2

Comprehensive income

    3,116       1,118       6,170       3,518  

Net (income) loss attributable to noncontrolling interests

    (865     (258     (1,373     (699

Other comprehensive (income) loss attributable to noncontrolling interests

    (16     6       (8     6  

Comprehensive income attributable to Comcast Corporation

  $ 2,235     $ 866     $ 4,789     $ 2,825  

See accompanying notes to condensed consolidated financial statements.

 

3


Table of Contents

Condensed Consolidated Statement of Cash Flows

(Unaudited)

 

    Nine Months Ended
September 30
 
(in millions)       2012               2011        

Net cash provided by (used in) operating activities

  $ 11,239     $ 10,206  

Investing Activities

   

Capital expenditures

    (4,043     (3,785

Cash paid for intangible assets

    (605     (505

Acquisitions, net of cash acquired

    (95     (6,407

Proceeds from sales of businesses and investments

    3,095       154  

Return of capital from investees

    2,281       6  

Purchases of investments

    (191     (85

Other

    68       (39

Net cash provided by (used in) investing activities

    510       (10,661

Financing Activities

   

Proceeds from (repayments of) short-term borrowings, net

    (555     1,642  

Proceeds from borrowings

    2,248         

Repurchases and repayments of debt

    (2,505     (2,813

Repurchases and retirements of common stock

    (2,250     (1,650

Dividends paid

    (1,176     (881

Issuances of common stock

    215       252  

Distributions to NBCUniversal noncontrolling member

    (340     (86

Distributions to other noncontrolling interests

    (157     (151

Other

    50       (36

Net cash provided by (used in) financing activities

    (4,470     (3,723

Increase (decrease) in cash and cash equivalents

    7,279       (4,178

Cash and cash equivalents, beginning of period

    1,620       5,984  

Cash and cash equivalents, end of period

  $ 8,899     $ 1,806  

See accompanying notes to condensed consolidated financial statements.

 

4


Table of Contents

Condensed Consolidated Statement of Changes in Equity

(Unaudited)

 

    Redeemable
Non-
controlling
Interests
        Common Stock     Additional
Paid-In
Capital
    Retained
Earnings
    Treasury
Stock at
Cost
    Accumulated
Other
Comprehensive
Income (Loss)
   

Non-

controlling
Interests

    Total
Equity
 
(in millions)          A     A Special     B              

Balance, January 1, 2011

  $ 143         $ 24     $ 8     $  —      $ 39,780     $ 12,158     $ (7,517   $ (99   $ 80     $ 44,434  

Stock compensation plans

          1           414       (40           375  

Repurchase and retirement of common
stock

            (1       (822     (827           (1,650

Employee stock purchase
plan

                50               50  

Dividends declared

                  (928           (928

Other comprehensive
income (loss)

    (6                     (48       (48

NBCUniversal
transaction

    15,192                 1,612             211       1,823  

Issuance of subsidiary
shares to noncontrolling interests

    83                 45             43       88  

Contributions from (distributions to)
noncontrolling interests, net

    (177                       (112     (112

Net income (loss)

    592                                           2,873                       107       2,980  

Balance, September 30, 2011

  $ 15,827         $ 25     $ 7     $      $ 41,079     $ 13,236     $ (7,517   $ (147   $ 329     $ 47,012  

Balance, January 1, 2012

  $ 16,014         $ 25     $ 7     $      $ 40,940     $ 13,971     $ (7,517   $ (152   $ 381     $ 47,655  

Stock compensation plans

                490       (169           321  

Repurchase and retirement of common
stock

            (1       (842     (1,407           (2,250

Employee stock purchase
plan

                62               62  

Dividends declared

                  (1,306           (1,306

Other comprehensive
income (loss)

    8                       104         104  

Contributions from (distributions to) noncontrolling interests, net

    (353                       (119     (119

Other

    (43               2             84       86  

Net income (loss)

    1,270                                           4,685                       103       4,788  

Balance, September 30, 2012

  $ 16,896         $ 25     $ 6     $      $ 40,652     $ 15,774     $ (7,517   $ (48   $ 449     $ 49,341  

See accompanying notes to condensed consolidated financial statements.

 

 

5


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 consolidated results of operations, financial condition and cash flows for the periods shown, including normal, recurring accruals and other items. The consolidated results of operations for the interim periods presented are not necessarily indicative of results for the full year.

The year-end condensed consolidated 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 consolidated financial statements included in our 2011 Annual Report on Form 10-K.

On January 28, 2011, we closed the NBCUniversal transaction in which we acquired control of the businesses of NBC Universal, Inc. (now named NBCUniversal Media, LLC (“NBCUniversal”)), and on July 1, 2011, we closed the Universal Orlando transaction in which we acquired the remaining 50% equity interest in Universal City Development Partners, Ltd. (“Universal Orlando”) that we did not already own. NBCUniversal’s and Universal Orlando’s results of operations have been consolidated with our results following their respective acquisition dates. For a more complete discussion of the NBCUniversal and Universal Orlando transactions, refer to our consolidated financial statements included in our 2011 Annual Report on Form 10-K.

Reclassifications have been made to the condensed consolidated financial statements for the prior year to conform to classifications used in the current period.

Note 2: Earnings Per Share

Computation of Diluted EPS

 

    Three Months Ended September 30  
    2012      2011  
(in millions, except per share data)   Net Income
Attributable to
Comcast
Corporation
     Shares      Per Share
Amount
     Net Income
Attributable to
Comcast
Corporation
     Shares      Per Share
Amount
 

Basic EPS attributable to Comcast Corporation shareholders

  $ 2,113        2,668      $ 0.79      $ 908        2,739      $ 0.33  

Effect of dilutive securities:

                

Assumed exercise or issuance of shares relating to stock plans

             35                          22           

Diluted EPS attributable to Comcast Corporation shareholders

  $ 2,113        2,703      $ 0.78      $ 908        2,761      $ 0.33  
    Nine Months Ended September 30  
    2012      2011  
(in millions, except per share data)   Net Income
Attributable to
Comcast
Corporation
     Shares      Per Share
Amount
     Net Income
Attributable to
Comcast
Corporation
     Shares      Per Share
Amount
 

Basic EPS attributable to Comcast Corporation shareholders

  $ 4,685        2,687      $ 1.74      $ 2,873        2,757      $ 1.04  

Effect of dilutive securities:

                

Assumed exercise or issuance of shares relating to stock plans

             37                          32           

Diluted EPS attributable to Comcast Corporation shareholders

  $ 4,685        2,724      $ 1.72      $ 2,873        2,789      $ 1.03  

 

6


Table of Contents

Diluted earnings per common share attributable to Comcast Corporation shareholders (“diluted EPS”) for the three and nine months ended September 30, 2012 excludes 21 million and 37 million, respectively, of potential common shares related to our share-based compensation plans, because the inclusion of the potential common shares would have had an antidilutive effect. For the three and nine months ended September 30, 2011, diluted EPS excluded 54 million and 45 million, respectively, of potential common shares.

Note 3: Film and Television Costs

 

(in millions)   September 30,
2012
     December 31,
2011
 

Film Costs:

    

Released, less amortization

  $ 1,518      $ 1,428  

Completed, not released

    137        148  

In production and in development

    1,020        1,374  
    2,675        2,950  

Television Costs:

    

Released, less amortization

    1,013        1,002  

In production and in development

    203        201  
    1,216        1,203  

Programming rights, less amortization

    2,092        2,061  
    5,983        6,214  

Less: Current portion of programming rights

    1,037        987  

Film and television costs

  $ 4,946      $ 5,227  

Note 4: Investments

 

(in millions)   September 30,
2012
     December 31,
2011
 

Fair value method

    $4,144      $ 3,028  

Equity Method:

    

A&E Television Networks

            2,021  

SpectrumCo

    11        1,417  

The Weather Channel

    469        463  

MSNBC.com

            174  

Clearwire LLC

            69  

Other

    655        736  
    1,135        4,880  

Cost Method:

    

AirTouch

    1,534        1,523  

Other

    539        477  
    2,073        2,000  

Total investments

    7,352        9,908  

Less: Current investments

    1,401        54  

Noncurrent investments

    $5,951      $ 9,854  

Fair Value Method

As of September 30, 2012, we held as collateral $4 billion of fair value method equity securities related to our obligations under prepaid forward sale agreements. As of September 30, 2012, our prepaid forward sale obligations were recorded at $3.4 billion within other current and noncurrent liabilities in our condensed consolidated balance sheet and had an estimated fair value of approximately $3.5 billion. The estimated fair values are based on Level 2 inputs using pricing models whose inputs are derived primarily from or corroborated by observable market data through correlation or other means for substantially the full term of the financial instrument.

 

7


Table of Contents

Clearwire

In September 2012, we exchanged our ownership units in Clearwire Communications LLC (“Clearwire LLC”) and our voting Class B stock for 89 million Class A shares of Clearwire Corporation. Following this exchange, we now account for our investment as an available-for-sale security under the fair value method. As of September 30, 2012, the carrying value of our investment in Clearwire Corporation was $119 million.

Equity Method

A&E Television Networks

In March 2012, NBCUniversal exercised an option that required A&E Television Networks LLC (“A&E Television Networks”) to redeem a substantial portion of NBCUniversal’s equity interest in A&E Television Networks. In July 2012, NBCUniversal entered into a redemption agreement with A&E Television Networks whereby A&E Television Networks agreed to redeem NBCUniversal’s entire 15.8% equity interest for $3 billion.

In August 2012, NBCUniversal closed this transaction, received cash proceeds of $3 billion and recognized a pretax gain of $1 billion, which is included in other income (expense), net. The net income attributable to noncontrolling interests and our consolidated income tax expense associated with this transaction were $495 million and $196 million, respectively.

SpectrumCo

In August 2012, SpectrumCo, LLC (“SpectrumCo”) closed its agreement to sell its advanced wireless services (“AWS”) spectrum licenses to Verizon Wireless for $3.6 billion. Our portion of SpectrumCo’s gain on sale of its AWS spectrum licenses was $876 million for the three and nine months ended September 30, 2012, which is included in equity in net income (losses) of investees, net in our condensed consolidated statement of income. Following the close of the transaction, SpectrumCo distributed to us $2.3 billion, which represents our portion of the sale proceeds. These proceeds are reflected as a return of capital from investees in our condensed consolidated statement of cash flows.

MSNBC.com

In July 2012, NBCUniversal acquired the remaining 50% equity interest in MSNBC Interactive News, LLC and other related entities (“MSNBC.com”) that it did not already own. The total purchase price was $195 million, which was net of $100 million of cash and cash equivalents held at MSNBC.com that were acquired in the transaction, which were not previously attributable to NBCUniversal. MSNBC.com is now a wholly owned consolidated subsidiary of NBCUniversal.

Cost Method

We hold two series of preferred stock of AirTouch Communications, Inc. (“AirTouch”), a subsidiary of Vodafone, which are redeemable in April 2020. As of September 30, 2012, the estimated fair value of the AirTouch preferred stock and the associated liability related to redeemable preferred shares issued by one of our consolidated subsidiaries was approximately $1.9 billion. The estimated fair values are primarily based on Level 2 inputs using pricing models whose inputs are derived from or corroborated by observable market data through correlation or other means for substantially the full term of the financial instrument.

Components of Investment Income (Loss), Net

 

    Three Months Ended
September 30
    Nine Months Ended
September 30
 
(in millions)       2012             2011             2012             2011      

Gains on sales and exchanges of investments, net

  $ 1     $ 6     $ 28     $ 27  

Investment impairment losses

    (1            (22     (3

Unrealized gains (losses) on securities underlying prepaid forward sale agreements

    500       (576     988       (41

Mark to market adjustments on derivative component of prepaid forward sale agreements and indexed debt instruments

    (470     454       (920     7  

Interest and dividend income

    32       28       89       80  

Other, net

    8       (59     7       (67

Investment income (loss), net

  $ 70     $ (147   $ 170     $ 3  

 

8


Table of Contents

Note 5: Goodwill

 

          NBCUniversal               
(in millions)   Cable
Communications
    Cable
Networks
    Broadcast
Television
    Filmed
Entertainment
     Theme
Parks
    Corporate
and Other
     Total  

Balance, December 31, 2011

  $ 12,208     $ 12,744     $ 772     $ 1      $ 1,140     $ 9      $ 26,874  

Acquisitions

           311                                     311  

Dispositions

    (1                                          (1

Adjustments

           (24     (11             (61             (96

Balance, September 30, 2012

  $ 12,207     $ 13,031     $ 761     $ 1      $ 1,079     $ 9      $ 27,088  

The increase in goodwill in our Cable Networks segment primarily relates to $232 million of goodwill associated with the acquisition of MSNBC.com and $71 million of goodwill associated with the acquisition of a controlling interest in a previously held equity method investment based in Brazil. The preliminary allocation of purchase price for these acquisitions, including the changes in goodwill, are not yet final and are subject to change. We will finalize the amounts recognized as we obtain the information necessary to complete the analyses, but no later than July 2013 and May 2013, respectively.

Note 6: Long-Term Debt

As of September 30, 2012, our debt had an estimated fair value of $46.1 billion. The estimated fair value of our publicly traded debt is based on quoted market values for the debt. To estimate the fair value of debt for which there are no quoted market prices, we use interest rates available to us for debt with similar terms and remaining maturities.

In July 2012, we issued $1 billion aggregate principal amount of 3.125% senior notes due 2022 and $1.25 billion aggregate principal amount of 4.650% senior notes due 2042. A portion of the proceeds from this offering was used to fund the repayment in July 2012 of $202 million aggregate principal amount of our 10.625% senior subordinated debentures and the redemption of $575 million aggregate principal amount of our 6.625% senior notes.

In October 2012, NBCUniversal issued $1 billion aggregate principal amount of 2.875% senior notes due 2023 and $1 billion aggregate principal amount of 4.450% senior notes due 2043. A portion of the proceeds from this issuance will be used to redeem in November 2012 the $260 million aggregate principal amount outstanding of Universal Orlando’s 8.875% senior notes due 2015 and the $146 million aggregate principal amount outstanding of Universal Orlando’s 10.875% senior subordinated notes due 2016. The carrying amount of these senior notes and senior subordinated notes was recorded in the current portion of long-term debt in our condensed consolidated balance sheet as of September 30, 2012.

Debt Repayments and Redemptions

 

(in millions)  

Nine Months Ended
September 30,

2012

 

7% senior notes due 2055

  $ 1,125  

6.625% senior notes due 2056

    575  

9.8% senior notes due 2012

    553  

10.625% senior subordinated debentures due 2012

    202  

Other

    50  

Total

  $ 2,505  

Commercial Paper Program

During the nine months ended September 30, 2012, net repayments of commercial paper by NBCUniversal were $550 million.

 

9


Table of Contents

Revolving Credit Facility

In June 2012, Comcast and Comcast Cable Communications, LLC entered into a new $6.25 billion revolving credit facility due June 2017 with a syndicate of banks, which may be used for general corporate purposes. The new revolving credit facility replaces our prior $6.8 billion revolving credit facility, which was terminated in connection with the execution of the new revolving credit facility. The interest rate on the new facility consists of a base rate plus a borrowing margin that is determined based on Comcast’s credit rating. As of September 30, 2012, the borrowing margin for borrowings based on the London Interbank Offered Rate (“LIBOR”) was 1.125%. The terms of the new revolving credit facility’s financial covenants and guarantees are substantially the same as those under the prior revolving credit facility. As of September 30, 2012, amounts available under the new facility totaled $5.8 billion.

Note 7: Derivative Financial Instruments

We use derivative financial instruments to manage our exposure to the risks associated with fluctuations in interest rates, foreign exchange rates and equity prices.

We manage our exposure to fluctuations in interest rates by using derivative financial instruments such as interest rate exchange agreements (“swaps”), interest rate lock agreements (“rate locks”) and interest rate collars (“collars”). We sometimes enter into rate locks or collars to hedge the risk that the cash flows related to the interest payments on an anticipated issuance or assumption of fixed-rate debt may be adversely affected by interest rate fluctuations.

We manage our exposure to fluctuations in foreign exchange rates by using foreign exchange contracts such as forward contracts and currency options, as well as cross-currency swaps for our foreign currency denominated borrowings.

We manage our exposure to and benefits from price fluctuations in the common stock of some of our investments by using equity derivative financial instruments embedded in other contracts, such as prepaid forward sale agreements, whose values, in part, are derived from the market value of certain publicly traded common stock.

We manage the credit risks associated with our derivative financial instruments through diversification and the evaluation and monitoring of the creditworthiness of counterparties. Although we may be exposed to losses in the event of nonperformance by the counterparties, we do not expect such losses, if any, to be significant. We have agreements with certain counterparties that include collateral provisions. These provisions require a party with an aggregate unrealized loss position in excess of certain thresholds to post cash collateral for the amount in excess of the threshold. The threshold levels in our collateral agreements are based on our and the counterparties’ credit ratings. As of September 30, 2012, neither we nor any of our counterparties were required to post collateral under the terms of the agreements.

During the three and nine months ended September 30, 2012, there were no significant changes in the composition of any of our derivative financial instruments or their classification in our condensed consolidated balance sheet. In addition, the impact of our derivative financial instruments on our condensed consolidated financial statements was not material for the three and nine months ended September 30, 2012 and 2011.

See Note 8 for additional information on the fair value of our derivative financial instruments as of September 30, 2012 and December 31, 2011.

Note 8: Fair Value Measurements

The accounting guidance related to financial assets and financial liabilities (“financial instruments”) 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). Level 1 consists of financial instruments whose values are based on quoted market prices for identical financial instruments in an active market. Level 2 consists of financial instruments that are valued using models or other valuation methodologies. These models use inputs that are observable either directly or indirectly. Level 3 consists of financial instruments whose values

 

10


Table of Contents

are determined using pricing models that use significant inputs that are primarily unobservable, discounted cash flow methodologies or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. Our financial instruments 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  
    September 30, 2012      December 31,
2011
 
(in millions)     Level 1          Level 2          Level 3          Total        Total  

Assets

             

Trading securities

  $ 3,866      $       $       $ 3,866      $ 2,895  

Available-for-sale securities

    226        29        21        276        131  

Interest rate swap agreements

            234                234        246  

Foreign exchange contracts

            10                10        10  

Equity warrants

                    2        2        2  

Total

  $ 4,092      $ 273      $ 23      $ 4,388      $ 3,284  

Liabilities

             

Derivative component of prepaid forward sale agreements and indexed debt instruments

  $       $ 2,153      $       $ 2,153      $ 1,234  

Contractual obligations

                    984        984        1,004  

Contingent consideration

                    650        650        583  

Cross-currency swap agreements

            8                8        69  

Foreign exchange contracts

            15                15        8  

Total

  $       $ 2,176      $ 1,634      $ 3,810      $ 2,898  

The fair values of the contractual obligations and contingent consideration in the table above are primarily based on certain expected future discounted cash flows, the determination of which involves the use of significant unobservable inputs. The most significant unobservable inputs we use are our estimates of the future revenue we expect to generate from certain NBCUniversal entities, which are related to our contractual obligations, and the future net tax benefits that will affect the payments to GE, which are related to contingent consideration. The discount rates used in the measurements of fair value were between 5.6% and 13% and are based on the underlying risk associated with our estimate of future revenue, as well as the terms of the respective contracts, and the uncertainty in the timing of our payments to GE. The fair value adjustments to these financial liabilities are recorded in other income (expense), net in our condensed consolidated statement of income.

Changes in Contractual Obligations and Contingent Consideration

 

(in millions)   Contractual
Obligations
    Contingent
Consideration
 

Balance, December 31, 2011

  $ 1,004     $ 583  

Acquisition accounting adjustments

    (20       

Fair value adjustments

    65       106  

Payments

    (65     (39

Balance, September 30, 2012

  $ 984     $ 650  

Nonrecurring Fair Value Measures

We have assets and liabilities required to be recorded at fair value on a nonrecurring basis when certain circumstances occur. In the case of film or stage play production costs, upon the occurrence of an event or change in circumstance that may indicate that the fair value of a production is less than its unamortized costs, we determine the fair value of the production and record an adjustment for the amount by which the unamortized

 

11


Table of Contents

capitalized costs exceed the production’s fair value. The estimate of fair value of a production is determined using Level 3 inputs, primarily an analysis of future expected cash flows. Fair value adjustments of $155 million were recorded during the nine months ended September 30, 2012.

Note 9: Noncontrolling Interests

Certain of the subsidiaries that we consolidate are not wholly owned. Some of the agreements with the minority partners of these subsidiaries contain redemption features whereby interests held by the minority partners, including GE’s 49% interest in NBCUniversal, are redeemable either (i) at the option of the holder or (ii) upon the occurrence of an event that is not solely within our control. If interests were to be redeemed under these agreements, we would generally be required to purchase the interest at fair value on the date of redemption. These interests are presented on the balance sheet outside of equity under the caption “Redeemable noncontrolling interests.” Noncontrolling interests that do not contain such redemption features are presented in equity.

The table below presents the changes in equity resulting from net income attributable to Comcast Corporation and transfers to or from noncontrolling interests.

 

    Nine Months Ended
September 30
 
(in millions)       2012              2011      

Net income attributable to Comcast Corporation

  $ 4,685      $ 2,873  

Transfers from (to) noncontrolling interests:

    

Increase in Comcast Corporation additional paid-in capital resulting from the issuance of noncontrolling equity interest

            1,657  

Increase in Comcast Corporation additional paid-in capital resulting from the purchase of noncontrolling interest

    2          

Changes in equity resulting from net income attributable to Comcast Corporation and transfers from (to) noncontrolling interests

  $ 4,687      $ 4,530  

Note 10: Pension Plans and Postretirement Benefits

The tables below present the components of net periodic benefit expense related to our active pension plans and postretirement benefit plans.

 

     Three Months Ended September 30  
     2012      2011  
(in millions)    Pension
Benefits
    Postretirement
Benefits
     Pension
Benefits
     Postretirement
Benefits
 

Service cost

   $ 32     $ 7      $ 27      $ 8  

Interest cost

     4       7        3        7  

Total benefits expense

   $ 36     $ 14      $ 30      $ 15  
     Nine Months Ended September 30  
     2012      2011  
(in millions)    Pension
Benefits
    Postretirement
Benefits
     Pension
Benefits
     Postretirement
Benefits
 

Service cost

   $ 95     $ 23      $ 72      $ 23  

Interest cost

     13       22        9        22  

Prior service cost

                            (13

Other

     (2                       

Total benefits expense

   $ 106     $ 45      $ 81      $ 32  

In April 2012, NBCUniversal provided funding to its qualified defined benefit plan of $76 million. The expected return on the plan assets is 5%.

In October 2012, NBCUniversal provided notice to its plan participants of an amendment to both the qualified and nonqualified NBCUniversal defined benefit plans that will freeze future benefits effective December 31, 2012. In addition, effective January 1, 2013, NBCUniversal will provide additional benefits to eligible employees through its other retirement benefit plans.

 

12


Table of Contents

Note 11: Share-Based Compensation

Our approach to long-term incentive compensation includes awarding stock options and restricted share units (“RSUs”) to certain employees and directors. We grant these awards under various plans. Additionally, through our employee stock purchase plans, employees are able to purchase shares of Comcast Class A common stock at a discount through payroll deductions.

In March 2012, we granted 21.8 million stock options and 5.7 million RSUs related to our annual management grant program. The weighted-average fair values associated with these grants were $7.38 per stock option and $27.43 per RSU.

Recognized Share-Based Compensation Expense

 

    Three Months Ended
September 30
     Nine Months Ended
September 30
 
(in millions)       2012              2011              2012              2011      

Stock options

  $ 32      $ 30      $ 99      $ 86  

Restricted share units

    38        35        114        113  

Employee stock purchase plans

    4        4        12        10  

Total

  $ 74      $ 69      $ 225      $ 209  

As of September 30, 2012, we had unrecognized pretax compensation expense related to nonvested stock options and nonvested RSUs of $353 million and $384 million, respectively.

For the three and nine months ended September 30, 2012, the employee cost associated with participation in our employee stock purchase plans was satisfied with payroll deductions of $14 million and $50 million, respectively. For the three and nine months ended September 30, 2011, the employee cost associated with participation in our employee stock purchase plans was satisfied with payroll deductions of $16 million and $44 million, respectively.

Note 12: Supplemental Financial Information

Receivables

 

(in millions)   September 30,
2012
     December 31,
2011
 

Receivables, gross

  $ 5,569      $ 4,978  

Less: Allowance for returns and customer incentives

    251        425  

Less: Allowance for doubtful accounts

    195        202  

Receivables, net

  $ 5,123      $ 4,351  

Accumulated Other Comprehensive Income (Loss)

 

(in millions)   September 30,
2012
    September 30,
2011
 

Unrealized gains (losses) on marketable securities

  $ 97     $ 22  

Deferred gains (losses) on cash flow hedges

    (90     (149

Unrecognized gains (losses) on employee benefit obligations

    (54     (18

Cumulative translation adjustments

    (1     (2

Accumulated other comprehensive income (loss), net of deferred taxes

  $ (48   $ (147

Operating Costs and Expenses

 

    Three Months Ended
September 30
     Nine Months Ended
September 30
 
(in millions)       2012              2011              2012              2011      

Programming and production

  $ 5,726      $ 4,338      $ 15,017      $ 11,932  

Cable Communications technical labor

    590        597        1,757        1,758  

Cable Communications customer service

    485        474        1,460        1,403  

Advertising, marketing and promotion

    1,223        1,101        3,713        3,186  

Other

    3,512        3,255        9,986        9,080  

Operating costs and expenses (excluding depreciation and

amortization)

  $ 11,536      $ 9,765      $ 31,933      $ 27,359  

 

13


Table of Contents

Net Cash Provided by Operating Activities

 

    Nine Months Ended
September 30
 
(in millions)       2012                 2011          

Net income

  $ 6,058     $ 3,572  

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

   

Depreciation and amortization

    5,815       5,638  

Amortization of film and television costs

    7,295       4,769  

Share-based compensation

    278       260  

Noncash interest expense (income), net

    158       111  

Equity in net (income) losses of investees, net

    (943     40  

Cash received from investees

    178       228  

Net (gain) loss on investment activity and other

    (1,071     97  

Deferred income taxes

    321       770  

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

   

Change in receivables, net

    (763     290  

Change in film and television costs

    (7,290     (5,342

Change in accounts payable and accrued expenses related to trade creditors

    424       (242

Change in other operating assets and liabilities

    779       15  

Net cash provided by operating activities

  $ 11,239     $ 10,206  

Cash Payments for Interest and Income Taxes

 

    Three Months Ended
September 30
     Nine Months Ended
September 30
 
(in millions)       2012              2011              2012              2011      

Interest

  $ 567      $ 612      $ 1,725      $ 1,809  

Income taxes

  $ 833      $ 596      $ 1,855      $ 1,166  

Noncash Investing and Financing Activities

During the nine months ended September 30, 2012:

 

   

we acquired $602 million of property and equipment and intangible assets that were accrued but unpaid, which is a noncash investing activity

 

 

   

we recorded a liability of $432 million for a quarterly cash dividend of $0.1625 per common share paid in October 2012, which is a noncash financing activity

 

 

   

NBCUniversal acquired controlling interests in MSNBC.com and a previously held equity method investment based in Brazil

 

 

   

NBCUniversal entered into a capital lease transaction that resulted in an increase in property and equipment and debt of $85 million

 

Note 13: Receivables Monetization

NBCUniversal monetizes certain of its accounts receivable under programs with a syndicate of banks. We account for receivables monetized through these programs as sales in accordance with the appropriate accounting guidance. We receive deferred consideration from the assets sold in the form of a receivable, which is funded by residual cash flows after the senior interests have been fully paid. The deferred consideration is recorded in receivables, net at its initial fair value, which reflects the net cash flows we expect to receive related to these interests. The accounts receivable we sold that underlie the deferred consideration are generally short-term in nature and, therefore, the fair value of the deferred consideration approximated its carrying value as of September 30, 2012.

NBCUniversal is responsible for servicing the receivables and remitting collections to the purchasers under the monetization programs. NBCUniversal performs this service for a fee that is equal to the prevailing market rate

 

14


Table of Contents

for such services. As a result, no servicing asset or liability has been recorded in our condensed consolidated balance sheet as of September 30, 2012. The servicing fees are a component of net (loss) gain on sale, which is presented in the table below.

Effect on Income from Receivables Monetization and Cash Flows on Transfers

 

    Three Months Ended
September 30
    Nine Months Ended
September 30
 
(in millions)       2012             2011             2012             2011      

Interest (expense)

  $ (3   $      $ (9   $   

Net (loss) gain on sale(a)

  $      $ (7   $ (1   $ (24

Net cash proceeds (payments) on transfers(b)

  $ 293     $ (168   $ 70     $ (542

 

(a)

Net (loss) gain on sale is included in other income (expense), net in our condensed consolidated statement of income.

(b)

Net cash proceeds (payments) on transfers are included within net cash provided by operating activities in our condensed consolidated statement of cash flows.

Receivables Monetized and Deferred Consideration

 

(in millions)   September 30,
    2012    
     December 31,
    2011    
 

Monetized receivables sold

  $ 896      $ 961  

Deferred consideration

  $ 372      $ 268  

In addition to the amounts presented above, we had $1 billion and $781 million payable to our monetization programs as of September 30, 2012 and December 31, 2011, respectively. These amounts represent cash receipts that have not yet been remitted to the monetization programs as of the balance sheet date and are recorded to accounts payable and accrued expenses related to trade creditors.

Note 14: Commitments and Contingencies

Contingencies

Antitrust Cases

We are defendants in two purported class actions originally filed in December 2003 in the United States District Courts for the District of Massachusetts and the Eastern District of Pennsylvania. The potential class in the Massachusetts case, which has been transferred to the Eastern District of Pennsylvania, is our customer base in the “Boston Cluster” area, and the potential class in the Pennsylvania case is our customer base in the “Philadelphia and Chicago Clusters,” as those terms are defined in the complaints. In each case, the plaintiffs allege that certain customer exchange transactions with other cable providers resulted in unlawful horizontal market restraints in those areas and seek damages under antitrust statutes, including treble damages.

Classes of Chicago Cluster and Philadelphia Cluster customers were certified in October 2007 and January 2010, respectively. We appealed the class certification in the Philadelphia Cluster case to the Third Circuit Court of Appeals, which affirmed the class certification in August 2011 and denied our petition for a rehearing en banc in September 2011. In March 2010, we moved for summary judgment dismissing all of the plaintiffs’ claims in the Philadelphia Cluster. In April 2012, the District Court issued a decision dismissing some of the plaintiffs’ claims, but allowing two claims to proceed to trial. The plaintiffs’ claims concerning the other two clusters are stayed pending determination of the Philadelphia Cluster claims. In June 2012, the U.S. Supreme Court granted our petition to review the Third Circuit Court of Appeals’ ruling, and has scheduled oral argument for November 2012. In September 2012, the trial court stayed all trial and pretrial proceedings pending resolution of the Supreme Court appeal.

We also are among the defendants in a purported class action filed in the United States District Court for the Central District of California in September 2007. 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 defendants. 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), which preclude the distributor defendants from reselling channels to customers on an “unbundled” basis in violation of federal

 

15


Table of Contents

antitrust laws. The plaintiffs seek treble damages and injunctive relief requiring each distributor defendant to resell certain channels to its customers on an “unbundled” basis. In October 2009, the Central District of California issued an order dismissing the plaintiffs’ complaint with prejudice. In March 2012, a panel of the Ninth Circuit Court of Appeals affirmed the District Court’s order. In April 2012, the plaintiffs filed a petition for a rehearing, which the Ninth Circuit denied in May 2012. In August 2012, the plaintiffs filed a petition for writ of certiorari with the U.S. Supreme Court, and in October 2012, we filed a brief in opposition to the petition.

In addition, we are the defendant in 22 purported class actions filed in federal district courts throughout the country. All of these actions have been consolidated by the Judicial Panel on Multidistrict Litigation in the United States District Court for the Eastern District of Pennsylvania for pre-trial proceedings. In a consolidated complaint filed in November 2009 on behalf of all plaintiffs in the multidistrict litigation, the plaintiffs allege that we improperly “tie” the rental of set-top boxes to the provision of premium cable services in violation of Section 1 of the Sherman Antitrust Act, various state antitrust laws and unfair/deceptive trade practices acts in California, Illinois and Alabama. The plaintiffs also allege a claim for unjust enrichment and seek relief on behalf of a nationwide class of our premium cable customers and on behalf of subclasses consisting of premium cable customers from California, Alabama, Illinois, Pennsylvania and Washington. In January 2010, we moved to compel arbitration of the plaintiffs’ claims for unjust enrichment and violations of the unfair/deceptive trade practices acts of Illinois and Alabama. In September 2010, the plaintiffs filed an amended complaint alleging violations of additional state antitrust laws and unfair/deceptive trade practices acts on behalf of new subclasses in Connecticut, Florida, Minnesota, Missouri, New Jersey, New Mexico and West Virginia. In the amended complaint, plaintiffs omitted their unjust enrichment claim, as well as their state law claims on behalf of the Alabama, Illinois and Pennsylvania subclasses. In June 2011, the plaintiffs filed another amended complaint alleging only violations of Section 1 of the Sherman Antitrust Act, antitrust law in Washington and unfair/deceptive trade practices acts in California and Washington. The plaintiffs seek relief on behalf of a nationwide class of our premium cable customers and on behalf of subclasses consisting of premium cable customers from California and Washington. In July 2011, we moved to compel arbitration of certain claims and to stay the remaining claims pending arbitration.

The West Virginia Attorney General also filed a complaint in West Virginia state court in July 2009 alleging that we improperly “tie” the rental of set-top boxes to the provision of digital cable services in violation of the West Virginia Antitrust Act and the West Virginia Consumer Credit and Protection Act. The Attorney General also alleges a claim for unjust enrichment/restitution. We removed the case to the United States District Court for West Virginia, and it was subsequently transferred to the United States District Court for the Eastern District of Pennsylvania and consolidated with the multidistrict litigation described above. In March 2010, the Eastern District of Pennsylvania denied the Attorney General’s motion to remand the case back to West Virginia state court. In June 2010, the Attorney General moved to sever and remand the portion of the claims seeking civil penalties and injunctive relief back to West Virginia state court. We filed a brief in opposition to the motion in July 2010.

We believe the claims in each of the pending actions described above in this item are without merit and intend to defend the actions vigorously. We cannot predict the outcome of any of the actions described above, including a range of possible loss, or how the final resolution of any such actions would impact our results of operations or cash flows for any one period or our consolidated financial position. In addition, as any action nears a trial, there is an increased possibility that the action may be settled by the parties. Nevertheless, 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 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 and technology vendors under applicable contractual indemnification provisions. We are also subject to other legal proceedings and claims that arise in the ordinary course of our business. While 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, any litigation resulting from any such legal proceedings or claims could be time consuming, costly and injure our reputation.

 

16


Table of Contents

Note 15: Financial Data by Business Segment

We present our operations in five reportable business segments:

 

   

Cable Communications: Consists primarily of video, high-speed Internet and voice services (“cable services”) for residential and business customers in the United States.

 

 

   

Cable Networks: Consists primarily of our national cable television networks, our regional sports and news networks, our international cable networks, our cable television production studio, and our related digital media properties.

 

 

   

Broadcast Television: Consists primarily of the NBC and Telemundo broadcast networks, our NBC and Telemundo owned local television stations, our broadcast television production operations, and our related digital media properties.

 

 

   

Filmed Entertainment: Consists of the operations of Universal Pictures, which primarily produces, acquires, markets and distributes filmed entertainment worldwide.

 

 

   

Theme Parks: Consists primarily of our Universal theme parks in Orlando and Hollywood.

 

In evaluating the profitability of our operating segments, the components of net income (loss) below operating income (loss) before depreciation and amortization are not separately evaluated by our management. Our financial data by business segment is presented in the tables below.

 

    Three Months Ended September 30, 2012  
(in millions)   Revenue(g)     Operating Income (Loss)
Before Depreciation and
Amortization(h)
    Depreciation and
Amortization
     Operating Income
(Loss)
    Capital
Expenditures
 

Cable Communications(a)

  $ 9,976     $ 3,998     $ 1,607      $ 2,391     $ 1,364  

NBCUniversal

          

Cable Networks

    2,165       809       192        617       56  

Broadcast Television(c)

    2,777       88       22        66       17  

Filmed Entertainment

    1,355       72       4        68         

Theme Parks

    614       316       65        251       55  

Headquarters and Other(e)

    8       (143     54        (197     81  

Eliminations(f)

    (97     (2             (2       

NBCUniversal

    6,822       1,140       337        803       209  

Corporate and Other

    112       (101     14        (115     9  

Eliminations(f)

    (366     (29     2        (31       

Comcast Consolidated

  $ 16,544     $ 5,008     $ 1,960      $ 3,048     $ 1,582  

 

    Three Months Ended September 30, 2011  
(in millions)   Revenue(g)     Operating Income (Loss)
Before Depreciation and
Amortization(h)
    Depreciation and
Amortization
    Operating Income
(Loss)
    Capital
Expenditures
 

Cable Communications(a)

  $ 9,331     $ 3,714     $ 1,579     $ 2,135     $ 1,254  

NBCUniversal

         

Cable Networks

    2,097       751       183       568       7  

Broadcast Television

    1,511       (7     24       (31     16  

Filmed Entertainment

    1,096       54       6       48       2  

Theme Parks

    580       285       63       222       42  

Headquarters and Other(e)

    9       (132     56       (188     41  

Eliminations(f)

    (93                            

NBCUniversal

    5,200       951       332       619       108  

Corporate and Other

    107       (91     23       (114     46  

Eliminations(f)

    (299            (1     1         

Comcast Consolidated

  $ 14,339     $ 4,574     $ 1,933     $ 2,641     $ 1,408  

 

17


Table of Contents
    Nine Months Ended September 30, 2012  
(in millions)   Revenue(g)     Operating Income (Loss)
Before Depreciation and
Amortization(h)
    Depreciation and
Amortization
     Operating Income
(Loss)
    Capital
Expenditures
 

Cable Communications(a)

  $ 29,472     $ 12,054     $ 4,802      $ 7,252     $ 3,544  

NBCUniversal

          

Cable Networks

    6,555       2,402       553        1,849       87  

Broadcast Television(c)

    6,168       274       64        210       36  

Filmed Entertainment

    3,778       (5     12        (17     4  

Theme Parks

    1,565       708       190        518       154  

Headquarters and Other(e)

    31       (444     150        (594     195  

Eliminations(f)

    (299                             

NBCUniversal

    17,798       2,935       969        1,966       476  

Corporate and Other

    416       (255     44        (299     23  

Eliminations(f)

    (1,053     (34             (34       

Comcast Consolidated

  $ 46,633     $ 14,700     $ 5,815      $ 8,885     $ 4,043  

 

    Nine Months Ended September 30, 2011  
(in millions)   Revenue(g)     Operating Income (Loss)
Before Depreciation and
Amortization(h)
    Depreciation and
Amortization
    Operating Income
(Loss)
    Capital
Expenditures
 

Cable Communications(a)

  $ 27,756     $ 11,349     $ 4,791     $ 6,558     $ 3,488  

NBCUniversal

         

Cable Networks(b)

    5,902       2,262       523       1,739       37  

Broadcast Television

    4,094       218       54       164       33  

Filmed Entertainment

    2,972       (62     15       (77     4  

Theme Parks(d)

    1,376       607       133       474       82  

Headquarters and Other(e)

    34       (381     120       (501     83  

Eliminations(f)

    (856     (234     (54     (180       

NBCUniversal

    13,522       2,410       791       1,619       239  

Corporate and Other

    423       (319     55       (374     58  

Eliminations(f)

    (901     1       1                

Comcast Consolidated

  $ 40,800     $ 13,441     $ 5,638     $ 7,803     $ 3,785  

 

(a)

For the three and nine months ended September 30, 2012 and 2011, Cable Communications segment revenue was derived from the following sources:

 

    Three Months Ended
September 30
     Nine Months Ended
September 30
 
          2012                2011                2012                2011      

Residential:

          

Video

    50.3%         52.4%         51.1%         53.0%   

High-speed Internet

    24.1%         23.6%         24.1%         23.4%   

Voice

    9.0%         9.5%         9.0%         9.4%   

Business services

    6.2%         5.0%         5.9%         4.7%   

Advertising

    6.1%         5.3%         5.5%         5.3%   

Other

    4.3%         4.2%         4.4%         4.2%   

Total

    100%         100%         100%         100%   

Subscription revenue received from customers who purchase bundled services at a discounted rate is allocated proportionally to each service based on the individual service’s price on a stand-alone basis. For both the three and nine months ended September 30, 2012 and 2011, 2.8% of Cable Communications revenue was derived from franchise and other regulatory fees.

 

(b)

For the nine months ended September 30, 2011, our Cable Networks segment included the results of operations of the businesses we contributed to NBCUniversal, as well as the results of operations of the NBCUniversal contributed cable networks for the period January 29, 2011 through September 30, 2011.

 

(c)

For the three and nine months ended September 30, 2012, our Broadcast Television segment included all revenue and operating costs and expenses associated with our broadcast of the 2012 London Olympics, which generated $120 million of operating income before depreciation and amortization. This amount reflects the settlement of a $237 million liability associated with the unfavorable Olympics contract that had been recorded through the application of acquisition accounting in 2011.

 

18


Table of Contents
(d)

For the period January 29, 2011 through June 30, 2011, we recorded Universal Orlando as an equity method investment in our consolidated results of operations. However, our Theme Parks segment included the results of operations for Universal Orlando for the period January 29, 2011 through June 30, 2011to reflect our measure of operating performance for our Theme Parks segment.

 

(e)

NBCUniversal Headquarters and Other activities included costs and expenses associated with overhead, employee benefits and headquarter initiatives.

 

(f)

NBCUniversal eliminations for the nine months ended September 30, 2011 included the elimination of the results of operations for Universal Orlando for the period January 29, 2011 through June 30, 2011. These results were not included in NBCUniversal’s total and our consolidated results of operations for the period January 29, 2011 through June 30, 2011 because we recorded Universal Orlando as an equity method investment during this period.

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

 

   

our Cable Networks and Broadcast Television segments generate revenue by selling programming to our Cable Communications segment, which represents a substantial majority of the revenue elimination amount

 

 

   

our Cable Communications segment receives incentives offered by our Cable Networks segment in connection with its distribution of the Cable Networks’ content, which are recorded as a reduction to programming expenses

 

 

   

our Cable Communications segment generates revenue by selling advertising and by selling the use of satellite feeds to our Cable Networks segment

 

 

   

our Filmed Entertainment and Broadcast Television segments generate revenue by licensing content to our Cable Networks segment

 

 

(g)

No single customer accounted for a significant amount of revenue in any period.

 

(h)

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, as the measure of profit or loss for our operating segments. This measure eliminates the significant level of noncash depreciation and amortization expense that results from the capital-intensive nature of certain 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 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 this measure is useful to investors because it is one of the bases for comparing our operating performance with 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 attributable to Comcast Corporation, net cash provided by operating activities, or other measures of performance or liquidity we have reported in accordance with GAAP.

 

19


Table of Contents

Note 16: Condensed Consolidating Financial Information

Comcast Corporation (“Comcast Parent”) and four of our 100% owned cable holding company subsidiaries, Comcast Cable Communications, LLC (“CCCL Parent”), Comcast MO Group, Inc. (“Comcast MO Group”), Comcast Cable Holdings, LLC (“CCH”) and Comcast MO of Delaware, LLC (“Comcast MO of Delaware”), have fully and unconditionally guaranteed 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 provides an unconditional subordinated guarantee of the $185 million principal amount currently outstanding of Comcast Holdings’ ZONES due October 2029. Comcast Corporation does not guarantee the $62 million principal amount currently outstanding of Comcast Holdings’ ZONES due November 2029.

Condensed Consolidating Balance Sheet

September 30, 2012

 

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

Assets

             

Cash and cash equivalents

  $      $      $      $      $ 8,899     $      $ 8,899  

Investments

                                1,401              1,401  

Receivables, net

                                5,123              5,123  

Programming rights

                                1,037              1,037  

Other current assets

    220       17       4              1,365              1,606  

Total current assets

    220       17       4              17,825              18,066  

Film and television costs

                                4,946              4,946  

Investments

                                5,951              5,951  

Investments in and amounts due from subsidiaries eliminated upon consolidation

    73,335       95,225       48,954        86,304       40,884       (344,702       

Property and equipment, net

    248                            26,736              26,984  

Franchise rights

                                59,364              59,364  

Goodwill

                                27,088              27,088  

Other intangible assets, net

    11                            17,860              17,871  

Other noncurrent assets, net

    1,090       1              147       1,813       (867     2,184  

Total assets

  $ 74,904     $ 95,243     $ 48,958     $ 86,451     $ 202,467     $ (345,569   $ 162,454  

Liabilities and Equity

             

Accounts payable and accrued expenses related to trade creditors

  $ 16     $      $      $      $ 6,234     $      $ 6,250  

Accrued participations and residuals

                                1,282              1,282  

Accrued expenses and other current liabilities

    1,170       294       24       275       5,241              7,004  

Current portion of long-term debt

           2,112       243              444              2,799  

Total current liabilities

    1,186       2,406       267       275       13,201              17,335  

Long-term debt, less current portion

    23,029       1,827       1,514       117       9,304              35,791  

Deferred income taxes

                         747       30,208       (724     30,231  

Other noncurrent liabilities

    1,797                            11,206       (143     12,860  

Redeemable noncontrolling interests

                                16,896              16,896  

Equity:

             

Common stock

    31                                          31  

Other shareholders’ equity

    48,861       91,010       47,177        85,312       121,203       (344,702     48,861  

Total Comcast Corporation shareholders’ equity

    48,892       91,010      
47,177
  
    85,312       121,203      
(344,702

    48,892  

Noncontrolling interests

                                449              449  

Total equity

    48,892       91,010      
47,177
  
    85,312       121,652      
(344,702

    49,341  

Total liabilities and equity

  $ 74,904     $ 95,243     $ 48,958      $ 86,451     $ 202,467     $ (345,569   $ 162,454  

 

20


Table of Contents

Condensed Consolidating Balance Sheet

December 31, 2011

 

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

Assets

                  

Cash and cash equivalents

  $       $       $       $       $ 1,620      $      $ 1,620  

Investments

                                    54               54  

Receivables, net

                                    4,351               4,351  

Programming rights

                                    987               987  

Other current assets

    235        8        3                1,315               1,561  

Total current assets

    235        8        3                8,327               8,573  

Film and television costs

                                    5,227               5,227  

Investments

                                    9,854               9,854  

Investments in and amounts due from subsidiaries eliminated upon consolidation

    71,222        89,568        45,725        88,336        36,949        (331,800       

Property and equipment, net

    262                                27,297               27,559  

Franchise rights

                                    59,376               59,376  

Goodwill

                                    26,874               26,874  

Other intangible assets, net

    9                                18,156               18,165  

Other noncurrent assets, net

    912        30        5        148        1,761        (666     2,190  

Total assets

  $ 72,640      $ 89,606      $ 45,733      $ 88,484      $ 193,821      $ (332,466   $ 157,818  

Liabilities and Equity

                  

Accounts payable and accrued expenses related to trade creditors

  $ 10      $       $       $       $ 5,695      $      $ 5,705  

Accrued participations and residuals

                                    1,255               1,255  

Accrued expenses and other current liabilities

    1,030        189        77        272        3,346               4,914  

Current portion of long-term debt

    26                554        202        585               1,367  

Total current liabilities

    1,066        189        631        474        10,881               13,241  

Long-term debt, less current portion

    22,451        3,953        1,764        111        9,663               37,942  

Deferred income taxes

                            727        29,728        (523     29,932  

Other noncurrent liabilities

    1,849                                11,328        (143     13,034  

Redeemable noncontrolling interests

                                    16,014               16,014  

Equity:

                  

Common stock

    32                                               32  

Other shareholders’ equity

    47,242        85,464        43,338        87,172        115,826        (331,800     47,242  

Total Comcast Corporation shareholders’ equity

    47,274        85,464        43,338        87,172        115,826        (331,800     47,274  

Noncontrolling interests

                                    381               381  

Total equity

    47,274        85,464        43,338        87,172        116,207        (331,800     47,655  

Total liabilities and equity

  $ 72,640      $ 89,606      $ 45,733      $ 88,484      $ 193,821      $ (332,466   $ 157,818  

 

21


Table of Contents

Condensed Consolidating Statement of Income

For the Three Months Ended September 30, 2012

 

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

Revenue:

             

Service revenue

  $      $      $      $      $ 16,544     $      $ 16,544  

Management fee revenue

    211       205       129                     (545       
      211       205       129              16,544       (545     16,544  

Costs and Expenses:

             

Operating costs and expenses

    99       205       129              11,648       (545     11,536  

Depreciation

    8                            1,541              1,549  

Amortization

    1                            410              411  
      108       205       129              13,599       (545     13,496  

Operating income (loss)

    103                            2,945              3,048  

Other Income (Expense):

             

Interest expense

    (363     (81     (33     (4     (152            (633

Investment income (loss), net

    1                     (3     72              70  

Equity in net income (losses) of investees, net

    2,281       1,641       1,216        2,047       911       (7,185     911  

Other income (expense), net

                                987              987  
      1,919       1,560       1,183        2,040       1,818       (7,185     1,335  

Income (loss) before income taxes

    2,022       1,560       1,183        2,040       4,763       (7,185     4,383  

Income tax (expense) benefit

    91       28       12       3       (1,539            (1,405

Net income (loss)

    2,113       1,588       1,195        2,043       3,224       (7,185     2,978  

Net (income) loss attributable to noncontrolling interests

                                (865            (865

Net income (loss) attributable to Comcast Corporation

  $ 2,113     $ 1,588     $ 1,195     $ 2,043     $ 2,359     $ (7,185   $ 2,113  

Comprehensive income (loss) attributable to Comcast Corporation

  $ 2,235     $ 1,591     $ 1,195     $ 2,043     $ 2,444     $ (7,273   $ 2,235  

 

22


Table of Contents

Condensed Consolidating Statement of Income

For the Three Months Ended September 30, 2011

 

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

Revenue:

             

Service revenue

  $      $      $      $      $ 14,339     $      $ 14,339  

Management fee revenue

    200       194       119                     (513       
      200       194       119              14,339       (513     14,339  

Costs and Expenses:

             

Operating costs and expenses

    84       194       119              9,881       (513     9,765  

Depreciation

    8                            1,532              1,540  

Amortization

                                393              393  
      92       194       119              11,806       (513     11,698  

Operating income (loss)

    108                            2,533              2,641  

Other Income (Expense):

             

Interest expense

    (358     (82     (43     (8     (146            (637

Investment income (loss), net

    1                     (5     (143            (147

Equity in net income (losses) of investees, net

    1,072       1,369       787       1,338       (40     (4,566     (40

Other income (expense), net

    (3                          (9            (12
      712       1,287       744       1,325       (338     (4,566     (836

Income (loss) before income taxes

    820       1,287       744       1,325       2,195       (4,566     1,805  

Income tax (expense) benefit

    88       29       15       5       (776            (639

Net income (loss)

    908       1,316       759       1,330       1,419       (4,566     1,166  

Net (income) loss attributable to noncontrolling interests

                                (258            (258

Net income (loss) attributable to Comcast Corporation

  $ 908     $ 1,316     $ 759     $ 1,330     $ 1,161     $ (4,566   $ 908  

Comprehensive income (loss) attributable to Comcast Corporation

  $ 866     $ 1,319     $ 759     $ 1,330     $ 1,155     $ (4,563   $ 866  

 

23


Table of Contents

Condensed Consolidating Statement of Income

For the Nine Months Ended September 30, 2012

 

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

Revenue:

             

Service revenue

  $      $      $      $      $ 46,633     $      $ 46,633  

Management fee revenue

    625       610       381                     (1,616       
      625       610       381              46,633       (1,616     46,633  

Costs and Expenses:

             

Operating costs and expenses

    290       610       381              32,268       (1,616     31,933  

Depreciation

    23                            4,571              4,594  

Amortization

    3                            1,218              1,221  
      316       610       381              38,057