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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 MARCH 31, 2007

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.)

1500 Market Street, Philadelphia, PA 19102-2148

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (215) 665-1700

 


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

Yes x No ¨

 


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

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

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

Yes ¨ No x

As of March 31, 2007, there were 2,068,611,983 shares of our Class A Common Stock, 1,033,988,874 shares of our Class A Special Common Stock and 9,444,375 shares of our Class B Common Stock outstanding.

 



Table of Contents

COMCAST CORPORATION AND SUBSIDIARIES — FORM 10-Q

QUARTER ENDED MARCH 31, 2007

 

TABLE OF CONTENTS

                Page
Number

PART I. FINANCIAL INFORMATION

  
  Item 1.  

Financial Statements

   2
    Condensed Consolidated Balance Sheet as of March 31, 2007 and December 31, 2006 (Unaudited)    2
    Condensed Consolidated Statement of Operations for the Three Months Ended March 31, 2007 and 2006 (Unaudited)    3
    Condensed Consolidated Statement of Cash Flows for the Three Months Ended March 31, 2007 and 2006 (Unaudited)    4
    Notes to Condensed Consolidated Financial Statements (Unaudited)    5
  Item 2.  

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

   21
  Item 3.  

Quantitative and Qualitative Disclosures About Market Risk

   28
  Item 4.  

Controls and Procedures

   28

PART II. OTHER INFORMATION

  
  Item 1.  

Legal Proceedings

   28
  Item 1A.  

Risk Factors

   28
  Item 2.  

Unregistered Sales of Equity Securities and Use of Proceeds

   28
  Item 6.  

Exhibits

   29

SIGNATURES

   30

 


This Quarterly Report on Form 10-Q is for the three months ended March 31, 2007. This Quarterly Report modifies and supersedes documents filed prior to this Quarterly Report. The Securities and Exchange Commission (“SEC”) allows us to “incorporate by reference” information that we file with them, which means that we can disclose important information to you by referring you directly to those documents. Information incorporated by reference is considered to be part of this Quarterly Report. In addition, information that we file with the SEC in the future will automatically update and supersede information contained in this Quarterly Report. Throughout this Quarterly Report, we refer to Comcast Corporation as “Comcast;” Comcast and its consolidated subsidiaries as “we,” “us” and “our;” and Comcast Holdings Corporation as “Comcast Holdings.”

You should carefully review the information contained in this Quarterly Report and particularly consider any risk factors that we set forth in this Quarterly Report and in other reports or documents that we file from time to time with the SEC. In this Quarterly Report, we state our beliefs of future events and of our future financial performance. In some cases, you can identify these so-called “forward-looking statements” by words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” or the negative of those words, and other comparable words. You should be aware that those statements are only our predictions. In evaluating those statements, you should specifically consider various factors, including the risks outlined below. Actual events or our actual results may differ materially from any of our forward-looking statements.

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

 

   

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

 

 

   

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

 

 

   

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

 

 

   

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

 

 

   

we face risks arising from the outcome of various litigation matters

 

 

   

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

 

 

   

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

 

 

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COMCAST CORPORATION AND SUBSIDIARIES — FORM 10-Q

QUARTER ENDED MARCH 31, 2007

 

PART I: FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheet

(Unaudited)

(in millions, except share data)   March 31,
2007
    December 31,
2006
 

ASSETS

   

Current Assets

   

Cash and cash equivalents

  $ 1,037     $ 1,239  

Investments

    1,248       1,735  

Accounts receivable, less allowance for doubtful accounts of $157 and $157

    1,282       1,450  

Other current assets

    688       778  

Total current assets

    4,255       5,202  

Investments

    6,077       8,847  

Property and equipment, net of accumulated depreciation of $16,548 and $15,506

    22,513       21,248  

Franchise rights

    57,838       55,927  

Goodwill

    14,076       13,768  

Other intangible assets, net of accumulated amortization of $5,897 and $5,543

    5,022       4,881  

Other noncurrent assets, net

    556       532  
  $ 110,337     $ 110,405  

LIABILITIES AND STOCKHOLDERS’ EQUITY

   

Current Liabilities

   

Accounts payable and accrued expenses related to trade creditors

  $ 2,980     $ 2,862  

Accrued expenses and other current liabilities

    2,957       3,032  

Deferred income taxes

    388       563  

Current portion of long-term debt

    1,049       983  

Total current liabilities

    7,374       7,440  

Long-term debt, less current portion

    27,222       27,992  

Deferred income taxes

    26,197       27,089  

Other noncurrent liabilities

    7,466       6,476  

Minority interest

    240       241  

Commitments and Contingencies (Note 11)

   

Stockholders’ Equity

   

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

           

Class A common stock, $0.01 par value—authorized, 7,500,000,000 shares; issued, 2,434,072,733 and 2,425,818,710; outstanding, 2,068,611,983 and 2,060,357,960

    24       24  

Class A Special common stock, $0.01 par value—authorized, 7,500,000,000 shares; issued 1,104,923,638 and 1,120,659,771; outstanding, 1,033,988,874 and 1,049,725,007

    11       11  

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

           

Additional capital

    42,547       42,401  

Retained earnings

    6,814       6,214  

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)

    (41 )     34  

Total stockholders’ equity

    41,838       41,167  
  $ 110,337     $ 110,405  

See notes to condensed consolidated financial statements.

 

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COMCAST CORPORATION AND SUBSIDIARIES — FORM 10-Q

QUARTER ENDED MARCH 31, 2007

 

Condensed Consolidated Statement of Operations

(Unaudited)

 

    Three Months Ended
March 31,
 
(in millions, except per share data)       2007             2006      

Revenues

  $ 7,388     $ 5,595  

Costs and Expenses

   

Operating (excluding depreciation)

    2,759       2,073  

Selling, general and administrative

    1,866       1,422  

Depreciation

    1,225       880  

Amortization

    277       216  
    6,127       4,591  

Operating income

    1,261       1,004  

Other Income (Expense)

   

Interest expense

    (568 )     (476 )

Investment income (loss), net

    174       64  

Equity in net (losses) income of affiliates, net

    (21 )     (9 )

Other income (expense)

    513       13  
    98       (408 )

Income from continuing operations before income taxes and minority interest

    1,359       596  

Income tax expense

    (526 )     (147 )

Income from continuing operations before minority interest

    833       449  

Minority interest

    4       (11 )

Income from continuing operations

    837       438  

Income from discontinued operations, net of tax

    —         28  

Net income

  $ 837     $ 466  

Basic earnings per common share

   

Income from continuing operations

  $ 0.27     $ 0.14  

Income from discontinued operations

    —         0.01  

Net income

  $ 0.27     $ 0.15  

Diluted earnings per common share

   

Income from continuing operations

  $ 0.26     $ 0.14  

Income from discontinued operations

    —         0.01  

Net income

  $ 0.26     $ 0. 15  

 

See notes to condensed consolidated financial statements.

 

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COMCAST CORPORATION AND SUBSIDIARIES — FORM 10-Q

QUARTER ENDED MARCH 31, 2007

 

Condensed Consolidated Statement of Cash Flows

(Unaudited)

 

    Three Months Ended
March 31,
 
(in millions)   2007     2006  

OPERATING ACTIVITIES

   

Net income

  $ 837     $ 466  

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

   

Depreciation

    1,225       880  

Amortization

    277       216  

Depreciation and amortization on discontinued operations

          55  

Share-based compensation expense

    30       46  

Noncash interest expense (income), net

    18       16  

Equity in net losses (income) of affiliates, net

    21       9  

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

    (651 )     (32 )

Noncash contribution expense

    3       2  

Minority interest

    (4 )     11  

Deferred income taxes

    103       (215 )

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

   

Change in accounts receivable, net

    212       150  

Change in accounts payable and accrued expenses related to trade creditors

    51       (77 )

Change in other operating assets and liabilities

    (157 )     211  

Net cash provided by (used in) operating activities

    1,965       1,738  

FINANCING ACTIVITIES

   

Proceeds from borrowings

    3       2,242  

Retirements and repayments of debt

    (704 )     (1,457 )

Repurchases of common stock

    (500 )     (710 )

Issuances of common stock

    218       12  

Other

    4       (9 )

Net cash provided by (used in) financing activities

    (979 )     78  

INVESTING ACTIVITIES

   

Capital expenditures

    (1,454 )     (878 )

Cash paid for intangible assets

    (118 )     (69 )

Acquisitions, net of cash acquired

    (9 )      

Proceeds from sales of investments

    392       189  

Purchases of investments

    (21 )     (48 )

Proceeds from sales (purchases) of short-term investments

    (22 )     4  

Other

    44       2  

Net cash provided by (used in) investing activities

    (1,188 )     (800 )

Increase (decrease) in cash and cash equivalents

    (202 )     1,016  

Cash and cash equivalents, beginning of period

    1,239       947  

Cash and cash equivalents, end of period

  $ 1,037     $ 1,963  

 

See notes to condensed consolidated financial statements.

 

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COMCAST CORPORATION AND SUBSIDIARIES — FORM 10-Q

QUARTER ENDED MARCH 31, 2007

 

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 upon Securities and Exchange Commission (“SEC”) rules that permit reduced disclosure for interim periods.

These financial statements include all adjustments that are necessary for a fair presentation of our results of operations and financial condition for the periods shown, including normal recurring accruals and other items. The results of operations for the interim periods presented are not necessarily indicative of results for the full year.

For a more complete discussion of our accounting policies and certain other information, refer to our annual financial statements for the preceding fiscal year as filed with the SEC.

Stock Split

In January 2007, our Board of Directors approved a three-for-two stock split in the form of a 50% stock dividend (the “Stock Split”) which was paid on February 21, 2007 to shareholders of record on February 14, 2007. The stock dividend was in the form of an additional 0.5 share for every share held and was payable in shares of Class A common stock on the existing Class A common stock and payable in shares of Class A Special common stock on the existing Class A Special common stock and Class B common stock with cash being paid in lieu of fractional shares. The number of shares outstanding and related prices, per share amounts, share conversions and share-based data have been adjusted to reflect the Stock Split for all prior periods presented.

Reclassifications

Certain reclassifications have been made in our segment presentation to be consistent with our management reporting presentation (see Note 12).

Note 2: Recent Accounting Pronouncements

SFAS No. 159

In February 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS No. 159”). SFAS No. 159 provides the option to report certain financial assets and liabilities at fair value, with the intent to mitigate volatility in financial reporting that can occur when related assets and liabilities are recorded on different bases. This statement is effective for us beginning January 1, 2008. We do not expect SFAS No. 159 to have a material impact on our consolidated financial statements.

FASB Interpretation No. 48

In July 2006, the FASB issued Financial Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—an Interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 clarifies the recognition threshold and measurement of a tax position taken on a tax return. FIN 48 also requires expanded disclosure with respect to the uncertainty in income taxes. Effective January 1, 2007, we adopted the provisions of FIN 48. See Note 9 for further detail regarding the adoption of this interpretation.

EITF Issue No. 06-10

In March 2007, the Emerging Issues Task Force (“EITF”) reached a consensus on EITF Issue No. 06-10, “Accounting for Deferred Compensation and Postretirement Benefit Aspects of Collateral Assignment Split-Dollar Life Insurance Arrangements” (“EITF 06-10”). EITF 06-10 provides that an employer should recognize a liability for the postretirement benefit related to collateral assignment split-dollar life insurance arrangements in accordance with either SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions,” or APB No. 12 “Omnibus Opinion.” Entities should recognize the effects of applying EITF 06-10 through either (i) a change in

 

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COMCAST CORPORATION AND SUBSIDIARIES — FORM 10-Q

QUARTER ENDED MARCH 31, 2007

 

accounting principle through a cumulative-effect adjustment to retained earnings or to other components of equity or net assets in the statement of financial position as of the beginning of the year of adoption or (ii) a change in accounting principle through retrospective application to all prior periods. The provisions of EITF 06-10 are effective as of January 1, 2008 and are not expected to have a material impact on our consolidated financial statements.

Note 3: Earnings Per Share

Basic earnings per common share (“Basic EPS”) is computed by dividing income from continuing operations for common stockholders by the weighted-average number of common shares outstanding during the period.

Our potentially dilutive securities include potential common shares related to our stock options and restricted share units. Diluted earnings per common share (“Diluted EPS”) considers the impact of potentially dilutive securities except in periods in which there is a loss because the inclusion of the potential common shares would have an antidilutive effect.

Diluted EPS for the three months ended March 31, 2007 and 2006 excludes approximately 39 million and 196 million potential common shares, respectively, related to our share-based compensation plans, because the inclusion of the potential common shares would have an antidilutive effect.

The following table reconciles the numerator and denominator of the computations of Diluted EPS from continuing operations for the periods presented:

 

    Three Months Ended March 31,
    2007    2006
(in millions, except per share data)   Income    Shares    Per Share
Amount
   Income    Shares    Per Share
Amount

Basic EPS

  $ 837    3,125    $ 0.27    $ 438    3,202    $ 0.14

Effect of Dilutive Securities:

                

Assumed exercise or issuance of shares relating to stock plans

           36                      11         

Diluted EPS

  $ 837    3,161    $ 0.26    $ 438    3,213    $ 0.14

Note 4: Acquisitions and Other Significant Events

Texas and Kansas City Cable Partnership

In July 2006, we initiated the dissolution of Texas and Kansas City Cable Partners (“TKCCP”), our 50%-50% cable system partnership with Time Warner Cable (“TWC”). On January 1, 2007, the distribution of assets by TKCCP was completed and we received the cable system serving Houston, Texas (“Houston Asset Pool”) and TWC received the cable systems serving Kansas City, south and west Texas, and New Mexico (“Kansas City Asset Pool”). We accounted for the distribution of assets by TKCCP as a sale of our 50% interest in the Kansas City Asset Pool in exchange for acquiring an additional 50% interest in the Houston Asset Pool. This transaction resulted in an increase of approximately 700,000 video subscribers. The estimated fair value of the 50% interest of the Houston Asset Pool we received was approximately $1.1 billion and resulted in a pretax gain of approximately $500 million, which is included in other income (expense). We recorded our 50% interest in the Houston Asset Pool as a step acquisition in accordance with SFAS No. 141, “Business Combinations” (“SFAS No. 141”). The valuation of assets acquired and the estimated gain are based on preliminary valuations. Refinements may occur as these valuations are finalized. The results of operations for the Houston Asset Pool have been included in our consolidated financial statements since the date of the distribution of assets by TKCCP (January 1, 2007) and are reported in our Cable segment. The exchange of our 50% interest in the Kansas City Asset Pool for TWC’s 50% interest in the Houston Asset Pool is considered a noncash investing activity.

Adelphia and Time Warner Transactions

In July 2006, we completed transactions with Adelphia and Time Warner that resulted in a net increase of approximately 1.7 million video subscribers, a net cash payment by us of approximately $1.5 billion and the

 

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COMCAST CORPORATION AND SUBSIDIARIES — FORM 10-Q

QUARTER ENDED MARCH 31, 2007

 

disposition of our ownership interests in TWC and Time Warner Entertainment (“TWE”), the assets of two cable system partnerships, and the transfer of our previously owned cable systems in Los Angeles, Cleveland and Dallas (“Comcast Exchange Systems”). We collectively refer to these transactions as the “Adelphia and Time Warner transactions.”

The operating results of the Comcast Exchange Systems transferred to TWC are reported as discontinued operations and are presented in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS No. 144”). The following represents the operating results of the Comcast Exchange Systems for the three months ended March 31, 2006:

 

(in millions)   Three Months Ended
March 31, 2006
 

Revenues

  $ 306  

Income before income taxes

  $ 44  

Income tax expense

  $ (16 )

Net income

  $ 28  

Unaudited Pro Forma Information

The following unaudited pro forma information has been presented as if the Adelphia and Time Warner transactions and the TKCCP transaction each occurred on January 1, 2006. This information is based on historical results of operations, adjusted for purchase price allocations, and is not necessarily indicative of what the results would have been had we operated the cable systems since January 1, 2006.

 

(in millions, except per share data)   Three Months Ended
March 31, 2006

Revenues

  $ 6,507

Income from continuing operations

  $ 455

Income from discontinued operations, net of tax

  $ 28

Net income

  $ 483

Basic EPS

  $ 0.15

Diluted EPS

  $ 0.15

Note 5: Investments

 

(in millions)   March 31,
2007
   December 31,
2006

Fair value method

    

Cablevision Systems Corporation

  $ 156    $ 146

Discovery Holding Company

    191      161

Embarq Corporation

    74      69

GSI Commerce

    58      48

Liberty Capital

    553      490

Liberty Global

    488      439

Liberty Interactive

    596      539

Sprint Nextel

    495      493

Time Warner

    600      1,052

Vodafone

         61

Other

    13      15
    3,224      3,513

Equity method, principally cable-related

    2,394      5,394

Cost method, principally AirTouch

    1,707      1,675

Total investments

    7,325      10,582

Less: current investments

    1,248      1,735

Noncurrent investments

  $ 6,077    $ 8,847

 

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COMCAST CORPORATION AND SUBSIDIARIES — FORM 10-Q

QUARTER ENDED MARCH 31, 2007

 

The cost, fair value and unrealized gains related to our available for sale securities, which consist principally of our investment in Time Warner, are presented in the following table:

 

(in millions)   March 31,
2007
   December 31,
2006

Cost

  $ 622    $ 936

Unrealized gains

    124      254

Fair value

  $ 746    $ 1,190

Texas and Kansas City Cable Partnership

We accounted for our interest in TKCCP, totaling approximately $3.0 billion, as an equity method investment through January 1, 2007, the date the Houston Asset Pool was distributed to us.

Insight Midwest Partnership

In April 2007, we and Insight Communications (“Insight”) agreed to divide the assets and liabilities of Insight Midwest, LP (“IM”), a 50%-50% cable system partnership with Insight. Under the terms of the agreement, we will receive cable systems serving approximately 684,000 video subscribers in Illinois and Indiana, together with approximately $1.34 billion of debt allocated to such cable systems (“Comcast Asset Pool”). Insight will receive cable systems serving approximately 639,000 video subscribers, together with approximately $1.26 billion of debt allocated to such cable systems (“Insight Asset Pool”). We will continue to account for our interest in IM as an equity method investment until the Comcast Asset Pool is distributed to us. Closing of the transaction is subject to customary government and other approvals and is expected on or before December 31, 2007. Effective April 1, 2007, we will report our share of the earnings and losses of IM based solely on the operating results of the Comcast Asset Pool.

Investment Income (Loss), Net

The following table presents the components of investment income (loss), net:

 

   

Three Months Ended

March 31,

 
(in millions)       2007             2006      

Interest and dividend income

  $ 56     $ 36  

Gains on sales and exchanges of investments, net

    42       3  

Investment impairment losses

    (1 )      

Unrealized gains (losses) on trading securities and hedged items

    216       86  

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

    (176 )     (72 )

Mark to market adjustments on derivatives

    37       11  

Investment income (loss), net

  $ 174     $ 64  

Note 6: Goodwill

The changes in the carrying amount of goodwill by business segment for the three months ended March 31, 2007 are presented in the following table:

 

(in millions)   Cable    Programming    Corporate
and Other
   Total

Balance, December 31, 2006

  $ 12,010    $ 1,441    $ 317    $ 13,768

Settlements or adjustments

    103                103

Acquisitions

    205                205

Balance, March 31, 2007

  $ 12,318    $ 1,441    $ 317    $ 14,076

 

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QUARTER ENDED MARCH 31, 2007

 

Settlements or adjustments are primarily related to certain valuation refinements of the Adelphia and Time Warner transactions and the adoption of FIN 48. Acquisitions are primarily related to the acquisition of the Houston Asset Pool.

Note 7: Long-Term Debt

Debt Redemptions

During the three months ended March 31, 2007, we redeemed $186 million principal amount of 8.15% senior notes due 2032 and $268 million principal amount of 9.65% debt supporting trust preferred securities due 2027. These redemptions were funded with available cash.

Note 8: Stockholders’ Equity

Share-Based Compensation

Effective January 1, 2006, we adopted SFAS No. 123R, “Share-Based Payment” (“SFAS No. 123R”), which requires the cost of all share-based payments to employees to be recognized in the financial statements based on their fair values at grant date, or the date of later modification, over the requisite service period.

In connection with the Stock Split, all outstanding share-based awards were modified as required under the terms of our equity plans. This modification did not change the fair value of outstanding awards. Prior to this modification, compensation costs related to awards granted prior to the adoption of SFAS No. 123R were recognized under an accelerated recognition method. As a result of the Stock Split modification, the remaining unrecognized compensation costs related to all awards are recognized on a straight-line basis over the remaining requisite service period. The impact of this change was not material to our consolidated financial statements.

In March 2007, 12.5 million stock options and 4.9 million restricted share units (“RSUs”) were granted related to our annual management grant program. The fair values associated with these grants were $9.47 per stock option and $25.44 per RSU.

Compensation expense recognized related to stock options and RSU awards is summarized in the table below:

 

   

Three Months Ended

March 31,

(in millions)   2007    2006

Stock options

  $ 17    $ 34

Restricted share units

    13      12

Total share-based compensation expense

  $ 30    $ 46

As of March 31, 2007, there was $305 million and $296 million of unrecognized pretax compensation cost related to nonvested stock options and nonvested RSUs, respectively.

Effective with the March 2007 grant above, we are granting net settled stock options instead of cash settled stock options. In net settled stock options, an employee receives the number of shares equal to the number of options being exercised less the number of shares necessary to satisfy the cost to exercise the options and, if applicable, taxes due on exercise based on the fair value of the shares at the exercise date. This change will result in fewer shares issued into the market and no cash proceeds will be received by us upon exercise of the option (as compared to options granted prior to the March 2007 grant).

 

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COMCAST CORPORATION AND SUBSIDIARIES — FORM 10-Q

QUARTER ENDED MARCH 31, 2007

 

Comprehensive Income

Our total comprehensive income for the three months ended March 31, 2007 and 2006 is presented in the following table:

 

    Three Months Ended
March 31,
 
(in millions)   2007     2006  

Net income

  $ 837     $ 466  

Unrealized (losses) gains on marketable securities

    (84 )     (4 )

Reclassification adjustments for (losses) gains included in net income

    3       3  

Cumulative translation adjustments

    6        

Comprehensive income

  $ 762     $ 465  

Note 9: Income Taxes

We adopted the provisions of FIN 48 on January 1, 2007. FIN 48 prescribes the recognition threshold and measurement attribute for the financial statement recognition and measurement of uncertain tax positions taken or expected to be taken in a tax return. As a result of adoption, we recognized a $35 million decrease in our reserves for uncertain tax positions, a $25 million increase in goodwill, a $60 million increase in retained earnings and a reclassification of approximately $960 million between deferred income taxes and other noncurrent liabilities to conform with the balance sheet presentation requirements of FIN 48. Our total uncertain tax positions as of January 1, 2007 were $2.1 billion, excluding the federal benefits on state tax positions which have been recorded as deferred income taxes; this amount includes a $500 million tax payment for which we are seeking a refund. Approximately $550 million would impact our effective tax rate if we were to recognize the tax benefit for such positions.

We file a consolidated federal income tax return and income tax returns with various states. Our federal and our state income tax return examinations, with limited exceptions, have been completed through 1999. The Internal Revenue Service (“IRS”) and various states are currently conducting examinations of our income tax returns for the years 2000 through 2004. The IRS has proposed certain adjustments principally related to certain financing transactions. We are currently evaluating those proposed adjustments, but if the adjustments are accepted or otherwise are sustained, such adjustments would not have a material impact on our effective tax rate. In addition, the statutes of limitations could expire for certain of our state tax returns over the next 12 months which could result in favorable adjustments to our uncertain tax positions. Such adjustments are not expected to have a material impact on our effective tax rate.

We classify interest and penalties associated with our uncertain tax positions as a component of income tax expense. As of January 1, 2007, we had accrued approximately $700 million of interest and penalties associated with our uncertain tax positions. For the three months ended March 31, 2007, we recognized $22 million of interest and penalties, net of deferred tax benefit, within income tax expense.

Note 10: Statement of Cash Flows—Supplemental Information

As of December 31, 2006, we began presenting our cash overdrafts resulting from checks drawn on zero balance accounts (“book overdrafts”) within accounts payable and accrued expenses related to trade creditors. Previously, these book overdrafts were included within cash and cash equivalents. Our financial statements reflect this revised presentation for 2006. Accordingly, the reported amounts of our cash and cash equivalents and accounts payable and accrued expenses related to trade creditors increased as of March 31, 2006 by $270 million and net cash provided by operating activities for the three months ended March 31, 2006 increased by $16 million.

 

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COMCAST CORPORATION AND SUBSIDIARIES — FORM 10-Q

QUARTER ENDED MARCH 31, 2007

 

The following table presents the cash payments we made for interest and income taxes during the three months ended March 31, 2007 and 2006:

 

   

Three Months Ended

March 31,

(in millions)       2007            2006    

Interest

  $ 662    $ 500

Income taxes

  $ 34    $ 16

During the three months ended March 31, 2007, we:

 

   

exchanged our 50% interest in the Kansas City Asset Pool for TWC’s 50% interest in the Houston Asset Pool, which is considered a noncash investing activity

 

 

   

settled the remaining outstanding $49 million face amount of exchangeable notes by delivering approximately 1.8 million of the 2.2 million underlying Vodafone ADRs to the counterparty, which is considered a noncash financing and investing activity

 

 

   

entered into capital leases totaling $42 million, which are considered noncash investing and financing activities

 

Note 11: Commitments and Contingencies

Commitments

Certain of our subsidiaries support debt compliance with respect to obligations of certain cable television partnerships and investments in which we hold an ownership interest (see Note 5). The obligations expire between May 2008 and March 2011. Although there can be no assurance, we believe that we will not be required to meet our obligations under such commitments. The total notional amount of our commitments was $965 million as of March 31, 2007, at which time there were no quoted market prices for similar agreements.

Contingencies

At Home Cases

Litigation has been filed against us as a result of our alleged conduct with respect to our investment in and distribution relationship with At Home Corporation. At Home was a provider of high-speed Internet services that filed for bankruptcy protection in September 2001. Filed actions are: (i) class action lawsuits against us, AT&T (the former controlling shareholder of At Home and also a former distributor of the At Home service) and others in the United States District Court for the Southern District of New York, alleging securities law violations and common law fraud in connection with disclosures made by At Home in 2001; and (ii) a lawsuit brought in the United States District Court for the District of Delaware in the name of At Home by certain At Home bondholders against us, Brian L. Roberts (our Chairman and Chief Executive Officer and a director), Cox (Cox is also an investor in At Home and a former distributor of the At Home service) and others, alleging breaches of fiduciary duty relating to March 2000 agreements (which, among other things, revised the distributor relationships), and seeking recovery of alleged short-swing profits pursuant to Section 16(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) (purported to have arisen in connection with certain transactions relating to At Home stock effected pursuant to the March 2000 agreements).

In the Southern District of New York actions (item (i) above), the court dismissed all claims. The plaintiffs appealed this decision, and the Court of Appeals for the Second Circuit denied the plaintiffs’ appeal. The plaintiffs petitioned the Court of Appeals for rehearing. The Delaware case (item (ii) above) was transferred to the United States District Court for the Southern District of New York. The court dismissed the Section 16(b) claims, and the breach of fiduciary duty claim for lack of federal jurisdiction. The Court of Appeals for the Second Circuit denied the plaintiffs’ appeal from the decision dismissing the Section 16(b) claims, and the U.S. Supreme Court denied the plaintiffs’ petition for a further appeal. The plaintiffs recommenced the breach of fiduciary duty claim in Delaware Chancery Court. The Court has set a trial date in October 2007.

 

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QUARTER ENDED MARCH 31, 2007

 

Under the terms of our 2002 acquisition of AT&T Corp.’s cable business, we are contractually liable for 50% of any liabilities of AT&T in the action described in item (i) above (in which we are also a defendant).

We deny any wrongdoing in connection with the claims that have been made directly against us, our subsidiaries and Brian L. Roberts, and are defending all of these claims vigorously. The final disposition of these claims is not expected to have a material effect on our consolidated financial position, but could possibly be material to our consolidated results of operations of any one period. Further, no assurance can be given that any adverse outcome would not be material to our consolidated financial position.

Patent Litigation

We are a defendant in several unrelated lawsuits claiming infringement of various patents relating to various aspects of our businesses. In certain of these cases other industry participants are also defendants, and also in certain of these cases we expect that any potential liability would be in part or in whole the responsibility of our equipment vendors pursuant to applicable contractual indemnification provisions. To the extent that the allegations in these lawsuits can be analyzed by us at this stage of their proceedings, we believe the claims are without merit and intend to defend the actions vigorously. The final disposition of these claims 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 of any one period. Further, no assurance can be given that any adverse outcome would not be material to our consolidated financial position.

Antitrust Cases

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

As a result of recent events in both cases relating to the procedural issue of whether the plaintiffs’ claims could proceed in court or, alternatively, whether the plaintiffs should be compelled to arbitrate their claims pursuant to arbitration clauses in their subscriber agreements, it has become more likely that these cases will proceed in court. Our motion to dismiss the Pennsylvania case on the pleadings was denied, and the plaintiffs have moved to certify a class action. We are opposing the plaintiffs’ motion and are proceeding with class discovery. We have moved to dismiss the Massachusetts case. The Massachusetts case was recently transferred to the Eastern District of Pennsylvania and plaintiffs are seeking to consolidate it with the Pennsylvania case.

We believe the claims in these actions are without merit and are defending the actions vigorously. The final disposition of these claims 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 of any one period. Further, no assurance can be given that any adverse outcome would not be material to our consolidated financial position.

Other

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

 

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COMCAST CORPORATION AND SUBSIDIARIES — FORM 10-Q

QUARTER ENDED MARCH 31, 2007

 

Note 12: Financial Data by Business Segment

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

 

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

Three months ended March 31, 2007

           

Revenues(g)

  $ 6,998    $ 302    $ 155     $ (67 )   $ 7,388

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

    2,793      65      (95 )           2,763

Depreciation and amortization

    1,440      47      20       (5 )     1,502

Operating income (loss)

    1,353      18      (115 )     5       1,261

Capital Expenditures

    1,443      4      7             1,454

Three months ended March 31, 2006

           

Revenues(g)

  $ 5,269    $ 239    $ 129     $ (42 )   $ 5,595

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

    2,105      50      (54 )     (1 )     2,100

Depreciation and amortization

    1,034      41      26       (5 )     1,096

Operating income (loss)

    1,071      9      (80 )     4       1,004

Capital Expenditures

    825      8      6       39       878

(a)

For the three months ended March 31, 2007 and 2006, Cable segment revenues were derived from the following services:

 

    Three Months Ended
March 31,
 
     2007     2006  

Video

  62.3 %   64.2 %

High-speed Internet

  21.8     20.1  

Phone

  5.0     3.2  

Advertising

  4.5     5.2  

Other

  6.4     7.3  

Total

  100 %   100 %

(b)

Our regional sports and news networks (Comcast SportsNet, Comcast SportsNet Mid-Atlantic, Comcast SportsNet Chicago, Comcast SportsNet West, Cable Sports Southeast, MountainWest Sports Network and CN8-The Comcast Network) are included in our Cable segment.

 

(c)

Programming includes our consolidated national programming networks: E!, Style, The Golf Channel, VERSUS, G4, AZN Television and other entertainment related business.

 

(d)

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

 

(e)

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

 

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COMCAST CORPORATION AND SUBSIDIARIES — FORM 10-Q

QUARTER ENDED MARCH 31, 2007

 

 

entity. The remaining net costs related to the minority corporate partners are included in Corporate and Other.

 

(f)

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

 

   

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

 

 

   

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

 

 

   

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

 

 

(g)

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

 

(h)

To measure the performance of our operating segments, we use operating income (loss) before depreciation and amortization, excluding impairment charges related to fixed and intangible assets, and gains or losses from the sale of assets, if any. This measure eliminates the significant level of noncash depreciation and amortization expense that results from the capital-intensive nature of our businesses and from intangible assets recognized in business combinations. It is also unaffected by our capital structure or investment activities. We use this measure to evaluate our consolidated operating performance, the operating performance of our operating segments, and to allocate resources and capital to our 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 (loss), net cash provided by operating activities or other measures of performance or liquidity reported in accordance with GAAP.

 

(i)

The 2006 Cable segment and Corporate and Other amounts have been adjusted for segment reclassifications to be consistent with our 2007 management reporting presentation. The adjustments resulted in the reclassification of revenue of $13 million and operating income (loss) before depreciation and amortization of $9 million from our Cable segment to Corporate and Other.

 

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COMCAST CORPORATION AND SUBSIDIARIES — FORM 10-Q

QUARTER ENDED MARCH 31, 2007

 

Note 13: Condensed Consolidating Financial Information

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

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

Comcast Corporation

Condensed Consolidating Balance Sheet

March 31, 2007

 

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

ASSETS

               

Cash and cash equivalents

  $ 7   $   $   $   $   $ 1,030   $     $ 1,037

Investments

                        1,248           1,248

Accounts receivable, net

                        1,282           1,282

Other current assets

    27     1                 660           688

Total current assets

    34     1                 4,220           4,255

Investments

                        6,077           6,077

Investments in and amounts due from subsidiaries eliminated upon consolidation

    63,044     31,107     38,405     41,473     24,993     841     (199,863 )    

Property and equipment, net

    27         1             22,485           22,513

Franchise rights

                        57,838           57,838

Goodwill

                        14,076           14,076

Other intangible assets, net

                        5,022           5,022

Other noncurrent assets, net

    174     14     19         31     318           556

Total assets

  $ 63,279   $ 31,122   $ 38,425   $ 41,473   $ 25,024   $ 110,877   $ (199,863 )   $ 110,337

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Accounts payable and accrued expenses related to trade creditors

  $   $   $   $   $   $ 2,980   $     $ 2,980

Accrued expenses and other current liabilities

    521     246     52     10     64     2,064           2,957

Deferred income taxes

                        388           388

Current portion of long-term debt

        750         19         280           1,049

Total current liabilities

    521     996     52     29     64     5,712           7,374

Long-term debt, less current portion

    15,168     4,256     3,498     3,039     965     296           27,222

Deferred income taxes

    4,638                 902     20,657           26,197

Other noncurrent liabilities

    1,114     36             76     6,240           7,466

Minority interest

                        240           240

Stockholders’ Equity

               

Common stock

    35                               35

Other stockholders’ equity

    41,803     25,834     34,875     38,405     23,017     77,732     (199,863 )     41,803

Total stockholders’ equity

    41,838     25,834     34,875     38,405     23,017     77,732     (199,863 )     41,838

Total liabilities and stockholders’ equity

  $ 63,279   $ 31,122   $ 38,425   $ 41,473   $ 25,024   $ 110,877   $ (199,863 )   $ 110,337

 

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COMCAST CORPORATION AND SUBSIDIARIES — FORM 10-Q

QUARTER ENDED MARCH 31, 2007

 

Comcast Corporation

Condensed Consolidating Balance Sheet

December 31, 2006

 

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

ASSETS

               

Cash and cash equivalents

  $ 77   $   $   $   $   $ 1,162   $     $ 1,239

Investments

                        1,735           1,735

Accounts receivable, net

                        1,450           1,450

Other current assets

    15     1                 762           778

Total current assets

    92     1                 5,109           5,202

Investments

                        8,847           8,847

Investments in and amounts due from subsidiaries eliminated upon consolidation

    62,622     31,152     37,757     41,151     24,250     1,629     (198,561 )    

Property and equipment, net

    17         1             21,230           21,248

Franchise rights

                        55,927           55,927

Goodwill

                        13,768           13,768

Other intangible assets, net

                        4,881           4,881

Other noncurrent assets, net

    176     16     20         31     289           532

Total assets

  $ 62,907   $ 31,169   $ 37,778   $ 41,151   $ 24,281   $ 111,680   $ (198,561 )   $ 110,405

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Accounts payable and accrued expenses related to trade creditors

  $ 11   $   $   $   $   $ 2,851   $     $ 2,862

Accrued expenses and other current liabilities

    616     247     83     106     69     1,911           3,032

Deferred income taxes

                        563           563

Current portion of long-term debt

        600         242         141           983

Total current liabilities

    627     847     83     348     69     5,466           7,440

Long term-debt, less current portion

    15,358     4,397     3,498     3,046     949     744           27,992

Deferred income taxes

    4,638                 887     21,564           27,089

Other noncurrent liabilities

    1,117     46             76     5,237           6,476

Minority interest

                        241           241

Stockholders’ Equity

               

Common stock

    35                               35

Other stockholders’ equity

    41,132     25,879     34,197     37,757     22,300     78,428     (198,561 )     41,132

Total stockholders’ equity

    41,167     25,879     34,197     37,757     22,300     78,428     (198,561 )     41,167

Total liabilities and stockholders’ equity

  $ 62,907   $ 31,169   $ 37,778   $ 41,151   $ 24,281   $ 111,680   $ (198,561 )   $ 110,405

 

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COMCAST CORPORATION AND SUBSIDIARIES — FORM 10-Q

QUARTER ENDED MARCH 31, 2007

 

Comcast Corporation

Condensed Consolidating Statement of Operations

For the Three Months Ended March 31, 2007

 

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

Revenues

               

Service revenues

  $     $     $     $     $     $ 7,388     $     $ 7,388  

Management fee revenue

    149       51       79       79                   (358 )      
    149       51       79       79             7,388       (358 )     7,388  

Costs and Expenses

               

Operating (excluding depreciation)

                                  2,759             2,759  

Selling, general and administrative

    71       51       79       79       4       1,940       (358 )     1,866  

Depreciation

    1                               1,224             1,225  

Amortization

                                  277             277  
    72       51       79       79       4       6,200       (358 )     6,127  

Operating income (loss)

    77                         (4 )     1,188             1,261  

Other Income (Expense)

               

Interest expense

    (251 )     (98 )     (81 )     (68 )     (24 )     (46 )           (568 )

Investment income (loss), net

                            (9 )     183             174  

Equity in net (losses) income of affiliates, net

    949       381       799       846       331       (34 )     (3,293 )     (21 )

Other income (expense)

    1                               512             513  
    699       283       718       778       298       615       (3,293 )     98  

Income (loss) from continuing operations before income taxes and minority interest

    776       283       718       778       294       1,803       (3,293 )     1,359  

Income tax (expense) benefit

    61       35       29       21       13       (685 )           (526 )

Income (loss) from continuing operations before minority interest

    837       318       747       799       307       1,118       (3,293 )     833  

Minority interest

                                  4             4  

Net income (loss)

  $ 837     $ 318     $ 747     $ 799     $ 307     $ 1,122     $ (3,293 )   $ 837  

 

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COMCAST CORPORATION AND SUBSIDIARIES — FORM 10-Q

QUARTER ENDED MARCH 31, 2007

 

Comcast Corporation

Condensed Consolidating Statement of Operations

For the Three Months Ended March 31, 2006

 

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

Revenues

               

Service revenues

  $     $     $     $     $     $ 5,595     $     $ 5,595  

Management fee revenue

    120       45       73       73       2             (313 )      
    120       45       73       73       2       5,595       (313 )     5,595  

Costs and Expenses

               

Operating (excluding depreciation)

                                  2,073             2,073  

Selling, general and administrative

    63       45       73       73       4       1,477       (313 )     1,422  

Depreciation

    3                         1       876             880  

Amortization

                            3       213             216  
    66       45       73       73       8       4,639       (313 )     4,591  

Operating income (loss)

    54                         (6 )     956             1,004  

Other Income (Expense)

               

Interest expense

    (149 )     (104 )     (82 )     (70 )     (23 )     (48 )           (476 )

Investment income (loss), net

                            (30 )     94             64  

Equity in net (losses) income of affiliates

    528       181       154       199       148       (44 )     (1,175 )     (9 )

Other income (expense)

                                  13             13  
    379       77       72       129       95       15       (1,175 )     (408 )

Income (loss) from continuing operations before income taxes and minority interest

    433       77       72       129       89       971       (1,175 )     596  

Income tax (expense) benefit

    33       36       29       25       21       (291 )           (147 )

Income (loss) from continuing operations before minority interest

    466       113       101       154       110       680       (1,175 )     449  

Minority interest

                                  (11 )           (11 )

Income from continuing operations

    466       113       101       154       110       669       (1,175 )     438  

Income from discontinued operations, net of tax

                                  28             28  

Net income (loss)

  $ 466     $ 113     $ 101     $ 154     $ 110     $ 697     $ (1,175 )   $ 466  

 

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COMCAST CORPORATION AND SUBSIDIARIES — FORM 10-Q

QUARTER ENDED MARCH 31, 2007

 

Comcast Corporation

Condensed Consolidating Statement of Cash Flows

For the Three Months Ended March 31, 2007

 

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

Operating Activities

               

Net cash provided by (used in) operating activities

  $ (202 )   $ (71 )   $ (78 )   $ (147 )   $ (21 )   $ 2,484     $   $ 1,965  

Financing Activities

               

Proceeds from borrowings

                                  3           3  

Retirements and repayments of debt

    (200 )                 (226 )           (278 )         (704 )

Repurchases of common stock

    (500 )                                       (500 )

Issuances of common stock

    218                                         218  

Other

    16                               (12 )         4  

Net cash provided by (used in) financing activities

    (466 )                 (226 )           (287 )         (979 )

Investing Activities

               

Net transactions with affiliates

    601       71       78       373       21       (1,144 )          

Capital expenditures

    (3 )                             (1,451 )         (1,454 )

Cash paid for intangible assets

                                  (118 )         (118 )

Acquisitions, net of cash acquired

                                  (9 )         (9 )

Proceeds from sales of investments

                                  392           392  

Purchases of investments

                                  (21 )         (21 )

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

                                  (22 )         (22 )

Other

                                  44           44  

Net cash provided by (used in) investing activities

    598       71       78       373       21       (2,329 )         (1,188 )

Increase in cash and cash equivalents

    (70 )                             (132 )         (202 )

Cash and cash equivalents, beginning of period

    77                               1,162           1,239  

Cash and cash equivalents, end of period

  $ 7     $     $     $     $     $ 1,030     $   $ 1,037  

 

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COMCAST CORPORATION AND SUBSIDIARIES — FORM 10-Q

QUARTER ENDED MARCH 31, 2007

 

Comcast Corporation

Condensed Consolidating Statement of Cash Flows

For the Three Months Ended March 31, 2006

 

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

Operating Activities

               

Net cash provided by (used in) operating activities

  $ 82     $ (55 )   $ (80 )   $ (82 )   $ (30 )   $ 1,903     $   $ 1,738  

Financing Activities

               

Proceeds from borrowings

    2,242                                         2,242  

Retirements and repayments of debt

    (550 )     (500 )           (388 )     (9 )     (10 )         (1,457 )

Repurchases of common stock

    (710 )                                       (710 )

Issuances of common stock

    12                                         12  

Other

    1                               (10 )         (9 )

Net cash provided by (used in) financing activities

    995       (500 )           (388 )     (9 )     (20 )         78  

Investing Activities

               

Net transactions with affiliates

    (1,123 )     555       80       470       39       (21 )          

Capital expenditures

    (1 )                             (877 )         (878 )

Cash paid for intangible assets

                                  (69 )         (69 )

Proceeds from sales of investments

    47                               142           189  

Purchases of investments

                                  (48 )         (48 )

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

                                  4           4  

Other

                                  2           2  

Net cash provided by (used in) investing activities

    (1,077 )     555       80       470       39       (867 )         (800 )

Increase in cash and cash equivalents

                                  1,016           1,016  

Cash and cash equivalents, beginning of period

                                  947           947  

Cash and cash equivalents, end of period

  $     $     $     $     $     $ 1,963     $   $ 1,963  

 

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Table of Contents

COMCAST CORPORATION AND SUBSIDIARIES — FORM 10-Q

QUARTER ENDED MARCH 31, 2007

 

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

Overview

We are the largest cable operator in the United States and offer a variety of consumer entertainment and communication products and services. As of March 31, 2007, our cable systems served approximately 24.2 million video subscribers, 12.1 million high-speed Internet subscribers and 3 million phone subscribers and passed approximately 47.7 million homes in 39 states and the District of Columbia. We classify our operations in two reportable segments: Cable and Programming. Our Cable segment manages and operates our cable systems, including video, high-speed Internet and phone services (“cable services”). The majority of our Cable segment revenue is earned from monthly subscriptions for these cable services. Other revenue sources include advertising and the operation of our regional sports and news networks. The Cable segment generates approximately 95% of our consolidated revenues. Our Programming segment consists of our six national programming networks: E!, Style, The Golf Channel, VERSUS, G4, and AZN Television; and other entertainment-related businesses. Revenue from our Programming segment is earned primarily from advertising revenues and from monthly per subscriber license fees paid by cable and satellite distributors.

The comparability of our results of operations for the three months ended March 31, 2007 is impacted by the dissolution of Texas and Kansas City Cable Partnership (“TKCCP”) in January 2007 and the Adelphia and Time Warner transactions in July 2006. The TKCCP dissolution resulted in the acquisition of cable systems serving approximately 700,000 video subscribers in Houston, Texas and a significant nonoperating gain recognized associated with the divestiture of our portion of the partnership’s investment in cable systems serving Kansas City, south and west Texas and New Mexico. The Adelphia and Time Warner transactions resulted in the acquisition of cable systems serving approximately 2.8 million video subscribers and the disposition of our previously owned cable systems located in Los Angeles, Cleveland and Dallas (“Comcast Exchange Systems”), which are presented as discontinued operations. Other highlights and business developments for the three months ended March 31, 2007 include the following:

 

   

consolidated revenue growth of 32.0% and consolidated operating income growth of 25.5%, both driven by results in our Cable segment

 

 

   

Cable segment revenue growth of 32.8% and growth in operating income before depreciation and amortization of 32.7%, both driven by growth in revenue generating units (“RGUs”) and the success of our triple play offering, as well as growth from acquisitions

 

 

   

repurchase of approximately 19 million shares of our Class A Special common stock pursuant to our Board-authorized share repurchase program for approximately $500 million

 

 

   

agreements to (i) divide the assets and liabilities of Insight Midwest partnership which, upon closing of the transaction, will result in our 100% ownership of cable systems serving subscribers in Illinois and Indiana, (ii) acquire the cable systems of Patriot Media and Communications servicing subscribers in the Central New Jersey area and (iii) acquire Fandango Inc., an online entertainment site and movie-ticket service; these transactions are subject to closing conditions, including government and other approvals and are all expected to close by the end of 2007

 

Refer to Note 4 to our consolidated financial statements for information about acquisitions and other significant events.

 

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COMCAST CORPORATION AND SUBSIDIARIES — FORM 10-Q

QUARTER ENDED MARCH 31, 2007

 

The discussion below provides further details of these highlights and insights into our consolidated financial statements.

Consolidated Operating Results

 

   

Three Months Ended

March 31,

   

Increase /

(Decrease)

 
(in millions)       2007             2006             

Revenues

  $ 7,388     $ 5,595     32.0 %

Costs and expenses

     

Operating, selling, general and administrative (excluding depreciation)

    4,625       3,495     32.3  

Depreciation

    1,225       880     39.2  

Amortization

    277       216     28.2  

Operating income

    1,261       1,004     25.5  

Other income (expense) items, net

    98       (408 )   124.0  

Income from continuing operations before income taxes and minority interest

    1,359       596     128.1  

Income tax expense

    (526 )     (147 )   257.2  

Income from continuing operations before minority interest

    833       449     85.7  

Minority interest

    4       (11 )   137.6  

Income from continuing operations

    837       438     91.0  

Discontinued operations, net of tax

    —         28     n/m  

Net income

  $ 837     $ 466     79.7 %

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

Consolidated Revenues

Our Cable and Programming segments accounted for substantially all of the increases in consolidated revenues for the three months ended March 31, 2007 compared to the same period in 2006. Cable segment and Programming segment revenues are discussed separately below in “Segment Operating Results.” The remaining changes relate to our other business activities, primarily Comcast Spectacor.

Consolidated Operating, Selling, General and Administrative Expenses

Our Cable and Programming segments accounted for substantially all of the increases in consolidated operating, selling, general and administrative expenses for the three months ended March 31, 2007 compared to the same period in 2006. Cable segment and Programming segment operating, selling, general and administrative expenses are discussed separately below in “Segment Operating Results.” The remaining changes relate to our other business activities, primarily Comcast Spectacor whose expenses were negatively affected for the three months ended March 31, 2007 by player contract termination costs.

Consolidated Depreciation and Amortization

The increase in depreciation expense for the three months ended March 31, 2007 compared to the same period in 2006 is primarily a result of the effects of capital expenditures and the depreciation associated with our newly acquired cable systems.

The increase in amortization expense for the three months ended March 31, 2007 compared to the same period in 2006 is primarily a result of the increase in the amortization expense of our franchise-related customer relationship intangible assets associated with our newly acquired cable systems and the increase in amortization expense related to software-related intangibles.

 

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COMCAST CORPORATION AND SUBSIDIARIES — FORM 10-Q

QUARTER ENDED MARCH 31, 2007

 

Segment Operating Results

Certain adjustments have been made to the 2006 segment presentation to conform to our 2007 management reporting presentation. See Note 12 to our consolidated financial statements for further discussion of these adjustments.

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

Cable Segment Operating Results

The comparability of the results of operations of our Cable segment is impacted by the acquisition of the cable systems serving Houston, Texas in January 2007, the Adelphia and Time Warner transactions in July 2006 and the acquisition of the cable systems of Susquehanna Communications in April 2006. We collectively refer to the cable systems acquired in these transactions as the “newly acquired cable systems.” The newly acquired cable systems accounted for approximately $1.0 billion of increased revenue for the three months ended March 31, 2007.

The table below presents our Cable segment operating results:

 

    Three Months Ended
March 31,
   Increase/(Decrease)  
(in millions)       2007            2006        $    %  

Video

  $ 4,362    $ 3,381    $ 981    29.0 %

High-speed Internet

    1,527      1,061      466    43.9  

Phone

    353      170      183    107.0  

Advertising

    313      276      37    13.3  

Other

    242      217      25    12.2  

Franchise fees

    201      164      37    22.2  

Revenues

    6,998      5,269      1,729    32.8  

Operating expenses

    2,550      1,903      647    34.0  

Selling, general and administrative expenses

    1,655      1,261      394    31.3  

Operating income before depreciation and

amortization

  $ 2,793    $ 2,105    $ 688    32.7 %

 

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COMCAST CORPORATION AND SUBSIDIARIES — FORM 10-Q

QUARTER ENDED MARCH 31, 2007

 

Cable Segment Revenues

Video    Our video revenues continue to grow due to the rate increases and subscriber growth in our digital cable services, including the demand for advanced services such as DVR and HDTV. In the three months ended March 31, 2007 we added approximately 644,000 digital cable subscribers. Our newly acquired cable systems contributed approximately $685 million to our video revenue growth for the three months ended March 31, 2007. As of March 31, 2007, approximately 55% of our 24.2 million video subscribers subscribed to at least one of our digital cable services. In addition, our average monthly video revenue per video subscriber increased to $60.08.

High-Speed Internet    The increase in high-speed Internet revenue for the three months ended March 31, 2007 compared to the same period in 2006 is reflective of an increase in subscribers and the addition of our newly acquired cable systems. In the three months ended March 31, 2007 we added approximately 563,000 subscribers. Our newly acquired systems contributed approximately $220 million to our high-speed Internet revenue growth for the three months ended March 31, 2007. Average monthly revenue per subscriber has remained relatively stable. We expect that the rate of subscriber and revenue growth may slow as the market continues to mature and competition increases.

Phone    We offer two phone services, Comcast Digital Voice, our IP-enabled phone service, and our circuit-switched local phone service. Revenues increased as a result of subscriber growth in our Comcast Digital Voice services, partially offset by the loss of circuit-switched subscribers. In the three months ended March 31, 2007 we added approximately 571,000 Comcast Digital Voice subscribers. Our newly acquired systems contributed approximately $26 million to our phone revenue growth for the three months ended March 31, 2007. We expect the number of phone subscribers will grow as we continue to expand Comcast Digital Voice to new markets in 2007. We expect the number of subscribers to our circuit-switched local phone service to continue to decrease as our marketing efforts are now focused on Comcast Digital Voice.

Advertising    The increase in advertising revenue for the three months ended March 31, 2007 compared to the same period in 2006 is primarily due to the addition of our newly acquired cable systems. We expect continued growth in our advertising revenues.

Other    We also generate revenues from our regional sports and news networks, video installation services, commissions from third-party electronic retailing, and fees for other services, such as providing businesses with data connectivity and networked applications.

Franchise Fees    The increase in franchise fees collected from our cable subscribers for the three months ended March 31, 2007 compared to the same period in 2006 is primarily a result of the increase in our revenues upon which the fees apply.

Cable Segment Operating Expenses

Operating expenses increased primarily as a result of growth in subscribers to our cable services and the addition of our newly acquired cable systems. For the three months ended March 31, 2007, our newly acquired cable systems contributed approximately $400 million to our increases in operating expenses. The remaining increase was primarily a result of costs associated with the delivery of these services and additional personnel to handle service calls and provide customer support.

Cable Segment Selling, General and Administrative Expenses

Selling, general and administrative expenses increased primarily as a result of growth in the number of subscribers to our cable services and the addition of our newly acquired systems. For the three months ended March 31, 2007, our newly acquired cable systems contributed approximately $230 million to our increases in selling, general and administrative expenses. The remaining increases were primarily a result of additional employees needed to provide customer and other administrative services, as well as additional marketing costs associated with attracting new subscribers.

 

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COMCAST CORPORATION AND SUBSIDIARIES — FORM 10-Q

QUARTER ENDED MARCH 31, 2007

 

Programming Segment Operating Results

The table below presents our Programming segment operating results:

 

    Three Months Ended
March 31,
   Increase/(Decrease)  
(in millions)       2007            2006                $                    %          

Revenues

  $ 302    $ 239    $ 63    26.7 %

Operating, selling, general and administrative expenses

    237      189      48    25.9  

Operating income before depreciation and amortization

  $ 65    $ 50    $ 15    29.6 %

Programming Segment Revenues

The increase in revenues for the three months ended March 31, 2007 compared to the same period in 2006 is primarily the result of increases in advertising and license fee revenues. For the three months ended March 31, 2007 and 2006, approximately 14% and 12%, respectively, of our Programming segment revenues were generated from our Cable segment. These amounts are eliminated in our consolidated financial statements but are included in the amounts presented above.

Programming Segment Operating, Selling, General and Administrative Expenses

The increase in operating, selling, general and administrative expenses for the three months ended March 31, 2007 compared to the same period in 2006 is primarily as a result of an increase in the production of and programming rights costs for new and live-event programming for our cable networks, including The PGA TOUR on The Golf Channel.

Consolidated Other Income (Expense) Items

 

    Three Months Ended
March 31,
 
(in millions)       2007             2006      

Interest expense

  $ (568 )   $ (476 )

Investment income (loss), net

    174       64  

Equity in net (losses) income of affiliates, net

    (21 )     (9 )

Other income (expense)

    513       13  

Total

  $ 98     $ (408 )

Interest Expense

The increase in interest expense for the three months ended March 31, 2007 compared to the same period in 2006 is primarily the result of an increase in our average debt outstanding.

Investment Income (Loss), Net

The components of investment income (loss), net for the three months ended March 31, 2007 and 2006 are presented in a table in Note 5 to our consolidated financial statements.

Other Income (Expense)

Other income for the three months ended March 31, 2007 consists principally of a pretax gain of approximately $500 million on the sale of our 50% interest in the Kansas City Asset Pool in connection with the TKCCP transaction.

 

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COMCAST CORPORATION AND SUBSIDIARIES — FORM 10-Q

QUARTER ENDED MARCH 31, 2007

 

Income Tax Expense

Income tax expense for the three months ended March 31, 2007 reflects an income tax rate higher than the federal statutory rate primarily as a result of state income taxes and interest on uncertain tax positions. We expect our 2007 annual effective tax rate to be in the range of 40% to 45%. Income tax expense for the three months ended March 31, 2006 reflects an income tax rate lower than the federal statutory rate primarily due to the reduction of interest accrued on uncertain tax positions as a result of the favorable resolution of certain tax matters.

Liquidity and Capital Resources

Our businesses generate significant cash flow from operating activities. The proceeds from monetizing our nonstrategic investments have also provided us with a significant source of cash flow. We believe that we will be able to meet our current and long-term liquidity and capital requirements, including fixed charges, through our cash flows from operating activities, existing cash, cash equivalents and investments; through available borrowings under our existing credit facilities; and through our ability to obtain future external financing. We anticipate continuing to use a substantial portion of our cash flow to fund our capital expenditures, invest in business opportunities and repurchase our stock.

Operating Activities

Net cash provided by operating activities was $2.0 billion for the three months ended March 31, 2007, as a result of our operating income before depreciation and amortization, the timing of interest and income tax payments, and changes in other operating assets and liabilities.

During the three months ended March 31, 2007, the net change in our operating assets and liabilities was an increase of $106 million. The increase was the result of a decrease in our accounts receivable of $212 million, an increase in our accounts payable and accrued expenses related to trade creditors of $51 million, partially offset by a decrease in other operating assets and liabilities of $157 million.

Financing Activities

Net cash used in financing activities was $1.0 billion for the three months ended March 31, 2007 and consisted principally of our debt repayments of $704 million and repurchases of approximately 19 million shares of our Class A Special common stock for $500 million (recognized on a settlement date or cash basis). These cash outflows were partially offset by cash proceeds received from the issuance of shares primarily under our share-based compensation plans of $218 million.

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

Available Borrowings Under Credit Facilities

We traditionally maintain significant availability under our lines of credit and commercial paper program to meet our short-term liquidity requirements. As of March 31, 2007, amounts available under these facilities totaled approximately $4.7 billion.

Share Repurchase Program

As of March 31, 2007, the maximum dollar value of shares that may be repurchased under our Board-authorized share repurchase program is approximately $2.5 billion. We expect such repurchases to continue from time to time in the open market or in private transactions, subject to market conditions.

See Note 7 to our consolidated financial statements for further discussion of our financing activities.

 

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COMCAST CORPORATION AND SUBSIDIARIES — FORM 10-Q

QUARTER ENDED MARCH 31, 2007

 

Investing Activities

Net cash used in investing activities was $1.2 billion for the three months ended March 31, 2007 and consisted principally of capital expenditures of $1.5 billion and cash paid for intangible assets of $118 million. These cash outflows were partially offset by proceeds received from the sale of investments of $392 million.

Our most significant recurring investing activity has been for capital expenditures, and we expect that this will continue in the future.

Critical Accounting Judgments and Estimates

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

For a discussion of the accounting judgments and estimates that we have identified as critical in the preparation of our consolidated financial statements, please refer to our 2006 Form 10-K.

 

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COMCAST CORPORATION AND SUBSIDIARIES — FORM 10-Q

QUARTER ENDED MARCH 31, 2007

 

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no significant changes to the information required under this item from what was disclosed in our 2006 Form 10-K.

ITEM 4: CONTROLS AND PROCEDURES

Conclusions regarding disclosure controls and procedures

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

Changes in internal control over financial reporting

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

PART II: OTHER INFORMATION

ITEM 1: LEGAL PROCEEDINGS

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

ITEM 1A: RISK FACTORS

There have been no significant changes from the risk factors previously disclosed in Item 1A of our 2006 Form 10-K.

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

A summary of our repurchases during the three months ended March 31, 2007, under our Board-authorized share repurchase program, on a trade-date basis, is as follows:

Purchases of Equity Securities

 

Period   Total
Number
of Shares
Purchased
   Average Price
per Share
   Total Number of
Shares Purchased as
Part of Publicly
Announced
Program
   Total
Dollars
Purchased
Under
the Program
   Maximum Dollar Value
of Shares that May
Yet Be Purchased
Under the Program

January 1-31, 2007

  1,228,150    $ 28.10    1,050,000    $ 29,483,363    $ 2,978,976,465

February 1-28, 2007

  5,277,493    $ 28.57    5,250,096      150,000,000    $ 2,828,976,465

March 1-31, 2007

  12,878,104    $ 25.91    12,390,638      321,000,000    $ 2,507,976,465

Total

  19,383,747    $ 26.77    18,690,734    $ 500,483,363    $ 2,507,976,465

The total number of shares purchased includes 693,013 shares received in the administration of employee share-based compensation plans.

 

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Table of Contents

COMCAST CORPORATION AND SUBSIDIARIES — FORM 10-Q

QUARTER ENDED MARCH 31, 2007

 

ITEM 6: EXHIBITS

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

 

10.1 *   

Comcast Corporation 2002 Stock Option Plan, as amended and restated effective February 28, 2007.

10.2 *   

Comcast Corporation 2003 Stock Option Plan, as amended and restated effective February 28, 2007.

10.3 *   

Comcast Corporation 2002 Restricted Stock Plan, as amended and restated effective February 28, 2007.

10.4 *   

Comcast Corporation 2006 Cash Bonus Plan, as amended and restated effective February 28, 2007.

31   

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

32   

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


*

Constitutes a management contract or compensatory plan or arrangement.

 

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Table of Contents

COMCAST CORPORATION AND SUBSIDIARIES — FORM 10-Q

QUARTER ENDED MARCH 31, 2007

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

COMCAST CORPORATION

/s/ LAWRENCE J. SALVA

Lawrence J. Salva

Senior Vice President, Chief Accounting Officer

and Controller

(Principal Accounting Officer)

Date: April 27, 2007

 

30

Amendment to 2002 Stock Option Plan dated as of February 28, 2007

COMCAST CORPORATION

2002 STOCK OPTION PLAN

(AS AMENDED AND RESTATED EFFECTIVE FEBRUARY 28, 2007)

 

  1. Background and Purpose of Plan

 

  (a) Background. COMCAST CORPORATION, a Pennsylvania corporation, hereby amends and restates the Comcast Corporation 2002 Stock Option Plan (the “Plan”), effective February 28, 2007.

 

  (b) Purpose. The purpose of the Plan is to assist the Sponsor and its Affiliates in retaining valued employees, officers and directors by offering them a greater stake in the Sponsor’s success and a closer identity with it, and to aid in attracting individuals whose services would be helpful to the Sponsor and would contribute to its success.

 

  2. Definitions

 

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

 

  (b) AT&T Broadband Transaction” means the acquisition of AT&T Broadband Corp. (now known as Comcast Cable Communications Holdings, Inc.) by the Sponsor.

 

  (c) Board” means the board of directors of the Sponsor.

 

  (d) Cash Right” means any right to receive cash in lieu of Shares granted under the Plan and described in Paragraph 3(a)(iii).

 

  (e) Cause” means (i) fraud; (ii) misappropriation; (iii) embezzlement; (iv) gross negligence in the performance of duties; (v) self-dealing; (vi) dishonesty; (vii) misrepresentation; (viii) conviction of a crime of a felony; (ix) material violation of any Company policy; (x) material violation of the Company’s Code of Ethics and Business Conduct or, (xi) in the case of an employee of a Company who is a party to an employment agreement with a Company, material breach of such agreement; provided that as to items (ix), (x) and (xi), if capable of being cured, such event or condition remains uncured following 30 days written notice thereof.

 

  (f) Change of Control” means any transaction or series of transactions as a result of which any Person who was a Third Party immediately before such

 


transaction or series of transactions owns then-outstanding securities of the Sponsor such that such Person has the ability to direct the management of the Sponsor, as determined by the Board in its discretion. The Board may also determine that a Change of Control shall occur upon the completion of one or more proposed transactions. The Board’s determination shall be final and binding.

 

  (g) Code” means the Internal Revenue Code of 1986, as amended.

 

  (h) Comcast Plan” means any restricted stock, stock bonus, stock option or other compensation plan, program or arrangement established or maintained by the Sponsor or an Affiliate of the Sponsor, including, but not limited to this Plan, the Comcast Corporation 2003 Stock Option Plan, the Comcast Corporation 2002 Restricted Stock Plan, the Comcast Corporation 1987 Stock Option Plan and the AT&T Broadband Corp. Adjustment Plan.

 

  (i) Committee” means the committee described in Paragraph 5, provided that for purposes of Paragraph 7:

 

  (i) all references to the Committee shall be treated as references to the Board with respect to any Option granted to or held by a Non-Employee Director; and

 

  (ii) all references to the Committee shall be treated as references to the Committee’s delegate with respect to any Option granted within the scope of the delegate’s authority pursuant to Paragraph 5(b).

 

  (j) Common Stock” means the Sponsor’s Class A Common Stock, par value, $.01.

 

  (k) Company” means the Sponsor and the Subsidiary Companies.

 

  (l) Date of Grant” means the date as of which an Option is granted.

 

  (m) Disability” means a disability within the meaning of section 22(e)(3) of the Code.

 

  (n) Fair Market Value.” If Shares are listed on a stock exchange, Fair Market Value shall be determined based on the last reported sale price of a Share on the principal exchange on which Shares are listed on the date of determination, or if such date is not a trading day, the next trading date. If Shares are not so listed, but trades of Shares are reported on the Nasdaq National Market, Fair Market Value shall be determined based on the last quoted sale price of a Share on the Nasdaq National Market on the date of determination, or if such date is not a trading day, the next trading date. If Shares are not so listed nor trades of Shares so reported, Fair Market Value shall be determined by the Board or the Committee in good faith.

 

  (o) Immediate Family” means an Optionee’s spouse and lineal descendants, any trust all beneficiaries of which are any of such persons and any partnership all partners of which are any of such persons.

 

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  (p) Incentive Stock Option” means an Option granted under the Plan, designated by the Committee at the time of such grant as an Incentive Stock Option within the meaning of section 422 of the Code and containing the terms specified herein for Incentive Stock Options; provided, however, that to the extent an Option granted under the Plan and designated by the Committee at the time of grant as an Incentive Stock Option fails to satisfy the requirements for an incentive stock option under section 422 of the Code for any reason, such Option shall be treated as a Non-Qualified Option.

 

  (q) Non-Employee Director” means an individual who is a member of the Board, and who is not an employee of a Company, including an individual who is a member of the Board and who previously was, but at the time of reference is not, an employee of a Company.

 

  (r) Non-Qualified Option” means:

 

  (i) an Option granted under the Plan, designated by the Committee at the time of such grant as a Non-Qualified Option and containing the terms specified herein for Non-Qualified Options; and

 

  (ii) an Option granted under the Plan and designated by the Committee at the time of grant as an Incentive Stock Option, to the extent such Option fails to satisfy the requirements for an incentive stock option under section 422 of the Code for any reason.

 

  (s) Officer” means an officer of the Sponsor (as defined in section 16 of the 1934 Act).

 

  (t) Option” means any stock option granted under the Plan and described in Paragraph 3(a)(i) or Paragraph 3(a)(ii).

 

  (u) Optionee” means a person to whom an Option has been granted under the Plan, which Option has not been exercised in full and has not expired or terminated.

 

  (v) Other Available Shares” means, as of any date, the sum of:

 

  (i) the total number of Shares owned by an Optionee that were not acquired by such Optionee pursuant to a Comcast Plan or otherwise in connection with the performance of services to the Sponsor or an Affiliate; plus

 

  (ii) the excess, if any of:

 

  (A) the total number of Shares owned by an Optionee other than the Shares described in Paragraph 2(v)(i); over

 

  (B) the sum of:

 

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  (1) the number of such Shares owned by such Optionee for less than six months; plus

 

  (2) the number of such Shares owned by such Optionee that has, within the preceding six months, been the subject of a withholding certification pursuant to Paragraph 15(b) or any similar withholding certification under any other Comcast Plan; plus

 

  (3) the number of such Shares owned by such Optionee that has, within the preceding six months, been received in exchange for Shares surrendered as payment, in full or in part, or as to which ownership was attested to as payment, in full or in part, of the exercise price for an option to purchase any securities of the Sponsor or an Affiliate of the Sponsor, under any Comcast Plan, but only to the extent of the number of Shares surrendered or attested to; plus

 

  (4) the number of such Shares owned by such Optionee as to which evidence of ownership has, within the preceding six months, been provided to the Sponsor in connection with the crediting of “Deferred Stock Units” to such Optionee’s Account under the Comcast Corporation 2002 Deferred Stock Option Plan (as in effect from time to time).

For purposes of this Paragraph 2(v), a Share that is subject to a deferral election pursuant to another Comcast Plan shall not be treated as owned by an Optionee until all conditions to the delivery of such Share have lapsed. The number of Other Available Shares shall be determined separately for Common Stock and for Special Common Stock. For purposes of determining the number of Other Available Shares, the term “Shares” shall also include the securities held by a Participant immediately before the consummation of the AT&T Broadband Transaction that became Common Stock or Special Common Stock as a result of the AT&T Broadband Transaction.

 

  (w) Outside Director” means a member of the Board who is an “outside director” within the meaning of section 162(m)(4)(C) of the Code and applicable Treasury Regulations issued thereunder.

 

  (x) Person” means an individual, a corporation, a partnership, an association, a trust or any other entity or organization.

 

  (y) Plan” means the Comcast Corporation 2002 Stock Option Plan.

 

  (z) Share” or “Shares.”

 

  (i) Except as otherwise provided in this Paragraph 2(z), the term “Share” or “Shares” means a share or shares of Common Stock.

 

  (ii) With respect to Options granted before the consummation of the AT&T Broadband Transaction, the term “Share” or “Shares” means a share or shares of Special Common Stock.

 

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  (iii) For purposes of Paragraphs 2(v), 7(d) and 15, the term “Share” or “Shares” also means a share or shares of Special Common Stock.

 

  (iv) The term “Share” or “Shares” also means such other securities issued by the Sponsor as may be the subject of an adjustment under Paragraph 10, or for purposes of Paragraph 2(u) and Paragraph 15, as may have been the subject of a similar adjustment under similar provisions of a Comcast Plan as now in effect or as may have been in effect before the AT&T Broadband Transaction.

 

  (aa) Special Common Stock” means the Sponsor’s Class A Special Common Stock, par value $0.01.

 

  (bb) Sponsor” means Comcast Corporation, a Pennsylvania corporation, as successor to Comcast Holdings Corporation (formerly known as Comcast Corporation), including any successor thereto by merger, consolidation, acquisition of all or substantially all the assets thereof, or otherwise.

 

  (cc) Subsidiary Companies” means all business entities that, at the time in question, are subsidiaries of the Sponsor within the meaning of section 424(f) of the Code.

 

  (dd) Ten Percent Shareholder” means a person who on the Date of Grant owns, either directly or within the meaning of the attribution rules contained in section 424(d) of the Code, stock possessing more than 10% of the total combined voting power of all classes of stock of his employer corporation or of its parent or subsidiary corporations, as defined respectively in sections 424(e) and (f) of the Code, provided that the employer corporation is a Company.

 

  (ee) Terminating Event” means any of the following events:

 

  (i) the liquidation of the Sponsor; or

 

  (ii) a Change of Control.

 

  (ff) Third Party” means any Person other than a Company, together with such Person’s Affiliates, provided that the term “Third Party” shall not include the Sponsor or an Affiliate of the Sponsor.

 

  (gg) 1933 Act” means the Securities Act of 1933, as amended.

 

  (hh) 1934 Act” means the Securities Exchange Act of 1934, as amended.

 

  3. Rights To Be Granted

 

  (a) Types of Options and Other Rights Available for Grant. Rights that may be granted under the Plan are:

 

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  (i) Incentive Stock Options, which give an Optionee who is an employee of a Company the right for a specified time period to purchase a specified number of Shares for a price not less than the Fair Market Value on the Date of Grant;

 

  (ii) Non-Qualified Options, which give the Optionee the right for a specified time period to purchase a specified number of Shares for a price determined by the Committee; and

 

  (iii) Cash Rights, which give an Optionee the right for a specified time period, and subject to such conditions, if any, as shall be determined by the Committee and stated in the option document, to receive a cash payment of such amount per Share as shall be determined by the Committee and stated in the option document, in lieu of exercising a Non-Qualified Option.

 

  (b) Limit on Grant of Options. The maximum number of Shares for which Options may be granted to any single individual in any calendar year, adjusted as provided in Paragraph 10, shall be 10,000,000 Shares.

 

  4. Shares Subject to Plan

Subject to adjustment as provided in Paragraph 10, not more than 112,500,000 Shares in the aggregate (including Shares granted pursuant to the Plan as in effect immediately before the closing of the AT&T Broadband Transaction, and as adjusted to reflect the three-for-two stock split in the form of a 50% stock dividend payable on February 21, 2007 to shareholders of record on February 14, 2007) may be issued pursuant to the Plan upon exercise of Options. Shares delivered pursuant to the exercise of an Option may, at the Sponsor’s option, be either treasury Shares or Shares originally issued for such purpose. If an Option covering Shares terminates or expires without having been exercised in full, other Options may be granted covering the Shares as to which the Option terminated or expired.

 

  5. Administration of Plan

 

  (a) Committee. The Plan shall be administered by the Compensation Committee of the Board or any other committee or subcommittee designated by the Board, provided that the committee administering the Plan is composed of two or more non-employee members of the Board, each of whom is an Outside Director.

 

  (b) Delegation of Authority.

 

  (i) Named Executive Officers and Section 16(b) Officers. All authority with respect to the grant, amendment, interpretation and administration of Options with respect to any employee or officer of a Company who is either (x) a Named Executive Officer (i.e., an officer who is required to be listed in the Company’s Proxy Statement Compensation Table) or (y) is subject to the short-swing profit recapture rules of section 16(b) of the 1934 Act, is reserved to the Committee.

 

  (ii)

Senior Officers and Highly Compensated Employees. The Committee may delegate to a committee consisting of the Chairman of the Committee and one or

 

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more officers of the Company designated by the Committee, discretion under the Plan to grant, amend, interpret and administer Options with respect to any employee or officer of a Company who (x) holds a position with Comcast Corporation of Senior Vice President or a position of higher rank than Senior Vice President or (y) has a base salary of $500,000 or more.

 

  (iii) Other Employees. The Committee may delegate to an officer of the Company, or a committee of two or more officers of the Company, discretion under the Plan to grant, amend, interpret and administer Options with respect to any employee or officer of a Company other than an employee or officer described in Paragraph 5(b)(i) or Paragraph 5(b)(ii).

 

  (iv) Termination of Delegation of Authority. Delegation of authority as provided under this Paragraph 5(b) shall continue in effect until the earliest of:

 

  (x) such time as the Committee shall, in its discretion, revoke such delegation of authority;

 

  (y) in the case of delegation under Paragraph 5(b)(ii), the delegate shall cease to serve as Chairman of the Committee or serve as an employee of the Company for any reason, as the case may be and in the case of delegation under Paragraph 5(b)(iii), the delegate shall cease to serve as an employee of the Company for any reason; or

 

  (z) the delegate shall notify the Committee that he declines to continue to exercise such authority.

 

  (c) Meetings. The Committee shall hold meetings at such times and places as it may determine. Acts approved at a meeting by a majority of the members of the Committee or acts approved by the unanimous consent of the members of the Committee shall be the valid acts of the Committee.

 

  (d) Exculpation. No member of the Committee shall be personally liable for monetary damages for any action taken or any failure to take any action in connection with the administration of the Plan or the granting of Options thereunder unless (i) the member of the Committee has breached or failed to perform the duties of his office, and (ii) the breach or failure to perform constitutes self-dealing, willful misconduct or recklessness; provided, however, that the provisions of this Paragraph 5(d) shall not apply to the responsibility or liability of a member of the Committee pursuant to any criminal statute.

 

  (e) Indemnification. Service on the Committee shall constitute service as a member of the Board. Each member of the Committee shall be entitled without further act on his part to indemnity from the Sponsor to the fullest extent provided by applicable law and the Sponsor’s By-laws in connection with or arising out of any actions, suit or proceeding with respect to the administration of the Plan or the granting of Options thereunder in which he may be involved by reasons of his being or having been a member of the Committee, whether or not he continues to be such member of the Committee at the time of the action, suit or proceeding.

 

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  6. Eligibility

 

  (a) Eligible individuals to whom Options may be granted shall be employees, officers or directors of a Company who are selected by the Committee for the grant of Options. Eligible individuals to whom Cash Rights may be granted shall be individuals who are employees of a Company on the Date of Grant. The terms and conditions of Options granted to individuals other than Non-Employee Directors shall be determined by the Committee, subject to Paragraph 7. The terms and conditions of Cash Rights shall be determined by the Committee, subject to Paragraph 7. The terms and conditions of Options granted to Non-Employee Directors shall be determined by the Board, subject to Paragraph 7.

 

  (b) An Incentive Stock Option shall not be granted to a Ten Percent Shareholder except on such terms concerning the option price and term as are provided in Paragraph 7(b) and 7(g) with respect to such a person. An Option designated as Incentive Stock Option granted to a Ten Percent Shareholder but which does not comply with the requirements of the preceding sentence shall be treated as a Non-Qualified Option. An Option designated as an Incentive Stock Option shall be treated as a Non-Qualified Option if the Optionee is not an employee of a Company on the Date of Grant.

 

  7. Option Documents and Terms—In General

All Options granted to Optionees shall be evidenced by option documents. The terms of each such option document for any Optionee who is an employee of a Company shall be determined from time to time by the Committee, and the terms of each such option document for any Optionee who is a Non-Employee Director shall be determined from time to time by the Board, consistent, however, with the following:

 

  (a) Time of Grant. All Options shall be granted on or before March 13, 2006.

 

  (b) Option Price. Except as otherwise provided in Section 13(b), the option price per Share with respect to any Option shall be determined by the Committee, provided, however, that with respect to any Incentive Stock Options, the option price per share shall not be less than 100% of the Fair Market Value of such Share on the Date of Grant, and provided further that with respect to any Incentive Stock Options granted to a Ten Percent Shareholder, the option price per Share shall not be less than 110% of the Fair Market Value of such Share on the Date of Grant.

 

  (c)

Restrictions on Transferability. No Option granted under this Paragraph 7 shall be transferable otherwise than by will or the laws of descent and distribution and, during the lifetime of the Optionee, shall be exercisable only by him or for his benefit by his attorney-in-fact or guardian; provided that the Committee may, in its discretion, at the time of grant of a Non-Qualified Option or by amendment of an option document for an Incentive Stock Option or a Non-Qualified Option, provide that Options granted to or held by an Optionee may be transferred, in whole or in part, to one or more transferees and exercised by any such transferee; provided further that (i) any such transfer is without consideration and (ii) each transferee is a member of such Optionee’s Immediate Family; and provided further that any

 

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Incentive Stock Option granted pursuant to an option document which is amended to permit transfers during the lifetime of the Optionee shall, upon the effectiveness of such amendment, be treated thereafter as a Non-Qualified Option. No transfer of an Option shall be effective unless the Committee is notified of the terms and conditions of the transfer and the Committee determines that the transfer complies with the requirements for transfers of Options under the Plan and the option document. Any person to whom an Option has been transferred may exercise any Options only in accordance with the provisions of Paragraph 7(g) and this Paragraph 7(c).

 

  (d) Payment Upon Exercise of Options.

 

  (i) In General. Full payment for Shares purchased upon the exercise of an Option shall be made in cash, by certified check payable to the order of the Sponsor, or, at the election of the Optionee and as the Committee may, in its sole discretion, approve, by surrendering or attesting to ownership of Shares with an aggregate Fair Market Value equal to the aggregate option price, or by attesting to ownership and delivering such combination of Shares and cash as the Committee may, in its sole discretion, approve; provided, however, that ownership of Shares may be attested to and Shares may be surrendered in satisfaction of the option price only if the Optionee certifies in writing to the Sponsor that the Optionee owns a number of Other Available Shares as of the date the Option is exercised that is at least equal to the number of Shares as to which ownership has been attested, or the number of Shares to be surrendered in satisfaction of the Option Price, as applicable; provided further, however, that the option price may not be paid in Shares if the Committee determines that such method of payment would result in liability under section 16(b) of the 1934 Act to an Optionee. Except as otherwise provided by the Committee, if payment is made in whole or in part by surrendering Shares, the Optionee shall deliver to the Sponsor certificates registered in the name of such Optionee representing Shares legally and beneficially owned by such Optionee, free of all liens, claims and encumbrances of every kind and having a Fair Market Value on the date of delivery that is equal to or greater than the aggregate option price for the Option Shares subject to payment by the surrender of Shares, accompanied by stock powers duly endorsed in blank by the record holder of the Shares represented by such certificates; and if payment is made in whole or in part by attestation of ownership, the Optionee shall attest to ownership of Shares representing Shares legally and beneficially owned by such Optionee, free of all liens, claims and encumbrances of every kind and having a Fair Market Value on the date of attestation that is equal to or greater than the aggregate option price for the Option Shares subject to payment by attestation of Share ownership. If the Committee, in its sole discretion, should refuse to accept Shares in payment of the option price, any certificates representing Shares which were delivered to the Sponsor shall be returned to the Optionee with notice of the refusal of the Committee to accept such Shares in payment of the option price. The Committee may impose such limitations and prohibitions on attestation or ownership of Shares and the use of Shares to exercise an Option as it deems appropriate.

 

  (ii)

Cashless Exercise. Except as authorized by the Committee and agreed to by an Optionee, the payment methods described in Paragraph 7(d)(i) shall, to the extent so provided in an Option document, be the exclusive payment methods, provided that the Committee may, in its sole discretion, and subject to the Optionee’s written consent on a form provided by the Committee, authorize Option documents covering Options to be amended to

 

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provide that the “cashless exercise” payment method described in this Paragraph 7(d)(ii) shall be an additional or the exclusive payment method. Accordingly, to the extent authorized by the Committee and agreed to by an Optionee, full payment for Shares purchased upon the exercise of an Option shall or may be made via cashless exercise, such that subject to the other terms and conditions of the Plan, following the date of exercise, the Company shall deliver to the Optionee Shares having a Fair Market Value, as of the date of exercise, equal to the excess, if any, of (A) the Fair Market Value of such Shares on the date of exercise of the Option over (B) the sum of (I) the aggregate Option Price for such Shares, plus (II) the applicable tax withholding amounts (as determined pursuant to Paragraph 15) for such exercise; provided that in connection with such cashless exercise that would not result in the issuance of a whole number of Shares, the Company shall withhold cash that would otherwise be payable to the Optionee from its regular payroll or the Optionee shall deliver cash or a certified check payable to the order of the Company for the balance of the option price for a whole Share to the extent necessary to avoid the issuance of a fractional Share or the payment of cash by the Company (as provided in Paragraph 7(e)).

 

  (e) Issuance of Certificate Upon Exercise of Options; Payment of Cash. For purposes of the Plan, the Sponsor may satisfy its obligation to deliver Shares following the exercise of Options either by (i) delivery of a physical certificate for Shares issuable on the exercise of Options or (ii) arranging for the recording of Optionee’s ownership of Shares issuable on the exercise of Options on a book entry recordkeeping system maintained on behalf of the Sponsor. Only whole Shares shall be issuable upon exercise of Options. No fractional Shares shall be issued. Any right to a fractional Share shall be satisfied in cash. Following the exercise of an Option and the satisfaction of the conditions of Paragraph 9, the Sponsor shall deliver to the Optionee the number of whole Shares issuable on the exercise of an Option and a check for the Fair Market Value on the date of exercise of any fractional Share to which the Optionee is entitled.

 

  (f) Termination of Employment. For purposes of the Plan, a transfer of an employee between two employers, each of which is a Company, shall not be deemed a termination of employment. For purposes of Paragraph 7(g), an Optionee’s termination of employment shall be deemed to occur on the date an Optionee ceases to have a regular obligation to perform services for a Company, without regard to whether (i) the Optionee continues on the Company’s payroll for regular, severance or other pay or (ii) the Optionee continues to participate in one or more health and welfare plans maintained by the Company on the same basis as active employees. Whether an Optionee ceases to have a regular obligation to perform services for a Company shall be determined by the Committee in its sole discretion. Notwithstanding the foregoing, if an Optionee is a party to an employment agreement or severance agreement with a Company which establishes the effective date of such Optionee’s termination of employment for purposes of this Paragraph 7(f), that date shall apply. For an Optionee who is a Non-Employee Director, all references to any termination of employment shall be treated as a termination of service to the Sponsor as a Non-Employee Director.

 

  (g)

Periods of Exercise of Options. An Option shall be exercisable in whole or in part at such time or times as may be determined by the Committee and stated in the option document, provided, however, that if the grant of an Option would be subject to section 16(b) of the 1934 Act, unless the requirements for exemption therefrom in Rule 16b-3(c)(1),

 

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under such Act, or any successor provision, are met, the option document for such Option shall provide that such Option is not exercisable until not less than six months have elapsed from the Date of Grant. Except as otherwise provided by the Committee in its discretion, no Option shall first become exercisable following an Optionee’s termination of employment for any reason; provided further, that:

 

  (i) In the event that an Optionee terminates employment with the Company for any reason other than death or Cause, any Option held by such Optionee and which is then exercisable shall be exercisable for a period of 90 days following the date the Optionee terminates employment with the Company (unless a longer period is established by the Committee); provided, however, that if such termination of employment with the Company is due to the Disability of the Optionee, he shall have the right to exercise those of his Options which are then exercisable for a period of one year following such termination of employment (unless a longer period is established by the Committee); provided, however, that in no event shall an Incentive Stock Option be exercisable after five years from the Date of Grant in the case of a grant to a Ten Percent Shareholder, nor shall any other Option be exercisable after ten years from the Date of Grant.

 

  (ii) In the event that an Optionee terminates employment with the Company by reason of his death, any Option held at death by such Optionee which is then exercisable shall be exercisable for a period of one year from the date of death (unless a longer period is established by the Committee) by the person to whom the rights of the Optionee shall have passed by will or by the laws of descent and distribution; provided, however, that in no event shall an Incentive Stock Option be exercisable after five years from the Date of Grant in the case of a grant to a Ten Percent Shareholder, nor shall any other Option be exercisable after ten years from the Date of Grant.

 

  (iii) In the event that an Optionee’s employment with the Company is terminated for Cause, each unexercised Option held by such Optionee shall terminate and cease to be exercisable; provided further, that in such event, in addition to immediate termination of the Option, the Optionee, upon a determination by the Committee shall automatically forfeit all Shares otherwise subject to delivery upon exercise of an Option but for which the Sponsor has not yet delivered the Share certificates, upon refund by the Sponsor of the option price.

 

  (h) Date of Exercise. The date of exercise of an Option shall be the date on which written notice of exercise, addressed to the Sponsor at its main office to the attention of its Secretary, is hand delivered, telecopied or mailed first class postage prepaid; provided, however, that the Sponsor shall not be obligated to deliver any certificates for Shares pursuant to the exercise of an Option until the Optionee shall have made payment in full of the option price for such Shares. Each such exercise shall be irrevocable when given. Each notice of exercise must (i) specify the Incentive Stock Option, Non-Qualified Option or combination thereof being exercised; and (ii) if applicable, include a statement of preference (which shall binding on and irrevocable by the Optionee but shall not be binding on the Committee) as to the manner in which payment to the Sponsor shall be made. Each notice of exercise shall also comply with the requirements of Paragraph 15.

 

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  (i) Cash Rights. The Committee may, in its sole discretion, provide in an option document for an eligible Optionee that Cash Rights shall be attached to Non-Qualified Options granted under the Plan. All Cash Rights that are attached to Non-Qualified Options shall be subject to the following terms:

 

  (i) Such Cash Right shall expire no later than the Non-Qualified Option to which it is attached.

 

  (ii) Such Cash Right shall provide for the cash payment of such amount per Share as shall be determined by the Committee and stated in the option document.

 

  (iii) Such Cash Right shall be subject to the same restrictions on transferability as the Non-Qualified Option to which it is attached.

 

  (iv) Such Cash Right shall be exercisable only when such conditions to exercise as shall be determined by the Committee and stated in the option document, if any, have been satisfied.

 

  (v) Such Cash Right shall expire upon the exercise of the Non-Qualified Option to which it is attached.

 

  (vi) Upon exercise of a Cash Right that is attached to a Non-Qualified Option, the Option to which the Cash Right is attached shall expire.

 

  8. Limitation on Exercise of Incentive Stock Options

The aggregate Fair Market Value (determined as of the time Options are granted) of the Shares with respect to which Incentive Stock Options may first become exercisable by an Optionee in any one calendar year under the Plan and any other plan of the Company shall not exceed $100,000. The limitations imposed by this Paragraph 8 shall apply only to Incentive Stock Options granted under the Plan, and not to any other options or stock appreciation rights. In the event an individual receives an Option intended to be an Incentive Stock Option which is subsequently determined to have exceeded the limitation set forth above, or if an individual receives Options that first become exercisable in a calendar year (whether pursuant to the terms of an option document, acceleration of exercisability or other change in the terms and conditions of exercise or any other reason) that have an aggregate Fair Market Value (determined as of the time the Options are granted) that exceeds the limitations set forth above, the Options in excess of the limitation shall be treated as Non-Qualified Options.

 

  9. Rights as Shareholders

An Optionee shall not have any right as a shareholder with respect to any Shares subject to his Options until the Option shall have been exercised in accordance with the terms of the Plan and the option document and the Optionee shall have paid the full purchase price for the number of Shares in respect of which the Option was exercised and the Optionee shall have made arrangements acceptable to the Sponsor for the payment of applicable taxes consistent with Paragraph 15.

 

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  10. Changes in Capitalization

In the event that Shares are changed into or exchanged for a different number or kind of shares of stock or other securities of the Sponsor, whether through merger, consolidation, reorganization, recapitalization, stock dividend, stock split-up or other substitution of securities of the Sponsor, the Board shall make appropriate equitable anti-dilution adjustments to the number and class of shares of stock available for issuance under the Plan, and subject to outstanding Options, and to the option prices and the amounts payable pursuant to any Cash Rights. Any reference to the option price in the Plan and in option documents shall be a reference to the option price as so adjusted. Any reference to the term “Shares” in the Plan and in option documents shall be a reference to the appropriate number and class of shares of stock available for issuance under the Plan, as adjusted pursuant to this Paragraph 10. The Board’s adjustment shall be effective and binding for all purposes of this Plan.

 

  11. Terminating Events

 

  (a) The Sponsor shall give Optionees at least thirty (30) days’ notice (or, if not practicable, such shorter notice as may be reasonably practicable) prior to the anticipated date of the consummation of a Terminating Event. Upon receipt of such notice, and for a period of ten (10) days thereafter (or such shorter period as the Board shall reasonably determine and so notify the Optionees), each Optionee shall be permitted to exercise the Option to the extent the Option is then exercisable; provided that, the Sponsor may, by similar notice, require the Optionee to exercise the Option, to the extent the Option is then exercisable, or to forfeit the Option (or portion thereof, as applicable). The Committee may, in its discretion, provide that upon the Optionee’s receipt of the notice of a Terminating Event under this Paragraph 11(a), the entire number of Shares covered by Options shall become immediately exercisable.

 

  (b) Notwithstanding Paragraph 11(a), in the event the Terminating Event is not consummated, the Option shall be deemed not to have been exercised and shall be exercisable thereafter to the extent it would have been exercisable if no such notice had been given.

 

  12. Interpretation

The Committee shall have the power to interpret the Plan and to make and amend rules for putting it into effect and administering it. It is intended that the Incentive Stock Options granted under the Plan shall constitute incentive stock options within the meaning of section 422 of the Code, and that Shares transferred pursuant to the exercise of Non-Qualified Options shall constitute property subject to federal income tax pursuant to the provisions of section 83 of the Code. The provisions of the Plan shall be interpreted and applied insofar as possible to carry out such intent.

 

  13. Amendments

 

  (a)

In General. The Board or the Committee may amend the Plan from time to time in such manner as it may deem advisable. Nevertheless, neither the Board nor the Committee may, without obtaining approval within twelve months before or after such action

 

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by such vote of the Sponsor’s shareholders as may be required by Pennsylvania law for any action requiring shareholder approval, or by a majority of votes cast at a duly held shareholders’ meeting at which a majority of all voting stock is present and voting on such amendment, either in person or in proxy (but not, in any event, less than the vote required pursuant to Rule 16b-3(b) under the 1934 Act) change the class of individuals eligible to receive an Incentive Stock Option, extend the expiration date of the Plan, decrease the minimum option price of an Incentive Stock Option granted under the Plan or increase the maximum number of shares as to which Options may be granted, except as provided in Paragraph 10 hereof.

 

  (b) Repricing of Options. Notwithstanding any provision in the Plan to the contrary, neither the Board nor the Committee may, without obtaining prior approval by the Sponsor’s shareholders, reduce the option price of any issued and outstanding Option granted under the Plan at any time during the term of such option (other than by adjustment pursuant to Paragraph 10 relating to Changes in Capitalization). This Paragraph 13(b) may not be repealed, modified or amended without the prior approval of the Sponsor’s shareholders.

 

  14. Securities Law

 

  (a) In General. The Committee shall have the power to make each grant under the Plan subject to such conditions as it deems necessary or appropriate to comply with the then-existing requirements of the 1933 Act or the 1934 Act, including Rule 16b-3 (or any similar rule) of the Securities and Exchange Commission.

 

  (b) Acknowledgment of Securities Law Restrictions on Exercise. To the extent required by the Committee, unless the Shares subject to the Option are covered by a then current registration statement or a Notification under Regulation A under the 1933 Act, each notice of exercise of an Option shall contain the Optionee’s acknowledgment in form and substance satisfactory to the Committee that:

 

  (i) the Shares subject to the Option are being purchased for investment and not for distribution or resale (other than a distribution or resale which, in the opinion of counsel satisfactory to the Sponsor, may be made without violating the registration provisions of the Act);

 

  (ii) the Optionee has been advised and understands that (A) the Shares subject to the Option have not been registered under the 1933 Act and are “restricted securities” within the meaning of Rule 144 under the 1933 Act and are subject to restrictions on transfer and (B) the Sponsor is under no obligation to register the Shares subject to the Option under the 1933 Act or to take any action which would make available to the Optionee any exemption from such registration;

 

  (iii) the certificate evidencing the Shares may bear a restrictive legend; and

 

  (iv) the Shares subject to the Option may not be transferred without compliance with all applicable federal and state securities laws.

 

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  (c) Delay of Exercise Pending Registration of Securities. Notwithstanding any provision in the Plan or an option document to the contrary, if the Committee determines, in its sole discretion, that issuance of Shares pursuant to the exercise of an Option should be delayed pending registration or qualification under federal or state securities laws or the receipt of a legal opinion that an appropriate exemption from the application of federal or state securities laws is available, the Committee may defer exercise of any Option until such Shares are appropriately registered or qualified or an appropriate legal opinion has been received, as applicable.

 

  15. Withholding of Taxes on Exercise of Option

 

  (a) Whenever the Company proposes or is required to deliver or transfer Shares in connection with the exercise of an Option, the Company shall have the right to (i) require the recipient to remit to the Sponsor an amount sufficient to satisfy any federal, state and local withholding tax requirements prior to the delivery or transfer of any certificate or certificates for such Shares or (ii) take any action whatever that it deems necessary to protect its interests with respect to tax liabilities. The Sponsor’s obligation to make any delivery or transfer of Shares on the exercise of an Option shall be conditioned on the recipient’s compliance, to the Sponsor’s satisfaction, with any withholding requirement. In addition, if the Committee grants Options or amends option documents to permit Options to be transferred during the life of the Optionee, the Committee may include in such option documents such provisions as it determines are necessary or appropriate to permit the Company to deduct compensation expenses recognized upon exercise of such Options for federal or state income tax purposes.

 

  (b) Except as otherwise provided in this Paragraph 15(b), any tax liabilities incurred in connection with the exercise of an Option under the Plan other than an Incentive Stock Option shall be satisfied by the Sponsor’s withholding a portion of the Shares underlying the Option exercised having a Fair Market Value approximately equal to the minimum amount of taxes required to be withheld by the Sponsor under applicable law, unless otherwise determined by the Committee with respect to any Optionee. Notwithstanding the foregoing, the Committee may permit an Optionee to elect one or both of the following: (i) to have taxes withheld in excess of the minimum amount required to be withheld by the Sponsor under applicable law; provided that the Optionee certifies in writing to the Sponsor that the Optionee owns a number of Other Available Shares having a Fair Market Value that is at least equal to the Fair Market Value of Option Shares to be withheld by the Company for the then-current exercise on account of withheld taxes in excess of such minimum amount, and (ii) to pay to the Sponsor in cash all or a portion of the taxes to be withheld upon the exercise of an Option. In all cases, the Shares so withheld by the Company shall have a Fair Market Value that does not exceed the amount of taxes to be withheld minus the cash payment, if any, made by the Optionee. Any election pursuant to this Paragraph 15(b) must be in writing made prior to the date specified by the Committee, and in any event prior to the date the amount of tax to be withheld or paid is determined. An election pursuant to this Paragraph 15(b) may be made only by an Optionee or, in the event of the Optionee’s death, by the Optionee’s legal representative. No Shares withheld pursuant to this Paragraph 15(b) shall be available for subsequent grants under the Plan. The Committee may add such other requirements and limitations regarding elections pursuant to this Paragraph 15(b) as it deems appropriate.

 

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  (c) Except as otherwise provided in this Paragraph 15(c), any tax liabilities incurred in connection with the exercise of an Incentive Stock Option under the Plan shall be satisfied by the Optionee’s payment to the Sponsor in cash all of the taxes to be withheld upon exercise of the Incentive Stock Option. Notwithstanding the foregoing, the Committee may permit an Optionee to elect to have the Sponsor withhold a portion of the Shares underlying the Incentive Stock Option exercised having a Fair Market Value approximately equal to the minimum amount of taxes required to be withheld by the Sponsor under applicable law. Any election pursuant to this Paragraph 15(c) must be in writing made prior to the date specified by the Committee, and in any event prior to the date the amount of tax to be withheld or paid is determined. An election pursuant to this Paragraph 15(c) may be made only by an Optionee or, in the event of the Optionee’s death, by the Optionee’s legal representative. No Shares withheld pursuant to this Paragraph 15(c) shall be available for subsequent grants under the Plan. The Committee may add such other requirements and limitations regarding elections pursuant to this Paragraph 15(c) as it deems appropriate.

 

  16. Effective Date and Term of Plan

This amendment and restatement of the Plan shall be effective August 4, 2005. The Plan shall expire no later than March 13, 2006, the tenth anniversary of the date the Plan was initially adopted by the board of directors of the Sponsor, unless sooner terminated by the Board.

 

  17. General

Each Option shall be evidenced by a written instrument containing such terms and conditions not inconsistent with the Plan as the Committee may determine. The issuance of Shares on the exercise of an Option shall be subject to all of the applicable requirements of the corporation law of the Sponsor’s state of incorporation and other applicable laws, including

 

[THIS SPACE INTENTIONALLY LEFT BLANK]

 

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federal or state securities laws, and all Shares issued under the Plan shall be subject to the terms and restrictions contained in the Articles of Incorporation and By-Laws of the Sponsor, as amended from time to time.

Executed as of the 28th day of February, 2007.

 

    COMCAST CORPORATION

BY:

  /s/ DAVID L. COHEN
  Name: David L. Cohen

ATTEST:

  /s/ ARTHUR R. BLOCK
  Name: Arthur R. Block

 

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Amendment to 2003 Stock Option Plan dated as of February 28, 2007

Exhibit 10.2

COMCAST CORPORATION

2003 STOCK OPTION PLAN

(AS AMENDED AND RESTATED EFFECTIVE FEBRUARY 28, 2007)

 

  1. Background and Purpose of Plan

(a)    Background. COMCAST CORPORATION, a Pennsylvania corporation hereby amends and restates the Comcast Corporation 2003 Stock Option Plan, (the “Plan”), effective February 28, 2007.

(b)    Purpose. The purpose of the Plan is to assist the Sponsor and its Affiliates in retaining valued employees, officers and directors by offering them a greater stake in the Sponsor’s success and a closer identity with it, and to aid in attracting individuals whose services would be helpful to the Sponsor and would contribute to its success.

 

  2. Definitions

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

(b)    “AT&T Broadband Transaction” means the acquisition of AT&T Broadband Corp. (now known as Comcast Cable Communications Holdings, Inc.) by the Sponsor.

(c)    “Board” means the board of directors of the Sponsor.

(d)    “Cash Right” means any right to receive cash in lieu of Shares granted under the Plan and described in Paragraph 3(a)(iii).

(e)    “Cause” means (i) fraud; (ii) misappropriation; (iii) embezzlement; (iv) gross negligence in the performance of duties; (v) self-dealing; (vi) dishonesty; (vii) misrepresentation; (viii) conviction of a crime of a felony; (ix) material violation of any Company policy; (x) material violation of the Company’s Code of Ethics and Business Conduct or, (xi) in the case of an employee of a Company who is a party to an employment agreement with a Company, material breach of such agreement; provided that as to items (ix), (x) and (xi), if capable of being cured, such event or condition remains uncured following 30 days written notice thereof.


(f)    “Change of Control” means any transaction or series of transactions as a result of which any Person who was a Third Party immediately before such transaction or series of transactions owns then-outstanding securities of the Sponsor such that such Person has the ability to direct the management of the Sponsor, as determined by the Board in its discretion. The Board may also determine that a Change of Control shall occur upon the completion of one or more proposed transactions. The Board’s determination shall be final and binding.

(g)    “Code” means the Internal Revenue Code of 1986, as amended.

(h)    “Comcast Plan” means any restricted stock, stock bonus, stock option or other compensation plan, program or arrangement established or maintained by the Sponsor or an Affiliate of the Sponsor, including, but not limited to this Plan, the Comcast Corporation 2002 Stock Option Plan, the Comcast Corporation 2002 Restricted Stock Plan, the Comcast Corporation 1987 Stock Option Plan and the AT&T Broadband Corp. Adjustment Plan.

(i)    “Committee” means the committee described in Paragraph 5, provided that for purposes of Paragraph 7:

(i)    all references to the Committee shall be treated as references to the Board with respect to any Option granted to or held by a Non-Employee Director; and

(ii)    all references to the Committee shall be treated as references to the Committee’s delegate with respect to any Option granted within the scope of the delegate’s authority pursuant to Paragraph 5(b).

(j)    “Common Stock” means the Sponsor’s Class A Common Stock, par value, $.01.

(k)    “Company” means the Sponsor and the Subsidiary Companies.

(l)    “Date of Grant” means the date as of which an Option is granted.

(m)    “Disability” means a disability within the meaning of section 22(e)(3) of the Code.

(n)    “Fair Market Value.” If Shares are listed on a stock exchange, Fair Market Value shall be determined based on the last reported sale price of a Share on the principal exchange on which Shares are listed on the date of determination, or if such date is not a trading day, the next trading date. If Shares are not so listed, but trades of Shares are reported on the Nasdaq National Market, Fair Market Value shall be determined based on the last quoted sale price of a Share on the Nasdaq National Market on the date of determination, or if such date is not a trading day, the next trading date. If Shares are not so listed nor trades of Shares so reported, Fair Market Value shall be determined by the Board or the Committee in good faith.

 

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(o)    “Immediate Family” means an Optionee’s spouse and lineal descendants, any trust all beneficiaries of which are any of such persons and any partnership all partners of which are any of such persons.

(p)    “Incentive Stock Option” means an Option granted under the Plan, designated by the Committee at the time of such grant as an Incentive Stock Option within the meaning of section 422 of the Code and containing the terms specified herein for Incentive Stock Options; provided, however, that to the extent an Option granted under the Plan and designated by the Committee at the time of grant as an Incentive Stock Option fails to satisfy the requirements for an incentive stock option under section 422 of the Code for any reason, such Option shall be treated as a Non-Qualified Option.

(q)    “Non-Employee Director” means an individual who is a member of the Board, and who is not an employee of a Company, including an individual who is a member of the Board and who previously was, but at the time of reference is not, an employee of a Company.

(r)    “Non-Qualified Option” means:

(i)    an Option granted under the Plan, designated by the Committee at the time of such grant as a Non-Qualified Option and containing the terms specified herein for Non-Qualified Options; and

(ii)    an Option granted under the Plan and designated by the Committee at the time of grant as an Incentive Stock Option, to the extent such Option fails to satisfy the requirements for an incentive stock option under section 422 of the Code for any reason.

(s)    “Officer” means an officer of the Sponsor (as defined in section 16 of the 1934 Act).

(t)    “Option” means any stock option granted under the Plan and described in Paragraph 3(a)(i) or Paragraph 3(a)(ii).

(u)    “Optionee” means a person to whom an Option has been granted under the Plan, which Option has not been exercised in full and has not expired or terminated.

(v)    “Other Available Shares” means, as of any date, the sum of:

(i)    the total number of Shares owned by an Optionee that were not acquired by such Optionee pursuant to a Comcast Plan or otherwise in connection with the performance of services to the Sponsor or an Affiliate; plus

(ii)    the excess, if any of:

(A)    the total number of Shares owned by an Optionee other than the Shares described in Paragraph 2(v)(i); over

 

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(B)    the sum of:

(1)    the number of such Shares owned by such Optionee for less than six months; plus

(2)    the number of such Shares owned by such Optionee that has, within the preceding six months, been the subject of a withholding certification pursuant to Paragraph 15(b) or any similar withholding certification under any other Comcast Plan; plus

(3)    the number of such Shares owned by such Optionee that has, within the preceding six months, been received in exchange for Shares surrendered as payment, in full or in part, or as to which ownership was attested to as payment, in full or in part, of the exercise price for an option to purchase any securities of the Sponsor or an Affiliate of the Sponsor, under any Comcast Plan, but only to the extent of the number of Shares surrendered or attested to; plus

(4)    the number of such Shares owned by such Optionee as to which evidence of ownership has, within the preceding six months, been provided to the Sponsor in connection with the crediting of “Deferred Stock Units” to such Optionee’s Account under the Comcast Corporation 2002 Deferred Stock Option Plan (as in effect from time to time).

For purposes of this Paragraph 2(v), a Share that is subject to a deferral election pursuant to another Comcast Plan shall not be treated as owned by an Optionee until all conditions to the delivery of such Share have lapsed. The number of Other Available Shares shall be determined separately for Common Stock and for Special Common Stock. For purposes of determining the number of Other Available Shares, the term “Shares” shall also include the securities held by a Participant immediately before the consummation of the AT&T Broadband Transaction that became Common Stock or Special Common Stock as a result of the AT&T Broadband Transaction.

(w)    “Outside Director” means a member of the Board who is an “outside director” within the meaning of section 162(m)(4)(C) of the Code and applicable Treasury Regulations issued thereunder.

(x)    “Person” means an individual, a corporation, a partnership, an association, a trust or any other entity or organization.

(y)    “Plan” means the Comcast Corporation 2002 Stock Option Plan.

(z)    “Share” or “Shares.”

(i)    Except as provided in this Paragraph 2(z), a share or shares Common Stock;

(ii)    For purposes of Paragraphs 2(v), 7(d) and Paragraph 15, the term “Share” or “Shares” also means a share or shares of Special Common Stock.

 

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(iii)    The term “Share” or “Shares” also means such other securities issued by the Sponsor as may be the subject of an adjustment under Paragraph 10, or for purposes of Paragraph 2(v) and Paragraph 15, as may have been the subject of a similar adjustment under similar provisions of a Comcast Plan as now in effect or as may have been in effect before the AT&T Broadband Transaction.

(aa)    “Special Common Stock” means the Sponsor’s Class A Special Common Stock, par value $0.01.

(bb)    “Sponsor” means Comcast Corporation, a Pennsylvania corporation, as successor to Comcast Holdings Corporation (formerly known as Comcast Corporation), including any successor thereto by merger, consolidation, acquisition of all or substantially all the assets thereof, or otherwise.

(cc)    “Subsidiary Companies” means all business entities that, at the time in question, are subsidiaries of the Sponsor within the meaning of section 424(f) of the Code.

(dd)    “Ten Percent Shareholder” means a person who on the Date of Grant owns, either directly or within the meaning of the attribution rules contained in section 424(d) of the Code, stock possessing more than 10% of the total combined voting power of all classes of stock of his employer corporation or of its parent or subsidiary corporations, as defined respectively in sections 424(e) and (f) of the Code, provided that the employer corporation is a Company.

(ee)    “Terminating Event” means any of the following events:

(i)    the liquidation of the Sponsor; or

(ii)    a Change of Control.

(ff)    “Third Party” means any Person other than a Company, together with such Person’s Affiliates, provided that the term “Third Party” shall not include the Sponsor or an Affiliate of the Sponsor.

(gg)    “1933 Act” means the Securities Act of 1933, as amended.

(hh)    “1934 Act” means the Securities Exchange Act of 1934, as amended.

 

  3. Rights To Be Granted

(a)    Types of Options and Other Rights Available for Grant. Rights that may be granted under the Plan are:

(i)    Incentive Stock Options, which give an Optionee who is an employee of a Company the right for a specified time period to purchase a specified number of Shares for a price not less than the Fair Market Value on the Date of Grant.

 

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(ii)    Non-Qualified Options, which give the Optionee the right for a specified time period to purchase a specified number of Shares for a price determined by the Committee; and

(iii)    Cash Rights, which give an Optionee the right for a specified time period, and subject to such conditions, if any, as shall be determined by the Committee and stated in the option document, to receive a cash payment of such amount per Share as shall be determined by the Committee and stated in the option document, in lieu of exercising a Non-Qualified Option.

(b)    Limit on Grant of Options. The maximum number of Shares for which Options may be granted to any single individual in any calendar year, adjusted as provided in Paragraph 10, shall be 10,000,000 Shares.

 

  4. Shares Subject to Plan

Subject to adjustment as provided in Paragraph 10, not more than 105 million Shares in the aggregate (including Shares granted pursuant to the Plan as in effect immediately before the closing of the AT&T Broadband Transaction, and as adjusted to reflect the three-for-two stock split in the form of a 50% stock dividend payable on February 21, 2007 to shareholders of record on February 14, 2007) may be issued pursuant to the Plan upon exercise of Options. Shares delivered pursuant to the exercise of an Option may, at the Sponsor’s option, be either treasury Shares or Shares originally issued for such purpose. If (a) an Option covering Shares terminates or expires without having been exercised in full, (b) the Sponsor withholds Shares to satisfy its minimum tax withholding requirements as provided in Paragraph 15(b) and Paragraph 15(c) or (c) effective February 28, 2007, an Option covering Shares is exercised pursuant to the cashless exercise provisions of Paragraph 7(d)(iv), other Options may be granted covering the Shares as to which the Option terminated or expired, covering the Shares so withheld to satisfy the Sponsor’s minimum tax withholding requirements or covering the Shares that were subject to such Option but not delivered because of the application of such cashless exercise provisions, as applicable.

 

  5. Administration of Plan

(a)    Committee. The Plan shall be administered by the Compensation Committee of the Board or any other committee or subcommittee designated by the Board, provided that the committee administering the Plan is composed of two or more non-employee members of the Board, each of whom is an Outside Director.

(b)    Delegation of Authority.

(i)    Named Executive Officers and Section 16(b) Officers. All authority with respect to the grant, amendment, interpretation and administration of Options with respect to any employee or officer of a Company who is either (x) a Named Executive Officer (i.e., an officer who is required to be listed in the Company’s Proxy Statement Compensation Table) or (y) is subject to the short-swing profit recapture rules of section 16(b) of the 1934 Act, is reserved to the Committee.

 

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(ii)    Senior Officers and Highly Compensated Employees. The Committee may delegate to a committee consisting of the Chairman of the Committee and one or more officers of the Company designated by the Committee, discretion under the Plan to grant, amend, interpret and administer Options with respect to any employee or officer of a Company who (x) holds a position with Comcast Corporation of Senior Vice President or a position of higher rank than Senior Vice President or (y) has a base salary of $500,000 or more, provided that an Option granted pursuant to this delegated authority may not have an exercise price per Share that is less than the Fair Market Value on the Date of Grant.

(iii)    Other Employees. The Committee may delegate to an officer of the Company, or a committee of two or more officers of the Company, discretion under the Plan to grant, amend, interpret and administer Options with respect to any employee or officer of a Company other than an employee or officer described in Paragraph 5(b)(i) or Paragraph 5(b)(ii), provided that an Option granted pursuant to this delegated authority may not have an exercise price per Share that is less than the Fair Market Value on the Date of Grant.

(iv)    Termination of Delegation of Authority. Delegation of authority as provided under this Paragraph 5(b) shall continue in effect until the earliest of:

(x)    such time as the Committee shall, in its discretion, revoke such delegation of authority;

(y)    in the case of delegation under Paragraph 5(b)(ii), the delegate shall cease to serve as Chairman of the Committee or serve as an employee of the Company for any reason, as the case may be and in the case of delegation under Paragraph 5(b)(iii), the delegate shall cease to serve as an employee of the Company for any reason; or

(z)    the delegate shall notify the Committee that he declines to continue to exercise such authority.

(c)    Meetings. The Committee shall hold meetings at such times and places as it may determine. Acts approved at a meeting by a majority of the members of the Committee or acts approved by the unanimous consent of the members of the Committee shall be the valid acts of the Committee.

(d)    Exculpation. No member of the Committee shall be personally liable for monetary damages for any action taken or any failure to take any action in connection with the administration of the Plan or the granting of Options thereunder unless (i) the member of the Committee has breached or failed to perform the duties of his office, and (ii) the breach or failure to perform constitutes self-dealing, willful misconduct or recklessness; provided, however, that the provisions of this Paragraph 5(d) shall not apply to the responsibility or liability of a member of the Committee pursuant to any criminal statute.

(e)    Indemnification. Service on the Committee shall constitute service as a member of the Board. Each member of the Committee shall be entitled without further act on his part to indemnity from the Sponsor to the fullest extent provided by applicable law and the Sponsor’s By-laws in connection with or arising out of any actions, suit or proceeding with

 

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respect to the administration of the Plan or the granting of Options thereunder in which he may be involved by reasons of his being or having been a member of the Committee, whether or not he continues to be such member of the Committee at the time of the action, suit or proceeding.

 

  6. Eligibility

(a)    Eligible individuals to whom Options may be granted shall be employees, officers or directors of a Company who are selected by the Committee for the grant of Options. Eligible individuals to whom Cash Rights may be granted shall be individuals who are employees of a Company on the Date of Grant other than Officers. The terms and conditions of Options granted to individuals other than Non-Employee Directors shall be determined by the Committee, subject to Paragraph 7. The terms and conditions of Cash Rights shall be determined by the Committee, subject to Paragraph 7. The terms and conditions of Options granted to Non-Employee Directors shall be determined by the Board, subject to Paragraph 7.

(b)    An Incentive Stock Option shall not be granted to a Ten Percent Shareholder except on such terms concerning the option price and term as are provided in Paragraph 7(b) and 7(g) with respect to such a person. An Option designated as Incentive Stock Option granted to a Ten Percent Shareholder but which does not comply with the requirements of the preceding sentence shall be treated as a Non-Qualified Option. An Option designated as an Incentive Stock Option shall be treated as a Non-Qualified Option if the Optionee is not an employee of a Company on the Date of Grant.

 

  7. Option Documents and Terms—In General

All Options granted to Optionees shall be evidenced by option documents. The terms of each such option document for any Optionee who is an employee of a Company shall be determined from time to time by the Committee, and the terms of each such option document for any Optionee who is a Non-Employee Director shall be determined from time to time by the Board, consistent, however, with the following:

(a)    Time of Grant. All Options shall be granted on or before February 25, 2013.

(b)    Option Price. Except as otherwise provided in Section 13(b), the option price per Share with respect to any Option shall be determined by the Committee, provided, however, that with respect to any Incentive Stock Options, the option price per share shall not be less than 100% of the Fair Market Value of such Share on the Date of Grant, and provided further that with respect to any Incentive Stock Options granted to a Ten Percent Shareholder, the option price per Share shall not be less than 110% of the Fair Market Value of such Share on the Date of Grant.

(c)    Restrictions on Transferability. No Option granted under this Paragraph 7 shall be transferable otherwise than by will or the laws of descent and distribution and, during the lifetime of the Optionee, shall be exercisable only by him or for his benefit by his attorney-in-fact or guardian; provided that the Committee may, in its discretion, at the time of grant of a Non-Qualified Option or by amendment of an option document for an Incentive Stock Option or a Non-Qualified Option, provide that Options granted to or held by an Optionee may

 

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be transferred, in whole or in part, to one or more transferees and exercised by any such transferee; provided further that (i) any such transfer is without consideration and (ii) each transferee is a member of such Optionee’s Immediate Family; and provided further that any Incentive Stock Option granted pursuant to an option document which is amended to permit transfers during the lifetime of the Optionee shall, upon the effectiveness of such amendment, be treated thereafter as a Non-Qualified Option. No transfer of an Option shall be effective unless the Committee is notified of the terms and conditions of the transfer and the Committee determines that the transfer complies with the requirements for transfers of Options under the Plan and the option document. Any person to whom an Option has been transferred may exercise any Options only in accordance with the provisions of Paragraph 7(g) and this Paragraph 7(c).

(d)    Payment Upon Exercise of Options. With respect to Options granted on and after February 28, 2007, full payment for Shares purchased upon the exercise of an Option shall be made pursuant to one or more of the following methods as determined by the Committee and set forth in the Option document:

(i)    In cash;

(ii)    By certified check payable to the order of the Sponsor;

(iii)    By surrendering or attesting to ownership of Shares with an aggregate Fair Market Value equal to the aggregate option price, provided, however, with respect to Options granted before February 28, 2007, that ownership of Shares may be attested to and Shares may be surrendered in satisfaction of the option price only if the Optionee certifies in writing to the Sponsor that the Optionee owns a number of Other Available Shares as of the date the Option is exercised that is at least equal to the number of Shares as to which ownership has been attested, or the number of Shares to be surrendered in satisfaction of the Option Price, as applicable; provided further, however, that the option price may not be paid in Shares if the Committee determines that such method of payment would result in liability under section 16(b) of the 1934 Act to an Optionee. Except as otherwise provided by the Committee, if payment is made in whole or in part by surrendering Shares, the Optionee shall deliver to the Sponsor certificates registered in the name of such Optionee representing Shares legally and beneficially owned by such Optionee, free of all liens, claims and encumbrances of every kind and having a Fair Market Value on the date of delivery that is equal to or greater than the aggregate option price for the Option Shares subject to payment by the surrender of Shares, accompanied by stock powers duly endorsed in blank by the record holder of the Shares represented by such certificates; and if payment is made in whole or in part by attestation of ownership, the Optionee shall attest to ownership of Shares representing Shares legally and beneficially owned by such Optionee, free of all liens, claims and encumbrances of every kind and having a Fair Market Value on the date of attestation that is equal to or greater than the aggregate option price for the Option Shares subject to payment by attestation of Share ownership. The Committee may impose such limitations and prohibitions on attestation or ownership of Shares and the use of Shares to exercise an Option as it deems appropriate; or

(iv)    Via cashless exercise, such that subject to the other terms and conditions of the Plan, following the date of exercise, the Company shall deliver to the

 

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Optionee Shares having a Fair Market Value, as of the date of exercise, equal to the excess, if any, of (A) the Fair Market Value of such Shares on the date of exercise of the Option over (B) the sum of (I) the aggregate Option Price for such Shares, plus (II) the applicable tax withholding amounts (as determined pursuant to Paragraph 15) for such exercise; provided that in connection with such cashless exercise that would not result in the issuance of a whole number of Shares, the Company shall withhold cash that would otherwise be payable to the Optionee from its regular payroll or the Optionee shall deliver cash or a certified check payable to the order of the Company for the balance of the option price for a whole Share to the extent necessary to avoid the issuance of a fractional Share or the payment of cash by the Company (as provided in Paragraph 7(e)).

Except as authorized by the Committee and agreed to by an Optionee, with respect to Options granted before February 28, 2007, the payment methods described in Paragraph 7(d)(i), (ii) and (iii) shall, to the extent so provided in an Option document, be the exclusive payment methods, provided that the Committee may, in its sole discretion, and subject to the Optionee’s written consent on a form provided by the Committee, authorize Option documents covering Options granted before February 28, 2007 to be amended to provide that the payment method described in Paragraph 7(d)(iv) shall be an additional or the exclusive payment method.

(e)    Issuance of Certificate Upon Exercise of Options; Payment of Cash. For purposes of the Plan, the Sponsor may satisfy its obligation to deliver Shares following the exercise of Options either by (i) delivery of a physical certificate for Shares issuable on the exercise of Options or (ii) arranging for the recording of Optionee’s ownership of Shares issuable on the exercise of Options on a book entry recordkeeping system maintained on behalf of the Sponsor. Only whole Shares shall be issuable upon exercise of Options. No fractional Shares shall be issued. Any right to a fractional Share shall be satisfied in cash. Following the exercise of an Option and the satisfaction of the conditions of Paragraph 9, the Sponsor shall deliver to the Optionee the number of whole Shares issuable on the exercise of an Option and a check for the Fair Market Value on the date of exercise of any fractional Share to which the Optionee is entitled.

(f)    Termination of Employment. For purposes of the Plan, a transfer of an employee between two employers, each of which is a Company, shall not be deemed a termination of employment. For purposes of Paragraph 7(g), an Optionee’s termination of employment shall be deemed to occur on the date an Optionee ceases to have a regular obligation to perform services for a Company, without regard to whether (i) the Optionee continues on the Company’s payroll for regular, severance or other pay or (ii) the Optionee continues to participate in one or more health and welfare plans maintained by the Company on the same basis as active employees. Whether an Optionee ceases to have a regular obligation to perform services for a Company shall be determined by the Committee in its sole discretion. Notwithstanding the foregoing, if an Optionee is a party to an employment agreement or severance agreement with a Company which establishes the effective date of such Optionee’s termination of employment for purposes of this Paragraph 7(f), that date shall apply. For an Optionee who is a Non-Employee Director, all references to any termination of employment shall be treated as a termination of service to the Sponsor as a Non-Employee Director.

 

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(g)    Periods of Exercise of Options. An Option shall be exercisable in whole or in part at such time or times as may be determined by the Committee and stated in the option document, provided, however, that if the grant of an Option would be subject to section 16(b) of the 1934 Act, unless the requirements for exemption therefrom in Rule 16b-3(c)(1), under such Act, or any successor provision, are met, the option document for such Option shall provide that such Option is not exercisable until not less than six months have elapsed from the Date of Grant. Except as otherwise provided by the Committee in its discretion, no Option shall first become exercisable following an Optionee’s termination of employment for any reason; provided further, that:

(i)    In the event that an Optionee terminates employment with the Company for any reason other than death or Cause, any Option held by such Optionee and which is then exercisable shall be exercisable for a period of 90 days following the date the Optionee terminates employment with the Company (unless a longer period is established by the Committee); provided, however, that if such termination of employment with the Company is due to the Disability of the Optionee, he shall have the right to exercise those of his Options which are then exercisable for a period of one year following such termination of employment (unless a longer period is established by the Committee); provided, however, that in no event shall an Incentive Stock Option be exercisable after five years from the Date of Grant in the case of a grant to a Ten Percent Shareholder, nor shall any other Option be exercisable after ten years from the Date of Grant.

(ii)    In the event that an Optionee terminates employment with the Company by reason of his death, any Option held at death by such Optionee which is then exercisable shall be exercisable for a period of one year from the date of death (unless a longer period is established by the Committee) by the person to whom the rights of the Optionee shall have passed by will or by the laws of descent and distribution; provided, however, that in no event shall an Incentive Stock Option be exercisable after five years from the Date of Grant in the case of a grant to a Ten Percent Shareholder, nor shall any other Option be exercisable after ten years from the Date of Grant.

(iii)    In the event that an Optionee’s employment with the Company is terminated for Cause, each unexercised Option held by such Optionee shall terminate and cease to be exercisable; provided further, that in such event, in addition to immediate termination of the Option, the Optionee, upon a determination by the Committee shall automatically forfeit all Shares otherwise subject to delivery upon exercise of an Option but for which the Sponsor has not yet delivered the Share certificates, upon refund by the Sponsor of the option price.

(h)    Date of Exercise. The date of exercise of an Option shall be the date on which written notice of exercise, addressed to the Sponsor at its main office to the attention of its Secretary, is hand delivered, telecopied or mailed first class postage prepaid; provided, however, that the Sponsor shall not be obligated to deliver any certificates for Shares pursuant to the exercise of an Option until the Optionee shall have made payment in full of the option price for such Shares. Each such exercise shall be irrevocable when given. Each notice of exercise must (i) specify the Incentive Stock Option, Non-Qualified Option or combination thereof being exercised; and (ii) if applicable, include a statement of preference (which shall

 

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binding on and irrevocable by the Optionee but shall not be binding on the Committee) as to the manner in which payment to the Sponsor shall be made. Each notice of exercise shall also comply with the requirements of Paragraph 15.

(i)    Cash Rights. The Committee may, in its sole discretion, provide in an option document for an eligible Optionee that Cash Rights shall be attached to Non-Qualified Options granted under the Plan. All Cash Rights that are attached to Non-Qualified Options shall be subject to the following terms:

(i)    Such Cash Right shall expire no later than the Non-Qualified Option to which it is attached.

(ii)    Such Cash Right shall provide for the cash payment of such amount per Share as shall be determined by the Committee and stated in the option document.

(iii)    Such Cash Right shall be subject to the same restrictions on transferability as the Non-Qualified Option to which it is attached.

(iv)    Such Cash Right shall be exercisable only when such conditions to exercise as shall be determined by the Committee and stated in the option document, if any, have been satisfied.

(v)    Such Cash Right shall expire upon the exercise of the Non-Qualified Option to which it is attached.

(vi)    Upon exercise of a Cash Right that is attached to a Non-Qualified Option, the Option to which the Cash Right is attached shall expire.

 

  8. Limitation on Exercise of Incentive Stock Options

The aggregate Fair Market Value (determined as of the time Options are granted) of the Shares with respect to which Incentive Stock Options may first become exercisable by an Optionee in any one calendar year under the Plan and any other plan of the Company shall not exceed $100,000. The limitations imposed by this Paragraph 8 shall apply only to Incentive Stock Options granted under the Plan, and not to any other options or stock appreciation rights. In the event an individual receives an Option intended to be an Incentive Stock Option which is subsequently determined to have exceeded the limitation set forth above, or if an individual receives Options that first become exercisable in a calendar year (whether pursuant to the terms of an option document, acceleration of exercisability or other change in the terms and conditions of exercise or any other reason) that have an aggregate Fair Market Value (determined as of the time the Options are granted) that exceeds the limitations set forth above, the Options in excess of the limitation shall be treated as Non-Qualified Options.

 

  9. Rights as Shareholders

An Optionee shall not have any right as a shareholder with respect to any Shares subject to his Options until the Option shall have been exercised in accordance with the terms of the Plan and the option document and the Optionee shall have paid the full purchase price for the

 

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number of Shares in respect of which the Option was exercised and the Optionee shall have made arrangements acceptable to the Sponsor for the payment of applicable taxes consistent with Paragraph 15.

 

  10. Changes in Capitalization

In the event that Shares are changed into or exchanged for a different number or kind of shares of stock or other securities of the Sponsor, whether through merger, consolidation, reorganization, recapitalization, stock dividend, stock split-up or other substitution of securities of the Sponsor, the Board shall make appropriate equitable anti-dilution adjustments to the number and class of shares of stock available for issuance under the Plan, and subject to outstanding Options, and to the option prices and the amounts payable pursuant to any Cash Rights. Any reference to the option price in the Plan and in option documents shall be a reference to the option price as so adjusted. Any reference to the term “Shares” in the Plan and in option documents shall be a reference to the appropriate number and class of shares of stock available for issuance under the Plan, as adjusted pursuant to this Paragraph 10. The Board’s adjustment shall be effective and binding for all purposes of this Plan.

 

  11. Terminating Events

(a)    The Sponsor shall give Optionees at least thirty (30) days’ notice (or, if not practicable, such shorter notice as may be reasonably practicable) prior to the anticipated date of the consummation of a Terminating Event. Upon receipt of such notice, and for a period of ten (10) days thereafter (or such shorter period as the Board shall reasonably determine and so notify the Optionees), each Optionee shall be permitted to exercise the Option to the extent the Option is then exercisable; provided that, the Sponsor may, by similar notice, require the Optionee to exercise the Option, to the extent the Option is then exercisable, or to forfeit the Option (or portion thereof, as applicable). The Committee may, in its discretion, provide that upon the Optionee’s receipt of the notice of a Terminating Event under this Paragraph 11(a), the entire number of Shares covered by Options shall become immediately exercisable.

(b)    Notwithstanding Paragraph 11(a), in the event the Terminating Event is not consummated, the Option shall be deemed not to have been exercised and shall be exercisable thereafter to the extent it would have been exercisable if no such notice had been given.

 

  12. Interpretation

The Committee shall have the power to interpret the Plan and to make and amend rules for putting it into effect and administering it. It is intended that the Incentive Stock Options granted under the Plan shall constitute incentive stock options within the meaning of section 422 of the Code, and that Shares transferred pursuant to the exercise of Non-Qualified Options shall constitute property subject to federal income tax pursuant to the provisions of section 83 of the Code. The provisions of the Plan shall be interpreted and applied insofar as possible to carry out such intent.

 

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  13. Amendments

(a)    In General. The Board or the Committee may amend the Plan from time to time in such manner as it may deem advisable. Nevertheless, neither the Board nor the Committee may, without obtaining approval within twelve months before or after such action by such vote of the Sponsor’s shareholders as may be required by Pennsylvania law for any action requiring shareholder approval, or by a majority of votes cast at a duly held shareholders’ meeting at which a majority of all voting stock is present and voting on such amendment, either in person or in proxy (but not, in any event, less than the vote required pursuant to Rule 16b-3(b) under the 1934 Act) change the class of individuals eligible to receive an Incentive Stock Option, extend the expiration date of the Plan, decrease the minimum option price of an Incentive Stock Option granted under the Plan or increase the maximum number of shares as to which Options may be granted, except as provided in Paragraph 10 hereof.

(b)    Repricing of Options. Notwithstanding any provision in the Plan to the contrary, neither the Board nor the Committee may, without obtaining prior approval by the Sponsor’s shareholders, reduce the option price of any issued and outstanding Option granted under the Plan at any time during the term of such option (other than by adjustment pursuant to Paragraph 10 relating to Changes in Capitalization). This Paragraph 13(b) may not be repealed, modified or amended without the prior approval of the Sponsor’s shareholders.

 

  14. Securities Law

(a)    In General. The Committee shall have the power to make each grant under the Plan subject to such conditions as it deems necessary or appropriate to comply with the then-existing requirements of the 1933 Act or the 1934 Act, including Rule 16b-3 (or any similar rule) of the Securities and Exchange Commission.

(b)    Acknowledgment of Securities Law Restrictions on Exercise. To the extent required by the Committee, unless the Shares subject to the Option are covered by a then current registration statement or a Notification under Regulation A under the 1933 Act, each notice of exercise of an Option shall contain the Optionee’s acknowledgment in form and substance satisfactory to the Committee that:

(i)    the Shares subject to the Option are being purchased for investment and not for distribution or resale (other than a distribution or resale which, in the opinion of counsel satisfactory to the Sponsor, may be made without violating the registration provisions of the Act);

(ii)    the Optionee has been advised and understands that (A) the Shares subject to the Option have not been registered under the 1933 Act and are “restricted securities” within the meaning of Rule 144 under the 1933 Act and are subject to restrictions on transfer and (B) the Sponsor is under no obligation to register the Shares subject to the Option under the 1933 Act or to take any action which would make available to the Optionee any exemption from such registration;

(iii)    the certificate evidencing the Shares may bear a restrictive legend; and

 

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(iv)    the Shares subject to the Option may not be transferred without compliance with all applicable federal and state securities laws.

(c)    Delay of Exercise Pending Registration of Securities. Notwithstanding any provision in the Plan or an option document to the contrary, if the Committee determines, in its sole discretion, that issuance of Shares pursuant to the exercise of an Option should be delayed pending registration or qualification under federal or state securities laws or the receipt of a legal opinion that an appropriate exemption from the application of federal or state securities laws is available, the Committee may defer exercise of any Option until such Shares are appropriately registered or qualified or an appropriate legal opinion has been received, as applicable.

 

  15. Withholding of Taxes on Exercise of Option

(a)    Whenever the Company proposes or is required to deliver or transfer Shares in connection with the exercise of an Option, the Company shall have the right to (i) require the recipient to remit to the Sponsor an amount sufficient to satisfy any federal, state and local withholding tax requirements prior to the delivery or transfer of any certificate or certificates for such Shares or (ii) take any action whatever that it deems necessary to protect its interests with respect to tax liabilities. The Sponsor’s obligation to make any delivery or transfer of Shares on the exercise of an Option shall be conditioned on the recipient’s compliance, to the Sponsor’s satisfaction, with any withholding requirement. In addition, if the Committee grants Options or amends option documents to permit Options to be transferred during the life of the Optionee, the Committee may include in such option documents such provisions as it determines are necessary or appropriate to permit the Company to deduct compensation expenses recognized upon exercise of such Options for federal or state income tax purposes.

(b)    Except as otherwise provided in this Paragraph 15(b), any tax liabilities incurred in connection with the exercise of an Option under the Plan other than an Incentive Stock Option shall be satisfied by the Sponsor’s withholding a portion of the Shares underlying the Option exercised having a Fair Market Value approximately equal to the minimum amount of taxes required to be withheld by the Sponsor under applicable law, unless otherwise determined by the Committee with respect to any Optionee. Notwithstanding the foregoing, the Committee may permit an Optionee to elect one or both of the following: (i) to have taxes withheld in excess of the minimum amount required to be withheld by the Sponsor under applicable law; provided that the Optionee certifies in writing to the Sponsor that the Optionee owns a number of Other Available Shares having a Fair Market Value that is at least equal to the Fair Market Value of Option Shares to be withheld by the Company for the then-current exercise on account of withheld taxes in excess of such minimum amount, and (ii) to pay to the Sponsor in cash all or a portion of the taxes to be withheld upon the exercise of an Option. In all cases, the Shares so withheld by the Company shall have a Fair Market Value that does not exceed the amount of taxes to be withheld minus the cash payment, if any, made by the Optionee. Any election pursuant to this Paragraph 15(b) must be in writing made prior to the date specified by the Committee, and in any event prior to the date the amount of tax to be withheld or paid is determined. An election pursuant to this Paragraph 15(b) may be made only by an Optionee or, in the event of the Optionee’s death, by the Optionee’s legal representative. Shares withheld pursuant to this Paragraph 15(b) up to the minimum amount of taxes required to

 

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be withheld by the Sponsor under applicable law shall not be treated as having been issued under the Plan and shall continue to be available for subsequent grants under the Plan. Shares withheld pursuant to this Paragraph 15(b) in excess of the number of Shares described in the immediately preceding sentence shall not be available for subsequent grants under the Plan. The Committee may add such other requirements and limitations regarding elections pursuant to this Paragraph 15(b) as it deems appropriate.

(c) Except as otherwise provided in this Paragraph 15(c), any tax liabilities incurred in connection with the exercise of an Incentive Stock Option under the Plan shall be satisfied by the Optionee’s payment to the Sponsor in cash all of the taxes to be withheld upon exercise of the Incentive Stock Option. Notwithstanding the foregoing, the Committee may permit an Optionee to elect to have the Sponsor withhold a portion of the Shares underlying the Incentive Stock Option exercised having a Fair Market Value approximately equal to the minimum amount of taxes required to be withheld by the Sponsor under applicable law. Any election pursuant to this Paragraph 15(c) must be in writing made prior to the date specified by the Committee, and in any event prior to the date the amount of tax to be withheld or paid is determined. An election pursuant to this Paragraph 15(c) may be made only by an Optionee or, in the event of the Optionee’s death, by the Optionee’s legal representative. Shares withheld pursuant to this Paragraph 15(c) up to the minimum amount of taxes required to be withheld by the Sponsor under applicable law shall not be treated as having been issued under the Plan and shall continue to be available for subsequent grants under the Plan. Shares withheld pursuant to this Paragraph 15(c) in excess of the number of Shares described in the immediately preceding sentence shall not be available for subsequent grants under the Plan. The Committee may add such other requirements and limitations regarding elections pursuant to this Paragraph 15(c) as it deems appropriate.

 

  16. Effective Date and Term of Plan

This amendment and restatement of the Plan shall be effective February 28, 2007. The Plan shall expire on February 25, 2013, unless sooner terminated by the Board.

 

  17. General

Each Option shall be evidenced by a written instrument containing such terms and conditions not inconsistent with the Plan as the Committee may determine. The issuance of Shares on the exercise of an Option shall be subject to all of the applicable requirements of the corporation law of the Sponsor’s state of incorporation and other applicable laws, including federal or state securities laws, and all Shares issued under the Plan shall be subject to the terms

 

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and restrictions contained in the Articles of Incorporation and By-Laws of the Sponsor, as amended from time to time.

Executed as of the 28th day of February, 2007.

 

     COMCAST CORPORATION

BY:

   /s/ DAVID L. COHEN
    
   Name: David L. Cohen

ATTEST:

   /s/ ARTHUR R. BLOCK
    
   Name: Arthur R. Block

 

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Amendment to 2002 Restricted Stock Plan dated as of February 28, 2007

Exhibit 10.3

COMCAST CORPORATION

2002 RESTRICTED STOCK PLAN

(As Amended And Restated, Effective February 28, 2007)

 

  1. Background and Purpose

 

  (a) Amendment and Restatement of Plan. COMCAST CORPORATION, a Pennsylvania corporation, hereby amends and restates the Comcast Corporation 2002 Restricted Stock Plan (the “Plan”), effective February 28, 2007. The purpose of the Plan is to promote the ability of Comcast Corporation to recruit and retain employees and enhance the growth and profitability of Comcast Corporation by providing the incentive of long-term awards for continued employment and the attainment of performance objectives.

 

  (b) Purpose of the Amendment; Credits Affected. The Plan has been amended and restated, effective December 14, 2005, to revise the rules relating to the delegation of authority by the Committee. The Plan was previously amended and restated, effective January 1, 2005 in order (i) to preserve the favorable tax treatment available to amounts deferred pursuant to the Plan before January 1, 2005 and the earnings credited in respect of such amounts (each a “Grandfathered Amount”) in light of the American Jobs Creation Act of 2004, IRS Notice 2005-1, and the regulations issued by the Department of the Treasury thereunder (collectively, the “AJCA”), and (ii) with respect to all other amounts eligible to be deferred under the Plan, to comply with the requirements of the AJCA. Except as provided in Paragraph 8(f)(iii) of the Plan, Grandfathered Amounts will continue to be subject to the terms and conditions of the Plan as in effect prior to the Amendment Date. All amounts eligible to be deferred under the Plan other than Grandfathered Amounts will be subject to the terms of this amendment and restatement of the Plan and the AJCA.

 

  (c) Reservation of Right to Amend to Comply with AJCA. The Board and the Committee reserve the right to amend the Plan, either retroactively or prospectively, in whatever respect is required to achieve and maintain compliance with the requirements of the AJCA.

 

  (d) Deferral Provisions of Plan Unfunded and Limited to Select Group of Management or Highly Compensated Employees. Deferral Eligible Grantees and Non-Employee Directors may elect to defer the receipt of Restricted Stock and Restricted Stock Units as provided in Article VIII. The deferral provisions of Article VIII and the other provisions of the Plan relating to the deferral of Restricted Stock and Restricted Stock Units are unfunded and maintained primarily for the purpose of providing a select group of management or highly compensated employees the opportunity to defer the receipt of compensation otherwise payable to such eligible employees in accordance with the terms of the Plan.


  2. Definitions

 

  (a) Acceleration Election” means a written election on a form provided by the Committee, pursuant to which a Deceased Grantee’s Successor-in-Interest or a Disabled Grantee elects to accelerate the distribution date of Shares issuable with respect to Restricted Stock and/or Restricted Stock Units.

 

  (b) Account” means unfunded bookkeeping accounts established pursuant to Paragraph 8(e) and maintained by the Committee in the names of the respective Grantees (i) to which Deferred Stock Units are deemed credited and (ii) to which an amount equal to the Fair Market Value of Deferred Stock Units with respect to which a Diversification Election has been made and interest thereon are deemed credited, reduced by distributions in accordance with the Plan.

 

  (c) Active Grantee” means each Grantee who is actively employed by a Participating Company.

 

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

 

  (e) AJCA” means the American Jobs Creation Act of 2004, IRS Notice 2005-1 and announcements, notices, revenue rulings and regulations issued under the American Jobs Creation Act of 2004.

 

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

 

  (g) Applicable Interest Rate” means:

 

 

(i)

Except as otherwise provided in Paragraph 2(g)(ii), the Applicable Interest Rate means the interest rate that, when compounded annually pursuant to rules established by the Committee from time to time, is mathematically equivalent to 8% per annum, compounded annually, or such other interest rate established by the Committee from time to time. The effective date of any reduction in the Applicable Interest Rate shall not precede the later of: (A) the 30th day following the date of the Committee’s action to establish a reduced rate; or (B) the lapse of 24 full calendar months from the date of the most recent adjustment of the Applicable Interest Rate by the Committee.

 

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  (ii) Effective for the period extending from a Grantee’s employment termination date to the date the Grantee’s Account is distributed in full, the Committee, in its sole and absolute discretion, may designate the term “Applicable Interest Rate” for such Grantee’s Account to mean the lesser of: (A) the rate in effect under Paragraph 2(g)(i) or (B) the interest rate that, when compounded annually pursuant to rules established by the Committee from time to time, is mathematically equivalent to the Prime Rate plus one percent, compounded annually as of the last day of the calendar year. Notwithstanding the foregoing, the Committee may delegate its authority to determine the Applicable Interest Rate under this Paragraph 2(g)(ii) to an officer of the Company or committee of two or more officers of the Company.

 

  (h) AT&T Broadband Transaction” means the acquisition of AT&T Broadband Corp. (now known as Comcast Cable Communications Holdings, Inc.) by the Company.

 

  (i) Award” means an award of Restricted Stock or Restricted Stock Units granted under the Plan.

 

  (j) Board” means the Board of Directors of the Company.

 

  (k) Change of Control” means:

 

  (i) For all purposes of the Plan other than Article VIII, any transaction or series of transactions as a result of which any Person who was a Third Party immediately before such transaction or series of transactions owns then-outstanding securities of the Company such that such Person has the ability to direct the management of the Company, as determined by the Board in its discretion. The Board may also determine that a Change of Control shall occur upon the completion of one or more proposed transactions. The Board’s determination shall be final and binding.

 

  (ii) For purposes of Article VIII, any transaction or series of transactions that constitutes:

 

  (1) a change in the ownership of the Company, within the meaning of Q&A 12 of IRS Notice 2005-1;

 

  (2) a change in effective control of the Company, within the meaning of Q&A 13 of IRS Notice 2005-1; or

 

  (3) a change in the ownership of a substantial portion of the assets of the Company, within the meaning of Q&A 14 of IRS Notice 2005-1.

 

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  (l) Code” means the Internal Revenue Code of 1986, as amended.

 

  (m) Comcast Plan” means any restricted stock, restricted stock unit, stock bonus, stock option or other compensation plan, program or arrangement established or maintained by the Company or an Affiliate, including but not limited to this Plan, the Comcast Corporation 2003 Stock Option Plan, the Comcast Corporation 2002 Stock Option Plan, the Comcast Corporation 1996 Stock Option Plan, Comcast Corporation 1987 Stock Option Plan and the Comcast Corporation 2002 Deferred Stock Option Plan.

 

  (n) Committee” means the Compensation Committee of the Board.

 

  (o) Common Stock” means Class A Common Stock, par value $0.01, of the Company.

 

  (p) Company” means Comcast Corporation, a Pennsylvania corporation, as successor to Comcast Holdings Corporation (formerly known as Comcast Corporation), including any successor thereto by merger, consolidation, acquisition of all or substantially all the assets thereof, or otherwise.

 

  (q) Company Stock Fund” means a hypothetical investment fund pursuant to which Deferred Stock Units are credited with respect to a portion of an Award subject to an Election, and thereafter until (i) the date of distribution or (ii) the effective date of a Diversification Election, to the extent a Diversification Election applies to such Deferred Stock Units, as applicable. The portion of a Grantee’s Account deemed invested in the Company Stock Fund shall be treated as if such portion of the Account were invested in hypothetical shares of Common Stock or Special Common Stock otherwise deliverable as Shares upon the Vesting Date associated with Restricted Stock or Restricted Stock Units, and all dividends and other distributions paid with respect to Common Stock or Special Common Stock were held uninvested in cash and credited with interest at the Applicable Interest Rate as of the next succeeding December 31 (to the extent the Account continues to be deemed credited in the form of Deferred Stock Units through such December 31).

 

  (r) Date of Grant” means the date on which an Award is granted.

 

  (s) Deceased Grantee” means:

 

  (i) A Grantee whose employment by a Participating Company is terminated by death; or

 

  (ii) A Grantee who dies following termination of employment by a Participating Company.

 

  (t) Deferral Eligible Employee” means:

 

  (i) An Eligible Employee whose Annual Rate of Pay is $200,000 or more as of both: (i) the date on which an Initial Election is filed with the Committee; and (ii) the first day of the calendar year in which such Initial Election filed.

 

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  (ii) An Eligible Employee whose Annual Rate of Pay is $125,000 as of each of: (A) June 30, 2002; (B) the date on which an Initial Election is filed with the Committee; and (C) the first day of each calendar year beginning after December 31, 2002.

 

  (iii) Each New Key Employee.

 

  (iv) Each other employee of a Participating Company who is designated by the Committee, in its sole and absolute discretion, as a Deferral Eligible Employee.

 

  (u) Deferred Stock Units” means the number of hypothetical Shares subject to an Election.

 

  (v) Disability” means:

 

  (i) An individual’s inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or

 

  (ii) Circumstances under which, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, an individual is receiving income replacement benefits for a period of not less than three months under an accident or health plan covering employees of the individual’s employer.

 

  (w) Disabled Grantee” means:

 

  (i) A Grantee whose employment by a Participating Company is terminated by reason of Disability;

 

  (ii) The duly-appointed legal guardian of an individual described in Paragraph 2(w)(i) acting on behalf of such individual.

 

  (x) Diversification Election” means a Grantee’s election to have a portion of the Grantee’s Account credited in the form of Deferred Stock Units and attributable to any grant of Restricted Stock or Restricted Stock Units deemed liquidated and credited thereafter under the Income Fund, as provided in Paragraph 8(h).

 

  (y) Election” means, as applicable, an Initial Election, a Subsequent Election, or an Acceleration Election.

 

  (z) Eligible Employee” means an employee of a Participating Company, as determined by the Committee.

 

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  (aa) Fair Market Value” means:

 

  (i) If Shares are listed on a stock exchange, Fair Market Value shall be determined based on the last reported sale price of a Share on the principal exchange on which Shares are listed on the date of determination, or if such date is not a trading day, the next trading date.

 

  (ii) If Shares are not so listed, but trades of Shares are reported on the Nasdaq National Market, Fair Market Value shall be determined based on the last quoted sale price of a Share on the Nasdaq National Market on the date of determination, or if such date is not a trading day, the next trading date.

 

  (iii) If Shares are not so listed nor trades of Shares so reported, Fair Market Value shall be determined by the Committee in good faith.

 

  (bb) Grandfathered Amount” means Deferred Stock Units described in Paragraph 1(b).

 

  (cc) Grantee” means an Eligible Employee or Non-Employee Director who is granted an Award.

 

  (dd)

Hardship” means a Grantee’s severe financial hardship due to an unforeseeable emergency resulting from a sudden and unexpected illness or accident of the Grantee, or, a sudden and unexpected illness or accident of a dependent (as defined by section 152(a) of the Code) of the Grantee, or loss of the Grantee’s property due to casualty, or other similar and extraordinary unforeseeable circumstances arising as a result of events beyond the control of the Grantee. A need to send the Grantee’s child to college or a desire to purchase a home is not an unforeseeable emergency. No Hardship shall be deemed to exist to the extent that the financial hardship is or may be relieved (a) through reimbursement or compensation by insurance or otherwise, (b) by borrowing from commercial sources on reasonable commercial terms to the extent that this borrowing would not itself cause a severe financial hardship, (c) by cessation of deferrals under the Plan, or (d) by liquidation of the Grantee’s other assets (including assets of the Grantee’s spouse and minor children that are reasonably available to the Grantee) to the extent that this liquidation would not itself cause severe financial hardship. For the purposes of the preceding sentence, the Grantee’s resources shall be deemed to include those assets of his spouse and minor children that are reasonably available to the Grantee; however, property held for the Grantee’s child under an irrevocable trust or under a Uniform Gifts to Minors Act custodianship or Uniform Transfers to Minors Act custodianship shall not be treated as a resource of the Grantee. The Committee shall determine whether the circumstances of the Grantee constitute an unforeseeable emergency and thus a Hardship within the meaning of this Paragraph 2(dd). Following a uniform procedure, the Committee’s determination shall consider any facts or conditions deemed necessary or advisable by the Committee, and the Grantee shall be required to submit any evidence of the Grantee’s circumstances that the Committee requires. The

 

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determination as to whether the Grantee’s circumstances are a case of Hardship shall be based on the facts of each case; provided however, that all determinations as to Hardship shall be uniformly and consistently made according to the provisions of this Paragraph 2(dd) for all Grantees in similar circumstances.

 

  (ee) Income Fund” means a hypothetical investment fund pursuant to which an amount equal to the Fair Market Value of Deferred Stock Units subject to a Diversification Election is credited as of the effective date of such Diversification Election and as to which interest is credited thereafter until the date of distribution at the Applicable Interest Rate.

 

  (ff) Initial Election” means a written election on a form provided by the Committee, pursuant to which a Grantee: (i) elects, within the time or times specified in Paragraph 8(a), to defer the distribution date of Shares issuable with respect to Restricted Stock or Restricted Stock Units; and (ii) designates the distribution date of such Shares.

 

  (gg) New Key Employee” means each employee of a Participating Company who: (i) becomes an employee of a Participating Company and has an Annual Rate of Pay of $200,000 or more as of his employment commencement date; or (ii) has an Annual Rate of Pay that is increased to $200,000 or more and who, immediately preceding such increase, was not a Deferral Eligible Employee.

 

  (hh) Non-Employee Director” means an individual who is a member of the Board, and who is not an employee of the Company, including an individual who is a member of the Board and who previously was an employee of the Company.

 

  (ii) Normal Retirement” means a Grantee’s termination of employment that is treated by the Participating Company as a retirement under its employment policies and practices as in effect from time to time.

 

  (jj) Other Available Shares” means, as of any date, the sum of:

 

  (i) The total number of Shares owned by a Grantee that were not acquired by such Grantee pursuant to a Comcast Plan or otherwise in connection with the performance of services to the Company or an Affiliate; plus

 

  (ii) The excess, if any of:

 

  (1) The total number of Shares owned by a Grantee other than the Shares described in Paragraph 2(jj)(i); over

 

  (2) The sum of:

 

  (A) The number of such Shares owned by such Grantee for less than six months; plus

 

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  (B) The number of such Shares owned by such Grantee that has, within the preceding six months, been the subject of a withholding certification pursuant to Paragraph 9(c)(ii) or any similar withholding certification under any other Comcast Plan; plus

 

  (C) The number of such Shares owned by such Grantee that has, within the preceding six months, been received in exchange for Shares surrendered as payment, in full or in part, or as to which ownership was attested to as payment, in full or in part, of the exercise price for an option to purchase any securities of the Company or an Affiliate of the Company, under any Comcast Plan, but only to the extent of the number of Shares surrendered or attested to; plus

 

  (D) The number of such Shares owned by such Grantee as to which evidence of ownership has, within the preceding six months, been provided to the Company in connection with the crediting of “Deferred Stock Units” to such Grantee’s Account under the Comcast Corporation 2002 Deferred Stock Option Plan (as in effect from time to time).

For purposes of this Paragraph 2(jj), a Share that is subject to an Election pursuant to Paragraph 8 or a deferral election pursuant to another Comcast Plan shall not be treated as owned by a Grantee until all conditions to the delivery of such Share have lapsed. The number of Other Available Shares shall be determined separately for Common Stock and Special Common Stock. For purposes of determining the number of Other Available Shares, the term “Shares” shall also include the securities held by a Grantee immediately before the consummation of the AT&T Broadband Transaction that became Shares as a result of the AT&T Broadband Transaction.

 

  (kk) Participating Company” means the Company and each of the Subsidiary Companies.

 

  (ll) Performance-Based Compensation” means “performance-based compensation” within the meaning of Q&A 22 of IRS Notice 2005-1, or such other guidance as may be issued by the Department of the Treasury under section 409A of the Code.

 

  (mm) Performance Period” means a period of at least 12 months during which a Grantee may earn Performance-Based Compensation.

 

  (nn) Person” means an individual, a corporation, a partnership, an association, a trust or any other entity or organization.

 

  (oo) Plan” means the Comcast Corporation 2002 Restricted Stock Plan, as set forth herein, and as amended from time to time.

 

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  (pp) Prime Rate” means, for any calendar year, the interest rate that, when compounded daily pursuant to rules established by the Committee from time to time, is mathematically equivalent to the prime rate of interest (compounded annually) as published in the Eastern Edition of The Wall Street Journal on the last business day preceding the first day of such calendar year, and as adjusted as of the last business day preceding the first day of each calendar year beginning thereafter.

 

  (qq) Restricted Stock” means Shares subject to restrictions as set forth in an Award.

 

  (rr) Restricted Stock Unit” means a unit that entitles the Grantee, upon the Vesting Date set forth in an Award, to receive one Share.

 

  (ss) Retired Grantee” means a Grantee who has terminated employment pursuant to a Normal Retirement.

 

  (tt) Rule 16b-3” means Rule 16b-3 promulgated under the 1934 Act, as in effect from time to time.

 

  (uu) Section 16(b) Officer” means an officer of the Company who is subject to the short-swing profit recapture rules of section 16(b) of the 1934 Act.

 

  (vv) Share” or “Shares” means:

 

  (i) except as provided in Paragraph 2(vv)(ii), a share or shares of Common Stock.

 

  (ii) with respect to Awards granted before the consummation of the AT&T Broadband Transaction as to which a Vesting Date has not occurred, and for purposes of Paragraphs 2(jj) and 9(c), the term “Share” or “Shares” also means a share or shares of Special Common Stock.

 

  (ww) Special Common Stock” means Class A Special Common Stock, par value $0.01, of the Company.

 

  (xx) Special Diversification Election” means, with respect to each separate grant of Restricted Stock or Restricted Stock Units, a Diversification Election by a Grantee other than a Non-Employee Director to have more than 40 percent of the Deferred Stock Units credited to such Grantee’s Account in the Company Stock Fund liquidated and credited thereafter under the Income Fund, as provided in Paragraph 8(h)(i), if (and to the extent that) it is approved by the Committee in accordance with Paragraph 8(h)(ii).

 

  (yy)

Subsequent Election” means a written election on a form provided by the Committee, filed with the Committee in accordance with Paragraph 8(d), pursuant to which a Grantee: (i) elects, within the time or times specified in Paragraph 8(d), to

 

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further defer the distribution date of Shares issuable with respect to Restricted Stock or Restricted Stock Units; and (ii) designates the distribution date of such Shares.

 

  (zz) Subsidiary Companies” means all business entities that, at the time in question, are subsidiaries of the Company, within the meaning of section 424(f) of the Code.

 

  (aaa) Successor-in-Interest” means the estate or beneficiary to whom the right to payment under the Plan shall have passed by will or the laws of descent and distribution.

 

  (bbb) Terminating Event” means any of the following events:

 

  (i) the liquidation of the Company; or

 

  (ii) a Change of Control.

 

  (ccc) Third Party” means any Person, together with such Person’s Affiliates, provided that the term “Third Party” shall not include the Company or an Affiliate of the Company.

 

  (ddd) Vesting Date” means, as applicable: (i) the date on which the restrictions imposed on a Share of Restricted Stock lapse or (ii) the date on which the Grantee vests in a Restricted Stock Unit.

 

  (eee) 1933 Act” means the Securities Act of 1933, as amended.

 

  (fff) 1934 Act” means the Securities Exchange Act of 1934, as amended.

 

  3. Rights to be Granted

Rights that may be granted under the Plan are:

 

  (a) Rights to Restricted Stock which gives the Grantee ownership rights in the Shares subject to the Award, subject to a substantial risk of forfeiture, as set forth in Paragraph 7, and to deferred payment, as set forth in Paragraph 8; and

 

  (b) Rights to Restricted Stock Units which give the Grantee the right to receive Shares upon a Vesting Date, as set forth in Paragraph 7, and to deferred payment, as set forth in Paragraph 8. The maximum number of Shares subject to Awards that may be granted to any single individual in any calendar year, adjusted as provided in Paragraph 10, shall be one million Shares.

 

  4. Shares Subject to the Plan

 

  (a)

Not more than 15 million Shares in the aggregate may be issued under the Plan pursuant to the grant of Awards, subject to adjustment in accordance with Paragraph 10, provided that subject to the approval of the Company’s shareholders at the

 

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Company’s Annual Meeting of Shareholders to be held in 2006, the number of Shares in the aggregate that may be issued under the Plan, pursuant to the grant of Awards, subject to adjustment in accordance with Paragraph 10, shall be increased from 15 million to 35 million. The Shares issued under the Plan may, at the Company’s option, be either Shares held in treasury or Shares originally issued for such purpose.

 

  (b) If Restricted Stock or Restricted Stock Units are forfeited pursuant to the term of an Award, other Awards with respect to such Shares may be granted.

 

  5. Administration of the Plan

 

  (a) Administration. The Plan shall be administered by the Committee, provided that with respect to Awards to Non-Employee Directors, the rules of this Section 5 shall apply so that all references in this Section 5 to the Committee shall be treated as references to either the Board or the Committee acting alone.

 

  (b) Grants. Subject to the express terms and conditions set forth in the Plan, the Committee shall have the power, from time to time, to:

 

  (i) select those Employees and Non-Employee Directors to whom Awards shall be granted under the Plan, to determine the number of Shares and/or Restricted Stock Units, as applicable, to be granted pursuant to each Award, and, pursuant to the provisions of the Plan, to determine the terms and conditions of each Award, including the restrictions applicable to such Shares and the conditions upon which a Vesting Date shall occur; and

 

  (ii) interpret the Plan’s provisions, prescribe, amend and rescind rules and regulations for the Plan, and make all other determinations necessary or advisable for the administration of the Plan.

The determination of the Committee in all matters as stated above shall be conclusive.

 

  (c) Meetings. The Committee shall hold meetings at such times and places as it may determine. Acts approved at a meeting by a majority of the members of the Committee or acts approved in writing by the unanimous consent of the members of the Committee shall be the valid acts of the Committee.

 

  (d) Exculpation. No member of the Committee shall be personally liable for monetary damages for any action taken or any failure to take any action in connection with the administration of the Plan or the granting of Awards thereunder unless (i) the member of the Committee has breached or failed to perform the duties of his office, and (ii) the breach or failure to perform constitutes self-dealing, willful misconduct or recklessness; provided, however, that the provisions of this Paragraph 5(d) shall not apply to the responsibility or liability of a member of the Committee pursuant to any criminal statute.

 

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  (e) Indemnification. Service on the Committee shall constitute service as a member of the Board. Each member of the Committee shall be entitled without further act on his part