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Filed by Comcast Corporation
Pursuant to Rule 425 under the
Securities Act of 1933 and deemed
filed pursuant to Rule 14a-12 under
the Securities Exchange Act of 1934
Subject Company: AT&T Corp.
Commission File No. 1-1105
Date: March 4, 2002
The following presentation was used by Comcast at Bear Stearns 15th Annual
Media, Entertainment & Information Conference:
Bear Stearns 15th Annual
Media, Entertainment & Information Conference
March 4, 2002
COMCAST Logo
Safe Harbor
Caution Concerning Forward-Looking Statements
This presentation contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. In some cases, you can
identify those 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. Comcast Corporation ("Comcast") wishes to take advantage of
the "safe harbor" provided for by the Private Securities Litigation Reform Act
of 1995 and you are cautioned that actual events or results may differ
materially from the expectations expressed in such forward-looking statements as
a result of various factors, including risks and uncertainties, many of which
are beyond the control of Comcast. Factors that could cause actual results to
differ materially include, but are not limited to (1) the effects of legislative
and regulatory changes; (2) the potential for increased competition; (3)
technological changes; (4) the need to generate substantial growth in the
subscriber base by successfully launching, marketing and providing services in
identified markets; (5) pricing pressures which could affect demand for
Comcast's services; (6) Comcast's ability to expand its distribution; (7)
changes in labor, programming, equipment and capital costs; (8) Comcast's
continued ability to create or acquire programming and products that customers
will find attractive; (9) future acquisitions, strategic partnerships and
divestitures; (10) general business and economic conditions; (11) other risks
described from time to time in Comcast's periodic reports filed with the
Securities and Exchange Commission; and (12) with respect to statements relating
to the proposed combination of Comcast and AT&T Broadband, factors that could
cause actual results of the combined businesses of Comcast and AT&T Broadband to
differ materially from expected results for such businesses, including failure
to integrate the businesses successfully or to achieve the expected combination
benefits.
Bear Stearns
March 4, 2002 COMCAST Logo
COMCAST Logo
Stephen B. Burke
President
Comcast Cable Communications
2001 Achievements
Completed Rebuild of Our Cable Systems
Exceeded New Service Goals
o 2.3 Million Digital Subscriptions
o 950,000 High-Speed Internet Subscribers
Delivered Accelerating OCF Growth
Integrated Nearly 2 Million Subscribers
While Improving OCF Margins
Bear Stearns
March 4, 2002 COMCAST Logo
Upgraded Network
Homes Passed
(in Millions)
1996 1997 1998 1999 2000 2001
Less Than 550MMz 3.4 2.5 1.3 1.9 1.3 0.7
550MHz to 750MHz 1.9 1.6 1.7 2.1 1.7 2.1
750MHz or More 1.6 3 4.4 5.5 9.7 11
--- ---
50% 95%
Bear Stearns
March 4, 2002 COMCAST Logo
Leveraging an Upgraded Network
-> New Services
COMCAST digital cable
Subscriptions
(000s)
YE98 YE99 YE00 YE01 YE02E
Subscriptions 78 515 1,350 2,300 3,000*
Penetration 5% 10.2% 18.7% 27% 34.8%
* 2002 Guidance: 600-700,000 net additions.
Bear Stearns
March 4, 2002 COMCAST Logo
Digital Growth Strategy
[Graph representing Digital Penetration increasing to 100%+ through the
combination of Digital Classic ($9.95), Digital Plus ($14.95), Video-On-Demand,
Interactive TV and T Commerce has been omitted.]
Bear Stearns
March 4, 2002 COMCAST Logo
Building on the Digital Platform
Video-On-Demand
o Differentiate vs. Satellite
o Drive Digital Penetration
o Today: 3 Million VOD-Ready
Homes in 16 Markets
o YE02: 5-6 Million VOD-Ready
Homes
Bear Stearns
March 4, 2002 COMCAST Logo
Building on the Digital Platform
High-Definition Television
o Today: Availability to 1.3MM
Customers in Mid-Atlantic
Super Cluster
o Broadcasts Include: ABC, NBC,
HBO and Showtime
Bear Stearns
March 4, 2002 COMCAST Logo
COMCAST High-Speed Internet
Subscribers
(000s)
YE98 YE99 YE00 YE01 YE02E
Subscribers 51 142 400 948 1,400*
Penetration 3% 5% 7% 9.5% 12.2%
* 2002 Guidance: 400-500,000 net additions.
Bear Stearns
March 4, 2002 COMCAST Logo
COMCAST High-Speed Internet
o Completed Transition to Comcast Network
o Improved Control and Network Reliability
o Significant Cash Flow Opportunity After Transition
o Designed to Support Multiple ISPs and Tiered Services
o First ISP Deal: Juno and NetZero
Bear Stearns
March 4, 2002 COMCAST Logo
New Services: Revenue Growth
$ In Millions
1997 1998 1999 2000 2001 2002E
High-Speed Internet 2.7 14.3 43.2 115 294 565
Digital Cable --- 2.2 31.6 114.7 241 340
Bear Stearns
March 4, 2002 COMCAST Logo
Accelerating Contribution to Cash Flow
$ In Millions
1997 1998 1999 2000 2001 2002E
High-Speed Internet -10 -9 -9 3 35 125
Digital Cable -- 1 25 92 192 272
Bear Stearns
March 4, 2002 COMCAST Logo
Integration Success
Integrated 3.6 Million Subscribers in Past Two Years
Cable EBITDA
(in Billions)
1996 1997 1998 1999 2000 2001
Cable EBITDA $0.81 $0.9877 $1.0966 $1.353 $1.899 $2.193
EBITDA Margins 49.3% 47.6% 48.1% 46.2% 45% 42.7%
Note: Excludes Impact of High-Speed Internet Transition in 2001
Bear Stearns
March 4, 2002 COMCAST Logo
Integration Success: Our Roadmap
o Clear Priorities
o Focus on Cash Flow Growth
o New Products
o Strong Local Management
o Local Budgeting
o Line by Line Reviews by Senior Management
o Monthly Follow-Up
Bear Stearns
March 4, 2002 COMCAST Logo
Integration Success: Acquired Systems
AT&T Broadband: 1.4MM Subscribers Acquired January 2001
2000 2001 2002E
---- ---- -----
Revenue (Millions) $831.3 $878.2 $964.6
Cash Flow (Millions) $262.5 $330.9 $391.3
OCF Margin 31.6% 37.7% 40.6%
Annual OCF/ Avg. Subscriber $179.7 $224.3 $262.3
Bear Stearns
March 4, 2002 COMCAST Logo
Integration Success: Acquired Systems
AT&T Broadband: 1.4MM Subscribers Acquired January 2001
Royal Oak, MI (78K Subs) 2000 2001 2002E
- -------------- ---- ---- -----
Revenue (Millions) $48.1 $51.6 $58.9
Cash Flow (Millions) $11.8 $17.9 $23.6
OCF Margin 24.5% 34.7% 40.1%
Annual OCF/Avg. Subscriber $151.9 $227.6 $301.0
Bear Stearns
March 4, 2002 COMCAST Logo
Integration Success: Acquired Systems
AT&T Broadband: 1.4MM Subscribers Acquired January 2001
Ann Arbor, MI (134K Subs) 2000 2001 2002E
- -------------- ---- ---- -----
Revenue (Millions) $68.3 $81.0 $96.5
Cash Flow (Millions) $16.0 $26.8 $36.8
OCF Margin 23.5% 33.1% 38.2%
Annual OCF/Avg. Subscriber $122.7 $200.3 $267.7
Bear Stearns
March 4, 2002 COMCAST Logo
Integration Success: Acquired Systems
Telephone
2000 2001 2002E
---- ---- -----
Revenue (Millions) $ 4.6 $10.7 $15.5
Cash Flow (Millions) $ (3.7) $ 2.0 $ 4.0
Telephone Subscribers 12,776 20,768 28,020
Homes Passed (000) 176 188 230
Bear Stearns
March 4, 2002 COMCAST Logo
COMCAST Logo
John R. Alchin
Executive Vice President and Treasurer
Comcast Corporation
Strong Operating Performance
Accelerating Cash Flow Growth
$ in Millions
FY00 FY01 FY02E
Cable $2009.1 $2,251.3 $2,543
12% 12-14%
FY00 FY01 FY02E
QVC $619.2 $722.3 $838
16% mid-teens
FY00 FY01 FY02E
Content $130.3 $189.2 $208
45% mid-teens
Consolidated 10.2% Revenue Growth and
12.3% Cash Flow Growth
Note: Pro Forma Results; Excludes Impact
of High-Speed Internet Transition in 2001
Bear Stearns
March 4, 2002 COMCAST Logo
Strong Operating Performance
Free Cash Flow Generation
Decrease in cable capital expenditures
(Billions)
1998 1999 2000 2001 2002E
---- ---- ---- ---- -----
Cable 0.711 0.739 1.248 1.855 1.3
Consolidated $0.898 $0.893 $1.636 $2.181 $1.496
. . . leads to significant FCF generation
1998 1999 2000 2001 2002E
---- ---- ---- ---- -----
FCF $66.3 $402.6 $266.6 $110.1 $800
Free Cash Flow = EBITDA - Cap Ex - Interest Expense - Cash Taxes. Excludes
One-Time Tax Payments, OCF losses from Business Telephony Initiatives and
High-Speed Internet Transition Costs
Bear Stearns
March 4, 2002 COMCAST Logo
Financial Flexibility
At 12/31/01:
o Solidly Investment Grade ------------
Consolidated Leverage (Debt/EBITDA)(1) 3.6x
Consolidated Interest Coverage 4.0x
o Significant Liquidity
Cash $350 MM
Investments $4.302 Bn
Unused Bank Lines $3.250 Bn
Modest Near-Term Maturities:(Dollars In Millions)
2002 2003 2004
---- ---- ----
450 75 325
(1) Net of Zones; Excludes Excite @Home Transition Costs
Bear Stearns
March 4, 2002 COMCAST Logo
AT&T COMCAST LOGO
OCF Growth Exceeding 20%
2003 2004 2005
---- ---- ----
AT&T Broadband OCF
Margin Improvement 26% --------------> 36%
Operating Synergies (Millions) $300 $400 $500
Comcast Cable OCF Growth(1) 11% --------------> 11%
(1) For Illustrative Purposes Only. Not Indicative of Guidance.
Bear Stearns
March 4, 2002 COMCAST Logo
AT&T COMCAST LOGO
12/31/02
------------------- Investment Grade
Debt Cash Flow
----- --------- o QUIPS Convert to Equity
o Rapid Reduction in Leverage
Comcast $10BN $3.4BN o OCF Growth
o Asset Monetization
AT&T Broadband $20BN(1) $2.5BN o Solid Investment Grade Profile:
----- ----- Leverage Ratio After Asset
$30BN $5.9BN Monetization:(1)
QUIPS
$5BN 2002 2003 2004
----- 3.6x 3.0x 2.5x
(1) Net of $5 billion of Exchangeable Securities
For Illustrative Purposes Only. Not Indicative of Guidance
Bear Stearns
March 4, 2002 COMCAST Logo
AT&T COMCAST LOGO
Pro Forma Organizational Structure
Guarantees Equalize Credit Across Issuers
AT&T COMCAST
Corporation
[Primary Borrower]
|
__________________________________|___________________________________________
| |
| |
| |
Comcast |
Corporation AT&T
[Unrestricted Group] Broadband
| |
| |
_______________________|______________________________________________ ___________|__________
| | | | | |
| | | | | |
| | | | | |
E! Entertainment QVC Comcast Comcast Cable MediaOne AT&T
Televison Inc Spectacor Comunications Group Inc. Broadband
[Unrestricted Group] [Unrestricted Group] [Unrestricted Group] [Restricted Group] [Restricted Group] [Restricted Group]
[Guarantees are between (i) AT&T Comcast Corporation and each of Comcast Cable
Communications, MediaOne Group, Inc. and AT&T Broadband LLC, (ii) Comcast Cable
Communications and MediaOne Group, Inc. and (iii) MediaOne Group, Inc. and AT&T
Broadband LLC.]
Bear Stearns
March 4, 2002 COMCAST Logo
AT&T COMCAST LOGO
Merger Funding Plan: Well On Its Way
o $10 Billion Already Committed By Five Major Financial Institutions
o Funding Requirement at Closing: $11-$14 Billion
o Includes Repayment of AT&T Intercompany Debt and Near-Term Liquidity Needs
for AT&T Comcast
o Additional Liquidity Cushion in $4.5 Billion of Current Bank Facilities That
Remain In Place
Bear Stearns
March 4, 2002 COMCAST Logo
COMCAST LOGO
Note: The following notice is included to meet certain legal requirements:
FORWARD-LOOKING STATEMENTS
The enclosed information contains forward-looking statements within the
meaning of the "safe harbor" provisions of the United States Private Securities
Litigation Reform Act of 1995. Investors are cautioned that such forward-looking
statements with respect to revenues, earnings, performance, strategies,
prospects and other aspects of the business of Comcast Corporation ("Comcast")
are based on current expectations that are subject to risks and uncertainties. A
number of factors could cause actual results or outcomes to differ materially
from those indicated by such forward-looking statements. These factors include,
but are not limited to, risks and uncertainties set forth in Comcast's filings
with the Securities and Exchange Commission ("SEC"), including risks and
uncertainties relating to: failure to obtain and retain expected synergies from
the proposed transaction with AT&T Corp. ("AT&T") relating to AT&T's broadband
business, delays in obtaining, or adverse conditions contained in, any
regulatory approvals required for the proposed transaction, changes in laws or
regulations, availability and cost of capital and other similar factors. Readers
are referred to Comcast's most recent reports filed with the SEC. Comcast is
under no obligation to (and expressly disclaims any such obligation to) update
or alter its forward-looking statements whether as a result of new information,
future events or otherwise.
ADDITIONAL INFORMATION
In connection with the proposed transactions, AT&T and Comcast will file a
joint proxy statement/prospectus with the SEC. INVESTORS AND SECURITY HOLDERS
ARE URGED TO CAREFULLY READ THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE
PROPOSED TRANSACTION WHEN IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT
INFORMATION. Investors and security holders may obtain a free copy of the joint
proxy statement/prospectus (when it is available) and other documents containing
information about AT&T and Comcast, without charge, at the SEC's web site at
http://www.sec.gov. Free copies of AT&T's filings may be obtained by directing a
request to AT&T Corp., 295 North Maple Avenue, Basking Ridge, N.J. 07920,
Attention: Investor Relations. Free copies of Comcast's filings may be obtained
by directing a request to Comcast Corporation, 1500 Market Street, Philadelphia,
Pennsylvania 19102-2148, Attention: General Counsel.
Comcast and its directors, executive officers and other members of its
management and employees may be soliciting proxies from its stockholders in
connection with the proposed transaction. Information concerning Comcast's
participants in the solicitation is contained in a filing made by Comcast with
the Commission pursuant to Rule 14a-12 on July 9, 2001.