XFRA:CTP2 Comcast Corp Class A Quarterly Report 10-Q Filing - 6/30/2012

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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 June 30, 2012

OR

 

¨

Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period from                     to                    

Commission File Number 001-32871

 

 

 

LOGO

COMCAST CORPORATION

(Exact name of registrant as specified in its charter)

 

PENNSYLVANIA   27-0000798

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

One Comcast Center, Philadelphia, PA   19103-2838
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (215) 286-1700

 

 

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

Yes x No ¨

 

 

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

Yes x No ¨

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

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

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

Yes ¨ No x

As of June 30, 2012, there were 2,114,859,096 shares of our Class A common stock, 551,522,669 shares of our Class A Special common stock and 9,444,375 shares of our Class B common stock outstanding.

 

 

 


Table of Contents

TABLE OF CONTENTS

           Page
Number
 
PART I. FINANCIAL INFORMATION   

Item 1.

  Financial Statements      1   
  Condensed Consolidated Balance Sheet as of June 30, 2012 and December 31, 2011 (Unaudited)      1   
  Condensed Consolidated Statement of Income for the Three and Six Months Ended June 30, 2012 and 2011 (Unaudited)      2   
  Condensed Consolidated Statement of Comprehensive Income for the Three and Six Months Ended June 30, 2012 and 2011 (Unaudited)      3   
  Condensed Consolidated Statement of Cash Flows for the Six Months Ended June 30, 2012 and 2011 (Unaudited)      4   
  Condensed Consolidated Statement of Changes in Equity for the Six Months Ended June 30, 2012 and 2011 (Unaudited)      5   
  Notes to Condensed Consolidated Financial Statements (Unaudited)      6   

Item 2.

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

Item 3.

  Quantitative and Qualitative Disclosures About Market Risk      40   

Item 4.

  Controls and Procedures      40   
PART II. OTHER INFORMATION   

Item 1.

  Legal Proceedings      41   

Item 1A.

  Risk Factors      41   

Item 2.

  Unregistered Sales of Equity Securities and Use of Proceeds      41   

Item 6.

  Exhibits      42   
SIGNATURES        43   

 

 

This Quarterly Report on Form 10-Q is for the three and six months ended June 30, 2012. This Quarterly Report modifies and supersedes documents filed prior to this Quarterly Report. The Securities and Exchange Commission (“SEC”) allows us to “incorporate by reference” information that we file with it, which means that we can disclose important information to you by referring you directly to those documents. Information incorporated by reference is considered to be part of this Quarterly Report. In addition, information that we file with the SEC in the future will automatically update and supersede information contained in this Quarterly Report. Throughout this Quarterly Report, we refer to Comcast Corporation as “Comcast;” Comcast and its consolidated subsidiaries, including NBCUniversal, as “we,” “us” and “our;” and Comcast Holdings Corporation as “Comcast Holdings.”

You should carefully review the information contained in this Quarterly Report and particularly consider any risk factors set forth in this Quarterly Report and in other reports or documents that we file from time to time with the SEC. In this Quarterly Report, we state our beliefs of future events and of our future financial performance. In some cases, you can identify these so-called “forward-looking statements” by words such as “may,” “will,” “should,” “expects,” “believes,” “estimates,” “potential,” or “continue,” or the negative of those words, and other comparable words. You should be aware that these statements are only our predictions. In evaluating these statements, you should specifically consider various factors, including the risks outlined below and in other reports we file with the SEC. Actual events or our actual results may differ materially from any of our forward-looking statements. We undertake no obligation to update any forward-looking statements.

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

 

   

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

 

 

   

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

 

 

   

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

 

 

   

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

 

 

   

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

 

 

   

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

 

 

   

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

 

 

   

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

 

 

   

our businesses depend on keeping pace with technological developments

 

 

   

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

 

 

   

sales of DVDs have been declining

 

 

   

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

 

 

   

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

 

 

   

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

 

 

   

we face risks arising from the outcome of various litigation matters

 

 

   

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

 

 

   

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

 

 

   

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

 

 

   

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

 


Table of Contents

PART I: FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheet

(Unaudited)

 

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

Assets

   

Current Assets:

   

Cash and cash equivalents

  $ 2,101     $ 1,620  

Investments

    2,231       54  

Receivables, net

    4,387       4,351  

Programming rights

    1,114       987  

Other current assets

    1,521       1,561  

Total current assets

    11,354       8,573  

Film and television costs

    5,120       5,227  

Investments

    8,018       9,854  

Property and equipment, net of accumulated depreciation of $37,980 and $36,528

    26,891       27,559  

Franchise rights

    59,364       59,376  

Goodwill

    27,010       26,874  

Other intangible assets, net of accumulated amortization of $7,325 and $6,665

    17,786       18,165  

Other noncurrent assets, net

    2,145       2,190  

Total assets

  $ 157,688     $ 157,818  

Liabilities and Equity

   

Current Liabilities:

   

Accounts payable and accrued expenses related to trade creditors

  $ 5,730     $ 5,705  

Accrued participations and residuals

    1,300       1,255  

Deferred revenue

    1,027       790  

Accrued expenses and other current liabilities

    4,731       4,124  

Current portion of long-term debt

    2,954       1,367  

Total current liabilities

    15,742       13,241  

Long-term debt, less current portion

    34,175       37,942  

Deferred income taxes

    29,881       29,932  

Other noncurrent liabilities

    13,432       13,034  

Commitments and contingencies (Note 14)

   

Redeemable noncontrolling interests

    16,279       16,014  

Equity:

   

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

             

Class A common stock, $0.01 par value—authorized, 7,500,000,000 shares; issued, 2,480,319,846 and 2,460,937,253; outstanding, 2,114,859,096 and 2,095,476,503

    25       25  

Class A Special common stock, $0.01 par value—authorized, 7,500,000,000 shares; issued, 622,457,433 and 671,947,577; outstanding, 551,522,669 and 601,012,813

    6       7  

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

             

Additional paid-in capital

    40,761       40,940  

Retained earnings

    14,626       13,971  

Treasury stock, 365,460,750 Class A common shares and 70,934,764 Class A Special common shares

    (7,517     (7,517

Accumulated other comprehensive income (loss)

    (170     (152

Total Comcast Corporation shareholders’ equity

    47,731       47,274  

Noncontrolling interests

    448       381  

Total equity

    48,179       47,655  

Total liabilities and equity

  $ 157,688     $ 157,818  

See accompanying notes to condensed consolidated financial statements.

 

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Table of Contents

Condensed Consolidated Statement of Income

(Unaudited)

 

    Three Months Ended
June 30
   

Six Months Ended

June 30

 
(in millions, except per share data)       2012             2011             2012             2011      

Revenue

  $ 15,211     $ 14,333     $ 30,089     $ 26,461  

Costs and Expenses:

       

Operating costs and expenses

    10,207       9,532       20,397       17,594  

Depreciation

    1,516       1,478       3,045       2,964  

Amortization

    409       385       810       741  
      12,132       11,395       24,252       21,299  

Operating income

    3,079       2,938       5,837       5,162  

Other Income (Expense):

       

Interest expense

    (625     (621     (1,265     (1,226

Investment income (loss), net

    8       61       100       150  

Equity in net income (losses) of investees, net

    29       37       32         

Other income (expense), net

    (47     (34     (63     (70
      (635     (557     (1,196     (1,146

Income before income taxes

    2,444       2,381       4,641       4,016  

Income tax expense

    (811     (1,014     (1,561     (1,610

Net income

    1,633       1,367       3,080       2,406  

Net (income) loss attributable to noncontrolling interests

    (285     (345     (508     (441

Net income attributable to Comcast Corporation

  $ 1,348     $ 1,022     $ 2,572     $ 1,965  

Basic earnings per common share attributable to Comcast Corporation shareholders

  $ 0.50     $ 0.37     $ 0.95     $ 0.71  

Diluted earnings per common share attributable to Comcast Corporation shareholders

  $ 0.50     $ 0.37     $ 0.94     $ 0.70  

Dividends declared per common share attributable to Comcast Corporation shareholders

  $ 0.1625     $ 0.1125     $ 0.325     $ 0.225  

See accompanying notes to condensed consolidated financial statements.

 

2


Table of Contents

Condensed Consolidated Statement of Comprehensive Income

(Unaudited)

 

   

Three Months Ended

June 30

   

Six Months Ended

June 30

 
(in millions)       2012             2011             2012             2011      

Net income

  $ 1,633     $ 1,367     $ 3,080     $ 2,406  

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

                         5  

Deferred gains (losses) on cash flow hedges, net of deferred taxes of $20, $4, $9 and $(2)

    (35     (9     (15     2  

Amounts reclassified to net income:

       

Realized (gains) losses on marketable securities, net of deferred taxes of $—, $1, $— and $5

           (2            (9

Realized (gains) losses on cash flow hedges, net of deferred taxes of $(10), $(1), $(1) and $6

    17       2       1       (10

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

    (3     (4     (5     (1

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

    (9     3       (7     7  

Comprehensive income

    1,603       1,357       3,054       2,400  

Net (income) loss attributable to noncontrolling interests

    (285     (345     (508     (441

Other comprehensive (income) loss attributable to noncontrolling interests

    8       2       8         

Comprehensive income attributable to Comcast Corporation

  $ 1,326     $ 1,014     $ 2,554     $ 1,959  

See accompanying notes to condensed consolidated financial statements.

 

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Table of Contents

Condensed Consolidated Statement of Cash Flows

(Unaudited)

 

   

Six Months Ended

June 30

 
(in millions)       2012             2011      

Net cash provided by (used in) operating activities

  $ 7,815     $ 6,956  

Investing Activities

   

Capital expenditures

    (2,461     (2,377

Cash paid for intangible assets

    (414     (296

Acquisitions, net of cash acquired

           (5,660

Proceeds from sales of businesses and investments

    64       116  

Purchases of investments

    (108     (46

Other

    90       (23

Net cash provided by (used in) investing activities

    (2,829     (8,286

Financing Activities

   

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

    (554     741  

Repurchases and repayments of debt

    (1,692     (1,764

Repurchases and retirements of common stock

    (1,500     (1,050

Dividends paid

    (741     (572

Issuances of common stock

    184       206  

Distributions to noncontrolling interests

    (233     (175

Other

    31       (43

Net cash provided by (used in) financing activities

    (4,505     (2,657

Increase (decrease) in cash and cash equivalents

    481       (3,987

Cash and cash equivalents, beginning of period

    1,620       5,984  

Cash and cash equivalents, end of period

  $ 2,101     $ 1,997  

See accompanying notes to condensed consolidated financial statements.

 

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Condensed Consolidated Statement of Changes in Equity

(Unaudited)

 

   

Redeemable
Non-
controlling
Interests

        Common Stock    

Additional
Paid-In
Capital

   

Retained
Earnings

   

Treasury
Stock at
Cost

   

Accumulated
Other
Comprehensive
Income (Loss)

   

Non-

controlling
Interests

   

Total
Equity

 
(in millions)          A     A Special     B              

Balance, January 1, 2011

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

Stock compensation plans

          1           310       (35           276  

Repurchase and retirement of common stock

            (1       (514     (535           (1,050

Employee stock purchase plan

                33               33  

Dividends declared

                  (621           (621

Other comprehensive income (loss)

                      (6       (6

NBCUniversal transaction

    15,166                 1,692             188       1,880  

Contributions from (distributions to) noncontrolling interests, net

    (162                       (85     (85

Net income (loss)

    362                                           1,965                       79       2,044  

Balance, June 30, 2011

  $ 15,509         $ 25     $ 7     $      $ 41,301     $ 12,932     $ (7,517   $ (105   $ 262     $ 46,905  

Balance, January 1, 2012

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

Stock compensation plans

                361       (127           234  

Repurchase and retirement of common stock

            (1       (583     (916           (1,500

Employee stock purchase plan

                41               41  

Dividends declared

                  (874           (874

Other comprehensive income (loss)

    (8                     (18       (18

Contributions from (distributions to) noncontrolling interests, net

    (132                       (85     (85

Other

    (44               2             93       95  

Net income (loss)

    449                                           2,572                       59       2,631  

Balance, June 30, 2012

  $ 16,279         $ 25     $ 6     $      $ 40,761     $ 14,626     $ (7,517   $ (170   $ 448     $ 48,179  

See accompanying notes to condensed consolidated financial statements.

 

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Table of Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1: Condensed Consolidated Financial Statements

Basis of Presentation

We have prepared these unaudited condensed consolidated financial statements based on Securities and Exchange Commission (“SEC”) rules that permit reduced disclosure for interim periods. These financial statements include all adjustments that are necessary for a fair presentation of our consolidated results of operations, financial condition and cash flows for the periods shown, including normal, recurring accruals and other items. The consolidated results of operations for the interim periods presented are not necessarily indicative of results for the full year.

The year-end condensed consolidated balance sheet was derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles in the United States (“GAAP”). For a more complete discussion of our accounting policies and certain other information, refer to our consolidated financial statements included in our 2011 Annual Report on Form 10-K.

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

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

Note 2: Earnings Per Share

Computation of Diluted EPS

 

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

Basic EPS attributable to Comcast Corporation shareholders

  $ 1,348        2,687      $ 0.50      $ 1,022        2,759      $ 0.37  

Effect of dilutive securities:

                

Assumed exercise or issuance of shares relating to stock plans

             30                          30           

Diluted EPS attributable to Comcast Corporation shareholders

  $ 1,348        2,717      $ 0.50      $ 1,022        2,789      $ 0.37  

 

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

Basic EPS attributable to Comcast Corporation shareholders

  $ 2,572        2,697      $ 0.95      $ 1,965        2,765      $ 0.71  

Effect of dilutive securities:

                

Assumed exercise or issuance of shares relating to stock plans

             36                          34           

Diluted EPS attributable to Comcast Corporation shareholders

  $ 2,572        2,733      $ 0.94      $ 1,965        2,799      $ 0.70  

 

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Table of Contents

Diluted earnings per common share attributable to Comcast Corporation shareholders (“diluted EPS”) for the three and six months ended June 30, 2012 excludes 44 million and 35 million, respectively, of potential common shares related to our share-based compensation plans, because the inclusion of the potential common shares would have had an antidilutive effect. For the three and six months ended June 30, 2011, diluted EPS excluded 52 million and 43 million, respectively, of potential common shares.

Note 3: Film and Television Costs

 

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

Film Costs:

    

Released, less amortization

  $ 1,649      $ 1,428  

Completed, not released

    131        148  

In production and in development

    1,053        1,374  
    2,833        2,950  

Television Costs:

    

Released, less amortization

    1,025        1,002  

In production and in development

    183        201  
    1,208        1,203  

Programming rights, less amortization

    2,193        2,061  
    6,234        6,214  

Less: Current portion of programming rights

    1,114        987  

Film and television costs

  $ 5,120      $ 5,227  

Note 4: Investments

 

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

Fair value method

   $ 3,514      $ 3,028  

Equity Method:

     

A&E Television Networks

     2,006        2,021  

SpectrumCo

     1,414        1,417  

The Weather Channel

     465        463  

MSNBC.com

     176        174  

Clearwire LLC

             69  

Other

     652        736  
     4,713        4,880  

Cost Method:

     

AirTouch

     1,530        1,523  

Other

     492        477  
     2,022        2,000  

Total investments

     10,249        9,908  

Less: Current investments

     2,231        54  

Noncurrent investments

   $ 8,018      $ 9,854  

Fair Value Method

As of June 30, 2012, we held as collateral $3.5 billion of fair value method equity securities related to our obligations under prepaid forward sale agreements. As of June 30, 2012, our prepaid forward sale obligations were recorded at $2.9 billion within other current and noncurrent liabilities in our condensed consolidated balance sheet and had an estimated fair value of approximately $3.0 billion. The estimated fair values are based on Level 2 inputs using pricing models whose inputs are derived primarily from or corroborated by observable market data through correlation or other means for substantially the full term of the financial instrument.

 

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Equity Method

On March 26, 2012, NBCUniversal exercised an option that required A&E Television Networks LLC (“A&E Television Networks”) to redeem a substantial portion of NBCUniversal’s equity interest in A&E Television Networks. On July 9, 2012, NBCUniversal entered into a redemption agreement with A&E Television Networks whereby A&E Television Networks agreed to redeem NBCUniversal’s entire 15.8% equity interest for $3 billion. The redemption price will be paid solely in cash, although in certain limited circumstances, it would be paid in cash and in the form of a senior note issued by A&E Television Networks. Under the terms of the redemption agreement, NBCUniversal is no longer required to provide a last dollar guarantee of indebtedness that A&E Television Networks may incur to finance the purchase of NBCUniversal’s equity interest. As of June 30, 2012, we have classified NBCUniversal’s equity interest as a current investment in our condensed consolidated balance sheet. We expect the transaction to close during the second half of 2012, and we expect to recognize a pretax gain on the sale of NBCUniversal’s equity interest of approximately $1 billion when the transaction closes.

On July 13, 2012, NBCUniversal acquired the remaining 50% equity interest in MSNBC Interactive News, LLC and other related entities (“MSNBC.com”) that it did not already own. MSNBC.com is now a wholly owned consolidated subsidiary of NBCUniversal and its results of operations will be reported in our Cable Networks segment following the date of acquisition.

Cost Method

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

Components of Investment Income (Loss), Net

 

    
    Three Months Ended
June 30
    Six Months Ended
June 30
 
(in millions)       2012             2011             2012             2011      

Gains on sales and exchanges of investments, net

  $ 20     $ 7     $ 27     $ 21  

Investment impairment losses

    (9     (3     (21     (3

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

    (28     226       488       535  

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

    20       (186     (450     (447

Interest and dividend income

    28       26       57       52  

Other, net

    (23     (9     (1     (8

Investment income (loss), net

  $ 8     $ 61     $ 100     $ 150  

Note 5: Goodwill

 

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

Balance, December 31, 2011

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

Acquisitions

           219                                     219  

Dispositions

    (1                                          (1

Adjustments

           (11     (10             (61             (82

Balance, June 30, 2012

  $ 12,207     $ 12,952     $ 762     $ 1      $ 1,079     $ 9      $ 27,010  

The change in goodwill in our Cable Networks segment primarily relates to the acquisition in May 2012 of a controlling interest in a previously held equity method investment based in Brazil, which we now consolidate. The

 

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preliminary allocation of purchase price, including the change in goodwill, is not yet final and is subject to change. We will finalize the amounts recognized as we obtain the information necessary to complete the analysis, but no later than May 2013.

Note 6: Long-Term Debt

As of June 30, 2012, our debt had an estimated fair value of $43.2 billion. The estimated fair value of our publicly traded debt is based on quoted market values for the debt. To estimate the fair value of debt for which there are no quoted market prices, we use interest rates available to us for debt with similar terms and remaining maturities.

Repayments and Redemptions

In February 2012, we redeemed $563 million principal amount of the $1.1 billion aggregate principal amount outstanding of our 7% senior notes due 2055 and repaid at maturity $553 million principal amount of our 9.8% senior notes due 2012. In April 2012, we redeemed the remaining $563 million principal amount of our 7% senior notes due 2055.

In July 2012, we repaid $202 million principal amount of our 10.625% senior subordinated debentures due 2012 and redeemed $575 million principal amount of our 6.625% senior notes due 2056. The carrying amount of these senior subordinated debentures and senior notes was recorded in the current portion of long-term debt in our condensed consolidated balance sheet as of June 30, 2012.

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

Commercial Paper Program

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

Revolving Credit Facility

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

Note 7: Derivative Financial Instruments

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

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

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

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

 

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

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

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

Note 8: Fair Value Measurements

The accounting guidance related to financial assets and financial liabilities (“financial instruments”) establishes a hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques (market approach, income approach and cost approach). Level 1 consists of financial instruments whose values are based on quoted market prices for identical financial instruments in an active market. Level 2 consists of financial instruments that are valued using models or other valuation methodologies. These models use inputs that are observable either directly or indirectly. Level 3 consists of financial instruments whose values are determined using pricing models that use significant inputs that are primarily unobservable, discounted cash flow methodologies or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. Our financial instruments that are accounted for at fair value on a recurring basis are presented in the table below.

Recurring Fair Value Measures

 

    Fair Value as of  
    June 30, 2012      December 31,
2011
 
(in millions)   Level 1      Level 2      Level 3      Total      Total  

Assets

             

Trading securities

  $ 3,381      $       $  —       $ 3,381      $ 2,895  

Interest rate swap agreements

            235                235        246  

Available-for-sale securities

    92        18        21        131        131  

Foreign exchange contracts

            14                14        10  

Equity warrants

                    2        2        2  

Total

  $ 3,473      $ 267      $ 23      $ 3,763      $ 3,284  

Liabilities

             

Derivative component of prepaid forward sale
agreements and indexed debt instruments

  $       $ 1,683      $       $ 1,683      $ 1,234  

Contractual obligations

                    984        984        1,004  

Contingent consideration

                    598        598        583  

Cross-currency swap agreements

            90                90        69  

Foreign exchange contracts

            8                8        8  

Total

  $       $ 1,781      $ 1,582      $ 3,363      $ 2,898  

The fair values of the contractual obligations and contingent consideration in the table above are primarily based on certain expected future discounted cash flows, the determination of which involves the use of significant unobservable inputs. The most significant unobservable input we use is our estimate of the future revenue we

 

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expect to generate from certain NBCUniversal entities that is related to our contractual obligations and future payments to GE that are related to contingent consideration. The discount rates used in the measurements of fair value were between 5.6% and 13.0% and are based on the underlying risk associated with our estimate of future revenue, as well as the terms of the respective contracts, and the uncertainty in the timing of our payments to GE. Fair value adjustments to these liabilities are recorded in other income (expense), net in our condensed consolidated statement of income.

Changes in Contractual Obligations and Contingent Consideration

 

    
(in millions)   Contractual
Obligations
    Contingent
Consideration
 

Balance, December 31, 2011

  $ 1,004     $ 583  

Acquisition accounting adjustments

    (20       

Fair value adjustments

    41       41  

Payments

    (41     (26

Balance, June 30, 2012

  $ 984     $ 598  

Note 9: Noncontrolling Interests

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

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

 

    Six Months Ended
June 30
 
(in millions)   2012      2011  

Net income attributable to Comcast Corporation

  $ 2,572      $ 1,965  

Transfers from (to) noncontrolling interests:

    

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

            1,692  

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

    2          

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

  $ 2,574      $ 3,657  

Note 10: Pension Plans and Postretirement Benefits

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

 

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

Service cost

  $ 31     $ 8      $ 27      $ 8  

Interest cost

    5       8        3        8  

Other

    (1                       

Total benefits expense

  $ 35     $ 16      $ 30      $ 16  

 

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    Six Months Ended June 30  
    2012      2011  
(in millions)   Pension
Benefits
    Postretirement
Benefits
     Pension
Benefits
     Postretirement
Benefits
 

Service cost

  $ 63     $ 16      $ 45      $ 15  

Interest cost

    9       15        6        15  

Prior service cost

                           (13

Other

    (2                       

Total benefits expense

  $ 70     $ 31      $ 51      $ 17  

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

Note 11: Share-Based Compensation

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

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

Recognized Share-Based Compensation Expense

 

   

Three Months Ended

June 30

    

Six Months Ended

June 30

 
(in millions)       2012              2011              2012              2011      

Stock options

  $ 38      $ 34      $ 67      $ 56  

Restricted share units

    41        38        76        78  

Employee stock purchase plans

    3        3        8        6  

Total

  $ 82      $ 75      $ 151      $ 140  

As of June 30, 2012, we had unrecognized pretax compensation expense related to nonvested stock options and nonvested RSUs of $385 million and $411 million, respectively.

For the three and six months ended June 30, 2012, the employee cost associated with participation in our employee stock purchase plans was satisfied with payroll deductions of $18 million and $36 million, respectively. For the three and six months ended June 30, 2011, the employee cost associated with participation in our employee stock purchase plans was satisfied with payroll deductions of $13 million and $28 million, respectively.

Note 12: Supplemental Financial Information

Receivables

 

(in millions)

 

June 30,

2012

    

December 31,

2011

 
    

Receivables, gross

  $ 4,846      $ 4,978  

Less: Allowance for returns and customer incentives

    259        425  

Less: Allowance for doubtful accounts

    200        202  

Receivables, net

  $ 4,387      $ 4,351  

 

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Accumulated Other Comprehensive Income (Loss)

 

(in millions)

 

June 30,

2012

   

June 30,

2011

 
   

Unrealized gains (losses) on marketable securities

  $ 22     $ 22  

Deferred gains (losses) on cash flow hedges

    (125     (112

Unrecognized gains (losses) on employee benefit obligations

    (59     (18

Cumulative translation adjustments

    (8     3  

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

  $ (170   $ (105

Operating Costs and Expenses

 

   

Three Months Ended

June 30

    

Six Months Ended

June 30

 
    
(in millions)   2012      2011      2012      2011  

Programming and production

  $ 4,554      $ 4,323      $ 9,290      $ 7,593  

Cable Communications technical labor

    579        568        1,167        1,161  

Cable Communications customer service

    481        460        975        929  

Advertising, marketing and promotion

    1,287        1,105        2,489        2,075  

Other

    3,306        3,076        6,476        5,836  

Operating costs and expenses (excluding depreciation and amortization)

  $ 10,207      $ 9,532      $ 20,397      $ 17,594  

Net Cash Provided by Operating Activities

 

   

Six Months Ended

June 30

 
(in millions)       2012             2011      

Net income

  $ 3,080     $ 2,406  

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

   

Depreciation and amortization

    3,855       3,705  

Amortization of film and television costs

    4,156       2,889  

Share-based compensation

    189       174  

Noncash interest expense (income), net

    105       78  

Equity in net (income) losses of investees, net

    (32       

Cash received from investees

    142       170  

Net (gain) loss on investment activity and other

    (27     (107

Deferred income taxes

    41       693  

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

   

Change in receivables, net

    (30     277  

Change in film and television costs

    (4,176     (3,268

Change in accounts payable and accrued expenses related to trade creditors

    (4     (154

Change in other operating assets and liabilities

    516       93  

Net cash provided by operating activities

  $ 7,815     $ 6,956  

Cash Payments for Interest and Income Taxes

 

   

Three Months Ended

June 30

    

Six Months Ended

June 30

 
(in millions)       2012              2011              2012              2011      

Interest

  $ 544      $ 540      $ 1,158      $ 1,197  

Income taxes

  $ 904      $ 496      $ 1,022      $ 570  

Noncash Investing and Financing Activities

During the six months ended June 30, 2012, we:

 

   

acquired $550 million of property and equipment and intangible assets that were accrued but unpaid, which is a noncash investing activity

 

 

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recorded a liability of $435 million for a quarterly cash dividend of $0.1625 per common share paid in July 2012, which is a noncash financing activity

 

 

   

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

 

Unaudited Actual and Pro Forma Information

The following unaudited pro forma information has been presented as if both the NBCUniversal transaction and the Universal Orlando transaction occurred on January 1, 2010. This information is based on historical results of operations, adjusted for the allocation of purchase price and other acquisition accounting adjustments, and is not necessarily indicative of what our results would have been had we operated the businesses since January 1, 2010. No pro forma adjustments have been made for our incremental transaction-related expenses.

 

    Three Months Ended
June 30
     Six Months Ended
June 30
 
    Actual      Pro Forma      Actual      Pro Forma  
(in millions except per share amounts)       2012          2011      2012      2011  

Revenue

  $ 15,211      $ 14,700      $ 30,089      $ 28,280  

Net income

  $ 1,633      $ 1,418      $ 3,080      $ 2,418  

Net income attributable to Comcast Corporation

  $ 1,348      $ 1,038      $ 2,572      $ 1,954  

Basic earnings per common share attributable to Comcast Corporation shareholders

  $ 0.50      $ 0.38      $ 0.95      $ 0.71  

Diluted earnings per common share attributable to Comcast Corporation shareholders

  $ 0.50      $ 0.37      $ 0.94      $ 0.70  

Note 13: Receivables Monetization

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

NBCUniversal is responsible for servicing the receivables and remitting collections to the purchasers under the monetization programs. NBCUniversal performs this service for a fee that is equal to the prevailing market rate for such services. As a result, no servicing asset or liability has been recorded in our condensed consolidated balance sheet as of June 30, 2012. The servicing fees are a component of net (loss) gain on sale, which is presented in the table below.

Effect on Income from Receivables Monetization and Cash Flows on Transfers

 

    Three Months Ended
June 30
    Six Months Ended
June 30
 
(in millions)   2012     2011     2012     2011  

Interest (expense)

  $ (3   $      $ (6   $   

Net (loss) gain on sale(a)

  $      $ (9   $ (1   $ (17

Net cash proceeds (payments) on transfers(b)

  $ (133   $ 50     $ (223   $ (374

 

(a)

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

 

(b)

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

 

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Receivables Monetized and Deferred Consideration

 

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

Monetized receivables sold

  $ 808      $ 961  

Deferred consideration

  $ 265      $ 268  

In addition to the amounts presented above, we had $712 million and $781 million payable to our monetization programs as of June 30, 2012 and December 31, 2011, respectively. These amounts represent cash receipts that have not yet been remitted to the monetization programs as of the balance sheet date and are recorded to accounts payable and accrued expenses related to trade creditors.

Note 14: Commitments and Contingencies

Contingencies

Antitrust Cases

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

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

We also are among the defendants in a purported class action filed in the United States District Court for the Central District of California in September 2007. The potential class is comprised of all persons residing in the United States who have subscribed to an expanded basic level of video service provided by one of the defendants. The plaintiffs allege that the defendants who produce video programming have entered into agreements with the defendants who distribute video programming via cable and satellite (including us), which preclude the distributor defendants from reselling channels to customers on an “unbundled” basis in violation of federal antitrust laws. The plaintiffs seek treble damages and injunctive relief requiring each distributor defendant to resell certain channels to its customers on an “unbundled” basis. In October 2009, the Central District of California issued an order dismissing the plaintiffs’ complaint with prejudice. In March 2012, a panel of the Ninth Circuit Court of Appeals affirmed the District Court’s order. In April 2012, the plaintiffs filed a petition for a rehearing, which the Ninth Circuit denied in May 2012.

In addition, we are the defendant in 22 purported class actions filed in federal district courts throughout the country. All of these actions have been consolidated by the Judicial Panel on Multidistrict Litigation in the United States District Court for the Eastern District of Pennsylvania for pre-trial proceedings. In a consolidated complaint filed in November 2009 on behalf of all plaintiffs in the multidistrict litigation, the plaintiffs allege that we improperly “tie” the rental of set-top boxes to the provision of premium cable services in violation of Section 1 of the Sherman Antitrust Act, various state antitrust laws and unfair/deceptive trade practices acts in California, Illinois and Alabama. The plaintiffs also allege a claim for unjust enrichment and seek relief on behalf of a nationwide class of our premium cable customers and on behalf of subclasses consisting of premium cable

 

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customers from California, Alabama, Illinois, Pennsylvania and Washington. In January 2010, we moved to compel arbitration of the plaintiffs’ claims for unjust enrichment and violations of the unfair/deceptive trade practices acts of Illinois and Alabama. In September 2010, the plaintiffs filed an amended complaint alleging violations of additional state antitrust laws and unfair/deceptive trade practices acts on behalf of new subclasses in Connecticut, Florida, Minnesota, Missouri, New Jersey, New Mexico and West Virginia. In the amended complaint, plaintiffs omitted their unjust enrichment claim, as well as their state law claims on behalf of the Alabama, Illinois and Pennsylvania subclasses. In June 2011, the plaintiffs filed another amended complaint alleging only violations of Section 1 of the Sherman Antitrust Act, antitrust law in Washington and unfair/deceptive trade practices acts in California and Washington. The plaintiffs seek relief on behalf of a nationwide class of our premium cable customers and on behalf of subclasses consisting of premium cable customers from California and Washington. In July 2011, we moved to compel arbitration of certain claims and to stay the remaining claims pending arbitration.

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

We believe the claims in each of the pending actions described above in this item are without merit and intend to defend the actions vigorously. We cannot predict the outcome of any of the actions described above, including a range of possible loss, or how the final resolution of any such actions would impact our results of operations or cash flows for any one period or our consolidated financial position. In addition, as any action nears a trial, there is an increased possibility that the action may be settled by the parties. Nevertheless, the final disposition of any of the above actions is not expected to have a material adverse effect on our consolidated financial position, but could possibly be material to our consolidated results of operations or cash flows for any one period.

Other

We are a defendant in several unrelated lawsuits claiming infringement of various patents relating to various aspects of our businesses. In certain of these cases other industry participants are also defendants, and also in certain of these cases we expect that any potential liability would be in part or in whole the responsibility of our equipment and technology vendors under applicable contractual indemnification provisions. We are also subject to other legal proceedings and claims that arise in the ordinary course of our business. While the amount of ultimate liability with respect to such actions is not expected to materially affect our financial position, results of operations or cash flows, any litigation resulting from any such legal proceedings or claims could be time consuming, costly and injure our reputation.

 

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Note 15: Financial Data by Business Segment

We present our operations in five reportable business segments:

 

   

Cable Communications: Provides video, high-speed Internet and voice services (“cable services”) to residential and business customers in 39 states and the District of Columbia.

 

 

   

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

 

 

   

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

 

 

   

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

 

 

   

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

 

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

 

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

Cable Communications(a)

  $ 9,897     $ 4,101     $ 1,593     $ 2,508     $ 1,124  

NBCUniversal

         

Cable Networks

    2,252       788       183       605       22  

Broadcast Television

    1,540       196       21       175       11  

Filmed Entertainment

    1,231       (83     4       (87     3  

Theme Parks

    539       235       63       172       52  

Headquarters and Other(d)

    11       (155     48       (203     68  

Eliminations(e)

    (69     1       1                

NBCUniversal

    5,504       982       320       662       156  

Corporate and Other

    130       (90     16       (106     7  

Eliminations(e)

    (320     11       (4     15         

Comcast Consolidated

  $ 15,211     $ 5,004     $ 1,925     $ 3,079     $ 1,287  

 

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

Cable Communications(a)

  $ 9,341     $ 3,886     $ 1,591     $ 2,295     $ 1,181  

NBCUniversal

         

Cable Networks

    2,173       846       187       659       19  

Broadcast Television

    1,695       190       9       181       12  

Filmed Entertainment

    1,254       27       5       22       1  

Theme Parks(c)

    521       225       57       168       28  

Headquarters and Other(d)

    14       (129     44       (173     25  

Eliminations(e)

    (478     (158     (48     (110       

NBCUniversal

    5,179       1,001       254       747       85  

Corporate and Other

    128       (87     16       (103     5  

Eliminations(e)

    (315     1       2       (1       

Comcast Consolidated

  $ 14,333     $ 4,801     $ 1,863     $ 2,938     $ 1,271  

 

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Table of Contents
    Six Months Ended June 30, 2012  
(in millions)   Revenue(f)     Operating Income (Loss)
Before Depreciation and
Amortization(g)
    Depreciation and
Amortization
    Operating Income
(Loss)
    Capital
Expenditures
 

Cable Communications(a)

  $ 19,496     $ 8,056     $ 3,195     $ 4,861     $ 2,180  

NBCUniversal

         

Cable Networks

    4,390       1,593       361       1,232       31  

Broadcast Television

    3,391       186       42       144       19  

Filmed Entertainment

    2,423       (77     8       (85     4  

Theme Parks

    951       392       125       267       99  

Headquarters and Other(d)

    23       (301     96       (397     114  

Eliminations(e)

    (202     2              2         

NBCUniversal

    10,976       1,795       632       1,163       267  

Corporate and Other

    304       (154     30       (184     14  

Eliminations(e)

    (687     (5     (2     (3       

Comcast Consolidated

  $ 30,089     $ 9,692     $ 3,855     $ 5,837     $ 2,461  

 

     Six Months Ended June 30, 2011  
(in millions)   Revenue(f)     Operating Income (Loss)
Before Depreciation and
Amortization(g)
    Depreciation and
Amortization
    Operating Income
(Loss)
    Capital
Expenditures
 

Cable Communications(a)

  $ 18,425     $ 7,635     $ 3,212     $ 4,423     $ 2,234  

NBCUniversal

         

Cable Networks(b)

    3,805       1,511       340       1,171       31  

Broadcast Television

    2,583       225       30       195       17  

Filmed Entertainment

    1,876       (116     9       (125     2  

Theme Parks(c)

    796       322       115       207       40  

Headquarters and Other(d)

    25       (249     66       (315     42  

Eliminations(e)

    (763     (234     (100     (134       

NBCUniversal

    8,322       1,459       460       999       132  

Corporate and Other

    316       (228     32       (260     11  

Eliminations(e)

    (602     1       1                

Comcast Consolidated

  $ 26,461     $ 8,867     $ 3,705     $ 5,162     $ 2,377  

 

(a)

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

 

    Three Months Ended
June 30
    Six Months Ended
June 30
 
         2012             2011             2012             2011      

Residential:

       

Video

    51.3     52.9     51.5      53.4

High-speed Internet

    24.0     23.4     24.1      23.3

Voice

    9.0     9.4     9.1      9.4

Business services

    5.9     4.6     5.8     4.5

Advertising

    5.6     5.5     5.3     5.2

Other

    4.2     4.2     4.2     4.2

Total

    100     100     100     100

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

 

(b)

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

 

(c)

For the three and six months ended June 30, 2011, our Theme Parks segment included the results of operations for Universal Orlando for the period January 29, 2011 through June 30, 2011 to reflect our measure of operating performance for our Theme Parks segment.

 

(d)

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

 

 

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Table of Contents
(e)

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

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

 

   

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

 

 

   

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

 

 

   

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

 

 

   

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

 

 

(f)

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

 

(g)

We use operating income (loss) before depreciation and amortization, excluding impairment charges related to fixed and intangible assets and gains or losses from the sale of assets, if any, as the measure of profit or loss for our operating segments. This measure eliminates the significant level of noncash depreciation and amortization expense that results from the capital-intensive nature of certain of our businesses and from intangible assets recognized in business combinations. Additionally, it is unaffected by our capital structure or investment activities. We use this measure to evaluate our consolidated operating performance and the operating performance of our operating segments and to allocate resources and capital to our operating segments. It is also a significant performance measure in our annual incentive compensation programs. We believe that this measure is useful to investors because it is one of the bases for comparing our operating performance with other companies in our industries, although our measure may not be directly comparable to similar measures used by other companies. This measure should not be considered a substitute for operating income (loss), net income attributable to Comcast Corporation, net cash provided by operating activities, or other measures of performance or liquidity we have reported in accordance with GAAP.

 

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Table of Contents

Note 16: Condensed Consolidating Financial Information

Comcast Corporation and four of our 100% owned cable holding company subsidiaries, Comcast Cable Communications, LLC (“CCCL Parent”), Comcast MO Group, Inc. (“Comcast MO Group”), Comcast Cable Holdings, LLC (“CCH”) and Comcast MO of Delaware, LLC (“Comcast MO of Delaware”), have fully and unconditionally guaranteed each other’s debt securities. Comcast MO Group, CCH and Comcast MO of Delaware are collectively referred to as the “Combined CCHMO Parents.”

Comcast Corporation provides an unconditional subordinated guarantee of the $185 million principal amount currently outstanding of Comcast Holdings’ ZONES due October 2029 and the $202 million principal amount outstanding as of June 30, 2012 of Comcast Holdings’ 10.625% senior subordinated debentures due July 2012. The 10.625% senior subordinated debentures were repaid in July 2012. Comcast Corporation does not guarantee the $62 million principal amount currently outstanding of Comcast Holdings’ ZONES due November 2029.

Condensed Consolidating Balance Sheet

June 30, 2012

 

(in millions)  

Comcast

Parent

    

CCCL

Parent

    

Combined

CCHMO

Parents

    

Comcast

Holdings

    

Non-

Guarantor

Subsidiaries

    

Elimination

and

Consolidation

Adjustments

   

Consolidated

Comcast

Corporation

 

Assets

                  

Cash and cash equivalents

  $       $       $       $       $ 2,101      $      $ 2,101  

Investments

                                    2,231               2,231  

Receivables, net

                                    4,387               4,387  

Programming rights

                                    1,114               1,114  

Other current assets

    282        25        2                1,212               1,521  

Total current assets

    282        25        2                11,045               11,354  

Film and television costs

                                    5,120               5,120  

Investments

                                    8,018               8,018  

Investments in and amounts due from subsidiaries eliminated upon consolidation

    70,576        93,134        47,455        84,072        43,272        (338,509       

Property and equipment, net

    253                                26,638               26,891  

Franchise rights

                                    59,364               59,364  

Goodwill

                                    27,010               27,010  

Other intangible assets, net

    11                                17,775               17,786  

Other noncurrent assets, net

    1,113        2        4        147        1,771        (892     2,145  

Total assets

  $ 72,235      $ 93,161      $ 47,461      $ 84,219      $ 200,013      $ (339,401   $ 157,688  

Liabilities and Equity

                  

Accounts payable and accrued expenses related to trade creditors

  $ 15      $       $       $       $ 5,715      $      $ 5,730  

Accrued participations and residuals

                                    1,300               1,300  

Accrued expenses and other current liabilities

    1,283        189        54        285        3,947               5,758  

Current portion of long-term debt

    601        2,117                202        34               2,954  

Total current liabilities

    1,899        2,306        54        487        10,996               15,742  

Long-term debt, less current portion

    20,752        1,826        1,759        113        9,725               34,175  

Deferred income taxes

                            740        29,890        (749     29,881  

Other noncurrent liabilities

    1,853                                11,722        (143     13,432  

Redeemable noncontrolling interests

                                    16,279               16,279  

Equity:

                  

Common stock

    31                                               31  

Other shareholders’ equity

    47,700        89,029        45,648        82,879        120,953        (338,509     47,700  

Total Comcast Corporation shareholders’ equity

    47,731        89,029        45,648        82,879        120,953        (338,509     47,731  

Noncontrolling interests

                                    448               448  

Total equity

    47,731        89,029        45,648        82,879        121,401        (338,509     48,179  

Total liabilities and equity

  $ 72,235      $ 93,161      $ 47,461      $ 84,219      $ 200,013      $ (339,401   $ 157,688  

 

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Table of Contents

Condensed Consolidating Balance Sheet

December 31, 2011

 

(in millions)  

Comcast

Parent

    

CCCL

Parent

    

Combined

CCHMO

Parents

    

Comcast

Holdings

    

Non-

Guarantor

Subsidiaries

    

Elimination

and

Consolidation

Adjustments

   

Consolidated

Comcast

Corporation

 

Assets

                  

Cash and cash equivalents

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

Investments

                                    54               54  

Receivables, net

                                    4,351               4,351  

Programming rights

                                    987               987  

Other current assets

    235        8        3                1,315               1,561  

Total current assets

    235        8        3                8,327               8,573  

Film and television costs

                                    5,227               5,227  

Investments

                                    9,854               9,854  

Investments in and amounts due from subsidiaries eliminated upon consolidation

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

Property and equipment, net

    262                                27,297               27,559  

Franchise rights

                                    59,376               59,376  

Goodwill

                                    26,874               26,874  

Other intangible assets, net

    9                                18,156               18,165  

Other noncurrent assets, net

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

Total assets

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

Liabilities and Equity

                  

Accounts payable and accrued expenses related to trade creditors

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

Accrued participations and residuals

                                    1,255               1,255  

Accrued expenses and other current liabilities

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

Current portion of long-term debt

    26                554        202        585               1,367  

Total current liabilities

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

Long-term debt, less current portion

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

Deferred income taxes

                            727        29,728        (523     29,932  

Other noncurrent liabilities

    1,849                                11,328        (143     13,034  

Redeemable noncontrolling interests

                                    16,014               16,014  

Equity:

                  

Common stock

    32                                               32  

Other shareholders’ equity

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

Total Comcast Corporation shareholders’ equity

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

Noncontrolling interests

                                    381               381  

Total equity

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

Total liabilities and equity

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

 

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Table of Contents

Condensed Consolidating Statement of Income

For the Three Months Ended June 30, 2012

 

(in millions)  

Comcast

Parent

   

CCCL

Parent

   

Combined

CCHMO

Parents

   

Comcast

Holdings

   

Non-

Guarantor

Subsidiaries

   

Elimination

and

Consolidation

Adjustments

   

Consolidated

Comcast

Corporation

 

Revenue:

             

Service revenue

  $      $      $      $      $ 15,211     $      $ 15,211  

Management fee revenue

    210       205       127                     (542       
      210       205       127              15,211       (542     15,211  

Costs and Expenses:

             

Operating costs and expenses

    99       205       127              10,318       (542     10,207  

Depreciation

    8                            1,508              1,516  

Amortization

    1                            408              409  
      108       205       127              12,234       (542     12,132  

Operating income (loss)

    102                            2,977              3,079  

Other Income (Expense):

             

Interest expense

    (354     (83     (33     (8     (147            (625

Investment income (loss), net

    2                     1       5              8  

Equity in net income (losses) of investees, net

    1,511       1,679       1,326       1,620       29       (6,136     29  

Other income (expense), net

                                (47            (47
      1,159       1,596       1,293       1,613       (160     (6,136     (635

Income (loss) before income taxes

    1,261       1,596       1,293       1,613       2,817       (6,136     2,444  

Income tax (expense) benefit

    87       29       11       2       (940            (811

Net income (loss)

    1,348       1,625       1,304       1,615       1,877       (6,136     1,633  

Net (income) loss attributable to noncontrolling interests

                                (285            (285

Net income (loss) attributable to Comcast Corporation

  $ 1,348     $ 1,625     $ 1,304     $ 1,615     $ 1,592     $ (6,136   $ 1,348  

Comprehensive income (loss) attributable to Comcast Corporation

  $ 1,326     $ 1,627     $ 1,304     $ 1,615     $ 1,588     $ (6,134   $ 1,326  

 

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Table of Contents

Condensed Consolidating Statement of Income

For the Three Months Ended June 30, 2011

 

(in millions)  

Comcast

Parent

   

CCCL

Parent

   

Combined

CCHMO

Parents

   

Comcast

Holdings

   

Non-

Guarantor

Subsidiaries

   

Elimination

and

Consolidation

Adjustments

   

Consolidated

Comcast

Corporation

 

Revenue:

             

Service revenue

  $      $      $      $      $ 14,333     $      $ 14,333  

Management fee revenue

    200       195       119                     (514       
      200       195       119              14,333       (514     14,333  

Costs and Expenses:

             

Operating costs and expenses

    89       195       119              9,643       (514     9,532  

Depreciation

    7                            1,471              1,478  

Amortization

    1                            384              385  
      97       195       119              11,498       (514     11,395  

Operating income (loss)

    103                            2,835              2,938  

Other Income (Expense):

             

Interest expense

    (358     (82     (43     (8     (130            (621

Investment income (loss), net

    2                     1       58              61  

Equity in net income (losses) of investees, net

    1,186       1,336       805       1,424       37       (4,751     37  

Other income (expense), net

    1                            (35            (34
      831       1,254       762       1,417       (70     (4,751     (557

Income (loss) before income taxes

    934       1,254       762       1,417       2,765       (4,751     2,381  

Income tax (expense) benefit

    88       28       15       2       (1,147            (1,014

Net income (loss)

    1,022       1,282       777       1,419       1,618       (4,751     1,367  

Net (income) loss attributable to noncontrolling interests

                                (345            (345

Net income (loss) attributable to Comcast Corporation

  $ 1,022     $ 1,282     $ 777     $ 1,419     $