Form 10-Q
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x

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

For the quarterly period ended June 30, 2014

OR

 

¨

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

For the Transition Period from                      to                     

 

 

 

LOGO

 

Commission File Number  

Registrant; State of

Incorporation; Address and Telephone

Number

  I.R.S. Employer Identification No.
001-32871   COMCAST CORPORATION   27-0000798
 

PENNSYLVANIA

One Comcast Center

Philadelphia, PA 19103-2838

(215) 286-1700

 
001-36438   NBCUNIVERSAL MEDIA, LLC   14-1682529
 

DELAWARE

30 Rockefeller Plaza

New York, NY 10112-0015

(212) 664-4444

 

 

 

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.

 

Comcast Corporation

 

Yes x

 

No ¨

NBCUniversal Media, LLC

 

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).

 

Comcast Corporation

 

Yes x

 

No ¨

NBCUniversal Media, LLC

 

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.

 

Comcast Corporation

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

NBCUniversal Media, LLC

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

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

 

Comcast Corporation

 

Yes ¨

 

No x

NBCUniversal Media, LLC

 

Yes ¨

 

No x

As of June 30, 2014, there were 2,149,576,442 shares of Comcast Corporation Class A common stock, 429,082,218 shares of Comcast Corporation Class A Special common stock and 9,444,375 shares of Comcast Corporation Class B common stock outstanding.

Indicate the number of shares outstanding of each of the registrant’s classes of stock, as of the latest practical date: Not applicable for NBCUniversal Media, LLC.

NBCUniversal Media, LLC meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format.

 

 

 


Table of Contents

TABLE OF CONTENTS

          Page
Number
 
PART I. FINANCIAL INFORMATION   

Item 1.

  Comcast Corporation Financial Statements     1   
  Condensed Consolidated Balance Sheet as of June 30, 2014 and December 31, 2013 (Unaudited)     1   
  Condensed Consolidated Statement of Income for the Three and Six Months Ended June 30, 2014 and 2013 (Unaudited)     2   
  Condensed Consolidated Statement of Comprehensive Income for the Three and Six Months Ended June 30, 2014 and 2013 (Unaudited)     3   
  Condensed Consolidated Statement of Cash Flows for the Six Months Ended June 30, 2014 and 2013 (Unaudited)     4   
  Condensed Consolidated Statement of Changes in Equity for the Six Months Ended June 30, 2014 and 2013 (Unaudited)     5   
  Notes to Condensed Consolidated Financial Statements (Unaudited)     6   

Item 2.

  Management’s Discussion and Analysis of Financial Condition and Results of Operations     27   

Item 3.

  Quantitative and Qualitative Disclosures About Market Risk     44   

Item 4.

  Controls and Procedures     44   
PART II. OTHER INFORMATION  

Item 1.

  Legal Proceedings     44   

Item 1A.

  Risk Factors     45   

Item 2.

  Unregistered Sales of Equity Securities and Use of Proceeds     45   

Item 6.

  Exhibits     45   
SIGNATURES       47   
NBCUniversal Media, LLC Financial Statements     48   

 

 

Explanatory Note

This Quarterly Report on Form 10-Q is a combined report being filed separately by Comcast Corporation (“Comcast”) and NBCUniversal Media, LLC (“NBCUniversal”). Comcast owns all of the common equity interests in NBCUniversal, and NBCUniversal meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing its information within this Form 10-Q with the reduced disclosure format. Each of Comcast and NBCUniversal is filing on its own behalf the information contained in this report that relates to itself, and neither company makes any representation as to information relating to the other company. Where information or an explanation is provided that is substantially the same for each company, such information or explanation has been combined in this report. Where information or an explanation is not substantially the same for each company, separate information and explanation has been provided. In addition, separate condensed consolidated financial statements for each company, along with notes to the condensed consolidated financial statements, are included in this report. Unless indicated otherwise, throughout this Quarterly Report on Form 10-Q, we refer to Comcast Corporation as “Comcast;” Comcast and its consolidated subsidiaries, including NBCUniversal and its consolidated subsidiaries, as “we,” “us” and “our;” Comcast Cable Communications, LLC and its consolidated subsidiaries as “Comcast Cable;” Comcast Holdings Corporation as “Comcast Holdings;” and NBCUniversal, LLC as “NBCUniversal Holdings.”

This Quarterly Report on Form 10-Q is for the three and six months ended June 30, 2014. 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.

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 businesses

 

 

   

our businesses depend on keeping pace with technological developments

 

 

   

programming expenses for our video services are increasing, which could adversely affect our businesses

 

 

   

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

 

 

   

a decline in advertising expenditures or changes in advertising markets could negatively impact our businesses

 

 

   

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

 

 

   

the loss of NBCUniversal’s programming distribution agreements, or the renewal of these agreements on less favorable terms, could adversely affect its businesses

 

 

   

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

 

 

   

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

 

 

   

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

 

 

   

acquisitions and other strategic transactions, including the proposed transactions with Time Warner Cable Inc. and Charter Communications, Inc., present many risks, and we may not realize the financial and strategic goals that were contemplated at the time of any transaction

 

 

   

our Class B common stock has substantial voting rights and separate approval rights over 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

Comcast Corporation

Condensed Consolidated Balance Sheet

(Unaudited)

 

(in millions, except share data)   June 30,
2014
    December 31,
2013
 

Assets

   

Current Assets:

   

Cash and cash equivalents

  $ 1,529      $ 1,718   

Investments

    2,325        3,573   

Receivables, net

    6,232        6,376   

Programming rights

    905        928   

Other current assets

    1,781        1,480   

Total current assets

    12,772        14,075   

Film and television costs

    5,208        4,994   

Investments

    3,072        3,770   

Property and equipment, net of accumulated depreciation of $44,186 and $42,574

    29,970        29,840   

Franchise rights

    59,364        59,364   

Goodwill

    27,323        27,098   

Other intangible assets, net of accumulated amortization of $9,466 and $8,874

    17,233        17,329   

Other noncurrent assets, net

    2,517        2,343   

Total assets

  $ 157,459      $ 158,813   

Liabilities and Equity

   

Current Liabilities:

   

Accounts payable and accrued expenses related to trade creditors

  $ 5,432      $ 5,528   

Accrued participations and residuals

    1,364        1,239   

Deferred revenue

    847        898   

Accrued expenses and other current liabilities

    6,785        7,967   

Current portion of long-term debt

    2,947        3,280   

Total current liabilities

    17,375        18,912   

Long-term debt, less current portion

    43,602        44,567   

Deferred income taxes

    31,854        31,935   

Other noncurrent liabilities

    11,241        11,384   

Commitments and contingencies (Note 11)

   

Redeemable noncontrolling interests and redeemable subsidiary preferred stock

    1,055        957   

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, 2,515,037,192 and 2,503,535,883; outstanding, 2,149,576,442 and 2,138,075,133

    25        25   

Class A Special common stock, $0.01 par value—authorized, 7,500,000,000 shares; issued, 500,016,982 and 529,964,944; outstanding, 429,082,218 and 459,030,180

    5        5   

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

             

Additional paid-in capital

    39,040        38,890   

Retained earnings

    20,432        19,235   

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)

    (14     56   

Total Comcast Corporation shareholders’ equity

    51,971        50,694   

Noncontrolling interests

    361        364   

Total equity

    52,332        51,058   

Total liabilities and equity

  $ 157,459      $ 158,813   

See accompanying notes to condensed consolidated financial statements.

 

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Table of Contents

Comcast Corporation

Condensed Consolidated Statement of Income

(Unaudited)

 

    Three Months Ended
June 30
    Six Months Ended
June 30
 
(in millions, except per share data)   2014     2013     2014     2013  

Revenue

  $ 16,844      $ 16,270      $ 34,252      $ 31,580   

Costs and Expenses:

       

Programming and production

    4,874        4,968        10,782        9,631   

Other operating and administrative

    4,924        4,570        9,676        9,036   

Advertising, marketing and promotion

    1,242        1,307        2,452        2,454   

Depreciation

    1,599        1,583        3,168        3,149   

Amortization

    401        407        802        808   
      13,040        12,835        26,880        25,078   

Operating income

    3,804        3,435        7,372        6,502   

Other Income (Expense):

       

Interest expense

    (648     (636     (1,290     (1,289

Investment income (loss), net

    120        13        233        85   

Equity in net income (losses) of investees, net

    22        23        54        34   

Other income (expense), net

    (39     (43     (54     30   
      (545     (643     (1,057     (1,140

Income before income taxes

    3,259        2,792        6,315        5,362   

Income tax expense

    (1,234     (1,048     (2,352     (1,973

Net income

    2,025        1,744        3,963        3,389   

Net (income) loss attributable to noncontrolling interests and redeemable subsidiary preferred stock

    (33     (10     (100     (218

Net income attributable to Comcast Corporation

  $ 1,992      $ 1,734      $ 3,863      $ 3,171   

Basic earnings per common share attributable to Comcast Corporation shareholders

  $ 0.77      $ 0.66      $ 1.49      $ 1.20   

Diluted earnings per common share attributable to Comcast Corporation shareholders

  $ 0.76      $ 0.65      $ 1.47      $ 1.19   

Dividends declared per common share

  $ 0.225      $ 0.195      $ 0.45      $ 0.39   

See accompanying notes to condensed consolidated financial statements.

 

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Comcast Corporation

Condensed Consolidated Statement of Comprehensive Income

(Unaudited)

 

    Three Months
Ended June 30
    Six Months Ended
June 30
 
(in millions)   2014     2013     2014     2013  

Net income

  $ 2,025      $ 1,744      $ 3,963      $ 3,389   

Unrealized gains (losses) on marketable securities, net of deferred taxes of $(2), $(59), $(19) and $(71)

    4        97        34        117   

Deferred gains (losses) on cash flow hedges, net of deferred taxes of $(2), $(1), $(1) and $20

    4        1        2        (35

Amounts reclassified to net income:

       

Realized (gains) losses on marketable securities, net of deferred taxes of $28, $—, $58 and $12

    (47            (97     (23

Realized (gains) losses on cash flow hedges, net of deferred taxes of $10, $(1), $12 and $(28)

    (17     2        (20     48   

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

    (1     2        (1     3   

Currency translation adjustments, net of deferred taxes of $(6), $9, $(7) and $14

    10        (14     12        (31

Comprehensive income

    1,978        1,832        3,893        3,468   

Net (income) loss attributable to noncontrolling interests and redeemable subsidiary preferred stock

    (33     (10     (100     (218

Other comprehensive (income) loss attributable to noncontrolling interests

                         9   

Comprehensive income attributable to Comcast Corporation

  $ 1,945      $ 1,822      $ 3,793      $ 3,259   

See accompanying notes to condensed consolidated financial statements.

 

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Comcast Corporation

Condensed Consolidated Statement of Cash Flows

(Unaudited)

 

   

Six Months Ended

June 30

 
(in millions)       2014             2013      

Net cash provided by operating activities

  $ 7,547      $ 7,685   

Investing Activities

   

Capital expenditures

    (3,246     (2,867

Cash paid for intangible assets

    (477     (444

Acquisitions and construction of real estate properties

    (10     (1,311

Acquisitions, net of cash acquired

    (406     (22

Proceeds from sales of businesses and investments

    481        91   

Return of capital from investees

    6        146   

Purchases of investments

    (77     (641

Other

    (159     88   

Net cash provided by (used in) investing activities

    (3,888     (4,960

Financing Activities

   

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

    (343     348   

Proceeds from borrowings

    2,187        2,933   

Repurchases and repayments of debt

    (3,163     (2,195

Repurchases and retirements of common stock

    (1,500     (1,000

Dividends paid

    (1,092     (942

Issuances of common stock

    29        24   

Purchase of NBCUniversal noncontrolling common equity interest

           (10,761

Distributions to noncontrolling interests and dividends for redeemable subsidiary preferred stock

    (117     (116

Settlement of Station Venture liability

           (602

Other

    151        24   

Net cash provided by (used in) financing activities

    (3,848     (12,287

Increase (decrease) in cash and cash equivalents

    (189     (9,562

Cash and cash equivalents, beginning of period

    1,718        10,951   

Cash and cash equivalents, end of period

  $ 1,529      $ 1,389   

See accompanying notes to condensed consolidated financial statements.

 

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Comcast Corporation

Condensed Consolidated Statement of Changes in Equity

(Unaudited)

 

   

Redeemable
Noncontrolling
Interests and
Redeemable
Subsidiary
Preferred Stock

              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, 2013

  $ 16,998              $ 25      $ 6      $  —      $ 40,547      $ 16,280      $ (7,517   $ 15      $ 440      $ 49,796   

Stock compensation plans

                  296        (212           84   

Repurchases and retirements of common stock

                  (296     (704           (1,000

Employee stock purchase plans

                  49                49   

Dividends declared

                    (1,026           (1,026

Other comprehensive income (loss)

    (9                       88          88   

Purchase of NBCUniversal noncontrolling common equity interest

    (17,006                 (1,482         (26       (1,508

Redeemable subsidiary preferred stock

    725                           

Contributions from (distributions to) noncontrolling interests, net

    (12                         (84     (84

Other

    (14                 (123           (8     (131

Net income (loss)

    171                                                3,171                        47        3,218   

Balance, June 30, 2013

  $ 853              $ 25      $ 6      $      $ 38,991      $ 17,509      $ (7,517   $ 77      $ 395      $ 49,486   

Balance, January 1, 2014

  $ 957            $ 25      $ 5      $      $ 38,890      $ 19,235      $ (7,517   $ 56      $ 364      $ 51,058   

Stock compensation plans

                  442        (343           99   

Repurchases and retirements of common stock

                  (345     (1,155           (1,500

Employee stock purchase plans

                  60                60   

Dividends declared

                    (1,168           (1,168

Other comprehensive income (loss)

                        (70       (70

Issuance of subsidiary shares to noncontrolling interests

    85                            13        13   

Contributions from (distributions to) noncontrolling interests, net

    (8                         (74     (74

Other

    (14                 (7           (7     (14

Net income (loss)

    35                                                3,863                        65        3,928   

Balance, June 30, 2014

  $ 1,055              $ 25      $ 5      $      $ 39,040      $ 20,432      $ (7,517   $ (14   $ 361      $ 52,332   

See accompanying notes to condensed consolidated financial statements.

 

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Table of Contents

Comcast Corporation

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 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 of America (“GAAP”). For a more complete discussion of our accounting policies and certain other information, refer to our consolidated financial statements included in our 2013 Annual Report on Form 10-K.

Note 2: Recent Accounting Pronouncements

Discontinued Operations

In April 2014, the Financial Accounting Standards Board (“FASB”) updated the accounting guidance related to discontinued operations. The updated accounting guidance provides a narrower definition of discontinued operations than existing GAAP. The updated accounting guidance requires that only disposals of components of an entity, or groups of components, that represent a strategic shift that has or will have a material effect on the reporting entity’s operations be reported in the financial statements as discontinued operations. The updated accounting guidance also provides guidance on the financial statement presentations and disclosures of discontinued operations. The updated accounting guidance will be effective prospectively for us on January 1, 2015, with early adoption permitted in 2014.

Revenue Recognition

In May 2014, the FASB and the International Accounting Standards Board updated the accounting guidance related to revenue recognition. The updated accounting guidance provides a single, contract-based revenue recognition model to help improve financial reporting by providing clearer guidance on when an entity should recognize revenue, and by reducing the number of standards to which entities have to refer. The updated accounting guidance will be effective for us on January 1, 2017, and early adoption is not permitted. The updated accounting guidance allows for either a full retrospective adoption or modified retrospective adoption. We are currently in the process of determining the impact that the updated accounting guidance will have on our consolidated financial statements and our method of adoption.

 

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Comcast Corporation

 

Note 3: Earnings Per Share

Computation of Diluted EPS

 

    Three Months Ended June 30  
    2014      2013  
(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

  $ 1,992         2,594       $ 0.77       $ 1,734         2,631       $ 0.66   

Effect of dilutive securities:

                

Assumed exercise or issuance of shares relating to stock plans

             34                           35            

Diluted EPS attributable to Comcast Corporation shareholders

  $ 1,992         2,628       $ 0.76       $ 1,734         2,666       $ 0.65   

 

    Six Months Ended June 30  
    2014      2013  
(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

  $ 3,863         2,598       $ 1.49       $ 3,171         2,633       $ 1.20   

Effect of dilutive securities:

                

Assumed exercise or issuance of shares relating to stock plans

             38                           39            

Diluted EPS attributable to Comcast Corporation shareholders

  $ 3,863         2,636       $ 1.47       $ 3,171         2,672       $ 1.19   

Our potentially dilutive securities include potential common shares related to our stock options and our restricted share units (“RSUs”). Diluted earnings per common share attributable to Comcast Corporation shareholders (“diluted EPS”) considers the impact of potentially dilutive securities using the treasury stock method.

For the three and six months ended June 30, 2014, diluted EPS excluded 16 million and 9 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, 2013, diluted EPS excluded 18 million and 10 million, respectively, of potential common shares.

Note 4: Significant Transactions

Time Warner Cable Merger

On February 12, 2014, we entered into an agreement and plan of merger (the “merger agreement”) with Time Warner Cable Inc. (“Time Warner Cable”). As a result of the merger agreement, we will acquire 100% of Time Warner Cable’s outstanding shares of common stock in exchange for shares of our Class A common stock (the “Time Warner Cable merger”). Time Warner Cable stockholders will receive, in exchange for each share of Time Warner Cable common stock owned immediately prior to the Time Warner Cable merger, 2.875 shares of our Class A common stock. Time Warner Cable stockholders will then own approximately 23% of our common stock, an estimate based on the number of shares outstanding as of the date of the merger agreement. Because the exchange ratio was fixed at the time of the merger agreement and the market value of our Class A common stock will continue to fluctuate, the number of shares of Class A common stock to be issued and the total value of the consideration exchanged will not be determinable until the closing date. Following the close of the Time Warner Cable merger, Time Warner Cable will be our wholly owned subsidiary. The Time Warner Cable merger remains subject to shareholder approval at both companies, regulatory review and other customary conditions. It is reasonably possible that the Time Warner Cable merger will close by the end of 2014.

 

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Divestiture Transactions

The terms of the merger agreement contemplate that we are prepared to divest systems serving up to approximately 3 million video customers of the combined company to reduce competitive concerns. As a result of this commitment, on April 25, 2014, we entered into a transactions agreement with Charter Communications, Inc. (“Charter”) that, if consummated, would satisfy our divestiture undertaking. Under the transactions agreement, following the close of the Time Warner Cable merger and subject to various conditions, we would divest cable systems resulting in a net disposition of approximately 3.9 million video customers through three transactions: (1) a spin-off of cable systems serving approximately 2.5 million of our video customers (the “spin-off transaction”) into a newly formed public entity (“SpinCo”), (2) an exchange of cable systems serving approximately 1.5 million Time Warner Cable video customers for cable systems serving approximately 1.7 million Charter video customers, and (3) a sale to Charter of cable systems serving approximately 1.5 million Time Warner Cable video customers for cash (collectively, the “divestiture transactions”).

In connection with the spin-off transaction and prior to the spin-off, it is expected that SpinCo will incur new debt to fund a distribution to us in the form of cash and notes, which will enable us to retire a portion of our debt. In the spin-off transaction, we will distribute common stock of SpinCo pro rata to the holders of all of our outstanding common stock, including the former Time Warner Cable stockholders who continue to hold shares through the record date of the spin-off transaction. After the spin-off transaction, a newly formed, wholly owned indirect subsidiary of Charter will merge with and into Charter with the effect that all shares of Charter will be converted into shares of a new holding company, which will survive as the publicly traded parent company of Charter (“New Charter”). New Charter will then acquire an interest in SpinCo by issuing New Charter stock in exchange for a portion of the outstanding SpinCo stock, following which Comcast shareholders, including the former Time Warner Cable stockholders, are expected to own approximately 67% of SpinCo and New Charter is expected to own approximately 33% of SpinCo.

The close of the divestiture transactions is subject to the completion of the Time Warner Cable merger, Charter stockholder approval, completion of the SpinCo financing transactions, regulatory approvals and other customary conditions. The Time Warner Cable merger and the divestiture transactions are subject to separate conditions, and the Time Warner Cable merger can be completed regardless of whether the divestiture transactions are ultimately completed.

Note 5: Film and Television Costs

 

(in millions)   June 30,
2014
     December 31,
2013
 

Film Costs:

    

Released, less amortization

  $ 1,356       $ 1,630   

Completed, not released

    65         70   

In production and in development

    1,077         658   
    2,498         2,358   

Television Costs:

    

Released, less amortization

    1,165         1,155   

In production and in development

    361         370   
    1,526         1,525   

Programming rights, less amortization

    2,089         2,039   
    6,113         5,922   

Less: Current portion of programming rights

    905         928   

Film and television costs

  $ 5,208       $ 4,994   

 

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Note 6: Investments

 

(in millions)   June 30,
2014
     December 31,
2013
 

Fair Value Method

  $ 2,387       $ 4,345   

Equity Method:

    

The Weather Channel

    331         333   

Hulu

    187         187   

Other

    486         469   
    1,004         989   

Cost Method:

    

AirTouch

    1,560         1,553   

Other

    446         456   
    2,006         2,009   

Total investments

    5,397         7,343   

Less: Current investments

    2,325         3,573   

Noncurrent investments

  $ 3,072       $ 3,770   

Investment Income (Loss), Net

 

   

Three Months Ended

June 30

    Six Months Ended
June 30
 
(in millions)       2014             2013             2014             2013      

Gains on sales and exchanges of investments, net

  $ 90      $ 3      $ 173      $ 38   

Investment impairment losses

    (19     (4     (24     (13

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

    85        247        (28     852   

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

    (85     (239     32        (841

Interest and dividend income

    28        26        56        56   

Other, net

    21        (20     24        (7

Investment income (loss), net

  $ 120      $ 13      $ 233      $ 85   

 

Fair Value Method

As of June 30, 2014, the majority of our fair value method investments were equity securities held as collateral that were related to our obligations under prepaid forward sale agreements.

Prepaid Forward Sale Agreements

 

(in millions)   June 30,
2014
     December 31,
2013
 

Assets:

    

Fair value equity securities held as collateral

  $ 2,250       $ 3,959   

Liabilities:

    

Obligations under prepaid forward sale agreements

  $ 470       $ 811   

Derivative component of prepaid forward sale agreements

    1,586         2,800   

Total liabilities

  $ 2,056       $ 3,611   

During the six months ended June 30, 2014, we settled $1.5 billion of obligations under certain of our prepaid forward sale agreements by delivering equity securities. As of June 30, 2014, our remaining prepaid forward sale obligations had an estimated fair value of $2.1 billion. The estimated fair value is 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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Cost Method

AirTouch

We hold two series of preferred stock of AirTouch Communications, Inc. (“AirTouch”), a subsidiary of Verizon Communications Inc., which are redeemable in April 2020. As of June 30, 2014, the estimated fair values of the AirTouch preferred stock and the associated liability related to the redeemable preferred shares issued by one of our consolidated subsidiaries were each $1.7 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.

Note 7: Long-Term Debt

As of June 30, 2014, our debt had a carrying value of $46.5 billion and an estimated fair value of $52.6 billion. The estimated fair value of our publicly traded debt is based on Level 1 inputs using quoted market values for the debt. The estimated fair value of debt for which there are no quoted market prices is based on Level 2 inputs using interest rates available to us for debt with similar terms and remaining maturities.

Debt Borrowings and Repayments

In February 2014, we issued $1.2 billion aggregate principal amount of 3.60% senior notes due 2024 and $1 billion aggregate principal amount of 4.75% senior notes due 2044. The proceeds from this offering were used for working capital and general corporate purposes, including the repayment of a portion of our outstanding commercial paper and our $900 million aggregate principal amount of 2.10% senior notes due April 2014 at maturity.

In January 2014, we repaid at maturity $1 billion aggregate principal amount of 5.30% senior notes due 2014. In February 2014, we repaid $1.25 billion of borrowings outstanding under NBCUniversal Enterprise Inc.’s (“NBCUniversal Enterprise”) revolving credit facility with the proceeds from $990 million of borrowings under its new commercial paper program and cash on hand.

Revolving Credit Facilities

As of June 30, 2014, amounts available under our consolidated revolving credit facilities, net of amounts outstanding under our commercial paper programs and outstanding letters of credit, totaled $6.3 billion, which included $340 million available under NBCUniversal Enterprise’s revolving credit facility.

Commercial Paper Programs

In February 2014, NBCUniversal Enterprise entered into a commercial paper program. The maximum borrowing capacity under this commercial paper program is $1.35 billion, and it is supported by NBCUniversal Enterprise’s existing $1.35 billion revolving credit facility due March 2018. The commercial paper program is fully and unconditionally guaranteed by us and 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”) (collectively, the “cable guarantors”). As of June 30, 2014, NBCUniversal Enterprise had $1 billion face amount of commercial paper outstanding.

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

 

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are determined using pricing models that use significant inputs that are primarily unobservable, discounted cash flow methodologies or similar techniques, as well as financial 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, 2014      December 31,
2013
 
(in millions)   Level 1      Level 2      Level 3      Total      Total  

Assets

             

Trading securities

  $ 2,248       $       $       $ 2,248       $ 3,956   

Available-for-sale securities

    9         119         10         138         389   

Interest rate swap agreements

            108                 108         110   

Other

            78         1         79         81   

Total

  $ 2,257       $ 305       $ 11       $ 2,573       $ 4,536   

Liabilities

             

Derivative component of prepaid forward sale agreements and indexed debt instruments

  $       $ 1,600       $       $ 1,600       $ 2,816   

Contractual obligation

                    788         788         747   

Contingent consideration

                    664         664         684   

Other

            12                 12         16   

Total

  $       $ 1,612       $ 1,452       $ 3,064       $ 4,263   

Fair Value of Redeemable Subsidiary Preferred Stock Financial Instrument

As of June 30, 2014, the fair value of the NBCUniversal Enterprise redeemable subsidiary preferred stock was $759 million. The estimated fair value is 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.

Contractual Obligation and Contingent Consideration

The estimated fair values of the contractual obligation and contingent consideration in the table above are primarily based on certain expected future discounted cash flows, the determination of which involves the use of significant unobservable inputs. The most significant unobservable inputs we use include our estimates of the future revenue we expect to generate from certain NBCUniversal businesses, which are related to our contractual obligation, and future net tax benefits that will affect payments to General Electric Company (“GE”), which are related to contingent consideration. The discount rates used in the measurements of fair value were between 5% and 13% and are based on the underlying risk associated with our estimate of future revenue, the terms of the respective contracts, and the uncertainty in the timing of our payments to GE. The fair value adjustments to contractual obligation and contingent consideration are sensitive to the assumptions related to future revenue and tax benefits, respectively, as well as to current interest rates, and therefore, the adjustments are recorded to other income (expense), net in our condensed consolidated statement of income.

Changes in Contractual Obligation and Contingent Consideration

 

(in millions)   Contractual
Obligation
    Contingent
Consideration
 

Balance, December 31, 2013

  $ 747      $ 684   

Fair value adjustments

    68        16   

Payments

    (27     (36

Balance, June 30, 2014

  $ 788      $ 664   

 

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Note 9: Share-Based Compensation

Our share-based compensation primarily consists of awards of stock options and RSUs to certain employees and directors as part of our approach to long-term incentive compensation. 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 2014, we granted 16.4 million stock options and 5.4 million RSUs related to our annual management awards. The weighted-average fair values associated with these grants were $11.09 per stock option and $46.57 per RSU.

Recognized Share-Based Compensation Expense

 

    Three Months Ended
June 30
    Six Months Ended
June 30
 
(in millions)       2014              2013             2014              2013      

Stock options

  $ 47       $ 36      $ 83       $ 68   

Restricted share units

    68         48        116         86   

Employee stock purchase plans

    7         5        13         11   

Total

  $ 122       $ 89      $ 212       $ 165   

As of June 30, 2014, we had unrecognized pretax compensation expense of $392 million and $529 million related to nonvested stock options and nonvested RSUs, respectively.

Note 10: Supplemental Financial Information

Receivables

 

(in millions)   June 30,
2014
     December 31,
2013
 

Receivables, gross

  $ 6,749       $ 6,972   

Less: Allowance for returns and customer incentives

    290         375   

Less: Allowance for doubtful accounts

    227         221   

Receivables, net

  $ 6,232       $ 6,376   

Accumulated Other Comprehensive Income (Loss)

 

(in millions)   June 30,
2014
    June 30,
2013
 

Unrealized gains (losses) on marketable securities

  $ 4      $ 277   

Deferred gains (losses) on cash flow hedges

    (63     (54

Unrecognized gains (losses) on employee benefit obligations

    70        (107

Cumulative translation adjustments

    (25     (39

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

  $ (14   $ 77   

 

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Net Cash Provided by Operating Activities

 

    Six Months Ended
June 30
 
(in millions)       2014             2013      

Net income

  $ 3,963      $ 3,389   

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

   

Depreciation and amortization

    3,970        3,957   

Share-based compensation

    266        213   

Noncash interest expense (income), net

    87        81   

Equity in net (income) losses of investees, net

    (54     (34

Cash received from investees

    50        72   

Net (gain) loss on investment activity and other

    (113     (91

Deferred income taxes

    (22     87   

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

   

Current and noncurrent receivables, net

    60        58   

Film and television costs, net(a)

    (28     750   

Accounts payable and accrued expenses related to trade creditors

    (168     (87

Other operating assets and liabilities

    (464     (710

Net cash provided by operating activities

  $ 7,547      $ 7,685   

 

(a)

Comprised of additions to our film and television cost assets of $5,007 million and $3,330 million, net of film and television cost amortization of $4,979 million and $4,080 million in 2014 and 2013, respectively.

Cash Payments for Interest and Income Taxes

 

    Three Months Ended
June 30
     Six Months Ended
June 30
 
(in millions)       2014              2013              2014              2013      

Interest

  $ 541       $ 515       $ 1,164       $ 1,132   

Income taxes

  $ 1,718       $ 1,761       $ 1,904       $ 2,222   

Noncash Investing and Financing Activities

During the six months ended June 30, 2014:

 

   

we acquired $879 million of property and equipment and intangible assets that were accrued but unpaid

 

 

   

we recorded a liability of $583 million for a quarterly cash dividend of $0.225 per common share paid in July 2014

 

 

   

we used $1.5 billion of equity securities to settle our obligations under prepaid forward sale agreements

 

 

Note 11: 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.

 

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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. In June 2012, the U.S. Supreme Court granted our petition to review the Third Circuit Court of Appeals’ ruling and in March 2013, the Supreme Court ruled that the class had been improperly certified and reversed the judgment of the Third Circuit. The matter has been returned to the District Court for action consistent with the Supreme Court’s opinion. In August 2013, the plaintiffs in the Philadelphia Cluster case moved to certify a new, smaller class, which we opposed in January 2014. The parties have been discussing possible resolution of the Philadelphia Cluster case. Accordingly, in February 2014, the plaintiff filed an unopposed motion to stay the case, which the District Court granted. In April 2014, the District Court granted our unopposed motion to de-certify the Chicago Cluster class and the plaintiffs’ unopposed motion to amend the Pennsylvania case so as to dismiss claims relating to the Chicago Cluster. In April 2014, lead counsel for the Boston Cluster cases withdrew, and in June 2014, new counsel requested the Boston Cluster cases be transferred to the federal court in Boston, which we have opposed.

In addition, we are the defendant in 22 purported class actions filed in federal district courts throughout the country. All of these actions have been consolidated by the Judicial Panel on Multidistrict Litigation in the United States District Court for the Eastern District of Pennsylvania for pre-trial proceedings. In a consolidated complaint filed in November 2009 on behalf of all plaintiffs in the multidistrict litigation, the plaintiffs allege that we improperly “tie” the rental of set-top boxes to the provision of premium cable services in violation of Section 1 of the Sherman Antitrust Act, various state antitrust laws and unfair/deceptive trade practices acts in California, Illinois and Alabama. The plaintiffs also allege a claim for unjust enrichment and seek relief on behalf of a nationwide class of our premium cable customers and on behalf of subclasses consisting of premium cable customers from California, Alabama, Illinois, Pennsylvania and Washington. In January 2010, we moved to compel arbitration of the plaintiffs’ claims for unjust enrichment and violations of the unfair/deceptive trade practices acts of Illinois and Alabama. In September 2010, the plaintiffs filed an amended complaint alleging violations of additional state antitrust laws and unfair/deceptive trade practices acts on behalf of new subclasses in Connecticut, Florida, Minnesota, Missouri, New Jersey, New Mexico and West Virginia. In the amended complaint, plaintiffs omitted their unjust enrichment claim, as well as their state law claims on behalf of the Alabama, Illinois and Pennsylvania subclasses. In June 2011, the plaintiffs filed another amended complaint alleging only violations of Section 1 of the Sherman Antitrust Act, antitrust law in Washington and unfair/deceptive trade practices acts in California and Washington. The plaintiffs seek relief on behalf of a nationwide class of our premium cable customers and on behalf of subclasses consisting of premium cable customers from California and Washington. In July 2011, we moved to compel arbitration of most of the plaintiffs’ 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 June 2013, a comprehensive settlement agreement for all 23 cases was submitted to the District Court for preliminary approval. Regardless of whether this settlement agreement is approved, we do not expect these cases to have a material effect on our results of operations, cash flows or financial position.

We believe the claims in each of the pending actions described above in this item are without merit, except as otherwise set forth above, 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 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.

 

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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 results of operations, cash flows or financial position, any litigation resulting from any such legal proceedings or claims could be time consuming, costly and injure our reputation.

Note 12: Financial Data by Business Segment

We present our operations in five reportable business segments:

 

   

Cable Communications: Consists of the operations of Comcast Cable, which is the nation’s largest provider of video, high-speed Internet and voice services (“cable services”) to residential customers under the XFINITY brand, and we also provide similar services to businesses and sell advertising.

 

 

   

Cable Networks: Consists primarily of our national cable networks, our regional sports networks, our international cable networks and our cable television production operations.

 

 

   

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

 

 

   

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

 

 

   

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

 

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

 

    Three Months Ended June 30, 2014  
(in millions)   Revenue(e)     Operating Income (Loss)
Before Depreciation and
Amortization(f)
    Depreciation
and
Amortization
     Operating
Income
(Loss)
    Capital
Expenditures
 

Cable Communications(a)

  $ 11,029      $ 4,564      $ 1,604       $ 2,960      $ 1,493   

NBCUniversal

          

Cable Networks(b)

    2,476        914        180         734        8   

Broadcast Television

    1,816        240        27         213        26   

Filmed Entertainment(b)

    1,176        195        5         190        3   

Theme Parks

    615        244        73         171        158   

Headquarters and Other(c)

    4        (159     85         (244     103   

Eliminations(d)

    (71                             

NBCUniversal

    6,016        1,434        370         1,064        298   

Corporate and Other

    172        (182     26         (208     7   

Eliminations(d)

    (373     (12             (12       

Comcast Consolidated

  $ 16,844      $ 5,804      $ 2,000       $ 3,804      $ 1,798   

 

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    Three Months Ended June 30, 2013  
(in millions)   Revenue(e)     Operating Income (Loss)
Before Depreciation and
Amortization(f)
    Depreciation
and
Amortization
     Operating
Income
(Loss)
    Capital
Expenditures
 

Cable Communications(a)

  $ 10,467      $ 4,335      $ 1,623       $ 2,712      $ 1,240   

NBCUniversal

          

Cable Networks(b)

    2,413        860        182         678        24   

Broadcast Television

    1,732        206        26         180        9   

Filmed Entertainment(b)

    1,388        33        3         30        1   

Theme Parks

    546        231        73         158        147   

Headquarters and Other(c)

    9        (137     65         (202     79   

Eliminations(d)

    (93     (2             (2       

NBCUniversal

    5,995        1,191        349         842        260   

Corporate and Other

    136        (119     17         (136     6   

Eliminations(d)

    (328     18        1         17          

Comcast Consolidated

  $ 16,270      $ 5,425      $ 1,990       $ 3,435      $ 1,506   

 

    Six Months Ended June 30, 2014  
(in millions)   Revenue(e)     Operating Income (Loss)
Before Depreciation and
Amortization(f)
    Depreciation
and
Amortization
     Operating
Income
(Loss)
    Capital
Expenditures
 

Cable Communications(a)

  $ 21,786      $ 8,964      $ 3,188       $ 5,776      $ 2,638   

NBCUniversal

          

Cable Networks(b)

    4,981        1,809        369         1,440        19   

Broadcast Television

    4,437        362        54         308        37   

Filmed Entertainment(b)

    2,527        483        10         473        4   

Theme Parks

    1,102        414        142         272        302   

Headquarters and Other(c)

    6        (322     160         (482     227   

Eliminations(d)

    (161     (1             (1       

NBCUniversal

    12,892        2,745        735         2,010        589   

Corporate and Other

    346        (335     47         (382     19   

Eliminations(d)

    (772     (32             (32       

Comcast Consolidated

  $ 34,252      $ 11,342      $ 3,970       $ 7,372      $ 3,246   

 

    Six Months Ended June 30, 2013  
(in millions)   Revenue(e)     Operating Income (Loss)
Before Depreciation and
Amortization(f)
    Depreciation
and
Amortization
     Operating
Income
(Loss)
    Capital
Expenditures
 

Cable Communications(a)

  $ 20,684      $ 8,554      $ 3,231       $ 5,323      $ 2,334   

NBCUniversal

          

Cable Networks(b)

    4,638        1,719        366         1,353        48   

Broadcast Television

    3,249        171        51         120        17   

Filmed Entertainment(b)

    2,604        102        7         95        3   

Theme Parks

    1,008        404        145         259        285   

Headquarters and Other(c)

    18        (249     124         (373     170   

Eliminations(d)

    (182     (3             (3       

NBCUniversal

    11,335        2,144        693         1,451        523   

Corporate and Other

    298        (202     32         (234     10   

Eliminations(d)

    (737     (37     1         (38       

Comcast Consolidated

  $ 31,580      $ 10,459      $ 3,957       $ 6,502      $ 2,867   

 

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Comcast Corporation

 

(a)

For the three and six months ended June 30, 2014 and 2013, Cable Communications segment revenue was derived from the following sources:

 

   

Three Months Ended

June 30

    Six Months Ended
June 30
 
         2014             2013             2014             2013      

Residential:

       

Video

    47.5     49.4     47.8     49.7

High-speed Internet

    25.6     24.5     25.6     24.6

Voice

    8.4     8.7     8.5     8.8

Business services

    8.7     7.5     8.6     7.4

Advertising

    5.4     5.3     5.1     5.1

Other

    4.4     4.6     4.4     4.4

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, 2014, 2.8% of Cable Communications segment revenue was derived from franchise and other regulatory fees. For the three and six months ended June 30, 2013, 2.8% and 2.9%, respectively, of Cable Communications segment revenue was derived from franchise and other regulatory fees.

 

(b)

Beginning in 2014, Fandango, our movie ticketing and entertainment business that was previously presented in our Cable Networks segment, is now presented in the Filmed Entertainment segment to reflect the change in our management reporting presentation. Due to immateriality, prior period amounts have not been adjusted. The change in presentation resulted in the reclassification of $195 million of goodwill from our Cable Networks segment to our Filmed Entertainment segment.

 

(c)

NBCUniversal Headquarters and Other activities includes costs associated with overhead, allocations, personnel costs and headquarter initiatives.

 

(d)

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 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

 

 

   

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

 

 

(e)

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

 

(f)

We use operating income (loss) before depreciation and amortization, excluding impairment charges related to fixed and intangible assets and gains or losses on 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 that of other companies in our industries, although our measure may not be directly comparable to similar measures used by other companies. This measure should not be considered a substitute for operating income (loss), net income (loss) 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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Comcast Corporation

Note 13: Condensed Consolidating Financial Information

Comcast Corporation (“Comcast Parent”), our cable guarantors and NBCUniversal Media, LLC (referred to as “NBCUniversal Media Parent” in the tables below) 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 Parent and the cable guarantors also fully and unconditionally guarantee NBCUniversal Enterprise’s $4 billion aggregate principal amount of senior notes, its $1.35 billion revolving credit facility due March 2018 and the associated commercial paper program. NBCUniversal Media Parent does not guarantee the NBCUniversal Enterprise senior notes, credit facility or commercial paper program.

Comcast Parent provides an unconditional subordinated guarantee of the $185 million principal amount currently outstanding of Comcast Holdings’ ZONES due October 2029. Neither the cable guarantors nor NBCUniversal Media Parent guarantee the Comcast Holdings’ ZONES due October 2029. None of Comcast Parent, the cable guarantors nor NBCUniversal Media Parent guarantee the $62 million principal amount currently outstanding of Comcast Holdings’ ZONES due November 2029.

 

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Comcast Corporation

Condensed Consolidating Balance Sheet

June 30, 2014

 

(in millions)   Comcast
Parent
    Comcast
Holdings
    CCCL
Parent
    Combined
CCHMO
Parents
    NBCUniversal
Media Parent
   

Non-

Guarantor
Subsidiaries

    Elimination
and
Consolidation
Adjustments
    Consolidated
Comcast
Corporation
 

Assets

               

Cash and cash equivalents

  $  —      $  —      $  —      $  —      $ 307      $ 1,222      $  —      $ 1,529   

Investments

                                8        2,317               2,325   

Receivables, net

                                       6,232               6,232   

Programming rights

                                       905               905   

Other current assets

    227                             35        1,519               1,781   

Total current assets

    227                             350        12,195               12,772   

Film and television costs

                                       5,208               5,208   

Investments

    21                             374        2,677               3,072   

Investments in and amounts due from subsidiaries eliminated upon consolidation

    81,329        100,649        107,347        57,057        40,511        91,705        (478,598       

Property and equipment, net

    209                                    29,761               29,970   

Franchise rights

                                       59,364               59,364   

Goodwill

                                       27,323               27,323   

Other intangible assets, net

    10                                    17,223               17,233   

Other noncurrent assets, net

    1,179        148                      97        2,065        (972     2,517   

Total assets

  $ 82,975      $ 100,797      $ 107,347      $ 57,057      $ 41,332      $ 247,521      $ (479,570   $ 157,459   

Liabilities and Equity

               

Accounts payable and accrued expenses related to trade creditors

  $ 11      $      $      $      $      $ 5,421      $      $ 5,432   

Accrued participations and residuals

                                       1,364               1,364   

Accrued expenses and other current liabilities

    1,501        283        193        47        322        5,286               7,632   

Current portion of long-term debt

    900                             1,011        1,036               2,947   

Total current liabilities

    2,412        283        193        47        1,333        13,107               17,375   

Long-term debt, less current portion

    26,489        132        1,827        1,502        9,220        4,432               43,602   

Deferred income taxes

           738                      59        31,885        (828     31,854   

Other noncurrent liabilities

    2,103                             981        8,301        (144     11,241   

Redeemable noncontrolling interests and redeemable subsidiary preferred stock

                                       1,055               1,055   

Equity:

               

Common stock

    30                                                  30   

Other shareholders’ equity

    51,941        99,644        105,327        55,508        29,739        188,380        (478,598     51,941   

Total Comcast Corporation shareholders’ equity

    51,971        99,644        105,327        55,508        29,739        188,380        (478,598     51,971   

Noncontrolling interests

                                       361               361   

Total equity

    51,971        99,644        105,327        55,508        29,739        188,741        (478,598     52,332   

Total liabilities and equity

  $ 82,975      $ 100,797      $ 107,347      $ 57,057      $ 41,332      $ 247,521      $ (479,570   $ 157,459   

 

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Comcast Corporation

Condensed Consolidating Balance Sheet

December 31, 2013

 

(in millions)   Comcast
Parent
    Comcast
Holdings
    CCCL
Parent
    Combined
CCHMO
Parents
    NBCUniversal
Media Parent
   

Non-

Guarantor
Subsidiaries

    Elimination
and
Consolidation
Adjustments
    Consolidated
Comcast
Corporation
 

Assets

               

Cash and cash equivalents

  $  —      $  —      $  —      $  —      $ 336      $ 1,382      $  —      $ 1,718   

Investments

                                       3,573               3,573   

Receivables, net

                                       6,376               6,376   

Programming rights

                                       928               928   

Other current assets

    237                             35        1,208               1,480   

Total current assets

    237                             371        13,467               14,075   

Film and television costs

                                       4,994               4,994   

Investments

    11                             374        3,385               3,770   

Investments in and amounts due from subsidiaries eliminated upon consolidation

    79,956        97,429        102,673        54,724        40,644        85,164        (460,590       

Property and equipment, net

    220                                    29,620               29,840   

Franchise rights

                                       59,364               59,364   

Goodwill

                                       27,098               27,098   

Other intangible assets, net

    11                                    17,318               17,329   

Other noncurrent assets, net

    1,078        145                      103        1,899        (882     2,343   

Total assets

  $ 81,513      $ 97,574      $ 102,673      $ 54,724      $ 41,492      $ 242,309      $ (461,472   $ 158,813   

Liabilities and Equity

               

Accounts payable and accrued expenses related to trade creditors

  $ 8      $      $      $      $      $ 5,520      $      $ 5,528   

Accrued participations and residuals

                                       1,239               1,239   

Accrued expenses and other current liabilities

    1,371        266        180        47        323        6,678               8,865   

Current portion of long-term debt

    2,351                             903        26               3,280   

Total current liabilities

    3,730        266        180        47        1,226        13,463               18,912   

Long-term debt, less current portion

    25,170        132        1,827        1,505        10,236        5,697               44,567   

Deferred income taxes

           777                      59        31,840        (741     31,935   

Other noncurrent liabilities

    1,919                             931        8,675        (141     11,384   

Redeemable noncontrolling interests and redeemable subsidiary preferred stock

                                       957               957   

Equity:

               

Common stock

    30                                                  30   

Other shareholders’ equity

    50,664        96,399        100,666        53,172        29,040        181,313        (460,590     50,664   

Total Comcast Corporation shareholders’ equity

    50,694        96,399        100,666        53,172        29,040        181,313        (460,590     50,694   

Noncontrolling interests

                                       364               364   

Total equity

    50,694        96,399        100,666        53,172        29,040        181,677        (460,590     51,058   

Total liabilities and equity

  $ 81,513      $ 97,574      $ 102,673      $ 54,724      $ 41,492      $ 242,309      $ (461,472   $ 158,813   

 

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Comcast Corporation

Condensed Consolidating Statement of Income

For the Three Months Ended June 30, 2014

 

(in millions)   Comcast
Parent
    Comcast
Holdings
    CCCL
Parent
    Combined
CCHMO
Parents
    NBCUniversal
Media Parent
   

Non-

Guarantor
Subsidiaries

    Elimination
and
Consolidation
Adjustments
    Consolidated
Comcast
Corporation
 

Revenue:

               

Service revenue

  $  —      $  —      $  —      $  —      $  —      $ 16,844      $  —      $ 16,844   

Management fee revenue

    237               231        145                      (613       
      237               231        145               16,844        (613     16,844   

Costs and Expenses:

               

Programming and production

                                       4,874               4,874   

Other operating and administrative

    181               231        145        237        4,743        (613     4,924   

Advertising, marketing and promotion

                                       1,242               1,242   

Depreciation

    8                                    1,591               1,599   

Amortization

    2                                    399               401   
      191               231        145        237        12,849        (613     13,040   

Operating income (loss)

    46                             (237     3,995               3,804   

Other Income (Expense):

               

Interest expense

    (400     (3     (44     (30     (125     (46            (648

Investment income (loss), net

    1                             4        115               120   

Equity in net income (losses) of investees, net

    2,222        1,908        1,774        1,554        1,171        836        (9,443     22   

Other income (expense), net

                                7        (46            (39
      1,823        1,905        1,730        1,524        1,057        859        (9,443     (545

Income (loss) before income taxes

    1,869        1,905        1,730        1,524        820        4,854        (9,443     3,259   

Income tax (expense) benefit

    123        1        15        11        (6     (1,378            (1,234

Net income (loss)

    1,992        1,906        1,745        1,535        814        3,476        (9,443     2,025   

Net (income) loss attributable to noncontrolling interests and redeemable subsidiary preferred stock

                                       (33            (33

Net income (loss) attributable to Comcast Corporation

  $ 1,992      $ 1,906      $ 1,745      $ 1,535      $ 814      $ 3,443      $ (9,443   $ 1,992   

Comprehensive income (loss) attributable to Comcast Corporation

  $ 1,945      $ 1,912      $ 1,744      $ 1,535      $ 832      $ 3,401      $ (9,424   $ 1,945   

 

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Comcast Corporation

Condensed Consolidating Statement of Income

For the Three Months Ended June 30, 2013

 

(in millions)   Comcast
Parent
    Comcast
Holdings
    CCCL
Parent
    Combined
CCHMO
Parents
    NBCUniversal
Media Parent
   

Non-

Guarantor
Subsidiaries

    Elimination
and
Consolidation
Adjustments
    Consolidated
Comcast
Corporation
 

Revenue:

               

Service revenue

  $      $      $      $      $      $ 16,270      $      $ 16,270   

Management fee revenue

    225               219        137                      (581       
      225               219        137               16,270        (581     16,270   

Costs and Expenses:

               

Programming and production

                                       4,968               4,968   

Other operating and administrative

    101               219        137        205        4,489        (581     4,570   

Advertising, marketing and promotion

                                       1,307               1,307   

Depreciation

    8                                    1,575               1,583   

Amortization

    2                                    405               407   
      111               219        137        205        12,744        (581     12,835   

Operating income (loss)

    114                             (205     3,526               3,435   

Other Income (Expense):

               

Interest expense

    (383     (2     (46     (33     (123     (49            (636

Investment income (loss), net

    1        6                      5        1               13   

Equity in net income (losses) of investees, net

    1,910        1,909        1,835        1,349        951        646        (8,577     23   

Other income (expense), net

    (1            2                      (44            (43
      1,527        1,913        1,791        1,316        833        554        (8,577     (643

Income (loss) before income taxes

    1,641        1,913        1,791        1,316        628        4,080        (8,577     2,792   

Income tax (expense) benefit

    93        (1     16        12        (5     (1,163            (1,048

Net income (loss)

    1,734        1,912        1,807        1,328        623        2,917        (8,577     1,744   

Net (income) loss attributable to noncontrolling interests and redeemable subsidiary preferred stock

                                       (10            (10

Net income (loss) attributable to Comcast Corporation

  $ 1,734      $ 1,912      $ 1,807      $ 1,328      $ 623      $ 2,907      $ (8,577   $ 1,734   

Comprehensive income (loss) attributable to Comcast Corporation

  $ 1,822      $ 1,905      $ 1,808      $ 1,328      $ 599      $ 3,007      $ (8,647   $ 1,822   

 

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Comcast Corporation

Condensed Consolidating Statement of Income

For the Six Months Ended June 30, 2014

 

(in millions)   Comcast
Parent
    Comcast
Holdings
    CCCL
Parent
    Combined
CCHMO
Parents
    NBCUniversal
Media Parent
   

Non-

Guarantor
Subsidiaries

    Elimination
and
Consolidation
Adjustments
    Consolidated
Comcast
Corporation
 

Revenue:

               

Service revenue

  $      $      $      $      $      $ 34,252      $      $ 34,252   

Management fee revenue

    467               454        286                      (1,207       
      467               454        286               34,252        (1,207     34,252   

Costs and Expenses:

               

Programming and production

                                       10,782               10,782   

Other operating and administrative

    274               454        286        494        9,375        (1,207     9,676   

Advertising, marketing and promotion

                                       2,452               2,452   

Depreciation

    15                                    3,153               3,168   

Amortization

    3                                    799               802   
      292               454        286        494        26,561        (1,207     26,880   

Operating income (loss)

    175                             (494     7,691               7,372   

Other Income (Expense):

               

Interest expense

    (787     (6     (89     (59     (249     (100            (1,290

Investment income (loss), net

    2        3                      5        223