Exhibit 99.1
COMCAST REPORTS SECOND QUARTER 2005 RESULTS
REVENUE INCREASED 10.5% TO $5.6 BILLION
OPERATING INCOME INCREASED 23.2% TO $1.0 BILLION
OPERATING CASH FLOW INCREASED 13.2% TO $2.2 BILLION
20TH CONSECUTIVE QUARTER OF DOUBLE-DIGIT GROWTH
GROWTH IN NEW SERVICES CONTINUES
ADDED 1.1 MILLION REVENUE GENERATING UNITS
DURING THE FIRST HALF OF 2005 INCLUDING
507,000 DURING THE SECOND QUARTER
PHILADELPHIA, August 2, 2005 -- Comcast Corporation (Nasdaq: CMCSA, CMCSK)
today reported results for the quarter ended June 30, 2005. Comcast will discuss
second quarter results on a conference call and webcast today at 8:30 AM Eastern
Time. A live broadcast of the conference call will be available on the investor
relations website at www.cmcsa.com and www.cmcsk.com.
Brian L. Roberts, Chairman and CEO of Comcast Corporation said, "This is our
20th consecutive quarter reporting double-digit operating cash flow growth and,
at 40.8%, cable's Operating Cash Flow margins are the highest in 2 1/2 years. We
are posting solid results in the second quarter with revenue growth of 10.5% and
Operating Cash Flow growth of 13.2%. Operating income increased 23.2% to $1.0
billion.
"Our consistently strong performance - double-digit revenue and cash flow
growth and free cash flow growth above 20% - demonstrates the inherent strength
of our business and reinforces our confidence in the future.
"We are extending our competitive advantage with industry-leading products.
In video, we are continuing to expand our ON DEMAND, HDTV and DVR offerings and
are beginning to rollout our enhanced basic - 100% digital service. We recently
announced an important new agreement with Starz Encore that significantly
enhances our ON DEMAND service, adding more than 325 top movies a month to the
3,500 program choices our customers enjoy today. In June, our customers viewed
over 112 million ON DEMAND programs, a 10 million increase in 3 months, as we
continue to provide an unmatched product with more choice and customer value.
"We also recently announced a 50% increase in the speed of our high-speed
Internet service - now 6 megabits per second - and continue to deliver a growing
array of valuable enhancements and features like security and online gaming. Our
strategy of product innovation and differentiation is working - we added 1.1
million revenue generating units during the first six months of this year - more
than we did in the first half of last year.
"We believe Comcast Digital Voice will be the next engine for growth and are
ramping up the rollout of this service in markets like Philadelphia,
Indianapolis, Boston, Hartford, Chicago and Portland. We are on track to extend
our offering to 15 million homes in 20 markets by year end and expect to offer
our fully-featured digital voice service across our 41 million homes by the end
of 2006.
"We are excited about the future of our business and are positioning Comcast
to continue to deliver the best entertainment and communications services to our
customers and to build value for our shareholders."
Comcast Cable Results
Cable results for the quarter and the six months ended June 30, 2005 are
presented on a pro forma basis. Pro forma cable results adjust only for certain
acquisitions and dispositions and are presented as if the acquisitions and
dispositions were effective on January 1, 2004. Please refer to Table 7-A for a
reconciliation of pro forma data.
Second Quarter 2005
Comcast Cable reported revenue of $5.3 billion for the quarter ended June
30, 2005, representing a 10.1% increase from the second quarter of 2004. Comcast
Cable added 507,000 revenue generating units in the second quarter of 2005, an
increase of 22.1% from the 415,000 added in the same quarter last year.
Video revenue increased $192 million or 5.9% to $3.4 billion in the second
quarter of 2005, driven by higher monthly revenue per basic subscriber and a
13.3% increase in the number of digital customers. Comcast Cable added 284,000
new digital customers in the second quarter of 2005 and with more than 9.1
million subscribers, digital cable penetration reached 42.6% of basic
subscribers. As expected, basic subscribers are essentially unchanged from a
year ago at 21.4 million, and declined seasonally by 77,000 or 0.2% from the
first quarter of 2005.
Digital cable subscriber and video revenue growth reflects strong consumer
demand for new digital features and services including Comcast ON DEMAND,
high-definition television (HDTV) programming and digital video recorders
(DVRs), as well as the initial rollout of an enhanced basic - 100% digital
service in a number of markets. During the second quarter, pay-per-view revenues
increased 24.0% - the seventh consecutive quarter of pay-per-view revenue
growth, driven by more movie and event purchases through the Comcast ON DEMAND
service. During the second quarter, Comcast Cable deployed nearly 300,000
advanced set-top boxes with DVR and/or HDTV programming capability, generating
an incremental $5 to $10 of monthly revenue per box.
Comcast High-speed Internet service revenues increased 28.8% to $982 million
in the second quarter of 2005, reflecting a 28.3% increase in subscribers and
strong average revenue per subscriber. Comcast Cable ended the second quarter of
2005 with more than 7.7 million high-speed Internet subscribers, adding 297,000
subscribers during the second quarter of 2005 for a penetration rate of 18.9% of
available homes. Average monthly revenue per high-speed Internet subscriber of
$43.34 in the second quarter of 2005, was in line with the second quarter of
2004 and increased $0.53 from the $42.81 reported in the first quarter of 2005.
Advertising revenue for the second quarter of 2005 increased 9.9% to $362
million, reflecting growth of 6.5% in local advertising and growth of 16.7% in
regional/national advertising as a result of the continuing success of our
regional interconnect strategy. The growth in advertising revenue during the
quarter was slightly offset by a decline in political advertising when compared
to the prior year. Advertising revenue growth in the second half of 2005 will
reflect a significant decline in political advertising when compared to the 2004
election year.
Comcast Cable added 15,000 Comcast Digital Voice customers (CDV - Comcast's
phone service using IP technology), reflecting the rollout of CDV in new markets
late in the second quarter. As expected, CDV customer additions were offset by a
decline in the number of Comcast's circuit-switched telephone customers as
Comcast transitions to marketing Comcast Digital Voice. Comcast Cable reported
2,000 net new phone customers in the second quarter of 2005. Cable phone revenue
declined 4.0% from the second quarter of 2004 to $170 million in the second
quarter of 2005, due primarily to a decline in access revenue per customer.
Cable operating income before depreciation and amortization (Operating Cash
Flow) grew 13.2% to $2.2 billion in the second quarter, an increase from the
$1.9 billion reported for the second quarter of 2004. Second quarter 2005
Operating Cash Flow margin increased to 40.8% from 39.7% in the second quarter
of 2004.
Cable capital expenditures increased 4.8% to $936 million compared to the
$893 million in the second quarter of the prior year. The increase in capital
expenditures reflects the purchase of digital set-top boxes to meet expected
demand, as well as certain capital investments, including equipment for digital
simulcasting and our integrated service platform, which are expected to decline
in the second half of 2005.
Year-to-date June 2005
For the six months ended June 30, 2005, Comcast Cable reported revenue of
$10.4 billion, representing a 9.9% increase from the prior year. Comcast Cable
added a total of 1.1 million new revenue generating units during the first half
of 2005, a 7.9% increase from the first half of last year.
Video revenue increased 5.8% during the period, driven by higher monthly
revenue per basic subscriber and a 13.3% increase in the number of digital
customers. Comcast Cable added nearly 484,000 digital cable subscribers during
the first six months of 2005 to end the period with more than 9.1 million
digital subscribers. Comcast Cable basic subscribers declined 106,000 during the
first six months of 2005, ending the period at 21.4 million subscribers.
Comcast Cable added nearly 712,000 high-speed Internet subscribers during
the first half of 2005 to end the period with more than 7.7 million subscribers.
Revenues for this service increased 30.6% from the prior year to $1.9 billion,
reflecting strong year over year subscriber growth. Advertising revenue
increased 9.8% from the same period of 2004 to $658 million, including the
decline in political advertising from the 2004 election year. Cable phone
revenue declined 3.5% from the same period one year ago to $343 million,
primarily due to lower revenue per customer. Comcast Cable added 7,000 phone
subscribers in the first six months of 2005 compared to a loss of 42,000
subscribers in the first half of 2004.
Operating Cash Flow grew 14.5% from the same period one year ago to $4.2
billion, reflecting strong revenue growth and the Company's success in
controlling the growth of operating costs. Operating Cash Flow margin for the
first six months of 2005 increased to 40.0% from 38.4% during the first six
months of the prior year. Comcast Cable capital expenditures were $1.8 billion
for the first six months of 2005 compared to $1.7 billion last year. As
previously described, the level of capital expenditures is expected to decline
in the second half of 2005.
Content
Comcast's content segment consists of our national networks E! Entertainment
Television and Style Network (E! Networks), The Golf Channel, Outdoor Life
Network, G4 and AZN Television (formerly International Channel Networks).
Comcast's content segment reported second quarter 2005 revenue of $234
million, a 17.7% increase from the second quarter of 2004 reflecting increases
in distribution and advertising revenue for all the networks. The content
segment reported Operating Cash Flow of $97 million in the second quarter of
2005, a 25.4% increase above the second quarter of 2004.
For the six months ended June 30, 2005, Comcast's content segment reported
revenue of $447 million, a 19.2% increase compared to the prior year period, and
Operating Cash Flow of $174 million, an increase of 19.1% from the same time
last year.
Corporate and Other
Corporate and Other includes Comcast-Spectacor, corporate overhead and other
operations and eliminations between Comcast's businesses. In the second quarter
of 2005, we reported Corporate and Other revenue of $36 million and an Operating
Cash Flow loss of $63 million as compared to revenue of $28 million and an
Operating Cash Flow loss of $45 million in the second quarter of 2004.
For the six months ended June 30, 2005, Corporate and Other revenue declined
to $83 million from the $114 million reported in the same period of 2004. The
Operating Cash Flow loss for the year-to-date period ended June 30, 2005, was
$105 million compared to $100 million in 2004. Results for the six month period
and the quarter ended June 30, 2005, were impacted by the absence of National
Hockey League games.
Consolidated Results
For the three months ended June 30, 2005, the Company reported consolidated
revenues of $5.6 billion, a 10.5% increase from the $5.1 billion reported in the
same period of 2004. Consolidated Operating Cash Flow increased to $2.2 billion
or 13.2%, in the second quarter of 2005, from the $2.0 billion reported in the
same prior year period. Operating income increased to $1.0 billion in the second
quarter of 2005 compared to operating income of $852 million in the second
quarter of 2004.
Free Cash Flow (described further on Table 4) was $422 million in the second
quarter of 2005 compared to $500 million reported in the second quarter of 2004,
reflecting increases in Operating Cash Flow and capital expenditures and the
timing of income tax payments in the second quarter of 2005. For the three
months ended June 30, 2005, the Company reported consolidated net income of $430
million or $0.19 per share compared to consolidated net income of $262 million
or $0.12 per share in the second quarter of 2004. The increase in net income is
primarily due to the growth in Operating Cash Flow.
For the six months ended June 30, 2005, consolidated revenue increased 9.9%
to $11.0 billion from the $10.0 billion reported in the same period of 2004. The
Operating Cash Flow for the period ended June 30, 2005 was $4.2 billion, an
increase of 15.0% when compared to $3.7 billion in 2004. Operating income
increased to $1.9 billion in the first half of 2005 compared to operating income
of $1.5 billion during the first half of 2004.
Free Cash Flow was $1.1 billion during the year-to-date period, an increase
of 27.5% from the $897 million reported during the same period of last year. For
the six months ended June 30, 2005, the Company reported consolidated net income
of $573 million or $0.26 per share compared to consolidated net income of $327
million or $0.14 per share in the six months ended June 30, 2004. The increase
in year-to-date net income is due primarily to the growth in Operating Cash
Flow.
Share Repurchase Program
Comcast repurchased $334 million, or 10.5 million shares, of its common
stock under its stock repurchase program during the second quarter of 2005.
During 2005, the Company repurchased $637 million of its Class A Special Common
Stock, or 19.9 million shares. Remaining availability under the Company's stock
repurchase program is $2 billion. Since the inception of the repurchase program
in December 2003, Comcast has repurchased $2.0 billion or 67.7 million shares of
its common stock.
Financial Guidance 2005
Comcast reaffirms the following previously issued guidance for 2005:
-- Consolidated revenue growth of approximately 10%.
-- Total Revenue Generating Unit growth of at least 2.5 million units.
-- Consolidated Operating Cash Flow growth of 14% to 15%.*
-- Consolidated Free Cash Flow growth of 35% to 45%.*
-- Consolidated capital expenditures of $3.2-$3.3 billion.
*Does not include any impact from the adoption of SFAS No. 123R
(Accounting for stock-based compensation).
This press release contains forward-looking statements. Readers are
cautioned that such forward-looking statements involve risks and uncertainties
that could significantly affect actual results from those expressed in any such
forward-looking statements. Readers are directed to Comcast's Quarterly Report
on Form 10-Q for a description of such risks and uncertainties.
In this discussion we sometimes refer to financial measures that are not
presented according to generally accepted accounting principles (GAAP). Certain
of these measures are considered "non-GAAP financial measures" under the
Securities and Exchange Commission (SEC) regulations; those rules require the
supplemental explanation and reconciliation provided in table 7 of this release.
Comcast Corporation will host a conference call with the financial community
today August 2, 2005 at 8:30 a.m. Eastern Time (ET). The conference call will be
broadcast live on the Company's Investor Relations website at www.cmcsa.com or
www.cmcsk.com. A recording of the call will be available on the Investor
Relations website starting at 12:30 p.m. ET on August 2, 2005.
Those parties interested in participating via telephone should dial (847)
413-2408. A telephone replay will begin immediately following the call until
Wednesday, August 3, 2005 at midnight ET. To access the rebroadcast, please dial
(630) 652-3000 and enter passcode number 12020969#.
To automatically receive Comcast financial news by email, please visit
www.cmcsa.com or www.cmcsk.com and subscribe to e-mail Alerts.
About Comcast:
Comcast Corporation (Nasdaq: CMCSA, CMCSK) (www.comcast.com) is the nation's
leading provider of cable, entertainment and communications products and
services. With 21.4 million cable customers, 7.7 million high-speed Internet
customers, and 1.2 million voice customers, Comcast is principally involved in
the development, management and operation of broadband cable networks and in the
delivery of programming content.
The Company's content networks and investments include E! Entertainment
Television, Style Network, The Golf Channel, Outdoor Life Network, G4, AZN
Television, PBS KIDS Sprout, TV One and four regional Comcast SportsNets. The
Company also has a majority ownership in Comcast-Spectacor, whose major holdings
include the Philadelphia Flyers NHL hockey team, the Philadelphia 76ers NBA
basketball team and two large multipurpose arenas in Philadelphia. Comcast Class
A common stock and Class A Special common stock trade on The NASDAQ Stock Market
under the symbols CMCSA and CMCSK, respectively.
COMCAST CORPORATION
Table 1
Condensed Consolidated Statement of Operations (Unaudited)
(amounts in millions, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2005 2004 2005 2004
-------- -------- -------- --------
Revenues $ 5,598 $ 5,066 $ 10,961 $ 9,974
Operating expenses 1,944 1,794 3,901 3,663
Selling, general and
administrative expenses 1,445 1,320 2,821 2,626
3,389 3,114 6,722 6,289
Operating Cash Flow 2,209 1,952 4,239 3,685
Depreciation expense 891 813 1,765 1,611
Amortization expense 270 287 560 563
1,161 1,100 2,325 2,174
Operating Income 1,048 852 1,914 1,511
Other Income (Expense)
Interest expense (467) (484) (911) (984)
Investment income, net 176 151 140 142
Equity in net losses of
affiliates (16) (20) (4) (37)
Other income (expense) 30 12 (78) 19
(277) (341) (853) (860)
Income before Income Taxes
and Minority Interest 771 511 1,061 651
Income tax expense (331) (234) (471) (310)
Income Before Minority Interest 440 277 590 341
Minority interest (10) (15) (17) (14)
Net Income $ 430 $ 262 $ 573 $ 327
Net Income per common share $ 0.19 $ 0.12 $ 0.26 $ 0.14
Basic weighted average number of
common shares 2,207 2,257 2,211 2,257
Diluted weighted average number of
common shares 2,221 2,267 2,224 2,268
COMCAST CORPORATION
TABLE 2
Condensed Consolidated Balance Sheet (Unaudited)
(dollars in millions)
June 30, December 31,
2005 2004
------------ ------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,335 $ 452
Investments 848 1,555
Accounts receivable, net 1,031 959
Other current assets 570 569
Total current assets 3,784 3,535
INVESTMENTS 13,208 12,812
PROPERTY AND EQUIPMENT, NET 18,797 18,711
FRANCHISE RIGHTS 51,075 51,071
GOODWILL 14,118 14,020
OTHER INTANGIBLE ASSETS, net 3,658 3,851
OTHER NONCURRENT ASSETS, net 707 694
$ 105,347 $ 104,694
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued
expenses related to trade
creditors $ 2,042 $ 2,041
Accrued expenses and other
current liabilities 2,663 2,735
Deferred income taxes 110 360
Current portion of long-term
debt 3,367 1,854
Current portion of
exchangeable debt 1,017 1,645
Total current liabilities 9,199 8,635
LONG-TERM DEBT, less current
portion 19,697 20,039
LONG-TERM EXCHANGEABLE DEBT, less
current portion 49 54
DEFERRED INCOME TAXES 26,995 26,815
OTHER NONCURRENT LIABILITIES 7,310 7,261
MINORITY INTEREST 679 468
STOCKHOLDERS' EQUITY 41,418 41,422
$ 105,347 $ 104,694
COMCAST CORPORATION
TABLE 3
Condensed Consolidated Statement of Cash Flows (Unaudited)
(dollars in millions)
Six Months Ended
June 30,
---------------------------
2005 2004
------------ ------------
OPERATING ACTIVITIES
Net cash provided by operating
activities $ 2,517 $ 2,633
FINANCING ACTIVITIES
Proceeds from borrowings 1,495 1,058
Retirements and repayments of debt (279) (1,617)
Repurchases of common stock and
stock options (660) (511)
Issuances of common stock 59 38
Other, net 83 8
Net cash provided by (used in)
financing activities 698 (1,024)
INVESTING ACTIVITIES
Capital expenditures (1,842) (1,732)
Proceeds from sales and
restructuring of investments 317 51
Purchases of investments (305) (106)
Acquisitions, net of cash acquired (134) (336)
Additions to intangible and other
noncurrent assets (305) (453)
Purchases of short-term
investments, net (63) (15)
Proceeds from settlement of contract
of acquired company - 26
Net cash used in investing
activities (2,332) (2,565)
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 883 (956)
CASH AND CASH EQUIVALENTS, beginning
of period 452 1,550
CASH AND CASH EQUIVALENTS, end of
period $ 1,335 $ 594
TABLE 4
Calculation of Free Cash Flow (Unaudited) (1)
(dollars in millions)
Six Months Ended
June 30,
---------------------------
2005 2004
------------ ------------
Operating Cash Flow $ 4,239 $ 3,685
Interest, Net (2) (826) (906)
Cash Paid for Income Taxes (427) (150)
Capital Expenditures (1,842) (1,732)
FREE CASH FLOW $ 1,144 $ 897
Changes in Working Capital and Other
Items (3) (469) 4
Net Cash Provided by (Used in)
Operating Activities Less Capital
Expenditures $ 675 $ 901
(1) Free Cash Flow is defined as Operating Cash Flow less net interest, cash
paid for taxes, and capital expenditures. It is unaffected by fluctuations
in working capital levels from period to period and cash payments
associated with intangible and other noncurrent assets. Cash payments for
intangible and other noncurrent assets include long-term technology license
agreements including computer software, long term rights to service
multi-dwelling properties and programming content for our cable networks.
In 2005, cash payments for intangibles and other noncurrent assets of $305
million included licenses and software intangibles of approximately $105
million, multiple dwelling unit contracts of approximately $67 million and
acquisitions of additional ownership interests in certain of our majority
owned subsidiaries. In 2004, cash payments for intangible assets of $453
million included a long-term strategic license agreement with Gemstar of
approximately $250 million, other licenses and software intangibles of $104
million and multiple dwelling unit contracts of $69 million. In 2005, cash
payments for acquisitions and investments totaling $439 million included
MGM Inc., Liberate Technologies, and MetaTV. In 2004, cash payments for
acquisitions primarily related to the acquisition of TechTV.
(2) Includes interest expense net of interest income and excludes non-cash
interest and subsidiary preferred dividends.
(3) Free Cash Flow excludes amounts necessary to reconcile Free Cash Flow to
"Net Cash Provided by Operating Activities Less Capital Expenditures." In
2005, this amount includes $383 million in cash payments for liabilities
incurred as part of the acquisition of AT&T Broadband, including $220
million in payments representing our share of the settlement payments
related to certain AT&T litigation. In 2004, this amount includes income
tax refunds of $536 million offset by $199 million in cash payments for
liabilities recorded as part of the acquisition of AT&T Broadband.
COMCAST CORPORATION
TABLE 5
Pro Forma Financial Data by Business Segment (Unaudited) (1)
(dollars in millions)
Corporate
and
Content Other
Cable (2) (3) (4) Total
---------- ---------- ---------- ----------
Three Months Ended June 30, 2005
Revenues $ 5,328 $ 234 $ 36 $ 5,598
Operating Cash Flow $ 2,175 $ 97 $ (63) $ 2,209
Operating Income (Loss) $ 1,054 $ 68 $ (74) $ 1,048
Operating Cash Flow Margin 40.8% 41.2% NM 39.4%
Capital Expenditures (5) $ 936 $ 3 $ 11 $ 950
Three Months Ended June 30, 2004
Revenues $ 4,840 $ 199 $ 28 $ 5,067
Operating Cash Flow $ 1,920 $ 77 $ (45) $ 1,952
Operating Income (Loss) $ 877 $ 38 $ (63) $ 852
Operating Cash Flow Margin 39.7% 38.7% NM 38.5%
Capital Expenditures (5) $ 893 $ 6 $ 5 $ 904
Six Months Ended June 30, 2005
Revenues $ 10,431 $ 447 $ 83 $ 10,961
Operating Cash Flow $ 4,170 $ 174 $ (105) $ 4,239
Operating Income (Loss) $ 1,945 $ 100 $ (131) $ 1,914
Operating Cash Flow Margin 40.0% 38.8% NM 38.7%
Capital Expenditures (5) $ 1,819 $ 7 $ 16 $ 1,842
Six Months Ended June 30, 2004
Revenues $ 9,490 $ 375 $ 114 $ 9,979
Operating Cash Flow $ 3,641 $ 146 $ (100) $ 3,687
Operating Income (Loss) $ 1,581 $ 72 $ (140) $ 1,513
Operating Cash Flow Margin 38.4% 38.8% NM 37.0%
Capital Expenditures (5) $ 1,707 $ 10 $ 15 $ 1,732
(1) See Non-GAAP and Other Financial Measures in Table 7. Historical financial
data by business segment, as required under generally accepted accounting
principles, is available in the Company's quarterly report on Form 10-Q.
All percentages are calculated based on actual amounts. Minor differences
may exist due to rounding.
(2) Pro forma financial data includes the results of the 30,000 cable
subscribers acquired from US Coastal Cable in April 2004.
(3) Content includes our national networks E! Entertainment Television and
Style Network (E! Networks), The Golf Channel, Outdoor Life Network, G4 and
AZN Television.
(4) Corporate and Other includes Comcast-Spectacor, Corporate activities and
all other businesses not presented in the Cable or Content segments and
elimination entries. Beginning in the third quarter of 2004,
Comcast-Spectacor includes the operating results of its investment in a
sports-event related business.
(5) Our Cable segment's capital expenditures are comprised of the following
categories:
YTD YTD
2Q05 2Q04 2Q05 2Q04
-------- -------- -------- --------
New Service Offerings
Customer Premise Equipment (CPE) $ 469 $ 338 $ 932 $ 630
Scalable Infrastructure 227 110 436 231
696 448 1,368 861
Recurring Capital Projects
Line Extensions 81 81 145 141
Support Capital 92 76 139 165
173 157 284 306
Upgrades 67 288 167 540
Total $ 936 $ 893 $ 1,819 $ 1,707
CPE includes costs incurred at the customer residence to secure new customers,
revenue units and additional bandwidth revenues (e.g. digital converters).
Scalable infrastructure includes costs, not CPE or network related, to secure
growth of new customers, revenue units and additional bandwidth revenues or
provide service enhancements (e.g. headend equipment). Line extensions include
network costs associated with entering new service areas (e.g. fiber/coaxial
cable). Support capital includes costs associated with the replacement or
enhancement of non-network assets due to obsolescence and wear out (e.g.
non-network equipment, land, buildings and vehicles). Upgrades include costs to
enhance or replace existing fiber/coaxial cable networks, including recurring
betterments.
COMCAST CORPORATION
TABLE 6
Pro Forma Data - Cable Segment Components (Unaudited) (1) (2)
(dollars in millions, except average monthly revenue per subscriber data)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2005 2004 2005 2004
-------- -------- -------- --------
Revenues:
Video (3) $ 3,441 $ 3,249 $ 6,803 $ 6,433
High-Speed Internet 982 763 1,907 1,461
Phone 170 176 343 355
Advertising 362 330 658 599
Other (4) 203 159 383 320
Franchise Fees 170 163 337 322
Total Revenues $ 5,328 $ 4,840 $ 10,431 $ 9,490
Operating Cash Flow $ 2,175 $ 1,920 $ 4,170 $ 3,641
Operating Income $ 1,054 $ 877 $ 1,945 $ 1,581
Operating Cash Flow Margin 40.8% 39.7% 40.0% 38.4%
Capital Expenditures $ 936 $ 893 $ 1,819 $ 1,707
Operating Cash Flow, Net of Capital
Expenditures $ 1,239 $ 1,027 $ 2,351 $ 1,934
2Q05 2Q04 1Q05
-------- -------- --------
Video
Homes Passed (000's) 41,200 40,300 41,000
Basic Subscribers (000's) 21,448 21,485 21,525
Basic Penetration 52.1% 53.3% 52.6%
Quarterly Net Basic Subscriber
Additions (000's) (77) (96) (29)
Digital Subscribers (000's) 9,140 8,065 8,856
Digital Penetration 42.6% 37.5% 41.1%
Quarterly Net Digital Subscriber
Additions (000's) 284 206 200
Digital Set-Top Boxes 13,859 11,926 13,365
Monthly Average Video Revenue per
Basic Subscriber $ 53.38 $ 50.29 $ 52.04
Monthly Average Total Revenue per
Basic Subscriber $ 82.67 $ 74.91 $ 78.99
High-Speed Internet
"Available" Homes (000's) 40,758 37,323 40,483
Subscribers (000's) 7,705 6,007 7,408
Penetration 18.9% 16.1% 18.3%
Quarterly Net Subscriber Additions
(000's) 297 327 414
Monthly Average Revenue per
Subscriber $ 43.34 $ 43.50 $ 42.81
Phone
"Available" Homes (000's) (5) 12,227 9,766 11,277
Subscribers (000's) 1,230 1,225 1,228
Penetration 10.1% 12.5% 10.9%
Quarterly Net Subscriber Additions
(000's) 3 (22) 4
Monthly Average Revenue per
Subscriber $ 46.06 $ 47.71 $ 47.07
Total Revenue Generating Units
(000's) (6) 39,523 36,782 39,017
Quarterly Net Additions 507 415 589
(1) See Non-GAAP and Other Financial Measures in Table 7. All percentages are
calculated based on actual amounts. Minor differences may exist due to
rounding.
(2) Pro forma financial and subscriber data includes the results of the 30,000
cable subscribers acquired from US Coastal Cable in April 2004. Pro forma
subscriber data also includes 60,000 subscribers acquired in various small
acquisitions during the periods presented. The impact of these acquisitions
on our segment operating results was not material.
(3) Video revenues consist of our basic, expanded basic, premium, pay-
per-view, equipment and digital services.
(4) Other revenues include installation revenues, guide revenues, commissions
from electronic retailing, other product offerings, commercial data
services and revenues of our digital media center and regional sports
programming networks.
(5) Available homes includes circuit switched and Comcast Digital Voice homes.
(6) The sum total of all basic video, digital video, high-speed Internet and
phone subscribers, excluding additional outlets.
COMCAST CORPORATION
TABLE 7
Non-GAAP and Other Financial Measures
Operating Cash Flow is the primary basis used to measure the operational
strength and performance of our businesses. Free Cash Flow is an additional
performance measure used as an indicator of our ability to repay debt, make
investments and return capital to investors, principally through stock
repurchases. We use Debt Excluding Exchangeables as a measure of debt that will
require cash from future operations or financings. We also adjust certain
historical data on a pro forma basis following significant acquisitions or
dispositions to enhance comparability.
Operating Cash Flow is defined as operating income before depreciation and
amortization and impairment charges, if any, related to fixed and intangible
assets and gains or losses from the sale of assets, if any. As such, it
eliminates the significant level of non-cash depreciation and amortization
expense that results from the capital intensive nature of our businesses and
intangible assets recognized in business combinations, and is unaffected by our
capital structure or investment activities. Our management and Board of
Directors use this measure in evaluating our consolidated operating performance
and the operating performance of all of our operating segments. This metric is
used to allocate resources and capital to our operating segments and is a
significant component of our annual incentive compensation programs. We believe
that Operating Cash Flow is also useful to investors as it is one of the bases
for comparing our operating performance with other companies in our industries,
although our measure of Operating Cash Flow may not be directly comparable to
similar measures used by other companies.
As Operating Cash Flow is the measure of our segment profit or loss, we
reconcile it to operating income, the most directly comparable financial measure
calculated and presented in accordance with Generally Accepted Accounting
Principles (GAAP), in the business segment footnote of our quarterly and annual
financial statements. Therefore, we believe our measure of Operating Cash Flow
for our business segments is not a "non-GAAP financial measure" as contemplated
by Regulation G adopted by the Securities and Exchange Commission. Consolidated
Operating Cash Flow is a non-GAAP financial measure.
Free Cash Flow, which is a non-GAAP financial measure, is defined as
Operating Cash Flow less net interest, cash paid for taxes, and capital
expenditures. As such, it is unaffected by fluctuations in working capital
levels from period to period and cash payments associated with intangible and
other non-current assets which are detailed in our quarterly and annual reports
on Forms 10Q/K. We believe that Free Cash Flow is also useful to investors as it
is one of the bases for comparing our operating performance with other companies
in our industries, although our measure of Free Cash Flow is accrual-based and
may not be comparable to similar measures used by other companies.
Debt Excluding Exchangeables, which is a non-GAAP financial measure, refers
to the aggregate amount of our consolidated debt and capital lease obligations
less the amount of notes that are collateralized by securities that we own.
Pro forma data is used by management to evaluate performance when
significant acquisitions or dispositions occur. Historical data reflects results
of acquired businesses only after the acquisition dates while pro forma data
enhances comparability of financial information between periods by adjusting the
data as if the acquisitions (or dispositions) occurred at the beginning of the
prior year. Our pro forma data is only adjusted for the timing of acquisitions
and does not include adjustments for costs related to integration activities,
cost savings or synergies that have been or may be achieved by the combined
businesses. We believe our pro forma data is not a non-GAAP financial measure as
contemplated by Regulation G.
Operating Cash Flow and Free Cash Flow should not be considered as
substitutes for operating income (loss), net income (loss), net cash provided by
operating activities or other measures of performance or liquidity reported in
accordance with GAAP. Debt Excluding Exchangeables should not be considered as a
substitute for Total Debt. Additionally, in the opinion of management, our pro
forma data is not necessarily indicative of future results or what results would
have been had the acquired businesses been operated by us after the assumed
earlier date.
Following are quantitative reconciliations of Free Cash Flow, Debt Excluding
Exchangeables, Consolidated Operating Cash Flow, and, although not required by
Regulation G, reconciliations of business segment Operating Cash Flow and pro
forma data.
COMCAST CORPORATION
TABLE 7-A continued
Reconciliation of Historical and Pro Forma Data by Business Segment
(Unaudited) (1)
(dollars in millions)
Historical Adjustments (1)
--------------------------------- ----------------------------------------------
Corporate Corporate
Three Months Ended June and and Pro
30, 2004 Cable Content Other Total Cable Other forma
- ------------------------ --------- --------- --------- --------- --------- --------- ---------
Revenues $ 4,838 $ 199 $ 29 $ 5,066 $ 2 $ (1) $ 5,067
Operating expenses
(excluding depreciation
and amortization) 2,918 122 74 3,114 2 (1) 3,115
Operating Cash Flow $ 1,920 $ 77 $ (45) $ 1,952 - - $ 1,952
Depreciation and
amortization 1,043 39 18 1,100 - - 1,100
Operating income (loss) $ 877 $ 38 $ (63) $ 852 - - $ 852
Capital expenditures $ 893 $ 6 $ 5 $ 904 - - $ 904
Corporate Corporate
Six Months Ended June 30, and and Pro
2004 Cable Content Other Total Cable Other forma
- ---------------------------- --------- --------- --------- --------- --------- --------- ---------
Revenues $ 9,485 $ 375 $ 114 $ 9,974 $ 5 - $ 9,979
Operating expenses
(excluding depreciation
and amortization) 5,846 229 214 6,289 3 - 6,292
Operating Cash Flow $ 3,639 $ 146 $ (100) $ 3,685 $ 2 - $ 3,687
Depreciation and
amortization 2,060 74 40 2,174 - - 2,174
Operating income (loss) $ 1,579 $ 72 $ (140) $ 1,511 $ 2 - $ 1,513
Capital expenditures $ 1,707 $ 10 $ 15 $ 1,732 - - $ 1,732
Reconciliation of Operating Cash Flow to Free
Cash Flow (Unaudited)
(dollars in millions)
Three Months Ended
June 30,
--------------------------------------------
2005 2004
-------------------- --------------------
Operating Cash Flow $ 2,209 $ 2,209 $ 1,952 $ 1,952
Less:
Interest, net (2) (422) (422) (459) (459)
Cash Paid for Income Taxes (415) (415) (89) (89)
Change in Operating Assets and
Liabilities, net of acquisitions (103) 442
Other (3) (84) 13
Net Cash Provided by Operating
Activities $ 1,185 $ 1,859
Less: Capital Expenditures (950) (904)
Free Cash Flow $ 422 $ 500
Reconciliation of Operating Cash Flow to Free
Cash Flow (Unaudited)
(dollars in millions)
Six Months Ended
June 30,
--------------------------------------------
2005 2004
-------------------- --------------------
Operating Cash Flow $ 4,239 $ 4,239 $ 3,685 $ 3,685
Less:
Interest, net (2) (826) (826) (906) (906)
Cash Paid for Income Taxes (427) (427) (150) (150)
Change in Operating Assets and
Liabilities, net of acquisitions (191) 3
Other (3) (278) 1
Net Cash Provided by Operating
Activities $ 2,517 $ 2,633
Less: Capital Expenditures (1,842) (1,732)
Free Cash Flow $ 1,144 $ 897
Calculation of 2005 Estimated Free Cash Flow
(dollars in billions)
Free Cash Flow
---------------
2004 Operating Income $ 2.9
Add: Depreciation and Amortization 4.6
2004 Operating Cash Flow 7.5
Less: 2004 Capital Expenditures 3.7
2004 Consolidated Interest,
net 1.7
2004 Consolidated Cash Paid
for Income Taxes 0.2
2004 Free Cash Flow $ 1.9
2005 Free Cash Flow Growth 35% to 45%
Projected 2005 Free Cash Flow $2.6 to $2.8
Reconciliation of Total Debt to Debt Excluding Exchangeables (Unaudited)
(dollars in millions)
June 30, December 31,
2005 2004
------------ ------------
Current portion of long-term debt $ 4,384 $ 3,499
Long-term debt 19,746 20,093
Total Debt $ 24,130 $ 23,592
Exchangeable debt 1,066 1,699
Debt excluding exchangeables $ 23,064 $ 21,893
(1) Pro forma data is only adjusted for timing of the acquisitions (or
dispositions) and does not include adjustments for costs related to
integration activities, cost savings or synergies that have been or may be
achieved by the combined businesses. There were no pro forma adjustments to
the three and six months ending June 30, 2005. Minor differences may exist
due to rounding.
(2) Includes interest expense net of interest income and excludes non-cash
interest and subsidiary preferred dividends.
(3) Includes non-cash interest expense included in Operating Cash Flow, cash
related to other (income) expense, dividends, and the net effect of changes
in accrued income taxes.
SOURCE Comcast Corporation
-0- 08/02/2005
/CONTACT: Investor Contacts: Marlene S. Dooner, +1-215-981-7392, Leslie
A. Arena, +1-215-981-8511, or Daniel J. Goodwin, +1-215-981-7518; or Press
Contacts: D'Arcy Rudnay, +1-215-981-8582, or Tim Fitzpatrick, +1-215-981-8515,
all of Comcast/
/Web site: http://www.comcast.com /
/Web site: http://www.cmcsk.com /
/Web site: http://www.cmcsa.com /
(CMCSK CMCSA)