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Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x

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

For the quarterly period ended September 30, 2016

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  

Exact Name of Registrant; State of

Incorporation; Address and Telephone

Number of Principal Executive Offices

  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

Indicate the number of shares outstanding of each of the registrant’s classes of stock, as of the latest practical date:

As of September 30, 2016, there were 2,383,388,019 shares of Comcast Corporation Class A common stock and 9,444,375 shares of Comcast Corporation Class B common stock outstanding.

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.

 

 

 


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TABLE OF CONTENTS

          Page
Number
 
PART I. FINANCIAL INFORMATION   

Item 1.

  Comcast Corporation Financial Statements     1   
  Condensed Consolidated Balance Sheet as of September 30, 2016 and December 31, 2015 (Unaudited)     1   
  Condensed Consolidated Statement of Income for the Three and Nine Months Ended September 30, 2016 and 2015 (Unaudited)     2   
  Condensed Consolidated Statement of Comprehensive Income for the Three and Nine Months Ended September 30, 2016 and 2015 (Unaudited)     3   
  Condensed Consolidated Statement of Cash Flows for the Nine Months Ended September 30, 2016 and 2015 (Unaudited)     4   
  Condensed Consolidated Statement of Changes in Equity for the Nine Months Ended September 30, 2016 and 2015 (Unaudited)     5   
  Notes to Condensed Consolidated Financial Statements (Unaudited)     6   

Item 2.

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

Item 3.

  Quantitative and Qualitative Disclosures About Market Risk     43   

Item 4.

  Controls and Procedures     43   
PART II. OTHER INFORMATION  

Item 1.

  Legal Proceedings     44   

Item 1A.

  Risk Factors     44   

Item 2.

  Unregistered Sales of Equity Securities and Use of Proceeds     44   

Item 5.

  Other Information     45   

Item 6.

  Exhibits     45   
SIGNATURES     46   
NBCUniversal Media, LLC Financial Statements     47   

 

 

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 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 nine months ended September 30, 2016. This Quarterly Report modifies and supersedes documents filed before it. 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


Table of Contents

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 alternative methods for viewing content may adversely affect our businesses and challenge existing business models

 

 

   

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

 

 

   

our businesses depend on keeping pace with technological developments

 

 

   

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

 

 

   

changes to existing statutes, rules, regulations, or interpretations thereof, or adoption of new ones, could have an adverse effect on our businesses

 

 

   

programming expenses for our video services are increasing, which could adversely affect our Cable Communications segment’s video business

 

 

   

NBCUniversal’s success depends on consumer acceptance of its content, 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

 

 

   

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

 

 

   

weak economic conditions may have a negative impact on our businesses

 

 

   

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

 

 

   

strategic initiatives and acquisitions present many risks, and we may not realize the financial and strategic goals that we had contemplated

 

 

   

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

 

 

   

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

 


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PART I: FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

Comcast Corporation

Condensed Consolidated Balance Sheet

(Unaudited)

 

(in millions, except share data)   September 30,
2016
    December 31,
2015
 

Assets

   

Current Assets:

   

Cash and cash equivalents

  $ 2,807      $ 2,295   

Receivables, net

    7,533        6,896   

Programming rights

    1,369        1,213   

Other current assets

    3,519        1,899   

Total current assets

    15,228        12,303   

Film and television costs

    7,153        5,855   

Investments

    3,857        3,224   

Property and equipment, net of accumulated depreciation of $49,540 and $48,100

    35,656        33,665   

Franchise rights

    59,364        59,364   

Goodwill

    36,652        32,945   

Other intangible assets, net of accumulated amortization of $10,678 and $9,868

    17,356        16,946   

Other noncurrent assets, net

    2,658        2,272   

Total assets

  $ 177,924      $ 166,574   

Liabilities and Equity

   

Current Liabilities:

   

Accounts payable and accrued expenses related to trade creditors

  $ 6,594      $ 6,215   

Accrued participations and residuals

    1,570        1,572   

Deferred revenue

    1,340        1,302   

Accrued expenses and other current liabilities

    5,201        5,462   

Current portion of long-term debt

    3,333        3,627   

Total current liabilities

    18,038        18,178   

Long-term debt, less current portion

    57,095        48,994   

Deferred income taxes

    34,523        33,566   

Other noncurrent liabilities

    11,119        10,637   

Commitments and contingencies (Note 12)

   

Redeemable noncontrolling interests and redeemable subsidiary preferred stock

    1,326        1,221   

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, 2,819,783,533 and 2,869,349,502; outstanding, 2,383,388,019 and 2,432,953,988

    28        29   

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

             

Additional paid-in capital

    38,426        38,518   

Retained earnings

    22,510        21,413   

Treasury stock, 436,395,514 Class A common shares

    (7,517     (7,517

Accumulated other comprehensive income (loss)

    34        (174

Total Comcast Corporation shareholders’ equity

    53,481        52,269   

Noncontrolling interests

    2,342        1,709   

Total equity

    55,823        53,978   

Total liabilities and equity

  $ 177,924      $ 166,574   

See accompanying notes to condensed consolidated financial statements.

 

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Comcast Corporation

Condensed Consolidated Statement of Income

(Unaudited)

 

    Three Months Ended
September 30
    Nine Months Ended
September 30
 
(in millions, except per share data)       2016             2015             2016             2015      

Revenue

  $ 21,319      $ 18,669      $ 59,378      $ 55,265   

Costs and Expenses:

       

Programming and production

    7,003        5,582        17,926        16,714   

Other operating and administrative

    5,994        5,390        17,280        15,738   

Advertising, marketing and promotion

    1,487        1,513        4,515        4,407   

Depreciation

    1,865        1,697        5,518        5,005   

Amortization

    530        486        1,544        1,405   
      16,879        14,668        46,783        43,269   

Operating income

    4,440        4,001        12,595        11,996   

Other Income (Expense):

       

Interest expense

    (751     (659     (2,186     (2,028

Investment income (loss), net

    80        (26     168        24   

Equity in net income (losses) of investees, net

    (34     1        (64     (202

Other income (expense), net

    (11     (53     104        364   
      (716     (737     (1,978     (1,842

Income before income taxes

    3,724        3,264        10,617        10,154   

Income tax expense

    (1,400     (1,223     (3,989     (3,797

Net income

    2,324        2,041        6,628        6,357   

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

    (87     (45     (229     (165

Net income attributable to Comcast Corporation

  $ 2,237      $ 1,996      $ 6,399      $ 6,192   

Basic earnings per common share attributable to Comcast Corporation shareholders

  $ 0.93      $ 0.81      $ 2.65      $ 2.48   

Diluted earnings per common share attributable to Comcast Corporation shareholders

  $ 0.92      $ 0.80      $ 2.62      $ 2.45   

Dividends declared per common share

  $ 0.275      $ 0.25      $ 0.825      $ 0.75   

See accompanying notes to condensed consolidated financial statements.

 

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Comcast Corporation

Condensed Consolidated Statement of Comprehensive Income

(Unaudited)

 

    Three Months Ended
September 30
    Nine Months Ended
September 30
 
(in millions)       2016             2015             2016             2015      

Net income

  $ 2,324      $ 2,041      $ 6,628      $ 6,357   

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

    (1     1        2        1   

Deferred gains (losses) on cash flow hedges, net of deferred taxes of $(7), $30, $46 and $40

    12        (50     (79     (67

Amounts reclassified to net income:

       

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

           (1     (1     (1

Realized (gains) losses on cash flow hedges, net of deferred taxes of $(6), $(20), $(42) and $(26)

    11        32        73        42   

Employee benefit obligations, net of deferred taxes of $—, $(8), $(2) and $(8)

           14        2        14   

Currency translation adjustments, net of deferred taxes of $(6), $15, $(122) and $23

    45        (41     532        (64

Comprehensive income

    2,391        1,996        7,157        6,282   

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

    (87     (45     (229     (165

Other comprehensive (income) loss attributable to noncontrolling interests

    (34     16        (321     26   

Comprehensive income attributable to Comcast Corporation

  $ 2,270      $ 1,967      $ 6,607      $ 6,143   

See accompanying notes to condensed consolidated financial statements.

 

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Comcast Corporation

Condensed Consolidated Statement of Cash Flows

(Unaudited)

 

    Nine Months Ended
September 30
 
(in millions)       2016             2015      

Net cash provided by operating activities

  $ 13,497      $ 13,813   

Investing Activities

   

Capital expenditures

    (6,562     (5,862

Cash paid for intangible assets

    (1,163     (916

Acquisitions and construction of real estate properties

    (303     (116

Acquisitions, net of cash acquired

    (3,904     (286

Proceeds from sales of businesses and investments

    188        420   

Purchases of investments

    (618     (712

Deposits

    (1,761       

Other

    (29     268   

Net cash provided by (used in) investing activities

    (14,152     (7,204

Financing Activities

   

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

    610        (220

Proceeds from borrowings

    9,231        3,996   

Repurchases and repayments of debt

    (2,994     (4,353

Repurchases and retirements of common stock

    (3,762     (5,770

Dividends paid

    (1,944     (1,823

Issuances of common stock

    23        35   

Distributions to noncontrolling interests and dividends for redeemable subsidiary preferred stock

    (194     (178

Other

    197        (313

Net cash provided by (used in) financing activities

    1,167        (8,626

Increase (decrease) in cash and cash equivalents

    512        (2,017

Cash and cash equivalents, beginning of period

    2,295        3,910   

Cash and cash equivalents, end of period

  $ 2,807      $ 1,893   

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, December 31, 2014

  $ 1,066                      $ 25      $ 5      $  —      $ 38,805      $ 21,539      $ (7,517   $ (146   $ 357      $ 53,068   

Stock compensation plans

                  573        (363           210   

Repurchases and retirements of common stock

              (1       (1,155     (4,614           (5,770

Employee stock purchase plans

                  106                106   

Dividends declared

                    (1,871           (1,871

Other comprehensive income (loss)

                        (49     (26     (75

Contributions from (distributions to) noncontrolling interests, net

    12                            (114     (114

Other

    67                    187              (74     113   

Net income (loss)

    59                                                        6,192                        106        6,298   

Balance, September 30, 2015

  $ 1,204                      $ 25      $ 4      $      $ 38,516      $ 20,883      $ (7,517   $ (195   $ 249      $ 51,965   

Balance, December 31, 2015

  $ 1,221            $ 29      $  —      $      $ 38,518      $ 21,413      $ (7,517   $ (174   $ 1,709      $ 53,978   

Stock compensation plans

                  544        (264           280   

Repurchases and retirements of common stock

            (1         (722     (3,039           (3,762

Employee stock purchase plans

                  117                117   

Dividends declared

                    (1,999           (1,999

Other comprehensive income (loss)

                        208        321        529   

Contributions from (distributions to) noncontrolling interests, net

    (20                         (99     (99

Other

    62                    (31           245        214   

Net income (loss)

    63                                                        6,399                        166        6,565   

Balance, September 30, 2016

  $ 1,326                      $ 28      $      $      $ 38,426      $ 22,510      $ (7,517   $ 34      $ 2,342      $ 55,823   

See accompanying notes to condensed consolidated financial statements.

 

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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 (“GAAP”). For a more complete discussion of our accounting policies and certain other information, refer to our consolidated financial statements included in our 2015 Annual Report on Form 10-K.

Reclassifications

Reclassifications have been made to our condensed consolidated financial statements for the prior year periods to conform to classifications used in 2016.

Note 2: Recent Accounting Pronouncements

Revenue Recognition

In May 2014, the Financial Accounting Standards Board (“FASB”) 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 an entity has to refer. The updated guidance is effective for us as of January 1, 2018. The updated accounting guidance provides companies with alternative methods of 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.

Consolidations

In February 2015, the FASB updated the accounting guidance related to consolidation under the variable interest entity (“VIE”) and voting interest entity models. The updated accounting guidance modifies the consolidation guidance for VIEs, limited partnerships and similar legal entities. We have adopted this guidance as of January 1, 2016 and it did not have a material impact on our consolidated financial statements.

Financial Assets and Financial Liabilities

In January 2016, the FASB updated the accounting guidance related to the recognition and measurement of financial assets and financial liabilities. The updated accounting guidance, among other things, requires that all nonconsolidated equity investments, except those accounted for under the equity method, be measured at fair value and that the changes in fair value be recognized in net income. The updated guidance is effective for us as of January 1, 2018. The updated accounting guidance requires a cumulative effect adjustment to beginning retained earnings when the guidance is adopted with certain exceptions. We are currently in the process of determining the impact that the updated accounting guidance will have on our consolidated financial statements.

Leases

In February 2016, the FASB updated the accounting guidance related to leases. The updated accounting guidance requires lessees to recognize a right-of-use asset and a lease liability on the balance sheet for all leases with the

 

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Comcast Corporation

 

exception of short-term leases. For a lessee, the recognition, measurement and presentation of expenses and cash flows arising from a lease do not significantly change from previous guidance. For a lessor, the accounting applied is also largely unchanged from previous guidance. The updated guidance is effective for us as of January 1, 2019 and early adoption is permitted. The updated accounting guidance must be adopted using a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. We are currently in the process of determining the impact that the updated accounting guidance will have on our consolidated financial statements.

Share-Based Compensation

In March 2016, the FASB updated the accounting guidance that affects several aspects of the accounting for share-based compensation. The most significant change for us relates to the presentation of the income and withholding tax consequences of share-based compensation in our consolidated financial statements. Among the changes, the updated guidance requires that the excess income tax benefits or deficiencies that arise when the tax consequences of share-based compensation differ from amounts previously recognized in the statement of income be recognized as income tax benefit or expense in the statement of income rather than as additional paid-in capital in the balance sheet. The guidance also states that excess income tax benefits should not be presented separately from other income taxes in the statement of cash flows and, thus, should be classified as an operating activity rather than a financing activity as they are under the current guidance. In addition, the updated guidance requires when an employer withholds shares upon exercise of options or the vesting of restricted stock for the purpose of meeting withholding tax requirements, that the cash paid for withholding taxes be classified as a financing activity. We currently record these amounts within operating activities.

We will implement the updated guidance in the first quarter of 2017. As required under the updated guidance, we will prospectively adopt the provisions of this guidance related to the recognition of the excess tax benefits or deficiencies in the statement of income. In addition, upon adoption we will retrospectively adopt the provisions of this guidance related to changes to the statement of cash flows for all periods presented.

If we had adopted the provisions of the updated guidance as of January 1, 2016, it would have increased net income attributable to Comcast Corporation by $34 million and $193 million for the three and nine months ended September 30, 2016, respectively. In addition, the updated guidance would have increased net cash provided by operating activities and decreased net cash provided by (used in) financing activities by $493 million for the nine months ended September 30, 2016. The most significant impact of implementing the new guidance is expected to occur in the first quarter of each year as a result of the vesting of restricted stock awards, which primarily occurs in March.

Note 3: Earnings Per Share

Computation of Diluted EPS

 

    Three Months Ended September 30  
    2016      2015  
(in millions, except per share data)   Net Income
Attributable to
Comcast
Corporation
     Shares      Per Share
Amount
     Net Income
Attributable to
Comcast
Corporation
     Shares      Per Share
Amount
 

Basic EPS attributable to Comcast Corporation shareholders

  $ 2,237         2,403       $ 0.93       $ 1,996         2,472       $ 0.81   

Effect of dilutive securities:

                

Assumed exercise or issuance of shares relating to stock plans

             28                           30            

Diluted EPS attributable to Comcast Corporation shareholders

  $ 2,237         2,431       $ 0.92       $ 1,996         2,502       $ 0.80   

 

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    Nine Months Ended September 30  
    2016      2015  
(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

  $ 6,399         2,419       $ 2.65       $ 6,192         2,498       $ 2.48   

Effect of dilutive securities:

                

Assumed exercise or issuance of shares relating to stock plans

             27                           32            

Diluted EPS attributable to Comcast Corporation shareholders

  $ 6,399         2,446       $ 2.62       $ 6,192         2,530       $ 2.45   

Diluted earnings per common share attributable to Comcast Corporation shareholders (“diluted EPS”) considers the impact of potentially dilutive securities using the treasury stock method. Our potentially dilutive securities include potential common shares related to our stock options and our restricted share units (“RSUs”). The amount of potential common shares related to our share-based compensation plans that were excluded from diluted EPS because their effect would have been antidilutive was not material for the three and nine months ended September 30, 2016 and 2015.

Note 4: Significant Transactions

DreamWorks

On August 22, 2016, we acquired all of the outstanding stock of DreamWorks Animation SKG, Inc. (“DreamWorks”) for $3.8 billion. DreamWorks’ stockholders received $41 in cash for each share of DreamWorks common stock. DreamWorks creates animated feature films, television series and specials, live entertainment and related consumer products. The results of operations for DreamWorks are reported in our Filmed Entertainment segment following the acquisition date.

The transaction is accounted for under the acquisition method of accounting and, accordingly, the assets and liabilities are to be recorded at their fair market values as of the acquisition date. Due to the limited amount of time since the acquisition date, the assets and liabilities of DreamWorks were recorded based primarily on their historical carrying values. We recorded the debt we assumed from DreamWorks at its estimated fair value of $381 million and we recorded a liability related to a tax receivable agreement that DreamWorks had previously entered into with one of its former stockholders (the “tax receivable agreement”) at its estimated fair value of $146 million. The fair value of the assumed debt was primarily based on quoted market values. The fair value of the tax receivable agreement was based on the contractual settlement provisions in the agreement and the value is subject to adjustment. In addition, we recorded deferred income taxes based on our estimate of the tax basis of the acquired assets and valuation allowances based on the expected use of net operating loss carryforwards. The remaining assets and liabilities primarily consisted of goodwill and film and television costs. We will adjust the remaining assets and liabilities to fair value and will record the related deferred income tax adjustments as valuations are completed and we obtain information necessary to complete the analyses, but no later than one year from the acquisition date. For purposes of the preliminary allocation of purchase price, the excess of the total transaction value over the recorded values of the net assets acquired has been recorded as goodwill.

The tax receivable agreement was settled immediately following the acquisition and the payment was recorded as an operating activity in our condensed consolidated statement of cash flows. In addition, during the three months ended September 30, 2016, we repaid all of the assumed debt of DreamWorks (see Note 8).

Revenue and net income attributable to the acquisition of DreamWorks were not material for the three and nine months ended September 30, 2016. During the three months ended September 30, 2016, we incurred severance costs of $50 million, which were recorded in operating costs and expenses in our Filmed Entertainment segment.

 

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Universal Studios Japan

On November 13, 2015, NBCUniversal acquired a 51% economic interest in the Universal Studios theme park in Osaka, Japan (“Universal Studios Japan”) for $1.5 billion.

Universal Studios Japan is a VIE based on the governance structure and we consolidate Universal Studios Japan as we have the power to direct activities that most significantly impact its economic performance. There are no liquidity arrangements, guarantees, or other financial commitments between us and Universal Studios Japan, and therefore our maximum risk of financial loss is NBCUniversal’s 51% interest. Universal Studios Japan’s results of operations are reported in our Theme Parks segment following the acquisition date.

Preliminary Allocation of Purchase Price

The acquired assets and liabilities of Universal Studios Japan and the 49% noncontrolling interest were recorded at their estimated fair values. During the nine months ended September 30, 2016, we updated the preliminary allocation of purchase price for Universal Studios Japan based on valuation analyses, which primarily resulted in increases to property and equipment and intangible assets and a decrease in goodwill. The changes did not have a material impact on our consolidated financial statements. We may adjust these amounts further as valuations are finalized and we obtain information necessary to complete the analyses, but no later than one year from the acquisition date.

The table below presents the preliminary allocation of the purchase price to the assets and liabilities of Universal Studios Japan.

Preliminary Allocation of Purchase Price

 

(in millions)       

Property and equipment

  $ 780   

Intangible assets

    323   

Working capital

    (33

Debt

    (3,271

Other noncurrent assets and liabilities

    22   

Identifiable net assets (liabilities) acquired

    (2,179

Noncontrolling interest

    (1,440

Goodwill

    5,118   

Cash consideration transferred

  $ 1,499   

Actual and Unaudited Pro Forma Results

Our consolidated revenue for the three and nine months ended September 30, 2016 included $424 million and $1.1 billion, respectively, from the acquisition of Universal Studios Japan. Our consolidated net income attributable to Comcast Corporation for the three and nine months ended September 30, 2016 included $48 million and $76 million, respectively, from the acquisition of Universal Studios Japan.

The following unaudited pro forma information has been presented as if the acquisition of Universal Studios Japan occurred on January 1, 2014. This information is primarily based on historical results of operations and is subject to change as valuations are finalized. In addition, the unaudited pro forma accounting adjustments are not necessarily indicative of what our results would have been had we operated Universal Studios Japan since January 1, 2014. No pro forma adjustments have been made for our transaction-related expenses.

 

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Unaudited Pro Forma Results

 

(in millions, except per share amounts)   Three Months Ended
September 30, 2015
     Nine Months Ended
September 30, 2015
 

Revenue

  $ 19,013       $ 56,147   

Net income

  $ 2,113       $ 6,498   

Net income attributable to Comcast Corporation

  $ 2,033       $ 6,263   

Basic earnings per common share attributable to Comcast Corporation shareholders

  $ 0.82       $ 2.51   

Diluted earnings per common share attributable to Comcast Corporation shareholders

  $ 0.81       $ 2.48   

Note 5: Film and Television Costs

 

(in millions)   September 30,
2016
     December 31,
2015
 

Film Costs:

    

Released, less amortization

  $ 1,586       $ 1,275   

Completed, not released

    222         226   

In production and in development

    1,402         907   
    3,210         2,408   

Television Costs:

    

Released, less amortization

    1,839         1,573   

In production and in development

    886         737   
    2,725         2,310   

Programming rights, less amortization

    2,587         2,350   
    8,522         7,068   

Less: Current portion of programming rights

    1,369         1,213   

Film and television costs

  $ 7,153       $ 5,855   

Note 6: Investments

 

 

(in millions)   September 30,
2016
     December 31,
2015
 

Fair Value Method

  $ 166       $ 167   

Equity Method:

    

Atairos

    363           

Hulu

    286         184   

Other

    563         494   
    1,212         678   

Cost Method:

    

AirTouch

    1,595         1,583   

Other

    938         902   
      2,533         2,485   

Total investments

    3,911         3,330   

Less: Current investments

    54         106   

Noncurrent investments

  $ 3,857       $ 3,224   

 

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Investment Income (Loss), Net

 

    Three Months Ended
September 30
    Nine Months Ended
September 30
 
(in millions)       2016             2015             2016             2015      

Gains on sales and exchanges of investments, net

  $ 24      $ 3      $ 39      $ 7   

Investment impairment losses

    (7     (15     (28     (46

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

                         42   

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

    (4     (5     (3     (42

Interest and dividend income

    31        27        91        83   

Other, net

    36        (36     69        (20

Investment income (loss), net

  $ 80      $ (26   $ 168      $ 24   

Equity Method

The Weather Channel

On January 29, 2016, following a legal restructuring at The Weather Channel, we and the other investors sold the entity holding The Weather Channel’s product and technology businesses to IBM. Following the close of the transaction, we continue to hold an investment in The Weather Channel cable network through a new holding company. As a result of the sale of our investment, we recognized a pretax gain for the nine months ended September 30, 2016 of $108 million in other income (expense), net.

During the nine months ended September 30, 2015, The Weather Channel recorded an impairment charge related to goodwill. We recorded an expense of $252 million that represents NBCUniversal’s proportionate share of this impairment charge in equity in net income (losses) of investees, net in our condensed consolidated statement of income.

Atairos

In 2015, we entered into an agreement to establish Atairos Group, Inc. (“Atairos”), a strategic company focused on investing in and operating companies in a range of industries and business sectors, both domestically and internationally. The agreement became effective as of January 1, 2016. Atairos has a term of up to 12 years and is controlled by management companies led by our former CFO through interests that carry all of the voting rights. We are the only investor other than our former CFO and the other management company employees. We have committed to fund up to $4 billion in the aggregate at any one time in Atairos, subject to certain offsets, and $40 million annually to fund a management fee, subject to certain adjustments, while the management company investors have committed to fund up to $100 million (with at least $40 million to be funded by our former CFO, subject to his continued role with Atairos). Our economic interests do not carry voting rights and obligate us to absorb approximately 99% of any losses and provide us the right to receive approximately 86.5% of any residual returns in Atairos, in either case on a cumulative basis.

We have concluded that Atairos is a VIE, that we do not have the power to direct the activities that most significantly impact the economic performance of Atairos as we have no voting rights and only certain consent rights, and that we are not a related party with our former CFO or the management companies. We therefore do not consolidate Atairos and account for this investment as an equity method investment. There are no other liquidity arrangements, guarantees, or other financial commitments between Comcast and Atairos, and therefore our maximum risk of financial loss is our investment balance and remaining unfunded capital commitment.

For the nine months ended September 30, 2016, we made capital contributions totaling $399 million to Atairos.

Hulu

In August 2016, Time Warner Inc. acquired a 10% interest in Hulu, LLC (“Hulu”), which diluted our interest in Hulu from 33% to 30%. For a period not to exceed three years, Time Warner may put its shares to Hulu or Hulu

 

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may call Time Warner’s shares under certain limited circumstances arising from regulatory review. Given the contingent nature of the put and call options, we recorded a deferred gain of $159 million and a corresponding increase to our investment in Hulu as a result of the dilution. The deferred gain will be recognized in other income (expense), net if and when the options expire unexercised.

For the three and nine months ended September 30, 2016, we recognized our proportionate share of losses of $43 million and $108 million, respectively, related to our investment in Hulu. For the three and nine months ended September 30, 2015, we recognized our proportionate share of losses of $19 million and $43 million, respectively, related to our investment in Hulu.

Cost Method

AirTouch

We hold two series of preferred stock of Verizon Americas, Inc., formerly known as AirTouch Communications, Inc. (“AirTouch”), a subsidiary of Verizon Communications Inc., which are redeemable in April 2020. As of September 30, 2016, the estimated fair value of the AirTouch preferred stock and the estimated fair value of the associated liability related to the redeemable subsidiary preferred shares issued by one of our consolidated subsidiaries were each $1.7 billion. The estimated fair values are based on Level 2 inputs that use 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: Goodwill

 

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

Balance, December 31, 2015

  $ 12,389       $ 12,947       $ 806       $ 267       $ 6,344      $ 192      $ 32,945   

Acquisitions

    73         247                 2,560                       2,880   

Adjustments

    175                         2         (255     (181     (259

Foreign currency translation

            5                 10         1,071               1,086   

Balance, September 30, 2016

  $ 12,637       $ 13,199       $ 806       $ 2,839       $ 7,160      $ 11      $ 36,652   

Acquisitions during the nine months ended September 30, 2016 included the DreamWorks acquisition in our Filmed Entertainment segment (see Note 4 for additional information). Adjustments to goodwill during the nine months ended September 30, 2016 included the updated preliminary allocation of the purchase price for Universal Studios Japan in our Theme Parks segment and the reclassification of certain operations and businesses from Corporate and Other to our Cable Communications segment.

Note 8: Long-Term Debt

As of September 30, 2016, our debt had a carrying value of $60.4 billion and an estimated fair value of $69.4 billion. The estimated fair value of our publicly traded debt is primarily based on Level 1 inputs that use 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 that use interest rates available to us for debt with similar terms and remaining maturities.

Debt Borrowings and Repayments

In July 2016, we issued $700 million aggregate principal amount of 1.625% senior notes due 2022, $1.4 billion aggregate principal amount of 2.35% senior notes due 2027, $1.0 billion aggregate principal amount of 3.20% senior notes due 2036 and $1.4 billion aggregate principal amount of 3.40% senior notes due 2046. The proceeds from this offering were primarily used to fund our acquisition of DreamWorks. In May 2016, we issued $1.43 billion aggregate principal amount of 4.05% senior notes due 2046. In February and March 2016, we issued $1.1 billion aggregate principal amount of 2.75% senior notes due 2023 and $2.2 billion aggregate principal amount of 3.15% senior notes due 2026.

 

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Following our acquisition of DreamWorks, we paid $381 million to settle all of the debt we assumed in the DreamWorks acquisition. In June 2016, we repaid at maturity $750 million aggregate principal amount of 4.95% senior notes due 2016. In April 2016, we repaid at maturity $1 billion aggregate principal amount of 2.875% senior notes due 2016 and $700 million aggregate principal amount of NBCUniversal Enterprise Inc.’s (“NBCUniversal Enterprise”) senior notes due 2016.

Revolving Credit Facilities

In May 2016, we entered into a new $7 billion revolving credit facility due 2021 with a syndicate of banks (“Comcast revolving credit facility”) that may be used for general corporate purposes. We may increase the commitment under the Comcast revolving credit facility up to a total of $10 billion, as well as extend the expiration date to a date no later than 2023, subject to approval of the lenders. In addition, NBCUniversal Enterprise entered into a new $1.5 billion revolving credit facility due 2021 with a syndicate of banks (“NBCUniversal Enterprise revolving credit facility”) that may be used for general corporate purposes. We may increase the commitment under the NBCUniversal Enterprise revolving credit facility up to a total of $2 billion, as well as extend the expiration date to a date no later than 2023, subject to approval of the lenders. The new revolving credit facilities replaced Comcast’s $6.25 billion and NBCUniversal Enterprise’s $1.35 billion revolving credit facilities, which were terminated in connection with the execution of the new revolving credit facilities. The interest rates on the new revolving credit facilities consist of a base rate plus a borrowing margin that is determined based on Comcast’s credit rating. As of September 30, 2016, the borrowing margin for borrowings based on the London Interbank Offered Rate was 1.00%. The terms of the new revolving credit facilities’ financial covenants and guarantees are substantially the same as those under the prior revolving credit facilities.

As of September 30, 2016, amounts available under the new consolidated revolving credit facilities, net of amounts outstanding under our commercial paper programs and outstanding letters of credit, totaled $6.6 billion, which included $408 million available under NBCUniversal Enterprise’s revolving credit facility.

Commercial Paper Programs

As of September 30, 2016, Comcast and NBCUniversal Enterprise had $505 million and $1.1 billion, respectively, face amount of commercial paper outstanding.

Note 9: Fair Value Measurements

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

 

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Recurring Fair Value Measurements

 

    Fair Value as of  
   

September 30,

2016

     December 31,
2015
 
(in millions)    Level 1      Level 2      Level 3      Total      Total  

Assets

             

Trading securities

  $ 5       $       $       $ 5       $ 22   

Available-for-sale securities

            126         11         137         133   

Interest rate swap agreements

            43                 43         53   

Other

            6         24         30         17   

Total

  $ 5       $ 175       $ 35       $ 215       $ 225   

Liabilities

             

Other

  $  —       $ 212       $  —       $ 212       $ 91   

Total

  $       $ 212       $       $ 212       $ 91   

Fair Value of Redeemable Subsidiary Preferred Stock

As of September 30, 2016, the fair value of the NBCUniversal Enterprise redeemable subsidiary preferred stock was $757 million. The estimated fair value is based on Level 2 inputs that use 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 10: Share-Based Compensation

Our share-based compensation plans primarily consist of awards of RSUs and stock options 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 2016, we granted 5.9 million RSUs and 20.7 million stock options related to our annual management awards. The weighted-average fair values associated with these grants were $59.50 per RSU and $11.45 per stock option.

Recognized Share-Based Compensation Expense

 

    Three Months Ended
September 30
     Nine Months Ended
September 30
 
(in millions)       2016              2015              2016              2015      

Restricted share units

  $ 77       $ 67       $ 236       $ 205   

Stock options

    48         40         133         118   

Employee stock purchase plans

    6         6         22         20   

Total

  $ 131       $ 113       $ 391       $ 343   

As of September 30, 2016, we had unrecognized pretax compensation expense of $771 million and $425 million related to nonvested RSUs and nonvested stock options, respectively.

 

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Note 11: Supplemental Financial Information

Receivables

 

(in millions)   September 30,
2016
     December 31,
2015
 

Receivables, gross

  $ 8,090       $ 7,595   

Less: Allowance for returns and customer incentives

    289         473   

Less: Allowance for doubtful accounts

    268         226   

Receivables, net

  $ 7,533       $ 6,896   

Accumulated Other Comprehensive Income (Loss)

 

(in millions)   September 30,
2016
    September 30,
2015
 

Unrealized gains (losses) on marketable securities

  $ 2      $ 1   

Deferred gains (losses) on cash flow hedges

    (52     (29

Unrecognized gains (losses) on employee benefit obligations

    8        (54

Cumulative translation adjustments

    76        (113

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

  $ 34      $ (195

Net Cash Provided by Operating Activities

 

    Nine Months Ended
September 30
 
(in millions)       2016             2015      

Net income

  $ 6,628      $ 6,357   

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

   

Depreciation and amortization

    7,062        6,410   

Share-based compensation

    495        430   

Noncash interest expense (income), net

    172        147   

Equity in net (income) losses of investees, net

    64        202   

Cash received from investees

    58        139   

Net (gain) loss on investment activity and other

    (159     (344

Deferred income taxes

    985        67   

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

   

Current and noncurrent receivables, net

    (315     (322

Film and television costs, net

    (593     (65

Accounts payable and accrued expenses related to trade creditors

    46        169   

Other operating assets and liabilities

    (946     623   

Net cash provided by operating activities

  $ 13,497      $ 13,813   

Cash Payments for Interest and Income Taxes

 

    Three Months Ended
September 30
     Nine Months Ended
September 30
 
(in millions)       2016              2015              2016              2015      

Interest

  $ 808       $ 673       $ 2,043       $ 1,914   

Income taxes

  $ 1,031       $ 1,146       $ 2,716       $ 3,145   

Noncash Investing and Financing Activities

During the nine months ended September 30, 2016:

 

   

we acquired $1.3 billion of property and equipment and intangible assets that were accrued but unpaid

 

 

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we recorded a liability of $658 million for a quarterly cash dividend of $0.275 per common share to be paid in October 2016

 

Note 12: Commitments and Contingencies

Contingencies

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 and injure our reputation.

Note 13: 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 one of the nation’s largest providers of video, high-speed Internet and voice services to residential customers under the XFINITY brand; we also provide these and other services to business customers and sell advertising.

 

 

   

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

 

 

   

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

 

 

   

Filmed Entertainment: Consists primarily of the operations of Universal Pictures, which produces, acquires, markets and distributes filmed entertainment worldwide. On August 22, 2016, we acquired all of the outstanding stock of DreamWorks.

 

 

   

Theme Parks: Consists primarily of our Universal theme parks in Orlando, Florida; Hollywood, California; and Osaka, Japan.

 

 

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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 September 30, 2016  
(in millions)   Revenue(g)     Operating Income (Loss)
Before Depreciation and
Amortization(h)
    Depreciation
and
Amortization
     Operating
Income
(Loss)
    Capital
Expenditures
 

Cable Communications(a)(b)

  $ 12,557      $ 4,986      $ 1,929       $ 3,057      $ 2,044   

NBCUniversal

          

Cable Networks(c)

    2,942        893        184         709        7   

Broadcast Television(c)

    3,087        378        27         351        28   

Filmed Entertainment

    1,792        353        13         340        6   

Theme Parks(d)

    1,440        706        130         576        228   

Headquarters and Other(e)

    1        (183     91         (274     67   

Eliminations(f)

    (84     (1             (1       

NBCUniversal

    9,178        2,146        445         1,701        336   

Corporate and Other(b)

    168        (223     21         (244     26   

Eliminations(d)(f)

    (584     (74             (74       

Comcast Consolidated

  $ 21,319      $ 6,835      $ 2,395       $ 4,440      $ 2,406   

 

    Three Months Ended September 30, 2015  
(in millions)   Revenue(g)     Operating Income (Loss)
Before Depreciation and
Amortization(h)
    Depreciation
and
Amortization
     Operating
Income
(Loss)
    Capital
Expenditures
 

Cable Communications(a)(b)

  $ 11,751      $ 4,726      $ 1,782       $ 2,944      $ 1,853   

NBCUniversal

          

Cable Networks

    2,412        835        193         642        9   

Broadcast Television

    1,971        150        26         124        28   

Filmed Entertainment

    1,946        376        8         368        2   

Theme Parks(d)

    896        434        72         362        156   

Headquarters and Other(e)

    5        (164     81         (245     94   

Eliminations(f)

    (79     2                2          

NBCUniversal

    7,151        1,633        380         1,253        289   

Corporate and Other(b)

    167        (211     21         (232     23   

Eliminations(d)(f)

    (400     36                36          

Comcast Consolidated

  $ 18,669      $ 6,184      $ 2,183       $ 4,001      $ 2,165   

 

    Nine Months Ended September 30, 2016  
(in millions)   Revenue(g)     Operating Income (Loss)
Before Depreciation and
Amortization(h)
    Depreciation
and
Amortization
     Operating
Income
(Loss)
    Capital
Expenditures
 

Cable Communications(a)(b)

  $ 37,205      $ 14,923      $ 5,676       $ 9,247      $ 5,501   

NBCUniversal

          

Cable Networks(c)

    7,961        2,793        561         2,232        15   

Broadcast Television(c)

    7,299        1,056        89         967        77   

Filmed Entertainment

    4,526        576        33         543        14   

Theme Parks(d)

    3,602        1,550        373         1,177        668   

Headquarters and Other(e)

    10        (518     268         (786     217   

Eliminations(f)

    (256                             

NBCUniversal

    23,142        5,457        1,324         4,133        991   

Corporate and Other(b)

    547        (668     62         (730     70   

Eliminations(d)(f)

    (1,516     (55             (55       

Comcast Consolidated

  $ 59,378      $ 19,657      $ 7,062       $ 12,595      $ 6,562   

 

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Comcast Corporation

 

    Nine Months Ended September 30, 2015  
(in millions)   Revenue(g)     Operating Income (Loss)
Before Depreciation and
Amortization(h)
    Depreciation
and
Amortization
     Operating
Income
(Loss)
    Capital
Expenditures
 

Cable Communications(a)(b)

  $ 34,932      $ 14,161      $ 5,194       $ 8,967      $ 4,977   

NBCUniversal

          

Cable Networks

    7,221        2,605        588         2,017        20   

Broadcast Television(c)

    6,032        563        85         478        53   

Filmed Entertainment

    5,658        1,091        19         1,072        7   

Theme Parks(d)

    2,320        1,012        214         798        484   

Headquarters and Other(e)

    12        (473     243         (716     265   

Eliminations(f)

    (258     2                2          

NBCUniversal

    20,985        4,800        1,149         3,651        829   

Corporate and Other(b)

    524        (651     67         (718     56   

Eliminations(d)(f)

    (1,176     96                96          

Comcast Consolidated

  $ 55,265      $ 18,406      $ 6,410       $ 11,996      $ 5,862   

 

(a)

For the three and nine months ended September 30, 2016 and 2015, Cable Communications segment revenue was derived from the following sources:

 

    Three Months Ended
September 30
    Nine Months Ended
September 30
 
         2016             2015             2016             2015      

Residential:

       

Video

    44.5     45.5     44.9     46.1

High-speed Internet

    27.1     26.6     27.0     26.5

Voice

    7.0     7.7     7.2     7.8

Business services

    11.1     10.3     10.9     10.0

Advertising

    5.1     5.0     4.8     4.8

Other

    5.2     4.9     5.2     4.8

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 nine months ended September 30, 2016 and 2015, 2.8% of Cable Communications segment revenue was derived from franchise and other regulatory fees.

 

(b)

Beginning in the first quarter of 2016, certain operations and businesses, including several strategic business initiatives, that were previously presented in Corporate and Other are now presented in our Cable Communications segment to reflect a change in our management reporting presentation. For segment reporting purposes, we have adjusted all periods presented to reflect this change.

 

(c)

The revenue and operating costs and expenses associated with our broadcast of the 2016 Rio Olympics were reported in our Cable Networks and Broadcast Television segments. The revenue and operating costs and expenses associated with our broadcast of the 2015 Super Bowl were reported in our Broadcast Television segment.

 

(d)

Beginning in the fourth quarter of 2015, we changed our method of accounting for a contractual obligation that involves an interest in the revenue of certain theme parks. As a result of the change, amounts payable based on current period revenue are presented in operating costs and expenses. Amounts paid through the third quarter of 2015 were included in other income (expense), net in our consolidated statement of income. For segment reporting purposes, we have adjusted periods prior to the fourth quarter of 2015 to reflect management reporting presentation for this expense on a consistent basis for all periods in the Theme Parks segment and total NBCUniversal, which resulted in a corresponding offsetting adjustment in Eliminations to reconcile to consolidated totals.

 

(e)

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

 

(f)

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

 

 

   

our Broadcast Television segment generates revenue from the fees received under retransmission consent agreements with our Cable Communications segment

 

 

   

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

 

 

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Comcast Corporation

 

   

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

 

 

(g)

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

 

(h)

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.

Note 14: Condensed Consolidating Financial Information

Comcast (“Comcast Parent”), Comcast Cable Communications, LLC (“CCCL Parent”), and NBCUniversal (“NBCUniversal Media Parent”) have fully and unconditionally guaranteed each other’s debt securities, including the Comcast revolving credit facility.

Comcast Parent and CCCL Parent also fully and unconditionally guarantee NBCUniversal Enterprise’s $3.3 billion of senior notes, revolving credit facility and commercial paper program. NBCUniversal Media Parent does not guarantee NBCUniversal Enterprise’s senior notes, revolving 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 CCCL Parent nor NBCUniversal Media Parent guarantee the Comcast Holdings’ ZONES due October 2029. None of Comcast Parent, CCCL Parent nor NBCUniversal Media Parent guarantee the $62 million principal amount currently outstanding of Comcast Holdings’ ZONES due November 2029 or the $3.8 billion of Universal Studios Japan term loans.

 

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Comcast Corporation

Condensed Consolidating Balance Sheet

September 30, 2016

 

(in millions)  

Comcast

Parent

    

Comcast

Holdings

    

CCCL

Parent

    NBCUniversal
Media Parent
   

Non-

Guarantor

Subsidiaries

   

Elimination

and

Consolidation

Adjustments

   

Consolidated

Comcast

Corporation

 

Assets

               

Cash and cash equivalents

  $       $       $      $ 576      $ 2,231      $      $ 2,807   

Receivables, net

                                  7,533               7,533   

Programming rights

                                  1,369               1,369   

Other current assets

    70                        16        3,433               3,519   

Total current assets

    70                        592        14,566               15,228   

Film and television costs

                                  7,153               7,153   

Investments

    58                        449        3,350               3,857   

Investments in and amounts due from subsidiaries eliminated upon consolidation

    96,542         119,137         125,719        47,218        119,344        (507,960       

Property and equipment, net

    244                               35,412               35,656   

Franchise rights

                                  59,364               59,364   

Goodwill

                                  36,652               36,652   

Other intangible assets, net

    10                               17,346               17,356   

Other noncurrent assets, net

    1,388         147                89        2,328        (1,294     2,658   

Total assets

  $ 98,312       $ 119,284       $ 125,719      $ 48,348      $ 295,515      $ (509,254   $ 177,924   

Liabilities and Equity

               

Accounts payable and accrued expenses related to trade creditors

  $ 7       $       $      $      $ 6,587      $      $ 6,594   

Accrued participations and residuals

                                  1,570               1,570   

Accrued expenses and other current liabilities

    1,448         335         224        361        4,173               6,541   

Current portion of long-term debt

    1,504                 550        4        1,275               3,333   

Total current liabilities

    2,959         335         774        365        13,605               18,038   

Long-term debt, less current portion

    39,177         138         2,100        8,208        7,472               57,095   

Deferred income taxes

            561                93        35,017        (1,148     34,523   

Other noncurrent liabilities

    2,695                        1,160        7,410        (146     11,119   

Redeemable noncontrolling interests and redeemable subsidiary preferred stock

                                  1,326               1,326   

Equity:

               

Common stock

    28                                             28   

Other shareholders’ equity

    53,453         118,250         122,845        38,522        228,343        (507,960     53,453   

Total Comcast Corporation shareholders’ equity

    53,481         118,250         122,845        38,522        228,343        (507,960     53,481   

Noncontrolling interests

                                  2,342               2,342   

Total equity

    53,481         118,250         122,845        38,522        230,685        (507,960     55,823   

Total liabilities and equity

  $ 98,312       $ 119,284       $ 125,719      $ 48,348      $ 295,515      $ (509,254   $ 177,924   

 

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Comcast Corporation

Condensed Consolidating Balance Sheet

December 31, 2015

 

(in millions)  

Comcast

Parent

   

Comcast

Holdings

   

CCCL

Parent

    NBCUniversal
Media Parent
   

Non-

Guarantor

Subsidiaries

   

Elimination

and

Consolidation

Adjustments

   

Consolidated

Comcast

Corporation

 

Assets

             

Cash and cash equivalents

  $      $      $      $ 414      $ 1,881      $      $ 2,295   

Receivables, net

                                6,896               6,896   

Programming rights

                                1,213               1,213   

Other current assets

    69                      17        1,813               1,899   

Total current assets

    69                      431        11,803               12,303   

Film and television costs

                                5,855               5,855   

Investments

    33                      430        2,761               3,224   

Investments in and amounts due from subsidiaries eliminated upon consolidation

    87,142        111,241        119,354        42,441        109,598        (469,776       

Property and equipment, net

    210                             33,455               33,665   

Franchise rights

                                59,364               59,364   

Goodwill

                                32,945               32,945   

Other intangible assets, net

    12                             16,934               16,946   

Other noncurrent assets, net

    1,301        147               78        2,114        (1,368     2,272   

Total assets

  $ 88,767      $ 111,388      $ 119,354      $ 43,380      $ 274,829      $ (471,144   $ 166,574   

Liabilities and Equity

             

Accounts payable and accrued expenses related to trade creditors

  $ 16      $      $      $      $ 6,199      $      $ 6,215   

Accrued participations and residuals

                                1,572               1,572   

Accrued expenses and other current liabilities

    1,789        335        290        389        3,961               6,764   

Current portion of long-term debt

    1,149                      1,005        1,473               3,627   

Total current liabilities

    2,954        335        290        1,394        13,205               18,178   

Long-term debt, less current portion

    31,106        130        2,650        8,211        6,897               48,994   

Deferred income taxes

           624               66        34,098        (1,222     33,566   

Other noncurrent liabilities

    2,438                      1,087        7,258        (146     10,637   

Redeemable noncontrolling interests and redeemable subsidiary preferred stock

                                1,221               1,221   

Equity:

             

Common stock

    29                                           29   

Other shareholders’ equity

    52,240        110,299        116,414        32,622        210,441        (469,776     52,240   

Total Comcast Corporation shareholders’ equity

    52,269        110,299        116,414        32,622        210,441        (469,776     52,269   

Noncontrolling interests

                                1,709               1,709   

Total equity

    52,269        110,299        116,414        32,622        212,150        (469,776     53,978   

Total liabilities and equity

  $ 88,767      $ 111,388      $ 119,354      $ 43,380      $ 274,829      $ (471,144   $ 166,574   

 

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Comcast Corporation

Condensed Consolidating Statement of Income

For the Three Months Ended September 30, 2016

 

(in millions)  

Comcast

Parent

   

Comcast

Holdings

   

CCCL

Parent

    NBCUniversal
Media Parent
   

Non-

Guarantor

Subsidiaries

   

Elimination

and

Consolidation

Adjustments

   

Consolidated

Comcast

Corporation

 

Revenue:

             

Service revenue

  $      $      $      $      $ 21,319      $      $ 21,319   

Management fee revenue

    268               263                      (531       
      268               263               21,319        (531     21,319   

Costs and Expenses:

             

Programming and production

                                7,003               7,003   

Other operating and administrative

    194               263        222        5,846        (531     5,994   

Advertising, marketing and promotion

                                1,487               1,487   

Depreciation

    7                             1,858               1,865   

Amortization

    1                             529               530   
      202               263        222        16,723        (531     16,879   

Operating income (loss)

    66                      (222     4,596               4,440   

Other Income (Expense):

             

Interest expense

    (502     (3     (59     (113     (74            (751

Investment income (loss), net

    3        (4            (12     93               80   

Equity in net income (losses) of investees, net

    2,519        2,385        2,134        1,644        1,255        (9,971     (34

Other income (expense), net

                         (2     (9            (11
      2,020        2,378        2,075        1,517        1,265        (9,971     (716

Income (loss) before income taxes

    2,086        2,378        2,075        1,295        5,861        (9,971     3,724   

Income tax (expense) benefit

    151        2        21        (6     (1,568            (1,400

Net income (loss)

    2,237        2,380        2,096        1,289        4,293        (9,971     2,324   

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

                                (87            (87

Net income (loss) attributable to Comcast Corporation

  $ 2,237      $ 2,380      $ 2,096      $ 1,289      $ 4,206      $ (9,971   $ 2,237   

Comprehensive income (loss) attributable to Comcast Corporation

  $ 2,270      $ 2,388      $ 2,096      $ 1,310      $ 4,235      $ (10,029   $ 2,270   

 

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Comcast Corporation

Condensed Consolidating Statement of Income

For the Three Months Ended September 30, 2015

 

(in millions)  

Comcast

Parent

   

Comcast

Holdings

   

CCCL

Parent

    NBCUniversal
Media Parent
   

Non-

Guarantor

Subsidiaries

   

Elimination

and

Consolidation

Adjustments

   

Consolidated

Comcast

Corporation

 

Revenue:

             

Service revenue

  $      $      $      $      $ 18,669      $      $ 18,669   

Management fee revenue

    251               244                      (495       
      251               244               18,669        (495     18,669   

Costs and Expenses:

             

Programming and production

                                5,582               5,582   

Other operating and administrative

    146               244        235        5,260        (495     5,390   

Advertising, marketing and promotion

                                1,513               1,513   

Depreciation

    8                             1,689               1,697   

Amortization

    1                             485               486   
      155               244        235        14,529        (495     14,668   

Operating income (loss)

    96                      (235     4,140               4,001   

Other Income (Expense):

             

Interest expense

    (428     (3     (65     (111     (52            (659

Investment income (loss), net

    3        (4            (3     (22            (26

Equity in net income (losses) of investees, net

    2,210        2,123        1,981        1,289        928        (8,530     1   

Other income (expense), net

                         (7     (46            (53
      1,785        2,116        1,916        1,168        808        (8,530     (737

Income (loss) before income taxes

    1,881        2,116        1,916        933        4,948        (8,530     3,264   

Income tax (expense) benefit

    115        2        23        (6     (1,357            (1,223

Net income (loss)

    1,996        2,118        1,939        927        3,591        (8,530     2,041   

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

                                (45            (45

Net income (loss) attributable to Comcast Corporation

  $ 1,996      $ 2,118      $ 1,939      $ 927      $ 3,546      $ (8,530   $ 1,996   

Comprehensive income (loss) attributable to Comcast Corporation

  $ 1,967      $ 2,112      $ 1,940      $ 902      $ 3,546      $ (8,500   $ 1,967   

 

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Comcast Corporation

Condensed Consolidating Statement of Income

For the Nine Months Ended September 30, 2016

 

(in millions)  

Comcast

Parent

   

Comcast

Holdings

   

CCCL

Parent

    NBCUniversal
Media Parent
   

Non-

Guarantor

Subsidiaries

   

Elimination

and

Consolidation

Adjustments

   

Consolidated

Comcast

Corporation

 

Revenue:

             

Service revenue

  $      $      $      $      $ 59,378      $      $ 59,378   

Management fee revenue

    793               778                      (1,571       
      793               778               59,378        (1,571     59,378   

Costs and Expenses:

             

Programming and production

                                17,926               17,926   

Other operating and administrative

    635               778        739        16,699        (1,571     17,280   

Advertising, marketing and promotion

                                4,515               4,515   

Depreciation

    21                             5,497               5,518   

Amortization

    4                             1,540               1,544   
      660               778        739        46,177        (1,571     46,783   

Operating income (loss)

    133                      (739     13,201               12,595   

Other Income (Expense):

             

Interest expense

    (1,431     (9     (179     (342     (225            (2,186

Investment income (loss), net

    6        (3            (20     185               168   

Equity in net income (losses) of investees, net

    7,239        6,924