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:
MARCH 31, 1999
OR
( ) Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Transition Period from ________ to ________.
Commission File Number 333-31009
COMCAST CELLULAR CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 23-2687447
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1201 Market Street, Wilmington, Delaware 19801
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code: (302) 594-8700
--------------------------
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 requirements
for the past 90 days.
Yes _X_ No ___
--------------------------
As of March 31, 1999, there were 100 shares of Common Stock outstanding.
The Registrant meets the conditions set forth in General Instructions H (1)(a)
and (b) of Form 10-Q and is therefore filing this form with the reduced
disclosure format.
<PAGE>
COMCAST CELLULAR CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 1999
TABLE OF CONTENTS
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance
Sheet as of March 31, 1999 and December 31,
1998 (Unaudited)..........................................2
Condensed Consolidated Statement of
Operations and Accumulated Deficit for
the Three Months Ended March 31,
1999 and 1998 (Unaudited).................................3
Condensed Consolidated Statement of Cash
Flows for the Three Months Ended March 31,
1999 and 1998 (Unaudited).................................4
Notes to Condensed Consolidated
Financial Statements (Unaudited)......................5 - 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations............................................7 - 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings........................................10
Item 6. Exhibits and Reports on Form 8-K.........................10
SIGNATURES.........................................................11
-----------------------------------
This Quarterly Report on Form 10-Q contains forward looking statements made
pursuant to the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. Readers are cautioned that such forward looking statements
involve risks and uncertainties which could significantly affect expected
results in the future from those expressed in any such forward looking
statements made by, or on behalf, of the Company. Certain factors that could
cause actual results to differ materially include, without limitation, the
effects of legislative and regulatory changes; the potential for increased
competition; technological changes; the need to generate substantial growth in
the subscriber base by successfully launching, marketing and providing services
in identified markets; pricing pressures which could affect demand for the
Company's services; the Company's ability to expand its distribution; changes in
labor, equipment and capital costs; future acquisitions, strategic partnerships
and divestitures; general business and economic conditions; and other risks
detailed from time to time in the Company's periodic reports filed with the
Securities and Exchange Commission.
<PAGE>
COMCAST CELLULAR CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 1999
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
(Dollars in thousands, except share data)
March 31, December 31,
1999 1998
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents ............................... $15,769 $24,422
Accounts receivable, less allowance for doubtful accounts
of $4,367 and $4,870 .................................. 72,534 75,302
Inventories ............................................. 15,223 23,292
Other current assets .................................... 3,994 4,937
----------- -----------
Total current assets ................................ 107,520 127,953
----------- -----------
INVESTMENT IN AFFILIATE .................................... 28,214
----------- -----------
PROPERTY AND EQUIPMENT ..................................... 702,330 686,240
Accumulated depreciation ................................ (295,862) (267,993)
----------- -----------
Property and equipment, net ............................. 406,468 418,247
----------- -----------
DEFERRED CHARGES AND OTHER ................................. 1,325,023 1,276,531
Accumulated amortization ................................ (368,267) (356,311)
----------- -----------
Deferred charges and other, net ......................... 956,756 920,220
----------- -----------
$1,470,744 $1,494,634
=========== ===========
LIABILITIES AND STOCKHOLDER'S DEFICIENCY
CURRENT LIABILITIES
Accounts payable and accrued expenses ................... $78,522 $116,979
Accrued interest ........................................ 40,034 16,802
Current portion of long-term debt ....................... 470 461
Due to affiliates ....................................... 16,262 18,508
----------- -----------
Total current liabilities ........................... 135,288 152,750
----------- -----------
LONG-TERM DEBT, less current portion ....................... 1,274,068 1,274,159
----------- -----------
DEFERRED INCOME TAXES ...................................... 217,866 230,046
----------- -----------
MINORITY INTEREST AND OTHER ................................ 35,459 8,073
----------- -----------
COMMITMENTS AND CONTINGENCIES
MANDATORILY REDEEMABLE PREFERRED STOCK HELD BY AFFILIATE ... 200,796 195,059
----------- -----------
STOCKHOLDER'S DEFICIENCY
Common stock, $.01 par value - authorized, 1,000 shares;
issued, 100 shares
Additional capital ...................................... 531,491 537,228
Accumulated deficit ..................................... (924,224) (902,681)
----------- -----------
Total stockholder's deficiency ...................... (392,733) (365,453)
----------- -----------
$1,470,744 $1,494,634
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE>
COMCAST CELLULAR CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 1999
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
(Unaudited)
<TABLE>
<CAPTION>
(Dollars in thousands)
Three Months Ended March 31,
1999 1998
--------- ---------
<S> <C> <C>
SERVICE INCOME, net ........................... $109,849 $105,386
--------- ---------
COSTS AND EXPENSES
Operating .................................. 10,626 9,356
Selling, general and administrative......... 69,615 58,117
Depreciation and amortization .............. 36,695 27,994
--------- ---------
116,936 95,467
--------- ---------
OPERATING (LOSS) INCOME ....................... (7,087) 9,919
OTHER (INCOME) EXPENSE
Interest expense ........................... 27,623 28,578
Investment income .......................... (206) (330)
Equity in net losses of affiliates ......... 20
Minority interest and other ................ (781) 228
--------- ---------
26,636 28,496
--------- ---------
LOSS BEFORE INCOME TAX BENEFIT ................ (33,723) (18,577)
INCOME TAX BENEFIT ............................ (12,180) (6,768)
--------- ---------
NET LOSS ...................................... (21,543) (11,809)
PREFERRED DIVIDENDS ........................... (5,737) (5,106)
--------- ---------
NET LOSS FOR COMMON STOCKHOLDER ............... ($27,280) ($16,915)
========= =========
ACCUMULATED DEFICIT
Beginning of period ........................ ($902,681) ($906,888)
Net loss ................................... (21,543) (11,809)
--------- ---------
End of period .............................. ($924,224) ($918,697)
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
COMCAST CELLULAR CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 1999
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
(Dollars in thousands)
Three Months Ended March 31,
1999 1998
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss .............................................................. ($21,543) ($11,809)
Adjustments to reconcile net loss to net cash (used in) provided
by operating activities:
Depreciation and amortization ....................................... 36,695 27,994
Non-cash interest expense ........................................... 29 1,414
Equity in net losses of affiliates .................................. 20
Minority interest ................................................... (781) 265
Deferred income taxes and other ..................................... (12,227) (6,107)
-------- --------
2,173 11,777
Changes in working capital accounts ................................. (2,497) 4,043
-------- --------
Net cash (used in) provided by operating activities ........... (324) 15,820
-------- --------
FINANCING ACTIVITIES
Repayments of long-term debt .......................................... (111) (10,000)
Deferred financing costs .............................................. (79)
Net transactions with affiliates ...................................... (848) 4,734
-------- --------
Net cash used in financing activities ......................... (959) (5,345)
-------- --------
INVESTING ACTIVITIES
Capital expenditures .................................................. (7,566) (4,389)
Other ................................................................. 196 (12)
-------- --------
Net cash used in investing activities ......................... (7,370) (4,401)
-------- --------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ......................... (8,653) 6,074
CASH AND CASH EQUIVALENTS, beginning of period ........................... 24,422 4,692
-------- --------
CASH AND CASH EQUIVALENTS, end of period ................................. $15,769 $10,766
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
COMCAST CELLULAR CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 1999
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation
The condensed consolidated balance sheet as of December 31, 1998 has been
condensed from the audited consolidated balance sheet as of that date. The
condensed consolidated balance sheet as of March 31, 1999 and the condensed
consolidated statements of operations and accumulated deficit and of cash
flows for the three months ended March 31, 1999 and 1998 have been prepared
by Comcast Cellular Corporation (the "Company"), an indirect wholly owned
subsidiary of Comcast Corporation ("Comcast") and have not been audited by
the Company's independent auditors. In the opinion of management, all
adjustments necessary to present fairly the financial position, results of
operations and cash flows as of March 31, 1999 and for all periods
presented have been made.
Certain information and note disclosures normally included in the Company's
annual financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These condensed
consolidated financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's December
31, 1998 Annual Report on Form 10-K filed with the Securities and Exchange
Commission. The results of operations for the period ended March 31, 1999
are not necessarily indicative of operating results for the full year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
New Accounting Pronouncement
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement, which establishes
accounting and reporting standards for derivatives and hedging activities,
is effective for fiscal years beginning after June 15, 1999. Upon the
adoption of SFAS No. 133, all derivatives are required to be recognized in
the statement of financial position as either assets or liabilities and
measured at fair value. The Company is currently evaluating the impact the
adoption of SFAS No. 133 will have on its financial position and results of
operations.
Reclassifications
Certain reclassifications have been made to the prior year condensed
consolidated financial statements to conform to those classifications used
in 1999.
3. SALE OF THE COMPANY
In January 1999, Comcast agreed to sell the Company to SBC Communications,
Inc. ("SBC") for approximately $400 million in cash and the assumption of
approximately $1.3 billion of the Company's debt. Comcast expects to
complete the sale in the second quarter of 1999 pending receipt of all
necessary regulatory and other approvals.
4. LONG-TERM DEBT
As of March 31, 1999, Comcast Cellular Communications, Inc. ("CCCI"), a
wholly-owned subsidiary of the Company, had outstanding $275.0 million
under its $396.5 million revolving credit facility, which consists of a
$300.0 million five and one quarter year revolving credit facility (the
"Tranche A Credit Facility") and a $96.5 million 364-day revolving credit
facility (the "Tranche B Credit Facility"). The Tranche B Credit Facility
will expire in October 1999. In April 1999, CCCI borrowed an additional
$40.0 million under its revolving credit facility, the proceeds of which
were used, together with available cash, to pay semi-annual interest
related to the Company's 9 1/2% Senior Notes due 2007 (the "Senior Notes").
As of March 31, 1999 and December 31, 1998, the Company's effective
weighted average interest rate on its long-term debt outstanding was 8.59%
and 8.69%, respectively.
5
<PAGE>
COMCAST CELLULAR CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 1999
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED
(Unaudited)
5. C-SW CELLULAR PARTNERSHIP
The Company and SBC, through the C-SW Cellular Partnership ("C-SW"), a
partnership owned 50% by each of the Company and SBC, purchased the
cellular license for the Delaware 1 Rural Statistical Area in May 1996. The
Company's investment of $28.2 million as of December 31, 1998 was accounted
for under the equity method and was classified as investment in affiliate
in the Company's condensed consolidated balance sheet. Effective January 1,
1999, the Company began consolidating C-SW and the liability related to
SBC's interest is included in minority interest and other in the Company's
March 31, 1999 condensed consolidated balance sheet. As the consolidation
of C-SW was a non-cash transaction, it had no significant impact on the
Company's condensed consolidated statement of cash flows.
6. RELATED PARTY TRANSACTIONS
Comcast and CCCI are parties to a management agreement pursuant to which
Comcast manages the business and operations of CCCI. The management
agreement provides for an annual management fee of 1.5% of revenues.
Management fees of $1.7 million and $1.6 million were charged to selling,
general and administrative expenses during the three months ended March 31,
1999 and 1998, respectively.
During 1997, the Company authorized 10,000 shares of $.01 par value
preferred stock and designated 5,200 of such shares as Series A Preferred
Stock. In May 1997, the Company issued 1,614.775 shares of its mandatorily
redeemable Series A Preferred Stock to Comcast Financial Corporation, a
wholly owned subsidiary of Comcast. Each holder of the Series A Preferred
Stock is entitled to receive cumulative cash dividends at the annual rate
of $12,000 per share, payable semi-annually on May 1 and November 1 each
year, in arrears. At the option of the Company, by declaration of the
Company's Board of Directors, dividends may be paid in additional shares of
Series A Preferred Stock (the "Additional Shares") instead of cash through
May 1, 2007. To the extent dividends are paid in Additional Shares, such
Additional Shares shall be valued at $100,000 per share with a liquidation
value of $100,000 per share. The Series A Preferred Stock is redeemable, at
the option of the Company, at any time prior to May 2, 2007, at a
redemption price of $100,000 per share, plus accrued and unpaid dividends,
and is mandatorily redeemable on May 2, 2007 after final maturity of the
Senior Notes, subject to certain conditions. The Series A Preferred Stock
is generally non-voting. During the three months ended March 31, 1999 and
1998, the Company accrued $5.7 million and $5.1 million, respectively, of
dividends on the Series A Preferred Stock, with a corresponding reduction
in additional capital. Such amounts have been excluded from the Company's
condensed consolidated statement of cash flows due to their noncash nature.
In connection with the closing of the sale of the Company to SBC (see Note
3), the Series A Preferred Stock will be exchanged into shares of the
Company's common stock.
As of March 31, 1999, due to affiliates consists principally of amounts due
to AWACS Garden State, Inc. in connection with tax savings received by the
Company during prior year periods in which AWACS Garden State, Inc. joined
with an indirect subsidiary of the Company in filing consolidated federal
tax returns.
7. STATEMENT OF CASH FLOWS - SUPPLEMENTAL INFORMATION
The Company made cash payments for interest of $4.4 million and $3.7
million during the three months ended March 31, 1999 and 1998,
respectively.
8. CONTINGENCIES
The Company is subject to claims which arise in the ordinary course of its
business. In the opinion of management, the amount of ultimate liability
with respect to these actions will not materially affect the financial
position, results of operations or liquidity of the Company.
6
<PAGE>
COMCAST CELLULAR CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 1999
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Information for this item is omitted pursuant to Securities and Exchange
Commission General Instruction to Form 10-Q, except as noted below.
Results of Operations
Summarized consolidated financial information for Comcast Cellular Corporation
(the "Company"), an indirect wholly owned subsidiary of Comcast Corporation
("Comcast"), for the three months ended March 31, 1999 and 1998 is as follows
(dollars in millions, "NM" denotes percentage is not meaningful):
<TABLE>
<CAPTION>
Three Months Ended
March 31, Increase / (Decrease)
1999 1998 $ %
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Service income, net..................................... $109.8 $105.4 $4.4 4.2%
Operating, selling, general and administrative
expenses........................................... 80.2 67.5 12.7 18.8
--------- ---------
Operating income before depreciation and
amortization (1)................................... 29.6 37.9 (8.3) (21.9)
Depreciation and amortization........................... 36.7 28.0 8.7 31.1
--------- ---------
Operating (loss) income................................. (7.1) 9.9 (17.0) NM
--------- ---------
Interest expense........................................ 27.6 28.6 (1.0) (3.5)
Investment income....................................... (0.2) (0.3) (0.1) (33.3)
Minority interest and other............................. (0.8) 0.2 1.0 NM
Income tax benefit...................................... (12.2) (6.8) 5.4 79.4
--------- ---------
Net loss........................................... ($21.5) ($11.8) 9.7 82.2%
========= =========
<FN>
- ----------
(1) Operating income before depreciation and amortization is commonly referred
to in the cellular industry as "operating cash flow." Operating cash flow
is a measure of a company's ability to generate cash to service its
obligations, including debt service obligations, and to finance capital and
other expenditures. In part due to the capital intensive nature of the
cellular industry and the resulting significant level of non-cash
depreciation and amortization expense, operating cash flow is frequently
used as one of the bases for evaluating cellular businesses, although the
Company's measure of operating cash flow may not be comparable to similarly
titled measures of other companies. Operating cash flow does not purport to
represent net income or net cash provided by operating activities, as those
terms are defined under generally accepted accounting principles, and
should not be considered as an alternative to such measurements as an
indicator of the Company's performance.
</FN>
</TABLE>
Service income increased by $4.4 million for the three month period from 1998 to
1999. This increase is primarily attributable to the effects of consolidating
the C-SW Cellular Partnership ("C-SW") effective January 1, 1999 and to
subscriber growth offset, in part, by the effects of increased use of
promotional and free minute plans offered to subscribers. These plans generally
have higher access fees and increase the minutes of use per subscriber while
lowering the average rate per minute of use.
The $12.7 million increase in operating, selling, general and administrative
expenses for the three month period from 1998 to 1999 is primarily attributable
to increases in commission costs associated with more gross sales in 1999,
additional promotional costs, costs related to customer retention efforts and
the consolidation of C-SW effective January 1, 1999.
Comcast and Comcast Cellular Communications, Inc. ("CCCI"), a wholly owned
subsidiary of the Company, are parties to a management agreement pursuant to
which Comcast manages the business and operations of CCCI. The management
7
<PAGE>
COMCAST CELLULAR CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 1999
agreement provides for an annual management fee of 1.5% of revenues. Management
fees of $1.7 million and $1.6 million were charged to selling, general and
administrative expenses during the three months ended March 31, 1999 and 1998,
respectively.
The $8.7 million increase in depreciation and amortization expense for the three
month period from 1998 to 1999 is primarily attributable to the effects of
capital expenditures and losses on asset disposals.
The $1.0 million decrease in interest expense for the three month period from
1998 to 1999 is primarily due to the transfer of AWACS Garden State, Inc.
("AWACS Garden State"), which was an indirect subsidiary of the Company. In
1992, AWACS Garden State issued a note (the "AWACS Note") with an initial
principal amount of $51.0 million to purchase, from a subsidiary of Comcast, a
40% limited partnership in Garden State Cablevision L.P. The AWACS Note bears
interest at a rate of 11% per annum. Interest is payable on a quarterly basis to
the extent of available cash, with any unpaid interest added to principal.
Interest expense on the AWACS Note was $1.4 million for the three months ended
March 31, 1998. Effective April 1, 1998, the Company distributed its indirect
interest in AWACS Garden State to a wholly owned subsidiary of Comcast at its
net book value of $41.3 million.
The $5.4 million increase in income tax benefit for the three month period from
1998 to 1999 is primarily attributable to fluctuations in the Company's loss
before income tax benefit.
For the three months ended March 31, 1999 and 1998, the Company's (loss)
earnings before income tax benefit, equity in net losses of affiliates and fixed
charges (interest expense) was ($6.1) million and $10.0 million, respectively.
Such amounts were not adequate to cover the Company's fixed charges of $27.6
million and $28.6 million for these periods, respectively. Fixed charges include
non-cash interest expense of $1.4 million for the three months ended March 31,
1998. The inadequacy of the Company's earnings to cover fixed charges is
primarily due to substantial non-cash charges for depreciation and amortization
expense of $36.7 million and $28.0 million during the three months ended March
31, 1999 and 1998, respectively.
The Company anticipates that, for the foreseeable future, depreciation,
amortization and interest expense will continue to be significant and will have
a significant adverse effect on the Company's ability to realize net earnings.
The Company believes that its losses will not significantly affect the
performance of its normal business activities because of its existing cash and
cash equivalents, its ability to generate operating income before depreciation
and amortization and its ability to obtain external financing.
The Company believes that its operations are not materially affected by
inflation.
Year 2000 Issue
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Certain of the Company's
computer programs that have date-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000 (the "Year 2000 Issue"). If this
situation occurs, the potential exists for computer system failure or
miscalculations by computer programs, which could cause disruption of
operations.
The Company is in the process of evaluating and addressing the impact of the
Year 2000 Issue on its operations to ensure that its information technology and
business systems recognize calendar Year 2000. The Company is utilizing both
internal and external resources in implementing its Year 2000 program, which
consists of the following phases:
Assessment Phase
Structured evaluation, including a detailed inventory outlining the impact that
the Year 2000 Issue may have on current operations.
8
<PAGE>
COMCAST CELLULAR CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 1999
Detailed Planning Phase
Establishment of priorities, development of specific action steps and allocation
of resources to address the issues identified in the Assessment Phase.
Conversion Phase
Implementation of the necessary system modifications as outlined in the Detailed
Planning Phase.
Testing Phase
Verification that the modifications implemented in the Conversion Phase will be
successful in resolving the Year 2000 Issue so that all inventory items will
function properly, both individually and on an integrated basis.
Implementation Phase
Final roll-out of fully tested components into an operational unit.
Based on an inventory conducted in 1997, the Company has identified computer
systems that will require modification or replacement so that they will properly
utilize dates beyond December 31, 1999. Many of the Company's critical systems
are new and are already Year 2000 compliant as a result of the Company's recent
implementation of a fully digital cellular communications network. In addition,
the Company has initiated communications with all of its significant software
suppliers and service bureaus to determine their plans for remediating the Year
2000 Issue in their software which the Company uses or relies upon.
As of March 31, 1999, the Company is in the Testing Phase of its Year 2000
remediation program and has entered the Implementation Phase with respect to
certain of its key systems. Through March 31, 1999, the Company has incurred
$1.4 million in connection with its Year 2000 remediation program. The Company
estimates that it will incur between approximately $1 million to $2 million of
additional expense through December 1999 in connection with its Year 2000
remediation program. The Company's estimate to complete the remediation plan
includes the estimated time associated with mitigating the Year 2000 Issue for
third party software. However, there can be no guarantee that the systems of
other companies on which the Company relies will be converted on a timely basis,
or that a failure to convert by another company would not have a material
adverse effect on the Company.
Management of the Company will continue to periodically report the progress of
its Year 2000 remediation program to the Audit Committee of Comcast's Board of
Directors. The Company plans to complete the Year 2000 mitigation by the third
quarter of 1999. Management of the Company has investigated and may consider
potential contingency plans in the event that the Company's Year 2000
remediation program is not completed by that date.
The costs of the project and the date on which the Company plans to complete the
Year 2000 modifications and replacements are based on management's best
estimates, which were derived using assumptions of future events including the
continued availability of resources and the reliability of third party
modification plans. However, there can be no guarantee that these estimates will
be achieved and actual results could differ materially from those plans.
Specific factors that may cause such material differences include, but are not
limited to, the availability and cost of personnel with appropriate necessary
skills and the ability to locate and correct all relevant computer code and
similar uncertainties.
The Company believes that with modifications to existing software and
conversions to new software, the Year 2000 Issue can be mitigated. However, if
such modifications and conversions are not made, or are not completed within an
adequate time frame, the Year 2000 Issue could have a material adverse impact on
the operations of the Company.
9
<PAGE>
COMCAST CELLULAR CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 1999
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is subject to claims which arise in the ordinary course of its
business. In the opinion of management, the amount of ultimate liability
with respect to these actions will not materially affect the financial
position, results of operations or liquidity of the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required to be filed by Item 601 of Regulation S-K:
27.1 Financial Data Schedule.
(b) Reports on Form 8-K:
(i) The Registrant filed a Current Report on Form 8-K under Item 5 on
January 21, 1999 relating to the sale of the Company to SBC
Communications, Inc.
10
<PAGE>
COMCAST CELLULAR CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 1999
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
COMCAST CELLULAR CORPORATION
-----------------------------------
/S/ LAWRENCE S. SMITH
-----------------------------------
Lawrence S. Smith
Principal Accounting Officer
/S/ JOSEPH J. EUTENEUER
-----------------------------------
Joseph J. Euteneuer
Vice President (Authorized Officer)
Date: May 14, 1999
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated statement of operations and consolidated balance sheet and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001041854
<NAME> COMCAST CELLULAR CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 15,769
<SECURITIES> 0
<RECEIVABLES> 76,901
<ALLOWANCES> (4,367)
<INVENTORY> 15,223
<CURRENT-ASSETS> 107,520
<PP&E> 702,330
<DEPRECIATION> (295,862)
<TOTAL-ASSETS> 1,470,744
<CURRENT-LIABILITIES> 135,288
<BONDS> 1,274,068
200,796
0
<COMMON> 0
<OTHER-SE> (392,733)
<TOTAL-LIABILITY-AND-EQUITY> 1,470,744
<SALES> 109,849
<TOTAL-REVENUES> 109,849
<CGS> 0
<TOTAL-COSTS> (116,936)
<OTHER-EXPENSES> 781
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (27,623)
<INCOME-PRETAX> (33,723)
<INCOME-TAX> 12,180
<INCOME-CONTINUING> (21,543)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (21,543)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>