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, 1996
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 0-6983
COMCAST CORPORATION
[GRAPHIC OMITTED - LOGO]
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 23-1709202
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1500 Market Street, Philadelphia, PA 19102-2148
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code: (215) 665-1700
---------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such requirements
for the past 90 days.
Yes __X__ No ____
---------------------
As of March 31, 1996, there were 192,662,145 shares of Class A Special Common
Stock, 35,114,511 shares of Class A Common Stock and 8,786,250 shares of Class B
Common Stock outstanding.
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 1996
TABLE OF CONTENTS
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance
Sheet as of March 31, 1996 and December 31,
1995 (Unaudited).........................................2
Condensed Consolidated Statement of
Operations and Accumulated Deficit for
the Three Months Ended March 31,
1996 and 1995 (Unaudited)................................3
Condensed Consolidated Statement of Cash
Flows for the Three Months Ended March 31, 1996
and 1995 (Unaudited).....................................4
Notes to Condensed Consolidated
Financial Statements (Unaudited)....................5 - 10
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations.........................................11 - 18
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.......................................19
Item 6. Exhibits and Reports on Form 8-K .......................19
-----------------------------------
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. Certain information included in this Quarterly
Report is forward-looking, such as information relating to future capital
commitments and the effects of competition. Such forward-looking information
involves important risks and uncertainties that could significantly affect
expected results in the future from those expressed in any forward-looking
statements made by, or on behalf of, the Company. These risks and uncertainties
include, but are not limited to, uncertainties relating to economic conditions,
acquisitions and divestitures, government and regulatory policies, the pricing
and availability of equipment, materials, inventories and programming,
technological developments and changes in the competitive environment in which
the Company operates.
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 1996
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
(Dollars in thousands)
March 31, December 31,
1996 1995
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents.............................................. $510,150 $539,061
Short-term investments, at cost which approximates fair value 199,575 370,982
Accounts receivable, less allowance for doubtful accounts
of $86,133 and $81,273............................................... 367,789 390,698
Inventories, net....................................................... 240,753 243,447
Prepaid charges and other.............................................. 45,771 49,671
Deferred income taxes.................................................. 62,287 59,799
---------- ----------
Total current assets............................................... 1,426,325 1,653,658
---------- ----------
INVESTMENTS, principally in affiliates.................................... 1,008,441 906,383
---------- ----------
PROPERTY AND EQUIPMENT.................................................... 2,839,028 2,575,633
Accumulated depreciation............................................... (982,195) (932,031)
---------- ----------
Property and equipment, net............................................ 1,856,833 1,643,602
---------- ----------
DEFERRED CHARGES.......................................................... 6,629,040 6,552,437
Accumulated amortization............................................... (1,262,709) (1,175,772)
---------- ----------
Deferred charges, net.................................................. 5,366,331 5,376,665
---------- ----------
$9,657,930 $9,580,308
========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Accounts payable and accrued expenses.................................. $853,972 $963,991
Accrued interest....................................................... 89,417 72,675
Current portion of long-term debt...................................... 66,183 85,403
---------- ----------
Total current liabilities.......................................... 1,009,572 1,122,069
---------- ----------
LONG-TERM DEBT, less current portion...................................... 7,101,045 6,943,766
---------- ----------
DEFERRED INCOME TAXES..................................................... 1,519,247 1,517,995
---------- ----------
MINORITY INTEREST AND OTHER............................................... 850,011 772,004
---------- ----------
COMMITMENTS AND CONTINGENCIES
COMMON EQUITY PUT OPTIONS................................................. 69,625 52,125
---------- ----------
STOCKHOLDERS' DEFICIENCY
Class A special common stock, $1 par value - authorized, 500,000,000
shares; issued, 192,662,145 and 192,844,814......................... 192,662 192,845
Class A common stock, $1 par value - authorized, 200,000,000
shares; issued, 35,114,511 and 37,706,517........................... 35,115 37,707
Class B common stock, $1 par value - authorized, 50,000,000
shares; issued, 8,786,250........................................... 8,786 8,786
Additional capital..................................................... 828,570 843,113
Accumulated deficit.................................................... (1,997,138) (1,914,292)
Unrealized gains on marketable securities.............................. 60,841 22,210
Cumulative translation adjustments..................................... (20,406) (18,020)
---------- ----------
Total stockholders' deficiency..................................... (891,570) (827,651)
---------- ----------
$9,657,930 $9,580,308
========== ==========
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 1996
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
(Unaudited)
<TABLE>
<CAPTION>
(Amounts in thousands, except per share data)
Three Months Ended March 31,
1996 1995
<S> <C> <C>
REVENUES
Service income......................................................... $500,666 $436,587
Net sales from electronic retailing.................................... 450,078 227,019
----------- -----------
950,744 663,606
----------- -----------
COSTS AND EXPENSES
Operating.............................................................. 229,763 171,467
Cost of goods sold from electronic retailing........................... 270,146 138,074
Selling, general and administrative.................................... 180,712 134,459
Depreciation and amortization.......................................... 156,873 243,477
----------- -----------
837,494 687,477
----------- -----------
OPERATING INCOME (LOSS)................................................... 113,250 (23,871)
INVESTMENT (INCOME) EXPENSE
Interest expense....................................................... 134,814 117,587
Investment income...................................................... (18,645) (152,824)
Equity in net losses of affiliates..................................... 34,502 16,417
Other.................................................................. 11,389 (290)
----------- -----------
162,060 (19,110)
----------- -----------
LOSS BEFORE INCOME TAX EXPENSE AND MINORITY INTEREST (48,810) (4,761)
INCOME TAX EXPENSE........................................................ 864 3,935
----------- -----------
LOSS BEFORE MINORITY INTEREST............................................. (49,674) (8,696)
MINORITY INTEREST......................................................... (15,070) (8,068)
----------- -----------
NET LOSS (34,604) (628)
ACCUMULATED DEFICIT
Beginning of period ................................................... (1,914,292) (1,827,647)
Dividends declared - $.0233 per share.................................. (5,580) (5,583)
Retirement of common stock............................................. (42,662)
----------- -----------
End of period.......................................................... ($1,997,138) ($1,833,858)
=========== ===========
NET LOSS PER SHARE........................................................ ($.14)
=========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING DURING THE PERIOD.................................. 239,421 239,408
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 1996
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
(Dollars in thousands)
Three Months Ended March 31,
1996 1995
<S> <C> <C>
OPERATING ACTIVITIES
Net loss............................................................... ($34,604) ($628)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization........................................ 156,873 243,477
Non-cash interest expense, net....................................... 16,053 13,487
Equity in net losses of affiliates................................... 34,502 16,417
Gain on sale of long-term investments................................ (140,968)
Minority interest.................................................... (15,070) (8,068)
Deferred income taxes and other...................................... (9,097) 4,857
----------- -----------
148,657 128,574
Decrease in accounts receivable, net................................. 23,595 39,983
Decrease (increase) in inventories, net.............................. 2,694 (15,295)
Decrease (increase) in prepaid charges and other..................... 6,685 (3,630)
Decrease in accounts payable and accrued expenses (70,262) (86,137)
Increase in accrued interest......................................... 16,742 9,344
----------- -----------
Net cash provided by operating activities........................ 128,111 72,839
----------- -----------
FINANCING ACTIVITIES
Proceeds from borrowings............................................... 191,175 1,319,621
Retirement and repayment of debt....................................... (167,429) (43,854)
(Repurchases) issuances of common stock, net........................... (38,226) 626
Equity contribution to a subsidiary.................................... 6,556
Dividends.............................................................. (5,580) (5,583)
Other.................................................................. (8,848) 2,072
----------- -----------
Net cash (used in) provided by financing activities (28,908) 1,279,438
----------- -----------
INVESTING ACTIVITIES
Acquisitions, net of cash acquired..................................... (16,250) (1,310,767)
Proceeds from sales of short-term investments, net..................... 171,407 104,779
Investments, principally in affiliates................................. (153,706) (137,273)
Proceeds from sale of long-term investments............................ 2,396 188,096
Additions to property and equipment.................................... (111,401) (109,618)
Other.................................................................. (20,560) (6,933)
----------- -----------
Net cash used in investing activities............................ (128,114) (1,271,716)
----------- -----------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS......................... (28,911) 80,561
CASH AND CASH EQUIVALENTS, beginning of period............................ 539,061 335,320
----------- -----------
CASH AND CASH EQUIVALENTS, end of period.................................. $510,150 $415,881
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 1996
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation
The condensed consolidated balance sheet as of December 31, 1995 has been
condensed from the audited balance sheet as of that date. The condensed
consolidated balance sheet as of March 31, 1996 and the condensed
consolidated statements of operations and accumulated deficit and of cash
flows for the three months ended March 31, 1996 and 1995 have been prepared
by Comcast Corporation (the "Company") and have not been audited by the
Company's independent auditors. In the opinion of management, all
adjustments (which include only normal recurring adjustments and the first
quarter 1995 adjustment described in Note 3) necessary to present fairly
the financial position, results of operations and cash flows as of March
31, 1996 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, 1995 Annual Report on Form 10-K filed with the Securities and Exchange
Commission. The results of operations for the period ended March 31, 1996
are not necessarily indicative of operating results for the full year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
New Accounting Pronouncement
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation." The Company has elected to continue to measure such
compensation expense using the method prescribed by Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees," as
permitted by SFAS No. 123. Accordingly, there was no impact of the adoption
of SFAS No. 123 on the Company's financial position or results of
operations.
Net Loss Per Share
Net loss per share is based on the weighted average number of common shares
outstanding during the period. For the three months ended March 31, 1996
and 1995, all of the common stock equivalents have an antidilutive effect
on the loss per share and, therefore, have not been used in determining the
total weighted average number of common shares outstanding.
Reclassifications
Certain reclassifications have been made to the prior year condensed
consolidated financial statements to conform to those classifications used
in 1996.
3. ACQUISITIONS AND OTHER SIGNIFICANT EVENTS
Regional Sports Venture
In March 1996, the Company entered into definitive agreements through which
it will ultimately acquire (the "Sports Venture Acquisition") a 66%
interest in the Philadelphia Flyers Limited Partnership, a Pennsylvania
limited partnership ("PFLP"), the assets of which, upon consummation of the
acquisition, will consist of (i) the National Basketball Association
("NBA") franchise to own and operate the Philadelphia 76ers basketball team
and related assets (the "Sixers"), (ii) the National Hockey League ("NHL")
franchise to own and operate the Philadelphia Flyers hockey team and
related assets, which PFLP currently owns (the "Flyers"), and (iii) two
adjacent arenas, leasehold interests in and development rights related to
the land underlying the arenas and other adjacent parcels of land located
in Philadelphia, Pennsylvania (collectively, the "Arenas"). The remaining
34% of PFLP will be owned by a group (the "Minority Group") represented by
Mr. Edward Snider ("Snider"), the current majority owner of PFLP and the
Arenas. A company owned by Snider will manage PFLP after consummation of
the Sports Venture Acquisition.
5
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 1996
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
In April 1996, the Company completed the first step of the Sports Venture
Acquisition by purchasing the Sixers from Mr. Harold Katz for $125.0
million in cash plus assumed net liabilities of approximately $11.0 million
through a partnership controlled by the Company. To complete the Sports
Venture Acquisition, the Company will contribute its interest in the Sixers
and exchange $15.0 million in cash plus approximately 5.2 million shares of
the Company's Class A Special Common Stock (the "Class A Special Common
Stock") or their equivalent for a 66% interest in PFLP. At the same time,
Snider will cause all of the Minority Group's interests in the Arenas to be
contributed to PFLP for a 34% interest in PFLP. In connection with the
Sports Venture Acquisition, PFLP will assume the outstanding liabilities
relating to the Sixers and the Arenas, including a mortgage obligation of
approximately $155.0 million. The closing of the Sports Venture Acquisition
is expected to occur during the second or third quarter of 1996 and is
subject to certain approvals, including approvals of the NBA and NHL, and
other conditions. The Company anticipates that it will account for its
interest in PFLP under the equity method.
Sprint Spectrum
Effective as of January 1996, the Company, Tele-Communications, Inc.
("TCI"), Cox Communications, Inc. and Sprint Corporation (collectively, the
"Parents"), and certain subsidiaries of the Parents, entered into a series
of agreements relating to their previously announced joint venture (March
1995) to engage in the communications business. Under an Amended and
Restated Agreement of Limited Partnership of MajorCo, L.P. (known as
"Sprint Spectrum"), the business of Sprint Spectrum will be the provision
of wireless telecommunications services and will not include the previously
authorized business of providing local wireline communications services to
residences and businesses. A partnership owned entirely by subsidiaries of
the Company owns 15% of Sprint Spectrum. The Company accounts for its
investment in Sprint Spectrum under the equity method (see Note 4).
Scripps Cable
In October 1995, the Company announced its agreement to acquire the cable
television operations ("Scripps Cable") of The E.W. Scripps Company in
exchange for shares of the Company's Class A Special Common Stock worth
$1.575 billion, subject to certain closing adjustments (the "Scripps
Transaction"). Scripps Cable passes approximately 1.2 million homes and
serves approximately 800,000 subscribers, with over 60% of its subscribers
located in Sacramento, California and Chattanooga and Knoxville, Tennessee.
The acquisition is expected to close in the third quarter of 1996, subject
to shareholder and regulatory approval and certain other conditions.
Share Repurchase Program
Concurrent with the announcement of the Scripps Transaction, the Company
announced that its Board of Directors authorized a market repurchase
program (the "Repurchase Program") pursuant to which the Company may
purchase, at such times and on such terms as it deems appropriate, up to
$500.0 million of its outstanding common stock, subject to certain
restrictions and market conditions. Pursuant to the Repurchase Program, the
Company has repurchased shares of its common stock for aggregate
consideration of $80.4 million through April 30, 1996, including $56.7
million during the three months ended March 31, 1996.
In addition, the Company has sold put options on 4.0 million shares of its
Class A Special Common Stock through April 30, 1996, including put options
on 1.0 million of such shares sold during the three months ended March 31,
1996. The put options give the holder the right to require the Company to
repurchase such shares at specified prices on specific dates. In May 1996,
the Company extended the original May through July 1996 maturities of the
put options to October through December 1996 and received $1.1 million in
connection with the extensions. Initial proceeds of $3.5 million from the
sale of these put options were credited to additional capital. The amount
the Company would be obligated to pay to repurchase such shares if all
outstanding put options were exercised, totaling $69.6 million, has been
reclassified to a temporary equity account in the Company's condensed
consolidated balance sheet as of March 31, 1996.
6
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 1996
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
QVC
In February 1995, the Company and TCI acquired all of the outstanding stock
of QVC Inc. and its subsidiaries ("QVC") not previously owned by them
(approximately 65% of such shares on a fully diluted basis) for $46, in
cash, per share (the "QVC Acquisition"), representing a total cost of
approximately $1.4 billion. The QVC Acquisition, including the exercise of
certain warrants held by the Company, was financed with cash contributions
from the Company and TCI of $296.3 million and $6.6 million, respectively,
borrowings of $1.1 billion under a $1.2 billion QVC credit facility and
existing cash and cash equivalents held by QVC. Following the acquisition,
the Company and TCI own, through their respective subsidiaries, 57.45% and
42.55%, respectively, of QVC. The Company has accounted for the QVC
Acquisition under the purchase method and QVC was consolidated with the
Company effective February 1, 1995.
Cellular Rebuild
In 1995, the Company's cellular division purchased approximately $172.0
million of switching and cell site equipment which replaced the existing
switching and cell site equipment (the "Cellular Rebuild"). The Company
substantially completed the Cellular Rebuild during 1995. During the first
quarter of 1995, the Company charged approximately $110.0 million to
depreciation expense which represented the difference between the net book
value of the equipment replaced and the residual value realized upon its
disposal.
Pro Forma Results
The following pro forma information for the three months ended March 31,
1995 has been presented as if the QVC Acquisition occurred on January 1,
1995. This unaudited pro forma information is based on historical results
of operations, adjusted for acquisition costs, and is not necessarily
indicative of what the results would have been had the Company operated QVC
since such date.
<TABLE>
<CAPTION>
(Dollars in millions, except per share data)
Three Months Ended
March 31, 1995 (1)
<S> <C>
Revenues............................................... $ 794.0
Net loss............................................... (5.6)
Net loss per share..................................... (.02)
<FN>
(1) Effective April 1, 1995, QVC commenced consolidating its United
Kingdom ("UK") operations. Pro forma revenues presented above do not
reflect revenues relating to QVC's UK operations.
</FN>
</TABLE>
7
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 1996
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
4. INVESTMENTS
Investments - Equity Method
Summarized financial information for equity method investments is as
follows (dollars in thousands):
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
December 31,1995 March 31, 1996
Sprint Spectrum (1) Other Combined
<S> <C> <C> <C>
Combined Results of Operations
Revenues, net............................... $ $221,119 $221,119
Depreciation and amortization............... 50 46,747 46,797
Operating loss.............................. (44,779) (40,824) (85,603)
Net loss as reported
by affiliates............................ (85,313) (68,270) (153,583)
Company's Equity in Net Loss
Equity in current period net loss ($12,797) ($19,950) ($32,747)
Amortization expense (3).................... (1,755) (1,755)
-------- -------- --------
Total equity in net loss.................. ($12,797) ($21,705) ($34,502)
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1995 March 31, 1996
Sprint Spectrum (1) Other Combined
<S> <C> <C> <C>
Combined Financial Position
Current assets.................................. $1,651 $444,109 $445,760
Noncurrent assets............................... 2,253,451 1,956,823 4,210,274
Current liabilities............................. 53,104 268,749 321,853
Noncurrent liabilities.......................... 1,627,776 1,627,776
</TABLE>
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
January 31,1995 March 31, 1995
QVC (2) Other Combined
<S> <C> <C> <C>
Combined Results of Operations
Revenues, net............................... $425,921 $140,386 $566,307
Depreciation and amortization............... 12,992 33,793 46,785
Operating income (loss)..................... 58,247 (48,955) 9,292
Net income (loss) as reported
by affiliates............................ 28,333 (67,191) (38,858)
Company's Equity in Net Income (Loss)
Equity in current period net income (loss) $4,286 ($19,978) ($15,692)
Amortization income (expense) (3) 1,194 (1,919) (725)
-------- -------- --------
Total equity in net income (loss) $5,480 ($21,897) ($16,417)
======== ======== ========
<FN>
(1) The Company's equity interest in Sprint Spectrum's net loss is
recorded three months in arrears. Accordingly, the summarized
financial information presented above includes Sprint Spectrum's
results of operations for the three months ended December 31, 1995 and
its financial position as of December 31, 1995.
(2) Through January 31, 1995, QVC's fiscal year end was January 31, and
therefore, the Company recorded its equity interest in QVC's net
income two months in arrears. For the three months ended March 31,
1995, the Company recorded its equity interest in QVC's net income for
the period from November 1, 1994 through January 31, 1995, which was
not previously recorded by the Company.
8
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 1996
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
The effect of this one-time adjustment was not significant to the
Company's results of operations. Effective February 1, 1995, QVC's
results of operations were consolidated with the Company.
(3) The differences between the Company's recorded investments and its
proportionate interests in the book value of the investees' net assets
are being amortized to equity in net income or loss, primarily over a
period of twenty years, which is consistent with the estimated lives
of the underlying assets.
</FN>
</TABLE>
Investments - Public Companies
In February 1996, in connection with certain preemptive rights of the
Company under previously existing agreements with Nextel Communications,
Inc. ("Nextel"), the Company purchased approximately 8.16 million shares,
classified as available for sale, of Nextel common stock at $12.25 per
share, for a total cost of $99.9 million.
The Company holds unrestricted equity investments in certain publicly
traded companies with an historical cost of $216.0 million and $115.9
million as of March 31, 1996 and December 31, 1995, respectively. The
Company has recorded these investments, which are classified as available
for sale, at their estimated fair values of $309.6 million and $150.1
million as of March 31, 1996 and December 31, 1995, respectively. The
unrealized pre-tax gains as of March 31, 1996 and December 31, 1995 of
$93.6 million and $34.2 million, respectively, have been reported in the
Company's condensed consolidated balance sheet as decreases in
stockholders' deficiency, net of related deferred income taxes.
Investments - Privately Held Companies
In January 1995, the Company exchanged its investments in Heritage
Communications, Inc. with TCI for approximately 13.3 million
publicly-traded Class A common shares of TCI with a fair market value of
approximately $290.0 million. Shortly thereafter, the Company sold
approximately 9.1 million unrestricted TCI shares for total proceeds of
approximately $188.1 million. As a result of these transactions, the
Company recognized a pre-tax gain of approximately $141.0 million in the
first quarter of 1995.
5. STATEMENT OF CASH FLOWS - SUPPLEMENTAL INFORMATION
The Company made interest payments of approximately $102.0 million and
$94.8 million during the three months ended March 31, 1996 and 1995,
respectively.
The Company made cash payments for income taxes of approximately $15.3
million and $3.1 million during the three months ended March 31, 1996 and
1995, respectively.
6. CONTINGENCIES
The Company is subject to claims which arise in the ordinary course of its
business and other legal proceedings. In the opinion of management, the
amount of ultimate liability with respect to these actions will not
materially affect the financial position or results of operations of the
Company.
9
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 1996
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED
(Unaudited)
7. FINANCIAL DATA BY BUSINESS SEGMENT
(Dollars in thousands)
<TABLE>
<CAPTION>
Domestic
Cable Electronic Cellular Corporate
Communications Retailing Communications and Other (1) Total
<S> <C> <C> <C> <C> <C>
Three Months Ended March 31, 1996
Revenues, net............................... $382,348 $450,078 $98,192 $20,126 $950,744
Depreciation and amortization............... 94,372 26,150 26,345 10,006 156,873
Operating income (loss)..................... 90,606 46,264 2,113 (25,733) 113,250
Interest expense............................ 56,685 18,169 20,786 39,174 134,814
Capital expenditures........................ 53,636 6,104 14,903 36,758 111,401
Equity in net (losses) income of
affiliates.............................. (5,554) 57 (868) (28,137) (34,502)
As of March 31, 1996
Assets...................................... $4,546,772 $2,072,256 $1,358,144 $1,680,758 $9,657,930
Long-term debt, less current portion 2,986,607 904,659 1,064,756 2,145,023 7,101,045
Three Months Ended March 31, 1995
Revenues, net............................... $347,122 $227,019 $82,153 $7,312 $663,606
Depreciation and amortization............... 89,498 14,272 134,482 5,225 243,477
Operating income (loss)..................... 75,636 24,400 (103,296) (20,611) (23,871)
Interest expense............................ 61,583 12,645 17,470 25,889 117,587
Capital expenditures........................ 42,217 1,235 50,253 15,913 109,618
Equity in net (losses) income of
affiliates.............................. (2,969) 1,058 (264) (14,242) (16,417)
<FN>
- ---------------
(1) Corporate and other includes certain operating businesses and elimination
entries related to the segments presented.
</FN>
</TABLE>
10
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 1996
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
The Company has experienced significant growth in recent years both through
strategic acquisitions and growth in its existing businesses. The Company has
historically met its cash needs for operations through its cash flows from
operating activities. Cash requirements for acquisitions and capital
expenditures have been provided through the Company's financing activities as
well as its existing cash, cash equivalents and short-term investments.
General Developments of Business
Regional Sports Venture
In March 1996, the Company entered into definitive agreements through which it
will ultimately acquire (the "Sports Venture Acquisition") a 66% interest in the
Philadelphia Flyers Limited Partnership, a Pennsylvania limited partnership
("PFLP"), the assets of which, upon consummation of the acquisition, will
consist of (i) the National Basketball Association ("NBA") franchise to own and
operate the Philadelphia 76ers basketball team and related assets (the
"Sixers"), (ii) the National Hockey League ("NHL") franchise to own and operate
the Philadelphia Flyers hockey team and related assets, which PFLP currently
owns (the "Flyers"), and (iii) two adjacent arenas, leasehold interests in and
development rights related to the land underlying the arenas and other adjacent
parcels of land located in Philadelphia, Pennsylvania (collectively, the
"Arenas"). The remaining 34% of PFLP will be owned by a group (the "Minority
Group") represented by Mr. Edward Snider ("Snider"), the current majority owner
of PFLP and the Arenas. A company owned by Snider will manage PFLP after
consummation of the Sports Venture Acquisition.
In April 1996, the Company completed the first step of the Sports Venture
Acquisition by purchasing the Sixers from Mr. Harold Katz for $125.0 million in
cash plus assumed net liabilities of approximately $11.0 million through a
partnership controlled by the Company. To complete the Sports Venture
Acquisition, the Company will contribute its interest in the Sixers and exchange
$15.0 million in cash plus approximately 5.2 million shares of the Company's
Class A Special Common Stock (the "Class A Special Common Stock") or their
equivalent for a 66% interest in PFLP. At the same time, Snider will cause all
of the Minority Group's interests in the Arenas to be contributed to PFLP for a
34% interest in PFLP. In connection with the Sports Venture Acquisition, PFLP
will assume the outstanding liabilities relating to the Sixers and the Arenas,
including a mortgage obligation of approximately $155.0 million. The closing of
the Sports Venture Acquisition is expected to occur during the second or third
quarter of 1996 and is subject to certain approvals, including approvals of the
NBA and NHL, and other conditions. The Company anticipates that it will account
for its interest in PFLP under the equity method.
Sprint Spectrum
Effective as of January 1996, the Company, Tele-Communications, Inc. ("TCI"),
Cox Communications, Inc. and Sprint Corporation (collectively, the "Parents"),
and certain subsidiaries of the Parents (the "Partner Subsidiaries"), entered
into a series of agreements relating to their previously announced joint venture
(March 1995) to engage in the communications business. Under an Amended and
Restated Agreement of Limited Partnership (the "Partnership Agreement") of
MajorCo, L.P. (known as "Sprint Spectrum"), the business of Sprint Spectrum will
be the provision of wireless telecommunications services and will not include
the previously authorized business of providing local wireline communications
services to residences and businesses. A partnership owned entirely by
subsidiaries of the Company owns 15% of Sprint Spectrum. The Company accounts
for its investment in Sprint Spectrum under the equity method.
11
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 1996
Scripps Cable
In October 1995, the Company announced its agreement to acquire the cable
television operations ("Scripps Cable") of The E.W. Scripps Company in exchange
for shares of the Company's Class A Special Common Stock worth $1.575 billion,
subject to certain closing adjustments (the "Scripps Transaction"). Scripps
Cable passes approximately 1.2 million homes and serves approximately 800,000
subscribers, with over 60% of its subscribers located in Sacramento, California
and Chattanooga and Knoxville, Tennessee. The acquisition is expected to close
in the third quarter of 1996, subject to shareholder and regulatory approval and
certain other conditions.
Share Repurchase Program
Concurrent with the announcement of the Scripps Transaction, the Company
announced that its Board of Directors authorized a market repurchase program
(the "Repurchase Program") pursuant to which the Company may purchase, at such
times and on such terms as it deems appropriate, up to $500.0 million of its
outstanding common stock, subject to certain restrictions and market conditions.
Pursuant to the Repurchase Program, the Company has repurchased shares of its
common stock for aggregate consideration of $80.4 million through April 30,
1996, including $56.7 million during the three months ended March 31, 1996.
QVC
In February 1995, the Company and TCI acquired all of the outstanding stock of
QVC, Inc. and its subsidiaries ("QVC") not previously owned by them
(approximately 65% of such shares on a fully diluted basis) for $46, in cash,
per share (the "QVC Acquisition"), representing a total cost of approximately
$1.4 billion. The QVC Acquisition, including the exercise of certain warrants
held by the Company, was financed with cash contributions from the Company and
TCI of $296.3 million and $6.6 million, respectively, borrowings of $1.1 billion
under a $1.2 billion QVC credit facility and existing cash and cash equivalents
held by QVC. Following the acquisition, the Company and TCI own, through their
respective subsidiaries, 57.45% and 42.55%, respectively, of QVC. The Company
has accounted for the QVC Acquisition under the purchase method and QVC was
consolidated with the Company effective February 1, 1995.
Liquidity and Capital Resources
Cash, Cash Equivalents and Short-term Investments
The Company has traditionally maintained significant levels of cash, cash
equivalents and short-term investments to meet its short-term liquidity
requirements. Cash, cash equivalents and short-term investments as of March 31,
1996 were $709.7 million. As of March 31, 1996 approximately $462.5 million of
the Company's cash, cash equivalents and short-term investments was restricted
to use by subsidiaries of the Company under contractual or other arrangements,
including approximately $295.0 million which is restricted to use by Comcast UK
Cable Partners Limited ("Comcast UK Cable"), a subsidiary of the Company.
The Company's cash, cash equivalents and short-term investments are recorded at
cost which approximates their fair value. As of March 31, 1996, the Company's
short-term investments of $199.6 million had a weighted average maturity of
approximately 17 months. However, due to the high degree of liquidity and the
intent of management to use these investments as needed to fund its commitments,
the Company considers these as current assets.
Investments
In conjunction with the Sports Venture Acquisition, the Company has agreed to
lend up to $50.0 million to PFLP on a subordinated basis in the event that PFLP
is unable to obtain financing from other sources.
Under the provisions of the Partnership Agreement, the Partner Subsidiaries have
committed to contribute $4.2 billion in cash to Sprint Spectrum through 1997, of
which the Company's share is $630.0 million. Of this funding requirement, the
Company has made total cash capital contributions to Sprint Spectrum of $363.1
million through March 31, 1996. The Company anticipates that Sprint Spectrum's
capital requirements over the next several years will be significant.
Requirements in excess of committed capital are planned to be funded by Sprint
Spectrum through
12
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 1996
external financing. Although it is anticipated that external financing will be
available to Sprint Spectrum on acceptable terms and conditions, no assurances
can be given as to such availability. The timing of the Company's remaining
capital contributions to Sprint Spectrum is dependent upon a number of factors,
including Sprint Spectrum's ability to obtain external financing as well as its
working capital requirements.
In February 1996, in connection with certain preemptive rights of the Company
under previously existing agreements with Nextel Communications, Inc.
("Nextel"), the Company purchased approximately 8.16 million shares, classified
as available for sale, of Nextel common stock at $12.25 per share, for a total
cost of $99.9 million. The Company continues to hold options, which expire in
1997, to acquire an additional 25 million shares of Nextel common stock at $16
per share.
In January 1995, the Company exchanged its investments in Heritage
Communications, Inc. with TCI for approximately 13.3 million publicly-traded
Class A common shares of TCI with a fair market value of approximately $290.0
million. Shortly thereafter, the Company sold approximately 9.1 million
unrestricted TCI shares for total proceeds of approximately $188.1 million
(collectively, the "Heritage Transaction"). As a result of these transactions,
the Company recognized a pre-tax gain of approximately $141.0 million in the
first quarter of 1995.
The Company does not have any additional significant contractual commitments
with respect to any of its investments. However, to the extent the Company does
not fund its investees' capital calls, it exposes itself to dilution of its
ownership interests.
Financing
In conjunction with the Repurchase Program, through April 30, 1996, the Company
had sold put options on 4.0 million shares of its Class A Special Common Stock,
including put options on 1.0 million of such shares sold during the three months
ended March 31, 1996. The put options give the holder the right to require the
Company to repurchase such shares at specified prices on specific dates. In May
1996, the Company extended the original May through July 1996 maturities of the
put options to October through December 1996 and received $1.1 million in
connection with the extensions. Initial proceeds of $3.5 million from the sale
of these put options were credited to additional capital. The amount the Company
would be obligated to pay to repurchase such shares if all outstanding put
options were exercised, totaling $69.6 million, has been reclassified to a
temporary equity account in the Company's condensed consolidated balance sheet
as of March 31, 1996.
-------------------------
The Company expects to continue to recognize significant losses and to continue
to pay dividends; therefore, it anticipates that it will continue to have a
deficiency in stockholders' equity that will increase through the date of
consummation of the Scripps Transaction. If the Scripps Transaction is
consummated, the Company will no longer have a deficiency in stockholders'
equity; however, the Company will continue to recognize losses for the
foreseeable future, resulting in decreases in stockholders' equity. The
telecommunications industry, including cable and cellular communications, and
the electronic retailing industry are experiencing increasing competition and
rapid technological changes. The Company's future results of operations will be
affected by its ability to react to changes in the competitive environment and
by its ability to implement new technologies. However, management believes that
competition, technological changes and its significant losses and deficiency in
stockholders' equity will not significantly affect its ability to obtain
financing.
The Company believes that it will be able to meet its current and long-term
liquidity and capital requirements, including fixed charges, through its cash
flows from operating activities, existing cash, cash equivalents, short-term
investments and lines of credit and other external financing.
13
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 1996
Statement of Cash Flows
Cash and cash equivalents decreased $28.9 million as of March 31, 1996 from
December 31, 1995 and increased $80.6 million as of March 31, 1995 from December
31, 1994. Changes in cash and cash equivalents resulted from cash flows from
operating, financing and investing activities which are explained below.
Net cash provided by operating activities amounted to $128.1 million and $72.8
million for the three months ended March 31, 1996 and 1995, respectively. The
increase of $55.3 million is due to the effects of the QVC Acquisition and to
changes in working capital as a result of the timing of receipts and
disbursements.
Net cash (used in) provided by financing activities was ($28.9) million and $1.3
billion for the three months ended March 31, 1996 and 1995, respectively. For
the three months ended March 31, 1996, the Company borrowed $191.2 million under
its existing lines of credit and repaid $167.4 million, including approximately
$78.5 million under a vendor financing arrangement. During the three months
ended March 31, 1995, the Company borrowed $1.3 billion, including $1.1 billion
in connection with the QVC Acquisition.
Net cash used in investing activities was $128.1 million and $1.3 billion for
the three months ended March 31, 1996 and 1995, respectively. For the three
months ended March 31, 1996, net cash used in investing activities includes
investments in affiliates of $153.7 million and additions to property and
equipment of $111.4 million, offset by proceeds from the sales of short-term and
long-term investments of $173.8 million. During the three months ended March 31,
1995, net cash used in investing activities includes the QVC Acquisition, net of
cash acquired, of $1.3 billion, investments in affiliates of $137.3 million and
additions to property and equipment of $109.6 million. Such amounts were offset
by proceeds from sales of short-term and long-term investments of $292.9
million.
Results of Operations
The effects of the Company's recent acquisitions has been to increase
significantly the Company's revenues and expenses resulting in substantial
increases in its operating income before depreciation and amortization,
depreciation and amortization expense and interest expense (see "Operating
Results by Business Segment" following). As a result of the increases in
depreciation and amortization expense and interest expense associated with these
acquisitions and their financing, it is expected that the Company will continue
to recognize substantial losses for the foreseeable future.
14
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 1996
Summarized consolidated financial information for the Company for the three
months ended March 31, 1996 and 1995 is as follows (dollars in millions, "NM"
denotes percentage is not meaningful):
<TABLE>
<CAPTION>
Three Months Ended
March 31, Increase / (Decrease)
1996 1995 $ %
<S> <C> <C> <C> <C>
Revenues.................................................. $950.7 $663.6 $287.1 43.3%
Cost of goods sold from electronic retailing 270.1 138.1 132.0 95.6
Operating, selling, general and administrative expenses 410.5 305.9 104.6 34.2
------ ------
Operating income before depreciation and
amortization (1) ...................................... 270.1 219.6 50.5 23.0
Depreciation and amortization............................. 156.8 243.5 (86.7) (35.6)
------ ------
Operating income (loss)................................... 113.3 (23.9) 137.2 NM
------ ------
Interest expense.......................................... 134.8 117.6 17.2 14.6
Investment income......................................... (18.6) (152.8) (134.2) (87.8)
Equity in net losses of affiliates........................ 34.5 16.4 18.1 NM
Other..................................................... 11.4 (0.3) 11.7 NM
Income tax expense........................................ 0.9 3.9 (3.0) (76.9)
Minority interest......................................... (15.1) (8.1) 7.0 86.4
------ ------
Net loss.................................................. ($34.6) ($0.6) $34.0 NM
====== =====
<FN>
- ------------
(1) Operating income before depreciation and amortization is commonly referred
to in the Company's businesses 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
Company's businesses and the resulting significant level of non-cash
depreciation and amortization expense, operating cash flow is frequently
used as one of the bases for comparing the Company's businesses. 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. See
"Statement of Cash Flows" above for a discussion of net cash provided by
operating activities.
</FN>
</TABLE>
Operating Results by Business Segment
Domestic Cable Communications
The following table sets forth operating results for the Company's domestic
cable communications segment (dollars in millions).
<TABLE>
<CAPTION>
Three Months Ended
March 31, Increase
1996 1995 $ %
<S> <C> <C> <C> <C>
Service income................................. $382.3 $347.1 $35.2 10.1%
Operating, selling, general and
administrative expenses................... 197.3 182.0 15.3 8.4
------ ------ -----
Operating income before depreciation
and amortization (a)...................... $185.0 $165.1 $19.9 12.1%
====== ====== =====
<FN>
- ---------------
(a) See footnote (1) above.
</FN>
</TABLE>
15
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 1996
Of the increase in service income of $35.2 million for the three month period
from 1995 to 1996, $9.1 million is attributable to subscriber growth, $20.0
million relates to changes in rates and $6.1 million relates to growth in other
product offerings.
Of the $15.3 million increase in operating, selling, general and administrative
expenses for the three month period from 1995 to 1996, $8.6 million is
attributable to increases in the costs of cable programming as a result of
subscriber growth, additional programming offerings and changes in rates and
$6.7 million results from increases in the cost of labor and other volume
related expenses. It is anticipated that the Company's cost of cable programming
will increase in the future as cable programming rates increase and additional
sources of cable programming become available.
Electronic Retailing
As a result of the QVC Acquisition, the Company commenced consolidating the
financial results of QVC, effective February 1, 1995. The following table
presents comparative financial information for the three months ended March 31,
1996 and pro forma financial information for the three months ended March 31,
1995, and is presented herein for purposes of analysis and may not reflect what
actual operating results would have been had the Company owned QVC since January
1, 1995 (dollars in millions).
<TABLE>
<CAPTION>
Three Months Ended
March 31, Increase
1996 1995 $ %
<S> <C> <C> <C> <C>
Net sales from electronic retailing $450.1 $358.5 $91.6 25.6%
Cost of goods sold from electronic retailing 270.1 216.1 54.0 25.0
Operating, selling, general and administrative
expenses................................... 107.6 80.3 27.3 34.0
------ ------ -----
Operating income before depreciation
and amortization (a)....................... $72.4 $62.1 $10.3 16.6%
===== ===== =====
Gross margin.................................... 40.0% 39.7%
<FN>
- ---------------
(a) See footnote (1) on page 15.
</FN>
</TABLE>
The consolidation of QVC's United Kingdom operations, effective April 1, 1995,
resulted in an increase in net sales from electronic retailing of $21.2 million
for the three month period from 1995 to 1996. The remaining increase of $70.4
million is primarily attributable to the effects of an 8.3% increase in the
average number of QVC homes receiving QVC services in the United States.
The increase in cost of goods sold from electronic retailing is directly related
to the growth in net sales. Gross margin has remained relatively constant from
1995 to 1996.
The consolidation of QVC's United Kingdom operations, effective April 1, 1995,
resulted in an increase in operating, selling, general and administrative
expenses of $10.2 million for the three month period from 1995 to 1996. The
remaining increase of $17.1 million is attributable to higher sales volume and
increases in advertising and administrative costs.
16
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 1996
Cellular Communications
The following table sets forth the operating results for the Company's cellular
communications segment (dollars in millions).
<TABLE>
<CAPTION>
Three Months Ended
March 31, Increase/(Decrease)
1996 1995 $ %
<S> <C> <C> <C> <C>
Service income $98.2 $82.2 $16.0 19.5%
Operating, selling, general and administrative
expenses 69.7 51.0 18.7 36.7
----- ----- -----
Operating income before depreciation
and amortization (a) $28.5 $31.2 ($2.7) (8.7%)
===== ===== =====
<FN>
- ---------------
(a) See footnote (1) on page 15.
</FN>
</TABLE>
Of the $16.0 million increase in service income for the three month period from
1995 to 1996, $20.7 million is attributable to the Company's subscriber growth
and $2.2 million is attributable to other products. Offsetting this increase is
a decrease of $6.9 million resulting from a reduction in the average rate per
minute of use from 1995 to the same period in 1996.
Of the $18.7 million increase in operating, selling, general and administrative
expenses for the three month period from 1995 to 1996, $12.7 million is related
to subscriber growth, including the costs to acquire and service subscribers.
The remaining increase of $6.0 million is due to increases in other expenses,
including subscriber retention costs, administrative costs and theft of service
in 1996.
Consolidated Analysis
The $86.7 million decrease in depreciation and amortization expense is
attributable to the effects of the rebuild of certain of the Company's cellular
equipment in 1995, as described below, partially offset by the effects of the
QVC Acquisition and capital expenditures.
In 1995, the Company's cellular division purchased approximately $172.0 million
of switching and cell site equipment which replaced the existing switching and
cell site equipment (the "Cellular Rebuild"). The Company substantially
completed the Cellular Rebuild during 1995. During the first quarter of 1995,
the Company charged approximately $110.0 million to depreciation expense which
represented the difference between the net book value of the equipment replaced
and the residual value realized upon its disposal.
The $17.2 million increase in interest expense is due to increased levels of
debt, including the debt related to the QVC Acquisition, offset by interest
capitalized and decreases in rates. The Company anticipates that, for the
foreseeable future, interest expense will be a significant cost to the Company
and will have a significant adverse effect on the Company's ability to realize
net earnings. The Company believes it will continue to be able to meet its
obligations through its ability both to generate operating income before
depreciation and amortization and to obtain external financing.
The $134.2 million decrease in investment income is attributable to the effects
of the Heritage Transaction in 1995, partially offset by interest earned on
larger average balances of cash, cash equivalents and short-term investments in
1996.
17
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 1996
The $18.1 million increase in equity in net losses of affiliates is due to
increased losses incurred by the Company's international investees, losses
incurred by Sprint Spectrum and certain programming investees and the effects of
the QVC Acquisition.
For the three months ended March 31, 1996 and 1995, the Company's earnings
before minority interest, income tax expense, equity in net losses of affiliates
and fixed charges (interest expense) were $120.5 million and $129.2 million,
respectively. Excluding the pre-tax gain of $141.0 million recognized in the
first quarter of 1995 in connection with the Heritage Transaction, such earnings
were not adequate to cover the Company's fixed charges, including capitalized
interest of $7.1 million for the three months ended March 31, 1996, of $141.9
million and $117.6 million for the three months ended March 31, 1996 and 1995,
respectively. Fixed charges include non-cash interest, net of interest
capitalized, of $16.1 million and $13.5 million for the three months ended March
31, 1996 and 1995, respectively. The inadequacy of these earnings to cover fixed
charges is primarily due to the substantial non-cash charges for depreciation
and amortization expense, including the first quarter 1995 charge associated
with the Cellular Rebuild.
The Company believes that its losses and inadequacy of earnings to cover fixed
charges will not significantly affect the performance of its normal business
activities because of its existing cash, cash equivalents and short-term
investments, 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.
18
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 1996
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
The Company is not party to litigation which, in the opinion of the
Company's management, will have a material adverse effect on the Company's
financial position or results of operations.
ITEM 6.Exhibits and Reports on Form 8-K
(a) Exhibits required to be filed by Item 601 of Regulation S-K:
10.1 Comcast Corporation 1996 Stock Option Plan, dated March 13, 1996
(incorporated by reference to the definitive additional
materials to the Company's amended definitive Proxy Statement
for its Annual Meeting of Shareholders to be held on June 19,
1996, filed on May 15, 1996).
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K under Item 5 on February
12, 1996 relating to its January 31, 1996 agreements with
Tele-Communications, Inc., Cox Communications, Inc. and Sprint
Corporation which amended agreements related to their previously
announced joint venture to engage in the communications business.
19
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 1996
SIGNATURE
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 CORPORATION
----------------------------------------
/s/ LAWRENCE S. SMITH
----------------------------------------
Lawrence S. Smith
Executive Vice President
(Chief Accounting Officer)
Date: May 15, 1996
20
<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> 0000022301
<NAME> COMCAST CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 510,150
<SECURITIES> 199,575
<RECEIVABLES> 453,922
<ALLOWANCES> (86,133)
<INVENTORY> 240,753
<CURRENT-ASSETS> 1,426,325
<PP&E> 2,839,028
<DEPRECIATION> (982,195)
<TOTAL-ASSETS> 9,657,930
<CURRENT-LIABILITIES> 1,009,572
<BONDS> 7,101,045
0
0
<COMMON> 236,563
<OTHER-SE> (1,128,133)
<TOTAL-LIABILITY-AND-EQUITY> 9,657,930
<SALES> 950,744
<TOTAL-REVENUES> 950,744
<CGS> (270,146)
<TOTAL-COSTS> (837,494)
<OTHER-EXPENSES> (34,502)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (134,814)
<INCOME-PRETAX> (48,810)<F1>
<INCOME-TAX> (864)
<INCOME-CONTINUING> (34,604)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (34,604)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Loss before income tax expense and other items excludes the effect of minority
interests, net of tax, of $15,070.
</FN>
</TABLE>
