comcast Annual Report to Shareholders 2006

Comcast 2006 Annual Report

It’s about record-breaking results from innovative products with constantly improving features and functions. It means getting there fi rst, and sustaining our advantage by increasing and extending the business while revving up our next growth engine.

It’s making phone, computer and television faster, better and more interactive. It’s adding choice, control and simplicity to the mix in one neat package.

Of course, it also describes the power of 90,000 exceptional employees — all committed to realizing the entertainment and communications dreams of our customers. Put it all together, and it’s a superior experience.

And that’s simply Comcastic!

Comcastic!

On the cover:Comcast employees are all smiles these days. Why? Their hard work, dedication and enthusiasm is really paying off. That’s why we’ve decided to feature them in this Annual Report — they make Comcast a great place to work.

Comcastic is...

turning a triple play into a grand slam.

Triple Play has been a phenomenal growth engine for Comcast in 2006. With one call and a single installation, customers get digital cable, high-speed Internet and digital voice for $99 a month. Plus, it’s great for business because:

Robert Negrete Manager, Call Center OperationsMorgan Hill, CA

“ You’ve heard of a ‘win-win.’ Well, think of Triple Play as a ‘win-win-win.’ Subscribers get video, high-speed Internet and phone service in one convenient package — and all at a great value. No wonder our phones just keep ringing.”

$33 $33 $33

+ + = $99 otherproducts = $120 –

$130 per month

+

• Triple Play results in higher average monthly revenue per customer.

• Triple Play is lifting sign-up rates for our three products — they all grew faster than ever in 2006.

• Triple Play is accelerating revenue and operating cash fl ow growth.

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Comcastic is...

meeting every demand with ON DEMAND.

ON DEMAND viewership has grown exponentially, building customer satisfaction and loyalty with every view.

• 12.7 million, or 52%, of our video customers take digital services — all of them with access to ON DEMAND. Some 36% also take HD/DVR.

• ON DEMAND movie purchases increased pay-per-view revenue 27%, to $633 million, in 2006, the third consecutive year of growth greater than 20%.

2004

More than 3.7 Billion ON DEMAND Views Since 2004:(in millions)

567 2005

1,3612006

1,855

04

04

Denise Higgins VOD Content SupervisorNew Castle, DE

“ People want what they want, when they want it. Nothing beats our ON DEMAND service. It gives our customers more than 8,000 viewing options today, most at no additional charge.”

Comcastic is...

building strong brands that deliver must-have content across multiple platforms.

Suzanne Kolb EVP, Marketing and Communications E! and Style Networks Los Angeles, CA

With fi rst-rate content, Comcast appeals to sports fans, kids and even horror fl ick fans. Our networks include:

“ Our brands are laser-focused on individual interests and passions. Whether it’s fashion on the red carpet, or horror fi lms, or the stars of golf on the course, we’re delivering great content on television, on demand and online.”

Comcastic is...

turning up the volume on a whole new business.

Since the introduction of Comcast Digital Voice, subscriptions have surged as customers take advantage of the unlimited local and nationwide phone service, low international rates and full set of features. Growth continues to accelerate.

“ So many new customers have discovered what a great value Comcast Digital Voice® is. And as impressive as the sign-up rates for phone are, they’re just gaining speed. It’s going to be a growth engine for years to come.”

Five times more Comcast Digital Voice additions in 2006 than in 2005: (subscribers in thousands)

• Comcast Digital Voice is now marketed to 32 million homes, or 70% of our footprint, and we will expand our coverage to 40 million homes by year-end 2007.

• Over 80% of voice customers take all three products.

2005 2006

290

1,549

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Mohammed Haroon Director, Telephony OperationsTwin Cities Region St. Paul, MN

Melinda Lindsley Director, Business Requirements /Cross-Product Systems Philadelphia, PA

Comcastic is...

taking high-speed Internet to a higher level.

Comcast High-Speed Internet delivers the speed and tools customers need to get the most from their Internet experience.

• We increased the speed of our service four times in the last three years, at no extra cost to consumers.

• In 2006, we introduced PowerBoost, which can burst speeds to 12 or 16 Mbps for large downloads, and we plan to roll out an upstream version in 2007.

• We launched 65 new features in the last three years, including McAfee® security, Video Mail, PhotoShow and many others.

• Through The Fan™ video player, we delivered 700 million video downloads in 2006 and ranked in the top 15 providers of video on the Internet.

• Comcast.net also ranked among the top 10 in Internet search traffi c.

“ Our high-speed Internet service is simply a better broadband experience. With a steady stream of new features and faster speeds, it makes video downloads and interactive media a snap.”

Carl Hansen South Jersey Area Technical Learning and Development Manager Turnersville, NJ

As we roll out new products, we continue to improve our service and fi eld support, which builds the foundation for our future growth.

• In 2006, we hired and trained 6,500 fi eld technicians and customer service representatives to keep pace with the accelerat-ing growth of new products. We expect the pace of new hiring to continue in 2007.

• We’re investing in automated tools to increase our operating effi ciency.

• We’re building new training programs at Comcast University and creating new career paths to provide better service and a better experience for our customers.

Comcastic is...

“ We begin technical training with ‘Think Customer First,’ emphasizing the skills our people need to make customers comfortable, like avoiding tech jargon, and making things simple.”

knowing how to deliver a great customer experience...

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William “Billy” Malone Dispatch ManagerUnion, NJ

Comcast is deeply rooted in local communities. We focus our civic efforts in three areas: youth leadership, literacy and volunteerism.

• Comcast is a national partner of City Year, which recruits young people to give a year to full-time community service and leadership development. In 2006, the company provided City Year with $1.4 million in grants and in-kind support.

• Comcast’s Leaders and Achievers® Scholarship Program recognized 1,728 high school seniors nationwide. Based on their community involvement and academic achievement, each earned a $1,000 college scholarship.

• Comcast recruited a diverse group of students to participate as summer interns through our ongoing partnership with the Emma Bowen Foundation. Last year, we hosted 25 interns who received funds for college in addition to their intern stipend.

“ Since my fi rst day with Comcast 25 years ago, the company has totally supported my volunteer activities — from backing my involvement in a special-needs camp, to giving me time off to help out in New York City after 9/11.”

and staying true to who we are.

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Comcastic! is...

14

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clockwise from left:

Brian L. Roberts Chairman and Chief Executive Offi cer

Stephen B. BurkeChief Operating Offi cerPresidentComcast Cable

Ralph J. Roberts FounderChairman, Executive and Finance Committee

Dear Comcast Shareholders, Employees and Friends:

About 18 months ago, we decided that it was time to launch Comcast’s very fi rst nationwide advertising campaign. Surveys showed that customers loved our new products — such as ON DEMAND, high-speed Internet and more. This led us to look for a smart way to express our customers’ enthusiasm for Comcast’s new and improved experience — and that’s how “Comcastic!” was born.

I’m glad our team came up with that word, because I can’t think of a better way to describe 2006. It was our best year ever. It was truly Comcastic!

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See notes and definitions on page 23.

We broke all records in 2006, driven by our cable business.(a) Cable revenues increased 12%, to $26.3 billion. Operating cash fl ow(b) rose 15%, to $10.5 billion, making 2006 our sixth straight year — capping 26 consecutive quarters — of double-digit operating cash fl ow growth. During the year, our customers bought fi ve million new products — or what we call “revenue-generating units” (RGUs)(c) — an increase of 69% from 2005. And each of our services — basic cable, digital cable, high-speed Internet and digital voice — added more new customers than ever before. We have real momentum. The past year was sensational, but 2007 and the future have the potential to be even better.

The big story behind these wonderful results is the rollout of Comcast’s Triple Play.

Triple Play: It’s a Whole New Ball Game

Our Triple Play offering of video, high-speed Internet and digital voice is just what consumers want. We can deliver our superior products in a compelling value package, providing a simple, convenient and attractive option for everyone. With one phone call and one installation visit, we become the primary provider of communications and entertainment services to the home — and at an introductory price of $99 a month, our biggest challenge has been to keep up with demand. With the widespread intro-duction of Triple Play to 70%, or 32 million, of the homes in our markets in 2006, consumers are embracing our Comcast Digital Voice® service, loaded with attractive features and with more to come. It’s clear that Triple Play is boosting our overall take rates for video and high-speed Internet as well. As customers see the great value they’re getting, they take additional digital and premium video services, too. As a result, revenue per Triple Play customer averages $120 – $130 per month.

We were determined to be fi rst to market on a wide scale with these three services, and we have succeeded in getting the jump on the competition. As we expand the availability of Triple Play to 85% of our customer base by the end of 2007, we expect it will continue to power our growth.

Our Triple Play offer of video, high-speed Internet and voice has proven to be a powerful formula for growth.

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Innovate. Differentiate. Win.

That’s been our mantra for the past several years. We’re absolutely focused on delivering superior products and services, and doing it better than our competitors. We added 1.9 million digital customers in 2006, an increase of 59% from 2005. Today, more than 12.7 million, or 52%, of our video customers take our digital cable services. Digital growth has been steady as consumers see and want ON DEMAND, our industry-leading video-on-demand platform, digital video recorders (DVRs) and high-defi nition television (HDTV) as part of their lives.

With more than 8,000 programming choices available today — and growing every year — ON DEMAND gives our digital cable customers unmatched choice and control. It’s truly the personalization of TV. And as the penetration of HDTV sets accelerates, we’re expanding our high-defi nition ON DEMAND offerings, too. We now offer more than 150 hours of high-defi nition programming ON DEMAND, primarily movies in high defi nition. We plan to double that number in 2007 and again in 2008, and continue to expand our linear HDTV channels, so that we remain the HDTV market leader with the most sports and movies in high defi nition. With our high-speed Internet service, we deliver a better experience by continually increasing the speed of our service and adding a wealth of new features. We added 1.9 million high-speed Internet subscribers in 2006, the highest level of annual high-speed Internet additions in our history, and ended the year with 11.5 million high-speed Internet customers, representing 25% penetration of homes in our markets. We believe we will keep growing not only by continuing to attract new customers, but also by capitalizing on the capabilities of our service to power innovation and develop new online services. We created Comcast Interactive Media to focus on those opportunities. In 2006, we launched several new digital media platforms, including Ziddio, TV Planner and Game Invasion, and in 2007 we plan to launch other new online services.

ON DEMAND gives our digital cable customers unmatched choice and control. It’s truly the personalization of TV.

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With the dramatic ramp-up of Comcast Digital Voice in 2006, we have built a fantastic new engine for continued growth. We added 1.5 million Comcast Digital Voice customers last year, more than fi ve times the number added in 2005. By year’s end, we were marketing this service to 32 million homes, or 70% of our footprint, yet we are only at 6% penetration. We intend to increase that dramatically in 2007. Our goal is to reach at least 20% penetration, or nine million customers, by 2009. Given the power of Triple Play, we are on pace to achieve that goal.

We are also excited about our latest initiative: expanding into commercial business services — providing phone, Internet and video services to small and medium-sized businesses (SMBs). In 2007, we are beginning to target an estimated fi ve million SMBs in our markets. We estimate that those businesses generated $12 – $15 billion in revenue for other providers in 2006, and our goal is to capture 20% or more of this market over the next fi ve years. Buoyed by our success in the high-speed Internet and residential digital voice markets, and riding on much of the same network and infrastructure, we enter this new fi eld with great confi dence.

Our programming division continues to be a major value creator for the company and helps us to partner and work with new platforms to help differentiate and grow our cable business. In 2006, we acquired the remaining interest in E! Entertainment Television and now own 100% of it. We brought in new on-air talent, like Ryan Seacrest, and invested in programming that increased revenues and ratings at E!. We made similar investments at The Golf Channel and VERSUS, drawing higher distribution and ratings as the result of our expanded relationships with the PGA TOUR and the National Hockey League.

Investing in a Future of Opportunity

Consumers want the best services at a great price. They want things to be simple and convenient. They want to feel in control. The next great frontier for Comcast is to integrate our products in ways never before imaginable — like providing a single access point for customers to manage all their communications, or to plan and schedule their TV experience no matter where they are.

Our product teams and Comcast Interactive Media are focused on developing integrated services that offer entertainment and communications to consumers across multiple platforms. Our programming networks are also working on that strategy. PBS KIDS Sprout is available on a linear channel, on demand and online. In October 2006, we launched FEARnet, a new advertising-supported, multiplatform network delivering the best of modern horror fi lms, streaming video and original content — on demand, online and to mobile devices.

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With our cable partners and Sprint Nextel, we are testing consumer demand and applications to integrate and extend the Comcast experience outside the home, bringing mobility to our products. We also invested in wireless spectrum with a nationwide reach as part of the SpectrumCo consortium. This spectrum gives us strategic fl exibility and many options to capitalize on new wireless functionalities as they evolve.

Our strong balance sheet and free cash fl ow(d) give us signifi cant fi nancial fl exibility to innovate, invest and grow. In 2006, we focused our investments in cable and pro-gramming to drive new product RGUs, to enhance our services and to launch new businesses. We generated over $2.6 billion in free cash fl ow and used $2.3 billion to repurchase our stock. In fact, over the past three years, we have invested virtually all of our free cash fl ow in our stock and securities exchangeable into our stock, reducing our shares outstanding by more than 10%.

On a Mission to Grow

In 2007, we will focus even more intently on growing RGUs to capture market share and extend our leadership in the market. In the last fi ve years, we have transformed Comcast into a company that develops and delivers multiple services with diverse revenue streams. Over the next few years, it is easy to imagine that our company could be serving as many high-speed Internet and digital voice customers as we have video customers today.

The fi rst quarter of 2007 marks a bittersweet milestone with the retirement of Larry Smith, our Co-Chief Financial Offi cer. Over the years, I have called Larry the company’s “chief money-making offi cer.” He has made phenomenal contributions to Comcast’s growth and success — his deal-making prowess, wise counsel and steady leadership are a huge part of Comcast’s culture. His friendship and guidance will continue as he remains a part-time advisor in the future. We are thrilled to have recruited Michael Angelakis, a managing director in the extremely successful Providence Equity Partners, to succeed Larry. Michael will partner with John Alchin in 2007 as Co-CFO and will succeed John when he retires at the end of 2007.

In 2007, we will focus even more intently on growing RGUs to capture market share and extend our leadership in the market.

See notes and definitions on page 23.

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Finally, since we’re talking about a year of record results, I want to highlight two other records set by Comcasters in 2006. Our nationwide employee United Way campaign reached $4.2 million, a new record that places us in the top tier of United Way corporate campaigns in America. And on October 7, more than 32,000 employees and their families participated in Comcast Cares Day, our national day of volunteerism, delivering over 192,000 hours of community service to 300 projects in 34 states in a single day. This extraordinary effort represents one of the largest single corporate days of service in America.

As you read this year’s report in print or online, you’ll see many great Comcasters who exemplify the commitment, confi dence, diversity and enthusiasm that made 2006 possible and make the future look so wonderful. Each of them, and every one of our 90,000 employees, gives so much to the company every day. They are our greatest asset, and we’re really proud to highlight them this year.

I will never forget what this company achieved in 2006. In many ways, it represents a turning point in our history, as we have once again positioned ourselves for growth and success. It was a phenomenal effort, led by Steve Burke and his fabulous team. My father, Ralph, and I believe we’re poised for even more great achievements in 2007.

It is an honor to help lead this company. Thank you for your continued support.

Sincerely,

Brian L. RobertsChairman and Chief Executive Offi cerComcast CorporationFebruary 23, 2007

2006 represents a turning point in our history, as we have once again positioned ourselves for growth and success.

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Financial Highlights

(in millions, except number of employees) 2006 2005

Comcast Cable(a)

Revenues $ 26,339 $ 23,556Operating Cash Flow(b) $ 10,511 $ 9,132Total Revenue Generating Units(c) 50.8 45.8 Subscribers Basic Cable 24.2 24.1 Digital Cable 12.7 10.8 High-Speed Internet 11.5 9.6 Phone 2.5 1.3

Consolidated Comcast CorporationRevenues $ 24,966 $ 21,075Operating Cash Flow(b) 9,442 8,072Depreciation and Amortization 4,823 4,551Operating Income 4,619 3,521Income from Continuing Operations 2,235 828Discontinued Operations(e) 298 100Net Income $ 2,533 $ 928

Shares Outstanding(f) 3,119 3,208

Cash and Short-Term Investments $ 2,974 $ 1,095Total Assets 110,405 103,400Total Debt $ 28,975 $ 23,371

Number of Employees 90,000 80,000

Minor differences may exist due to rounding.

Notes and definitions used in the Letter to Shareholders and Financial Highlights:(a) All Comcast Cable results in the Letter to Shareholders and in these highlights are presented on a pro forma, as adjusted basis. See reconciliation on page 76.(b) Operating Cash Flow is defined as operating income before depreciation and amortization, excluding impairment charges related to fixed and intangible assets and gains or losses on sale of assets, if any. See reconciliation on page 76.(c) RGUs represent the sum of basic and digital cable, high-speed Internet and phone subscribers, excluding additional outlets. Subscriptions to DVR and/or HDTV services by existing Comcast Digital Cable customers do not result in additional RGUs.(d) Free Cash Flow is defined as “Net Cash Provided by Operating Activities From Continuing Operations” (as stated in our Consolidated Statement of Cash Flows) reduced by capital expenditures and cash paid for intangible assets; and increased by any payments related to certain non-operating items, net of estimated tax benefits (such as income taxes on investment sales, and non-recurring payments related to income tax and litigation contingencies of acquired companies). Reconciliation of this item appears on page 76.(e) In July 2006, in connection with the transactions with Adelphia and Time Warner, we transferred our previously owned cable systems located in Los Angeles, Cleveland and Dallas to Time Warner Cable. These cable systems are presented as discontinued operations for the years ended on or before December 31, 2006 (see Note 5 to our consolidated financial statements).(f) Adjusted to reflect the Stock Split.

Additional information about Comcast is also contained in our Annual Report on Form 10-K and in our Proxy Statement. We invite you to refer to those documents.

This report may contain forward-looking statements. Readers are cautioned that such forward-looking statements involve risks and uncertainties that could significantly affect actual results from those expressed in any such forward-looking statements. Readers are directed to Comcast’s Annual Report on Form 10-K for a description of such risks and uncertainties.

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Financial Report

Management’s Discussion and Analysis of Financial Condition and Results of Operations 25

Introduction and Overview 25

Consolidated Operating Results 26

Segment Operating Results 27

Cable Segment Overview 27

Cable Segment Revenues 28

Cable Segment Expenses 30

Programming Segment Overview 31

Consolidated Other Income (Expense) Items 31

Income Tax Expense 32

Discontinued Operations 32

Liquidity and Capital Resources 32

Interest Rate Risk Management 34

Equity Price Risk Management 34

Contractual Obligations 35

Off-Balance Sheet Arrangements 35

Critical Accounting Judgments and Estimates 35

Report of Management 37

Report of Independent Registered Public Accounting Firm 38

Consolidated Balance Sheet 39

Consolidated Statement of Operations 40

Consolidated Statement of Cash Flows 41

Consolidated Statement of Stockholders’ Equity 42

Notes to Consolidated Financial Statements 43

Reconciliation of Non-GAAP Measures 76

Market for the Registrant’s Common Equity 77

Selected Financial Data 78

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25 Comcast2006AnnualReport

IntroductionandOverview

Weare the largestcableoperator in theUnitedStatesandofferavarietyofconsumerentertainmentandcommunicationproductsandservices.AsofDecember31,2006,ourcablesystemsservedapprox-imately23.4millionvideosubscribers,11millionhigh-speedInternetsubscribersand2.4millionphonesubscribersandpassedapproxi-mately45.7millionhomesin39statesandtheDistrictofColumbia.

Weclassifyouroperationsintworeportablesegments:CableandProgramming.OurCablesegment,whichgeneratesapproximately95% of our consolidated revenues, manages and operates ourcable systems. Our Programming segment consists of our sixnationalprogrammingnetworks.During2006,ouroperationsgen-eratedconsolidatedrevenuesofapproximately$25billion.

Our Cable segment earns revenues primarily through subscrip-tionstoourvideo,high-speedInternetandphoneservices(“cableservices”).Ourvideorevenuescontinuetoincreaseasaresultofdigital subscribergrowthanddemand forourotherdigitalcableservices, including video on demand, which we refer to as ONDEMAND,DigitalVideoRecorder(“DVR”)andHighDefinitionTele-vision(“HDTV”),aswellashigherpricingonourbasicvideoservice.AsofDecember31,2006,approximately51%ofthehomesintheareasweservesubscribedtoourvideoserviceandapproximately52%ofthosevideosubscriberssubscribedtoatleastoneofourdigitalcableservices.Ourhigh-speedInternetservicewithInternetaccessatdownstreamspeedsfrom6Mbpsto16Mbps,dependingon the level of service selected, has been one of our fastestgrowingservicesoverthepastseveralyears.AsofDecember31,2006,approximately25%ofthehomesintheareasweservesub-scribedtoourhigh-speedInternetservice.ComcastDigitalVoice,our phone service that provides unlimited local and domesticlong-distancecallingandotherfeatures,isourmostrecentcableserviceoffering.AsofDecember31,2006,approximately6%ofthehomes in theareasweservesubscribed toComcastDigitalVoice. In2006,webeganofferingourvideo,high-speedInternetandComcastDigitalVoiceservicesinapackagethatwerefertoasthe“tripleplay.”Inadditiontocableservices,otherCableseg-mentrevenuesourcesincludeadvertisingandtheoperationofourregionalsportsandnewsnetworks.

OurProgrammingsegmentconsistsofourconsolidatednationalprogrammingnetworks:E!,Style,TheGolfChannel,VERSUS(for-merlyknownasOLN),G4andAZNTelevision.RevenuefromourProgramming segment is earned primarily from advertising rev-enuesandfrommonthlypersubscriberlicensefeespaidbycableandsatellitedistributors.

OurotherbusinessinterestsincludeComcastSpectacor,whichownsthePhiladelphiaFlyers,thePhiladelphia76ersandtwolargemultipur-posearenasinPhiladelphia,andmanagesotherfacilitiesforsportingevents,concertsandotherevents.ComcastSpectacorandallotherconsolidatedbusinessesnotincludedinourCableorProgrammingsegmentsareincludedin“CorporateandOther”activities.

OnJanuary31,2007,ourBoardofDirectorsapproveda three-for-twostocksplitintheformofa50%stockdividend(the“StockSplit”)payableonFebruary21,2007,toshareholdersofrecordonFebruary14,2007.ThenumberofsharesoutstandingandrelatedamountshavebeenadjustedtoreflecttheStockSplitforallperi-odspresented.

2006FinancialandOperationalHighlights• consolidatedrevenuegrowthof18.5%andconsolidatedoperat-

ingincomegrowthof31.2%,bothdrivenbyresultsinourCablesegment

• Cablesegment revenuegrowthof20.6%andgrowth inoper-ating income before depreciation and amortization of 22.1%,both driven by revenue generating units (“RGUs”) growth andthesuccessofour tripleplayoffering,aswell asgrowth fromacquisitions

2006BusinessDevelopments• completed transactions with Adelphia and Time Warner that

resultedinanetincreaseof1.7millionvideosubscribers,anetcashpaymentbyusofapproximately$1.5billionandthedis-position of our ownership interest in Time Warner Cable Inc.(“TWC”)andTimeWarnerEntertainmentCompany,L.P.(“TWE”),theassetsoftwocablesystempartnershipsandthetransferofourpreviouslyownedcablesystemsinLosAngeles,Clevelandand Dallas. We collectively refer to these transactions as the“AdelphiaandTimeWarnertransactions.”

• initiated the dissolution of the Texas and Kansas City CablePartnership (“TKCCP”) that resulted inouracquisitionofcablesystemsservingHouston,Texas(approximately700,000videosubscribers)inJanuary2007

• acquired thecablesystemsofSusquehannaCommunicationsserving approximately 200,000 video subscribers for approxi-mately$775million

• acquiredthe39.5%interestinE!EntertainmentTelevision(whichoperates theE!andStyleprogrammingnetworks) thatwedidnotalreadyownforapproximately$1.2billion

• participated in a consortium of investors (“SpectrumCo”) thatacquired wireless spectrum licenses covering approximately91% of the population in the United States for approximately$2.4billion(ourportionwas$1.3billion)

• repurchasedapproximately113millionshares(adjustedtoreflecttheStockSplit)ofourClassASpecialcommonstockpursuanttoourBoard-authorizedsharerepurchaseprogramforapproxi-mately$2.3billion

RefertoNote5toourconsolidatedfinancialstatementsforinfor-mationaboutacquisitionsandothersignificantevents.

Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations

MD&AComcast2006AnnualReport 26

Thefollowingprovidesfurtherdetailsofourhighlightsandinsightsintoourconsolidatedfinancialstatements,includingdiscussionofourresultsofoperationsandourliquidityandcapitalresources.AsaresultoftransferringourpreviouslyownedcablesystemslocatedinLosAngeles,ClevelandandDallas(“ComcastExchangeSystems”),theoperatingresultsoftheComcastExchangeSystemsarereportedasdiscontinuedoperationsforallperiodspresented.

ConsolidatedOperatingResults

%Change %ChangeYearEndedDecember31(inmillions) 2006 2005 2004 2005to2006 2004to2005

Revenues $24,966 $21,075 $19,221 18.5% 9.6%CostsandExpensesOperating,Selling,GeneralandAdministrative(excludingdepreciation) 15,524 13,003 12,041 19.4 8.0Depreciation 3,828 3,413 3,197 12.2 6.8Amortization 995 1,138 1,154 (12.5) (1.5)

OperatingIncome 4,619 3,521 2,829 31.2 24.4OtherIncome(Expense)Items,net (1,025) (1,801) (1,086) (43.1) 65.8

IncomefromContinuingOperationsbeforeIncomeTaxesand MinorityInterest 3,594 1,720 1,743 109.0 (1.4)IncomeTaxExpense (1,347) (873) (801) 54.3 9.0

IncomefromContinuingOperationsbeforeMinorityInterest 2,247 847 942 165.5 (10.2)MinorityInterest (12) (19) (14) (36.8) 35.7

IncomefromContinuingOperations 2,235 828 928 169.9 (10.8)DiscontinuedOperations,netofTax 298 100 42 198.0 138.1

NetIncome $ 2,533 $ 928 $ 970 173.0% (4.3)%

Allpercentagesarecalculatedbasedonactualamounts.Minordifferencesmayexistduetorounding.

TheAreasWeServeThemapbelowhighlightsour40majormarketswithemphasisonouroperationsinthetop25U.S.TVmarkets.Approximately90%ofourvideosubscribersareinthemarketslisted(subscribersinthousands).

*AsofJanuary1,2007

WestPalmBeach

Nashville

Hartford

GrandRapids

SaltLakeCity

Houston*700

Atlanta800

Baltimore600

Washington,D.C.900

Philadelphia1,800NewYork700

Boston1,600

Pittsburgh700

Detroit800

Miami700

Orlando100Tampa200

Indianapolis300

Chicago1,600

Minneapolis/St.Paul

500

Denver700

Seattle1,000

Portland500

Sacramento500SanFrancisco

1,500

Top25U.S.TVMarketsTop40ComcastMarkets(>125,000 subscribers)

Statesinfootprint

Jacksonville

Ft.Myers

RichmondMemphis

Fresno

Albuquerque

Providence

Salisbury

Knoxville

Springfield

Roanoke

Lansing

Wilkes-Barre

Chattanooga

ColoradoSprings

Harrisburg

27 Comcast2006AnnualReportMD&A

ConsolidatedRevenuesOur Cable and Programming segments accounted for substan-tially all of the increases in consolidated revenues for 2006 and2005. Cable segment and Programming segment revenues arediscussedseparatelybelow.Theremainingchangesrelatetoourotherbusinessactivities,primarilyComcastSpectacor,whoserev-enues were negatively affected in 2005 by the National HockeyLeague(“NHL”)lockout.

ConsolidatedOperating,Selling,GeneralandAdministrativeExpensesOur Cable and Programming segments accounted for substan-tiallyalloftheincreasesinconsolidatedoperating,selling,generalandadministrativeexpensesfor2006and2005.Cablesegmentand Programming segment expenses are discussed separatelybelow.Theremainingchangesrelatetoourotherbusinessactivi-ties, primarily Comcast Spectacor, and the impact of adoptingStatementofFinancialAccountingStandards(“SFAS”)No.123R,“Share-BasedPayment”(“SFASNo.123R”).

EffectiveJanuary1,2006,weadoptedSFASNo.123RusingtheModified Prospective Approach. SFAS No.123R revises SFASNo.123, “Accounting for Stock-Based Compensation” (“SFASNo.123”) and supersedes Accounting Principles Board (“APB”)OpinionNo.25,“AccountingforStockIssuedtoEmployees”(“APBNo.25”).SFASNo.123Rrequiresthecostofallshare-basedpay-mentstoemployees,includinggrantsofemployeestockoptions,to be recognized in the financial statements based on their fairvalues at grant date, or the date of later modification, over therequisiteserviceperiod.Inaddition,SFASNo.123Rrequiresunrec-ognizedcost (basedon theamountspreviouslydisclosed inourproformafootnotedisclosure)relatedtooptionsvestingafterthedateofinitialadoptiontoberecognizedinthefinancialstatementsovertheremainingrequisiteserviceperiod.

The incrementalpretaxshare-basedcompensationexpenserec-ognizedbecauseof theadoptionofSFASNo.123Rfor theyearendedDecember31,2006,was$126million.Totalshare-basedcompensationexpenserecognizedunderSFASNo.123R,includ-ing the incremental pretax share-based compensation expense,was$190millionfortheyearendedDecember31,2006.Share-basedcompensationexpenseisreflectedintheoperatingresultsofeachofourbusinesssegments.RefertoNote10andNote14toourconsolidatedfinancialstatementsforfurtherdetailsonouradoptionofSFASNo.123R.

ConsolidatedDepreciationandAmortizationTheincreasesindepreciationexpensefor2006and2005arepri-marilyaresultofcapitalexpendituresinourCablesegmentand,in 2006, the depreciation associated with acquisitions of cablesystems.

The decreases in amortization expense for 2006 and 2005 areprimarilyaresultofdecreasesintheamortizationofourfranchise-

relatedcustomer relationship intangibleassets,partiallyoffsetbyincreasedamortizationexpenserelatedtosoftware-relatedintan-giblesacquiredinvarioustransactions,andin2006,thecustomerrelationship intangible assets recorded in connection with theacquisitionsofcablesystems.

SegmentOperatingResults

Certain adjustments have been made in our segment presenta-tiontobeconsistentwithourmanagementreportingpresentation.These adjustments primarily relate to the adoption of SFAS No.123R and are further discussed in Note 14 to our consolidatedfinancialstatements.

Tomeasuretheperformanceofouroperatingsegments,weuseoperating income before depreciation and amortization, exclud-ing impairment charges related to fixed and intangible assets,andgainsor lossesfromthesaleofassets, ifany.Thismeasureeliminatesthesignificantlevelofnoncashdepreciationandamor-tization expense that results from the capital-intensive nature ofour businesses and from intangible assets recognized in busi-ness combinations. It is also unaffected by our capital structureorinvestmentactivities.Weusethismeasuretoevaluateourcon-solidatedoperatingperformance,theoperatingperformanceofouroperatingsegments,andtoallocateresourcesandcapitaltoouroperatingsegments.Itisalsoasignificantperformancemeasureinourannualincentivecompensationprograms.Webelievethatthismeasure isuseful to investorsbecause it isoneof thebasesforcomparingouroperatingperformancewithothercompaniesinourindustries,althoughourmeasuremaynotbedirectlycomparableto similarmeasuresusedbyother companies.Becauseweusethismetrictomeasureoursegmentprofitorloss,wereconcileittooperatingincome,themostdirectlycomparablefinancialmeasurecalculatedandpresented inaccordancewithgenerallyacceptedaccountingprinciplesintheUnitedStates(“GAAP”)inthebusinesssegment footnote to our consolidated financial statements. Youshouldnotconsiderthismeasureasubstituteforoperatingincome(loss),netincome(loss),netcashprovidedbyoperatingactivities,orothermeasuresofperformanceorliquiditywehavereportedinaccordancewithGAAP.

CableSegmentOverviewOurcablesystemssimultaneouslydelivervideo,high-speedInternetandphoneservicestooursubscribers.ThemajorityofourCablesegmentrevenueisearnedfromsubscriptionstothesecableser-vices.Subscriberstypicallypayusmonthly,basedontheirchosenlevel of service, number of services and the type of equipmenttheyuse,andgenerallymaydiscontinueserviceatanytime.Wemeasureoursuccessinsellingsubscription-basedservicestocus-tomersbyametricreferredtoasarevenuegeneratingunit(“RGU”).Eachindividualcableservice(basiccable,digitalcable,high-speedInternet or phone service) that a subscriber receives representsone RGU. As of December 31, 2006, we had approximately


50.8millionRGUs.Asaresultofcontinuedandgrowingdemandforourexistingandnewproductsandservices,includingourtripleplayoffering,aswellasother factorsdiscussedbelow,wehaveincreasedourrevenuesandoperatingincomebeforedepreciationandamortization.

REVENUEANDOpERATINGINCOME

BEFOREDEpRECIATIONAND

AMORTIzATION(inbillions)

$18.2$20.0

$24.1

$6.9$7.9

$9.7

200620052004

RevenueOperatingIncomeBeforeDepreciationandAmortization

CableSegmentResultsofOperationsThecomparabilityoftheresultsofoperationsandsubscriberinfor-mationofourCablesegmentare impactedby theAdelphiaandTimeWarnertransactions(closedJuly31,2006)andtheacquisi-tionofthecablesystemsofSusquehannaCommunications(closed

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April30,2006).Further,consistentwithourmanagementreport-ingpresentation,theoperatingresultsandsubscriberinformationofthecablesystemsservingHouston,Texashavebeenincludedin the Cable segment beginning August 1, 2006. However, theoperatingresultsof theHoustoncablesystemsareeliminated inourconsolidatedfinancialstatementsasTKCCPcontinuedtobeaccountedforasanequitymethodinvestmentforexternalfinancialreportingpurposesuntiltheHoustoncablesystemswereactuallyacquired on January 1, 2007 (see Note 5). We collectively referto these cable systems as the “newly acquired cable systems.”The newly acquired cable systems accounted for $1.7 billion ofincreasedrevenuein2006.

Cable Segment RevenuesVideo. Weofferafullrangeofvideoservices,rangingfromalim-ited basic service and a digital starter service, to our full digitalcableservice,whichprovidesaccesstoover250channels,includ-ing premium and pay-per-view channels; ON DEMAND (whichallowsaccesstoa libraryofmovies,sportsandnews,startingaselectionatanytime,andpausing,rewindingandfast-forwardingselections);musicchannels;andaninteractive,on-screenprogramguide(whichallowsnavigatingthechannellineupandONDEMANDlibrary).Digitalcablesubscribersmayalsosubscribetoadditionaldigitalcableservices, includingDVR(whichallowsdigitalrecord-ingofprograms,andpausingandrewindingoflivetelevision),andHDTV(whichprovidesmultiplechannelsinhighdefinition).

AsofDecember31,2006,approximately52%ofourvideosub-scribers subscribed to at least oneof ourdigital cable services,compared to approximately 45% and approximately 39% as ofDecember31,2005and2004,respectively.

%Change %ChangeYearEndedDecember31(inmillions) 2006 2005 2004 2005to2006 2004to2005

Video $15,096 $12,918 $12,211 16.9% 5.8%High-speedInternet 4,986 3,757 2,938 32.7 27.9Phone 913 617 620 48.0 (0.5)Advertising 1,537 1,272 1,206 20.8 5.4Other 851 789 654 7.8 20.7Franchisefees 717 634 601 13.1 5.3

Revenues 24,100 19,987 18,230 20.6 9.6Operatingexpenses 8,600 7,041 6,656 22.1 5.8Selling,generalandadministrativeexpenses 5,796 4,999 4,634 15.9 7.8

Operatingincomebeforedepreciationandamortization $ 9,704 $ 7,947 $ 6,940 22.1% 14.5%


VIDEOSUBSCRIBERS(inmillions)

2.024.2

6.28.020.4

9.120.3

4.5

12.411.2 11.5

200620052004

BasicCableSubscribers DigitalCableSubscribers*DigitalStarterDigitalCableDigitalCablewithDVRand/orHDTV

*DigitalCablesubscriberdetailpresentedfor2006only.

Revenuesincreasedasaresultofhigherpricingonourbasicvideoservice,growthinourdigitalcableservicesand,in2006,theaddi-tion of our newly acquired cable systems. Our newly acquiredcable systems added approximately 3.7 million video subscrib-ersandcontributed$1.143billionofourvideorevenuegrowthfortheyearendedDecember31,2006.Asaresultofthesefactors,ouraveragemonthlyvideorevenuepervideosubscriberincreasedfrom$50in2004to$57in2006.

High-Speed Internet. Weofferhigh-speed InternetservicewithInternetaccessatdownstreamspeeds from6Mbpsto16Mbps,depending on the level of service selected. This service alsoincludesourinteractiveportal,Comcast.net,whichprovidesmul-tiplee-mailaddressesandonlinestorage,aswellasavarietyofproprietarycontentandvalue-addedfeaturesandenhancementsthataredesignedtotakeadvantageofthespeedoftheInternetserviceweprovide.

HIGH-SpEEDINTERNETSUBSCRIBERS(inmillions)

6.6

8.1

11.5

200620052004

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Revenues increased in2006and2005asa resultof subscribergrowthand,in2006,theadditionofournewlyacquiredcablesys-tems. As of December 31, 2006, 24.5% of our homes passedsubscribedtoourhigh-speedInternetservice,comparedto21.1%and17.8%asofDecember31,2005and2004,respectively.Ournewly acquired cable systems added approximately 1.7 millionhigh-speed Internet subscribers and contributed $379 million ofourhigh-speedInternetrevenuegrowthfortheyearendedDecem-ber31,2006.Averagemonthly revenueperhigh-speed Internetsubscriber has remained relatively stable between $42 and $43from 2004 through 2006. The rate of subscriber and revenuegrowthmayslowasthemarketcontinuestomatureandcompeti-tionincreases.

Phone. We offer Comcast Digital Voice, our IP-enabled phoneservice thatprovidesunlimited localanddomestic long-distancecallingandincludessuchfeaturesasVoiceMail,CallerIDandCallWaiting.ComcastDigitalVoicewasavailableto32millionhomesas of December 31, 2006. We expect that by the end of 2007approximately85%ofourhomespassedwillhaveaccesstoCom-castDigitalVoice.Insomeareas,weprovideourcircuit-switchedlocalphoneservice.Subscriberstothisservicehaveaccesstoafullarrayofcallingfeaturesandthird-partylong-distanceservices.

COMCASTDIGITAlVOICESUBSCRIBERS(inmillions)

0.2

0.4

0.7

1.3

1.9

4Q063Q062Q061Q064Q05

Revenuesincreasedin2006asaresultoftheincreaseinComcastDigital Voice subscribers, partially offset by the loss of approxi-mately300,000circuit-switchedsubscribers.Ournewlyacquiredcablesystemsaddedapproximately156,000phonesubscribersandcontributed$40millionofourphonerevenuegrowthfortheyearendedDecember31,2006.Thedecreaseinphonerevenuesin2005 from2004wasprimarily the resultofa reduction in thenumber of circuit-switched phone subscribers as we began thedeploymentofComcastDigitalVoice.Weexpect thenumberofphonesubscriberswillgrowasweexpandComcastDigitalVoicetonewmarketsin2007.Weexpectthenumberofsubscriberstoourcircuit-switched localphoneservice tocontinue todecreasein 2007 as our marketing efforts are now focused on ComcastDigitalVoice.


Advertising. Aspartofourprogramminglicenseagreementswithprogramming networks, we receive an allocation of scheduledadvertising time that we may sell to local, regional and nationaladvertisers.Wealsocoordinatetheadvertisingsaleseffortsofothercableoperators insomemarkets,and inothermarketswehaveformedandoperateadvertising interconnects,whichestablishaphysical,direct linkbetweenmultiplecablesystemsandprovideforthesaleofregionalandnationaladvertisingacrosslargergeo-graphicareasthancouldbeprovidedbyasinglecableoperator.

Advertising revenues increased in2006asa resultof thestronggrowthinpoliticaladvertisingandtheadditionofournewlyacquiredcablesystems.Weexpectslowergrowthinouradvertisingrevenuesin2007,primarilyasaresultoflowerlevelsofpoliticaladvertising.

Other. Wealsogenerate revenues fromour regional sportsandnews networks, video installation services, commissions fromthird-partyelectronicretailing,andfeesforotherservices,suchasprovidingbusinesseswithdataconnectivityandnetworkedappli-cations.OurregionalsportsandnewsnetworksincludeComcastSportsNet (Philadelphia), Comcast SportsNet Mid-Atlantic (Balti-more/Washington),CableSportsSoutheast,CN8—TheComcastNetwork,ComcastSportsNetChicago,ComcastSportsNetWest(Sacramento)andMountainWestSportsNetwork.Thesenetworksearnrevenuethroughthesaleofadvertisingtimeandreceivepro-gramminglicensefeespaidbycableandsatellitedistributors.

Franchise Fees. Ourfranchisefeerevenuesrepresentthepass-throughtooursubscribersofthefeesrequiredtobepaidtostateandlocalfranchisingauthorities.Underthetermsofourfranchiseagreements,wearegenerallyrequiredtopayupto5%ofourgrossvideorevenuestothelocalfranchisingauthority.Theincreasesinfranchisefeesareprimarilyaresultoftheincreasesinourrevenuesuponwhichthefeesapply.

Total Cable Segment Revenue. As a result of the growth inrevenues fromourproductsandservices,wehavebeenable toincreaseour totalaveragemonthly revenuepervideosubscriber(includingallrevenuesources)fromapproximately$77in2004toapproximately$95in2006.

AVERAGEMONTHlyTOTAlREVENUE

pERVIDEOSUBSCRIBER

$77

$84

$95

200620052004

Cable Segment ExpensesWecontinuetofocusoncontrollingthegrowthofexpenses.Ouroperating margins (operating income before depreciation andamortizationasapercentageofrevenue)were40.2%,39.8%and38.1%fortheyearsendedDecember31,2006,2005and2004,respectively.

OpERATINGMARGINS(inbillions)

$6.9$7.9

$9.7

200620052004

$18.2$20.0

$24.1

30

45

38%

40% 40%

OperatingMarginsRevenueOperatingIncomeBeforeDepreciationandAmortization

Cable Segment Operating Expenses. Cable programmingexpenses,our largestexpense,arethefeeswepaytoprogram-mingnetworkstolicensetheprogrammingwepackage,offeranddistribute toourcablesubscribers.Theseexpensesareaffectedbychanges in the rateschargedbyprogrammingnetworks, thenumberofsubscribersandtheprogrammingoptionsweoffertosubscribers.Cableprogrammingexpensesincreasedto$4.9bil-lionin2006asaresultofincreasesinratesandthenewlyacquiredcablesystems,from$4.1billionin2005and$3.9billionin2004.Weanticipateourcableprogrammingexpenseswillincreaseinthefuture,asthefeeschargedbyprogrammingnetworksincreaseandasweprovideadditionalchannelsandONDEMANDprogrammingoptionstooursubscribers.Weanticipatethattheseincreasesmaybemitigatedtosomeextentbyvolumediscounts.

Otheroperatingexpenses increased to$3.7billion in2006 from$2.9billion in2005and$2.8billion in2004. In2006,ournewlyacquiredcablesystemscontributedapproximately$650millionofourincreasesinotheroperatingexpenses.Theremainingincreasesin2006wereprimarily a result of growth in thenumberof sub-scriberstoourcableservices,whichrequiredadditionalpersonneltohandleservicecallsandprovidecustomersupport,andcostsassociatedwiththedeliveryoftheseservices.Theincreasein2005wasprimarilyaresultofincreasesinourtechnicalservicesgroupduetothelaunchofComcastDigitalVoice,thedeploymentofdigi-talsimulcasting,theimplementationofanewprovisioningsystemand,toalesserdegree,therepairofourcablesystemsasaresultofweather-relateddamage.

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Cable Segment Selling, General and Administrative Expenses. Selling,generalandadministrativeexpensesincreased$797millionto$5.8billionin2006.In2006,ournewlyacquiredcablesystemscontributedapproximately$400millionofourincreasesinselling,generalandadministrativeexpenses.The remaining increases in2006wereprimarilyaresultofgrowthinthenumberofsubscrib-

erstoourcableservices,whichrequiredadditionalemployeestohandlecustomerservice,marketingandotheradministrativecosts.Theincreasein2005wasprimarilyaresultofthelaunchofCom-castDigitalVoice,thedeploymentofdigitalsimulcastingandtheimplementationofanewprovisioningsystem.

programmingSegmentOverviewOurProgrammingsegmentconsistsofourconsolidatednationalprogrammingnetworks:

Approximate U.S.SubscribersProgrammingNetwork (inmillions) Description

E! 81 Popcultureandentertainment-relatedprogrammingStyle 37 Lifestyle-relatedprogrammingTheGolfChannel 63 Golfandgolf-relatedprogrammingVERSUS 61 SportsandleisureprogrammingG4 53 GamerlifestyleprogrammingAZNTelevision 14 AsianAmericanprogramming

WealsoowninterestsinMGM(20%),iNDEMAND(54%),TVOne(33%),PBSKIDSSprout(40%),FEARnet(33%)andExerciseTV(55%).TheoperatingresultsoftheseentitiesarenotincludedinourProgrammingsegment’soperatingresultsastheyarepresentedinequityinnet(losses)incomeofaffiliates,netorCorporateandOtheractivities.

programmingSegmentResultsofOperations %Change %ChangeYearEndedDecember31(inmillions) 2006 2005 2004 2005to2006 2004to2005

Revenues $1,053 $919 $787 14.6% 16.7%Operating,selling,generalandadministrativeexpenses 812 647 518 25.6 24.7

Operatingincomebeforedepreciationandamortization $ 241 $272 $269 (11.4)% 1.3%

Programming Segment RevenuesRevenues from our Programming segment are earned primarilyfromthesaleofadvertisingtimeandfrommonthlypersubscriberlicensefeespaidbycableandsatellitedistributors.Programmingrevenuesfor2006and2005increasedasaresultofincreasesinadvertisingand license feerevenues.For2006,2005and2004,approximately11%to12%ofourProgrammingsegmentrevenuesweregeneratedfromourCablesegmentandareeliminatedinourconsolidatedfinancialstatements,butareincludedintheamountspresentedabove.

Programming Segment Operating, Selling, General and Administrative ExpensesOperating, selling, general and administrative expenses consistmainlyofthecostofproducingtelevisionprogramsandliveevents,thepurchaseofprogrammingrights,marketingandpromotingourprogramming networks, and administrative costs. Programmingexpensesfor2006and2005increasedasaresultofanincreaseinproductionandprogrammingrightscostsfornewandliveeventprogramming for our programming networks, including the NHLonVERSUS,andacorrespondingincreaseinmarketingexpensesforthisprogramming.Thefull-yearimpactofour2004acquisitionsof TechTV and AZN Television also contributed to the growth in

2005expenses.Wehaveandexpecttocontinuetoinvestinnewandliveeventprogramming,suchasourrecentrightsagreementwith the PGA TOUR, that will cause our Programming segmentexpensestoincreaseinthefuture.

ConsolidatedOtherIncome(Expense)Items

YearEndedDecember31(inmillions) 2006 2005 2004

Interestexpense $(2,064) $(1,795) $(1,874)Investmentincome(loss),net 990 89 472Equityinnet(losses)income ofaffiliates,net (124) (42) (81)Otherincome(expense) 173 (53) 397

Total $(1,025) $(1,801) $(1,086)

InterestExpenseTheincreasein interestexpensefor2006from2005wasprimarilytheresultofanincreaseinouraveragedebtoutstandingandhigherinterestratesonourvariable-ratedebt,aswellas$57millionofgainsrecognized in2005 inconnectionwith theearlyextinguishmentofsomeofourdebtfacilities.Thedecreaseininterestexpensefor2005


from2004wasprimarilytheresultof$57millionofgainsrecognizedin2005and$69millionoflossesrecognizedin2004inconnectionwiththeearlyextinguishmentofsomeofourdebtfacilities,partiallyoffsetbytheeffectsofhigherinterestratesonvariable-ratedebtin2005.

InvestmentIncome(loss),NetThecomponentsofinvestmentincome(loss),netfor2006,2005and2004arepresentedinatable inNote6toourconsolidatedfinancial statements. In connection with the Adelphia and TimeWarnertransactions,werecognizedgainsofapproximately$646millionfortheyearendedDecember31,2006.

We have entered into derivative financial instruments that weaccountforatfairvalueandwhicheconomicallyhedgethemarketprice fluctuations in thecommonstockofsubstantiallyallofourinvestments accounted for as trading securities. Thedifferencesbetween the unrealized gains (losses) on trading securities andthemarktomarketadjustmentsonderivativesrelatedtotradingsecurities,aspresentedinthetableinNote6,resultfromoneormoreofthefollowing:

• wedidnotmaintainaneconomichedgeforourentireinvestmentinthesecurityduringsomeoralloftheperiod

• therewerechangesinthederivativevaluationassumptionssuchasinterestrates,volatilityanddividendpolicy

• themagnitudeofthedifferencebetweenthemarketpriceoftheunderlyingsecuritytowhichthederivativerelatesandthestrikepriceofthederivative

• thechangeinthetimevaluecomponentofthederivativevalueduringtheperiod

• the security to which the derivative relates changed due to acorporate reorganizationof the issuing company to a securitywithadifferentvolatilityrate

EquityinNet(losses)IncomeofAffiliates,NetTheincreaseinequityinnetlossesofaffiliatesfor2006from2005wasprimarilyaresultofother-than-temporaryimpairmentchargesrecognizedin2006.Thedecreaseinequityinnetlossesofaffiliatesfor2005 from2004wasprimarilya resultofchanges in thenetincomeorlossofourequityinvestees.

OtherIncome(Expense)Otherincomefor2006consistedprincipallyof$170millionofgainsonthesalesof investmentassets.Otherexpense for2005con-sistedprincipallyofa$170millionpaymentrepresentingourshareofthesettlementamountrelatedtocertainofAT&T’slitigationwithAtHome,partiallyoffsetbya$24milliongainontheexchangeofone of our equity method investments and $62 million of gainsrecognized on the sale or restructuring of investment assets in2005. Other income for 2004 consisted principally of the $250

millionreductionintheestimatedfairvalueliabilityassociatedwiththesecuritieslitigationofanacquiredcompanyandthe$94milliongain recognizedon thesaleofour investment inDHCVentures,LLC(“DiscoveryHealthChannel”).

IncomeTaxExpense

Oureffective incometax ratewas37.5%,50.7%and45.9%for2006,2005and2004,respectively.Taxexpensereflectsaneffec-tive income tax rate that differs from the federal statutory rateprimarilyasaresultofstateincometaxesandadjustmentstoprioryearaccruals,includingrelatedinterest.Adjustmentstoprioryearaccrualsin2006areprincipallyrelatedtothefavorableresolutionofissuesandrevisedestimatesoftheoutcomeofunresolvedissueswithvarioustaxingauthorities.

DiscontinuedOperations

TheoperatingresultsofourpreviouslyownedcablesystemslocatedinLosAngeles,DallasandCleveland,reportedasdiscontinuedoper-ationsfor2006,includesevenmonthsofoperations,astheclosingdateof the transactionwas July 31, 2006. For 2005and2004,resultsinclude12monthsofoperations.Asaresultoftheexchangetransaction,werecognizedagainonthesaleofthesesystemsof$195million,netoftaxof$541million(seeNote5).Theeffectivetaxrateonthegainishigherthanthefederalstatutoryrateprimarilyasaresultofthenondeductibleamountsattributedtogoodwill.

liquidityandCapitalResources

Aswedescribefurtherbelow,ourbusinessesgeneratesignificantcashflowfromoperatingactivities.Theproceedsfrommonetizingournonstrategicinvestmentshavealsoprovideduswithasignifi-cantsourceofcashflow.Webelievethatwewillbeabletomeetourcurrentandlong-termliquidityandcapitalrequirements,includ-ingfixedcharges,throughourcashflowfromoperatingactivities,existingcash,cashequivalentsandinvestments;throughavailableborrowingsunderourexistingcreditfacilities;andthroughourabil-itytoobtainfutureexternalfinancing.Weanticipatecontinuingtouseasubstantialportionofourcashflowtofundourcapitalexpen-ditures,investinbusinessopportunitiesandrepurchaseourstock.

OperatingActivitiesNetcashprovidedbyoperatingactivitiesamountedto$6.618bil-lionfor2006,primarilyasaresultofouroperatingincomebeforedepreciationandamortization,thetimingofinterestandincometaxpayments,andchangesinotheroperatingassetsandliabilities.

FinancingActivitiesNet cash provided by financing activities was $3.546 billion for2006,andconsistedprincipallyofourproceedsfromborrowingsof


$7.497billion,partiallyoffsetbyourdebtrepaymentsof$2.039bil-lion,andourrepurchaseofapproximately113millionsharesofourClassASpecialcommonstockataweighted-averagesharepriceof$20.76 for$2.347billion (recognizedonasettlementdateorcashbasisandadjustedtoreflecttheStockSplit).Wehavemade,andmayfromtimetotimeinthefuturemake,optionalrepaymentson our debt obligations, which may include repurchases of ouroutstandingpublicnotesanddebentures,dependingonvariousfactors,suchasmarketconditions.SeeNote8toourconsolidatedfinancialstatements for furtherdiscussionofour financingactivi-ties,includingdetailsofourdebtrepaymentsandborrowings.

Available Borrowings Under Credit FacilitiesWetraditionallymaintainsignificantavailabilityunderlinesofcreditandourcommercialpaperprogramtomeetourshort-termliquidityrequirements.AsofDecember31,2006,amountsavailableunderthesefacilitiestotaled$4.464billion.

Debt CovenantsWeandourcablesubsidiariesthathaveprovidedguarantees(seeNote8)aresubjecttothecovenantsandrestrictionssetforthintheindenturesgoverningourpublicdebtsecuritiesand in thecreditagreementgoverningourbankcredit facilities.Weandtheguar-antorsareincompliancewiththecovenants,andwebelievethatneitherthecovenantsnortherestrictionsinourindenturesorloandocuments will limit our ability to operate our business or raiseadditionalcapital.Ourcovenantsaretestedonanongoingbasis.Theonlyfinancialcovenantinour$5.0billionrevolvingcreditfacilityrelatestoleverage(ratioofdebttooperatingincomebeforedepre-ciation and amortization), which we met by a significant marginasofDecember31,2006.Ourabilitytocomplywiththisfinancialcovenantinthefuturedoesnotdependonfurtherdebtreductionoronimprovedoperatingresults.

Share Repurchase ProgramAs of December 31, 2006, the maximum dollar value of sharesremaining thatmaybe repurchasedunderourBoard-authorizedsharerepurchaseprogramwasapproximately$3billion.Weexpectsuchrepurchasestocontinuefromtimetotimeintheopenmarketorinprivatetransactions,subjecttomarketconditions.

SHAREREpURCHASES(inbillions)

$1.4

$2.3 $2.3

200620052004

InvestingActivitiesNetcashused in investingactivitieswas$9.872billion for2006and consists principally of cash paid for acquisitions of $5.110billion(primarilyrelatedtotheAdelphiatransaction,SusquehannaCommunicationsacquisitionandtheacquisitionofouradditionalinterest in E! Entertainment Television), capital expenditures of$4.395billion,andinvestmentsof$2.812billion(primarilyrelatedtoour interest inSpectrumCoand theadditional funding relatedtothedissolutionofTKCCP).Thesecashoutflowswerepartiallyoffset by proceeds from sales, settlements and restructuring ofinvestmentsof$2.720billion(primarilyrelatedtoourdispositionofourownershipinterestinTWEandTWC).

RefertoNotes5,6and7toourconsolidatedfinancialstatementsfor adiscussionofour acquisitionsandother significant events,investments,andourintangibleassets,respectively.

Capital ExpendituresOur most significant recurring investing activity has been capitalexpenditures,andweexpect that thiswillcontinue in the future.ThefollowingchartillustratesthecapitalexpendituresweincurredinourCablesegmentfrom2004through2006:

CABlECApITAlExpENDITURES(inbillions)

$1.9$3.4

$2.5$3.4

$3.2$4.2

$0.9

$0.3 $0.3

$0.6 $0.6 $0.7

200620052004

NewserviceofferingsUpgradingofcablesystemsRecurringcapitalprojects

In 2006, approximately 75% of Cable capital expenditures werevariable and directly associated with continued and growingdemand for our existing and new products and services, whichleadstoincreasesinRGUs.Theamountsofcapitalexpendituresin our Programming segment and our other business activitieshave not been significant and have been relatively stable from2004through2006.Theamountsofourcapitalexpendituresfor2007andforsubsequentyearswilldependonnumerousfactors,includingacquisitions,competition,changesintechnologyandthetimingandrateofdeploymentofnewservices.

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Weusethenotionalamountsontheinstrumentstocalculatetheinteresttobepaidorreceived.Thenotionalamountsdonotrepre-senttheamountofourexposuretocreditloss.Theestimatedfairvalueapproximatesthepaymentsnecessarytosettletheoutstand-ingcontracts.WeestimateinterestratesonvariabledebtusingtheaverageimpliedforwardLondonInterbankOfferedRate(“LIBOR”)rates for the year of maturity based on the yield curve in effecton December 31, 2006, plus the applicable margin in effect onDecember31,2006.WeestimatethefloatingratesonourswapsusingtheaverageimpliedforwardLIBORfortheyearofmaturitybasedontheyieldcurveineffectonDecember31,2006.

Asamatterofpractice,wetypicallydonotstructureourfinancialcontractstoincludecredit-ratings-basedtriggersthatcouldaffectourliquidity.Intheordinarycourseofbusiness,someofourswapscouldbesubject to terminationprovisions ifwedonotmaintaininvestmentgradecredit ratings.AsofDecember31,2006, and2005, the estimated fair value of those swaps was a liability of$60millionand$69million, respectively.Theamount tobepaidorreceivedupontermination,ifany,wouldbebaseduponthefairvalueofthoseoutstandingcontractsatthattime.

EquitypriceRiskManagement

Weareexposedtothemarketriskofchangesintheequitypricesofourinvestmentsinmarketablesecurities.Weenterintovariousderivativetransactionspursuanttoourpoliciestomanagethevola-tilityrelatingtotheseexposures.

Through market value and sensitivity analyses, we monitor ourequity price risk exposures to ensure that the instruments arematchedwiththeunderlyingassetsor liabilities,reduceourrisksrelatingtoequitypricesandmaintainahighcorrelationtotheriskinherentinthehedgeditem.

Tolimitourexposuretoandbenefitsfrompricefluctuationsinthecommonstockofsomeofourinvestments,weuseequityderiva-tive financial instruments. These derivative financial instrumentsinclude equity collar agreements, prepaid forward sales agree-ments and indexed or exchangeable debt instruments and areaccountedforatfairvalue.

ThetablesetforthbelowsummarizesthefairvaluesandcontracttermsoffinancialinstrumentssubjecttointerestrateriskmaintainedbyusasofDecember31,2006:

FairValue(inmillions) 2007 2008 2009 2010 2011 Thereafter Total 12/31/06

DebtFixed-Rate $908 $1,474 $ 990 $1,109 $1,741 $20,982 $27,204 $28,923 AverageInterestRate 8.3% 7.3% 7.5% 5.7% 6.4% 7.2% 7.2%Variable-Rate $ 75 $ 194 $1,259 $ 211 $ 26 $ 6 $ 1,771 $ 1,771 AverageInterestRate 5.8% 5.5% 5.3% 5.1% 5.9% 6.8% 5.3%InterestRateInstruments(a)

FixedtoVariableSwaps $ — $ 600 $ 750 $ 200 $ 750 $ 900 $ 3,200 $ (103) AveragePayRate —% 7.2% 7.0% 6.1% 6.1% 5.4% 6.3% AverageReceiveRate —% 6.2% 6.9% 5.9% 5.5% 5.3% 5.9%

(a)WedidnothaveanyvariabletofixedswapsasofDecember31,2006.

InterestRateRiskManagement

Wemaintainamixoffixedandvariable-ratedebt.Approximately94%ofourtotaldebtof$28.975billion isatfixedrateswiththeremainingatvariablerates.Weareexposedtothemarketriskofadversechangesininterestrates.Inordertomanagethecostandvolatility relating to the interestcostofouroutstandingdebt,weenterintovariousinterestrateriskmanagementderivativetransac-tionspursuanttoourpolicies.

Wemonitorourinterestrateriskexposuresusingtechniquesthatincludemarketvalueandsensitivityanalyses.Wedonotholdorissueanyderivativefinancialinstrumentsforspeculativepurposesandwearenotapartytoanyleveragedderivativeinstruments.

Wemanagethecreditrisksassociatedwithourderivativefinancialinstruments through theevaluationandmonitoringof thecredit-worthinessofthecounterparties.Althoughwemaybeexposedtolossesintheeventofnonperformancebythecounterparties,wedonotexpectsuchlosses,ifany,tobesignificant.

Our interestratederivativefinancial instruments,whichcanincludeswaps,ratelocks,capsandcollars,representanintegralpartofourinterestrateriskmanagementprogram.Our interestratederivativefinancial instrumentsreducedtheportionofourtotaldebtatfixed-ratesfrom94%to83%asofDecember31,2006.Theeffectofourinterest ratederivative financial instruments increasedour interestexpensebyapproximately$39million in2006,anddecreasedourinterestexpensebyapproximately$16millionand$66millionin2005and2004, respectively. Interest rate riskmanagement instrumentsmayhaveasignificanteffectonourinterestexpenseinthefuture.


Exceptasdescribedin“InvestmentIncome(Loss),Net”(seeabove),thechangesinthefairvalueofourinvestmentsthatweaccountedforastradingsecuritiesweresubstantiallyoffsetbythechangesinthefairvaluesoftheequityderivativefinancialinstruments.

Refer to Note 2 to our consolidated financial statements for adiscussionofouraccountingpoliciesforderivativefinancialinstru-ments and to Note 6 and Note 8 to our consolidated financialstatementsfordiscussionsofourderivativefinancialinstruments.

Off-BalanceSheetArrangements

We do not have any significant off-balance sheet arrangementsthatarereasonablylikelytohaveacurrentorfutureeffectonourfinancialcondition,resultsofoperations,liquidity,capitalexpendi-turesorcapitalresources.

CriticalAccountingJudgmentsandEstimates

Thepreparationof our financial statements requires us tomakeestimatesthataffectthereportedamountsofassets,liabilities,rev-enuesandexpenses,andrelateddisclosureofcontingentassetsand contingent liabilities. We base our judgments on historicalexperienceandonvariousotherassumptionsthatwebelievearereasonableunderthecircumstances,theresultsofwhichformthebasisformakingestimatesaboutthecarryingvaluesofassetsandliabilitiesthatarenotreadilyapparent fromothersources.Actualresultsmaydifferfromtheseestimatesunderdifferentassumptionsorconditions.

Webelieveour judgmentsandrelatedestimatesassociatedwiththevaluationandimpairmenttestingofourcablefranchiserightsandtheaccountingforincometaxesandlegalcontingenciesarecriticalinthepreparationofourfinancialstatements.Managementhas discussed the development and selection of these criticalaccountingjudgmentsandestimateswiththeAuditCommitteeofourBoardofDirectors,andtheAuditCommitteehasreviewedourdisclosuresrelatingtothempresentedbelow.

Refer to Note 2 to our consolidated financial statements for adiscussion of our accounting policies with respect to these andotheritems.

ValuationandImpairmentTestingofCableFranchiseRightsOur largestasset,ourcable franchise rights, results fromagree-mentswehavewithstateandlocalgovernmentsthatallowustoconstruct and operate a cable business within a specified geo-graphicarea.Thevalueofafranchiseisderivedfromtheeconomic

ContractualObligations

OurunconditionalcontractualobligationsasofDecember31,2006,whichconsistprimarilyofourdebtobligationsandtheiramountsinfutureperiods,aresummarizedinthefollowingtable:

PaymentsDuebyPeriod

Years Years More(inmillions) Total Year1 2–3 4–5 than5

Debtobligations(a) $28,909 $ 962 $3,900 $3,079 $20,968Capitalleaseobligations 66 21 17 8 20Operatingleaseobligations 1,614 292 491 253 578Purchaseobligations(b) 12,068 3,809 3,056 2,150 3,053Otherlong-termliabilitiesreflectedonthebalancesheet: Acquisition-relatedobligations(c) 364 271 75 11 7 Otherlong-termobligations(d) 4,361 283 449 207 3,422

Total $47,382 $5,638 $7,989 $5,707 $28,048

RefertoNote8(long-termdebt)andNote13(commitments)toourconsolidatedfinancialstatements.

(a)Excludesinterestpayments.

(b)Purchaseobligationsconsistofagreementstopurchasegoodsandservicesthatarelegallybindingonusandspecifyallsignificantterms,includingfixedorminimumquantitiestobepurchasedandpriceprovisions.Ourpurchaseobligationsprimarily relate toourCable segment, includingcontractswithprogrammingnetworks, customerpremiseequipmentmanufacturers,communicationvendors,othercableoperatorsforwhichweprovideadvertisingsalesrepresentation,andothercontractsenteredintointhenormalcourseofbusiness.WealsohavepurchaseobligationsthroughComcastSpectacorfortheplayersandcoachesofourprofessionalsportsteams.Wedidnotincludecontractswithimmaterialfuturecommitments.

(c)Acquisition-relatedobligationsconsistprimarilyofcostsrelatedtoterminatedemployees,costsrelatingtoexitingcontractualobligations,andotherassumedcontractualobligationsoftheacquiredentity.

(d)Other long-term obligations consist primarily of our prepaid forward sales transactions of equity securities wehold, subsidiary preferred shares, deferred compensationobligations,pension,postretirementandpostemploymentbenefitobligations,andprogrammingrightspayableunderlicenseagreements.


benefitswereceivefromtherighttosolicitnewsubscribersandtomarketnewservicessuchasadditionaldigitalcableservices,high-speedInternetandphoneservicesinaparticularservicearea.Theamountswerecordforcablefranchiserightsareprimarilytheresultof cable systemacquisitions.Typicallywhenweacquire acablesystem, themost significant assetwe record is the valueof thefranchiseintangible.Oftenthesecablesystemacquisitionsincludemultiple franchiseareas.Wecurrentlyserveapproximately6,000franchiseareasintheUnitedStates.

Wehaveconcludedthatourcablefranchiserightshaveanindefi-nite useful life since there are no legal, regulatory, contractual,competitive,economicorotherfactorswhichlimittheperiodoverwhich theserightswillcontribute toourcash flows.Accordingly,wedonotamortizeourcablefranchiserightsbutassessthecarry-ingvalueofourcablefranchiserightsannually,ormorefrequentlywhenever events or changes in circumstances indicate that thecarryingamountmayexceeditsfairvalue(the“impairmenttest”)inaccordancewithSFASNo.142,“GoodwillandOtherIntangibleAssets.”

Ifwedeterminethevalueofourcablefranchiserightsislessthanthecarryingamount,werecognizean impairmentchargeforthedifferencebetweentheestimatedfairvalueandthecarryingvalueoftheassets.Forthepurposeofourimpairmenttesting,wehavegroupedtherecordedvaluesofourvariouscablefranchiserightsintogeographicregions.Weevaluatethesegroupsperiodicallytoensure impairment testing is performed at an appropriate level.Weestimate the fair valueofour cable franchise rightsprimarilybasedonadiscountedcashflowanalysisthatinvolvessignificantjudgmentindevelopingindividualassumptionsforeachofthegeo-graphicregions,includinglong-termgrowthrateanddiscountrateassumptions. We have not recorded any significant impairmentchargesasaresultofourimpairmenttesting.

We could record impairment charges in the future if there arechanges inmarket conditions,operating results, federal or stateregulations,orgroupingsof thegeographic regions inwhichwetestforimpairment,inanysuchcasethatpreventusfromrecover-ing thecarryingvalueof thesecable franchise rights.Atour lastimpairment test date, the amounts by which the estimated fairvalueofourcablefranchiserightsexceededthecarryingvalueforourgeographicregionsrangedfromzerotoinexcessof$2.0bil-lion.A10%declineintheestimatedfairvalueofthecablefranchiserights foreachof these regionswould result inan impairment inthreeoftheseregionsandanimpairmentchargeofapproximately$540million.

IncomeTaxesOur provision for income taxes is based on our current periodincome, changes in deferred income tax assets and liabilities,income tax rates and tax planning opportunities available in thejurisdictions inwhichweoperate.Fromtimetotime,weengage

in transactions in which the tax consequences may be subjectto uncertainty. Examples of such transactions include businessacquisitions and disposals, including like-kind exchanges ofcable systems, issues related to consideration paid or receivedin connection with acquisitions, and certain financing transac-tions.Significantjudgmentisrequiredinassessingandestimatingthetaxconsequencesofthesetransactions.Weprepareandfiletax returns based on our interpretation of tax laws and regula-tions, and we record estimates based on these judgments andinterpretations.

In thenormalcourseofbusiness,our tax returnsare subject toexaminationbyvarioustaxingauthorities.Suchexaminationsmayresultinfuturetaxandinterestassessmentsbythesetaxingauthor-ities. We adjust our estimates periodically because of ongoingexaminationsbyandsettlementswiththevarioustaxingauthori-ties, aswell as changes in tax laws, regulations andprecedent.Theeffectsonour financial statementsof income taxuncertain-tiesthatariseinconnectionwithbusinesscombinationsandthoseassociated with entities acquired in business combinations arediscussedinNote2toourconsolidatedfinancialstatements.Theconsolidatedtaxprovisionofanygivenyearincludesadjustmentsto prior year income tax accruals that are considered appropri-ateandanyrelatedestimatedinterest.Webelievethatadequateaccrualshavebeenmadeforincometaxes.Differencesbetweentheestimatedandactualamountsdetermineduponultimatereso-lution,individuallyorintheaggregate,arenotexpectedtohaveamaterialadverseeffectonourconsolidatedfinancialposition,butcouldpossiblybematerialtoourconsolidatedresultsofoperationsorcashflowofanyoneperiod.

legalContingenciesWe are subject to legal, regulatory and other proceedings andclaims that arise in the ordinary course of our business and, incertaincases,thosethatweassumefromanacquiredentityinabusinesscombination.We recordanestimated liability for thoseproceedingsandclaimsarisingintheordinarycourseofbusinessbasedupon theprobableand reasonablyestimablecriteriacon-tainedinSFASNo.5,“AccountingforContingencies.”Forthoselitigation contingencies assumed in a business combination, werecordaliabilitybasedonestimatedfairvaluewhenwecandeter-minesuchfairvalue.Wereviewoutstandingclaimswithinternalaswellasexternalcounseltoassesstheprobabilityandtheestimatesofloss.Wereassesstheriskoflossasnewinformationbecomesavailable,andweadjustliabilitiesasappropriate.Theactualcostofresolvingaclaimmaybesubstantiallydifferentfromtheamountof the liability recorded. Differences between the estimated andactual amounts determined upon ultimate resolution, individuallyorintheaggregate,arenotexpectedtohaveamaterialadverseeffectonourconsolidatedfinancialposition,butcouldpossiblybematerialtoourconsolidatedresultsofoperationsorcashflowofanyoneperiod.


Management’sReportonFinancialStatementsOurmanagement isresponsibleforthepreparation, integrityandfairpresentationof informationinourconsolidatedfinancialstate-ments, including estimates and judgments. The consolidated financial statements presented in this report have been prepared inaccordancewithaccountingprinciplesgenerallyacceptedintheUnitedStates.Ourmanagementbelievestheconsolidatedfinancialstatementsandotherfinancialinformationincludedinthisreportfairlypresent,inallmaterialrespects,ourfinancialcondition,resultsofoperationsandcashflowsasofandfortheperiodspresentedinthisreport.TheconsolidatedfinancialstatementshavebeenauditedbyDeloitte&ToucheLLP,anindependentregisteredpublicaccountingfirm,asstatedintheirreport,whichisincludedherein.

Management’sReportonInternalControlOverFinancialReportingOurmanagementisresponsibleforestablishingandmaintaininganadequatesystemofinternalcontroloverfinancialreporting.Oursystemofinternalcontroloverfinancialreportingisdesignedtoprovidereasonableassuranceregardingthereliabilityoffinancialreport-ingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithaccountingprinciplesgenerallyacceptedintheUnitedStates.

Ourinternalcontroloverfinancialreportingincludesthosepoliciesandproceduresthat:

• Pertain to themaintenanceof records that, in reasonabledetail,accuratelyand fairly reflectour transactionsanddispositionsofourassets.

• ProvidereasonableassurancethatourtransactionsarerecordedasnecessarytopermitpreparationofourfinancialstatementsinaccordancewithaccountingprinciplesgenerallyacceptedintheUnitedStates,andthatourreceiptsandexpendituresarebeingmadeonlyinaccordancewithauthorizationsofourmanagementandourdirectors.

• Providereasonableassuranceregardingpreventionortimelydetectionofunauthorizedacquisition,useordispositionofourassetsthatcouldhaveamaterialeffectonthefinancialstatements.

Becauseof its inherent limitations,asystemof internalcontrolover financial reportingcanprovideonly reasonableassuranceandmaynotpreventordetectmisstatements.Further,becauseofchangesinconditions,effectivenessofinternalcontrolsoverfinancialreportingmayvaryovertime.Oursystemcontainsself-monitoringmechanisms,andactionsaretakentocorrectdeficienciesastheyareidentified.

Ourmanagementconductedanevaluationoftheeffectivenessofthesystemofinternalcontroloverfinancialreportingbasedontheframeworkin Internal Control — Integrated FrameworkissuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCom-mission.Basedonthisevaluation,ourmanagementconcludedthatoursystemofinternalcontroloverfinancialreportingwaseffectiveasofDecember31,2006.Ourmanagement’sassessmentoftheeffectivenessofourinternalcontroloverfinancialreportinghasbeenauditedbyDeloitte&ToucheLLP,anindependentregisteredpublicaccountingfirm,asstatedintheirreport,whichisincludedherein.

AuditCommitteeOversightTheAuditCommitteeoftheBoardofDirectors,whichiscomprisedsolelyofindependentdirectors,hasoversightresponsibilityforourfinancialreportingprocessandtheauditsofourconsolidatedfinancialstatementsandinternalcontroloverfinancialreporting.TheAuditCommitteemeetsregularlywithmanagementandwithourinternalauditorsandindependentregisteredpublicaccountingfirm(collec-tively,the“auditors”)toreviewmattersrelatedtothequalityandintegrityofourfinancialreporting,internalcontroloverfinancialreporting(includingcompliancemattersrelatedtoourCodeofEthicsandBusinessConduct),andthenature,extent,andresultsofinternalandexternalaudits.OurauditorshavefullandfreeaccessandreportdirectlytotheAuditCommittee.TheAuditCommitteerecommended,andtheBoardofDirectorsapproved,thattheauditedconsolidatedfinancialstatementsbeincludedinthisAnnualReport.

Brianl.RobertsChairmanandCEO

JohnR.AlchinExecutiveVicePresident,Co-ChiefFinancialOfficerandTreasurer

lawrenceS.SmithExecutiveVicePresidentandCo-ChiefFinancialOfficer

lawrenceJ.SalvaSeniorVicePresident,ChiefAccountingOfficerandController

ReportofManagement

Comcast2006AnnualReport 38

BoardofDirectorsandStockholdersComcastCorporationphiladelphia,pennsylvania

We have audited the accompanying consolidated balance sheet of Comcast Corporation and subsidiaries (the “Company”) as ofDecember31,2006and2005,andtherelatedconsolidatedstatementsofoperations,cashflowsandstockholders’equityforeachofthethreeyearsintheperiodendedDecember31,2006.Wealsohaveauditedmanagement’sassessment,includedunderthecaption Management’s Report on Internal Control Over Financial Reporting,thattheCompanymaintainedeffectiveinternalcontroloverfinancialreportingasofDecember31,2006,basedoncriteriaestablishedin Internal Control — Integrated FrameworkissuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission.TheCompany’smanagementisresponsibleforthesefinancialstatements,formaintainingeffectiveinternalcontroloverfinancialreporting,andforitsassessmentoftheeffectivenessofinternalcontroloverfinan-cialreporting.Ourresponsibilityistoexpressanopiniononthesefinancialstatements,anopiniononmanagement’sassessment,andanopinionontheeffectivenessoftheCompany’sinternalcontroloverfinancialreportingbasedonouraudits.

WeconductedourauditsinaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates).Thosestandardsrequirethatweplanandperformtheauditstoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreeofmaterialmisstatementandwhethereffectiveinternalcontroloverfinancialreportingwasmaintainedinallmaterialrespects.Ourauditsofthefinancialstatementsincludedexamining,onatestbasis,evidencesupportingtheamountsanddisclosuresinthefinancialstate-ments,assessingtheaccountingprinciplesusedandsignificantestimatesmadebymanagement,andevaluatingtheoverallfinancialstatementpresentation.Ourauditofinternalcontroloverfinancialreportingincludedobtaininganunderstandingofinternalcontroloverfinancial reporting,evaluatingmanagement’sassessment, testingandevaluating thedesignandoperatingeffectivenessof internalcontrol,andperformingsuchotherproceduresasweconsiderednecessaryinthecircumstances.Webelievethatourauditsprovideareasonablebasisforouropinions.

Acompany’s internalcontroloverfinancialreportingisaprocessdesignedby,orunderthesupervisionof,thecompany’sprincipalexecutiveandprincipalfinancialofficers,orpersonsperformingsimilarfunctions,andeffectedbythecompany’sboardofdirectors,management,andotherpersonneltoprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccountingprinciples.Acompany’sinternalcontroloverfinancialreportingincludesthosepoliciesandproceduresthat(1)pertaintothemaintenanceofrecordsthat,inreasonabledetail,accuratelyand fairly reflect the transactionsanddispositionsof theassetsof thecompany; (2)provide reasonableassurance thattransactionsarerecordedasnecessarytopermitpreparationoffinancialstatementsinaccordancewithgenerallyacceptedaccountingprinciplesandthatreceiptsandexpendituresofthecompanyarebeingmadeonlyinaccordancewithauthorizationsofmanagementanddirectorsofthecompany;and(3)providereasonableassuranceregardingpreventionortimelydetectionofunauthorizedacquisi-tion,use,ordispositionofthecompany’sassetsthatcouldhaveamaterialeffectonthefinancialstatements.

Becauseofthe inherent limitationsof internalcontroloverfinancialreporting, includingthepossibilityofcollusionor improperman-agementoverrideofcontrols,materialmisstatementsduetoerrororfraudmaynotbepreventedordetectedonatimelybasis.Also,projectionsofanyevaluationoftheeffectivenessoftheinternalcontroloverfinancialreportingtofutureperiodsaresubjecttotheriskthatthecontrolsmaybecomeinadequatebecauseofchanges inconditions,orthatthedegreeofcompliancewiththepoliciesorproceduresmaydeteriorate.

Inouropinion,theconsolidatedfinancialstatementsreferredtoabovepresentfairly,inallmaterialrespects,thefinancialpositionofComcastCorporationandsubsidiariesasofDecember31,2006and2005,andtheresultsoftheiroperationsandtheircashflowsforeachofthethreeyearsintheperiodendedDecember31,2006, inconformitywithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica.Also,inouropinion,management’sassessmentthattheCompanymaintainedeffectiveinternalcontroloverfinancialreportingasofDecember31,2006,isfairlystated,inallmaterialrespects,basedonthecriteriaestablishedin Internal Control — Integrated FrameworkissuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission.Furthermore,inouropinion,theCompanymaintained,inallmaterialrespects,effectiveinternalcontroloverfinancialreportingasofDecember31,2006,basedonthecriteriaestablishedin Internal Control — Integrated FrameworkissuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission.

AsdiscussedinNote10totheconsolidatedfinancialstatements,theCompanyadoptedStatementofFinancialAccountingStandardsNo.123R,“ShareBasedPayments,”effectiveJanuary1,2006.

Deloitte&TouchellpPhiladelphia,PennsylvaniaFebruary23,2007

ReportofIndependentRegisteredPublicAccountingFirm


December31(inmillions,exceptsharedata) 2006 2005

AssetsCurrentAssets Cashandcashequivalents $ 1,239 $ 947 Investments 1,735 148 Accountsreceivable,lessallowancefordoubtfulaccountsof$157and$132 1,450 1,008 Othercurrentassets 778 685 Currentassetsofdiscontinuedoperations — 60

Totalcurrentassets 5,202 2,848

Investments 8,847 12,675Propertyandequipment,netofaccumulateddepreciationof$15,506and$12,079 21,248 17,704Franchiserights 55,927 48,804Goodwill 13,768 13,498Otherintangibleassets,netofaccumulatedamortizationof$5,543and$4,635 4,881 3,118Othernoncurrentassets,net 532 635Noncurrentassetsofdiscontinuedoperations,net — 4,118

$110,405 $103,400

liabilitiesandStockholders’EquityCurrentLiabilities Accountspayableandaccruedexpensesrelatedtotradecreditors $ 2,862 $ 2,239 Accruedsalariesandwages 453 360 Othercurrentliabilities 2,579 2,122 Deferredincometaxes 563 2 Currentportionoflong-termdebt 983 1,689 Currentliabilitiesofdiscontinuedoperations — 112

Totalcurrentliabilities 7,440 6,524

Long-termdebt,lesscurrentportion 27,992 21,682Deferredincometaxes 27,089 27,370Othernoncurrentliabilities 6,476 6,920Noncurrentliabilitiesofdiscontinuedoperations — 28Minorityinterest 241 657Commitmentsandcontingencies(Note13)Stockholders’equity Preferredstock—authorized20,000,000shares;issued,zero — — ClassAcommonstock,$0.01parvalue—authorized,7,500,000,000shares; issued,2,425,818,710and2,410,511,727;outstanding,2,060,357,960,and2,045,050,977 24 24 ClassASpecialcommonstock,$0.01parvalue—authorized,7,500,000,000shares; issued1,120,659,771and1,224,368,823;outstanding,1,049,725,007and1,153,434,059 11 12 ClassBcommonstock,$0.01parvalue—authorized,75,000,000shares; issuedandoutstanding,9,444,375 — — Additionalcapital 42,401 42,989 Retainedearnings 6,214 4,825 Treasurystock,365,460,750ClassAcommonsharesand70,934,764ClassASpecialcommonshares (7,517) (7,517) Accumulatedothercomprehensiveincome(loss) 34 (114)

Totalstockholders’equity 41,167 40,219

$110,405 $103,400

Seenotestoconsolidatedfinancialstatements.

ConsolidatedBalanceSheet


YearEndedDecember31(inmillions,exceptpersharedata) 2006 2005 2004

Revenues $24,966 $21,075 $19,221CostsandExpenses Operating(excludingdepreciation) 9,010 7,513 7,036 Selling,generalandadministrative 6,514 5,490 5,005 Depreciation 3,828 3,413 3,197 Amortization 995 1,138 1,154

20,347 17,554 16,392

Operatingincome 4,619 3,521 2,829OtherIncome(Expense) Interestexpense (2,064) (1,795) (1,874) Investmentincome(loss),net 990 89 472 Equityinnet(losses)incomeofaffiliates,net (124) (42) (81) Otherincome(expense) 173 (53) 397

(1,025) (1,801) (1,086)

Incomefromcontinuingoperationsbeforeincometaxesandminorityinterest 3,594 1,720 1,743Incometaxexpense (1,347) (873) (801)

Incomefromcontinuingoperationsbeforeminorityinterest 2,247 847 942Minorityinterest (12) (19) (14)

Incomefromcontinuingoperations 2,235 828 928Incomefromdiscontinuedoperations,netoftax 103 100 42Gainondiscontinuedoperations,netoftax 195 — —

NetIncome $ 2,533 $ 928 $ 970

Basicearningsforcommonstockholderspercommonshare Incomefromcontinuingoperations $ 0.71 $ 0.25 $ 0.28 Incomefromdiscontinuedoperations 0.03 0.03 0.01 Gainondiscontinuedoperations 0.06 — —

Netincome $ 0.80 $ 0.28 $ 0.29

Dilutedearningsforcommonstockholderspercommonshare Incomefromcontinuingoperations $ 0.70 $ 0.25 $ 0.28 Incomefromdiscontinuedoperations 0.03 0.03 0.01 Gainondiscontinuedoperations 0.06 — —

Netincome $ 0.79 $ 0.28 $ 0.29


ConsolidatedStatementofOperations



OperatingActivities Netincome $ 2,533 $ 928 $ 970 Adjustmentstoreconcilenetincometonetcashprovidedbyoperatingactivities: Depreciation 3,828 3,413 3,197 Amortization 995 1,138 1,154 Depreciationandamortizationofdiscontinuedoperations 139 253 272 Share-basedcompensationexpenses 190 56 33 Noncashinterestexpense,net 99 8 33 Equityinnetlosses(income)ofaffiliates,net 124 42 81 (Gains)lossesoninvestmentsandnoncashother(income)expense,net (979) (54) (703) Gainondiscontinuedoperations (736) — — Noncashcontributionexpense 33 10 25 Minorityinterest 12 19 14 Deferredincometaxes 674 183 531 Proceedsfromsalesoftradingsecurities — — 680 Changesinoperatingassetsandliabilities,netofeffectsofacquisitionsanddivestitures: Changeinaccountsreceivable,net (357) (97) (54) Changeinaccountspayableandaccruedexpensesrelatedtotradecreditors 560 (152) (163) Changeinotheroperatingassetsandliabilities (497) (912) 12

Netcashprovidedby(usedin)operatingactivities 6,618 4,835 6,082

FinancingActivities Proceedsfromborrowings 7,497 3,978 1,030 Retirementsandrepaymentsofdebt (2,039) (2,706) (2,323) Repurchasesofcommonstock (2,347) (2,313) (1,361) Issuancesofcommonstock 410 93 113 Other 25 15 25

Netcashprovidedby(usedin)financingactivities 3,546 (933) (2,516)

InvestingActivities Capitalexpenditures (4,395) (3,621) (3,660) Cashpaidforintangibleassets (306) (281) (615) Acquisitions,netofcashacquired (5,110) (199) (296) Proceedsfromsalesandrestructuringofinvestments 2,720 861 228 Purchasesofinvestments (2,812) (306) (156) Proceedsfromsales(purchases)ofshort-terminvestments,net 33 (86) (13) Proceedsfromsettlementofcontractofacquiredcompany — — 26 Other (2) (116) (26)

Netcashprovidedby(usedin)investingactivities (9,872) (3,748) (4,512)

Increase(decrease)incashandcashequivalents 292 154 (946)Cashandcashequivalents,beginningofyear 947 793 1,739

Cashandcashequivalents,endofyear $ 1,239 $ 947 $ 793


ConsolidatedStatementofCashFlows


AccumulatedOther ComprehensiveIncome(Loss)

Treasury Unrealized Cumulative Minimum CommonStockClass Additional Retained Stock Gains Translation Pension(inmillions) A Special B Capital Earnings AtCost (Losses) Adjustments Liability Total

Balance,January1,2004 $24 $14 $— $44,729 $4,552 $(7,517) $(112) $(28) $— $41,662Comprehensiveincome: Netincome 970 Reclassificationadjustmentsfor lossesincludedinnetincome, netofdeferredtaxes 1 Cumulativetranslationadjustments 20Totalcomprehensiveincome 991 Stockcompensationplans 130 (73) 57 Repurchaseandretirementof commonstock (1) (757) (558) (1,316) Employeestockpurchaseplan 28 28

Balance,December31,2004 24 13 — 44,130 4,891 (7,517) (111) (8) — 41,422Comprehensiveincome: Netincome 928 Unrealizedgainsonmarketable securities,netofdeferred taxesof$11 20 Reclassificationadjustmentsfor incomeincludedinnetincome, netofdeferredtaxesof$2 (4) Minimumpensionliability, netofdeferredtaxesof$7 (12) Cumulativetranslationadjustments 1Totalcomprehensiveincome 933 Stockcompensationplans 120 120 Repurchaseandretirementof commonstock (1) (1,294) (994) (2,289) Employeestockpurchaseplan 33 33

Balance,December31,2005 24 12 — 42,989 4,825 (7,517) (95) (7) (12) 40,219Comprehensiveincome: Netincome 2,533 Unrealizedgainsonmarketable securities,netofdeferred taxesof$69 128 Reclassificationadjustmentsfor incomeincludedinnetincome, netofdeferredtaxesof$6 11 Minimumpensionliability, netofdeferredtaxesof$4 7 Cumulativetranslationadjustments 2Totalcomprehensiveincome 2,681 Stockcompensationplans 604 (33) 571 Repurchaseandretirementof commonstock (1) (1,235) (1,111) (2,347) Employeestockpurchaseplan 43 43

Balance,December31,2006 $24 $11 $— $42,401 $6,214 $(7,517) $ 44 $ (5) $ (5) $41,167


ConsolidatedStatementofStockholders’Equity


Note1:OrganizationandBusiness

We are a Pennsylvania corporation and were incorporated inDecember2001.Throughourpredecessors,wehavedeveloped,managedandoperatedcablesystemssince1963.Weclassifyouroperationsintworeportablesegments:CableandProgramming.

OurCablesegmentisprincipallyinvolvedinthemanagementandoperationofcablesystemsintheUnitedStates.AsofDecember31,2006, we served approximately 23.4 million video subscribers,11millionhigh-speed Internetsubscribersand2.4millionphonesubscribers.OurregionalsportsandnewsnetworksareincludedinourCablesegmentbecausetheyderiveasubstantialportionoftheirrevenuesfromourcableoperations.

Our Programming segment operates our consolidated nationalprogrammingnetworks:E!,Style,TheGolfChannel,VERSUS(for-merlyknownasOLN),G4andAZNTelevision.

Our other businesses consist principally of Comcast Spectacor,which owns the Philadelphia Flyers, the Philadelphia 76ers andtwolargemultipurposearenasinPhiladelphia,andmanagesotherfacilitiesforsportingevents,concertsandotherspecialevents,andourcorporateactivities.Wealsoownequitymethodinvestmentsinotherprogrammingnetworks.

StockSplitOnJanuary31,2007,ourBoardofDirectorsapproveda three-for-twostocksplitintheformofa50%stockdividend(the“StockSplit”)payableonFebruary21,2007,toshareholdersofrecordonFebruary14,2007.Thestockdividendwasintheformofanaddi-tional0.5shareforeveryshareheldandwaspayableinsharesofClassAcommonstockontheexistingClassAcommonstockandpayableinsharesofClassASpecialcommonstockontheexist-ingClassASpecialcommonstockandClassBcommonstockwithcashbeingpaidinlieuoffractionalshares.Ourstockbegantradingex-dividendonFebruary22,2007.Thenumberofsharesoutstanding and related prices, per share amounts, share con-versionsandshare-baseddatahavebeenadjustedtoreflecttheStockSplitforallperiodspresented.

Note2:SummaryofSignificantAccountingpolicies

BasisofConsolidationTheaccompanyingconsolidatedfinancialstatementsinclude(i)allofouraccounts,(ii)allentitiesinwhichwehaveacontrollingvot-inginterest(“subsidiaries”)and(iii)variableinterestentities(“VIEs”)requiredtobeconsolidatedinaccordancewithgenerallyacceptedaccounting principles in the United States (“GAAP”). We haveeliminatedallsignificant intercompanyaccountsandtransactionsamongconsolidatedentities.

OurUseofEstimatesWeprepareourconsolidatedfinancialstatementsinconformitywithGAAP,whichrequiresustomakeestimatesandassumptionsthataffectthereportedamountsanddisclosures.Actualresultscoulddiffer from those estimates. Estimates are used when account-ing forvarious items,suchasallowances fordoubtfulaccounts,investments, derivative financial instruments, asset impairment,nonmonetary transactions, certain acquisition-related liabilities,programming-related liabilities, pensions and other postretire-mentbenefits,revenuerecognition,depreciationandamortization,incometaxesandlegalcontingencies.

FairValuesWehavedeterminedtheestimatedfairvalueamountspresentedintheseconsolidatedfinancialstatementsusingavailablemarketinformationandappropriatemethodologies.However,considerablejudgmentisrequiredininterpretingmarketdatatodeveloptheesti-matesoffairvalue.Theestimatespresentedintheseconsolidatedfinancialstatementsarenotnecessarilyindicativeoftheamountsthatwecouldrealizeinacurrentmarketexchange.Theuseofdif-ferentmarketassumptionsand/orestimationmethodologiesmayhave a material effect on the estimated fair value amounts. WebasedthesefairvalueestimatesonpertinentinformationavailabletousasofDecember31,2006and2005.

CashEquivalentsThecarryingamountsofourcashequivalentsapproximatetheirfairvalue.Ourcashequivalentsprincipallyconsistofcommercialpaper,moneymarketfunds,U.S.governmentobligationsandcertificatesofdepositwithmaturitiesoflessthanthreemonthswhenpurchased.

InvestmentsWereviewourinvestmentportfolioeachreportingperiodtodeter-minewhether adecline in themarket value is considered tobeother than temporary. Ifan investment isdeemed tohaveexpe-riencedanotherthantemporarydeclinebelowitscostbasis,wereduce the carrying amount of the investment to its fair marketvalue.Wechargetheimpairmenttoearningsandestablishanewcostbasisfortheinvestment.

Purchasesoforproceeds from thesaleof tradingsecuritiesareclassifiedascashflowsfromoperatingactivities,whilecashflowsfrom all other investment securities are classified as cash flowsfrominvestingactivities.

Weclassifyunrestrictedpublicly traded investmentsasavailable-for-sale(“AFS”)ortradingsecuritiesandrecordthematfairvalue.ForAFSsecurities,werecordunrealizedgainsorlossesresultingfromchangesinfairvaluebetweenmeasurementdatesasacom-ponent of other comprehensive income (loss), except when weconsiderdeclinesinvaluetobeotherthantemporary.Theseotherthantemporarydeclinesarerecognizedasacomponentofinvest-mentincome(loss),net.Fortradingsecurities,werecordunrealized

NotestoConsolidatedFinancialStatements

NotestoConsolidatedFinancialStatementsComcast2006AnnualReport 44

gainsorlossesresultingfromchangesinfairvaluebetweenmea-surementdatesasacomponentofinvestmentincome(loss),net.We recognize realized gains and losses associated with our fairvaluemethodinvestmentsusingthespecificidentificationmethod.

Weusetheequitymethodtoaccountforinvestmentsinwhichwehavetheabilitytoexercisesignificantinfluenceovertheinvestee’soperating and financial policies. Equity method investments arerecorded at original cost and adjusted to recognize our propor-tionateshareoftheinvestee’snetincomeorlossesafterthedateofinvestment,amortizationofbasisdifferences,additionalcontri-butions made and dividends received, and impairment chargesresulting fromadjustments to fair value.Wegenerally recordourshareof the investee’snet incomeor lossonequarter inarrearsduetothetimingofourreceiptofsuchinformation.

Ifaconsolidatedsubsidiaryorequitymethodinvesteeissuesaddi-tionalsecuritiesthatchangeourproportionateshareoftheentity,we recognize the change as a gain or loss in our consolidatedstatement of operations. In cases where gain realization is notassured,werecordthegaintoadditionalcapital.

Restrictedpubliclytradedinvestmentsandinvestmentsinprivatelyheld companies are stated at cost and adjusted for any knowndecreaseinvalue(seeNote6).

propertyandEquipmentPropertyandequipmentarestatedatcost.Wecapitalizeimprove-ments that extend asset lives and expense other repairs andmaintenancechargesasincurred.Forassetsthataresoldorretired,weremovetheapplicablecostandaccumulateddepreciationand,unlessthegainorlossondispositionispresentedseparately,werecognizeitasacomponentofdepreciationexpense.

We capitalize the costs associated with the construction of ourcabletransmissionanddistributionfacilitiesandnewserviceinstal-lations. Costs include all direct labor and materials, as well asvariousindirectcosts.

We recorddepreciationusing thestraight-linemethodoveresti-mated useful lives. Our significant components of property andequipmentareasfollows:

December31(inmillions) UsefulLife 2006 2005

Cabletransmissionand distributionfacilities 2–15years $ 31,870 $ 25,737Buildingsandbuilding improvements 5–40years 1,366 1,279Land — 163 148Other 3–10years 3,355 2,619

Propertyandequipment,atcost 36,754 29,783Less:accumulateddepreciation (15,506) (12,079)

Propertyandequipment,net $ 21,248 $ 17,704

IntangibleAssetsCablefranchiserightsrepresentthevalueattributedtoagreementswithlocalauthoritiesthatallowaccesstohomesincableserviceareasacquiredinconnectionwithbusinesscombinations.Wedonotamortizecablefranchiserightsbecausewehavedeterminedthat they have an indefinite life. We reassess this determinationperiodically for each franchise based on the factors included inStatementofFinancialAccountingStandardsNo.142,“GoodwillandOtherIntangibleAssets”(“SFASNo.142”).Costsweincurinnegotiatingandrenewingcablefranchiseagreementsareincludedinotherintangibleassetsandareprincipallyamortizedonastraight-linebasisoverthetermofthefranchiserenewalperiod.

Otherintangibleassetsconsistprincipallyoffranchise-relatedcus-tomerrelationshipsacquiredinbusinesscombinations,cableandsatellitetelevisiondistributionrights,cablefranchiserenewalcosts,contractual operating rights, computer software, programmingagreementsandrights,patentsandothertechnologyrights,andnoncompetitionagreements.Werecordthesecostsasassetsandamortizethemonastraight-linebasisoverthetermoftherelatedagreementsorestimatedusefullife.

OurProgrammingsubsidiariesenterintomulti-yearlicenseagree-mentswithvariouscableandsatellitedistributorsfordistributionoftheir respectiveprogramming (“distribution rights”).Wecapitalizedistributionrightsandamortizethemonastraight-linebasisoverthetermoftherelatedlicenseagreements.Weclassifytheamorti-zationofthesedistributionrightsasareductionofrevenueunlesstheProgrammingsubsidiaryreceives,orwillreceive,anidentifiablebenefitfromthecableorsatellitesystemdistributorseparatefromthefeepaidforthedistributionright,inwhichcasewerecognizethefairvalueoftheidentifiedbenefitasanoperatingexpenseintheperiodinwhichitisreceived.

Wecapitalizedirectdevelopmentcostsassociatedwithinternal-usesoftware, includingexternaldirectcostsofmaterialandservices,andpayrollcosts foremployeesdevoting timeto thesesoftwareprojects.Weincludethesecostswithinotherintangibleassetsandamortize themoveraperiodnot toexceed fiveyears,beginningwhentheasset issubstantiallyreadyforuse.Weexpensemain-tenanceand trainingcosts,aswell ascosts incurredduring thepreliminaryprojectstage,astheyareincurred.Wecapitalizeinitialoperatingsystemsoftwarecostsandamortizethemoverthelifeoftheassociatedhardware.

SeeNote7fortherangesofusefullivesofourintangibleassets.

AssetImpairments

Property and Equipment and Intangible Assets Subject to AmortizationWe periodically evaluate the recoverability and estimated livesof our property and equipment and intangible assets subject toamortizationinaccordancewithSFASNo.144,“Accountingforthe

45 Comcast2006AnnualReportNotestoConsolidatedFinancialStatements

ImpairmentorDisposalofLong-LivedAssets” (“SFASNo.144”).Our evaluations occur whenever events or changes in circum-stancesindicatethatthecarryingamountmaynotberecoverableortheusefullifehaschanged,andtheyincludeanalysesbasedonthecashflowsgeneratedbytheunderlyingassetsandprofitabilityinformation,includingestimatedfutureoperatingresults,trendsorotherdeterminantsoffairvalue.Ifthetotaloftheexpectedfutureundiscountedcash flows is less thanthecarryingamountof theasset,werecognizealossforthedifferencebetweenthefairvalueandthecarryingvalueoftheasset.Unlesspresentedseparately,thelossisincludedasacomponentofeitherdepreciationexpenseoramortizationexpense,asappropriate.

Franchise RightsWe evaluate the recoverability of our franchise rights annually,ormorefrequentlywhenevereventsorchangesincircumstancesindicate that theassetsmightbe impaired.Weestimate the fairvalueofourcablefranchiserightsutilizingvariousvaluationtech-niques, including discounted cash flow analysis, multiples ofoperatingincomebeforedepreciationandamortizationgeneratedbytheunderlyingassets,analysesofcurrentmarkettransactionsandprofitabilityinformation.Ifthevalueofourcablefranchiserightsdeterminedbytheseevaluationsislessthanthecarryingamount,werecognizeanimpairmentchargeforthedifferencebetweentheestimated fair value and the carrying value of the assets. Whenwe perform our impairment test, we group the recorded valuesofourvariouscablefranchiserights intogeographicregions.Weevaluatethesegroupsperiodicallytoensureimpairmenttestingisperformedatanappropriatelevel.Wehavenotrecordedanysig-nificantimpairmentchargesasaresultofourimpairmenttesting.

GoodwillGoodwillistheexcessoftheacquisitioncostofanacquiredentityoverthefairvalueoftheidentifiablenetassetsacquired.Weevalu-atetherecoverabilityofourgoodwillannually,ormore frequentlywhenever events or changes in circumstances indicate that theassetmightbeimpaired.Weperformtheimpairmentassessmentofourgoodwillonelevelbelowthebusinesssegmentlevel,exceptforourCablebusiness.InourCablebusiness,sincecomponentsonelevelbelowthesegmentlevelarenotseparatereportingunitsandhavesimilareconomiccharacteristics,weaggregatethecom-ponentsintoonereportingunitattheCablesegmentlevel.

AssetRetirementObligationsSFASNo.143,“AccountingforAssetRetirementObligations,”asinterpreted by Financial Accounting Standards Board (“FASB”)Interpretation (“FIN”) No. 47, “Accounting for Conditional AssetRetirement Obligations—an Interpretation of FASB StatementNo.143,”requiresthataliabilityberecognizedforanassetretire-mentobligationintheperiodinwhichitisincurredifareasonableestimateoffairvaluecanbemade.

Certainofourfranchiseandleaseagreementscontainprovisionsrequiring us to restore facilities or remove property in the event

thatthefranchiseorleaseagreementisnotrenewed.Weexpecttocontinuallyrenewourfranchiseagreements;however,aremotepossibility exists that such agreements could terminate unex-pectedly,whichcouldresult inus incurringsignificantexpenseincomplyingwith the restorationor removalprovisionsundersuchagreements. No such liabilities have been recorded in our con-solidated financial statements as the obligations related to therestorationandremovalprovisionscontainedinouragreementsoranydisposalobligationsrelatedtoourpropertiesarenotmaterialtoourconsolidatedfinancialstatementsorcannotbereasonablyestimated.

RevenueRecognitionCable revenues are principally derived from subscriber feesreceived for our video, high-speed Internet and phone services(“cable services”) and from advertising. We recognize revenuesfromcableservicesastheserviceisprovided.Wemanagecreditrisk by screening applicants through the use of credit bureaudata.Ifasubscriber’saccountisdelinquent,variousmeasuresareusedtocollectoutstandingamounts,includingterminationofthesubscriber’s cable service. We recognize advertising revenue atestimatedrealizablevalueswhentheadvertisingisaired.Installa-tionrevenuesobtainedfromtheconnectionofsubscriberstoourcablesystemsarelessthanrelateddirectsellingcosts.Therefore,suchrevenuesarerecognizedasconnectionsarecompleted.Rev-enuesearned fromother sourcesare recognizedwhen servicesare provided or events occur. Under the terms of our franchiseagreements,wearegenerallyrequiredtopaytothelocalfranchiseauthorityup to5%ofourgross revenuesearned fromprovidingcable serviceswithin the local franchisearea.Wenormallypassthesefeesthroughtoourcablesubscribersandclassifythefeesasacomponentofrevenues.

OurProgrammingbusinesses recognize revenue fromcableandsatellitedistributorsasprogrammingisprovided,generallypursu-anttomultiyeardistributionagreements.Fromtimetotimetheseagreements expirewhileprogrammingcontinues tobeprovidedto theoperatorbasedon interimarrangementswhile thepartiesnegotiatenewcontractualterms.Revenuerecognitionisgenerallylimitedtocurrentpaymentsbeingmadebytheoperator,typicallypursuanttothepriorcontractterms,untilanewcontractisnego-tiated, sometimes with effective dates that affect prior periods.Differencesbetweenactualamountsdetermineduponresolutionofnegotiationsandamountsrecordedduringtheseinterimarrange-mentsarerecordedintheperiodofresolution.

AdvertisingrevenueforourProgrammingbusinessesisrecognizedintheperiodinwhichcommercialannouncementsorprogramsareaired.Insomeinstances,ourProgrammingbusinessesguaranteeviewer ratings for theirprogramming.Revenue isdeferred to theextentofanestimatedshortfall intheratings.Suchshortfallsareprimarilysettledbyprovidingadditionaladvertisingtime,atwhichpointtherevenueisrecognized.


CableprogrammingExpensesCable programming expenses are the fees we pay to program-mingnetworkstolicensetheprogrammingwepackage,offeranddistribute toourcablesubscribers.Programming isacquired fordistributiontoourcablesubscribers,generallypursuanttomultiyeardistributionagreements,withratestypicallybasedonthenumberof subscribers that receive theprogramming. From time to timethesecontractsexpireandprogrammingcontinuestobeprovidedbased on interim arrangements while the parties negotiate newcontractualterms,sometimeswitheffectivedatesthataffectpriorperiods.Whilepaymentsaretypicallymadeunderthepriorcon-tract terms, theamountofourprogrammingexpenses recordedduringtheseinterimarrangementsisbasedonourestimatesoftheultimatecontractualtermsexpectedtobenegotiated.

Ourcablesubsidiarieshavereceivedormayreceiveincentivesfromprogrammingnetworksforthelicensingoftheirprogramming.Weclassifythedeferredportionofthesefeeswithinnoncurrentliabilitiesandrecognizethefeesasareductionofprogrammingexpenses(includedinoperatingexpenses)overthetermofthecontract.

Share-BasedCompensationPriortoJanuary1,2006,weaccountedforourshare-basedcom-pensationplans inaccordancewiththeprovisionsofAccountingPrinciplesBoard (“APB”)OpinionNo. 25, “Accounting forStockIssued to Employees” (“APB No. 25”), as permitted by SFASNo.123,“AccountingforStock-BasedCompensation”(“SFASNo.123”),andaccordinglydidnotrecognizecompensationexpenseforstockoptionswithanexercisepriceequaltoorgreaterthanthemarketpriceoftheunderlyingstockatthedateofgrant.

EffectiveJanuary1,2006,weadoptedSFASNo.123R, “Share-BasedPayment”(“SFASNo.123R”),usingtheModifiedProspectiveApproach.UndertheModifiedProspectiveApproach,theamountofcompensationcostrecognizedincludes:(i)compensationcostforallshare-basedpaymentsgrantedpriortobutnotyetvestedasofJanuary1,2006,basedonthegrantdatefairvalueestimatedinaccordancewith theprovisionsofSFASNo.123and (ii)com-pensationcostforallshare-basedpaymentsgrantedormodifiedsubsequenttoJanuary1,2006,basedontheestimatedfairvalueatthedateofgrantorsubsequentmodificationdateinaccordancewiththeprovisionsofSFASNo.123R.

SFAS No.123R also required us to change the classification, inourconsolidatedstatementofcashflows,ofanyincometaxben-efits realized upon the exercise of stock options or issuance ofrestrictedshareunitawardsinexcessofthatwhichisassociatedwiththeexpenserecognizedforfinancialreportingpurposes.Theseamountsarepresentedasafinancingcash inflowratherthanasareductionofincometaxespaidinourconsolidatedstatementofcashflows.SeeNote10forfurtherdetailsregardingtheadoptionofSFASNo.123R.

postretirementandpostemploymentBenefitsWechargetooperationstheestimatedcostsofretireebenefitsandbenefits for former or inactive employees, after employment butbeforeretirement,duringtheyearstheemployeesprovideservices(seeNote9).

IncomeTaxesWerecognizedeferredtaxassetsandliabilitiesfortemporarydif-ferencesbetween the financial reportingbasisand the taxbasisofourassetsand liabilitiesand theexpectedbenefitsofutilizingnetoperatinglosscarryforwards.Theimpactondeferredtaxesofchangesintaxratesandlaws,ifany,appliedtotheyearsduringwhichtemporarydifferencesareexpectedtobesettled,isreflectedintheconsolidatedfinancialstatementsintheperiodofenactment(seeNote11).

Weaccount for incometaxuncertainties thatarise inconnectionwithbusinesscombinationsandthosethatareassociatedwithenti-tiesacquiredinbusinesscombinationsinaccordancewithEmergingIssuesTaskForce(“EITF”)IssueNo.93-7,“UncertaintiesRelatedtoIncomeTaxesinaPurchaseBusinessCombination.”Deferredtaxassetsandliabilitiesarerecordedasofthedateofabusinesscom-binationandarebasedonourestimateof theultimate taxbasisthatwillbeacceptedbythevarioustaxingauthorities.Liabilitiesforcontingenciesassociatedwithpriortaxreturnsfiledbytheacquiredentityarerecordedbasedonourestimateoftheultimatesettlementthatwillbeacceptedby thevarioustaxingauthorities.Estimatedinterestexpenseontheseliabilitiessubsequenttotheacquisitionisreflectedinourconsolidatedincometaxprovision.Weadjustthesedeferred tax accounts and liabilitiesperiodically to reflect revisedestimatedtaxbasesandanyestimatedsettlementswiththevari-oustaxingauthorities.Theeffectoftheseadjustmentsisgenerallyapplied to goodwill except for post-acquisition interest expense,whichisrecognizedasanadjustmentofincometaxexpense.

DerivativeFinancialInstrumentsWeusederivativefinancialinstrumentsforanumberofpurposes.Wemanageourexposuretofluctuationsininterestratesbyenter-ing into instruments, which may include interest rate exchangeagreements(“swaps”),interestratelockagreements(“ratelocks”),interestratecapagreements(“caps”)andinterestratecollaragree-ments(“collars”).Wemanageourexposuretofluctuations inthevalue of some of our investments by entering into equity collaragreements (“equity collars”) and equity put option agreements(“equityputoptions”).Wearealsoapartytoequitywarrantagree-ments(“equitywarrants”).Wehaveissuedindexeddebtinstruments(“ExchangeableNotes”and“ZONES”)andhaveenteredintopre-paid forward sale agreements (“prepaid forward sales”) whosevalue,inpart, isderivedfromthemarketvalueofcertainpubliclytradedcommonstock.Wehavealsosoldcalloptionsonsomeofourinvestmentsinequitysecurities.Weuseequityhedgestoman-ageexposure tochanges inequitypricesassociatedwithstockappreciation rightsofacquiredcompanies.Theseequityhedgesarerecordedatfairvaluebasedonmarketquotes.


For derivative instruments designated and effective as fair valuehedges,suchasfixedtovariableswaps,changesinthefairvalueofthederivativeinstrumentaresubstantiallyoffsetintheconsolidatedstatementofoperationsbychangesinthefairvalueofthehedgeditem.Forderivativeinstrumentsdesignatedascashflowhedges,suchasvariabletofixedswapsandratelocks,theeffectiveportionofanyhedgeisreportedinothercomprehensiveincome(loss)untilit is recognized inearningsduring thesameperiod inwhich thehedgeditemaffectsearnings.Theineffectiveportionofallhedgesisrecognizedeachperiodincurrentearnings.Changesinthefairvalueofderivativeinstrumentsthatarenotdesignatedasahedgearerecordedeachperiodincurrentearnings.

When a derivative instrument designated as a fair value hedgeis terminated,sold,exercisedorhasexpired,anygainor loss isdeferredandrecognizedinearningsovertheremaininglifeofthehedgeditem.Whenahedgeditemissettledorsold,theadjust-ment inthecarryingamountofthehedgeditemisrecognizedinearnings.Whenhedgedvariable-ratedebtissettled,thepreviouslydeferredeffectiveportionofthehedgeiswrittenoffsimilartodebtextinguishmentcosts.

Equitywarrantsandequitycollarsareadjusted toestimated fairvalue on a current basis with the result included in investmentincome(loss),netinourconsolidatedstatementofoperations.

Derivative instruments embedded in other contracts, such asourExchangeableNotes,ZONESandprepaidforwardsales,areseparatedintotheirhostandderivativefinancialinstrumentcom-ponents.Thederivativecomponentisrecordedatitsestimatedfairvalueinourconsolidatedbalancesheet,andchangesinestimatedfairvaluearerecordedininvestmentincome(loss),netinourcon-solidatedstatementofoperations.

AllderivativetransactionsmustcomplywithourBoard-authorizedderivatives policy. We do not hold or issue any derivative finan-cialinstrumentsforspeculativeortradingpurposesandarenotapartytoleveragedderivativeinstruments(seeNote8).Wemanagethecreditrisksassociatedwithourderivativefinancialinstrumentsthrough theevaluationandmonitoringof thecreditworthinessofthecounterparties.Althoughwemaybeexposedtolossesintheeventofnonperformancebythecounterparties,wedonotexpectsuchlosses,ifany,tobesignificant.

Weperiodicallyexaminetheinstrumentsweusetohedgeexposuretointerestrateandequitypriceriskstoensurethattheinstrumentsarematchedwithunderlyingassetsor liabilities,reduceourrisksrelatingtointerestratesorequitypricesand,throughmarketvalueandsensitivityanalysis,maintainahighcorrelationtotheriskinher-entinthehedgeditem.Forthoseinstrumentsthatdonotmeettheabovecriteria,variationsintheirfairvaluearereflectedonacurrentbasisinourconsolidatedstatementofoperations.

SecuritieslendingTransactionsWe may enter into securities lending transactions in which werequiretheborrowertoprovidecashcollateralequaltothevalueoftheloanedsecurities,asadjustedforanychangesinthevalueoftheunderlyingloanedsecurities.Loanedsecuritiesforwhichwemaintaineffectivecontrolare included in investments inourcon-solidatedbalancesheet.

Note3:RecentAccountingpronouncements

SFASNo.155InFebruary2006,theFASBissuedSFASNo.155,“AccountingforCertain Hybrid Financial Instruments—an Amendment of FASBStatements No.133 and 140” (“SFAS No.155”). SFAS No.155allowsfinancial instrumentsthatcontainanembeddedderivativeandthatotherwisewouldrequirebifurcationtobeaccountedforasawholeonafairvaluebasis,attheholder’selection.SFASNo.155 also clarifies and amends certain other provisions of SFASNo.133andSFASNo.140.Thisstatementiseffectiveforallfinan-cial instrumentsacquiredor issuedinfiscalyearsbeginningafterSeptember15,2006.WedonotexpectSFASNo.155tohaveamaterialimpactonourconsolidatedfinancialstatements.

SFASNo.157InSeptember2006, theFASB issuedSFASNo.157, “FairValueMeasurements”(“SFASNo.157”).SFASNo.157definesfairvalue,establishing a framework for measuring fair value and expandsdisclosureaboutfairvaluemeasurements.SFASNo.157iseffec-tiveforfiscalyearsbeginningafterNovember15,2007.WedonotexpectSFASNo.157 tohaveamaterial impactonourconsoli-datedfinancialstatements.

SFASNo.158InSeptember2006,theFASBissuedSFASNo.158,“Employers’AccountingforDefinedBenefitPensionandOtherPostretirementPlans”(“SFASNo.158”).SFASNo.158requirescompaniestorec-ognizeintheirstatementoffinancialpositionanassetforaplan’soverfundedstatusoraliabilityforaplan’sunderfundedstatusandtomeasureaplan’sassetsand itsobligations thatdetermine itsfundedstatusasoftheendofthecompany’sfiscalyear.Addition-ally,SFASNo.158requirescompaniestorecognizechangesinthefundedstatusofadefinedbenefitpostretirementplanintheyearthatthechangesoccurandtoreporttheseinothercomprehen-siveincome(loss).TheapplicationofSFASNo.158didnothaveamaterialimpactonourconsolidatedfinancialstatements.

FASBInterpretationNo.48InJuly2006,theFASBissuedFIN48,“AccountingforUncertaintyin IncomeTaxes—an interpretationofFASBStatementNo.109”(“FIN48”).FIN48clarifiestherecognitionthresholdandmeasure-mentof a taxposition takenona tax return. FIN48 is effectivefor fiscal yearsbeginningafterDecember15,2006.FIN48alsorequires expanded disclosure with respect to the uncertainty in


incometaxes.WedonotexpectFIN48tohaveamaterialimpactonourconsolidatedfinancialstatements.

EITFIssueNo.06-1InJune2006, theEITF reachedaconsensusonEITF IssueNo.06-1,“AccountingforConsiderationGivenbyaServiceProvidertoManufacturersorResellersofSpecializedEquipmentNecessaryforanEnd-CustomertoReceiveServicefromtheServiceProvider”(“EITF06-1”).EITF06-1providesguidanceontheaccountingforconsiderationgivenbyavendortoacustomer.TheprovisionsofEITF06-1willbeeffectiveforusasofDecember31,2007.Wedonot expectEITF06-1 tohaveamaterial impactonour consoli-datedfinancialstatements.

EITFIssueNo.06-3In June 2006, the EITF reached a consensus on EITF IssueNo. 06-3, “How Taxes Collected from Customers and RemittedtoGovernmentalAuthoritiesShouldBePresented in the IncomeStatement(ThatIs,GrossversusNetPresentation)”(“EITF06-3”).EITF 06-3 provides that the presentation of taxes assessed bya governmental authority that is directly imposed on a revenue-producingtransactionbetweenasellerandacustomeroneitheragrossbasis (included inrevenuesandcosts)oronanetbasis(excluded from revenues) is an accounting policy decision thatshouldbedisclosed.TheprovisionsofEITF06-3willbeeffectiveforusasofJanuary1,2007.WedonotexpectEITF06-3tohaveamaterialimpactonourconsolidatedfinancialstatements.

SABNo.108In September 2006, the Securities Exchange Commission StaffissuedStaffAccountingBulletinNo.108,“ConsideringtheEffectsof Prior Year Misstatements when Quantifying Misstatements intheCurrentYearFinancialStatements”(“SABNo.108”).SABNo.108 requires the use of two alternative approaches in quantita-tivelyevaluatingmaterialityofmisstatements. If themisstatementasquantifiedundereitherapproachismaterialtothecurrentyear

financial statements, themisstatementmustbecorrected. If theeffect of correcting the prior year misstatements, if any, in thecurrent year income statement is material, the prior year finan-cialstatementsshouldbecorrected.Intheyearofadoption(fiscalyearsendingafterNovember15,2006,orcalendaryear2006forus),themisstatementsmaybecorrectedasanaccountingchangebyadjustingopening retainedearnings rather than including theadjustmentinthecurrentyearincomestatement.UponcompletingourevaluationoftherequirementsofSABNo.108,wedetermineditdidnotaffectourconsolidatedfinancialstatements.

Note4:EarningsperShare

Basic earnings for common stockholders per common share(“Basic EPS”) is computed by dividing net income for commonstockholdersbytheweighted-averagenumberofcommonsharesoutstandingduringtheperiod.

Ourpotentiallydilutivesecuritiesincludepotentialcommonsharesrelated to our stock options and restricted share units. Dilutedearnings for common stockholders per common share (“DilutedEPS”)considerstheimpactofpotentiallydilutivesecuritiesexceptin periods in which there is a loss because the inclusion of thepotentialcommonshareswouldhaveanantidilutiveeffect.DilutedEPSexcludes the impactofpotentialcommonshares related toour stock options in periods in which the option exercise priceisgreaterthantheaveragemarketpriceofourClassAcommonstockandourClassASpecialcommonstockduring theperiod(seeNote10).

Diluted EPS for 2006, 2005 and 2004 excludes approximately116million,126millionand154million, respectively,ofpotentialcommonshares related toourshare-basedcompensationplansbecausetheinclusionofthepotentialcommonshareswouldhaveanantidilutiveeffect.

ThefollowingtablereconcilesthenumeratoranddenominatorofthecomputationsofDilutedEPSfromcontinuingoperationsfortheyearspresented(adjustedtoreflecttheStockSplit):

2006 2005 2004

per Per PerYearEndedDecember31 Share Share Share(inmillions,exceptpersharedata) Income Shares Amount Income Shares Amount Income Shares Amount

BasicEPS $2,235 3,160 $0.71 $828 3,295 $0.25 $928 3,360 $0.28EffectofDilutiveSecuritiesAssumedexerciseorissuanceof sharesrelatingtostockplans 20 17 15

DilutedEPS $2,235 3,180 $0.70 $828 3,312 $0.25 $928 3,375 $0.28


Note5:AcquisitionsandOtherSignificantEvents

AdelphiaandTimeWarnerTransactionsInApril2005,weenteredintoanagreementwithAdelphiaCom-munications (“Adelphia”) in which we agreed to acquire certainassets and assume certain liabilities of Adelphia (the “AdelphiaAcquisition”).At thesametime,weandTimeWarnerCable Inc.andcertainofitsaffiliates(“TWC”)enteredintoseveralagreementsinwhichweagreedto(i)haveourinterestinTimeWarnerEntertain-mentCompany,L.P.(“TWE”)redeemed,(ii)haveourinterestinTWCredeemed(togetherwiththeTWEredemption,the“Redemptions”),and (iii) exchangecertain cable systemsacquired fromAdelphiaandcertainComcastcablesystemswithTWC(the“Exchanges”).OnJuly31,2006,thesetransactionswerecompleted.Wecollec-tivelyrefer totheAdelphiaAcquisition, theRedemptionsandtheExchangesasthe“AdelphiaandTimeWarnertransactions.”AlsoinApril2005,AdelphiaandTWCenteredintoanagreementfortheacquisitionofsubstantiallyalloftheremainingcablesystemassetsandtheassumptionofcertainoftheliabilitiesofAdelphia.

TheAdelphiaandTimeWarnertransactions,whicharedescribedinmoredetailbelow,resultedinanetincreaseof1.7millionvideosubscribers,anetcashpaymentbyusofapproximately$1.5bil-lion and the disposition of our ownership interests in TWE andTWCandtheassetsoftwocablesystempartnerships.

TheAdelphiaandTimeWarnertransactionsaddedcablesystemslocated in 16 states (California, Colorado, Connecticut, Florida,Georgia, Louisiana, Maryland, Massachusetts, Minnesota, Mis-sissippi,Oregon,Pennsylvania,Tennessee,Vermont,VirginiaandWestVirginia).Weexpectthatthelargersystemswillresultinecon-omiesofscale.

The Adelphia AcquisitionWepaidapproximately$3.6billion incash for theacquisitionofAdelphia’s interest in twocable systempartnershipsandcertainAdelphia cable systems and to satisfy certain related liabilities.Approximately$2.3billionof theamountpaidwasrelatedtotheacquisitionofAdelphia’sinterestinCentury—TCICaliforniaCom-munications,L.P.(“Century”)andParnassosCommunications,L.P.(“Parnassos”and togetherwithCentury, the “Partnerships”).Wehelda25%interest inCenturyanda33.33%interest inParnas-sos.OurpriorinterestsinthePartnershipswereaccountedforascostmethodinvestments.AfteracquiringAdelphia’sinterestsinthePartnerships,wetransferredthecablesystemsheldbythePart-nershipstoTWCintheExchanges,asdiscussedfurtherbelow.

InadditiontoacquiringAdelphia’sinterestinCenturyandParnas-sos,weacquiredcablesystemsfromAdelphiaforapproximately$600millionincashthatwecontinuetoownandoperate.

The RedemptionsOur4.7%interestinTWEwasredeemedinexchangefor100%oftheequityinterestsinasubsidiaryofTWEholdingcablesystems

withafairvalueofapproximately$600millionandapproximately$147million incash.Our17.9% interest inTWCwasredeemedinexchangefor100%ofthecapitalstockofasubsidiaryofTWCholdingcablesystemswithafairvalueofapproximately$2.7billionandapproximately$1.9billionincash.OurownershipinterestsinTWEandTWCwereaccountedforascostmethodinvestments.

Werecognizedagainofapproximately$535million,intheaggre-gate,ontheRedemptions,whichisincludedininvestmentincome(loss),net.

The ExchangesThe estimated fair value of the cable systems we transferred toandreceivedfromTWCwasapproximately$8.6billionand$8.5billion, respectively. TWC made net cash payments aggregatingapproximately$67milliontousforcertainpreliminaryadjustmentsrelatedtotheExchanges.

ThecablesystemswetransferredtoTWCincludedourpreviouslyownedcablesystemslocatedinLosAngeles,ClevelandandDal-las (“Comcast Exchange Systems”) and the cable systems heldbyCenturyandParnassos.TheoperatingresultsoftheComcastExchangeSystemsarereportedasdiscontinuedoperationsforallperiodsandarepresentedinaccordancewithSFASNo.144(see“DiscontinuedOperations”below).

AsaresultoftheExchanges,werecognizedagainonthesaleofdiscontinuedoperationsof$195million,netoftaxof$541millionandagainonthesaleoftheCenturyandParnassoscablesystemsof approximately $111 million that is included within investmentincome(loss),net.

ThecablesystemsthatTWCtransferredtous intheExchangesincludedcablesystemsthatTWCacquiredfromAdelphiainitsassetpurchasefromAdelphiaandTWC’sPhiladelphiacablesystem.

Purchase Price AllocationThe cable systems acquired in the Adelphia and Time Warnertransactions were accounted for in accordance with SFAS No.141, “Business Combinations” (“SFAS No. 141”). The results ofoperations for theacquiredcablesystemshavebeen included inour consolidated financial statements since the acquisition date(July31,2006)andarereportedinourCablesegment.AsaresultoftheredemptionofourinvestmentinTWCandtheexchangeofthe cable systemsheldbyCentury andParnassos,we reverseddeferredtaxliabilitiesofapproximately$760million,primarilyrelatedtotheexcessoftaxbasisoftheassetsacquiredoverthetaxbasisoftheassetsexchangedandreducedtheamountofgoodwillandothernoncurrentassetsthatwouldhaveotherwisebeenrecordedintheacquisition.Substantiallyallofthegoodwillrecordedisexpectedtobeamortizablefortaxpurposes.Thepurchasepriceallocationispreliminaryandsubjecttorefinementasvaluationsarefinalized.Theweighted-averageamortizationperiodofthefranchise-relatedcustomerrelationshipintangibleassetsacquiredwassevenyears.


The following represents thepurchaseprice allocation to assetsacquired and liabilities assumed, exclusive of the cable systemsheldbyCenturyandParnassosandtransferredtoTWC,asaresultoftheAdelphiaandTimeWarnertransactions:

(inmillions) 2006

Propertyandequipment $ 2,692Franchise-relatedcustomerrelationships 1,648Cablefranchiserights 6,842Goodwill 271Otherassets 111Totalliabilities (397)

Netassetsacquired $11,167

Discontinued OperationsAs discussed above, the operating results of the ComcastExchange Systems transferred to TWC are reported as discon-tinuedoperationsforallperiodsandarepresentedinaccordancewithSFASNo.144.ThefollowingrepresentstheoperatingresultsoftheComcastExchangeSystemsthroughtheclosingdateoftheExchanges(July31,2006):

(inmillions) 2006 2005 2004

Revenues $734 $1,180 $1,086Incomebeforeincometaxes 121 159 67Incometaxexpense (18) (59) (25)Netincome $103 $ 100 $ 42

Unaudited Pro Forma InformationThefollowingunauditedproformainformationhasbeenpresentedas if the Adelphia and Time Warner transactions occurred onJanuary 1, 2005. This information is based on historical resultsofoperations,adjusted forpurchasepriceallocationsand isnotnecessarilyindicativeofwhattheresultswouldhavebeenhadweoperatedtheentitiessinceJanuary1,2005.

YearEndedDecember31(inmillions) 2006 2005

Revenues $26,616 $23,672Incomefromcontinuingoperations 2,284 770Incomefromdiscontinuedoperations, netoftax 103 100Gainondiscontinuedoperations, netoftax 195 —NetIncome $ 2,582 $ 870Basicearningsforcommon stockholderspercommonshare $ 0.82 $ 0.26Dilutedearningsforcommon stockholderspercommonshare $ 0.81 $ 0.26

TexasandKansasCityCablepartnershipInJuly2006,weinitiatedthedissolutionofTexasandKansasCityCablePartners(“TKCCP”),our50%-50%cablesystempartnershipwithTWC.Oncethedissolutionwastriggered,thenon-triggeringpartyhadtherighttochooseandtakefullownershipofoneoftwopoolsofTKCCP’scablesystemstogetherwithanydebtallocatedtosuchassetpoolbythetriggeringpartner.OnepoolconsistedofcablesystemsservingHouston,Texas(“HoustonAssetPool”)andtheotherpoolconsistedofcablesystemsservingKansasCity,southandwestTexas,andNewMexico(“KansasCityAssetPool”).

InJuly2006,wenotifiedTWCofourelectiontodissolveTKCCPandtheallocationofallofitsdebt,whichtotaledapproximately$2bil-lionasofJuly1,2006,totheHoustonAssetPool.InAugust2006,TWCnotifiedusthat itselectedtheKansasCityAssetPoolandasa result,wewere to receive theHoustonAssetPool.The$2billionofdebtallocated to theHoustonAssetPoolwasrequiredtoberefinancedwithin60daysoftheAugust1,2006,selectiondate.Thisdebtincluded$600millionowedtoeachpartner(foranaggregateof$1.2billion).WerefinancedthisdebtinOctober2006(seeNote8).Tobeconsistentwithourmanagementreportingpre-sentation,theresultsofoperationsoftheHoustonAssetPoolhavebeen reported inourCablesegmentsinceAugust1,2006.TheoperatingresultsoftheHoustonAssetPoolareeliminatedinourconsolidatedfinancialstatements(seeNote14).

InJanuary2007,thedistributionofassetsbyTKCCPwascom-pletedandwereceivedtheHoustonAssetPool.WewillaccountforthedistributionofassetsbyTKCCPasasaleofour50%inter-est in the Kansas City Asset Pool in exchange for acquiring anadditional50%interest intheHoustonAssetPoolandexpecttorecordagainonthistransaction.

E!EntertainmentTelevisionIn November 2006, we acquired the 39.5% of E! EntertainmentTelevision(whichoperatestheE!andStyleprogrammingnetworks)thatwedidnotalreadyownforapproximately$1.2billion.Wehavehistoricallyconsolidated the resultsofoperationsofE!Entertain-ment Television. We allocated the purchase price to intangiblesandgoodwill.

SusquehannaIn April 2006, we acquired the cable systems of SusquehannaCableCo.anditssubsidiaries(“Susquehanna”)foratotalpurchaseprice of approximately $775 million. The Susquehanna systemsacquiredare locatedprimarily inPennsylvania,NewYork,Maine,andMississippi.

Prior to the acquisition, we held an approximate 30% equityownership interest inSusquehannathatweaccounted forasanequitymethodinvestment.OnMay1,2006,SusquehannaCableCo.redeemedtheapproximate70%equityownershipinterest inSusquehannaheldbySusquehannaMediaCo.,whichresultedinSusquehannabecoming100%ownedbyus.


The results of operations of the Susquehanna cable systemshavebeenincludedinourconsolidatedfinancialstatementssincetheacquisitiondateandare reported inourCablesegment.Weallocatedthepurchasepricetopropertyandequipment,franchise-related customer relationship intangibles, nonamortizing cablefranchiserightsandgoodwill.TheacquisitionoftheSusquehannacable systems was not significant to our consolidated financialstatementsfor2006.

MotorolaInMarch2005,weentered intotwo jointventureswithMotorolaunder which we are developing and licensing next-generationprogramming access security (known as “conditional access”)technology for cable systems and related products. One of theventures will license such products to equipment manufactur-ersandothercablecompanies.Theotherventurewillprovideusgreaterparticipationinthedesignanddevelopmentofconditionalaccess technology forour cable systems. Inaddition to fundingapproximately50%oftheannualcostrequirements,wehavepaid$20milliontoMotorolaandhavecommittedtopayupto$80mil-liontoMotorolaoverafour-yearperiodbasedontheachievementofcertainmilestones.Motorolacontributedlicensestoconditionalaccessandrelatedtechnologytotheventures.

ThesetwoventuresarebothconsideredVIEsandwehavecon-solidatedbothoftheseventuresasweareconsideredtheprimarybeneficiary. Accordingly, we have recorded approximately $190million in intangible assets, of which we recorded a charge ofapproximately$20millionrelatedtoin-processresearchanddevel-opmentin2005thathasbeenincludedinamortizationexpense.

libertyMediaExchangeAgreementInJuly2004,weexchangedapproximately120millionsharesofLiberty Media Corporation (“Liberty Media”) Series A commonstockthatweheld,valuedatapproximately$1.022billionbaseduponthepriceofLibertyMediacommonstockontheclosingdateofthetransactionwithLibertyMediafor100%ofthestockofLib-erty’s subsidiary,Encore ICCP, Inc.Encore’sassetsconsistedofcashofapproximately$547million,a10.4%interest inE!Enter-tainmentTelevisionand100%of InternationalChannelNetworks(which operates AZN Television). We also received all of LibertyMedia’srights,benefitsandobligationsundertheTCIMusiccon-tributionagreement,whichresultedintheresolutionofallpendinglitigationbetweenLibertyMediaandusregardingthecontributionagreement.Theexchangewasstructuredasatax-freetransaction.Weallocatedthevalueofthesharesexchangedinthetransactionamongcash,ouradditional investment inE!EntertainmentTele-vision, International Channel Networks and the resolution of thelitigationrelatedtothecontributionagreement.TheeffectsofouracquisitionoftheadditionalinterestinE!EntertainmentTelevisionandouracquisitionofInternationalChannelNetworkshavebeenreflectedinourconsolidatedstatementofoperationsfromthedateofthetransaction.

TechTVIn May 2004, we completed the acquisition of TechTV Inc. byacquiringalloutstandingcommonandpreferredstockofTechTVfrom Vulcan Programming Inc. for approximately $300 million incash. Substantially all of the purchase price has been recordedto intangibleassetsandisbeingamortizedoveraperiodof2to22years.OnMay28,2004,G4andTechTVbeganoperatingasonenetwork.TheeffectsofouracquisitionofTechTVhavebeenreflectedinourconsolidatedstatementofoperationsfromthedateofthetransaction.WehaveclassifiedG4aspartofourProgram-mingsegment.

GemstarInMarch2004,weenteredintoalong-term,non-exclusivepatentlicenseanddistributionagreementwithGemstar-TVGuide Inter-national(“Gemstar”)inexchangeforaone-timepaymentof$250million to Gemstar. If our total subscribers exceed a specifiedthreshold, we will be required to make additional one-time pay-mentstoGemstarforeachsubscriberinexcessofsuchthreshold.ThisagreementallowsustoutilizeGemstar’sintellectualpropertyandtechnologyandtheTVGuidebrandandcontentonourinter-activeprogramguides.Wehaveallocatedthe$250millionamountpaidbasedonthefairvalueofthecomponentsofthecontracttovariousintangibleandotherassets,whicharebeingamortizedoveraperiodof3to12years.Inaddition,weandGemstarformedanentitytodevelopandenhanceinteractiveprogrammingguides.

Note6:Investments

December31(inmillions) 2006 2005

Fairvaluemethod CablevisionSystemsCorporation $ 146 $ 120 DiscoveryHoldingCompany 161 152 EmbarqCorporation 69 — LibertyCapital 490 — LibertyGlobal 439 336 LibertyInteractive 539 — LibertyMedia — 787 SprintNextel 493 614 TimeWarner 1,052 994 Vodafone 61 54 Other 63 90

3,513 3,147Equitymethod,principallycable-related 5,394 2,823Costmethod,principallyAirTouchasof December31,2006,and TimeWarnerCableandAirTouchasof December31,2005 1,675 6,853

Totalinvestments 10,582 12,823Lesscurrentinvestments 1,735 148

Noncurrentinvestments $ 8,847 $12,675


FairValueMethodWeholdunrestrictedequity investments inpublicly tradedcom-paniesthatweaccount forasAFSortradingsecurities.Thenetunrealized pretax gains on investments accounted for as AFSsecuritiesasofDecember31,2006and2005,of$254millionand$56million, respectively,havebeenreported inourconsolidatedbalance sheet principally as a component of accumulatedothercomprehensiveincome(loss),netofrelateddeferredincometaxesof$89millionand$19million,respectively.

Thecost,fairvalueandunrealizedgainsandlossesrelatedtoourAFSsecuritiesareasfollows:

YearEndedDecember31(inmillions) 2006 2005

Cost $ 936 $1,104Unrealizedgains 254 62Unrealizedlosses — (6)

Fairvalue $1,190 $1,160

Proceeds from the sales of AFS securities for the years endedDecember31,2006,2005and2004were$209million,$490mil-lion and $67 million, respectively. Gross realized gains on thesesales for the years ended December 31, 2006, 2005 and 2004were$59million,$18millionand$10million,respectively.SalesofAFSsecuritiesfortheyearsendedDecember31,2006and2005consistedprincipallyofsalesofTimeWarnercommonstock.

AsofDecember31,2006and2005,approximately$1.879billionand$1.496billion,respectively,ofourfairvaluemethodsecuritiessupportourobligationsunderourexchangeablenotesorprepaidforwardcontracts.

Cablevision Systems CorporationInJune2005,we,throughamajority-ownedpartnership,enteredinto a prepaid forward sale that terminates in 2013 of approxi-mately 5.1 million shares of Cablevision Systems Corporation(“Cablevision”)ClassAcommonstockforcashproceedsof$114million.Wehavedesignatedthederivativecomponentofthepre-paidforwardasafairvaluehedgeoftherelatedCablevisionshares.Accordingly,themarktomarketadjustmenton2.9millionoftheCablevisionsharesheldbyusandclassifiedasAFSsecuritieswillberecordedtoinvestmentincome(loss),netoverthetermoftheprepaidforward.

Discovery Holding CompanyIn July 2005, we received 10 million shares of Discovery Hold-ingCompany(“Discovery”)SeriesAcommonstockinconnectionwiththespin-offbyLibertyMediaofDiscovery.AllofthesesharescollateralizeaportionofourLibertyMediaprepaid forwardsalesobligationthatterminatesin2014.

Embarq CorporationIn May 2006, we received approximately 1.3 million shares ofEmbarqCorporation(“Embarq”)commonstockinconnectionwiththespin-offbySprintNextelofEmbarq,itslocalcommunicationsbusiness.Inthespin-off,eachshareofSprintNextelCorporationcommonstockreceived0.05sharesofthenewEmbarqcommonstock. Of these shares, 100,000 shares collateralize our SprintNextelprepaidforwardsalesobligationthatterminatesin2011.

Liberty Capital and Liberty InteractiveInMay2006,wereceived25millionsharesofLibertyMediaInter-active(“LibertyInteractive”)SeriesAcommonstockand5millionsharesofLibertyMediaCapital (“LibertyCapital”)SeriesAcom-monstockinconnectionwithLibertyMedia’srestructuring.Intherestructuring,eachshareofLibertyMediaSeriesAcommonstockreceived0.25sharesofthenewLibertyInteractiveSeriesAcom-monstockand0.05sharesofLibertyCapitalSeriesAcommonstockinexchangeforeachshareofLibertyMediaSeriesAcom-monstock.AllofthesesharescollateralizeaportionofourLibertyMediaprepaidforwardsalesobligationthatterminatesin2014.

Liberty GlobalInJune2004,wereceivedapproximately11millionsharesofLibertyGlobal,Inc.(“LibertyGlobal”)SeriesAcommonstockinconnec-tionwith itsspin-offbyLibertyMedia. Inthespin-off,eachshareofLibertyMediaSeriesAcommonstockreceived0.05sharesofthenewLibertyGlobalSeriesAcommonstock.Approximately5millionofthesesharescollateralizeaportionofourLibertyMediaprepaidforwardsalesobligationthatterminatesin2014.

InDecember2004,wesold3millionsharesofLibertyGlobalSeriesAcommonstocktoLibertyMediainaprivatetransactionforcashproceedsof$128million.

In February 2005, we entered into a prepaid forward sale thatterminates in2015ofapproximately2.7millionsharesofLibertyGlobalSeriesAcommonstockforcashproceedsof$99million.

InSeptember2005,wereceivedapproximately7.7millionsharesofLibertyGlobalSeriesCcommonstockinconnectionwithLibertyGlobal’sspecialstockdividend.AllofthesesharescollateralizeaportionofourLibertyMediaprepaidforwardsalesobligationthatterminatesin2014andaportionofourLibertyGlobalprepaidfor-wardsalesobligationthatterminatesin2015.

Sprint NextelInMarch2006,wereceivedcashproceedsof$62millionincon-nection with Sprint Nextel’s redemption of all of its outstandingSeventh Series B Convertible Preferred Stock (“Sprint PreferredStock”),includingall61,726sharesofSprintPreferredStockheldbyus. Inconnectionwiththeredemptiontransaction,werecog-nizedinvestmentincomeof$8million.


EquityMethodOur recorded investments exceed our proportionate interests inthebookvalueof the investees’netassetsby$984millionand$1.210 billion as of December 31, 2006 and 2005, respectively(principally related to our investments in TKCCP (50% interest),InsightMidwest (50% interest),andMGM(20% interest)).Apor-tionofthisbasisdifferencehasbeenattributedtofranchise-relatedcustomerrelationshipsofsomeoftheinvestees.Thisdifferenceisamortizedtoequityin(loss)incomeofaffiliates,netoveraperiodoffouryears.Theportionofthebasisdifferenceattributabletogood-willistestedforimpairmentannually,ormorefrequentlywhenevereventsorchanges incircumstances indicatethat the investmentmightbeimpaired.

SpectrumCo, LLCSpectrumCo,LLC(“SpectrumCo”),aconsortiumofinvestorsinclud-ing us, was the successful bidder for 137 wireless spectrumlicenses for approximately $2.4 billion in the Federal Communi-cations Commission’s advanced wireless spectrum auction thatconcluded in September 2006. Our portion of the total cost topurchasethelicenseswasapproximately$1.3billion.Basedonitscurrentlyplannedactivities,wehavedeterminedthatSpectrumCoisnotaVIE.Weaccountforthisjointventureasanequitymethodinvestmentbasedonitsgovernancestructure,notwithstandingourmajorityinterest.

Dissolution of TKCCPInOctober2006,wecontributed$1.362billiontoTKCCPtorefi-nancetheoutstandingbankandpartnershipdebtoftheHoustonAsset Pool. We have historically accounted for our interest inTKCCPasanequitymethodinvestment.However,effectiveJuly1,2006(thebeginningofthemonthwhendissolutionwasinitiated),theeconomicreturn tousonour interest inTKCCPtrackedtheperformanceoftheHoustonAssetPool,andwewereno longerentitledtoanybenefitsofownershiporresponsiblefortheobliga-tionsoftheKansasCityAssetPool.Asaresult,webeganreportingourshareoftheearningsandlossesofTKCCPbasedsolelyontheoperatingresultsoftheHoustonAssetPool.Forsegmentreportingpurposes,wehaveincludedtheoperatingresultsoftheHoustonAssetPoolinourCablesegment.However,theoperatingresultsoftheHoustonAssetPoolareeliminatedinourconsolidatedfinancialstatements(seeNote14).OnJanuary1,2007,thedistributionofassetsofTKCCPwascompletedandwe received theHoustonAssetPool(seeNote5).

MGMInApril2005,wecompletedatransactionwithagroupofinvestorsto acquire Metro-Goldwyn-Mayer Inc. We acquired a 20% eco-nomicinterestforapproximately$250millionincash.

DHC Ventures, LLCInSeptember2004,wesoldour20% interest inDHCVentures,LLC(“DiscoveryHealthChannel”) toDiscoveryCommunications,Inc.forapproximately$149millionincashandrecognizedagainonthesaleofapproximately$94milliontootherincome.

CostMethod

AirTouch Communications, Inc.We hold two series of preferred stock of AirTouch Communica-tions,Inc.(“AirTouch”),asubsidiaryofVodafone,thatarerecordedat$1.451billionand$1.437billionasofDecember31,2006and2005, respectively. The dividend and redemption activity of theAirTouch preferred stock is tied to the dividend and redemptionpaymentsassociatedwithsubstantiallyallofthepreferredsharesissuedbyoneofourconsolidatedsubsidiaries,whichisaVIE.Thesubsidiaryhasthreeseriesofpreferredstockoutstandingwithanaggregate redemptionvalueof$1.750billion.Substantiallyall ofthepreferredsharesare redeemable inApril 2020ata redemp-tionvalueof$1.650billion,withoneoftheseriesbearinga9.08%dividendrate.Thetworedeemableseriesofsubsidiarypreferredsharesarerecordedat$1.451billionand$1.437billion,andsuchamountsare includedinothernoncurrent liabilitiesasofDecem-ber31,2006and2005,respectively.Thenon-redeemableseriesofsubsidiarypreferredsharesisrecordedat$100millionasofbothDecember31,2006and2005,andsuchamountsareincludedinminorityinterest.

InvestmentIncome(loss),NetInvestmentincome(loss),netincludesthefollowing:


Interestanddividendincome $ 178 $ 112 $ 160Gainsonsalesandexchanges ofinvestments,net 733 17 45Investmentimpairmentlosses (4) (3) (16)Unrealizedgains(losses)on tradingsecuritiesand hedgeditems 339 (259) 378Marktomarketadjustmentson derivativesrelatedtotrading securitiesandhedgeditems (238) 206 (120)Marktomarketadjustmentson derivatives (18) 16 25

Investmentincome(loss),net $ 990 $ 89 $ 472

InconnectionwiththeAdelphiaandTimeWarnertransactions,werecognizedgainsofapproximately$646million,intheaggregate,ontheRedemptionsandtheexchangeofcablesystemsheldbyCentury and Parnassos (see Note 5). These gains are includedwithin the “Gains on sales and exchanges of investments, net”captioninthetableabove.


Note7:GoodwillandIntangibleAssets

TheDecember31,2005and2004Cablesegmentgoodwillbalancesexclude$720millionrelatedtodiscontinuedoperations.Thechangesinthecarryingamountofgoodwillbybusinesssegment(seeNote14)fortheperiodspresentedareasfollows:

Corporate(inmillions) Cable Programming andOther Total

Balance,December31,2004 $12,278 $ 824 $198 $13,300Settlementsandadjustments (50) 89 — 39Acquisitions 45 53 61 159

Balance,December31,2005 12,273 966 259 13,498Settlementsandadjustments (695) 7 — (688)Acquisitions 432 468 58 958

Balance,December31,2006 $12,010 $1,441 $317 $13,768

Settlementsandadjustmentsareprimarilyrelatedtocertainpre-acquisitiontaxliabilities.Acquisitionsin2006areprimarilyrelatedtotheAdelphiaandTimeWarnertransactions,andtheSusquehannaandE!EntertainmentTelevisiontransactions.

Thegrosscarryingamountandaccumulatedamortizationofourintangibleassetssubjecttoamortizationareasfollows:

2006 2005

Gross Gross Carrying Accumulated Carrying AccumulatedDecember31(inmillions) UsefulLife Amount Amortization Amount Amortization

Franchise-relatedcustomerrelationships 4–11years $ 4,954 $(3,188) $3,273 $(2,701)Cableandsatellitetelevisiondistributionrights 5–11years 1,267 (533) 1,333 (685)Cablefranchiserenewalcostsandcontractual operatingrights 10years 982 (283) 863 (198)Computersoftware 1–5years 1,104 (515) 871 (252)Patentsandothertechnologyrights 3–12years 214 (62) 214 (62)Programmingagreementsandrights 2–4years 1,026 (782) 772 (520)Otheragreementsandrights 2–22years 877 (180) 427 (217)

Total $10,424 $(5,543) $7,753 $(4,635)

Estimatedamortizationexpenseforeachofthenextfiveyearsisasfollows:

(inmillions) EstimatedAmortization

2007 $9972008 7512009 6792010 5612011 375


Note8:long-TermDebt

WeightedAverage InterestRateasofDecember31(inmillions) December31,2006 2006 2005

Commercialpaper 5.42% $ 199 $ 549Termloan,due2008 5.85% 185 —Seniornotes, due2006–2097 6.93% 26,942 20,993Seniorsubordinatednotes, due2006–2012 10.63% 202 349ZONESdue2029 2.00% 747 752DebtsupportingTrust PreferredSecurities, due2027 9.65% 283 284Exchangeablenotes, due2007 5.77% 49 46Other,includingcapital leaseobligations — 368 398

Totaldebt 28,975 23,371Less:currentportion 983 1,689

Long-termdebt $27,992 $21,682

AsofDecember31,2006,maturitiesoflong-termdebtoutstand-ingwereasfollows:

(inmillions) Maturities

2007 $ 9832008 1,6682009 2,2492010 1,3202011 1,767Thereafter 20,988

GuaranteeStructuresComcastCorporation(ourparentcorporation)andanumberofourwhollyownedsubsidiaries thatholdsubstantiallyallofourcableassets haveunconditionally guaranteedeachother’sdebt secu-rities and indebtedness for borrowed money, including amountsoutstandingunderour$5.0billionrevolvingbankcreditfacility.AsofDecember31,2006,$27.141billionofourdebtwasincludedinthiscross-guaranteestructure.

ComcastHoldingsCorporation (“ComcastHoldings”),ourwhollyowned subsidiary, is not part of the cross-guarantee structure.However, Comcast Corporation has unconditionally guaranteedComcast Holdings’ ZONES due October 2029 and its 105⁄8%Senior Subordinated Debentures due 2012, which totaled $683millionasofDecember31,2006.TheComcastHoldingsguaran-tee is subordinate to the guarantees under the cross-guaranteestructure.

DebtBorrowingsDuring2006,weissued$7.485billionaggregateprincipalamountofseniornotesasfollows:

(inmillions) Principal

Floating-ratenotes(LIBOR+0.3%),due2009 $1,2505.90%Seniornotes,due2016 1,0006.50%Seniornotes,due2017 1,0005.875%Seniornotes,due2018 9006.45%Seniornotes,due2037 1,8657.00%Seniornotes,due2055 1,470

$7,485

We used the net proceeds of these offerings for working capi-tal and general corporate purposes, including the repayment ofcommercialpaperobligations(seebelow),theAdelphiaandTimeWarner transactions, the refinancingofdebtassociatedwith theHoustonAssetPool,andtheacquisitionoftheremainingportionof E! Entertainment Television that we did not already own (seeNote5).

DebtRepaymentsDuring2006,werepaid$1.607billionaggregateprincipalamountofseniornotesandseniorsubordinatednotesattheirscheduledmaturitydatesasfollows:

(inmillions) Principal

6.375%Seniornotes $ 5006.875%Seniornotes 3888.3%Seniornotes 60010.5%Seniorsubordinatednotes 119

$1,607

During2006,wealso repaid$350millionoutstandingunderourcommercialpaperprogramand$82millionofotherdebt.

CommercialpaperOurcommercialpaperprogramprovidesa lowercostborrowingsourceof liquiditytofundourshort-termworkingcapitalrequire-ments. The program allows for a maximum of $2.25 billion ofcommercialpapertobeissuedatanyonetime.Ourrevolvingbankcredit facilitysupports thisprogram.Amountsoutstandingundertheprogramareclassifiedas long-term inourconsolidatedbal-ance sheet because we have both the ability and the intent torefinancetheseobligations,ifnecessary,onalong-termbasiswithamountsavailableunderourrevolvingbankcreditfacility.

RevolvingBankCreditFacilityWe have a $5.0 billion revolving bank credit facility due Octo-ber2010(the“creditfacility”)withasyndicateofbanks.Thebaserate,chosenatouroption,iseitherLondonInterbankOfferedRate(“LIBOR”)orthegreateroftheprimerateortheFederalFundsrateplus 0.5%. The borrowing margin is based on our senior unse-cureddebtratings.AsofDecember31,2006,theinterestratefor


borrowingsunderthecreditfacilityisLIBORplus0.35%basedonourcreditratings.

linesandlettersofCreditAsofDecember31,2006,weandcertainofoursubsidiarieshadunused linesof credit totaling$4.464billionunder variouscreditfacilities andunused irrevocable standby lettersof credit totaling$377milliontocoverpotentialfundingsundervariousagreements.

zONESAt maturity, holders of our 2.0% Exchangeable SubordinatedDebentures due 2029 (the “ZONES”) are entitled to receive incash an amount equal to the higher of the principal amount oftheoutstandingZONESof $1.807billionor themarket valueof24,124,398sharesofSprintNextelcommonstockand1,205,049sharesofEmbarqcommonstock.Priortomaturity,eachZONESisexchangeableattheholder’soptionforanamountofcashequalto95%oftheaggregatemarketvalueofoneshareofSprintNextelcommonstockand0.05sharesofEmbarqcommonstock.

WeseparatetheaccountingfortheZONESintoderivativeanddebtcomponents.Werecordthechangeinthefairvalueofthederiva-tivecomponentoftheZONES(seeNote6)andthechangeinthecarryingvalueofthedebtcomponentoftheZONESasfollows:

YearEndedDecember31,2006 Debt Derivative (inmillions) Component Component Total

Balanceatbeginningofyear $568 $184 $752Changeindebtcomponent tointerestexpense 28 — 28Changeinderivative componenttoinvestment income(loss),net — (33) (33)

Balanceatendofyear $596 $151 $747

InterestRatesExcluding the derivative component of our Exchangeable Notesdue2007andtheZONESwhosechangesinfairvaluearerecordedto investment income (loss), net, our effective weighted-averageinterestrateonourtotaldebtoutstandingwas7.07%and7.32%asofDecember31,2006and2005,respectively.AsofDecem-ber 31, 2006 and 2005, accrued interest was $501 million and$422million,respectively.

InterestRateRiskManagementWeareexposed to themarket riskof adversechanges in inter-est rates. To manage the volatility relating to these exposures,ourpolicyistomaintainamixoffixed-rateandvariable-ratedebtand to enter into various interest rate derivative transactions asdescribedbelow.

Using swaps, we agree to exchange, at specified intervals, thedifferencebetweenfixedandvariableinterestamountscalculatedby reference to an agreed-uponnotional principal amount.Ratelocksaresometimesused tohedge the risk that thecash flowsrelated to the interest payments on an anticipated issuance orassumptionoffixed-ratedebtmaybeadverselyaffectedbyinter-estratefluctuations.

Thefollowingtablesummarizesthetermsofourexistingswaps:

Notional Average Average Estimated(inmillions) Amount Maturities PayRate ReceiveRate FairValue

AsofDecember31,2006FixedtoVariableSwaps $3,200 2008–2014 7.2% 5.9% $(103)AsofDecember31,2005FixedtoVariableSwaps $3,600 2006–2014 6.5% 6.0% $ (97)

Thenotionalamountsofinterestrateinstruments,aspresentedintheabovetable,areusedtomeasureinteresttobepaidorreceivedanddonotrepresenttheamountofexposuretocredit loss.Theestimated fair value approximates the proceeds or payments tosettletheoutstandingcontracts.Swapsandratelocksrepresentanintegralpartofourinterestrateriskmanagementprogram.Theeffect of our interest rate derivative financial instruments was toincreaseourinterestexpensebyapproximately$39millionin2006,andtodecreaseourinterestexpensebyapproximately$16millionand$66millionin2005and2004,respectively.

Wehaveentered into rate locks tohedge the risk that thecashflowsrelatedtotheinterestpaymentsonananticipatedissuanceor assumption of fixed-rate debt may be adversely affected byinterest-rate fluctuations. Upon the issuance or assumption offixed-ratedebt,thevalueoftheratelocksisbeingrecognizedasanadjustmenttointerestexpense,similartoadeferredfinancingcost,overthesameperiodinwhichtherelatedinterestcostsonthedebtarerecognizedinearnings(approximately11yearsremaining,unlessearlier retired).Theunrealizedpretax lossesoncash flowhedgesasofDecember31,2006and2005,of$185millionand


$203million,respectively,havebeenreportedinourbalancesheetas a component of accumulated other comprehensive income(loss),netofrelateddeferredincometaxesof$65millionand$71million,respectively.

EstimatedFairValueOurdebthadestimatedfairvaluesof$28.923billionand$25.305billionasofDecember31,2006and2005,respectively.Theesti-mated fair valueofourpublicly tradeddebt isbasedonquotedmarketvaluesforthatdebt.Interestratesthatarecurrentlyavail-able tous for issuanceofdebtwithsimilar termsand remainingmaturitiesareusedtoestimatefairvaluefordebtissuesforwhichquotedmarketpricesarenotavailable.

DebtCovenantsSome of our loan agreements require that we maintain financialratiosbasedondebt,interestandoperatingincomebeforedepre-ciationandamortization,asdefinedintheagreements.Wewereincompliancewithallfinancialcovenantsforallperiodspresented.

Note9:pension,postretirementandOtherEmployeeBenefitplans

Wesponsor twopensionplans that togetherprovidebenefits tosubstantiallyall formeremployeesofapreviouslyacquiredcom-pany.AsofDecember31,2006,futurebenefitsforbothplanshavebeenfrozen.TotalpensionexpenserecognizedfortheyearsendedDecember31,2006,2005and2004,was$8million,$8millionand$9million,respectively.

Ourpostretirementmedicalbenefitscoversubstantiallyallofouremployeeswhomeetcertainageandservice requirements.Themajorityofeligibleemployeesparticipate intheComcastPostre-tirementHealthcareStipendProgram(the“StipendPlan”),andasmallnumberofeligibleemployeesparticipate in legacyplansofacquiredcompanies.TheStipendPlanprovidesanannualstipendfor reimbursementofhealthcarecosts toeacheligibleemployeebasedonyearsofservice.BasedonthebenefitdesignoftheSti-pendPlan,wearenotexposedtothecostofincreasinghealthcare,sincetheamountsundertheStipendPlanarefixedatapredeter-minedamount.Postretirementexpense recognized for theyearsendedDecember31,2006,2005and2004,was$29million,$25millionand$23million,respectively.

Thefollowingtableprovidescondensedinformationrelatingtoourpensionbenefitsandpostretirementbenefitsfortheperiodspresented:

2006 2005

pension postretirement Pension PostretirementYearEndedDecember31(inmillions) Benefits Benefits Benefits Benefits

Benefitobligation $184 $ 280 $194 $ 247Fairvalueofplanassets $122 $ — $ 98 $ –Planfundedstatusandrecordedbenefitobligation $ (62) $(280) $ (96) $(236)Portionofbenefitobligationnotyetrecognizedasacomponent ofnetperiodicbenefitcost $ 12 $ (4) $ 18 —Discountrate 5.75% 6.00% 5.50% 5.75%Expectedreturnonplanassets 7.00% N/A 7.00% N/A

Wesponsorvariousretirementinvestmentplansthatalloweligibleemployeestocontributeaportionoftheircompensationthroughpayroll deductions in accordance with specified guidelines. Wematchapercentageoftheemployees’contributionsuptocertainlimits.Expensesrelatedtotheseplansamountedto$125million,$115millionand$100millionfortheyearsendedDecember31,2006,2005and2004,respectively.

Wealsomaintainunfunded,nonqualifieddeferredcompensationplans,whichwerecreated forkeyexecutives,othermembersofmanagement and nonemployee directors (each a “Participant”).TheamountofcompensationdeferredbyeachParticipantisbasedonParticipantelections.AccountbalancesofParticipantsarecred-itedwithincomebasedgenerallyonafixedannualrateofinterest.Participantswillbeeligibletoreceivedistributionsoftheamountscreditedtotheiraccountbalancebasedonelecteddeferralperiodsthatareconsistentwiththeplansandapplicabletaxlaw.Interest

expenserecognizedundertheplanstotaled$50million,$40mil-lionand$33millionfortheyearsendedDecember31,2006,2005and2004,respectively.Theunfundedobligationoftheplanstotal$554millionand$469millionasofDecember31,2006and2005,respectively.Wehavepurchased life insurancepoliciesto fundaportionofthisunfundedobligation.AsofDecember31,2006,thecashsurrendervalueofthesepolicies,whichareincludedin“OtherAssets,”wasapproximately$40million.

Note10:Stockholders’Equity

preferredStockWeareauthorizedto issue, inoneormoreseries,uptoamaxi-mum of 20 million shares of preferred stock. We can issue theshares with such designations, preferences, qualifications, privi-leges,limitations,restrictions,options,conversionrightsandother


specialorrelatedrightsasourBoardofDirectorsshallfromtimetotimefixbyresolution.

CommonStockOurClassASpecialcommonstockisgenerallynonvoting.Hold-ersofourClassAcommonstockintheaggregatehold662⁄ 3%oftheaggregatevotingpowerofourcommonstock.ThenumberofvotesthateachshareofourClassAcommonstockwillhaveatanygiventimewilldependonthenumberofsharesofClassAcommonstockandClassBcommonstockthenoutstanding.EachshareofourClassBcommonstockisentitledto15votes,andallsharesofourClassBcommonstockintheaggregatehave331⁄ 3%ofthevotingpowerofallofourcommonstock.The331⁄ 3%aggregatevotingpowerofourClassBcommonstockwillnotbedilutedbyadditionalissuancesofanyotherclassofourcommonstock.OurClassBcommonstockisconvertible,shareforshare,intoClassAorClassASpecialcommonstock,subjecttocertainrestrictions.

Board-AuthorizedShareRepurchaseprogramDuring 2006, 2005 and 2004, we repurchased approximately113million,119millionand70millionshares,respectively(adjustedtoreflect theStockSplit),ofourClassASpecialcommonstockfor aggregate consideration of $2.347 billion, $2.290 billion and$1.328billion,respectively,pursuanttoourBoard-authorizedsharerepurchaseprogram.

The maximum dollar value of shares remaining that may berepurchasedunder theprogram isapproximately$3billionasofDecember31,2006.Weexpectrepurchasestocontinuefromtimeto time in theopenmarketor inprivate transactions, subject tomarketconditions.

ComcastOptionplansWemaintainstockoptionplansforcertainemployeesunderwhichfixed-pricestockoptionsmaybegrantedandtheoptionpriceisgenerallynot lessthanthefairvalueofashareof theunderlyingstockatthedateofgrant.Underourstockoptionplans,approxi-mately236millionshares(adjustedtoreflecttheStockSplit)ofourClassAandClassASpecialcommonstockarereservedforissu-anceupontheexerciseofoptions,includingthoseoutstandingasofDecember31,2006.Optiontermsaregenerally10years,withoptionsgenerallybecomingexercisablebetweentwoandnineandonehalfyearsfromthedateofgrant.

The fair value of each stock option is estimated on the date ofgrantusingtheBlack-Scholesoptionpricingmodelthatusestheassumptionssummarizedinthefollowingtable.ExpectedvolatilityisbasedonablendofimpliedandhistoricalvolatilityofourClass

A common stock. We use historical data on exercises of stockoptions and other factors to estimate the expected term of theoptionsgranted.Therisk-freerate isbasedontheU.S.Treasuryyieldcurveineffectatthedateofgrant.

The followingtablesummarizes theweighted-average fairvaluesatdateofgrant (adjustedtoreflect theStockSplit)ofaClassAcommonstockoptiongrantedunderourstockoptionplansandtherelatedweighted-averagevaluationassumptions:

2006 2005 2004

Fairvalue $7.30 $8.67 $7.63Dividendyield 0% 0% 0%Expectedvolatility 26.9% 27.1% 28.6%Risk-freeinterestrate 4.8% 4.3% 3.5%Expectedoptionlife(inyears) 7.0 7.0 7.0

Thefollowingtablesummarizesourshareactivityfortheperiodspresented(adjustedtoreflecttheStockSplit):

CommonStock ClassA ClassASpecial ClassB

Balance,January1,2004 2,036,280,835 1,331,386,738 9,444,375Stockcompensationplans 1,537,284 8,153,658 —EmployeeStockPurchasePlan 1,702,427 — —Repurchasesofcommonstock — (70,401,353) —

Balance,December31,2004 2,039,520,546 1,269,139,043 9,444,375Stockcompensationplans 3,586,731 2,975,453 —EmployeeStockPurchasePlan 1,943,700 — —Repurchasesofcommonstock — (118,680,437) —

Balance,December31,2005 2,045,050,977 1,153,434,059 9,444,375Stockcompensationplans 13,140,825 9,362,105 —EmployeeStockPurchasePlan 2,166,158 — —Repurchasesofcommonstock — (113,071,157) —

Balance,December31,2006 2,060,357,960 1,049,725,007 9,444,375


Wealsomaintainadeferredstockoptionplanforcertainemploy-eesanddirectorsthatprovidedtheoptioneeswiththeopportunitytodefer the receiptofsharesofourClassAorClassASpecialcommonstockthatwouldotherwisebedeliverableuponexercisebytheoptioneesoftheirstockoptions.AsofDecember31,2006,approximately2.0millionshares(adjustedtoreflecttheStockSplit)ofClassASpecialcommonstockwereissuableunderexercisedoptions,thereceiptofwhichwasirrevocablydeferredbytheoptio-neespursuanttoourdeferredstockoptionplan.

StockOptionliquidityprogramDuring 2004, we repurchased 16.6 million options (adjusted toreflecttheStockSplit)fromvariousnonemployeeholdersofstockoptionsunderastockoptionliquidityprogram,targetedprimarilytoemployeesofapreviouslyacquiredcompany.Theformeroptionholdersreceived$37millionfortheiroptionsundertheprogram.Afinancialcounterpartyweengagedinconnectionwiththestockoptionliquidityprogramfundedthecostoftheprogramthroughthesimultaneouspurchasebythecounterpartyofnewstockoptionsfromusthathadsimilareconomictermsastheoptionsbeingpur-chasedbyusfromtheoptionholders.AsofDecember31,2006,13.9millionoptionsremainoutstanding,withaweighted-averageexercisepriceof$30.89pershare (adjusted to reflect theStockSplit), and these options will expire over the course of the nextsixyears.

RestrictedStockplanWemaintainarestrictedstockplanunderwhichcertainemploy-eesanddirectors(“Participants”)maybegrantedrestrictedshareunit awards in our Class A or Class A Special common stock(the “Restricted Stock Plan”). Under our Restricted Stock Plan,approximately40millionshares(adjustedtoreflecttheStockSplit)ofourClassAandClassASpecialcommonstockarereservedfor issuancepursuant toawardsunder theplan, including thoseoutstandingasofDecember31,2006.Awardsofrestrictedshareunitsarevaluedbyreferencetosharesofcommonstockthatenti-tle Participants to receive, upon the settlement of the unit, oneshareofcommonstock foreachunit.Theawardsvestannually,generallyoveraperiodnottoexceedfiveyearsfromthedateoftheaward,anddonothavevotingrights.

Thefollowingtablesummarizestheweighted-averagefairvalueatdateofgrant(adjustedtoreflecttheStockSplit)andthecompen-sationexpenserecognizedrelatedtorestrictedshareunitawards:

2006 2005 2004

Weighted-averagefairvalue $19.98 $22.13 $20.73Compensationexpense recognized(inmillions) $ 62 $ 57 $ 33

The following tablesummarizes theactivityofourstockoptionplans for theyearendedDecember31,2006 (adjusted to reflect theStockSplit):

Weighted-Average Remaining Aggregate Options Weighted-Average ContractualTerm IntrinsicValue (inthousands) ExercisePrice (inyears) (inmillions)

ClassACommonStockOutstandingasofJanuary1,2006 121,240 $24.73Granted 18,594 $18.12Exercised (12,222) $19.18Forfeited (4,113) $19.76Expired (1,722) $26.10

OutstandingasofDecember31,2006 121,777 $24.43 5.5 $812.3

ExercisableasofDecember31,2006 67,297 $28.33 3.6 $343.1

ClassASpecialCommonStockOutstandingasofJanuary1,2006 76,948 $20.90Exercised (10,545) $15.31Forfeited (95) $21.75Expired (1,707) $23.96

OutstandingasofDecember31,2006 64,601 $21.75 3.5 $410.6

ExercisableasofDecember31,2006 57,081 $21.95 3.4 $353.1


ThefollowingtablesummarizestheactivityoftheRestrictedStockPlanfortheyearendedDecember31,2006(adjustedtoreflecttheStockSplit):

NumberofNonvested Weighted- ShareUnitAwards AverageGrant (inthousands) DateFairValue

ClassACommonStockNonvestedawardsasof January1,2006 8,474 $21.70Granted 7,539 $19.98Vested (1,635) $21.90Forfeited (894) $20.76

Nonvestedawardsasof December31,2006 13,484 $20.78

ClassASpecialCommonStockNonvestedawardsasof January1,2006 104 $24.46Vested (103) $24.75

Nonvestedawardsasof December31,2006 1 $18.31

AsofDecember31,2006,approximately605,000and145,000shares (adjusted to reflect the Stock Split) of Class A commonstockandClassASpecialcommonstock,respectively,wereissu-ableundervestedrestrictedshareunitawards,thereceiptofwhichwasirrevocablydeferredbyParticipantspursuanttotheRestrictedStockPlan.

Share-BasedCompensationEffectiveJanuary1,2006,weadoptedSFASNo.123RusingtheModifiedProspectiveApproach.SFASNo.123RrevisesSFASNo.123 and supersedes APB No. 25. SFAS No.123R requires thecostofallshare-basedpaymentstoemployees, includinggrantsofemployeestockoptions,toberecognizedinthefinancialstate-mentsbasedontheirfairvaluesatgrantdate,orthedateoflatermodification,overtherequisiteserviceperiod.Inaddition,SFASNo.123Rrequiresunrecognizedcost(basedontheamountspreviouslydisclosedinourproformafootnotedisclosure)relatedtooptionsvesting after the date of initial adoption to be recognized in thefinancialstatementsovertheremainingrequisiteserviceperiod.

Under the Modified Prospective Approach, the amount of com-pensationcost recognized includes: (i)compensationcost forallshare-basedpaymentsgrantedpriorto,butnotyetvestedasofJanuary1,2006,basedonthegrantdatefairvalueestimatedinaccordancewiththeprovisionsofSFASNo.123and(ii)compen-sationcost forallshare-basedpaymentsgrantedsubsequent toJanuary1,2006,basedonthegrantdatefairvalueestimatedinaccordance with the provisions of SFAS No.123R. Prior to the

adoption of SFAS No.123R, we recognized the majority of ourshare-basedcompensationcostsusingtheacceleratedrecognitionmethod.Werecognizethecostofpreviouslygrantedshare-basedawardsundertheacceleratedrecognitionmethodandrecognizethecostofnewshare-basedawardsonastraight-linebasisoverthe requisiteserviceperiod.The incrementalpretaxshare-basedcompensationexpenserecognizeddueto theadoptionofSFASNo.123RfortheyearendedDecember31,2006,was$126million.Totalshare-basedcompensationexpenserecognizedunderSFASNo.123R,includingtheincrementalpretaxshare-basedcompen-sationexpense,was$190million,withanassociatedtaxbenefitof$66millionfortheyearendedDecember31,2006.PriortotheadoptionofSFASNo.123R,werecognizedshare-basedcompen-sationexpenseof$67millionand$44millionwithassociatedtaxbenefitsof$25millionand$16millionfortheyearsendedDecem-ber31,2005and2004,respectively.Theamountofshare-basedcompensation capitalized or related to discontinued operationswasnotmaterialtoourconsolidatedfinancialstatements.

Cash received fromoptionexercisesunderall share-basedpay-ment arrangements for the year ended December 31, 2006,was$372million.The total intrinsic value (market valueondateofexerciselessexerciseprice)ofoptionsexercisedfortheyearsended December 31, 2006, 2005 and 2004, was $180 million,$59millionand$88million, respectively.The taxbenefit realizedfromstockoptionsexercisedfor theyearsendedDecember31,2006,2005and2004,was$62million,$19millionand$30million,respectively.

AsofDecember31,2006,therewas$207millionoftotalunrec-ognized, pretax compensation cost related to nonvested stockoptions.Thiscostisexpectedtoberecognizedoveraweighted-averageperiodofapproximatelytwoandonehalfyears.

ThetotalfairvalueofrestrictedshareunitsvestedduringtheyearsendedDecember31,2006,2005and2004,was$32million,$28million and $7 million, respectively. As of December 31, 2006,therewas$177millionoftotalunrecognizedpretaxcompensationcostrelatedtononvestedrestrictedshareunitawards.Thiscostisexpectedtoberecognizedoveraweighted-averageperiodofapproximatelytwoandonehalfyears.

SFASNo.123Ralsorequiredustochangetheclassification,inourconsolidatedstatementofcashflows,ofanytaxbenefitsrealizedupontheexerciseofstockoptionsorissuanceofrestrictedshareunitawardsinexcessofthatwhichisassociatedwiththeexpenserecognized for financial reporting purposes. These amounts arepresentedasafinancingcashinflowratherthanasareductionofincome taxespaid in our consolidated statement of cash flows.TheexcesscashtaxbenefitclassifiedasafinancingcashinflowfortheyearendedDecember31,2006,was$33million.


PriortoJanuary1,2006,weaccountedforourshare-basedcom-pensationplansinaccordancewiththeprovisionsofAPBNo.25,as permitted by SFAS No.123, and accordingly did not recog-nize compensation expense for stock options with an exercisepriceequal toorgreater than themarketpriceof theunderlyingstock at the date of grant. Had the fair-value-based method asprescribedbySFASNo.123beenapplied,additionalpretaxcom-pensationexpenseof$166millionand$283millionwouldhavebeen recognized for the years ended December 31, 2005 and2004,respectively.Thepretaxcompensationexpenseincludestheexpenserelatedtodiscontinuedoperations,whichforeachoftheyearsendedDecember31,2005and2004,was$4million.Hadthefair-value-basedmethodasprescribedbySFASNo.123beenapplied, theeffectonnet incomeandearningspersharewouldhavebeenasfollows(adjustedtoreflecttheStockSplit):

(inmillions,exceptpersharedata) 2005 2004

Netincome,asreported $ 928 $ 970Add:Share-basedcompensation expenseincludedinnetincome, asreportedabove,netofrelated taxeffects 42 27Less:Share-basedcompensation expensedeterminedunderfair value-basedmethodforallawards, netofrelatedtaxeffects (150) (206)

Proforma,netincome $ 820 $ 791

Basicearningsforcommon stockholderspercommonshare:Asreported $0.28 $0.29Proforma $0.25 $0.24Dilutedearningsforcommon stockholderspercommonshare:Asreported $0.28 $0.29Proforma $0.25 $0.23

On December 23, 2004, the Compensation Committee of ourBoard of Directors approved the acceleration of vesting of allunvestedoptionsgrantedprior toJanuary1,2003, topurchasesharesofourClassASpecialcommonstockhavinganexercisepriceof$22.67(adjustedtoreflecttheStockSplit)orgreaterandheldbycurrentemployees.Optionswithrespecttoapproximately23.3millionshares(adjustedtoreflecttheStockSplit)ofourClassASpecial commonstockweresubject to thisacceleration.ThisaccelerationwaseffectiveasofDecember31,2004,except forthoseholdersofincentivestockoptions(“ISOs”),whoweregiventhe opportunity to decline the acceleration of an option if suchaccelerationwouldhave theeffectofchanging thestatusof the

optionforfederalincometaxpurposesfromanISOtoanonquali-fied stockoption.Because theseoptionshadexerciseprices inexcess of current market values (were “underwater”) and werenot fully achieving their original objectives of incentive compen-sationandemployeeretention, theaccelerationmayhavehadapositive effect on employee morale, retention and perception ofoptionvalue.TheaccelerationalsotookintoaccountthefactthatinDecember2004,wecompletedtherepurchaseofstockoptionsheld by certain nonemployees for cash (including underwateroptions)underastockoption liquidityprogram (seeabove),andthatnosuchoffer(noranyother“solution”forunderwateroptions)wasmade tocurrentemployees.Theaccelerationhadnoeffecton reportednet income,an immaterial impactonpro formanetincomein2005andanapproximate$39million,netoftax,impactonproformanetincomein2004.Theimpactsoftheaccelerationare reflected in thepro formaamounts above. This accelerationeliminatedthefuturecompensationexpensewewouldhaveoth-erwiserecognizedinourstatementofoperationswithrespecttotheseoptionssubsequenttotheadoptionofSFASNo.123R.

Note11:IncomeTaxes

Wejoinwithour80%ormoreownedsubsidiariesinfilingconsoli-datedfederal incometaxreturns.E!Entertainment filedseparateconsolidated federal income tax returns for periods prior to ourobtaining 100% ownership, which occurred in November 2006(seeNote5).Incometax(expense)benefitconsistsofthefollowingcomponents:


Current(expense)benefitFederal $ (887) $(590) $(120)State (77) (123) (208)

(964) (713) (328)

Deferred(expense)benefitFederal (301) (66) (536)State (82) (94) 63

(383) (160) (473)

Incometax(expense)benefit $(1,347) $(873) $(801)


Oureffectiveincometax(expense)benefitdiffersfromthefederalstatutoryamountbecauseoftheeffectofthefollowingitems:


Federaltaxatstatutoryrate $(1,258) $(602) $(610)Stateincometaxes,netof federalbenefit (132) (105) (20)Nondeductiblelossesfrom jointventuresandequity innet(losses)incomeof affiliates,net 18 (24) (9)Adjustmentstoprioryear incometaxaccrualand relatedinterest 97 (105) (157)Other (72) (37) (5)

Incometax(expense)benefit $(1,347) $(873) $(801)

Ournetdeferredtaxliabilityconsistsofthefollowingcomponents:

December31(inmillions) 2006 2005

Deferredtaxassets:Netoperatinglosscarryforwards $ 309 $ 331Differencesbetweenbookandtaxbasis oflong-termdebt 177 191Nondeductibleaccrualsandother 742 904

1,228 1,426

Deferredtaxliabilities:Differencesbetweenbookandtaxbasis ofpropertyandequipmentand intangibleassets $25,527 $23,712Differencesbetweenbookandtaxbasis ofinvestments 2,633 4,442Differencesbetweenbookandtaxbasis ofindexeddebtsecurities 720 644

28,880 28,798

Netdeferredtaxliability $27,652 $27,372

We recorded $(27) million and $319 million of deferred incometax liabilities (assets) in 2006 through income from discontinuedoperationsandgainondiscontinuedoperations,respectively.Wedecreasednetdeferredincometaxliabilitiesby$474millionin2006,principallyinconnectionwiththeAdelphiaandTimeWarnertrans-actions,theacquisitionoftheinterestinE!EntertainmentTelevisionthatwedidnotalreadyownandSusquehanna(seeNote5).

Werecordedanincrease(decrease)of$79million,$2millionand$(12)milliontonetdeferredincometaxliabilitiesin2006,2005and2004,respectively,inconnectionwithunrealizedgains(losses)onmarketablesecurities,cashflowhedgesandotheramountsthatareincludedinaccumulatedothercomprehensiveincome(loss).

Netdeferredtax liabilities included incurrent liabilitiesarerelatedprimarilytoourcurrentinvestments.Wehavefederalnetoperatinglosscarryforwardsof$178millionandvariousstatecarryforwardsthatexpireinperiodsthrough2026.Thedeterminationofthestatenetoperatinglosscarryforwardsisdependentuponthesubsidiar-ies’taxableincomeorloss,apportionmentpercentagesandotherrespectivestatelawsthatcanchangefromyeartoyearandimpacttheamountofsuchcarryforward.

In2006,2005and2004,incometaxbenefitsattributabletoshare-basedcompensationofapproximately$60million,$35millionand$80million,respectively,wereallocatedtostockholders’equity.

Intheordinarycourseofbusiness,ourtaxreturns,includingthoseofacquiredsubsidiaries,aresubjecttoexaminationbyvarioustax-ingauthorities.

In December 2004, the Internal Revenue Service concluded anexaminationof the tax returnsofMediaOneGroup, Inc., a sub-sidiary acquired in our 2002 acquisition of AT&T Corp.’s cablebusiness, for the period of 1996 through 2000. We received anoticeofadjustmentdisallowingcertaindeductions,principallya$1.5billionbreakupfeepaidbyMediaOnein1999.TheNationalOfficeoftheIRShasissuedaTechnicalAdviceMemorandumthatisadversetous.Wedonotagreewiththeadjustment.Wehavereceivedafinalassessmentandareintheprocessofpreparinganappeal. InNovember2005,wemadeapaymentof$557milliontoreducetheaccruingof interestonthependingassessment. Ifwearesuccessfulinpartorfull,allorsomeofthefundswouldberefundable.IftheIRSprevails,therewouldbenomaterialeffectonourconsolidatedresultsofoperationsforanyperiod.

During2005,theIRSproposedthedisallowanceofnoncashinter-est deductions taken on the ZONES (see Note 8). The NationalOffice of the IRS has issued a Technical Advice Memorandumthat is adverse to us. We have recognized a cumulative federaltaxbenefitof$523millionthroughDecember31,2006,whichwillreverseandbecomepayableuponthematurityorretirementoftheZONES;wehaverecordedthisamountasadeferredtaxliability.IftheIRS’spositionissustained,theincometaxbenefitspreviouslyrecognizedwouldbedisallowed,andinterestwouldbeassessedon amounts disallowed. Accordingly, the amounts recorded asdeferredtaxeswouldbecomepayable.WedonotagreewiththeIRS’spositionandhaveappealed.Theultimateresolutionof thisissueisnotexpectedtohaveamaterialeffectonourconsolidatedresultsofoperationsforanyperiod.

Other examinations of our tax returns may result in future taxand interestassessmentsbythetaxingauthorities,andwehaveaccrued a liability when we believe that it is probable that wewill be assessed. Differences between the estimated and actualamountsdetermineduponultimateresolution,individuallyorintheaggregate,arenotexpectedtohaveamaterialadverseeffectonourconsolidatedfinancialpositionbutcouldpossiblybematerial


to our consolidated results of operations or cash flows of anyoneperiod.

Note12:StatementofCashFlows—SupplementalInformation

In2006,webeganpresentingourcashoverdraftsresultingfromchecksdrawnonzerobalanceaccounts(“bookoverdrafts”)withinaccountspayable andaccruedexpenses related to trade credi-tors.Previously,thesebookoverdraftswereincludedwithincashandcashequivalents.Thefinancialstatementsreflectthisrevisedpresentationinpriorperiods.Accordingly,thereportedamountsofourcashandcashequivalentsandaccountspayableandaccruedexpensesrelatedtotradecreditorsincreasedasofDecember31,2005, 2004 and 2003, by $254 million, $341 million and $189million,respectively,andnetcashprovidedbyoperatingactivitiesdecreasedby$87million in2005and increasedby$152millionin2004.

Thefollowingtablesummarizesourcashpaymentsforinterestandincometaxes:


Interest $1,880 $1,809 $1,898Incometaxes $1,284 $1,137 $ 205

During2006,we:

• exchanged investments forcablesystems intheRedemptionswithafairvalueofapproximately$3.2billionandcablesystemsforcablesystemsintheExchangeswithafairvalueofapproxi-mately$8.5billion(seeNote5),whichareconsiderednoncashinvestingactivities

• acquired an additional equity interest with a fair value of $21million and recorded a liability, for a corresponding amount inconnection with our achievement of certain subscriber launchmilestones,whichisconsideredanoncashinvestingandoperat-ingactivity

• inconnectionwith theSusquehanna transaction (seeNote5),weassumeda$185millionprincipalamountvariable-ratetermloan due 2008, which is considered a noncash financing andinvestingactivity

During2005,we:

• settled through noncash financing and investing activitiesapproximately$1.347billionrelatedtoourExchangeableNotesbydeliveringtheunderlyingsecuritiestothecounterpartiesuponmaturity of the instruments, and the equity collar agreementsrelatedtotheunderlyingsecuritieswereexercised

• acquired$170millionofintangibleassetsandincurredacorre-spondingliabilityinconnectionwiththeformationoftheventuresin the Motorola transaction, which is considered a noncashinvestingandfinancingactivity

• acquiredanequitymethod investmentwitha fairvalueof$91millionandincurredacorrespondingliability,whichisconsideredanoncashinvestingandfinancingactivity

• acquired an additional equity interest with a fair value of $45million and recorded a liability for a corresponding amount inconnectionwith our achievement of certain subscriber launchmilestones,whichisconsideredanoncashinvestingandoperat-ingactivity

During2004,we:

• settled through noncash financing and investing activitiesapproximately$1.944billionrelatedtoourExchangeableNotesbydeliveringtheunderlyingsecuritiestothecounterpartiesuponmaturity of the instruments, and the equity collar agreementsrelatedtotheunderlyingsecuritieswereexercised

• received noncash consideration of approximately $475 millioninconnectionwiththeLibertyMediaExchangeAgreement(seeNote5),whichisconsideredanoncashinvestingactivity

• acquiredcablesystemsthroughtheassumptionof$68millionofdebt,whichisconsideredanoncashinvestingandfinancingactivity

• issuedsharesofG4withavalueofapproximately$70millioninconnectionwiththeacquisitionofTechTV(seeNote5),whichisconsideredanoncashfinancingandinvestingactivity

• receivedfederalincometaxrefundsofapproximately$591million


Note13:CommitmentsandContingencies

CommitmentsOurprogrammingnetworkshaveenteredintolicenseagreementsfor programsand sporting events that are available for telecast.In addition, we, through Comcast Spectacor, have employmentagreements with both players and coaches of our professionalsports teams. Certain of these employment agreements, whichprovideforpaymentsthatareguaranteedregardlessofemployeeinjuryortermination,arecoveredbydisability insuranceifcertainconditionsaremet.

Certainofoursubsidiariessupportdebtcompliancewithrespecttoobligationsofcertaincable televisionpartnershipsand invest-ments inwhichweholdanownership interest (seeNote6).TheobligationsexpirebetweenMay2008andMarch2011.Althoughtherecanbenoassurance,webelievethatwewillnotberequiredtomeetourobligationsundersuchcommitments.Thetotalnotionalamountofourcommitmentswas$965millionasofDecember31,2006,atwhichtimetherewerenoquotedmarketpricesforsimilaragreements.

Thefollowingtablesummarizesourminimumannualcommitmentsunderprogramminglicenseagreementsofourprogrammingnet-works and our minimum annual rental commitments for officespace, equipment and transponder service agreements undernoncancelableoperatingleases:

Program License OperatingDecember31,2006(inmillions) Agreements Leases

2007 $ 381 $2922008 343 2682009 273 2232010 284 1472011 285 106Thereafter 2,338 578

The following table summarizes our rental expense charged tooperations:


Rentalexpense $273 $212 $184

ContingenciesWe and the minority owner group in Comcast Spectacor eachhavetherighttoinitiateanexitprocessunderwhichthefairmarketvalueofComcastSpectacorwouldbedeterminedbyappraisal.Followingsuchdetermination,wewouldhavetheoptiontoacquirethe24.3%interest inComcastSpectacorownedbytheminorityownergroupbasedontheappraisedfairmarketvalue.Intheevent

wedonotexercisethisoption,weandtheminorityownergroupwould then be required to use our best efforts to sell ComcastSpectacor.Thisexitprocess includestheminorityownergroup’sinterestinComcastSportsNet.

AminorityownerofG4isentitledtotriggeranexitprocesswherebyonMay10,2009(thefifthanniversaryoftheclosingdate),andoneachsuccessiveanniversaryoftheclosingdateortheoccurrenceofcertainotherdefinedevents,G4wouldberequiredtopurchasetheminorityowner’s15% interest at fairmarket value (asdeter-minedbyanappraisalprocess).Theminorityownersincertainofourtechnologydevelopmentventuresalsohaverightstotriggeranexitprocessafteracertainperiodoftimebasedonthefairvalueoftheentitiesatthetimetheexitprocessistriggered.

At Home CasesLitigationhasbeenfiledagainstusasaresultofourallegedcon-ductwithrespecttoourinvestmentinanddistributionrelationshipwithAtHomeCorporation.AtHomewasaproviderofhigh-speedInternet services that filed for bankruptcy protection in Septem-ber 2001. Filed actions are: (i) class action lawsuits against us,AT&T (the formercontrollingshareholderofAtHomeandalsoaformerdistributoroftheAtHomeservice)andothersintheUnitedStatesDistrictCourtfortheSouthernDistrictofNewYork,allegingsecuritieslawviolationsandcommonlawfraudinconnectionwithdisclosuresmadebyAtHomein2001;and(ii)a lawsuitbroughtin theUnitedStatesDistrictCourt for theDistrictofDelaware inthenameofAtHomebycertainAtHomebondholdersagainstus,Brian L.Roberts (ourChairmanandChief ExecutiveOfficer andadirector),Cox(CoxisalsoaninvestorinAtHomeandaformerdistributoroftheAtHomeservice)andothers,allegingbreachesoffiduciarydutyrelatingtoMarch2000agreements(which,amongother things, revised the distributor relationships), and seekingrecoveryofallegedshort-swingprofitspursuant toSection16(b)oftheExchangeAct(purportedtohaveariseninconnectionwithcertaintransactionsrelatingtoAtHomestockeffectedpursuanttotheMarch2000agreements).

In theSouthernDistrictofNewYorkactions (item (i)above), thecourt dismissed all claims.Theplaintiffs’ appealed this decision,andtheCourtofAppealsfortheSecondCircuitdeniedtheplain-tiffs’ appeal. The plaintiffs petitioned the Court of Appeals forrehearing.TheDelawarecase (item(ii)above)wastransferredtotheUnitedStatesDistrictCourt for theSouthernDistrictofNewYork.ThecourtdismissedtheSection16(b)claims,andthebreachoffiduciarydutyclaim,forlackoffederaljurisdiction.TheCourtofAppeals for theSecondCircuitdenied theplaintiffs’appeal fromthe decision dismissing the Section 16(b) claims, and the U.S.SupremeCourtdeniedtheplaintiffs’petitionforafurtherappeal.Theplaintiffs recommenced thebreachof fiduciarydutyclaim inDelawareChanceryCourt.TheCourthassetatrialdateinOcto-ber2007.


Under the terms of our 2002 acquisition of AT&T Corp.’s cablebusiness, we are contractually liable for 50% of any liabilities ofAT&Tintheactionsdescribedin items(i)and(ii)above(inwhichwearealsoadefendant).

Wedenyanywrongdoinginconnectionwiththeclaimsthathavebeenmadedirectlyagainstus,oursubsidiariesandBrianL.Roberts,andaredefendingalloftheseclaimsvigorously.Thefinaldisposi-tion of these claims is not expected to have a material adverseeffect on our consolidated financial position, but could possiblybematerial toourconsolidated resultsofoperationsofanyoneperiod.Further,noassurancecanbegiventhatanyadverseout-comewouldnotbematerialtoourconsolidatedfinancialposition.

AT&T — TCI CasesInJune1998,classactionlawsuitswerefiledbythen-shareholdersofTele-Communications,Inc.(“TCI”)SeriesATCIGroupCommonStock(“CommonA”)againstAT&TandthedirectorsofTCIrelatingtotheacquisitionofTCIbyAT&T,allegingthatformermembersoftheTCIboardofdirectorsbreachedtheirfiduciarydutiestoCom-mon A shareholders by agreeing to transaction terms wherebyholdersoftheSeriesBTCIGroupCommonStockreceiveda10%premiumoverwhatCommonAshareholdersreceived.

InconnectionwiththeTCIacquisition (completed inearly1999),AT&TagreedundercertaincircumstancestoindemnifyTCI’sformerdirectorsforcertainliabilities,potentiallyincludingthoseincurredinconnectionwiththisaction.UnderthetermsofouracquisitionofAT&TCorp.’scablebusiness,(i)weagreedtoindemnifyAT&Tforcertain liabilities, potentially including those incurred by AT&T inconnectionwiththisaction,and(ii)weassumedcertainobligationsofTCItoindemnifyitsformerdirectors,potentiallyincludingthoseincurredinconnectionwiththisaction.

InOctober2006theselawsuitsweresettled.Weagreedtocontrib-uteapproximately$44milliontothesettlement.ThisamountwaspaidinNovember2006anddidnothaveamaterialimpactonourresultsofoperationsfortheyearendedDecember31,2006.ThesettlementwasapprovedinFebruary2007.

Patent LitigationWe are a defendant in several unrelated lawsuits claiminginfringementofvariouspatentsrelatingtovariousaspectsofourbusinesses. In certain of thesecasesother industryparticipantsarealsodefendants,andalsoincertainofthesecasesweexpectthatanypotentialliabilitywouldbeinpartorinwholetheresponsi-bilityofourequipmentvendorspursuanttoapplicablecontractualindemnification provisions. To the extent that the allegations inthese lawsuits canbeanalyzedbyusat this stageof theirpro-ceedings,webelieve theclaimsarewithoutmerit and intend todefendtheactionsvigorously.Thefinaldispositionoftheseclaimsis not expected to have a material adverse effect on our con-solidatedfinancialposition,butcouldpossiblybematerial toourconsolidatedresultsofoperationsofanyoneperiod.Further,no

assurancecanbegiventhatanyadverseoutcomewouldnotbematerialtoourconsolidatedfinancialposition.

Antitrust CasesWearedefendantsintwopurportedclassactionsoriginallyfiledintheUnitedStatesDistrictCourtsfortheDistrictofMassachusettsandtheEasternDistrictofPennsylvania,respectively.Thepoten-tialclassintheMassachusettscaseisoursubscriberbaseinthe“BostonCluster”area,andthepotentialclassinthePennsylvaniacaseisoursubscriberbaseinthe“PhiladelphiaandChicagoclus-ters,”asthosetermsaredefinedinthecomplaints.Ineachcase,theplaintiffsallegethatcertainsubscriberexchangetransactionswithothercableprovidersresulted inunlawful“horizontalmarketrestraints”inthoseareasandseekdamagespursuanttoantitruststatutes,includingtrebledamages.

Asa resultof recentevents inbothcases relating to theproce-duralissueofwhethertheplaintiffs’claimscouldproceedincourtor, alternatively, whether the plaintiffs should be compelled toarbitrate theirclaimspursuant toarbitrationclauses in theirsub-scriber agreements, it has become more likely that these caseswillproceedincourt.OurmotiontodismissthePennsylvaniacaseon the pleadings was denied, and the plaintiffs have moved tocertifyaclassaction.Weareopposingtheplaintiffs’motionandareproceedingwithclassdiscovery.Wehavemoved todismissthe Massachusetts case. The Massachusetts case was recentlytransferredtotheEasternDistrictofPennsylvaniaandplaintiffsareseekingtoconsolidateitwiththePennsylvaniacase.

Webelievetheclaims in theseactionsarewithoutmeritandaredefending the actions vigorously. The final disposition of theseclaims is not expected tohaveamaterial adverseeffect onourconsolidated financialposition,butcouldpossiblybematerial toourconsolidatedresultsofoperationsofanyoneperiod.Further,noassurancecanbegiventhatanyadverseoutcomewouldnotbematerialtoourconsolidatedfinancialposition.

OtherWearesubjecttootherlegalproceedingsandclaimsthatariseintheordinarycourseofourbusiness.Theamountofultimateliabilitywithrespecttosuchactionsisnotexpectedtomateriallyaffectourfinancialposition,resultsofoperationsorliquidity.

Note14:FinancialDatabyBusinessSegment

OurreportablesegmentsconsistofourCableandProgrammingbusinesses. In evaluating the profitability of our segments, thecomponents of net income (loss) below operating income (loss)beforedepreciationandamortizationarenotseparatelyevaluatedby our management. Assets are not allocated to segments formanagement reporting. Our financial data by business segmentisasfollows:


Corporate(inmillions) Cable(a)(b) Programming(c) andOther(d)(e) Eliminations(e)(f) Total

2006Revenues(g) $24,100 $1,053 $ 355 $(542) $24,966Operatingincome(loss)beforedepreciation andamortization(h) 9,704 241 (357) (146) 9,442Depreciationandamortization 4,657 166 80 (80) 4,823Operatingincome(loss) 5,047 75 (437) (66) 4,619CapitalExpenditures 4,244 16 31 104 4,3952005Revenues(g) $19,987 $ 919 $ 315 $(146) $21,075Operatingincome(loss)beforedepreciation andamortization(h)(i) 7,947 272 (302) 155 8,072Depreciationandamortization 4,346 154 71 (20) 4,551Operatingincome(loss)(i) 3,601 118 (373) 175 3,521CapitalExpenditures 3,409 16 38 158 3,6212004Revenues(g) $18,230 $ 787 $ 332 $(128) $19,221Operatingincome(loss)beforedepreciation andamortization(h)(i) 6,940 269 (310) 281 7,180Depreciationandamortization 4,102 162 105 (18) 4,351Operatingincome(loss)(i) 2,838 107 (415) 299 2,829CapitalExpenditures 3,394 17 21 228 3,660

(a)FortheyearsendedDecember31,2006,2005and2004,Cablesegmentrevenueswerederivedfromthefollowingservices:

2006 2005 2004

Video 62.6% 64.6% 67.0%High-speedInternet 20.7 18.8 16.1Phone 3.8 3.1 3.4Advertising 6.4 6.4 6.6Other 6.5 7.1 6.9

Total 100.0% 100.0% 100.0%

(b)Our regional sports and news networks (Comcast SportsNet, Comcast SportsNet Mid-Atlantic, Comcast SportsNet Chicago, Comcast SportsNet West, Cable SportsSoutheast,MountainWestSportsNetworkandCN8—TheComcastNetwork)areincludedinourCablesegment.Tobeconsistentwithourmanagementreportingpresentation,beginningAugust1,2006,theCablesegmentalsoincludestheoperatingresultsofthecablesystemsservingHouston,TexasheldintheTKCCP(seeNote5).TheoperatingresultsofthecablesystemsservingHouston,TexasarereversedintheEliminationscolumntoreconciletoourconsolidatedfinancialstatements.

(c)Programmingincludesourconsolidatednationalprogrammingnetworks:E!,Style,TheGolfChannel,VERSUS,G4andAZNTelevision.

(d)CorporateandOtherincludesComcastSpectacor,aportionofoperatingresultsofourlessthanwhollyownedtechnologydevelopmentventures(see“(e)”below),corporateactivitiesandallotherbusinessesnotpresentedinourCableorProgrammingsegments.

(e)Weconsolidateourlessthanwhollyownedtechnologydevelopmentventures,whichwecontrolorofwhichweareconsideredtheprimarybeneficiary.Theseventuresarewithvariouscorporatepartners,suchasMotorolaandGemstar.Theventureshavebeencreatedtosharethecostsofdevelopmentofnewtechnologiesforset-topboxesandotherdevices.TheresultsoftheseentitiesareincludedwithinCorporateandOther.CostallocationsaremadetotheCablesegmentbasedonourpercentageownershipineachentity.TheremainingnetcostsrelatedtotheminoritycorporatepartnersareincludedinCorporateandOther.

(f) IncludedintheEliminationscolumnareintersegmenttransactionsthatoursegmentsenterintowithoneanother.Themostcommontypesoftransactionsarethefollowing:

•ourProgrammingsegmentgeneratesrevenuebysellingcablenetworkprogrammingtoourCablesegment,whichrepresentsasubstantialmajorityoftherevenueelimina-tionamount

•ourCablesegmentreceivesincentivesofferedbyourProgrammingsegmentwhennegotiatingprogrammingcontractsthatarerecordedasareductionofprogrammingexpenses

•ourCablesegmentgeneratesrevenuebysellingtheuseofsatellitefeedstoourProgrammingsegment

(g)Non-U.S.revenueswerenotsignificantinanyperiod.Nosinglecustomeraccountedforasignificantamountofourrevenueinanyperiod.

(h)Tomeasuretheperformanceofouroperatingsegments,weuseoperatingincomebeforedepreciationandamortization,excludingimpairmentchargesrelatedtofixedandintangibleassets,andgainsorlossesfromthesaleofassets,ifany.Thismeasureeliminatesthesignificantlevelofnoncashdepreciationandamortizationexpensethatresultsfromthecapital-intensivenatureofourbusinessesandfromintangibleassetsrecognizedinbusinesscombinations.Itisalsounaffectedbyourcapitalstructureorinvestmentactivities.Weusethismeasuretoevaluateourconsolidatedoperatingperformance,theoperatingperformanceofouroperatingsegments,andtoallocateresourcesandcapitaltoouroperatingsegments.Itisalsoasignificantperformancemeasureinourannualincentivecompensationprograms.Webelievethatthismeasureisusefultoinvestorsbecauseitisoneofthebasesforcomparingouroperatingperformancewithothercompaniesinourindustries,althoughourmeasuremaynotbedirectlycomparabletosimilarmeasuresusedbyothercompanies.Thismeasureshouldnotbeconsideredasubstituteforoperatingincome(loss),netincome(loss),netcashprovidedbyoperatingactivitiesorothermeasuresofperformanceorliquidityreportedinaccordancewithGAAP.

(i) Tobeconsistentwithourmanagement reportingpresentation, the2005and2004segmentamountshavebeenadjustedas if stockoptionshadbeenexpensedasofJanuary1,2004(seeNote10).ThetotaladjustmentsarereversedintheEliminationscolumntoreconciletoourconsolidated2005and2004amounts.FortheyearsendedDecember31,2005and2004,theadjustmentsreducingoperatingincome(loss)beforedepreciationandamortizationbysegmentwereasfollows:

(inmillions) 2005 2004

Cable $116 $180Programming 1 (4)CorporateandOther 49 107

Total $166 $283


Note15:QuarterlyFinancialInformation(Unaudited)

First Second Third Fourth Total(inmillions,exceptpersharedata) Quarter Quarter Quarter Quarter Year

2006Revenues $5,595 $5,908 $6,432 $7,031 $24,966Operatingincome 1,004 1,173 1,224 1,218 4,619Incomefromcontinuingoperations 438 399 969 429(a) 2,235Incomefromdiscontinuedoperations 28 61 14 — 103Gainondiscontinuedoperations — — 234 (39)(a) 195Netincome $ 466 $ 460 $1,217 $ 390 $ 2,533Basicearningsforcommonstockholderspercommonshare(c)

Incomefromcontinuingoperations $ 0.14 $ 0.13 $ 0.31 $ 0.14 $ 0.71 Incomefromdiscontinuedoperations 0.01 0.02 — — 0.03 Gainondiscontinuedoperations — — 0.07 (.01) 0.06 Netincome $ 0.15 $ 0.15 $ 0.38 $ 0.13 $ 0.80Dilutedearningsforcommonstockholderspercommonshare(c)

Incomefromcontinuingoperations $ 0.14 $ 0.13 $ 0.31 $ 0.14 $ 0.70 Incomefromdiscontinuedoperations 0.01 0.02 — — 0.03 Gainondiscontinuedoperations — — 0.07 (0.01) 0.06 Netincome $ 0.15 $ 0.15 $ 0.38 $ 0.13 $ 0.792005Revenues $5,074 $5,301 $5,284 $5,416 $21,075Operatingincome 829 1,002 841 849 3,521Incomefromcontinuingoperations 122 401 198 107 828Incomefromdiscontinuedoperations 21 29 24 26 100Netincome $ 143 $ 430 $ 222 $ 133(b) $ 928Basicearningsforcommonstockholderspercommonshare(c)

Incomefromcontinuingoperations $ 0.04 $ 0.12 $ 0.06 $ 0.03 $ 0.25 Incomefromdiscontinuedoperations — 0.01 0.01 0.01 0.03 Netincome $ 0.04 $ 0.13 $ 0.07 $ 0.04 $ 0.28Dilutedearningsforcommonstockholderspercommonshare(c)

Incomefromcontinuingoperations $ 0.04 $ 0.12 $ 0.06 $ 0.03 $ 0.25 Incomefromdiscontinuedoperations — 0.01 0.01 0.01 0.03 Netincome $ 0.04 $ 0.13 $ 0.07 $ 0.04 $ 0.28

(a)Includesadjustmentsreducingestimatedgainsrecordedontransactionsthatclosedinthethirdquarterof2006.

(b)Includesrefinementtooureffectivetaxrateinthefourthquarterof2005.

(c)AdjustedtoreflecttheStockSplit


Note16:CondensedConsolidatingFinancialInformation

ComcastCorporationandfiveofourcableholdingcompanysub-sidiaries,ComcastCableCommunications,LLC(“CCCL”),ComcastCable Communications Holdings, Inc. (“CCCH”), Comcast MOGroup,Inc.(“ComcastMOGroup”),ComcastCableHoldings,LLC(“CCH”), and Comcast MO of Delaware, LLC (“Comcast MO ofDelaware”)fullyandunconditionallyguaranteedeachother’sdebtsecurities.ComcastMOGroup,CCHandComcastMOofDelawarearecollectivelyreferredtoasthe“CombinedCCHMOParents.”

InSeptember2005,ComcastCorporationunconditionallyguaran-teedComcastHoldings’ZONESdueOctober2029andits105⁄8%SeniorSubordinatedDebenturesdue2012, bothofwhichwereissuedbyComcastHoldings;accordingly,wehaveaddedCom-castHoldings’condensedconsolidatedfinancialinformationforallperiodspresented.Ourcondensedconsolidatingfinancialinforma-tionisasfollows:

CondensedConsolidatingBalanceSheetAsofDecember31,2006

Elimination Combined Non- and Consolidated Comcast CCCl CCCH CCHMO Comcast Guarantor Consolidation Comcast(inmillions) parent parent parent parents Holdings Subsidiaries Adjustments Corporation

Assets Cashandcashequivalents $ 77 $ — $ — $ — $ — $ 1,162 $ — $ 1,239 Investments — — — — — 1,735 — 1,735 Accountsreceivable,net — — — — — 1,450 — 1,450 Othercurrentassets 15 1 — — — 762 — 778

Totalcurrentassets 92 1 — — — 5,109 — 5,202

Investments — — — — — 8,847 — 8,847Investmentsinandamountsduefrom subsidiarieseliminateduponconsolidation 62,622 31,152 37,757 41,151 23,984 1,895 (198,561) —Propertyandequipment,net 17 — 1 — — 21,230 — 21,248Franchiserights — — — — — 55,927 — 55,927Goodwill — — — — — 13,768 — 13,768Otherintangibleassets,net — — — — — 4,881 — 4,881Othernoncurrentassets,net 176 16 20 — 31 289 — 532

Totalassets $ 62,907 $31,169 $37,778 $41,151 $24,015 $111,946 $(198,561) $110,405

liabilitiesandStockholders’Equity Accountspayableandaccruedexpenses relatedtotradecreditors $ 11 $ — $ — $ — $ — $ 2,851 $ — $ 2,862 Accruedexpensesandothercurrent liabilities 616 247 83 106 69 1,911 — 3,032 Deferredincometaxes — — — — — 563 — 563 Currentportionoflong-termdebt — 600 — 242 — 141 — 983

Totalcurrentliabilities 627 847 83 348 69 5,466 — 7,440

Long-termdebt,lesscurrentportion 15,358 4,397 3,498 3,046 683 1,010 — 27,992Deferredincometaxes 4,638 — — — 887 21,564 — 27,089Othernoncurrentliabilities 1,117 46 — — 76 5,237 — 6,476Minorityinterest — — — — — 241 — 241Stockholders’Equity Commonstock 35 — — — — — — 35 Otherstockholders’equity 41,132 25,879 34,197 37,757 22,300 78,428 (198,561) 41,132

Totalstockholders’equity 41,167 25,879 34,197 37,757 22,300 78,428 (198,561) 41,167

Totalliabilitiesand stockholders’equity $ 62,907 $31,169 $37,778 $41,151 $24,015 $111,946 $(198,561) $110,405


CondensedConsolidatingBalanceSheetAsofDecember31,2005


Assets Cashandcashequivalents $ — $ — $ — $ — $ — $ 947 $ — $ 947 Investments — — — — — 148 — 148 Accountsreceivable,net — — — — — 1,008 — 1,008 Othercurrentassets 16 — — — — 669 — 685 Currentassetsofdiscontinuedoperations — — — — — 60 — 60

Totalcurrentassets 16 — — — — 2,832 — 2,848

Investments — — — — — 12,675 — 12,675Investmentsinandamountsduefrom subsidiarieseliminateduponconsolidation 53,103 29,562 36,042 40,482 22,742 955 (182,886) —Propertyandequipment,net 11 — 2 — 3 17,688 — 17,704Franchiserights — — — — — 48,804 — 48,804Goodwill — — — — — 13,498 — 13,498Otherintangibleassets,net — — — — 4 3,114 — 3,118Othernoncurrentassets,net 122 21 23 — 43 426 — 635Othernoncurrentassetsofdiscontinued operations,net — — — — — 4,118 — 4,118

Totalassets $53,252 $29,583 $36,067 $40,482 $22,792 $104,110 $(182,886) $103,400

liabilitiesandStockholders’Equity Accountspayableandaccruedexpenses relatedtotradecreditors $ — $ — $ — $ — $ — $ 2,239 $ — $ 2,239 Accruedexpensesandothercurrent liabilities 447 224 113 127 89 1,482 — 2,482 Deferredincometaxes — — — — — 2 — 2 Currentportionoflong-termdebt — 620 — 995 — 74 — 1,689 Currentliabilityofdiscontinuedoperations — — — — — 112 — 112

Totalcurrentliabilities 447 844 113 1,122 89 3,909 — 6,524

Longterm-debt,lesscurrentportion 8,243 4,988 3,498 3,318 981 654 — 21,682Deferredincometaxes 3,470 — — — 811 23,089 — 27,370Othernoncurrentliabilities 873 54 — — 50 5,943 — 6,920Minorityinterest — — — — — 657 — 657Noncurrentliabilitiesofdiscontinued operations — — — — — 28 — 28Stockholders’Equity Commonstock 36 — — — — — — 36 Otherstockholders’equity 40,183 23,697 32,456 36,042 20,861 69,830 (182,886) 40,183

Totalstockholders’equity 40,219 23,697 32,456 36,042 20,861 69,830 (182,886) 40,219

Totalliabilitiesand stockholders’equity $53,252 $29,583 $36,067 $40,482 $22,792 $104,110 $(182,886) $103,400


CondensedConsolidatingStatementofOperationsFortheYearEndedDecember31,2006


Revenues Servicerevenues $ — $ — $ — $ — $ — $24,966 $ — $24,966 Managementfeerevenue 526 193 298 298 8 — (1,323) —

526 193 298 298 8 24,966 (1,323) 24,966

CostsandExpenses Operating(excludingdepreciation) — — — — — 9,010 — 9,010 Selling,generalandadministrative 256 193 298 298 16 6,776 (1,323) 6,514 Depreciation 8 — — — 2 3,818 — 3,828 Amortization — — — — 4 991 — 995

264 193 298 298 22 20,595 (1,323) 20,347

Operatingincome(loss) 262 — — — (14) 4,371 — 4,619OtherIncome(Expense) Interestexpense (776) (400) (325) (259) (68) (236) — (2,064) Investmentincome(loss),net — — — — 34 956 — 990 Equityinnetincome(losses)ofaffiliates 2,867 1,509 1,900 2,069 1,266 (138) (9,597) (124) Otherincome(expense) — — — — — 173 — 173

2,091 1,109 1,575 1,810 1,232 755 (9,597) (1,025)

Income(loss)fromcontinuingoperations beforeincometaxesandminorityinterest 2,353 1,109 1,575 1,810 1,218 5,126 (9,597) 3,594Incometax(expense)benefit 180 143 114 90 26 (1,900) — (1,347)

Income(loss)fromcontinuingoperations beforeminorityinterest 2,533 1,252 1,689 1,900 1,244 3,226 (9,597) 2,247Minorityinterest — — — — — (12) — (12)

Incomefromcontinuingoperations 2,533 1,252 1,689 1,900 1,244 3,214 (9,597) 2,235Incomefromdiscontinuedoperations, netoftax — — — — — 103 — 103Gainondiscontinuedoperations,netoftax — — — — — 195 — 195

NetIncome $2,533 $1,252 $1,689 $1,900 $1,244 $ 3,512 $(9,597) $ 2,533




Revenues Servicerevenues $ — $ — $ — $ — $ — $21,075 $ — $21.075 Managementfeerevenue 457 174 278 278 8 — (1,195) —

457 174 278 278 8 21,075 (1,195) 21,075

CostsandExpenses Operating(excludingdepreciation) — — — — — 7,513 — 7,513 Selling,generalandadministrative 204 174 278 278 15 5,736 (1,195) 5,490 Depreciation 3 — — — 3 3,407 — 3,413 Amortization — — — — 10 1,128 — 1,138

207 174 278 278 28 17,784 (1,195) 17,554

Operatingincome(loss) 250 — — — (20) 3,291 — 3,521OtherIncome(Expense) Interestexpense (371) (477) (329) (306) (101) (211) — (1,795) Investmentincome(loss),net — — — — (16) 105 — 89 Equityinnetincome(losses)ofaffiliates 1,007 1,372 605 804 977 43 (4,850) (42) Otherincome(expense) — — — — — (53) — (53)

636 895 276 498 860 (116) (4,850) (1,801)

Income(loss)fromcontinuingoperations beforeincometaxesandminorityinterest 886 895 276 498 840 3,175 (4,850) 1,720Incometax(expense)benefit 42 167 115 107 48 (1,352) — (873)

Income(loss)fromcontinuingoperations beforeminorityinterest 928 1,062 391 605 888 1,823 (4,850) 847Minorityinterest — — — — — (19) — (19)

Incomefromcontinuingoperations $ 928 $1,062 $ 391 $ 605 $ 888 $ 1,804 $(4,850) $ 828Incomefromdiscontinuedoperations, netoftax — — — — — 100 — 100

NetIncome $ 928 $1,062 $ 391 $ 605 $ 888 $ 1,904 $(4,850) $ 928




Revenues Servicerevenues $ — $ — $ — $ — $ — $19,221 $ — $19,221 Managementfeerevenue 416 161 253 253 8 — (1,091) —

416 161 253 253 8 19,221 (1,091) 19,221

CostsandExpenses Operating(excludingdepreciation) — — — — — 7,036 — 7,036 Selling,generalandadministrative 168 161 253 253 13 5,248 (1,091) 5,005 Depreciation 2 — — — 3 3,192 — 3,197 Amortization — — — — 11 1,143 — 1,154

170 161 253 253 27 16,619 (1,091) 16,392

Operatingincome(loss) 246 — — — (19) 2,602 — 2,829OtherIncome(Expense) Interestexpense (289) (474) (348) (399) (98) (266) — (1,874) Investmentincome(loss),net — — — — 100 372 — 472 Equityinnetincome(losses)ofaffiliates 998 1,170 310 569 997 (216) (3,909) (81) Otherincome(expense) — — — — — 397 — 397

709 696 (38) 170 999 287 (3,909) (1,086)

Income(loss)fromcontinuingoperations beforeincometaxesandminorityinterest 955 696 (38) 170 980 2,889 (3,909) 1,743Incometax(expense)benefit 15 166 122 140 6 (1,250) — (801)

Income(loss)fromcontinuingoperations beforeminorityinterest 970 862 84 310 986 1,639 (3,909) 942Minorityinterest — — — — — (14) — (14)

Incomefromcontinuingoperations 970 862 84 310 986 1,625 (3,909) 928Incomefromdiscontinuedoperations, netoftax — — — — — 42 — 42

NetIncome $ 970 $ 862 $ 84 $ 310 $986 $ 1,667 $(3,909) $ 970


CondensedConsolidatingStatementofCashFlowsFortheYearEndedDecember31,2006


OperatingActivities Netcashprovidedby(usedin) operatingactivities $ 90 $(240) $(226) $ (224) $ 20 $ 7,198 $— $ 6,618

FinancingActivities Proceedsfromborrowings 7,474 — — — — 23 — 7,497 Retirementsandrepaymentsofdebt (350) (619) — (988) (27) (55) — (2,039) Repurchasesofcommonstock (2,347) — — — — — — (2,347) Issuancesofcommonstock 410 — — — — — — 410 Other 33 — — — — (8) — 25

Netcashprovidedby(usedin) financingactivities 5,220 (619) — (988) (27) (40) — 3,546

InvestingActivities Nettransactionswithaffiliates (5,272) 859 226 1,212 (3) 2,978 — — Capitalexpenditures (8) — — — — (4,387) — (4,395) Cashpaidforintangibleassets — — — — — (306) — (306) Acquisitions,netofcashacquired — — — — — (5,110) — (5,110) Proceedsfromsalesandrestructuring ofinvestments 47 — — — 10 2,663 — 2,720 Purchasesofinvestments — — — — — (2,812) — (2,812) Proceedsfromsales(purchases)of short-terminvestments,net — — — — — 33 — 33 Other — — — — — (2) — (2)

Netcashprovidedby(usedin) investingactivities (5,233) 859 226 1,212 7 (6,943) — (9,872)

Increaseincashandcashequivalents 77 — — — — 215 — 292Cashandcashequivalents, beginningofyear — — — — — 947 — 947

Cashandcashequivalents,endofyear $ 77 $ — $ — $ — $ — $ 1,162 $— $ 1,239




OperatingActivities Netcashprovidedby(usedin) operatingactivities $ 61 $(256) $(204) $ (387) $(110) $ 5,731 $— $ 4,835

FinancingActivities Proceedsfromborrowings 3,972 — — — — 6 — 3,978 Retirementsandrepaymentsofdebt — (700) — (1,628) (13) (365) — (2,706) Repurchasesofcommonstock (2,313) — — — — — — (2,313) Issuancesofcommonstock 93 — — — — — — 93 Other — — — — — 15 — 15

Netcashprovidedby(usedin) financingactivities 1,752 (700) — (1,628) (13) (344) — (933)

InvestingActivities Nettransactionswithaffiliates (1,813) 956 204 2,015 123 (1,485) — — Capitalexpenditures — — — — — (3,621) — (3,621) Cashpaidforintangibleassets — — — — — (281) — (281) Acquisitions,netofcashacquired — — — — — (199) — (199) Proceedsfromsalesandrestructuring ofinvestments — — — — — 861 — 861 Purchasesofinvestments — — — — — (306) — (306) Proceedsfromsales(purchases)of short-terminvestments,net — — — — — (86) — (86) Other — — — — — (116) — (116)

Netcashprovidedby(usedin) investingactivities (1,813) 956 204 2,015 123 (5,233) — (3,748)

Increaseincashandcashequivalents — — — — — 154 — 154Cashandcashequivalents, beginningofyear — — — — — 793 — 793

Cashandcashequivalents,endofyear $ — $ — $ — $ — $ — $ 947 $— $ 947




OperatingActivities Netcashprovidedby(usedin) operatingactivities $ 482 $(143) $(155) $(478) $ 8 $ 6,368 $— $ 6,082

FinancingActivities Proceedsfromborrowings 620 — 400 — — 10 — 1,030 Retirementsandrepaymentsofdebt (300) (561) (400) (306) — (756) — (2,323) Repurchasesofcommonstock (1,361) — — — — — — (1,361) Issuancesofcommonstock 113 — — — — — — 113 Other 8 — — — — 17 — 25

Netcashprovidedby(usedin) financingactivities (920) (561) — (306) — (729) — (2,516)

InvestingActivities Nettransactionswithaffiliates 438 704 155 784 (8) (2,073) — — Capitalexpenditures — — — — — (3,660) — (3,660) Cashpaidforintangibleassets — — — — — (615) — (615) Acquisitions,netofcashacquired — — — — — (296) — (296) Proceedsfromsalesandrestructuring ofinvestments — — — — — 228 — 228 Purchasesofinvestments — — — — — (156) — (156) Proceedsfromsales(purchases)of short-terminvestments,net — — — — — (13) — (13) Proceedsfromsettlementofcontract ofacquiredcompany — — — — — 26 — 26 Other — — — — — (26) — (26)

Netcashprovidedby(usedin) investingactivities 438 704 155 784 (8) (6,585) — (4,512)

Decreaseincashandcashequivalents — — — — — (946) — (946)Cashandcashequivalents, beginningofyear — — — — — 1,739 — 1,739

Cashandcashequivalents,endofyear $ — $ — $ — $ — $— $ 793 $— $ 793


Reconciliationof2006OperatingIncometoOperatingCashFlow

(inmillions)

OperatingIncome $4,619DepreciationandAmortization 4,823

OperatingCashFlow(a) $9,442

(a)OperatingCashFlow(aspresentedabove)isdefinedasoperatingincomebeforedepreciation and amortization, excluding impairment charges related to fixed andintangibleassetsandgainsorlossesonsaleofassets,ifany.

Calculationof2006FreeCashFlow

(inmillions)

NetCashProvidedbyOperatingActivities $6,618CapitalExpenditures (4,395)CashPaidForIntangibleAssets (306)NonoperatingItems,NetofTax 706

FreeCashFlow(a) $2,623

(a)FreeCashFlow(aspresentedabove)isdefinedas“NetCashProvidedbyOperatingActivities”(asstatedinourConsolidatedStatementofCashFlows)reducedbycapitalexpenditures andcashpaid for intangible assets; and increasedbyanypaymentsrelatedtocertainnonoperatingitems,netofestimatedtaxbenefits(suchasincometaxes on investment sales, and nonrecurring payments related to income tax andlitigationcontingenciesofacquiredcompanies).

ReconciliationofNon-GAAPMeasures

ReconciliationofCableSegmentproForma,“AsAdjusted”FinancialData

ProForma Cable ProForma (inmillions) Cable Adjustments(a) ProForma %Growth %Growth

2006Revenue $24,100 $2,239 $26,339 12% 21%OperatingExpenses(excludingdepreciation andamortization) 14,396 1,432 15,828

OperatingCashFlow $ 9,704 $ 807 $10,511 15% 22%DepreciationandAmortization 4,657 608 5,265

OperatingIncome $ 5,047 $ 199 $ 5,246

2005Revenue $19,987 $3,569 $23,556OperatingExpenses(excludingdepreciation andamortization) 11,924 2,384 14,308 Stockoptionadjustment(b) 116 — 116

OperatingCashFlow $ 7,947 $1,185 $ 9,132DepreciationandAmortization 4,346 1,134 5,480

OperatingIncome $ 3,601 $ 51 $ 3,652

(a)Pro forma resultsadjustonly forcertainacquisitionsanddispositions, includingSusquehannaCommunications (April2006), theAdelphiaandTimeWarner transactions(July2006)andthedissolutionoftheTexasandKansasCitycablepartnership(effectiveJanuary1,2007).CablesegmentresultsarepresentedasifthetransactionsnotedabovewereeffectiveonJanuary1,2005.

(b)Tobeconsistentwithourmanagementreporting,the2005CablesegmentamountshavebeenadjustedasifstockoptionshadbeenexpensedasofJanuary1,2005.


OurClassAcommonstockislistedontheNasdaqGlobalSelectMarketunderthesymbolCMCSAandourClassASpecialcom-monstockislistedontheNasdaqGlobalSelectMarketunderthesymbolCMCSK.ThereisnoestablishedpublictradingmarketforourClassBcommonstock.OurClassBcommonstockcanbeconverted,onashareforsharebasis,intoClassAorClassASpe-cialcommonstock.Thefollowingtablesetsforth,fortheindicatedperiods,thehighandlowsalespricesofourClassAandClassASpecialcommonstock(adjustedtoreflecttheStockSplit).

ClassA ClassASpecial

High Low High Low

2006FirstQuarter $18.97 $16.90 $18.87 $16.73SecondQuarter 22.37 17.45 22.27 17.33ThirdQuarter 24.77 20.67 24.74 20.64FourthQuarter 28.94 24.17 28.69 24.142005FirstQuarter $23.00 $20.69 $22.77 $20.33SecondQuarter 22.69 20.37 22.47 19.80ThirdQuarter 21.54 19.16 21.25 18.82FourthQuarter 19.56 17.20 19.24 17.01

WehavenotdeclaredandpaidanycashdividendsonourClassA,ClassASpecialorClassBcommonstockinourlasttwofiscalyearsanddonotintendtodosofortheforeseeablefuture.

AsofDecember31,2006,therewere921,275recordholdersofourClassAcommonstock,2,266recordholdersofourClassASpecial commonstockand three recordholdersofourClassBcommonstock.

MarketfortheRegistrant’sCommonEquity

StockperformanceGraphThe following graph compares the yearly percentage change inthecumulative total shareholder returnonourClassAcommonstock and Class A Special common stock during the five yearsendedDecember31,2006,withthecumulativetotalreturnontheStandard&Poor’s500StockIndexandwithaselectedpeergroupconsistingofusandothercompaniesengagedinthecable,tele-communicationsandmedia industries.ThispeergroupconsistsofCablevisionSystemsCorporation (ClassA),TimeWarner Inc.,TheDirecTVGroupInc.andEchostarCommunicationsCorp.Thecomparisonassumes$100wasinvestedonDecember31,2001,inourClassAcommonstockandClassASpecialcommonstockandineachofthefollowingindicesandassumesthereinvestmentofdividends.

COMpARISONOF5yEARCUMUlATIVETOTAlRETURNAmongComcastCorporation,theS&P500IndexandaPeerGroup

$0

$20

$40

$60

$80

$100

$120

$140

$160Peer Group

S & P 500

Comcast Corporation Class A Special

Comcast Corporation Class A

12/0612/0512/0412/0312/0212/01

ComcastClassAComcastClassASpecialS&P500PeerGroup

(indollars) 2002 2003 2004 2005 2006

ComcastClassA 65 91 92 72 118ComcastClassASpecial 63 87 91 71 116S&P500StockIndex 78 100 111 117 135PeerGroupIndex 46 64 67 57 84

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YearEndedDecember31(inmillions,exceptpersharedata) 2006 2005 2004 2003 2002

StatementofOperationsDataRevenues $ 24,966 $ 21,075 $ 19,221 $ 17,330 $ 7,997Operatingincome 4,619 3,521 2,829 1,938 948Income(loss)fromcontinuingoperations 2,235 828 928 (222) (452)Discontinuedoperations(a)(b) 298 100 42 3,462 178Netincome(loss) 2,533 928 970 3,240 (274)Basicearnings(loss)forcommonstockholderspercommonshare(c)

Income(loss)fromcontinuingoperations $ 0.71 $ 0.25 $ 0.28 $ (0.07) $ (0.27) Discontinuedoperations(a)(b) 0.09 0.03 0.01 1.02 0.11

Netincome(loss) $ 0.80 $ 0.28 $ 0.29 $ 0.95 $ (0.16)

Dilutedearnings(loss)forcommonstockholderspercommonshare(c)

Income(loss)fromcontinuingoperations $ 0.70 $ 0.25 $ 0.28 $ (0.07) $ (0.27) Discontinuedoperations(a)(b) 0.09 0.03 0.01 1.02 0.11

Netincome(loss) $ 0.79 $ 0.28 $ 0.29 $ 0.95 $ (0.16)

BalanceSheetData(atyearend)Totalassets $110,405 $103,400 $105,035 $109,348 $113,485Long-termdebt 27,992 21,682 20,093 23,835 27,956Stockholders’equity 41,167 40,219 41,422 41,662 38,329StatementofCashFlowsDataNetcashprovidedby(usedin): Operatingactivities $ 6,618 $ 4,835 $ 6,082 $ 2,686 $ 2,518 Financingactivities 3,546 (933) (2,516) (7,048) (1,005) Investingactivities (9,872) (3,748) (4,512) 5,239 (1,125)

(a)InJuly2006,inconnectionwiththetransactionswithAdelphiaandTimeWarner,wetransferredourpreviouslyownedcablesystemslocatedinLosAngeles,ClevelandandDallastoTimeWarnerCable.ThesecablesystemsarepresentedasdiscontinuedoperationsfortheyearsendedonorbeforeDecember31,2006(seeNote5toourconsolidatedfinancialstatements).

(b)InSeptember2003,wesoldourinterestinQVCtoLibertyMediaCorporation.QVCispresentedasadiscontinuedoperationfortheyearsendedonandbeforeDecem-ber31,2003.

(c)AdjustedtoreflecttheStockSplit.

SelectedFinancialData


BoardofDirectorsandCorporateExecutives

BoardofDirectors

S.DeckerAnstromPresidentandChiefOperatingOfficerLandmarkCommunications,Inc.

KennethJ.BaconExecutiveVicePresidentHousingandCommunityDevelopmentFannieMae

SheldonM.BonovitzChairmanandChiefExecutiveOfficerDuaneMorrisLLP

EdwardD.BreenChairmanandChiefExecutiveOfficerTycoInternational,Ltd.

JulianA.BrodskyNon-ExecutiveViceChairman

JosephJ.CollinsChairmanAegis,LLCRetiredChairmanandChiefExecutiveOfficerTimeWarnerCable

J.MichaelCookRetiredChairmanandChiefExecutiveOfficerDeloitte&ToucheLLP

JeffreyA.HonickmanChiefExecutiveOfficerPepsi-ColaandNationalBrandBeverage,Ltd.

Brianl.RobertsChairmanandCEO

RalphJ.RobertsFounderChairman,ExecutiveandFinanceCommittee

Dr.JudithRodinPresidentTheRockefellerFoundation

MichaelI.SovernChairmanSotheby’sHoldings,Inc.

CorporateExecutives

Brianl.RobertsChairmanandChiefExecutiveOfficer

RalphJ.RobertsFounderChairman,ExecutiveandFinanceCommittee

JohnR.AlchinExecutiveVicePresidentandCo-ChiefFinancialOfficer

StephenB.BurkeExecutiveVicePresidentandChiefOperatingOfficerPresident,ComcastCable

Davidl.CohenExecutiveVicePresident

lawrenceS.SmithExecutiveVicePresidentandCo-ChiefFinancialOfficer

Amyl.BanseSeniorVicePresidentInteractiveMediaPresidentComcastInteractiveMedia

ArthurR.BlockSeniorVicePresident,GeneralCounselandSecretary

MarkA.CoblitzSeniorVicePresidentStrategicPlanning

RobertS.pickSeniorVicePresidentCorporateDevelopment

lawrenceJ.SalvaSeniorVicePresident,ChiefAccountingOfficerandController

C.StephenBackstromVicePresidentTaxation

payneD.BrownVicePresidentStrategicInitiatives

KarenDoughertyBuchholzVicePresidentAdministration

JosephF.DiTrolioVicePresidentFinancialOperations

MarleneS.DoonerVicePresidentInvestorRelations

WilliamE.DordelmanVicePresidentFinance

KamalDuaVicePresidentInternalAuditandGeneralAuditor

leonardJ.GattiVicePresidentFinancialReporting

GreggM.GoldsteinVicePresidentCorporateDevelopment

KerryKnottVicePresidentGovernmentAffairs

CharisseR.lilleVicePresidentHumanResources

KennethMikalauskasVicePresidentFinance

MarcA.RockfordVicePresidentandSeniorDeputyGeneralCounsel

D’ArcyF.RudnayVicePresidentCorporateCommunications

JosephW.Waz,Jr.VicePresidentExternalAffairsandPublicPolicyCounsel


ComcastCable

StephenB.BurkePresident

DavidA.ScottExecutiveVicePresidentFinanceandAdministration

DavidN.WatsonExecutiveVicePresidentOperations

MadisonBondExecutiveVicePresidentContentAcquisition

DavidA.JulianoExecutiveVicePresidentMarketingandProductDevelopment

JohnD.SchanzExecutiveVicePresidentNationalEngineeringandTechnologyOperations

TonyG.WernerExecutiveVicePresidentandChiefTechnologyOfficer

CatherineAvgirisSeniorVicePresidentandGeneralManagerVoiceServices

GregR.ButzSeniorVicePresidentProductDevelopmentGeneralManagerMediaServices

DouglasGastonGeneralCounsel

Suzannel.KeenanSeniorVicePresidentCustomerServiceandComcastUniversity

CharisseR.lilleSeniorVicePresidentHumanResources

KevinM.CaseyPresidentNorthernDivision

WilliamConnorsPresidentMidwestDivision

DivisionExecutives

MichaelA.DoylePresidentEasternDivision

Bradleyp.DustoPresidentWesternDivision

JohnH.RidallPresidentSouthernDivision

WilliamE.StemperPresidentComcastBusinessServices

CharlesW.ThurstonPresidentComcastSpotlight

Comcastprogramming

JeffShellPresident

JosephM.DonnellyChiefFinancialOfficer

DavidT.CassaroPresidentComcastNetworkAdvertisingSales

TedHarbertPresidentandCEOComcastEntertainmentGroup

GavinHarveyPresidentVERSUS

DavidManougianChiefExecutiveOfficerTheGolfChannel

Dianel.RobinaPresidentEmergingNetworks

RodShanksPresidentAZN

NealTilesPresidentG4

SandyWaxPresidentandGeneralManagerPBSKIDSSprout

Jackl.WilliamsPresidentComcastSportsManagementServicesPresidentandChiefExecutiveOffierComcastSportsNet

ComcastInteractiveMedia

Amyl.BansePresident

SamuelH.SchwartzExecutiveVicePresidentStrategyandDevelopment

ComcastSpectacor

EdwardM.SniderChairman

FredA.ShabelViceChairman

peterA.luukkoPresident

SanfordlipsteinExecutiveVicePresidentFinanceandChiefFinancialOfficer

philipI.WeinbergExecutiveVicePresidentandGeneralCounsel

Shareholder Information

Corporate HeadquartersComcast Corporation1500 Market StreetPhiladelphia, PA 19102-2148215-665-1700www.comcast.com

Stock ListingsComcast’s stock trades on the Nasdaq Global Select Market under the following trading symbols:Class A common stock: CMCSAClass A Special common stock: CMCSK

Stock Transfer Agent and RegistrarComputershare Trust Co., N.A.P.O. Box 43091Providence, RI 02940-3091Domestic: 888-883-8903TTD Domestic: 800-952-9245International: 781-575-4730www.computershare.com/comcast

Shareholder ServicesPlease contact our Stock Transfer Agent and Registrar with inquiries concerning shareholder accounts of record, stock transfer matters, information on Book Entry ownership, account consolidations or lost certificates.

To eliminate duplicate mailings, please contact Computershare (if you are a registered shareholder) or your broker (if you hold your stock through a brokerage firm).

If you wish to receive all shareholder information exclusively online, you can register by going to www.cmcsa.com or www.cmcsk.com and following the instructions under Enroll for E-Delivery on our Shareholder Services page.

Investor RelationsComcast Investor Relations1500 Market StreetPhiladelphia, PA 19102-2148866-281-2100www.cmcsa.com or www.cmcsk.comTo e-mail Investor Relations, go to our Web site and click on Contact Investor Relations.

2006 Annual Report on Form 10-KThis Annual Report to Shareholders contains much of the information that is included in the 2006 Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission. For a copy of Comcast’s Form 10-K for the year ended Decem ber 31, 2006, visit our Investor Relations Web site (www.cmcsa.com or www.cmcsk.com) or call our Investor Relations Hotline toll-free at 866-281-2100. Other printed information is also available through this hotline.

Stock SplitOn January 31, 2007, our Board of Directors approved a three-for-two stock split in the form of a 50% stock dividend (the “Stock Split”) payable on February 21, 2007, to shareholders of record on February 14, 2007. The number of shares out standing and related amounts presented in this Annual Report to Shareholders have been adjusted to reflect the Stock Split for all periods presented.

2007 Annual Meeting of ShareholdersPennsylvania Convention CenterOne Convention Center Place1101 Arch StreetPhiladelphia, PA 19107May 23, 20079 a.m. Eastern Time

Legal CounselDavis Polk & Wardwell, New York, NY

Independent Registered Public Accounting FirmDeloitte & Touche LLP, Philadelphia, PA

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1500 Market StreetPhiladelphia, PA 19102-2148215-665-1700www.comcast.com

CO-AR-07

comcast Annual Report to Shareholders 2006

Economy & Finance

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stock transfer

derivative

consolidated

fi ve years

comcast digital

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