Page |1 DEVRY UNIVERSITY
Analysis of 2010 Annual ReportRandall Potts Accounting 305
Professor Nekesha Joy August 14, 2011
Comcast Corporation, commonly referred to as Comcast, is the
largest cable operator, home internet service provider, and third
largest home telephone service provider in the United States,
providing cable television, broadband internet, and telephone
service to both residential and commercial customers in 39 states
and the District of Columbia. The company is headquartered in
Philadelphia, Pennsylvania. Comcast also has significant holding in
several cable networks (including E! Entertainment Television,
Style Network, G4, The Golf Channel and Versus), distribution (The
Platform), and related businesses. Comcast acquired a majority
stake in media conglomerate NBC Universal in January 2011.
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ContentsAnalysis of 2010 Annual Report
....................................................................................................................
1
What is the amount of property and equipment on the balance
sheet for the two most recent years? What is the amount of
depreciation expense? What amounts are on the cash flow statement
for the most recent year that relate to depreciation, gains and
sales of property and equipment, and purchases and sale of property
and equipment? What amounts are permitted for inclusion in the
capitalized cost of property and equipment?
............................................................. 7
Looking at the footnote disclosures of the company, what are the
individual components of property and equipment? For example, what
are the amounts for land, building, equipment, accumulated
depreciation, and so forth? How do companies account for
nonmonetary exchange and dispositions of property and equipment?
.....................................................................................
8 Does the company have intangible assets? If so what are the types
of intangible assets (patent, copyrights, etc.) and their amounts?
What is the amount of amortization expense? What amounts on the
most recent cash flow statement relate to the purchase and sale of
intangible assets? How do intangible assets differ from property
and equipment? What costs do we include in intangible assets?
.................................................................................................................................................
10 What are the company's depreciation methods? What is the range
of estimated useful lives used for depreciating their assets? Does
the company use the same depreciation methods for financial
statements and tax returns? If not, please describe the methods
used for tax purposes. ................ 13 What are the company's
footnote disclosures relating to impairment? Please also describe
how to determine if impairment exists and how to calculate the
impairment loss. ...................................... 14 What are
the amounts and descriptions for the company's current liabilities
for the most recent year? Does the company have any contingent
liabilities? If yes, please describe. What are the three categories
of contingent liabilities and the treatment for each type? Does the
company have any subsequent events disclosed in their footnotes? If
so, please describe them. .................................. 15
What are the amounts and descriptions for all of the company's
long-term liabilities on their balance sheet for the most recent
two years? What is the interest expense for the two most recent
years? What amounts are included in the cash flow statements for
proceeds from issuance of debt and repayment of debt for the most
recent year? For each note payable discussed in the footnotes
disclosures, what is the interest rate, total amount borrowed, and
maturity date? ......................... 18 Does the company have
bonds payable? If so, what are the amounts? Please also describe
how bonds payable differ from notes payable and how to account for
the issuance of bonds at par, at a discount, and at a premium. How
is the discount and premium amortized? What is the effective
interest method?
................................................................................................................................
20 Works Cited
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21
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Comcast Corporation, Inc. Consolidated Balance Sheet December
31, 2010 (in millions) Current assets: 2010 2009 Difference %Change
Cash and Cash Equivalents $5,984 $671 $5,313 792% Investments 81 50
$31 62% Accounts receivable, less allowance for doubtful 1,855
1,711 $144 8% accounts of $173 and $175 Deferred Income Taxes 174
240 ($66) -28% Other Current Assets 792 551 $241 44% $8,886 $3,223
Total Current Assets $5,663 176% Investments 6,670 5,947 $723 12%
Property, plant and equipment, net of 23,515 20,858 $2,657 13%
depreciation of $32,505 and $27,810 Franchise Rights 59,442 59,452
($10) 0% Goodwill 14,958 14,933 $25 0% Other intangible assets, net
of accumulated 3,602 4,105 ($503) -12% amortization of $9,791 and
$80,711 Other Noncurrent Assets Net 1,461 1,218 $243 20% Total
Assets $118,534 $109,736 $8,798 8% Current Liabilities Accounts
Payable and accrued expenses related $3,291 $3,094 $197 6% to trade
creditors Accrued Salaries and Wages 475 487 ($12) -2% Accrued
Expenses and Other Current Liabilities 2,668 2,512 $156 6% Current
Portion of Long-Term Debt 1,800 1,156 $644 56% Total Current
Liabilities $8,234 $7,249 $985 14% Long-Term Debt, Less Current
Portion 29,615 27,940 $1,675 6% Deferred Income Taxes 28,246 27,800
$446 2% Other Noncurrent Liabilities 7,862 6,767 $1,095 16%
Redeemable Non-controlling Interests 143 166 ($23) -14% Total
Liabilities $74,100 $69,922 $4,178 6% Equity: Class A Common Stock
24 24 $0 0% Class A Special Common Stock 8 8 $0 0% Additional
Paid-In Capital 39,780 40,247 ($467) -1% Retained Earnings 12,158
10,005 $2,153 22% Treasury Stock (7,517) (7,517) $0 0% Accumulated
Other Comprehensive Income (99) (46) ($53) 115% Non-controlling
Interests 80 90 ($10) -11% Total Liabilities and Equity $118,534
$112,733 $5,801 5%Figure 1: Consolidated Balance Sheet
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Comcast Corporation, Inc. Consolidated Statement of Operations
For the year ending December 31, 2010 (in millions except per share
data) 2010 $37,937 2009 $35,756 2008 $34,423
Revenue Costs and Expenses: Operating (excluding depreciation
andamortization)
15,250 8,091 5,539 1,077 29,957 7,980 (2,156) 288 (141) 133
(1,876) 6,104 (2,436) 3,668 (33) $3,635 $1.29 $1.29 $0.370
14,380 7,662 5,483 1,017 28,542 7,214 (2,348) 282 (64) 22
(1,487) 5,106 (1,478) 3,620 10 $3,638 $1.27 $1.26 $0.297
13,662 7,629 5,457 943 27,691 6,732 (2,439) 89 (39) (285)
(2,674) 4,058 (1,533) 2,525 22 $2,547 $0.87 $0.86 $0.250
Selling, General and Administrative Depreciation Amortization
Operating Income Other Income (Expenses): Interest Expense
Investment Income (Loss), net Equity in Net Income (Losses) of
Affiliates, net Other Income (Expense) Income before Taxes Income
Tax Expense Net Income from Consolidated Operations Net (Income)
loss Attributed to Noncontrolling Interests Net Income Attributed
to Comcast Corporation Basic Earnings per Common Share Attributable
To Shareholders Diluted Earnings per Common Share Attributable to
Shareholders Dividends Declared per Common Share Attribute
Shareholders
Figure 2: Consolidated Statement of Operations
Page |6Comcast Corporation, Inc Consolidated Statement of Cash
Flows Year ended December 31 (in millions) 2010 Operating
Activities Net income from consolidated operations $3,668
Adjustments to reconcile net income from consolidated operations to
net cash provided by operating activities: Depreciation 5,539
Amortization 1,077 Share-based compensation 300 Noncash Interest
Expense (Income), net 141 Equity in net (Income) loss of
affiliates, net 141 (Gains) losses on investments and noncash other
(income) expense, net (267) Deferred income taxes 649 Changes in
operating assets and liabilities, net of effects of acquisitions
and divestitures: Change in accounts receivable, net (131) Change
in accounts payable and accrued expenses related to trade creditors
37 Change in other operating assets and liabilities 125 Net cash
provided by (used in) operating activities 11,179 Investing
Activities: Capital expenditures (4,961) Cash paid for intangible
assets (536) Acquisitions, net of cash acquired (183) Proceeds from
sales of investments 99 Purchases of investments (260) Other 130
Net cash provided by (used in) investing activities (5,711)
Financing Activities: Proceeds from borrowings 3,420 Repurchases
and repayments of debt (1,153) Repurchases of common stock (1,200)
Dividends paid (1,064) Issuances of common stock 34 Other (192) Net
cash provided by (used in) financing activities (166) Increase
(decrease) in cash and cash equivalents 5,313 Cash and cash
equivalents, beginning of year 671 Cash and cash equivalents, end
of year $5,984 2009 $3,628 2008 $2,525
5,483 1,017 257 160 64 (201) 832 (84) (136) (739) 10,281 (5,177)
(522) (88) (346) 74 (5,897) 1,564 (4,738) (765) (761) 1 (209)
(4,908) (524) 1,195 $671
5,457 943 258 209 39 321 495 39 (38) (17) 10,231 (5,750) (527)
(738) 737 (1,167) (32) (7,477) 3,535 (2,610) (2,800) (547) 53 (153)
(2,522) 232 963 $1,195
Figure 3: Consolidated Statement of Cash Flows
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What is the amount of property and equipment on the balance
sheet for the two most recent years? What is the amount of
depreciation expense? What amounts are on the cash flow statement
for the most recent year that relate to depreciation, gains and
sales of property and equipment, and purchases and sale of property
and equipment? What amounts are permitted for inclusion in the
capitalized cost of property and equipment?
Property and equipment are stated at cost. Comcast capitalizes
improvements that extend asset lives and expense repairs and
maintenance costs as incurred. For assets that are sold or retired,
they remove the applicable cost and accumulated depreciation and,
unless the gain or loss on disposition is presented separately,
Comcast recognizes it as a component of depreciation expense
(Comcast Corporation Annual Report, 2011). Comcast capitalizes the
costs associated with the construction of and improvements to their
cable transmission and distribution facilities and new service
installations. Costs include all direct labor and materials, as
well as various indirect costs. They capitalize initial customer
installation costs that are directly attributable to installation
of the product, including material, labor and overhead costs, in
accordance with accounting guidance related to cable television
companies. All costs incurred in connection with subsequent service
disconnects and reconnects are expensed as they are incurred.
Comcast records depreciation using the straightline method over the
assets estimated useful life (Comcast Corporation Annual Report,
2011). Comcast evaluates the recoverability of their property and
equipment whenever events or substantive changes in circumstances
indicate that the carrying amount may not be recoverable or the
useful life has changed. The evaluation is based on the cash flows
generated by the underlying assets and profitability information,
including estimated future operating
Page |8
results, trends or other determinants of fair value. If the
total of the expected future undiscounted cash flows were less than
the carrying amount of the asset, we would recognize an impairment
charge for the difference between the estimated fair value and the
carrying value of the asset (Comcast Corporation Annual Report,
2011). Looking at the footnote disclosures of the company, what are
the individual components of property and equipment? For example,
what are the amounts for land, building, equipment, accumulated
depreciation, and so forth? How do companies account for
nonmonetary exchange and dispositions of property and
equipment?
Comcast Corporation, Inc Property and Equipment Detail December
31, 2011 (in millions) Weighted Average Original Useful Life at
December 31, 11 years 6 years 6 years 20 years -
Cable Distribution System Customer Premises Equipment Vehicles
and Other Equipment Buildings and Building Improvements Land
Property and Equipment at Cost Less: Accumulated Depreciation
Property and Equipment, net
2010 2009 $27,727 $24,540 21,716 19,639 4,392 5,343 1,981 1,937
204 206 56,020 51,665 (32,505) (27,810) $23,515 $23,855
Figure 4: Property and Equipment Detail
In 2010, Comcast performed an evaluation of its asset base,
resulting in the removal of fully depreciated assets no longer in
service. Comcast also made adjustments within property and
equipment that resulted in changes in the prior year amounts
classified in the cable distribution system, customer premises
equipment and vehicles and other equipment categories. These
adjustments did not affect prior year property and equipment,
net.
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The accounting guidance related to financial assets and
financial liabilities (financial instruments) establishes a
hierarchy that prioritizes fair value measurements based on the
types of inputs used for the various valuation techniques (market
approach, income approach and cost approach). The levels of the
hierarchy are described below: Level 1: consists of financial
instruments whose values are based on quoted market prices for
identical financial instruments in an active market. Level 2:
consists of financial instruments that are valued using models or
other valuation methodologies. These models use inputs that are
observable either directly or indirectly; Level 2 inputs include:
Quoted prices for similar assets or liabilities in active markets.
Quoted prices for identical or similar assets or liabilities in
markets that are not active. Pricing models whose inputs are
observable for substantially the full term of the financial
instrument. Pricing models whose inputs are derived principally
from or corroborated by observable market data through correlation
or other means for substantially the full term of the financial
instrument. Level 3: consists of financial instruments whose values
are determined using pricing models that use significant inputs
that are primarily unobservable, discounted cash flow
methodologies, or similar techniques, as well as instruments for
which the determination of fair value requires significant
management judgment or estimation.
P a g e | 10
Comcasts assessment of the significance of a particular input to
the fair value measurement requires judgment and may affect the
valuation of financial instruments and their classification within
the fair value hierarchy. Financial instruments are classified in
their entirety based on the lowest level of input that is
significant to the fair value measurement. There have been no
changes in the classification of any financial instruments within
the fair value hierarchy in the periods presented (Comcast
Corporation Annual Report, 2011). Does the company have intangible
assets? If so what are the types of intangible assets (patent,
copyrights, etc.) and their amounts? What is the amount of
amortization expense? What amounts on the most recent cash flow
statement relate to the purchase and sale of intangible assets? How
do intangible assets differ from property and equipment? What costs
do we include in intangible assets?
Comcast Corporation, Inc. The Carrying Amount and Accumulated
Amortization of Intangible Assets December 31, 2011 (in millions)
Useful Life at December 31, 2010 4 to 12 years 6 to 22 years 5 to
15 years 3 to 5 years 3 to 10 years 1 to 10 years 2 to 25 years
2010 Gross Caring Amount $5,554 1,858 1,077 2,594 307 1,149 854
$13,393 Accumulated Amortization ($4,682) (1,287) (608) (1,624)
(207) (976) (417) ($9,791) Gross Caring Amount $5,515 1,861 968
2,283 246 1,094 849 $12,816 2009 Accumulated Amortization ($4,370)
(1,119) (499) (1,388) (148) (853) (334) ($8,711)
Customer Relationships Programming Distribution Rights Cable
franchise renewal cost and contractual operating rights Software
Patents and Other Technology Rights Programming Agreements and
Rights Other Agreements and Rights Total
Figure 5: The Carrying Amount and Accumulated Amortization of
Intangible Assets
Franchise Rights Comcast franchise rights consist primarily of
cable franchise rights. Cable franchise rights represent the value
the company attributes to agreements with state and local
authorities that allow access to homes and businesses in cable
service areas acquired in business combinations. Comcast also has
sports franchise rights, which represent the value the company
attaches to our two professional sports teams that were acquired in
business
P a g e | 11
combinations. Comcast does not amortize their franchise rights
because the company has determined that they have an indefinite
life. The company reassesses this determination periodically or
whenever events or substantive changes in circumstances occur.
Costs the company incurs in negotiating and renewing cable
franchise agreements are included in other intangible assets and
are primarily amortized on a straight-line basis over the term of
the franchise agreement (Comcast Corporation Annual Report, 2011).
Programming Distribution Rights Comcast programming subsidiaries
enter into multiyear license agreements with various multichannel
video providers for distribution of their networks programming
(programming distribution rights). Comcast capitalizes amounts paid
to secure or extend these programming distribution rights and
include them within other intangible assets. They amortize these
programming distribution rights on a straight-line basis over the
term of the related license agreements. Comcast classifies the
amortization of these programming distribution rights as a
reduction to revenue unless the Programming subsidiary receives, or
will receive, an identifiable benefit from the distributor separate
from the fee paid for the programming distribution right, in which
case they recognize the fair value of the identified benefit in the
period in which it is received (Comcast Corporation Annual Report,
2011). Software Comcast capitalizes direct development costs
associated with internal-use software, including external direct
costs of material and services and payroll costs for employees
devoting time to these software projects. They also capitalize
costs associated with the purchase of software licenses. Comcast
includes these costs within other intangible assets and
amortize
P a g e | 12
them on a straight-line basis over a period not to exceed 5
years, beginning when the asset is substantially ready for use. The
company expenses maintenance and training costs, as well as costs
incurred during the preliminary stage of a project, as they are
incurred. They capitalize initial operating system software costs
and amortize them over the life of the associated hardware (Comcast
Corporation Annual Report, 2011).
Other Intangibles Other intangible assets consist primarily of
customer relationships acquired in business combinations,
programming distribution rights, software, cable franchise renewal
costs, and programming agreements and rights. These assets are
amortized primarily on a straight-line basis over the estimated
useful life or the term of the related agreements (Comcast
Corporation Annual Report, 2011). Does the company have goodwill?
What are the footnote disclosures relating to goodwill and the
related acquisition? Please also describe the calculation of
goodwill and how we account for differences between fair value and
book value of assets acquired.Comcast Corporation, Inc. Changes in
the Caring Amount of Goodwill By Business Segment (in millions)
Corporate Cable Programming and Other a $12,732 $1,620 $537
Balance, December 31, 2008 Acquisitions 33 10 Settlements in
Adjustments 63 (62) a 12,828 1,630 475 Balance, December 31, 2009
Acquisitions 81 13 10 Impairments (60) (16) Settlements and
Adjustments (3) (1) 1 Balance, December 31, 2010 $12,906 $1,582
$470
Total $14,889 43 1 14,933 104 (76) (3) $14,958
(a) The December 31, 2008 and 2009 Cable segment and Corporate
and Other amounts have been adjusted for segment reclassifications
to be consistent with our 2010
Figure 6: Changes in the Carrying Amount of Goodwill by Business
Segment
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Comcast assess the recoverability of its goodwill annually, or
more frequently whenever events or substantive changes in
circumstances indicate that the asset might be impaired. The
company generally performs the assessment of its goodwill one level
below the operating segment level. In its Cable business, since
components one level below the segment level (Cable divisions) are
not separate reporting units and have similar economic
characteristics, the company aggregates the components into one
reporting unit at the Cable segment level. The assessment of
recoverability considers if the carrying amount of a reporting unit
exceeds its fair value, in which case an impairment charge is
recorded to the extent the carrying amount of the reporting units
goodwill exceeds its implied fair value. Unless presented
separately, the impairment charge is included as a component of
amortization expense (Comcast Corporation Annual Report, 2011).
What are the company's depreciation methods? What is the range of
estimated useful lives used for depreciating their assets? Does the
company use the same depreciation methods for financial statements
and tax returns? If not, please describe the methods used for tax
purposes.
For its financial reports Comcast uses straight-line
depreciation with a range of estimated useful lives shown in figure
4, "Property and Equipment Detail". The company bases their
provision for income taxes on its current period income, changes in
its deferred income tax assets and liabilities, income tax rates,
changes in estimates of their uncertain tax positions, and tax
planning opportunities available in the jurisdictions in which they
operate. Substantially all of the companies income is from
operations in the United States. Comcast recognizes its deferred
tax assets and liabilities when there are temporary differences
between the financial reporting basis and tax basis of their assets
and liabilities and for the expected benefits of using
P a g e | 14
net operating loss carry forwards. When a change in the tax rate
or tax law has an impact on deferred taxes, Comcast applies the
change based on the years in which the temporary differences are
expected to reverse. Comcast records the change in its consolidated
financial statements in the period of enactment (Comcast
Corporation Annual Report, 2011). Income tax consequences that
arise in connection with business combinations include identifying
the tax bases of assets and liabilities acquired and any
contingencies associated with uncertain tax positions assumed or
resulting from the business combination. Deferred tax assets and
liabilities related to temporary differences of acquired entities
are recorded as of the date of the business combination and are
based on the companies estimate of the ultimate tax basis that will
be accepted by the various taxing authorities. Comcast records
liabilities for contingencies associated with prior tax returns
filed by the acquired entity based on criteria set forth in the
accounting guidance related to accounting for uncertainty in income
taxes. Comcast adjusts the deferred tax accounts and the
liabilities periodically to reflect any revised estimated tax basis
and any estimated settlements with the various taxing authorities.
The effects of these adjustments are applied to income tax expense
(Comcast Corporation Annual Report, 2011). Comcast classifies
interest and penalties, if any, associated with their uncertain tax
positions as a component of income tax expense (Comcast Corporation
Annual Report, 2011).What are the company's footnote disclosures
relating to impairment? Please also describe how to determine if
impairment exists and how to calculate the impairment loss.
Comcast's disclosures regarding impairment are demonstrated in
figure 6, "The Changes in the Carrying Amount of Goodwill by
Business Segments". Assets are tested for impairment
P a g e | 15
when events or changes in indicators suggest that book value may
not be recoverable. An impairment loss is required when an assets
book value exceeds the undiscounted sum of the estimated future
cash flows. The impairment loss is the difference between book
value and fair value. Asset impairment occurs when there are:
Changes in regulation and business climate. Declines in usage
rate. Technology changes. Forecasts of a significant decline in the
long-term profitability of the asset (Spiceland, Sepe, &
Nelson, 2011).
What are the amounts and descriptions for the company's current
liabilities for the most recent year? Does the company have any
contingent liabilities? If yes, please describe. What are the three
categories of contingent liabilities and the treatment for each
type? Does the company have any subsequent events disclosed in
their footnotes? If so, please describe them. Comcast Corporation,
Inc. Consolidated Balance Sheet (partial) December 31, 2010 (in
millions)
Current Liabilities Accounts Payable and accrued expenses
related to trade creditors Accrued Salaries and Wages Accrued
Expenses and Other Current Liabilities Current Portion of Long-Term
Debt Total Current LiabilitiesLoss Contingencies
$3,291 475 2,668 1,800 $8,234
$3,094 487 2,512 1,156 $7,249
$197 ($12) $156 $644 $985
6% -2% 6% 56% 14%
Figure 7: Consolidated Balance Sheet (partial)
A loss contingency is an existing uncertain situation involving
potential loss depending on whether some future event occurs. Two
factors effect whether a loss contingency must be
P a g e | 16
accrued and reported as a liability: First, the likelihood that
the confirming event will occur. Second, whether the loss amount
can be reasonably estimated. Accounting standards require that the
likelihood that the future event(s) will confirm the incurrence of
a liability be categorized as: probable, meaning that the
confirming event is likely to occur, which requires that the
liability be accrued and a disclosure note; reasonably possible,
meaning that the chance the confirming event will occur is more
than remote, but less than likely which requires the disclosure
note only; remote, meaning that the chance the confirming event
will occur is slight (Spiceland, Sepe, & Nelson, 2011).
Contingencies Comcast and the minority owner group in Comcast
Spectacor each have the right to initiate an exit process under
which the fair market value of Comcast Spectacor would be
determined by appraisal. Following such determination, Comcast
would have the option to acquire the 24.3% interest in Comcast
Spectacor owned by the minority owner group based on the appraised
fair market value. In the event the company does not exercise this
option, Comcast and the minority owner group would then be required
to use our best efforts to sell Comcast Spectacor (Comcast
Corporation Annual Report, 2011). Subsequent Events A subsequent
event is significant developments that take place after the
companys fiscal year and before the financial statements are issued
or available to be issued. These events are described in the
disclosure note. Disclosure notes are required for certain
transactions and events that occur infrequently, but are
potentially important to investors and creditors and other
financial statement users. Examples include irregularities
(intentional distortion of
P a g e | 17
financial statements), illegal acts (for example, bribes or
kickbacks), and related third party transactions (transactions with
owners, management, families of owners or management, affiliated
companies, and other parties who can significantly influence are
being influenced by the company) (Spiceland, Sepe, & Nelson,
2011). On January 28, 2011, Comcast closed its transaction with GE
to form a new company named NBC Universal, LLC (NBC Universal
Holdings). Comcast controls and owns 51% of NBC Universal Holdings
and GE owns the remaining 49%. As part of the NBC Universal
transaction, GE contributed the historical businesses of NBC
Universal, which is now a wholly owned subsidiary of NBC Universal
Holdings. The NBC Universal contributed businesses include its
national cable programming networks, the NBC network and its owned
NBC affiliated local television stations, the Telemundo network and
its owned Telemundo affiliated local television stations, Universal
Pictures filmed entertainment, the Universal Studios Hollywood
theme park and other related assets (Comcast Corporation Annual
Report, 2011). Comcast contributed its national cable programming
networks, its regional sports and news networks, certain of its
Internet businesses, including Daily Candy and Fandango, and other
related assets (Comcast Content Business). In addition to
contributing the Comcast Content Business, Comcast also made a cash
payment of $6.2 billion at the closing. The cash paid will be
adjusted subsequent to close to reflect final balances of certain
working capital accounts and other closing adjustments. The
transaction also calls for the payment to GE, in the future, of
certain tax benefits to the extent realized. The combination of
businesses creates a
P a g e | 18
leading media and entertainment company capable of providing
entertainment, news, sports and other content to a global audience
across all platforms (Comcast Corporation Annual Report, 2011).
What are the amounts and descriptions for all of the company's
long-term liabilities on their balance sheet for the most recent
two years? What is the interest expense for the two most recent
years? What amounts are included in the cash flow statements for
proceeds from issuance of debt and repayment of debt for the most
recent year? For each note payable discussed in the footnotes
disclosures, what is the interest rate, total amount borrowed, and
maturity date?Comcast Corporation, Inc. Long-Term Debt December 31,
2010 (in millions) Weighted Average Interest Rate as of December
31, 2010 6.96% 5.90% 6.88% 10.63% 2.00% 6.26% b 2010 $8,145 8,381
14,258 202 108 321 $31,416 1,800 $29,615 2009 $6,861 9,293 12,267
202 124 329 $29,096 1,156 $27,940
Senior notes with maturities of 5 years or less Senior notes
with maturities between 6 and 10 years Senior notes with maturities
greater than 10 years (a) Senior subordinated notes due 2012 ZONES
due 2029 Other, including capital lease obligations Total debt
Less: Current portion Long-term debt
(a) The December 31, 2010 amount includes 625 million of 5.50%
notes due 2029 valued at $976 million using the exchange rate at
that date. (b) Includes the effects of our derivative financial
instruments.Figure 8: Long-Term Debt
Interest Expense
Comcast Corporation, Inc. Interest Expense December 31, 2010 (in
millions) 2010 $2,156
2009 $2,348
2008 $2,439
Figure 9: Interest Expense
P a g e | 19Comcast Corporation, Inc. Consolidated Statement of
Cash Flows (partial) December 31, 2010 (in millions) 2010 Financing
Activities Proceeds from borrowings Repurchases and repayments of
debt Repurchases of common stock Dividends paid Issuances of common
stock Other Net cash provided by (used in) financing activities
$3,420 (1,153) (1,200) (1,064) 34 (192) ($155) 2009 $1,564 (4,738)
(765) (761) 1 (209) ($4,908) 2008 $3,535 (2,610) (2,800) (547) 53
(153) ($2,522)
Figure 10: Consolidated Statement of Cash Flows (partial)
Debt Maturities
Debt BorrowingsYear Ended December 31, 2010 (in millions) 5.15%
notes due 2020 $1,400 6.40% notes due 2040 1000 5.50 notes due 2029
997 Other 23 Total $3,420Figure 11: Debt Borrowing
Debt Instruments Commercial Paper Program Comcasts commercial
paper program provides a lower cost borrowing source of liquidity
to fund their short-term working capital requirements. The program
allows for a maximum of $2.25 billion of commercial paper to be
issued at any one time. The companys revolving bank credit facility
supports this program (Comcast Corporation Annual Report, 2011).
Revolving Bank Credit Facilities As of December 31, 2010, Comcast
had a $6.8 billion revolving credit facility due January 2013 (the
credit facility) with a syndicate of banks. The base rate, chosen
at their option, is either the London Interbank Offered Rate
(LIBOR) or the greater of the prime rate or the Federal
P a g e | 20
Funds rate plus 0.5%. The borrowing margin is based on their
senior unsecured debt ratings. As of December 31, 2010, the
borrowing margin for LIBOR-based loans was 0.35% (Comcast
Corporation Annual Report, 2011). Lines and Letters of Credit As of
December 31, 2010, Comcast and certain of their subsidiaries had
unused lines of credit totaling $6.4 billion under various credit
facilities and unused irrevocable standby letters of credit
totaling $431 million to cover potential funding under various
agreements (Comcast Corporation Annual Report, 2011).Does the
company have bonds payable? If so, what are the amounts? Please
also describe how bonds payable differ from notes payable and how
to account for the issuance of bonds at par, at a discount, and at
a premium. How is the discount and premium amortized? What is the
effective interest method?
ZONES At maturity, holders of Comcast 2.0% Exchangeable
Subordinated Debentures due 2029 (ZONES) are entitled to receive in
cash an amount equal to the higher of the principal amount of the
outstanding ZONES of $247 million or the market value of
approximately 3.3 million shares of Sprint Nextel common stock and
228,807 shares of CenturyLink common stock. Before maturity, each
of the ZONES is exchangeable at the holders option for an amount of
cash equal to 95% of the aggregate market value of one share of
Sprint Nextel common stock and 0.0685 shares of CenturyLink common
stock (Comcast Corporation Annual Report, 2011) Effective Interest
Method Interest accrues on an outstanding debt at a constant
percentage of the debt each period. Interest each period is
recorded as the effective market rate of interest multiplied by the
outstanding balance of the debt (during the interest period)
(Spiceland, Sepe, & Nelson, 2011).
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Works Cited(2011). Comcast Corporation Annual Report.
Philadelphia: Edgar Online. Spiceland, J. D., Sepe, J. F., &
Nelson, M. W. (2011). Intermediate Accounting (Sixth Edition). New
York: McGraw - Hill / Irwin.