filings.toolsItem 8. Comcast Corporation Financial Statements and Supplementary Data
211K characters. Original on sec.gov · Markdown
Item 8. Comcast Corporation Financial Statements and Supplementary Data
NBCUniversal Media, LLC
See Index to NBCUniversal Media, LLC Financial Statements and Supplementary Data on page 123.
| 62 | Comcast 2019 Annual Report on Form 10-K |
Report of Management
Management’s Report on Comcast’s Financial Statements
Our management is responsible for the preparation, integrity and fair presentation of information in Comcast’s consolidated financial statements, including estimates and judgments. The consolidated financial statements presented in this report have been prepared in accordance with accounting principles generally accepted in the United States. Our management believes the Comcast consolidated financial statements and other financial information included in this report fairly present, in all material respects, Comcast’s financial condition, results of operations and cash flows as of and for the periods presented in this report. The Comcast consolidated financial statements have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report, which is included herein.
Management’s Report on Comcast’s Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining an adequate system of internal control over financial reporting. Our system of internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.
Our internal control over financial reporting includes those policies and procedures that:
| • | Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of our assets. |
| • | Provide reasonable assurance that our transactions are recorded as necessary to permit preparation of our financial statements in accordance with accounting principles generally accepted in the United States, and that our receipts and expenditures are being made only in accordance with authorizations of our management and our directors. |
| • | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance and may not prevent or detect misstatements. Further, because of changes in conditions, effectiveness of internal control over financial reporting may vary over time. Our system contains self-monitoring mechanisms, and actions are taken to correct deficiencies as they are identified.
Our management conducted an evaluation of the effectiveness of the system of internal control over financial reporting based on the framework in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management concluded that Comcast’s system of internal control over financial reporting was effective as of December 31, 2019. The effectiveness of Comcast’s internal controls over financial reporting of Comcast has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report, which is included herein.
Audit Committee Oversight
The Audit Committee of the Board of Directors, which is comprised solely of independent directors, has oversight responsibility for our financial reporting process and the audits of Comcast’s consolidated financial statements and internal control over financial reporting. The Audit Committee meets regularly with management and with our internal auditors and independent registered public accounting firm (collectively, the “auditors”) to review matters related to the quality and integrity of our financial reporting, internal control over financial reporting (including compliance matters related to our Code of Conduct), and the nature, extent, and results of internal and external audits. Our auditors have full and free access and report directly to the Audit Committee. The Audit Committee recommended, and the Board of Directors approved, that the Comcast audited consolidated financial statements be included in this Form 10-K.
| /s/ BRIAN L. ROBERTS | /s/ MICHAEL J. CAVANAGH | /s/ DANIEL C. MURDOCK | ||
| Brian L. Roberts | Michael J. Cavanagh | Daniel C. Murdock | ||
| Chairman and Chief Executive Officer | Senior Executive Vice President and Chief Financial Officer | Senior Vice President, Chief Accounting Officer and Controller |
| Comcast 2019 Annual Report on Form 10-K | 63 |
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of
Comcast Corporation
Philadelphia, Pennsylvania
Opinions on the Consolidated Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Comcast Corporation and subsidiaries (the “Company”) as of December 31, 2019 and 2018, the related consolidated statements of income, comprehensive income, cash flows, and changes in equity for each of the three years in the period ended December 31, 2019, and the related notes (collectively referred to as the “financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
Basis for Opinions
The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Comcast’s Internal Control Over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Acquisition of Sky Limited - Refer to Note 8 to the financial statements
Critical Audit Matter Description
The Company obtained a controlling interest in Sky Limited (“Sky”) for $39.4 billion on October 9, 2018 and finalized the purchase price allocation in 2019. The Company accounted for the acquisition under the acquisition method of accounting for business combinations. Accordingly,
| 64 | Comcast 2019 Annual Report on Form 10-K |
Report of Independent Registered Public Accounting Firm
the purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values, including identified intangible assets of $19.5 billion and resulting goodwill of $31.3 billion.
The assets acquired and liabilities assumed included, among others, certain customer relationships, trade names, and contractual obligations. The fair value determination of these assets and liabilities required management to make significant estimates and assumptions, including future cash flows and discount rates as well as royalty rates and current market rates for trade names and contractual obligations, respectively. Given the judgments necessary to estimate the fair value determination, auditing these estimates involved especially subjective judgment and involved the use of fair value specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the significant estimates and assumptions used in the valuation of customer relationships, trade names, and contractual obligations included the following, among others:
| • | We tested the effectiveness of management’s controls over the valuation of assets and liabilities, including management’s controls over forecasts of future cash flows, assumptions of market rates for contractual obligations, and selection of the discount rates and royalty rates. |
| • | We assessed the reasonableness of management’s forecasts of future cash flows by comparing the projections to historical results and certain peer companies. |
| • | We assessed the reasonableness of management’s assumptions of current market rates for contractual obligations by comparing the rates to historical contractual rates and industry data for similar contracts. |
| • | With the assistance of our fair value specialists, we evaluated the reasonableness of the valuation methodology, discount rates, and royalty rates by: |
| ◦ | Testing the source information underlying the determination of the discount rates and royalty rates and testing the mathematical accuracy of the calculations. |
| ◦ | Developing a range of independent estimates for the discount rates and comparing those to the discount rates selected by management. |
Film and Television Costs - Refer to Note 4 to the financial statements
Critical Audit Matter Description
The Company amortizes capitalized film and television production costs using the individual film forecast computation method, which amortizes such costs using the ratio of current period revenue to the total remaining revenue forecasted to be realized, also known as “ultimate revenue.” In addition, the Company recognizes the costs of multiyear, live-event sports programming rights as the rights are utilized over the contractual term based on estimated relative value. Estimated relative value is generally based on the ratio of current period revenue to the estimated ultimate revenue or the terms of the contract. The estimates of ultimate revenue have a significant impact on the rate at which capitalized costs are amortized.
The determination of ultimate revenue for capitalized film and television costs requires the Company to make significant estimates of future revenue based on anticipated release patterns, public acceptance, and historical results for similar productions. The determination of ultimate revenue for multiyear, live-event sports programming rights requires the Company to make significant estimates of future revenue based on historical and expected trends in the advertising market as well as the number of subscribers receiving or viewing the sports programming. Given the judgments necessary to estimate ultimate revenue, auditing these estimates involved especially subjective judgment.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to forecasts of ultimate revenue for individual film or television productions and for sports programming rights included the following, among others:
| • | We tested the effectiveness of management’s controls over its amortization of film and television costs and sports programming rights, including controls over forecasts of ultimate revenue. |
| • | We evaluated the historical accuracy of management’s forecast of future revenues by comparing actual results to management’s historical estimates of ultimate revenue. |
| • | For film and television productions, we tested management’s selection of inputs and assumptions, including considering the historical performance of similar titles, factors unique to the individual film or television production, and third-party projections. |
/s/ Deloitte & Touche LLP
Philadelphia, Pennsylvania
January 30, 2020
We have served as the Company’s auditor since 1963.
| Comcast 2019 Annual Report on Form 10-K | 65 |
Comcast Corporation
Consolidated Statement of Income
| Year ended December 31 (in millions, except per share data) | 2019 | 2018 | 2017 | ||||||||
| Revenue | $ | 108,942 | $ | 94,507 | $ | 85,029 | |||||
| Costs and Expenses: | |||||||||||
| Programming and production | 34,440 | 29,692 | 25,355 | ||||||||
| Other operating and administrative | 32,807 | 28,094 | 25,449 | ||||||||
| Advertising, marketing and promotion | 7,617 | 7,036 | 6,519 | ||||||||
| Depreciation | 8,663 | 8,281 | 7,914 | ||||||||
| Amortization | 4,290 | 2,736 | 2,216 | ||||||||
| Other operating gains | — | (341 | ) | (442 | ) | ||||||
| Total costs and expenses | 87,817 | 75,498 | 67,011 | ||||||||
| Operating income | 21,125 | 19,009 | 18,018 | ||||||||
| Interest expense | (4,567 | ) | (3,542 | ) | (3,086 | ) | |||||
| Investment and other income (loss), net | 438 | (225 | ) | 421 | |||||||
| Income before income taxes | 16,996 | 15,242 | 15,353 | ||||||||
| Income tax (expense) benefit | (3,673 | ) | (3,380 | ) | 7,569 | ||||||
| Net income | 13,323 | 11,862 | 22,922 | ||||||||
| Less: Net income attributable to noncontrolling interests and redeemable subsidiary preferred stock | 266 | 131 | 187 | ||||||||
| Net income attributable to Comcast Corporation | $ | 13,057 | $ | 11,731 | $ | 22,735 | |||||
| Basic earnings per common share attributable to Comcast Corporation shareholders | $ | 2.87 | $ | 2.56 | $ | 4.83 | |||||
| Diluted earnings per common share attributable to Comcast Corporation shareholders | $ | 2.83 | $ | 2.53 | $ | 4.75 |
See accompanying notes to consolidated financial statements.
| 66 | Comcast 2019 Annual Report on Form 10-K |
Comcast Corporation
Consolidated Statement of Comprehensive Income
| Year ended December 31 (in millions) | 2019 | 2018 | 2017 | ||||||||
| Net income | $ | 13,323 | $ | 11,862 | $ | 22,922 | |||||
| Unrealized gains (losses) on marketable securities, net of deferred taxes of $—, $(1) and $25 | 3 | 1 | (42 | ) | |||||||
| Deferred gains (losses) on cash flow hedges, net of deferred taxes of $(4), $(3) and $(35) | 19 | 50 | 60 | ||||||||
| Amounts reclassified to net income: | |||||||||||
| Realized (gains) losses on marketable securities, net of deferred taxes of $—, $— and $1 | — | — | (1 | ) | |||||||
| Realized (gains) losses on cash flow hedges, net of deferred taxes of $(10), $(4) and $22 | 65 | (6 | ) | (37 | ) | ||||||
| Employee benefit obligations, net of deferred taxes of $16, $(2) and $(24) | (60 | ) | 7 | 41 | |||||||
| Currency translation adjustments, net of deferred taxes of $(66), $9 and $(40) | 1,375 | (916 | ) | 147 | |||||||
| Comprehensive income | 14,725 | 10,998 | 23,090 | ||||||||
| Less: Net income attributable to noncontrolling interests and redeemable subsidiary preferred stock | 266 | 131 | 187 | ||||||||
| Less: Other comprehensive income (loss) attributable to noncontrolling interests | (13 | ) | (41 | ) | 81 | ||||||
| Comprehensive income attributable to Comcast Corporation | $ | 14,472 | $ | 10,908 | $ | 22,822 |
See accompanying notes to consolidated financial statements.
| Comcast 2019 Annual Report on Form 10-K | 67 |
Comcast Corporation
Consolidated Statement of Cash Flows
| Year ended December 31 (in millions) | 2019 | 2018 | 2017 | ||||||||
| Operating Activities | |||||||||||
| Net income | $ | 13,323 | $ | 11,862 | $ | 22,922 | |||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation, amortization and other operating gains | 12,953 | 10,676 | 9,688 | ||||||||
| Share-based compensation | 1,021 | 826 | 751 | ||||||||
| Noncash interest expense (income), net | 417 | 364 | 272 | ||||||||
| Net (gain) loss on investment activity and other | (20 | ) | 576 | (194 | ) | ||||||
| Deferred income taxes | 563 | 290 | (10,646 | ) | |||||||
| Changes in operating assets and liabilities, net of effects of acquisitions and divestitures: | |||||||||||
| Current and noncurrent receivables, net | (57 | ) | (802 | ) | (869 | ) | |||||
| Film and television costs, net | (929 | ) | (395 | ) | (197 | ) | |||||
| Accounts payable and accrued expenses related to trade creditors | (347 | ) | (394 | ) | 173 | ||||||
| Other operating assets and liabilities | (1,227 | ) | 1,294 | (639 | ) | ||||||
| Net cash provided by operating activities | 25,697 | 24,297 | 21,261 | ||||||||
| Investing Activities | |||||||||||
| Capital expenditures | (9,953 | ) | (9,774 | ) | (9,550 | ) | |||||
| Cash paid for intangible assets | (2,475 | ) | (1,935 | ) | (1,605 | ) | |||||
| Acquisitions and construction of real estate properties | (54 | ) | (143 | ) | (418 | ) | |||||
| Construction of Universal Beijing Resort | (1,116 | ) | (460 | ) | (71 | ) | |||||
| Acquisitions, net of cash acquired | (370 | ) | (38,219 | ) | (532 | ) | |||||
| Proceeds from sales of businesses and investments | 886 | 141 | 150 | ||||||||
| Purchases of investments | (1,899 | ) | (1,257 | ) | (2,292 | ) | |||||
| Other | 140 | 793 | 785 | ||||||||
| Net cash provided by (used in) investing activities | (14,841 | ) | (50,854 | ) | (13,533 | ) | |||||
| Financing Activities | |||||||||||
| Proceeds from (repayments of) short-term borrowings, net | (1,288 | ) | 379 | (1,905 | ) | ||||||
| Proceeds from borrowings | 5,479 | 44,781 | 11,466 | ||||||||
| Proceeds from collateralized obligation | 5,175 | — | — | ||||||||
| Repurchases and repayments of debt | (14,354 | ) | (8,798 | ) | (6,364 | ) | |||||
| Repurchases of common stock under repurchase program and employee plans | (504 | ) | (5,320 | ) | (5,435 | ) | |||||
| Dividends paid | (3,735 | ) | (3,352 | ) | (2,883 | ) | |||||
| Purchase of Universal Studios Japan noncontrolling interests | — | — | (2,299 | ) | |||||||
| Distributions to noncontrolling interests and dividends for redeemable subsidiary preferred stock | (311 | ) | (277 | ) | (252 | ) | |||||
| Other | 357 | (273 | ) | 100 | |||||||
| Net cash provided by (used in) financing activities | (9,181 | ) | 27,140 | (7,572 | ) | ||||||
| Impact of foreign currency on cash, cash equivalents and restricted cash | 5 | (245 | ) | — | |||||||
| Increase (decrease) in cash, cash equivalents and restricted cash | 1,680 | 338 | 156 | ||||||||
| Cash, cash equivalents and restricted cash, beginning of year | 3,909 | 3,571 | 3,415 | ||||||||
| Cash, cash equivalents and restricted cash, end of year | $ | 5,589 | $ | 3,909 | $ | 3,571 |
See accompanying notes to consolidated financial statements.
| 68 | Comcast 2019 Annual Report on Form 10-K |
Comcast Corporation
Consolidated Balance Sheet
| December 31 (in millions, except share data) | 2019 | 2018 | |||||
| Assets | |||||||
| Current Assets: | |||||||
| Cash and cash equivalents | $ | 5,500 | $ | 3,814 | |||
| Receivables, net | 11,292 | 11,104 | |||||
| Programming rights | 3,877 | 3,746 | |||||
| Other current assets | 4,723 | 3,184 | |||||
| Total current assets | 25,392 | 21,848 | |||||
| Film and television costs | 8,933 | 7,837 | |||||
| Investments | 6,989 | 7,883 | |||||
| Investment securing collateralized obligation | 694 | — | |||||
| Property and equipment, net | 48,322 | 44,437 | |||||
| Goodwill | 68,725 | 66,154 | |||||
| Franchise rights | 59,365 | 59,365 | |||||
| Other intangible assets, net | 36,128 | 38,358 | |||||
| Other noncurrent assets, net | 8,866 | 5,802 | |||||
| Total assets | $ | 263,414 | $ | 251,684 | |||
| Liabilities and Equity | |||||||
| Current Liabilities: | |||||||
| Accounts payable and accrued expenses related to trade creditors | $ | 10,826 | $ | 8,494 | |||
| Accrued participations and residuals | 1,730 | 1,808 | |||||
| Deferred revenue | 2,768 | 2,182 | |||||
| Accrued expenses and other current liabilities | 10,516 | 10,721 | |||||
| Current portion of long-term debt | 4,452 | 4,398 | |||||
| Total current liabilities | 30,292 | 27,603 | |||||
| Long-term debt, less current portion | 97,765 | 107,345 | |||||
| Collateralized obligation | 5,166 | — | |||||
| Deferred income taxes | 28,180 | 27,589 | |||||
| Other noncurrent liabilities | 16,765 | 15,329 | |||||
| Commitments and contingencies (Note 17) | |||||||
| Redeemable noncontrolling interests and redeemable subsidiary preferred stock | 1,372 | 1,316 | |||||
| Equity: | |||||||
| Preferred stock—authorized, 20,000,000 shares; issued, zero | — | — | |||||
| Class A common stock, $0.01 par value—authorized, 7,500,000,000 shares; issued, 5,416,381,298 and 5,389,309,175; outstanding, 4,543,590,270 and 4,516,518,147 | 54 | 54 | |||||
| Class B common stock, $0.01 par value—authorized, 75,000,000 shares; issued and outstanding, 9,444,375 | — | — | |||||
| Additional paid-in capital | 38,447 | 37,461 | |||||
| Retained earnings | 50,695 | 41,983 | |||||
| Treasury stock, 872,791,028 Class A common shares | (7,517 | ) | (7,517 | ) | |||
| Accumulated other comprehensive income (loss) | 1,047 | (368 | ) | ||||
| Total Comcast Corporation shareholders’ equity | 82,726 | 71,613 | |||||
| Noncontrolling interests | 1,148 | 889 | |||||
| Total equity | 83,874 | 72,502 | |||||
| Total liabilities and equity | $ | 263,414 | $ | 251,684 |
See accompanying notes to consolidated financial statements.
| Comcast 2019 Annual Report on Form 10-K | 69 |
Comcast Corporation
Consolidated Statement of Changes in Equity
| (in millions, except per share data) | 2019 | 2018 | 2017 | ||||||||
| Redeemable Noncontrolling Interests and Redeemable Subsidiary Preferred Stock | |||||||||||
| Balance, beginning of year | $ | 1,316 | $ | 1,357 | $ | 1,446 | |||||
| Contributions from (distributions to) noncontrolling interests, net | (62 | ) | (56 | ) | (39 | ) | |||||
| Other | (38 | ) | (43 | ) | (123 | ) | |||||
| Net income (loss) | 156 | 58 | 73 | ||||||||
| Balance, end of year | $ | 1,372 | $ | 1,316 | $ | 1,357 | |||||
| Class A common stock | |||||||||||
| Balance, beginning of year | $ | 54 | $ | 55 | $ | 56 | |||||
| Repurchases of common stock under repurchase program and employee plans | — | (1 | ) | (1 | ) | ||||||
| Balance, end of year | $ | 54 | $ | 54 | $ | 55 | |||||
| Class B common stock | |||||||||||
| Balance, beginning and end of year | $ | — | $ | — | $ | — | |||||
| Additional Paid-In Capital | |||||||||||
| Balance, beginning of year | $ | 37,461 | $ | 37,497 | $ | 38,230 | |||||
| Stock compensation plans | 783 | 607 | 554 | ||||||||
| Repurchases of common stock under repurchase program and employee plans | (34 | ) | (920 | ) | (832 | ) | |||||
| Employee stock purchase plans | 222 | 214 | 190 | ||||||||
| Purchase of Universal Studios Japan noncontrolling interests | — | — | (696 | ) | |||||||
| Other | 15 | 63 | 51 | ||||||||
| Balance, end of year | $ | 38,447 | $ | 37,461 | $ | 37,497 | |||||
| Retained Earnings | |||||||||||
| Balance, beginning of year | $ | 41,983 | $ | 38,202 | $ | 23,065 | |||||
| Cumulative effects of adoption of accounting standards | — | (43 | ) | — | |||||||
| Repurchases of common stock under repurchase program and employee plans | (485 | ) | (4,408 | ) | (4,623 | ) | |||||
| Dividends declared | (3,860 | ) | (3,499 | ) | (2,975 | ) | |||||
| Net income (loss) | 13,057 | 11,731 | 22,735 | ||||||||
| Balance, end of year | $ | 50,695 | $ | 41,983 | $ | 38,202 | |||||
| Treasury Stock at Cost | |||||||||||
| Balance, beginning and end of year | $ | (7,517 | ) | $ | (7,517 | ) | $ | (7,517 | ) | ||
| Accumulated Other Comprehensive Income (Loss) | |||||||||||
| Balance, beginning of year | $ | (368 | ) | $ | 379 | $ | 98 | ||||
| Cumulative effects of adoption of accounting standards | — | 76 | — | ||||||||
| Other comprehensive income (loss) | 1,415 | (823 | ) | 87 | |||||||
| Purchase of Universal Studios Japan noncontrolling interests | — | — | 194 | ||||||||
| Balance, end of year | $ | 1,047 | $ | (368 | ) | $ | 379 | ||||
| Noncontrolling Interests | |||||||||||
| Balance, beginning of year | $ | 889 | $ | 843 | $ | 2,231 | |||||
| Other comprehensive income (loss) | (13 | ) | (41 | ) | 81 | ||||||
| Contributions from (distributions to) noncontrolling interests, net | 176 | 294 | (108 | ) | |||||||
| Purchase of Universal Studios Japan noncontrolling interests | — | — | (1,736 | ) | |||||||
| Other | (14 | ) | (280 | ) | 261 | ||||||
| Net income (loss) | 110 | 73 | 114 | ||||||||
| Balance, end of year | $ | 1,148 | $ | 889 | $ | 843 | |||||
| Total equity | $ | 83,874 | $ | 72,502 | $ | 69,459 | |||||
| Cash dividends declared per common share | $ | 0.84 | $ | 0.76 | $ | 0.63 |
See accompanying notes to consolidated financial statements.
| 70 | Comcast 2019 Annual Report on Form 10-K |
Comcast Corporation
Notes to Consolidated Financial Statements
| Note 1: Basis of Presentation and Summary of Significant Accounting Policies |
We are a global media and technology company with three primary businesses: Comcast Cable, NBCUniversal and Sky. We present our operations for (1) Comcast Cable in one reportable business segment, referred to as Cable Communications; (2) NBCUniversal in four reportable business segments: Cable Networks, Broadcast Television, Filmed Entertainment and Theme Parks (collectively, the “NBCUniversal segments”); and (3) Sky in one reportable business segment. See Note 2 for additional information on our reportable business segments.
Basis of Presentation
The accompanying consolidated financial statements include all entities in which we have a controlling voting interest and variable interest entities (“VIEs”) required to be consolidated in accordance with generally accepted accounting principles in the United States (“GAAP”).
We translate assets and liabilities of our foreign operations where the functional currency is the local currency, primarily the British pound, euro, Japanese yen and Chinese renminbi, into U.S. dollars at the exchange rate as of the balance sheet date and translate revenue and expenses using average monthly exchange rates. The related translation adjustments are recorded as a component of accumulated other comprehensive income (loss) in our consolidated balance sheet. Any foreign currency transaction gains or losses are included in our consolidated statement of income.
Reclassifications
Reclassifications have been made to our consolidated financial statements for the prior periods to conform to classifications used in 2019. See Note 9 for a discussion of the effects of the adoption of new accounting pronouncements on our consolidated financial statements.
Accounting Policies
Our consolidated financial statements are prepared in accordance with GAAP, which require us to select accounting policies, including in certain cases industry-specific policies, and make estimates that affect the reported amount of assets, liabilities, revenue and expenses, and the related disclosure of contingent assets and contingent liabilities. Actual results could differ from these estimates. We believe that the judgments and related estimates for the following items are critical in the preparation of our consolidated financial statements:
| • | valuation and impairment testing of goodwill and cable franchise rights (see Note 12) |
| • | film and television costs (see Note 4) |
| • | fair value of acquisition-related assets and liabilities (see Note 8) |
In addition, the following accounting policies are specific to the industries in which we operate:
| • | capitalization and amortization of film and television costs (see Note 4) |
| • | costs for connecting customers to our cable systems (see Note 11) |
Information on other accounting policies and methods that we use in the preparation of our consolidated financial statements are included, where applicable, in their respective footnotes that follow. The collateralized obligation related to our investment in Hulu is discussed in Note 10 and our other long-term debt is discussed in Note 7. Below is a discussion of accounting policies and methods used in our consolidated financial statements that are not presented within other footnotes.
Advertising Expenses
Advertising costs are expensed as incurred.
Derivative Financial Instruments
We use derivative financial instruments to manage our exposure to the risks associated with fluctuations in interest rates, foreign exchange rates and equity prices. Our objective is to manage the financial and operational exposure arising from these risks by offsetting gains and losses on the underlying exposures with gains and losses on the derivatives used to economically hedge them.
Our derivative financial instruments are recorded in our consolidated balance sheet at fair value. We designate certain derivative instruments as cash flow hedges of forecasted foreign currency denominated transactions, including cash flows associated with non-functional currency debt and non-functional currency revenues and expense. Changes in the fair value of derivative instruments accounted for as cash flow hedges are recorded as a component of accumulated other comprehensive income (loss) until the hedged item affects earnings. For derivatives not designated as cash flow hedges, changes in fair value are recognized in earnings.
| Comcast 2019 Annual Report on Form 10-K | 71 |
Comcast Corporation
Refer to Note 7 for further information on derivative instruments related to debt. The impact of our remaining derivative financial instruments was not material to our consolidated financial statements in any of the periods presented.
Fair Value Measurements
The accounting guidance related to fair value measurements establishes a hierarchy based on the types of inputs used for the various valuation techniques. The levels of the hierarchy are described below.
| • | Level 1: Values are determined using quoted market prices for identical financial instruments in an active market |
| • | Level 2: Values are determined using quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets |
| • | Level 3: Values are determined using 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 |
We use these levels of hierarchy to measure the fair value of certain financial instruments on a recurring basis, such as for investments; on a non-recurring basis, such as for acquisitions and impairment testing; for disclosure purposes, such as for long-term debt; and for other applications, as discussed in their respective footnotes. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation and classification within the fair value hierarchy.
| Note 2: Segment Information |
Cable Communications is a leading provider of high-speed internet, video, voice, wireless, and security and automation services to residential customers in the United States under the Xfinity brand; we also provide these and other services to business customers and sell advertising. As of December 31, 2019, our cable systems had 31.5 million total customer relationships, including 29.1 million residential and 2.4 million business customer relationships, of which 28.6 million received our high-speed internet service, 21.3 million received our video service, 11.3 million received our voice service, and 1.4 million received our security and automation service. As of December 31, 2019, there were 2.1 million activated lines that received our wireless phone service.
Cable Networks consists primarily of our national cable networks that provide a variety of entertainment, news and information, and sports content; our regional sports and news networks; our international cable networks; our cable television studio production operations; and various digital properties.
Broadcast Television consists primarily of the NBC and Telemundo broadcast networks, our NBC and Telemundo owned local broadcast television stations, the NBC Universo national cable network, our broadcast television studio production operations, and various digital properties.
Filmed Entertainment consists primarily of the operations of Universal Pictures, which produces, acquires, markets and distributes filmed entertainment worldwide; our films are also produced under the Illumination, DreamWorks Animation and Focus Features names.
Theme Parks consists primarily of our Universal theme parks in Orlando, Florida; Hollywood, California; and Osaka, Japan. In addition, we are developing a theme park in Beijing, China along with a consortium of Chinese state-owned companies, and an additional theme park in Orlando, Florida.
Sky is one of Europe’s leading entertainment companies, which primarily includes a direct-to-consumer business, providing video, high-speed internet, voice and wireless phone services, and a content business, operating entertainment networks, the Sky News broadcast network and Sky Sports networks. As of December 31, 2019, Sky had 24.0 million retail customer relationships.
We use Adjusted EBITDA to evaluate the profitability of our operating segments and the components of net income attributable to Comcast Corporation excluded from Adjusted EBITDA are not separately evaluated. Beginning in the first quarter of 2019, Comcast Cable’s wireless phone service and certain other Cable-related business development initiatives are presented in the Cable Communications segment. Results were previously presented in Corporate and Other. Prior periods have been adjusted to reflect this presentation. We do not present a measure of total assets for our reportable business segments as this information is not used by management to allocate resources and capital. Our financial data by business segment is presented in the tables below.
| 72 | Comcast 2019 Annual Report on Form 10-K |
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| (in millions) | Revenue | Adjusted EBITDA(d) | Depreciation and Amortization | Capital Expenditures | Cash Paid for Intangible Assets | ||||||||||
| 2019 | |||||||||||||||
| Cable Communications | $ | 58,082 | $ | 23,266 | $ | 7,994 | $ | 6,909 | $ | 1,426 | |||||
| NBCUniversal | |||||||||||||||
| Cable Networks | 11,513 | 4,444 | 735 | 41 | 17 | ||||||||||
| Broadcast Television | 10,261 | 1,730 | 157 | 161 | 15 | ||||||||||
| Filmed Entertainment | 6,493 | 833 | 79 | 21 | 22 | ||||||||||
| Theme Parks | 5,933 | 2,455 | 696 | 1,605 | 60 | ||||||||||
| Headquarters and Other(a) | 83 | (689 | ) | 462 | 244 | 171 | |||||||||
| Eliminations(b) | (316 | ) | (1 | ) | — | — | — | ||||||||
| NBCUniversal | 33,967 | 8,772 | 2,129 | 2,072 | 285 | ||||||||||
| Sky | 19,219 | 3,099 | 2,699 | 768 | 707 | ||||||||||
| Corporate and Other(c) | 333 | (880 | ) | 131 | 204 | 57 | |||||||||
| Eliminations(b) | (2,659 | ) | 1 | — | — | — | |||||||||
| Comcast Consolidated | $ | 108,942 | $ | 34,258 | $ | 12,953 | $ | 9,953 | $ | 2,475 |
| (in millions) | Revenue | Adjusted EBITDA(d) | Depreciation and Amortization | Capital Expenditures | Cash Paid for Intangible Assets | ||||||||||
| 2018 | |||||||||||||||
| Cable Communications | $ | 56,033 | $ | 21,681 | $ | 8,262 | $ | 7,723 | $ | 1,346 | |||||
| NBCUniversal | |||||||||||||||
| Cable Networks(e) | 11,773 | 4,428 | 738 | 42 | 23 | ||||||||||
| Broadcast Television(e) | 11,439 | 1,657 | 146 | 204 | 81 | ||||||||||
| Filmed Entertainment | 7,152 | 734 | 145 | 35 | 25 | ||||||||||
| Theme Parks | 5,683 | 2,455 | 660 | 1,143 | 173 | ||||||||||
| Headquarters and Other(a) | 63 | (680 | ) | 419 | 306 | 146 | |||||||||
| Eliminations(b)(e) | (349 | ) | 4 | — | — | — | |||||||||
| NBCUniversal | 35,761 | 8,598 | 2,108 | 1,730 | 448 | ||||||||||
| Sky | 4,587 | 692 | 539 | 222 | 137 | ||||||||||
| Corporate and Other(c) | 513 | (779 | ) | 108 | 99 | 4 | |||||||||
| Eliminations(b)(e) | (2,387 | ) | (27 | ) | — | — | — | ||||||||
| Comcast Consolidated | $ | 94,507 | $ | 30,165 | $ | 11,017 | $ | 9,774 | $ | 1,935 |
| (in millions) | Revenue | Adjusted EBITDA(d) | Depreciation and Amortization | Capital Expenditures | Cash Paid for Intangible Assets | ||||||||||
| 2017 | |||||||||||||||
| Cable Communications | $ | 53,399 | $ | 20,555 | $ | 8,019 | $ | 7,978 | $ | 1,294 | |||||
| NBCUniversal | |||||||||||||||
| Cable Networks | 10,497 | 4,053 | 755 | 33 | 19 | ||||||||||
| Broadcast Television | 9,563 | 1,251 | 133 | 180 | 22 | ||||||||||
| Filmed Entertainment | 7,595 | 1,276 | 109 | 58 | 23 | ||||||||||
| Theme Parks | 5,443 | 2,384 | 648 | 960 | 78 | ||||||||||
| Headquarters and Other(a) | 45 | (741 | ) | 396 | 271 | 153 | |||||||||
| Eliminations(b) | (307 | ) | (5 | ) | — | — | — | ||||||||
| NBCUniversal | 32,836 | 8,218 | 2,041 | 1,502 | 295 | ||||||||||
| Corporate and Other(c) | 864 | (859 | ) | 70 | 70 | 16 | |||||||||
| Eliminations(b) | (2,070 | ) | 42 | — | — | — | |||||||||
| Comcast Consolidated | $ | 85,029 | $ | 27,956 | $ | 10,130 | $ | 9,550 | $ | 1,605 |
| Comcast 2019 Annual Report on Form 10-K | 73 |
Comcast Corporation
| (a) | NBCUniversal Headquarters and Other activities include costs associated with overhead, allocations, personnel costs and headquarter initiatives. |
| (b) | Included in Eliminations are transactions that our segments enter into with one another. The most common types of transactions are the following: |
| • | Cable Networks generates revenue by selling programming to Cable Communications, which represents a substantial majority of the revenue elimination amount |
| • | Broadcast Television generates revenue from the fees received under retransmission consent agreements with Cable Communications |
| • | Cable Communications generates revenue by selling advertising and by selling the use of satellite feeds to Cable Networks |
| • | Cable Networks and Broadcast Television generate revenue by selling advertising to Cable Communications |
| • | Filmed Entertainment and Broadcast Television generate revenue by licensing content to our Cable Networks; for segment reporting, this revenue is recognized as the programming rights asset for the licensed content is amortized based on third-party revenue |
| • | Filmed Entertainment, Cable Networks and Broadcast Television generate revenue by licensing content to Sky; for segment reporting, this revenue is recognized as content is delivered and available for use by Sky |
| (c) | Corporate and Other activities include costs associated with overhead and personnel, revenue and expenses associated with the operations of Comcast Spectacor, which owns the Philadelphia Flyers and the Wells Fargo Center arena in Philadelphia, Pennsylvania, and other business initiatives, such as the development of Peacock. |
| (d) | We use Adjusted EBITDA as the measure of profit or loss for our operating segments. Adjusted EBITDA is defined as net income attributable to Comcast Corporation before net income (loss) attributable to noncontrolling interests and redeemable subsidiary preferred stock, income tax expense, investment and other income (loss), net, interest expense, depreciation and amortization expense, and other operating gains and losses (such as impairment charges related to fixed and intangible assets and gains or losses on the sale of long-lived assets), if any. From time to time we may exclude from Adjusted EBITDA the impact of certain events, gains, losses or other charges (such as significant legal settlements) that affect the period-to-period comparability of our operating performance. Our reconciliation of the aggregate amount of Adjusted EBITDA for our reportable segments to consolidated income before income taxes is presented in the table below. |
| Year ended December 31 (in millions) | 2019 | 2018 | 2017 | ||||||
| Adjusted EBITDA | $ | 34,258 | $ | 30,165 | $ | 27,956 | |||
| Adjustment for legal settlement | — | (125 | ) | (250 | ) | ||||
| Adjustment for Sky transaction-related costs | (180 | ) | (355 | ) | — | ||||
| Depreciation | (8,663 | ) | (8,281 | ) | (7,914 | ) | |||
| Amortization | (4,290 | ) | (2,736 | ) | (2,216 | ) | |||
| Other operating gains | — | 341 | 442 | ||||||
| Interest expense | (4,567 | ) | (3,542 | ) | (3,086 | ) | |||
| Investment and other income (loss), net | 438 | (225 | ) | 421 | |||||
| Income before income taxes | $ | 16,996 | $ | 15,242 | $ | 15,353 |
| (e) | The revenue and operating costs and expenses associated with our broadcast of the 2018 PyeongChang Olympics were reported in Cable Networks and Broadcast Television. The revenue and operating costs and expenses associated with our broadcast of the 2018 Super Bowl were reported in Broadcast Television. Included in Eliminations are transactions relating to these events that Broadcast Television and Cable Networks enter into with other segments. |
| 74 | Comcast 2019 Annual Report on Form 10-K |
Comcast Corporation
| Note 3: Revenue |
| Year ended December 31 (in millions) | 2019 | 2018 | 2017 | ||||||||
| Residential: | |||||||||||
| High-speed internet | $ | 18,752 | $ | 17,144 | $ | 15,681 | |||||
| Video | 22,270 | 22,455 | 22,874 | ||||||||
| Voice | 3,879 | 3,960 | 4,090 | ||||||||
| Wireless | 1,167 | 890 | 329 | ||||||||
| Business services | 7,795 | 7,129 | 6,437 | ||||||||
| Advertising | 2,465 | 2,795 | 2,450 | ||||||||
| Other | 1,754 | 1,660 | 1,538 | ||||||||
| Total Cable Communications(a)(b) | 58,082 | 56,033 | 53,399 | ||||||||
| Distribution | 6,790 | 6,826 | 6,081 | ||||||||
| Advertising | 3,478 | 3,587 | 3,359 | ||||||||
| Content licensing and other | 1,245 | 1,360 | 1,057 | ||||||||
| Total Cable Networks | 11,513 | 11,773 | 10,497 | ||||||||
| Advertising | 5,712 | 7,010 | 5,654 | ||||||||
| Content licensing | 2,157 | 2,182 | 2,114 | ||||||||
| Distribution and other | 2,392 | 2,247 | 1,795 | ||||||||
| Total Broadcast Television | 10,261 | 11,439 | 9,563 | ||||||||
| Theatrical | 1,469 | 2,111 | 2,192 | ||||||||
| Content licensing | 3,045 | 2,899 | 2,956 | ||||||||
| Home entertainment | 957 | 1,048 | 1,287 | ||||||||
| Other | 1,022 | 1,094 | 1,160 | ||||||||
| Total Filmed Entertainment | 6,493 | 7,152 | 7,595 | ||||||||
| Total Theme Parks | 5,933 | 5,683 | 5,443 | ||||||||
| Headquarters and Other | 83 | 63 | 45 | ||||||||
| Eliminations(c) | (316 | ) | (349 | ) | (307 | ) | |||||
| Total NBCUniversal | 33,967 | 35,761 | 32,836 | ||||||||
| Direct-to-consumer | 15,538 | 3,632 | — | ||||||||
| Content | 1,432 | 304 | — | ||||||||
| Advertising | 2,249 | 651 | — | ||||||||
| Total Sky | 19,219 | 4,587 | — | ||||||||
| Corporate and Other(b) | 333 | 513 | 864 | ||||||||
| Eliminations(c) | (2,659 | ) | (2,387 | ) | (2,070 | ) | |||||
| Total revenue | $ | 108,942 | $ | 94,507 | $ | 85,029 |
| (a) | For 2019, 2018 and 2017, 2.6%, 2.6% and 2.8%, respectively, of Cable Communications segment revenue was derived from franchise and other regulatory fees. |
| (b) | Comcast Cable’s wireless phone service is now presented in the Cable Communications segment. Results were previously presented in Corporate and Other. |
| (c) | Included in Eliminations are transactions that our segments enter into with one another. See Note 2 for a description of these transactions. |
We operate primarily in the United States but also in select international markets. The table below summarizes revenue by geographic location.
| Year ended December 31 (in millions) | 2019 | 2018 | 2017 | ||||||||
| United States | $ | 82,952 | $ | 82,233 | $ | 77,246 | |||||
| Europe | 21,553 | 7,721 | 3,190 | ||||||||
| Other | 4,437 | 4,553 | 4,593 | ||||||||
| Total revenue | $ | 108,942 | $ | 94,507 | $ | 85,029 |
No single customer accounted for a significant amount of revenue in any period presented.
| Comcast 2019 Annual Report on Form 10-K | 75 |
Comcast Corporation
Cable Communications Segment
Residential
Revenue is generated from subscribers to our high-speed internet, video, voice, wireless and security and automation services, which we market individually and as bundled services at a discounted rate in the United States. Revenue from customers that purchase bundled services at a discounted rate is allocated between the separate services based on the respective stand-alone selling prices. The stand-alone selling prices are determined based on the current prices at which we separately sell the services. Significant judgment is used to determine performance obligations that should be accounted for separately and the allocation of revenue when services are combined in a bundle. Revenue related to our security and automation services is reported in other revenue.
We recognize revenue as the services are provided on a monthly basis. Subscription rates and related charges vary according to the services and features customers receive. Customers are typically billed in advance and pay on a monthly basis. Installation fees are deferred and recognized as revenue over the period of benefit to the customer, which is less than a year for residential customers. While a portion of our customers are subject to contracts for their services, which are typically 1 to 2 years in length, based on our evaluation of the terms of these contracts, we recognize revenue for these services on a basis that is consistent with our customers that are not subject to contracts. Our services generally involve customer premise equipment, such as set-top boxes, cable modems and wireless gateways. The timing and pattern of recognition for customer premise equipment revenue are consistent with those of our services. We recognize revenue from the sale of wireless handsets at the point of sale. Sales commissions are expensed as incurred, as the related period of benefit is less than a year.
Under the terms of cable franchise agreements, we are generally required to pay the cable franchising authority an amount based on gross video revenue. We generally pass these and other similar fees through to our customers and classify these fees in the respective Cable Communications services revenue, with the corresponding costs included in other operating and administrative expenses.
Business Services
Revenue is generated from subscribers to a variety of our products and services which are offered to businesses. Our service offerings for small business locations primarily include high-speed internet services, as well as voice and video services, that are similar to those provided to residential customers, as well as cloud-based cybersecurity services, wireless backup connectivity, advanced Wi-Fi solutions, video monitoring services and cloud-based services that provide file sharing, online backup and web conferencing, among other features. We also offer Ethernet network services that connect multiple locations and provide higher downstream and upstream speed options to medium-sized customers and larger enterprises, as well as advanced voice services, along with video solutions that serve hotels and other large venues. In addition, we provide cellular backhaul services to mobile network operators to help them manage their network bandwidth.
We have expanded our service offerings to include a software-defined networking product for medium-sized and enterprise customers. Larger enterprises may also receive support services related to Wi-Fi networks, router management, network security, business continuity risks and other services. These service offerings are primarily provided to Fortune 1000 companies and other large enterprises with multiple locations both within and outside of our cable distribution footprint, where we have agreements with other companies to use their networks to provide coverage outside of our service areas.
We recognize revenue as the services are provided on a monthly basis. Substantially all of our customers are initially under contracts, with terms typically ranging from 2 years for small and medium-sized businesses to up to 5 years for larger enterprises. At any given time, the amount of future revenue to be earned related to fixed pricing under existing agreements is equal to approximately half of our annual business services revenue, of which the substantial majority will be recognized within 2 years. Customers with contracts may only discontinue service in accordance with the terms of their contracts. We receive payments based on a billing schedule established in our contracts, which is typically on a monthly basis. Installation revenue and sales commissions are generally deferred and recognized over the respective contract terms.
Advertising
Revenue is generated from the sale of advertising and technology, tools and solutions relating to advertising businesses. As part of distribution agreements with cable networks, we generally receive an allocation of scheduled advertising time that we sell to local, regional and national advertisers. In most cases, the available advertising units are sold by our sales force. We also represent the advertising sales efforts of other multichannel video providers in some markets. Since we are acting as the principal in these arrangements, we record the advertising that is sold in advertising revenue and the fees paid to multichannel video providers in other operating and administrative expenses. In some cases, we work with representation firms as an extension of our sales force to sell a portion of the advertising units allocated to us and record the revenue net of agency commissions. In addition, we generate revenue from the sale of advertising on digital platforms. We enter into advertising arrangements with customers and have determined that a contract exists once all terms and conditions are agreed upon, typically when the number of advertising units is
| 76 | Comcast 2019 Annual Report on Form 10-K |
Comcast Corporation
specifically identified and the timing of airing is scheduled. Advertisements are generally aired or viewed within one year once all terms and conditions are agreed upon. Revenue from these arrangements is recognized in the period in which advertisements are aired or viewed. Payment terms vary by contract, although terms generally require payment within 30 to 60 days from when advertisements are aired or viewed. In addition, we also provide technology, tools, data-driven services and marketplace solutions to customers in the media industry, which allows advertisers to more effectively engage with their target audiences. Revenue earned in this manner is recognized when services are provided.
NBCUniversal Segments
Distribution
Cable Networks generates revenue from the distribution of our cable network programming to traditional and virtual multichannel video providers. Broadcast Television generates revenue from the fees received under retransmission consent agreements and associated fees received from NBC-affiliated local broadcast television stations.
These arrangements are accounted for as licenses of functional intellectual property and revenue is recognized as programming is provided on a monthly basis, generally under multiyear agreements. Monthly fees received under distribution agreements with multichannel video providers are generally based on the number of subscribers. Payment terms and conditions vary by contract type, although terms generally include payment within 60 days.
Advertising
Cable Networks and Broadcast Television generate revenue from the sale of advertising on our cable and broadcast networks, our owned local broadcast television stations and various digital properties.
We enter into advertising arrangements with customers and have determined that a contract exists once all terms and conditions are agreed upon, typically when the number of advertising units is specifically identified and the timing of airing is scheduled. Advertisements are generally aired or viewed within one year once all terms are agreed upon. Revenue is recognized, net of agency commissions, in the period in which advertisements are aired or viewed and payment occurs thereafter, with payment generally required within 30 days. In some instances, we guarantee audience ratings for the advertisements. To the extent there is a shortfall in contracts where the ratings were guaranteed, a portion of the revenue is deferred until the shortfall is settled, typically by providing additional advertising units generally within one year of the original airing.
Theatrical
Filmed Entertainment generates revenue from the worldwide theatrical release of produced and acquired films for exhibition in movie theaters. Theatrical revenue is affected by the timing, nature and number of films released in movie theaters and their acceptance by audiences. It is also affected by the number of exhibition screens, ticket prices, the percentage of ticket sale retention by the exhibitors and the popularity of competing films at the time when films are released. We recognize revenue as the films are viewed and exhibited in theaters and payment generally occurs within 30 days after exhibition.
Content Licensing
Cable Networks, Broadcast Television and Filmed Entertainment generate revenue from the licensing of our owned film and television content in the United States and internationally to cable, broadcast and premium networks and subscription video on demand services. Our agreements generally include fixed pricing and span multiple years. For example, following a film’s theatrical release, Filmed Entertainment may license the exhibition rights of a film to different customers over multiple successive distribution windows.
We recognize revenue when the content is delivered and available for use by the licensee. When the term of an existing agreement is renewed or extended, we recognize revenue at the later of when the content is available or when the renewal or extension period begins. Payment terms and conditions vary by contract type, although payments are generally collected over the license term. The amount of future revenue to be earned related to fixed pricing under existing agreements at any given time equals approximately 1 to 2 years of annual Filmed Entertainment content licensing revenue, which is the segment with the largest portion of this future revenue. The majority of this revenue will be recognized within 2 years. This amount may fluctuate from period to period depending on the timing of the releases and the availability of content under existing agreements and may not represent the total revenue expected to be recognized as it does not include revenue from future agreements or from variable pricing or optional purchases under existing agreements.
For our agreements that include variable pricing, such as pricing based on the number of subscribers to a subscription video on demand service sold by our customers, we generally recognize revenue as our customers sell to their subscribers.
Home Entertainment
Filmed Entertainment generates revenue from the sale of our produced and acquired films on standard-definition digital video discs and Blu-ray discs (together, “DVDs”) and through digital distribution services. Cable Networks and Broadcast Television
| Comcast 2019 Annual Report on Form 10-K | 77 |
Comcast Corporation
also generate revenue from the sale of owned programming on DVDs and through digital distribution services, which is reported in other revenue. We generally recognize revenue from DVD sales, net of estimated returns and customer incentives, on the date that DVDs are delivered to and made available for sale by retailers. Payment terms generally include payment within 60 to 90 days from delivery to the retailer.
Theme Parks
Theme Parks generates revenue primarily from guest spending at our Universal theme parks in Orlando, Florida; Hollywood, California; and Osaka, Japan. Guest spending includes ticket sales and in-park spending on food, beverages and merchandise. We recognize revenue from ticket sales when the tickets are used, generally within a year from the date of purchase. For annual passes, we generally recognize revenue on a straight-line basis over the period the pass is available to be used. We recognize revenue from in-park spending at the point of sale.
Sky Segment
Direct-to-Consumer
Revenue is generated from subscribers to our video services from both residential and business customers. We also provide high-speed internet, voice and wireless phone services in select countries. Generally, all of our residential customers are initially under contracts, with terms typically ranging from rolling monthly to 2 years, depending on the product and territory, and may only discontinue service in accordance with the terms of their contracts. Subscription rates and related charges vary according to the services and features customers receive and the types of equipment they use. Our video, high-speed internet, voice and wireless phone services generally may be purchased individually or in bundles. We recognize revenue from video, high-speed internet, voice and wireless phone services as the services are provided on a monthly basis. At any given time, the amount of future revenue to be earned related to existing agreements is equal to less than half of our annual direct-to-consumer revenue, which generally will be recognized within 2 years.
Content
Revenue is generated from the distribution of our television channels on third-party platforms and the licensing of owned and acquired programming to third-party video providers. See the NBCUniversal segment discussion of distribution and content licensing revenue above for accounting policies for these types of arrangements.
Advertising
Revenue is generated from advertising and sponsorships across our owned television channels and where we represent the sales efforts of third-party channels. We also sell targeted advertising and generate revenue from online and mobile advertising and advertising across our On Demand services. Revenue is recognized when the advertising is aired or viewed. Since we are acting as the principal in the arrangements where we represent the sales efforts of third parties, we record the advertising that is sold in advertising revenue and the fees paid to the third-party channels in other operating and administrative expenses.
Consolidated Balance Sheet
The following tables summarize our accounts receivable and other balances that are not separately presented in our consolidated balance sheet that relate to the recognition of revenue and collection of the related cash, as well as deferred costs associated with our contracts with customers.
| December 31 (in millions) | 2019 | 2018 | |||||
| Receivables, gross | $ | 11,711 | $ | 11,456 | |||
| Less: Allowance for doubtful accounts | 419 | 352 | |||||
| Receivables, net | $ | 11,292 | $ | 11,104 |
| December 31 (in millions) | 2019 | 2018 | |||||
| Noncurrent receivables (included in other noncurrent assets, net) | $ | 1,337 | $ | 1,399 | |||
| Contract acquisition and fulfillment costs (included in other noncurrent assets, net) | $ | 1,083 | $ | 991 | |||
| Noncurrent deferred revenue (included in other noncurrent liabilities) | $ | 618 | $ | 650 |
In Cable Communications and Sky, we manage credit risk by screening applicants through the use of internal customer information, identification verification tools and credit bureau data, as well as by offering customers the opportunity to establish automatic monthly payments. If a customer’s account is delinquent, various measures are used to collect outstanding amounts, including termination of the customer’s services.
| 78 | Comcast 2019 Annual Report on Form 10-K |
Comcast Corporation
| Note 4: Programming and Production Costs |
Video Distribution Programming Expenses
Programming expenses for Cable Communications and Sky are the fees we pay to license the programming we distribute to our customers. Programming is generally acquired under multiyear distribution agreements, with rates typically based on the number of customers that receive the programming and the extent of distribution. From time to time, these contracts expire and programming continues to be provided under interim arrangements while the parties negotiate new contract terms, sometimes with effective dates that affect prior periods. While payments are typically made under the prior contract’s terms, the amount of programming expenses recorded during the interim arrangement is based on our estimate of the ultimate contract terms expected to be negotiated. Differences between actual amounts determined upon resolution of negotiations and amounts recorded during these interim arrangements are recorded in the period of resolution.
Film and Television Costs
Cable Networks, Broadcast Television, Filmed Entertainment and Sky produce owned content or acquire the rights to programming from third parties, which are described as film and television costs and programming rights, respectively.
| December 31 (in millions) | 2019 | 2018 | ||||
| Film Costs: | ||||||
| Released, less amortization | $ | 1,551 | $ | 1,600 | ||
| Completed, not released | 187 | 144 | ||||
| In production and in development | 1,314 | 1,063 | ||||
| 3,052 | 2,807 | |||||
| Television Costs: | ||||||
| Released, less amortization | 2,810 | 2,289 | ||||
| In production and in development | 1,162 | 953 | ||||
| 3,972 | 3,242 | |||||
| Programming rights, less amortization | 5,786 | 5,534 | ||||
| 12,810 | 11,583 | |||||
| Less: Current portion of programming rights | 3,877 | 3,746 | ||||
| Film and television costs | $ | 8,933 | $ | 7,837 |
Based on our current estimates of the total remaining revenue from all sources (“ultimate revenue”), in 2020 we expect to amortize approximately $1.9 billion of film and television costs associated with our original film and television productions that have been released, or are completed and have not been released. Through 2022, we expect to amortize approximately 88% of unamortized film and television costs for our released productions, excluding amounts allocated to acquired libraries.
As of December 31, 2019, acquired film and television libraries, which are included within the “released, less amortization” captions in the table above, had remaining unamortized costs of $328 million. These costs are generally amortized over a period not to exceed 20 years, and approximately 47% of these costs are expected to be amortized through 2022.
Capitalization of Film and Television Costs
We capitalize film and television production costs, including direct costs, production overhead, print costs, development costs and interest. We amortize capitalized film and television production costs, including acquired libraries, and accrue costs associated with participation and residual payments to programming and production expenses. We generally record the amortization and the accrued costs using the individual film forecast computation method, which amortizes the costs in the same ratio as the associated ultimate revenue. Estimates of ultimate revenue and total costs are based on anticipated release patterns, public acceptance and historical results for similar productions. Unamortized film and television production costs, including acquired libraries, are stated at the lower of unamortized cost or fair value. We do not capitalize costs related to the distribution of a film in movie theaters or the licensing or sale of a film or television production, which primarily include costs associated with marketing and distribution.
In determining the method of amortization and estimated life of an acquired film or television library, we generally use the method and the life that most closely follow the undiscounted cash flows over the estimated life of the asset.
When an event or a change in circumstance occurs that was known or knowable as of the balance sheet date and that indicates the fair value of a film is less than its unamortized costs, we determine the fair value of the film and record an impairment charge for the amount by which the unamortized capitalized costs exceed the film’s fair value. The estimated fair value of a production is based on level 3 inputs that primarily use an analysis of future expected cash flows. Adjustments to capitalized film production costs were not material in any of the periods presented.
| Comcast 2019 Annual Report on Form 10-K | 79 |
Comcast Corporation
We may enter into cofinancing arrangements with third parties to jointly finance or distribute certain of our film productions. Cofinancing arrangements can take various forms, but in most cases involve the grant of an economic interest in a film to an investor. The number of investors and the terms of these arrangements can vary, although investors generally assume the full risks and rewards for the portion of the film acquired in these arrangements. We account for the proceeds received from a third-party investor under these arrangements as a reduction to our capitalized film costs. Under these arrangements, the investor owns an undivided copyright interest in the film, and therefore in each period we record either a charge or a benefit to programming and production expenses to reflect the estimate of the third-party investor’s interest in the profit or loss of the film. The estimate of the third-party investor’s interest in the profit or loss of a film is determined using the ratio of actual revenue earned to date to the ultimate revenue expected to be recognized over the film’s useful life.
We capitalize the costs of programming rights for content that we license but do not own at the earlier of when payments are made for the programming or when the license period begins and the content is made available for use. We amortize capitalized programming costs as the associated programs are broadcast. We recognize the costs of multiyear, live-event sports programming rights as the rights are utilized over the contract term based on estimated relative value. Estimated relative value is generally based on the ratio of the current period revenue to the estimated ultimate revenue or the terms of the contract. Advance payments for rights to multiyear, live-event sports programming are included in programming rights.
Programming costs are recorded at the lower of unamortized cost or net realizable value on a program by program, package, channel or daypart basis. A daypart is an aggregation of programs broadcast during a particular time of day or programs of a similar type. Programming acquired by Cable Networks is primarily tested on a channel basis for impairment, whereas programming acquired by Broadcast Television is tested on a daypart basis. If we determine that the estimates of future cash flows are insufficient or if there is no plan to broadcast certain programming, we recognize an impairment charge to programming and production expenses.
| Note 5: Income Taxes |
| Income Before Income Taxes | |||||||||||
| Year ended December 31 (in millions) | 2019 | 2018 | 2017 | ||||||||
| Domestic | $ | 16,646 | $ | 14,387 | $ | 14,331 | |||||
| Foreign | 350 | 855 | 1,022 | ||||||||
| $ | 16,996 | $ | 15,242 | $ | 15,353 |
| Components of Income Tax (Expense) Benefit | |||||||||||
| Year ended December 31 (in millions) | 2019 | 2018 | 2017 | ||||||||
| Current (Expense) Benefit: | |||||||||||
| Federal | $ | (2,085 | ) | $ | (2,026 | ) | $ | (2,411 | ) | ||
| State | (425 | ) | (639 | ) | (277 | ) | |||||
| Foreign | (600 | ) | (425 | ) | (389 | ) | |||||
| (3,110 | ) | (3,090 | ) | (3,077 | ) | ||||||
| Deferred (Expense) Benefit: | |||||||||||
| Federal | (902 | ) | (546 | ) | 10,651 | ||||||
| State | 15 | 167 | (11 | ) | |||||||
| Foreign | 324 | 89 | 6 | ||||||||
| (563 | ) | (290 | ) | 10,646 | |||||||
| Income tax (expense) benefit | $ | (3,673 | ) | $ | (3,380 | ) | $ | 7,569 |
| 80 | Comcast 2019 Annual Report on Form 10-K |
Comcast Corporation
Our income tax (expense) benefit differs from the federal statutory amount because of the effect of the items detailed in the table below.
| Year ended December 31 (in millions) | 2019 | 2018 | 2017 | ||||||||
| Federal tax at statutory rate | $ | (3,569 | ) | $ | (3,201 | ) | $ | (5,374 | ) | ||
| State income taxes, net of federal benefit | (306 | ) | (212 | ) | (299 | ) | |||||
| Foreign income taxed at different rates | (126 | ) | (147 | ) | (70 | ) | |||||
| Nontaxable income attributable to noncontrolling interests | 51 | 20 | 45 | ||||||||
| Adjustments to uncertain and effectively settled tax positions, net | (3 | ) | (144 | ) | 62 | ||||||
| Accrued interest and penalties on uncertain and effectively settled tax positions, net | 13 | (29 | ) | (3 | ) | ||||||
| Excess tax benefits recognized on share-based compensation | 196 | 75 | 297 | ||||||||
| Tax legislation | 31 | 120 | 12,682 | ||||||||
| Other | 40 | 138 | 229 | ||||||||
| Income tax (expense) benefit | $ | (3,673 | ) | $ | (3,380 | ) | $ | 7,569 |
We base our provision for income taxes on our current period income, changes in our deferred income tax assets and liabilities, income tax rates, changes in estimates of our uncertain tax positions, tax planning opportunities available in the jurisdictions in which we operate and excess tax benefits or deficiencies that arise when the tax consequences of share-based compensation differ from amounts previously recognized in the statement of income. We recognize deferred tax assets and liabilities when there are temporary differences between the financial reporting basis and tax basis of our assets and liabilities and for the expected benefits of using net operating loss carryforwards. When a change in the tax rate or tax law has an impact on deferred taxes, we apply the change based on the years in which the temporary differences are expected to reverse. We record the change in our consolidated financial statements in the period of enactment.
The determination of the income tax consequences of a business combination includes identifying the tax basis 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 an acquired entity are recorded as of the date of the business combination and are based on our estimate of the ultimate tax basis that will be accepted by the various tax authorities. We record liabilities for contingencies associated with prior tax returns filed by the acquired entity based on criteria set forth in the appropriate accounting guidance. We adjust the deferred tax accounts and the liabilities periodically to reflect any revised estimated tax basis and any estimated settlements with the various tax authorities. The effects of these adjustments are recorded to income tax (expense) benefit.
From time to time, we engage in transactions in which the tax consequences may be subject to uncertainty. In these cases, we evaluate our tax position using the recognition threshold and the measurement attribute in accordance with the accounting guidance related to uncertain tax positions. Examples of these transactions include business acquisitions and dispositions, including consideration paid or received in connection with these transactions, certain financing transactions, and the allocation of income among state and local tax jurisdictions. Significant judgment is required in assessing and estimating the tax consequences of these transactions. We determine whether it is more likely than not that a tax position will be sustained on examination, including the resolution of any related appeals or litigation processes, based on the technical merits of the position. A tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to be recognized in our consolidated financial statements. We classify interest and penalties, if any, associated with our uncertain tax positions as a component of income tax (expense) benefit.
Tax Reform
On December 22, 2017, new federal tax reform legislation was enacted in the United States, resulting in significant changes from previous tax law. The new legislation reduced the federal corporate income tax rate to 21% from 35% effective January 1, 2018, which resulted in a $12.7 billion net income tax benefit to us for 2017, primarily related to the remeasurement of deferred taxes at the new tax rate. Our federal income tax expense for periods beginning in 2018 is based on the new rate.
| Comcast 2019 Annual Report on Form 10-K | 81 |
Comcast Corporation
| Components of Net Deferred Tax Liability | |||||||
| December 31 (in millions) | 2019 | 2018 | |||||
| Deferred Tax Assets: | |||||||
| Net operating loss and other loss carryforwards | $ | 2,017 | $ | 1,926 | |||
| Nondeductible accruals and other | 2,779 | 2,656 | |||||
| Less: Valuation allowance | 1,906 | 632 | |||||
| 2,890 | 3,950 | ||||||
| Deferred Tax Liabilities: | |||||||
| Differences between book and tax basis of property and equipment and intangible assets | 29,387 | 29,139 | |||||
| Differences between book and tax basis of investments | 702 | 491 | |||||
| Differences between book and tax basis of long-term debt | 751 | 604 | |||||
| Differences between book and tax basis of foreign subsidiaries and undistributed foreign earnings | 143 | 85 | |||||
| 30,983 | 30,319 | ||||||
| Net deferred tax liability | $ | 28,093 | $ | 26,369 |
Changes in our net deferred tax liability in 2019 that were not recorded as deferred income tax benefit (expense) are primarily related to an increase of $118 million associated with items included in other comprehensive income (loss) and an increase in net deferred tax liabilities of $1.0 billion as a result of the finalization of acquisition accounting for Sky. Our net deferred tax liability includes $15.4 billion related to cable franchise rights that will remain unchanged unless we recognize an impairment or dispose of a cable franchise or there is a change in the tax law.
As of December 31, 2019, we had federal net operating loss carryforwards of $274 million, and various state net operating loss carryforwards, the majority of which expire in periods through 2039. As of December 31, 2019, we also had foreign net operating loss carryforwards of $5.6 billion related to the foreign operations of Sky and NBCUniversal, the majority of which can be carried forward indefinitely. The determination of the realization of the state and foreign net operating loss carryforwards is dependent on our subsidiaries’ taxable income or loss, apportionment percentages, redetermination from taxing authorities, and state and foreign laws that can change from year to year and impact the amount of such carryforwards. We recognize a valuation allowance if we determine it is more likely than not that some portion, or all, of a deferred tax asset will not be realized. As of December 31, 2019 and 2018, our valuation allowance was primarily related to foreign and state net operating loss carryforwards. In 2019, in conjunction with the finalization of acquisition accounting for Sky, we recorded an additional valuation allowance of approximately $1.2 billion associated with our assessment of the realization of Sky’s deferred tax assets, primarily related to net operating losses.
Uncertain Tax Positions
Our liability for uncertain tax positions as of December 31, 2019 totaled $1.0 billion, which excludes the federal benefits on state tax positions that were recorded as deferred income taxes.
| Reconciliation of Unrecognized Tax Benefits | |||||||||||
| (in millions) | 2019 | 2018 | 2017 | ||||||||
| Gross unrecognized tax benefits, January 1 | $ | 1,543 | $ | 1,497 | $ | 1,443 | |||||
| Additions based on tax positions related to the current year | 230 | 229 | 121 | ||||||||
| Additions based on tax positions related to prior years | 133 | 125 | 319 | ||||||||
| Additions from acquired subsidiaries | 1 | 130 | — | ||||||||
| Reductions for tax positions of prior years | (344 | ) | (346 | ) | (251 | ) | |||||
| Reductions due to expiration of statutes of limitations | (117 | ) | (75 | ) | (70 | ) | |||||
| Settlements with tax authorities | (24 | ) | (17 | ) | (65 | ) | |||||
| Gross unrecognized tax benefits, December 31 | 1,422 | 1,543 | 1,497 | ||||||||
| Positions paid | (409 | ) | (531 | ) | (688 | ) | |||||
| Liability for uncertain tax positions | $ | 1,013 | $ | 1,012 | $ | 809 |
Our liability for uncertain tax positions represents the amounts recorded for potential payment obligations. Our gross unrecognized tax benefits also include amounts related to positions for which tax has been assessed and paid. If we were to recognize our gross unrecognized tax benefits in the future, $1.1 billion would impact our effective tax rate and the remaining amount would increase our deferred income tax liability. The amount and timing of the recognition of any such tax benefit is dependent on the completion of examinations of our tax filings by the various tax authorities and the expiration of statutes of limitations. It is reasonably possible that certain tax contests could be resolved within the next 12 months that may result in a decrease in our effective tax rate.
| 82 | Comcast 2019 Annual Report on Form 10-K |
Comcast Corporation
As of December 31, 2019 and 2018, our accrued interest associated with our liability for uncertain tax positions was $186 million and $203 million, respectively.
The IRS has completed its examination of our income tax returns for all years through 2016. Various states are examining our state tax returns and the tax years of those tax returns currently under examination vary by state, with most of the periods relating to tax years 2000 and forward. Various foreign jurisdictions are examining our tax returns and the tax years of those tax returns currently under examination vary by country, with most of the periods relating to tax years 2010 and forward.
| Note 6: Earnings Per Share |
| Computation of Diluted EPS | ||||||||||||||||||||||||
| 2019 | 2018 | 2017 | ||||||||||||||||||||||
| Year ended December 31 (in millions, except per share data) | Net Income Attributable to Comcast Corporation | Shares | Per Share Amount | Net Income Attributable to Comcast Corporation | Shares | Per Share Amount | Net Income Attributable to Comcast Corporation | Shares | Per Share Amount | |||||||||||||||
| Basic EPS attributable to Comcast Corporation shareholders | $ | 13,057 | 4,548 | $ | 2.87 | $ | 11,731 | 4,584 | $ | 2.56 | $ | 22,735 | 4,708 | $ | 4.83 | |||||||||
| Effect of dilutive securities: | ||||||||||||||||||||||||
| Assumed exercise or issuance of shares relating to stock plans | 62 | 56 | 78 | |||||||||||||||||||||
| Diluted EPS attributable to Comcast Corporation shareholders | $ | 13,057 | 4,610 | $ | 2.83 | $ | 11,731 | 4,640 | $ | 2.53 | $ | 22,735 | 4,786 | $ | 4.75 |
Diluted earnings per common share attributable to Comcast Corporation shareholders (“diluted EPS”) considers the impact of potentially dilutive securities using the treasury stock method. Our potentially dilutive securities include potential common shares related to our stock options and our restricted share units (“RSUs”). Diluted EPS excludes the impact of potential common shares related to our stock options in periods in which the combination of the option exercise price and the associated unrecognized compensation expense is greater than the average market price of our common stock. The amount of potential common shares related to our share-based compensation plans that were excluded from diluted EPS because their effect would have been antidilutive was not material in any of the periods presented.
| Note 7: Long-Term Debt |
| Long-Term Debt Outstanding | |||||||||
| December 31 (in millions) | Weighted-Average Interest Rate as of December 31, 2019 | 2019**(b)** | 2018(b) | ||||||
| Commercial paper | — | $ | — | $ | 675 | ||||
| Revolving credit facilities | — | — | 606 | ||||||
| Term loans | 1.87 | % | 8,078 | 13,268 | |||||
| Senior notes with maturities of 5 years or less, at face value | 3.29 | % | 26,378 | 26,331 | |||||
| Senior notes with maturities between 5 and 10 years, at face value | 3.74 | % | 21,683 | 26,727 | |||||
| Senior notes with maturities greater than 10 years, at face value | 4.54 | % | 46,653 | 45,030 | |||||
| Other, including capital lease obligations | — | 1,098 | 808 | ||||||
| Debt issuance costs, premiums, discounts, fair value adjustments for acquisition accounting and hedged positions, net(a) | — | (1,673 | ) | (1,702 | ) | ||||
| Total debt | 3.78 | % | (a) | 102,217 | 111,743 | ||||
| Less: Current portion | 4,452 | 4,398 | |||||||
| Long-term debt | $ | 97,765 | $ | 107,345 |
| (a) | Includes the effects of our derivative financial instruments. |
| Comcast 2019 Annual Report on Form 10-K | 83 |
Comcast Corporation
| (b) | As of December 31, 2019, included in our outstanding debt were foreign currency denominated borrowings with principal amounts of £4.9 billion, €4.9 billion, ¥267 billion and ¥9 billion RMB. As of December 31, 2018, included in our outstanding debt were foreign currency denominated borrowings with principal amounts of £7.3 billion, €4.9 billion, ¥390 billion and ¥4 billion RMB. |
As of December 31, 2019 and 2018, our debt had an estimated fair value of $115.8 billion and $114.1 billion, respectively. The estimated fair value of our publicly traded debt was primarily based on level 1 inputs that use quoted market value for the debt. The estimated fair value of debt for which there are no quoted market prices was based on level 2 inputs that use interest rates available to us for debt with similar terms and remaining maturities.
| Principal Maturities of Debt | |||
| (in millions) | |||
| 2020 | $ | 4,455 | |
| 2021 | $ | 9,125 | |
| 2022 | $ | 5,581 | |
| 2023 | $ | 7,664 | |
| 2024 | $ | 6,759 | |
| Thereafter | $ | 70,306 |
We use cross-currency swaps as cash flow hedges for foreign currency denominated debt obligations when those obligations are denominated in a currency other than the functional currency. Cross-currency swaps effectively convert foreign currency denominated debt to debt denominated in the functional currency, which hedge currency exchange risks associated with foreign currency denominated cash flows such as interest and principal debt repayments. As of both December 31, 2019 and 2018, we had cross-currency swaps designated as cash flow hedges on $3.7 billion of our foreign currency denominated debt. As of December 31, 2019 and 2018, the aggregate estimated fair values of cross-currency swaps designated as cash flow hedges were a net asset of $373 million and $399 million, respectively.
We are also exposed to foreign exchange risk on the consolidation of our foreign operations. We have foreign currency denominated debt and use cross-currency swaps to hedge our net investments in certain of these subsidiaries. Transaction gains and losses resulting from currency movements on debt and changes in fair value of cross-currency swaps designated as net investment hedges are recorded within the currency translation adjustments component of accumulated other comprehensive income (loss).The aggregate amount of our net investment in foreign subsidiaries that have been hedged using cross-currency swaps and foreign currency denominated debt was $14.0 billion and $15.6 billion, as of December 31, 2019 and 2018, respectively. As of December 31, 2019 and 2018, the aggregate estimated fair value of the cross-currency swaps was a net liability of $373 million and $587 million, respectively. As of December 31, 2019 and 2018, there were pre-tax cumulative translation gains of $339 million and pre-tax cumulative translation losses of $4 million, respectively, related to these net investment hedges recorded in accumulated other comprehensive income (loss).
Commercial Paper Programs
Our commercial paper programs provide a lower-cost source of borrowing to fund our short-term working capital requirements.
Revolving Credit Facilities
As of December 31, 2019, we had $9.2 billion of revolving credit facilities due 2022 with a syndicate of banks that may be used for general corporate purposes. In June 2019, we amended the terms of our revolving credit facilities to extend their expiration dates from May 26, 2021 to May 26, 2022. We may increase the commitment under the revolving credit facilities up to a total of $12 billion, as well as extend the expiration dates to no later than 2023, subject to approval of the lenders. The interest rates on the revolving credit facilities consist of a base rate plus a borrowing margin that is determined based on Comcast’s credit rating. As of December 31, 2019, the borrowing margin for borrowings based on the London Interbank Offered Rate was 1.00%. Our revolving credit facilities require that we maintain certain financial ratios based on debt and EBITDA, as defined in the revolving credit facilities. We were in compliance with all financial covenants for all periods presented.
As of December 31, 2019, amounts available under our revolving credit facilities, net of amounts outstanding under our commercial paper programs and outstanding letters of credit and bank guarantees, totaled $9.2 billion. In 2019, we made net repayments of $615 million under Sky’s £1 billion revolving credit facility, which was terminated in February 2019.
Letters of Credit and Bank Guarantees
As of December 31, 2019, we and certain of our subsidiaries had undrawn irrevocable standby letters of credit and bank guarantees totaling $484 million to cover potential fundings under various agreements.
| 84 | Comcast 2019 Annual Report on Form 10-K |
Comcast Corporation
Guarantee Structure
Comcast, Comcast Cable and NBCUniversal fully and unconditionally guarantee each other’s debt securities, including the Comcast revolving credit facility. As of December 31, 2019, the principal amount outstanding of debt securities within the cross-guarantee structure totaled $88.3 billion. Additionally, certain other subsidiary debt securities are guaranteed by Comcast and/or Comcast Cable as described below.
Comcast and Comcast Cable fully and unconditionally guarantee NBCUniversal Enterprise’s debt securities, including its revolving credit facility. As of December 31, 2019, the principal amount outstanding of NBCUniversal Enterprise’s debt securities guaranteed by Comcast and Comcast Cable totaled $1.5 billion, all of which will mature within the next 3 years.
Comcast fully and unconditionally guarantees Universal Studios Japan’s yen-denominated term loans. As of December 31, 2019, the principal amount outstanding of Universal Studio Japan’s term loans guaranteed by Comcast totaled $2.5 billion (using exchange rates as of December 31, 2019), all of which will mature within the next 3 years.
In May 2019, Comcast provided a full and unconditional guarantee of Sky’s debt securities in connection with Sky’s noteholders consenting to (i) the transfer of the listing of three series of Sky notes from the Main Market of the London Stock Exchange to the Professional Securities Market of the London Stock Exchange and (ii) amending certain terms of the Sky notes. As of December 31, 2019, the principal amount outstanding of Sky’s debt securities guaranteed by Comcast totaled $9.2 billion (using exchange rates as of December 31, 2019), of which $6.0 billion will mature within the next 5 years.
| Note 8: Significant Transactions |
2018
Sky Transaction
On October 9, 2018, in connection with our offer to acquire the share capital of Sky, we acquired a controlling interest in Sky through a series of purchases of Sky shares at our offer price of £17.28 per Sky share. In the fourth quarter of 2018, we acquired the remaining Sky shares and now own 100% of Sky’s equity interests. Total cash consideration was £30.2 billion (approximately $39.4 billion using the exchange rates on the purchase dates). We financed the acquisition through a combination of fixed and floating rate senior notes, the issuance of term loans and cash on hand.
Allocation of Purchase Price
We have applied acquisition accounting to Sky. Sky’s results of operations are included in our consolidated results of operations since the acquisition date and are reported in our Sky segment. The net assets of Sky were recorded at their estimated fair value using level 3 inputs. In valuing acquired assets and liabilities, fair value estimates are based on, but are not limited to, future expected cash flows, market rate assumptions for contractual obligations and appropriate discount rates.
In 2019, we finalized the acquisition accounting in connection with the Sky transaction, which primarily resulted in decreases to intangible assets and investments (included below in other noncurrent assets and (liabilities), net), an increase to property and equipment, and corresponding adjustments to deferred taxes. We also recorded an additional valuation allowance of approximately $1.2 billion associated with our assessment of the realization of Sky’s deferred tax assets, primarily related to net operating losses. These changes resulted in an increase in goodwill of approximately $1.4 billion and an adjustment recorded in 2019 related to the fourth quarter of 2018 that resulted in an increase to depreciation and amortization expense of $53 million.
| Comcast 2019 Annual Report on Form 10-K | 85 |
Comcast Corporation
The table below presents the allocation of the all-cash purchase price of £30.2 billion, or $39.4 billion, to the assets and liabilities of Sky as a result of the transaction.
| Allocation of Purchase Price | |||
| (in millions) | |||
| Consideration transferred | $ | 39,387 | |
| Allocation of purchase price | |||
| Cash | $ | 1,283 | |
| Accounts receivable and other current assets | 2,359 | ||
| Film and television costs (See Note 4) | 2,512 | ||
| Property and equipment (See Note 11) | 4,127 | ||
| Intangible assets (See Note 12) | 19,539 | ||
| Accounts payable, accrued liabilities and other current liabilities | (5,885 | ) | |
| Long-term debt (See Note 7) | (11,468 | ) | |
| Deferred tax assets (liabilities), net (See Note 5) | (2,974 | ) | |
| Other noncurrent assets and (liabilities), net | (1,398 | ) | |
| Fair value of identifiable net assets acquired | 8,095 | ||
| Goodwill (See Note 12) | $ | 31,292 |
Property and Equipment
Property and equipment includes customer premise equipment with a carrying value of $1.4 billion, which have original estimated useful lives of 5 to 7 years. The remaining property and equipment includes network assets, real estate and other machinery and equipment.
Intangible Assets
Finite-lived intangible assets primarily consist of customer relationships with a carrying amount of $9.5 billion and developed technology and software with a carrying amount of $4.3 billion, with original estimated useful lives between 6 and 19 years and 4 and 9 years, respectively. Indefinite-lived assets consist of trade names with a carrying amount of $5.8 billion.
Goodwill
Goodwill consists primarily of intangible assets that do not qualify for separate recognition, including increased footprint, assembled workforce, noncontractual relationships and agreements. The acquired goodwill is not expected to be deductible for tax purposes.
Acquisition-Related Costs
As a result of the Sky transaction, we incurred expenses in 2018 related to legal, accounting, valuation and other professional services, which are reflected in other operating and administrative expenses. We also incurred certain financing costs associated with our borrowings, which are reflected in interest expense. The table below presents the amounts related to these expenses included in our consolidated statement of income. The amounts below do not reflect the costs of any integration activities or costs related to synergies that may be achieved as a result of the acquisition.
| (in millions) | Year ended December 31, 2018 | ||
| Other operating and administrative expenses | $ | 339 | |
| Interest expense | $ | 63 |
Unaudited Pro Forma Information
The following unaudited pro forma information has been presented as if the Sky transaction occurred on January 1, 2017. This information is based on historical results of operations, adjusted for allocation of purchase price and other acquisition accounting adjustments, and is not necessarily indicative of what the results would have been had we operated the business since January 1, 2017. For pro forma purposes, 2018 earnings were adjusted to exclude acquisition-related costs noted above, and 2017 earnings were adjusted to include these costs. No pro forma adjustments have been made for cost savings or synergies that have been or may be achieved by the combined businesses. The year ended December 31, 2019 is not presented as Sky is included in the consolidated results for the entire period.
| 86 | Comcast 2019 Annual Report on Form 10-K |
Comcast Corporation
| Year ended December 31 (in millions, except per share data) | 2018 | 2017 | ||||
| Revenue | $ | 109,518 | $ | 102,971 | ||
| Net income attributable to Comcast Corporation | $ | 12,176 | $ | 22,085 | ||
| Basic earnings per common share attributable to Comcast Corporation shareholders | $ | 2.66 | $ | 4.69 | ||
| Diluted earnings per common share attributable to Comcast Corporation shareholders | $ | 2.62 | $ | 4.61 |
Universal Beijing Resort
In 2018, we entered into an agreement with a consortium of Chinese state-owned companies to build and operate a Universal theme park and resort in Beijing, China (“Universal Beijing Resort”). We own a 30% interest in Universal Beijing Resort and the construction is being funded through a combination of debt financing and equity contributions from the investors in accordance with their equity interests. The debt financing, which is being provided by a syndicate of Chinese financial institutions, contains certain financial and operating covenants and a maximum borrowing limit of ¥26.6 billion RMB (approximately $3.8 billion). The debt financing is secured by the assets of Universal Beijing Resort and the equity interests of the investors. As of December 31, 2019, Universal Beijing Resort had $1.3 billion principal amount of a term loan outstanding under the debt financing agreement.
We have concluded that Universal Beijing Resort is a variable interest entity based on its governance structure, and we consolidate it because we have the power to direct activities that most significantly impact its economic performance. There are no liquidity arrangements, guarantees or other financial commitments between us and Universal Beijing Resort, and therefore our maximum risk of financial loss is our 30% interest. Universal Beijing Resort’s results of operations are reported in our Theme Parks segment. Our consolidated statement of cash flows includes the costs of construction and related borrowings in the “construction of Universal Beijing Resort” and “proceeds from borrowings” captions, respectively, and equity contributions from the noncontrolling interests are included in other financing activities.
In March 2018, Universal Beijing Resort received initial equity investments through a combination of cash and noncash contributions from the investors. As of December 31, 2019, our consolidated balance sheet included assets, primarily property and equipment, and liabilities, including the term loan, of Universal Beijing Resort totaling $3.0 billion and $2.1 billion, respectively.
2017
FCC Spectrum Auction
On April 13, 2017, the Federal Communications Commission announced the results of its spectrum auction. In the auction, NBCUniversal relinquished its spectrum rights in the New York, Philadelphia and Chicago designated market areas (“DMAs”) where NBC and Telemundo had overlapping spectrum. NBCUniversal received proceeds of $482 million in July 2017, which were recorded in other investing activities in our consolidated statement of cash flows. NBCUniversal recognized a pretax gain of $337 million in other operating gains in 2017. NBC and Telemundo stations share broadcast signals in these DMAs. In connection with the auction, we also acquired the rights to $1.7 billion of spectrum in the second quarter of 2017, which were recorded to other intangible assets, net. We had previously made a deposit of $1.8 billion to participate in the auction in 2016 and received a refund for amounts in excess of the purchase price in 2017.
Universal Studios Japan
On April 6, 2017, we acquired the remaining interests in Universal Studios Japan that we did not already own for $2.3 billion. The acquisition was funded through cash on hand and borrowings under our commercial paper program. Because we maintained control of Universal Studios Japan, the difference between the consideration transferred and the recorded value of the noncontrolling interests, as well as the related tax and accumulated other comprehensive income impacts, were recorded to additional paid-in capital.
| Note 9: Recent Accounting Pronouncements |
Leases
In February 2016, the FASB updated the accounting guidance related to leases. The most significant change in the updated accounting guidance requires lessees to recognize lease assets and liabilities on the balance sheet for all operating leases with the exception of short-term leases. The standard also expands the disclosures regarding the amount, timing and uncertainty of cash flows arising from leases. For a lessee, the recognition, measurement and presentation of expenses and cash flows arising from a lease did not significantly change from previous guidance. We adopted the updated guidance on January 1, 2019 on a prospective basis and as a result, prior period amounts were not adjusted to reflect the impacts of the updated guidance. In addition, as permitted under the transition guidance within the new standard, prior scoping and classification conclusions were carried forward for leases existing as of the adoption date.
| Comcast 2019 Annual Report on Form 10-K | 87 |
Comcast Corporation
Upon adoption, we recorded $4.2 billion and $4.8 billion for operating lease assets and liabilities, respectively, which includes the impact of fair value adjustments, prepaid and deferred rent and lease incentives. The adoption of the updated accounting guidance did not significantly impact our recognition of finance leases, which were previously described as capital leases. As of the date of adoption, our liabilities for finance leases were $787 million, including $229 million of additional contracts determined to be leases in connection with the Sky transaction, which were recorded in long-term debt, and the related assets were recorded in property and equipment, net. Our finance leases were not considered material for further disclosure. The adoption of the new accounting guidance did not have a material impact on our consolidated results of operations or cash flows. See Note 17 for further information.
Film and Television Costs
In March 2019, the FASB updated the accounting guidance related to film and television costs. The updated guidance aligns the accounting for production costs of episodic television series with those of films, allowing for costs to be capitalized in excess of amounts of revenue contracted for each episode. The updated guidance also updates certain presentation and disclosure requirements for capitalized film and television costs and requires impairment testing to be performed at a group level for capitalized film and television costs when the content is predominantly monetized with other owned or licensed content. We will adopt the updated accounting guidance prospectively in the first quarter of 2020. Following adoption, we will present all film and television costs, including capitalized costs of acquired programming rights, as noncurrent assets in the consolidated balance sheet. We do not expect the updated accounting guidance to have a material impact on our consolidated results of operations or financial position.
Credit Losses
In June 2016, the FASB updated the accounting guidance related to the measurement of credit losses on financial instruments, including trade receivables and loans. The updated guidance requires the recognition of credit losses on financial instruments based on an estimate of expected losses, replacing the incurred loss model in the prior guidance. We will adopt the updated accounting guidance prospectively in the first quarter of 2020. We do not expect the updated accounting guidance to have a material impact on our consolidated results of operations or financial position.
| Note 10: Investments |
| Investment and Other Income (Loss), Net | |||||||||||
| Year ended December 31 (in millions) | 2019 | 2018 | 2017 | ||||||||
| Equity in net income (losses) of investees, net | $ | (505 | ) | $ | (364 | ) | $ | 107 | |||
| Realized and unrealized gains (losses) on equity securities, net | 656 | (187 | ) | (17 | ) | ||||||
| Other income (loss), net | 287 | 326 | 331 | ||||||||
| Investment and other income (loss), net | $ | 438 | $ | (225 | ) | $ | 421 |
| Investments | |||||||
| December 31 (in millions) | 2019 | 2018 | |||||
| Equity method | $ | 5,347 | $ | 4,035 | |||
| Marketable equity securities | 353 | 341 | |||||
| Nonmarketable equity securities | 1,896 | 1,805 | |||||
| Other investments | 1,796 | 1,796 | |||||
| Total investments | 9,392 | 7,977 | |||||
| Less: Current investments | 1,709 | 94 | |||||
| Less: Investment securing collateralized obligation | 694 | — | |||||
| Noncurrent investments | $ | 6,989 | $ | 7,883 |
| 88 | Comcast 2019 Annual Report on Form 10-K |
Comcast Corporation
Equity Method
We use the equity method to account for investments in which we have the ability to exercise significant influence over the investee’s operating and financial policies, or in which we hold a partnership or limited liability company interest in an entity with specific ownership accounts, unless we have virtually no influence over the investee’s operating and financial policies. Equity method investments are recorded at cost and are adjusted to recognize (1) our share, based on percentage ownership or other contractual basis, of the investee’s net income or loss after the date of investment, (2) amortization of the recorded investment that exceeds our share of the book value of the investee’s net assets, (3) additional contributions made and dividends received, and (4) impairments resulting from other-than-temporary declines in fair value. For some investments, we record our share of the investee’s net income or loss one quarter in arrears due to the timing of our receipt of such information. Gains or losses on the sale of equity method investments are recorded to other income (loss), net. If an equity method investee were to issue additional securities that would change our proportionate share of the entity, we would recognize the change, if any, as a gain or loss to other income (loss), net.
Atairos
On January 1, 2016, we established Atairos Group, Inc., a strategic company focused on investing in and operating companies in a range of industries and business sectors, both domestically and internationally. Atairos has a term of up to 12 years and is controlled by management companies led by our former CFO through interests that carry all of the voting rights. We are the only investor other than our former CFO and the other management company employees. We have committed to fund Atairos up to $5 billion in the aggregate at any one time, subject to certain offsets, and $45 million annually for a management fee, subject to certain adjustments. The management company investors have committed to fund from $50 million to $100 million, with at least $40 million to be funded by our former CFO, subject to his continued role with Atairos. Our economic interests do not carry voting rights and obligate us to absorb approximately 99% of any losses and they provide us the right to receive approximately 86% of any residual returns in Atairos, in either case on a cumulative basis.
We have concluded that Atairos is a VIE, that we do not have the power to direct the activities that most significantly impact the economic performance of Atairos as we have no voting rights and only certain consent rights, and that we are not a related party with our former CFO or the management companies. We therefore do not consolidate Atairos and account for our investment as an equity method investment. There are no other liquidity arrangements, guarantees or other financial commitments between Comcast and Atairos, and therefore our maximum risk of financial loss is our investment balance and our remaining unfunded capital commitment of $2.2 billion as of December 31, 2019.
Atairos follows investment company accounting and records its investments at their fair values each reporting period with the net gains or losses reflected in its statement of operations. We recognize our share of these gains and losses in equity in net income (losses) of investees, net. In 2019 and 2018, we recognized losses of $64 million and $31 million, respectively; in 2017, we recognized income of $281 million. In 2019, 2018 and 2017, we made cash capital contributions totaling $571 million, $282 million and $994 million, respectively, to Atairos. As of December 31, 2019 and 2018, our investment was $3.2 billion and $2.7 billion, respectively.
In April 2018, we sold a controlling interest in our arena management-related businesses to Atairos and received as consideration additional equity interests in Atairos. In connection with the sale of the businesses, we recognized a pre-tax gain of $200 million in other operating gains. In July 2017, we sold a business to a company owned by Atairos and received as consideration an investment in that company. In connection with the sale of the business, we recognized a pre-tax gain of $105 million in other operating gains.
Hulu and Collateralized Obligation
In May 2019, we entered into a series of agreements (the “Hulu Transaction”) with The Walt Disney Company and certain of its subsidiaries, whereby we relinquished our board seats and substantially all voting rights associated with our investment in Hulu, and Disney assumed full operational control. We also acquired our proportionate share of the approximate 10% interest in Hulu previously held by AT&T Inc. (“AT&T”) for approximately $477 million, increasing our ownership interest to approximately 33% from approximately 30%.
Following the Hulu Transaction, future capital calls are limited to $1.5 billion in the aggregate each year, with any excess funding requirements funded with member loans. We have the right, but not the obligation, to fund our proportionate share of these capital calls, and if we elect not to fund our share of future equity capital calls, our ownership interest will be diluted, subject to an ownership floor of 21%. The Hulu Transaction agreements include put and call provisions regarding our ownership interest in Hulu, pursuant to which, as early as January 2024, we can require Disney to buy, and Disney can require us to sell our interest, in either case, for fair value at that future time subject to a minimum equity value of $27.5 billion for 100% of the equity of Hulu. The minimum total equity value and ownership floor guarantee minimum proceeds of approximately $5.8 billion upon exercise of the put or call.
| Comcast 2019 Annual Report on Form 10-K | 89 |
Comcast Corporation
In connection with the Hulu Transaction, we agreed to extend certain licenses of NBCUniversal content until late 2024. We can terminate most of our content license agreements with Hulu beginning in 2022, and beginning in 2020, we have the right to modify certain content licenses that are currently exclusive to Hulu, so that we can exhibit the content on our platforms in return for reducing the license fee.
In August 2019, we entered into a financing arrangement with a syndicate of banks whereby we received proceeds of $5.2 billion under a term loan facility due March 2024. The principal amount of the term loan is secured by the proceeds guaranteed by Disney under the put/call provisions related to our investment in Hulu. The proceeds from the put/call provisions are available only for the repayment of the term loan and are not available to us unless and until the bank lenders are fully paid under the term loan provisions. The bank lenders have no rights to proceeds from the put/call provisions in excess of amounts owed under the term loan. As a result of this transaction, we now present our investment in Hulu and the term loan separately in our consolidated balance sheet in the captions “investment securing collateralized obligation” and “collateralized obligation”, respectively. The recorded value of our investment reflects our historical cost in applying the equity method, and as a result, is less than its fair value. As of December 31, 2019, our collateralized obligation had a carrying value of $5.2 billion and an estimated fair value of $5.2 billion. The estimated fair value was based on level 2 inputs that use interest rates for debt with similar terms and remaining maturities.
We account for our investment using the equity method. In 2019, 2018 and 2017, we recognized losses of $473 million, $454 million and $276 million, respectively, in equity in net income (losses) of investees, net. In 2019, 2018 and 2017, we made cash capital contributions totaling $903 million, inclusive of the funding for the acquisition of the AT&T interest, $454 million and $300 million, respectively, to Hulu. As of December 31, 2019 and 2018, our investment was $694 million and $248 million, respectively.
In August 2016, Time Warner Inc., which was acquired by AT&T in 2018, acquired a 10% interest in Hulu, diluting our interest at that time from approximately 33% to approximately 30%. Given the contingent nature of put and call options related to that interest, we recorded a deferred gain as a result of the dilution. In the first quarter of 2019, the put and call options expired unexercised and we recognized the previously deferred gain of $159 million in other income (loss), net.
Marketable Equity Securities
We classify investments with readily determinable fair values that are not accounted for under the equity method as marketable equity securities. Marketable equity securities are recorded at cost and adjusted to fair value at each reporting period. The changes in fair value between measurement dates are recorded in realized and unrealized gains (losses) on equity securities, net. The fair values of our marketable equity securities are based on level 1 inputs that use quoted market prices.
Snap
In March 2017, we acquired an interest in Snap Inc. for $500 million as part of its initial public offering, which was classified as a marketable equity security and was sold in 2019. We recognized gains of $293 million and losses of $268 million in 2019 and 2018, respectively. As of December 31, 2018, our investment was $162 million.
Peloton
In 2019, we recognized unrealized gains of $184 million, which included unrealized gains as a result of Peloton’s initial public offering in September 2019. Following the initial public offering, we now present our investment in marketable equity securities, which was previously presented in non-marketable equity securities. As of December 31, 2019 and 2018, our investment was $294 million and $110 million, respectively.
Nonmarketable Equity Securities
We classify investments without readily determinable fair values that are not accounted for under the equity method as nonmarketable equity securities. The accounting guidance requires nonmarketable equity securities to be recorded at cost and adjusted to fair value at each reporting period. However, the guidance allows for a measurement alternative, which is to record the investments at cost, less impairment, if any, and subsequently adjust for observable price changes of identical or similar investments of the same issuer. We apply this measurement alternative to a majority of our nonmarketable equity securities. When an observable event occurs, we estimate the fair values of our nonmarketable equity securities based on level 2 inputs that are derived from observable price changes of similar securities adjusted for insignificant differences in rights and obligations. The changes in value are recorded in realized and unrealized gains (losses) on equity securities, net.
| 90 | Comcast 2019 Annual Report on Form 10-K |
Comcast Corporation
Other Investments
AirTouch
We hold two series of preferred stock of Verizon Americas, Inc., formerly known as AirTouch Communications, Inc. (“AirTouch”), a subsidiary of Verizon Communications Inc., which are redeemable in April 2020. As of both December 31, 2019 and 2018, our investment in AirTouch was $1.6 billion, and was included in other current assets and investments, respectively. We account for our investment in AirTouch as a held to maturity investment using the cost method. As of both December 31, 2019 and 2018, the estimated fair value of the AirTouch preferred stock was $1.7 billion.
The dividend and redemption activity of the AirTouch preferred stock determines the dividend and redemption payments associated with substantially all of the preferred shares issued by one of our consolidated subsidiaries, which is a VIE. The subsidiary has three series of preferred stock outstanding with an aggregate redemption value of $1.75 billion. Substantially all of the AirTouch preferred stock is redeemable in April 2020 at a redemption value of $1.65 billion. As of December 31, 2019 and 2018, the two series of redeemable subsidiary preferred shares were recorded at $1.7 billion and $1.6 billion, respectively, and were included in other current liabilities and other noncurrent liabilities, respectively. As of both December 31, 2019 and 2018, the liability related to the redeemable subsidiary preferred shares had an aggregate estimated fair value of $1.7 billion. The estimated fair values of the AirTouch preferred stock and redeemable subsidiary preferred shares are based on level 2 inputs that use pricing models whose inputs are derived primarily from or corroborated by observable market data through correlation or other means for substantially the full term of the financial instrument. The one series of nonredeemable subsidiary preferred shares was recorded at $100 million as of both December 31, 2019 and 2018, and those amounts are included in noncontrolling interests in our consolidated balance sheet. The carrying amount of the nonredeemable subsidiary preferred shares approximates its fair value.
Impairment Testing of Investments
We review our investment portfolio, other than our marketable equity securities, each reporting period to determine whether there are identified events or circumstances that would indicate there is a decline in the fair value. For our nonpublic investments, if there are no identified events or circumstances that would have a significant adverse effect on the fair value of the investment, then the fair value is not estimated. For our equity method investments and held to maturity investments, if an investment is deemed to have experienced an other-than-temporary decline below its cost basis, we reduce the carrying amount of the investment to its quoted or estimated fair value, as applicable, and establish a new cost basis for the investment. For our nonmarketable equity securities, we record the impairment to realized and unrealized gains (losses) on equity securities, net. For our equity method investments and our held to maturity investments, we record the impairment to other income (loss), net.
| Note 11: Property and Equipment |
| December 31 (in millions) | Weighted-Average Original Useful Life as of December 31, 2019 | 2019 | 2018 | ||||||
| Distribution systems | 11 years | $ | 40,639 | $ | 38,380 | ||||
| Customer premise equipment | 6 years | 26,065 | 26,208 | ||||||
| Other equipment | 9 years | 13,025 | 12,437 | ||||||
| Buildings and leasehold improvements | 30 years | 15,104 | 14,188 | ||||||
| Construction in process | N/A | 5,245 | 2,991 | ||||||
| Land | N/A | 1,483 | 1,539 | ||||||
| Property and equipment, at cost | 101,561 | 95,743 | |||||||
| Less: Accumulated depreciation | 53,239 | 51,306 | |||||||
| Property and equipment, net | $ | 48,322 | $ | 44,437 |
Property and equipment are stated at cost. We capitalize improvements that extend asset lives and expense repairs and maintenance costs as incurred. We record depreciation using the straight-line method over the asset’s estimated useful life. For assets that are sold or retired, we remove the applicable cost and accumulated depreciation and, unless the gain or loss on disposition is presented separately, we recognize it as a component of depreciation expense. Capital expenditures for acquisitions and construction of real estate properties and the construction of Universal Beijing Resort are presented separately in our consolidated statement of cash flows.
In accordance with the accounting guidance related to cable television companies, Cable Communications capitalizes the costs associated with the construction of and improvements to our cable transmission and distribution facilities, including scalable infrastructure and line extensions; costs associated with acquiring and deploying new customer premise equipment; and costs
| Comcast 2019 Annual Report on Form 10-K | 91 |
Comcast Corporation
associated with installation of our services. Costs capitalized include all direct costs for labor and materials, as well as various indirect costs. Costs incurred in connection with subsequent disconnects and reconnects are expensed as they are incurred.
We evaluate the recoverability of our property and equipment whenever events or substantive changes in circumstances indicate that the carrying amount may not be recoverable. The evaluation is based on the cash flows generated by the underlying asset groups, including estimated future operating 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 group, we would recognize an impairment charge to the extent the carrying amount of the asset group exceeded its estimated fair value. Unless presented separately, the impairment charge is included as a component of depreciation expense.
Certain of our cable franchise agreements and lease agreements contain provisions requiring us to restore facilities or remove property in the event that the franchise or lease agreement is not renewed. We expect to continually renew our cable franchise agreements and therefore cannot reasonably estimate liabilities associated with such agreements. A remote possibility exists that franchise agreements could be terminated unexpectedly, which could result in us incurring significant expense in complying with restoration or removal provisions. We do not have any material liabilities related to asset retirement obligations recorded in our consolidated financial statements.
| Note 12: Goodwill and Intangible Assets |
| Goodwill | ||||||||||||||||||||||||
| NBCUniversal | ||||||||||||||||||||||||
| (in millions) | Cable Communications | Cable Networks | Broadcast Television | Filmed Entertainment | Theme Parks | Sky | Corporate and Other | Total | ||||||||||||||||
| Balance, December 31, 2017 | $ | 12,784 | $ | 13,427 | $ | 806 | $ | 3,212 | $ | 6,544 | $ | — | $ | 7 | $ | 36,780 | ||||||||
| Acquisitions(a) | — | — | 36 | — | — | 29,889 | — | 29,925 | ||||||||||||||||
| Dispositions | — | — | — | (8 | ) | — | — | (5 | ) | (13 | ) | |||||||||||||
| Adjustments | — | (13 | ) | 1 | (9 | ) | — | — | — | (21 | ) | |||||||||||||
| Foreign currency translation | — | (7 | ) | — | (11 | ) | 140 | (639 | ) | — | (517 | ) | ||||||||||||
| Balance, December 31, 2018 | 12,784 | 13,407 | 843 | 3,184 | 6,684 | 29,250 | 2 | 66,154 | ||||||||||||||||
| Acquisitions | 86 | 162 | 14 | — | — | 17 | — | 279 | ||||||||||||||||
| Dispositions | — | — | — | — | — | (12 | ) | — | (12 | ) | ||||||||||||||
| Adjustments**(b)** | 2,166 | 490 | 199 | 138 | — | (1,616 | ) | 2 | 1,379 | |||||||||||||||
| Foreign currency translation | 38 | 8 | 3 | (1 | ) | 55 | 822 | — | 925 | |||||||||||||||
| Balance, December 31, 2019 | $ | 15,074 | $ | 14,067 | $ | 1,059 | $ | 3,321 | $ | 6,739 | $ | 28,461 | $ | 4 | $ | 68,725 |
| (a) | Acquisitions in 2018 primarily included the Sky acquisition. As of December 31, 2018, the goodwill resulting from the Sky acquisition was presented in the Sky segment. See Note 8 for further information on the Sky acquisition. |
| (b) | Adjustments in 2019 primarily included 1) measurement period adjustments resulting from finalization of acquisition accounting for Sky and 2) the final assignment of goodwill resulting from the Sky transaction to our reporting units. |
Goodwill is calculated as the excess of the consideration transferred over the identifiable net assets acquired in a business combination and represents the future economic benefits expected to arise from anticipated synergies and intangible assets acquired that do not qualify for separate recognition, including increased footprint, assembled workforce, noncontractual relationships and other agreements. We assess the recoverability of our goodwill annually, or more frequently whenever events or substantive changes in circumstances indicate that the carrying amount of a reporting unit may exceed its fair value. We test goodwill for impairment at the reporting unit level. To determine our reporting units, we evaluate the components one level below the segment level and we aggregate the components if they have similar economic characteristics. As a result of this assessment, our reporting units are generally the same as our reportable segments. We evaluate the determination of our reporting units used to test for impairment periodically or whenever events or substantive changes in circumstances occur. The assessment of recoverability may first consider qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. A quantitative assessment is performed if the qualitative assessment results in a more-likely-than-not determination or if a qualitative assessment is not performed. The quantitative assessment considers whether the carrying amount of a reporting unit exceeds its fair value, in which case an impairment charge is recorded to the extent the reporting unit’s carrying value exceeds its fair value. Unless presented separately, the impairment charge is included as a component of amortization expense. We did not recognize any impairment charges in any of the periods presented.
| 92 | Comcast 2019 Annual Report on Form 10-K |
Comcast Corporation
| Intangible Assets | |||||||||||||
| 2019 | 2018 | ||||||||||||
| December 31 (in millions) | Weighted-Average Original Useful Life as of December 31, 2019 | Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | ||||||||
| Indefinite-Lived Intangible Assets: | |||||||||||||
| Franchise rights | N/A | $ | 59,365 | $ | 59,365 | ||||||||
| Trade names | N/A | 8,809 | 9,633 | ||||||||||
| FCC licenses | N/A | 2,337 | 2,333 | ||||||||||
| Finite-Lived Intangible Assets: | |||||||||||||
| Customer relationships | 14 years | 22,884 | $ | (8,295 | ) | 25,046 | $ | (6,682 | ) | ||||
| Software | 5 years | 15,357 | (7,287 | ) | 11,395 | (5,990 | ) | ||||||
| Other agreements and rights | 23 years | 3,958 | (1,635 | ) | 4,145 | (1,522 | ) | ||||||
| Total | $ | 112,710 | $ | (17,217 | ) | $ | 111,917 | $ | (14,194 | ) |
Indefinite-Lived Intangible Assets
Indefinite-lived intangible assets consist primarily of our cable franchise rights. Our cable franchise rights represent the values we attributed to agreements with state and local authorities that allow access to homes and businesses in cable service areas acquired in business combinations. We do not amortize our cable franchise rights because we have determined that they meet the definition of indefinite-lived intangible assets since there are no legal, regulatory, contractual, competitive, economic or other factors which limit the period over which these rights will contribute to our cash flows. We reassess this determination periodically or whenever events or substantive changes in circumstances occur.
We assess the recoverability of our cable franchise rights and other indefinite-lived intangible assets annually, or more frequently whenever events or substantive changes in circumstances indicate that the assets might be impaired. Our three Cable Communications divisions represent the unit of account we use to test for impairment of our cable franchise rights. We evaluate the unit of account used to test for impairment of our cable franchise rights and other indefinite-lived intangible assets periodically or whenever events or substantive changes in circumstances occur to ensure impairment testing is performed at an appropriate level. The assessment of recoverability may first consider qualitative factors to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount. A quantitative assessment is performed if the qualitative assessment results in a more-likely-than-not determination or if a qualitative assessment is not performed. When performing a quantitative assessment, we estimate the fair value of our cable franchise rights and other indefinite-lived intangible assets primarily based on a discounted cash flow analysis that involves significant judgment. When analyzing the fair values indicated under the discounted cash flow models, we also consider multiples of Adjusted EBITDA generated by the underlying assets, current market transactions and profitability information. If the fair value of our cable franchise rights or other indefinite-lived intangible assets were less than the carrying amount, we would recognize an impairment charge for the difference between the estimated fair value and the carrying value of the assets. Unless presented separately, the impairment charge is included as a component of amortization expense. We did not recognize any material impairment charges in any of the periods presented.
Finite-Lived Intangible Assets
| Estimated Amortization Expense of Finite-Lived Intangible Assets | |||
| (in millions) | |||
| 2020 | $ | 4,113 | |
| 2021 | $ | 3,649 | |
| 2022 | $ | 3,090 | |
| 2023 | $ | 2,589 | |
| 2024 | $ | 2,184 |
Finite-lived intangible assets are subject to amortization and consist primarily of customer relationships acquired in business combinations, software and intellectual property rights. Our finite-lived intangible assets are amortized primarily on a straight-line basis over their estimated useful life or the term of the associated agreement.
We capitalize 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. We also capitalize costs associated with the purchase of software licenses. We generally amortize them on a straight-line basis over a period not to exceed five years. We expense maintenance and training costs, as well as costs incurred during the preliminary stage of a project, as they are incurred. We capitalize initial operating system software costs and amortize them over the life of the associated hardware.
| Comcast 2019 Annual Report on Form 10-K | 93 |
Comcast Corporation
We evaluate the recoverability of our finite-lived intangible assets whenever events or substantive changes in circumstances indicate that the carrying amount may not be recoverable. The evaluation is based on the cash flows generated by the underlying asset groups, including estimated future operating 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 group, we would recognize an impairment charge to the extent the carrying amount of the asset group exceeded its estimated fair value. Unless presented separately, the impairment charge is included as a component of amortization expense.
| Note 13: Employee Benefit Plans |
Deferred Compensation Plans
| Year ended December 31 (in millions) | 2019 | 2018 | 2017 | ||||||
| Benefit obligation | $ | 3,273 | $ | 2,885 | $ | 2,539 | |||
| Interest expense | $ | 285 | $ | 222 | $ | 209 |
We maintain unfunded, nonqualified deferred compensation plans for certain members of management and nonemployee directors. The amount of compensation deferred by each participant is based on participant elections. Participant accounts are credited with income primarily based on a fixed annual rate. Participants are eligible to receive distributions from their account based on elected deferral periods that are consistent with the plans and applicable tax law.
We have purchased life insurance policies to recover a portion of the future payments related to our deferred compensation plans. As of December 31, 2019 and 2018, the cash surrender value of these policies, which is recorded to other noncurrent assets, was $423 million and $351 million, respectively.
Pension and Postretirement Benefit Plans
We sponsor several 401(k) defined contribution retirement plans that allow eligible employees to contribute a portion of their compensation through payroll deductions in accordance with specified plan guidelines. We make contributions to the plans that include matching a percentage of the employees’ contributions up to certain limits. In 2019, 2018 and 2017, expenses related to these plans totaled $573 million, $546 million and $458 million, respectively.
We sponsor a retiree health and welfare benefit plan that provides postretirement benefits to eligible employees. The plan provides, to eligible employees who retire from Comcast or its subsidiaries, an annual stipend for reimbursement of certain eligible healthcare costs. The amount of the stipend for an eligible retiree is fixed at a predetermined amount based on the retiree’s years of service and whether the retiree is eligible for Medicare. NBCUniversal sponsors various nonqualified defined benefit pension plans for domestic employees. The future benefits for these plans have been frozen since the beginning of 2013. In addition to the defined benefit plans it sponsors, NBCUniversal is also obligated to reimburse The General Electric Company (“GE”) for future benefit payments to those participants who were vested in the supplemental pension plan sponsored by GE at the time of the NBCUniversal transaction in 2011. These plans are all unfunded and not material.
We participate in various multiemployer benefit plans, including pension and postretirement benefit plans, that cover some of our employees and temporary employees who are represented by labor unions. We also participate in other multiemployer benefit plans that provide health and welfare and retirement savings benefits to active and retired participants. If we cease to be obligated to make contributions or were to otherwise withdraw from participation in any of these plans, applicable law would require us to fund our allocable share of the unfunded vested benefits, which is known as a withdrawal liability. In addition, actions taken by other participating employers may lead to adverse changes in the financial condition of one of these plans, which could result in an increase in our withdrawal liability. In 2019, 2018 and 2017, the total contributions we made to multiemployer benefit plans were not material.
Severance Benefits
We provide severance benefits to certain former employees. A liability is recorded when payment is probable, the amount is reasonably estimable, and the obligation relates to rights that have vested or accumulated. In 2019, 2018 and 2017, we recorded severance costs of $359 million, $243 million and $203 million, respectively.
| 94 | Comcast 2019 Annual Report on Form 10-K |
Comcast Corporation
| Note 14: Equity |
Common Stock
In the aggregate, holders of our Class A common stock have 662/3% of the voting power of our common stock and holders of our Class B common stock have 331/3% of the voting power of our common stock, which percentage is generally non-dilutable under the terms of our articles of incorporation. Each share of our Class B common stock is entitled to 15 votes. The number of votes held by each share of our Class A common stock depends on the number of shares of Class A and Class B common stock outstanding at any given time. The 331/3% aggregate voting power of our Class B common stock cannot be diluted by additional issuances of any other class of common stock. Our Class B common stock is convertible, share for share, into Class A common stock, subject to certain restrictions.
| Shares of Common Stock Outstanding | |||||
| (in millions) | Class A | Class B | |||
| Balance, December 31, 2016 | 4,742 | 9 | |||
| Stock compensation plans | 19 | — | |||
| Repurchases and retirements of common stock | (131 | ) | — | ||
| Employee stock purchase plans | 5 | — | |||
| Balance, December 31, 2017 | 4,635 | 9 | |||
| Stock compensation plans | 15 | — | |||
| Repurchases and retirements of common stock | (140 | ) | — | ||
| Employee stock purchase plans | 7 | — | |||
| Balance, December 31, 2018 | 4,517 | 9 | |||
| Stock compensation plans | 21 | — | |||
| Repurchases and retirements of common stock | — | — | |||
| Employee stock purchase plans | 6 | — | |||
| Balance, December 31, 2019 | 4,544 | 9 |
Share Repurchases
Effective January 1, 2017, our Board of Directors increased our share repurchase program authorization to $12 billion, which does not have an expiration date. As of December 31, 2019, $2.0 billion remained under this authorization.
| Share Repurchases Under Share Repurchase Program Authorization | |||||||||||
| Year ended December 31 (in millions) | 2019 | 2018 | 2017 | ||||||||
| Cash consideration | $ | — | $ | 5,000 | $ | 5,000 | |||||
| Shares repurchased | — | 140 | 131 |
| Accumulated Other Comprehensive Income (Loss) | |||||||
| December 31 (in millions) | 2019 | 2018 | |||||
| Unrealized gains (losses) on marketable securities | $ | 6 | $ | 3 | |||
| Deferred gains (losses) on cash flow hedges | 139 | 55 | |||||
| Unrecognized gains (losses) on employee benefit obligations | 265 | 325 | |||||
| Cumulative translation adjustments | 637 | (751 | ) | ||||
| Accumulated other comprehensive income (loss), net of deferred taxes | $ | 1,047 | $ | (368 | ) |
| Note 15: Share-Based Compensation |
The tables below provide information on our share-based compensation.
| Recognized Share-Based Compensation Expense | |||||||||||
| Year ended December 31 (in millions) | 2019 | 2018 | 2017 | ||||||||
| Restricted share units | $ | 564 | $ | 402 | $ | 349 | |||||
| Stock options | 231 | 205 | 205 | ||||||||
| Employee stock purchase plans | 30 | 32 | 32 | ||||||||
| Total | $ | 825 | $ | 639 | $ | 586 |
| Comcast 2019 Annual Report on Form 10-K | 95 |
Comcast Corporation
Our share-based compensation plans consist primarily of awards of RSUs and stock options to certain employees and directors as part of our approach to long-term incentive compensation. Awards generally vest over a period of 5 years and in the case of stock options, have a 10 year term. Additionally, through our employee stock purchase plans, employees are able to purchase shares of our common stock at a discount through payroll deductions. As of December 31, 2019, all of our stock options outstanding were net settled stock options. Net settled stock options, as opposed to stock options exercised with a cash payment, result in fewer shares being issued and no cash proceeds being received by us when the options are exercised.
| Stock Options and Restricted Share Units | |||||||
| As of December 31, 2019, unless otherwise stated (in millions, except per share data) | Stock Options | RSUs | |||||
| Awards granted during 2019 | 42 | 17 | |||||
| Weighted-average exercise price of awards granted during 2019 | $ | 40.50 | |||||
| Stock options outstanding and nonvested RSUs | 192 | 51 | |||||
| Weighted-average exercise price of stock options outstanding | $ | 31.84 | |||||
| Weighted-average fair value at grant date of nonvested RSUs | $ | 36.54 |
The cost associated with our share-based compensation is based on an award’s estimated fair value at the date of grant and is recognized over the period in which any related services are provided. RSUs are valued based on the closing price of our common stock on the date of grant and are discounted for the lack of dividends, if any, during the vesting period. We use the Black-Scholes option pricing model to estimate the fair value of stock option awards.
The table below presents the weighted-average fair value on the date of grant of RSUs and stock options awarded under our various plans and the related weighted-average valuation assumptions.
| Year ended December 31 | 2019 | 2018 | 2017 | ||||||||
| RSUs fair value | $ | 40.42 | $ | 35.56 | $ | 37.77 | |||||
| Stock options fair value | $ | 7.91 | $ | 7.14 | $ | 7.01 | |||||
| Stock Option Valuation Assumptions: | |||||||||||
| Dividend yield | 2.1 | % | 2.1 | % | 1.7 | % | |||||
| Expected volatility | 22.0 | % | 22.0 | % | 20.1 | % | |||||
| Risk-free interest rate | 2.5 | % | 2.7 | % | 2.2 | % | |||||
| Expected option life (in years) | 6.0 | 6.0 | 6.1 |
As of December 31, 2019, we had unrecognized pretax compensation expense of $1.1 billion related to nonvested RSUs and unrecognized pretax compensation expense of $493 million related to nonvested stock options that will be recognized over a weighted-average period of approximately 1.5 years and 1.7 years, respectively. In 2019, 2018, and 2017, we recognized $196 million, $75 million and $297 million, respectively, as a reduction to income tax expense as a result of excess tax benefits associated with our share-based compensation plans.
| Note 16: Supplemental Financial Information |
| Cash Payments for Interest and Income Taxes | |||||||||
| Year ended December 31 (in millions) | 2019 | 2018 | 2017 | ||||||
| Interest | $ | 4,254 | $ | 2,897 | $ | 2,820 | |||
| Income taxes | $ | 3,231 | $ | 2,355 | $ | 4,057 |
Noncash Activities
During 2019:
| • | we acquired $1.9 billion of property and equipment and intangible assets that were accrued but unpaid |
| • | we recorded a liability of $956 million for a quarterly cash dividend of $0.21 per common share paid in January 2020 |
During 2018:
| • | we acquired $2.1 billion of property and equipment and intangible assets that were accrued but unpaid |
| • | we recorded a liability of $860 million for a quarterly cash dividend of $0.19 per common share paid in January 2019 |
| 96 | Comcast 2019 Annual Report on Form 10-K |
Comcast Corporation
| • | we received noncash contributions from noncontrolling interests totaling $391 million related to Universal Beijing Resort (see Note 8) |
During 2017:
| • | we acquired $1.2 billion of property and equipment and intangible assets that were accrued but unpaid |
| • | we recorded a liability of $732 million for a quarterly cash dividend of $0.1575 per common share paid in January 2018 |
| • | we completed a senior notes exchange in the fourth quarter of 2017 in which we issued $5.5 billion aggregate principal amount of new senior notes in exchange for $3.9 billion aggregate principal amount of certain series of outstanding senior notes that were issued by us and NBCUniversal |
Cash, Cash Equivalents and Restricted Cash
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the consolidated balance sheet to the total of the amounts reported in our consolidated statement of cash flows.
| December 31 (in millions) | 2019 | 2018 | ||||
| Cash and cash equivalents | $ | 5,500 | $ | 3,814 | ||
| Restricted cash included in other current assets | 42 | 46 | ||||
| Restricted cash included in other noncurrent assets, net | 47 | 49 | ||||
| Cash, cash equivalents and restricted cash, end of year | $ | 5,589 | $ | 3,909 |
The carrying amounts of our cash equivalents approximate their fair values. Our cash equivalents consist primarily of money market funds and U.S. government obligations, as well as commercial paper and certificates of deposit with maturities of three months or less when purchased.
| Note 17: Commitments and Contingencies |
Programming and Talent Commitments
NBCUniversal and Sky enter into long-term commitments with third parties in the ordinary course of business, including commitments to acquire film and television programming, obligations under various creative talent agreements, and various other television-related commitments. Some of NBCUniversal’s employees, including writers, directors, actors, technical and production personnel, and others, as well as some of its on-air and creative talent, are covered by collective bargaining agreements or works councils. As of December 31, 2019, the total number of NBCUniversal employees covered by collective bargaining agreements was 9,400 full-time equivalent employees. Approximately, 12% of these full-time equivalent employees were covered by collective bargaining agreements that have expired or are scheduled to expire during 2020.
We, through Comcast Spectacor, have employment agreements with both players and coaches of the Philadelphia Flyers. Certain of these employment agreements, which provide for payments that are guaranteed regardless of employee injury or termination, are covered by disability insurance if certain conditions are met.
The table below summarizes our minimum annual programming and talent commitments. Programming and talent commitments include acquired film and television programming, broadcast rights to sporting events such as the Olympics, and other programming commitments, as well as various contracts with creative talent.
| As of December 31, 2019 (in millions) | Programming and Talent Commitments | ||
| 2020 | $ | 14,682 | |
| 2021 | $ | 7,701 | |
| 2022 | $ | 7,849 | |
| 2023 | $ | 3,674 | |
| 2024 | $ | 4,595 | |
| Thereafter | $ | 13,230 |
Leases
Our leases consist primarily of real estate, vehicles and other equipment. We determine if an arrangement is a lease at inception. Lease assets and liabilities are recognized upon commencement of the lease based on the present value of the future minimum lease payments over the lease term. The lease term includes options to extend the lease when it is reasonably certain that we will
| Comcast 2019 Annual Report on Form 10-K | 97 |
Comcast Corporation
exercise that option. We generally utilize our incremental borrowing rate based on information available at the commencement of the lease in determining the present value of future payments. The lease asset also includes any lease payments made and initial direct costs incurred and excludes lease incentives. Lease assets and liabilities are not recorded for leases with an initial term of one year or less. Lease expense for operating leases recorded in the balance sheet is included in operating costs and expenses and is based on the future minimum lease payments recognized on a straight-line basis over the term of the lease plus any variable lease costs. Operating lease expenses, inclusive of short-term and variable lease expenses, recognized in our consolidated statement of income for the period ended December 31, 2019 was $1.1 billion. This amount does not include lease costs associated with production activities or other amounts capitalized in our consolidated balance sheet, which are not material.
The table below summarizes the operating lease assets and liabilities recorded in our consolidated balance sheet.
Consolidated Balance Sheet
| (in millions) | December 31, 2019 | ||
| Other noncurrent assets, net | $ | 4,038 | |
| Accrued expenses and other current liabilities | $ | 715 | |
| Other noncurrent liabilities | $ | 3,891 |
The table below summarizes our future minimum lease commitments for operating leases as of December 31, 2019 applying the new guidance.
| (in millions) | December 31, 2019 | ||
| 2020 | $ | 877 | |
| 2021 | 791 | ||
| 2022 | 669 | ||
| 2023 | 566 | ||
| 2024 | 480 | ||
| Thereafter | 2,243 | ||
| Total future minimum lease payments | 5,626 | ||
| Less: imputed interest | 1,020 | ||
| Total liability | $ | 4,606 |
The weighted average remaining lease term for operating leases and the weighted average discount rate used to calculate our operating lease liabilities as of December 31, 2019 were 10 years and 3.74%, respectively.
In 2019, cash payments for operating leases recorded in the consolidated balance sheet were $914 million. Leases that have not yet commenced and lease assets and liabilities associated with leases entered into during the year were not material.
The tables below summarize our future minimum rental commitments for operating leases as of December 31, 2018 and rent expense for operating leases using the accounting guidance in effect at that time. These amounts have been updated to include $804 million of future cash payments related to additional contracts determined to be operating leases in connection with the Sky transaction.
| (in millions) | December 31, 2018 | ||
| 2019 | $ | 891 | |
| 2020 | $ | 824 | |
| 2021 | $ | 722 | |
| 2022 | $ | 592 | |
| 2023 | $ | 513 | |
| Thereafter | $ | 2,608 |
| Year ended December 31 (in millions) | 2018 | 2017 | ||||
| Rental expense | $ | 779 | $ | 839 |
Contractual Obligation
We are party to a contractual obligation that involves an interest held by a third party in the revenue of certain theme parks. The arrangement provides the counterparty with the right to periodic payments associated with current period revenue which are
| 98 | Comcast 2019 Annual Report on Form 10-K |
Comcast Corporation
recorded as an operating expense, and beginning in June 2017, the option to require NBCUniversal to purchase the interest for cash in an amount based on a contractual formula. The contractual formula is based on an average of specified historical theme park revenue at the time of exercise, which amount could be significantly higher than our carrying value. As of December 31, 2019, our carrying value was $1.1 billion, and the estimated value of the contractual obligation was $1.8 billion based on inputs to the contractual formula as of that date.
Redeemable Subsidiary Preferred Stock
NBCUniversal Enterprise is a holding company that we control and consolidate whose principal assets are its interests in NBCUniversal Holdings. The holders of the Series A cumulative preferred stock of NBCUniversal Enterprise have the right to cause NBCUniversal Enterprise to redeem their shares at a price equal to the $725 million aggregate liquidation preference plus accrued but unpaid dividends for a 30 day period beginning on March 19, 2020 and thereafter on every third anniversary of such date (each such date, a “put date”). The NBCUniversal Enterprise preferred stock pays dividends at a fixed rate of 5.25% per year. Shares of preferred stock can be called for redemption by NBCUniversal Enterprise at a price equal to the liquidation preference plus accrued but unpaid dividends one year following the put date applicable to such shares. Because certain of these redemption provisions are outside of our control, the NBCUniversal Enterprise preferred stock is presented outside of equity under the caption “redeemable noncontrolling interests and redeemable subsidiary preferred stock” in our consolidated balance sheet. Its initial value was based on the liquidation preference of the preferred stock and is adjusted for accrued but unpaid dividends. As of December 31, 2019 and 2018, the fair value of the NBCUniversal Enterprise redeemable subsidiary preferred stock was $749 million and $741 million, respectively. The estimated fair values are based on level 2 inputs that use pricing models whose inputs are derived primarily from or corroborated by observable market data through correlation or other means for substantially the full term of the financial instrument.
Contingencies
We are subject to legal proceedings and claims that arise in the ordinary course of our business. While the amount of ultimate liability with respect to such actions is not expected to materially affect our results of operations, cash flows or financial position, any litigation resulting from any such legal proceedings or claims could be time-consuming and injure our reputation.
| Note 18: Quarterly Financial Information (Unaudited) |
| (in millions, except per share data) | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Total Year | ||||||||||
| 2019 | |||||||||||||||
| Revenue | $ | 26,859 | $ | 26,858 | $ | 26,827 | $ | 28,398 | $ | 108,942 | |||||
| Operating income | $ | 5,182 | $ | 5,356 | $ | 5,340 | $ | 5,247 | $ | 21,125 | |||||
| Net income attributable to Comcast Corporation | $ | 3,553 | $ | 3,125 | $ | 3,217 | $ | 3,162 | $ | 13,057 | |||||
| Basic earnings per common share attributable to Comcast Corporation shareholders | $ | 0.78 | $ | 0.69 | $ | 0.71 | $ | 0.69 | $ | 2.87 | |||||
| Diluted earnings per common share attributable to Comcast Corporation shareholders | $ | 0.77 | $ | 0.68 | $ | 0.70 | $ | 0.68 | $ | 2.83 | |||||
| Dividends declared per common share | $ | 0.21 | $ | 0.21 | $ | 0.21 | $ | 0.21 | $ | 0.84 | |||||
| 2018(a) | |||||||||||||||
| Revenue | $ | 22,791 | $ | 21,735 | $ | 22,135 | $ | 27,846 | $ | 94,507 | |||||
| Operating income | $ | 4,645 | $ | 5,014 | $ | 4,836 | $ | 4,514 | $ | 19,009 | |||||
| Net income attributable to Comcast Corporation | $ | 3,118 | $ | 3,216 | $ | 2,886 | $ | 2,511 | $ | 11,731 | |||||
| Basic earnings per common share attributable to Comcast Corporation shareholders | $ | 0.67 | $ | 0.70 | $ | 0.63 | $ | 0.55 | $ | 2.56 | |||||
| Diluted earnings per common share attributable to Comcast Corporation shareholders | $ | 0.66 | $ | 0.69 | $ | 0.62 | $ | 0.55 | $ | 2.53 | |||||
| Dividends declared per common share | $ | 0.19 | $ | 0.19 | $ | 0.19 | $ | 0.19 | $ | 0.76 |
Minor differences may exist due to rounding.
| (a) | The 2018 amounts include the operations of Sky from October 9, 2018 through December 31, 2018. See Note 8 for additional information. |
| Comcast 2019 Annual Report on Form 10-K | 99 |
Comcast Corporation
| Note 19: Condensed Consolidating Financial Information |
Comcast (“Comcast Parent”), Comcast Cable Communications, LLC (“CCCL Parent”) and NBCUniversal (“NBCUniversal Media Parent”) fully and unconditionally guarantee each other’s debt. See Note 7 for additional information on the cross-guarantee structure.
Condensed Consolidating Statement of Income
| For the Year Ended December 31, 2019 (in millions) | Comcast Parent | Comcast Holdings | CCCL Parent | NBCUniversal Media Parent | Non- Guarantor Subsidiaries | Elimination and Consolidation Adjustments | Consolidated Comcast Corporation | ||||||||||||||
| Revenue: | |||||||||||||||||||||
| Service revenue | $ | — | $ | — | $ | — | $ | — | $ | 108,942 | $ | — | $ | 108,942 | |||||||
| Management fee revenue | 1,262 | — | 1,236 | — | — | (2,498 | ) | — | |||||||||||||
| Total revenue | 1,262 | — | 1,236 | — | 108,942 | (2,498 | ) | 108,942 | |||||||||||||
| Costs and Expenses: | |||||||||||||||||||||
| Programming and production | — | — | — | — | 34,440 | — | 34,440 | ||||||||||||||
| Other operating and administrative | 801 | 16 | 1,236 | 957 | 32,295 | (2,498 | ) | 32,807 | |||||||||||||
| Advertising, marketing and promotion | — | — | — | — | 7,617 | — | 7,617 | ||||||||||||||
| Depreciation | 61 | — | — | — | 8,602 | — | 8,663 | ||||||||||||||
| Amortization | 5 | — | — | — | 4,285 | — | 4,290 | ||||||||||||||
| Other operating gains | — | — | — | — | — | — | — | ||||||||||||||
| Total costs and expenses | 867 | 16 | 1,236 | 957 | 87,239 | (2,498 | ) | 87,817 | |||||||||||||
| Operating income (loss) | 395 | (16 | ) | — | (957 | ) | 21,703 | — | 21,125 | ||||||||||||
| Interest expense | (3,511 | ) | (13 | ) | (190 | ) | (474 | ) | (379 | ) | — | (4,567 | ) | ||||||||
| Investment and other income (loss), net | 15,581 | 15,366 | 13,787 | 7,260 | 5,755 | (57,311 | ) | 438 | |||||||||||||
| Income (loss) before income taxes | 12,465 | 15,337 | 13,597 | 5,829 | 27,079 | (57,311 | ) | 16,996 | |||||||||||||
| Income tax (expense) benefit | 592 | (9 | ) | 40 | (45 | ) | (4,251 | ) | — | (3,673 | ) | ||||||||||
| Net income (loss) | 13,057 | 15,328 | 13,637 | 5,784 | 22,828 | (57,311 | ) | 13,323 | |||||||||||||
| Less: Net income attributable to noncontrolling interests and redeemable subsidiary preferred stock | — | — | — | — | 266 | — | 266 | ||||||||||||||
| Net income (loss) attributable to Comcast Corporation | $ | 13,057 | $ | 15,328 | $ | 13,637 | $ | 5,784 | $ | 22,562 | $ | (57,311 | ) | $ | 13,057 | ||||||
| Comprehensive income (loss) attributable to Comcast Corporation | $ | 14,472 | $ | 15,321 | $ | 13,641 | $ | 5,744 | $ | 24,210 | $ | (58,916 | ) | $ | 14,472 |
| 100 | Comcast 2019 Annual Report on Form 10-K |
Comcast Corporation
Condensed Consolidating Statement of Income
| For the Year Ended December 31, 2018 (in millions) | Comcast Parent | Comcast Holdings | CCCL Parent | NBCUniversal Media Parent | Non- Guarantor Subsidiaries | Elimination and Consolidation Adjustments | Consolidated Comcast Corporation | ||||||||||||||
| Revenue: | |||||||||||||||||||||
| Service revenue | $ | — | $ | — | $ | — | $ | — | $ | 94,507 | $ | — | $ | 94,507 | |||||||
| Management fee revenue | 1,197 | — | 1,175 | — | — | (2,372 | ) | — | |||||||||||||
| Total revenue | 1,197 | — | 1,175 | — | 94,507 | (2,372 | ) | 94,507 | |||||||||||||
| Costs and Expenses: | |||||||||||||||||||||
| Programming and production | — | — | — | — | 29,692 | — | 29,692 | ||||||||||||||
| Other operating and administrative | 947 | — | 1,175 | 1,023 | 27,321 | (2,372 | ) | 28,094 | |||||||||||||
| Advertising, marketing and promotion | — | — | — | — | 7,036 | — | 7,036 | ||||||||||||||
| Depreciation | 46 | — | — | — | 8,235 | — | 8,281 | ||||||||||||||
| Amortization | 5 | — | — | — | 2,731 | — | 2,736 | ||||||||||||||
| Other operating gains | — | — | — | — | (341 | ) | — | (341 | ) | ||||||||||||
| Total costs and expenses | 998 | — | 1,175 | 1,023 | 74,674 | (2,372 | ) | 75,498 | |||||||||||||
| Operating income (loss) | 199 | — | — | (1,023 | ) | 19,833 | — | 19,009 | |||||||||||||
| Interest expense | (2,644 | ) | (12 | ) | (190 | ) | (430 | ) | (266 | ) | — | (3,542 | ) | ||||||||
| Investment and other income (loss), net | 13,638 | 13,604 | 12,021 | 6,694 | 5,054 | (51,236 | ) | (225 | ) | ||||||||||||
| Income (loss) before income taxes | 11,193 | 13,592 | 11,831 | 5,241 | 24,621 | (51,236 | ) | 15,242 | |||||||||||||
| Income tax (expense) benefit | 538 | 8 | 40 | (4 | ) | (3,962 | ) | — | (3,380 | ) | |||||||||||
| Net income (loss) | 11,731 | 13,600 | 11,871 | 5,237 | 20,659 | (51,236 | ) | 11,862 | |||||||||||||
| Less: Net income loss attributable to noncontrolling interests and redeemable subsidiary preferred stock | — | — | — | — | 131 | — | 131 | ||||||||||||||
| Net income (loss) attributable to Comcast Corporation | $ | 11,731 | $ | 13,600 | $ | 11,871 | $ | 5,237 | $ | 20,528 | $ | (51,236 | ) | $ | 11,731 | ||||||
| Comprehensive income (loss) attributable to Comcast Corporation | $ | 10,908 | $ | 13,623 | $ | 11,873 | $ | 5,279 | $ | 19,553 | $ | (50,328 | ) | $ | 10,908 |
| Comcast 2019 Annual Report on Form 10-K | 101 |
Comcast Corporation
Condensed Consolidating Statement of Income
| For the Year Ended December 31, 2017 (in millions) | Comcast Parent | Comcast Holdings | CCCL Parent | NBCUniversal Media Parent | Non- Guarantor Subsidiaries | Elimination and Consolidation Adjustments | Consolidated Comcast Corporation | ||||||||||||||
| Revenue: | |||||||||||||||||||||
| Service revenue | $ | — | $ | — | $ | — | $ | — | $ | 85,029 | $ | — | $ | 85,029 | |||||||
| Management fee revenue | 1,128 | — | 1,109 | — | — | (2,237 | ) | — | |||||||||||||
| Total revenue | 1,128 | — | 1,109 | — | 85,029 | (2,237 | ) | 85,029 | |||||||||||||
| Costs and Expenses: | |||||||||||||||||||||
| Programming and production | — | — | — | — | 25,355 | — | 25,355 | ||||||||||||||
| Other operating and administrative | 766 | — | 1,109 | 1,044 | 24,767 | (2,237 | ) | 25,449 | |||||||||||||
| Advertising, marketing and promotion | — | — | — | — | 6,519 | — | 6,519 | ||||||||||||||
| Depreciation | 31 | — | — | — | 7,883 | — | 7,914 | ||||||||||||||
| Amortization | 6 | — | — | — | 2,210 | — | 2,216 | ||||||||||||||
| Other operating gains | — | — | — | — | (442 | ) | — | (442 | ) | ||||||||||||
| Total costs and expenses | 803 | — | 1,109 | 1,044 | 66,292 | (2,237 | ) | 67,011 | |||||||||||||
| Operating income (loss) | 325 | — | — | (1,044 | ) | 18,737 | — | 18,018 | |||||||||||||
| Interest expense | (2,172 | ) | (12 | ) | (207 | ) | (456 | ) | (239 | ) | — | (3,086 | ) | ||||||||
| Investment and other income (loss), net | 24,076 | 21,767 | 19,610 | 6,584 | 5,545 | (77,161 | ) | 421 | |||||||||||||
| Income (loss) before income taxes | 22,229 | 21,755 | 19,403 | 5,084 | 24,043 | (77,161 | ) | 15,353 | |||||||||||||
| Income tax (expense) benefit | 506 | 156 | 71 | (4 | ) | 6,840 | — | 7,569 | |||||||||||||
| Net income (loss) | 22,735 | 21,911 | 19,474 | 5,080 | 30,883 | (77,161 | ) | 22,922 | |||||||||||||
| Less: Net income attributable to noncontrolling interests and redeemable subsidiary preferred stock | — | — | — | — | 187 | — | 187 | ||||||||||||||
| Net income (loss) attributable to Comcast Corporation | $ | 22,735 | $ | 21,911 | $ | 19,474 | $ | 5,080 | $ | 30,696 | $ | (77,161 | ) | $ | 22,735 | ||||||
| Comprehensive income (loss) attributable to Comcast Corporation | $ | 22,822 | $ | 21,909 | $ | 19,477 | $ | 5,054 | $ | 30,558 | $ | (76,998 | ) | $ | 22,822 |
| 102 | Comcast 2019 Annual Report on Form 10-K |
Comcast Corporation
Condensed Consolidating Statement of Cash Flows
| For the Year Ended December 31, 2019 (in millions) | Comcast Parent | Comcast Holdings | CCCL Parent | NBCUniversal Media Parent | Non- Guarantor Subsidiaries | Elimination and Consolidation Adjustments | Consolidated Comcast Corporation | ||||||||||||||
| Net cash provided by (used in) operating activities | $ | (1,693 | ) | $ | 318 | $ | (119 | ) | $ | (1,232 | ) | $ | 28,423 | $ | — | $ | 25,697 | ||||
| Investing Activities: | |||||||||||||||||||||
| Net transactions with affiliates | 10,218 | (318 | ) | 119 | 3,354 | (13,373 | ) | — | — | ||||||||||||
| Capital expenditures | (42 | ) | — | — | — | (9,911 | ) | — | (9,953 | ) | |||||||||||
| Cash paid for intangible assets | (4 | ) | — | — | — | (2,471 | ) | — | (2,475 | ) | |||||||||||
| Acquisitions and construction of real estate properties | (51 | ) | — | — | — | (3 | ) | — | (54 | ) | |||||||||||
| Construction of Universal Beijing Resort | — | — | — | — | (1,116 | ) | — | (1,116 | ) | ||||||||||||
| Acquisitions, net of cash acquired | — | — | — | — | (370 | ) | — | (370 | ) | ||||||||||||
| Proceeds from sales of businesses and investments | — | — | — | — | 886 | — | 886 | ||||||||||||||
| Purchases of investments | (36 | ) | — | — | (72 | ) | (1,791 | ) | — | (1,899 | ) | ||||||||||
| Other | — | — | — | — | 140 | — | 140 | ||||||||||||||
| Net cash provided by (used in) investing activities | 10,085 | (318 | ) | 119 | 3,282 | (28,009 | ) | — | (14,841 | ) | |||||||||||
| Financing Activities: | |||||||||||||||||||||
| Proceeds from (repayments of) short-term borrowings, net | — | — | — | — | (1,288 | ) | — | (1,288 | ) | ||||||||||||
| Proceeds from borrowings | 4,741 | — | — | — | 738 | — | 5,479 | ||||||||||||||
| Proceeds from collateralized obligation | — | — | — | — | 5,175 | — | 5,175 | ||||||||||||||
| Repurchases and repayments of debt | (8,821 | ) | — | — | (2,010 | ) | (3,523 | ) | — | (14,354 | ) | ||||||||||
| Repurchases of common stock under repurchase program and employee plans | (504 | ) | — | — | — | — | — | (504 | ) | ||||||||||||
| Dividends paid | (3,735 | ) | — | — | — | — | — | (3,735 | ) | ||||||||||||
| Distributions to noncontrolling interests and dividends for redeemable subsidiary preferred stock | — | — | — | — | (311 | ) | — | (311 | ) | ||||||||||||
| Other | (78 | ) | — | — | (40 | ) | 475 | — | 357 | ||||||||||||
| Net cash provided by (used in) financing activities | (8,397 | ) | — | — | (2,050 | ) | 1,266 | — | (9,181 | ) | |||||||||||
| Impact of foreign currency on cash, cash equivalents and restricted cash | 5 | — | — | — | — | — | 5 | ||||||||||||||
| Increase (decrease) in cash and cash equivalents and restricted cash | — | — | — | — | 1,680 | — | 1,680 | ||||||||||||||
| Cash, cash equivalents and restricted cash, beginning of year | — | — | — | 416 | 3,493 | — | 3,909 | ||||||||||||||
| Cash, cash equivalents and restricted cash, end of year | $ | — | $ | — | $ | — | $ | 416 | $ | 5,173 | $ | — | $ | 5,589 |
| Comcast 2019 Annual Report on Form 10-K | 103 |
Comcast Corporation
Condensed Consolidating Statement of Cash Flows
| For the Year Ended December 31, 2018 (in millions) | Comcast Parent | Comcast Holdings | CCCL Parent | NBCUniversal Media Parent | Non- Guarantor Subsidiaries | Elimination and Consolidation Adjustments | Consolidated Comcast Corporation | ||||||||||||||
| Net cash provided by (used in) operating activities | $ | (2,245 | ) | $ | 126 | $ | (112 | ) | $ | (1,430 | ) | $ | 27,958 | $ | — | $ | 24,297 | ||||
| Investing Activities: | |||||||||||||||||||||
| Net transactions with affiliates | (26,179 | ) | (575 | ) | 112 | 1,336 | 25,306 | — | — | ||||||||||||
| Capital expenditures | (27 | ) | — | — | — | (9,747 | ) | — | (9,774 | ) | |||||||||||
| Cash paid for intangible assets | (4 | ) | — | — | — | (1,931 | ) | — | (1,935 | ) | |||||||||||
| Acquisitions and construction of real estate properties | (105 | ) | — | — | — | (38 | ) | — | (143 | ) | |||||||||||
| Construction of Universal Beijing Resort | — | — | — | — | (460 | ) | — | (460 | ) | ||||||||||||
| Acquisitions, net of cash acquired | — | — | — | — | (38,219 | ) | — | (38,219 | ) | ||||||||||||
| Proceeds from sales of businesses and investments | — | — | — | 68 | 73 | — | 141 | ||||||||||||||
| Purchases of investments | (126 | ) | — | — | (50 | ) | (1,081 | ) | — | (1,257 | ) | ||||||||||
| Other | 148 | 449 | — | — | 196 | — | 793 | ||||||||||||||
| Net cash provided by (used in) investing activities | (26,293 | ) | (126 | ) | 112 | 1,354 | (25,901 | ) | — | (50,854 | ) | ||||||||||
| Financing Activities: | |||||||||||||||||||||
| Proceeds from (repayments of) short-term borrowings, net | (902 | ) | — | — | — | 1,281 | — | 379 | |||||||||||||
| Proceeds from borrowings | 44,113 | — | — | — | 668 | — | 44,781 | ||||||||||||||
| Repurchases and repayments of debt | (5,737 | ) | — | — | (4 | ) | (3,057 | ) | — | (8,798 | ) | ||||||||||
| Repurchases of common stock under repurchase program and employee plans | (5,320 | ) | — | — | — | — | — | (5,320 | ) | ||||||||||||
| Dividends paid | (3,352 | ) | — | — | — | — | — | (3,352 | ) | ||||||||||||
| Distributions to noncontrolling interests and dividends for redeemable subsidiary preferred stock | — | — | — | — | (277 | ) | — | (277 | ) | ||||||||||||
| Other | (201 | ) | — | — | — | (72 | ) | — | (273 | ) | |||||||||||
| Net cash provided by (used in) financing activities | 28,601 | — | — | (4 | ) | (1,457 | ) | — | 27,140 | ||||||||||||
| Impact of foreign currency on cash, cash equivalents and restricted cash | (63 | ) | — | — | — | (182 | ) | — | (245 | ) | |||||||||||
| Increase (decrease) in cash and cash equivalents and restricted cash | — | — | — | (80 | ) | 418 | — | 338 | |||||||||||||
| Cash, cash equivalents and restricted cash, beginning of year | — | — | — | 496 | 3,075 | — | 3,571 | ||||||||||||||
| Cash, cash equivalents and restricted cash, end of year | $ | — | $ | — | $ | — | $ | 416 | $ | 3,493 | $ | — | $ | 3,909 |
| 104 | Comcast 2019 Annual Report on Form 10-K |
Comcast Corporation
Condensed Consolidating Statement of Cash Flows
| For the Year Ended December 31, 2017 (in millions) | Comcast Parent | Comcast Holdings | CCCL Parent | NBCUniversal Media Parent | Non- Guarantor Subsidiaries | Elimination and Consolidation Adjustments | Consolidated Comcast Corporation | ||||||||||||||
| Net cash provided by (used in) operating activities | $ | 151 | $ | 15 | $ | (147 | ) | $ | (1,439 | ) | $ | 22,681 | $ | — | $ | 21,261 | |||||
| Investing Activities: | |||||||||||||||||||||
| Net transactions with affiliates | 5,578 | (5 | ) | 757 | 1,447 | (7,777 | ) | — | — | ||||||||||||
| Capital expenditures | (12 | ) | — | — | — | (9,538 | ) | — | (9,550 | ) | |||||||||||
| Cash paid for intangible assets | (4 | ) | — | — | — | (1,601 | ) | — | (1,605 | ) | |||||||||||
| Acquisitions and construction of real estate properties | (267 | ) | — | — | — | (151 | ) | — | (418 | ) | |||||||||||
| Construction of Universal Beijing Resort | — | — | — | — | (71 | ) | — | (71 | ) | ||||||||||||
| Acquisitions, net of cash acquired | — | — | — | — | (532 | ) | — | (532 | ) | ||||||||||||
| Proceeds from sales of businesses and investments | — | — | — | 14 | 136 | — | 150 | ||||||||||||||
| Purchases of investments | (70 | ) | (10 | ) | (60 | ) | (62 | ) | (2,090 | ) | — | (2,292 | ) | ||||||||
| Other | 101 | — | — | 58 | 626 | — | 785 | ||||||||||||||
| Net cash provided by (used in) investing activities | 5,326 | (15 | ) | 697 | 1,457 | (20,998 | ) | — | (13,533 | ) | |||||||||||
| Financing Activities: | |||||||||||||||||||||
| Proceeds from (repayments of) short-term borrowings, net | (837 | ) | — | — | — | (1,068 | ) | — | (1,905 | ) | |||||||||||
| Proceeds from borrowings | 5,997 | — | — | — | 5,469 | — | 11,466 | ||||||||||||||
| Repurchases and repayments of debt | (2,288 | ) | — | (550 | ) | (4 | ) | (3,522 | ) | — | (6,364 | ) | |||||||||
| Repurchases of common stock under repurchase program and employee plans | (5,435 | ) | — | — | — | — | — | (5,435 | ) | ||||||||||||
| Dividends paid | (2,883 | ) | — | — | — | — | — | (2,883 | ) | ||||||||||||
| Purchase of Universal Studios Japan noncontrolling interests | — | — | — | — | (2,299 | ) | — | (2,299 | ) | ||||||||||||
| Distributions to noncontrolling interests and dividends for redeemable subsidiary preferred stock | — | — | — | — | (252 | ) | — | (252 | ) | ||||||||||||
| Other | (31 | ) | — | — | — | 131 | — | 100 | |||||||||||||
| Net cash provided by (used in) financing activities | (5,477 | ) | — | (550 | ) | (4 | ) | (1,541 | ) | — | (7,572 | ) | |||||||||
| Increase (decrease) in cash and cash equivalents and restricted cash | — | — | — | 14 | 142 | — | 156 | ||||||||||||||
| Cash, cash equivalents and restricted cash, beginning of year | — | — | — | 482 | 2,933 | — | 3,415 | ||||||||||||||
| Cash, cash equivalents and restricted cash, end of year | $ | — | $ | — | $ | — | $ | 496 | $ | 3,075 | $ | — | $ | 3,571 |
| Comcast 2019 Annual Report on Form 10-K | 105 |
Comcast Corporation
Condensed Consolidating Balance Sheet
| December 31, 2019 (in millions) | Comcast Parent | Comcast Holdings | CCCL Parent | NBCUniversal Media Parent | Non- Guarantor Subsidiaries | Elimination and Consolidation Adjustments | Consolidated Comcast Corporation | ||||||||||||||
| Assets | |||||||||||||||||||||
| Cash and cash equivalents | $ | — | $ | — | $ | — | $ | 416 | $ | 5,084 | $ | — | $ | 5,500 | |||||||
| Receivables, net | — | — | — | — | 11,292 | — | 11,292 | ||||||||||||||
| Programming rights | — | — | — | — | 3,877 | — | 3,877 | ||||||||||||||
| Other current assets | 115 | 19 | — | 24 | 4,565 | — | 4,723 | ||||||||||||||
| Total current assets | 115 | 19 | — | 440 | 24,818 | — | 25,392 | ||||||||||||||
| Film and television costs | — | — | — | — | 8,933 | — | 8,933 | ||||||||||||||
| Investments | 270 | 12 | 156 | 1,085 | 5,466 | — | 6,989 | ||||||||||||||
| Investment securing collateralized obligation | — | — | — | — | 694 | — | 694 | ||||||||||||||
| Investments in and amounts due from subsidiaries eliminated upon consolidation | 164,754 | 152,179 | 135,536 | 55,472 | 92,925 | (600,866 | ) | — | |||||||||||||
| Property and equipment, net | 660 | — | — | — | 47,662 | — | 48,322 | ||||||||||||||
| Goodwill | — | — | — | — | 68,725 | — | 68,725 | ||||||||||||||
| Franchise rights | — | — | — | — | 59,365 | — | 59,365 | ||||||||||||||
| Other intangible assets, net | 9 | — | — | — | 36,119 | — | 36,128 | ||||||||||||||
| Other noncurrent assets, net | 1,058 | 327 | — | 97 | 7,919 | (535 | ) | 8,866 | |||||||||||||
| Total assets | $ | 166,866 | $ | 152,537 | $ | 135,692 | $ | 57,094 | $ | 352,626 | $ | (601,401 | ) | $ | 263,414 | ||||||
| Liabilities and Equity | |||||||||||||||||||||
| Accounts payable and accrued expenses related to trade creditors | $ | 58 | $ | — | $ | — | $ | — | $ | 10,768 | $ | — | $ | 10,826 | |||||||
| Accrued participations and residuals | — | — | — | — | 1,730 | — | 1,730 | ||||||||||||||
| Deferred revenue | — | — | — | — | 2,768 | — | 2,768 | ||||||||||||||
| Accrued expenses and other current liabilities | 2,333 | 245 | 388 | 380 | 7,170 | — | 10,516 | ||||||||||||||
| Current portion of long-term debt | 2,731 | — | — | 7 | 1,714 | — | 4,452 | ||||||||||||||
| Total current liabilities | 5,122 | 245 | 388 | 387 | 24,150 | — | 30,292 | ||||||||||||||
| Long-term debt, less current portion | 75,786 | 154 | 2,100 | 5,752 | 13,973 | — | 97,765 | ||||||||||||||
| Collateralized obligation | — | — | — | — | 5,166 | — | 5,166 | ||||||||||||||
| Deferred income taxes | — | 350 | — | 67 | 28,298 | (535 | ) | 28,180 | |||||||||||||
| Other noncurrent liabilities | 3,232 | 145 | — | 1,634 | 11,754 | — | 16,765 | ||||||||||||||
| Redeemable noncontrolling interests and redeemable subsidiary preferred stock | — | — | — | — | 1,372 | — | 1,372 | ||||||||||||||
| Equity: | |||||||||||||||||||||
| Common stock | 54 | — | — | — | — | — | 54 | ||||||||||||||
| Other shareholders’ equity | 82,672 | 151,643 | 133,204 | 49,254 | 266,765 | (600,866 | ) | 82,672 | |||||||||||||
| Total Comcast Corporation shareholders’ equity | 82,726 | 151,643 | 133,204 | 49,254 | 266,765 | (600,866 | ) | 82,726 | |||||||||||||
| Noncontrolling interests | — | — | — | — | 1,148 | — | 1,148 | ||||||||||||||
| Total equity | 82,726 | 151,643 | 133,204 | 49,254 | 267,913 | (600,866 | ) | 83,874 | |||||||||||||
| Total liabilities and equity | $ | 166,866 | $ | 152,537 | $ | 135,692 | $ | 57,094 | $ | 352,626 | $ | (601,401 | ) | $ | 263,414 |
| 106 | Comcast 2019 Annual Report on Form 10-K |
Comcast Corporation
Condensed Consolidating Balance Sheet
| December 31, 2018 (in millions) | Comcast Parent | Comcast Holdings | CCCL Parent | NBCUniversal Media Parent | Non- Guarantor Subsidiaries | Elimination and Consolidation Adjustments | Consolidated Comcast Corporation | ||||||||||||||
| Assets | |||||||||||||||||||||
| Cash and cash equivalents | $ | — | $ | — | $ | — | $ | 416 | $ | 3,398 | $ | — | $ | 3,814 | |||||||
| Receivables, net | — | — | — | — | 11,104 | — | 11,104 | ||||||||||||||
| Programming rights | — | — | — | — | 3,746 | — | 3,746 | ||||||||||||||
| Other current assets | 66 | 20 | — | 28 | 3,070 | — | 3,184 | ||||||||||||||
| Total current assets | 66 | 20 | — | 444 | 21,318 | — | 21,848 | ||||||||||||||
| Film and television costs | — | — | — | — | 7,837 | — | 7,837 | ||||||||||||||
| Investments | 270 | 11 | 143 | 790 | 6,669 | — | 7,883 | ||||||||||||||
| Investments in and amounts due from subsidiaries eliminated upon consolidation | 157,264 | 147,028 | 130,214 | 53,853 | 97,872 | (586,231 | ) | — | |||||||||||||
| Property and equipment, net | 670 | — | — | — | 43,767 | — | 44,437 | ||||||||||||||
| Goodwill | — | — | — | — | 66,154 | — | 66,154 | ||||||||||||||
| Franchise Rights | — | — | — | — | 59,365 | — | 59,365 | ||||||||||||||
| Other intangible assets, net | 11 | — | — | — | 38,347 | — | 38,358 | ||||||||||||||
| Other noncurrent assets, net | 1,057 | 208 | — | 85 | 4,910 | (458 | ) | 5,802 | |||||||||||||
| Total assets | $ | 159,338 | $ | 147,267 | $ | 130,357 | $ | 55,172 | $ | 346,239 | $ | (586,689 | ) | $ | 251,684 | ||||||
| Liabilities and Equity | |||||||||||||||||||||
| Accounts payable and accrued expenses related to trade creditors | $ | 2 | $ | — | $ | — | $ | — | $ | 8,492 | $ | — | $ | 8,494 | |||||||
| Accrued participations and residuals | — | — | — | — | 1,808 | — | 1,808 | ||||||||||||||
| Deferred revenue | — | — | — | — | 2,182 | — | 2,182 | ||||||||||||||
| Accrued expenses and other current liabilities | 2,357 | 150 | 360 | 282 | 7,572 | — | 10,721 | ||||||||||||||
| Current portion of long-term debt | 699 | — | — | 4 | 3,695 | — | 4,398 | ||||||||||||||
| Total current liabilities | 3,058 | 150 | 360 | 286 | 23,749 | — | 27,603 | ||||||||||||||
| Long-term debt, less current portion | 81,661 | 146 | 2,100 | 7,748 | 15,690 | — | 107,345 | ||||||||||||||
| Deferred income taxes | — | 314 | — | 65 | 27,734 | (524 | ) | 27,589 | |||||||||||||
| Other noncurrent liabilities | 3,006 | — | — | 1,201 | 11,056 | 66 | 15,329 | ||||||||||||||
| Redeemable noncontrolling interests and redeemable subsidiary preferred stock | — | — | — | — | 1,316 | — | 1,316 | ||||||||||||||
| Equity: | |||||||||||||||||||||
| Common stock | 54 | — | — | — | — | — | 54 | ||||||||||||||
| Other shareholders’ equity | 71,559 | 146,657 | 127,897 | 45,872 | 265,805 | (586,231 | ) | 71,559 | |||||||||||||
| Total Comcast Corporation shareholders’ equity | 71,613 | 146,657 | 127,897 | 45,872 | 265,805 | (586,231 | ) | 71,613 | |||||||||||||
| Noncontrolling interests | — | — | — | — | 889 | — | 889 | ||||||||||||||
| Total equity | 71,613 | 146,657 | 127,897 | 45,872 | 266,694 | (586,231 | ) | 72,502 | |||||||||||||
| Total liabilities and equity | $ | 159,338 | $ | 147,267 | $ | 130,357 | $ | 55,172 | $ | 346,239 | $ | (586,689 | ) | $ | 251,684 |
| Comcast 2019 Annual Report on Form 10-K | 107 |
Previous: Item 7A. Quantitative and Qualitative Disclosures About Market Risk · Next: Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure