Filed by Comcast Corporation
Pursuant to Rule 425 under the
Securities Act of 1933 and deemed
filed pursuant to Rule 14a-12 under
the Securities Exchange Act of 1934
Subject Company: AT&T Corp.
Commission File No. 1-1105
Date: February 6, 2002
The following press release was issued by Comcast Corporation:
COMCAST PRESS RELEASE
-------------------------------------------------------------------------------
Contact:
Kelley L. Claypool, Director, Investor Relations (215) 981-7729
Marlene S. Dooner, Vice President, Investor Relations (215) 981-7392
William E. Dordelman, Vice President, Finance (215) 981-7550
FOR IMMEDIATE RELEASE
COMCAST REPORTS RECORD REVENUE OF $9.7 BILLION
AND OPERATING CASH FLOW OF $2.7 BILLION FOR 2001
***
COMCAST CABLE ADDS 1.28 MILLION NEW PRODUCT UNITS
Digital Cable Subscriptions Increase 54% and High-Speed Internet
Customers Increase 98% Year Over Year
***
QVC REPORTS ANOTHER RECORD YEAR
Achieves Full Year Revenue Growth Of 10.8% And
Operating Cash Flow Growth Of 16.6%
Domestic Operations Report Operating Cash Flow Growth of 18.6%
***
Philadelphia, PA - February 6, 2002...Comcast Corporation today reported
results for the year and three months ended December 31, 2001. For the year
ended December 31, 2001, the Company reported consolidated revenues of $9.674
billion, a 17.7% increase from the $8.219 billion reported in 2000.
Consolidated operating cash flow increased 9.4% to $2.702 billion from the
$2.470 billion reported in 2000.
Brian L. Roberts, president of Comcast Corporation said, "We are delighted with
the results we are reporting for 2001, as we delivered on the operating and
financial goals for each of our businesses while focusing on long term value
creation."
"The cable division successfully integrated nearly two million new cable
subscribers during 2001, completed the rebuild of our cable systems, and
delivered growth in new services and accelerating operating cash flow growth.
This excellent performance supports our confidence in the strength and
opportunities for growth in this business. As we look forward to completing our
merger with AT&T Broadband, we believe our strong track record of operating
performance, great combination of distribution and content assets and strong
balance sheet will help support accelerated growth rates and provide a whole
new range of opportunities."
Cable Division Results
----------------------
Cable division results for the quarter and the year ended December 31, 2001 are
presented on a pro forma basis. Pro forma results assume that all cable systems
acquisitions and exchanges were effective on January 1, 2000. Pro forma cable
division results include the Lenfest acquisition completed in January 2000, the
Prime acquisition completed in August 2000, the cable systems exchanges with
AT&T Corp. and Adelphia Communications Corp. completed in December 2000 and
January 2001, respectively, and the acquisitions from AT&T of 585,000 and
112,000 cable subscribers in April 2001 and June 2001, respectively.
Pro forma cable division revenues for the year ended December 31, 2001 were
$5.289 billion, representing a 9.2% increase from the $4.843 billion for 2000.
Pro forma operating cash flow for the year was $2.112 billion, compared to the
$2.009 billion for 2000, reflecting the inclusion in the fourth quarter of $140
million of incremental expenses incurred in the transition of Comcast
high-speed Internet customers from Excite@Home to Comcast's network. Excluding
the impact of the high-speed Internet transition, pro forma operating cash flow
increased 12.1% to $2.251 billion, reflecting the ongoing business of the cable
division.
For the fourth quarter, pro forma cable revenues were $1.375 billion, an
increase of 9.1% from the $1.260 billion for 2000. Pro forma operating cash
flow for the quarter was $443.8 million, compared to the $520.8 million for the
same period of 2000. Excluding the impact of the high-speed Internet transition
mentioned above, pro forma operating cash flow for the quarter increased 12.0%
to $583.3 million.
Cable subscribers grew to 8.471 million, a pro forma twelve-month trailing
growth rate of 1%. Continuing strong demand for Comcast Digital Cable
contributed to a 6.0% increase in pro forma video revenues in the fourth
quarter. High-speed Internet service revenues more than doubled from the fourth
quarter of 2000. These new services contributed nearly two thirds of the
revenue growth in the fourth quarter, helping to offset decreases in
pay-per-view and advertising revenues. Excluding the impact of the high-speed
Internet transition in the fourth quarter, cash flow margins improved to 42.4%
from 41.3% as a result of the successful integration and improved operating
performance of recently acquired cable properties.
As previously announced, the cable division added 213,800 Digital Cable
subscriptions in the fourth quarter, a weekly average of over 16,400 net
additions. Comcast Cable finished the year with 2.336 million Digital Cable
units, representing a 54% pro forma increase over 2000 and a subscription
penetration rate of nearly 28%. Comcast Digital Cable is now available to
nearly 99% of Comcast's cable subscribers.
During the quarter, the cable division added 155,400 high-speed Internet
customers, a 33% increase over the third quarter and a weekly average of nearly
12,000 net additions. Comcast Cable finished the year with 948,100 high-speed
Internet customers, a 98% pro forma increase over 2000, representing a
penetration rate of 9% of marketable homes. In 2001, Comcast expanded
availability of high-speed Internet service by more than 3.6 million homes on a
pro forma basis. At year-end, 10.4 million homes, or close to 75% of the homes
in Comcast's footprint were marketed this service.
The rebuild of the Company's cable systems is substantially complete. At
December 31, 2001, 95% of Comcast's cable systems had capacity of at least
550MHz (80 analog channels). During the year, Comcast made significant progress
in upgrading recently acquired cable systems. At December 31, 2001, 100% of
Prime systems, 100% of Lenfest, 83% of Adelphia and 88% of AT&T systems
acquired in 2000 and 2001 had been upgraded.
2
Mr. Roberts said, "We continued to demonstrate the power of upgraded systems in
delivering digital and broadband services to consumers. Building on this
platform, we are continuing to expand the reach of our high-speed Internet,
digital and video-on-demand services. We now have more than three million
video-on-demand (VOD)-ready homes. We plan to nearly double the number of
VOD-ready homes and to make the new Comcast high-speed Internet service
available to nearly 11.5 million homes by year-end 2002."
"We have substantially completed the transition of high-speed Internet
customers to our new network. We are building a more robust network to deliver
an even better service to our customers, including remote e-mail, multiple
e-mail addresses, web storage and enhanced high-speed options."
Commerce: QVC
-------------
QVC's consolidated revenues for the year ended December 31, 2001 were $3.917
billion, representing a 10.8% increase from the $3.536 billion reported in
2000. Consolidated operating cash flow in 2001 was $722.3 million, an increase
of 16.6% over the $619.2 million reported in 2000. Excluding the results of
QVC-Japan, consolidated operating cash flow increased 19.0% to $741.3 million.
For the fourth quarter of 2001, QVC's consolidated revenues were $1.262
billion, representing a 12.3% increase from the $1.124 billion reported for the
same period in 2000. Operating cash flow for the fourth quarter was $236.1
million, an increase of 17.4% from the $201.2 million reported in the fourth
quarter of 2000. Excluding the results of QVC-Japan, consolidated operating
cash flow increased 18.2% to $240.3 million.
Mr. Roberts said, "After 15 years in business, QVC continues to deliver stellar
performance. In the fourth quarter, QVC recorded the highest sales day in the
company's history, with over $80 million in sales in one day. The domestic
business continued to drive QVC's performance with over 18% growth in operating
cash flow and higher operating margins. QVC is also making significant
investments in Germany and Japan to tap exciting new opportunities in those
markets. QVC-Japan had a strong launch year in 2001 and QVC-Germany reached
near break-even in the fourth quarter of 2001 and is expected to contribute to
consolidated operating cash flow in 2002."
Content
-------
Comcast's Content businesses include E! Networks, Comcast-Spectacor, The Golf
Channel, and Outdoor Life Network. Results are presented on a pro forma basis,
assuming that the consolidation of The Golf Channel, effective June 2001, and
the acquisition of Outdoor Life Network, effective in October 2001, occurred on
January 1, 2000.
Solid growth in carriage continued to drive the results of E! Networks and The
Golf Channel in 2001, contributing to double-digit increases in full year
revenue and operating cash flow for both cable networks. As a whole, Comcast's
content business segment reported pro forma revenue and operating cash flow
growth of 17.4% and 45.2%, respectively, for the full year of 2001. In the
fourth quarter, revenue and operating cash flow grew 8.6% and 9.7%
respectively, as increased affiliate revenues and cost controls helped to
offset the impact of a soft advertising environment.
Consolidated Results
--------------------
The Company's consolidated results include all acquisitions as of the dates of
their closing. For the quarter and the year ended December 31, 2001, the
Company's consolidated results
3
include the Lenfest acquisition as of January 2000, the Prime acquisition as of
August 2000, the cable systems exchanges with AT&T Corp. and Adelphia
Communications Corp. as of December 2000 and January 2001, respectively, the
acquisition from AT&T of 585,000 and 112,000 cable subscribers in April 2001
and June 2001, respectively, the acquisition of Home Team Sports in February
2001, the consolidation of The Golf Channel in June 2001, and the acquisition
of Outdoor Life Network in October 2001. Pro forma results assume that all
acquisitions and exchanges were effective on January 1, 2000.
For the year ended December 31, 2001, the Company reported consolidated
revenues of $9.674 billion, a 17.7% increase from the $8.219 billion reported
in 2000. Consolidated operating cash flow increased 9.4% to $2.702 billion from
the $2.470 billion reported in 2000. Excluding the impact of the high-speed
Internet transition, operating cash flow increased 15.0%.
For the year ended December 31, 2001, the Company reported consolidated net
income of $608.6 million or $0.63 per diluted share as compared to net income
of $2.022 billion or $2.13 per diluted share in 2000. The consolidated income
reported for 2001 includes non-operating items on a pre-tax basis of $2.557
billion ($2.65 per share). These non-operating items include certain investment
activity, such as the reclassification of unrealized gains on certain of the
Company's investments in the first and third quarters of 2001 of $1.330 billion
($1.38 per share) as well as a gain from the cable systems exchange with
Adelphia Communications in the first quarter of 2001 of $1.199 billion ($1.24
per share). Net income in 2000 included, on a pre-tax basis, non-operating
items of $4.315 billion ($4.55 per share). Non-operating items for the year
2000 included a gain from the cable systems exchange with AT&T in the fourth
quarter of 2000 of $1.711 billion ($1.80 per share), a gain due to the receipt
by the Company of a right to exchange its investment in Excite@Home with AT&T
of $1.045 billion ($1.10 per share), gains on sales of certain investments of
$886.7 million ($0.93 per share) and income related to the mark-to-market of
its Zones indexed debt of $666.0 million ($0.70 per share). Please refer to the
table "Reconciliation of Diluted EPS to OCF per Share" at the end of this
release.
For the fourth quarter, the Company reported consolidated revenue of $2.824
billion and operating cash flow of $654.7 million, as compared to revenues and
operating cash flow of $2.408 billion and $674.9 million, respectively, for the
same period in 2000. Fourth quarter 2001 operating cash flow includes $140
million of incremental expenses incurred in the transition of Comcast
high-speed Internet customers from Excite@Home to Comcast's network. Excluding
the impact of the high-speed Internet transition, operating cash flow increased
17.7%.
For the fourth quarter, the Company reported a consolidated net loss of $321.0
million or $0.34 per diluted share as compared to net income of $778.5 million
or $0.80 per diluted share in the same prior year period. The consolidated net
loss reported in the fourth quarter of 2001 includes non-operating items on a
pre-tax basis of $63.1 million ($0.06 per share) such as a gain recorded on the
completion of the exchange of the Company's interest in Speedvision Network of
$106.7 million ($0.11 per share). Net income in the fourth quarter of 2000
included, on a pre-tax basis, non-operating items of $1.613 billion ($1.67 per
share). Non-operating items for the fourth quarter of 2000 primarily include a
gain from the cable systems exchange with AT&T of $1.711 billion ($1.77 per
share).
New Accounting Statement
------------------------
A new accounting statement that addresses how intangible assets, including
goodwill, should be accounted for in financial statements upon and subsequent
to their acquisition was issued in June 2001 (FAS 142). Upon adoption, the
Company will no longer amortize goodwill and other indefinite lived intangible
assets, which consist primarily of cable franchise operating rights. The
4
Company adopted FAS 142 on January 1, 2002. Adoption will result in increased
income as a result of reduced amortization expense.
Based on the Company's preliminary evaluation, the estimated effect of adoption
of the statement would have been to decrease amortization expense by
approximately $540 million and $2 billion, for the quarter and the year ended
December 31, 2001, respectively.
Financial Guidance: 2002
------------------------
Financial guidance for 2002 does not include the anticipated effects of the
AT&T Broadband transaction.
o In 2002, Comcast Cable expects to generate pro forma revenue growth
between 10% and 12% and pro forma operating cash flow growth between 12%
and 14%.
o Comcast Cable expects to add between 600,000 and 700,000 Digital
Cable units and between 400,000 and 500,000 high-speed Internet
customers.
o In 2002, Comcast Cable will invest $1.3 billion, down from $1.85
billion in 2001, to maintain and upgrade its cable systems and to
deploy new services. Cable capital expenditures include approximately
$225 million for upgrades and rebuilds, approximately $625 million
for the deployment of new services, and approximately $450 million
for recurring capital projects.
o QVC expects to generate consolidated revenue growth in the low double
digits and consolidated operating cash flow growth in the low to
mid-teens, excluding the results of its start-up channel in Japan.
o Through a 60/40 venture with Mitsui, QVC launched QVC-Japan in April
2001. For 2002, QVC-Japan is expected to report operating cash flow
losses of $20-25 million and capital investment in Japan is expected
to approximate $15 million.
o In 2002, on a consolidated basis, QVC expects to invest $175 million
in capital to maintain and extend QVC's warehousing and distribution
facilities and information systems in the U.S., Germany, the U.K. and
Japan. Capital investment in international markets represents nearly
50% of the $175 million total capital investment.
o Comcast's consolidated content properties, consisting of E! Networks,
Comcast-Spectacor, The Golf Channel and Outdoor Life Network, expect to
generate high single digits revenue growth and operating cash flow growth
in the mid to high-teens, excluding the results of the recently acquired
Outdoor Life Network and start-up channel, G4.
o G4 is a 24-hour, seven-day-a-week television network for video game
enthusiasts. Comcast will launch G4 in April 2002 and expects the new
network to report operating cash flow losses of $30 million for 2002.
This press release contains forward-looking statements. Readers are cautioned
that such forward-looking statements involve risks and uncertainties that could
significantly affect actual results from those expressed in any such
forward-looking statements. Readers are directed to Comcast's Annual Report on
Form 10-K for a description of such risks and uncertainties.
5
Comcast Corporation will hold its quarterly conference call with the financial
community today, February 6, 2002, at 10:30 a.m. Eastern Time (ET). The
conference call will be broadcast live via the Internet at www.cmcsk.com. A
recording of the call will be available on the Company's website from 12:30
p.m. ET on February 6, 2002 through midnight ET on February 13, 2002.
Those parties interested in participating via telephone should dial (847)
413-3237. A telephone replay will begin immediately following the call until
February 7, 2002 at midnight ET. To access the rebroadcast, please dial (630)
652-3000 and enter code 5254738.
To automatically receive Comcast financial news by email, please visit
www.cmcsk.com and subscribe to e-mail Alerts.
Comcast Corporation (www.comcast.com) is principally involved in the
development, management and operation of broadband cable networks, and in the
provision of electronic commerce and programming content. Comcast Cable is the
third largest cable company in the United States serving more than 8.4 million
cable subscribers. Comcast's commerce and content businesses include majority
ownership of QVC, Comcast-Spectacor, Comcast SportsNet, The Golf Channel,
Outdoor Life Network, a controlling interest in E! Networks, and other
programming investments. Comcast's Class A Special and Class A Common Stock are
traded on The Nasdaq Stock Market under the symbols CMCSK and CMCSA,
respectively.
COMCAST
Condensed Consolidated Statement of Operations (Unaudited)
(in millions, except per share data)
Three Months Ended Year Ended
December 31, December 31,
2001 2000 2001 2000
----------- ----------- ----------- ------------
Service revenues $1,561.9 $1,283.6 $5,756.9 $4,682.7
Net sales from electronic retailing 1,262.2 1,124.0 3,917.3 3,535.9
----------- ----------- ----------- ------------
2,824.1 2,407.6 9,674.2 8,218.6
Cost of goods sold from electronic retailing 828.4 740.5 2,514.0 2,284.9
Operating, selling, general and administrative expenses 1,341.0 992.2 4,458.4 3,463.4
----------- ----------- ----------- ------------
Operating cash flow 654.7 674.9 2,701.8 2,470.3
Depreciation expense 381.4 237.4 1,141.8 837.3
Amortization expense 607.5 551.7 2,306.2 1,794.0
----------- ----------- ----------- ------------
Operating loss (334.2) (114.2) (746.2) (161.0)
Interest expense (182.6) (184.4) (731.8) (691.4)
Investment income (expense) 16.0 (40.9) 1,061.7 983.9
Income related to indexed debt 666.0
Equity in net losses of affiliates (2.4) (13.6) (28.5) (21.3)
Other income 120.1 1,701.0 1,301.0 2,825.5
----------- ----------- ----------- ------------
(48.9) 1,462.1 1,602.4 3,762.7
----------- ----------- ----------- ------------
Income (loss) before income taxes, minority interest,
extraordinary items and cumulative effect of accounting change (383.1) 1,347.9 856.2 3,601.7
Income tax benefit (expense) 132.7 (535.7) (470.2) (1,441.3)
Minority interest (70.6) (28.6) (160.4) (115.3)
----------- ----------- ----------- ------------
Income (loss) before extraordinary items and cumulative
effect of accounting change (321.0) 783.6 225.6 2,045.1
Extraordinary items (5.1) (1.5) (23.6)
Cumulative effect of accounting change 384.5
----------- ----------- ----------- ------------
Net income (loss) (321.0) 778.5 608.6 2,021.5
Preferred dividends (0.8) (23.5)
----------- ----------- ----------- ------------
Net income (loss) for common stockholders ($321.0) $777.7 $608.6 $1,998.0
=========== =========== =========== ============
Basic earnings (loss) for common stockholders per common share
Income (loss) before extraordinary items and cumulative effect
of accounting change ($0.34) $0.87 $0.24 $2.27
Extraordinary items (0.01) (0.03)
Cumulative effect of accounting change 0.40
----------- ----------- ----------- ------------
Net income (loss) ($0.34) $0.86 $0.64 $2.24
=========== =========== =========== ============
Basic weighted average number of common shares outstanding 950.9 907.6 949.7 890.7
=========== =========== =========== ============
Diluted earnings (loss) for common stockholders per common share
Income (loss) before extraordinary items and cumulative effect
of accounting change ($0.34) $0.81 $0.23 $2.16
Extraordinary items (0.01) (0.03)
Cumulative effect of accounting change 0.40
----------- ----------- ----------- ------------
Net income (loss) ($0.34) $0.80 $0.63 $2.13
=========== =========== =========== ============
Diluted weighted average number of common shares outstanding 950.9 965.0 964.5 948.7
=========== =========== =========== ============
COMCAST
Condensed Consolidated Balance Sheet (Unaudited)
(in millions)
December 31, December 31,
2001 2000
---------- -----------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $350.0 $651.5
Investments 2,623.2 3,059.7
Accounts receivable, net 967.4 891.9
Inventories, net 454.5 438.5
Other current assets 153.7 102.8
----------- -----------
Total current assets 4,548.8 5,144.4
----------- -----------
INVESTMENTS 1,679.2 2,661.9
----------- -----------
PROPERTY AND EQUIPMENT 9,736.8 7,393.0
Accumulated depreciation (2,725.7) (1,873.1)
----------- -----------
Property and equipment, net 7,011.1 5,519.9
----------- -----------
INTANGIBLE AND OTHER NONCURRENT ASSETS 30,985.3 26,272.1
Accumulated amortization (6,092.6) (3,853.8)
----------- -----------
Intangible and other noncurrent assets, net 24,892.7 22,418.3
----------- -----------
$38,131.8 $35,744.5
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $2,858.4 $2,852.9
Accrued interest 129.1 105.5
Deferred income taxes 275.4 789.9
Current portion of long-term debt 460.2 293.9
----------- -----------
Total current liabilities 3,723.1 4,042.2
----------- -----------
LONG-TERM DEBT, less current portion 11,741.6 10,517.4
----------- -----------
DEFERRED INCOME TAXES 6,375.7 5,786.7
----------- -----------
MINORITY INTEREST & OTHER 1,818.4 1,257.2
----------- -----------
COMMON EQUITY PUT OPTIONS 54.6
----------- -----------
STOCKHOLDERS' EQUITY
5.25% series B convertible preferred stock 59.5
Class A special common stock 913.9 908.0
Class A common stock 21.8 21.8
Class B common stock 9.4 9.4
Additional capital 11,752.0 11,598.8
Retained earnings 1,631.5 1,056.5
Accumulated other comprehensive income 144.4 432.4
----------- -----------
Total stockholders' equity 14,473.0 14,086.4
----------- -----------
$38,131.8 $35,744.5
=========== ===========
Note - Certain reclassifications have been made to the prior year condensed
consolidated balance sheet to conform to those classifications used in 2001.
COMCAST
Pro Forma Financial Data by Business Segment (Unaudited) (1)
(in millions, except margin data)
(2) (3) (4)
Cable Commerce Content Other Total
----- -------- ------- ----- -----
Three Months Ended December 31, 2001
------------------------------------
Revenues $1,374.9 $1,262.2 $205.2 ($12.2) $2,830.1
Operating Cash Flow (Deficit) $443.8 $236.1 $42.7 ($66.2) $656.4
Operating Cash Flow (Deficit) (excluding
Excite@Home Transition) (5) $583.3 $236.1 $42.7 ($66.2) $795.9
Operating Cash Flow Margin (excluding
Excite@Home Transition) (5) 42.4% 18.7% 20.8% NM 28.1%
Capital Expenditures (6) $454.4 $35.5 $7.7 $2.9 $500.5
Total Debt (7) $8,566.5 $302.0 $376.2 $2,957.1 $12,201.8
Three Months Ended December 31, 2000
------------------------------------
Revenues $1,260.1 $1,124.0 $189.0 ($1.8) $2,571.3
Operating Cash Flow (Deficit) $520.8 $201.2 $39.1 ($56.9) $704.2
Operating Cash Flow Margin 41.3% 17.9% 20.7% NM 27.4%
Capital Expenditures (6) $398.5 $26.7 $7.6 $148.0 $580.8
Total Debt (7) $7,716.4 $476.7 $454.1 $2,164.1 $10,811.3
Twelve Months Ended December 31, 2001
-------------------------------------
Revenues $5,289.2 $3,917.3 $742.7 ($15.3) $9,933.9
Operating Cash Flow (Deficit) $2,111.8 $722.3 $189.2 ($232.8) $2,790.5
Operating Cash Flow (Deficit) (excluding
Excite@Home Transition) (5) $2,251.3 $722.3 $189.2 ($232.8) $2,930.0
Operating Cash Flow Margin (excluding
Excite@Home Transition) (5) 42.6% 18.4% 25.5% NM 29.5%
Capital Expenditures (6) $1,855.3 $142.9 $25.5 $158.0 $2,181.7
Twelve Months Ended December 31, 2000
-------------------------------------
Revenues $4,843.1 $3,535.9 $632.6 $1.5 $9,013.1
Operating Cash Flow (Deficit) $2,009.1 $619.2 $130.3 ($150.9) $2,607.7
Operating Cash Flow Margin 41.5% 17.5% 20.6% NM 28.9%
Capital Expenditures (6) $1,248.1 $155.9 $41.5 $191.3 $1,636.8
-----------------------------------------------------------------------------------------------------------------------------------
Supplemental Information - Cable & Content Segments
Pro Forma Historical Data
---------------------------------------------------
3Q01 2Q01 1Q01 4Q00 3Q00 2Q00 1Q00
---- ---- ---- ---- ---- ---- ----
Cable (2)
Revenue $1,326.9 $1,326.1 $1,261.3 $1,260.1 $1,208.0 $1,212.3 $1,162.7
OCF $575.0 $565.1 $527.9 $520.8 $508.2 $504.4 $475.7
OCF Margin 43.3% 42.6% 41.9% 41.3% 42.1% 41.6% 40.9%
Content (3)
Revenue $146.7 $185.5 $205.3 $189.0 $114.4 $154.7 $174.5
OCF $38.1 $58.1 $50.3 $39.1 $15.4 $39.1 $36.7
OCF Margin 25.8% 31.3% 24.5% 20.7% 13.5% 25.3% 21.0%
-----------------------------------------------------------------------------------------------------------------------------------
(1) Pro forma financial data is presented as if acquisitions and systems
exchanges occurred at the beginning of 2000. The information presented
above is not necessarily indicative of what the results would have been
had the Company operated the acquired businesses and exchanged systems
since the beginning of 2000. Historical financial data by business
segment, as required under generally accepted accounting principles, is
available in the Company's Annual Report on Form 10-K.
(2) The Company acquired Lenfest Communications Inc and Prime Communications
LLC in January 2000 and August 2000, respectively. The Company completed
its systems exchanges with AT&T Corp. and Adelphia Communications Corp. in
December 2000 and January 2001, respectively. In April 2001 and June 2001,
the Company acquired cable systems serving 585,000 and 112,000
subscribers, respectively, from AT&T Corp.
Effective in the fourth quarter of 2001, the Company included its regional
sports programming networks as part of its cable business segment. Pro
forma results have been restated to include the regional sports
programming networks within the cable segment for all periods presented.
In February 2001, the Company acquired Home Team Sports.
(3) Content includes E! Networks, Comcast-Spectacor, The Golf Channel, and
Outdoor Life Network. The Company consolidated The Golf Channel and
acquired Outdoor Life Network in June 2001 and October 2001, respectively.
(4) Other includes the Company's domestic wireline telecommunications
business, international wireless operations, Corporate and elimination
entries related to the segments presented.
(5) Excludes the incremental expenses of $140 million incurred in the
transition of Comcast high-speed Internet customers from Excite@Home to
Comcast's network.
(6) For acquired businesses, includes capital expenditures made by the Company
subsequent to the date of acquisition by the Company.
(7) Total debt includes both current and long-term portions as reported in the
Company's consolidated balance sheet.
COMCAST
Pro Forma Data - Cable Segment (Unaudited) (1) (2)
Comcast
(3) High-Speed (4)
Video Advertising Internet Other Total
----- ----------- -------- ----- -----
Three Months Ended December 31, 2001
------------------------------------
Revenue (millions) $1,124.4 $90.0 $91.6 $68.9 $1,374.9
Monthly average revenue per cable subscriber $44.34 $3.55 $3.61 $2.71 $54.21
Three Months Ended December 31, 2000
------------------------------------
Revenue (millions) $1,060.3 $97.4 $43.7 $58.7 $1,260.1
Monthly average revenue per cable subscriber $42.23 $3.88 $1.74 $2.33 $50.18
Twelve Months Ended December 31, 2001
-------------------------------------
Revenue (millions) $4,417.8 $333.0 $294.3 $244.1 $5,289.2
Monthly average revenue per cable subscriber $43.66 $3.29 $2.91 $2.41 $52.27
Twelve Months Ended December 31, 2000
-------------------------------------
Revenue (millions) $4,152.9 $318.9 $144.6 $226.7 $4,843.1
Monthly average revenue per cable subscriber $41.50 $3.19 $1.44 $2.27 $48.40
----------------------------------------------------------------------------------------------------------------
Growth Growth
4Q01 3Q01 4Q00 vs. 3Q01 vs. 4Q00
---- ---- ---- -------- --------
Cable
Homes Passed (000's) 13,928.5 13,856.5 13,558.4 0.5% 2.7%
Subscribers (000's) 8,471.1 8,437.0 8,386.8 0.4% 1.0%
Penetration 60.8% 60.9% 61.9% (0.1) pts (1.1) pts
Quarterly Net Subscriber Additions (000's) 34.1 12.3 34.5 177.2% (1.2%)
Digital Cable
"Digital Ready" Subscribers (000's) 8,375.3 8,336.5 7,529.3 0.5% 11.2%
Subscriptions (000's) (5) 2,335.8 2,122.0 1,519.9 10.1% 53.7%
Penetration (6) 27.9% 25.5% 20.2% 2.4 pts 7.7 pts
Quarterly Net Subscription Additions (000's) 213.8 243.4 235.5 (12.2%) (9.2%)
Monthly Average Revenue per Subscription $10.53 $10.60 $10.10 (0.7%) 4.2%
Comcast High-Speed Internet
"Marketable" Homes Passed (000's) 10,399.6 9,624.3 6,744.4 8.1% 54.2%
Subscribers (000's) 948.1 792.7 479.4 19.6% 97.8%
"Marketable" Homes Penetration 9.1% 8.2% 7.1% 0.9 pts 2.0 pts
Quarterly Net Subscriber Additions (000's) 155.4 117.1 111.6 32.7% 39.2%
Monthly Average Revenue per Subscriber $35.08 $34.05 $34.39 3.0% 2.0%
----------------------------------------------------------------------------------------------------------------
(1) Pro forma data is presented as if acquisitions and systems exchanges
occurred at the beginning of 2000. The information presented above is not
necessarily indicative of what the results would have been had the Company
operated the acquired businesses and exchanged systems since the beginning
of 2000.
(2) The Company acquired Lenfest Communications Inc and Prime Communications
LLC in January 2000 and August 2000, respectively. The Company completed
its systems exchanges with AT&T Corp. and Adelphia Communications Corp. in
December 2000 and January 2001, respectively. In April 2001 and June 2001,
the Company acquired cable systems serving 585,000 and 112,000
subscribers, respectively, from AT&T Corp.
Effective in the fourth quarter of 2001, the Company included its regional
sports programming networks as part of its cable business segment. Pro
forma results have been restated to include the regional sports
programming networks within the cable segment for all periods presented.
In February 2001, the Company acquired Home Team Sports.
(3) Video revenues consist of our basic, expanded basic, premium,
pay-per-view, equipment, and digital services.
(4) Other Cable subscriber revenues include installation revenues, guide
revenues, commissions from electronic retailing, other product offerings
and revenues of our regional sports programming networks.
(5) Each digital converter box counts as one digital cable subscription.
(6) Digital cable subscriptions as a percentage of "digital ready"
subscribers. Certain subscribers may have multiple digital cable
subscriptions.
COMCAST
Pro Forma Data - Commerce Segment (QVC) (Unaudited)
Base (1) UK Germany Other (2) Total
-------- -- ------- --------- -----
Three Months Ended December 31, 2001
------------------------------------
Revenue (millions) $1,088.0 $79.7 $64.1 $30.4 $1,262.2
Gross Margin 34.1% 38.4% 31.0% 39.6% 34.4%
Operating Cash Flow (Deficit) (millions) $231.5 $12.4 ($1.0) ($6.8) $236.1
Operating Cash Flow Margin 21.3% 15.6% (1.5)% (22.6)% 18.7%
Average Homes (millions) (3) 72.9 9.4 23.6 N/A N/A
Revenue per Average Home (in local currency) $14.93 (pound)5.86 5.85 DM N/A N/A
Three Months Ended December 31, 2000
------------------------------------
Revenue (millions) $985.7 $84.3 $39.4 $14.6 $1,124.0
Gross Margin 33.8% 34.5% 31.7% 58.3% 34.1%
Operating Cash Flow (Deficit) (millions) $195.7 $7.6 ($1.1) ($1.0) $201.2
Operating Cash Flow Margin 19.9% 9.0% (2.8)% (6.8)% 17.9%
Average Homes (millions) (3) 70.2 8.7 22.5 N/A N/A
Revenue per Average Home (in local currency) $14.04 (pound)6.70 3.84 DM N/A N/A
Twelve Months Ended December 31, 2001
-------------------------------------
Revenue (millions) $3,373.1 $271.7 $197.8 $74.7 $3,917.3
Gross Margin 36.0% 35.9% 29.9% 41.9% 35.8%
Operating Cash Flow (Deficit) (millions) $726.4 $25.1 ($7.0) ($22.2) $722.3
Operating Cash Flow Margin 21.5% 9.2% (3.5)% (29.7)% 18.4%
Average Homes (millions) (3) 71.9 9.1 23.3 N/A N/A
Revenue per Average Home (in local currency) $46.92 (pound)20.44 18.46 DM N/A N/A
Twelve Months Ended December 31, 2000
-------------------------------------
Revenue (millions) $3,050.9 $300.9 $137.5 $46.6 $3,535.9
Gross Margin 35.5% 34.0% 29.9% 54.7% 35.4%
Operating Cash Flow (Deficit) (millions) $612.3 $20.2 ($12.0) ($1.3) $619.2
Operating Cash Flow Margin 20.1% 6.7% (8.7)% (2.8)% 17.5%
Average Homes (millions) (3) 69.3 8.4 21.7 N/A N/A
Revenue per Average Home (in local currency) $44.05 (pound)23.52 12.57 DM N/A N/A
(1) Base Business includes domestic channel and QVC.com.
(2) Other includes domestic and international infomercial businesses and QVC
Japan which launched in April 2001.
(3) Note that while QVC has the potential to serve this many homes in Germany,
it is estimated that only approximately 40% of the homes in Germany are
programmed to receive the QVC channel.
COMCAST
Reconciliation of Diluted EPS to OCF per share (Unaudited)
(dollars in millions, except per share data)
Three Months Ended Year Ended
December 31, December 31,
2001 2000 2001 2000
---- ---- ---- ----
per per per per
$ share $ share $ share $ share
- ----- - ----- - ----- - -----
Net income (loss) as reported ($321.0) ($0.34) $778.5 $0.80 $608.6 $0.63 $2,021.5 $2.13
Items to reconcile net income (loss)
to operating cash flow:
Depreciation & amortization 988.9 1.04 789.1 0.82 3,448.0 3.57 2,631.3 2.77
Interest expense 182.6 0.19 184.4 0.19 731.8 0.76 691.4 0.73
Income tax (benefit) expense (132.7) (0.14) 535.7 0.56 470.2 0.49 1,441.3 1.52
Non-operating items (1) (63.1) (0.06) (1,612.8) (1.67) (2,556.8) (2.65) (4,315.2) (4.55)
--------------- ---------------- ---------------- ----------------
Operating Cash Flow as reported $654.7 $0.69 $674.9 $0.70 $2,701.8 $2.80 $2,470.3 $2.60
=============== ================ ================ ================
Diluted weighted average shares outstanding 950.9 965.0 964.5 948.7
====== ====== ====== ======
------------------------------------------------------
(1) Detail of non-operating items:
Investment income - mark to market adjustments on
trading securities, derivatives and hedged
items, net ($9.3) ($0.01) ($142.0) ($0.15)
Investment income - (gain) loss on sales and
exchanges of investments (8.4) (0.01) $2.4 (485.2) (0.50) ($886.7) ($0.93)
Investment income - reclassification of
unrealized gains (2) (1,330.2) (1.38)
Investment expense - investment impairment
losses (3) 17.6 0.02 67.0 $0.07 972.3 1.01 74.4 0.08
Income related to indexed debt (4) (666.0) (0.70)
Other income - gain on sale of Speedvision (5) (106.7) (0.11) (106.7) (0.11)
Other income - gain on Excite@Home right (6) 1,045.0) (1.10)
Other income - gain on AT&T systems exchange (7) (1,710.8) (1.77) (1,710.8) (1.80)
Other income - gain on Adelphia systems
exchange (7) (1,198.6) (1.24)
Cumulative effect of accounting change,
net of tax (8) (384.5) (0.40)
All other, net (9) 43.7 0.05 28.6 0.03 118.1 0.12 (81.1) (0.10)
--------------- ---------------- ---------------- ----------------
Total non-operating items ($63.1) ($0.06) ($1,612.8) ($1.67) ($2,556.8) ($2.65) ($4,315.2) ($4.55)
=============== ================ ================= ================
(2) In the third quarter of 2001, the Company reclassified to investment
income the accumulated unrealized gain relating to the Company's
investment in Excite@Home. The Company recorded this accumulated
unrealized gain prior to the Company's designation of its right under a
share exchange agreement as a hedge of the Company's investment in
Excite@Home. In connection with the adoption of a new accounting standard
for the accounting of derivative instruments and hedging activities in the
first quarter of 2001, the Company reclassified its investment in Sprint
PCS from an available for sale security to a trading security.
(3) The Company records losses on its investments for which the Company has
determined that a decline in value of the investment was considered other
than temporary. The loss for 2001 relates principally to the Company's
investment in AT&T, a portion of which was exchanged on April 30, 2001.
(4) Represents non-cash income associated with the mark-to-market adjustment
related to the Company's ZONES debt. Through December 31, 2000, the ZONES
were accounted for as an indexed debt instrument since the maturity value
is dependent upon the fair value of Sprint PCS stock.
(5) Represents the gain recognized upon the completion of the Company's
exchange of its interest in Speedvision Network in October 2001.
(6) In August 2000, the Company recorded this gain due to the receipt of a
right to exchange its investment in Excite@Home with AT&T for the
Company's waiver of certain of its Board level and shareholder rights.
(7) Represents the gain recognized upon the completion of the Company's cable
systems exchanges with AT&T Corp and Adelphia Communications Corporation
in December 2000 and January 2001, respectively.
(8) Represents the effects of adopting the new accounting standard for the
accounting of derivative instruments and hedging activities.
(9) Includes investment, interest and dividend income, equity in net losses of
affiliates, other income (expense), minority interest and extraordinary
items.
Note: The following notice is included to meet certain legal requirements:
FORWARD-LOOKING STATEMENTS
The enclosed information contains forward-looking statements within the
meaning of the "safe harbor" provisions of the United States Private Securities
Litigation Reform Act of 1995. Investors are cautioned that such
forward-looking statements with respect to revenues, earnings, performance,
strategies, prospects and other aspects of the business of Comcast Corporation
("Comcast") are based on current expectations that are subject to risks and
uncertainties. A number of factors could cause actual results or outcomes to
differ materially from those indicated by such forward-looking statements.
These factors include, but are not limited to, risks and uncertainties set
forth in Comcast's filings with the Securities and Exchange Commission ("SEC"),
including risks and uncertainties relating to: failure to obtain and retain
expected synergies from the proposed transaction with AT&T Corp. ("AT&T")
relating to AT&T's broadband business, delays in obtaining, or adverse
conditions contained in, any regulatory approvals required for the proposed
transaction, changes in laws or regulations, availability and cost of capital
and other similar factors. Readers are referred to Comcast's most recent
reports filed with the SEC. Comcast is under no obligation to (and expressly
disclaims any such obligation to) update or alter its forward-looking
statements whether as a result of new information, future events or otherwise.
ADDITIONAL INFORMATION
In connection with the proposed transactions, AT&T and Comcast will file a
joint proxy statement/prospectus with the SEC. INVESTORS AND SECURITY HOLDERS
ARE URGED TO CAREFULLY READ THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE
PROPOSED TRANSACTION WHEN IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN
IMPORTANT INFORMATION. Investors and security holders may obtain a free copy of
the joint proxy statement/prospectus (when it is available) and other documents
containing information about AT&T and Comcast, without charge, at the SEC's web
site at http://www.sec.gov. Free copies of AT&T's filings may be obtained by
directing a request to AT&T Corp., 295 North Maple Avenue, Basking Ridge, N.J.
07920, Attention: Investor Relations. Free copies of Comcast's filings may be
obtained by directing a request to Comcast Corporation, 1500 Market Street,
Philadelphia, Pennsylvania 19102-2148, Attention: General Counsel.
Comcast and its directors, executive officers and other members of its
management and employees may be soliciting proxies from its stockholders in
connection with the proposed transaction. Information concerning Comcast's
participants in the solicitation is contained in a filing made by Comcast with
the Commission pursuant to Rule 14a-12 on July 9, 2001.