Comcast 2006 Annual Report Download - page 37

35 Comcast 2006 Annual Report MD&A
Except as described in “Investment Income (Loss), Net” (see above),
the changes in the fair value of our investments that we accounted
for as trading securities were substantially offset by the changes in
the fair values of the equity derivative financial instruments.
Refer to Note 2 to our consolidated financial statements for a
discussion of our accounting policies for derivative financial instru-
ments and to Note 6 and Note 8 to our consolidated financial
statements for discussions of our derivative financial instruments.
Off-Balance Sheet Arrangements
We do not have any significant off-balance sheet arrangements
that are reasonably likely to have a current or future effect on our
financial condition, results of operations, liquidity, capital expendi-
tures or capital resources.
Critical Accounting Judgments and Estimates
The preparation of our financial statements requires us to make
estimates that affect the reported amounts of assets, liabilities, rev-
enues and expenses, and related disclosure of contingent assets
and contingent liabilities. We base our judgments on historical
experience and on various other assumptions that we believe are
reasonable under the circumstances, the results of which form the
basis for making estimates about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates under different assumptions
or conditions.
We believe our judgments and related estimates associated with
the valuation and impairment testing of our cable franchise rights
and the accounting for income taxes and legal contingencies are
critical in the preparation of our financial statements. Management
has discussed the development and selection of these critical
accounting judgments and estimates with the Audit Committee of
our Board of Directors, and the Audit Committee has reviewed our
disclosures relating to them presented below.
Refer to Note 2 to our consolidated financial statements for a
discussion of our accounting policies with respect to these and
other items.
Valuation and Impairment Testing of Cable
Franchise Rights
Our largest asset, our cable franchise rights, results from agree-
ments we have with state and local governments that allow us to
construct and operate a cable business within a specified geo-
graphic area. The value of a franchise is derived from the economic
Contractual Obligations
Our unconditional contractual obligations as of December 31, 2006, which consist primarily of our debt obligations and their amounts in
future periods, are summarized in the following table:
Payments Due by Period
Years Years More
(in millions) Total Year 1 2 – 3 4 – 5 than 5
Debt obligations(a) $ 28,909 $ 962 $ 3,900 $ 3,079 $ 20,968
Capital lease obligations 66 21 17 8 20
Operating lease obligations 1,614 292 491 253 578
Purchase obligations(b) 12,068 3,809 3,056 2,150 3,053
Other long-term liabilities reflected on the balance sheet:
Acquisition-related obligations(c) 364 271 75 11 7
Other long-term obligations(d) 4,361 283 449 207 3,422
Total $ 47,382 $ 5,638 $ 7,989 $ 5,707 $ 28,048
Refer to Note 8 (long-term debt) and Note 13 (commitments) to our consolidated financial statements.
(a) Excludes interest payments.
(b) Purchase obligations consist of agreements to purchase goods and services that are legally binding on us and specify all significant terms, including fixed or minimum quantities
to be purchased and price provisions. Our purchase obligations primarily relate to our Cable segment, including contracts with programming networks, customer premise
equipment manufacturers, communication vendors, other cable operators for which we provide advertising sales representation, and other contracts entered into in the normal
course of business. We also have purchase obligations through Comcast Spectacor for the players and coaches of our professional sports teams. We did not include contracts
with immaterial future commitments.
(c) Acquisition-related obligations consist primarily of costs related to terminated employees, costs relating to exiting contractual obligations, and other assumed contractual
obligations of the acquired entity.
(d) Other long-term obligations consist primarily of our prepaid forward sales transactions of equity securities we hold, subsidiary preferred shares, deferred compensation
obligations, pension, postretirement and postemployment benefit obligations, and programming rights payable under license agreements.