Comcast 2006 Annual Report Download - page 52

Notes to Consolidated Financial Statements Comcast 2006 Annual Report 50
The following represents the purchase price allocation to assets
acquired and liabilities assumed, exclusive of the cable systems
held by Century and Parnassos and transferred to TWC, as a result
of the Adelphia and Time Warner transactions:
(in millions) 2006
Property and equipment $ 2,692
Franchise-related customer relationships 1,648
Cable franchise rights 6,842
Goodwill 271
Other assets 111
Total liabilities (397)
Net assets acquired $ 11,167
Discontinued Operations
As discussed above, the operating results of the Comcast
Exchange Systems transferred to TWC are reported as discon-
tinued operations for all periods and are presented in accordance
with SFAS No. 144. The following represents the operating results
of the Comcast Exchange Systems through the closing date of the
Exchanges (July 31, 2006):
(in millions) 2006 2005 2004
Revenues $ 734 $ 1,180 $ 1,086
Income before income taxes 121 159 67
Income tax expense (18) (59) (25)
Net income $ 103 $ 100 $ 42
Unaudited Pro Forma Information
The following unaudited pro forma information has been presented
as if the Adelphia and Time Warner transactions occurred on
January 1, 2005. This information is based on historical results
of operations, adjusted for purchase price allocations and is not
necessarily indicative of what the results would have been had we
operated the entities since January 1, 2005.
Year Ended December 31 (in millions) 2006 2005
Revenues $ 26,616 $ 23,672
Income from continuing operations 2,284 770
Income from discontinued operations,
net of tax 103 100
Gain on discontinued operations,
net of tax 195 —
Net Income $ 2,582 $ 870
Basic earnings for common
stockholders per common share $ 0.82 $ 0.26
Diluted earnings for common
stockholders per common share $ 0.81 $ 0.26
Texas and Kansas City Cable Partnership
In July 2006, we initiated the dissolution of Texas and Kansas City
Cable Partners (“TKCCP”), our 50%-50% cable system partnership
with TWC. Once the dissolution was triggered, the non-triggering
party had the right to choose and take full ownership of one of two
pools of TKCCP’s cable systems together with any debt allocated
to such asset pool by the triggering partner. One pool consisted of
cable systems serving Houston, Texas (“Houston Asset Pool”) and
the other pool consisted of cable systems serving Kansas City, south
and west Texas, and New Mexico (“Kansas City Asset Pool”).
In July 2006, we notified TWC of our election to dissolve TKCCP and
the allocation of all of its debt, which totaled approximately $2 bil-
lion as of July 1, 2006, to the Houston Asset Pool. In August 2006,
TWC notified us that it selected the Kansas City Asset Pool and
as a result, we were to receive the Houston Asset Pool. The $2
billion of debt allocated to the Houston Asset Pool was required
to be refinanced within 60 days of the August 1, 2006, selection
date. This debt included $600 million owed to each partner (for an
aggregate of $1.2 billion). We refinanced this debt in October 2006
(see Note 8). To be consistent with our management reporting pre-
sentation, the results of operations of the Houston Asset Pool have
been reported in our Cable segment since August 1, 2006. The
operating results of the Houston Asset Pool are eliminated in our
consolidated financial statements (see Note 14).
In January 2007, the distribution of assets by TKCCP was com-
pleted and we received the Houston Asset Pool. We will account
for the distribution of assets by TKCCP as a sale of our 50% inter-
est in the Kansas City Asset Pool in exchange for acquiring an
additional 50% interest in the Houston Asset Pool and expect to
record a gain on this transaction.
E! Entertainment Television
In November 2006, we acquired the 39.5% of E! Entertainment
Television (which operates the E! and Style programming networks)
that we did not already own for approximately $1.2 billion. We have
historically consolidated the results of operations of E! Entertain-
ment Television. We allocated the purchase price to intangibles
and goodwill.
Susquehanna
In April 2006, we acquired the cable systems of Susquehanna
Cable Co. and its subsidiaries (“Susquehanna”) for a total purchase
price of approximately $775 million. The Susquehanna systems
acquired are located primarily in Pennsylvania, New York, Maine,
and Mississippi.
Prior to the acquisition, we held an approximate 30% equity
ownership interest in Susquehanna that we accounted for as an
equity method investment. On May 1, 2006, Susquehanna Cable
Co. redeemed the approximate 70% equity ownership interest in
Susquehanna held by Susquehanna Media Co., which resulted in
Susquehanna becoming 100% owned by us.