Comcast 2008 Annual Report Download - page 53

Diluted EPS for 2008, 2007 and 2006 excludes approximately 159 million, 61 million and 116 million, respectively, of potential common
shares related to our share-based compensation plans, because the inclusion of the potential common shares would have an antidilutive
effect.
Computation of Diluted EPS
2008 2007 2006
Year ended December 31 (in millions,
except per share data) Income Shares
Per
Share
Amount Income Shares
Per
Share
Amount Income Shares
Per
Share
Amount
Basic EPS $2,547 2,939 $0.87 $2,587 3,098 $0.84 $2,235 3,160 $0.71
Effect of dilutive securities:
Assumed exercise or issuance of
shares relating to stock plans 13 31 20
Diluted EPS $2,547 2,952 $0.86 $2,587 3,129 $0.83 $2,235 3,180 $0.70
Note 5: Acquisitions and Other Significant Events
2008 Acquisitions
Insight Transaction
In April 2007, we and Insight Communications (“Insight”) agreed to
divide the assets and liabilities of Insight Midwest, a 50%-50%
cable system partnership with Insight (the “Insight transaction”).
On December 31, 2007, we contributed approximately $1.3 billion
to Insight Midwest for our share of the partnership’s debt. On
January 1, 2008, the distribution of the assets of Insight Midwest
was completed without assumption of any of Insight’s debt by us
and we received cable systems serving approximately 696,000
video customers in Illinois and Indiana (the “Comcast asset pool”).
Insight received cable systems serving approximately 652,000
video customers, together with approximately $1.24 billion of debt
allocated to those cable systems (the “Insight asset pool”). We
accounted for our interest in Insight Midwest as an equity method
investment until the Comcast asset pool was distributed to us on
January 1, 2008. We accounted for the distribution of assets by
Insight Midwest as a sale of our 50% interest in the Insight asset
pool in exchange for acquiring an additional 50% interest in the
Comcast asset pool. The estimated fair value of the 50% interest
of the Comcast asset pool we received was approximately $1.2
billion and resulted in a pretax gain of approximately $235 million,
which is included in other income (expense). We recorded our
50% interest in the Comcast asset pool as a step acquisition in
accordance with SFAS No. 141, “Business Combinations,” (“SFAS
No. 141”).
The results of operations for the cable systems acquired in the
Insight transaction have been reported in our consolidated financial
statements since January 1, 2008 and are reported in our Cable
segment. The weighted-average amortization period of the
franchise-related customer relationship intangible assets acquired
was 4.5 years. Substantially all of the goodwill recorded is
expected to be amortizable for tax purposes.
The table below presents the purchase price allocation to assets
acquired and liabilities assumed as a result of the Insight trans-
action.
(in millions)
Property and equipment $ 587
Franchise-related customer relationships 64
Cable franchise rights 1,374
Goodwill 105
Other assets 27
Total liabilities (31)
Net assets acquired $2,126
The following unaudited pro forma information has been presented
as if the Insight transaction had occurred on January 1, 2007. 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 cable
systems since January 1, 2007.
Year ended December 31, 2007 (in millions, except per share data)
Revenue $31,582
Net income $ 2,627
Basic EPS $ 0.85
Diluted EPS $ 0.84
Other 2008 Acquisitions
In April 2008, we acquired an additional interest in Comcast
SportsNet Bay Area. In July 2008, we acquired Plaxo, an address
book management and social networking Web site service. In
August 2008, we acquired the remaining interest in G4 that we did
not already own. In September 2008, we acquired DailyCandy, an
e-mail newsletter and Web site. The results of operations for these
acquisitions have been included in our consolidated results of
operations since their respective acquisition dates. The results of
operations for Plaxo and DailyCandy are reported in Corporate and
51 Comcast 2008 Annual Report on Form 10-K