Comcast 2008 Annual Report Download - page 62

Interest Rate Risk Management
We are exposed to the market risk of adverse changes in interest
rates. To manage the volatility relating to these exposures, our
policy is to maintain a mix of fixed-rate and variable-rate debt and
to use interest rate derivative transactions.
Using swaps, we agree to exchange, at specified dates, the differ-
ence between fixed and variable interest amounts calculated by
reference to an agreed-upon notional principal amount. The table
below summarizes the terms of our existing swaps.
Fixed to Variable Swaps
December 31 (in millions) 2008 2007
Maturities 2009-2018 2008-2014
Notional amount $ 3,500 $ 3,200
Average pay rate 3.9% 6.8%
Average receive rate 5.8% 5.9%
Estimated fair value $ 309 $17
The notional amounts presented in the table above are used to
measure interest to be paid or received and do not represent the
amount of exposure to credit loss. The estimated fair value repre-
sents the approximate amount of proceeds or payments required
to settle the contracts.
In 2008, 2007 and 2006, the effect of our interest rate derivative
financial instruments was an (decrease) increase to our interest
expense of approximately $(34) million, $43 million and $39 million,
respectively.
Note 10: Postretirement, Pension and Other Employee Benefit Plans
The table below provides condensed information on our postretirement and pension benefit plans.
2008 2007 2006
Year ended December 31 (in millions)
Postretirement
Benefits
Pension
Benefits
Postretirement
Benefits
Pension
Benefits
Postretirement
Benefits
Pension
Benefits
Benefit obligation $ 338 $ 181 $ 280 $ 179 $ 280 $ 184
Fair value of plan assets $ – $ 152 $ — $ 157 $ — $ 122
Plan funded status and recorded benefit obligation $ (338) $ (29) $ (280) $ (22) $ (280) $ (62)
Portion of benefit obligation not yet recognized in benefits
expense $ (18) $ 67 $ (39) $ 1 $ (4) $ 12
Benefits expense $36 $ 1 $34 $ 4 $29 $ 8
Discount rate 6.15% 6.00% 6.65% 6.25% 6.00% 5.75%
Expected return on plan assets N/A 8.00% N/A 8.00% N/A 7.00%
Postretirement Benefit Plans
Our postretirement medical benefits cover substantially all of our
employees who meet certain age and service requirements. The
majority of eligible employees participate in the Comcast
Postretirement Healthcare Stipend Program (the “stipend plan”),
and a small number of eligible employees participate in legacy
plans of acquired companies. The stipend plan provides an annual
stipend for reimbursement of healthcare costs to each eligible
employee based on years of service. Under the stipend plan, we
are not exposed to the increasing costs of healthcare because the
benefits are fixed at a predetermined amount.
Pension Benefit Plans
We sponsor two pension plans that together provide benefits to
substantially all former employees of a previously acquired com-
pany. Future benefits for both plans have been frozen.
Other Employee Benefits
Deferred Compensation Plans
We maintain unfunded, nonqualified deferred compensation plans
for certain members of management and nonemployee directors
(each a “participant”). 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 of the
amounts credited to their account based on elected deferral peri-
ods that are consistent with the plans and applicable tax law. We
have purchased life insurance policies to fund a portion of the
unfunded obligation related to our deferred compensation plans.
As of December 31, 2008 and 2007, the cash surrender value of
these policies, which are recorded in other noncurrent assets, was
approximately $147 million and $112 million, respectively.
Comcast 2008 Annual Report on Form 10-K 60