Comcast 2010 Annual Report Download - page 49

Table of Contents
43
Comcast 2010 Annual Report on Form 10-
K
Consolidated Other Income (Expense) Items
Interest Expense
The decrease in interest expense for 2010 is primarily due to
$175 million of early extinguishment losses, net of early
extinguishment gains, associated with the repayment of debt
obligations prior to their scheduled maturity that were
recognized in 2009 and decreases in interest rates on debt
subject to variable interest rate swap agreements. Interest
expense decreased in 2009 primarily due to a decrease in
our average debt outstanding, decreases in interest rates on
debt subject to variable interest rate swap agreements, and
decreases in interest rates on our variable rate debt, partially
offset by an increase in early extinguishment costs in 2009.
During 2009 and 2008, interest expense included
$175 million and $64 million, respectively, of early
extinguishment losses, net of early extinguishment gains,
associated with the repayment of debt obligations prior to
their scheduled maturity.
Investment Income (Loss), Net
The components of investment income (loss), net for 2010,
2009 and 2008 are presented in a table in Note 6 to our
consolidated financial statements. We have entered into
derivative financial instruments that we account for at fair
value and that economically hedge the market price
fluctuations in the common stock of all of our investments
accounted for as trading securities and substantially all of our
investments accounted for as available-for-sale securities.
The differences between the unrealized gains or losses on
securities underlying prepaid forward sale agreements and
the mark to market adjustments on the derivative component
of prepaid forward sale agreements, as presented in a table
in Note 6 to our consolidated financial statements, result from
one or more of the following:
Year ended December 31
(in millions)
2010
2009
2008
Interest expense
$
(2,156
)
$
(2,348
)
$
(2,439
)
Investment income
(loss), net
288
282
89
Equity in net income
(losses) of
affiliates, net
(141
)
(64
)
(39
)
Other income
(expense)
133
22
(285
)
Total
$
(1,876
)
$
(2,108
)
$
(2,674
)
•
there were unusual changes in the derivative valuation
assumptions such as interest rates, volatility and dividend
policy
•
the magnitude of the difference between the market price
of the underlying security to which the derivative relates
and the strike price of the derivative
•
the change in the time value component of the derivative
value during the period
Other Income (Expense)
In connection with the NBCUniversal transaction, we agreed
to share with GE certain financing and other costs associated
with debt facilities that were entered into in December 2009
and with the issuance of NBCUniversal’s senior notes in
2010. Other income (expense) for 2010 includes $129 million
of expenses for our share of these costs. Other income
(expense) for 2010 also includes income of $141 million
related to the sale of one of our equity method investments
and $108 million related to recoveries in connection with the
resolution of a contingency of an acquired company.
Other expense for 2008 includes an impairment of
approximately $600 million related to our investment in
Clearwire LLC partially offset by a gain of approximately
$235 million related to the Insight transaction (see Note 5 and
Note 6 to our consolidated financial statements).
Income Tax Expense
Our effective income tax rate for 2010, 2009 and 2008 was
39.9%, 28.9% and 37.8%, respectively. Income tax expense
reflects an effective income tax rate that differs from the
federal statutory rate primarily due to state income taxes and
interest on uncertain tax positions. Our 2009 income tax
expense was reduced by approximately $566 million primarily
due to the recognition of tax benefits associated with
settlements and adjustments of uncertain tax positions and
related interest and certain subsidiary reorganizations that
impacted deferred state income taxes. Our 2008 income tax
expense was reduced by approximately $154 million,
primarily due to the settlement of an uncertain tax position
and the net impact of certain state tax law changes, which
primarily affected our deferred income tax liabilities and other
noncurrent liabilities, and the future deductibility of certain
deferred compensation arrangements. Our income tax
expense may in the future continue to be impacted by
adjustments to uncertain tax positions and related interest
and changes in state tax laws. We expect our 2011 annual
effective tax rate to be in the range of 35% to 40% due to the
partnership structure of NBCUniversal Holdings.
Liquidity and Capital Resources
Our businesses generate significant cash flows from
operating activities. We believe that we will be able to
continue to meet our current and long-term liquidity and
capital requirements, including fixed charges, through our
cash flows from operating activities, existing cash, cash
equivalents and investments, available borrowings under our
existing credit facilities, and our ability to obtain future
external financing.
•
the security to which the derivative relates changed due to
a corporate reorganization of the issuing company to a
security with a different volatility rate