Comcast 2011 Annual Report Download - page 75

We have analyzed our foreign currency exposures related to NBCUniversal’s operations as of December 31,
2011, including our hedging contracts, to identify assets and liabilities denominated in a currency other than
their relevant functional currency. For these assets and liabilities, we then evaluated the effects of a 10% shift
in currency exchange rates between those currencies and the U.S. dollar. The analysis of such shift in
exchange rates indicated that there would be an immaterial effect on our 2011 income.
We are also exposed to the market risks associated with fluctuations in foreign exchange rates as they relate
to our foreign currency denominated debt obligations. Cross-currency swaps are used to effectively convert
fixed rate foreign currency denominated debt to fixed rate U.S. dollar denominated debt, hedging the risk that
the cash flows related to annual interest payments and the payment of principal at maturity may be adversely
affected by fluctuations in currency exchange rates. The gains and losses on the cross-currency swaps offset
changes in the U.S. dollar equivalent value of the related exposures. As of December 31, 2011 and 2010, the
fair value of our cross-currency swaps on our £625 million principal amount of 5.50% senior notes due 2029
was a liability of $69 million and $29 million, respectively.
See Note 2 to our consolidated financial statements for additional information on our accounting policies for
derivative financial instruments and Note 10 to our consolidated financial statements for additional information
on our derivative financial instruments.
Equity Price Risk Management
We are exposed to the market risk of changes in the equity prices of our investments in marketable secu-
rities. We enter into various derivative transactions in accordance with our policies to manage the volatility
relating to these exposures. Through market value and sensitivity analyses, we monitor our equity price risk
exposures to ensure that the instruments are matched with the underlying assets or liabilities, reduce our
risks relating to equity prices and maintain a high correlation to the risk inherent in the hedged item.
To limit our exposure to and the benefits from price fluctuations in the common stock of some of our invest-
ments, we use equity derivative financial instruments. These derivative financial instruments, which are
accounted for at fair value, may include equity collar agreements, prepaid forward sale agreements and
indexed debt instruments.
Except as described above in Item 7 under the heading “Investment Income (Loss), Net,” the changes in the
fair value of the investments that we accounted for as available-for-sale or trading securities were sub-
stantially offset by the changes in the fair values of the equity derivative financial instruments. See Note 2 to
our consolidated financial statements for additional information on our accounting policies for derivative finan-
cial instruments and Note 6 and Note 10 to our consolidated financial statements for additional information
on our investments and derivative financial instruments.
Counterparty Credit Risk Management
We manage the credit risks associated with our derivative financial instruments through diversification and the
evaluation and monitoring of the creditworthiness of the counterparties. Although we may be exposed to
losses in the event of nonperformance by the counterparties, we do not expect such losses, if any, to be sig-
nificant. We have agreements with certain counterparties that include collateral provisions. These provisions
require a party with an aggregate unrealized loss position in excess of certain thresholds to post cash
collateral for the amount in excess of the threshold. The threshold levels in our collateral agreements are
based on our and the counterparties’ credit ratings. As of December 31, 2011 and 2010, neither we nor any
of the counterparties were required to post collateral under the terms of the agreements.
73 Comcast 2011 Annual Report on Form 10-K