Comcast 2013 Annual Report Download - page 80

Table of Contents
We use the notional amount of each interest rate derivative financial instrument to calculate the interest to be paid or received. The
notional amounts do not represent our exposure to credit loss. The estimated fair value approximates the amount of payments to be
made or proceeds to be received to settle the outstanding contracts, including accrued interest. We estimate interest rates on
variable rate debt and swaps using the average implied forward LIBOR through the year of maturity based on the yield curve in
effect on December 31, 2013, plus the applicable borrowing margin on December 31, 2013.
Certain of our financial contracts include credit-ratings-
based triggers that could affect our liquidity. In the ordinary course of
business, some of Comcast’
s swaps could be subject to termination provisions if it does not maintain investment grade credit
ratings. As of December 31, 2013 and 2012, the estimated fair value of those swaps was not material. The amount to be paid or
received upon termination, if any, would be based on the fair value of the outstanding contracts at that time.
See Note 2 to each of the Comcast and NBCUniversal consolidated financial statements for additional information on our
accounting policies for derivative financial instruments.
Foreign Exchange Risk Management
NBCUniversal has significant operations in a number of countries outside the United States, and certain of NBCUniversal’
s
operations are conducted in foreign currencies. The value of these currencies fluctuates relative to the U.S. dollar. These changes
could adversely affect the U.S. dollar value of our non-
U.S. revenue and operating costs and expenses and reduce international
demand for our content, all of which could negatively affect our business, financial condition and results of operations in a given
period or in specific territories.
As part of our overall strategy to manage the level of exposure to the risk of foreign exchange rate fluctuations, NBCUniversal
enters into derivative financial instruments related to a significant portion of its foreign currency exposures. NBCUniversal enters
into foreign currency forward contracts that change in value as foreign exchange rates change to protect the U.S. dollar equivalent
value of its foreign currency assets, liabilities, commitments, and forecasted foreign currency revenue and expenses. In accordance
with our policy, NBCUniversal hedges forecasted foreign currency transactions for periods generally not to exceed 18 months. In
certain circumstances NBCUniversal enters into foreign exchange contracts with initial maturities in excess of 18 months. As of
December 31, 2013 and 2012, NBCUniversal had foreign exchange contracts with a total notional value of $968 million and $820
million, respectively. As of December 31, 2013 and 2012, the aggregate estimated fair value of these foreign exchange contracts
was not material.
We have analyzed our foreign currency exposures related to NBCUniversal’
s operations as of December 31, 2013, including our
hedging contracts, to identify assets and liabilities denominated in a currency other than their functional currency. For these assets
and liabilities, we then evaluated the effect 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 2013 income.
Comcast is also exposed to the market risks associated with fluctuations in foreign exchange rates as they relate to its 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, in order to hedge 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, 2013 and 2012, the fair value of our cross-currency swaps on our £
625 million principal amount of 5.50% senior
notes due 2029 was an asset of $73 million and $30 million, respectively.
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Comcast 2013 Annual Report on Form 10
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