Comcast 2015 Annual Report Download - page 73

Item 7A: Quantitative and Qualitative Disclosures About Market
Risk
Interest Rate Risk Management
We maintain a mix of fixed-rate and variable-rate debt and we are exposed to the market risk of adverse
changes in interest rates. In order to manage the cost and volatility relating to the interest cost of our out-
standing debt, we enter into various interest rate risk management derivative transactions in accordance with
our policies.
We monitor our exposure to the risk of adverse changes in interest rates through the use of techniques that
include market value and sensitivity analyses. We do not engage in any speculative or leveraged derivative
transactions.
Our interest rate derivative financial instruments, which may include swaps, rate locks, caps and collars, repre-
sent an integral part of our interest rate risk management program. Comcast’s interest rate derivative financial
instruments reduced the portion of Comcast’s total consolidated debt at fixed rates as of December 31, 2015
to 84.5% from 89.2%. NBCUniversal’s interest rate derivative financial instruments reduced the portion of
NBCUniversal’s total consolidated debt at fixed rates as of December 31, 2015 to 71.5% from 73.9%.
In 2015, 2014 and 2013, the effect of our interest rate derivative financial instruments was to decrease
Comcast’s consolidated interest expense by $62 million, $66 million and $98 million, respectively. The effect
of NBCUniversal’s interest rate derivative financial instruments was not material to NBCUniversal’s con-
solidated financial statements for all periods presented. Interest rate derivative financial instruments may have
a significant effect on Comcast’s interest expense in the future.
The table below summarizes as of December 31, 2015 the principal cash flows, notional amounts, fair values
and contract terms of financial instruments by contractual year of maturity subject to interest rate risk main-
tained by us.
(in millions) 2016 2017 2018 2019 2020 Thereafter Total
Estimated
Fair Value as of
December 31,
2015
Debt
Fixed rate $ 1,801 $ 2,587 $ 3,329 $ 2,224 $ 3,419 $ 33,846 $ 47,206 $ 52,336
Average interest rate 3.9% 6.9% 4.4% 3.2% 5.1% 5.2% 5.1%
Variable rate $ 1,826 $ 108 $ 865 $ 221 $ 2,657 $ — $ 5,677 $ 5,678
Average interest rate 1.7% 3.0% 2.9% 3.0% 2.7% 0.0% 2.4%
Interest Rate Instruments
Fixed to variable swaps $ 300 $ 400 $ 1,600 $ 200 $ — $ — $ 2,500 $ 64
Average pay rate 0.9% 6.0% 4.4% 5.0% 0.0% 0.0% 3.6%
Average receive rate 2.9% 6.3% 5.8% 5.7% 0.0% 0.0% 5.5%
The estimated fair value of our interest rate swaps in the table above includes $3 million associated with inter-
est rate swaps held by NBCUniversal.
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 con-
tracts, including accrued interest. We estimate interest rates on variable rate debt and swaps using the
Comcast 2015 Annual Report on Form 10-K 70