Comcast 2015 Annual Report Download - page 74

relevant average implied forward rates through the year of maturity based on the yield curve in effect on
December 31, 2015, plus the applicable borrowing margin on December 31, 2015.
See Note 2 to each of Comcast’s and NBCUniversal’s 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 rela-
tive to the U.S. dollar. These changes could adversely affect the U.S. dollar value of our non-U.S. dollar
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 fluctua-
tions, NBCUniversal enters into derivative financial instruments related to a significant portion of its foreign
currency exposure, resulting from transactions denominated in other than the functional currency. NBCUni-
versal 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 fore-
casted 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 circum-
stances, NBCUniversal enters into foreign exchange contracts with initial maturities in excess of 18 months.
As of December 31, 2015 and 2014, NBCUniversal had foreign exchange contracts with a total notional value
of $998 million and $890 million, respectively. As of December 31, 2015 and 2014, the aggregate estimated
fair value of these foreign exchange contracts was not material.
We have analyzed our foreign currency exposure related to NBCUniversal’s operations as of December 31,
2015, including our hedging contracts, to identify assets and liabilities denominated in a currency other than
their functional currency. For those assets and liabilities, we then evaluated the effect of a 10% shift in cur-
rency exchange rates between the functional currency and the U.S. dollar. Our analysis of such a shift in
exchange rates indicated that there would be an immaterial effect on our 2015 income. In addition, the
impact of fluctuations in currencies relative to the U.S. dollar for our non-U.S. dollar functional currency oper-
ations did not have a material impact on our financial condition or results of operations in 2015.
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. We use cross-currency swaps for foreign cur-
rency denominated debt obligations, when those obligations are denominated in other than the functional
currency. Cross-currency swaps 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 equiv-
alent value of the related exposures. As of December 31, 2015 and 2014, 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 $71 million and
an asset of $37 million, respectively.
Counterparty Credit Risk Management
Comcast and NBCUniversal manage the credit risks associated with our derivative financial instruments
through diversification and the evaluation and monitoring of the creditworthiness of counterparties. Although
we may be exposed to losses in the event of nonperformance by counterparties, we do not expect such
71 Comcast 2015 Annual Report on Form 10-K