ATLANTA - Cox Communications, Inc. today reported financial results for the three and six months ended June 30, 2005.

"This quarter we surpassed a major milestone: three million Cox customers now subscribe to a bundle of two or more services," said Jim Robbins, president and CEO of Cox Communications. "Nearly half of our basic subscribers have realized the convenience and value of bundled services."

"We added over 89,000 telephone customers in the second quarter, and the excellent quality and value of our phone service earned us a third consecutive J.D. Power and Associates award for overall customer satisfaction in the western region. Building on that success, Cox plans to launch Cox Digital Telephone in five additional markets in the second half of 2005."

"The strong quarter also marked our best ever for sell-in of all advanced services and a reduction in churn across all product categories. With all our sales channels focused on increasing the number of bundled customers, we now report 13.2 million RGUs, which translates into higher revenues that fuel greater free cash flow."

SECOND QUARTER HIGHLIGHTS

For the second quarter of 2005, Cox:

• Ended the quarter with approximately 13.2 million total RGUs, up 11% from June 30, 2004, driven by 22% year-over-year growth in advanced-service RGUs.
• Added 48,768 Cox Digital Cable customers, ending the quarter with approximately 2.6 million digital cable customers, representing year-over-year customer growth of 12%. Cox Digital Cable is now available to 99% of the homes in Cox's service areas with 41% penetration of our basic video customer base.
• Added 97,779 high-speed Internet customers, ending the quarter with over 2.8 million high-speed Internet customers, representing year-over-year customer growth of 27%.
• Added 89,023 Cox Digital Telephone customers, ending the quarter with over 1.5 million telephone customers, representing year-over-year customer growth of 33%.
• Generated $366.1 million in net cash provided by operating activities and $36.9 million in free cash flow (net cash provided by operating activities less capital expenditures).
• Generated 11% revenue growth during the quarter and six months ended June 30, 2005, compared with the same periods in 2004.
• Generated 7% operating income growth and 12% operating cash flow growth (operating income before depreciation and amortization) during the quarter ended June 30, 2005 and 15% operating income growth and 14% operating cash flow growth during the six months ended June 30, 2005, compared with the same periods in 2004.

OPERATING RESULTS

Three months ended June 30, 2005 compared with three months ended June 30, 2004

Total revenues for the second quarter of 2005 were $1.8 billion, an increase of 11% over the second quarter of 2004. This was primarily due to growth in advanced-service subscriptions (which include digital cable, high-speed Internet access and telephony) and higher basic cable rates. An increase in Cox Business Services customers, as well as an increase in advertising sales, also contributed to overall revenue growth.

Cost of services, which includes programming costs, other direct costs and field service costs, was $709.5 million for the second quarter of 2005, an increase of 10% over the same period in 2004. Programming costs increased 10% to $351.9 million, primarily reflecting rate increases. Other direct costs and field service costs in the aggregate increased 10% to $357.6 million, primarily resulting from 11% growth in total RGUs over the last twelve months, partially offset by cost savings achieved through successful field service initiatives.

Selling, general and administrative expenses were $375.1 million for the second quarter of 2005, an increase of 12% over the comparable period in 2004. This was due to a 13% increase in general and administrative expenses and a 9% increase in marketing expense. The increase in general and administrative expenses was due to increased salaries and benefits, as well as an increase in the cost of providing healthcare benefits. The increase in marketing expense primarily related to promotions for new video products, as well as a 14% increase in costs associated with Cox Media, Cox's advertising sales business.

Operating income increased 7% to $228.9 million for the second quarter of 2005, and operating cash flow increased 12% to $692.1 million, compared to the same period in 2004. Operating income margin (operating income as a percentage of revenues) for the second quarter of 2005 was 13%, consistent with the second quarter of 2004. Operating cash flow margin (operating cash flow as a percentage of revenues) was 39% for the second quarter of 2005 and 2004.

Depreciation and amortization increased to $463.2 million from $397.1 million in the second quarter of 2005. This was primarily due to the amortization of finite-lived intangible assets that resulted from the push-down basis accounting applied pursuant to the December 2004 going-private transaction, as well as additional depreciation resulting from an increase in capital expenditures over the comparable period associated with Cox's continuing investment in its broadband network in order to deliver additional services.

During the second quarter of 2004, Cox recorded a $5.0 million pre-tax loss on the sale of certain small, non-clustered cable systems in Oklahoma, Kansas, Texas and Arkansas, which in the aggregate consisted of approximately 53,000 basic cable subscribers.

Net loss on investments for the second quarter of 2005 was $2.7 million due to a pre-tax decline considered to be other than temporary in the fair value of certain investments. Net gain on investments of $2.3 million for the comparable period of 2004 was primarily due to the sale of all remaining shares of Sprint stock then held by Cox.

During the second quarter of 2005, Cox recorded a $13.0 million pre-tax loss on extinguishment of debt due to the redemption of $62.3 million original principal amount at maturity of its exchangeable subordinated discount debentures due 2020 (Discount Debentures) for aggregate cash consideration of $32.5 million, which represented all remaining outstanding Discount Debentures. During the comparable period in 2004, Cox recorded a $7.0 million pre-tax loss on extinguishment of debt due to the redemption of $14.6 million aggregate principal amount of Cox's exchangeable subordinated debentures due 2029 (PRIZES) and $0.1 million aggregate principal amount of Cox's 3% exchangeable subordinated debentures due 2030 (Premium PHONES), which represented all remaining outstanding PRIZES and Premium PHONES. As a result of these redemptions, Cox no longer has any outstanding exchangeable subordinated debentures.

Net income for the second quarter of 2005 was $18.3 million compared to $62.7 million for the comparable period of 2004.

Six months ended June 30, 2005 compared with six months ended June 30, 2004

Total revenues for the six months ended June 30, 2005 were $3.5 billion, an increase of 11% over the six months ended June 30, 2004. This was primarily due to growth in advanced-service subscriptions (which include digital cable, high-speed Internet access and telephony) and higher basic cable rates. An increase in Cox Business Services customers, as well as an increase in advertising sales, also contributed to overall revenue growth.

Cost of services was $1.4 billion for the six months ended June 30, 2005, an increase of 9% over the same period in 2004. Programming costs increased 10% to $699.7 million, primarily reflecting rate increases. Other direct costs and field service costs in the aggregate increased 8% to $691.7 million, primarily resulting from 11% growth in total RGUs over the last twelve months, partially offset by cost savings achieved through successful field service initiatives.

Selling, general and administrative expenses were $743.6 million for the six months ended June 30, 2005, an increase of 11% over the comparable period in 2004. This was due to an 11% increase in general and administrative expenses and a 10% increase in marketing expense. The increase in general and administrative expenses was primarily due to increased salaries and benefits, as well as an increase in the costs of providing healthcare benefits. The increase in marketing expense primarily related to promotions for new video products, as well as an 11% increase in costs associated with Cox Media, Cox's advertising sales business.

Operating income increased 15% to $448.3 million for the six months ended June 30, 2005, and operating cash flow increased 14% to $1.3 billion, compared to the same period in 2004. Operating income margin for the six months ended June 30, 2005 was 13%, compared to 12% for the same period in 2004. Operating cash flow margin for the six months ended June 30, 2005 was 39%, compared to 38% for the same period in 2004.

Depreciation and amortization increased to $897.4 million from $789.2 million for the six months ended June 30, 2005. This was primarily due to the amortization of finite-lived intangible assets that resulted from the push-down basis accounting applied pursuant to the December 2004 going-private transaction, as well as additional depreciation resulting from an increase in capital expenditures over the comparable period associated with Cox's continuing investment in its broadband network in order to deliver additional services.

Net loss on investments of $2.7 million for the six months ended June 30, 2005 was due to a pre-tax decline considered to be other than temporary in the fair value of certain investments. Net gain on investments for the comparable period in 2004 of $29.1 million was due to: (i) a $19.5 million pre-tax gain on the sale of 0.1 million shares of Sprint PCS preferred stock, (ii) a $7.3 million pre-tax gain on the sale of certain other non-strategic investments, and (iii) a $2.3 million pre-tax gain on the sale of all remaining shares of Sprint stock then held by Cox.

Net income for the six months ended June 30, 2005 was $45.3 million compared with $120.4 million for the comparable period in 2004.

LIQUIDITY AND CAPITAL RESOURCES

Cox has included Consolidated Statements of Cash Flows for the six months ended June 30, 2005 and 2004 as a means of providing more detail regarding the liquidity and capital resources discussion below. In addition, Cox has included a calculation of free cash flow in the Summary of Operating Statistics to provide additional detail regarding a measure of liquidity that Cox believes will be useful to investors in evaluating Cox's financial performance. For further details, please refer to the Summary of Operating Statistics and discussion under the heading Use of Operating Cash Flow and Free Cash Flow.

Significant sources of cash for the six months ended June 30, 2005 consisted primarily of the following:

• the generation of net cash provided by operating activities of approximately $789.1 million;
• net credit facility borrowings of $575.0 million; and
• net commercial paper borrowings of $111.9 million.

Significant uses of cash for the six months ended June 30, 2005 consisted of the following:

• capital expenditures of $661.2 million;
• contributions of $43 million to TV Works, LLC (formerly known as Double C Technologies, LLC), which represents a 33% ownership interest in the entity;
• the repayment of Cox's $375 million 6.9% notes due June 15, 2005 upon their maturity;
• the purchase of $62.3 million original principal amount at maturity of Cox's Discount Debentures for aggregate cash consideration of $32.5 million, which represented all remaining outstanding Discount Debentures; and
• payments to acquire Cox's former public stock that was converted into the right to receive cash as part of the going-private transaction in December 2004 of approximately $472.7 million, with such payments being made as holders of the former public stock surrender their certificates and otherwise claim their going-private merger consideration.

USE OF OPERATING CASH FLOW AND FREE CASH FLOW

Operating cash flow and free cash flow are not measures of performance calculated in accordance with accounting principles generally accepted in the United States (GAAP). Operating cash flow is defined as operating income before depreciation and amortization. Free cash flow is defined as cash flows provided by operating activities less capital expenditures.

Cox's management believes that presentation of these measures provides useful information to investors regarding Cox's financial position and results of operations. Cox believes that operating cash flow and free cash flow are useful to investors in evaluating its performance because they are commonly used financial analysis tools for measuring and comparing media companies in several areas of liquidity, operating performance and leverage. Both operating cash flow and free cash flow are used to gauge Cox's ability to service long-term debt and other fixed obligations and to fund continued growth with internally generated funds. In addition, management uses operating cash flow to monitor compliance with certain financial covenants in Cox's credit agreements, and it is used as a factor in determining executive compensation.

Operating cash flow and free cash flow should not be considered as alternatives to net income as indicators of Cox's aggregate performance, or as alternatives to net cash provided by operating activities as measures of liquidity, and may not be comparable to similarly titled measures used by other companies. Reconciliations of these non-GAAP measures to the most comparable GAAP measures on a historical basis are presented under the headings Reconciliation of Operating Cash Flow to Operating Income and Reconciliation of Free Cash Flow to Cash Provided by Operating Activities in the attached financial tables.

Caution Concerning Forward-Looking Statements

Statements in this release, including statements relating to growth opportunities, revenue and cash flow projections and introduction of new products and services, are "forward-looking statements", as defined by the Private Securities Litigation Reform Act of 1995. These statements relate to Cox's future plans, earnings, objectives, expectations, performance and similar projections, as well as any facts or assumptions underlying these statements or projections. Actual results may differ materially from the results expressed or implied in these forward-looking statements, due to various risks, uncertainties or other factors. These factors include competition within the broadband communications industry, our ability to achieve anticipated subscriber and revenue growth, our success in implementing new services and other operating initiatives, our ability to generate sufficient cash flow to meet our debt service obligations and finance operations, and other risk factors described from time to time in Cox's filings with the Securities and Exchange Commission, including Cox's Annual Report on Form 10-K, as amended, for the year ended December 31, 2004. Cox assumes no responsibility to update any forward-looking statements as a result of new information, future events or otherwise.

Acerca de Cox Communications

Cox Communications Inc. is a multi-service broadband communications company with approximately 6.7 million total customers, including approximately 6.3 million basic cable subscribers. The nation's third-largest cable television provider, Cox offers analog cable television under the Cox Cable brand as well as digital video service under the Cox Digital Cable brand. Cox provides an array of other communications and entertainment services including local and long-distance telephone under the Cox Digital Telephone brand, high-speed Internet service under the Cox High Speed Internet brand, video on demand programming under the Entertainment on Demand brand, digital video recorders, high-definition television and home networking. Commercial voice and data services are offered via Cox Business Services. Local cable advertising, promotional opportunities and production services are sold under the Cox Media brand. Cox is an investor in programming services including Discovery Communications, Inc. Cox Communications is a wholly-owned subsidiary of Cox Enterprises, Inc.

Información de contacto

Susan Coker, Vice President and Treasurer
(404) 843-5462, susan.coker@cox.com

David Grabert, Director of Media Relations
(404) 269-7054, mobile (678) 592-2258
david.grabert@cox.com

Bobby Amirshahi, Director of Media Relations
(404) 843-7872, mobile (404) 353-7138
bobby.amirshahi@cox.com