Cox Communications Announces First Quarter Financial Results for 2005.ATLANTA Atlanta (ətlăn`tə, ăt–), city (1990 pop. 394,017), state capital and seat of Fulton co., NW Ga., on the Chattahoochee R. and Peachtree Creek, near the Appalachian foothills; inc. 1847. -- Cox Communications Cox Communications is a privately owned subsidiary of Cox Enterprises providing digital cable television and telecommunications services in the United States. It is the third-largest[2] cable television provider in the United States, serving more than 6. , Inc. today reported financial results for the three months ended March 31, 2005. "Cox employees hit the ball out of the park in the first quarter of 2005 -- our first full quarter since our recent privatization privatization: see nationalization. privatization Transfer of government services or assets to the private sector. State-owned assets may be sold to private owners, or statutory restrictions on competition between privately and publicly owned ," said Jim Robbins Rob·bins , Frederick Chapman 1916-2003. American microbiologist. He shared a 1954 Nobel Prize for work on the cultivation of the polio virus. , President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Cox Communications, Inc. "With intense focus on executing strategy, we once again leveraged the power of our bundle To sell hardware and software as a combined product or to combine several software packages for sale as a single unit. Contrast with unbundle. See bundled software and bundling. and delivered growth in every product category, increasing our total customer relationships to 6.7 million." "Bolstered bol·ster n. A long narrow pillow or cushion. tr.v. bol·stered, bol·ster·ing, bol·sters 1. To support or prop up with or as if with a long narrow pillow or cushion. 2. in part by the wider availability of advanced video services, such as DVR (1) (Digital Video Recorder) A device that records video onto a hard disk from one or more ceiling mounted video cameras. Part of a security system, the DVR typically supports 4, 8 or 16 separate camera channels. and High Definition service, our digital cable penetration The successful unauthorized breach of a security perimeter. See penetration test. is now 40%, as we added more than 90,000 digital video customers in the first quarter." "Cox Communications continues to lead the industry in being a true full-service full-ser·vice adj. Associated with or offering complete service: full-service gasoline pumps; full-service banks. broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). telecommunications company See telecom company. . In the first quarter, we added more than 111,000 new Cox Digital Telephone customers and more than 177,000 Cox High Speed Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the customers. Combined, this is more than a quarter of a million new non-video service subscriptions achieved in just one quarter." FIRST QUARTER HIGHLIGHTS For the first quarter of 2005, Cox: --Ended the quarter with over 6.3 million basic video customers, up 0.2% from March 31, 2004. --Ended the quarter with over 6.7 million total customer relationships, up 1.3% from March 31, 2004. --Ended the quarter with approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 13.0 million total RGUs, up 11% from March 31, 2004, driven by 23% year-over-year growth in advanced-service RGUs. --Added 94,499 Cox Digital Cable customers, ending the quarter with over 2.5 million digital cable customers, representing year-over-year customer growth of 13%. Cox Digital Cable is now available to 99% of the homes in Cox's service areas with 40% penetration of our basic video customer base. --Added 177,413 high-speed Internet See broadband. customers, ending the quarter with over 2.7 million high-speed Internet customers, representing year-over-year customer growth of 28%. --Added 111,522 Cox Digital Telephone customers, the most Cox Digital Telephone customers ever added in a quarter. Cox ended the quarter with over 1.4 million telephone customers, representing year-over-year customer growth of 33%. --Generated $423.0 million in net cash provided by operating activities and $91.0 million in free cash flow (net cash provided by operating activities less capital expenditures). --Generated year-over-year revenue growth of 11%. --Generated year-over-year operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. growth of 25% and operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. (operating income before depreciation and amortization) growth of 15%. OPERATING RESULTS Total revenues for the first quarter of 2005 were $1.7 billion, an increase of 11% over the first quarter of 2004. This was primarily due to growth in advanced-service subscriptions (which include digital cable, high-speed Internet access and telephony Meaning "sound over distance," it refers to electronically transmitting the human voice. In the beginning, telephony dealt only with analog signals in the circuit-switched networks of the telephone companies. ) and higher basic cable rates. An increase in Cox Business Services customers, with customer locations now surpassing 140,000, 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 $681.9 million for the first quarter of 2005, an increase of 7% over the same period in 2004. Programming costs increased 9% to $347.8 million, reflecting rate increases and customer growth. Other direct costs and field service costs in the aggregate increased 5% to $334.1 million, reflecting 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 $368.6 million for the first quarter of 2005, an increase of 9% over the comparable period in 2004. This was due to a 9% increase in general and administrative expenses and a 10% increase in marketing expense. The increase in general and administrative expenses was due to increased salaries and benefits. Marketing expense increased due to additional marketing related to new video products, as well as a 9% increase in costs associated with Cox Media, Cox's advertising sales business. Operating income increased 25% to $219.4 million for the first quarter of 2005, and operating cash flow increased 15% to $653.6 million, compared to the same period in the 2004. Operating income margin (operating income as a percentage of revenues) for the first quarter of 2005 was 13%, compared to 11% for the first quarter of 2004. Operating cash flow margin (operating cash flow as a percentage of revenues) was 38% for the first quarter of 2005, compared to 37% for the first quarter of 2004. Depreciation and amortization increased to $434.2 million from $392.1 million in the first quarter of 2004. This was due to an increase in depreciation from Cox's continuing investment in its broadband network in order to deliver additional services. Net gain on investments for the first quarter of 2005 was nominal Trifling, token, or slight; not real or substantial; in name only. Nominal capital, for example, refers to extremely small or negligible funds, the use of which in a particular business is incidental. NOMINAL. Relating to a name. . Net gain on investments of $26.8 million for the first quarter of 2004 was due to a $19.5 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta gain on the sale of 0.1 million shares of Sprint PCS (1) (Personal Communications Services) Refers to wireless services that emerged after the U.S. government auctioned commercial licenses in 1994 and 1995. This radio spectrum in the 1. preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. and a $7.3 million pre-tax gain on the sale of certain other non-strategic investments. Net income for the first quarter of 2005 was $27.0 million compared to $57.7 million for the first quarter of 2004. LIQUIDITY AND CAPITAL RESOURCES Cox has included Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: Statements of Cash Flows for the three months ended March 31, 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 three months ended March 31, 2005 consisted primarily of the following: --the generation of net cash provided by operating activities of approximately $423.0 million; and --revolving credit borrowings of approximately $400.0 million. Significant uses of cash for the three months ended March 31, 2005 consisted of the following: --net commercial paper repayments of approximately $96.9 million; --payment 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 December: see month. 2004 of approximately $467.4 million, with such payments being made as holders of the former public stock surrender To give up, return, or yield. The word surrender presupposes the possession or ownership of the thing that is to be returned or given up. It indicates a transfer of title as well as possession, but it does not express or in any way suggest the transaction of a sale their certificates and otherwise claim their going-private merger consideration; and --capital expenditures of $332.0 million. USE OF OPERATING CASH FLOW AND FREE CASH FLOW Operating cash flow and free cash flow are not measures of performance calculated in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with accounting principles generally accepted in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (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 gauge In manufacturing and engineering, a device used to determine whether a dimension is larger or smaller than a reference standard. A snap gauge, for example, is formed like the letter C, with outer “go” and inner “not go” jaws, and is used to Cox's ability to service long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered 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 forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Statements in this release, including statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc growth opportunities, revenue and cash flow projections A Cash Flow Projection is an attempt to forecast the cash flows that will be generated by an asset, often a company, over a specified time frame. Methodology Projections can be made with varying levels of detail, but any cash flow projection for a business entails and introduction of new products and services, are "forward-looking statements", as defined by the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. in these forward-looking statements, due to various risks, uncertainties or other factors. These factors include competition within the broadband communications industry communications industry, broadly defined, the business of conveying information. Although communication by means of symbols and gestures dates to the beginning of human history, the term generally refers to mass communications. , our ability to achieve anticipated subscriber subscriber, n the person, usually the employee, who represents the family unit in relation to the prepayment plan. Other family members are dependents. Also called certificate holders or enrollees. 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 The execution of the joint finance mission to provide financial advice and guidance, support of the procurement process, providing pay support, and providing disbursing support.See also financial management. , 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. , as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , 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. About Cox Communications Cox Communications Inc. is a multi-service broadband communications company Communications Company is a communications unit of the United States Marine Corps. They are part of Combat Logistics Regiment 37 , 3rd Marine Logistics Group (3MLG) and III Marine Expeditionary Force (III MEF). The unit is based out of the Marine Corps Base Camp Smedley D. 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 long-dis·tance adj. 1. Covering a long distance: a long-distance runner; operating under long-distance supervision. 2. 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 See DVR. , high-definition television high-definition television (HDTV) Any system producing significantly greater picture resolution than that of the ordinary 525-line (625-line in Europe) television screen. Conventional television transmits signals in analog form. 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 Cox Enterprises is the successor to the publishing company founded in Dayton, Ohio, by James Middleton Cox, who began with the Dayton Daily News. The company is private, 98% controlled by the octogenarian daughter of Cox, Anne Cox Chambers, and the two children of her late , Inc.
Cox Communications, Inc.
Consolidated Statements of Operations
(Unaudited)
(Thousands of Dollars)
Three Months Ended
March 31
----------------------------
2005 2004 Change
---------- ---------- ------
Revenues 1,704,060 1,540,357 11%
Costs and expenses
Cost of services (excluding
depreciation and amortization) 681,899 635,816 7%
Selling, general and administrative
expenses (excluding depreciation
and amortization) 368,569 337,308 9%
---------- ---------- ------
Total costs and expenses 1,050,468 973,124 8%
---------- ---------- ------
Operating cash flow 653,592 567,233 15%
Depreciation and amortization 434,196 392,066 11%
---------- ---------- ------
Operating income 219,396 175,167 25%
Interest expense (163,488) (96,612) 69%
Loss on derivative instruments, net (30) (39) (23%)
Gain on investments, net 2 26,809 (100%)
Other, net 218 (1,509) (114%)
---------- ---------- ------
Income before income taxes, minority
interest and equity in net (losses)
income of affiliated companies 56,098 103,816 (46%)
Income tax expense 28,314 45,706 (38%)
---------- ---------- ------
Income before minority interest and equity
in net (losses) income of affiliated
companies 27,784 58,110 (52%)
Minority interest, net of tax - (985) -
Equity in net (losses) income of
affiliated companies, net of tax of
$507 and $(393), respectively (772) 578 -
---------- ---------- ------
Net income $ 27,012 $ 57,703 (53%)
========== ==========
Cox Communications, Inc.
Consolidated Balance Sheets
(Unaudited)
(Thousands of Dollars)
March 31 December 31
2005 2004
----------- -----------
Assets
Current assets
Cash $ 112,775 $ 76,339
Accounts and notes receivable, less allowance
for doubtful accounts of $23,975 and $26,482 387,071 394,540
Other current assets 157,159 136,386
----------- -----------
Total current assets 657,005 607,265
----------- -----------
Net plant and equipment 7,862,193 7,942,699
Investments 1,172,190 1,171,647
Intangible assets 19,306,274 19,329,452
Goodwill 106,889 106,889
Other noncurrent assets 71,664 95,789
----------- -----------
Total assets $29,176,215 $29,253,741
=========== ===========
Liabilities and shareholders' equity
Current liabilities
Accounts payable and accrued expenses $ 876,952 $ 797,553
Other current liabilities 331,457 339,742
Cash obligation to untendered shareholders 15,905 483,603
Current portion of long-term debt 58,613 59,962
Amounts due to Cox Enterprises, Inc. (CEI) 60,302 5,573
----------- -----------
Total current liabilities 1,343,229 1,686,433
----------- -----------
Deferred income taxes 8,318,571 8,326,574
Other noncurrent liabilities 132,564 148,733
Long-term debt, less current portion 13,228,034 12,965,773
----------- -----------
Total liabilities 23,022,398 23,127,513
----------- -----------
Shareholders' equity
Class A common stock, $0.01 par value;
671,000,000 shares authorized; shares
issued and outstanding: 556,170,238 5,562 5,562
Class C common stock, $0.01 par value;
62,000,000 shares authorized; shares issued
and outstanding: 27,597,792 276 276
Additional paid-in capital 4,802,645 4,802,117
Retained earnings 1,345,230 1,318,218
Accumulated other comprehensive income 104 55
----------- -----------
Total shareholders' equity 6,153,817 6,126,228
----------- -----------
Total liabilities and shareholders'
equity $29,176,215 $29,253,741
=========== ===========
- -
Cox Communications, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(Thousands of Dollars)
Three Months
Ended March 31
-------------------
2005 2004
--------- ---------
Cash flows from operating activities
Net income $ 27,012 $ 57,703
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 434,196 392,066
Deferred income taxes (7,624) 21,651
Loss on derivative instruments, net 30 39
Gain on investments, net (2) (26,809)
Minority interest, net of tax - 985
Equity in net losses (income) of affiliated
companies, net of tax 772 (972)
Other, net 448 4,473
Decrease in accounts and notes receivable 7,469 22,943
Increase in other assets (22,874) (12,510)
Decrease (increase) in accounts payable and
accrued expenses 17,465 (65,662)
(Decrease) increase in taxes payable (4,074) 4,500
Decrease in other liabilities (29,825) (19,585)
--------- ---------
Net cash provided by operating activities 422,993 378,822
--------- ---------
Cash flows from investing activities
Capital expenditures (332,022) (294,554)
Investments in affiliated companies (1,929) -
Proceeds from the sale and exchange of investments - 67,247
Other, net 11,118 3,578
--------- ---------
Net cash used in investing activities (322,833) (223,729)
--------- ---------
Cash flows from financing activities
Revolving credit facilities borrowings, net 400,000 -
Commercial paper repayments, net (96,886) (155,016)
Repayment of debt (41,213) (37,739)
Payments to acquire Cox's former public stock (467,698) -
Proceeds from exercise of stock options - 1,765
Increase in amounts due to CEI 54,729 16,630
Other, net 87,344 16,461
--------- ---------
Net cash used in financing activities (63,724) (157,899)
--------- ---------
Net increase (decrease) in cash 36,436 (2,806)
Cash at beginning of period 76,339 83,841
--------- ---------
Cash at end of period $ 112,775 $ 81,035
========= =========
Cox Communications, Inc.
Reconciliation of Operating Cash Flow to Operating Income
(Unaudited)
(Thousands of Dollars)
Three Months Ended
March 31
-------------------
2005 2004
--------- ---------
Operating cash flow $ 653,592 $ 567,233
Depreciation and amortization (434,196) (392,066)
--------- ---------
Operating income $ 219,396 $ 175,167
========= =========
Cox Communications, Inc.
Reconciliation of Free Cash Flow to Cash Provided by Operating
Activities
(Unaudited)
(Thousands of Dollars)
Three Months Ended
March 31
-------------------
2005 2004
--------- ---------
Free cash flow $ 90,971 $ 84,268
Capital expenditures 332,022 294,554
--------- ---------
Net cash provided by operating activities $ 422,993 $ 378,822
========= =========
Cox Communications, Inc.
Summary of Operating Statistics
----------------------------------------------------------------------
Customer Data
-----------------------------------
March 31 December 31 March 31
2005 2004 2004 (a)
----------- ----------- -----------
Customer Relationships
Basic Video Customers (b) 6,329,593 6,287,395 6,316,335
Non-Video Customers (c) 379,749 348,825 308,427
----------- ----------- -----------
Total Customer Relationships (d) 6,709,342 6,636,220 6,624,762
Revenue Generating Units
Basic Video Customers (b) 6,329,593 6,287,395 6,316,335
Advanced Services 6,670,261 6,286,827 5,434,149
----------- ----------- -----------
Total Revenue Generating Units 12,999,854 12,574,222 11,750,484
Video Homes Passed 10,611,858 10,567,166 10,376,293
Basic Video Penetration 59.6% 59.5% 60.9%
----------------------------------------------------------------------
Cox Digital Cable
-----------------------------------
March 31 December 31 March 31
2005 2004 2004 (a)
----------- ----------- -----------
Digital Cable Ready Homes Passed 10,541,555 10,494,634 10,239,378
Customers 2,504,715 2,410,216 2,218,172
Penetration of Customers to Basic
Video Customers 39.6% 38.3% 35.1%
Quarterly Net Additions 94,499 58,825 76,953
----------------------------------------------------------------------
High-Speed Internet Access
-----------------------------------
March 31 December 31 March 31
2005 2004 2004 (a)
----------- ----------- -----------
High-Speed Internet Access Ready
Homes Passed 10,521,594 10,466,947 10,242,078
Customers 2,748,659 2,571,246 2,148,592
Penetration of Customers to High-
Speed Internet Access
Ready Homes Passed 26.1% 24.6% 21.0%
Quarterly Net Additions 177,413 140,691 161,355
----------------------------------------------------------------------
Cox Digital Telephone
-----------------------------------
March 31 December 31 March 31
2005 2004 2004
----------- ----------- -----------
Telephony Ready Homes Passed 6,626,700 6,537,968 5,266,735
Customers 1,416,887 1,305,365 1,067,385
Penetration of Customers to
Telephony Ready Homes Passed 21.4% 20.0% 20.3%
Quarterly Net Additions 111,522 89,119 78,959
----------------------------------------------------------------------
Bundled Customers
-----------------------------------
March 31 December 31 March 31
2005 2004 2004 (a)
----------- ----------- -----------
Customers subscribing to two or
more services 2,968,770 2,777,588 2,405,734
Penetration of Bundled Customers to
Basic Video Customers 46.9% 44.2% 38.1%
----------------------------------------------------------------------
Comparative Operating Statistics
-----------------------------------
Three Months Ended
-----------------------
March 31 March 31
2005 2004
----------- -----------
Operating Cash Flow Margin 38.4% 36.8%
Capital Expenditures (thousands of
dollars) $332,022 $294,554
Operating Cash Flow per Basic Video
Customer (e) 103.26 89.80
Capital Expenditures per Basic
Video Customer (f) 52.46 46.63
----------------------------------------------------------------------
Free Cash Flow Calculation (g)
-----------------------------------
Three Months Ended
-----------------------
March 31 March 31
2005 2004
----------- -----------
(Thousands of Dollars)
Operating cash flow (g) $653,592 $567,233
Less capital expenditures (332,022) (294,554)
Plus cash decrease in working
capital (h) (86,516) (99,212)
----------- -----------
Operating free cash flow 235,054 173,467
Less cash paid for interest (104,480) (69,030)
Less cash paid for taxes (39,603) (20,169)
----------- -----------
Free cash flow $90,971 $84,268
=========== ===========
----------------------------------------------------------------------
(a) Core Video, Cox Digital Cable and High-Speed Internet Access
operating statistics as of March 31, 2004 have been adjusted for the
sale of certain cable systems in the second quarter of 2004.
(b) The number of customers who receive primary analog or digital
video service. Additional outlets are not counted.
(c) The number of customers who receive high-speed Internet access or
telephony service, but do not subscribe to video service.
(d) The number of customers who receive at least one level of
service, encompassing video, data and telephony services, without
regard to which service(s) customers purchase.
(e) Operating cash flow per basic video customer is calculated by
dividing operating cash flow for the respective period by basic video
customers as of the end of the period.
(f) Capital expenditures per basic video customer is calculated by
dividing capital expenditures for the respective period by basic
video customers as of the end of the period.
(g) Free cash flow and operating cash flow are not measures of
performance calculated in accordance with GAAP. For a reconciliation
of these non-GAAP measures to the most comparable GAAP measures, see
the information presented under "Reconciliation of Operating Cash
Flow to Operating Income" and "Reconciliation of Free Cash Flow to
Cash Provided by Operating Activities" in these financial tables.
(h) Cash change in working capital is calculated based on the cash
flow changes in current assets and liabilities, excluding changes
related to interest and taxes.
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