Cox Communications Announces Second Quarter and Year-to-Date 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. -- Demand for bundled bun·dle n. 1. A group of objects held together, as by tying or wrapping. 2. Something wrapped or tied up for carrying; a package. 3. Biology A cluster or strand of closely bound muscle or nerve fibers. services grows revenues 11%; high customer satisfaction scores outpace out·pace tr.v. out·paced, out·pac·ing, out·pac·es To surpass or outdo (another), as in speed, growth, or performance. outpace Verb [-pacing, competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. 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 and six months ended June June: see month. 30, 2005. "This quarter we surpassed a major milestone “Milemarker” redirects here. For the American indie rock band, see Milemarker (band). A milestone or kilometre sign is one of a series of numbered markers placed along a road at regular intervals, typically at the side of the road or in a median. : three million Cox customers now subscribe to Verb 1. subscribe to - receive or obtain regularly; "We take the Times every day" subscribe, take buy, purchase - obtain by purchase; acquire by means of a financial transaction; "The family purchased a new car"; "The conglomerate acquired a new company"; a 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. of two or more services," 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. "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 churn: see butter. 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 ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 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 The successful unauthorized breach of a security perimeter. See penetration test. of our basic video customer base. --Added 97,779 high-speed Internet See broadband. 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 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 and 12% 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. 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 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, 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 Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. that resulted from the push-down basis accounting applied pursuant to the December December: see month. 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 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). network in order to deliver additional services. During the second quarter of 2004, Cox recorded a $5.0 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta loss on the sale of certain small, non-clustered cable systems in Oklahoma Oklahoma (ōkləhō`mə), state in SW United States. It is bordered by Missouri and Arkansas (E); Texas, partially across the Red R. (S, W); New Mexico, across the narrow edge of the Oklahoma Panhandle (W); and Colorado and Kansas (N). , Kansas Kansas, state, United States Kansas (kăn`zəs), midwestern state occupying the center of the coterminous United States. It is bordered by Missouri (E), Oklahoma (S), Colorado (W), and Nebraska (N). , Texas and Arkansas Arkansas, river, United States Arkansas (ärkăn`zəs, är`kənsô'), river, c.1,450 mi (2,330 km) long, rising in the Rocky Mts., central Colo. , 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 The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of debt due to the redemption The liberation of an estate in real property from a mortgage. Redemption is the process by which land that has been mortgaged or pledged is bought back or reclaimed. It is accomplished through a payment of the debt owed or a fulfillment of the other conditions. of $62.3 million original principal amount at maturity of its exchangeable subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. 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 subordinated debenture An unsecured bond with a claim to assets that is subordinate to all existing and future debt. Thus, in the event that the issuer encounters financial difficulties and must be liquidated, all other claims must be satisfied before 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 (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. , (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 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 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 (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control (formerly known as Double C Technologies, LLC), which represents a 33% ownership interest in the entity; --the repayment Repayment The act of paying back a debt. Notes: Everyone has to repay their debts eventually. See also: Debt, Defeasance, Loan 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 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. 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 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 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, excluding per share data)
Three Months Ended
June 30
-------------------------------
2005 2004 Change
------------ ---------- -------
Revenues 1,776,653 1,595,240 11%
Costs and expenses
Cost of services (excluding
depreciation and amortization) 709,485 644,627 10%
Selling, general and administrative
expenses (excluding depreciation
and amortization) 375,051 334,576 12%
------------ ---------- -------
Total costs and expenses 1,084,536 979,203 11%
------------ ---------- -------
Operating cash flow 692,117 616,037 12%
Depreciation and amortization 463,204 397,114 17%
Loss on sale of cable systems - 5,021 (100%)
------------ ---------- -------
Operating income 228,913 213,902 7%
Interest expense (171,661) (95,591) 80%
Loss on derivative instruments, net (48) (15) -
(Loss) gain on investments, net (2,723) 2,326 -
Loss on extinguishment of debt (13,019) (7,006) 86%
Other, net (585) (258) 127%
------------ ---------- -------
Income before income taxes, minority
interest and equity in net losses
of affiliated companies 40,877 113,358 (64%)
Income tax expense 21,061 50,359 (58%)
------------ ---------- -------
Income before minority interest
and equity in net losses
of affiliated companies 19,816 62,999 (69%)
Minority interest, net of tax - 413 (100%)
Equity in net losses of affiliated
companies, net of tax of $1,016,
$436, $1,523 and $43, respectively (1,534) (730) 110%
------------ ---------- -------
Net income $ 18,282 $ 62,682 (71%)
============ ==========
Six Months Ended
June 30
------------------------------
2005 2004 Change
---------- ---------- --------
Revenues 3,480,713 3,135,597 11%
Costs and expenses
Cost of services (excluding
depreciation and amortization) 1,391,384 1,280,443 9%
Selling, general and administrative
expenses (excluding depreciation
and amortization) 743,620 671,884 11%
---------- ---------- --------
Total costs and expenses 2,135,004 1,952,327 9%
---------- ---------- --------
Operating cash flow 1,345,709 1,183,270 14%
Depreciation and amortization 897,400 789,180 14%
Loss on sale of cable systems - 5,021 (100%)
---------- ---------- --------
Operating income 448,309 389,069 15%
Interest expense (335,149) (192,203) 74%
Loss on derivative instruments, net (78) (54) 44%
(Loss) gain on investments, net (2,721) 29,135 (109%)
Loss on extinguishment of debt (13,019) (7,006) 86%
Other, net (367) (1,767) (79%)
---------- ---------- --------
Income before income taxes, minority
interest and equity in net losses
of affiliated companies 96,975 217,174 (55%)
Income tax expense 49,375 96,065 (49%)
---------- ---------- --------
Income before minority interest
and equity in net losses
of affiliated companies 47,600 121,109 (61%)
Minority interest, net of tax - (572) (100%)
Equity in net losses of affiliated
companies, net of tax of $1,016,
$436, $1,523 and $43, respectively (2,306) (152) -
---------- ---------- --------
Net income $ 45,294 $ 120,385 (62%)
========== ==========
Cox Communications, Inc.
Consolidated Balance Sheets
(Unaudited)
(Thousands of Dollars)
June 30 December 31
2005 2004
----------- -----------
Assets
Current assets
Cash $ 85,761 $ 76,339
Accounts and notes receivable,
less allowance for doubtful
accounts of $24,605 and $26,482 421,204 394,540
Other current assets 191,859 136,386
----------- -----------
Total current assets 698,824 607,265
----------- -----------
Net plant and equipment 7,771,768 7,942,699
Investments 1,212,010 1,171,647
Intangible assets 19,284,204 19,329,452
Goodwill 106,889 106,889
Other noncurrent assets 70,787 95,789
----------- -----------
Total assets $29,144,482 $29,253,741
=========== ===========
Liabilities and shareholders' equity
Current liabilities
Accounts payable and accrued expenses $ 880,507 $ 797,553
Other current liabilities 282,767 339,742
Cash obligation to untendered shareholders 10,853 483,603
Current portion of long-term debt 54,922 59,962
Amounts due to Cox Enterprises, Inc. (CEI) 92,588 5,573
----------- -----------
Total current liabilities 1,321,637 1,686,433
----------- -----------
Deferred income taxes 8,284,725 8,326,574
Other noncurrent liabilities 127,477 148,733
Long-term debt, less current portion 13,236,536 12,965,773
----------- -----------
Total liabilities 22,970,375 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 4,804,645 4,802,117
Retained earnings 1,363,512 1,318,218
Accumulated other comprehensive income 112 55
----------- -----------
Total shareholders' equity 6,174,107 6,126,228
----------- -----------
Total liabilities and
shareholders' equity $29,144,482 $29,253,741
=========== ===========
Cox Communications, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(Thousands of Dollars)
Six Months
Ended June 30
-------------------
2005 2004
--------- ---------
Cash flows from operating activities
Net income $ 45,294 $ 120,385
Adjustments to reconcile net income to net cash
provided by
operating activities:
Depreciation and amortization 897,400 789,180
Loss on sale of cable system - 5,021
Deferred income taxes (39,914) 53,333
Loss on derivative instruments, net 78 54
Loss on extinguishment of debt 13,019 7,006
Loss (gain) on investments, net 2,721 (29,135)
Minority interest, net of tax - 572
Equity in net losses of affiliated companies,
net of tax 2,306 152
Other, net 1,651 6,181
Increase in accounts and notes receivable (26,664) (9,510)
Increase in other assets (49,994) (17,040)
Increase (decrease) in accounts payable and
accrued expenses 25,129 (55,019)
(Decrease) increase in taxes payable (39,188) 18,178
Decrease in other liabilities (42,764) (31,938)
--------- ---------
Net cash provided by operating activities 789,074 857,420
--------- ---------
Cash flows from investing activities
Capital expenditures (661,183) (617,869)
Investments in affiliated companies (43,554) (15,827)
Proceeds from the sale and exchange of investments - 70,230
Increase in amounts due to CEI - (10,871)
Proceeds from the sale of cable systems - 53,076
Other, net 15,394 12,312
--------- ---------
Net cash used in investing activities (689,343) (508,949)
--------- ---------
Cash flows from financing activities
Revolving credit facilities borrowings, net 575,000 -
Commercial paper repayments, net 111,938 (266,308)
Repayment of debt (460,021) (72,549)
Payments to acquire Cox's former public stock (472,750) -
Proceeds from exercise of stock options - 2,154
Increase (decrease) in amounts due to CEI 87,015 (3,980)
Other, net 68,509 (16,261)
--------- ---------
Net cash used in financing activities (90,309) (356,944)
--------- ---------
Net increase (decrease) in cash 9,422 (8,473)
Cash at beginning of period 76,339 83,841
--------- ---------
Cash at end of period $ 85,761 $ 75,368
========= =========
Cox Communications, Inc.
Reconciliation of Operating Cash Flow to Operating Income
(Unaudited)
(Thousands of Dollars)
Three Months Ended Six Months Ended
June 30 June 30
------------------- ---------------------
2005 2004 2005 2004
--------- --------- ---------- ----------
Operating cash flow $ 692,117 $ 616,037 $1,345,709 $1,183,270
Depreciation and
amortization (463,204) (397,114) (897,400) (789,180)
Loss on sale of cable system - (5,021) - (5,021)
--------- --------- ---------- ----------
Operating income $ 228,913 $ 213,902 $ 448,309 $ 389,069
========= ========= ========== ==========
Cox Communications, Inc.
Reconciliation of Free Cash Flow to Cash
Provided by Operating Activites
(Unaudited)
(Thousands of Dollars)
Three Months Ended Six Months Ended
June 30 June 30
----------------- -----------------
2005 2004 2005 2004
-------- -------- -------- --------
Free cash flow $ 36,920 $155,283 $127,891 $239,551
Capital expenditures 329,161 323,315 661,183 617,869
-------- -------- -------- --------
Net cash provided by operating
activities $366,081 $478,598 $789,074 $857,420
======== ======== ======== ========
Cox Communications, Inc.
Summary of Operating Statistics
----------------------------------------------------------------------
Customer Data
-------------
June 30 March 31 June 30
2005 2005 2004(a)
----------- ----------- -----------
Customer Relationships
Basic Video Customers (b) 6,283,122 6,329,593 6,262,688
Non-Video Customers (c) 401,783 379,749 322,152
----------- ----------- -----------
Total Customer Relationships (d) 6,684,905 6,709,342 6,584,840
Revenue Generating Units
Basic Video Customers (b) 6,283,122 6,329,593 6,262,688
Advanced Services 6,905,831 6,670,261 5,658,282
----------- ----------- -----------
Total Revenue Generating Units 13,188,953 12,999,854 11,920,970
Video Homes Passed 10,671,040 10,611,858 10,441,754
Basic Video Penetration 58.9% 59.6% 60.0%
----------------------------------------------------------------------
Cox Digital Cable
-----------------
June 30 March 31 June 30
2005 2005 2004(a)
----------- ----------- -----------
Digital Cable Ready Homes Passed 10,600,123 10,541,555 10,381,012
Customers 2,553,483 2,504,715 2,278,523
Penetration of Customers to Basic
Video Customers 40.6% 39.6% 36.4%
Quarterly Net Additions 48,768 94,499 60,351
----------------------------------------------------------------------
High-Speed Internet Access
--------------------------
June 30 March 31 June 30
2005 2005 2004(a)
----------- ----------- -----------
High-Speed Internet Access Ready
Homes Passed 10,582,112 10,521,594 10,343,363
Customers 2,846,438 2,748,659 2,246,109
Penetration of Customers to
High-Speed Internet Access
Ready Homes Passed 26.9% 26.1% 21.7%
Quarterly Net Additions 97,779 177,413 97,517
----------------------------------------------------------------------
Cox Digital Telephone
---------------------
June 30 March 31 June 30
2005 2005 2004
----------- ----------- -----------
Telephony Ready Homes Passed 6,838,291 6,626,700 5,461,632
Customers 1,505,910 1,416,887 1,133,650
Penetration of Customers to
Telephony Ready Homes Passed 22.0% 21.4% 20.8%
Quarterly Net Additions 89,023 111,522 66,265
----------------------------------------------------------------------
Bundled Customers
-----------------
June 30 March 31 June 30
2005 2005 2004(a)
----------- ----------- -----------
Customers subscribing to two or
more services 3,055,014 2,968,770 2,473,373
Penetration of Bundled Customers
to Basic Video Customers 48.6% 46.9% 39.5%
Cox Communications, Inc.
Summary of Operating Statistics - Continued
---------------------------------------------------------------------
Comparative Operating
Statistics
------------
Three Months Ended Six Months Ended
------------------- -----------------------
June 30 June 30 June 30 June 30
2005 2004 2005 2004
--------- --------- ----------- -----------
Operating Cash Flow Margin 39.0% 38.6% 38.7% 37.7%
Capital Expenditures
(thousands of dollars) $329,161 $323,315 $661,183 $617,869
Operating Cash Flow per
Basic Video Customer (e) 110.15 98.37 214.18 188.94
Capital Expenditures per
Basic Video Customer (f) 52.39 51.63 105.23 98.66
---------------------------------------------------------------------
Free Cash Flow
Calculation (g)
-----------------
Three Months Ended Six Months Ended
------------------- -----------------------
June 30 June 30 June 30 June 30
2005 2004 2005 2004
--------- --------- ----------- -----------
(Thousands of Dollars)
Operating cash flow (g) $692,117 $616,037 $1,345,709 $1,183,270
Less capital
expenditures (329,161) (323,315) (661,183) (617,869)
Plus cash decrease in
working capital (h) (41,274) (13,046) (127,790) (112,258)
--------- --------- ----------- -----------
Operating free cash flow 321,682 279,676 556,736 453,143
Less cash paid for
interest (194,332) (119,581) (298,812) (188,611)
Less cash paid for taxes (90,430) (4,812) (130,033) (24,981)
--------- --------- ----------- -----------
Free cash flow (g) $36,920 $155,283 $127,891 $239,551
========= ========= =========== ===========
---------------------------------------------------------------------
(a) Core Video, Cox Digital Cable and High-Speed Internet Access
operating statistics as of June 30, 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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