##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2005
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number 1-6590
 
 COMMUNICATIONS
 Cox Communications, Inc.
 (Exact name of registrant as specified in its charter)
 Delaware(State or other jurisdiction of incorporation or organization)
    
    58-2112281(I.R.S. Employer Identification No.)
 1400 Lake Hearn Drive, Atlanta, Georgia(Address of principal executive offices)
    
    30319(Zip Code)
  
 þ o
 þ o




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Cox Communications, Inc.
 Form 10-Q
For the Three and Six Months Ended June 30, 2005
 Table of Contents
 PagePart I  Financial InformationItem 1. Condensed Consolidated Financial Statements
    
    
    2Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    30Item 4. Controls and Procedures
    
    
    31Part II  Other InformationItem 1. Legal Proceedings
    
    
    31Item 2.
Changes in Securities, Use of Proceeds and Issuer Purchases of Equity
Securities
    
    
    31Item 3. Defaults Upon Senior Securities
    
    
    32Item 4. Submission of Matters to a Vote of Security Holders
    
    
    32Item 5. Other Information
    
    
    32Item 6. Exhibits
    
    
    32EX-10.1 Cox Enterprises 2005 Unit Appreciation PlanEX-10.2 Form of Unit Appreciation Plan Summary StatementEX-21 SUBSIDIARIES OF COX COMMUNICATIONS, INC.EX-31.1 302 Certification of CEOEX-31.2 302 Certification of CFOEX-32.1 906 Certification of CEO and CFO
  Preliminary Note




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##### Table of Contents



Part I  Financial Information
 
 Item 1. Condensed Consolidated Financial Statements
 Cox Communications, Inc.
 Condensed Consolidated Balance Sheets
 June 30
    
    December 312005
    
    2004(unaudited)(Thousands of Dollars)AssetsCurrent assetsCash
    
    $
    85,761
    
    
    $
    76,339Accounts and notes receivable, less allowance for doubtful
accounts of $24,605 and $26,482
    
    
    421,204
    
    
    
    394,540Other current assets
    
    
    191,859
    
    
    
    136,386Total current assets
    
    
    698,824
    
    
    
    607,265Net plant and equipment
    
    
    7,771,768
    
    
    
    7,942,699Investments
    
    
    1,212,010
    
    
    
    1,171,647Intangible assets
    
    
    19,284,204
    
    
    
    19,329,452Goodwill
    
    
    106,889
    
    
    
    106,889Other noncurrent assets
    
    
    70,787
    
    
    
    95,789Total assets
    
    $
    29,144,482
    
    
    $
    29,253,741Liabilities
and Shareholders equityCurrent liabilitiesAccounts payable and accrued expenses
    
    $
    880,507
    
    
    $
    797,553Other current liabilities
    
    
    282,767
    
    
    
    339,742Cash obligation to untendered shareholders
    
    
    10,853
    
    
    
    483,603Current portion of long-term debt
    
    
    54,922
    
    
    
    59,962Amounts due to Cox Enterprises, Inc. (CEI)
    
    
    92,588
    
    
    
    5,573Total current liabilities
    
    
    1,321,637
    
    
    
    1,686,433Deferred income taxes
    
    
    8,284,725
    
    
    
    8,326,574Other noncurrent liabilities
    
    
    127,477
    
    
    
    148,733Long-term debt, less current portion
    
    
    13,236,536
    
    
    
    12,965,773Total liabilities
    
    
    22,970,375
    
    
    
    23,127,513Commitments and contingencies (Note 11)Shareholders equityClass A common stock, $0.01 par value; 671,000,000 shares
authorized; shares issued and outstanding: 556,170,238
    
    
    5,562
    
    
    
    5,562Class C common stock, $0.01 par value; 62,000,000 shares
authorized; shares issued and outstanding: 27,597,792
    
    
    276
    
    
    
    276Additional paid-in capital
    
    
    4,804,645
    
    
    
    4,802,117Retained earnings
    
    
    1,363,512
    
    
    
    1,318,218Accumulated other comprehensive income
    
    
    112
    
    
    
    55Total shareholders equity
    
    
    6,174,107
    
    
    
    6,126,228Total liabilities and shareholders equity
    
    $
    29,144,482
    
    
    $
    29,253,741
  2




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##### Table of Contents



Cox Communications, Inc.
 Condensed Consolidated Statements of Operations
 Three Months
    
    Six MonthsEnded June 30
    
    Ended June 302005
    
    2004
    
    2005
    
    2004(unaudited)(Thousands of Dollars)Revenues
    
    $
    1,776,653
    
    
    $
    1,595,240
    
    
    $
    3,480,713
    
    
    $
    3,135,597Costs and expensesCost of services (excluding depreciation and amortization)
    
    
    709,485
    
    
    
    644,627
    
    
    
    1,391,384
    
    
    
    1,280,443Selling, general and administrative expenses (excluding depreciation and amortization)
    
    
    375,051
    
    
    
    334,576
    
    
    
    743,620
    
    
    
    671,884Depreciation and amortization
    
    
    463,204
    
    
    
    397,114
    
    
    
    897,400
    
    
    
    789,180Loss on sale of cable systems
    
    
    
    
    
    
    5,021
    
    
    
    
    
    
    
    5,021Operating income
    
    
    228,913
    
    
    
    213,902
    
    
    
    448,309
    
    
    
    389,069Interest expense
    
    
    (171,661
    )
    
    
    (95,591
    )
    
    
    (335,149
    )
    
    
    (192,203
    )Loss on derivative instruments, net
    
    
    (48
    )
    
    
    (15
    )
    
    
    (78
    )
    
    
    (54
    )(Loss) gain on investments, net
    
    
    (2,723
    )
    
    
    2,326
    
    
    
    (2,721
    )
    
    
    29,135Loss on extinguishment of debt
    
    
    (13,019
    )
    
    
    (7,006
    )
    
    
    (13,019
    )
    
    
    (7,006
    )Other, net
    
    
    (585
    )
    
    
    (258
    )
    
    
    (367
    )
    
    
    (1,767
    )Income before income taxes,
minority interest and equity in net losses of affiliated companies
    
    
    40,877
    
    
    
    113,358
    
    
    
    96,975
    
    
    
    217,174Income tax expense
    
    
    21,061
    
    
    
    50,359
    
    
    
    49,375
    
    
    
    96,065Income
before minority interest and equity in net losses of affiliated companies
    
    
    19,816
    
    
    
    62,999
    
    
    
    47,600
    
    
    
    121,109Minority interest, net of tax
    
    
    
    
    
    
    413
    
    
    
    
    
    
    
    (572
    )Equity in net losses of affiliated companies, net of tax of
$1,016, $436, $1,523 and $43, respectively
    
    
    (1,534
    )
    
    
    (730
    )
    
    
    (2,306
    )
    
    
    (152
    )Net income
    
    $
    18,282
    
    
    $
    62,682
    
    
    $
    45,294
    
    
    $
    120,385
  3




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##### Table of Contents



Cox Communications, Inc.
 Condensed Consolidated Statement of Shareholders Equity
 AccumulatedAdditional
    
    
    
    
    
    OtherCommon Stock
    
    Paid-in
    
    Retained
    
    Comprehensive
    
    
    
    
    
ComprehensiveClass A
    
    Class C
    
    Capital
    
    Earnings
    
    Income
    
    Total
    
    Income(unaudited)(Thousands of Dollars)December 31, 2004
    
    $
    5,562
    
    
    $
    276
    
    
    $
    4,802,117
    
    
    $
    1,318,218
    
    
    $
    55
    
    
    $
    6,126,228Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,294
    
    
    
    
    
    
    
    45,294
    
    
    $
    45,294Expenses incurred pursuant to the going-private
transaction paid by CEI on behalf of Cox
    
    
    
    
    
    
    
    
    
    
    2,528
    
    
    
    
    
    
    
    
    
    
    
    2,528Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    57
    
    
    
    57
    
    
    
    57Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    45,351June 30, 2005
    
    $
    5,562
    
    
    $
    276
    
    
    $
    4,804,645
    
    
    $
    1,363,512
    
    
    $
    112
    
    
    $
    6,174,107
  4




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Cox Communications, Inc.
 Condensed Consolidated Statements of Cash Flows
 Six MonthsEnded June 302005
    
    2004(unaudited)(Thousands of Dollars)Cash flows from operating activitiesNet income
    
    $
    45,294
    
    
    $
    120,385Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation and amortization
    
    
    897,400
    
    
    
    789,180Loss on sale of cable system
    
    
    
    
    
    
    5,021Deferred income taxes
    
    
    (39,914
    )
    
    
    53,333Loss on derivative instruments, net
    

    
    78
    
    
    
    54Loss on extinguishment of debt
    
    
    13,019
    
    
    
    7,006Loss (gain) on investments, net
    
    
    2,721
    
    
    
    (29,135
    )Minority interest, net of tax
    
    
    
    
    
    
    572Equity in net losses of affiliated companies, net of tax
    
    
    2,306
    
    
    
    152Other, net
    
    
    1,651
    
    
    
    6,181Increase 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
    )
    
    
    18,178Decrease in other liabilities
    
    
    (42,764
    )
    
    
    (31,938
    )Net cash provided by operating activities
    
    
    789,074
    
    
    
    857,420Cash flows from investing activitiesCapital expenditures
    
    
    (661,183
    )
    
    
    (617,869
    )Investments in affiliated companies
    
    
    (43,554
    )
    
    
    (15,827
    )Proceeds from the sale and exchange of investments
    
    
    
    
    
    
    70,230Increase in amounts due from CEI
    
    
    
    
    
    
    (10,871
    )Proceeds from the sale of cable systems
    
    
    
    
    
    
    53,076Other, net
    
    
    15,394
    
    
    
    12,312Net cash used in investing activities
    
    
    (689,343
    )
    
    
    (508,949
    )Cash flows from financing activitiesRevolving credit facilities borrowings, net
    
    
    575,000
    
    
    
    Commercial paper borrowings (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
    
    
    
    
    
    
    2,154Increase (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
    
    
    
    83,841Cash at end of period
    
    $
    85,761
    
    
    $
    75,368
  5




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##### Table of Contents



Cox Communications, Inc.
 Notes to Condensed Consolidated Financial Statements (Unaudited)
 For the Three and Six Months Ended June 30, 2005
 1. Organization and Basis of Presentation
    2. Summary of Significant Accounting Policies
  Use of Estimates
  Stock Compensation Plans
  6




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Cox Communications, Inc.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  Continued
 Accounting for Stock Issued to Employees
 Accounting
for Stock-Based Compensation  Transition and Disclosure Accounting for
Stock-Based Compensation
 Three Months EndedJune 302005
    
    2004Net income, as reported
    

    $
    18,282
    
    
    $
    62,682Add: Stock-based compensation, as reported
    
    
    
    
    
    
    1,319Deduct: Total stock-based compensation
determined under fair value based method
for all awards, net of tax
    
    
    (50
    )
    
    
    (8,337
    )Pro forma net income
    
    $
    18,232
    
    
    $
    55,664
 Six Months EndedJune 302005
    
    2004Net income, as reported
    
    $
    45,294
    
    
    $
    120,385Add: Stock-based compensation, as reported
    
    
    
    
    
    
    2,024Deduct: Total stock-based compensation
determined under fair value based method
for all awards, net of tax
    
    
    (5,854
    )
    
    
    (15,101
    )Pro forma net income
    
    $
    39,440
    
    
    $
    107,308
 Other Compensation Plans
  7




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##### Table of Contents



Cox Communications, Inc.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  Continued
     Recently Issued Accounting Pronouncements
 Accounting for Electronic
Equipment Waste Obligations
 Determining Whether a General
Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When
the Limited Partners Have Certain Rights
 Accounting Changes and Error Correctionsa
replacement of APB Opinion No. 20 and FASB Statement No. 3 Accounting Changes Reporting Accounting Changes in
Interim Financial Statements
 8




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Cox Communications, Inc.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  Continued
  Accounting for Conditional Asset
Retirement Obligations . Accounting for Asset Retirement Obligations,
 Exchanges of Nonmonetary Assetsan amendment
of APB Opinion No. 29 Accounting for
Nonmonetary Transactions
 Share-Based Payment
 3. Going-Private Transaction
   9




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Cox Communications, Inc.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  Continued
  4. Investments
 June 30
    
    December 312005
    
    2004(Thousands of Dollars)Investments stated at fair value:Available-for-sale
    
    $
    433
    
    
    $
    339Derivative instruments
    
    
    152
    
    
    
    939Equity method investments
    
    
    1,200,346
    
    
    
    1,159,290Investments stated at cost
    
    
    11,079
    
    
    
    11,079Total investments
    
    $
    1,212,010
    
    
    $
    1,171,647
 Investments Stated at Fair Value
   Three Months Ended
    
    Six Months EndedJune 30
    
    June 302005
    
    2004
    
    2005
    
    2004(Thousands of Dollars)Realized gains
    
    $
    
    
    
    $
    2,326
    
    
    $
    2
    
    
    $
    29,135Realized
losses
    
    
    2,723
    
    
    
    
    
    
    
    2,723
    
    
    
    
  Sprint Corporation.
  10




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##### Table of Contents



Cox Communications, Inc.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  Continued
 Equity Method Investments
 TV Works, LLC .
 Discovery Communications, Inc.
  Other
   5. Intangible Assets
 Goodwill and Other Intangible Assets
 Recognition of Customer Relationship Intangible Assets Acquired in a Business Combination
 Business
Combinations
 11




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##### Table of Contents



Cox Communications, Inc.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  Continued
       June 30, 2005
    
    December 31, 2004Gross
    
    
    
    
    
    Net
    
    Gross
    
    
    
    
    
    NetCarrying
    
    Accumulated
    
    Carrying
    
    Carrying
    
    Accumulated
    
    CarryingValue
    
    Amortization
    
    Value
    
    Value
    
    Amortization
    
    Value(Thousands of Dollars)Intangible assets subject
to amortization
    
    $
    669,274
    
    
    $
    85,297
    
    
    $
    583,976
    
    
    $
    659,967
    
    
    $
    30,743
    
    
    $
    629,224Trade name
    
    
    
    
    
    
    
    
    
    
    380,844
    
    
    
    
    
    
    
    
    
    
    
    380,844Franchise value
    
    
    
    
    
    
    
    
    
    
    18,319,384
    
    
    
    
    
    
    
    
    
    
    
    18,319,384Intangible assets
    
    
    
    
    
    
    
    
    
    $
    19,284,204
    
    
    
    
    
    
    
    
    
    
    
    19,329,452Goodwill
    
    
    
    
    
    
    
    
    
    $
    106,889
    
    
    
    
    
    
    
    
    
    
    $
    106,889
 12




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Cox Communications, Inc.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  Continued
 6. Debt
 June 30
    
    December 312005
    
    2004(Thousands of Dollars)Revolving credit facilities
    
    $
    2,225,000
    
    
    $
    1,650,000Commercial paper
    
    
    210,933
    
    
    
    96,142Term loan
    
    
    2,000,000
    
    
    
    2,000,000Medium-term notes
    
    
    264,463
    
    
    
    264,429Notes and debentures
    
    
    8,370,085
    
    
    
    8,765,359Exchangeable subordinated debentures
    
    
    
    
    
    
    19,546Capitalized lease obligations
    
    
    200,515
    
    
    
    209,576Other
    
    
    20,462
    
    
    
    20,68313,291,458
    
    
    
    13,025,735Less current portion
    
    
    54,922
    
    
    
    59,962Total long-term debt
    
    $
    13,236,536
    
    
    $
    12,965,773
  Revolving Credit Facilities
  Exchangeable Subordinated Debentures
  Interest Rate Swaps
  13




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Cox Communications, Inc.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  Continued
   June 30
    
    December 312005
    
    2004Notional amount (in thousands)
    
    $
    1,000,000
    
    
    $
    1,375,000Weighted average fixed interest rate received
    
    
    7.35
    %
    
    
    7.35
    %Weighted average floating interest rate paid
    
    
    5.35
    %
    
    
    4.37
    %Maturity
    
    
    2005  2009
    
    
    
    2005  2009
  7. Derivative Instruments and Hedging Activities
    14




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Cox Communications, Inc.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  Continued
 short-cut
method
 8. Transactions with Affiliated Companies
  (Thousands of Dollars)Intercompany due to CEI, December 31, 2004
    
    $
    5,573Cash transferred to CEI
    
    
    (211,002
    )Net operating expense reimbursements
    
    
    298,017Intercompany due to CEI, June 30, 2005
    
    $
    92,588
 9. Retirement Plans
  Three Months Ended June 302005
    
    2004Pension
    
    Other
    
    Pension
    
    OtherBenefits
    
    Benefits
    
    Benefits
    
    Benefits(Thousands of Dollars)Service cost
    
    $
    8,972
    
    
    $
    1,576
    
    
    $
    8,714
    
    
    $
    1,404Interest cost
    
    
    6,141
    
    
    
    951
    
    
    
    5,650
    
    
    
    916Expected return on plan
assets
    
    
    (7,087
    )
    
    
    (415
    )
    
    
    (7,408
    )
    
    
    (445
    )Prior service cost
amortization
    
    
    35
    
    
    
    
    
    
    
    59
    
    
    
    Actuarial loss amortization
    
    
    438
    
    
    
    17
    
    
    
    1,037
    
    
    
    27Net periodic benefit
cost
    
    $
    8,499
    
    
    $
    2,129
    
    
    $
    8,052
    
    
    $
    1,902
 15




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\

Cox Communications, Inc.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  Continued
 Six Months Ended June 302005
    
    2004Pension
    
    Other
    
    Pension
    
    OtherBenefits
    
    Benefits
    
    Benefits
    
    Benefits(Thousands of Dollars)Service cost
    
    $
    17,944
    
    
    $
    3,152
    
    
    $
    15,907
    
    
    $
    2,742Interest cost
    
    
    12,282
    
    
    
    1,902
    
    
    
    10,921
    
    
    
    1,693Expected return on plan
assets
    
    
    (14,174
    )
    
    
    (831
    )
    
    
    (13,199
    )
    
    
    (746
    )Prior service cost
amortization
    
    
    68
    
    
    
    
    
    
    
    118
    
    
    
    Actuarial loss amortization
    
    
    795
    
    
    
    27
    
    
    
    1,932
    
    
    
    102Net periodic benefit
cost
    
    $
    16,915
    
    
    $
    4,250
    
    
    $
    15,679
    
    
    $
    3,791
  10. Supplemental Financial Information
 June 30
    
    December 312005
    
    2004(Thousands of Dollars)Other current assetsInventory
    
    $
    95,416
    
    
    $
    68,221Prepaid assets
    
    
    59,767
    
    
    
    31,974Deferred income tax asset
    
    
    33,988
    
    
    
    33,988Other
    
    
    2,688
    
    
    
    2,203Total other current assets
    
    $
    191,859
    
    
    $
    136,386Other current liabilitiesDeposits and advances
    
    $
    110,867
    
    
    $
    103,800Income tax payable
    
    
    82,529
    
    
    
    121,269Other
    
    
    89,371
    
    
    
    114,673Total other current liabilities
    
    $
    282,767
    
    
    $
    339,742
 Six Months EndedJune 302005
    
    2004(Thousands of Dollars)Significant non-cash transactionsConversion of Series A preferred stock to
Class A common stock
    
    $
    
    
    
    $
    365,635Additional cash flow informationCash paid for interest
    
    $
    298,812
    
    
    $
    188,611Cash paid for income taxes
    
    
    130,033
    
    
    
    24,981
 11. Commitments and Contingencies
  16




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Cox Communications, Inc.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  Continued
     17




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##### Table of Contents



Cox Communications, Inc.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  Continued
    18




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##### Table of Contents



Cox Communications, Inc.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  Continued
     19




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Cox Communications, Inc.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  Continued
       12. Other
  20




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Results of Operations
 Three Months Ended June 30, 2005 Compared with Three Months Ended June 30, 2004
  Three Months EndedJune 302005
    
    2004
    
    $ Change
    
    % Change(Thousands of Dollars)Revenues
    
    $
    1,776,653
    
    
    $
    1,595,240
    
    
    $
    181,413
    
    
    
    11
    %Cost of services
    
    
    709,485
    
    
    
    644,627
    
    
    
    64,858
    
    
    
    10
    %Selling, general and
administrative expenses
    
    
    375,051
    
    
    
    334,576
    
    
    
    40,475
    
    
    
    12
    %Depreciation and amortization
    
    
    463,204
    
    
    
    397,114
    
    
    
    66,090
    
    
    
    17
    %Loss on sale of cable systems
    
    
    
    
    
    
    5,021
    
    
    
    (5,021
    )
    
    
    (100
    %)Operating income
    
    
    228,913
    
    
    
    213,902
    
    
    
    15,011
    
    
    
    7
    %Interest expense
    
    
    (171,661
    )
    
    
    (95,591
    )
    
    
    (76,070
    )
    
    
    80
    %Loss on derivative instruments, net
    
    
    (48
    )
    
    
    (15
    )
    
    
    (33
    )
    
    NM(Loss) gain on investments, net
    
    
    (2,723
    )
    
    
    2,326
    
    
    
    (5,049
    )
    
    NMLoss on extinguishment of debt
    
    
    (13,019
    )
    
    
    (7,006
    )
    
    
    (6,013
    )
    
    
    86
    %Other, net
    
    
    (585
    )
    
    
    (258
    )
    
    
    (327
    )
    
    
    127
    %Income tax expense
    
    
    21,061
    
    
    
    50,359
    
    
    
    (29,298
    )
    
    
    (58
    %)Minority interest, net of tax
    
    
    
    
    
    
    413
    
    
    
    (413
    )
    
    
    (100
    %)Equity in net losses of affiliated
companies, net of tax
    
    
    (1,534
    )
    
    
    (730
    )
    
    
    (804
    )
    
    
    110
    %Net income
    
    $
    18,282
    
    
    $
    62,682
    
    
    $
    (44,400
    )
    
    
    (71
    %)
 
  Revenues
  Three Months Ended June 302005
    
    % of Total
    
    2004
    
    % of Total
    
    $ Change
    
    % Change(Thousands of Dollars)ResidentialVideo
    
    $
    1,011,344
    
    
    
    57
    %
    
    $
    960,914
    
    
    
    60
    %
    
    $
    50,430
    
    
    
    5
    %Data
    
    
    334,372
    
    
    
    19
    %
    
    
    270,545
    
    
    
    17
    %
    
    
    63,827
    
    
    
    24
    %Telephony
    
    
    183,325
    
    
    
    10
    %
    
    
    144,111
    
    
    
    9
    %
    
    
    39,214
    
    
    
    27
    %Other
    
    
    23,854
    
    
    
    1
    %
    
    
    26,336
    
    
    
    2
    %
    
    
    (2,482
    )
    
    
    (9
    %)Total
residential
    
    
    1,552,895
    
    
    
    87
    %
    
    
    1,401,906
    
    
    
    88
    %
    
    
    150,989
    
    
    
    11
    %Commercial
    
    
    105,082
    
    
    
    6
    %
    
    
    86,338
    
    
    
    5
    %
    
    
    18,744
    
    
    
    22
    %Advertising
    
    
    118,676
    
    
    
    7
    %
    
    
    106,996
    
    
    
    7
    %
    
    
    11,680
    
    
    
    11
    %Total revenues
    
    $
    1,776,653
    
    
    
    100
    %
    
    $
    1,595,240
    
    
    
    100
    %
    
    $
    181,413
    
    
    
    11
    %
  21




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##### Table of Contents




    
    a 22% increase in customers for advanced services, including digital cable, high-speed
Internet access and telephony customers;
    
    an increase in basic cable rates resulting from increased programming costs and
inflation, as well as increased channel availability; and
    
    an increase in commercial broadband customers.
  
    
    ended the quarter with approximately 6.3 million basic video customers, consistent with
the quarter ended June 30, 2004.
    
    added 48,768 digital cable customers, which contributed to year-over-year growth of
12%.
    
    added 97,779 high-speed Internet customers, which contributed to year-over-year growth
of 27%.
    
    added 89,023 telephony customers, which contributed to year-over-year growth of 33%.
   Costs and expenses (cost of services and selling, general and administrative expenses)
  Three Months EndedJune 302005
    
    2004
    
    $ Change
    
    % Change(Thousands of Dollars)Cost of servicesProgramming costs
    
    $
    351,949
    
    
    $
    320,725
    
    
    $
    31,224
    
    
    
    10
    %Other cost of services
    
    
    357,536
    
    
    
    323,902
    
    
    
    33,634
    
    
    
    10
    %Total cost of services
    
    
    709,485
    
    
    
    644,627
    
    
    
    64,858
    
    
    
    10
    %Selling, general and administrativeMarketing
    
    
    90,912
    
    
    
    83,431
    
    
    
    7,481
    
    
    
    9
    %General and administrative
    
    
    284,139
    
    
    
    251,145
    
    
    
    32,994
    
    
    
    13
    %Total selling, general and
administrative
    
    
    375,051
    
    
    
    334,576
    
    
    
    40,475
    
    
    
    12
    %Total costs and expenses
    
    $
    1,084,536
    
    
    $
    979,203
    
    
    $
    105,333
    
    
    
    11
    %
  22




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##### Table of Contents




    
    a $33.0 million increase in general and administrative expenses primarily related to
increased salaries and benefits, as well as an increase in the cost of providing
healthcare benefits; and,
    
    a $7.5 million increase in marketing expense primarily due to additional marketing
related to new video products, as well as a 14% increase in costs associated with Cox
Media, Coxs advertising sales business.
  Depreciation and amortization
  Loss on sale of cable systems
  Interest expense
  (Loss) gain on investments, net
  23




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##### Table of Contents



Loss on extinguishment of debt
  Income tax expense
  Equity in net losses of affiliated companies, net of tax
  Net income
  Six Months Ended June 30, 2005 Compared with Six Months Ended June 30, 2004
  Six Months EndedJune 302005
    
    2004
    
    $ Change
    
    % Change(Thousands of Dollars)Revenues
    
    $
    3,480,713
    
    
    $
    3,135,597
    
    
    $
    345,116
    
    
    
    11
    %Cost of services
    
    
    1,391,384
    
    
    
    1,280,443
    
    
    
    110,941
    
    
    
    9
    %Selling, general and
administrative expenses
    
    
    743,620
    
    
    
    671,884
    
    
    
    71,736
    
    
    
    11
    %Depreciation and amortization
    
    
    897,400
    
    
    
    789,180
    
    
    
    108,220
    
    
    
    14
    %Loss on sale of cable system
    
    
    
    
    
    
    5,021
    
    
    
    (5,021
    )
    
    
    (100
    %)Operating income
    
    
    448,309
    
    
    
    389,069
    
    
    
    59,240
    
    
    
    15
    %Interest expense
    
    
    (335,149
    )
    
    
    (192,203
    )
    
    
    (142,946
    )
    
    
    74
    %Loss on derivative
instruments, net
    
    
    (78
    )
    
    
    (54
    )
    
    
    (24
    )
    
    
    44
    %(Loss) gain on investments, net
    
    
    (2,721
    )
    
    
    29,135
    
    
    
    (31,856
    )
    
    
    (109
    %)Loss on extinguishment of debt
    
    
    (13,019
    )
    
    
    (7,006
    )
    
    
    (6,013
    )
    
    
    86
    %Other, net
    
    
    (367
    )
    
    
    (1,767
    )
    
    
    1,400
    
    
    
    (79
    %)Income tax expense
    
    
    49,375
    
    
    
    96,065
    
    
    
    (49,690
    )
    
    
    (49
    %)Minority interest, net of tax
    
    
    
    
    
    
    (572
    )
    
    
    572
    
    
    
    (100
    %)Equity in net losses income of
affiliated companies, net of
tax
    
    
    (2,306
    )
    
    
    (152
    )
    
    
    (2,154
    )
    
    NMNet income
    
    $
    45,294
    
    
    $
    120,385
    
    
    $
    (75,091
    )
    
    
    (62
    %)
 
  24




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Revenues
  Six Months Ended June 302005
    
    % of Total
    
    2004
    
    % of Total
    
    $ Change
    
    % Change(Thousands of Dollars)ResidentialVideo
    
    $
    2,000,825
    
    
    
    57
    %
    
    $
    1,911,545
    
    
    
    61
    %
    
    $
    89,280
    
    
    
    5
    %Data
    
    
    655,641
    
    
    
    19
    %
    
    
    528,228
    
    
    
    17
    %
    
    
    127,413
    
    
    
    24
    %Telephony
    
    
    352,953
    
    
    
    10
    %
    
    
    278,071
    
    
    
    9
    %
    
    
    74,882
    
    
    
    27
    %Other
    
    
    50,472
    
    
    
    2
    %
    
    
    52,843
    
    
    
    2
    %
    
    
    (2,371
    )
    
    
    (4
    %)Total
residential
    
    
    3,059,891
    
    
    
    88
    %
    
    
    2,770,687
    
    
    
    89
    %
    
    
    289,204
    
    
    
    10
    %Commercial
    
    
    204,426
    
    
    
    6
    %
    
    
    169,521
    
    
    
    5
    %
    
    
    34,905
    
    
    
    21
    %Advertising
    
    
    216,396
    
    
    
    6
    %
    
    
    195,389
    
    
    
    6
    %
    
    
    21,007
    
    
    
    11
    %Total revenues
    
    $
    3,480,713
    
    
    
    100
    %
    
    $
    3,135,597
    
    
    
    100
    %
    
    $
    345,116
    
    
    
    11
    %
  
    
    a 22% increase in customers for advanced services, including digital cable, high-speed
Internet access and telephony customers;
    
    an increase in basic cable rates resulting from increased programming costs and
inflation, as well as increased channel availability; and
    
    an increase in commercial broadband customers.
  
    
    ended the period with approximately 6.3 million basic video customers, consistent with
the period ending December 31, 2004.
    
    added 143,267 digital cable customers, which contributed to year-over-year growth of
12%.
    
    added 275,192 high-speed Internet customers, which contributed to year-over-year growth
of 27%.
    
    added 200,545 telephony customers, which contributed to year-over-year customer growth
of 33%.
  Costs and expenses (cost of services and selling, general and administrative expenses)
  Six Months Ended June 302005
    
    2004
    
    $ Change
    
    % Change(Thousands of Dollars)Cost of servicesProgramming costs
    
    $
    699,734
    
    
    $
    638,384
    
    
    $
    61,350
    
    
    
    10
    %Other cost of services
    
    
    691,650
    
    
    
    642,059
    
    
    
    49,591
    
    
    
    8
    %
 25




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##### Table of Contents



Six Months Ended June 302005
    
    2004
    
    $ Change
    
    % Change(Thousands of Dollars)Total cost of services
    
    
    1,391,384
    
    
    
    1,280,443
    
    
    
    110,941
    
    
    
    9
    %Selling, general and administrativeMarketing
    
    
    177,870
    
    
    
    162,412
    
    
    
    15,458
    
    
    
    10
    %General and administrative
    
    
    565,750
    
    
    
    509,472
    
    
    
    56,278
    
    
    
    11
    %Total selling, general and
administrative
    
    
    743,620
    
    
    
    671,884
    
    
    
    71,736
    
    
    
    11
    %Total costs and expenses
    
    $
    2,135,004
    
    
    $
    1,952,327
    
    
    $
    182,677
    
    
    
    9
    %
    
    
    a $56.3 million increase in general and administrative expenses primarily related to
increased salaries and benefits, as well as an increase in the cost of providing
healthcare benefits; and,
    
    a $15.5 million increase in marketing expense primarily due to additional marketing
related to new video products, as well as an 11% increase in costs associated with Cox
Media, Coxs advertising sales business.
  Depreciation and amortization
  Loss on sale of cable systems
  26




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##### Table of Contents



Interest expense
  (Loss) gain on investments, net
  Income tax expense
  Equity in net losses of affiliated companies, net of tax
  Net income
  Liquidity and Capital Resources
 Uses of Cash
    27




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##### Table of Contents



Sources of Cash
  Recently Issued Accounting Pronouncements
 Accounting for Electronic
Equipment Waste Obligations
 Determining Whether a General
Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When
the Limited Partners Have Certain Rights
 28




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##### Table of Contents



Accounting Changes and Error Correctionsa
replacement of APB Opinion No. 20 and FASB Statement No. 3 Accounting Changes Reporting Accounting Changes in
Interim Financial Statements
 Accounting for Conditional Asset
Retirement Obligations . Accounting for Asset Retirement Obligations,
 Exchanges of Nonmonetary Assetsan amendment
of APB Opinion No. 29 Accounting for
Nonmonetary Transactions
 Share-Based Payment
 Caution Concerning Forward-Looking Statements
  29




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
      June 30, 2005
    
    December 31, 2004Fair Value
    
    
    
    
    
    
    
    
    
    Fair ValueCarrying
    
    Fair
    
    (1% Decrease
    
    Carrying
    
    Fair
    
    (1% DecreaseValue
    
    Value
    
    in Interest Rates)
    
    Value
    
    Value
    
    in Interest Rates)(Millions of Dollars)Fixed-rate notes and
Debentures
    
    $
    8,355.5
    
    
    $
    8,800.6
    
    
    $
    9,290.1
    
    
    $
    8,760.0
    
    
    $
    9,092.6
    
    
    $
    9,593.0Exchangeable
subordinated
Debentures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19.5
    
    
    
    31.4
    
    
    
    31.6
 30




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##### Table of Contents



Item 4. Controls and Procedures
 Evaluation of Controls and Procedures
  Changes in Internal Controls
 
 Part II  Other Information
 
 Item 1. Legal Proceedings
   
 Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities
 (c) Total Number
    
    (d) Maximumof Shares
    
    Number of SharesPurchased as Part
    
    that May Yet Be(a) Total Number
    
    
    
    of Publicly
    
    Purchased Underof Shares
    
    (b) Average Price
    
    announced Plans
    
    the Plans orPeriod
    
    Purchased
    
    Paid Per Share
    
    of Programs
    
    ProgramsApril 2005
    
    
    15,343,197
    
    
    See Note 1
    
    -0-
    
    -0-
  31




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##### Table of Contents



Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters of a Vote of Security Holders
  
 Item 5. Other Information
 Jimmy W. Hayes William J. Fitzsimmons
 James O. Robbins Patrick J. Esser
 
 Item 6. Exhibits
 3.1
    
    
    
    Certificate of Incorporation of Cox Communications, Inc., as
amended (incorporated by reference to exhibit 3.1 to Coxs
Registration Statement on Form S-4, file no. 333-122050, filed
on January 14, 2005).3.2
    
    
    
    Bylaws of Cox Communications, Inc. (Incorporated by reference
to Exhibit 3.2 to Coxs Registration Statement on Form S-4,
File No. 33-80152, filed with the Commission on December 16,
1994.)10.1
    
    
    
    Cox Enterprises, Inc. 2005 Unit Appreciation Plan (management
contract or compensatory plan).10.2
    
    
    
    Form of Unit Appreciation Plan Summary Statement (management
contract or compensatory plan).21
    
    
    
    Subsidiaries of Cox
Communications, Inc.31.1
    
    
    
    Certification of Principal Executive Officer Pursuant to Rule
13a-14(a) of the Securities Exchange Act of 1934.31.2
    
    
    
    Certification of Principal Financial Officer Pursuant to Rule
13a-14(a) of the Securities Exchange Act of 1934.32.1
    
    
    
    Certification of Principal
Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 32




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##### Table of Contents



SIGNATURE
  Cox Communications, Inc.Date:  August 9, 2005
    /s/ William J. FitzsimmonsWilliam J. FitzsimmonsVice President of Accounting
and Financial Planning and Analysis
and Chief Accounting Officer
(principal financial officer and
duly authorized officer) 33