##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

(Mark One)

|[x] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|--- | ---------------------------------------------------------------------------------------
|    | For the quarterly period ended June 30, 2003                                           

|     |                                                                                         
|---- | ----------------------------------------------------------------------------------------
|[  ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|     | For the transition period fromto                                                        

Commission File Number 1-6590(COX LOGO)COMMUNICATIONS

Cox Communications, Inc.


(Exact name of registrant as specified in its charter)


|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 58-2112281                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               |  |                                     
|1400 Lake Hearn Drive, Atlanta, Georgia                        |  | 30319                               
|(Address of principal executive offices)                       |  | (Zip Code)                          

Registrants telephone number, including area code: (404) 843-5000



---

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes x
No o

There
were 592,697,329 shares of Class A Common Stock and 27,597,792
shares of Class C Common Stock
outstanding as of July 31, 2003.



---





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##### 



Cox Communications, Inc.
Form 10-Q
For the Quarter Ended June 30, 2003
Table of Contents

|        |  |                                                                                       |  |                                |    |      |  | 
|------- |  | ------------------------------------------------------------------------------------- |  | ------------------------------ | -- | ---- |  | 
|        |  |                                                                                       |  |                                |    | Page
|        |  |                                                                                       |  |                                |    |     
|        |  |                                                                                       |  | Part I  Financial Information |    |      |  | 
|Item 1. |  | Condensed Consolidated Financial
Statements                                           |  |                                | 2  |     
|Item 2. |  | Managements Discussion and Analysis of Financial Condition
and Results of
Operations |  |                                | 20 |     
|Item 3. |  | Quantitative and Qualitative Disclosures About Market
Risk                            |  |                                | 29 |     
|Item 4. |  | Controls and
Procedures                                                               |  |                                | 31 |     
|        |  |                                                                                       |  | Part II  Other Information    |    |      |  | 
|Item 1. |  | Legal
Proceedings                                                                     |  |                                | 31 |     
|Item 4. |  | Submission of Matters to a Vote of Security
Holders                                   |  |                                | 32 |     
|Item 6. |  | Exhibits and Reports on Form
8-K                                                      |  |                                | 33 |     

Preliminary Note

This Quarterly Report on Form 10-Q is for the three and six-month periods
ended June 30, 2003. This Quarterly Report modifies and supersedes documents
filed prior to this Quarterly Report. The SEC allows Cox to incorporate by
reference information that Cox files with it, which means that
Cox can disclose
important information to you by referring you directly to those documents.
Information incorporated by reference is considered to be part of this
Quarterly Report. In addition, information that Cox files with the SEC in the
future will automatically update and supersede information contained in this
Quarterly Report. In this Quarterly Report, Cox, refers to Cox
Communications, Inc. and its subsidiaries, unless the context requires
otherwise.





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##### 



Part I - Financial Information

Item 1. Condensed Consolidated Financial Statements

Cox Communications, Inc.
Condensed Consolidated Balance Sheets

|                                                                                           |                                                                                                                                                                                  |                           |                                            |           |                        |            |             |           |           |            | 
|------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------- | ------------------------------------------ | --------- | ---------------------- | ---------- | ----------- | --------- | --------- | ---------- | 
|                                                                                           |                                                                                                                                                                                  |                           |                                            |           | June 30                |            | December 31
|                                                                                           |                                                                                                                                                                                  |                           |                                            |           | 2003                   |            | 2002       
|                                                                                           |                                                                                                                                                                                  |                           |                                            |           |                        |            |            
|                                                                                           |                                                                                                                                                                                  |                           |                                            |           | (unaudited)           
|                                                                                           |                                                                                                                                                                                  |                           |                                            |           | (Thousands of Dollars)
|Assets                                                                                     |                                                                                                                                                                                  |                           |                                            |           |                        |            |             |          
|Current assets                                                                             |                                                                                                                                                                                  |                           |                                            |           |                        |            |             |          
|Cash                                                                                       |                                                                                                                                                                                  | $                         | 148,436                                    |           |                        | $          | 228,704     |          
|Accounts and notes receivable, less allowance for doubtful
accounts of $29,722 and $33,607 |                                                                                                                                                                                  |                           | 334,665                                    |           |                        |            | 354,928     |          
|Amounts due from Cox Enterprises, Inc. (CEI)                                               |                                                                                                                                                                                  |                           |                                           |           |                        |            | 21,109      |          
|Other current assets                                                                       |                                                                                                                                                                                  |                           | 123,374                                    |           |                        |            | 267,341     |          
|                                                                                           |                                                                                                                                                                                  |                           |                                            |           |                        |            |             |          
|                                                                                           |                                                                                                                                                                                  | Total current assets      |                                            |           | 606,475                |            |             |           | 872,082   |           
|                                                                                           |                                                                                                                                                                                  |                           |                                            |           |                        |            |             |          
|Net plant and equipment                                                                    |                                                                                                                                                                                  |                           | 7,739,245                                  |           |                        |            | 7,793,178   |          
|Investments                                                                                |                                                                                                                                                                                  |                           | 304,880                                    |           |                        |            | 397,435     |          
|Intangible assets                                                                          |                                                                                                                                                                                  |                           | 15,696,884                                 |           |                        |            | 15,724,288  |          
|Other noncurrent assets                                                                    |                                                                                                                                                                                  |                           | 204,003                                    |           |                        |            | 218,166     |          
|                                                                                           |                                                                                                                                                                                  |                           |                                            |           |                        |            |             |          
|                                                                                           |                                                                                                                                                                                  |                           | Total assets                               |           | $                      | 24,551,487 |             |           | $         | 25,005,149 | 
|                                                                                           |                                                                                                                                                                                  |                           |                                            |           |                        |            |             |          
|Liabilities and shareholders equity                                                       |                                                                                                                                                                                  |                           |                                            |           |                        |            |             |          
|Current liabilities                                                                        |                                                                                                                                                                                  |                           |                                            |           |                        |            |             |          
|Accounts payable and accrued expenses                                                      |                                                                                                                                                                                  | $                         | 661,028                                    |           |                        | $          | 727,877     |          
|Other current liabilities                                                                  |                                                                                                                                                                                  |                           | 336,191                                    |           |                        |            | 216,235     |          
|Current portion of long-term debt                                                          |                                                                                                                                                                                  |                           | 90,797                                     |           |                        |            | 393,040     |          
|Amounts due to CEI                                                                         |                                                                                                                                                                                  |                           | 8,489                                      |           |                        |            |            |          
|                                                                                           |                                                                                                                                                                                  |                           |                                            |           |                        |            |             |          
|                                                                                           |                                                                                                                                                                                  | Total current liabilities |                                            |           | 1,096,505              |            |             |           | 1,337,152 |           
|                                                                                           |                                                                                                                                                                                  |                           |                                            |           |                        |            |             |          
|Deferred income taxes                                                                      |                                                                                                                                                                                  |                           | 6,498,582                                  |           |                        |            | 6,750,635   |          
|Other noncurrent liabilities                                                               |                                                                                                                                                                                  |                           | 181,314                                    |           |                        |            | 175,912     |          
|Long-term debt, less current portion                                                       |                                                                                                                                                                                  |                           | 6,892,084                                  |           |                        |            | 6,922,957   |          
|                                                                                           |                                                                                                                                                                                  |                           |                                            |           |                        |            |             |          
|                                                                                           |                                                                                                                                                                                  |                           | Total liabilities                          |           |                        | 14,668,485 |             |           |           | 15,186,656 | 
|                                                                                           |                                                                                                                                                                                  |                           |                                            |           |                        |            |             |          
|Commitments and contingencies (Note 10)                                                    |                                                                                                                                                                                  |                           |                                            |           |                        |            |             |          
|Minority interest in equity of consolidated subsidiaries                                   |                                                                                                                                                                                  |                           | 137,317                                    |           |                        |            | 133,403     |          
|Shareholders equity                                                                       |                                                                                                                                                                                  |                           |                                            |           |                        |            |             |          
|                                                                                           | Series A preferred stock - liquidation preference of $22.1375
per share, $1 par value; 10,000,000 shares of preferred stock
authorized; shares issued and outstanding: 4,836,372 |                           |                                            | 4,836     |                        |            |             | 4,836     |          
|                                                                                           | Class A common stock, $1 par value; 671,000,000 shares
authorized; shares issued: 598,216,349 and 598,076,894; shares
outstanding: 592,693,329 and 592,567,757                   |                           |                                            | 598,216   |                        |            |             | 598,077   |          
|                                                                                           | Class C common stock, $1 par value; 62,000,000 shares
authorized; shares issued and outstanding: 27,597,792                                                                      |                           |                                            | 27,598    |                        |            |             | 27,598    |          
|                                                                                           | Additional paid-in capital                                                                                                                                                       |                           |                                            | 4,552,559 |                        |            |             | 4,549,029 |          
|                                                                                           | Retained earnings                                                                                                                                                                |                           |                                            | 4,726,946 |                        |            |             | 4,638,422 |          
|                                                                                           | Accumulated other comprehensive income                                                                                                                                           |                           |                                            | 48,274    |                        |            |             | 79,465    |          
|                                                                                           | Class A common stock in treasury, at cost: 5,523,020 and 5,509,137
shares                                                                                                        |                           |                                            | (212,744  | )                      |            |             | (212,337  | )        
|                                                                                           |                                                                                                                                                                                  |                           |                                            |           |                        |            |             |          
|                                                                                           |                                                                                                                                                                                  |                           | Total shareholders equity                 |           |                        | 9,745,685  |             |           |           | 9,685,090  | 
|                                                                                           |                                                                                                                                                                                  |                           |                                            |           |                        |            |             |          
|                                                                                           |                                                                                                                                                                                  |                           | Total liabilities and shareholders equity |           | $                      | 24,551,487 |             |           | $         | 25,005,149 | 
|                                                                                           |                                                                                                                                                                                  |                           |                                            |           |                        |            |             |          

See notes to condensed consolidated financial statements.

2



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##### 



Cox Communications, Inc.
Condensed Consolidated Statements of Operations

|                                                        |  |                                                            |                            |   |                                              |           |               |   |         |           |             |   |           |           |             |   |           |           | 
|------------------------------------------------------- |  | ---------------------------------------------------------- | -------------------------- | - | -------------------------------------------- | --------- | ------------- | - | ------- | --------- | ----------- | - | --------- | --------- | ----------- | - | --------- | --------- | 
|                                                        |  |                                                            |                            |   | Three Months                                 |           | Six Months   
|                                                        |  |                                                            |                            |   | Ended June 30                                |           | Ended June 30
|                                                        |  |                                                            |                            |   |                                              |           |              
|                                                        |  |                                                            |                            |   | 2003                                         |           | 2002          |   | 2003    |           | 2002       
|                                                        |  |                                                            |                            |   |                                              |           |               |   |         |           |            
|                                                        |  |                                                            |                            |   | (unaudited)                                 
|                                                        |  |                                                            |                            |   | (Thousands of Dollars, excluding share data)
|Revenues                                                |  |                                                            |                            |   |                                              |           |               |   |         |           |             |   |           |           |             |  
|Residential                                             |  |                                                            |                            |   |                                              |           |               |   |         |           |             |   |           |           |             |  
|                                                        |  | Video                                                      |                            | $ | 907,902                                      |           |               | $ | 857,197 |           |             | $ | 1,806,843 |           |             | $ | 1,691,056 |          
|                                                        |  | Data                                                       |                            |   | 210,699                                      |           |               |   | 134,863 |           |             |   | 404,918   |           |             |   | 256,428   |          
|                                                        |  | Telephony                                                  |                            |   | 116,450                                      |           |               |   | 82,395  |           |             |   | 223,543   |           |             |   | 155,147   |          
|                                                        |  | Other                                                      |                            |   | 22,478                                       |           |               |   | 20,001  |           |             |   | 44,630    |           |             |   | 40,545    |          
|                                                        |  |                                                            |                            |   |                                              |           |               |   |         |           |             |   |           |           |             |  
|                                                        |  |                                                            | Total residential revenues |   |                                              | 1,257,529 |               |   |         | 1,094,456 |             |   |           | 2,479,934 |             |   |           | 2,143,176 | 
|                                                        |  | Commercial                                                 |                            |   | 68,137                                       |           |               |   | 52,057  |           |             |   | 131,506   |           |             |   | 101,853   |          
|                                                        |  | Advertising                                                |                            |   | 98,273                                       |           |               |   | 98,116  |           |             |   | 178,781   |           |             |   | 177,642   |          
|                                                        |  |                                                            |                            |   |                                              |           |               |   |         |           |             |   |           |           |             |  
|                                                        |  |                                                            | Total revenues             |   |                                              | 1,423,939 |               |   |         | 1,244,629 |             |   |           | 2,790,221 |             |   |           | 2,422,671 | 
|Costs and expenses                                      |  |                                                            |                            |   |                                              |           |               |   |         |           |             |   |           |           |             |  
|                                                        |  | Cost of services (excluding depreciation and amortization) |                            |   | 594,939                                      |           |               |   | 523,947 |           |             |   | 1,178,558 |           |             |   | 1,031,330 |          
|                                                        |  | Selling, general and administrative expenses               |                            |   | 296,885                                      |           |               |   | 278,807 |           |             |   | 600,094   |           |             |   | 557,401   |          
|                                                        |  | Depreciation and amortization                              |                            |   | 364,274                                      |           |               |   | 337,728 |           |             |   | 748,594   |           |             |   | 663,520   |          
|                                                        |  | (Gain)
loss on sale of cable systems                       |                            |   | (469                                         | )         |               |   | 3,916   |           |             |   | (469      | )         |             |   | 3,916     |          
|                                                        |  |                                                            |                            |   |                                              |           |               |   |         |           |             |   |           |           |             |  
|Operating income                                        |  |                                                            | 168,310                    |   |                                              |           | 100,231       |   |         |           | 263,444     |   |           |           | 166,504     |  
|Interest expense                                        |  |                                                            | (130,498                   | ) |                                              |           | (128,367      | ) |         |           | (260,322    | ) |           |           | (255,984    | )
|Gain (loss) on derivative instruments, net              |  |                                                            | (24,197                    | ) |                                              |           | 47,860        |   |         |           | (26,700     | ) |           |           | 767,623     |  
|Gain (loss) on investments, net                         |  |                                                            | 124,147                    |   |                                              |           | (792,900      | ) |         |           | 122,395     |   |           |           | (1,201,630  | )
|Equity in net losses of affiliated companies            |  |                                                            | (4,354                     | ) |                                              |           | (20,907       | ) |         |           | (6,518      | ) |           |           | (23,720     | )
|Other, net                                              |  |                                                            | (617                       | ) |                                              |           | 275           |   |         |           | (957        | ) |           |           | 1,010       |  
|                                                        |  |                                                            |                            |   |                                              |           |               |   |         |           |             |   |           |           |             |  
|Income (loss) before income taxes and
minority interest |  |                                                            | 132,791                    |   |                                              |           | (793,808      | ) |         |           | 91,342      |   |           |           | (546,197    | )
|Income tax expense
(benefit)                            |  |                                                            | 13,402                     |   |                                              |           | (289,178      | ) |         |           | (1,096      | ) |           |           | (189,208    | )
|                                                        |  |                                                            |                            |   |                                              |           |               |   |         |           |             |   |           |           |             |  
|Income (loss) before minority interest                  |  |                                                            | 119,389                    |   |                                              |           | (504,630      | ) |         |           | 92,438      |   |           |           | (356,989    | )
|Minority interest, net of tax                           |  |                                                            | (1,644                     | ) |                                              |           | (11,564       | ) |         |           | (3,914      | ) |           |           | (23,633     | )
|                                                        |  |                                                            |                            |   |                                              |           |               |   |         |           |             |   |           |           |             |  
|Net income (loss)                                       |  | $                                                          | 117,745                    |   |                                              | $         | (516,194      | ) |         | $         | 88,524      |   |           | $         | (380,622    | )
|                                                        |  |                                                            |                            |   |                                              |           |               |   |         |           |             |   |           |           |             |  
|Share data                                              |  |                                                            |                            |   |                                              |           |               |   |         |           |             |   |           |           |             |  
|Basic net income (loss) per share                       |  |                                                            |                            |   |                                              |           |               |   |         |           |             |   |           |           |             |  
|Basic weighted-average shares outstanding               |  |                                                            | 620,256,065                |   |                                              |           | 601,318,335   |   |         |           | 620,239,661 |   |           |           | 601,024,267 |  
|Basic net income (loss) per share                       |  | $                                                          | 0.19                       |   |                                              | $         | (0.86         | ) |         | $         | 0.14        |   |           | $         | (0.63       | )
|Diluted net income (loss) per share                     |  |                                                            |                            |   |                                              |           |               |   |         |           |             |   |           |           |             |  
|Diluted weighted-average shares outstanding             |  |                                                            | 629,728,659                |   |                                              |           | 601,318,335   |   |         |           | 629,693,126 |   |           |           | 601,024,267 |  
|Diluted net income (loss) per share                     |  | $                                                          | 0.19                       |   |                                              | $         | (0.86         | ) |         | $         | 0.14        |   |           | $         | (0.63       | )

See notes to condensed consolidated financial statements.

3



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##### 



Cox Communications, Inc.
Condensed Consolidated Statement of Shareholders Equity

|                  |                                                                                                          |   |           |  |              |   |            |     |          |   |               |  |           |   |           |       |       |   |                        |        |  |   |             |         |        |   |          |      |   |   |           |         |   |  |   |         |  
|----------------- | -------------------------------------------------------------------------------------------------------- | - | --------- |  | ------------ | - | ---------- | --- | -------- | - | ------------- |  | --------- | - | --------- | ----- | ----- | - | ---------------------- | ------ |  | - | ----------- | ------- | ------ | - | -------- | ---- | - | - | --------- | ------- | - |  | - | ------- | -
|                  |                                                                                                          |   |           |  |              |   |            |     |          |   |               |  |           |   |           |       |       |   |                        |        |  |   |             |         |        |   | Class A  |      |   |   |           |         |   |  |  
|                  |                                                                                                          |   |           |  |              |   |            |     |          |   |               |  |           |   |           |       |       |   |                        |        |  |   | Accumulated |         | Common |   |          |      |   |   |           |         |  
|                  |                                                                                                          |   | Series A  |  | Common Stock |   | Additional |     |          |   |               |  | Other     |   | Stock in  |       |       |   |                        |        |  |   |            
|                  |                                                                                                          |   | Preferred |  |              |   | Paid-in    |     | Retained |   | Comprehensive |  | Treasury, |   |           |       |       |   | Comprehensive         
|                  |                                                                                                          |   | Stock     |  | Class A      |   | Class C    |     | Capital  |   | Earnings      |  | Income    |   | at Cost   |       | Total |   | Income                
|                  |                                                                                                          |   |           |  |              |   |            |     |          |   |               |  |           |   |           |       |       |   |                       
|                  |                                                                                                          |   |           |  |              |   |            |     |          |   |               |  |           |   |           |       |       |   | (unaudited)            |        |  |   |             |         |        |   |          |      |   |   |          
|                  |                                                                                                          |   |           |  |              |   |            |     |          |   |               |  |           |   |           |       |       |   | (Thousands of Dollars) |        |  |   |             |         |        |   |          |      |   |   |          
|December 31, 2002 |                                                                                                          | $ | 4,836     |  |              | $ | 598,077    |     |          | $ | 27,598        |  |           | $ | 4,549,029 |       |       | $ | 4,638,422              |        |  | $ | 79,465      |         |        | $ | (212,337 | )    |   | $ | 9,685,090 |         |   |  |   |        
|                  | Net income                                                                                               |   |           |  |              |   |            |     |          |   |               |  |           |   |           |       |       |   |                        | 88,524 |  |   |             |         |        |   |          |      |   |   |           | 88,524  |   |  | $ | 88,524  |  
|                  |                                                                                                          |   |           |  |              |   |            |     |          |   |               |  |           |   |           |       |       |   |                        |        |  |   |             |         |        |   |          |      |   |   |           |         |   |  |   |        
|                  | Issuance of stock related to
stock compensation plans (including tax
benefit on stock options exercised) |   |           |  |              |   |            | 139 |          |   |               |  |           |   |           | 3,530 |       |   |                        |        |  |   |             |         |        |   |          |      |   |   |           | 3,669   |   |  |   |         |  
|                  | Shares surrendered in connection
with vesting of restricted stock                                        |   |           |  |              |   |            |     |          |   |               |  |           |   |           |       |       |   |                        |        |  |   |             |         |        |   |          | (407 | ) |   |           | (407    | ) |  |   |         |  
|                  | Change in net accumulated unrealized
gain on securities, net of tax                                      |   |           |  |              |   |            |     |          |   |               |  |           |   |           |       |       |   |                        |        |  |   |             |         |        |   |          |      |   |   |           |         |   |  |   | (31,191 | )
|                  |                                                                                                          |   |           |  |              |   |            |     |          |   |               |  |           |   |           |       |       |   |                        |        |  |   |             |         |        |   |          |      |   |   |           |         |   |  |   |        
|                  | Other comprehensive income                                                                               |   |           |  |              |   |            |     |          |   |               |  |           |   |           |       |       |   |                        |        |  |   |             | (31,191 | )      |   |          |      |   |   |           | (31,191 | ) |  |   | (31,191 | )
|                  |                                                                                                          |   |           |  |              |   |            |     |          |   |               |  |           |   |           |       |       |   |                        |        |  |   |             |         |        |   |          |      |   |   |           |         |   |  |   |        
|                  | Comprehensive income                                                                                     |   |           |  |              |   |            |     |          |   |               |  |           |   |           |       |       |   |                        |        |  |   |             |         |        |   |          |      |   |   |           |         |   |  | $ | 57,333  |  
|                  |                                                                                                          |   |           |  |              |   |            |     |          |   |               |  |           |   |           |       |       |   |                        |        |  |   |             |         |        |   |          |      |   |   |           |         |   |  |   |        
|June 30, 2003     |                                                                                                          | $ | 4,836     |  |              | $ | 598,216    |     |          | $ | 27,598        |  |           | $ | 4,552,559 |       |       | $ | 4,726,946              |        |  | $ | 48,274      |         |        | $ | (212,744 | )    |   | $ | 9,745,685 |         |   |  |   |        
|                  |                                                                                                          |   |           |  |              |   |            |     |          |   |               |  |           |   |           |       |       |   |                        |        |  |   |             |         |        |   |          |      |   |   |           |         |   |  |   |        

See notes to condensed consolidated financial statements.

4



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##### 



Cox Communications, Inc.
Condensed Consolidated Statements of Cash Flows

|                                                                                         |                                                              |                                                     |            |                        |          |      |            |           |          |  
|---------------------------------------------------------------------------------------- | ------------------------------------------------------------ | --------------------------------------------------- | ---------- | ---------------------- | -------- | ---- | ---------- | --------- | -------- | -
|                                                                                         |                                                              |                                                     |            | Six Months            
|                                                                                         |                                                              |                                                     |            | Ended June 30         
|                                                                                         |                                                              |                                                     |            |                       
|                                                                                         |                                                              |                                                     |            | 2003                   |          | 2002
|                                                                                         |                                                              |                                                     |            |                        |          |     
|                                                                                         |                                                              |                                                     |            | (unaudited)           
|                                                                                         |                                                              |                                                     |            | (Thousands of Dollars)
|Cash flows from operating activities                                                     |                                                              |                                                     |            |                        |          |      |            |          
|Net income (loss)                                                                        |                                                              | $                                                   | 88,524     |                        |          | $    | (380,622   | )        
|Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |                                                              |                                                     |            |                        |          |      |            |          
|                                                                                         | Depreciation and amortization                                |                                                     |            | 748,594                |          |      |            | 663,520   |         
|                                                                                         | (Gain) loss on sale of cable systems                         |                                                     |            | (469                   | )        |      |            | 3,916     |         
|                                                                                         | (Gain) loss on derivative instruments, net                   |                                                     |            | 26,700                 |          |      |            | (767,623  | )       
|                                                                                         | Write off of debt issuance costs upon extinguishment of debt |                                                     |            | 36,063                 |          |      |            |          |         
|                                                                                         | Deferred income taxes                                        |                                                     |            | (232,527               | )        |      |            | (65,874   | )       
|                                                                                         | (Gain) loss on investments, net                              |                                                     |            | (122,395               | )        |      |            | 1,201,630 |         
|                                                                                         | Equity in net losses of affiliated companies                 |                                                     |            | 6,518                  |          |      |            | 23,720    |         
|                                                                                         | Minority interest, net of tax                                |                                                     |            | 3,914                  |          |      |            | 23,633    |         
|Decrease in accounts and notes receivable                                                |                                                              |                                                     | 20,245     |                        |          |      | 21,682     |          
|Decrease (increase) in other assets                                                      |                                                              |                                                     | 33,829     |                        |          |      | (6,364     | )        
|Increase (decrease) in accounts payable and accrued expenses                             |                                                              |                                                     | (91,874    | )                      |          |      | 8,094      |          
|Increase (decrease) in taxes payable                                                     |                                                              |                                                     | 231,290    |                        |          |      | (24,484    | )        
|Other, net                                                                               |                                                              |                                                     | 70,456     |                        |          |      | 48,959     |          
|                                                                                         |                                                              |                                                     |            |                        |          |      |            |          
|                                                                                         |                                                              | Net cash provided by operating activities           |            |                        | 818,868  |      |            |           | 750,187  |  
|                                                                                         |                                                              |                                                     |            |                        |          |      |            |          
|Cash flows from investing activities                                                     |                                                              |                                                     |            |                        |          |      |            |          
|Capital expenditures                                                                     |                                                              |                                                     | (662,892   | )                      |          |      | (1,013,664 | )        
|Investments in affiliated companies                                                      |                                                              |                                                     | (8,412     | )                      |          |      | (9,793     | )        
|Proceeds from the sale of investments                                                    |                                                              |                                                     | 161,739    |                        |          |      | 1,320,271  |          
|Decrease in amounts due from CEI, net                                                    |                                                              |                                                     | 21,109     |                        |          |      | 13,245     |          
|Proceeds from the sale of cable systems                                                  |                                                              |                                                     | 822        |                        |          |      | 12,574     |          
|Other, net                                                                               |                                                              |                                                     | (5,234     | )                      |          |      | (4,295     | )        
|                                                                                         |                                                              |                                                     |            |                        |          |      |            |          
|                                                                                         |                                                              | Net cash provided by (used in) investing activities |            |                        | (492,868 | )    |            |           | 318,338  |  
|                                                                                         |                                                              |                                                     |            |                        |          |      |            |          
|Cash flows from financing activities                                                     |                                                              |                                                     |            |                        |          |      |            |          
|Commercial paper issuance (repayments), net                                              |                                                              |                                                     | 110,000    |                        |          |      | (727,384   | )        
|Proceeds from issuance of debt, net of debt issuance costs                               |                                                              |                                                     | 596,154    |                        |          |      |           |          
|Repayment of debt                                                                        |                                                              |                                                     | (1,124,971 | )                      |          |      | (266,576   | )        
|Proceeds from exercise of stock options                                                  |                                                              |                                                     | 2,535      |                        |          |      | 23,110     |          
|Increase in amounts due to CEI, net                                                      |                                                              |                                                     | 8,489      |                        |          |      | 22,554     |          
|Distributions paid on capital and preferred securities of
subsidiary trusts              |                                                              |                                                     |           |                        |          |      | (29,938    | )        
|Premium paid on debt extinguishment                                                      |                                                              |                                                     | (19,483    | )                      |          |      |           |          
|Other, net                                                                               |                                                              |                                                     | 21,008     |                        |          |      | 16,577     |          
|                                                                                         |                                                              |                                                     |            |                        |          |      |            |          
|                                                                                         |                                                              | Net cash used in financing activities               |            |                        | (406,268 | )    |            |           | (961,657 | )
|                                                                                         |                                                              |                                                     |            |                        |          |      |            |          
|Net increase (decrease) in cash                                                          |                                                              |                                                     | (80,268    | )                      |          |      | 106,868    |          
|Cash at beginning of period                                                              |                                                              |                                                     | 228,704    |                        |          |      | 86,860     |          
|                                                                                         |                                                              |                                                     |            |                        |          |      |            |          
|Cash at end of period                                                                    |                                                              | $                                                   | 148,436    |                        |          | $    | 193,728    |          
|                                                                                         |                                                              |                                                     |            |                        |          |      |            |          

See notes to condensed consolidated financial statements.

5



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##### 



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

Quarter Ended June 30, 2003

1.     Organization and Basis of Presentation

Cox Communications, Inc. (Cox), an indirect 63.4% majority-owned
subsidiary of Cox Enterprises, Inc. (CEI), is a multi-service broadband
communications company serving approximately 6.5 million customers nationwide,
including 6.3 million basic cable subscribers. Cox is the nations fourth
largest cable television provider and offers an array of broadband products and
services to both residential and commercial customers in its markets. These
services primarily include analog and digital video, high-speed Internet access
and local and long-distance telephone. Cox operates in one operating segment,
broadband communications.

The accompanying unaudited condensed consolidated financial statements of
Cox have been prepared in accordance with accounting principles generally
accepted in the United States of America (GAAP) for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnote
disclosures required by GAAP for complete financial statements. In the opinion
of management, the condensed consolidated financial statements reflect all
adjustments considered necessary for a fair statement of the consolidated
results of operations and financial position for the interim periods presented.
All such adjustments are of a normal recurring nature. These unaudited interim
condensed consolidated financial statements should be read in conjunction with
the audited consolidated financial statements and notes thereto contained in
Coxs Annual Report on Form 10-K for the year ended December 31, 2002.

2.     Summary of Significant Accounting Policies

The following is a summary of certain significant accounting policies.
For a detailed description of all of Coxs significant accounting policies, see
Note 2. Summary of Significant Accounting Policies and Other Items contained
in Coxs Annual Report on Form 10-K for the year ended December 31, 2002.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates. The results of operations for the interim periods presented
are not necessarily indicative of the results to be expected for the year
ending December 31, 2003 or any other interim period.

Stock Compensation Plans

At June 30, 2003, Cox had two stock-based compensation plans for
employees, a Long-Term Incentive Plan (LTIP) and an Employee Stock Purchase
Plan (ESPP), which are more fully described in Coxs Annual Report on Form 10-K
for the year ended December 31, 2002. Cox accounts for those plans under the
intrinsic value method, which follows the recognition and measurement
principles of Accounting Principles Board (APB) Opinion No. 25, Accounting for
Stock Issued to Employees, and related interpretations. No stock-based
employee compensation cost is reflected in net income, as all options granted
under the LTIP had an exercise price equal to or greater than the market value
of the underlying Class A common stock on the grant date. Further, the ESPP is
a noncompensatory plan under APB Opinion No. 25, and, as such, no compensation
cost was recognized with respect to the ESPP.

6



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##### 



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

The following tables illustrate the effect on net income (loss) and net
income (loss) per share if Cox had applied the fair value recognition
provisions of Statement of Financial Accounting Standards (SFAS) No. 148,
Accounting for Stock-Based Compensation  Transition and
Disclosure, and SFAS
No. 123, Accounting for Stock-Based Compensation, to stock-based employee
compensation:

|                                                                                                           |                                                 |   |                            |      |      |   |          |       |  
|---------------------------------------------------------------------------------------------------------- | ----------------------------------------------- | - | -------------------------- | ---- | ---- | - | -------- | ----- | -
|                                                                                                           |                                                 |   | Three Months Ended June 30
|                                                                                                           |                                                 |   |                           
|                                                                                                           |                                                 |   | 2003                       |      | 2002
|                                                                                                           |                                                 |   |                            |      |     
|                                                                                                           |                                                 |   | (Thousands of Dollars,    
|                                                                                                           |                                                 |   | excluding per share data) 
|Net income (loss), as
reported                                                                             |                                                 | $ | 117,745                    |      |      | $ | (516,194 | )    
|Deduct: Total stock-based compensation
determined under fair value based method
for all awards, net of
tax |                                                 |   | (6,091                     | )    |      |   | (4,725   | )    
|                                                                                                           |                                                 |   |                            |      |      |   |          |      
|Pro forma net income
(loss)                                                                                |                                                 | $ | 111,654                    |      |      | $ | (520,919 | )    
|Earnings (loss) per share:                                                                                 |                                                 |   |                            |      |      |   |          |      
|                                                                                                           | Basic earnings (loss) per share  as
reported   |   | $                          | 0.19 |      |   | $        | (0.86 | )
|                                                                                                           | Basic earnings (loss) per share  pro
forma     |   |                            | 0.18 |      |   |          | (0.87 | )
|                                                                                                           | Diluted earnings (loss) per share  as
reported |   | $                          | 0.19 |      |   | $        | (0.86 | )
|                                                                                                           | Diluted earnings (loss) per share  pro
forma   |   |                            | 0.18 |      |   |          | (0.87 | )

|                                                                                                           |                                                 |   |                           |      |      |   |          |       |  
|---------------------------------------------------------------------------------------------------------- | ----------------------------------------------- | - | ------------------------- | ---- | ---- | - | -------- | ----- | -
|                                                                                                           |                                                 |   | Six Months Ended June 30 
|                                                                                                           |                                                 |   |                          
|                                                                                                           |                                                 |   | 2003                      |      | 2002
|                                                                                                           |                                                 |   |                           |      |     
|                                                                                                           |                                                 |   | (Thousands of Dollars,   
|                                                                                                           |                                                 |   | excluding per share data)
|Net income (loss), as
reported                                                                             |                                                 | $ | 88,524                    |      |      | $ | (380,622 | )    
|Deduct: Total stock-based compensation
determined under fair value based method
for all awards, net of
tax |                                                 |   | (10,856                   | )    |      |   | (10,188  | )    
|                                                                                                           |                                                 |   |                           |      |      |   |          |      
|Pro forma net income
(loss)                                                                                |                                                 | $ | 77,668                    |      |      | $ | (390,810 | )    
|Earnings (loss) per share:                                                                                 |                                                 |   |                           |      |      |   |          |      
|                                                                                                           | Basic earnings (loss) per share  as
reported   |   | $                         | 0.14 |      |   | $        | (0.63 | )
|                                                                                                           | Basic earnings (loss) per share  pro
forma     |   |                           | 0.13 |      |   |          | (0.65 | )
|                                                                                                           | Diluted earnings (loss) per share  as
reported |   | $                         | 0.14 |      |   | $        | (0.63 | )
|                                                                                                           | Diluted earnings (loss) per share  pro
forma   |   |                           | 0.12 |      |   |          | (0.65 | )

Recently Issued Accounting Pronouncements

In January 2003, the Financial Accounting Standards Board (FASB) issued
FASB Interpretation No. 46, Consolidation of Variable Interest Entities.
Interpretation No. 46 addresses consolidation by business enterprises of
variable interest entities, which are entities that either (a) do not have
equity investors with vesting rights or (b) have equity investors that do not
provide sufficient financial resources for the entity to support its
activities. The interpretation is effective for the first interim or annual
reporting period beginning after June 15, 2003 for existing variable interest
entities and is effective immediately for variable interest entities created
after January 31, 2003. The adoption of Interpretation No. 46 is not expected
to have a material impact on Coxs results of operations or financial position.

7



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##### 



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

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. This statement amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities under SFAS No. 133, Accounting for Derivative Instruments
and Hedging Activities. SFAS No. 149 requires that contracts with comparable
characteristics be accounted for similarly. The statement is effective for
contracts entered into or modified after June 30, 2003 and for hedging
relationships designated after June 30, 2003. The provisions of SFAS No. 149
generally are to be applied prospectively only. The adoption of SFAS No. 149
is not expected to have a material effect on Coxs results of operations or
financial position.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity.
SFAS No. 150 establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. The statement requires that an issuer classify a financial instrument
that is within its scope as a liability (or asset in some circumstances). This
statement is effective for financial instruments entered into or modified after
May 31, 2003, and otherwise is effective at the beginning of the first interim
period beginning after June 15, 2003. SFAS No. 150 requires that financial
instruments created before the issuance date of the statement and still
existing at the beginning of the interim period of adoption, be reported
through a cumulative effect of a change in accounting principle. The adoption
of SFAS No. 150 will not have a material effect on Coxs results of operations
or financial position.

Reclassifications

Certain amounts in the 2002 condensed consolidated financial statements
have been reclassified for comparative purposes.

3.     Investments

|                                  |                        |  |                        |         |             |  |        |         | 
|--------------------------------- | ---------------------- |  | ---------------------- | ------- | ----------- |  | ------ | ------- | 
|                                  |                        |  | June 30                |         | December 31
|                                  |                        |  | 2003                   |         | 2002       
|                                  |                        |  |                        |         |            
|                                  |                        |  | (Thousands of Dollars)
|Investments stated at fair value: |                        |  |                        |         |             |  |        |        
|                                  | Available-for-sale     |  | $                      | 146,930 |             |  | $      | 262,939 | 
|                                  | Trading
securities     |  |                        | 112,125 |             |  |        | 85,410  | 
|                                  | Derivative
instruments |  |                        | 1,324   |             |  |        | 6,137   | 
|Equity method investments         |                        |  | 32,905                 |         |             |  | 31,714 |        
|Investments stated at
cost        |                        |  | 11,596                 |         |             |  | 11,235 |        
|                                  |                        |  |                        |         |             |  |        |        
|                                  | Total
investments      |  | $                      | 304,880 |             |  | $      | 397,435 | 
|                                  |                        |  |                        |         |             |  |        |        

Investments Stated at Fair Value

The aggregate cost of Coxs investments stated at fair value at June 30,
2003 and December 31, 2002 was $108.1 million and $175.0 million, respectively.
Gross unrealized gains on investments were $78.5 million at June 30, 2003, and
gross unrealized gains and losses on investments were $129.6 million and $0.4
million, respectively, at December 31, 2002. For the three and six months ended
June 30, 2003, gross realized gains and losses on investments stated at fair
value were $124.5 million and $0.4 million, respectively, and $124.5 million
and $2.1 million, respectively. For the three and six months ended June 30,
2002, gross realized gains and losses on investments stated at fair value were
$0.2 million and $793.1 million, respectively, and $37.2 million and $1.2
billion, respectively. Derivative instruments classified within investments
are comprised of certain warrants to purchase shares of publicly-traded and
privately-held entities, as further described in Note 6. Derivative
Instruments and Hedging Activities.

8



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##### 



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

Sprint PCS.In April 2003, Cox sold its Sprint Corporations PCS Group
(Sprint PCS) warrants, which were exercisable for approximately 6.3 million
shares of Sprint PCS common stock, for nominal consideration. Cox recognized a
pre-tax loss of $0.4 million as a result of this sale.

In June 2003, Cox sold 32.9 million shares of Sprint PCS common stock for
aggregate net proceeds of approximately $161.7 million. Cox recognized an
aggregate pre-tax gain of $97.2 million on the sale of these shares.

At June 30, 2003, Coxs remaining investment in Sprint PCS was comprised
of 33.8 million shares of Sprint PCS common stock and convertible preferred
stock, which is convertible into approximately 4.0 million shares of Sprint PCS
common stock. Of the 33.8 million shares of Sprint PCS common stock, 19.5
million shares were classified as trading securities and have been pledged in
connection with Coxs zero-coupon debt and the remaining shares were classified
as available-for-sale securities and were associated with Coxs remaining
outstanding exchangeable subordinated debentures. For more information
regarding Coxs zero-coupon debt and exchangeable subordinated debentures,
refer to Note 5. Debt. The estimated fair value of Coxs investment in
Sprint PCS was $252.3 million and $349.2 million at June 30, 2003 and December
31, 2002, respectively.

Other

Cox has several other fair value, equity and cost method investments that
were not, individually or in the aggregate, significant in relation to Coxs
Condensed Consolidated Balance Sheets at June 30, 2003 and December 31, 2002.

4.     Intangible Assets

On January 1, 2002, Cox adopted SFAS No. 142, Goodwill and Other
Intangible Assets, which requires that goodwill and certain intangible assets
with indefinite useful lives no longer be amortized, but instead be tested for
impairment at least annually. Cox has determined that its franchise value
intangible assets have an indefinite useful life. Cox assesses franchise value
for impairment under SFAS No. 142 by utilizing a residual approach whereby Cox
measures the implied fair value of each franchise value intangible asset
subject to the same unit of accounting by deducting from the fair value of each
cable system cluster the fair value of the cable system clusters other net
assets, including previously unrecognized intangible assets. In performing its
annual impairment test as of January 1, 2003, Cox considered the guidance
contained in Emerging Issues Task Force (EITF) Issue No. 02-17, Recognition of
Customer Relationship Intangible Assets Acquired in a Business
Combination,
whereby Cox considered assumptions that marketplace participants would
consider, such as expectations of future contract renewals and other benefits
related to the intangible asset, when measuring the fair value of the cable
system clusters other net assets. The January 1, 2003 impairment test
resulted in a non-cash impairment charge of approximately $25.0 million, which
is classified within amortization expense in Coxs Condensed Consolidated
Statement of Operations.

9



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##### 



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

Summarized below are the carrying value and accumulated amortization of
intangible assets that continue to be amortized under SFAS No. 142, as well as
the carrying value of those intangible assets that are no longer amortized:

|                                          |  |                        |        |                   |  |          |        |          |  |              |            |          |  |   |        |     |  |   |        |  |  |   |            | 
|----------------------------------------- |  | ---------------------- | ------ | ----------------- |  | -------- | ------ | -------- |  | ------------ | ---------- | -------- |  | - | ------ | --- |  | - | ------ |  |  | - | ---------- | 
|                                          |  | June 30, 2003          |        | December 31, 2002
|                                          |  |                        |        |                  
|                                          |  | Gross                  |        |                   |  |          |        | Net      |  | Gross        |            |          |  |   |        | Net
|                                          |  | Carrying               |        | Accumulated       |  | Carrying |        | Carrying |  | Accumulated  |            | Carrying
|                                          |  | Value                  |        | Amortization      |  | Value    |        | Value    |  | Amortization |            | Value   
|                                          |  |                        |        |                   |  |          |        |          |  |              |            |         
|                                          |  | (Thousands of Dollars)
|Intangible assets
subject
to amortization |  | $                      | 49,784 |                   |  | $        | 18,239 |          |  | $            | 31,545     |          |  | $ | 47,095 |     |  | $ | 15,788 |  |  | $ | 31,307     | 
|Franchise value                           |  |                        |        |                   |  |          |        |          |  |              | 15,665,339 |          |  |   |        |     |  |   |        |  |  |   | 15,692,981 | 
|                                          |  |                        |        |                   |  |          |        |          |  |              |            |          |  |   |        |     |  |   |        |  |  |   |            | 
|Total intangible assets                   |  |                        |        |                   |  |          |        |          |  | $            | 15,696,884 |          |  |   |        |     |  |   |        |  |  | $ | 15,724,288 | 
|                                          |  |                        |        |                   |  |          |        |          |  |              |            |          |  |   |        |     |  |   |        |  |  |   |            | 

5.     Debt

|                                     |                      |   |                        |           |             |   |           |           | 
|------------------------------------ | -------------------- | - | ---------------------- | --------- | ----------- | - | --------- | --------- | 
|                                     |                      |   | June 30                |           | December 31
|                                     |                      |   | 2003                   |           | 2002       
|                                     |                      |   |                        |           |            
|                                     |                      |   | (Thousands of Dollars)
|Revolving credit
facilities          |                      | $ |                       |           |             | $ |          |          
|Commercial paper                     |                      |   | 109,493                |           |             |   |          |          
|Medium-term notes                    |                      |   | 391,320                |           |             |   | 391,274   |          
|Notes and
debentures                 |                      |   | 5,663,661              |           |             |   | 5,352,489 |          
|Exchangeable subordinated debentures |                      |   | 527,078                |           |             |   | 1,296,070 |          
|Zero-coupon debt                     |                      |   | 78,409                 |           |             |   | 41,377    |          
|Capitalized lease
obligations        |                      |   | 196,942                |           |             |   | 219,217   |          
|Other                                |                      |   | 15,978                 |           |             |   | 15,570    |          
|                                     |                      |   |                        |           |             |   |           |          
|                                     |                      |   | 6,982,881              |           |             |   | 7,315,997 |          
|Less current portion                 |                      |   | 90,797                 |           |             |   | 393,040   |          
|                                     |                      |   |                        |           |             |   |           |          
|                                     | Total long-term debt |   | $                      | 6,892,084 |             |   | $         | 6,922,957 | 
|                                     |                      |   |                        |           |             |   |           |          

See Note 6. Derivative Instruments and Hedging Activities for a
discussion of the accounting for certain derivative instruments embedded in the
exchangeable subordinated debentures and zero-coupon debt, which have been
classified as a component of debt in Coxs Condensed Consolidated Balance
Sheets at June 30, 2003 and December 31, 2002.

Revolving Credit Facilities

In June 2003, Cox renewed its 364-day credit agreement, which is now
available through June 26, 2004. The 364-day credit agreement also allows Cox
to extend the agreement for an additional two years at maturity. The capacity
of this credit agreement was reduced from $1.1 billion to $900.0 million. Cox
also has a $900.0 million 5-year credit agreement available through September
26, 2005. At Coxs election, the interest rate on these credit agreements is
based on London Interbank Offered Rate (LIBOR), the certificate of deposit rate
plus varying percentages or an alternate base rate. These credit agreements
also impose a commitment fee on the unused portion of the total amount
available based on a ratio of debt to operating cash flow, a measure of
performance not calculated in accordance with GAAP, and a utilization fee based

10



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##### 



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

on the level of borrowings. Cox had no borrowings outstanding under either
credit agreement at June 30, 2003 and December 31, 2002.

Notes and Debentures

In May 2003, Cox issued a series of 4.625% senior notes due 2013 with an
aggregate principal amount of $600.0 million, less offering costs and
underwriting commissions of $7.7 million. The 4.625% senior notes mature on
June 1, 2013, are unsecured and rank equally with Coxs other senior unsecured
indebtedness. In addition, the 4.625% senior notes may be redeemed by Cox, in
whole or in part, at any time prior to maturity at the greater of (x) 100% of
the principal amount and (y) the present value of the principal amount and the
remaining scheduled interest payments plus a make-whole premium, plus in either
case (x) or (y), accrued and unpaid interest. Interest is payable on a
semi-annual basis beginning December 1, 2003.

In accordance with the terms of the indenture governing Coxs convertible
senior notes due 2021, Cox became obligated to purchase for cash convertible
notes tendered and not withdrawn before the close of business on February 24,
2003. Cox repurchased $422.7 million aggregate principal amount at maturity of
the convertible notes that had been properly tendered and not withdrawn, for
aggregate cash consideration of $304.2 million, which represented the accreted
value of the repurchased notes. As a result, $19.0 million of the original
$770.8 million aggregate principal amount at maturity of Coxs convertible
notes remain outstanding at June 30, 2003.

On August 1, 2003, Coxs $250.0 million aggregate principal amount of
6.15% REset Put Securities due 2033 (REPS) was subject to mandatory tender to
the remarketing dealer. However, the remarketing dealer and Cox mutually agreed
to terminate the remarketing dealers right to remarket the REPS and, in
accordance with the terms of the REPS, Cox repurchased the REPS on August 1,
2003. The total aggregate consideration paid to repurchase the REPS was $301.4
million, which amount included the remarketing option value paid to the
remarketing dealer and accrued interest paid to the holders.

Exchangeable Subordinated Debentures

In June 2003, Cox repurchased $1.3 billion original principal amount of
its 2% Exchangeable Subordinated Debentures due 2029 (PRIZES) and $274.9
million original principal amount of its 3% Exchangeable Subordinated
Debentures due 2030 (Premium PHONES) pursuant to Coxs tender offers for such
securities for aggregate cash consideration of $755.1 million, representing the
tender offer consideration plus accrued and unpaid interest for each security.
As a result of Coxs repurchase pursuant to the tender offers, on June 30,
2003, the Premium PHONES were de-listed from the New York Stock Exchange and
registration of the Premium PHONES under Section 12 of the Securities Exchange
Act of 1934 was terminated.

Exchangeable subordinated debentures at June 30, 2003 are comprised of:
$14.6 million aggregate original principal amount of PRIZES, which were issued
in November 1999 and are due November 2029; $0.1 million aggregate original
principal amount of Premium PHONES, which were issued in March 2000 and are due
March 2030; and $1.8 billion aggregate principal amount at maturity of
exchangeable subordinated discount debentures due 2020 (Discount Debentures)
which were issued in April 2000 and are due April 2020. The Discount Debentures
were issued with an aggregate original issue discount of
$1.1 billion. The aggregate carrying value of the exchangeable
subordinated debentures, which is adjusted for the embedded
derivative obligations, amounted to $527.1 million and
$1.3 billion at June 30, 2003 and December 31, 2002,
respectively, and has been classified within debt in the Condensed
Consolidated Balance Sheets.

The original principal amount of the PRIZES, Premium PHONES and Discount
Debentures are indexed to the trading price of Sprint PCS common stock.
Accordingly, if the fair value of the Sprint PCS common stock rises above the
market price at the time of issuance, Cox may be obligated to pay an additional
amount in excess of the original principal at maturity or upon the holders
exchange of the PRIZES, Premium PHONES and Discount Debentures; however, Cox is
obligated to pay the full principal amount at maturity of each security. The
PRIZES and Premium Phones are exchangeable at the holders

11



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##### 



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

option for cash based on the value of shares of Sprint PCS common stock. The
Discount Debentures are exchangeable at the holders option for cash based on
the value of shares of Sprint PCS common stock, and Cox, may elect, in its sole
discretion, to deliver shares of Sprint PCS common stock to a holder upon a
settlement of such holders exchange. Holders of the Discount Debentures also
may require Cox to repurchase these securities on certain dates prior to
maturity at a purchase price equal to the adjusted principal amount plus any
accrued and unpaid interest. See Note 6. Derivative Instruments and Hedging
Activities for more information regarding the accounting for the exchangeable
subordinated debentures.

Interest Rate Swaps

Cox utilizes interest rate swap agreements to manage its exposure to
changes in interest rates associated with certain of its fixed-rate debt
obligations whereby these fixed-rate debt obligations are effectively converted
into floating-rate debt obligations. The variable rates with respect to Coxs
interest rate swaps are adjusted quarterly or semi-annually based on LIBOR.
The notional amounts with respect to the interest rate swaps do not quantify
risk, but are used in the determination of cash settlements under the interest
rate swap agreements. Cox is exposed to a credit loss in the event of
nonperformance by the counterparties; however, Cox does not anticipate
nonperformance by the counterparties. For a further discussion regarding Coxs
accounting for interest rate swaps, see Note 6. Derivative Instruments and
Hedging Activities.

In March
2003, Cox entered into two interest rate swap agreements with an
aggregate notional amount of $200.0 million. The swaps have been
designated as fair value hedges of the underlying debt, as defined in
SFAS No. 133, and relate to debt maturing in 2008.

In June
and July 2003, Cox entered into a series of interest rate swap
agreements with an aggregate notional amount of $400.0 million.
These swaps have been designated as fair value hedges of the
underlying debt, as defined in SFAS No. 133, and relate to debt
maturing in 2009.

The following table summarizes the notional amounts, weighted average
interest rate data and maturities for Coxs interest rate swap agreements at
June 30, 2003 and December 31, 2002:

|                                              |  |         |             |             |  |   |             |  
|--------------------------------------------- |  | ------- | ----------- | ----------- |  | - | ----------- | -
|                                              |  | June 30 |             | December 31
|                                              |  | 2003    |             | 2002       
|                                              |  |         |             |            
|Notional amount (in
thousands)                |  | $       | 1,450,000   |             |  | $ | 1,150,000   |  
|Weighted average fixed interest rate received |  |         | 7.28        | %           |  |   | 7.38        | %
|Weighted average floating interest rate
paid  |  |         | 2.91        | %           |  |   | 3.10        | %
|Maturity                                      |  |         | 2004  2009 |             |  |   | 2004  2006 |  

As a result of the settlements under Coxs interest rate swap agreements,
interest expense was reduced by $15.2 million and $29.0 million, respectively,
during the three and six months ended June 30, 2003, and $10.5 million and
$23.4 million, respectively, during the same periods in the prior year.

6.     Derivative Instruments and Hedging Activities

Cox accounts for derivative instruments in accordance with SFAS No. 149
and SFAS No. 133, which require all freestanding and embedded derivative
instruments to be measured at fair value and recognized on the balance sheet as
either assets or liabilities. In addition, all derivative instruments used in
hedging relationships must be designated, reassessed and accounted for as
either fair value hedges or cash flow hedges pursuant to the provisions of SFAS
No. 133.

12



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##### 



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

Cox does not hold or issue derivative instruments for trading purposes and
is not a party to leveraged instruments. From time to time, however, Cox uses
derivative instruments to manage its exposure to changes in the fair value of
certain of its assets or liabilities or to manage its exposure to changes in
interest rates or equity prices. These derivative instruments are designated
and accounted for by Cox as hedges of the underlying exposure being managed, as
prescribed by SFAS No. 133. In addition, upon adoption of SFAS No. 133,
certain of Coxs debt instruments and investments contained embedded or
freestanding derivatives, as defined. Cox has not designated these embedded
and freestanding derivatives as hedges under SFAS No. 133 and, as such, changes
in their fair value are being recognized in earnings as derivative gains or
losses. Coxs use of derivative instruments may result in short-term gains or
losses and may increase volatility in its earnings.

The credit risks associated with Coxs derivative financial instruments
are controlled through the evaluation and monitoring of the creditworthiness of
the counterparties. Although Cox may be exposed to losses in the event of
nonperformance by the counterparties, Cox does not expect such losses, if any,
to be significant.

Cox recorded pre-tax losses on derivative instruments of $24.2 million and
$26.7 million during the three and six months ended June 30, 2003,
respectively, and pre-tax gains on derivative instruments of $47.9 million and
$767.6 million during the three and six months ended June 30, 2002,
respectively. In addition, cumulative derivative adjustments made in
accordance with SFAS No. 133, which are classified as a component of debt in
Coxs Condensed Consolidated Balance Sheets, reduced reported indebtedness by
approximately $611.2 million at June 30, 2003 and approximately $1.4 billion at
December 31, 2002. The following is a detail of Coxs gain (loss) on
derivative instruments for the three and six months ended June 30, 2003 and
2002 followed by a summary of Coxs derivative instruments.

|                                     |  |                    |       |                  |  |                       |       |      |  |   |       |   |  |   |       |  
|------------------------------------ |  | ------------------ | ----- | ---------------- |  | --------------------- | ----- | ---- |  | - | ----- | - |  | - | ----- | -
|                                     |  | Three Months Ended |       | Six Months Ended
|                                     |  | June 30            |       | June 30         
|                                     |  |                    |       |                 
|                                     |  | 2003               |       | 2002             |  | 2003                  |       | 2002
|                                     |  |                    |       |                  |  |                       |       |     
|                                     |  |                    |       |                  |  | (Millions of Dollars) |       |      |  |  
|Equity collar
arrangements           |  | $                  |      |                  |  | $                     |      |      |  | $ |      |   |  | $ | 268.8 |  
|Zero-coupon
debt                     |  |                    | (24.5 | )                |  |                       | 106.7 |      |  |   | (22.9 | ) |  |   | 333.0 |  
|Exchangeable
subordinated
debentures |  |                    | 0.4   |                  |  |                       | (38.0 | )    |  |   | 0.6   |   |  |   | 249.2 |  
|Stock purchase
warrants              |  |                    | (0.1  | )                |  |                       | (20.8 | )    |  |   | (4.4  | ) |  |   | (83.4 | )
|                                     |  |                    |       |                  |  |                       |       |      |  |   |       |   |  |   |       |  
|Total derivative gain
(loss)         |  | $                  | (24.2 | )                |  | $                     | 47.9  |      |  | $ | (26.7 | ) |  | $ | 767.6 |  
|                                     |  |                    |       |                  |  |                       |       |      |  |   |       |   |  |   |       |  

Interest Rate Swap Agreements

Cox utilizes interest rate swap agreements designed to assist Cox in
maintaining a mix of fixed and floating rate debt by converting a portion of
existing fixed rate debt into a floating rate obligation. Cox has designated
and accounted for its interest rate swap agreements as fair value hedges
whereby the fair value of the related interest rate swap agreements are
classified as a component of other assets with the corresponding fixed-rate
debt obligations being classified as a component of debt in Coxs Condensed
Consolidated Balance Sheets. Cox has assumed no ineffectiveness with regard to
these interest rate swap agreements as the agreements qualify for the short-cut
methodof accounting for fair value hedges of debt instruments, as prescribed
by SFAS No. 133. Coxs interest rate swap agreements approximated a derivative
asset of $135.4 million and $112.1 million at June 30, 2003 and December 31,
2002, respectively.

13



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##### 



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

Equity Collar Arrangements

Cox had a series of costless equity collar arrangements to manage its
exposure to market price fluctuations of approximately 15.8 million shares of
its Sprint PCS common stock. Cox also had costless equity collar arrangements
to manage its exposure to market price fluctuations of 17.2 million shares of
its AT&T Wireless common stock and of 22.5 million shares of its AT&T common
stock. Cox had designated and accounted for all of these costless equity
collars as fair value hedges. During the first quarter of 2002, Cox terminated
these equity collar arrangements for aggregate proceeds of $264.4 million and
recognized a pre-tax derivative gain of approximately $268.8 million.

Zero-Coupon Debt

Cox has a series of prepaid forward contracts to sell up to 19.5 million
shares of its Sprint PCS common stock. These contracts mature at various dates
between 2004 and 2006, and at Coxs election, may be settled in cash or shares
of Sprint PCS common stock. These contracts meet the definition of a hybrid
instrument, as prescribed by SFAS No. 133. These hybrid instruments are
comprised of a zero-coupon debt instrument, as the host contract, and an
embedded derivative, which derives its value, in part, based on the trading
price of Sprint PCS common stock. Cox has not designated these embedded
derivatives as a hedge of its investment in Sprint PCS common stock. As a
result, changes in the fair value of these embedded derivatives are recognized
in earnings and classified within gain (loss) on derivative instruments in
Coxs Condensed Consolidated Statements of Operations. The aggregate fair
value of these embedded derivatives approximated a derivative asset of $377.2
million and $400.1 million at June 30, 2003 and December 31, 2002,
respectively, and has been classified as a component of the zero-coupon debt
instruments. Accordingly, the carrying value of the zero-coupon debt
instruments, net of the embedded derivative assets, amounted to a net liability
of $78.4 million and $41.4 million at June 30, 2003 and December 31, 2002,
respectively, and has been classified within debt in Coxs Condensed
Consolidated Balance Sheets.

Exchangeable Subordinated Debentures

Cox has three series of exchangeable subordinated debentures outstanding,
referred to as PRIZES, Premium PHONES and Discount Debentures, as further
described in Note 5. Debt. The exchangeable subordinated debentures meet the
definition of a hybrid instrument, as prescribed by SFAS No. 133. These hybrid
instruments are comprised of an exchangeable subordinated debt instrument, as
the host contract, and an embedded derivative, which derives, in part, its
value based on the trading price of Sprint PCS common stock, U.S. Treasury
rates and Coxs credit spreads. Cox has not designated these embedded
derivatives as a hedge of its investment in Sprint PCS common stock. As a
result, changes in the fair value of these embedded derivatives are recognized
in earnings and classified within gain (loss) on derivative instruments in the
Condensed Consolidated Statements of Operations. The aggregate fair value of
these embedded derivatives approximated a derivative obligation of $0 and $0.6
million at June 30, 2003 and December 31, 2002, respectively, and has been
classified as a component of the corresponding exchangeable subordinated debt
instruments. Accordingly, the aggregate carrying value of the exchangeable
subordinated debt instruments, including the embedded derivative obligations,
amounted to $527.1 million and $1.3 billion at June 30, 2003 and December
31, 2002, respectively, and has been classified within debt in the Condensed
Consolidated Balance Sheets. As a result of Coxs repurchase of PRIZES and
Premium PHONES pursuant to its tender offers described in Note 5. Debt, $14.6
million original principal amount of PRIZES and $0.1 million original principal
amount of Premium PHONES remain outstanding and, therefore, the carrying values
for such securities at June 30, 2003 are significantly less than the carrying
value at December 31, 2002.

14



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##### 



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

Stock Purchase Warrants

Cox holds warrants to purchase equity securities of certain
publicly-traded and privately-held entities. Warrants that can be exercised
and settled by the delivery of net shares such that Cox pays no cash upon
exercise are deemed freestanding derivative instruments, as prescribed by SFAS
No. 133. Cox has not designated these net share warrants as hedging
instruments; accordingly, changes in the fair value of these warrants are
recognized in earnings and classified within gain (loss) on derivative
instruments in Coxs Condensed Consolidated Statements of Operations. The
aggregate fair value of these warrants approximated a derivative asset of $1.3
million and $6.1 million at June 30, 2003 and December 31, 2002, respectively,
and has been classified as a component of investments in Coxs Condensed
Consolidated Balance Sheets.

7.     Earnings Per Share

The following table reconciles the numerator and the denominator of the
basic and diluted per share computations for net income for the three and six
months ended June 30, 2003:

|                                                                              |                                  |   |                           |       |               |   |         |       | 
|----------------------------------------------------------------------------- | -------------------------------- | - | ------------------------- | ----- | ------------- | - | ------- | ----- | 
|                                                                              |                                  |   | Three Months              |       | Six Months   
|                                                                              |                                  |   | Ended                     |       | Ended        
|                                                                              |                                  |   | June 30, 2003             |       | June 30, 2003
|                                                                              |                                  |   |                           |       |              
|                                                                              |                                  |   | (Thousands of Dollars,   
|                                                                              |                                  |   | excluding per share data)
|Net income
(A)                                                                |                                  | $ | 117,745                   |       |               | $ | 88,524  |      
|                                                                              |                                  |   |                           |       |               |   |         |      
|Basic weighted average shares
outstanding
(B)                                 |                                  |   | 620,256                   |       |               |   | 620,240 |      
|Effect of dilutive securities:                                                |                                  |   |                           |       |               |   |         |      
|                                                                              | Employee stock purchase
plan     |   |                           | 84    |               |   |         | 64    | 
|                                                                              | Convertible preferred
stock      |   |                           | 9,389 |               |   |         | 9,389 | 
|                                                                              |                                  |   |                           |       |               |   |         |      
|Diluted weighted average shares
outstanding
(C)                               |                                  |   | 629,729                   |       |               |   | 629,693 |      
|                                                                              |                                  |   |                           |       |               |   |         |      
|Earnings per share before cumulative
effect of change in accounting principle |                                  |   |                           |       |               |   |         |      
|                                                                              | Basic earnings per share
(A/B)   |   | $                         | 0.19  |               |   | $       | 0.14  | 
|                                                                              |                                  |   |                           |       |               |   |         |      
|                                                                              | Diluted earnings per share
(A/C) |   | $                         | 0.19  |               |   | $       | 0.14  | 
|                                                                              |                                  |   |                           |       |               |   |         |      

For the three and six months ended June 30, 2003, 15.7 million Class A
common shares related to employee stock-based compensation plans and
convertible senior notes were not included in the computation of diluted
earnings per share, because such effects would have been antidilutive for the
period.

For the three and six months ended June 30, 2002, 55.3 million and 54.8
million Class A common shares, respectively, related to employee stock-based
compensation plans, convertible preferred stock and notes, and the effect of
Cox-obligated capital and preferred securities of subsidiary trusts were not
included in the computation of diluted earnings per share, because such effects
would have been antidilutive for the period.

15



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##### 



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

8.     Transactions with Affiliated Companies

Cox receives day-to-day cash management services from CEI, with
settlements of outstanding balances between Cox and CEI occurring periodically
at market interest rates. The amounts due to CEI are generally due on demand
and represent the net balance of the intercompany transactions. Prior to May
2, 2003, outstanding amounts due from CEI bore interest equal to CEIs current
commercial paper borrowing rate and outstanding amounts due to CEI bore
interest at 50 basis points above CEIs current commercial borrowing rate as
payment for the services provided. From and after May 2, 2003, both
outstanding amounts due from and to CEI bear interest equal to CEIs current
commercial paper borrowing rate. The amount due to CEI from Cox was $8.5
million at June 30, 2003, and the amount due from CEI to Cox was approximately
$21.1 million at December 31, 2002. The interest rate was 1.3% and 1.8% at
June 30, 2003 and December 31, 2002, respectively. Included in amounts due to
CEI are the following transactions:

|                                             |  |                        |          |  
|-------------------------------------------- |  | ---------------------- | -------- | -
|                                             |  | (Thousands of Dollars)
|                                             |  |                       
|Intercompany due from CEI, December 31, 2002 |  | $                      | 21,109   |  
|Cash transferred to CEI                      |  |                        | 100,754  |  
|Net operating expense reimbursements         |  |                        | (130,352 | )
|                                             |  |                        |          |  
|Intercompany due to CEI, June 30, 2003       |  | $                      | (8,489   | )
|                                             |  |                        |          |  

9.     Supplemental Financial Information

|                          |                                 |   |                        |         |             |   |         |         | 
|------------------------- | ------------------------------- | - | ---------------------- | ------- | ----------- | - | ------- | ------- | 
|                          |                                 |   | June 30                |         | December 31
|                          |                                 |   | 2003                   |         | 2002       
|                          |                                 |   |                        |         |            
|                          |                                 |   | (Thousands of Dollars)
|Other current assets      |                                 |   |                        |         |             |   |         |        
|Inventory                 |                                 | $ | 62,110                 |         |             | $ | 96,967  |        
|Income tax
receivable     |                                 |   |                       |         |             |   | 119,754 |        
|Prepaid assets            |                                 |   | 42,137                 |         |             |   | 41,522  |        
|Other                     |                                 |   | 19,127                 |         |             |   | 9,098   |        
|                          |                                 |   |                        |         |             |   |         |        
|                          | Total other current
assets      |   | $                      | 123,374 |             |   | $       | 267,341 | 
|                          |                                 |   |                        |         |             |   |         |        
|Other current liabilities |                                 |   |                        |         |             |   |         |        
|Deposits and
advances     |                                 | $ | 85,104                 |         |             | $ | 80,816  |        
|Income tax
payable        |                                 |   | 110,402                |         |             |   |        |        
|Other                     |                                 |   | 140,685                |         |             |   | 135,419 |        
|                          |                                 |   |                        |         |             |   |         |        
|                          | Total other current
liabilities |   | $                      | 336,191 |             |   | $       | 216,235 | 
|                          |                                 |   |                        |         |             |   |         |        

|                                      |  |                        |         |      |  |   |         |  
|------------------------------------- |  | ---------------------- | ------- | ---- |  | - | ------- | -
|                                      |  | Six Months Ended      
|                                      |  | June 30               
|                                      |  |                       
|                                      |  | 2003                   |         | 2002
|                                      |  |                        |         |     
|                                      |  | (Thousands of Dollars)
|Cash flow information                 |  |                        |         |      |  |   |         |  
|Cash paid for
interest                |  | $                      | 192,975 |      |  | $ | 205,937 |  
|Cash paid (received) for
income taxes |  |                        | 1,116   |      |  |   | (98,313 | )

16



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##### 



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

10.     Commitments and Contingencies

In connection with certain of Coxs recent acquisitions and other
transactions, Cox has provided certain indemnities to the respective
counterparties with respect to future claims that may arise from state or
federal taxing authorities. The nature and terms of these indemnities vary by
transaction and generally remain in force through the requisite statutory
review periods. In addition, the events or circumstances that would require
Cox to perform under these indemnities are transaction and circumstance
specific. As of June 30, 2003, Cox believes the likelihood that it will be
required to perform under these indemnities is remote and that the maximum
potential future payments that Cox could be required to make under these
indemnifications are not determinable at this time, as any future payments
would be dependent on the type and extent of the related claims, and all
available defenses, which are not reasonably estimable. Cox has not
historically incurred any material costs related to performance under these
types of indemnities.

Coxs subsidiary Cox Communications Louisiana L.L.C. (Cox Louisiana) is a
defendant in a putative subscriber class action suit in Louisiana state court
filed on November 5, 1997. The suit challenges the propriety of late fees
charged by Cox Louisiana in the greater New Orleans area to customers who fail
to pay for services in a timely manner. The suit seeks injunctive relief and
damages under certain claimed state law causes of action. The action is being
defended vigorously. The outcome of this matter cannot be predicted at this
time. A related suit filed in Texas was voluntarily dismissed on September 19,
2002.

On November 14, 2000, GTE.NET, L.L.C. d/b/a Verizon Internet Solutions and
Verizon Select Services, Inc. filed suit against Cox in the United States
District Court for the Southern District of California. Verizon alleged that
Cox has violated various sections of the Communications Act of 1934 by
allegedly refusing to provide Verizon with broadband telecommunications service
and interconnection, among other things. On November 29, 2000, Verizon amended
its complaint to add CoxCom, Inc., a subsidiary of Cox, as an additional
defendant. On January 8, 2002, Verizon filed a second amended complaint,
dropping its claims for interconnections and damages. Verizon seeks various
forms of relief, including declaratory and injunctive relief. On January 29,
2002, the Court granted defendants motion to stay the case on primary
jurisdiction grounds. Cox and CoxCom intend to defend this action vigorously.
The outcome cannot be predicted at this time.

On August 23, 2002, plaintiff Redefining Progress, on behalf of itself and
all others similarly situated, sued Fax.com, Inc., Cox Business Services,
L.L.C. and others in United States District Court for the Northern District of
California, alleging that Fax.com has sent numerous unsolicited advertisements
by facsimile in violation of a federal statute. The complaint alleges that Cox
Business Services, which provides telecommunications services to Fax.com, is
also liable for the facsimiles in violation of the Telephone Consumer
Protection Act of 1991 (TCPA), Sections 206 and 207 of the Telecommunications
Act of 1996 and certain state laws. The suit seeks an award of statutory
damages in the amount of $500 for each violation of the TCPA, treble damages,
injunctive relief, the establishment of a constructive trust and other relief.
On October 11, 2002, Cox Business Services moved to dismiss for lack of subject
matter jurisdiction, for failure to state a claim, and based on the primary
jurisdiction of the FCC. On March 3, 2003, the court granted Cox Business
Services motion to dismiss for lack of subject matter jurisdiction. The time
for appeal has expired. A nearly identical federal court suit was filed in the
United States District Court for the Northern District of California on
September 4, 2002 by plaintiff Daniel David, on behalf of himself and all
others similarly situated, against Fax.com, Cox Business Services, and others,
but was not served until December 4, 2002. The David suit was reassigned to
the same judge presiding over the suit filed by Redefining Progress, and it
asserts substantially the same claims and seeks substantially the same relief.
On May 1, 2003, the David suit was dismissed in light of the courts ruling in
the Redefining Progress suit.

In addition, on September 8, 2002, plaintiff Daniel David, on behalf of
himself and all others similarly situated, filed a nearly identical case
against Fax.com, Cox Business Services and others in the Superior Court of
California, Alameda County. The complaint asserts various causes of action
including violation of the TCPA, trespass to chattels, violation of Section
17-200 of the California Business and Professions Code

17



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##### 



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

and unjust enrichment. The suit seeks damages and injunctive relief similar to
that sought in the related federal suits. This action has been stayed until
September 30, 2003 pending FCC action on its on-going TCPA rule-making. Cox
Business Services intends to defend this action vigorously. The outcome cannot
be predicted at this time.

Cox @Home, Inc., a wholly-owned subsidiary of Cox, is a stockholder of At
Home Corporation, also called Excite@Home, formerly a provider of high-speed
Internet access and content services, which filed for bankruptcy protection in
September 2001. On September 24, 2002, a committee of bondholders of
Excite@Home sued Cox, Cox @Home and Comcast Corporation, among others, in the
United States District Court for the District of Delaware. The suit alleges
the realization of short-swing profits under Section 16(b) of the Securities
Exchange Act of 1934 from purported transactions relating to Excite@Home common
stock involving Cox, Comcast and AT&T Corp., and purported breaches of
fiduciary duty. The suit seeks disgorgement of short-swing profits allegedly
received by the Cox and Comcast defendants totaling at least $600.0 million,
damages for breaches of fiduciary duties in an unspecified amount, attorneys
fees, pre-judgment interest and post-judgment interest. On November 12, 2002,
Cox, Cox @Home, and David Woodrow filed a motion to dismiss or transfer the
action for improper venue or, in the alternative, to transfer the action
pursuant to 28 U.S.C. Sec. 1404. The Court has not yet decided the motion. Cox
and Cox @Home intend to defend this action vigorously. The outcome cannot be
predicted at this time.

Jerrold Schaffer and Kevin J. Yourman, on May 26, 2000 and May 30, 2000,
respectively, filed class action lawsuits in the Superior Court of the State of
California for the County of San Mateo, on behalf of themselves and all other
stockholders of Excite@Home as of March 28, 2000, seeking (a) to enjoin
consummation of a March 28, 2000 letter agreement among Excite@Homes principal
investors, including Cox, and (b) unspecified compensatory damages. Cox and
David Woodrow, Coxs former Executive Vice President, Business Development,
among others, are named defendants in both lawsuits. Mr. Woodrow formerly
served on the Excite@Home board of directors. The plaintiffs assert that the
defendants breached purported fiduciary duties of care, candor and loyalty to
the plaintiffs by entering into the letter agreement and/or taking certain
actions to facilitate the consummation of the transactions contemplated by the
letter agreement. On February 26, 2001, the Court stayed both actions, which
had been previously consolidated, on grounds of forum non-conveniens. A
related suit styled Linda Ward, et al. v. At Home Corporation (No. 418233) was
filed on September 6, 2001 in the same court. On February 7, 2002, the Court
consolidated the Ward action with the Schaffer/Yourman action, thereby also
staying the Ward action. On June 18, 2002, the court granted plaintiffs motion
to lift the stay and authorized discovery to proceed regarding Coxs pending
motion to dismiss for lack of personal jurisdiction. On September 10, 2002 the
United States Bankruptcy Court for the Northern District of California in the
Excite@Home bankruptcy proceeding held that the claims in the suits were
derivative and, thus, constituted the exclusive property of the Excite@Home
bankruptcy estate. The Bankruptcy Court thereafter ordered the plaintiffs to
dismiss the suits. Plaintiffs have appealed the Bankruptcy Courts decision to
the United States District Court for the Northern District of California. Cox
intends to defend these actions vigorously. The outcome cannot be predicted at
this time.

On April 26, 2002, Frieda and Michael Eksler filed an amended complaint
naming Cox as a defendant in a putative class action lawsuit in the United
States District Court for the Southern District of New York against AT&T Corp.
and certain former officers and directors of Excite@Home, among others. Cox
was served on May 10, 2002. This case has been consolidated with a related
case captioned Semen Leykin v. AT&T Corp., et al., and another related case,
and an amended complaint in the consolidated case, naming Cox as a defendant,
was filed and served on November 7, 2002. The putative class includes persons
who purchased shares of Excite@Home common stock between the time period March
28, 2000 and September 28, 2001. The sole count against Cox asserts a claim
against Cox as an alleged controlling person of Excite@Home under Section
20(a) of the Securities Exchange Act for violations of Section 10(b) of the
Securities Exchange Act and Rule 10b-5 thereunder. The suit seeks from Cox
unspecified monetary damages, statutory compensation and other relief. In
addition, a claim against Coxs former Executive Vice President, David Woodrow,
who formerly served on Excite@Homes board of directors, is

18



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##### 



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

asserted for breach of purported fiduciary duties. The suit seeks from Woodrow
unspecified monetary and punitive damages. On February 11, 2003, Cox and
Woodrow filed a dispositive motion to dismiss on various grounds, including
failure to state a claim. Cox intends to defend this action vigorously. The
outcome cannot be predicted at this time.

Cox also understands that on July 3, 2003, Leo James filed a putative
class action lawsuit against Cox and David Woodrow, among others, in the United States
District Court for the Southern District of New York. Mr. James is represented
by the same attorneys who represent the individuals who were previously
designated lead plaintiffs in the Leykin action described above. The complaint
in the James action, with which Cox has not been served, asserts
claims substantially similar to the operative allegations in the
Leykin action described above. Accordingly, the sole count against
Cox asserts a claim against Cox as an alleged controlling
person of Excite@Home under Section 20(a) of the
Securities Exchange Act for violations of Section 10(b) of the
Securities Exchange Act and Rule 10b-5 thereunder and seeks from
Cox unspecified monetary damages, statutory compensation and other
relief. Cox intends to
defend the James action vigorously in the event that it is served with the
complaint. The outcome cannot be predicted at this time.

Cox and its subsidiaries are parties to various other legal proceedings
that are ordinary and incidental to their businesses. Management does not
expect that any of these other currently pending legal proceedings will have a
material adverse impact on Coxs consolidated financial position, results of
operations or cash flows.

19



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##### 



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the
accompanying unaudited condensed consolidated financial statements for the
three and six month periods ended June 30, 2003 and 2002.

Overview

Cox Communications, Inc. (Cox), an indirect 63.4% majority-owned
subsidiary of Cox Enterprises, Inc. (CEI), is a multi-service broadband
communications company serving approximately 6.5 million customers nationwide,
including 6.3 million basic cable subscribers. Cox is the nations fourth
largest cable television provider and offers an array of broadband products and
services to both residential and commercial customers in its markets. These
services primarily include analog and digital video, high-speed Internet access
and local and long-distance telephone. Cox operates in one operating segment,
broadband communications.

Coxs business strategy is to leverage the capacity and capability of its
broadband network to deliver multiple services to consumers and businesses
while creating multiple revenue streams for Cox. Cox believes that aggressive
investment in the technological capabilities of its broadband network, the
long-term advantages of clustering, the competitive value of bundled services
and its commitment to customer and community service will enhance its ability
to continue to grow its cable operations and offer new services to existing and
new customers.

Based on reported subscriber numbers of other providers of multi-channel
video services, Cox is the sixth largest provider of multi-channel video
services in the country. The following providers report higher subscriber
numbers than Cox: Comcast Corporation, Echostar Communications Corporation,
DirecTV (a subsidiary of Hughes Electronics), AOL-Time Warner and Charter
Communications.

Results of Operations

Three Months Ended June 30, 2003 Compared with Three Months Ended June 30, 2002

The following table sets forth summarized consolidated financial
information for the three months ended June 30, 2003 and 2002.

|                                             |  |                        |           |      |  |          |           |          |  |   |          |   |  |    |      |   
|-------------------------------------------- |  | ---------------------- | --------- | ---- |  | -------- | --------- | -------- |  | - | -------- | - |  | -- | ---- | --
|                                             |  | Three Months Ended     |           |      |  |          |           |          |  |  
|                                             |  | June 30                |           |      |  |          |           |          |  |  
|                                             |  | 2003                   |           | 2002 |  | $ Change |           | % Change
|                                             |  |                        |           |      |  |          |           |         
|                                             |  | (Thousands of Dollars) |           |      |  |          |           |          |  |  
|Revenues                                     |  | $                      | 1,423,939 |      |  | $        | 1,244,629 |          |  | $ | 179,310  |   |  |    | 14   | % 
|Costs and expenses                           |  |                        | 891,824   |      |  |          | 802,754   |          |  |   | 89,070   |   |  |    | 11   | % 
|Depreciation and amortization                |  |                        | 364,274   |      |  |          | 337,728   |          |  |   | 26,546   |   |  |    | 8    | % 
|(Gain) loss on sale of cable systems         |  |                        | (469      | )    |  |          | 3,916     |          |  |   | (4,385   | ) |  |    | (112 | %)
|                                             |  |                        |           |      |  |          |           |          |  |   |          |   |  |    |      |   
|Operating income                             |  |                        | 168,310   |      |  |          | 100,231   |          |  |   | 68,079   |   |  |    | 68   | % 
|Interest expense                             |  |                        | (130,498  | )    |  |          | (128,367  | )        |  |   | (2,131   | ) |  |    | 2    | % 
|Gain (loss) on derivative instruments, net   |  |                        | (24,197   | )    |  |          | 47,860    |          |  |   | (72,057  | ) |  |    | (151 | %)
|Gain (loss) on investments, net              |  |                        | 124,147   |      |  |          | (792,900  | )        |  |   | 917,047  |   |  |    | 116  | % 
|Equity in net losses of affiliated companies |  |                        | (4,354    | )    |  |          | (20,907   | )        |  |   | 16,553   |   |  |    | (79  | %)
|Other, net                                   |  |                        | (617      | )    |  |          | 275       |          |  |   | (892     | ) |  | NM
|Income tax (expense) benefit                 |  |                        | (13,402   | )    |  |          | 289,178   |          |  |   | (302,580 | ) |  |    | (105 | %)
|Minority interest, net of tax                |  |                        | (1,644    | )    |  |          | (11,564   | )        |  |   | 9,920    |   |  |    | (86  | %)
|                                             |  |                        |           |      |  |          |           |          |  |   |          |   |  |    |      |   
|Net income (loss)                            |  | $                      | 117,745   |      |  | $        | (516,194  | )        |  | $ | 633,939  |   |  |    | 123  | % 
|                                             |  |                        |           |      |  |          |           |          |  |   |          |   |  |    |      |   

20



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##### 



Revenues

The following table sets forth summarized revenue information for the
three months ended June 30, 2003 and 2002.

|            |             |                   |   |                            |           |       |  |      |     |       |   |          |           |      |  |    |     |   |   |        |         |  |    |    |    |  
|----------- | ----------- | ----------------- | - | -------------------------- | --------- | ----- |  | ---- | --- | ----- | - | -------- | --------- | ---- |  | -- | --- | - | - | ------ | ------- |  | -- | -- | -- | -
|            |             |                   |   | Three Months Ended June 30 |           |       |  |      |     |       |   |          |           |      |  |   
|            |             |                   |   |                            |           |       |  | % of |     |       |   |          |           | % of |  |    |     |   |   |        |         | 
|            |             |                   |   | 2003                       |           | Total |  | 2002 |     | Total |   | $ Change | % Change 
|            |             |                   |   |                            |           |       |  |      |     |       |   |          |          
|            |             |                   |   | (Thousands of Dollars)     |           |       |  |      |     |       |   |          |           |      |  |   
|Residential |             |                   |   |                            |           |       |  |      |     |       |   |          |           |      |  |    |     |   |   |        |         |  |    |   
|            | Video       |                   | $ | 907,902                    |           |       |  | 64   | %   |       | $ | 857,197  |           |      |  | 69 | %   |   | $ | 50,705 |         |  |    | 6  | % 
|            | Data        |                   |   | 210,699                    |           |       |  | 15   | %   |       |   | 134,863  |           |      |  | 11 | %   |   |   | 75,836 |         |  |    | 56 | % 
|            | Telephony   |                   |   | 116,450                    |           |       |  | 8    | %   |       |   | 82,395   |           |      |  | 7  | %   |   |   | 34,055 |         |  |    | 41 | % 
|            | Other       |                   |   | 22,478                     |           |       |  | 1    | %   |       |   | 20,001   |           |      |  | 1  | %   |   |   | 2,477  |         |  |    | 12 | % 
|            |             |                   |   |                            |           |       |  |      |     |       |   |          |           |      |  |    |     |   |   |        |         |  |    |   
|            |             | Total residential |   |                            | 1,257,529 |       |  |      | 88  | %     |   |          | 1,094,456 |      |  |    | 88  | % |   |        | 163,073 |  |    |    | 15 | %
|            | Commercial  |                   |   | 68,137                     |           |       |  | 5    | %   |       |   | 52,057   |           |      |  | 4  | %   |   |   | 16,080 |         |  |    | 31 | % 
|            | Advertising |                   |   | 98,273                     |           |       |  | 7    | %   |       |   | 98,116   |           |      |  | 8  | %   |   |   | 157    |         |  | NM
|            |             |                   |   |                            |           |       |  |      |     |       |   |          |           |      |  |    |     |   |   |        |         |  |    |   
|            |             | Total revenues    |   | $                          | 1,423,939 |       |  |      | 100 | %     |   | $        | 1,244,629 |      |  |    | 100 | % |   | $      | 179,310 |  |    |    | 14 | %
|            |             |                   |   |                            |           |       |  |      |     |       |   |          |           |      |  |    |     |   |   |        |         |  |    |   

The 14% increase in total revenues is primarily attributable to:



| |  | a 34% increase in customers for advanced services, including digital
cable, high-speed Internet access and telephony customers;                                                              
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | a 6% increase in basic cable rates resulting from increased
programming costs and inflation, as well as increased channel
availability;                                                      
| 
| |  | a $5 per month price increase on high-speed Internet access adopted in
certain markets in the fourth quarter of 2002 and in most of Coxs
remaining markets in the first quarter of 2003; and
| 
| |  | an increase in commercial broadband customers.                                                                                                                                               

Cox has experienced solid growth in digital cable, residential data and
telephony customers. Cox expects this trend to continue and anticipates
continued consumer demand for its existing portfolio of broadband products, as
well as for new services such as Entertainment On Demand, Home Networking and
high-definition television. However, actual growth and demand may not meet
Coxs expectations due to increased competition, reduced demand and other risks
and uncertainties.

Costs and expenses

The following table sets forth summarized operating expenses for the three
months ended June 30, 2003 and 2002.

|                                    |                            |                                           |                          |         |                        |         |      |         |          |         |          |        |        |        |  |    |    |    |  
|----------------------------------- | -------------------------- | ----------------------------------------- | ------------------------ | ------- | ---------------------- | ------- | ---- | ------- | -------- | ------- | -------- | ------ | ------ | ------ |  | -- | -- | -- | -
|                                    |                            |                                           |                          |         | Three Months Ended     |         |      |         |          |         |          |        |       
|                                    |                            |                                           |                          |         | June 30                |         |      |         |          |         |          |        |       
|                                    |                            |                                           |                          |         | 2003                   |         | 2002 |         | $ Change |         | % Change
|                                    |                            |                                           |                          |         |                        |         |      |         |          |         |         
|                                    |                            |                                           |                          |         | (Thousands of Dollars) |         |      |         |          |         |          |        |       
|Cost of services                    |                            |                                           |                          |         |                        |         |      |         |          |         |          |        |        |        |  |   
|                                    | Programming costs          |                                           | $                        | 291,499 |                        |         | $    | 265,326 |          |         | $        | 26,173 |        |        |  | 10 | % 
|                                    | Other cost of
services     |                                           |                          | 303,440 |                        |         |      | 258,621 |          |         |          | 44,819 |        |        |  | 17 | % 
|                                    |                            |                                           |                          |         |                        |         |      |         |          |         |          |        |        |        |  |   
|                                    |                            | Total cost of
services                    |                          |         | 594,939                |         |      |         | 523,947  |         |          |        | 70,992 |        |  |    | 14 | % 
|Selling, general and administrative |                            |                                           |                          |         |                        |         |      |         |          |         |          |        |        |        |  |   
|                                    | Marketing                  |                                           |                          | 69,711  |                        |         |      | 68,888  |          |         |          | 823    |        |        |  | 1  | % 
|                                    | General and administrative |                                           |                          | 227,174 |                        |         |      | 209,919 |          |         |          | 17,255 |        |        |  | 8  | % 
|                                    |                            |                                           |                          |         |                        |         |      |         |          |         |          |        |        |        |  |   
|                                    |                            | Total selling, general and
administrative |                          |         | 296,885                |         |      |         | 278,807  |         |          |        | 18,078 |        |  |    | 6  | % 
|                                    |                            |                                           |                          |         |                        |         |      |         |          |         |          |        |        |        |  |   
|                                    |                            |                                           | Total costs and expenses |         | $                      | 891,824 |      |         | $        | 802,754 |          |        | $      | 89,070 |  |    |    | 11 | %
|                                    |                            |                                           |                          |         |                        |         |      |         |          |         |          |        |        |        |  |   

Cost of services includes cable programming costs, other direct costs and
field service costs. Other direct costs include costs that Cox incurs in
conjunction with providing its residential, commercial and

21



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##### 



advertising services. Field service costs include costs associated with
providing and maintaining Coxs broadband network and customer care costs
necessary to maintain its customer base.

Cost of services increased 14% for the three months ended June 30, 2003
over the comparable period in 2002. Programming costs increased 10% primarily
due to programming rate increases and customer growth. Approximately 8% of the
increase in programming costs was attributable to programming rate increases,
and 2% was related to digital customer growth. Other cost of services
increased 17%, primarily due to 1.2 million in net additions of basic and
advanced-service customers over the last twelve months and increased labor
costs due to the transition from upgrade construction and new product launches
to maintenance and related customer costs directly associated with the growth
of new subscribers.

Selling, general and administrative expenses include marketing, salaries
and benefits, maintenance and support, commissions and bonuses, travel,
facilities, insurance and other administrative expenses. Selling, general and
administrative expenses increased 6% primarily due to:



| |  |  | an 8% increase in general and administrative expenses primarily
relating to increased salaries and benefits and increased headcount;
and                                                                                              
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | a 1% net increase in marketing expense primarily due to an increase
related to the promotion of new services and bundling alternatives,
partially offset by a decrease in costs associated with Cox Media,
Coxs advertising business.

Cox expects continued increases in programming costs and will continue to
pass through some portion of these increases to its customers. In addition, Cox
expects to have continued growth in advanced services, which include digital
cable, high-speed Internet access and telephony, both as a result of increased
penetration where these services are currently available and from continued
roll-out of these services in new areas. As a result of these trends, Cox
expects its cost of services and, to a lesser degree, selling, general and
administrative expenses to increase.

Depreciation and amortization

Depreciation and amortization increased to $364.3 million during the three
months ended June 30, 2002 from $337.7 million during the comparable period in
2002 due to an increase in depreciation from Coxs continuing investments in
its broadband network in order to deliver additional programming and services.
Cox will continue to invest in its broadband network and new services, which
management expects will result in increased revenues to offset increased
depreciation expense.

Operating income

Operating income for the second quarter of 2003 was $168.3 million
compared to $100.2 million for the second quarter of 2002. The increase in
operating income was primarily attributable to the 14% increase in revenues.

Interest expense

Interest
expense increased 2% to $130.5 million primarily due to:



| |  |  | the repurchase of a portion of the
REPS remarketing option from the remarketing dealer in June 2003 (see
Recent Developments); and                                                                                                                                                                                         
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  | financing the redemption of
Coxs capital securities of a subsidiary trust, referred to as
RHINOS, with senior notes, which resulted in replacing payments
accounted for as minority interest to the holder of the RHINOS with
payments accounted for as interest expense to holders of the senior
notes; partially offset by
| |  |  | a reduction of outstanding
indebtedness, prior to cumulative derivative adjustments made in
accordance with SFAS No. 133, of $500.0 million; and                                                                                                                                                                             
| |  |  | increased savings as a result of
Coxs interest rate swap arrangements associated with fair value
hedges.                                                                                                                                                                                                                    

22



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##### 



Gain (loss) on derivative instruments, net

During the second quarter of 2003, Cox recorded a $24.2 million pre-tax
loss on derivative instruments primarily resulting from the change in the fair
value of certain derivative instruments embedded in Coxs zero-coupon debt that
is indexed to shares of Sprint PCS common stock that Cox owns.

The $47.9 million pre-tax gain on derivative instruments for the second
quarter of 2002 was due to the following:



| |  |  | a $38.0 million pre-tax loss resulting from the change in the
fair value of certain derivative instruments embedded in Coxs
exchangeable subordinated debentures and indexed to shares of Sprint
PCS common stock that Cox owns;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | a $106.7 million pre-tax gain resulting from the change in
the fair value of certain derivative instruments embedded in Coxs
zero-coupon debt and indexed to shares of Sprint PCS common stock
that Cox owns; and               
|
| |  |  | a $20.8 million pre-tax loss resulting from the change in the
fair value of certain derivative instruments associated with Coxs
investments.                                                                                    

For a more detailed description of the exchangeable subordinated
debentures, zero-coupon debt and their corresponding embedded derivatives,
please refer to Note 5. Debt and Note 6. Derivative Instruments and Hedging
Activities in Part I, Item 1. Condensed Consolidated Financial Statements.

Gain (loss) on investments, net

Net gain on investments of $124.1 million for the second quarter of 2003
is primarily due to a $97.2 million pre-tax gain on the sale of 32.9 million
shares of Sprint PCS common stock and a $27.1 million pre-tax gain as a result
of the change in the market value of Coxs investment in Sprint PCS common
stock classified as trading. The net loss on investments of $792.9 million for
the comparable period in 2002 was primarily due to a $113.5 million pre-tax
loss as a result of the change in market value of Coxs investment in Sprint
PCS common stock classified as trading and a $677.4 million decline in the fair
value of certain investments, primarily Sprint PCS, considered to be other than
temporary.

In determining whether a decline in the fair value of Coxs investments is
other than temporary, Cox considers the factors prescribed by SEC Staff
Accounting Bulletin Topic 5-M, Accounting for Noncurrent Marketable Equity
Securities. These factors include: the length of time and extent to which the
fair market value has been less than cost; the financial condition and near
term prospects of the investee; and Coxs intent and ability to retain its
investment.

Equity in net losses of affiliated companies

Equity in net losses of affiliated companies decreased 79% to $4.4
million. Generally, these losses are attributable to Coxs proportionate share
of the investees income or loss. Although Cox has various levels of ownership
and rights with respect to the companies in which it has equity investments,
Cox does not exercise control over the financial position of these companies.
Therefore, Cox cannot predict the impact that its equity investments will have
on its future operations.

Minority interest, net of tax

Minority interest, net of tax, decreased 86% to $1.6 million for the
second quarter of 2003. This was primarily due to the settlement of Coxs
obligated capital and preferred securities of subsidiary trusts, referred to as
FELINE PRIDES and RHINOS, in 2002. The distributions on these securities
represented minority interest.

23



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##### 



Net income (loss)

Net income for the second quarter of 2003 was $117.7 million compared to a
net loss of $516.2 million for the comparable period in 2002.

Six Months Ended June 30, 2003 Compared with Six Months Ended June 30, 2002

The following table sets forth summarized consolidated financial
information for the six months ended June 30, 2003 and 2002.

|                                             |  |                          |           |      |  |          |            |          |  |   |           |   |  |  |      |   
|-------------------------------------------- |  | ------------------------ | --------- | ---- |  | -------- | ---------- | -------- |  | - | --------- | - |  |  | ---- | --
|                                             |  | Six Months Ended June 30 |           |      |  |          |            |          |  |  
|                                             |  | 2003                     |           | 2002 |  | $ Change |            | % Change
|                                             |  |                          |           |      |  |          |            |         
|                                             |  | (Thousands of Dollars)   |           |      |  |          |            |          |  |  
|Revenues                                     |  | $                        | 2,790,221 |      |  | $        | 2,422,671  |          |  | $ | 367,550   |   |  |  | 15   | % 
|Costs and expenses                           |  |                          | 1,778,652 |      |  |          | 1,588,731  |          |  |   | 189,921   |   |  |  | 12   | % 
|Depreciation and
amortization                |  |                          | 748,594   |      |  |          | 663,520    |          |  |   | 85,074    |   |  |  | 13   | % 
|(Gain) loss on sale of cable
systems         |  |                          | (469      | )    |  |          | 3,916      |          |  |   | (4,385    | ) |  |  | (112 | %)
|                                             |  |                          |           |      |  |          |            |          |  |   |           |   |  |  |      |   
|Operating income                             |  |                          | 263,444   |      |  |          | 166,504    |          |  |   | 96,940    |   |  |  | 58   | % 
|Interest expense                             |  |                          | (260,322  | )    |  |          | (255,984   | )        |  |   | (4,338    | ) |  |  | 2    | % 
|Gain (loss) on derivative
instruments,
net   |  |                          | (26,700   | )    |  |          | 767,623    |          |  |   | (794,323  | ) |  |  | (103 | %)
|Gain (loss) on investments,
net              |  |                          | 122,395   |      |  |          | (1,201,630 | )        |  |   | 1,324,025 |   |  |  | 110  | % 
|Equity in net losses of affiliated
companies |  |                          | (6,518    | )    |  |          | (23,720    | )        |  |   | 17,202    |   |  |  | (73  | %)
|Other, net                                   |  |                          | (957      | )    |  |          | 1,010      |          |  |   | (1,967    | ) |  |  | (195 | %)
|Income tax benefit                           |  |                          | 1,096     |      |  |          | 189,208    |          |  |   | (188,112  | ) |  |  | (99  | %)
|Minority interest, net of tax                |  |                          | (3,914    | )    |  |          | (23,633    | )        |  |   | 19,719    |   |  |  | (83  | %)
|                                             |  |                          |           |      |  |          |            |          |  |   |           |   |  |  |      |   
|Net income
(loss)                            |  | $                        | 88,524    |      |  | $        | (380,622   | )        |  | $ | 469,146   |   |  |  | 123  | % 
|                                             |  |                          |           |      |  |          |            |          |  |   |           |   |  |  |      |   

Revenues

The following table sets forth summarized revenue information for the six
months ended June 30, 2003 and 2002.

|            |             |                   |   |                          |           |       |  |      |     |       |   |           |           |          |  |    |     |   |   |         |         |  |  |    |    |  
|----------- | ----------- | ----------------- | - | ------------------------ | --------- | ----- |  | ---- | --- | ----- | - | --------- | --------- | -------- |  | -- | --- | - | - | ------- | ------- |  |  | -- | -- | -
|            |             |                   |   | Six Months Ended June 30 |           |       |  |      |     |       |   |           |           |          |  |   
|            |             |                   |   |                          |           |       |  | % of |     |       |   |           |           | % of     |  |    |     |   |   |         |         | 
|            |             |                   |   | 2003                     |           | Total |  | 2002 |     | Total |   | $ Change  |           | % Change
|            |             |                   |   |                          |           |       |  |      |     |       |   |           |           |         
|            |             |                   |   | (Thousands of Dollars)   |           |       |  |      |     |       |   |           |           |          |  |   
|Residential |             |                   |   |                          |           |       |  |      |     |       |   |           |           |          |  |    |     |   |   |         |         |  |  |   
|            | Video       |                   | $ | 1,806,843                |           |       |  | 65   | %   |       | $ | 1,691,056 |           |          |  | 70 | %   |   | $ | 115,787 |         |  |  | 7  | % 
|            | Data        |                   |   | 404,918                  |           |       |  | 15   | %   |       |   | 256,428   |           |          |  | 11 | %   |   |   | 148,490 |         |  |  | 58 | % 
|            | Telephony   |                   |   | 223,543                  |           |       |  | 8    | %   |       |   | 155,147   |           |          |  | 6  | %   |   |   | 68,396  |         |  |  | 44 | % 
|            | Other       |                   |   | 44,630                   |           |       |  | 1    | %   |       |   | 40,545    |           |          |  | 2  | %   |   |   | 4,085   |         |  |  | 10 | % 
|            |             |                   |   |                          |           |       |  |      |     |       |   |           |           |          |  |    |     |   |   |         |         |  |  |   
|            |             | Total residential |   |                          | 2,479,934 |       |  |      | 89  | %     |   |           | 2,143,176 |          |  |    | 89  | % |   |         | 336,758 |  |  |    | 16 | %
|            | Commercial  |                   |   | 131,506                  |           |       |  | 5    | %   |       |   | 101,853   |           |          |  | 4  | %   |   |   | 29,653  |         |  |  | 29 | % 
|            | Advertising |                   |   | 178,781                  |           |       |  | 6    | %   |       |   | 177,642   |           |          |  | 7  | %   |   |   | 1,139   |         |  |  | 1  | % 
|            |             |                   |   |                          |           |       |  |      |     |       |   |           |           |          |  |    |     |   |   |         |         |  |  |   
|            |             | Total revenues    |   | $                        | 2,790,221 |       |  |      | 100 | %     |   | $         | 2,422,671 |          |  |    | 100 | % |   | $       | 367,550 |  |  |    | 15 | %
|            |             |                   |   |                          |           |       |  |      |     |       |   |           |           |          |  |    |     |   |   |         |         |  |  |   

The 15% increase in total revenues is primarily attributable to:



| |  |  | a 34% increase in customers for advanced services, including
digital cable, high-speed Internet access and telephony customers;                                                              
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | a 6% increase in basic cable rates resulting from increased
programming costs and inflation, as well as increased channel
availability;                                                      
|
| |  |  | a $5 per month price increase on high-speed Internet access adopted
in certain markets in the fourth quarter of 2002 and in most of Coxs
remaining markets in the first quarter of 2003; and
|
| |  |  | an increase in commercial broadband customers.                                                                                                                                               

24



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Cox has experienced solid growth in digital cable, residential data and
telephony customers. Cox expects this trend to continue and anticipates
continued consumer demand for its existing portfolio of broadband products, as
well as for new services such as Entertainment On Demand, Home Networking and
high-definition television. However, actual growth and demand may not meet
Coxs expectations due to increased competition, reduced demand and other risks
and uncertainties.

Costs and expenses

The following table sets forth summarized operating expenses for the six
months ended June 30, 2003 and 2002.

|                                    |                            |                                           |                          |         |                          |           |      |         |           |           |          |        |         |         |  |    |    |    |  
|----------------------------------- | -------------------------- | ----------------------------------------- | ------------------------ | ------- | ------------------------ | --------- | ---- | ------- | --------- | --------- | -------- | ------ | ------- | ------- |  | -- | -- | -- | -
|                                    |                            |                                           |                          |         | Six Months Ended June 30 |           |      |         |           |           |          |        |        
|                                    |                            |                                           |                          |         | 2003                     |           | 2002 |         | $ Change  |           | % Change
|                                    |                            |                                           |                          |         |                          |           |      |         |           |           |         
|                                    |                            |                                           |                          |         | (Thousands of Dollars)   |           |      |         |           |           |          |        |        
|Cost of services                    |                            |                                           |                          |         |                          |           |      |         |           |           |          |        |         |         |  |   
|                                    | Programming costs          |                                           | $                        | 586,144 |                          |           | $    | 524,087 |           |           | $        | 62,057 |         |         |  | 12 | % 
|                                    | Other cost of
services     |                                           |                          | 592,414 |                          |           |      | 507,243 |           |           |          | 85,171 |         |         |  | 17 | % 
|                                    |                            |                                           |                          |         |                          |           |      |         |           |           |          |        |         |         |  |   
|                                    |                            | Total cost of
services                    |                          |         | 1,178,558                |           |      |         | 1,031,330 |           |          |        | 147,228 |         |  |    | 14 | % 
|Selling, general and administrative |                            |                                           |                          |         |                          |           |      |         |           |           |          |        |         |         |  |   
|                                    | Marketing                  |                                           |                          | 132,147 |                          |           |      | 134,443 |           |           |          | (2,296 | )       |         |  | (2 | %)
|                                    | General and administrative |                                           |                          | 467,947 |                          |           |      | 422,958 |           |           |          | 44,989 |         |         |  | 11 | % 
|                                    |                            |                                           |                          |         |                          |           |      |         |           |           |          |        |         |         |  |   
|                                    |                            | Total selling, general and
administrative |                          |         | 600,094                  |           |      |         | 557,401   |           |          |        | 42,693  |         |  |    | 8  | % 
|                                    |                            |                                           |                          |         |                          |           |      |         |           |           |          |        |         |         |  |   
|                                    |                            |                                           | Total costs and expenses |         | $                        | 1,778,652 |      |         | $         | 1,588,731 |          |        | $       | 189,921 |  |    |    | 12 | %
|                                    |                            |                                           |                          |         |                          |           |      |         |           |           |          |        |         |         |  |   

Cost of services increased 14% for the six months ended June 30, 2003 over
the comparable period in 2002. Programming costs increased 12% primarily due
to programming rate increases and customer growth. Approximately 10% of the
increase in programming costs was attributable to programming rate increases,
and 2% was related to digital customer growth. Other cost of services
increased 17%, primarily due to:



| |  |  | 1.2 million in net additions of basic and advanced-service
customers over the last twelve months;                                                                                                                    
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | increased labor costs due to the transition from upgrade
construction and new product launches to maintenance and related
customer costs directly associated with the growth of new subscribers;
partially offset by 
|
| |  |  | a one-time non-recurring charge of approximately $9.8 million taken
in the first quarter of 2002 associated with the continuation of
Excite@Home high-speed Internet service following the bankruptcy of
Excite@Home.

Selling, general and administrative expenses increased 8% primarily due
to:



| |  |  | an 11% increase in general and administrative expenses primarily
relating to increased salaries and benefits and increased headcount;
partially offset by
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | a 2% decrease in marketing expense primarily due to a decrease in
costs associated with Cox Media, Coxs advertising business.                           

Cox expects continued increases in programming costs and will continue to
pass through some portion of these increases to its customers. In addition, Cox
expects to have continued growth in advanced services, which include digital
cable, high-speed Internet access and telephony, both as a result of increased
penetration where these services are currently available and from continued
roll-out of these services in new areas. As a result of these trends, Cox
expects its cost of services and, to a lesser degree, selling, general and
administrative expenses to increase.

25



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Depreciation and amortization

Depreciation and amortization increased to $748.6 million for the six
months ended June 30, 2003 from $663.5 million for the comparable period in
2002 due to a non-cash impairment charge of $25.0 million recognized in the
first quarter of 2003, as further described below, and an increase in
depreciation from Coxs continuing investments in its broadband network in
order to deliver additional programming and services. Cox will continue to
invest in its broadband network and new services, which management expects will
result in increased revenues to offset increased depreciation expense.

In performing its January 1, 2003 annual impairment test, Cox considered
the guidance contained in Emerging Issues Task Force (EITF) Issue No. 02-17,
Recognition of Customer Relationship Intangible Assets Acquired in a Business
Combination, whereby Cox considered assumptions that marketplace participants
would consider, such as expectations of future contract renewals and other
benefits related to the intangible asset, when measuring the fair value of the
cable system clusters other net assets. The January 1, 2003 impairment test
resulted in a non-cash impairment charge of approximately $25.0 million, which
is classified within amortization expense in Coxs Condensed Consolidated
Statement of Operations.

Operating income

Operating income for the six months ended June 30, 2003 was $263.4 million
compared to $166.5 million for the six months ended June 30, 2002. Operating
income for the six months ended June 30, 2002 includes a one-time non-recurring
net charge of approximately $9.8 million associated with the continuation of
Excite@Home high-speed Internet service following the bankruptcy of
Excite@Home. The increase in operating income, after adjusting for the
one-time charge, was primarily attributable to a 15% increase in revenues.

Interest expense

Interest
expense increased 2% to $260.3 million primarily due to:



| |  |  | the repurchase of a portion of the
REPS remarketing option from the remarketing dealer in June 2003 (see
Recent Developments); and                                                                                                                                                                                         
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | financing the redemption of
Coxs capital securities of a subsidiary trust, referred to as
RHINOS, with senior notes, which resulted in replacing payments
accounted for as minority interest to the holder of the RHINOS with
payments accounted for as interest expense to holders of the senior
notes; partially offset by
|
| |  |  | a reduction of outstanding
indebtedness, prior to cumulative derivative adjustments made in
accordance with SFAS No. 133, of $500.0 million; and                                                                                                                                                                             
|
| |  |  | increased savings as a result of
Coxs interest rate swap arrangements associated with fair value
hedges.                                                                                                                                                                                                                    

Gain (loss) on derivative instruments, net

During the first half of 2003, Cox recorded a $26.7 million pre-tax loss
on derivative instruments, which was comprised of the following:



| |  |  | a $4.4 million pre-tax loss due to a decrease in the fair value of
Coxs stock purchase warrants. The decrease in fair value of these
warrants was primarily attributed to the decrease in the fair value of
the underlying equity security during the quarter; and                                                                                  
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | a $22.9 million pre-tax loss due to a change in the fair value of
the embedded derivatives contained in Coxs zero-coupon debt. The
change in fair value of these embedded derivatives was primarily
attributed to the increase in the trading price of Sprint PCS and the
change in U.S. Treasury rates and Coxs credit spreads during the
quarter.

The $767.6 million pre-tax gain on derivative instruments for the first
half of 2002 was comprised of the following:



| |  |  | a $249.2 million pre-tax gain due to a decrease in the fair value
of the embedded derivatives in Coxs exchangeable subordinated
debentures;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | a $333.0 million pre-tax gain due to a decrease in the fair value
of the embedded derivatives contained in Coxs zero-coupon debt; and      

26



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##### 





| |  |  | a $185.4 million pre-tax gain due to a decrease in the fair value
of certain derivative instruments associated with Coxs investments,
including Sprint PCS, AT&T and AT&T Wireless.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Gain (loss) on investments, net

Net gain on investments of $122.4 million for the six months ended June
30, 2003 is primarily due to a $97.2 million pre-tax gain on the sale of 32.9
million shares of Sprint PCS common stock and a $27.1 million pre-tax gain as a
result of the change in the market value of Coxs investment in Sprint PCS
common stock classified as trading. The $1.2 billion net loss on investments
for the comparable period in 2002 was primarily due to a $170.4 million pre-tax
loss related to the sale of 23.9 million shares of AT&T Wireless common stock,
a $388.8 million pre-tax loss as a result of the change in market value of
Coxs investment in Sprint PCS common stock classified as trading and a $677.4
million decline in the fair value of certain investments, primarily Sprint PCS,
considered to be other than temporary.

Equity in net losses of affiliated companies

Equity in net losses of affiliated companies decreased 73% to $6.5
million. Generally, these losses are attributable to Coxs proportionate share
of the investees income or loss. Although Cox has various levels of ownership
and rights with respect to the companies in which it has equity investments,
Cox does not exercise control over the financial position of these companies.
Therefore, Cox cannot predict the impact that its equity investments will have
on its future operations.

Minority interest, net of tax

Minority interest, net of tax, decreased 83% to $3.9 million for the first
half of 2003. This was primarily due to the settlement of Coxs obligated
capital and preferred securities of subsidiary trusts, referred to as FELINE
PRIDES and RHINOS, in 2002. The distributions on these securities represented
minority interest.

Net income (loss)

Net income for the six months ended June 30, 2003 was $88.5 million
compared to a net loss of $380.6 million for the comparable period in 2002.

Liquidity and Capital Resources

Uses of Cash

As part of Coxs ongoing strategic plan, Cox has invested, and will
continue to invest, capital to enhance the reliability and capacity of its
broadband network in preparation for the offering of new services and to make
investments in companies primarily focused on cable programming,
telecommunications and technology. Cox believes it will be able to meet its
capital needs for the next twelve months and beyond with amounts available
under existing revolving credit facilities and its commercial paper program.

During the six months ended June 30, 2003, Cox made capital expenditures
of $662.9 million. These expenditures were primarily directed at costs related
to electronic equipment located on customers premises, costs to upgrade and
rebuild Coxs broadband network to allow for the delivery of advanced broadband
services and costs associated with network equipment used to enter new service
areas.

Capital expenditures for the year ending 2003 are expected to be
approximately $1.5 billion. Cox expects depreciation expense to increase due
to its continued investment in its broadband network. However, management
expects increased revenues to offset increased depreciation expense. Cox does
not expect to make any material acquisitions or cable systems exchanges in
2003, although management continuously reviews industry and economic conditions
to identify opportunities.

During the six months ended June 30, 2003, Cox repaid $1.1 billion of
debt, which primarily consisted of the repurchase of a portion of its
convertible senior notes and the repurchase of a portion of its

27



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##### 



exchangeable subordinated debentures.
Refer to Note 5. Debt in Part I, Item 1. Condensed Consolidated
Financial Statements for more information regarding
Coxs repurchase of its convertible senior notes and its tender offers for two
of the three series of exchangeable subordinated debentures.

Sources of Cash

During the six months ended June 30, 2003, Cox generated $818.9 million
from operating activities. Net commercial paper borrowings during the first six
months of 2003 were $110.0 million. Cox received net proceeds from the
issuance of senior notes of $596.2 million during the first six months of 2003.

Other

At June 30, 2003, Cox had approximately $7.0 billion of outstanding
indebtedness (net of cumulative derivative adjustments made in accordance with
SFAS No. 133 which reduced reported indebtedness by approximately $611.2
million). In addition, Cox had approximately $1.7 billion of total available
financing capacity under its revolving credit facilities and commercial paper
program at June 30, 2003.

In June 2003, Cox renewed its 364-day credit agreement, which is now
available through June 26, 2004. The 364-day credit agreement also allows Cox
to extend the agreement for an additional two years at maturity. The capacity
of this credit agreement was reduced from $1.1 billion to $900.0 million. Cox
also has a $900.0 million 5-year credit agreement available through September
26, 2005. At Coxs election, the interest rate on these credit agreements is
based on London Interbank Offered Rate (LIBOR), the certificate of deposit rate
plus varying percentages or an alternate base rate. These credit agreements
also impose a commitment fee on the unused portion of the total amount
available based on a ratio of debt to operating cash flow, a measure of
performance not calculated in accordance with accounting principles generally
accepted in the United States of America, and a utilization fee based on the
level of borrowings. Cox had no borrowings outstanding under either credit
agreement at June 30, 2003 and December 31, 2002.

Prior to May 2003, outstanding amounts due from CEI bore interest equal to
CEIs current commercial paper borrowing rate and outstanding amounts due to
CEI bore interest at 50 basis points above CEIs current commercial borrowing
rate as payment for the services provided. From and after May 2, 2003, both
outstanding amounts due from and to CEI bear interest equal to CEIs current
commercial paper borrowing rate.

Recent Developments

On August 1, 2003, Coxs $250.0 million aggregate principal amount of 6.15%
REset Put Securities due 2033 (REPS) was subject to mandatory tender to the
remarketing dealer. However, the remarketing dealer did not elect to remarket
the REPS, and Cox repurchased the REPS on August 1, 2003. The total aggregate
consideration paid to repurchase the REPS was $301.4 million, which amount
included the remarketing option value paid to the remarketing dealer and
accrued interest paid to the holders.

28



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Recently Issued Accounting Pronouncements

In January 2003, the Financial Accounting Standards Board (FASB) issued
FASB Interpretation No. 46, Consolidation of Variable Interest Entities.
Interpretation No. 46 addresses consolidation by business enterprises of
variable interest entities, which are entities that either (a) do not have
equity investors with vesting rights or (b) have equity investors that do not
provide sufficient financial resources for the entity to support its
activities. The interpretation is effective for the first interim or annual
reporting period beginning after June 15, 2003 for existing variable interest
entities and is effective immediately for variable interest entities created
after January 31, 2003. The adoption of Interpretation No. 46 is not expected
to have a material effect on Coxs results of operations or financial position.

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. This Statement amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities under FASB Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 149 requires that contracts with
comparable characteristics be accounted for similarly. The Statement is
effective for contracts entered into or modified after June 30, 2003 and for
hedging relationships designated after June 30, 2003. The provisions of SFAS
No. 149 generally are to be applied prospectively only. The adoption of SFAS
No. 149 is not expected to have a material effect on Coxs results of
operations or financial position.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity.
SFAS No. 150 establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. The Statement requires that an issuer classify a financial instrument
that is within its scope as a liability (or asset in some circumstances). This
Statement is effective for financial instruments entered into or modified after
May 31, 2003, and otherwise is effective at the beginning of the first interim
period beginning after June 15, 2003. SFAS No. 150 requires that financial
instruments created before the issuance date of the Statement and still
existing at the beginning of the interim period of adoption, be reported
through a cumulative effect of a change in accounting principal. The adoption
of SFAS No. 150 is not expected to have a material effect on Coxs results of
operations or financial position.

Caution Concerning Forward-Looking Statements

This Form 10-Q includes forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements include, among others, statements that relate to
Coxs future plans, earnings, objectives, expectations, performance, and
similar projections, as well as any facts or assumptions underlying these
statements or projections. Actual results may differ materially from the
results expressed or implied in these forward-looking statements due to various
risks, uncertainties or other factors. These factors include competition
within the broadband communications industry, Coxs ability to achieve
anticipated subscriber and revenue growth, Coxs success in implementing new
services and other operating initiatives, and Coxs ability to generate
sufficient cash flow to meet debt service obligations and finance operations.
For a more detailed discussion of these and other risk factors, see the
Caution Concerning Forward-Looking Statements section of Coxs Annual Report
on Form 10-K, as amended, for the year ended December 31, 2002. Cox assumes no
responsibility to update any forward-looking statements as a result of new
information, future events or otherwise.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Cox has estimated the fair value of its financial instruments as of June
30, 2003 and December 31, 2002 using available market information or other
appropriate valuation methodologies. Considerable judgment, however, is
required in interpreting market data to develop the estimates of fair value.
Accordingly, the estimates presented herein are not necessarily indicative of
the amounts that Cox would realize in a current market exchange.

29



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##### 



The carrying amount of cash, accounts and other receivables, accounts and
other payables and amounts due to/from CEI approximates fair value because of
the short maturity of those instruments. The fair value of Coxs investments
stated at fair value are estimated and recorded based on quoted market prices.
The fair value of Coxs equity method investments and investments stated at
cost cannot be estimated without incurring excessive costs. Cox is exposed to
market price risk volatility with respect to investments in publicly-traded and
privately-held entities. Additional information pertinent to the value of
Coxs investments is discussed in Note 3. Investments in Part I, Item 1.
Condensed Consolidated Financial Statements.

Cox uses
interest rate swap arrangements to manage its exposure to its
fixed-rate debt obligations by effectively converting a portion of
its fixed rate obligations to floating rate obligations. Cox entered
into a series of interest rate swaps with an aggregate notional
amount of $600.0 million in March, June and July 2003. Under each of
these interest rate swaps, as well as its other interest rate swap
agreements, Cox pays a floating rate based on LIBOR and receives a
fixed rate. Cox does not anticipate entering into any additional
swaps in the near term, but may consider additional interest rate
hedging activity in the future. For additional information about
Coxs interest rate swap agreements, refer to Note 5.
Debt and Note 6. Derivative Instruments and Hedging
Activities in Part I, Item 1. Condensed Consolidated Financial Statements.

The fair value of interest rate swaps used for hedging purposes was
approximately $135.4 million and $112.1 million at June 30, 2003 and December
31, 2002, respectively, and represents the estimated amount that Cox would
receive upon termination of the swap agreements.

Coxs outstanding commercial paper bears interest at current market rates
and, thus, approximates fair value at June 30, 2003. Cox is exposed to
interest rate volatility with respect to these variable-rate instruments. Cox
did not have any variable rate instruments outstanding at December 31, 2002.

The estimated fair value of Coxs fixed-rate notes and debentures and
exchangeable subordinated debentures at June 30, 2003 and December 31, 2002 are
based on quoted market prices or a discounted cash flow analysis using Coxs
incremental borrowing rate for similar types of borrowing arrangements and
dealer quotations. A summary of the carrying value, estimated fair value and
the effect of a hypothetical one percentage point decrease in interest rates on
the foregoing fixed-rate instruments at June 30, 2003 and December 31, 2002 is
as follows:

|                                     |  |               |         |                   |  |                    |         |  |  |                       |         |          |  |       |  |                    |  |  |  |  |  |   |         |            |  |   |         |  |  |   |         |  |  |  |  | 
|------------------------------------ |  | ------------- | ------- | ----------------- |  | ------------------ | ------- |  |  | --------------------- | ------- | -------- |  | ----- |  | ------------------ |  |  |  |  |  | - | ------- | ---------- |  | - | ------- |  |  | - | ------- |  |  |  |  | 
|                                     |  | June 30, 2003 |         | December 31, 2002
|                                     |  |               |         |                  
|                                     |  |               |         |                   |  |                    |         |  |  | Fair Value            |         |          |  |       |  |                    |  |  |  |  |  |   |         | Fair Value
|                                     |  | Carrying      |         | Fair              |  | (1% Decrease       |         |  |  |                       |         | Carrying |  | Fair  |  | (1% Decrease      
|                                     |  | Value         |         | Value             |  | in Interest Rates) |         |  |  |                       |         | Value    |  | Value |  | in Interest Rates)
|                                     |  |               |         |                   |  |                    |         |  |  |                       |         |          |  |       |  |                   
|                                     |  |               |         |                   |  |                    |         |  |  | (Millions of Dollars) |         |          |  |       |  |                    |  |  |  |  |  |  
|Fixed-rate notes and Debentures      |  | $             | 6,267.9 |                   |  | $                  | 6,719.2 |  |  | $                     | 6,099.3 |          |  |       |  |                    |  |  |  |  |  | $ | 5,978.6 |            |  | $ | 6,386.5 |  |  | $ | 6,432.8 | 
|Exchangeable subordinated
Debentures |  |               | 527.1   |                   |  |                    | 873.9   |  |  |                       | 891.3   |          |  |       |  |                    |  |  |  |  |  |   | 1,296.1 |            |  |   | 1,409.1 |  |  |   | 1,637.6 | 

30



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Item 4. Controls and Procedures

The Chief Executive Officer and the Chief Financial Officer of Cox (its
principal executive officer and principal financial officer, respectively) have
concluded, based on their evaluation as of June 30, 2003, that Coxs disclosure
controls and procedures: are effective to ensure that information required to
be disclosed by Cox in the reports filed or submitted by it under the
Securities Exchange Act of 1934, as amended, is recorded, processed, summarized
and reported within the time periods specified in the SECs rules and forms;
and include controls and procedures designed to ensure that information
required to be disclosed by Cox in such reports is accumulated and communicated
to Coxs management, including the Chief Executive Officer and the Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure.

There were no changes in Coxs internal control over financial reporting
that occurred during the quarter ended June 30, 2003 that have materially
affected, or are reasonably likely to materially affect, Coxs internal control
over financial reporting.

Coxs disclosure controls and procedures are designed to provide a
reasonable level of assurance of reaching Coxs desired disclosure control
objectives and are effective in reaching that level of reasonable assurance.

Part II  Other Information

Item 1. Legal Proceedings

For a description of certain legal matters, refer to Note 10. Commitments
and Contingencies in Part I, Item 1. Condensed Consolidated Financial
Statements.

Cox is also a party to various legal proceedings that are ordinary and
incidental to its business. Management does not expect that any legal
proceedings currently pending will have a material adverse impact on Coxs
consolidated financial position, consolidated results of operations or
consolidated cash flows.

31



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Item 4. Submission of Matters to a Vote of Security Holders

Cox held its Annual Meeting of Stockholders on May 15, 2003. Four matters
were voted upon at the meeting: (a) the election of a Board of Directors of
seven members to serve until the 2004 Annual Meeting or until their successors
are duly elected and qualified; (b) approval of Coxs Second Amended and
Restated Long-Term Incentive Plan; (c) approval of an amendment to Coxs
Amended and Restated Annual Incentive Plan; and (d) a shareholder proposal
regarding the use of indexed executive stock options.

The following directors were elected and received the votes indicated:

|                      |  |                |             |                |  |  |            | 
|--------------------- |  | -------------- | ----------- | -------------- |  |  | ---------- | 
|Nominee               |  | Votes in Favor |             | Votes Withheld
|                      |  |                |             |               
|James C. Kennedy      |  |                | 812,866,982 |                |  |  | 36,781,484 | 
|G. Dennis Berry       |  |                | 812,881,559 |                |  |  | 36,786,907 | 
|Janet Morrison Clarke |  |                | 798,456,004 |                |  |  | 51,212,462 | 
|Robert C. OLeary     |  |                | 812,881,096 |                |  |  | 36,787,370 | 
|James O. Robbins      |  |                | 812,876,200 |                |  |  | 36,792,266 | 
|Rodney W. Schrock     |  |                | 798,410,565 |                |  |  | 51,257,901 | 
|Andrew J. Young       |  |                | 797,846,243 |                |  |  | 51,822,223 | 

The Second Amended and Restated Long-Term Incentive Plan was approved,
with 819,796,881 votes in favor, 29,503,422 votes in opposition, and 368,163
abstentions.

The amendment to the Amended and Restated Annual Incentive Plan was
approved, with 822,687,023 votes in favor, 24,406,411 votes in opposition, and
251,273 abstentions.

The shareholder proposal regarding indexed stock options was not approved,
with 19,529,423 votes in favor, 802,259,018 votes in opposition, 720,312
abstentions, and 27,159,713 broker non-votes.

32



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##### 



Item 6. Exhibits and Reports on Form 8-K



|(a) |  | Exhibits:
|--- |  | ---------

|     |   |  |                                                                                                                                                                                                                                                                                                                                                                                 
|---- | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1  |  |  | Amended Certificate of Incorporation of Cox Communications,
Inc. (Incorporated by reference to Exhibit 3.1 to Coxs
Quarterly Report on Form 10-Q, filed with the Commission on
November 14, 2000.)                                                                                                                                                                             
|     |   |  |                                                                                                                                                                                                                                                                                                                                                                                 
|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.)                                                                                                                                                                                   
|     |   |  |                                                                                                                                                                                                                                                                                                                                                                                 
|4.1  |  |  | Form of 4.625% Note (incorporated by reference to Exhibit 4.1
to Coxs Current Report on Form 8-K, dated May 20, 2003 and
filed with the Commission on May 28, 2003).                                                                                                                                                                                                           
|     |   |  |                                                                                                                                                                                                                                                                                                                                                                                 
|4.2  |  |  | Sixth Supplemental Indenture, dated as of May 5, 2003, between
Cox Communications, Inc. and The Bank of New York, as Trustee
(incorporated by reference to exhibit 4.4 to Coxs Form 8-A/A,
filed on May 7, 2003).                                                                                                                                                              
|     |   |  |                                                                                                                                                                                                                                                                                                                                                                                 
|10.1 |  |  | Revolving Promissory Notes, dated as of May 2, 2003.                                                                                                                                                                                                                                                                                                                            
|     |   |  |                                                                                                                                                                                                                                                                                                                                                                                 
|10.2 |  |  | Amended and Restated 364-Day Credit Agreement, dated as of
June 27, 2003, among Cox Communications, Inc., the banks party
thereto, JPMorgan Chase Bank, as administrative agent, and
Bank of America, N.A. and Wachovia Bank, National Association
as syndication agents.                                                                                                       
|     |   |  |                                                                                                                                                                                                                                                                                                                                                                                 
|10.3 |  |  | Third Amendment dated as of June 27, 2003 in respect of the
Five-Year Credit Agreement, dated as of September 26, 2000, by
and among Cox Communications, Inc., the banks party thereto,
JPMorgan Chase Bank, as administrative agent, The Bank of New
York and Wachovia Bank, National Association, as
co-documentation agents, and Bank of America, N.A., as
syndication agent.
|     |   |  |                                                                                                                                                                                                                                                                                                                                                                                 
|10.4 |  |  | Termination of Remarketing Agreement, dated as of June 25,
2003, by and between Cox Communications, Inc. and Morgan
Stanley Co. Incorporated.                                                                                                                                                                                                                                   
|     |   |  |                                                                                                                                                                                                                                                                                                                                                                                 
|21   |  |  | Subsidiaries of Cox Communications, Inc. (incorporated by
reference to Exhibit 21 to Coxs Annual Report on Form 10-K,
filed with the Commission on March 31, 2003).                                                                                                                                                                                                            
|     |   |  |                                                                                                                                                                                                                                                                                                                                                                                 
|31.1 |  |  | Certification of Chief Executive Officer, pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                            
|     |   |  |                                                                                                                                                                                                                                                                                                                                                                                 
|31.2 |  |  | Certification of Chief Financial Officer, pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                            
|     |   |  |                                                                                                                                                                                                                                                                                                                                                                                 
|32.1 |  |  | Certification of Chief Executive Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (furnished pursuant to SEC Release
No. 34-47986).                                                                                                                                                                             
|     |   |  |                                                                                                                                                                                                                                                                                                                                                                                 
|32.2 |  |  | Certification of Chief Financial Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (furnished pursuant to SEC Release
No. 34-47986).                                                                                                                                                                             



|(b) |  | Reports on Form 8-K filed during the quarter ended June 30, 2003:                                                                                                                                                                                                                                                                                               
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Form 8-K dated May 19, 2003 (furnished May 20, 2003) reporting the amendment
of certain terms of Coxs offer to purchase any and all of its outstanding
2% Exchangeable Subordinated Debentures (the PRIZES) and 3% Exchangeable
Subordinated Debentures (the Premium PHONES) under Item 5.                                                                     
|   
|    |  | Form 8-K dated May 20, 2003 (furnished May 28, 2003) reporting the
registered public offering of $600,000,000 aggregate principal amount of its
4.625% Notes due 2013 under Item 5 and the filing the associated
underwriting agreement, form of Note, opinion of Dow, Lohnes and Albertson,
and computation of ratio of earnings to fixed charges under Item 7.
|   
|    |  | Form 8-K dated June 4, 2003 (furnished June 5, 2003) reporting the
expiration of Coxs tender offers for its outstanding the PRIZES and the
Premium PHONES in accordance with their terms under Item 5.                                                                                                                                                         

33



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##### 



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|      |  |                |  |                                                                                                                                       
|----- |  | -------------- |  | --------------------------------------------------------------------------------------------------------------------------------------
|      |  |                |  | Cox Communications, Inc.                                                                                                              
|      |  |                |  |                                                                                                                                       
|Date: |  | August 8, 2003 |  | /s/ Jimmy W. Hayes                                                                                                                    
|      |  |                |  |                                                                                                                                       
|      |  |                |  | Jimmy W. Hayes
Executive Vice President, Finance
and Chief Financial Officer
(principal financial officer and
duly authorized officer)

34