##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2005
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from _______to _______
 Commission File Number 1-6590
 
 COMMUNICATIONS
 Cox Communications, Inc.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    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)
  
 þ o
 þ o
 o þ




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Cox Communications, Inc.
 Form 10-Q
For the Three and Nine Months Ended September 30, 2005
 Table of Contents
 PagePart I  Financial InformationItem 1.
    
    Condensed Consolidated Financial Statements
    
    
    2Item 2.
    
    Management's Discussion and Analysis of Financial Condition and Results of perations
    
    
    21Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    30Item 4.
    
    Controls and Procedures
    
    
    31Part II  Other InformationItem 1.
    
    Legal Proceedings
    
    
    31Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    31Item 3.
    
    Defaults Upon Senior Securities
    
    
    32Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    32Item 5.
    
    Other Information
    
    
    32Item 6.
    
    Exhibits
    
    
    32EX-21 SUBSIDIARIES OF COX COMMUNICATIONS, INC.EX-31.1 SECTION 302 CERTIFICATION OF THE CEOEX-31.2 SECTION 302 CERTIFICATION OF THE CFOEX-32.1 SECTION 906 CERTIFICATION OF THE CEO
  Preliminary Note




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##### Table of Contents



Part I  Financial Information
 
 Item 1. Condensed Consolidated Financial Statements
 Cox Communications, Inc.
 Condensed Consolidated Balance Sheets
 September 30
    
    
    December 312005
    
    
    2004(unaudited)(Thousands of Dollars)AssetsCurrent assetsCash
    
    $
    67,989
    
    
    $
    76,339Accounts and notes receivable, less allowance for doubtful
accounts of $26,928 and $26,482
    
    
    466,603
    
    
    
    394,540Other current assets
    
    
    194,829
    
    
    
    136,386Total current assets
    
    
    729,421
    
    
    
    607,265Net plant and equipment
    
    
    7,700,822
    
    
    
    7,942,699Investments
    
    
    1,196,917
    
    
    
    1,171,647Intangible assets
    
    
    18,645,133
    
    
    
    19,329,452Goodwill
    
    
    106,889
    
    
    
    106,889Other noncurrent assets
    
    
    63,366
    
    
    
    95,789Total assets
    
    $
    28,442,548
    
    
    $
    29,253,741Liabilities and shareholders equityCurrent liabilitiesAccounts payable and accrued expenses
    
    $
    890,882
    
    
    $
    797,553Other current liabilities
    
    
    302,027
    
    
    
    339,742Cash obligation to untendered shareholders
    
    
    9,895
    
    
    
    483,603Current portion of long-term debt
    
    
    47,107
    
    
    
    59,962Amounts due to CEI
    
    
    36,735
    
    
    
    5,573Total current liabilities
    
    
    1,286,646
    
    
    
    1,686,433Deferred income taxes
    
    
    8,048,651
    
    
    
    8,326,574Other noncurrent liabilities
    
    
    151,586
    
    
    
    148,733Long-term debt, less current portion
    
    
    13,129,263
    
    
    
    12,965,773Total liabilities
    
    
    22,616,146
    
    
    
    23,127,513Commitments and contingencies (Note 11)Shareholders equityClass A common stock, $0.01 par value; 671,000,000 shares
authorized; shares issued and outstanding: 556,170,238
    
    
    5,562
    
    
    
    5,562Class C common stock, $0.01 par value; 62,000,000 shares
authorized; shares issued and outstanding: 27,597,792
    
    
    276
    
    
    
    276Additional paid-in capital
    
    
    4,807,643
    
    
    
    4,802,117Retained earnings
    
    
    1,012,809
    
    
    
    1,318,218Accumulated other comprehensive income
    
    
    112
    
    
    
    55Total shareholders equity
    
    
    5,826,402
    
    
    
    6,126,228Total liabilities and shareholders
equity
    
    $
    28,442,548
    
    
    $
    29,253,741
  2




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##### Table of Contents



Cox Communications, Inc.
 Condensed Consolidated Statements of Operations
 Three Months
    
    
    Nine MonthsEnded September 30
    
    
    Ended September 302005
    
    
    2004
    
    
    2005
    
    
    2004(unaudited)(Thousands of Dollars)Revenues
    
    $
    1,755,174
    
    
    $
    1,618,059
    
    
    $
    5,235,887
    
    
    $
    4,753,656Costs and expensesCost of services (excluding depreciation and amortization)
    
    
    703,296
    
    
    
    666,924
    
    
    
    2,094,680
    
    
    
    1,947,367Selling, general and administrative expenses (excluding
depreciation and amortization)
    
    
    370,484
    
    
    
    366,452
    
    
    
    1,114,104
    
    
    
    1,038,336Depreciation and amortization
    
    
    424,203
    
    
    
    400,871
    
    
    
    1,321,603
    
    
    
    1,190,051Impairment of intangible assets
    
    
    614,111
    
    
    
    
    
    
    
    614,111
    
    
    
    Loss on sale of cable systems
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,021Operating
(loss) income
    
    
    (356,920
    )
    
    
    183,812
    
    
    
    91,389
    
    
    
    572,881Interest expense
    
    
    (177,642
    )
    
    
    (96,998
    )
    
    
    (512,791
    )
    
    
    (289,201
    )(Loss) gain on investments, net
    
    
    (6,406
    )
    
    
    (204
    )
    
    
    (9,127
    )
    
    
    28,931Loss on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    (13,019
    )
    
    
    (7,006
    )Other, net
    
    
    3,514
    
    
    
    (1,474
    )
    
    
    3,068
    
    
    
    (3,295
    )(Loss)
income before income taxes, minority interest and
equity in net losses of affiliated companies
    
    
    (537,454
    )
    
    
    85,136
    
    
    
    (440,480
    )
    
    
    302,310Income tax
(benefit) expense
    
    
    (189,211
    )
    
    
    41,813
    
    
    
    (139,836
    )
    
    
    137,878(Loss)
income before minority interest and equity in net
    
    
    (348,243
    )
    
    
    43,323
    
    
    
    (300,644
    )
    
    
    164,432losses of affiliated companiesMinority interest, net of tax
    
    
    
    
    
    
    (631
    )
    
    
    
    
    
    
    (1,203
    )Equity in
net losses of affiliated companies, net of tax of $1,574, $398,
$3,097 and $441, respectively
    
    
    (1,952
    )
    
    
    (732
    )
    
    
    (4,765
    )
    
    
    (884
    )Net
(loss) income
    
    $
    (350,195
    )
    
    $
    41,960
    
    
    $
    (305,409
    )
    
    $
    162,345
  3




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##### Table of Contents



Cox Communications, Inc.
 Condensed Consolidated Statement of Shareholders Equity
 AccumulatedAdditional
    
    
    
    
    
    
    OtherCommon Stock
    
    
    Paid-in
    
    
    Retained
    
    
    Comprehensive
    
    
    
    
    
    
    ComprehensiveClass A
    
    
    Class C
    
    
    Capital
    
    
    Earnings
    
    
    Income
    
    
    Total
    
    

(Loss)
Income(unaudited)(Thousands of Dollars)December 31, 2004
    
    $
    5,562
    
    
    $
    276
    
    
    $
    4,802,117
    
    
    $
    1,318,218
    
    
    $
    55
    
    
    $
    6,126,228Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (305,409
    )
    
    
    
    
    
    
    (305,409
    )
    
    $
    (305,409
    )Expenses incurred pursuant to the going-private
transaction paid by CEI on behalf of Cox
    
    
    
    
    
    
    
    
    
    
    5,526
    
    
    
    
    
    
    
    
    
    
    
    5,526Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    57
    
    
    
    57
    
    
    
    57Comprehensive
loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (305,352
    )September 30, 2005
    
    $
    5,562
    
    
    $
    276
    
    
    $
    4,807,643
    
    
    $
    1,012,809
    
    
    $
    112
    
    
    $
    5,826,402
  4




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##### Table of Contents



Cox Communications, Inc.
 Condensed Consolidated Statements of Cash Flows
 Nine MonthsEnded September 302005
    
    
    2004(unaudited)(Thousands of Dollars)Cash flows from operating activitiesNet (loss) income
    
    $
    (305,409
    )
    
    $
    162,345Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation and amortization
    
    
    1,321,603
    
    
    
    1,190,051Impairment of intangible assets
    
    
    614,111
    
    
    
    Loss on sale of cable system
    
    
    
    
    
    
    5,021Deferred income taxes
    
    
    (273,773
    )
    
    
    121,478Loss on extinguishment of debt
    
    
    13,019
    
    
    
    7,006Loss (gain) on investments, net
    
    
    9,127
    
    
    
    (28,931
    )Minority interest, net of tax
    
    
    
    
    
    
    1,203Equity in net losses of affiliated companies, net of tax
    
    
    4,765
    
    
    
    884Other, net
    
    
    (384
    )
    
    
    11,350Increase in accounts and notes receivable
    
    
    (47,397
    )
    
    
    (14,343
    )(Increase) decrease in other assets
    
    
    (45,214
    )
    
    
    4,595Increase in accounts payable and accrued expenses
    
    
    23,787
    
    
    
    6,108Decrease in taxes payable
    
    
    (35,962
    )
    
    
    (16,108
    )Decrease in other liabilities
    
    
    (43,262
    )
    
    
    (26,925
    )Net cash provided by operating activities
    
    
    1,235,011
    
    
    
    1,423,734Cash flows from investing activitiesCapital expenditures
    
    
    (1,027,001
    )
    
    
    (1,008,745
    )Investments in affiliated companies
    
    
    (44,003
    )
    
    
    (17,356
    )Proceeds from the sale and exchange of investments
    
    
    
    
    
    
    70,230Proceeds from the sale of cable systems
    
    
    
    
    
    
    53,076Acquisition of minority interest
    
    
    
    
    
    
    (153,016
    )Other, net
    
    
    45,222
    
    
    
    43,766Net cash used in investing activities
    
    
    (1,025,782
    )
    
    
    (1,012,045
    )Cash flows from financing activitiesRevolving credit facilities borrowings, net
    
    
    350,000
    
    
    
    Commercial paper borrowings, net
    
    
    269,337
    
    
    
    203,732Repayment of debt
    
    
    (479,941
    )
    
    
    (562,664
    )Payments to acquire Coxs former public stock
    
    
    (473,708
    )
    
    
    Proceeds from exercise of stock options
    
    
    
    
    
    
    3,347Increase in amounts due to CEI
    
    
    31,162
    
    
    
    8,601Other, net
    
    
    85,571
    
    
    
    (11,233
    )Net cash used in financing activities
    
    
    (217,579
    )
    
    
    (358,217
    )Net (decrease) increase in cash
    
    
    (8,350
    )
    
    
    53,472Cash at beginning of period
    
    
    76,339
    
    
    
    83,841Cash at end of period
    
    $
    67,989
    
    
    $
    137,313
  5




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##### Table of Contents



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




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##### Table of Contents



Cox Communications, Inc.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  Continued
 Accounting for Stock Issued to Employees
 Accounting
for Stock-Based Compensation  Transition and Disclosure Accounting for
Stock-Based Compensation
 Three Months EndedSeptember 302005
    
    
    2004Net (loss) income, as reported
    
    $
    (350,195
    )
    
    $
    41,960Add: Stock-based compensation, as reported
    
    
    
    
    
    
    1,306Deduct: Total stock-based compensation
determined under fair value based method
for all awards, net of tax
    
    
    (42
    )
    
    
    (8,131
    )Pro forma
net (loss) income
    
    $
    (350,237
    )
    
    $
    35,135
 Nine Months EndedJune 302005
    
    
    2004Net (loss) income, as reported
    
    $
    (305,409
    )
    
    $
    162,345Add: Stock-based compensation, as reported
    
    
    
    
    
    
    3,330Deduct: Total stock-based compensation
determined under fair value based method
for all awards, net of tax
    
    
    (5,896
    )
    
    
    (23,232
    )Pro forma
net (loss) income
    
    $
    (311,305
    )
    
    $
    142,443
 Other Compensation Plans
  7




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##### Table of Contents



Cox Communications, Inc.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  Continued
     Recently Issued Accounting Pronouncements
 Accounting Changes and Error Corrections  a
replacement of APB Opinion No. 20 and FASB Statement No. 3 Accounting Changes Reporting Accounting Changes in
Interim Financial Statements
 Accounting for Conditional Asset
Retirement Obligations . Accounting for Asset Retirement Obligations,
 8




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##### Table of Contents



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




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Cox Communications, Inc.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  Continued
  4. Investments
 September 30
    
    
    December 312005
    
    
    2004(Thousands of Dollars)Investments stated at fair value:Available-for-sale
    
    $
    428
    
    
    $
    339Derivative instruments
    
    
    
    
    
    
    939Equity method investments
    
    
    1,191,355
    
    
    
    1,159,290Investments stated at cost
    
    
    5,134
    
    
    
    11,079Total investments
    
    $
    1,196,917
    
    
    $
    1,171,647
 Investments Stated at Fair Value
   Three Months Ended
    
    
    Nine Months EndedSeptember 30
    
    
    September 302005
    
    
    2004
    
    
    2005
    
    
    2004(Thousands of Dollars)Realized gains
    
    $
    
    
    
    $
    
    
    
    $
    2
    
    
    $
    29,135Realized
losses
    
    
    6,406
    
    
    
    204
    
    
    
    9,129
    
    
    
    204
  Sprint Corporation.
  Equity Method Investments
 TV Works, LLC .
 10




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##### Table of Contents



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




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##### Table of Contents



Cox Communications, Inc.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  Continued
  Accounting for the Impairment
or Disposal of Long-Lived Assets
      12




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Cox Communications, Inc.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  Continued
 September 30, 2005
    
    
    December 31, 2004Gross
    
    
    
    
    
    
    Net
    
    
    Gross
    
    
    
    
    
    
    NetCarrying
    
    
    Accumulated
    
    
    Carrying
    
    
    Carrying
    
    
    Accumulated
    
    
    CarryingValue
    
    
    Amortization
    
    
    Value
    
    
    Value
    
    
    Amortization
    
    
    Value(Thousands of Dollars)Intangible assets
subject to amortization
    
    $
    673,733
    
    
    $
    114,717
    
    
    $
    559,016
    
    
    $
    659,967
    
    
    $
    30,743
    
    
    $
    629,224Trade name
    
    
    
    
    
    
    
    
    
    
    380,844
    
    
    
    
    
    
    
    
    
    
    
    380,844Franchise value
    
    
    
    
    
    
    
    
    
    
    17,705,273
    
    
    
    
    
    
    
    
    
    
    
    18,319,384Intangible assets
    
    
    
    
    
    
    
    
    
    $
    18,645,133
    
    
    
    
    
    
    
    
    
    
    $
    19,329,452Goodwill
    
    
    
    
    
    
    
    
    
    $
    106,889
    
    
    
    
    
    
    
    
    
    
    $
    106,889
  6. Debt
 September 30
    
    
    December 312005
    
    
    2004(Thousands of Dollars)Revolving credit facilities
    
    $
    2,000,000
    
    
    $
    1,650,000Commercial paper
    
    
    371,470
    
    
    
    96,142Term loan
    
    
    2,000,000
    
    
    
    2,000,000Medium-term notes
    
    
    264,480
    
    
    
    264,429Notes and debentures
    
    
    8,353,581
    
    
    
    8,765,359Exchangeable subordinated debentures
    
    
    
    
    
    
    19,546Capitalized lease obligations
    
    
    166,489
    
    
    
    209,576Other
    
    
    20,350
    
    
    
    20,68313,176,370
    
    
    
    13,025,735Less current portion
    
    
    47,107
    
    
    
    59,962Total long-term debt
    
    $
    13,129,263
    
    
    $
    12,965,773
  Revolving Credit Facilities
  Exchangeable Subordinated Debentures
  Interest Rate Swaps
  13




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##### Table of Contents



Cox Communications, Inc.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  Continued
   September 30
    
    
    December 312005
    
    
    2004Notional amount (in thousands)
    
    $
    1,000,000
    
    
    $
    1,375,000Weighted average fixed interest rate received
    
    
    7.53
    %
    
    
    7.35
    %Weighted average floating interest rate paid
    
    
    6.88
    %
    
    
    4.37
    %Maturity
    
    
    2006 - 2009
    
    
    
    2005 - 2009
  7. Derivative Instruments and Hedging Activities
   short-cut method
 8. Transactions with Affiliated Companies
 14




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Cox Communications, Inc.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  Continued
  (Thousands of Dollars)Intercompany due to CEI, December 31, 2004
    
    $
    (5,573
    )Cash transferred to CEI
    
    
    367,085Net
operating expense reimbursements from CEI
    
    $
    (398,247
    )Intercompany
due to CEI, September 30, 2005
    
    $
    (36,735
    )
 9. Retirement Plans
  Three Months Ended September 302005
    
    
    2004Pension
    
    
    Other
    
    
    Pension
    
    
    OtherBenefits
    
    
    Benefits
    
    
    Benefits
    
    
    Benefits(Thousands of Dollars)Service cost
    
    $
    10,600
    
    
    $
    2,053
    
    
    $
    7,954
    
    
    $
    1,371Interest
cost
    
    
    6,908
    
    
    
    1,154
    
    
    
    5,461
    
    
    
    842Expected return on plan
assets
    
    
    (7,122
    )
    
    
    (558
    )
    
    
    (6,600
    )
    
    
    (373
    )Prior service cost
amortization
    
    
    34
    
    
    
    
    
    
    
    59
    
    
    
    Actuarial loss
amortization
    
    
    1,479
    
    
    
    196
    
    
    
    966
    
    
    
    47Net periodic benefit
cost
    
    $
    11,899
    
    
    $
    2,845
    
    
    $
    7,840
    
    
    $
    1,887
 Nine Months Ended September 302005
    
    
    2004Pension
    
    
    Other
    
    
    Pension
    
    
    OtherBenefits
    
    
    Benefits
    
    
    Benefits
    
    
    Benefits(Thousands of Dollars)Service
cost
    
    $
    28,544
    
    
    $
    5,205
    
    
    $
    23,861
    
    
    $
    4,113Interest
cost
    
    
    19,191
    
    
    
    3,056
    
    
    
    16,382
    
    
    
    2,535Expected return on
plan assets
    
    
    (21,297
    )
    
    
    (1,389
    )
    
    
    (19,799
    )
    
    
    (1,119
    )Prior service cost
amortization
    
    
    102
    
    
    
    
    
    
    
    177
    
    
    
    Actuarial loss
amortization
    
    
    2,274
    
    
    
    223
    
    
    
    2,898
    
    
    
    149Net periodic
benefit cost
    
    $
    28,814
    
    
    $
    7,095
    
    
    $
    23,519
    
    
    $
    5,678
  15




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Cox Communications, Inc.
 Notes to Condensed Consolidated Financial Statements (Unaudited)  Continued
 10. Supplemental Financial Information
 September 30
    
    
    December 312005
    
    
    2004(Thousands of Dollars)Other current assetsInventory
    
    $
    98,774
    
    
    $
    68,221Prepaid assets
    
    
    59,595
    
    
    
    31,974Deferred income tax asset
    
    
    33,999
    
    
    
    33,988Other
    
    
    2,461
    
    
    
    2,203Total other current assets
    
    $
    194,829
    
    
    $
    136,386Other current liabilitiesDeposits and advances
    
    $
    123,685
    
    
    $
    103,800Income tax payable
    
    
    86,307
    
    
    
    121,269Other
    
    
    92,035
    
    
    
    114,673Total other current liabilities
    
    $
    302,027
    
    
    $
    339,742
 Nine Months EndedSeptember 302005
    
    
    2004(Thousands of Dollars)Significant non-cash transactionsConversion of Series A preferred stock to
Class A common stock
    
    $
    
    
    
    $
    367,648Additional cash flow informationCash paid for interest
    
    $
    454,592
    
    
    $
    259,015Cash paid for income taxes
    
    
    171,523
    
    
    
    33,153
 11. Commitments and Contingencies
   16




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




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




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




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




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Results of Operations
 Three Months Ended September 30, 2005 Compared with Three Months Ended September 30, 2004
  Three Months EndedSeptember 302005
    
    
    2004
    
    
    $ Change
    
    
    % Change(Thousands of Dollars)Revenues
    
    $
    1,755,174
    
    
    $
    1,618,059
    
    
    $
    137,115
    
    
    
    8
    %Cost of services
    
    
    703,296
    
    
    
    666,924
    
    
    
    36,372
    
    
    
    5
    %Selling, general and
administrative expenses
    
    
    370,484
    
    
    
    366,452
    
    
    
    4,032
    
    
    
    1
    %Depreciation and
amortization
    
    
    424,203
    
    
    
    400,871
    
    
    
    23,332
    
    
    
    6
    %Impairment of intangible
assets
    
    
    614,111
    
    
    
    
    
    
    
    614,111
    
    
    
NMOperating income
    
    
    (356,920)
    
    
    
    183,812
    
    
    
    (540,732)
    
    
    
        NMInterest expense
    
    
    (177,642
    )
    
    
    (96,998
    )
    
    
    (80,644
    )
    
    
    83
    %Loss on investments, net
    
    
    (6,406
    )
    
    
    (204
    )
    
    
    (6,202
    )
    
    NMOther, net
    
    
    3,514
    
    
    
    (1,474
    )
    
    
    4,988
    
    
    NMIncome tax
benefit (expense)
    
    
    189,211
    
    
    
    (41,813
    )
    
    
    231,024
    
    

NMMinority interest, net of tax
    
    
    
    
    
    
    (631
    )
    
    
    631
    
    
    
    (100
    %)Equity in net losses of
affiliated companies, net of
tax
    
    
    (1,952
    )
    
    
    (732
    )
    

    (1,220
    )


    NMNet (loss) income
    
    $
    (350,195
    )
    
    $
    41,960
    
    
    $
    (392,155
    )
    
NM
  Revenues
  Three Months Ended September 30
 % of
    
    
    
    
    
    
    % of
    
    
    $
    
    
    %2005
    
    
    Total
    
    
    2004
    
    
    Total
    
    
    Change
    
    
    Change(Thousands of Dollars)ResidentialVideo
    
    $
    994,123
    
    
    
    57
    %
    
    $
    964,067
    
    
    
    60
    %
    
    $
    34,056
    
    
    
    3
    %Data
    
    
    341,226
    
    
    
    19
    %
    
    
    283,941
    
    
    
    18
    %
    
    
    57,285
    
    
    
    20
    %Telephony
    
    
    188,556
    
    
    
    11
    %
    
    
    147,344
    
    
    
    9
    %
    
    
    41,212
    
    
    
    28
    %Other
    
    
    28,978
    
    
    
    2
    %
    
    
    24,176
    
    
    
    1
    %
    
    
    4,802
    
    
    
    20
    %Total residential
    
    
    1,552,883
    
    
    
    89
    %
    
    
    1,419,528
    
    
    
    88
    %
    
    
    133,355
    
    
    
    9
    %Commercial
    
    
    109,171
    
    
    
    6
    %
    
    
    90,605
    
    
    
    6
    %
    
    
    18,565
    
    
    
    20
    %Advertising
    
    
    93,120
    
    
    
    5
    %
    
    
    107,926
    
    
    
    6
    %
    
    
    (14,806
    )
    
    
    (14)
    %Total revenues
    
    $
    1,755,174
    
    
    
    100
    %
    
    $
    1,618,059
    
    
    
    100
    %
    
    $
    137,115
    
    
    
    8
    %
 21




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
    
    an increase in customers for advanced services, including digital cable, high-speed
Internet access and telephony customers;
    
    an increase in basic cable rates resulting from increased programming costs and
inflation, as well as increased channel availability; and
    
    an increase in commercial broadband customers; partially offset by
    
    a decrease in revenues due to revenues lost as a result of Hurricane Katrina.
 Costs and expenses (cost of services and selling, general and administrative expenses)
  Three Months EndedSeptember 30$
    
    
    %2005
    
    
    2004
    
    
    Change
    
    
    Change(Thousands of Dollars)Cost of servicesProgramming costs
    
    $
    347,554
    
    
    $
    324,824
    
    
    $
    22,730
    
    
    
    7
    %Other cost of services
    
    
    355,742
    
    
    
    342,100
    
    
    
    13,642
    
    
    
    4
    %Total cost of services
    
    
    703,296
    
    
    
    666,924
    
    
    
    36,372
    
    
    
    5
    %Selling, general and
administrativeMarketing
    
    
    93,367
    
    
    
    88,832
    
    
    
    4,535
    
    
    
    5
    %General and administrative
    
    
    277,117
    
    
    
    277,620
    
    
    
    (503
    )
    
    
    Total selling, general and
administrative
    
    
    370,484
    
    
    
    366,452
    
    
    
    4,032
    
    
    
    Total costs and expenses
    
    $
    1,073,780
    
    
    $
    1,033,376
    
    
    $
    40,404
    
    
    
    4
    %
    
    
    a $0.5 million decrease in general and administrative expenses primarily related to the
inclusion of an estimated settlement and expenses related to a legal claim in the three
months ended September 30, 2004; partially offset by,
    
    a $4.5 million increase in marketing expense primarily due to a 6% increase in costs
associated with Cox Media, Coxs advertising sales business.
 22




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Depreciation and amortization
  Impairment of intangible assets
  Accounting for the Impairment or Disposal of Long-Lived
Assets
 Interest expense
  (Loss) gain on investments, net
  Income tax expense
  Equity in net losses of affiliated companies, net of tax
  23




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Net income
  Nine Months Ended September 30, 2005 Compared with Nine Months Ended September 30, 2004
  Nine Months EndedSeptember 30%2005
    
    
    2004
    
    
    $ Change
    
    
    Change(Thousands of Dollars)Revenues
    
    $
    5,235,887
    
    
    $
    4,753,656
    
    
    $
    482,231
    
    
    
    10
    %Cost of services
    
    
    2,094,680
    
    
    
    1,947,367
    
    
    
    147,313
    
    
    
    8
    %Selling, general and
administrative expenses
    
    
    1,114,104
    
    
    
    1,038,336
    
    
    
    75,768
    
    
    
    7
    %Depreciation and amortization
    
    
    1,321,603
    
    
    
    1,190,051
    
    
    
    131,552
    
    
    
    11
    %Impairment of intangible
assets
    
    
    614,111
    
    
    
    
    
    
    
    614,111
    
    


NMLoss on sale of cable system
    
    
    
    
    
    
    5,021
    
    
    
    (5,021
    )
    
    
    (100
    %)Operating income
    
    
    91,389
    
    
    
    572,881
    
    
    
    (481,492
    )
    
    
    (84
    %)Interest expense
    
    
    (512,791
    )
    
    
    (289,201
    )
    
    
    (223,590
    )
    
    
    77
    %(Loss) gain on investments,
net
    
    
    (9,127
    )
    
    
    28,931
    
    
    
    (38,058
    )
    
    
    (132
    %)Loss on extinguishment of
debt
    
    
    (13,019
    )
    
    
    (7,006
    )
    
    
    (6,013
    )
    
    
    86
    %Other, net
    
    
    3,068
    
    
    
    (3,295
    )
    
    
    6,363
    
    
    NMIncome tax
benefit (expense)
    
    
    139,836
    
    
    
    (137,878
    )
    
    
    277,714
    
    

NMMinority interest, net of
tax
    
    
    
    
    
    
    (1,203
    )
    
    
    1,203
    
    
    
    100
    %Equity in net losses income of
affiliated companies, net of
tax
    
    
    (4,765
    )
    
    
    (884
    )
    
    
    (3,881
    )
    
    NMNet (loss) income
    
    $
    (305,409)
    
    
    $
    162,345
    
    
    $
    (467,754
    )
    

NM
  Revenues
  Nine Months Ended September 30% of
    
    
    
    
    
    
    % of
    
    
    $
    
    
    %2005
    
    
    Total
    
    
    2004
    
    
    Total
    
    
    Change
    
    
    Change(Thousands of Dollars)ResidentialVideo
    
    $
    2,994,948
    
    
    
    57
    %
    
    $
    2,875,612
    
    
    
    60
    %
    
    $
    119,336
    
    
    
    4
    %Data
    
    
    996,867
    
    
    
    19
    %
    
    
    812,169
    
    
    
    17
    %
    
    
    184,698
    
    
    
    23
    %Telephony
    
    
    541,508
    
    
    
    10
    %
    
    
    425,415
    
    
    
    9
    %
    
    
    116,093
    
    
    
    27
    %Other
    
    
    79,451
    
    
    
    2
    %
    
    
    77,019
    
    
    
    2
    %
    
    
    2,432
    
    
    
    3
    %Total
residential
    
    
    4,612,774
    
    
    
    88
    %
    
    
    4,190,215
    
    
    
    88
    %
    
    
    422,559
    
    
    
    10
    %Commercial
    
    
    313,596
    
    
    
    6
    %
    
    
    260,126
    
    
    
    6
    %
    
    
    53,470
    
    
    
    21
    %Advertising
    
    
    309,517
    
    
    
    6
    %
    
    
    303,315
    
    
    
    6
    %
    
    
    6,202
    
    
    
    2
    %Total revenues
    
    $
    5,235,887
    
    
    
    100
    %
    
    $
    4,753,656
    
    
    
    100
    %
    
    $
    482,231
    
    
    
    10
    %
 24




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
    
    an increase in customers for advanced services, including digital cable, high-speed
Internet access and telephony customers;
    
    an increase in basic cable rates resulting from increased programming costs and
inflation, as well as increased channel availability; and
    
    an increase in commercial broadband customers.
  Costs and expenses (cost of services and selling, general and administrative expenses)
  Nine Months EndedSeptember 30$
    
    
    %2005
    
    
    2004
    
    
    Change
    
    
    Change(Thousands of Dollars)Cost of servicesProgramming costs
    
    $
    1,047,288
    
    
    $
    963,208
    
    
    $
    84,080
    
    
    
    9
    %Other cost of services
    
    
    1,047,392
    
    
    
    984,159
    
    
    
    63,233
    
    
    
    6
    %Total cost of services
    
    
    2,094,680
    
    
    
    1,947,367
    
    
    
    147,313
    
    
    
    8
    %Selling,
general and administrative Marketing
    
    
    271,238
    
    
    
    251,244
    
    
    
    19,994
    
    
    
    8
    %General and administrative
    
    
    842,866
    
    
    
    787,092
    
    
    
    55,774
    
    
    
    7
    %Total selling, general and
administrative
    
    
    1,114,104
    
    
    
    1,038,336
    
    
    
    75,768
    
    
    
    7
    %Total costs and expenses
    
    $
    3,208,784
    
    
    $
    2,985,703
    
    
    $
    223,082
    
    
    
    7
    %
    25




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##### Table of Contents




    
    a $55.8 million increase in general and administrative expenses primarily related to
increased salaries and benefits, as well as an increase in the cost of providing
healthcare benefits; and,
    
    a $20.0 million increase in marketing expense primarily due to a 10% increase in costs
associated with Cox Media, Coxs advertising sales business.
  Depreciation and amortization
  Loss on sale of cable systems
  Interest expense
  (Loss) gain on investments, net
  Loss on extinguishment of debt
  26




---



##### Table of Contents



Income tax expense
  Equity in net losses of affiliated companies, net of tax
  Net income
  Hurricane Katrina
  Recent Developments
   27




---



##### Table of Contents



Liquidity and Capital Resources
 Uses of Cash
       Sources of Cash
  Recently Issued Accounting Pronouncements
 28




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##### Table of Contents



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




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
      September 30, 2005
    
    December 31, 2004Fair Value
    
    
    
    
    
    
    
    
    
    Fair Value(1% Decrease
    
    
    
    
    
    
    
    
    
    (1% DecreaseCarrying
    
    Fair
    
    in Interest
    
    Carrying
    
    Fair
    
    in InterestValue
    
    Value
    
    Rates)
    
    Value
    
    Value
    
    Rates)(Millions of Dollars)Fixed-rate notes and
Debentures
    
    $
    7,019.9
    
    
    $
    7,255.4
    
    
    $
    7,713.7
    
    
    $
    8,760.0
    
    
    $
    9,092.6
    
    
    $
    9,593.0Exchangeable
subordinated
Debentures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19.5
    
    
    
    31.4
    
    
    
    31.6
 
 Item 4. Controls and Procedures
 30




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##### Table of Contents



Evaluation
of Controls and Procedures.
  Changes
in Internal Controls.
 
 Part II  Other Information
 
 Item 1. Legal Proceedings
   
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters of a Vote of Security Holders
  
 Item 5. Other Information
 Jimmy W. Hayes John M. Dyer
 
 Item 6. Exhibits
 31




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##### Table of Contents



3.1
    
    
    
    Certificate of Incorporation of Cox Communications, Inc., as
amended (incorporated by reference to exhibit 3.1 to Coxs
Registration Statement on Form S-4, file no. 333-122050, filed
on January 14, 2005).3.2
    
    
    
    Bylaws of Cox Communications, Inc. (Incorporated by reference
to Exhibit 3.2 to Coxs Registration Statement on Form S-4,
File No. 33-80152, filed with the Commission on December 16,
1994.)21
    
    
    
    Subsidiaries of Cox Communications,
Inc.31.1
    
    
    
    Certification of Principal Executive Officer Pursuant to Rule
13a-14(a) of the Securities Exchange Act of 1934.31.2
    
    
    
    Certification of Principal Financial Officer Pursuant to Rule
13a-14(a) of the Securities Exchange Act of 1934.32.1
    
    
    
    Certification of Principal Executive Officer and Principal
Financial Officer Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
 
 SIGNATURE
  Cox Communications, Inc.Date:  November 9, 2005
    /s/ John M. DyerJohn M. DyerChief Financial Officer
(principal financial officer and
duly authorized officer) 32