##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2005
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For
the transition period from ___ to ___
 Commission File Number 1-6590
 
 COMMUNICATIONS
 Cox Communications, Inc.
 (Exact name of registrant as specified in its charter)
 Delaware(State or other jurisdiction of incorporation or organization)
    
    58-2112281(I.R.S. Employer Identification No.)1400 Lake Hearn Drive, Atlanta, Georgia
    
    30319(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code: (404) 843-5000
 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:   SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
 o þ
 þ o
 o þ
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
 o þ




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##### 



COX COMMUNICATIONS, INC.
2005 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
 PagePART IItem 1.
    
    Business
    
    
    1Item 1A.
    
    Risk Factors
    
    
    26Item 1B.
    
    Unresolved Staff Comments
    
    
    28Item 2.
    
    Properties
    
    
    28Item 3.
    
    Legal Proceedings
    
    
    29Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    32PART IIItem 5.
    
    Market for Registrants Common Equity,
Related Stockholder Matters and Issuer
Purchases of Equity
Securities
    
    
    33Item 6.
    
    Selected Consolidated Financial Data
    
    
    33Item 7.
    
    Managements Discussion and Analysis of
Financial Condition and Results of
Operations
    
    
    35Item 7A.
    
    Quantitative and Qualitative
Disclosures about Market
Risk
    
    
    55Item 8.
    
    Consolidated Financial Statements and
Supplementary DataConsolidated Balance Sheets
    
    
    57Consolidated Statements of Operations
    
    
    58Consolidated Statements of Shareholders Equity
    
    
    59Consolidated Statements of Cash Flows
    
    
    60Notes to Consolidated Financial Statements
    
    
    61Report of Independent Registered Public Accounting Firm
    
    
    100Item 9.
    
    Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure
    
    
    101Item 9A.
    
    Controls and Procedures
    
    
    101Item 9B.
    
    Other Information
    
    
    101PART IIIItem 10.
    
    Directors and Executive Officers of the Registrant
    
    
    101Item 11.
    
    Executive Compensation
    
    
    105Item 12.
    
    Security Ownership of Certain
Beneficial Owners and Management and
Related Stockholder Matters
    
    
    109Item 13.
    
    Certain Relationships and Related Transactions
    
    
    110Item 14.
    
    Principal Accountant Fees and Services
    
    
    111PART IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    
    112Signatures
    
    
    115EX-2.1 ASSET PURCHASE AGREEMENTEX-10.3 FIRST AMENDMENT TO THE CREDIT AGREEMENT DATED AS OF DECEMBER 3, 2004EX-10.4 FIRST AMENDMENT TO THE CREDIT AGREEMENT DATED AS OF JUNE 4, 2004EX-10.12 LETTER AGREEMENT DATED DECEMBER 31, 2005EX-21.1 SUBSIDIARIES OF COX COMMUNICATIONS, INC.EX-31.1 SECTION 302 CERTIFICATION OF THE PEOEX-31.2 SECTION 302 CERTIFICATION OF THE PFOEX-32.1 SECTION 906 CERTIFICATION OF THE PEO AND PFO




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Preliminary Note
  Supplemental
Information to be Furnished with Reports Filed Pursuant to
Section 15(d) of the Securities Exchange Act of 1934 by
Registrants Which Have not Registered Securities Pursuant to
Section 12 of the Securities Exchange Act of 1934




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##### Table of Contents



PART I
 
 ITEM 1. BUSINESS
 Overview
     Business Strategy
 1




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##### Table of Contents



Technology and Network Infrastructure.
 
    
    Cox had upgraded 94% of its networks to a bandwidth capacity of 750 megahertz or
greater;
    
    digital cable was available to 99% of the homes passed by Coxs broadband network;
    
    high-speed Internet was available to 99% of homes passed; and
    
    telephone was available to 73% of homes passed.
 Clustering.
 Hampton Roads
    
    New England
    
    Orange CountyKansas
    
    New Orleans
    
    ArizonaLas Vegas
    
    Northern Virginia
    
    San DiegoMiddle America Cox
    
    Oklahoma
    
    West Texas
  Bundling.
 Customer Service.
 Community Service.
 2




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##### Table of Contents




    
    Cox Cable in the Classroom, which provides more than 6,000 schools and 3.7 million
students with complimentary basic cable service and more than 540 hours of commercial-free
educational cable programming on a monthly basis.
    
    Cox Line to Learning, which provides complimentary high-speed Internet access,
exclusive curricula and distance-learning experiences to students in more than 900
accredited public and private schools in communities where high-speed digital services are
available. Coxs Line to Learning events link students through online video conferencing
to experts in the workplace. These distance-learning events demonstrate the link between
classroom activities and the wider world, enabled by Coxs broadband technology.
  Products and Services
  Video
   
    
    Basic Cable. Basic cable includes, for a monthly fee, local broadcast signals available
off-air, a limited number of broadcast signals from so-called superstations, and public,
governmental and educational access channels.
    
    Expanded Basic. Expanded service includes, for an additional monthly fee,
satellite-delivered non-broadcast programming (such as CNN, MTV, USA, ESPN, A&E, TNT, The
Discovery Channel, The Learning Channel and Nickelodeon).
    
    Premium Services.Premium services include, for an additional monthly fee,
satellite-delivered programming that consists principally of feature motion pictures
presented without commercial interruption, sports events, concerts and other entertainment
programming (such as Home Box Office, Showtime, Starz and Cinemax).
    
    Pay-Per-View. Pay-per-view service allows customers to order, for a one-time fee, a
single showing of a recently released movie, sporting event or music concert without
commercial interruption.
    
    Cox Digital Cable.Digital compression technology currently allows up to 12 digital
channels to be inserted into the space of only one traditional analog channel. A set-top
video terminal converts the digital signal into analog signals that can be viewed on a
television set. A Cox Digital Cable customer can currently receive up to approximately
250 channels, including enhanced pay-per-view service, digital music channels, new
networks grouped by genre and an interactive program guide. Customers pay a monthly fee
for digital cable, which varies based on level of service and number of digital converters
selected by the customer.
 3




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
    
    Entertainment On Demand. Entertainment On Demand (also referred to as video on demand)
is an interactive service that provides access to hundreds of movies and other programming
with full VCR-like functionality, including the ability to pause, rewind and fast forward
programs. Customers can also start a program whenever they like, stop the selection
before it is completed and view a program repeatedly during the 24 hour rental period.
Customers generally pay on a per-selection basis. Cox has already launched Entertainment
On Demand in nine markets, and is working with technology vendors and others to make
Entertainment On Demand available in additional markets.
    
    High-Definition Television. High definition television is high-resolution digital
television. A high definition television signal has twice the color resolution, provides a
picture that is six times sharper than that provided by a traditional analog television
set and provides enhanced audio, such as Dolby Digital. Cox
offers high definition
television service in over 90% of its homes passed.
    
    Digital Video Recorders. A digital video recorder is a device that allows customers to
store television programming on a hard disk drive so that customers can access this
programming at a later time. The digital video recorder functions like a VCR, except that
there is no videotape and it offers more sophisticated recording options and playback
features. Cox has deployed digital video recorders in all of its markets.
 High-Speed Internet Access
   Cox Digital Telephone
  Cox Business Services
 4




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##### Table of Contents



Cox Media
   Customer Data
  December 312005*
    
    
    2004*Customer relationshipsCustomer relationshipsBasic video customers (a)
    
    
    6,300,432
    
    
    
    6,287,395Non-video customers (b)
    
    
    446,573
    
    
    
    348,825Total customer relationships (c)
    
    
    6,747,005
    
    
    
    6,636,220Revenue generating unitsBasic video customers (a)
    
    
    6,300,432
    
    
    
    6,287,395Advanced services (d)
    
    
    7,531,110
    
    
    
    6,286,827Total revenue generating units (e)
    
    
    13,831,542
    
    
    
    12,574,222Video homes passed (f)
    
    
    10,788,522
    
    
    
    10,567,166Basic video penetration (g)
    
    
    58.4
    %
    
    
    59.5
    %Cox Digital CableDigital cable ready homes passed
    
    
    10,715,294
    
    
    
    10,494,634Customers
    
    
    2,704,161
    
    
    
    2,410,216Penetration of customers to basic video
customers
    
    
    42.9
    %
    
    
    38.3
    %High-Speed Internet AccessHigh-speed Internet access ready homes passed
    
    
    10,697,174
    
    
    
    10,466,947Customers
    
    
    3,143,313
    
    
    
    2,571,246Penetration of customers to high-speed Internet
access ready homes passed
    
    
    29.4
    %
    
    
    24.6
    %Cox Digital TelephoneTelephone ready homes passed
    
    
    7,875,402
    
    
    
    6,537,968Customers
    
    
    1,683,636
    
    
    
    1,305,365
 5




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December 312005*
    
    
    2004*Penetration of customers to telephone ready homes
Passed
    
    
    21.4
    %
    
    
    20.0
    %Bundled CustomersCustomers subscribing to two or more services
    
    
    3,325,306
    
    
    
    2,777,588Penetration of bundled customers to basic video
customers
    
    
    52.8
    %
    
    
    44.2
    %
 
 *
    
    Operating statistics for 2005 and 2004 include the Sales
Systems, which at December 31, 2005,
had approximately: 963,000 total customer relationships; 1,501,000 total revenue generating
units; 1,612,000 video homes passed; 1,592,000 digital cable ready
homes passed; 1,564,000
high-speed Internet access ready homes passed; 364,000 telephone
ready homes passed; and
274,000 customers subscribing to two or more services.
    
    Cox is continuing to assess the impact of Hurricane Katrina on its cable systems in New
Orleans, and although all of Coxs New Orleans network where
commercial power has been restored is serving customers,
the precise and long-term impact of Hurricane Katrina on the population of New Orleans and,
therefore, Coxs cable systems in New Orleans, remains uncertain. For more information, see
Part II, Item 7. Managements Discussion and Analysis of Financial Condition and Results of
Operations2005 Compared to 2004Hurricane Katrina.(a)
    
    A home with one or more television sets connected to a cable system is counted as one basic
video customer.(b)
    
    A customer who receives high-speed Internet or telephone service, but does not subscribe to
video service is counted as a non-video customer.(c)
    
    Total customer relationships represent the number of customers who receive at least one level
of service, encompassing video, high-speed Internet and telephony services, without regard to
which service(s) customers purchase.(d)
    
    Advanced services include Cox Digital Cable, Cox High Speed Internet and Cox Digital
Telephone.(e)
    
    Each basic video customer and each advanced service is a revenue generating unit. In certain
locations, a household may purchase more than one advanced service, each of which is counted
as a separate revenue generating unit.(f)
    
    A home is deemed to be passed if it can be connected to the distribution system without any
further extension of the distribution plant.(g)
    
    Basic video customers as a percentage of video homes passed. Franchises
    6




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Programming Suppliers
  Investments
  Discovery Communications, Inc.
 TV Works.
 Other
 Competition
   Cable and Internet Access Competition
 7




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
    
    direct broadcast satellite (commonly known as DBS) and direct-to-home satellite program
distributors that transmit video programming, data and other information by satellite to
customers receiving dishes;
    
    local exchange carriers (commonly known as LECs) that have partnered with DBS providers to offer
video services or that are constructing and are operating fiber optic networks to offer video and
other communications services or that have announced plans to enter the video distribution market
using fiber optic facilities;
    
    multichannel multipoint distribution service (also known as MMDS or wireless cable) that uses
low-power microwave frequencies to transmit video programming and other information over-the-air
to subscribers receiving dishes;
    
    local television broadcast stations providing free off-air programming that can be received using
a roof-top antenna and television set;
    
    satellite master antenna television systems (also known as SMATV or private cable systems) that
serve condominiums, apartments, office complexes and private residential developments;
    
    competitive cable systems that have been franchised by local governments to provide cable
television services in areas where Cox operates (commonly known as overbuilders);
    
    distributors of home video products;
    
    interactive online computer and Internet services;
    
    movie theaters;
    
    live concerts and sporting events; and
    
    books, newspapers and magazines.In order to compete effectively, Cox strives to provide, at a reasonable price to its subscribers:
    
    new products and services, including digital video and audio programming, high definition video
programming, high-speed Internet access and telephone services;
    
    a greater variety of optional video programming packages;
    
    superior technical performance; and
    
    superior customer service.
 de facto
 8




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9




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i.e.
   10




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Telephony Competition
 11




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3⁄4
 Legislation and Regulation
 Cable Television
   The Communications Act and FCC Regulations
  12




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
    
    subscriber rates;
    
    the content of programming Cox offers to subscribers, as well as
the manner in which Cox markets its program packages to
subscribers;
    
    the use of Coxs cable system facilities by local franchising
authorities, the public and unrelated companies;
    
    the use of utility poles and conduits;
    
    cable system and program ownership limitations; and
    
    franchise agreements with local governmental authorities.
 Rate Regulation .
   
    
    prohibit regulation of rates for non-basic multichannel video
service packages and video programming offered on a per channel or
per program basis, as well as regulation of rates by local
franchising authorities for other non-basic communications
services provided over the cable system;
    
    require operators to establish a uniform rate structure for cable
services throughout each franchise area that is not subject to
effective competition, subject to certain exceptions allowing
operators to establish reasonable categories of customers and
services; and
    
    permit operators to offer non-predatory bulk discount rates for
subscribers in commercial and residential developments and to
offer discounted rates to senior citizens and other economically
disadvantaged groups.
  13




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Content Requirements and Restrictions.
 
    
    to carry the station on certain designated channel positions on
the operators cable system (subject to certain exceptions); or
    
    to negotiate an agreement for the stations retransmission
consent that permits the operator to carry the station on the
cable system.
   
    
    declined to order the carriage of both the analog and digital signals of television stations;
    
    determined that a television broadcast station licensee that is operating only on its authorized digital channel and/or
that has surrendered its analog broadcast channel has mandatory cable carriage rights within the broadcasters local
service area for only the primary video programming stream of the broadcasters digital broadcast channel and does
not have the right to require the cable operator to carry multiple digital programming streams, commonly called
multicasting;
    
    authorized the digital-only broadcast station to elect whether the operators cable system will carry the stations
signal in a digital or converted analog format; and
    
    authorized broadcasters with both analog and digital signals to tie the carriage of their digital signals with the
carriage of their analog signals as a retransmission consent condition.
   14




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
    
    precludes any satellite video programmer affiliated with a cable company, or with a common carrier providing video
programming directly to its subscribers, from favoring an affiliated company over competitors;
    
    requires such programmers to sell their programming to other multichannel video distributors; and
    
    limits the ability of such programmers to offer exclusive programming arrangements to their affiliates.
   
    
    use of syndicated and network programs and local sports broadcast programming;
    
    advertising in childrens programming;
    
    political advertising;
    
    programming created or controlled by the cable operator (i.e., origination cablecasting);
    
    lottery programming;
    
    sponsorship identification; and
    
    closed captioning of video programming.
  Use of Coxs Cable Systems by the Government and Unrelated Third Parties . see
 
    
    permits franchising authorities to require that cable operators
provide channel capacity for public, educational and governmental
access programming; and
    
    requires cable systems with 36 or more activated channels to
designate a significant portion of their channel capacity for
programming provided by unaffiliated third parties under regulated
lease arrangements.
 15




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16




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Pole Attachments .
   Ownership Limitations.
 
    
    subscriber ownership information reporting requirements; and
    
    attribution rules that identify when the ownership or management
by Cox or third parties of other communications businesses,
including cable systems, television broadcast stations and local
telephone companies, may be imputed to Cox for purposes of
determining Coxs compliance with the FCCs ownership
restrictions.
 17




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Local Telephone Company Ownership of Cable Systems
   General Ownership Limitations
 18




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Other Regulatory Requirements of the Communications Act and the FCC .
 
    
    customer service;
 
    
    subscriber privacy;
 
    
    marketing practices;
 
    
    equal employment opportunity;
 
    
    technical standards and equipment compatibility;
 
    
    antenna structure notification, marking, and lighting;
 
    
    emergency alert system requirements; and
 
    
    the collection from cable operators of annual regulatory fees,
which are calculated based on the number of subscribers served and
the types of FCC licenses held.
    19




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Cable Copyright Matters
    Cable Franchising Matters
  
    
    generally prohibits a cable operator from operating without a franchise;
 
    
    permits local authorities to regulate basic service and equipment rates, but only in a manner consistent with the FCCs
regulations and decisions;
 20




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
    
    encourages competition with existing cable systems by:
 -
    
    allowing municipalities to operate their own cable systems without franchises; and-
    
    preventing franchising authorities from granting exclusive franchises or from
unreasonably refusing to award additional franchises covering an existing cable systems
service area;
 
    
    permits local authorities, when granting or renewing franchises,
to establish requirements for cable-related facilities and
equipment;
 
    
    permits local authorities, when granting or renewing franchises, to require the provision of channel capacity for
public, educational and governmental channels, including capacity on institutional networks;
 
    
    prohibits franchising authorities from establishing requirements
for specific video programming or information services other than
in broad categories;
 
    
    permits a cable operator to seek modification of franchise
requirements from the franchising authority or by judicial action
if changed circumstances warrant the modification;
 
    
    generally prohibits franchising authorities from:
 -
    
    imposing requirements in the grant or renewal of a cable franchise that require,
prohibit or restrict the provision of telecommunications services;-
    
    imposing franchise fees on revenues derived from providing telecommunications
services over the cable system; or-
    
    restricting the use of any type of subscriber equipment or transmission technology;
 
    
    limits franchise fees to 5% of gross revenues derived from providing cable services over the cable system;
 
    
    establishes formal and informal procedures for renewal of franchises that are designed to protect cable operators
from arbitrary denials of renewal; and
 
    
    permits state or local franchising authorities to adopt certain additional conditions regarding the transfer of cable
system ownership.
     21




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Telecommunications
   Local Telephone Competition Rules.
   22




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Intercarrier Compensation.
  23




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Wireline
Broadband Services.
 Universal Service.
   e.g.
 Regulatory Forbearance.
 24




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##### Table of Contents



Telephone Numbers.
 Voice over Internet Protocol Services.
 Customer
Privacy.
 25




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State Telecommunications Regulation.
   Employees
  
 Item 1A. RISK FACTORS
  Cox
has significant debt.
  26




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Cox faces a wide range of competition in areas served by Coxs cable systems, which could adversely
affect Coxs future results of operations.
   Programming costs are increasing and Cox may not have the ability to pass these increases on to
Coxs subscribers, which would materially adversely affect Coxs cash flow and operating margins.
   27




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Cox is subject to regulation by federal, state and local governments which may impose costs and
restrictions.
  Cox is subject to additional regulatory burdens in connection with the provision of phone services,
which could cause Cox to incur additional costs.
   Cox may face new regulatory requirements because of technological advances, which could adversely
affect Coxs future results of operations.
  Cox is controlled by a principal stockholder whose interests may be different than your interest.
  
 Item 1B. UNRESOLVED STAFF COMMENTS
 28




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ITEM 2. PROPERTIES
   
 ITEM 3. LEGAL PROCEEDINGS
   29




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30




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31




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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  32




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PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
   A
    
    B
    
    CNumber of securitiesremaining available forNumber of securities to be
    
    
    
    
    
    future issuance under equityissued upon exercise of
    
    Weighted-average exercise
    
    compensation plansoutstanding options,
    
    price of outstanding options,
    
    (excluding securities reflectedPlan Category
    
    warrants and rights
    
    warrants and rights
    
    in column A)Equity
compensation plans
approved by
security
holders
    
    
    165,878
    (a)
    
    $
    37.50
    (a)
    
    
    -0-
    (b)Equity compensation
plans not approved
by security
holders
    
    
    0
    
    
    
    N/A
    
    
    
    -0-
    (c)Total
    
    
    165,878
    
    
    $
    37.50
    
    
    
    -0-
 
 (a)
    
    Consists of stock options outstanding under the Cox Communications,
Inc. Amended and Restated Long-Term Incentive Plan (referred to as the LTIP).(b)
    
    On December 29, 2004, Cox filed a post-effective amendment on Form S-8
to deregister all shares of Class A Common Stock not issued prior to the going-private
merger.(c)
    
    On December 29, 2004, Cox filed a post-effective amendment on Form S-8
to deregister all shares of Class A Common Stock not issued prior to the going-private merger
under the Cox Communications, Inc. Stock Option Plan for Non-Employees (the Non-Employee
Plan), which was adopted by the Compensation Committee on August 11, 1999 in connection with
the merger between Cox and TCA Cable TV, Inc. 
 ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
  Year Ended December 312005
    
    2004
    
    2003
    
    2002
    
    2001(Millions of Dollars)Statement of Operations DataRevenues
    
    $
    6,722.3
    
    
    $
    6,106.1
    
    
    $
    5,458.8
    
    
    $
    4,767.7
    
    
    $
    4,017.9Operating income (loss)
    
    
    736.5
    
    
    
    (1,530.5
    )
    
    
    569.9
    
    
    
    390.6
    
    
    
    (153.8
    )Interest expense
    
    
    697.4
    
    
    
    428.6
    
    
    
    467.3
    
    
    
    549.5
    
    
    
    565.6(Loss) gain on derivative instruments, net
    
    
    (0.1
    )
    
    
    (0.1
    )
    
    
    (22.6
    )
    
    
    1,125.6
    
    
    
    (212.0
    )(Loss) gain on investments, net
    
    
    (9.5
    )
    
    
    28.4
    
    
    
    165.2
    
    
    
    (1,317.2
    )
    
    
    1,151.2Loss on extinguishment of debt
    
    
    (13.0
    )
    
    
    (7.0
    )
    
    
    (450.1
    )
    
    
    (0.8
    )
    
    
    Loss from continuing operations
    
    
    (0.1
    )
    
    
    (1,085.1
    )
    
    
    (147.9
    )
    
    
    (290.2
    )
    
    
    733.9(Loss) income from discontinued operations,
net of tax
    
    
    (230.6
    )
    
    
    (80.0
    )
    
    
    10.1
    
    
    
    16.2
    
    
    
    21.1
 33




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Year Ended December 312005
    
    2004
    
    2003
    
    2002
    
    2001(Millions of Dollars)(Loss) income before cumulative effect of
change in accounting principle
    
    
    (230.7
    )
    
    
    (1,165.1
    )
    
    
    (137.8
    )
    
    
    (274.0
    )
    
    
    755.0Cumulative effect of change in accounting
principle, net of tax
    
    
    
    
    
    
    (1,210.2
    )
    
    
    
    
    
    
    
    
    
    
    Net (loss) income
    
    
    (230.7
    )
    
    
    (2,375.3
    )
    
    
    (137.8
    )
    
    
    (274.0
    )
    
    
    755.0Balance Sheet Data *As of December 31Total assets
    
    $
    28,377.7
    
    
    $
    29,253.7
    
    
    $
    24,417.6
    
    
    $
    25,015.3
    
    
    $
    25,061.4Debt (including amounts due to CEI)
    
    
    13,017.3
    
    
    
    12,995.6
    
    
    
    7,015.8
    
    
    
    7,316.0
    
    
    
    8,417.7Cox-obligated capital and preferred
securities of subsidiary trusts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,155.7
 
 *
    
    CEI elected to apply push-down basis accounting with respect to shares acquired in the
going-private transaction. Accordingly, the aggregate $8.4 billion purchase price (exclusive of
estimated fees and expenses), which amount includes approximately $1.5 billion paid by CEI to
purchase shares of Coxs former public stock pursuant to the going-private transaction, has been
pushed-down to the consolidated financial statements of Cox. Accordingly, the net tangible and
intangible assets of Cox at December 31, 2005 and 2004 have been stepped-up to fair value to the
extent of the 37.96% minority interest acquired in the going-private transaction pursuant to the
purchase method of accounting for business combinations. 34




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##### Table of Contents



ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
  Executive Overview
      35




---



##### Table of Contents



Discontinued Operations
  Accounting for the Impairment or Disposal of Long-Lived Assets
 Results of Operations
 2005 compared with 2004
  Year Ended December 312005
    
    
    2004
    
    
    $ Change
    
    
    % Change(Thousands of Dollars)Revenues
    
    $
    6,722,293
    
    
    $
    6,106,105
    
    
    $
    616,188
    
    
    
    10
    %Cost of services (excluding
depreciation and
amortization)
    
    
    2,672,873
    
    
    
    2,482,149
    
    
    
    190,724
    
    
    
    8
    %Selling, general and
administrative expenses
(excluding depreciation and
amortization)
    
    
    1,467,982
    
    
    
    1,365,256
    
    
    
    102,726
    
    
    
    8
    %Depreciation and
amortization
    
    
    1,663,037
    
    
    
    1,548,160
    
    
    
    114,877
    
    
    
    7
    %Impairment of intangible
assets
    
    
    181,896
    
    
    
    2,235,973
    
    
    
    (2,054,077
    )
    
    NMLoss on sale of cable systems
    
    
    
    
    
    
    5,021
    
    
    
    (4,884
    )
    
    NMOperating income (loss)
    
    
    736,505
    
    
    
    (1,530,454
    )
    
    
    2,266,959
    
    
    NMInterest expense
    
    
    (697,436
    )
    
    
    (428,556
    )
    
    
    (268,880
    )
    
    
    63
    %Loss on derivative
instruments, net
    
    
    (74
    )
    
    
    (127
    )
    
    
    53
    
    
    
    42
    %(Loss) gain on investments, net
    
    
    (9,547
    )
    
    
    28,364
    
    
    
    (37,911
    )
    
    NM
 36




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##### Table of Contents



Year Ended December 312005
    
    
    2004
    
    
    $ Change
    
    
    % Change(Thousands of Dollars)Loss on extinguishment of debt
    
    
    (13,019
    )
    
    
    (7,006
    )
    
    
    (6,013
    )
    
    NMOther, net
    
    
    3,631
    
    
    
    (8,903
    )
    
    
    12,534
    
    
    NMIncome tax (expense) benefit
    
    
    (13,492
    )
    
    
    866,316
    
    
    
    (879,808
    )
    
    NMMinority interest, net of tax
    
    
    
    
    
    
    (1,203
    )
    
    
    1,203
    
    
    NMEquity in net losses of
affiliated companies, net of
tax
    
    
    (6,689
    )
    
    
    (3,509
    )
    
    
    (4,432
    )
    
    NMLoss from continuing
operations
    
    
    (121
    )
    
    
    (1,085,078
    )
    
    
    1,084,957
    
    
    NMDiscontinued operations, net of
tax
    
    
    (230,555
    )
    
    
    (80,037
    )
    
    
    (150,518
    )
    
    NMCumulative effect of change in
accounting principle, net of
tax
    
    
    
    
    
    
    (1,210,190
    )
    
    
    1,210,190
    
    
    NMNet loss
    
    
    (230,676
    )
    
    
    (2,375,305
    )
    
    
    2,144,629
    
    
    
    90%
  Revenues
  Year Ended December 31% of
    
    
    
    
    
    
    % of2005
    
    
    Total
    
    
    2004
    
    
    Total
    
    
    $ Change
    
    
    % Change(Thousands of Dollars)ResidentialVideo
    
    $
    3,765,071
    
    
    
    56
    %
    
    $
    3,609,557
    
    
    
    59
    %
    
    $
    155,514
    
    
    
    4
    %Data
    
    
    1,295,785
    
    
    
    19
    %
    
    
    1,066,105
    
    
    
    17
    %
    
    
    229,680
    
    
    
    22
    %Telephony
    
    
    732,140
    
    
    
    11
    %
    
    
    579,752
    
    
    
    9
    %
    
    
    152,388
    
    
    
    26
    %Other
    
    
    105,185
    
    
    
    2
    %
    
    
    100,617
    
    
    
    2
    %
    
    
    4,568
    
    
    
    5
    %Total
residential
revenue
    
    
    5,898,181
    
    
    
    88
    %
    
    
    5,356,031
    
    
    
    87
    %
    
    
    542,150
    
    
    
    10
    %Commercial
    
    
    420,952
    
    
    
    6
    %
    
    
    347,873
    
    
    
    7
    %
    
    
    73,079
    
    
    
    21
    %Advertising
    
    
    403,160
    
    
    
    6
    %
    
    
    402,201
    
    
    
    6
    %
    
    
    959
    
    
    
    Total revenues
    
    $
    6,722,293
    
    
    
    100
    %
    
    $
    6,106,105
    
    
    
    100
    %
    
    $
    616,188
    
    
    
    10
    %
  
    
    an increase in customers for advanced services (digital cable, high-speed Internet
access and telephony);
    
    an increase in basic cable rates resulting from increased programming costs , 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. See the
discussion under the heading Hurricane Katrinabelow.
  Costs and expenses (Costs of services and Selling, general and administrative expenses)
  37




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##### Table of Contents



Year Ended December 312005
    
    
    2004
    
    
    $ Change
    
    
    % Change(Thousands of Dollars)Cost of servicesProgramming costs
    
    $
    1,317,809
    
    
    $
    1,211,369
    
    
    $
    106,440
    
    
    
    9
    %Other cost of services
    
    
    1,355,064
    
    
    
    1,270,780
    
    
    
    84,284
    
    
    
    7
    %Total cost of services
    
    
    2,672,873
    
    
    
    2,482,149
    
    
    
    190,724
    
    
    
    8
    %Selling, general and administrativeMarketing
    
    
    348,021
    
    
    
    323,053
    
    
    
    24,968
    
    
    
    8
    %General and administrative
    
    
    1,119,961
    
    
    
    1,042,203
    
    
    
    77,758
    
    
    
    7
    %Total selling, general and
administrative
    
    
    1,467,982
    
    
    
    1,365,256
    
    
    
    102,726
    
    
    
    8
    %Total costs and expenses
    
    $
    4,140,855
    
    
    $
    3,847,405
    
    
    $
    293,450
    
    
    
    8
    %
   
    
    net additions of advanced-service customers over the last twelve months; and
    
    increased labor costs due to maintenance, higher fuel costs
during the second half of 2005 and related customer costs directly
associated with the growth of new subscribers.
  
    
    a $77.8 million increase in general and administrative expenses primarily relating to
increased compensation expense from certain long-term compensation plans adopted during
2005; and
    
    a $25.0 million increase in marketing expense primarily due to the launch of faster
high-speed Internet service, new high-speed Internet tiers and new video products, as well
as a 9% increase in costs associated with Coxs advertising sales business, Cox Media.
  Depreciation and amortization
  Impairment of intangible assets
 Goodwill and Other Intangible Assets
 38




---



##### Table of Contents



Interest expense
  Loss on derivative instruments, net
 short-cut method
 Accounting
for Derivative Instruments and Hedging Activities
 
    
    embedded derivatives contained in Coxs three series of exchangeable subordinated
debentures, referred to as the PRIZES, the Premium PHONES and the Discount Debentures.
These debentures were exchangeable for the cash value of shares of Sprint PCS common stock
or, in the case of the Discount Debentures, at Coxs option, the related shares. These
embedded derivatives derived their value primarily based on changes in the fair value of
PCS common stock of Sprint Corp. (now Sprint Nextel Corp.) (Sprint PCS common stock), U.S.
Treasury rates and Coxs credit spreads.
    
    stock purchase warrants to purchase equity securities of certain publicly-traded or
privately-held companies that can be exercised and settled by delivery of net shares, such
that Cox pays no cash upon exercise. These warrants meet the definition of a freestanding
derivative, as prescribed by SFAS No. 133, and derive their value primarily based on the
change in the fair value of the underlying equity security.
   Loss on investments, net
 39




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##### Table of Contents



Other
Than Temporary Impairment of Certain Investments in Debt and Equity Securities The Meaning of Other-Than-Temporary Impairment and Its Application to
Certain Investments
 Loss on extinguishment of debt
  Income tax (expense) benefit
  Equity in net losses of affiliated companies, net of tax
  Discontinued operations, net of tax
  Hurricane Katrina
  2004 compared with 2003
 40




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##### Table of Contents



Year Ended December 312004
    
    
    2003
    
    
    $ Change
    
    
    % Change(Thousands of Dollars)Revenues
    
    $
    6,106,105
    
    
    $
    5,458,815
    
    
    $
    647,290
    
    
    
    12
    %Cost of services (excluding
depreciation and
amortization)
    
    
    2,482,149
    
    
    
    2,270,891
    
    
    
    211,258
    
    
    
    9
    %Selling, general and
administrative
expenses (excluding
depreciation and
amortization)
    
    
    1,365,256
    
    
    
    1,193,227
    
    
    
    172,029
    
    
    
    14
    %Depreciation and
amortization
    
    
    1,548,160
    
    
    
    1,425,256
    
    
    
    122,904
    
    
    
    9
    %Impairment of intangible
assets
    
    
    2,235,973
    
    
    
    
    
    
    
    2,235,973
    
    
    NMLoss (gain) on sale of cable
systems
    
    
    5,021
    
    
    
    (469
    )
    
    
    5,490
    
    
    NMOperating (loss) income
    
    
    (1,530,454
    )
    
    
    569,910
    
    
    
    (2,100,364
    )
    
    NMInterest expense
    
    
    (428,556
    )
    
    
    (467,288
    )
    
    
    38,732
    
    
    
    8
    %Loss on derivative
instruments, net
    
    
    (127
    )
    
    
    (22,567
    )
    
    
    22,440
    
    
    
    99
    %Gain on investments, net
    
    
    28,364
    
    
    
    165,194
    
    
    
    (136,830
    )
    
    
    (83
    )%Loss on extinguishment of
debt
    
    
    (7,006
    )
    
    
    (450,068
    )
    
    
    443,062
    
    
    
    98
    %Other, net
    
    
    (8,903
    )
    
    
    (3,522
    )
    
    
    (5,381
    )
    
    NMIncome tax benefit
    
    
    866,316
    
    
    
    74,703
    
    
    
    791,613
    
    
    NMMinority interest, net of tax
    
    
    (1,203
    )
    
    
    (6,116
    )
    
    
    4,913
    
    
    
    80
    %Equity in net losses of
affiliated companies, net of
tax
    
    
    (3,509
    )
    
    
    (8,098
    )
    
    
    4,589
    
    
    
    57
    %Loss from continuing
operations
    
    
    (1,085,078
    )
    
    
    (147,852
    )
    
    
    (937,226
    )
    
    NMDiscontinued operations, net
of tax
    
    
    (80,037
    )
    
    
    10,051
    
    
    
    90,088
    
    
    NMCumulative effect of change
in accounting principle, net
of tax
    
    
    (1,210,190
    )
    
    
    
    
    
    
    (1,210,190
    )
    
    NMNet
loss
    
    $
    (2,375,305
    )
    
    $
    (137,801
    )
    
    $
    (2,237,504
    )
    
    NM
  Revenues
  Year Ended December 31% of
    
    
    
    
    
    
    % of2004
    
    
    Total
    
    
    2003
    
    
    Total
    
    
    $ Change
    
    
    % Change(Thousands of Dollars)ResidentialVideo
    
    $
    3,609,557
    
    
    
    59
    %
    
    $
    3,420,303
    
    
    
    63
    %
    
    $
    189,254
    
    
    
    5
    %Data
    
    
    1,066,105
    
    
    
    17
    %
    
    
    837,199
    
    
    
    15
    %
    
    
    228,906
    
    
    
    28
    %Telephony
    
    
    579,752
    
    
    
    9
    %
    
    
    469,920
    
    
    
    8
    %
    
    
    109,832
    
    
    
    23
    %Other
    
    
    100,617
    
    
    
    2
    %
    
    
    82,343
    
    
    
    2
    %
    
    
    18,274
    
    
    
    22
    %Total
residential
revenue
    
    
    5,356,031
    
    
    
    87
    %
    
    
    4,809,765
    
    
    
    88
    %
    
    
    546,266
    
    
    
    11
    %Commercial
    
    
    347,873
    
    
    
    7
    %
    
    
    282,984
    
    
    
    5
    %
    
    
    64,889
    
    
    
    23
    %Advertising
    
    
    402,201
    
    
    
    6
    %
    
    
    366,066
    
    
    
    7
    %
    
    
    36,135
    
    
    
    10
    %Total revenues
    
    $
    6,106,105
    
    
    
    100
    %
    
    $
    5,458,815
    
    
    
    100
    %
    
    $
    647,290
    
    
    
    12
    %
  
    
    an increase in customers for advanced services (digital cable, high-speed Internet
access and telephony);
    
    an increase in basic cable rates resulting from increased programming costs, as well as
increased channel availability; and
 41




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##### Table of Contents




    
    an increase in commercial broadband customers.
 Costs and expenses (Costs of services and Selling, general and administrative expenses)
  Year Ended December 312004
    
    
    2003
    
    
    $ Change
    
    
    % Change(Thousands of Dollars)Cost of servicesProgramming costs
    
    $
    1,211,369
    
    
    $
    1,085,041
    
    
    $
    126,328
    
    
    
    12
    %Other cost of services
    
    
    1,270,780
    
    
    
    1,185,850
    
    
    
    84,930
    
    
    
    7
    %Total cost of services
    
    
    2,482,149
    
    
    
    2,270,891
    
    
    
    211,258
    
    
    
    9
    %Selling, general and administrativeMarketing
    
    
    323,053
    
    
    
    285,535
    
    
    
    37,518
    
    
    
    13
    %General and administrative
    
    
    1,042,203
    
    
    
    907,692
    
    
    
    134,511
    
    
    
    15
    %Total selling, general and
administrative
    
    
    1,365,256
    
    
    
    1,193,227
    
    
    
    172,029
    
    
    
    14
    %Total costs and expenses
    
    $
    3,847,405
    
    
    $
    3,464,118
    
    
    $
    383,287
    
    
    
    11
    %
  
    
    net additions of advanced-service customers over the last twelve months; and
    
    increased labor costs due to maintenance and related customer costs directly associated
with the growth of new subscribers.
  
    
    a $134.5 million increase in general and administrative expenses relating to increased
salaries and benefits and costs related to the going-private transaction; and
    
    a $37.5 million increase in marketing expense primarily due to the launch of faster
high-speed Internet service, new high-speed Internet tiers and new video products, as well
as a 10% increase in costs associated with Coxs advertising sales business, Cox Media.
 Depreciation and amortization
  Impairment of intangible assets
  42




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##### Table of Contents



Interest expense
  Loss on derivative instruments, net
 short-cut method
  
    
    embedded derivatives contained in Coxs three series of exchangeable subordinated
debentures, referred to as the PRIZES, the Premium PHONES and the Discount Debentures.
These debentures were exchangeable for the cash value of shares of Sprint PCS common stock
or, in the case of the Discount Debentures, at Coxs option, the related shares. These
embedded derivatives derived their value primarily based on changes in the fair value of
Sprint PCS common stock, U.S. Treasury rates and Coxs credit spreads.
    
    stock purchase warrants to purchase equity securities of certain publicly-traded or
privately-held companies that can be exercised and settled by delivery of net shares, such
that Cox pays no cash upon exercise. These warrants meet the definition of a freestanding
derivative, as prescribed by SFAS No. 133, and derive their value primarily based on the
change in the fair value of the underlying equity security.
   
    
    embedded derivatives contained in Coxs series of prepaid variable forward contracts
secured by 19.5 million shares of Sprint PCS common stock and accounted for as zero-coupon
debt. These embedded derivatives also derived their value primarily based on changes in
the fair value of Sprint PCS common stock, U.S. Treasury rates and Coxs credit spreads.
 Gain on investments, net
  
    
    $2.3 million pre-tax gain on the sale of all remaining shares of Sprint stock held by Cox;
    
    $19.5 million pre-tax gain on the sale of 0.1 million shares of Sprint PCS preferred stock; and
 43




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##### Table of Contents




    
    $7.3 million pre-tax gain on the sale of certain other non-strategic investments.
 Loss on extinguishment of debt
  Income tax benefit
  Equity in net losses of affiliated companies, net of tax
  Discontinued operations, net of tax
  Cumulative effect of change in accounting principle, net of tax
 Business Combinations
 Use of the Residual Method
to Value Acquired Assets Other Than Goodwill
 Liquidity and Capital Resources
 44




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##### Table of Contents



2005 Uses and Sources of Cash
        2004 Uses and Sources of Cash
    
    
    the repurchase of its remaining outstanding convertible senior notes, PRIZES and
Premium PHONES;
 45




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##### Table of Contents




    
    the repayment of its $375.0 million 7.5% notes and its $100 million 6.69%
medium-term notes, each at their maturity; and
    
    the repayment of its 18-month, $3.0 billion term loan (Bridge Loan).
   
    
    the Bridge Loan for net proceeds of approximately $3.0 billion;
    
    a term loan due 2009 for net proceeds of approximately $2.0 billion;
    
    floating rate notes due 2007 for net proceeds of approximately $498.7 million;
    
    4.625% notes due 2010 for net proceeds of approximately $1.2 billion; and
    
    5.450% notes due 2014 for net proceeds of approximately $1.2 billion.
   2003 Uses and Sources of Cash
     
    
    4.625% senior notes due 2013 for net proceeds of approximately $596.2 million;
    
    3.875% senior notes due 2008 for net proceeds of $248.8 million; and
    
    5.5% senior notes due 2015 for net proceeds of $496.5 million.
  46




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##### Table of Contents



Off-Balance Sheet Arrangements
  Contractual Obligations and Commitments
  Payments Due by PeriodLessthan 1
    
    
    1  3
    
    
    4  5
    
    
    After 5Total
    
    
    Year
    
    
    Years
    
    
    Years
    
    
    Years(Millions of Dollars)Debt maturities and
pay-off obligations
(a)
    
    $
    12,575.2
    
    
    $
    465.2
    (b)
    
    $
    950.0
    
    
    $
    6,461.4
    
    
    $
    4,698.6
    (c)Interest on aggregate
debt (d)
    
    
    4,480.5
    
    
    
    712.6
    
    
    
    1,267.7
    
    
    
    940.1
    
    
    
    1,560.1Capital leases
    
    
    206.7
    
    
    
    47.5
    
    
    
    63.4
    
    
    
    35.4
    
    
    
    60.4Operating leases
    
    
    70.2
    
    
    
    17.4
    
    
    
    24.3
    
    
    
    12.9
    
    
    
    15.6Nonbinding purchase and
other commitments (e)
    
    
    679.2
    
    
    
    437.7
    
    
    
    89.4
    
    
    
    75.1
    
    
    
    77.0Total contractual cash
obligations
    
    $
    18,011.8
    
    
    $
    1,680.4
    
    
    $
    2,394.7
    
    
    $
    7,524.9
    
    
    $
    6,411.8
 
 (a)
    
    Excludes $224.6 million of commercial paper borrowings outstanding as of December 31,
2005.(b)
    
    Cox has classified approximately $465.0 million of outstanding debt obligations
scheduled to mature in the next twelve months in the noncurrent portion of long-term debt
in its Consolidated Balance Sheet because it intends to refinance these obligations on a
long-term basis. Cox has the ability to refinance these obligations under its existing
revolving credit facilities.(c)
    
    The holders of Coxs $200.0 million aggregate principal amount 6.53% debentures due
2028, which were issued by TCA Cable TV prior to Coxs acquisition of TCA, have the right
to require the Cox subsidiary that assumed TCAs obligations under the debentures to
repurchase the debentures on February 1, 2008 at a purchase price equal to 100% of the
principal amount of such debentures, plus any accrued but unpaid cash interest.(d)
    
    Coxs estimate of its cash requirement for interest payments is based on future cash
interest payments related to known debt instruments as of December 31, 2005. These
estimates also assume that (i) debt is repaid and not refinanced at maturity, (ii) the
holders of the former TCA bonds do not exercise their rights to require Cox to repurchase
such securities as described in footnote (c) above and (iii) no future impact is
recognized from Coxs interest rate swap agreements, which effectively convert $1.0
billion of Coxs fixed-rate debt into floating-rate obligations and have resulted in
significant interest savings in both 2005 and 2004. Coxs future interest payments could
differ materially from amounts indicated in the table due to Coxs future 47




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##### Table of Contents



operational and financing needs, changing market conditions and other currently
unanticipated events.
 (e)
    
    Includes unfulfilled purchase orders, construction commitments and various other
commitments arising in the normal course of business.
  Credit Facilities
     48




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##### Table of Contents



Credit Ratings
   Senior UnsecuredRating Agency
    
    Debt Rating
    
    OutlookMoodys
    
    Baa3
    
    StableStandard & Poors
    
    BBB-
    
    StableFitch Ratings
    
    BBB-
    
    Stable
 http://www.moodys.com http://www.fitchratings.com http://www.standardandpoors.com
 Other
     Recent Development
 49




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##### Table of Contents



Critical Accounting Policies and Estimates
  Plant and equipment
  Derivative Instruments
  Intangible Assets
  Unit of Accounting for Testing of
Impairment of Indefinite-Lived Intangible Assets,
 50




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51




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##### Table of Contents



Income Tax Estimates
     Pension and Postretirement Benefits
 Employers Accounting for Pensions Employers Accounting for Postretirement Benefits Other Than Pensions
 52




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##### Table of Contents



Recently Issued Accounting Pronouncements
  Accounting for Conditional Asset
Retirement Obligations Accounting for Asset Retirement Obligations
 Share-Based Payment Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees
 53




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##### Table of Contents



Statement of Cash Flows
  .
 Inflation
  Caution Concerning Forward-Looking Statements
  
    
    Coxs ability to collect on insurance policies covering Coxs New
Orleans systems and the ability to rebuild Coxs cable plant and
subscriber base in the impacted areas, and competition within the
broadband communications industry.
 
    
    Coxs ability to implement successfully Coxs growth strategies
and the level of success of Coxs operating initiatives, including
future expenditures on capital projects, terms and availability of
capital,
 54




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the actual level of revenue growth, adverse changes in
the price of telephony interconnection or cable programming and
disruptions in the supply of services and equipment. In addition,
material changes in
the cost of equipment or significant unanticipated capital expenditures could disrupt Coxs
business plan and adversely affect Coxs business operations.
 
    
    Trends in Coxs businesses, particularly success in implementing
new services and other operating initiatives in the market for
existing and new communications services and changes in Coxs
business strategy and development plans.
 
    
    Coxs ability to increase penetration in existing markets, as well
as those Cox enters through acquisitions or other business
combinations, including Coxs ability to control costs and
maintain high standards of customer service, the extent to which
consumer demand for video, data and telephony services increases,
subscriber availability, retention and growth, subscriber demand
and competition.
 
    
    Coxs ability to generate sufficient cash flow to meet its debt
service obligations and to finance ongoing operations. Cox
operates with a significant level of indebtedness. Cash generated
from operating activities and borrowing has been sufficient to
fund Coxs debt service, working capital obligations and capital
expenditure requirements. Cox believes that it will continue to
generate cash and obtain financing sufficient to meet these
requirements. However, if Cox were unable to meet these
requirements, Cox would have to consider refinancing its
indebtedness or obtaining new financing. Although in the past Cox
has been able to refinance its indebtedness and obtain new
financing, there can be no assurance that Cox will be able to do
so in the future or that, if Cox were able to do so, the terms
available would be acceptable to Cox. In addition, Cox must
manage exposure to interest rate risk due to variable rate debt
instruments.
 
    
    Competition from alternative methods of receiving and distributing
signals and from other sources of news, information and
entertainment, such as DBS, newspapers, movie theaters, online
computer services and home video products. Because Coxs
franchises are generally non-exclusive, there is potential for
competition from other operators of cable systems and other
distribution systems capable of delivering programming to homes or
businesses, including direct broadcast satellite systems and
multichannel multipoint distribution services. In addition, Cox
faces general competitive factors, such as the introduction of new
technologies (such as Internet-based services), changes in prices
or demand for Coxs products as a result of competitive actions or
economic factors and competitive pressures within the broadband
communications industry.
 
    
    Coxs ability to obtain the necessary FCC, as well as state and
local, authorizations for new services, and Coxs response to
adverse regulatory changes. The cable industry is subject to
extensive regulation by federal, local and, in some instances,
state governmental agencies. Advances in communications
technology as well as changes in the marketplace and the
regulatory and legislative environment are constantly occurring.
As a result, it is not possible to predict the effect that ongoing
developments might have on the broadband communications industry
or on Coxs operations.
 
    
    Coxs ability to limit the increases in its programming costs and
maintain successful relationships with its programmers. In recent
years the cable industry has experienced a rapid escalation in the
cost of programming. Coxs cable programming services are
dependent upon its ability to procure programming that is
attractive to Coxs customers at reasonable rates. Programming
costs may continue to escalate and Cox may not be able to pass
programming cost increases on to its customers.
 
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  55




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December 31, 2005
    
    
    December 31, 2004Fair Value
    
    
    
    
    
    
    
    
    
    


    Fair ValueCarrying
    
    
    Fair
    
    
    (1% Decrease
    
    
    Carrying
    
    
    Fair
    
    
    (1% DecreaseValue
    
    
    Value
    
    
    in Interest Rates)
    
    
    Value
    
    
    Value
    
    
    in Interest Rates)(Millions of Dollars)Fixed-rate notes and
debentures
    
    $
    8,292.7
    
    
    $
    8,411.7
    
    
    $
    8,847.4
    
    
    $
    8,724.4
    
    
    $
    9,056.9
    
    
    $
    9,557.3Exchangeable
subordinated
debentures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19.5
    
    
    
    31.4
    
    
    
    31.6
 56




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ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 COX COMMUNICATIONS, INC.
 
 CONSOLIDATED BALANCE SHEETS
 December 312005
    
    
    2004(Thousands of Dollars)AssetsCurrent assetsCash
    
    $
    81,132
    
    
    $
    76,339Accounts and notes receivable, less allowance for doubtful
accounts of $23,675 and $24,461
    
    
    417,407
    
    
    
    363,310Amounts due from CEI
    
    
    18,784
    
    
    
    Other current assets
    
    
    192,835
    
    
    
    127,010Assets held for sale
    
    
    2,474,872
    
    
    
    2,965,787Total current assets
    
    
    3,185,030
    
    
    
    3,532,446Net plant and equipment
    
    
    6,739,624
    
    
    
    7,043,401Investments
    
    
    1,273,054
    
    
    
    1,171,647Intangible assets
    
    
    17,044,193
    
    
    
    17,315,361Goodwill
    
    
    75,621
    
    
    
    96,657Other noncurrent assets
    
    
    60,213
    
    
    
    94,229Total assets
    
    $
    28,377,735
    
    
    $
    29,253,741Liabilities and shareholders equityCurrent liabilitiesAccounts payable and accrued expenses
    
    $
    906,341
    
    
    $
    759,374Other current liabilities
    
    
    348,291
    
    
    
    319,275Cash obligation to untendered shareholders
    
    
    9,152
    
    
    
    483,603Current portion of long-term debt
    
    
    45,453
    
    
    
    51,581Amounts due to CEI
    
    
    
    
    
    
    5,573Liabilities related to assets held for sale
    
    
    107,573
    
    
    
    95,017Total current liabilities
    
    
    1,416,810
    
    
    
    1,714,423Deferred income taxes
    
    
    7,900,343
    
    
    
    8,326,574Other noncurrent liabilities
    
    
    187,610
    
    
    
    148,050Long-term debt, less current portion
    
    
    12,971,821
    
    
    
    12,938,466Total liabilities
    
    
    22,476,584
    
    
    
    23,127,513Commitments and contingencies (Note 19)Shareholders 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
    
    
    4,807,720
    
    
    
    4,802,117Retained earnings
    
    
    1,087,542
    
    
    
    1,318,218Accumulated other comprehensive income
    
    
    51
    
    
    
    55Total shareholders equity
    
    
    5,901,151
    
    
    
    6,126,228Total liabilities and shareholders equity
    
    $
    28,377,735
    
    
    $
    29,253,741
  57




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COX COMMUNICATIONS, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Year Ended December 312005
    
    
    2004
    
    
    2003(Thousands of Dollars)Revenues
    
    $
    6,722,293
    
    
    $
    6,106,105
    
    
    $
    5,458,815Costs and expensesCost of services (excluding depreciation and amortization)
    
    
    2,672,873
    
    
    
    2,482,149
    
    
    
    2,270,891Selling, general and administrative expenses (excluding
depreciation and amortization)
    
    
    1,467,982
    
    
    
    1,365,256
    
    
    
    1,193,227Depreciation and amortization
    
    
    1,663,037
    
    
    
    1,548,160
    
    
    
    1,425,256Impairment of intangible assets
    
    
    181,896
    
    
    
    2,235,973
    
    
    
    Loss (gain) on sale and exchange of cable systems
    
    
    
    
    
    
    5,021
    
    
    
    (469
    )Operating income (loss)
    
    
    736,505
    
    
    
    (1,530,454
    )
    
    
    569,910Interest expense
    
    
    (697,436
    )
    
    
    (428,556
    )
    
    
    (467,288
    )Loss on derivative instruments, net
    
    
    (74
    )
    
    
    (127
    )
    
    
    (22,567
    )(Loss) gain on investments, net
    
    
    (9,547
    )
    
    
    28,364
    
    
    
    165,194Loss on extinguishment of debt
    
    
    (13,019
    )
    
    
    (7,006
    )
    
    
    (450,068
    )Other, net
    
    
    3,631
    
    
    
    (8,903
    )
    
    
    (3,522
    )Income (loss) from continuing operations before income taxes
    
    
    20,060
    
    
    
    (1,946,682
    )
    
    
    (208,341
    )Income tax (expense) benefit
    
    
    (13,492
    )
    
    
    866,316
    
    
    
    74,703Minority interest
    
    
    
    
    
    
    (1,203
    )
    
    
    (6,116
    )Equity in net losses of affiliated companies, net of tax of
$4,349, $2,073 and $4,975, respectively
    
    
    (6,689
    )
    
    
    (3,509
    )
    
    
    (8,098
    )Loss from continuing operations
    
    
    (121
    )
    
    
    (1,085,078
    )
    
    
    (147,852
    )Discontinued operations(Loss) income from discontinued operations
    
    
    (375,248
    )
    
    
    (130,231
    )
    
    
    16,455Income tax benefit (expense)
    
    
    144,693
    
    
    
    50,194
    
    
    
    (6,404
    )Discontinued operations, net of tax
    
    
    (230,555
    )
    
    
    (80,037
    )
    
    
    10,051Loss before cumulative effect of change in
accounting principle
    
    
    (230,676
    )
    
    
    (1,165,115
    )
    
    
    (137,801
    )Cumulative effect of change in accounting principle, net of
tax of $813,130
    
    
    
    
    
    
    (1,210,190
    )
    
    
    Net loss
    
    $
    (230,676
    )
    
    $
    (2,375,305
    )
    
    $
    (137,801
    )
  58




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COX COMMUNICATIONS, INC.
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 Class AAccumulated
    
    
    CommonSeries A
    
    
    
    
    
    
    
    
    
    
    Additional
    
    
    
    
    
    
    Other
    
    
    Stock inPreferred
    
    
    Common Stock
    
    
    Paid-in
    
    
    Retained
    
    
    Comprehensive
    
    
    Treasury,
    
    
    
    
    
    
    
    ComprehensiveStock
    
    
    Class A
    
    
    Class C
    
    
    Capital
    
    
    Earnings
    
    
    Income
    
    
    at Cost
    
    
    Total
    
    
    
    Loss(Thousands of Dollars)December 31, 2002
    
    
    4,836
    
    
    
    598,077
    
    
    
    27,598
    
    
    
    4,549,029
    
    
    
    4,638,422
    
    
    
    79,465
    
    
    
    (212,337
    )
    
    
    9,685,090Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (137,801
    )
    
    
    
    
    
    
    
    
    
    
    (137,801
    )
    
    
    $
    (137,801
    )Issuance of stock related to stock compensation plans (including
tax benefit on stock options exercised)
    
    
    
    
    
    
    405
    
    
    
    
    
    
    
    8,381
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,786Shares surrendered in connection with vesting of restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (407
    )
    
    
    (407
    )Assumption of post-retirement medical plan obligation from
CEI, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,775
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,775
    )Change in net accumulated unrealized gain on securities, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (63,917
    )
    
    
    
    
    
    
    (63,917
    )
    
    
    
    (63,917
    )Other comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (63,917
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (201,718
    )December 31, 2003
    
    $
    4,836
    
    
    $
    598,482
    
    
    $
    27,598
    
    
    $
    4,545,635
    
    
    $
    4,500,621
    
    
    $
    15,548
    
    
    $
    (212,744
    )
    
    $
    9,479,976Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,375,305
    )
    
    
    
    
    
    
    
    
    
    
    (2,375,305
    )
    
    
    $
    (2,375,305
    )Issuance of stock related to stock compensation plans (including
tax benefit
on stock options exercised)
    
    
    
    
    
    
    2,157
    
    
    
    
    
    
    
    69,319
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    71,476Shares surrendered in connection with vesting of restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (330
    )
    
    
    (330
    )Conversion of Series A Preferred Stock to Class A Common Stock
    
    
    (4,836
    )
    
    
    11,212
    
    
    
    
    
    
    
    225,243
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    231,619Cancellation of Class A Common Stock, in treasury
    
    
    
    
    
    
    (5,533
    )
    
    
    
    
    
    
    (207,541
    )
    
    
    
    
    
    
    
    
    
    
    213,074
    
    
    
    Cancellation of $1 par Class A Common Stock and $1 par value Class C
Common Stock and Issuance of $0.01 par value Class A Common Stock
and $0.01 par value Class C Common Stock
    
    
    
    
    
    
    (600,756
    )
    
    
    (27,322
    )
    
    
    628,078
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Elimination of 37.96% of Cox shareholders equity pursuant to the
going-private transaction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,981,919
    )
    
    
    (807,098
    )
    
    
    
    
    
    
    
    
    
    
    (2,789,017
    )Funding and expenses incurred pursuant to the going-private transaction
paid by CEI on behalf of Cox
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,523,302
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,523,302Change in net accumulated unrealized gain on securities, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,493
    )
    
    
    
    
    
    
    (15,493
    )
    
    
    
    (15,493
    )Other comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,493
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (2,390,798
    )December 31, 2004
    
    $
    
    
    
    $
    5,562
    
    
    $
    276
    
    
    $
    4,802,117
    
    
    $
    1,318,218
    
    
    $
    55
    
    
    $
    
    
    
    $
    6,126,228Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (230,676
    )
    
    
    
    
    
    
    
    
    
    
    (230,676
    )
    
    
    $
    (230,676
    )Funding and expenses incurred pursuant to the going-private transaction
paid by CEI on behalf of Cox
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,603
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,603Change in net accumulated unrealized gain on securities, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4
    )
    
    
    
    
    
    
    (4
    )
    
    
    
    (4
    )Other comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (230,680
    )December 31, 2005
    
    $
    
    
    
    $
    5,562
    
    
    $
    276
    
    
    $
    4,807,720
    
    
    $
    1,087,542
    
    
    $
    51
    
    
    $
    
    
    
    $
    5,901,151
  59




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##### Table of Contents



COX
COMMUNICATIONS, INC.
 
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 Year Ended December 312005
    
    
    2004
    
    
    2003(Thousands of Dollars)Cash flows from operating activitiesNet loss
    
    $
    (230,676
    )
    
    $
    (2,375,305
    )
    
    $
    (137,801
    )Adjustments to reconcile net loss to net cash provided
by operating activities:Depreciation and amortization
    
    
    1,741,380
    
    
    
    1,627,064
    
    
    
    1,505,475Impairment of intangible assets
    
    
    614,111
    
    
    
    2,415,889
    
    
    
    25,000Loss (gain) on sale of cable systems
    
    
    
    
    
    
    5,021
    
    
    
    (469
    )Deferred income taxes
    
    
    (241,226
    )
    
    
    (827,650
    )
    
    
    (327,668
    )Loss on derivative instruments, net
    
    
    74
    
    
    
    127
    
    
    
    22,567Loss (gain) on investments, net
    
    
    9,547
    
    
    
    (28,364
    )
    
    
    (165,194
    )Equity in net losses of affiliated companies
    
    
    6,689
    
    
    
    3,509
    
    
    
    8,098Loss on extinguishment of debt
    
    
    13,019
    
    
    
    7,006
    
    
    
    450,069Minority interest, net of tax
    
    
    
    
    
    
    1,203
    
    
    
    6,116Other, net
    
    
    (3,363
    )
    
    
    (994
    )
    
    
    108,698Cumulative effect of change in accounting principle, net of tax
    
    
    
    
    
    
    1,210,190
    
    
    
    Increase in accounts and notes receivable
    
    
    (56,761
    )
    
    
    (14,661
    )
    
    
    (15,922
    )(Increase) decrease in other assets
    
    
    (47,627
    )
    
    
    532
    
    
    
    41,328Increase in accounts payable and accrued expenses
    
    
    201,727
    
    
    
    54,247
    
    
    
    22,650Increase (decrease) in taxes payable
    
    
    39,419
    
    
    
    (68,729
    )
    
    
    331,439Decrease in other liabilities
    
    
    (47,497
    )
    
    
    (30,569
    )
    
    
    (6,415
    )Net cash provided by operating activities
    
    
    1,998,816
    
    
    
    1,978,516
    
    
    
    1,867,971Cash flows from investing activitiesCapital expenditures
    
    
    (1,478,617
    )
    
    
    (1,389,931
    )
    
    
    (1,561,331
    )Investments in affiliated companies
    
    
    (45,932
    )
    
    
    (17,805
    )
    
    
    (22,270
    )Proceeds from the sale and exchange of investments
    
    
    
    
    
    
    70,230
    
    
    
    246,417(Increase) decrease in amounts due from CEI
    
    
    (18,784
    )
    
    
    
    
    
    
    21,109Proceeds from the sale of cable systems
    
    
    
    
    
    
    53,076
    
    
    
    822Acquisition of minority interest
    
    
    
    
    
    
    (153,016
    )
    
    
    Other, net
    
    
    47,548
    
    
    
    43,813
    
    
    
    (3,883
    )Net cash used in investing activities
    
    
    (1,495,785
    )
    
    
    (1,393,633
    )
    
    
    (1,319,136
    )Cash flows from financing activitiesRevolving credit facilities borrowings, net
    
    
    350,000
    
    
    
    1,650,000
    
    
    
    Commercial paper borrowings (repayments), net
    
    
    119,348
    
    
    
    (209,228
    )
    
    
    300,941Proceeds from issuance of debt, net of debt issuance costs
    
    
    
    
    
    
    7,968,724
    
    
    
    1,330,750Repayment of debt
    
    
    (491,593
    )
    
    
    (3,566,148
    )
    
    
    (2,310,074
    )Payment to acquire publicly held shares of Cox pursuant
to the going-private transaction
    
    
    (474,451
    )
    
    
    (6,422,908
    )
    
    
    Proceeds from the exercise of stock options
    
    
    
    
    
    
    5,219
    
    
    
    6,768(Decrease) increase in amounts due to CEI, net
    
    
    (5,573
    )
    
    
    1,593
    
    
    
    3,980Payment to repurchase remarketing option
    
    
    
    
    
    
    
    
    
    
    (43,734
    )Other, net
    
    
    4,031
    
    
    
    (19,637
    )
    
    
    17,671Net cash used in financing activities
    
    
    (498,238
    )
    
    
    (592,385
    )
    
    
    (693,698
    )Net increase (decrease) in cash
    
    
    4,793
    
    
    
    (7,502
    )
    
    
    (144,863
    )Cash at beginning of period
    
    
    76,339
    
    
    
    83,841
    
    
    
    228,704Cash at end of period
    
    $
    81,132
    
    
    $
    76,339
    
    
    $
    83,841
  60




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##### Table of Contents



1. Organization and Basis of Presentation
   2. Summary of Significant Accounting Policies and Other Items
 Basis of Consolidation
  Discontinued Operations and Assets Held for Sale
   Accounting for the
Impairment or Disposal of Long-Lived Assets
 61




---



##### Table of Contents



Use of Estimates
  Allowance for Doubtful Accounts
  Balance at
    
    
    
    
    
    Write-offs,
    
    Balance atBeginning of
    
    Charged to Costs
    
    Net of
    
    End ofPeriod
    
    and Expenses
    
    Recoveries
    
    Period(Thousands of Dollars)Year Ended December 312003
    
    $
    30,442
    
    
    $
    66,116
    
    
    $
    73,135
    
    
    $
    23,4232004
    
    
    23,423
    
    
    
    72,484
    
    
    
    71,446
    
    
    
    24,4612005
    
    
    24,461
    
    
    
    74,628
    
    
    
    75,414
    
    
    
    23,675
 Plant and Equipment
    Investments
  62




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##### Table of Contents



Accounting for Certain Investments in Debt and Equity Securities,
 Other Than Temporary Impairment of Certain Investments in Debt and Equity Securities The Meaning of Other-Than-Temporary Impairment and Its
Application to Certain Investments
 Asset Retirement Obligations
 Accounting for Asset Retirement Obligations
  Intangible Assets
 Goodwill and Other Intangible Assets
 63




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##### Table of Contents



Valuation of Long-Lived Assets
 , ,
 Income Taxes
  Accounting for Income Taxes
 Debt Issuance Costs
  Revenue
 Financial Reporting by Cable Television Companies
 Revenue Recognition
 64
    Table of Contents   
 For the year ended December 312005
    
    2004
    
    2003Video
    
    
    56
    %
    
    
    59
    %
    
    
    63
    %Data
    
    
    19
    %
    
    
    17
    %
    
    
    15
    %Telephony
    
    
    11
    %
    
    
    9
    %
    
    
    8
    %Commercial
    
    
    6
    %
    
    
    7
    %
    
    
    5
    %Advertising
    
    
    6
    %
    
    
    6
    %
    
    
    7
    %Other
    
    
    2
    %
    
    
    2
    %
    
    
    2
    %
 Cost of Services
  Pension, Postretirement and Postemployment Benefits
  Stock Compensation Plans
 Accounting for Stock Issued to Employees
 Accounting for Stock-Based Compensation  Transition and
Disclosure Accounting for Stock-Based Compensation
 65




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##### Table of Contents



Year Ended December 312005
    
    
    2004
    
    
    2003(Thousands of Dollars)Net loss, as reported
    
    $
    (230,676
    )
    
    $
    (2,375,305
    )
    
    $
    (137,801
    )Add: Stock-based
compensation, as
reported, net of tax
    
    
    
    
    
    
    24,361
    
    
    
    Deduct: Total stock based
compensation determined
under fair value based
method for all awards,
net of tax
    
    
    (5,934
    )
    
    
    (51,351
    )
    
    
    (22,859
    )Pro forma net loss
    
    $
    (236,610
    )
    
    $
    (2,402,295
    )
    
    $
    (160,660
    )
 Other Compensation Plans
     Derivative Financial Instruments
 Accounting
for Derivative Instruments and Hedging Activities
 66




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##### Table of Contents



Recently Issued Accounting Pronouncements
 The Meaning of
Other-Than-Temporary Impairment and its Application to Certain Investments
 Accounting for Conditional Asset
Retirement Obligations Accounting for Asset Retirement Obligations
 Share-Based Payment Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees Statement of Cash
Flows
  67




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##### Table of Contents



3. Cash Management System
  4. Going-Private Transaction
   (Thousands ofDollars)Cash consideration to acquire Coxs former public stock at $34.75 per share and
to settle the outstanding vested, in-the-money Cox employee stock
options
    
    $
    8,405,713Transaction fees and expenses
    
    
    31,134Total purchase price
    
    
    8,436,847Less: Carrying value of net assets acquired at historical cost
    
    
    (2,789,017
    )Aggregate purchase price in excess of historical cost of net assets acquired
    
    $
    5,647,830
   68




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##### Table of Contents



Business Combinations Use of the Residual Method to Value Acquired Assets Other Than Goodwill
  (Thousands of Dollars)Current assets
    
    $
    247,718Net plant and
equipment
    
    
    3,002,005Intangible assets:Customer relationships
(estimated useful life of
6 years)
    
    
    680,397Trade name (indefinite
useful life)
    
    
    375,439Telephony technology
(estimated useful life of
3 years)
    
    
    14,987Franchise value
(indefinite useful
life)
    
    
    11,165,706Goodwill
    
    
    81,803Other assets
    
    
    1,249,776Total assets acquired
    
    
    16,817,831
    (a)Current
liabilities
    
    
    548,030Long-term debt
    
    
    2,523,080Deferred income taxes
    
    
    5,299,271Other liabilities
    
    
    10,603Total liabilities assumed
    
    
    8,380,984
    (b)Aggregate purchase price
    
    $
    8,436,847
    (a) - (b)
  Year Ended December 312004
    
    2003(Thousands of Dollars)Revenues from continuing operations
    
    $
    6,106,105
    
    
    $
    5,458,815Loss before cumulative effect of change in accounting principle
    
    
    (1,268,651
    )
    
    
    (241,337
    )Cumulative effect of change in accounting principle
    
    
    (1,210,190
    )
    
    
    Net loss
    
    $
    (2,478,841
    )
    
    $
    (241,337
    )
 5. Discontinued Operations and Assets Held for Sale
   69




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##### Table of Contents



Year Ended December 312005
    
    
    2004
    
    
    2003(Thousands of Dollars)Revenues from
Discontinued
Operations
Systems
    
    $
    331,970
    
    
    $
    318,885
    
    
    $
    300,052(Loss) income from
Discontinued
Operations
Systems
    
    
    (375,248
    )
    
    
    (130,231
    )
    
    
    16,455Income tax benefit
(provision)
    
    
    144,693
    
    
    
    50,194
    
    
    
    (6,404
    )Net (loss) income
from Discontinued
Operations Systems
    
    $
    (230,555
    )
    
    $
    (80,037
    )
    
    $
    10,051
  December 312005
    
    
    2004(Thousands of Dollars)Current assets
    
    $
    42,973
    
    
    $
    40,606Net plant and equipment
    
    
    921,478
    
    
    
    899,297Intangible assets
    
    
    1,502,937
    
    
    
    2,014,091Goodwill
    
    
    6,183
    
    
    
    10,232Other noncurrent assets
    
    
    1,301
    
    
    
    1,561Total assets held for sale
    
    $
    2,474,872
    
    
    $
    2,965,787Accounts payable and accrued expenses
    
    $
    49,886
    
    
    $
    38,179Other current liabilities
    
    
    29,607
    
    
    
    28,847Other noncurrent liabilities
    
    
    28,080
    
    
    
    27,991Total liabilities held for
sale
    
    $
    107,573
    
    
    $
    95,017
 6. Intangible Assets
   70




---



##### Table of Contents



Unit of Accounting for Testing of Impairment of Indefinite-Lived Intangible Assets,
 Recognition of Customer Relationship Intangible Assets Acquired
in a Business Combination
 Use of the Residual Method
to Value Acquired Assets Other Than Goodwill
 71




---



##### Table of Contents



72




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##### Table of Contents



December 31, 2005
    
    
    December 31, 2004Gross
    
    
    
    
    
    
    Net
    
    
    Gross
    
    
    
    
    
    
    NetCarrying
    
    
    Accumulated
    
    
    Carrying
    
    
    Carrying
    
    
    Accumulated
    
    
    CarryingValue
    
    
    Amortization
    
    
    Value
    
    
    Value
    
    
    Amortization
    
    
    Value(Thousands of Dollars)Intangible assets
subjectto amortization
    
    $
    736,176
    
    
    $
    144,470
    
    
    $
    591,706
    
    
    $
    616,483
    
    
    $
    29,844
    
    
    $
    586,639Trade name
    
    
    375,778
    
    
    
    9,641
    
    
    
    366,137
    
    
    
    
    
    
    
    
    
    
    
    380,844Franchise value
    
    
    
    
    
    
    
    
    
    
    16,086,350
    
    
    
    
    
    
    
    
    
    
    
    16,347,878Total intangible assets
    
    
    
    
    
    
    
    
    
    $
    17,044,193
    
    
    
    
    
    
    
    
    
    
    $
    17,315,361Goodwill
    
    
    
    
    
    
    
    
    
    $
    75,621
    
    
    
    
    
    
    
    
    
    
    $
    96,657
  7. Investments
 December 312005
    
    
    2004(Thousands of Dollars)Investments stated at fair value:Available-for-sale
    
    $
    332
    
    
    $
    339Derivative instruments
    
    
    
    
    
    
    939Equity method investments
    
    
    1,268,222
    
    
    
    1,159,290Investments stated at cost
    
    
    4,500
    
    
    
    11,079Total investments
    
    $
    1,273,054
    
    
    $
    1,171,647
 Investments Stated at Fair Value
 73




---



##### Table of Contents



Year Ended December 312005
    
    2004
    
    2003(Millions of Dollars)Realized gains
    
    $
    
    
    
    $
    29.1
    
    
    $
    181.8Realized losses
    
    
    9.6
    
    
    
    0.8
    
    
    
    16.7
  Sprint PCS.
       Equity Method Investments
 Discovery Communications, Inc.
 74




---



##### Table of Contents



TV Works, LLC .
  Combined Financial Information
    
    Coxs Proportionate ShareYear Ended December 31
    
    Year Ended December 312005
    
    2004
    
    2003
    
    2005
    
    2004
    
    2003(Thousands of Dollars)Revenues
    
    $
    3,842,458
    
    
    $
    3,338,217
    
    
    $
    2,291,103
    
    
    $
    868,585
    
    
    $
    769,917
    
    
    $
    547,304Operating income
    
    
    539,517
    
    
    
    482,828
    
    
    
    278,283
    
    
    
    131,221
    
    
    
    119,458
    
    
    
    71,971Net income
    
    
    153,648
    
    
    
    145,319
    
    
    
    18,309
    
    
    
    34,895
    
    
    
    36,629
    
    
    
    7,450
 Combined Financial InformationDecember 312005
    
    2004(Thousands of Dollars)Current
assets
    
    $
    1,315,868
    
    
    $
    1,287,914Noncurrent assets
    
    
    2,747,664
    
    
    
    2,667,590Current liabilities
    
    
    1,141,124
    
    
    
    1,159,360Noncurrent liabilities
    
    
    3,167,517
    
    
    
    3,093,036
  Other
 .
 8. Income Taxes
 75




---



##### Table of Contents



Year Ended December 312005
    
    
    2004
    
    
    2003(Thousands of Dollars)CurrentFederal
    
    $
    128,438
    
    
    $
    (95,416
    )
    
    $
    273,941State
    
    
    4,774
    
    
    
    7,535
    
    
    
    (4,289
    )Total current
    
    
    133,212
    
    
    
    (87,881
    )
    
    
    269,652DeferredFederal
    
    
    (115,820
    )
    
    
    (548,646
    )
    
    
    (334,193
    )State
    
    
    (3,900
    )
    
    
    (229,789
    )
    
    
    (10,162
    )Total deferred
    
    
    (119,720
    )
    
    
    (778,435
    )
    
    
    (344,355
    )Net income tax expense (benefit)
from
continuing operations
    
    $
    13,492
    
    
    $
    (866,316
    )
    
    $
    (74,703
    )
  Year Ended December 312005
    
    

2004
    
    

2003(Thousands of Dollars)Federal tax expense (benefit) at statutory rates on
income before income taxes
    
    $
    7,021
    
    
    $
    (681,339
    )
    
    $
    (72,919
    )State income tax benefit, net of federal
impact
    
    
    (8,990
    )
    
    
    (84,534
    )
    
    
    (22,374
    )Change in state tax rate, net
    
    
    9,559
    
    
    
    (59,931
    )
    
    
    12,981Adjustments and settlements, net
    
    
    9,843
    
    
    
    (48,259
    )
    
    
    5,400Tax basis adjustment in equity investment
    
    
    
    
    
    
    
    
    
    
    6,648Other,net
    
    
    (3,941
    )
    
    
    7,747
    
    
    
    (4,439
    )Net income tax expense (benefit) from continuing
operations
    
    $
    13,492
    
    
    $
    (866,316
    )
    
    $
    (74,703
    )
  December 312005
    
    
    2004(Thousands of Dollars)Plant and equipment
    
    $
    (1,490,624
    )
    
    $
    (1,551,003
    )Intangible assets
    
    
    (5,960,542
    )
    
    
    (6,324,831
    )Investments
    
    
    (539,774
    )
    
    
    (501,509
    )Deferred financing costs
    
    
    45,238
    
    
    
    9,081Other, net
    
    
    78,787
    
    
    
    75,676(7,866,915
    )
    
    
    (8,292,586
    )Less current portion
    
    
    33,428
    
    
    
    33,988Net deferred tax liability
    
    $
    (7,900,343
    )
    
    $
    (8,326,574
    )
  76




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##### Table of Contents



9. Debt
 December 312005
    
    
    2004(Thousands of Dollars)Revolving credit facilities
    
    $
    2,000,000
    
    
    $
    1,650,000Commercial paper
    
    
    224,611
    
    
    
    96,142Term loan
    
    
    2,000,000
    
    
    
    2,000,000Medium-term notes
    
    
    264,498
    
    
    
    264,429Notes and debentures
    
    
    8,346,017
    
    
    
    8,765,359Exchangeable Subordinated Discount Debentures due
April 19, 2020
    
    
    
    
    
    
    19,546Capitalized lease obligations
    
    
    161,912
    
    
    
    173,888Other
    
    
    20,236
    
    
    
    20,68313,017,274
    
    
    
    12,990,047Less current portion
    
    
    45,453
    
    
    
    51,581Total long-term debt
    
    $
    12,971,821
    
    
    $
    12,938,466
   77




---



##### Table of Contents



Revolving Credit Agreements
  Commercial Paper
  Bridge Loan Credit Facility
 2004 Issuances and Repayments Notes and Debenture
 Term Loan
  Medium-Term Notes
 78




---



##### Table of Contents



Notes and Debentures
  2005 Repayments.
 2004 Issuances and Repayments.
   Exchangeable Subordinated Debentures
 Exchangeable Subordinated Debentures due November 15, 2029 (PRIZES).
 79




---



##### Table of Contents



Exchangeable Subordinated Debentures due March 14, 2030 (Premium PHONES).
   Exchangeable Subordinated Discount Debentures due April 19, 2020 (Discount Debentures).
  2005 Purchases.
 2004 Purchases
 80




---



##### Table of Contents



Capital Leases
  Interest Rate Swaps
   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
    
    
    7.37
    %
    
    
    4.37
    %Maturity
    
    
    2006 - 2009
    
    
    
    2005 - 2009
  Maturities
  Debt Covenants
  81




---



##### Table of Contents



10. Derivative Instruments and Hedging Activities
     Interest Rate Swap Agreements
 short-cut method
 Exchangeable Subordinated Debentures
  82




---



##### Table of Contents



Stock Purchase Warrants
  11. Fair Value of Financial Instruments
     December 312005
    
    2004Carrying
    
    Fair
    
    Carrying
    
    FairValue
    
    Value
    
    Value
    
    Value(Millions of Dollars)Fixed-rate notes and
debentures
    
    $
    8,292.7
    
    
    $
    8,411.7
    
    
    $
    8,724.4
    
    
    $
    9,056.9Exchangeable subordinated
debentures
    
    
    
    
    
    
    
    
    
    
    19.5
    
    
    
    31.4
 12. Financial Instruments with Characteristics of both Liabilities and Equity
 83




---



##### Table of Contents



Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity
  13. Retirement Plans
    Obligations and Funded Status
 Year Ended December 31Pension Benefits
    
    
    Other Benefits2005
    
    
    2004
    
    
    2005
    
    
    2004(Thousands of Dollars)Change in Benefit ObligationBenefit obligation at beginning of year
    
    $
    375,445
    
    
    $
    293,392
    
    
    $
    60,604
    
    
    $
    46,568Service cost
    
    
    38,058
    
    
    
    31,797
    
    
    
    6,941
    
    
    
    5,484Interest cost
    
    
    25,589
    
    
    
    20,823
    
    
    
    4,075
    
    
    
    3,381Actuarial loss
    
    
    59,509
    
    
    
    33,175
    
    
    
    9,681
    
    
    
    6,455Benefits paid
    
    
    (4,319
    )
    
    
    (3,742
    )
    
    
    (1,669
    )
    
    
    (1,326
    )Plan participants contributions
    
    
    
    
    
    
    
    
    
    
    62
    
    
    
    42
 84




---



##### Table of Contents



Year Ended December 31Pension Benefits
    
    
    Other Benefits2005
    
    
    2004
    
    
    2005
    
    
    2004(Thousands of Dollars)Benefit obligation at end of the year
    
    
    494,282
    
    
    
    375,445
    
    
    
    79,694
    
    
    
    60,604Change in Plan AssetsFair value of plan assets at beginning of year
    
    
    312,910
    
    
    
    274,705
    
    
    
    18,471
    
    
    
    14,087Actual return on plan assets
    
    
    28,031
    
    
    
    31,947
    
    
    
    1,885
    
    
    
    1,943Employer contributions
    
    
    53,805
    
    
    
    10,000
    
    
    
    7,566
    
    
    
    3,725Benefits paid
    
    
    (4,319
    )
    
    
    (3,742
    )
    
    
    (1,669
    )
    
    
    (1,326
    )Plan participants contributions
    
    
    
    
    
    
    
    
    
    
    62
    
    
    
    42Other
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    Fair value of plan assets at end of year
    
    
    390,436
    
    
    
    312,910
    
    
    
    26,315
    
    
    
    18,471Funded status of plan
    
    
    (103,846
    )
    
    
    (62,535
    )
    
    
    (53,378
    )
    
    
    (42,133
    )Unrecognized actuarial losses
    
    
    104,877
    
    
    
    46,555
    
    
    
    16,108
    
    
    
    6,560Unrecognized prior service cost
    
    
    710
    
    
    
    822
    
    
    
    
    
    
    
    Prepaid (accrued) benefit cost
    
    $
    1,741
    
    
    $
    (15,158
    )
    
    $
    (37,270
    )
    
    $
    (35,573
    )Amounts recognized in the Consolidated
Balance Sheets consist of:Prepaid benefit cost
    
    $
    1,741
    
    
    $
    
    
    
    $
    
    
    
    $
    Accrued benefit cost
    
    
    
    
    
    
    (15,158
    )
    
    
    (37,270
    )
    
    
    (35,573
    )Net amount recognized
    
    $
    1,741
    
    
    $
    (15,158
    )
    
    $
    (37,270
    )
    
    $
    (35,573
    )
   Components of Net Periodic Benefit Cost
 Year Ended December 312005
    
    
    2004
    
    
    2003Pension
    
    
    Other
    
    
    Pension
    
    
    Other
    
    
    Pension
    
    
    OtherBenefits
    
    
    Benefits
    
    
    Benefits
    
    
    Benefits
    
    
    Benefits
    
    
    Benefits(Thousands of Dollars)Service cost
    
    $
    38,058
    
    
    $
    6,940
    
    
    $
    31,797
    
    
    $
    5,484
    
    
    $
    25,540
    
    
    $
    4,301Interest cost
    
    
    25,589
    
    
    
    4,075
    
    
    
    20,823
    
    
    
    3,381
    
    
    
    17,348
    
    
    
    2,794Expected return on plan assets
    
    
    (28,396
    )
    
    
    (1,853
    )
    
    
    (24,758
    )
    
    
    (1,493
    )
    
    
    (19,418
    )
    
    
    Prior
service cost amortization
    
    
    136
    
    
    
    
    
    
    
    215
    
    
    
    
    
    
    
    215
    
    
    
    Actuarial loss (gain) amortization
    
    
    3,032
    
    
    
    298
    
    
    
    3,862
    
    
    
    198
    
    
    
    1,567
    
    
    
    (89
    )Net periodic benefit cost
    
    $
    38,419
    
    
    $
    9,460
    
    
    $
    31,939
    
    
    $
    7,570
    
    
    $
    25,252
    
    
    $
    7,006
 Weighted-Average Assumptions
 85




---



##### Table of Contents



At December 312005
    
    2004Pension
    
    Other
    
    Pension
    
    OtherBenefits
    
    Benefits
    
    Benefits
    
    BenefitsDiscount rate
    
    
    5.75
    %
    
    
    5.75
    %
    
    
    6.00
    %
    
    
    5.75
    %Rate of compensation
increase
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    4.25
    %
    
    
    4.00
    %
  Year Ended December 312005
    
    2004
    
    2003Pension
    
    Other
    
    Pension
    
    Other
    
    Pension
    
    OtherBenefits
    
    Benefits
    
    Benefits
    
    Benefits
    
    Benefits
    
    BenefitsDiscount rate
    
    
    6.00
    %
    
    
    5.75
    %
    
    
    6.25
    %
    
    
    6.25
    %
    
    
    6.75
    %
    
    
    6.75
    %Rate of compensation increase
    
    
    4.25
    %
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    4.50
    %
    
    
    5.00
    %Expected long-term return on plan
assets
    
    
    9.00
    %
    
    
    9.00
    %
    
    
    9.00
    %
    
    
    9.00
    %
    
    
    9.00
    %
    
    
    9.00
    %
   1% Increase
    
    1% Decrease(Thousands of Dollars)Effect on service and interest cost
components
    
    $
    14
    
    
    $
    (12
    )Effect on postretirement benefit obligations
    
    
    218
    
    
    
    (191
    )
 Expected Benefits Payments
 86




---



##### Table of Contents



Pension
    
    OtherBenefits
    
    Benefits(Thousands of Dollars)2006
    
    $
    4,870
    
    
    $
    2,4422007
    
    
    5,955
    
    
    
    2,3072008
    
    
    7,324
    
    
    
    2,8422009
    
    
    9,158
    
    
    
    3,5412010
    
    
    11,178
    
    
    
    4,5862011-2015
    
    
    98,435
    
    
    
    42,827
 Expected Medicare subsidy receipts
 OtherBenefits(Thousands ofDollars)2006
    
    $
    252007
    
    
    232008
    
    
    212009
    
    
    192010
    
    
    182011-2015
    
    
    43
 Plan Assets
  Percentage of Plan Assets
    
    
    TargetAt December 31
    
    
    Allocations2005
    
    
    2004
    
    
    2006Equity Securities
    
    
    62
    %
    
    
    62
    %
    
    
    62
    %Debt Securities
    
    
    34
    %
    
    
    36
    %
    
    
    38
    %Other
    
    
    4
    %
    
    
    2
    %
    
    
    0
    %Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
   87




---



##### Table of Contents



Contributions
        14. Stock and Other Compensation Plans
  Long-Term Incentive Plan
  88




---



##### Table of Contents



2005
    
    
    2004
    
    
    2003Weighted-
    
    
    
    
    
    
    Weighted-
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    Exercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    Price
    
    
    Shares
    
    
    PriceOutstanding at beginning
of year
    
    
    15,989,939
    
    
    
    36.46
    
    
    
    14,994,603
    
    
    $
    34.26
    
    
    
    10,860,838
    
    
    $
    36.09Granted
    
    
    
    
    
    
    
    
    
    
    4,589,898
    
    
    
    31.29
    
    
    
    5,177,530
    
    
    
    30.18Exercised
    
    
    
    
    
    
    
    
    
    
    (2,865,840
    )
    
    
    16.38
    
    
    
    (268,455
    )
    
    
    12.44Canceled
    
    
    (15,824,061
    )
    
    
    36.50
    
    
    
    (728,722
    )
    
    
    37.64
    
    
    
    (775,310
    )
    
    
    40.29Outstanding at end of year
    
    
    165,878
    
    
    $
    37.50
    
    
    
    15,989,939
    
    
    
    36.46
    
    
    
    14,994,603
    
    
    
    34.26Options exercisable at
year-end
    
    
    60,848
    
    
    
    45.63
    
    
    
    2,341,343
    
    
    $
    47.33
    
    
    
    3,881,550
    
    
    $
    24.72Weighted-average grant date
fair value of options granted
during the year
    
    $
    
    
    
    
    
    
    
    $
    9.33
    
    
    
    
    
    
    $
    10.81
  Options Outstanding
    
    Options ExercisableWeighted-
    
    
    
    
    
    
    
    
    
    Weighted-Average
    
    Weighted-
    
    
    
    
    
    Average
    
    Weighted-Remaining
    
    Average
    
    
    
    
    
    Remaining
    
    AverageRange of
    
    Number
    
    Contractual
    
    Exercise
    
    Number
    
    Contractual
    
    ExerciseExercise Prices
    
    Outstanding
    
    Life
    
    Price
    
    Exercisable
    
    Life
    
    Price$30.15  $31.27
    
    
    87,040
    
    
    
    7.7
    
    
    $
    30.71
    
    
    
    0
    
    
    
    N/A
    
    
    
    N/A41.55
  46.22
    
    
    61,690
    
    
    
    5.6
    
    
    
    43.66
    
    
    
    43,700
    
    
    
    5.5
    
    
    
    44.0047.06
  50.94
    
    
    17,148
    
    
    
    4.1
    
    
    
    49.81
    
    
    
    17,148
    
    
    
    4.1
    
    
    
    49.81165,878
    
    
    
    6.5
    
    
    
    37.50
    
    
    
    60,848
    
    
    
    5.1
    
    
    
    45.63
 89




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Employee Stock Purchase Plan
  Other Compensation Plans
    90




---



##### Table of Contents



15. Shareholders Equity
  Convertible Preferred Stock
  Common
Stock
  Other
  16. Transactions with Affiliated Companies
  91




---



##### Table of Contents




    
    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 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 as
payment for the services provided. Amounts due from (to) CEI to (from) Cox were approximately
$18.8 million, $(5.6) million and $(4.0) million at December 31, 2005, 2004 and 2003, respectively;
and the associated interest rate was 4.7%, 2.4% and 1.3% at December 31, 2005, 2004 and 2003,
respectively. Included in amounts due from CEI are the following transactions:
 (Thousands of Dollars)Intercompany due from CEI, December 31, 2002
    
    $
    21,109Cash transferred to CEI
    
    
    221,117Net operating expense allocations and reimbursements
    
    
    (246,206
    )Intercompany due to CEI, December 31, 2003
    
    
    (3,980
    )Cash transferred to CEI
    
    
    288,821Net operating expense allocations and reimbursements
    
    
    (290,414
    )Intercompany due to CEI, December 31, 2004
    
    
    (5,573
    )Cash transferred to CEI
    
    
    460,111Net operating expense allocations and reimbursements
    
    
    (435,754
    )Intercompany due from CEI, December 31, 2005
    
    $
    18,784
 
    
    Cox receives certain management services from CEI including legal, corporate
secretarial, tax, internal audit, risk management, employee benefit (including pension plan)
administration, fleet and other support services. Cox was allocated expenses for the year ended
December 31, 2005, 2004 and 2003 of approximately $8.3 million, $7.4 million and $6.0 million,
respectively, related to these services.
    
    In connection with these management services,
Cox reimburses CEI for payments made to third-party vendors for certain goods and services provided
to Cox under arrangements made by CEI on behalf of CEI and its affiliates, including Cox. Cox
believes such arrangements result in Cox receiving such goods and services at more attractive
pricing than Cox would be able to secure separately. Such reimbursed expenditures include
insurance premiums for coverage through the CEI insurance program, which provides coverage for all
of its affiliates, including Cox. Rather than self-insuring these risks, CEI purchases insurance
for a fixed-premium cost from several insurance companies, including an insurance company
indirectly owned by descendants of Governor James M. Cox, the founder of CEI, including James C.
Kennedy, Chairman of Coxs Board of Directors, and his sister, who each own 25%. This insurance
company is an insurer and reinsurer on various insurance policies purchased by CEI, and it employs
a consulting actuary to calculate the annual premiums for general/auto liability and workers
compensation insurance based on Coxs loss experience, consistent with insurance industry practice.
Coxs portion of these insurance costs was approximately $34.6 million, $32.0 million and $33.0
million for 2005, 2004 and 2003, respectively.
 92




---



##### Table of Contents




    
    Coxs employees participate in certain CEI
employee benefit plans, and Cox made payments to CEI in 2005, 2004 and 2003 for the costs incurred
by reason of such participation, including self-insured employee medical insurance costs of
approximately $127.2 million, $110.4 million and $86.7 million, respectively; postemployment
benefits of $11.4 million, $10.2 million and $8.4 million, respectively; and executive pension plan
payments of approximately $7.5 million in 2005 and $6.4 million in 2004 and 2003. In January 2003,
Cox adopted its own post-retirement medical plan to provide benefits to substantially all eligible
Cox retirees. Prior to January 2003, all eligible retirees of Cox participated in the CEI
post-retirement medical plan.
    
    Cox and CEI share resources relating to aircraft owned by
each company. Depending on need, each occasionally uses aircraft owned by the other, paying a
cost-based hourly rate. CEI also operates and maintains two airplanes owned by Cox. Cox pays CEI
on a quarterly basis for fixed and variable operations and maintenance costs relating to these two
airplanes. Cox paid approximately $1.1 million during 2005 and $1.2 million during 2004 and 2003
for use of CEIs aircraft and maintenance of Coxs aircraft by CEI, net of aircraft costs paid by
CEI to Cox for use of Coxs aircraft.
    
    Cox pays rent and certain other occupancy costs to
CEI for its corporate headquarters building. CEI holds the long-term lease of the Cox headquarters
building of which Cox is the sole occupant. Rent was $9.2 million, $9.9 million and $11.2 million
for the years ended December 31, 2005, 2004 and 2003, respectively.
  17. Other Comprehensive Loss
  Year Ended December 312005
    
    
    2004
    
    
    2003(Thousands of Dollars)Unrealized gains
(losses), net of
taxes of $(3),
$(498) and
$(19,301) in 2005,
2004 and 2003,
respectively
    
    $
    (4
    )
    
    $
    796
    
    
    $
    30,831Recognition of
previously
unrealized gains
(losses) on
available- for-sale
securities, net of
taxes of $0,
$10,197 and $59,314
in 2005, 2004 and
2003,
respectively
    
    
    
    
    
    
    (16,289
    )
    
    
    (94,748
    )Total other
comprehensive
loss
    
    $
    (4
    )
    
    $
    (15,493
    )
    
    $
    (63,917
    )
  93




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18. Supplemental Financial Statement Information
 Supplemental Consolidated Balance Sheet Information
 December 312005
    
    
    2004(Thousands of Dollars)Plant and equipmentLand
    
    $
    96,294
    
    
    $
    95,721Buildings and building improvements
    
    
    624,199
    
    
    
    608,914Transmission and distribution plant
    
    
    10,916,889
    
    
    
    10,486,189Other equipment
    
    
    1,101,537
    
    
    
    992,990Capital leases
    
    
    449,632
    
    
    
    394,925Construction in progress
    
    
    243,042
    
    
    
    116,212Plant and equipment, at cost
    
    
    13,431,593
    
    
    
    12,694,951Less accumulated depreciation
    
    
    (6,691,969
    )
    
    
    (5,651,550
    )Net plant and equipment
    
    $
    6,739,624
    
    
    $
    7,043,401
 December 312005
    
    
    2004(Thousands of Dollars)Other current assetsInventory
    
    $
    114,613
    
    
    $
    60,288Prepaid assets
    
    
    43,396
    
    
    
    30,531Deferred income tax asset
    
    
    33,428
    
    
    
    33,988Other
    
    
    1,398
    
    
    
    2,203Total other current assets
    
    $
    192,835
    
    
    $
    127,010Other current liabilitiesDeposits and advances
    
    $
    105,110
    
    
    $
    90,938Income tax payable
    
    
    158,307
    
    
    
    121,269Other
    
    
    84,874
    
    
    
    107,068Total other current liabilities
    
    $
    348,291
    
    
    $
    319,275
 Supplemental Disclosure of Non-cash Investing and Financing Activities
 Year Ended December 312005
    
    
    2004
    
    
    2003(Thousands of Dollars)Significant non-cash transactionsConversion of Series A preferred
stock to former public
stock
    
    
    
    
    
    
    365,635
    
    
    
    Additional cash flow informationCash paid for interest
    
    $
    661,023
    
    
    $
    379,090
    
    
    $
    374,030Cash paid (received) for income
taxes
    
    
    72,262
    
    
    
    (19,663
    )
    
    
    (69,875
    )
 19. Commitments and Contingencies
   94




---



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95




---



##### Table of Contents



96




---



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20. Unaudited Quarterly Financial Information
  97




---



##### Table of Contents



20051st
    
    
    2nd
    
    
    3rd
    
    
    4thQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter(Millions of Dollars)Revenues
    
    $
    1,622.4
    
    
    $
    1,694.7
    
    
    $
    1,672.3
    
    
    $
    1,732.9Cost of services (excluding
depreciation and
amortization)
    
    
    649.8
    
    
    
    676.1
    
    
    
    668.2
    
    
    
    678.8Selling, general and
administrative (excluding
depreciation and
amortization)
    
    
    352.5
    
    
    
    359.7
    
    
    
    355.9
    
    
    
    399.9Depreciation and amortization
    
    
    412.8
    
    
    
    441.9
    
    
    
    402.8
    
    
    
    405.5Impairment of intangible
assets
    
    
    
    
    
    
    
    
    
    
    181.9
    
    
    
    Operating income
    
    
    207.3
    
    
    
    217.0
    
    
    
    63.5
    
    
    
    248.7Net income (loss) from
continuing operations
    
    
    19.7
    
    
    
    11.0
    
    
    
    (91.8
    )
    
    
    61.0Net income (loss) from
discontinued operations, net
of tax
    
    
    7.3
    
    
    
    7.3
    
    
    
    (258.4
    )
    
    
    13.2Net income (loss)
    
    $
    27.0
    
    
    $
    18.3
    
    
    $
    (350.2
    )
    
    $
    74.2
 20041st
    
    
    2nd
    
    
    3rd
    
    
    4thQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter(Millions of Dollars)Revenues
    
    $
    1,461.1
    
    
    $
    1,516.1
    
    
    $
    1,539.3
    
    
    $
    1,589.6Cost of services (excluding
depreciation and
amortization)
    
    
    604.4
    
    
    
    614.0
    
    
    
    634.3
    
    
    
    629.4Selling, general and
administrative (excluding
depreciation and amortization)
    
    
    322.4
    
    
    
    319.0
    
    
    
    351.2
    
    
    
    372.7Depreciation and amortization
    
    
    371.8
    
    
    
    377.4
    
    
    
    381.5
    
    
    
    417.5Impairment of intangible
assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,236.0Loss on sale of cable systems
    
    
    
    
    
    
    5.0
    
    
    
    
    
    
    
    Operating income (loss)
    
    
    162.5
    
    
    
    200.7
    
    
    
    172.3
    
    
    
    (2,066.0
    )Net income (loss) from
continuing operations
    
    
    50.0
    
    
    
    54.7
    
    
    
    34.9
    
    
    
    (1,224.7
    )Net income (loss) from
discontinued operations, net of
tax
    
    
    7.7
    
    
    
    8.0
    
    
    
    7.0
    
    
    
    (102.7
    )Cumulative effect of change in
accounting principle, net of
tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,210.2
    )Net income (loss)
    
    $
    57.7
    
    
    $
    62.7
    
    
    $
    41.9
    
    
    $
    (2,537.6
    )
 21. Subsequent Event
  98




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99




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    Use of the Residual Method to Value Acquired Assets
Other Than Goodwill.
 DELOITTE & TOUCHE LLP
 
 100




---



##### Table of Contents



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. DISCLOSURE CONTROLS AND PROCEDURES
 Evaluation of Controls and Procedures
   Changes
in Internal Controls.
 
 ITEM 9B. OTHER INFORMATION
   
 Part III
 
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
  Directors
   101




---



##### Table of Contents



Atlanta Journal-Constitution
      102




---



##### Table of Contents



Executive Officers
       103




---



##### Table of Contents



Audit Committee
  Compensation of Directors
  104




---



##### Table of Contents



Code of Conduct
  
 Item 11. Executive Compensation
  Summary Compensation Table
 Long-Term Compensation AwardsRestricted
    
    SecuritiesName
    
    
    
    
    
    Annual Compensation
    
    Stock
    
    Underlying
    
    LTIP
    
    All otherPrincipal Position
    
    Year
    
    Salary
    
    Bonus
    
    Other (a)
    
    Awards (b)
    
    Options (c)
    
    Payouts
    
    Compensation (d)James O.
Robbis
    
    
    2005
    
    
    $
    1,322,900
    
    
    $
    1,166,798
    
    
    $
    86,627
    
    
    
    
    
    
    
    
    
    
    $
    6,325,789
    
    
    $
    6,000Former President & Chief
    
    
    2004
    
    
    
    1,272,000
    
    
    
    813,226
    
    
    
    
    
    
    
    2,383,504
    
    
    
    284,470
    
    
    
    
    
    
    
    6,000Executive Officer (e)
    
    
    2003
    
    
    
    1,200,000
    
    
    
    1,680,000
    
    
    
    
    
    
    
    2,592,297
    
    
    
    298,210
    
    
    
    
    
    
    
    6,000Patrick J. Esser
    
    
    2005
    
    
    $
    760,000
    
    
    $
    574,560
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    6,000President
    
    
    2004
    
    
    
    700,000
    
    
    
    383,597
    
    
    
    
    
    
    
    1,047,137
    
    
    
    130,000
    
    
    
    
    
    
    
    6,0002003
    
    
    
    615,060
    
    
    
    736,072
    
    
    
    
    
    
    
    1,034,748
    
    
    
    118,800
    
    
    
    
    
    
    
    6,000John M. Dyer
    
    
    2005
    
    
    $
    505,000
    
    
    $
    318,150
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    6,000Senior Vice President
    
    
    2004
    
    
    
    475,000
    
    
    
    228,000
    
    
    
    
    
    
    
    499,466
    
    
    
    68,000
    
    
    
    
    
    
    
    6,000and Chief Financial Officer
    
    
    2003
    
    
    
    439,930
    
    
    
    439,930
    
    
    
    
    
    
    
    524,007
    
    
    
    71,670
    
    
    
    
    
    
    
    6,000Claus F.
Kroeger
    
    
    2005
    
    
    $
    495,000
    
    
    $
    311,850
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    6,000Senior Vice President,
    
    
    2004
    
    
    
    465,000
    
    
    
    223,200
    
    
    
    
    
    
    
    488,270
    
    
    
    68,000
    
    
    
    
    
    
    
    6,000Operations
    
    
    2003
    
    
    
    430,000
    
    
    
    430,000
    
    
    
    
    
    
    
    498,078
    
    
    
    71,670
    
    
    
    
    
    
    
    6,000Jill Cambell
    
    
    2005
    
    
    $
    485,000
    
    
    $
    305,550
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    6,000Senior Vice President,
    
    
    2004
    
    
    
    450,000
    
    
    
    216,000
    
    
    
    
    
    
    
    453,749
    
    
    
    68,000
    
    
    
    
    
    
    
    6,000Operations
    
    
    2003
    
    
    
    399,790
    
    
    
    399,970
    
    
    
    
    
    
    
    472,752
    
    
    
    71,670
    
    
    
    
    
    
    
    6,000
 
 (a)
    
    The amount shown for Mr. Robbins in 2005 includes $73,826 related to personal use of
Cox aircraft.(b)
    
    All shares of restricted stock were converted into the right to receive
$34.75 per share as a part of the December 2004 going-private merger and no restricted stock
was granted in 2005.(c)
    
    The outstanding stock options were surrendered in exchange for awards
under the Cox Communications 2005 Performance Plan (referred to as the Performance Plan) in
April 2005, and no stock options were granted in 2005.(d)
    
    Consists of amounts contributed
pursuant to the Cox Communications, Inc. Savings and Investment Plan and credited under the Cox
Communications, Inc. Executive Savings Plus Restoration Plan.(e)
    
    Mr. Robbins retired as of
December 31, 2005. 105




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##### Table of Contents



Long-Term Incentives
    Number of units
    
    PerformanceName
    
    awarded
    
    period
    
    Target
    
    MaximumJames O. RobbinsUAP(1)
    
    
    201,060
    
    
    
    5 years
    
    
    $
    4,987,588
    
    
    $
    23,910,055Performance Plan(2)(3)(4)
    
    
    
    
    
    
    5 years
    
    
    
    15,279,684
    
    
    $
    30,559,368Patrick J. EsserUAP(1)
    
    
    90,000
    
    
    
    5 years
    
    
    $
    2,232,582
    
    
    
    10,702,800Performance Plan(2)(3)
    
    
    
    
    
    
    5 years
    
    
    
    5,777,398
    
    
    
    11,554,796John M. DyerUAP(1)
    
    
    46,450
    
    
    
    5 years
    
    
    $
    1,152,260
    
    
    
    5,523,834Performance Plan(2)(3)
    
    
    
    
    
    
    5 years
    
    
    
    3,436,191
    
    
    
    6,872,382Claus F. KroegerUAP(1)
    
    
    46,450
    
    
    
    5 years
    
    
    $
    1,152,260
    
    
    
    5,523,834Performance Plan(2)(3)
    
    
    
    
    
    
    5 years
    
    
    
    3,322,671
    
    
    
    6,645,342Jill CampbellUAP(1)
    
    
    46,450
    
    
    
    5 years
    
    
    $
    1,152,260
    
    
    
    5,523,834Performance Plan(2)(3)
    
    
    
    
    
    
    5 years
    
    
    
    3,076,113
    
    
    
    6,152,226
 
 (1)
    
    The payout value of UAP units is based on appreciation in the equity value of CEI
generally determined over the five-year period after grant of the award. The target award is
not determinable until the time of payment and, therefore, the amount presented assumes
appreciation in CEIs equity value for 2004 and 2005 applied uniformly over the five-year
period and operating cash flow growth consistent with 2004 and 2005 over that same period. The
payout value of units is subject to a maximum limit on appreciation in CEIs equity value under
the UAP, which serves as the basis for the amounts disclosed in the Maximum column.
Additionally, the payout value of awards would be reduced by 50% if the annual operating cash
flow growth of Cox averages less than 5% over the five-year vesting period. Units are settled
in cash at the end of the five-year period or earlier upon termination of employment for
certain reasons. Awarded units are subject to a five-year vesting schedule, with no vesting
rights earned in the first two years, 60% vesting earned after completion of the third
year and 20% additional vesting earned in each of the final two years. A participant who
retires, becomes disabled or dies becomes fully vested in all outstanding units awarded to
the participant upon the occurrence of any such event.(2)
    
    The performance goal for the
Performance Plan is the amount of Coxs cumulative operating cash flow in excess of its
cumulative capital expenditures measured over the measurement period. For this purpose, the
measurement period generally covers the period from January 1, 2005 through December 31, 2009,
except that the measurement period for any participant who terminates with Cox and any of its
affiliates shall end as of the last day of the year ending just before the year in 106




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##### Table of Contents



which that termination occurs. At the end of the relevant measurement period, the
participants earned award will be valued by determining the performance result actually
achieved in that period as a percentage of the performance goal set by Coxs Compensation
Committee and will be paid in cash. The maximum award payable under the Performance Plan is
equal to 200% of a participants target award, and the maximum award payable under the
Performance Plan to a participant who terminates employment other than for reason of
retirement, disability, death or involuntary termination of employment solely as a result
of the consummation of certain transactions in which assets are sold by Cox or its
affiliates is equal to 100% of a participants target award. The minimum award payable
under the Performance Plan is zero.(3)
    
    Awards under the Performance Plan were granted in exchange for the surrender of stock
options outstanding under the LTIP. Vested options with an exercise price of less than
$34.75 were valued based on the difference between the exercise price and $34.75, and all
other options were valued using the Black-Scholes option pricing model. The aggregate
value of the individuals options became the target amount of the Performance Plan award.
For each of the named executive officers, the following number of options were
surrendered: James O. Robbins 1,226,270 options; Patrick J. Esser 441,100 options; John M.
Dyer 275,670 options; Claus F. Kroeger 264,670 options; Jill Campbell 231,670 options.(4)
    
    Mr. Robbins retired as of December 31, 2005 and received a payout under the
Performance Plan, as reported in the Summary Compensation Table.
 Retirement Plans
 Cox Communications, Inc. Pension Plan.
  Cox Executive Supplemental Plan.
   107




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PENSION PLAN AND EXECUTIVE SUPPLEMENTAL PLAN TABLE
 Years of Service20 orFinal Average Compensation (5 years)
    
    5
    
    10
    
    15
    
    more$150,000
    
    $
    18,750
    
    
    $
    37,500
    
    
    $
    56,250
    
    
    $
    75,000250,000
    
    
    31,250
    
    
    
    62,500
    
    
    
    93,750
    
    
    
    125,000350,000
    
    
    43,750
    
    
    
    87,500
    
    
    
    131,250
    
    
    
    175,000450,000
    
    
    56,250
    
    
    
    112,500
    
    
    
    168,750
    
    
    
    225,000550,000
    
    
    68,750
    
    
    
    137,500
    
    
    
    206,250
    
    
    
    275,000650,000
    
    
    81,250
    
    
    
    162,500
    
    
    
    243,750
    
    
    
    325,000750,000
    
    
    93,750
    
    
    
    187,500
    
    
    
    281,250
    
    
    
    375,000
   Compensation Committee Interlocks and Insider Participation
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ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
 Security Ownership of Certain Beneficial Owners
  Percent ofClass A
    
    
    
    
    
    Class C
    
    
    
    
    
    Vote of AllCommon
    
    Percent
    
    Common
    
    Percent
    
    Classes ofName of Beneficial Owner
    
    Stock
    
    of Class
    
    Stock
    
    of Class
    
    Voting StockCox Enterprises,
Inc.(a)(b)(c)
    
    
    556,170,238
    
    
    
    100
    %
    
    
    27,597,792
    
    
    
    100.0
    %
    
    
    100
    %
 
 (a)
    
    The business address for Cox Enterprises is 6205 Peachtree Dunwoody Road, Atlanta, Georgia
30328.(b)
    
    Of the shares of common stock of Cox that are beneficially owned by Cox Enterprises,
531,189,708 shares of Class A Common Stock and 25,696,470 shares of Class C Common Stock are
held of record by Cox Holdings, Inc. The remaining 24,980,530 shares of Class A Common Stock
and 1,901,322 shares of Class C Common Stock beneficially owned by Cox Enterprises are held of
record by Cox DNS, Inc. All of the outstanding capital stock of Cox Holdings and of Cox DNS is
beneficially owned by Cox Enterprises. The beneficial ownership of the outstanding capital
stock of Cox Enterprises is described in footnote (c) below. The Class C Common Stock is
convertible on a share for share basis into Class A Common Stock at the option of the holder.(c)
    
    There are 604,078,787 shares of common stock of Cox Enterprises outstanding, with respect to
which (i) Barbara Cox Anthony, as trustee of the Anne Cox Chambers Atlanta Trust, exercises
beneficial ownership over 174,949,266 shares (29.0%); (ii) Anne Cox Chambers, as trustee of
the Barbara Cox Anthony Atlanta Trust, exercises beneficial ownership over 174,949,266 shares
(29.0%); (iii) Barbara Cox Anthony, Anne Cox Chambers and Richard L. Braunstein, as trustees
of the Dayton Cox Trust A, exercise beneficial ownership over 248,237,055 shares (41.0%); and
(iv) 280 individuals and other trusts exercise beneficial ownership over the remaining
5,943,200 shares (1.0%), including 43,734 shares held beneficially and of record by Garner
Anthony, the husband of Barbara Cox Anthony (as to which Barbara Cox Anthony disclaims
beneficial ownership). Thus, Barbara Cox Anthony and Anne Cox Chambers, who are sisters,
together exercise sole or shared beneficial ownership over 598,135,587 shares (99.0%) of the
common stock of Cox Enterprises. Barbara Cox Anthony and Anne Cox Chambers are the mother and
aunt, respectively, of James C. Kennedy, the Chairman of the Board of Directors and Chief Executive Officer of Cox Enterprises
and the Chairman of the Board of Directors of Cox. Security Ownership of Management
  109




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Number of Shares of
    
    Number of Shares ofName of Beneficial Owner
    
    Class A Common Stock
    
    Cox Enterprises Common StockJames C. Kennedy
    
    
    
    
    
    
    546,813
    (a)G. Dennis Berry
    
    
    
    
    
    
    105,015Jill Campbell
    
    
    
    
    
    
    279Janet M. Clarke
    
    
    
    
    
    
    John M. Dyer
    
    
    
    
    
    
    Patrick J. Esser
    
    
    
    
    
    
    546Claus F. Kroeger
    
    
    
    
    
    
    4,329Robert C. OLeary
    
    
    
    
    
    
    147,682James O. Robbins
    
    
    
    
    
    
    50,000Rodney W. Schrock
    
    
    
    
    
    
    Andrew J. Young
    
    
    
    
    
    
    All directors and
executive officers as a
group (18 persons,
including those named
above)
    
    
    
    
    
    
    854,664
 
 (a)
    
    Mr. Kennedy owns of record 546,813 shares of the common stock of Cox Enterprises. Sarah K.
Kennedy, Mr. Kennedys wife and trustee of the Kennedy Trusts, exercises beneficial ownership
over an aggregate of 22,140 shares of the common stock of Cox Enterprises. In addition, as
described above, Barbara Cox Anthony and Anne Cox Chambers, the mother and aunt, respectively,
of Mr. Kennedy, together exercise sole or shared beneficial ownership over 598,135,587 shares
of the common stock of Cox Enterprises, and both are members of the Board of Directors of Cox
Enterprises. Also, Mr. Kennedys children are the beneficiaries of a trust, of which R. Dale
Hughes and Mr. Kennedy are co-trustees, that beneficially owns 16,155 shares of the common
stock of Cox Enterprises. Mr. Kennedy disclaims beneficial ownership of all such shares, other
than the 546,813 shares included in the table. 
 Item 13. Certain Relationships and Related Transactions
   110




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ITEM 14. Principal Accountant Fees and Services.
  2005
    
    2004Audit Fees
    
    $
    14,214,250
    
    
    $
    4,374,825Audit-related fees
    
    
    419,505
    
    
    
    279,575Tax fees
    
    
    2,076,167
    
    
    
    1,471,410All other fees
    
    
    
    
    
    
    
 111




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##### Table of Contents



de minimis
 
 PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
  (1)
    
    Listed below are the financial statements which are filed as part of this
report:
 
    
    Consolidated Balance Sheets at December 31, 2005 and 2004;
    
    Consolidated Statements of Operations for the Years Ended December 31, 2005,
2004 and 2003;
    
    Consolidated Statements of Shareholders Equity for the Years Ended December
31, 2005, 2004 and 2003;
    
    Consolidated Statements of Cash Flows for the Years Ended December 31, 2005,
2004 and 2003; and
    
    Notes to Consolidated Financial Statements.
 (2)
    
    No financial statement schedules are required to be filed by Items 8 and
14(d) of this report because they are not required or are not applicable, or the
required information is set forth in the applicable financial statements or notes
thereto.(3)
    
    Exhibits required to be filed by Item 601 of Regulation S-K:
 
 ExhibitNumber
    
    Description2.1
    
    Asset Purchase Agreement, dated as of October 31, 2005, by and among TCA Cable Partners, Cox
Southwest Holdings, L.P., Cox Communications Louisiana, L.L.C., CoxCom, Inc., and Cox Telcom
 112




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##### Table of Contents



ExhibitNumber
    
    DescriptionPartners, Inc., and Cox Communications, Inc., on the one hand, and Cebridge Acquisition Co.
LLC, on the other hand.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.)4.1
    
    Indenture, dated as of June 27, 1995, between Cox Communications, Inc. and The Bank of New
York, as Trustee (incorporated by reference to exhibit 4.1 to Coxs Registration Statement on
Form S-1, file no. 33-99116, filed on November 8, 1995).4.2
    
    Seventh Supplemental Indenture, dated as of December 15, 2004, between Cox Communications,
Inc. and The Bank of New York Trust Company, N.A., as Trustee (incorporated by reference to
exhibit 4.1 to Coxs Current Report on Form 8-K, filed on December 16, 2004).4.3
    
    Agreement of Resignation, Appointment and Acceptance, effective as of April 27, 2005, by and
among Cox Communications, Inc., The Bank of New York and The Bank of New York Trust Company
(incorporated by reference to exhibit 4.3 to Coxs Quarterly Report on Form 10-Q, filed May 9,
2006).4.4
    
    Indenture, dated as of January 30, 1998, between TCA Cable TV, Inc. and Chase Bank of Texas,
National Association, as Trustee (incorporated by reference to exhibit 4(a) to TCAs
Registration Statement on Form S-3, file no. 333-32015, filed on July 24, 1997).4.5
    
    First Supplemental Indenture, dated as of August 12, 1999, among TCA Cable TV, Inc., Cox
Classic Cable, Inc. and Chase Bank of Texas, National Association, as Trustee (incorporated by
reference to exhibit 4.2 to Coxs Current Report on Form 8-K, filed on August 25, 1999).4.6
    
    Second Supplemental Indenture, dated as of December 1, 2003, between Cox Classic Cable, Inc.,
CoxCom, Inc. and JPMorgan Chase Bank (as successor to Chase Bank of Texas, National
Association), as Trustee (incorporated by reference to exhibit 4.10 to Coxs Annual Report on
Form 10-K, filed on February 27, 2004).10.1
    
    Credit Agreement, dated December 3, 2004, among Cox Communications, Inc., the lenders party
thereto and JPMorgan Chase Bank, N.A., as administrative agent for the lenders, Citicorp North
America, Inc. and Lehman Commercial Paper Inc., as syndication agents, and Citigroup Global
Markets Inc., Lehman Brothers Inc. and J.P. Morgan Securities Inc., as joint lead arrangers
and joint bookrunners (incorporated by reference to exhibit 10.1 to Coxs Current Report on
Form 8-K, filed on December 3, 2004).10.2
    
    Amended and Restated Five-Year Credit Agreement, dated as of the June 4, 2004 and amended and
restated as of December 3, 2004, among Cox Communications, Inc. the lenders party thereto and
JPMorgan Chase Bank, N.A., as administrative agent for the lenders, Bank of America, N.A., as
co-syndication agent, Wachovia Bank, National Association, as co-syndication agent, J.P.
Morgan Securities Inc., as co-lead arranger and joint bookrunner, and Banc Of America
Securities, LLC, as co-lead arranger and joint bookrunner (incorporated by reference to
exhibit 10.2 to Coxs Current Report on Form 8-K, filed on December 3, 2004).10.3
    
    First Amendment, dated as of March 17, 2006, to the Credit Agreement dated as of December 3,
2004, among Cox Communications, Inc., the lenders, syndication agents and arrangers and
bookrunners party thereto, and JP Morgan Chase Bank, N.A., as Administrative Agent.
 113




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##### Table of Contents



ExhibitNumber
    
    Description10.4
    
    First Amendment, dated as of
March 17, 2006, to the Amended and Restated Five-Year Credit Agreement dated as of June 4, 2004
and amended and restated as of December 3, 2004, among Cox Communications, Inc., the lenders,
syndication agents and arrangers and bookrunners party thereto, and JP Morgan Chase Bank,
N.A., as Administrative Agent.10.5
    
    Revolving Promissory Notes, dated as of May 2, 2003 (incorporated by reference to exhibit
10.1 to Coxs Quarterly Report on Form 10-Q, filed August 8, 2003).10.6
    
    Cox Executive Supplemental Plan of Cox Enterprises, Inc. (incorporated by reference to
exhibit 10.5 to Coxs Registration Statement on Form S-4, File No. 33-80152, filed with the
Commission on December 16, 1994) (management contract or compensatory plan) (incorporated by
reference to exhibit 10.5 to Coxs Registration Statement on Form S-4, file no. 333-122050,
filed on January 14, 2005).10.7
    
    Cox Communications, Inc. Executive Savings Plus Restoration Plan (management contract or
compensatory plan) (incorporated by reference to exhibit 10.1 to Coxs Current Report on Form
8-K, filed on December 14, 2005).10.8
    
    Cox Enterprises, Inc. 2005 Unit Appreciation Plan (management contract or compensatory plan)
(incorporated by reference to exhibit 10.1 to Coxs Quarterly Report on Form 10-Q, filed May
9, 2005).10.9
    
    Form of Unit Appreciation Plan Summary Statement (management contract or compensatory plan)
(incorporated by reference to exhibit 10.2 to Coxs Quarterly Report on Form 10-Q, filed May
9, 2006).10.10
    
    Cox Communications, Inc. 2005 Performance Plan (management contract or compensatory
plan) (incorporated by reference to exhibit 10.2 to Coxs Quarterly Report on Form 10-Q, filed
May 9, 2006).10.11
    
    Cox Communications, Inc. 2005 Performance Plan Form of Performance Award Statement
(management contract or compensatory plan) (incorporated by reference to exhibit 10.2 to Coxs
Quarterly Report on Form 10-Q, filed May 9, 2006).10.12
    
    Letter Agreement, dated as of December 31, 2005, with James O. Robbins with respect to
Recognition Unit award (management contract or compensatory plan).21.1
    
    Subsidiaries of Cox Communications, Inc.24.1
    
    Powers of Attorney (included on the signatures page to this report).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 Pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    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.
 114




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SIGNATURES
 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
Cox Communications, Inc. has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
 COX COMMUNICATIONS, INC.By:
    
    /s/ PATRICK J. ESSER

Patrick J. EsserPresidentDate:
March 28, 2006
 POWER OF ATTORNEY
  Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of Cox Communications, Inc. and in the capacities
and on the dates indicated.
 Signature
    
    Title
    
    Date/s/ JAMES C. KENNEDY

James C. Kennedy
    
    Chairman of the Board of Directors
    
    March 28, 2006/s/ PATRICK J. ESSER

Patrick J. Esser
    
    President (principal
executive officer)
    
    March 28, 2006/s/ JOHN M. DYER

John M. Dyer
    
    Senior Vice President and Chief
Financial Officer(principal financial officer)
    
    March 28, 2006/s/ WILLIAM J. FITZSIMMONS

William J. Fitzsimmons
    
    Vice President of Accounting &
Financial Planning(principal accounting officer)
    
    March 28, 2006/s/ JANET M. CLARKE

Janet M. Clarke
    
    Director
    
    March 28, 2006/s/ RODNEY W. SCHROCK

Rodney W. Schrock
    
    Director
    
    March 28, 2006/s/ ROBERT C. OLEARY

Robert C. OLeary
    
    Director
    
    March 28, 2006/s/ ANDREW J. YOUNG

Andrew J. Young
    
    Director
    
    March 28, 2006
 115