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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549FORM 10-K

(Mark One)

|[X] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | ------------------------------------------------------------------------------------
|    | For the fiscal year ended December 31, 2001                                         

OR

|[  ] | 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

COX COMMUNICATIONS LOGO

(Exact name of registrant as specified in its charter)

Delaware(State or other jurisdiction of
incorporation or organization)

58-2112281(I.R.S. Employer Identification No.)1400 Lake Hearn Drive, Atlanta, Georgia(Address of principal executive offices)

30319(Zip Code)


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

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

The
principal exchange for the following securities is the New York Stock Exchange:
Class A Common Stock, $1.00 par value
Income PRIDES
Growth PRIDES
Exchangeable Subordinated Debentures due 2029
Exchangeable Subordinated Debentures due 2030
Exchangeable Subordinated Discount Debentures due 2020

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:None

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

Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this
Form 10-K. ý

As
of February 28, 2002, the aggregate market value of the Class A Common Stock held by non-affiliates of the registrant was $7.126 billion based on the
closing price on the New York Stock Exchange on such date.

There
were 573,139,206 shares of Class A Common Stock and 27,597,792 shares of Class C Common Stock outstanding as of February 28, 2002.

DOCUMENTS INCORPORATED BY REFERENCE

Portions
of the 2001 Summary Annual Report to Stockholders are incorporated by reference into Part II, and portions of the Proxy Statement for the 2002 Annual Meeting of
Stockholders are incorporated by reference into Part III.

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COX COMMUNICATIONS, INC.    2001 FORM 10-K ANNUAL REPORT    TABLE OF CONTENTS

|           |  |                                                                                       |  | Page
|---------- |  | ------------------------------------------------------------------------------------- |  | ----
|PART I    
|Item 1.    |  | Business                                                                              |  | 1   
|Item 2.    |  | Properties                                                                            |  | 23  
|Item 3.    |  | Legal Proceedings                                                                     |  | 23  
|Item 4.    |  | Submission of Matters to a Vote of Security Holders                                   |  | 24  
|PART II   
|Item 5.    |  | Market for Registrant's Common Equity and Related Stockholder Matters                 |  | 25  
|Item 6.    |  | Selected Consolidated Financial Data                                                  |  | 25  
|Item 7.    |  | Management's Discussion and Analysis of Financial Condition and Results of Operations |  | 27  
|Item 7A.   |  | Quantitative and Qualitative Disclosures about Market Risk                            |  | 39  
|Item 8.    |  | Consolidated Financial Statements and Supplementary Data                              |  | 41  
|Item 9.    |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  |  | 84  
|PART III  
|Item 10.   |  | Directors and Executive Officers of the Registrant                                    |  | 84  
|Item 11.   |  | Executive Compensation                                                                |  | 84  
|Item 12.   |  | Security Ownership of Certain Beneficial Owners and Management                        |  | 84  
|Item 13.   |  | Certain Relationships and Related Transactions                                        |  | 84  
|PART IV   
|Item 14.   |  | Exhibits, Financial Statement Schedules and Reports on Form 8-K                       |  | 84  
|SIGNATURES |  | 89                                                                                   

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PART I

ITEM 1. BUSINESS

Cox Communications, Inc. is one of the nation's largest multi-service advanced communications companies with U.S. broadband network operations and
investments focused on cable programming, telecommunications and technology. Cox operates in one operating segment, broadband communications.

Cox's
business strategy is to utilize the technological capabilities of its advanced broadband network, its strong locally and regionally clustered cable systems and its longstanding
commitment to superior customer and community service to provide an array of entertainment and communications services to both residential and commercial customers in its markets. Today, these
services primarily include analog and digital video, high-speed Internet access and local and long-distance telephone. Additional services could include video on demand,
targeted advertising, interactive and e-commerce applications and advanced data applications and services.

In
addition, Cox has sought to utilize its expertise and position as one of the nation's premier broadband communications companies to invest in programming, telecommunications and
technology companies which are complementary to Cox's business strategy. Cox believes that these investments have contributed to the growth of its business and that its leadership position in the
industry has facilitated the growth of these investments. Cox seeks to utilize insights gained from the integrated operations of its cable systems and related programming, telecommunications and
technology investments to continue its leadership in the broadband communications industry by anticipating and capitalizing upon long-term industry trends.

Cox
is an indirect 65.5% majority-owned subsidiary of Cox Enterprises, Inc. CEI, a privately-held corporation headquartered in Atlanta, Georgia, is one of the largest
diversified media companies in the U.S. with consolidated revenues in 2001 of approximately $8.7 billion. CEI, which has a 104-year history in the media and communications industry,
also publishes 17 daily newspapers and owns or operates 15
television stations. Through its indirect majority-owned subsidiary, Cox Radio, Inc., CEI owns, operates or provides sales and marketing services for 81 radio stations clustered in 18 markets.
CEI is also an operator of wholesale auto auctions through Manheim Auctions, Inc., an indirect wholly-owned subsidiary.

Broadband Networks

Business Strategy

Cox believes that aggressive investment in the technological capabilities of its broadband network, the long-term competitive advantages of clustering
and its commitment to customer and community service will enhance its ability to continue to grow its cable operations and offer new services to existing and new customers.

Technology and Capital Improvements.Cox emphasizes high technical standards for its cable systems by
continuing to deploy fiber optic cable, upgrading the technical quality of its hybrid fiber-coaxial broadband network and investing in back office, billing, provisioning and customer interface
technologies. The result has been a significant increase in network and application capacity, quality and reliability, facilitating the delivery of additional programming and services such as digital
video, high-speed Internet access and local and long-distance telephone services.

Cox
strives to maintain the highest technological standards in the industry. Cox's cable systems have bandwidth capacities ranging from 400 to 750 megahertz (MHz) or greater. At the end
of 2001, Cox had upgraded 81% of its networks to a bandwidth capacity of 750 MHz or greater and anticipates that approximately 89% of its networks will have bandwidth capacity of 750 MHz or greater by
the end of 2002.

1

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Clustering.As an integral part of its broadband communications strategy, Cox has continually sought
the advantages and efficiencies of operating large local and regional cable system clusters. As of December 31, 2001, approximately 74% of Cox's customers were served by Cox's 15 largest
clusters which averaged more than 300,000 customers each. These clusters, represented by location, are:

|Baton Rouge
Fort Walton Beach/Pensacola
Hampton Roads
Kansas
Las Vegas |  | New England
New Orleans
Northern Virginia
Oklahoma City
Omaha |  | Orange County
Phoenix
San Diego
Tulsa
West Texas
|---------------------------------------------------------------------- |  | ------------------------------------------------------------- |  | ------------------------------------------------

Locally
and regionally clustered cable systems enable Cox to reduce expenses through the consolidation of marketing and support functions and to place more experienced management teams
at the system level who are better equipped to meet the new competitive and regulatory challenges of today's telecommunications industry. Local and regional clusters also increase the speed and
effectiveness of Cox's new product and services deployment, enhancing its ability to increase both customers and revenues.

Customer and Community Service.Strong customer service is a key element of Cox's business strategy
to deliver advanced communications services to its customers. Cox has always been committed to customer service and has been recognized by several industry groups as a leader in providing excellent
customer service. Cox believes that its high level of customer satisfaction will help it compete more effectively as it delivers its wide range of communications services, including digital video,
high-speed Internet access and local and long-distance telephone, as well as future services. Cox places special emphasis on training its customer contact employees and has
developed customer service standards and programs that exceed national customer service standards developed by the National Cable and Telecommunications Association (NCTA) and the Federal
Communications Commission (FCC).

A
key element of Cox's community service is enhancing education through the use of cable technology and programming. Cox participates in a wide range of education and community service
initiatives in its communities nationwide. Cox's major company-wide programs are:



Cable Television

Cox's cable operations represent the primary element of its integrated broadband communications strategy. As of December 31, 2001, Cox's cable systems
passed approximately 10.0 million homes and provided service to approximately 6.2 million customers.

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Cox's
cable systems offer customers packages of basic and expanded programming services that consist of broadcast signals available off-air, a limited number of broadcast
signals from so-called "superstations," numerous satellite-delivered non-broadcast channels (such as CNN, MTV, USA, ESPN, A&E, TNT, The Discovery Channel, The Learning Channel
and Nickelodeon), displays of information featuring news, weather, stock and financial market reports and public, governmental and educational access channels. Cox's cable systems also offer premium
cable services for an additional monthly charge. Such services, including Home Box Office, Showtime, Starz and Cinemax, are satellite-delivered channels that consist principally of feature motion
pictures presented without commercial interruption, sports events, concerts and other entertainment programming. Customers generally pay initial connection charges and fixed monthly fees for cable
programming and premium cable services, which constitute the principal sources of video revenues to Cox.

Operating Data.The following table indicates the growth of Cox's cable systems by summarizing basic
customers, new services, Revenue Generating Units, the number of homes passed, basic penetration levels and premium service units for each of the last five years as of December 31:

|                             |  | December 31 |  
|---------------------------- |  | ----------- | -
|
|Basic customers(a)           |  | 6,237,888   |  
|New services(b)              |  | 2,723,173   |  
|                             |  |             |  
|Revenue Generating Units (c) |  | 8,961,061   |  
|Homes passed(d)              |  | 9,979,207   |  
|Basic penetration(e)         |  | 62.5        | %
|Premium service units(f)     |  | 4,098,881   |  

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Franchises.Cable systems are constructed and operated under
non-exclusive franchises granted by local governmental authorities that may choose to award additional franchises to competing companies at any time. Franchise agreements typically contain
many requirements, such as time limitations on commencement and completion of system construction, service standards, including number of channels, types of programming and the provision of free
service to schools and certain other public institutions, and the maintenance of insurance and indemnity bonds. Local regulation of cable television operations and franchising matters is subject to
federal regulation under the Communications Act of 1934, as amended (the Communications Act) and the corresponding regulations of the FCC. See "Legislation and RegulationCable Franchising
Matters."

As
of March 2002, Cox held approximately 888 cable television franchises. These franchises generally provide for the payment of fees to the issuing authority. The Communications
Act prohibits franchising authorities from imposing annual franchise fees in excess of 5% of "gross revenues" derived from the provision of cable services and also permits the cable system operator to
seek renegotiation and modification of franchise requirements if warranted by changed circumstances. For both 2001 and 2000, franchise fee payments made by Cox averaged approximately 5.0% of gross
video revenues.

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Cox
has never had a franchise revoked, and it has never been denied a franchise renewal. Although franchises historically have been renewed, renewals may include less favorable terms and
conditions than the existing franchise. The Communications Act provides for an orderly franchise renewal process and establishes comprehensive renewal procedures which require that an incumbent
franchisee's renewal application be assessed on its own merit and not as part of a comparative process with competing applications. A franchising authority may not unreasonably withhold the renewal of
a franchise. If a franchise renewal is denied, and the franchise authority or a third party acquires the system, then the franchise authority must pay the operator the "fair market value" for the
system covered by the franchise, but with no value allocated to the franchise itself. Cox believes that it has satisfactory relationships with its franchising authorities.

Programming Suppliers.Cox has various contracts to obtain basic and premium programming from program
suppliers whose compensation is typically based on a fixed fee per customer or a percentage of Cox's gross receipts for the particular service. Some program suppliers provide volume discount pricing
structures or offer marketing support to Cox. Cox's programming contracts are generally for a fixed period of time and are subject to negotiated renewal. Cox's programming costs have increased in
recent years and are expected to continue to increase due to additional programming being provided to Cox's customers, increased costs to produce or purchase programming, inflationary increases and
other factors. Increases in the cost of programming services have been offset in part by additional volume discounts as a result of the growth of Cox and its success in selling such services to its
customers.

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. Digital
compression enables Cox to increase the channel capacity of its cable systems up to approximately 250 channels. Cox believes that its cable system upgrades, along with the implementation of digital
compression technology, will provide its customers with greater programming diversity, better picture quality, improved reliability and enhanced service. 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. Below
is a summary of Cox Digital Cable operating statistics as of December 31, 2001 and 2000:

December 312001

2000Digital cable ready homes passed

9,258,310

7,397,306Customers

1,386,039

841,824Penetration

15.0
%
11.4
%


High-Speed Internet Access

The use of computers, online services and the Internet has increased significantly over the last few years. Cox believes in the revenue opportunities of
Internet-related services and is taking advantage of these opportunities by providing high-speed Internet access and work-at-home services to residential and
commercial customers.These services deliver access to the Internet at speeds of up to 100 times faster than traditional phone modems and provide unique
online content that capitalizes on the substantial capacity of

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Cox's broadband network. Below is a summary of Cox's high-speed Internet access operating statistics as of December 31, 2001 and 2000:

December 312001

2000High-speed Internet access ready homes passed

9,057,020

7,122,773Customers

883,562

481,947Penetration

9.8
%
6.8
%


In
the first quarter of 2002, Cox completed the development of its own nationwide Internet Protocol (IP) network to deliver high-speed data and Internet services to its
subscribers. This network utilizes Cox's coaxial cable infrastructure to connect subscribers to the Internet and other online services and includes standard Internet service provider functionality,
such as web page hosting for subscribers, access to Internet news groups, multiple e-mail accounts and remote access. Cox believes that control of its network and service will result in
better customer service, reduced operating costs and enhanced future services.

Cox Digital Telephone

Cox utilizes the capacity and reliability of its advanced broadband network, which passes most homes in its markets, by providing local telephone services and
reselling long-distance services. Below is a summary of Cox Digital Telephone operating statistics as of December 31, 2001 and 2000:

December 312001

2000Telephone ready homes passed

3,338,097

2,426,580Customers

453,572

244,653Penetration

13.6
%
10.1
%Lines

583,114

334,589Lines per customer

1.29

1.37


Cox Business Services

Cox delivers telecommunications services to businesses through its competitive local exchange carrier operation, Cox Business Services. Through both its dedicated
fiber optic networks and its hybrid fiber coaxial cable networks, Cox Business Services provides business customers video, telephony and high-speed Internet access services. Below is a
summary of Cox Business Services telephony operating statistics as of December 31, 2001 and 2000:

December 312001

2000Buildings connected on-net

11,119

4,554Voice grade equivalent circuits

1,773,340

1,200,684


Advertising Revenue

Cox also derives revenues from the sale of advertising time on satellite-delivered networks such as ESPN, MTV and CNN. Currently, Cox inserts advertising on up to
48 analog channels in each of its cable systems, and has additional advertising revenue through digital channels in its major markets. Local cable advertising is often more effective and less
expensive than alternative local advertising sources. As such, Cox expects continued growth of this revenue source. In addition, Cox participates in the regional and national cable advertising market
through its investment in National Cable Communications, L.L.C., a partnership which represents cable companies in connection with the sale of advertising space to

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advertisers. National Cable Communications is the largest representation firm in spot cable advertising sales.

Investments

Cox has made substantial investments in cable programming, telecommunications and technology. The following summarizes Cox's significant investments.

Discovery Communications, Inc.Discovery provides nature, science and technology, history,
exploration and adventure programming and is distributed to customers in virtually all cable homes in the U.S. The principal businesses of Discovery are the advertiser-supported basic cable networks
The Discovery Channel, The Learning Channel, Animal Planet Network, The Travel Channel and Discovery Europe and the retail businesses of Discovery.com. In addition, through internally generated
funding, investments are being made by Discovery in building a documentary programming library. Cox owned a 24.6% equity interest in Discovery at December 31, 2001.

AT&T Corp. and AT&T Wireless Services, Inc.In August 2000, Cox consummated an
agreement with Excite@Home and AT&T pursuant to which the ownership, voting control and management of Excite@Home were restructured. In January 2001, Cox exercised its right to sell Excite@Home
shares to AT&T. However, Cox and AT&T agreed to restructure the transaction to provide a more favorable tax structure for AT&T, and in May 2001, AT&T issued 75.0 million shares of AT&T
common stock to Cox, which satisfied Cox's right to sell its Excite@Home shares to AT&T in full. Cox recognized a $307.4 million pre-tax gain in the second quarter of 2001
associated with the exercise and satisfaction of the right-to-sell agreement.

Also
in May 2001, Cox completed a private placement of 25.0 million shares of its AT&T common stock for net proceeds of $525.5 million, which approximated the fair
value of these shares. In addition, Cox tendered 15.0 million shares of AT&T common stock for approximately 17.6 million shares of AT&T Wireless common stock in a registered exchange
offer and recognized a nominal pre-tax loss. In July 2001, Cox received a stock dividend from AT&T of approximately 11.3 million shares of AT&T Wireless common stock as a
result of AT&T's split-off of AT&T Wireless. During 2001, Cox sold 5.0 million shares of AT&T Wireless common stock in open-market transactions for net proceeds of
approximately $83.1 million and recognized a nominal pre-tax loss.

During 2001,
Cox entered into a costless equity collar arrangement to manage its exposure to market price fluctuations in 10.0 million shares of its AT&T Wireless common
stock. Also during 2001, Cox entered into two costless equity collar arrangements to manage its exposure to market price fluctuations in 22.5 million shares of its AT&T common stock. Cox
pledged 10.0 million AT&T Wireless shares and 22.5 million AT&T shares as collateral for these collar transactions and, in accordance with the collar agreements, Cox deposited
7.2 million AT&T Wireless shares received in connection with the AT&T Wireless split-off in July 2001 as additional collateral under the AT&T collar transactions.

At
December 31, 2001, Cox owned 35.0 million shares of AT&T common stock and 23.9 million shares of AT&T Wireless common stock, and the estimated fair value of Cox's
interests in AT&T and AT&T Wireless were approximately $634.9 million and $343.5 million, respectively. AT&T Wireless share information reflects the redemption and exchange of AT&T
Wireless Group tracking stock for AT&T Wireless common stock as part of the AT&T Wireless split-off from AT&T in July 2001.

Subsequent
to December 31, 2001, Cox terminated all three collar transactions discussed above and received aggregate proceeds of approximately $112.8 million. In connection
with the terminations, Cox also sold 22.5 million shares of AT&T common stock and 17.2 million shares of AT&T Wireless common stock covered by these collar transactions for aggregate net
proceeds of approximately $527.0 million. In addition, Cox sold 12.5 million shares of AT&T common stock and 6.7 million shares of AT&T Wireless common stock that were not covered
by collar transactions for aggregate net proceeds of approximately

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$263.8 million. As a result, Cox no longer holds any shares of AT&T common stock or AT&T Wireless common stock.

Cox Interactive Media Joint Ventures.Cox has invested in a series of local joint ventures with Cox
Interactive Media, Inc., an indirect wholly-owned subsidiary of CEI, to develop, operate and promote advertising supported local Internet content, orCity
Sites, in the markets where Cox operates cable systems featuring high-speed Internet access. Cox owns a 49% equity interest in the joint ventures at
December 31, 2001. Cox Interactive Media owns the remaining interest in these joint ventures and is responsible for the day-to-day operations.

Sprint PCS.Sprint Corporation offers personal communications services through its PCS group. In
January 2001, Cox entered into a series of prepaid forward contracts to sell up to 19.5 million shares of its Sprint PCS common stock. In contemplation of this transaction, Cox
recognized a $239.3 million pre-tax gain associated with a one-time reclassification of the 19.5 million shares of Cox's investment in Sprint PCS common stock
from available-for-sale securities to trading securities upon adoption of Statement of Financial Accounting Standards No. 133,Accounting for
Derivative Instruments and Hedging Activities. Cox recognized an aggregate pre-tax gain of $77.4 million on these trading securities as a result of the
change in their fair value during the year ended December 31, 2001.

Also
in 2001, Cox entered into a series of costless equity collar arrangements to manage its exposure to market price fluctuations in approximately 15.8 million shares of its
Sprint PCS common stock with an aggregate fair value of $350.1 million. In addition, during 2001 Cox sold a total of 12.8 million shares of its Sprint PCS common stock for net proceeds
of approximately $318.2 million and recognized a pre-tax gain of $213.5 million.

At
December 31, 2001, Cox held approximately 91.9 million shares of unregistered Sprint PCS common stockSeries 2 and warrants and convertible preferred
stock which are exercisable for, or convertible into, approximately 10.3 million shares of Sprint PCS common stockSeries 2. Each share of Sprint PCS common
stockSeries 2 automatically converts into a share of Sprint PCS common stockSeries 1, the series traded on the New York Stock Exchange, upon the transfer of the
Series 2 shares to any holder other than Cox, Comcast Corporation and AT&T or their respective affiliates. The estimated fair value of Cox's investment in Sprint PCS was $2,444.3 million
and $2,330.3 million at December 31, 2001 and December 31, 2000, respectively.

Of
the shares of Sprint PCS common stock owned by Cox, approximately 47.2 million shares are identified with Cox's exchangeable subordinated debentures, the PRIZES, Premium PHONES
and Discount Debentures, and as described above, 19.5 million shares are pledged in connection with Cox's January 2001 prepaid forward contracts. See Note 7. "Debt" in
Part II, Item 8. "Consolidated Financial Statements and Supplementary Data."

Subsequent
to December 31, 2001, Cox terminated its series of collar arrangements and received aggregate proceeds of approximately $151.6 million. In connection with the
terminations, Cox also sold the 15.8 million shares of Sprint PCS common stock covered by the collar arrangements for aggregate proceeds of approximately $155.9 million. In addition, Cox
sold 9.4 million shares of Sprint PCS common stock that were not covered by the collar arrangements for aggregate proceeds of approximately $82.8 million.

Other.Cox also has ownership interests in Motorola, Inc., Liberate Technologies, In Demand,
L.L.C. and National Cable Communications, L.L.C, as well as certain other public and private companies in the cable programming, telecommunications and technology businesses.

Competition

Each of Cox's broadband services operates in a competitive environment. Certain facilities-based competitors offer cable and other communications services in
various areas where Cox operates its cable

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systems. Cox anticipates that facilities-based competitors will develop in other areas that Cox serves. Cox's services will likely face competition in the future from other competitors using
additional spectrum the FCC makes available from time to time in spectrum auctions.

Cable Competition.Cox's cable systems compete with a variety of news, information and entertainment
providers, including:



In
recent years, Congress has enacted legislation and the FCC has adopted regulatory policies intended to provide a favorable operating environment for existing and new technologies that
provide, or have the potential to provide, substantial competition to cable systems. These technologies include direct broadcast satellite service, commonly known as DBS, among others. DBS services
are available throughout the country through the installation of a small roof top or side-mounted antenna. DBS is the cable industry's largest competitor, and DBS subscribership continues
to grow. According to recent industry reports, conventional, medium and high-powered satellites provide video programming to over 17 million subscribers in the U.S. DBS providers
with high-power satellites typically offer more than 300 channels of programming, including programming services substantially similar to those provided by Cox's cable systems. DBS systems
use video compression technology to increase channel capacity and digital technology to improve the quality and quantity of the signals transmitted to their subscribers. Cox's video service packages,
including its digital cable services, are competitive with the programming, channel capacity and the digital quality of signals delivered to subscribers by DBS systems.

Two
major companies, DirecTV and EchoStar Communications Corporation, are currently offering nationwide high-power DBS services and are, respectively, the third and sixth
largest providers of multichannel video programming service. In October 2001, EchoStar and General Motors announced an agreement under which EchoStar would acquire Hughes Electronics, the
parent company of DirecTV. Upon closing of the transaction, which is subject to shareholder and regulatory approvals, the combined company would serve more than 16 million subscribers, which
constitutes approximately 94% of satellite television subscribers nationwide according to a recent FCC report.

The
DBS industry also provides advanced communications services. DBS providers currently offer one-way high-speed Internet access services using a telephone
return path; however, both DirecTV and EchoStar are beginning to provide two-way high-speed Internet access services. Another satellite company

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called WildBlue (formerly iSKY) reports that it plans to deliver two-way high-speed Internet access to residential and small business markets in the contiguous U.S. and
portions of Canada in 2003 using the
Ka-band and spot beam technology. Many of Cox's cable systems offer high-speed Internet services that compete with the Internet services offered by these DBS providers and by
existing Internet Service Providers (ISPs) and local and long-distance telephone companies. Real-time (i.e., streaming) and downloadable video accessible over the Internet
continue to improve in quality and are becoming more widely available, although streaming Internet video has yet to become a direct competitor to traditional video services. Cox is unable to predict
the impact that companies providing Internet services may have on its business and operations.

Federal
law allows local telephone companies to provide, directly to subscribers, a wide variety of services that are competitive with Cox's cable television services, including video
and Internet services, within and outside their telephone service areas. Telephone companies and other businesses construct and operate communications facilities using various technologies that
provide access to the Internet and distribute interactive computer-based services, data and other non-video services to homes and businesses. The deployment of Digital Subscriber Line
technology, known as DSL, allows Internet access to subscribers at data transmission speeds equal to or greater than that of modems over conventional telephone lines. Numerous companies, including
telephone companies, have introduced DSL service, and certain telephone companies are seeking to provide high-speed broadband services without regard to present service boundaries and
other regulatory restrictions. In Phoenix, Arizona and Omaha, Nebraska, where Cox operates cable systems, Qwest uses Very High-Speed Digital Subscriber Line (VDSL) technology to distribute
video, high-speed Internet access and telephone service over existing copper phone lines. Congress is currently considering legislation that, if enacted into law, will eliminate or reduce
significantly many of the regulatory restrictions on the offering of high-speed broadband services by local telephone companies. Cox is unable to predict the likelihood of success of
competing video or cable service ventures by telephone companies or other businesses. Although Cox's cable modem and broadband Internet services are very competitive with the DSL and VDSL Internet
services delivered by telephone companies, Cox cannot predict the impact these competitive ventures might have on its business and operations.

Cox's
cable systems also compete for subscribers with satellite master antenna television systems (SMATV) which receive signals transmitted by satellite at receiving facilities located
on private property such as condominiums, apartments, office complexes and other private residential developments. These systems also are developing and/or offering high-speed Internet
access and other broadband services along with video service. SMATV systems, which normally are free of many regulatory burdens imposed on franchised cable systems, often enter into exclusive
agreements with property owners or managers that may preclude franchised cable systems from serving their residents, although some states have enacted laws prohibiting such exclusive arrangements.
Courts reviewing challenges to these laws have reached varying results. Cox is unable to predict the extent to which additional competition from these services will materialize in the future or the
impact such competition would have on its operations. However, Cox is continuing to develop competitive packages of services to offer these residential and commercial developments.

Cable
systems also compete with MMDS or wireless cable systems, which are licensed to serve specific areas using low-power microwave frequencies. The FCC amended its
regulations in 1998 to provide wireless systems the flexibility to employ digital technology in delivering two-way communications services, including high-speed Internet
access. This development, along with the use of digital compression technology, has enabled wireless cable systems to deliver more channels and additional services, such as Internet service. One such
system in Phoenix, Arizona has over 10,000 customers subscribing to its Internet service and is competing with Cox's cable system. A wireless cable operator also is authorized or has commenced service
in several California communities where Cox operates. In addition, the FCC has awarded licenses in the 28 gigahertz band for a new multichannel wireless video service called Local Multipoint
Distribution Service (LMDS), which, like MMDS, is capable of transmitting voice and

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high-speed Internet access as well as video transmissions. Generally, MMDS providers are now focusing on data transmission rather than video service. In November 2000, the FCC
authorized a new terrestrial wireless service to provide video, voice, and data transmission services over spectrum previously allocated for DBS use. The FCC decision, which is being contested,
requires that the new terrestrial service operate on a "non-harmful interference" basis with the incumbent spectrum user. Cox is unable to predict whether these wireless services will have
a material impact on its business and operations.

Cox
operates its cable systems pursuant to non-exclusive franchises that are issued by a community's governing body such as a city council, a county board of supervisors or a
state regulatory agency. Federal law prohibits franchising authorities from unreasonably denying requests for additional franchises, and it permits franchising authorities to operate cable systems.
Companies that traditionally have not provided cable services and that have substantial financial resources (such as public utilities that own certain of the poles to which Cox's cables are attached)
may also obtain cable franchises and may provide competing communications services. To date, the number of competing cable systems in Cox's service areas has been relatively slight, and fewer than 2%
of Cox's total homes passed are overbuilt by other cable operators at this time. While Cox believes that the current level of overbuilding has not had a material impact on its operations, it is unable
to predict the extent to which adverse effects may occur in the future as a result of overbuilds. See "Legislation and RegulationCable Franchising Matters."

Other
new technologies also compete with Cox's cable-delivered services. The FCC has issued digital television (DTV) licenses to incumbent television broadcast licensees. DTV is capable
of delivering high-definition television pictures, multiple digital program streams, as well as CD-quality audio programming and advanced digital services such as data transfer
or subscription video.

Telephony Competition.Cox's telephone services compete with various providers of both landline and
wireless communications services, including cellular, personal communications services (PCS), specialized mobile radio (SMR) systems and satellite communications services. The switched voice and data
telecommunications market currently is dominated by local telephone companies, also known as incumbent local exchange carriers (LECs). Changes in federal law in 1996 present unprecedented
opportunities for new entrants into these markets. Under federal law, and subject to certain limitations for rural LECs, the FCC may preempt any state or local law or regulation that prohibits or has
the effect of prohibiting any entity from providing telecommunications services. The changes to federal law in 1996 were intended to open local exchange markets to competition, which has resulted in a
substantial increase in Cox's business opportunities to deliver telecommunications services over its cable broadband networks.

Advances
in communications technology, marketplace developments and regulatory and legislative changes will occur in the future. For further information concerning legislative and
regulatory matters, please see "Legislation and Regulation." New technologies and services may develop and may compete
with services offered by Cox over its communications facilities. Consequently, Cox is unable to predict the effect that ongoing or future developments might have on its business and operations.

Legislation and Regulation

Cable Television

The cable industry is regulated to varying degrees by the FCC, certain state governments and agencies and most local governments. In addition, legislative and
regulatory proposals under consideration from time to time by Congress and various federal, state and local agencies may materially affect the cable industry. The following is a summary of federal
laws and regulations affecting the growth and operation of the cable industry and a brief description of certain state and local laws.

The
Communications Act, as amended by the Cable Communications Policy Act of 1984, the Cable Television Consumer Protection and Competition Act of 1992 (the 1992 Cable Act), and the
Telecommunications Act of 1996 (the 1996 Act), establishes comprehensive national standards and guidelines for the regulation of cable television systems and allocates responsibility for enforcing
federal

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regulatory policies among the FCC, state and local governmental authorities. The courts, especially the federal courts, have an important oversight role as the statutory and regulatory provisions and
policies are interpreted and enforced by various governmental units. Court actions and regulatory proceedings will continue to refine the rights and obligations of cable operators and governmental
authorities under the Communications Act. The results of these judicial and administrative proceedings may materially impact Cox's business and operations.



The Communications Act and the regulations and policies of the FCC affect significant aspects of Cox's cable system operations, including:



Rate Regulation.The Communications Act and FCC regulations authorize certified local franchising
authorities to regulate rates for basic tier cable services and associated customer equipment and installations in communities where the cable operator is not subject to "effective competition," as
defined by federal law. The FCC has detailed rate regulations, guidelines and rate forms that franchising authorities must use in connection with their regulation of Cox's basic service and equipment
rates. Where it is regulated, Cox may modify its rates on a quarterly or annual basis to account for changes in the number of regulated channels, inflation and certain "external" costs such as
franchise and other governmental fees, copyright and retransmission consent fees, taxes, programming fees and franchise-related obligations. Additionally, Cox may modify its rates to account for
significant network upgrades. If the franchising authority determines that Cox's basic service or equipment rates are not in compliance with the FCC's regulations, it may require Cox to reduce those
rates and to refund any overcharges to subscribers with interest. Cox may appeal adverse rate decisions to the FCC and the FCC may reverse any rate decision made by a local franchising authority if
the decision is inconsistent with the FCC's rules and policies.

The
Communications Act and the FCC's regulations also:



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Approximately 243 communities served by Cox's cable systems, which represent approximately 27% of total communities served by Cox, currently regulate Cox's basic service and equipment
rates. Several complaints are still pending at the FCC that challenge the reasonableness of Cox's rates for cable programming service tiers under former statutory and regulatory provisions that were
in effect prior to April 1, 1999. Cox does not believe that the outcome of these pending rate proceedings will be material to its business and operations.

Content Requirements and Restrictions.The Communications Act and FCC regulations permit a local
commercial television broadcast station to elect once every three years to require a cable operator in the station's designated market area either:



The
Communications Act requires a cable operator to devote as much as one-third of its activated channel capacity for the mandatory carriage of local commercial television
stations. The Communications Act also gives local non-commercial television stations mandatory carriage rights; however, such stations are not given the option to negotiate retransmission
consent for the carriage of their signals by cable systems. Cable systems must negotiate retransmission consent for any additional "distant" commercial television stations (except for certain
commercial satellite-delivered independent "superstations" such as WGN), commercial radio stations and certain low-power television stations.

The
FCC has a pending administrative proceeding in which it is considering various requirements for mandatory carriage of digital television signals. In the first phase of this
proceeding, the FCC:



The
FCC continues to evaluate additional modifications to its digital broadcast signal carriage requirements. Cox cannot predict the ultimate outcome of this proceeding, or the impact any new carriage
requirements may have on the operation of its cable systems.

The
Communications Act requires Cox's cable systems to permit subscribers to purchase video programming offered by Cox on a per channel or a per program basis without the necessity of
subscribing to any tier of service, other than basic service. However, Cox is not required to comply with this requirement until October 2002 for any of its cable systems that do not have
addressable converter boxes or that have other substantial technological limitations. A limited number of Cox's systems do not have the technological capability to offer programming in the manner
required by the statute and thus currently are exempt from complying with this requirement. Cox anticipates that all of its systems will be in material compliance with this requirement by the
statutory deadline.

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One
of the underlying competitive policy goals of the 1992 Cable Act is to limit the ability of vertically integrated program suppliers from favoring affiliated cable operators over
unaffiliated program distributors. Consequently, with certain limitations, federal law generally:



The
FCC has started an administrative proceeding to determine whether to retain the current prohibition, which expires in October 2002, on exclusive programming distribution contracts between
cable operators and affiliated satellite program distributors.

The
Communications Act contains restrictions on the transmission by cable operators of obscene programming. The Communications Act also requires cable operators, upon the request of a
subscriber, to scramble or otherwise fully block any channel that is not included in the programming package purchased by the subscriber. Cable operators are also required to provide by sale or lease
a lockbox or other device that permits a subscriber to block the viewing of specific channels during specified periods selected by such subscriber.

The
FCC actively regulates other aspects of a cable operator's programming, including:



The
FCC has also initiated a regulatory proceeding to evaluate its jurisdiction and regulatory authority over the distribution of interactive television services, including advanced
instant messaging and interactive menu services.

Use of Cox's Cable Systems by the Government and Unrelated Third Parties.The Communications Act
allows local franchising authorities and unrelated third parties to have access to cable systems' channel capacity for their own use. For example, the Communications Act:



The
FCC regulates various aspects of third party use of channel capacity on cable systems, including the rates and certain terms and conditions of such commercial use.

Various
consumer groups and companies, including telephone companies and ISPs, have lobbied vigorously for local, state and federal governments to mandate that cable operators provide
capacity on their systems so that these companies and others may deliver high-speed Internet and interactive television services directly to subscribers over the cable system. Municipal
efforts to impose unilaterally so-called

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"open access" requirements on cable operators have not generally been successful and have been rejected by several federal courts, although the rationales for each decision have varied. The FCC, in
connection with its review of the AOL-Time Warner merger, imposed, together with the Federal Trade Commission, limited multiple access, technical performance and other requirements related
to the merged company's Internet and Instant Messaging platforms.

In
March 2002, the FCC adopted a decision that the provision of broadband Internet services over cable systems is an interstate "information service." The FCC also confirmed that
cable operators offering integrated cable modem services are not providing common carrier services and are not subject to common carrier requirements to offer on a stand-alone basis to unaffiliated
ISPs the transport functions underlying cable operators' Internet services. Similarly, in a rulemaking proceeding involving regulation of incumbent LEC broadband services, the FCC has proposed to
classify broadband Internet services provided by telephone companies over their own wireline facilities as "information services." The FCC also has initiated a separate rulemaking to assess issues
concerning regulation of broadband Internet services provided over cable systems, including whether the FCC can and should exercise authority to develop a new regulatory framework for facilities-based
provision of interstate information services and the role, if any, of state and local governmental authorities in regulating such services. The outcome of the FCC's rulemaking proceedings concerning
the regulation of Internet services provided by cable operators and incumbent LECs may affect significantly Cox's regulatory obligations, including whether Cox will be required to obtain additional
local authority to utilize the local rights-of-way for the delivery of high-speed Internet services or to pay local governmental franchise fees and/or federal and
state universal service fees on cable Internet revenues. Cox cannot predict the ultimate outcome of
these administrative proceedings or the impact of any new regulatory requirements on Cox's business and operations.

In
June 2000, the federal appellate court for the Ninth Circuit, which has jurisdiction over California, Nevada and Arizona (among other states), decided that cable Internet
service is not a cable service. As a result, Cox determined that it could incur some liability in its cable operations in those states by continuing to collect cable service franchise fees on revenue
derived from cable Internet service. Cox therefore notified affected local franchising authorities in those states that it could no longer collect and remit cable franchise fees on its cable Internet
service revenues pending a final determination by the FCC and the courts of whether Internet over cable constitutes a cable service under the Communications Act. For a discussion of certain related
matters, see Item 3. "Legal Proceedings."

Legislation
has been introduced previously in Congress which, among other things, would have required cable operators to offer interconnection to unaffiliated ISPs on terms and
conditions regulated by the FCC. Although the legislation was not enacted, Cox cannot predict if similar proposals will be introduced or adopted in the future or whether such proposals, administrative
proceedings or litigation will have a material impact on its business and operations.

Pole Attachments.The Communications Act requires utilities to provide cable systems and
telecommunications carriers with nondiscriminatory access to any pole, conduit or right-of-way controlled by the utility. The Communications Act also requires the FCC to
regulate the rates, terms and conditions imposed by public utilities for use of utility poles and conduit space unless state authorities have certified to the FCC that they adequately regulate pole
attachment rates, as is the case in certain states where Cox operates. In the absence of state regulation, the FCC will regulate pole attachment rates, terms and conditions only in response to a
formal complaint. The FCC's original rate formula governs the maximum rate certain utilities may charge for attachments to their poles and conduit by cable operators providing cable services and other
non-telecommunications services. The FCC also adopted a second rate formula that became effective in February 2001 and that governs the maximum rate certain utilities may charge for
attachments to their poles and conduit by companies providing telecommunications services, including cable operators. Any resulting increase in attachment rates due to the FCC's new rate formula will
be phased in over a five-year period in equal annual increments, beginning in February 2001.

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The
U.S. Supreme Court recently upheld the FCC's jurisdiction to regulate the rates, terms and conditions of cable operators' pole attachments that are simultaneously used to provide
high-speed Internet access and cable services, and a federal appellate court is currently evaluating whether the FCC's rate formulas, as applied in a specific case, provide "just
compensation" under the Federal Constitution. Cox is involved in several pending complaints filed at the FCC by various state cable associations challenging certain utilities' rate increases and the
unilateral imposition of new contract terms. The utilities in these cases have challenged, among other things, the constitutionality of the FCC's pole attachment rate formulas. Cox is unable to
predict the outcome of the legal challenge to the FCC's regulations or the ultimate impact any revised FCC rate formula, any new pole attachment
regulations or any modification of the FCC's regulatory authority might have on its business and operations

Ownership Limitations.The Communications Act authorizes the FCC to impose nationwide limits on the
number of subscribers under the control of a cable operator and on the number of channels that can be occupied on a cable system by video programmers in which the cable operator has an attributable
ownership interest. The FCC adopted cable ownership regulations and established:



The
federal courts have rejected constitutional challenges to the statutory ownership limitations; but a federal appellate court recently concluded that the FCC's nationwide cable
subscriber ownership limit and its cap on the number of affiliated programming channels an operator may carry on its cable systems were unconstitutional and that certain of its ownership attribution
rules were unreasonable. The FCC has initiated a rulemaking proceeding to evaluate the feasibility of new horizontal and vertical cable ownership limitations and revised attribution standards. Cox is
unable to predict the outcome of this FCC proceeding or the impact any new FCC ownership restrictions or attribution rules might have on its business and operations.

The
1996 Act eliminated the statutory prohibition on the common ownership, operation or control of a cable system and a television broadcast station in the same market. The FCC
eliminated its regulations precluding the cross-ownership of a national broadcasting network and a cable system, and a federal appellate court recently ordered the FCC to repeal its regulations that
prohibit the common ownership of other broadcasting interests and cable systems in the same geographical areas. This rule prohibited Cox from owning or operating a cable system in the same area in
which CEI or one of CEI's subsidiaries owns or operates a television broadcast station. If the court's ruling becomes finalthat is, if the court's decision either is not appealed or is
upheld on appealCox may obtain an enhanced degree of flexibility in structuring its cable operations.

Local Telephone Company Ownership of Cable Systems.Prior to the 1996 Act, federal cross-ownership
restrictions limited entry into the cable business by potentially strong competitors such as telephone companies. The 1996 Act modified the regulatory relationship between local telephone companies
and cable television operators by:



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Under
the 1996 Act, local telephone companies and other entities may provide video programming services as traditional cable operators or, among other things, as open video system (OVS)
operators, subject to certain conditions, including setting aside a portion of their channel capacity for use by unaffiliated program distributors on a non-discriminatory basis. OVS
operators are exempt from several of the regulatory obligations that currently apply to cable operators. However, certain restrictions and requirements remain applicable to OVS operators, including,
without limitation, the obligation to obtain FCC certification for OVS operations and any necessary local operating authority, and the obligation to comply with the FCC's sports blackout, network
non-duplication, syndicated exclusivity and mandatory carriage rules.

Under
the 1996 Act, local telephone companies providing cable service through cable systems or open video systems are not bound by common carrier interconnection obligations, which
otherwise would require the telephone company to make available on a nondiscriminatory basis capacity for the provision of cable service directly to subscribers. In addition, telephone companies are
not required to obtain a certification under Section 214 of the Communications Act to establish or operate a video programming delivery system. The FCC has ruled that cable operators may elect
to operate OVS, but only if they are subject to effective competition. The FCC's rules prohibit a cable operator from terminating an existing franchise agreement to become an OVS operator.

General Ownership Limitations.The Communications Act generally prohibits Cox, with certain limited
exceptions, from owning and/or operating a SMATV or a wireless cable system in any area where Cox provides franchised cable service. The FCC's rules, however, permit a cable operator to offer service
through SMATV systems in the operator's existing franchise area so long as the service is offered according to the terms and conditions of the cable operator's local franchise agreement.

In
1998, the FCC initiated a DBS rulemaking proceeding, which, among other things, sought comments on whether the FCC should implement cross-ownership restrictions between DBS and cable
operators. That proceeding remains pending, and no FCC rule currently prohibits cross-ownership between DBS and cable system operators. The FCC has stated that it would evaluate cross-ownership issues
case-by-case in the context of DBS license transfer proceedings.

Other Regulatory Requirements of the Communications Act and the FCC.The Communications Act and the
FCC's rules also include provisions concerning, among other things:



The
FCC adopted cable inside wiring rules to provide specific procedures for the disposition of residential home wiring and internal building wiring where a subscriber terminates service
or where an incumbent cable operator is forced by a building owner to terminate service in a multiple dwelling unit

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building. The FCC is also considering additional rules relating to inside wiring that, if adopted, may disadvantage incumbent cable operators.

The
FCC also adopted regulations regarding compatibility between cable systems and consumer electronics equipment. The FCC's rules assure the competitive availability of customer
premises equipment, such as set-top converters or other navigation devices, which are used to access services offered by cable systems and other multichannel video programming
distributors. Cable operators are required to separate security from non-security functions in certain subscriber premises equipment by making available modular security components that
would function in set-top units purchased or leased by subscribers from retail outlets. Effective January 1, 2005, Cox will be prohibited from selling or leasing new navigation
devices or converter boxes that integrate both security and non-security functions. Cox, however, will not be required to discontinue the leasing of older converters that include
integrated security functions if those converters were provided to subscribers before January 1, 2005.

The
FCC also actively regulates other aspects of Cox's cable operations and has adopted regulations implementing its authority and jurisdiction under the Communications Act. The FCC may
enforce its regulations through the imposition of substantial fines, the issuance of cease and desist orders and the imposition of other administrative sanctions such as the revocation of FCC licenses
needed to operate certain transmission facilities often used in cable operations. Local franchising authorities are also permitted to enforce the FCC's technical and consumer protection standards.
Pending FCC proceedings may change existing rules or lead to new regulations. Cox is unable to predict the impact that any further FCC rule changes may have on its business and operations.



Cox's cable systems utilize local and distant television and radio broadcast signals in their channel line-ups. This programming is protected by
federal copyright law. Cox, however, generally does not obtain licenses to display this programming directly from its owner or owners. Consequently, Cox must comply with a federal compulsory licensing
process that covers television and radio broadcast signals. In exchange for filing certain reports and contributing a percentage of its revenues to a federal copyright royalty pool, Cox obtains
blanket permission to retransmit the copyrighted material carried on broadcast signals. The nature and amount of future copyright payments for broadcast signal carriage cannot be predicted at this
time. Increases in such payments may be passed through to subscribers as external costs under the FCC's cable rate regulations.

The
Copyright Office has recommended that Congress revise both the cable and satellite compulsory copyright licenses. Congress modified the satellite compulsory license in a manner that
permits DBS providers to be more competitive with cable operators such as Cox. The possible simplification, modification or elimination of the compulsory copyright license is the subject of continuing
legislative review. The elimination or substantial modification of the cable compulsory license could adversely affect Cox's ability to obtain suitable programming and could substantially increase the
cost of programming that remains available for distribution to Cox's subscribers. Cox cannot predict the outcome of this legislative activity.

Cox
distributes to subscribers programming that contains music, including local advertising, local origination programs, access channels and pay-per-view events.
The right to utilize this music is often controlled by music rights organizations that negotiate on behalf of their members for the payment of license fees covering each performance. The cable
industry previously reached an agreement with one of these organizations for a standard license covering the performance of music in programs and advertising originated by cable operators and in
pay-per-view events. Cable industry representatives recently negotiated standard license agreements with the two remaining sizable music performing rights organizations
covering locally originated programming, including advertising inserted by the cable operator in programming produced by other parties. Cox expects that these organizations will now seek to execute

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these standard agreements with most cable operators, including Cox. Although each of these agreements will require the payment of music license fees for earlier time periods and for future periods,
Cox does not believe such license fees will have a significant impact on its business and operations.



Because cable systems use local streets and rights-of-way, they are subject to state and local regulation, which typically is implemented
through the franchising process. Consistent with the Communications Act, state and/or local officials are usually involved in franchisee selection and in establishing requirements for system
capabilities and construction, insurance, basic service rates, consumer relations, billing practices and community-related programming and services. Although franchising matters normally are resolved
at the local level through a franchise agreement and/or a local ordinance, the Communications Act provides certain guidelines and requirements that govern a cable operator's relationship with its
local franchising authority. For example, the Communications Act:



Cox's
franchises typically require the periodic payment of fees to franchising authorities of up to 5% of "gross revenues" (as defined by each franchise agreement). Under the
Communications Act and FCC rules, these franchise fees may be passed on to subscribers and separately itemized on subscriber bills. In

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October 2001, the FCC ruled that all franchise fees imposed on cable operators may be passed through and itemized on subscriber bills regardless of the source of the revenues on which they
were assessed, and that such fees may be itemized and passed through to subscribers at any time at the cable operator's discretion. Local franchising authorities have appealed the FCC's decision. In
connection with its recent decision classifying cable Internet services as interstate information services, the FCC stated that revenues derived from cable operators' Internet services should not be
included in the revenue base from which franchise fees are calculated. Cox anticipates that the FCC's decision will be challenged in court by local governmental and consumer groups. Cox is unable to
predict the ultimate resolution of these matters, but does not expect that any additional franchise fees it may be required to pay will be material to Cox's business and operations.

The
Communications Act contains franchise renewal procedures designed to protect cable operators against arbitrary denials of renewal. Even if a franchise is renewed, however, the
franchising authority may seek to impose as a condition of renewal new and more onerous requirements, such as significant upgrades in facilities and services or increased franchise fees. Some
franchising authorities may also attempt to impose so-called "open access" regulations as a condition of renewal. See "Use of Cox's Cable Systems by the Government and
Unrelated Third Parties." Similarly, if a franchising authority's consent is required for the purchase or sale of a cable system or franchise, the franchising authority may attempt to impose
burdensome or onerous franchise requirements as a condition for such consent.

Historically,
cable operators providing satisfactory services to their subscribers and complying with the terms of their franchises typically have obtained franchise renewals. Cox
believes it generally has met the terms of its franchises and has provided high-quality service. Cox therefore anticipates that its future franchise renewal prospects generally will be
favorable. Nevertheless, although the Communications Act provides certain procedural protections, no assurance can be given that franchise renewals will be granted or that renewals will be made on
similar terms and conditions. Upon receipt of a franchise, the cable system owner usually assumes a broad range of obligations to the issuing authority that directly affect the system's business.
Franchise terms and conditions vary materially from jurisdiction to jurisdiction, and even from city to city within the same state. Historically, these terms and conditions range from reasonable to
highly restrictive or burdensome.

The
Communications Act places certain limitations on a franchising authority's ability to control cable system operation, and courts have from time to time reviewed the constitutionality
of several general franchise requirements, including franchise fees and access channel requirements, often with inconsistent results. Federal law immunizes franchising authorities from monetary damage
awards arising from their regulation of cable systems or decisions regarding franchise grants, renewals, transfers and amendments.

A
number of states subject cable systems to the jurisdiction of centralized state governmental agencies, some of which impose public utility-type regulation on cable
operators. Attempts in other states to
regulate cable systems are continuing and can be expected to increase. To date, the states in which Cox operates that have enacted such state level regulation are Connecticut, Massachusetts and Rhode
Island. State and local franchising jurisdiction is not unlimited, however, and must be exercised in accordance with federal law.

Telecommunications

The telecommunications services currently offered by Cox affiliates are subject to varying degrees of federal, state and local regulation. The FCC exercises
jurisdiction over all aspects of interstate and international telecommunications services and the facilities used to provide those services. The 1996 Act established a national policy of promoting
local exchange competition and set standards to govern relationships among telecommunications providers, including, among others, the interconnection of competitive carriers and the unbundling of
monopoly incumbent LEC services. The statute expressly preempts legal barriers to telecommunications competition under state and local laws. The 1996 Act also

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establishes new requirements for the maintenance of universal telephone service and imposes obligations on telecommunications providers to maintain customer privacy. Cox's ability to offer telephone
services in competition with incumbent LECs and others will be affected by the degree and form of regulatory flexibility ultimately afforded by the FCC to incumbent LECs, and will depend, in part,
upon FCC determinations regarding telecommunications markets generally.

Local Telephone Competition Rules.While the current switched voice and data market is dominated by
incumbent LECs, the 1996 Act presents unprecedented opportunities for new entrants into these markets, such as Cox. Because LECs historically have had exclusive state franchises to provide telephone
services, they have established monopoly relationships with their customers. Under the 1996 Act, and subject to certain limited exemptions for rural telephone companies, the FCC may preempt any state
law or regulation that prohibits or has the effect of prohibiting any entity from providing telecommunications services.

The
1996 Act also imposes access and interconnection requirements on incumbent LECs to open their networks to competitors. State regulators are responsible for arbitrating
interconnection disputes that arise between incumbent LECs and new entrants. In addition, the 1996 Act specifies procedures for state commissions to review and approve interconnection agreements
entered into between new entrants and incumbent LECs. The FCC adopted pricing standards and negotiation and arbitration guidelines that the states must follow in reviewing interconnection agreements
between incumbent LECs and their competitors. In 1997, a federal appellate court vacated certain portions of the FCC's rules, but in January 1999, the U.S. Supreme Court reversed the lower
court and upheld, for the most part, the FCC's interconnection rules. The Supreme Court, however, instructed the FCC to reconsider its determination regarding the extent to which incumbent LECs must
provide unbundled elements of their networks to competitors. In response to the Supreme Court's decision, the FCC eliminated several items from its previous list of unbundled network elements and
provided a framework for the phase-out of other network elements. The FCC's revised unbundling rules are designed to advance the development of facilities-based competition and to provide
incentives for incumbent and competitive carriers to invest in their own facilities and to innovate.

On
July 18, 2000, a federal appellate court vacated the FCC's pricing rules for incumbent LEC pricing of unbundled network elements and interconnection. The U.S. Supreme Court
heard oral argument on October 10, 2001 regarding the FCC's interconnection pricing rules. Cox cannot predict the ultimate resolution of these matters. However, if the Supreme Court does not
reinstate the FCC's interconnection pricing rules, Cox's interconnection costs could increase. In addition, the FCC is considering modifying its rules governing intercarrier competition. If the FCC
modifies these rules, Cox's costs for interconnection could decrease, but Cox also may lose revenues it now receives for providing interconnection to other LECs, including incumbent LECs.

The
terms of intercarrier compensation for local calls to Internet service providers have been the subject of ongoing disputes between competitive local exchange carriers (known as
CLECs) and incumbent LECs at state commissions and the FCC. Although most states have ruled otherwise, the FCC has twice held that such traffic is not subject to the standard compensation for
termination of local calls. The FCC's initial determination was vacated and remanded to the FCC by a federal appellate court and the FCC's second order is the subject of a pending appeal in that
court. If the FCC's rules are upheld, Cox may receive significantly reduced reciprocal compensation payments in the future. In addition, Cox has had repeated disputes with incumbent LECs concerning
their refusal to pay reciprocal compensation for Internet-bound traffic and one such dispute is the subject of a pending complaint at the FCC. Cox cannot be assured that it will recover reciprocal
compensation for traffic delivered to ISPs to which Cox believes it is entitled under its existing interconnection agreements.

Under
the 1996 Act, new wireline entrants such as Cox are subject to federal regulatory requirements for the provision of local exchange service in any market. Specifically, the 1996 Act
required the FCC to

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implement rules under which all LECs must provide telephone number portability, dialing parity, reciprocal compensation for transport and termination of local traffic, resale, and access to
rights-of-way. The 1996 Act also requires state commissions to review and approve voluntarily negotiated interconnection agreements and to arbitrate unresolved compulsory
interconnection negotiations between new entrants and incumbent LECs. These requirements also place burdens on new entrants that may benefit their competitors. In particular, the resale requirement
means that a company could seek to resell services using the facilities of a new entrant such as Cox without making a similar investment in facilities. In addition to incumbent LECs and existing
competitive access providers, new entrants potentially capable of offering telecommunications services include cable companies, electric utilities, long-distance carriers, microwave
carriers, terrestrial and satellite wireless service providers, resellers and private networks built by large end-users or groups of these entities in combination.

On
December 5, 2001, the U.S. Supreme Court heard oral argument in a dispute over whether federal courts can review state public utility commission (PUC) decisions that arise when
they arbitrate interconnection disputes between LECs and competitive carriers. The Communications Act permits carriers to appeal PUC decisions to United States district courts. Several state
commissions have challenged this provision based on the Eleventh Amendment, which gives states immunity from suits in federal court. Should the Supreme Court determine that states are immune from such
suits, all carriers, including Cox, would be limited in their ability to challenge state arbitration decisions in federal court.

Access Charges.On April 27, 2001, the FCC adopted an order to prevent CLECs from using the
FCC's tariff rules to impose excessive access charges on long distance carriers. The FCC implemented a regime designed to cause the access charge rates of CLECs to decrease over time until they reach
the rates charged by incumbent LECs. At the same time, the FCC held that a long distance carrier's refusal to serve the customers of a CLEC whose access charges comply with the FCC's benchmarks
generally would constitute a violation of the duty of all common carriers to provide service upon reasonable request. Consequently, while the access charges collected by CLECs, including Cox, could
decline under the FCC's order, the order also will ensure that the CLEC's customers have access to a fully interconnected telecommunications network.

Universal Service.One of the goals of the Communications Act is to extend telephone service to all
citizens of the United States, that is, to provide universal service. This goal was achieved primarily by state commissions maintaining the rates for basic local exchange service at an affordable
level. Prior to AT&T's divestiture of its local exchange affiliates pursuant to the AT&T Modified Final Judgment, most observers accepted that incumbent LECs were able to maintain relatively low local
rates by subsidizing them with revenues from business and long-distance toll services, and by subsidizing rural service at the expense of urban customers. The extent of these subsidies has
been widely disputed and the incumbent LECs that possess this information generally have not made it available for review and verification.

The
1996 Act continues the goal of preserving and advancing universal service by requiring the FCC to establish an explicit mechanism for subsidizing service to those who might otherwise
drop local telephone service. The rules adopted by the FCC in its Universal Service orders require telecommunications carriers (subject to limited exemptions) to contribute to funding existing
universal service programs for high-cost carriers and low income customers and to new universal service programs for schools, libraries and rural health care providers. The FCC has adopted
a program to fund high-cost service areas that preserves many of the existing subsidies. The FCC is currently considering recommendations of the Rural Task Force, as submitted by the
Federal-State Joint Board on Universal Service, for implementing a rural universal service program. Among other recommendations, the proposal calls for an expansion of the services covered by the
Universal Service Fund. If adopted, this recommendation could substantially increase carrier contributions to the Universal Service Fund. Moreover, the FCC's recent tentative conclusion that broadband
Internet services provided by telephone companies should be classified as information services under the Communications Act has led to questions

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regarding whether similar services provided by cable operators should be subject to universal service fund contributions.

Under
the proposed contribution factors for the second quarter of 2002, Cox will be required to contribute approximately $6.9 million of its interstate telecommunications revenues
to the federal Universal Service Fund. In addition to the federal universal service plan, most or all states likely will adopt their own universal service support mechanisms.

Depending
upon how the FCC completes the implementation of its statutory mandate to preserve and promote universal service and how states adjust their existing programs or create new
programs, this subsidy mechanism may provide an additional source of revenue to those LECs or other carriers (e.g., wireless providers) willing and able
to provide service to markets that are less financially desirable either due to the high cost of providing service or the limited revenues that might be available from serving a particular subset of
customers in an area, such as residential customers.

Another
goal of the 1996 Act is to increase competition in the telecommunications services market, thereby reducing the need for continuing regulation of these services. To this end, the
1996 Act requires the FCC to streamline its regulation of incumbent LECs and permits the FCC to refrain from regulating particular classes of telecommunications services or providers. The FCC has
established a framework for granting certain LECs relief from the FCC's rate level, rate structure and tariffing rules once these LECs satisfy certain competitive criteria, but it has not granted any
requests under this framework. To obtain relief, an incumbent must demonstrate that sufficient competition has developed in the incumbent's market for special access and high capacity dedicated
transport services to warrant relaxation of the FCC rules for that market. There continues to be activity at both the FCC and the courts by incumbent LECs requesting increased pricing flexibility for
special access and high-capacity transport service. While the FCC has granted requests for regulatory forbearance from CLECs, it has not granted such requests from incumbent LECs.

Telephone Numbering Resources.Local telephone companies must obtain telephone numbering resources to
provide service to their customers. In a series of proceedings over the past six years, the FCC has adopted rules that could affect Cox's access to and use of numbering resources. The most significant
FCC rules are intended to promote the efficient use of numbering resources by all telecommunications carriers. In orders released in March and December 2000 and in December 2001, the FCC
adopted rules that require carriers to meet specified number usage thresholds before they can obtain additional numbering resources; to share blocks of telephone numbers, a requirement known as
"number pooling"; and to provide detailed reports on their number usage, which will be subject to third-party audits. The FCC also has adopted rules and orders that delegate to states a larger role in
number conservation, including expanded rights to ration access to numbering resources. Several states served by Cox, including California, Connecticut, Louisiana and Oklahoma, have sought number
conservation authority from the FCC.

State Telecommunications Regulation.In addition to federal rules and regulations that apply to Cox's
telephony operations, state commissions regulate, to varying degrees, the intrastate services of landline telecommunications providers including those of Cox's landline affiliates. New entrants
providing local exchange services typically must apply for and receive state certification and operate in accordance with state commission pricing, terms and quality-of-service
regulations. Under the 1996 Act, state commissions also must review interconnection agreements entered into between incumbent LECs and new entrants, as well as enforce the terms of disputed
agreements. If a state commission refuses to fulfill these responsibilities, carriers may seek relief from the FCC. Cox and several other carriers have been required to seek such relief for matters
arising in Virginia because the Virginia State Corporation Commission has determined that it will not consider matters brought under the 1996 Act. The Virginia-related matters now pending before the
FCC include disputes concerning the payment of reciprocal compensation for Internet-bound traffic to Cox and other carriers and the arbitration of the terms of interconnection agreements between
Verizon and three CLECs, including Cox.

22

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State commissions also may choose to assess universal service funding contributions from new carriers provided that a state's program is consistent with the FCC's universal service
rules. State commissions also are playing an increasing role in telephone number assignment and number conservation policies.

The
foregoing summary does not purport to describe all present and proposed federal, state and local regulations and legislation affecting the cable or telephony industries. Other
existing federal regulations, copyright licensing and, in many jurisdictions, state and local franchise requirements currently are the subject of a variety of judicial proceedings, legislative
hearings, and administrative and legislative proposals that could alter, in varying degrees, the manner in which cable or telephony systems operate. Neither the outcome of these proceedings nor their
impact upon the cable or telecommunications industries can be predicted at this time.

Employees

At December 31, 2001, Cox had approximately 20,700 full-time-equivalent employees. Cox considers its relations with its employees
to be satisfactory.

ITEM 2.    PROPERTIES

Cox's principal physical assets consist of cable operating plant and equipment, including signal receiving, encoding and decoding devices, headends and
distribution systems and customer house drop equipment for each of its cable systems. The signal receiving apparatus typically includes a tower, antenna, ancillary electronic equipment and earth
stations for reception of satellite signals. Headends, consisting of associated electronic equipment necessary for the reception, amplification and modulation of signals, are located near the
receiving devices. Cox's distribution system consists primarily of coaxial and fiber optic cables and related electronic equipment. Customer devices consist of decoding converters, cable modems and
telephone network interface units. The physical components of cable systems require maintenance and periodic upgrading to keep pace with technological advances.

Cox's
cable distribution plant and related equipment are generally attached to utility poles under pole rental agreements with local public utilities, although in some areas the
distribution cable is buried in underground ducts or trenches. Cox owns or leases parcels of real property for signal reception sites
(antenna towers and headends), microwave facilities and business offices in each of its markets and leases most of its service vehicles. Cox believes that its properties, both owned and leased, taken
as a whole, are in good operating condition and are suitable and adequate for Cox's business operations.

ITEM 3. LEGAL PROCEEDINGS

Cox and certain subsidiaries are defendants in two putative subscriber class action suits in state courts in Louisiana and Texas initiated between
October 17, 1997 and December 17, 1998. The suits challenge the propriety of late fees charged by the subsidiaries to customers who fail to pay for services in a timely manner. The suits
seek injunctive relief and various formulations of damages under certain claimed causes of action under various bodies of state law. These actions are in various stages of defense and are being
defended vigorously. The outcome of these matters cannot be predicted at this time. Five similar suits that had been pending in Nevada, Indiana, Arizona and Florida have been settled and dismissed;
one similar suit that had been pending in Nebraska was dismissed with prejudice.

Cox's
subsidiary Cox California Telcom, L.L.C. (Cox Telcom) is a defendant in three putative class action lawsuits and two additional non-class action suits that were filed
in state and federal courts in California relating to the unauthorized publication of information pertaining to approximately 11,400 Cox Telcom telephone customers in the PacBell 2000 White Pages and
411 directory and in the Cox TelTrust information directory. The lawsuits assert various causes of action for breach of contract, invasion of privacy, negligence, commission of fraudulent or unfair
business acts and practices in violation of California Business & Professions Code Section 17-200 and violation of California Public Utilities Code Section 2891 and
2891.1. The suits seek damages and injunctive relief. Cox Telcom, along with PacBell, has

23

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completed the process of reclaiming tainted PacBell White Pages and reprinting and redistributing corrected books. The parties to two of the class action lawsuits have entered into a stipulation of
settlement, which was approved on March 30, 2001. The third class action has been settled and was dismissed with prejudice on June 27, 2001. Cox intends to defend the remaining
non-class actions vigorously, though the outcome cannot be predicted at this time.

Jerrold
Schaffer and Kevin J. Yourman, on May 26, 2000 and May 30, 2000, respectively, filed class action lawsuits in the Superior Court of the State of California for the
County of San Mateo on behalf of themselves and all other shareholders of At Home Corporation, also referred to asExcite@Home, as of March 28,
2000 seeking (a) to enjoin consummation of a March 28, 2000 letter agreement among Excite@Home's principal investors, including Cox, and (b) unspecified compensatory damages. Cox
and David Woodrow, Cox's former Executive Vice President, Business Development, among others, are named defendants in both lawsuits. Mr. Woodrow formerly served on the Excite@Home board of
directors. See Note 5. "Investments" in Part II, Item 8. "Consolidated Financial Statements and Supplementary Data." The plaintiffs, who continue to seek unspecified compensatory
damages, assert that the defendants breached purported fiduciary duties of care, candor and loyalty to the plaintiffs by entering into the letter agreement and/or taking certain actions to facilitate
the consummation of the transactions contemplated by the letter agreement. Pursuant to an agreement with the plaintiffs, the defendants have yet to answer the complaint. On February 26, 2001,
the Court stayed the action on grounds of forum non conveniens. A related suit styled Linda Ward, et al. v. At Home Corporation
(No. 418233) was filed on September 6, 2001 in California Superior Court in San Mateo County. On February 7, 2002, the Court consolidated the Ward action with the Schaffer/Yourman
action, thereby staying the case. Cox intends to defend these actions vigorously, though the outcome cannot be predicted at this time.

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

On
February 6, 2001, plaintiffs Kimberly D. and William L. Bova, on behalf of themselves individually and a putative class of subscribers, sued Cox in United States District Court
for the Western District of Virginia. The putative class includes persons outside of California, Nevada, Arizona and Idaho who on or after November 1, 2000 purchased broadband Internet access
services from Cox and paid a franchise fee on those services. The suit asserts that the collection of franchise fees by Cox from its broadband Internet access service subscribers outside of the Ninth
Circuit is unlawful under the Telecommunications Act of 1996 and seeks restitution of all such fees collected. On October 19, 2001, the Court took the matter off the trial calendar pending a
ruling by the United States Supreme Court in NCTA v. Gulf Power Co., No. 00-832. Cox intends to defend the action vigorously, though the outcome cannot be predicted at this time.

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

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

None.

24

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PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The information required by this Item is incorporated by reference to the section entitled "Shareholder Information" of Cox's 2001 Summary Annual Report to
Shareholders. See Exhibit 13. "Portion of the Summary Annual Report."

ITEM 6.    SELECTED CONSOLIDATED FINANCIAL DATA

Please see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 7. for a discussion of events which affect the
comparability of the information reflected in the selected consolidated financial data for each of the years in the three year period ended December 31, 2001.

|                                   |                                                                          | Year Ended December 31                                                   |  
|---------------------------------- | ------------------------------------------------------------------------ | ------------------------------------------------------------------------ | -
|
|
|Statement of Operations Data       |                                                                          |                                                                          |  
|                                   | Revenues                                                                 |                                                                          | $
|                                   | Operating income (loss)                                                  |                                                                          |  
|                                   | Interest expense                                                         |                                                                          |  
|                                   | Equity in net losses of affiliated companies                             |                                                                          |  
|                                   | Gain on investments, net                                                 |                                                                          |  
|                                   | Gain on issuance of stock by affiliated companies                        |                                                                          |  
|                                   | Income (loss) before cumulative effect of change in accounting principle |                                                                          |  
|                                   | Cumulative effect of change in accounting principle                      |                                                                          |  
|                                   | Net income (loss)                                                        |                                                                          |  
|                                   | Basic net income (loss) per share(a)                                     |                                                                          |  
|                                   |                                                                          | Income (loss) before cumulative effect of change in accounting principle |  
|                                   |                                                                          | Cumulative effect of change in accounting principle                      |  
|                                   |                                                                          |                                                                          |  
|                                   | Basic net income (loss) per share                                        |                                                                          | $
|                                   |                                                                          |                                                                          |  
|                                   | Diluted net income (loss) per share(a)                                   |                                                                          |  
|                                   |                                                                          | Income (loss) before cumulative effect of change in accounting principle |  
|                                   |                                                                          | Cumulative effect of change in accounting principle                      |  
|                                   |                                                                          |                                                                          |  
|                                   | Diluted net income (loss) per share                                      |                                                                          | $
|                                   |                                                                          |                                                                          |  
|Balance Sheet Data                 |                                                                          |                                                                          |  
|As of December 31                  |                                                                          |                                                                          |  
|                                   | Total assets                                                             |                                                                          | $
|                                   | Debt (including amounts due to CEI)                                      |                                                                          |  
|                                   | Cox-obligated capital and preferred securities of subsidiary trusts      |                                                                          |  
|Other Operating and Financial Data |                                                                          |                                                                          |  
|                                   | Operating cash flow(b)                                                   |                                                                          | $
|                                   | Operating cash flow margin(b)                                            |                                                                          |  
|                                   | Ratio of debt to operating cash flow(b)(c)                               |                                                                          |  
|                                   | Cash flows provided by operating activities                              |                                                                          | $
|                                   | Cash flows used in investing activities                                  |                                                                          |  
|                                   | Cash flows provided by financing activities                              |                                                                          |  

25

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|                            |  | As of December 31 |  
|--------------------------- |  | ----------------- | -
|
|Customer Data               |  |                   |  
|Basic customers(d)          |  | 6,237,888         |  
|New services(e)             |  | 2,723,173         |  
|                            |  |                   |  
|Revenue Generating Units(f) |  | 8,961,061         |  
|Homes passed(g)             |  | 9,979,207         |  
|Basic penetration(h)        |  | 62.5              | %
|Premium service units(i)    |  | 4,098,881         |  

---

26

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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the "Consolidated Financial
Statements and Supplementary Data" in Item 8.

Overview

Cox Communications, Inc., an indirect 65.5% majority-owned subsidiary of Cox Enterprises, Inc., is one of the nation's largest multi-service
advanced communications companies with U.S. broadband network operations and investments focused on cable programming, telecommunications and technology. Cox operates in one operating segment,
broadband communications.

Cox's
business strategy is to utilize the technological capabilities of its advanced broadband network, its strong locally and regionally clustered cable systems and its longstanding
commitment to superior customer service to provide an array of entertainment and communications services to both residential and commercial customers in its markets. Today, these services primarily
include analog and digital video, high-speed Internet access and local and long-distance telephone. Additional services could include video on demand, Internet to the
television, targeted advertising and other types of interactive and e-commerce applications and services.

Recent Cable System Transactions

2000 Acquisitions and Transactions

In January 2000, Cox completed the acquisition of cable systems serving approximately 522,000 customers in Kansas, Oklahoma and North Carolina from
Multimedia Cablevision, Inc., a subsidiary of Gannett Co., Inc., for $2.7 billion.

In
March 2000, Cox and AT&T Corp. exchanged 50.3 million shares of AT&T common stock previously held by Cox for the stock of AT&T subsidiaries that own certain cable
systems serving approximately 495,000 customers and certain other assets and liabilities, including cash. Cox received: cable systems serving Oklahoma and Louisiana; the remaining 20% ownership
interest in a partnership in which Cox acquired an 80% interest through its merger with TCA Cable TV, Inc.; Peak Cablevision LLC, which has customers in Oklahoma, Arkansas, Utah and Nevada; and
approximately $798.0 million in other assets and liabilities, including cash. Cox recognized a pre-tax gain of $775.9 million in connection with this transaction.

These
transactions are collectively referred to as the2000 transactions.

1999 Acquisitions and Transactions

In August 1999, Cox completed its merger with TCA, a cable television operator serving approximately 883,000 customers in Texas, Arkansas, Louisiana and
four other states for $1.6 billion in cash, 38.3 million shares of Cox common stock and assumed indebtedness of $540.0 million. Upon completion of the merger, Cox repaid
$340.0 million of the assumed TCA debt. Cox also acquired VPI Communications, Inc., an affiliate of TCA, and TCA's interest in two majority-owned partnerships in connection with the TCA
merger.

Also
in August 1999, Cox exchanged its cable systems in Massachusetts, serving more than 54,000 customers, for MediaOne properties in Connecticut and Rhode Island, serving 51,000
customers, and cash. Cox recognized a pre-tax gain of $77.4 million in connection with this transaction.

In
October 1999, Cox completed the acquisition of cable systems serving more than 260,000 customers in northern Virginia from Media General, Inc. for $1.4 billion.

27

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Also
in October 1999, Cox reorganized its partnership with Time Warner Entertainment Company, L.P., under which Cox acquired control of the cable system serving Fort Walton Beach,
Florida and received $104.5 million, and Time Warner acquired control of the cable system serving Staten Island, New York. Cox recognized a pre-tax gain of $94.8 million in
connection with this reorganization.

These
transactions are collectively referred to as the1999 transactions.

Investments

See "Investments" in Part I, Item 1. "Business" and Note 5. "Investments" in Part II, Item 8. "Consolidated Financial Statements and
Supplementary Data."

Results of Operations

2001 compared with 2000

The results of operations include the effects of the 2000 transactions as of their respective acquisition dates.

Total
revenues for the year ended December 31, 2001 were $4,067.0 million, a 16% increase over revenues of $3,506.9 million for the year ended December 31,
2000. This increase includes the effects of:



Programming
costs were $971.1 million for the year ended December 31, 2001, an increase of 13% over the same period in 2000. This increase is due to programming rate
increases implemented in January 2001, digital customer growth and channel additions. Selling, general and administrative expenses for the year ended December 31, 2001 increased 31% to
$1,674.9 million due primarily to:



In
September 2001, Excite@Home, Cox's primary high-speed Internet provider, filed for protection under Chapter 11 of the U.S. Bankruptcy Code. Subsequently, Cox and
Excite@Home entered into two separate agreements so that Cox would continue to receive high-speed Internet access services from Excite@Home for existing and new customers through
February 28, 2002 and so that Excite@Home would provide minimal services to Cox related to the transition of Cox's customers to Cox High Speed Internet service. In February 2002, Cox
completed the transition of its customers from Excite@Home's high-speed Internet service to Cox High Speed Internet service.

Depreciation
and amortization for the year ended December 31, 2001 increased to $1,539.2 million from $1,236.5 million for the comparable period in 2000 due to Cox
continuing to invest significantly in its broadband network in order to deliver additional programming and services. Operating loss for the year ended December 31, 2001 was
$118.3 million, compared to operating income of $140.8 million for the comparable period in 2000.

28

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Interest
expense increased to $565.9 million primarily due to an increase in the issuance of notes and debentures in the first quarter of 2001. For the year ended
December 31, 2001, Cox recorded a $212.0 million pre-tax loss on derivative instruments due to a decrease of approximately $279.8 million in
the fair value of certain derivative instruments embedded in the exchangeable subordinated debentures issued by Cox, offset by an increase of approximately $67.8 million in the fair value of
certain derivative instruments associated with Cox's investments, including Sprint PCS, AT&T and AT&T Wireless.

Net
gain on investments for the year ended December 31, 2001 of $1,151.2 million includes:



In
August 2000, Cox consummated an agreement with Excite@Home and AT&T pursuant to which the ownership, voting control and management of Excite@Home were restructured. In
connection with these transactions, Cox waived its rights under the Excite@Home stockholders agreement, which, among other things, entitled Cox to designate a person to be elected as a director of
Excite@Home by the holders of Excite@Home's Series B common stock. Cox's designee constituted one of five directors elected by the holders of Excite@Home's Series B common stock, and the
consent of a majority of such directors was required to authorize and approve certain actions on behalf of Excite@Home. Cox also caused its existing designee on Excite@Home's board of directors, who
was elected by the holders of Excite@Home's Series B common stock, to resign. In addition, as part of these transactions, Cox agreed to extend its distribution of certain Excite@Home services
through June 2006, subject to certain termination rights. Pursuant to this agreement, Cox was entitled to warrants to purchase two shares of Excite@Home Series A common stock for each home its
cable systems passed as of March 28, 2000, subject to adjustment under certain circumstances.

Cox
also received the right, under certain circumstances, to sell its shares in Excite@Home to AT&T, with a maximum amount payable to Cox of approximately $1.4 billion in cash or
shares of AT&T common stock, as elected by Cox. In January 2001, Cox exercised its right to sell its shares in Excite@Home to AT&T. However, Cox and AT&T agreed to restructure the transaction
to provide a more favorable tax structure for AT&T, and in May 2001, AT&T issued 75.0 million shares of AT&T common stock to Cox, Cox retained its Excite@Home common stock and Cox's
right to sell its Excite@Home shares to AT&T was satisfied in full. Cox recognized a $307.4 million pre-tax gain in the second quarter of 2001 associated with the exercise and
satisfaction of the right-to-sell agreement.

Minority
interest, net of tax, of $71.1 million primarily represents distributions, net of tax, on Cox's obligated capital and preferred securities of subsidiary trusts, referred
to asFELINE PRIDESandRHINOS. On January 1, 2001, Cox adopted SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities, as amended, resulting in an after-tax cumulative effect of change in
accounting principle which increased earnings by $717.1 million and reduced accumulated other comprehensive income by

29

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$194.0 million. Net income for the year ended December 31, 2001 was $755.0 million as compared to $1,925.3 million for the year ended December 31, 2000.

Operating
cash flow is not a measure of performance calculated in accordance with accounting principles generally accepted in the United States of America. However, Cox believes that
operating cash flow is useful to investors in evaluating its performance because it is a commonly used financial analysis tool for measuring and comparing cable companies in several areas of
liquidity, operating performance and leverage. Cox defines operating cash flow as operating income before depreciation, amortization and gain on sale and exchange of cable systems. Operating cash flow
increased 3% to $1,421.0 million for the year ended December 31, 2001. The operating cash flow margin (operating cash flow as a percentage of revenues) for the year ended
December 31, 2001 was 34.9%, a decrease from 39.3% over the year ended December 31, 2000. Operating cash flow, as Cox defines this term, should not be considered as an alternative to net
income as an indicator of Cox's performance or as an alternative to net cash provided by operating activities as a measure of liquidity and may not be comparable to similarly titled measures used by
other companies.

2000 compared with 1999

The results of operations include the effects of the 2000 and 1999 transactions as of their respective acquisition dates.

Total
revenues for the year ended December 31, 2000 were $3,506.9 million, a 51% increase over revenues of $2,318.1 million for the year ended December 31,
1999. Of this increase, 36% relates to the 2000 and 1999 transactions. The remaining 15% increase includes the effects of:



Programming
costs were $855.8 million for the year ended December 31, 2000, an increase of 52% over the same period in 1999. Of this increase, 39% relates to the 2000 and
1999 transactions. The remaining 13% is due to basic and digital customer growth at existing cable systems, channel additions and programming rate increases offset by fewer national
pay-per-view boxing events during 2000. Selling, general and administrative expenses for the year ended December 31, 2000 increased 49% to $1,273.9 million due
primarily to:



Depreciation
and amortization increased to $1,236.5 million from $715.7 million for the comparable period in 1999 due to the 2000 and 1999 transactions. Operating income
for the year ended December 31, 2000 was $140.8 million, a decrease of 46% compared to 1999.

Interest
expense increased to $550.8 million primarily due to an increase in the total debt outstanding. Equity in net losses of affiliated companies decreased to
$7.3 million from $90.5 million for the comparable

30

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period in 1999 primarily due to prior year losses associated with Cox Communications PCS, L.P. (Cox PCS).

Net
gain on investments for the year ended December 31, 2000 of $3,282.0 million includes:



Minority
interest, net of tax, of $69.8 million primarily represents distributions, net of tax, on the FELINE PRIDES and RHINOS. Net income for the year ended December 31,
2000 was $1,925.3 million as compared to $881.9 million for the year ended December 31, 1999.

Operating
cash flow increased 53% to $1,377.3 million for the year ended December 31, 2000. The operating cash flow margin for the year ended December 31, 2000 was
39.3%, an increase from 38.9% over the year ended December 31, 1999.

Liquidity and Capital Resources

2001 Uses and Sources of Cash

As part of Cox's ongoing strategic plan, Cox has invested, and will continue to invest, significant amounts of capital to enhance the reliability and capacity of
its broadband network in preparation for the offering of new services and to make investments in companies primarily focused on cable programming, telecommunications and technology.

During
2001, Cox made capital expenditures of $2.2 billion. These expenditures were primarily directed at upgrading and rebuilding its broadband network to allow for the delivery
of advanced broadband services, including digital video, high-speed Internet access, telephony and video-on-demand. Capital expenditures for 2002 are expected to be
approximately $2.0 billion.

In
addition to improvements of existing systems, Cox made strategic investments in businesses focused on cable programming, telecommunications and technology. Investments in these
companies of $54.0 million included debt and equity funding. Future funding requirements are expected to total approximately $30.0 million in 2002. These funding requirements may vary
significantly from the amounts stated above and will depend on numerous factors as many of these investments are growing businesses and specific financing requirements will change depending on the
evolution of these businesses.

Net
revolving credit and commercial paper borrowings decreased $801.4 million for the year ended December 31, 2001 due to net repayments on Cox's commercial paper program.
During 2001, Cox repaid approximately $386.7 million of debt, which primarily consisted of $300.0 million aggregate principal amount of 7.0% notes due August 2001 and
$33.0 million aggregate principal amount of 6.94% notes due October 2001.

Distributions
paid on capital and preferred securities of subsidiary trusts of $76.0 million consist of quarterly payments on the FELINE PRIDES and RHINOS.

During
2001, Cox generated $798.8 million from operations. Proceeds from the sale and exchange of investments of $1.3 billion primarily include:



31

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Proceeds
from the issuance of debt and capital and preferred securities of subsidiary trusts of $1.4 billion, net of debt issuance costs, underwriting commissions, discounts and
premiums, primarily include:



2000 Uses and Sources of Cash

During 2000, Cox made capital expenditures of $2.2 billion to upgrade and rebuild its broadband network. Investments in affiliated companies of
$83.3 million included debt and equity funding. Payments for the purchases of cable systems of $2.8 billion primarily represents cash paid in connection with the acquisition of cable
systems from Multimedia.

During
2000, Cox repaid approximately $1.5 billion of debt, which primarily consisted of $525.0 million aggregate principal amount of floating rate notes due
August 2000, $425.0 million aggregate principal amount of 6.375% notes due June 2000 and a $500.0 million floating rate bridge loan.

Repurchase
of Class A common stock represents the aggregate cost of repurchasing 5.5 million shares of Cox's Class A common stock for an aggregate cost of
$211.9 million in connection with Cox's stock repurchase program, which was announced in April 2000 and authorized Cox to purchase up to $500.0 million of its outstanding
Class A common stock on the open market or through private transactions.

Distributions
paid on capital and preferred securities of subsidiary trusts of $82.3 million consist of quarterly payments on the FELINE PRIDES and RHINOS.

During
2000, Cox generated $306.2 million from operations. Proceeds from the sale and exchange of investments of $2.9 billion primarily include:



32

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Net revolving credit and commercial paper borrowings increased $1.0 billion for the year ended December 31, 2000 due to net borrowings on Cox's commercial paper program.
Proceeds from the issuance of debt and capital and preferred securities of subsidiary trusts of $2.5 billion, net of debt issuance costs, underwriting commissions, discounts and premiums,
primarily include:



1999 Uses and Sources of Cash

During 1999, Cox made capital expenditures of approximately $1.2 billion to upgrade and rebuild its broadband network. Investments in affiliated companies
of $31.0 million primarily includes debt and equity funding for NextLink Nevada. Payments for the purchases of cable systems of $3.5 billion primarily represents cash paid in connection
with the TCA merger and the acquisition of cable systems from Media General.

Net
revolving credit and commercial paper borrowings decreased $862.4 million due to revolving credit repayments of approximately $350.0 million and net commercial paper
repayments of $512.4 million. During 1999, Cox repaid its $150.0 million Floating Rate Reset Notes.

During
1999, Cox generated $402.0 million from operations. Proceeds from the sale of investments of $987.1 million include the sale of Cox's interest in Telewest
Communications plc for proceeds of approximately $727.9 million and the sale of 3.9 million shares of Sprint PCS common stock for net proceeds of approximately $130.3 million.

Proceeds
from the issuance of debt and capital and preferred securities of subsidiary trusts of $4.3 billion, net of debt issuance costs, underwriting commissions, discounts and
premiums, primarily include:



Proceeds
from the issuance of Class A common stock primarily relates to the issuance of 10.1 million shares of Class A common stock for aggregate proceeds of
$350.3 million, net of offering costs of $12.4 million.

Contractual Obligations and Commitments

The following table contains information relating to Cox's contractual obligations and commitments for the five years subsequent to December 31, 2001 and
thereafter. The amounts represent the maximum future contractual obligations (some of which may be settled by delivering equity securities) and are reported without giving effect to any related
discounts, premiums and other adjustments necessary to

33

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comply with accounting principals generally accepted in the U.S. In addition, Cox has unused letters of credit outstanding totaling $3.6 million at December 31, 2001.

|                                               |  | Payments Due by Period |         
|---------------------------------------------- |  | ---------------------- | --------
|
|
|Debt(a)                                        |  | $                      | 9,405.0 
|Capital leases                                 |  |                        | 140.8   
|Operating leases                               |  |                        | 78.5    
|Nonbinding purchase and other commitments.     |  |                        | 605.0   
|Cox-obligated capital and preferred securities |  |                        | 1,150.0 
|                                               |  |                        |         
|Total contractual cash obligations             |  | $                      | 11,379.3
|                                               |  |                        |         

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34

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Other

At December 31, 2001, Cox had approximately $8.4 billion of outstanding indebtedness, net of derivative adjustments made in accordance with SFAS
No. 133 which reduced debt by approximately $521.2 million, and $1.2 billion of Cox-obligated capital and preferred securities of subsidiary trusts. In addition, Cox
had approximately $4.6 billion of total available financing capacity under its shelf registration statements, revolving credit facilities and commercial paper program at December 31,
2001.

Subsequent
to December 31, 2001, Cox was notified by Moody's Investor Services that Cox's debt was being evaluated for a potential credit rating downgrade. Although Cox is unsure
of the outcome of this evaluation, possible effects of a downgrade include, but are not limited to, interest rate increases on new borrowings and reduced access to commercial paper for
short-term funding needs. Also in March 2002, Fitch Investor Services, Inc. downgraded Cox's credit rating from BBB+ to BBB, which is comparable to Cox's current rating from Moody's and
from Standard and Poor's. Cox believes that the Fitch downgrade will not have a material adverse impact on its liquidity. In any event, Cox will be able to meet its capital needs for the next twelve
months and beyond with amounts available under existing revolving credit facilities and its shelf registration statements. In addition, subsequent to December 31, 2001 Cox monetized certain
unconsolidated investments. See "Recent Developments" for a further discussion.

Certain
of Cox's debt instruments and credit agreements contain covenants which, among other provisions, restrict the payment of cash dividends or the repurchase of capital stock if
certain requirements are not met as to the ratio of debt to operating cash flow. Historically, Cox has not paid dividends nor does Cox intend to pay dividends in the foreseeable future but to reinvest
future earnings, consistent with its business strategy. Although Cox was in compliance with its credit facility covenants at December 31, 2001, Cox was restricted from paying dividends.

Transactions with Affiliated Companies

CEI performs day to day cash management services for Cox. In addition, CEI provides certain other management services to Cox including legal, corporate
secretarial, tax, cash management, internal audit, risk management, benefits administration including self-insured health and other insured plans, and other support services. These
allocated expenses are based on CEI's estimate of expenses relative to the services provided to Cox in relation to those provided to other divisions of CEI. Cox also pays rent and certain other
occupancy costs to CEI for its home office facilities. Rent and occupancy expense is allocated based on occupied space. Management believes that these allocations were made on a reasonable basis.
However, the allocations are not necessarily indicative of the level of expenses that
might have been incurred had Cox contracted directly with third parties. Management has not made a study or any attempt to obtain quotes from third parties to determine what the cost of obtaining such
services from third parties would have been. The fees and expenses to be paid by Cox to CEI are subject to change.

The
amounts due to CEI are generally due on demand and represent the net of various transactions, including those described above. Outstanding amounts due from CEI bear interest equal to
CEI's current commercial paper borrowing rate, which was 3.0% and 7.6% at December 31, 2001 and 2000, respectively.

Cox
filed a shelf registration statement to register shares of its Class A common stock deliverable by CEI upon exchange of the 2% exchangeable senior notes due 2021 issued by CEI
in April 2001, and that shelf registration statement was declared effective by the Securities and Exchange Commission (SEC) in July 2001. Pursuant to the indenture governing the
exchangeable notes, CEI was obligated, at the option of the holder, to purchase the exchangeable notes held by such holder if the notes were properly tendered and not withdrawn before the close of
business on February 15, 2002. All of the outstanding notes were tendered to CEI, and CEI repurchased all such notes in February 2002. Accordingly, in March 2002, Cox filed a
post-effective amendment to its shelf registration statement related to CEI's exchangeable notes to de-register the shares of Class A common stock covered by that
registration statement.

35

---

In
October 2001, CEI sold 13.5 million shares of Cox Class A common stock it owned to two private investors. In connection with this transaction, Cox entered into
agreements providing the two private investors with certain demand and piggy-back registration rights.

Cox
has invested in a series of local joint ventures with Cox Interactive Media, Inc., an indirect, wholly-owned subsidiary of CEI, to develop, operate and promote advertising
supported local Internet content, orCity Sites, in the markets where Cox operates cable television systems featuring high speed Internet access. Cox is
a 49% equity holder in the joint ventures, has contributed approximately $22.3 million in the aggregate and has agreed to certain non-compete provisions. Cox Interactive Media owns
the remaining interest in these joint ventures and is responsible for day-to-day operations of the joint ventures. For a more detailed discussion of Cox's related party
transactions, see Note 14. "Transactions with Affiliated Companies" in Part II, Item 8. "Consolidated Financial Statements and Supplementary Data."

Recent Developments

Subsequent to December 31, 2001, Cox terminated all three of its costless equity collar arrangements with respect to AT&T common stock and AT&T Wireless
common stock and received aggregate
proceeds of approximately $112.8 million. In connection with the terminations, Cox also sold the 22.5 million shares of AT&T common stock and 17.2 million shares of the AT&T
Wireless common stock covered by these collar arrangements for aggregate net proceeds of approximately $527.0 million. In addition, Cox sold 12.5 million shares of AT&T common stock and
6.7 million shares of AT&T Wireless common stock that were not covered by collar arrangements for aggregate net proceeds of approximately $263.8 million. As a result of these
transactions, Cox no longer holds any shares of AT&T common stock or AT&T Wireless common stock. Cox expects to recognize a loss on these transactions in the first quarter of 2002.

Cox
also terminated its series of costless equity collar arrangements for Sprint PCS common stock and received aggregate proceeds of approximately $151.6 million. In connection
with the terminations, Cox sold the 15.8 million shares of Sprint PCS common stock covered by these collar arrangements for aggregate net proceeds of approximately $155.9 million. In
addition, Cox sold 9.4 million shares of Sprint PCS common stock that were not covered by these collar arrangements for aggregate net proceeds of approximately $82.8 million. Cox expects
to recognize a gain on these transactions in the first quarter of 2002.

In
accordance with the terms of the indenture governing Cox's convertible senior notes due 2021, Cox became obligated to purchase for cash convertible notes tendered and not withdrawn
before the close of business on February 22, 2002. Cox repurchased $329.1 million aggregate principal amount at maturity of the convertible notes that had been properly tendered and not
withdrawn, for aggregate cash consideration of $232.8 million, which represented the amortized cost of the repurchased notes. As a result, $441.7 million aggregate principal amount at
maturity of Cox's convertible notes remain outstanding. In addition, Cox made an aggregate cash payment of $7.5 million to the remaining holders of the convertible notes who elected not to
require Cox to repurchase their notes.

Critical Accounting Policies

Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties and that could potentially result in materially
different results under different assumptions and conditions. Cox's critical accounting policies are described below. For a detailed description of Cox's significant accounting policies, see
Note 2. "Summary of Significant Accounting Policies and Other Items" in Part II, Item 8. "Consolidated Financial Statements and Supplementary Data."



36

---



Recently Issued Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board, or FASB, issued SFAS No. 133,Accounting for Derivative Instruments
and Hedging Activities, as amended, which became effective for Cox on January 1, 2001. SFAS No. 133 requires that an entity recognize all derivatives as either
assets or liabilities measured at fair value. In addition, all derivatives used in hedging relationships must be designated, reassessed and documented pursuant to the provisions of SFAS
No. 133.

Cox's
adoption of SFAS No. 133 on January 1, 2001 resulted in an after-tax transition adjustment that increased earnings by approximately $717.1 million
and an after-tax transition adjustment that reduced accumulated other comprehensive income by approximately $194.0 million. In addition, the adoption impacted assets and liabilities
recorded on the consolidated balance sheet. SFAS No. 133 also permits a one-time transfer of an available-for-sale security into the trading category.
Accordingly, Cox reclassified approximately 19.5 million shares of its investment in Sprint PCS common stock from available-for-sale to trading on January 1,
2001. As a result of this reclassification, Cox recognized a pre-tax gain of approximately $239.3 million, representing the accumulated unrealized gain on these securities,
previously recorded as a component of accumulated other comprehensive income.

In
June 2001, the FASB issued SFAS No. 141,Business Combinations, which requires that the purchase method of accounting be
used for all business combinations initiated after June 30, 2001 and eliminates the pooling-of-interests method.

Also
in June 2001, the FASB issued SFAS No. 142,Goodwill and Other Intangible Assets, which requires that goodwill and
certain intangible assets, including those recorded in past business combinations, no longer be amortized through the statement of operations, but instead be tested for impairment at least annually.
SFAS No. 142 will become effective for fiscal years beginning after December 15, 2001. Upon adoption on January 1, 2002, Cox stopped amortizing goodwill and other intangibles with
indefinite useful lives. Cox has tentatively concluded that its other intangible assets with indefinite useful lives consist primarily of cable franchises. Based on the current levels of goodwill and
other intangibles with indefinite useful lives, Cox expects a reduction of amortization expense and an increase in pre-tax income of approximately $373.0 million for the year ended
December 31, 2002 and is currently assessing the impact, if any, of its initial impairment testing.

In
July 2001, the FASB issued SFAS No. 143,Accounting for Asset Retirement Obligations, which addresses financial
accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS No. 143 will become effective
for fiscal years beginning after June 15, 2002. Cox is currently assessing the impact of SFAS No. 143 on its consolidated financial statements.

In
August 2001, the FASB issued SFAS No. 144,Accounting for the Impairment or Disposal of Long-Lived Assets,
which addresses financial accounting and reporting for the impairment and disposition of long-lived assets. SFAS No. 144, which supersedes SFAS No. 121, will become effective
for fiscal years

37

---

beginning after December 15, 2001. Cox is currently assessing the impact of SFAS No. 144 on its consolidated financial statements.

At
the November 2001 meeting of the Emerging Issues Task Force, or EITF, the FASB staff announced their position regarding the classification of reimbursements for
out-of-pocket expenses. The FASB staff believes that these reimbursements should be classified as revenue in the statements of operations. The staff announcement, which will be
codified in EITF Topic No. 01-14, is effective for fiscal years beginning after December 15, 2001 and will require comparative financial statements for prior periods to be reclassified.
Cox is currently assessing the impact of this announcement, which will be adopted in the first quarter of 2002, on its consolidated financial statements.

Inflation

Cox believes its operations are not materially affected by inflation.

Caution Concerning Forward-Looking Statements

This Form 10-K includes "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended. These forward-looking statements include, among others, statements concerning our outlook for the future and information about our strategic plans and objectives, expectations as to
subscriber and revenue growth, anticipated rates of subscriber penetration, and other statements of expectations, beliefs, future plans and strategies, anticipated events or trends and similar
projections, as well as any facts or assumptions underlying these statements or projections. Actual results may differ materially from those in the forward-looking statements, and may be affected by
known and unknown risks, uncertainties and other factors. Many of these risks and uncertainties have been discussed in our prior filings with the SEC. Factors to consider in connection with any of our
forward-looking statements include, but are not limited to:



38

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Cox has estimated the fair value of its financial instruments as of December 31, 2001 and 2000 using available market information or other appropriate
valuation methodologies. Considerable judgment, however, is required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily
indicative of the amounts that Cox would realize in a current market exchange.

The
carrying amount of cash, accounts and other receivables, accounts and other payables and amounts due to/from CEI approximates fair value because of the short maturity of those
instruments. The fair value of Cox's investments stated at fair value are estimated and recorded based on quoted market prices. The fair value of Cox's equity method investments and investments stated
at cost cannot be estimated without incurring excessive costs. Cox is exposed to market price risk volatility with respect to investments in publicly traded and privately held entities. Additional
information pertinent to the value of the foregoing investments is discussed in Note 5. "Investments" in Part II, Item 8. "Consolidated Financial Statements and Supplementary Data."

The
fair value of interest rate swaps used for hedging purposes was approximately $53.4 million and $35.2 million at December 31, 2001 and 2000, respectively, and
represents the estimated amount that Cox would receive upon termination of the swap agreements.

Cox's
outstanding commercial paper, revolving credit facilities, RHINOS and floating rate notes and debentures bear interest at current market rates and, thus, approximate fair value at
December 31, 2001 and 2000. Cox is exposed to interest rate volatility with respect to these variable-rate instruments.

39

---

The
estimated fair value of Cox's fixed-rate notes and debentures, exchangeable subordinated debentures and FELINE PRIDES at December 31, 2001 and 2000 are based on
quoted market prices or a discounted cash flow analysis using Cox's incremental borrowing rate for similar types of borrowing arrangements and dealer quotations. A summary of the carrying value,
estimated fair value and the effect of a hypothetical one percentage point decrease in interest rates on the foregoing fixed-rate instruments at December 31, 2001 and 2000 is as
follows:

|                                     |  | December 31, 2001 |         | December 31, 2000
|------------------------------------ |  | ----------------- | ------- | -----------------
|
|
|Fixed-rate notes and debentures      |  | $                 | 5,280.7 |                  
|FELINE PRIDES                        |  |                   | 652.3   |                  
|Exchangeable subordinated debentures |  |                   | 1,829.5 |                  

40

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ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

COX COMMUNICATIONS, INC.        CONSOLIDATED BALANCE SHEETS

|                                                                                           |                                                                                                                                                                                            | December 31                                |           
|------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------ | ----------
|
|
|Assets                                                                                     |                                                                                                                                                                                            |                                            |           
|Cash                                                                                       |                                                                                                                                                                                            | $                                          | 86,860    
|Accounts and notes receivable, less allowance for doubtful accounts of $33,514 and $25,636 |                                                                                                                                                                                            |                                            | 421,111   
|Net plant and equipment                                                                    |                                                                                                                                                                                            |                                            | 7,127,908 
|Investments                                                                                |                                                                                                                                                                                            |                                            | 3,515,233 
|Intangible assets                                                                          |                                                                                                                                                                                            |                                            | 13,510,894
|Amounts due from Cox Enterprises, Inc. (CEI)                                               |                                                                                                                                                                                            |                                            | 13,245    
|Other assets                                                                               |                                                                                                                                                                                            |                                            | 386,185   
|                                                                                           |                                                                                                                                                                                            |                                            |           
|                                                                                           |                                                                                                                                                                                            | Total assets                               |           
|                                                                                           |                                                                                                                                                                                            |                                            |           
|Liabilities and shareholders' equity                                                       |                                                                                                                                                                                            |                                            |           
|Accounts payable and accrued expenses                                                      |                                                                                                                                                                                            | $                                          | 674,426   
|Deferred income taxes                                                                      |                                                                                                                                                                                            |                                            | 4,538,288 
|Other liabilities                                                                          |                                                                                                                                                                                            |                                            | 470,397   
|Debt                                                                                       |                                                                                                                                                                                            |                                            | 8,417,675 
|                                                                                           |                                                                                                                                                                                            |                                            |           
|                                                                                           |                                                                                                                                                                                            | Total liabilities                          |           
|                                                                                           |                                                                                                                                                                                            |                                            |           
|Commitments and contingencies (Note 17)                                                    |                                                                                                                                                                                            |                                            |           
|Minority interest in equity of consolidated subsidiaries                                   |                                                                                                                                                                                            |                                            | 129,121   
|Cox-obligated capital and preferred securities of subsidiary trusts                        |                                                                                                                                                                                            |                                            | 1,155,738 
|Shareholders' equity                                                                       |                                                                                                                                                                                            |                                            |           
|                                                                                           | Series A convertible preferred stockliquidation preference of $22.1375 per share, $1 par value; 10,000,000 shares of preferred stock authorized; shares issued and outstanding: 4,836,372 |                                            |           
|                                                                                           | Class A common stock, $1 par value; 671,000,000 shares authorized; shares issued: 578,493,107 and 577,725,528; shares outstanding: 572,994,707 and 572,227,128                             |                                            |           
|                                                                                           | Class C common stock, $1 par value; 62,000,000 shares authorized; shares issued and outstanding: 27,597,792                                                                                |                                            |           
|                                                                                           | Additional paid-in capital                                                                                                                                                                 |                                            |           
|                                                                                           | Retained earnings                                                                                                                                                                          |                                            |           
|                                                                                           | Accumulated other comprehensive income                                                                                                                                                     |                                            |           
|                                                                                           | Class A common stock in treasury, at cost: 5,498,400 shares                                                                                                                                |                                            |           
|                                                                                           |                                                                                                                                                                                            |                                            |           
|                                                                                           |                                                                                                                                                                                            | Total shareholders' equity                 |           
|                                                                                           |                                                                                                                                                                                            |                                            |           
|                                                                                           |                                                                                                                                                                                            | Total liabilities and shareholders' equity |           
|                                                                                           |                                                                                                                                                                                            |                                            |           

See
notes to consolidated financial statements.

41

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COX COMMUNICATIONS, INC.        CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                                                                      |                                                                   | Year Ended December 31 |            
|----------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------- | ---------------------- | -----------
|
|
|Revenues                                                                                              |                                                                   | $                      | 4,066,969  
|Costs and expenses                                                                                    |                                                                   |                        |            
|                                                                                                      | Programming costs                                                 |                        |            
|                                                                                                      | Selling, general and administrative                               |                        |            
|                                                                                                      | Depreciation                                                      |                        |            
|                                                                                                      | Amortization                                                      |                        |            
|                                                                                                      | Gain on sale and exchange of cable systems                        |                        |            
|                                                                                                      |                                                                   |                        |            
|Operating income (loss)                                                                               |                                                                   |                        | (118,253   
|Interest expense                                                                                      |                                                                   |                        | (565,934   
|Loss on derivative instruments, net                                                                   |                                                                   |                        | (211,963   
|Equity in net losses of affiliated companies                                                          |                                                                   |                        | (40,043    
|Gain on investments, net                                                                              |                                                                   |                        | 1,151,172  
|Other, net                                                                                            |                                                                   |                        | (11,882    
|                                                                                                      |                                                                   |                        |            
|Income before income taxes, minority interest and cumulative effect of change in accounting principle |                                                                   |                        | 203,097    
|Income tax expense                                                                                    |                                                                   |                        | 94,039     
|                                                                                                      |                                                                   |                        |            
|Income before minority interest and cumulative effect of change in accounting principle               |                                                                   |                        | 109,058    
|Minority interest, net of tax                                                                         |                                                                   |                        | (71,147    
|                                                                                                      |                                                                   |                        |            
|Income before cumulative effect of change in accounting principle                                     |                                                                   |                        | 37,911     
|Cumulative effect of change in accounting principle, net of tax                                       |                                                                   |                        | 717,090    
|                                                                                                      |                                                                   |                        |            
|Net income                                                                                            |                                                                   | $                      | 755,001    
|                                                                                                      |                                                                   |                        |            
|Share data                                                                                            |                                                                   |                        |            
|Basic net income per share                                                                            |                                                                   |                        |            
|Basic weighted-average shares outstanding                                                             |                                                                   |                        | 600,365,787
|                                                                                                      | Income before cumulative effect of change in accounting principle |                        | $          
|                                                                                                      | Cumulative effect of change in accounting principle               |                        |            
|                                                                                                      |                                                                   |                        |            
|Basic net income per share                                                                            |                                                                   | $                      | 1.26       
|                                                                                                      |                                                                   |                        |            
|Diluted net income per share                                                                          |                                                                   |                        |            
|Diluted weighted-average shares outstanding                                                           |                                                                   |                        | 608,816,689
|                                                                                                      | Income before cumulative effect of change in accounting principle |                        | $          
|                                                                                                      | Cumulative effect of change in accounting principle               |                        |            
|                                                                                                      |                                                                   |                        |            
|Diluted net income per share                                                                          |                                                                   | $                      | 1.24       
|                                                                                                      |                                                                   |                        |            

See
notes to consolidated financial statements.

42

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COX COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

|                  |                                                                                                                                    |   |       |  |   |         |        |   |        |  |   |           |           | Class A
Common
Stock in
Treasury,
at Cost |           |           |   |           |           
|----------------- | ---------------------------------------------------------------------------------------------------------------------------------- | - | ----- |  | - | ------- | ------ | - | ------ |  | - | --------- | --------- | ----------------------------------------- | --------- | --------- | - | --------- | ----------
|
|
|
|
|December 31, 1998 |                                                                                                                                    | $ | 4,836 |  | $ | 527,112 |        | $ | 27,598 |  | $ | 1,872,477 |           | $                                         | 1,350,277 |           | $ | 1,594,266 |           
|                  | Net income                                                                                                                         |   |       |  |   |         |        |   |        |  |   |           |           |                                           |           | 881,928   |   |           |           
|                  |                                                                                                                                    |   |       |  |   |         |        |   |        |  |   |           |           |                                           |           |           |   |           |           
|                  | Issuance of stock related to stock compensation plans (including tax benefit on stock options exercised)                           |   |       |  |   |         | 634    |   |        |  |   |           | 14,054    |                                           |           |           |   |           |           
|                  | Issuance of stock related to the TCA merger                                                                                        |   |       |  |   |         | 38,323 |   |        |  |   |           | 1,607,051 |                                           |           |           |   |           |           
|                  | Issuance of common stock related to public offering                                                                                |   |       |  |   |         | 10,100 |   |        |  |   |           | 327,784   |                                           |           |           |   |           |           
|                  | Fair value of forward purchase contracts, less the present value of contract adjustment payments issued as a part of FELINE PRIDES |   |       |  |   |         |        |   |        |  |   |           | 14,273    |                                           |           |           |   |           |           
|                  | Change in net accumulated unrealized gain on securities, net of tax                                                                |   |       |  |   |         |        |   |        |  |   |           |           |                                           |           |           |   |           |           
|                  |                                                                                                                                    |   |       |  |   |         |        |   |        |  |   |           |           |                                           |           |           |   |           |           
|                  | Other comprehensive income                                                                                                         |   |       |  |   |         |        |   |        |  |   |           |           |                                           |           |           |   |           | 3,264,871 
|                  |                                                                                                                                    |   |       |  |   |         |        |   |        |  |   |           |           |                                           |           |           |   |           |           
|                  | Comprehensive income                                                                                                               |   |       |  |   |         |        |   |        |  |   |           |           |                                           |           |           |   |           |           
|                  |                                                                                                                                    |   |       |  |   |         |        |   |        |  |   |           |           |                                           |           |           |   |           |           
|December 31, 1999 |                                                                                                                                    |   | 4,836 |  |   | 576,169 |        |   | 27,598 |  |   | 3,835,639 |           |                                           | 2,232,205 |           |   | 4,859,137 |           
|                  | Net income                                                                                                                         |   |       |  |   |         |        |   |        |  |   |           |           |                                           |           | 1,925,255 |   |           |           
|                  |                                                                                                                                    |   |       |  |   |         |        |   |        |  |   |           |           |                                           |           |           |   |           |           
|                  | Issuance of stock related to stock compensation plans (including tax benefit on stock options exercised)                           |   |       |  |   |         | 1,557  |   |        |  |   |           | 30,713    |                                           |           |           |   |           |           
|                  | Purchase of 5,498,400 shares of Class A common stock for treasury, at cost                                                         |   |       |  |   |         |        |   |        |  |   |           |           |                                           |           |           |   |           |           
|                  | Proceeds from issuance of put options                                                                                              |   |       |  |   |         |        |   |        |  |   |           | 6,374     |                                           |           |           |   |           |           
|                  | Change in net accumulated unrealized gain on securities, net of tax                                                                |   |       |  |   |         |        |   |        |  |   |           |           |                                           |           |           |   |           |           
|                  |                                                                                                                                    |   |       |  |   |         |        |   |        |  |   |           |           |                                           |           |           |   |           |           
|                  | Other comprehensive loss                                                                                                           |   |       |  |   |         |        |   |        |  |   |           |           |                                           |           |           |   |           | (4,071,321
|                  |                                                                                                                                    |   |       |  |   |         |        |   |        |  |   |           |           |                                           |           |           |   |           |           
|                  | Comprehensive loss                                                                                                                 |   |       |  |   |         |        |   |        |  |   |           |           |                                           |           |           |   |           |           
|                  |                                                                                                                                    |   |       |  |   |         |        |   |        |  |   |           |           |                                           |           |           |   |           |           
|December 31, 2000 |                                                                                                                                    |   | 4,836 |  |   | 577,726 |        |   | 27,598 |  |   | 3,872,726 |           |                                           | 4,157,460 |           |   | 787,816   |           
|                  | Net income                                                                                                                         |   |       |  |   |         |        |   |        |  |   |           |           |                                           |           | 755,001   |   |           |           
|                  |                                                                                                                                    |   |       |  |   |         |        |   |        |  |   |           |           |                                           |           |           |   |           |           
|                  | Issuance of stock related to stock compensation plans (including tax benefit on stock options exercised)                           |   |       |  |   |         | 767    |   |        |  |   |           | 18,431    |                                           |           |           |   |           |           
|                  | Change in net accumulated unrealized gain on securities, net of tax                                                                |   |       |  |   |         |        |   |        |  |   |           |           |                                           |           |           |   |           |           
|                  | Cumulative effect of change in accounting principle, net of tax                                                                    |   |       |  |   |         |        |   |        |  |   |           |           |                                           |           |           |   |           |           
|                  |                                                                                                                                    |   |       |  |   |         |        |   |        |  |   |           |           |                                           |           |           |   |           |           
|                  | Other comprehensive loss                                                                                                           |   |       |  |   |         |        |   |        |  |   |           |           |                                           |           |           |   |           | (314,681  
|                  |                                                                                                                                    |   |       |  |   |         |        |   |        |  |   |           |           |                                           |           |           |   |           |           
|                  | Comprehensive income                                                                                                               |   |       |  |   |         |        |   |        |  |   |           |           |                                           |           |           |   |           |           
|                  |                                                                                                                                    |   |       |  |   |         |        |   |        |  |   |           |           |                                           |           |           |   |           |           
|December 31, 2001 |                                                                                                                                    | $ | 4,836 |  | $ | 578,493 |        | $ | 27,598 |  | $ | 3,891,157 |           | $                                         | 4,912,461 |           | $ | 473,135   |           
|                  |                                                                                                                                    |   |       |  |   |         |        |   |        |  |   |           |           |                                           |           |           |   |           |           

See notes to consolidated financial statements.

43

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COX COMMUNICATIONS, INC.        CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                                                      |                                                                 | Year Ended December 31                    |           
|--------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------- | ----------------------------------------- | ----------
|
|
|Cash flows from operating activities                                                                                  |                                                                 |                                           |           
|Net income                                                                                                            |                                                                 | $                                         | 755,001   
|Adjustments to reconcile net income to net cash provided by operating activities, net of effects of acquisitions:     |                                                                 |                                           |           
|                                                                                                                      | Depreciation and amortization                                   |                                           |           
|                                                                                                                      | Gain on sale and exchange of cable systems, net                 |                                           |           
|                                                                                                                      | Loss on derivative instruments, net                             |                                           |           
|                                                                                                                      | Equity in net losses of affiliated companies                    |                                           |           
|                                                                                                                      | Deferred income taxes                                           |                                           |           
|                                                                                                                      | Gain on investments, net                                        |                                           |           
|                                                                                                                      | Minority interest, net of dividends paid                        |                                           |           
|                                                                                                                      | Cumulative effect of change in accounting principle, net of tax |                                           |           
|(Increase) decrease in accounts and notes receivable                                                                  |                                                                 |                                           | 848       
|(Increase) decrease in prepaid expenses                                                                               |                                                                 |                                           | (40,324   
|Increase (decrease) in accounts payable and accrued liabilities                                                       |                                                                 |                                           | (30,363   
|Increase (decrease) in other liabilities                                                                              |                                                                 |                                           | 42,539    
|Increase (decrease) in taxes payable                                                                                  |                                                                 |                                           | 328,541   
|Other, net                                                                                                            |                                                                 |                                           | 55,238    
|                                                                                                                      |                                                                 |                                           |           
|                                                                                                                      |                                                                 | Net cash provided by operating activities |           
|                                                                                                                      |                                                                 |                                           |           
|Cash flows from investing activities                                                                                  |                                                                 |                                           |           
|Capital expenditures                                                                                                  |                                                                 |                                           | (2,205,451
|Investments in affiliated companies                                                                                   |                                                                 |                                           | (53,991   
|Proceeds from the sale and exchange of investments                                                                    |                                                                 |                                           | 1,316,192 
|Payments for purchases of cable systems                                                                               |                                                                 |                                           | (1,495    
|(Increase) decrease in amounts due from CEI                                                                           |                                                                 |                                           | (7,437    
|Other, net                                                                                                            |                                                                 |                                           | (1,160    
|                                                                                                                      |                                                                 |                                           |           
|                                                                                                                      |                                                                 | Net cash used in investing activities     |           
|                                                                                                                      |                                                                 |                                           |           
|Cash flows from financing activities                                                                                  |                                                                 |                                           |           
|Revolving credit and commercial paper borrowings (repayments), net                                                    |                                                                 |                                           | (801,385  
|Proceeds from issuance of debt, net of debt issuance costs, and capital and preferred securities of subsidiary trusts |                                                                 |                                           | 1,405,887 
|Repayment of debt                                                                                                     |                                                                 |                                           | (386,728  
|Decrease in amounts due to CEI                                                                                        |                                                                 |                                           |          
|Proceeds from issuance of Class A common stock, net of offering costs                                                 |                                                                 |                                           | 10,595    
|Repurchase of Class A common stock                                                                                    |                                                                 |                                           |          
|Distributions paid on capital and preferred securities of subsidiary trusts                                           |                                                                 |                                           | (75,955   
|Other, net                                                                                                            |                                                                 |                                           | 10,578    
|                                                                                                                      |                                                                 |                                           |           
|                                                                                                                      |                                                                 | Net cash provided by financing activities |           
|                                                                                                                      |                                                                 |                                           |           
|Net increase in cash                                                                                                  |                                                                 |                                           | 8,418     
|Cash at beginning of period                                                                                           |                                                                 |                                           | 78,442    
|                                                                                                                      |                                                                 |                                           |           
|Cash at end of period                                                                                                 |                                                                 | $                                         | 86,860    
|                                                                                                                      |                                                                 |                                           |           

See notes to consolidated financial statements.

44

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COX COMMUNICATIONS, INC.        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Basis of Presentation

Cox Communications, Inc. (Cox), an indirect 65.5% majority-owned subsidiary of Cox Enterprises, Inc. (CEI), is one of the nation's largest
multi-service advanced communications companies, serving more than 6.2 million customers as of December 31, 2001. Cox owns U.S. broadband network operations and investments focused on
cable programming, telecommunications and technology. Cox operates in one operating segment, broadband communications.

2. Summary of Significant Accounting Policies and Other Items

Basis of Consolidation

The consolidated financial statements include the accounts of Cox and all wholly-owned, majority-owned or controlled subsidiaries. All intercompany accounts and
transactions among consolidated entities have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Plant and Equipment

Plant and equipment are stated at cost less accumulated depreciation. Additions to cable plant generally include material, labor and indirect costs. Depreciation
is computed using the straight-line method over estimated useful lives as follows: five to 20 years for buildings and building improvements; five to 12 years for cable
systems; and three to 10 years for other plant and equipment. Cox evaluates the depreciation periods of plant and equipment to determine whether events or circumstances warrant revised
estimates of useful lives.

The
costs associated with the construction of cable transmission and distribution facilities and new cable service installations are capitalized. Costs include all direct labor and
materials as well as certain indirect costs. The amount of indirect costs that are capitalized, which include employee benefits, warehousing and transportation costs, are estimated based on historical
construction costs. Cox performs semi-annual evaluations of these estimates and any changes to the estimates, which may be significant, are included prospectively in the period in which
the evaluations are completed. Expenditures for maintenance and repairs are charged to operating expense as incurred. At the time of retirements, sales or other dispositions of property, the original
cost and related accumulated depreciation are removed from the respective accounts, and the gains and losses are presented as a component of operating income.

Investments

Investments in affiliated entities are accounted for either under the equity method or are stated at cost depending on Cox's ability to exercise significant
influence over the operating and financial policies of the investee. Equity method investments are recorded at cost and adjusted periodically to recognize Cox's proportionate share of the investee's
income or loss, additional contributions made and dividends received. When Cox's cumulative proportionate share of loss exceeds the carrying amount of the equity method

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investment, application of the equity method is suspended and Cox's proportionate share of the investees' loss is not recognized unless Cox is committed to provide further financial support to the
investee, including advances from Cox. Cox will resume application of the equity method when the investee becomes profitable and Cox's proportionate share of the investees' earnings equals its
cumulative proportionate share of losses that were not recognized during the period the application of the equity method was suspended. Investments stated at cost are adjusted for any known diminution
in value determined to be other than temporary.

Investments
in publicly traded entities are classified as available-for-sale or trading under Statement of Financial Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in Debt and Equity Securities,and are recorded at their fair value. Unrealized gains and losses resulting from
changes in fair value of available-for-sale securities between measurement dates are recognized as a component of accumulated other comprehensive income. Realized losses for any decline in market
value of available-for-sale securities considered to be other than temporary are recognized in earnings. Realized gains and losses on investments sold or impaired are recognized using the
first-in first-out method. Unrealized gains and losses resulting from changes in fair value of trading securities are recognized in earnings.

Intangible Assets

Franchise value is derived from the value ascribed to an acquired subscriber base for which Cox is granted a non-exclusive cable system franchise. Cox
has never had a franchise revoked, and it has never been denied a franchise renewal. As an incumbent franchisee, Cox's renewal applications are granted by the local franchising authority on their own
merits and not as part of a comparative process with competing applications. A local franchising authority may not unreasonably withhold the renewal of a franchise. Accordingly, franchise value is
amortized using the straight-line method over a period of 40 years. The excess cost over the fair value of net assets acquired is amortized using the straight-line
method over its estimated useful life not to exceed 40 years.

Cox
assesses on an on-going basis the recoverability of certain intangible assets based on estimates of future undiscounted cash flows for the applicable business acquired
compared to net book value. If the future undiscounted cash flow estimate is less than net book value, net book value is then reduced to the fair value. Cox also evaluates the amortization periods of
intangible assets to determine whether events or circumstances warrant revised estimates of useful lives.

Valuation of Long-Lived Assets

Cox evaluates the recoverability of long-lived assets, including plant and equipment and intangible assets, for impairment when events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable, with any impairment losses being reported in the period in which the recognition criteria are first applied based on
the fair value of the asset. Long-lived assets and certain intangible assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.

Income Taxes

Cox provides for income taxes using the liability method in accordance with SFAS No. 109,Accounting for Income
Taxes. SFAS No. 109 requires an asset and liability based approach in accounting for income taxes. Deferred income taxes reflect the net tax effect on future years of
temporary differences between the

46

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carrying amount of assets and liabilities for financial statement and income tax purposes. Valuation allowances reduce deferred tax assets to an amount that represents management's best estimate of
such deferred tax assets that more likely than not will be realized. The financial effect of changes in tax laws or rates is accounted for in the period of enactment.

Debt Issuance Costs

Costs associated with the refinancing and issuance of debt as well as debt discounts, if any, are deferred and expensed as interest over the term of the related
debt agreement.

Revenue Recognition

Revenue is recognized as broadband communications services are provided, as persuasive evidence of an arrangement exists, the price to the customer is fixed and
determinable and collectability is reasonably assured. Credit risk is managed by disconnecting services to customers who are delinquent. Other revenues are recognized as services are provided.
Revenues obtained from the connection of customers to the broadband network are less than related direct selling costs. Therefore, such revenues are recognized as connections have been completed.

Pension, Postretirement and Postemployment Benefits

Cox provides defined pension benefits to substantially all employees based on years of service and compensation during those years. Cox provides certain health
care and life insurance benefits to substantially all employees and retirees through certain CEI plans. Expense related to the CEI plans is allocated to Cox through the intercompany account. The
amount of the allocations is based on actuarial determinations of the effects of Cox employees' participation in the plans.

Stock Compensation Plans

Cox accounts for employee equity-based compensation using the intrinsic value method in accordance with Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and discloses the pro forma effect on net income and earnings per share of using the fair value method as
required by SFAS No. 123,Accounting for Stock-Based Compensation.

Gain on Issuance of Stock by Affiliated Companies

Gains recognized on the issuance of stock by affiliated entities are reflected as income in the Consolidated Statements of Operations in accordance with Staff
Accounting Bulletin (SAB) No. 51,Accounting for Sales of Stock by a Subsidiary.

Earnings Per Share

Cox computes earnings per share in accordance with SFAS No. 128,Earnings per Share. Basic earnings per
share is computed by dividing income from continuing operations by the weighted-average number of common shares outstanding for the period. Diluted earnings per share is computed in the same manner,
but also includes the dilutive effect of common stock equivalents and other financial instruments which are convertible or exercisable for Cox Class A common stock as further described in
Note 13. "Shareholders' Equity."

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Derivative Financial Instruments

Cox accounts for derivative financial instruments in accordance with SFAS No. 133,Accounting for Derivative Instruments and
Hedging Activities, as amended, which became effective for Cox on January 1, 2001. SFAS No. 133 requires that an entity recognize all derivatives as either assets
or liabilities measured at fair value. In addition, all derivatives used in hedging relationships must be designated, reassessed and documented pursuant to the provisions of SFAS No. 133. See
Note 9. "Derivative Instruments and Hedging Activities."

Cox
uses derivative financial instruments designated as fair value hedges, such as interest rate swap agreements to manage exposure to changes in the fair value of certain
fixed-rate debt instruments and
equity collar agreements to manage exposure to changes in the fair value of common stock of certain public companies whose shares are held by Cox.

Cox
does not hold or issue any derivative financial instruments for trading purposes and is not a party to leveraged instruments. The credit risks associated with Cox's derivative
financial instruments are controlled through the evaluation and monitoring of the creditworthiness of the counterparties. Although Cox may be exposed to losses in the event of nonperformance by the
counterparties, Cox does not expect such losses, if any, to be significant.

Recently Issued Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 141,Business
Combinations, which requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001 and eliminates the
pooling-of-interests method.

Also
in June 2001, the FASB issued SFAS No. 142,Goodwill and Other Intangible Assets, which requires that goodwill and
certain intangible assets, including those recorded in past business combinations, no longer be amortized through the statement of operations, but instead be tested for impairment at least annually.
SFAS No. 142 will become effective for fiscal years beginning after December 15, 2001. Upon adoption on January 1, 2002, Cox will stop amortizing goodwill and other intangibles
with indefinite useful lives. Cox's other intangible assets with indefinite useful lives consist primarily of cable franchises. Based on the current levels of goodwill and other intangibles with
indefinite useful lives, Cox expects a reduction of amortization expense and an increase in pre-tax income of approximately $373.0 million for the year ended December 31,
2002 and is currently assessing the impact, if any, of its initial impairment testing.

In
July 2001, the FASB issued SFAS No. 143,Accounting for Asset Retirement Obligations, which addresses financial
accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS No. 143 will become effective
for fiscal years beginning after June 15, 2002. Cox is currently assessing the impact of SFAS No. 143 on its consolidated financial statements.

In
August 2001, the FASB issued SFAS No. 144,Accounting for the Impairment or Disposal of Long-Lived Assets,
which addresses financial accounting and reporting for the impairment and disposition of long-lived assets. SFAS No. 144, which supersedes SFAS No. 121, will become effective
for fiscal years beginning after December 15, 2001. Cox is currently assessing the impact of SFAS No. 144 on its consolidated financial statements.

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At
the November 2001 meeting of the Emerging Issues Task Force, or EITF, the FASB staff announced their position regarding the classification of reimbursements for
out-of-pocket expenses. The FASB staff believes that these reimbursements should be classified as revenue in the statements of operations. The staff announcement, which will be
codified in EITF Topic No. 01-14, is effective for fiscal years beginning after December 15, 2001 and will require comparative financial statements for prior periods to be reclassified.
Cox is currently assessing the impact of this announcement, which will be adopted in the first quarter of 2002, on its consolidated financial statements.

Reclassifications

Certain amounts in the 2000 and 1999 consolidated financial statements have been reclassified for comparative purposes with 2001.

3. Cash Management System

Cox participates in CEI's cash management program, whereby CEI transfers funds from Cox's depository accounts and transfers funds to financial institutions upon
daily notification of checks presented for payment. Book overdrafts of $90.7 million and $104.2 million existed at December 31, 2001 and 2000, respectively, as a result of checks
outstanding. These book overdrafts are reclassified as accounts payable and are considered financing activities in the Consolidated Statements of Cash Flows.

4. Acquisitions, Dispositions and Exchanges of Businesses

2000 Acquisitions and Transactions

In January 2000, Cox completed the acquisition of cable systems serving 522,000 customers in Kansas, Oklahoma and North Carolina from Multimedia
Cablevision, Inc., a subsidiary of Gannett Co., Inc., for $2.7 billion.

In
March 2000, Cox and AT&T Corp. (AT&T) exchanged 50.3 million shares of AT&T common stock previously held by Cox for the stock of AT&T subsidiaries that own certain cable
systems serving approximately 495,000 customers and certain other assets and liabilities, including cash. Cox received: cable systems serving Oklahoma and Louisiana; the remaining 20% ownership
interest in a partnership
in which Cox acquired an 80% interest through its merger with TCA Cable TV, Inc. (TCA); Peak Cablevision LLC, which has customers in Oklahoma, Arkansas, Utah and Nevada; and approximately
$798.0 million in other assets and liabilities, including cash. Cox recognized a pre-tax gain of $775.9 million in connection with this transaction.

1999 Acquisitions and Transactions

In August 1999, Cox completed its merger with TCA, a cable television operator serving approximately 883,000 customers in Texas, Arkansas, Louisiana and
four other states for $1.6 billion in cash, 38.3 million shares of Cox common stock and assumed indebtedness of $540.0 million. Upon completion of the merger, Cox repaid
$340.0 million of the assumed TCA debt. Cox also acquired VPI Communications, Inc., an affiliate of TCA, and TCA's interest in two majority-owned partnerships in connection with the TCA
merger.

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Also
in August 1999, Cox exchanged its cable systems in Massachusetts, serving more than 54,000 customers, for MediaOne properties in Connecticut and Rhode Island, serving 51,000
customers, and cash. Cox recognized a pre-tax gain of $77.4 million in connection with this transaction.

In
October 1999, Cox completed the acquisition of cable systems serving more than 260,000 customers in northern Virginia from Media General, Inc. for $1.4 billion.

Also
in October 1999, Cox reorganized its partnership with Time Warner Entertainment Company, L.P., under which Cox acquired control of the cable system serving Fort Walton Beach,
Florida and received $104.5 million, and Time Warner acquired control of the cable system serving Staten Island, New York. Cox recognized a pre-tax gain of $94.8 million in
connection with this reorganization.

The
purchase price of each of the acquisitions was allocated to the assets purchased and liabilities assumed based on their estimated fair market value at the date of acquisition in
accordance with APB Opinion No. 16,Business Combinations. The purchase price allocations of each acquisition are finalized as independent
appraisals of certain tangible and intangible assets acquired are received. The excess of purchase price over the fair value of net assets acquired has been recorded as franchise value and is being
amortized on a straight-line basis over 40 years.

The
following summarized unaudited pro forma combined financial information for the years ended December 31, 2000 and 1999 assumes the acquisitions of cable systems from
Multimedia and AT&T
occurred on January 1 of each year and also that the TCA merger and the acquisition of cable systems from Media General occurred on January 1, 1999.

Pro Forma
Year Ended December 312000

1999(Thousands of Dollars, excluding earnings per share)
(unaudited)Revenue

$
3,573,339

$
3,050,938Operating income


142,023


289,954Net income


1,153,350


773,879Earnings per shareBasic net income per share

$
1.92

$
1.28Diluted net income per share


1.90


1.26


50

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5. Investments

December 31
2001

December 31
2000(Thousands of Dollars)Equity method investments

$
909

$
86,394Investments stated at fair value:Available-for-sale


2,903,062


3,784,799Trading securities


475,995


Derivative instruments


90,494


Investments stated at cost


44,773


25,219Total investments

$
3,515,233

$
3,896,412


Equity Method Investments

Discovery Communications, Inc.The principal businesses of Discovery are the advertiser-supported basic cable networks
The Discovery Channel, The Learning Channel, Animal Planet Network, The Travel Channel and Discovery Europe and the retail businesses of Discovery.com. In 2000, Cox ceased applying the equity method
on its investment in Discovery as Cox's cumulative proportionate share of equity in net losses exceeded the carrying amount of the investment. During the years ended December 31, 2001 and 1999,
Cox recognized equity in net losses in affiliated companies of $23.9 million and $11.8 million, respectively, related to its investment in Discovery.

Cox Communications PCS, L.P.In May 1999, Cox transferred its remaining 32.0% equity interest in Cox Communications
PCS, L.P. (Cox PCS) to Sprint Corporation in exchange for approximately 38.1 million shares of Sprint PCS common stockSeries 2. As a result of this transaction, Cox
recognized a pre-tax gain of $908.5 million. During the year ended December 31, 1999, Cox recognized equity in net losses in affiliated companies of $65.1 million,
related to its investment in Cox PCS.

TWC Cable Partners.In October 1999, Cox reorganized its partnership with Time Warner Entertainment Company, L.P.,
under which Cox acquired control of the cable system serving Fort Walton Beach, Florida and received $104.5 million, and Time Warner acquired control of the cable system serving Staten Island,
New York. Cox recognized a pre-tax gain of $94.8 million in connection with this reorganization. Cox's share of equity in net losses related to its investment in TWC Cable Partners
was nominal for the year ended December 31, 1999.

Outdoor Life/Speedvision.In July 2001, Cox sold its equity interests in Outdoor Life Network L.L.C., Speedvision
Network, L.L.C. and Cable Network Services, L.L.C. to Fox Sports, L.L.C. and Fox Sports CNS, L.L.C. for an aggregate cash purchase price of $439.7 million and recognized a pre-tax
gain of $436.1 million.

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5. Investments (Continued)

Summarized
combined unaudited financial information for all equity method investments and Cox's proportionate share (determined using Cox's ownership interest in each investment) for
2001, 2000 and 1999 is as follows:

|                        |  | Combined Financial Information
Year Ended December 31 |           | Cox's Proportionate Share
Year Ended December 31 |  
|----------------------- |  | ----------------------------------------------------- | --------- | ------------------------------------------------ | -
|
|
|Revenues                |  | $                                                     | 1,940,486 |                                                  | $
|Operating income (loss) |  |                                                       | (139,236  | )                                                |  
|Net loss                |  |                                                       | (184,127  | )                                                |  

Combined Financial Information
December 312001

2000(Thousands of Dollars)
(unaudited)Current assets

$
664,892

$
805,318Noncurrent assets


2,853,576


2,270,890Current liabilities


733,566


753,099Noncurrent liabilities


3,418,179


2,862,272


Cox's
proportionate share of the net losses stated above is not equal to the equity in net losses of affiliated companies as reported in the Consolidated Statements of Operations
primarily due to discontinuing the application of equity method accounting for certain investments when aggregate net losses from the investments have exceeded their carrying value and amortization of
other expenses. At December 31, 2001, the aggregate unamortized excess of Cox's investments over its equity in the underlying net assets of the affiliates was approximately $22.4 million
and is being amortized over 35 years.

The
investment balances and supplemental financial information above include the effects of the Cox PCS stock transaction, and Sprint PCS reorganization, as described herein.
Additionally, the above balances include investments in and advances to affiliated companies. The advances are generally interest-bearing long-term notes receivable, which total
$1.5 million and $36.5 million at December 31, 2001 and 2000, respectively. Interest income recognized on notes receivable was $3.1 million, $4.0 million and
$3.6 million in 2001, 2000 and 1999, respectively.

Investments Stated at Fair Value

The aggregate cost of Cox's investments stated at fair value at December 31, 2001 and 2000 was $2,326.0 million and $2,499.0 million,
respectively. Gross unrealized gains and losses on investments were $843.3 million and $76.6 million, respectively, at December 31, 2001 and $1,322.2 million and
$36.4 million, respectively, at December 31, 2000. Gross realized gains and losses on investments were $1,339.2 million and $188.0 million, respectively, for the year ended
December 31, 2001; $3,306.9 million and $24.9 million, respectively, for the year ended December 31, 2000; and $1,619.1 million and $49.7 million,
respectively, for the year ended December 31, 1999.

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Sprint PCS.Sprint offers personal communications services through its PCS group. At December 31, 2001, Cox's
investment in Sprint PCS was comprised of 91.9 million shares of Sprint PCS common stockSeries 2 and warrants and convertible preferred stock which are exercisable for, or
convertible into, approximately 10.3 million shares of Sprint PCS common stockSeries 2. The estimated fair value of Cox's investment in Sprint PCS was
$2,444.3 million and $2,330.3 million at December 31, 2001 and December 31, 2000, respectively.

In
January 2001, Cox entered into a series of prepaid forward contracts to sell up to 19.5 million shares of its Sprint PCS common stock. In contemplation of this
transaction, Cox recognized a $239.3 million pre-tax gain associated with a one-time reclassification of the 19.5 million shares of Cox's investment in Sprint PCS
common stock from available-for-sale securities to trading securities upon adoption of SFAS No. 133. Cox recognized an aggregate pre-tax gain of
$77.4 million on these trading securities as a result of the change in their fair value during the year ended December 31, 2001. For a further discussion, see Note 7. "Debt" and
Note 9. "Derivative Instruments and Hedging Activities."

In
2001, Cox entered into a series of costless equity collar arrangements to manage its exposure to market price fluctuations in approximately 15.8 million shares of its Sprint
PCS common stock with an aggregate fair value of $350.1 million. Also during 2001, Cox sold a total of 12.8 million shares of its Sprint PCS common stock for net proceeds of
approximately $318.2 million and recognized a pre-tax gain of $213.5 million. During 2000, Cox sold a total of 28.1 million shares of its Sprint PCS common stock for
aggregate proceeds of $1,422.6 million and recognized total pre-tax gains of $1,193.0 million.

Subsequent
to December 31, 2001, Cox terminated these collar arrangements and received aggregate proceeds of approximately $151.6 million. In connection with the
terminations, Cox also sold the 15.8 million shares of Sprint PCS common stock covered by the collar arrangements for aggregate proceeds of approximately $155.9 million. In addition, Cox
sold 9.4 million shares of Sprint PCS common stock that were not covered by the collar arrangements for aggregate proceeds of approximately $82.8 million. Cox expects to recognize a gain
on these transactions in the first quarter of 2002.

All
Sprint PCS share information reflects a two-for-one stock dividend paid by Sprint in February 2000.

Flextech plc.In March 2000, Cox sold its entire interest in Flextech, an English publicly held programming company,
for proceeds of $522.3 million and recognized a pre-tax gain of $318.9 million.

Excite@Home/AT&T.Excite@Home was both an Internet service provider and supplier of comprehensive Internet navigation
services. In August 2000, Cox consummated an agreement with Excite@Home and AT&T pursuant to which the ownership, voting control and management of Excite@Home were restructured. In connection
with these transactions, Cox waived its rights under the Excite@Home stockholders agreement, which, among other things, entitled Cox to designate a person to be elected as a director of Excite@Home by
the holders of Excite@Home's Series B common stock. Cox's designee constituted one of five directors elected by the holders of Excite@Home's Series B common stock, and the consent of a
majority of such directors was required to authorize and approve certain actions on behalf of Excite@Home. Cox also caused its existing designee on Excite@Home's board of directors, who was elected by
the holders of Excite@Home's Series B common stock, to resign. In addition, as part of these transactions, Cox agreed to extend its distribution of certain Excite@Home services through June
2006, subject to certain termination rights. Pursuant to this agreement, Cox was entitled to warrants to

53

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purchase two shares of Excite@Home Series A common stock for each home its cable systems passed as of March 28, 2000, subject to adjustment under certain circumstances.

Cox
also received the right, under certain circumstances, to sell its shares in Excite@Home to AT&T, with a maximum amount payable to Cox of approximately $1.4 billion in cash or
shares of AT&T common stock, as elected by Cox. In January 2001, Cox exercised its right to sell Excite@Home shares to AT&T. However, Cox and AT&T agreed to restructure the transaction to
provide a more favorable tax structure for AT&T, and in May 2001, AT&T issued 75.0 million shares of AT&T common stock to Cox, Cox retained its Excite@Home common stock and Cox's right
to sell its Excite@Home shares to AT&T was satisfied in full. Cox recognized a $307.4 million pre-tax gain in the second quarter of 2001 associated with the exercise and
satisfaction of the right-to-sell agreement.

Also
in May 2001, Cox completed a private placement of 25.0 million shares of its AT&T common stock for net proceeds of $525.5 million, which approximated the fair
value of these shares. In addition, Cox tendered 15.0 million shares of AT&T common stock for approximately 17.6 million shares of AT&T Wireless common stock in a registered exchange
offer and recognized a nominal pre-tax loss. In
July 2001, Cox received a stock dividend from AT&T of approximately 11.3 million shares of AT&T Wireless common stock as a result of AT&T's split-off of AT&T Wireless. During
2001, Cox sold 5.0 million shares of AT&T Wireless common stock in open-market transactions for net proceeds of approximately $83.1 million and recognized a nominal
pre-tax loss.

During
2001, Cox entered into a costless equity collar arrangement to manage its exposure to market price fluctuations in 10.0 million shares of its AT&T Wireless common stock.
Also, during 2001, Cox entered into two costless equity collar arrangements to manage its exposure to market price fluctuations in 22.5 million shares of its AT&T common stock. Cox pledged
10.0 million AT&T Wireless shares and 22.5 million AT&T shares as collateral for these collar transactions and, in accordance with the collar agreements, Cox deposited 7.2 million
AT&T Wireless shares received in connection with the AT&T Wireless split-off in July 2001 as additional collateral under the AT&T collar transactions.

In
September 2001, Excite@Home, Cox's primary high-speed Internet provider, filed for protection under Chapter 11 of the U.S. Bankruptcy Code. Subsequently, Cox and
Excite@Home entered into two separate agreements so that Cox would continue to receive high-speed Internet access services from Excite@Home for existing and new customers through
February 28, 2002 and so that Excite@Home would provide minimal services to Cox related to the transition of Cox's customers to Cox High Speed Internet service. Pursuant to one of these
agreements, Cox paid Excite@Home $160.0 million. Of this amount, approximately $150.2 million was recognized in 2001 in Cox's Consolidated Statement of Operations and approximately
$9.8 million is attributable to services that will be provided, and hence recognized, in 2002. In February 2002, Cox completed the transition of its customers from Excite@Home's
high-speed Internet access service to Cox High Speed Internet service.

Subsequent
to December 31, 2001, Cox terminated all three of its collar transactions and received aggregate proceeds of approximately $112.8 million. In connection with the
terminations, Cox also sold the 22.5 million shares of AT&T common stock and 17.2 million shares of AT&T Wireless common stock covered by these collar transactions for aggregate net
proceeds of approximately $527.0 million. In addition, Cox sold 12.5 million shares of AT&T common stock and 6.7 million shares of AT&T Wireless common stock that were not covered
by collar transactions for aggregate net proceeds of approximately $263.8 million. As a result of these transactions, Cox no longer holds any shares of AT&T common stock or

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AT&T Wireless common stock. Cox expects to recognize a loss on these transactions in the first quarter of 2002.

Cox
has accounted for its interests in Excite@Home, AT&T and AT&T Wireless common stock at fair value as available-for-sale securities. At December 31,
2001, the estimated fair value of Cox's interests in Excite@Home, AT&T and AT&T Wireless were approximately $0, $634.9 million and $343.5 million, respectively. At December 31,
2000, the estimated fair value of Excite@Home, including the right to sell agreement with AT&T, was approximately $1.4 billion. AT&T Wireless share information reflects the redemption and
exchange of AT&T Wireless Group tracking stock for AT&T Wireless common stock as part of the AT&T Wireless split-off from AT&T in July 2001.

In
March 2000, Cox exchanged 50.3 million shares of AT&T common stock previously held by Cox for the stock of AT&T subsidiaries that own certain cable systems. See
Note 4. "Acquisitions, Disposals and Exchanges of Businesses."

Telewest Communications plc.Telewest is a company that operates and constructs cable television and telephony systems in the
United Kingdom. In January 1999, Cox sold its entire interest in Telewest for $727.9 million and recognized a pre-tax gain of $433.1 million.

Other

During 2001 and 2000, Cox recorded aggregate pre-tax losses of approximately $73.5 million and $22.8 million, respectively, on certain
of its investments as a result of a decline in market value that was considered other than temporary. These losses are included in net gain on investments in Cox's Consolidated Statement of
Operations.

Cox
has several other fair value, equity and cost method investments which are not, individually or in the aggregate, significant in relation to the Consolidated Balance Sheets at
December 31, 2001 and 2000.

6. Income Taxes

Current and deferred income tax expenses (benefits) are as follows:

Year Ended December 312001

2000

1999(Thousands of Dollars)CurrentFederal

$
408,770

$
381,276

$
164,338State


(7,917
)

44,751


49,048Total current


400,853


426,027


213,386DeferredFederal


(199,731
)

362,498


318,672State


(107,083
)

88,506


47,907Total deferred


(306,814
)

451,004


366,579Net income tax expense

$
94,039

$
877,031

$
579,965


55

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The
difference between net income tax expense and income taxes expected at the U.S. statutory federal income tax rate of 35% are as indicated below:

Year Ended December 312001

2000

1999(Thousands of Dollars)Federal tax expense at statutory rates on income before income taxes

$
71,087

$
1,005,240

$
518,171State income taxes (benefit), net of federal benefit


(8,593
)

86,617


63,021Amortization of acquisition adjustments


33,575


33,377


26,104Gain on exchange of cable system





(271,567
)

Other, net


(2,030
)

23,364


(27,331
)Net income tax expense

$
94,039

$
877,031

$
579,965


Significant
components of Cox's net deferred tax liability are as follows:

December 312001

2000(Thousands of Dollars)Depreciation and amortization

$
(3,200,836
)
$
(3,029,006
)Gain on investments, net


(536,163
)

(1,066,904
)Unrealized gain on securities


(418,351
)

(493,184
)Cumulative effect of change in accounting principle


(326,750
)

Other, net


(56,188
)

(3,561
)Net deferred tax liability

$
(4,538,288
)
$
(4,592,655
)


Cox
is currently subject to various federal and state income tax return audits. Cox does not believe that current income tax audits will have a material impact on its financial
statements.

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7. Debt

December 312001

2000(Thousands of Dollars)Revolving credit facilities

$


$
Commercial paper


727,384


1,524,772Medium-term notes


391,183


424,065Notes and debentures


5,313,517


4,110,409Exchangeable Subordinated Debentures due November 15, 2029.


981,283


1,272,188Exchangeable Subordinated Debentures due March 14, 2030


151,823


274,996Exchangeable Subordinated Discount Debentures due April 19, 2020


696,391


804,646Capitalized lease obligations


140,866


105,516Other


15,228


27,170Total debt

$
8,417,675

$
8,543,762


Shelf Registrations

Cox had approximately $2.9 billion available under its existing shelf registration statements at December 31, 2001, of which $575.0 million
is reserved in connection with the RHINOS, as described in Note 8. "Cox-Obligated Capital and Preferred Securities of Subsidiary Trusts." In January 2001, Cox filed a shelf
registration statement with the SEC under which Cox, or certain wholly-owned Cox financing trusts, may from time to time offer and issue various debt and equity instruments for a maximum aggregate
amount up to $2.0 billion. Of the $2.0 billion registered under this registration statement, $444.8 million represents a transfer of the remaining amount available under Cox's
July 1999 shelf registration statement. This registration statement was declared effective by the SEC in February 2001.

In
July 2001, Cox and Cox Trust I, a wholly-owned Cox financing trust, filed a new shelf registration statement with the SEC under which Cox or Cox Trust I may issue various debt
and equity instruments for a maximum aggregate amount up to $2.0 billion. This registration statement includes $1.5 billion of previously registered but unsold securities transferred
from the February 2001 shelf registration statement.

Revolving Credit Agreements

Cox has a $1.5 billion 364-day credit agreement available through June 28, 2002 and a $0.9 billion 5-year credit
agreement available through September 26, 2005. At Cox's election, the interest rate on these credit agreements is based on London Interbank Offered Rate (LIBOR), the certificate of deposit
rate plus varying percentages or an alternate base rate. These credit agreements also impose a commitment fee on the unused portion of the total amount available based on a ratio of debt to operating
cash flow, a measure of performance not calculated in accordance with accounting principles generally accepted in the Unites States of America, and a utilization fee based on the level of borrowings.
Cox had no borrowings outstanding under either credit agreement at December 31, 2001 and 2000.

57

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Commercial Paper

Cox had outstanding commercial paper of approximately $0.7 billion at December 31, 2001 and $1.5 billion at December 31, 2000. This
commercial paper is backed by amounts available under Cox's revolving credit agreements. The weighted-average interest rates for outstanding commercial paper were 5.4% and 6.7% for the years ended
December 31, 2001 and 2000, respectively.

Medium-Term Notes

At December 31, 2001 and 2000, Cox had outstanding borrowings under several fixed rate medium-term notes due in varying amounts through 2028
which pay interest in cash at fixed rates ranging from 6.7% to 7.2% per annum. In October 2001, Cox repaid its 6.94% medium term notes due October 1, 2001 upon maturity.

Notes and Debentures

Cox had outstanding borrowings under several fixed-rate notes and debentures of approximately $5.1 billion and $3.9 billion at
December 31, 2001 and 2000, respectively. The fixed-rate notes and debentures are due in varying amounts through 2033 and pay interest in cash at rates ranging from 6.15% to 7.875%
per annum. Cox also had an outstanding borrowing under a floating rate note, as described below, of approximately $206.3 million and $206.9 million at December 31, 2001 and 2000,
respectively.

2001 Issuances and Repayments.In February 2001, Cox privately placed $685.0 million aggregate principal amount
at maturity of its convertible senior notes due 2021 for proceeds of $466.6 million, net of an original issue discount of $208.9 million and commissions. In March 2001, Cox
privately placed an additional $85.8 million aggregate principal amount at maturity of the convertible notes upon the partial exercise of the initial purchasers' over-allotment
option. Cox received additional proceeds of $58.5 million, net of commissions, original issue discount and cash interest accrued since February 2001. The convertible notes are
convertible at the option of the holders at any time prior to maturity, and upon conversion, Cox may deliver, at its option, 11.8135 shares of Cox Class A common stock per $1,000 principal
amount at maturity or the cash equivalent thereof. The convertible notes pay interest in cash on a semi-annual basis at a rate of 0.348% per annum on the principal amount at maturity.
Accretion of the original issue discount plus the semi-annual cash interest payments represents a yield to maturity of 2.25%. In April 2001, Cox filed a registration statement on
Form S-3 to register the resale of its convertible senior notes due 2021 and the shares of Class A common stock issuable upon conversion thereof. This registration statement
was declared effective by the Securities and Exchange Commission in July 2001.

In
accordance with the terms of the indenture governing the convertible notes, Cox became obligated to purchase for cash convertible notes tendered and not withdrawn before the close of
business on February 22, 2002. Cox repurchased $329.1 million aggregate principal amount at maturity of the convertible notes that had been properly tendered and not withdrawn, for
aggregate cash consideration of $232.8 million, which represented the amortized cost of the repurchased notes. As a result, $441.7 million aggregate principal amount at maturity of Cox's
convertible notes remain outstanding. In addition, Cox made an aggregate cash payment of $7.5 million to the remaining holders of the convertible notes who elected not to require Cox to
repurchase their notes.

In
March 2001, Cox issued a series of 6.75% senior notes due March 15, 2011 with an aggregate principal amount of $500.0 million, less offering costs and
underwriting commissions of $3.3 million, in a

58

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registered public offering. The 6.75% senior notes are unsecured and rank equally with Cox's other senior unsecured indebtedness. In addition, the 6.75% senior notes may be redeemed by Cox in whole
or in part at any time prior to maturity at 100% of the principal amount plus accrued and unpaid interest and a make-whole premium, if any. Interest is payable on a semi-annual
basis beginning September 15, 2001.

In
August 2001, Cox's 7.0% notes due August 16, 2001 matured, and Cox repaid the $300.0 million aggregate principal amount of such notes.

2000 Issuances and Repayments.In January 2000, Cox borrowed $500.0 million under a floating-rate
bridge loan, which was subsequently repaid in March 2000. In March 2000, Cox called and redeemed all $525.0 million aggregate principal amount of its floating-rate
notes due August 15, 2000. In June 2000, Cox repaid its 6.375% notes with an aggregate principal amount of $425.0 million upon their maturity.

In
November 2000, Cox issued two series of senior debt securities in an offering under its shelf registration statement with an aggregate principal amount of $1.0 billion,
less offering costs and underwriting commissions of $5.9 million. Both securities are unsecured and rank equally with Cox's other unsecured senior indebtedness.

The
first series of securities, referred to as the7.75% Notes,was issued with an aggregate principal amount of $800.0 million and
is due November 1, 2010. The 7.75% Notes may be redeemed by Cox in whole or in part at any time prior to maturity at 100% of the principal amount plus accrued and unpaid interest and a
make-whole premium, if any. Interest is payable on a semi-annual basis beginning May 1, 2001.

The
second series of securities, referred to as theMOPPRS/CHEERS,was issued with an aggregate principal amount of $200.0 million
and is due November 7, 2012. The MOPPRS/CHEERS are subject to mandatory tender to the remarketing dealers on November 7, 2002 at 100% of the principal amount, if
the remarketing dealers elect to remarket the MOPPRS/CHEERS. Otherwise, Cox will be required to repurchase the MOPPRS/CHEERS from the beneficial owners at 100% of the principal amount plus accrued
interest, if any, if the remarketing dealers do not purchase the tendered MOPPRS/CHEERS or do not elect to remarket all or a portion of the MOPPRS/CHEERS. Unless maturity is extended under certain
circumstances pursuant to a remarketing, the MOPPRS/CHEERS will mature on November 7, 2012. In addition, Cox may not redeem the MOPPRS/CHEERS prior to November 7, 2002. Interest on the
MOPPRS/CHEERS is payable and reset quarterly at a floating rate of three month LIBOR plus 70 basis points. Thereafter, in the event the MOPPRS/CHEERS are remarketed, the interest rate on the
MOPPRS/CHEERS will be reset in accordance with the terms of the remarketing.

Exchangeable Subordinated Debentures

Exchangeable Subordinated Debentures due November 15, 2029.In November 1999, Cox issued 14,375,000 PRIZES in a
registered public offering for aggregate net proceeds of approximately $1.3 billion, less offering costs and underwriting commissions of approximately $35.0 million. Interest on the
PRIZES is payable quarterly at a rate of 7.75% per year on the original principal amount through November 15, 2002, and thereafter at a rate of 2% per year on the original principal amount.

The
original principal amount of each PRIZES is indexed to the trading price of Sprint PCS common stock. The maximum number of shares of Sprint PCS common stock attributable to each
PRIZES is currently two shares, and the minimum number is equal to 1.7242 shares. The maximum and minimum

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number of reference shares will be redetermined on November 15, 2002, or in the case of a redemption of the PRIZES on a date which is between November 6 and November 15, 2002,
effective on such redemption date.

The
payment upon maturity of the PRIZES is dependent upon the current market value of the maximum number of reference shares attributable to each PRIZES, plus a final period distribution
premium, as defined. Prior to maturity, the PRIZES are exchangeable at the holders' option at any time at an amount dependent upon the current market value of the minimum number of reference shares
attributable to each PRIZES, subject to adjustment under certain circumstances. In addition, the PRIZES are redeemable by Cox at any time at a redemption price dependent upon the current market value
of the maximum number of reference shares attributable to each PRIZES, plus the final period distribution and a make-whole premium until November 2002. Cox will have to pay an
additional amount of premium if redeemed prior to November 15, 2002.

Exchangeable Subordinated Debentures due March 14, 2030.In March 2000, Cox issued $275.0 million
aggregate principal amount of Premium PHONES in a registered public offering for net proceeds of approximately $269.5 million. Interest on the Premium PHONES is payable
semi-annually at a rate of
3% per year on the original principal amount. Each Premium PHONES is indexed to the trading price of 16.28 shares of Sprint PCS common stock.

Prior
to March 14, 2002, the Premium PHONES are exchangeable at the holders' option initially for cash based on the market value of the shares underlying each Premium PHONES. On
and after that date, the Premium PHONES can be exchanged by the holder based on the market value of the underlying shares for, at Cox's election, cash, shares of Sprint PCS common stock or a
combination of both. In addition, on or after March 17, 2004, Cox may redeem the Premium PHONES for cash based on the market value of the underlying shares, plus accrued and unpaid interest and
a final period distribution premium, as defined.

At
maturity, holders of the Premium PHONES are entitled to receive, at Cox's election, cash, equal to the then exchange market value of the underlying shares plus accrued and unpaid
interest and a final period distribution, as defined, or the shares underlying the Premium Phones.

Exchangeable Subordinated Discount Debentures due April 19, 2020.In April 2000, Cox issued $1.8 billion
aggregate principal amount at maturity of Discount Debentures in a registered public offering for proceeds of approximately $764.0 million, net of offering costs and underwriting commissions of
$18.7 million and original issue discount of $1.1 billion. Interest on the Discount Debentures is payable semi-annually at a rate of 1% per annum on the original issue price
of each debenture. The accretion of the original issue discount plus the 1% interest payments result in an annualized yield to maturity of 5%. Each Discount Debenture is indexed to the trading price
of 7.5908 shares of Sprint PCS common stock.

Prior
to April 19, 2002, the Discount Debentures are exchangeable at the holders' option for cash based on the market value of the shares underlying each Discount Debenture. On
and after that date, the Discount Debentures can be exchanged by the holder based on the market value of the underlying shares for, at Cox's election, cash, shares of Sprint PCS common stock or a
combination of both. The holders may also require Cox to repurchase these securities on certain dates prior to maturity at a purchase price equal to the adjusted principal amount, as defined, plus any
accrued and unpaid cash interest. Cox may pay in cash, shares of Sprint PCS common stock or a combination of both.

60

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On
or after April 19, 2005, Cox may redeem some or all of the Discount Debentures for cash at a redemption price per debenture equal to the adjusted principal amount, plus any
accrued and unpaid cash interest.

The
PRIZES, Premium PHONES and Discount Debentures are unsecured, subordinated obligations, ranking junior in right of payment to all of Cox's existing and future senior indebtedness.
These
instruments are accounted for as derivative instruments pursuant to SFAS No. 133. See Note 9. "Derivative Instruments and Hedging Activities" for more information.

Zero-Coupon Debt

In January 2001, Cox entered into a series of prepaid forward contracts to sell up to 19.5 million shares of its Sprint PCS common
stockSeries 2 with an aggregate fair value as of the respective trade dates of $502.0 million for proceeds of $389.4 million, which was net of an original issue
discount of $112.6 million. These contracts mature at various dates between 2004 and 2006 and, at Cox's election, can be settled in cash or shares of Sprint PCS common stock. Cox has accounted
for these contracts as zero-coupon debt instruments and is accreting the $112.6 million original issue discount through the respective contract maturity dates using the effective
interest method. Embedded in each of the contracts is an equity collar agreement, which will allow Cox to manage its exposure to fluctuations in the fair value of the Sprint PCS common stock through
the contract maturity dates. The equity collar agreements embedded in the contracts are being accounted for as derivative instruments in accordance with the requirements of SFAS No. 133 and the
change in fair value of these derivatives between measurement dates is recognized through earnings. See Note 9. "Derivative Instruments and Hedging Activities."

Interest Rate Swaps

Cox has entered into interest rate swap agreements with banks to manage its exposure to changes in interest rates associated with certain of its
fixed-rate debt obligations whereby these fixed-rate debt obligations are effectively converted into floating-rate debt obligations. In August 2001, Cox
terminated its interest rate swap agreement expiring on August 15, 2004 with a notional principal amount of $375.0 million that converted the 7.5% fixed rate on certain senior debt
securities due August 15, 2004 with an aggregate principal amount of $375.0 million to a variable rate and received approximately $24.0 million in cash which represented the fair
value of the instrument. Cox contemporaneously entered into a new interest rate swap agreement expiring on August 15, 2004 with a notional principal amount of $375.0 million to convert
the 7.5% fixed rate on certain senior debt securities due August 15, 2004 with an aggregate principal amount of $375.0 million to a variable rate.

The
variable rates with respect to Cox's interest rate swaps are adjusted quarterly based on LIBOR. The notional amounts with respect to the interest rate swaps do not quantify risk, but
are used in the determination of cash settlements under the interest rate swap agreements. Cox is exposed to a credit loss in the event of nonperformance by the counterparties. However, Cox does not
anticipate nonperformance by the counterparties, and no material loss would be expected in the event of the counterparties' nonperformance. For a further discussion regarding Cox's accounting for
interest rate swaps, see Note 9. "Derivative Instruments and Hedging Activities."

61

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The
following table summarizes the notional amounts, weighted average interest rate data and maturities for Cox's existing interest rate swaps at December 31, 2001 and 2000:

December 312001

2000Notional amount (in thousands)

$
1,150,000

$
750,000Average receive interest rate


7.38
%

7.02
%Average pay interest rate


4.84
%

6.39
%Maturity


2004 - 2006


2004 - 2005


As
a result of the settlements under these agreements, interest expense was reduced by $22.1 million and $3.1 million during the years ended December 31, 2001 and
2000, respectively.

Other

Certain of Cox's debt instruments and credit agreements contain covenants which, among other provisions, restrict the payment of cash dividends or the repurchase
of capital stock if certain requirements are not met as to the ratio of debt to operating cash flow. Operating cash flow, a measure of performance not calculated in accordance with generally accepted
accounting principles, is defined as operating income before depreciation, amortization and gain on sale and exchange of cable systems. Historically, Cox has not paid dividends nor does Cox intend to
pay dividends in the foreseeable future but to reinvest future earnings, consistent with its business strategy. Although Cox was in compliance with its credit facility covenants at December 31,
2001, Cox was restricted from paying dividends.

Excluding
commercial paper, maturities of long-term debt for each of the five years subsequent to December 31, 2001 and thereafter, are $439.0 million,
$312.5 million, $672.0 million, $565.9 million, $644.9 million and $6,911.5 million, respectively. Subsequent to December 31, 2001, Cox repaid all of its
commercial paper outstanding of $727.4 million with proceeds from monetizations of certain investments. Included in the maturities of long-term debt are obligations under capital
leases of $39.0 million, $35.5 million, $29.7 million, $23.5 million, $12.6 million and $0.5 million for each of the five years subsequent to
December 31, 2001 and thereafter, respectively. The maturities of long-term debt represent future contractual obligations and are reported gross of any related discounts, premiums
and other adjustments necessary to comply with accounting principles generally accepted in the U.S. These amounts represented a contra liability of approximately $1,855.5 million at
December 31, 2001. Certain debt obligations are subject to remarketing prior to maturity, subject to repurchase prior to maturity or may be settled with shares of Sprint PCS common
stock.

8. Cox-Obligated Capital and Preferred Securities of Subsidiary Trusts

Cox Trust II (the Trust), a statutory business trust formed under the laws of the State of Delaware and a wholly-owned consolidated subsidiary of Cox, issued
13 million FELINE PRIDES and 1.3 million Trust capital securities in August 1999 for aggregate proceeds of $650.0 million, less offering costs of $19.5 million. The
Trust invested the proceeds in 7% Senior Debentures due 2004 (the Debentures) issued by Cox, which represent the sole assets of the Trust. The Debentures are unsecured, bear interest at a rate of 7%
per year payable in cash on a quarterly basis and mature in August 2004. The obligations of the Trust related to the FELINE PRIDES and the Trust capital securities are guaranteed by Cox.

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The
FELINE PRIDES consist of 11.7 million Income PRIDES and 1.3 million Growth PRIDES. Each Income PRIDES consists of a capital security of the Trust and a forward purchase
contract under which the holder is required to purchase Class A common stock from Cox on August 16, 2002. The Trust capital securities forming a part of the Income PRIDES and the
stand-alone Trust capital securities bear interest, in the form of distributions, at an annual rate of 7% payable in cash on a quarterly basis. On or prior to the fifth business day preceding
August 16, 2002, the holders of Income PRIDES may elect to participate in a remarketing of the Trust capital securities in order to satisfy the holders' obligations under the related forward
purchase contracts forming a part of the Income PRIDES in lieu of satisfying their obligations in cash. The holders of the stand-alone Trust capital securities may also elect to participate in this
remarketing. Each Growth PRIDES consists of a 5% undivided beneficial ownership in a zero-coupon U.S. Treasury security, having a principal amount at maturity equal to $1,000, and a
forward purchase contract under which the holder is required to purchase Class A common stock from Cox on August 16, 2002. The forward purchase contracts forming a part of the Growth
PRIDES entitle the holders to unsecured contract adjustment payments of .25% of $50 per year payable in cash on a quarterly basis. The zero-coupon U.S. Treasury securities are pledged to
Cox to secure the holders' obligations under the forward purchase contracts forming a part of the Growth PRIDES.

The
forward purchase contracts forming a part of the Income and Growth PRIDES require the holder to purchase a minimum of 1.1962 shares and a maximum of 1.4414 shares of Cox
Class A common stock per forward purchase contract depending upon the average closing price per share of Cox's Class A common stock for a 20 consecutive day period ending on the third
trading day immediately preceding August 16, 2002. Interest on the Debentures, and therefore the distribution rate on the Trust capital securities, will be reset on August 16, 2002 to a
rate whereby the Trust capital securities have an approximate market value of 100.5% per security on the third business day immediately preceding August 16, 2002, subject to a maximum reset
rate equal to the two-year benchmark U.S. Treasury rate plus 200 basis points. The Debentures and, thus, the Trust capital securities, are redeemable at Cox's option upon the occurrence of
certain events based on a stated liquidation equal to the unpaid principal amount plus accumulated and unpaid distributions. Following any redemption prior to August 16, 2002, holders of the
Income PRIDES will own a portfolio of U.S. Treasury securities as a component of their Income PRIDES.

Cox
RHINOS Trust (the RHINOS Trust), a statutory business trust formed under the laws of the State of Delaware and a wholly-owned consolidated subsidiary of Cox, issued 500,000 RHINOS to
a special purpose entity in October 1999 for aggregate proceeds of $500.0 million, less offering costs of $11.3 million. The RHINOS are long-term auction rate reset
preferred securities, representing undivided beneficial interests in the assets of the RHINOS Trust. The RHINOS Trust invested the proceeds in Senior Notes due 2029 (the Notes) issued by Cox, which
represent the sole assets of the RHINOS Trust. The obligations of the RHINOS Trust related to the RHINOS are unconditionally guaranteed by Cox. The Notes bear interest and, thus, the RHINOS pay
distributions, at a floating rate based on LIBOR plus 75 points per year payable in cash on a quarterly basis and mature in October 2029. The weighted-average interest rate for the Notes was
5.08% and 7.19% for the years ended December 31, 2001 and 2000, respectively.

The
RHINOS are redeemable at Cox's option with the proceeds from one or more public offerings of its Class A common stock. If the RHINOS remain outstanding on or after
October 6, 2002 or if the closing price of Cox's Class A common stock falls below $28 per share, subject to adjustment upon the occurrence of certain events, Cox may be required to
remarket the RHINOS in a private auction to qualified

63

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institutional investors. The interest rate and maturity date of the RHINOS will be reset upon completion of the remarketing. Pursuant to the terms of the RHINOS underwriting agreement, Cox has
reserved $575.0 million of availability under an existing shelf registration statement.

The
FELINE PRIDES, stand-alone Trust capital securities and RHINOS have been presented as mezzanine equity in Cox's Consolidated Balance Sheets at December 31, 2001 and 2000. The
corresponding distributions on these securities, as well as the contract adjustment payments described above, totaled $68.5 million and $57.5 million, net of tax, for the years ended
December 31, 2001 and 2000, respectively, and have been presented as minority interest in the Consolidated Statement of Operations.

9. Derivative Instruments and Hedging Activities

On January 1, 2001, Cox adopted SFAS No. 133, as amended, which requires all derivative instruments to be measured at fair value and recognized on
the balance sheet as either assets or liabilities. In addition, all derivative instruments used in hedging relationships must be designated, reassessed and documented pursuant to the provisions of
SFAS No. 133. Upon adoption of SFAS No. 133, Cox recognized a one-time after-tax transition adjustment that increased earnings by approximately
$717.1 million and reduced accumulated other comprehensive income by approximately $194.0 million. These amounts have been presented as a cumulative effect of change in accounting
principle, net of tax, in the accompanying Consolidated Statement of Operations and Consolidated Statement of Shareholders' Equity for the year ended December 31, 2001.

Under
the provisions of SFAS No. 133, the accounting for changes in the fair value of derivative instruments at each new measurement date is dependent upon the intended use of
such derivative instruments. Changes in the fair value of derivative instruments not designated as hedges are immediately recognized in earnings. The effective and ineffective portion of changes in
the fair value of derivative instruments designated as hedges of assets, liabilities or firm commitments, referred to asfair value hedges, are
typically recognized in earnings as an offset to changes in the fair value of the related hedged assets, liabilities or firm commitments. The effective portion of changes in the fair value of
derivative instruments designated as hedges of forecasted transactions, referred to ascash flow hedges,are deferred and recorded as a component of
accumulated other comprehensive income until the hedged forecasted transactions occur and are recognized in earnings. The ineffective portion of changes in the fair value of derivative instruments
designated as cash flow hedges are immediately recognized in earnings. Cox determines the fair value of its derivative instruments through option-pricing models using current market prices and
volatility assumptions.

The
following is a summary of Cox's derivative instruments as of December 31, 2001 and the accounting policies it employs for each.

Interest Rate Swap Agreements

Cox utilizes four interest rate swap agreements to manage its exposure to changes in interest rates associated with certain of its fixed-rate debt
obligations whereby these fixed-rate debt obligations are effectively converted into floating-rate debt obligations. Under the provisions of SFAS No. 133, Cox has
designated and accounted for its interest rate swap agreements as fair value hedges whereby the fair value of the related interest rate swap agreements are classified as a component of other assets
with the corresponding fixed-rate debt obligations being classified as a component of debt in the Consolidated Balance Sheet. Cox has assumed no ineffectiveness with regard to these
interest rate swap agreements as

64

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they qualify for theshort-cut methodof accounting for fair value hedges of debt obligations, as prescribed by SFAS No. 133. The
aggregate fair value of Cox's interest rate swap agreements approximated a derivative asset of $53.4 million at December 31, 2001.

As
discussed in Note 7. "Debt", in August 2001 Cox terminated one of its four interest rate swap agreements (the Old Swap) and contemporaneously entered into a new interest
rate swap agreement (the New Swap). Under SFAS No. 133, Cox de-designated the Old Swap and designated the New Swap as a fair value hedge against certain fixed-rate debt
obligations. The New Swap qualifies for theshort-cut methodof accounting. As a result of terminating the Old Swap, Cox will amortize, as a
yield adjustment, the difference, which is nominal, between the par value and carrying amount of the fixed-rate debt obligation over the remaining term of the debt. The effect of this
amortization is not material to Cox's consolidated financial statements.

Right-to-Sell Agreement

Cox received the right to sell its shares of Excite@Home common stock to AT&T in conjunction with the restructuring of Excite@Home in August 2000, as
further described in Note 5. "Investments." Cox exercised this right in January 2001 for shares of AT&T common stock and completed this transaction, as restructured, in May 2001
in satisfaction of Cox's right-to-sell agreement. Prior to the adoption of SFAS No. 133, Cox accounted for the right-to-sell agreement at fair
value as an investment, classified as available-for-sale, and recognized changes in the fair value as a component of accumulated other comprehensive income. Upon adoption of
SFAS No. 133, the right-to-sell agreement met the definition of a freestanding derivative instrument and, as a result, on January 1, 2001, Cox reclassified the
unrealized gain on its right to sell agreement of approximately $151.3 million, net of tax, from accumulated other comprehensive income into earnings, classified as a component of the
cumulative effect of change in accounting principle in the Consolidated Statement of Operations. Prior to the consummation of the transaction with AT&T, Cox accounted for the
right-to-sell agreement as a derivative instrument whereby it was measured at fair value and classified as a component of investments in the Consolidated Balance Sheet. In
addition, Cox did not designate the right-to-sell agreement as a hedge of its investment in shares of Excite@Home common stock. Therefore, changes in the fair value of this
derivative were recognized in earnings and classified as a component of gain or loss on derivative instruments in the Consolidated Statement of Operations. During the year ended December 31,
2001, Cox recognized a net gain on derivative instruments as a result of changes in the fair value of the right-to-sell agreement of approximately $46.3 million.

Equity Collar Arrangements

In March and April 2001, Cox entered into a series of costless equity collar arrangements, expiring on various dates in October 2004, 2005 and 2006,
to manage its exposure to market price fluctuations of approximately 15.8 million shares of its Sprint PCS common stock. In June 2001, Cox entered into a costless equity collar
arrangement, expiring in June 2003, to manage its exposure to market price fluctuations of 10.0 million shares of its AT&T Wireless common stock. In June and July 2001, Cox
entered into two costless collar arrangements, expiring in June 2003 and July 2004, respectively, to manage its exposure to market price fluctuations of 22.5 million shares of its
AT&T common stock. Cox has designated and
accounted for the costless equity collars as fair value hedges whereby the fair value of the related costless equity collars is classified as a component of other assets in the Consolidated Balance
Sheet. In addition, Cox has elected to use an intrinsic value model to measure effectiveness whereby time

65

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value will be excluded from the measure of effectiveness on these fair value hedges. Accordingly, changes in the intrinsic value of these derivatives and changes in the fair value of the shares of
common stock designated in the hedging relationship are recorded as a derivative gain or loss and investment gain or loss, respectively, in the Consolidated Statement of Operations. In addition, the
change in the time value of the costless equity collars is also recognized in earnings and classified as gain or loss on derivative instruments in the Consolidated Statement of Operations.

The
fair value of the costless equity collars approximated a derivative obligation of $4.4 million at December 31, 2001. In addition, during the year ended
December 31, 2001, Cox recognized a net loss on derivative instruments as a result of changes in the fair value of the costless equity collars of approximately $4.4 million.

Subsequent
to December 31, 2001, Cox terminated all of its equity collar arrangements. For a further discussion of these transactions, see Note 5. "Investments."

Zero-Coupon Debt

In January 2001, Cox entered into a series of prepaid forward contracts to sell up to 19.5 million shares of its Sprint PCS common stock, as further
described in Note 7. "Debt." These prepaid forward contracts meet the definition of a hybrid instrument, as prescribed by SFAS No. 133. Each hybrid instrument is comprised of a
zero-coupon debt instrument, as the host contract, and an equity collar that meets the definition of an embedded derivative and derives its value based on the trading price of Sprint PCS
common stock. The embedded derivative instruments are not clearly and closely related to the underlying zero-coupon debt instruments since the economic characteristics and risks associated
with these derivatives are based on equity prices. Therefore, as prescribed by SFAS No. 133, Cox has separated the embedded derivative instruments from the hybrid instruments based on their
relative fair values and has classified these embedded derivatives as a component of debt.

Cox
has not designated the embedded derivative instruments as a hedge of its investment in Sprint PCS common stock. Accordingly, changes in the fair value of these embedded derivatives
are recognized in earnings and classified as a component of gain or loss on derivative instruments in the Consolidated Statement of Operations. The aggregate fair value of the embedded derivative
instruments approximated a derivative asset of $40.8 million at December 31, 2001. Cox recognized a net gain on derivative instruments of approximately $40.8 million during the
year ended December 31, 2001 as a result of the changes in the fair value of these embedded derivatives. In addition, upon adoption of SFAS No. 133, Cox elected a one-time
transfer of 19.5 million shares of its Sprint PCS common stock from available-for-sale to trading securities, as permitted by SFAS No. 133. As a result of this
transfer,
Cox recognized a pre-tax gain of approximately $239.3 million, representing the accumulated unrealized gain on these shares, previously recorded as a component of accumulated other
comprehensive income.

66

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9. Derivative Instruments and Hedging Activities (Continued)

Exchangeable Subordinated Debentures

Cox has three series of exchangeable subordinated debentures outstanding, the PRIZES, the Premium PHONES and the Discount Debentures. Prior to the adoption of
SFAS No. 133, the exchangeable subordinated debentures were accounted for as indexed debt instruments pursuant to Emerging Issues Task Force Issue No. 86-28, Accounting Implications of Indexed Debt Instruments,because the payment obligation by Cox at maturity or upon redemption or exchange by the holders was
dependent on the fair value of Sprint PCS common stock. Accordingly, the carrying value of these indexed debt instruments was adjusted to fair value through earnings and classified as expense or
income related to indexed debentures in the Consolidated Statement of Operations as the fair value of the Sprint PCS common stock increased or decreased such that Cox would be required to pay an
amount of contingent principal in excess of the original principal amount.

Upon
adoption of SFAS No. 133, the exchangeable subordinated debentures met the definition of a hybrid instrument. Each hybrid instrument is comprised of a debt instrument, as the
host contract, and an embedded derivative, which derives its value based on the trading price of Sprint PCS common stock. The embedded derivative instruments are not clearly and closely related to the
underlying debt instruments since the economic characteristics and risks associated with these derivatives are based on equity prices. Therefore, as prescribed by SFAS No. 133, Cox has
separated the embedded derivative instruments from the hybrid instruments based on their relative fair values and has classified these embedded derivatives as a component of debt.

In
order to determine the SFAS No. 133 transition adjustment associated with the exchangeable subordinated debentures, Cox first determined the initial carrying amount of the
embedded derivative instruments based on their relative fair value as of the date that each series of exchangeable
subordinated debentures was issued. Cox then separated the fair value of the embedded derivative instruments from the exchangeable subordinated debentures and the resulting difference in the initial
carrying amount of the exchangeable subordinated debentures, after separation of the embedded derivatives, has been accounted for as a discount on the underlying debt instruments, as prescribed by
SFAS No. 133. The carrying amount of the debt instruments as of January 1, 2001 was then determined based on their initial fair value and adjusted for any subsequent activity, such as
subsequent cash redemptions and amortization of the debt discount arising from the separation of the embedded derivative instruments. The carrying amount of the embedded derivative instruments as of
January 1, 2001 was determined based on their relative fair values as of that date. The difference between the carrying amount of the exchangeable subordinated debentures as of
January 1, 2001, just prior to the adoption of SFAS No. 133, and the sum of the adjusted carrying amount of the underlying debt instruments and fair value of embedded derivative
instruments as of January 1, 2001, resulted in a one-time after-tax increase in earnings of approximately $522.0 million, which was classified as a component of
the cumulative effect of change in accounting principle in the Consolidated Statement of Operations.

Cox
has not designated these embedded derivative instruments as a hedge of its investment in Sprint PCS common stock. Accordingly, changes in the fair value of these embedded derivatives
are recognized in earnings and classified as a component of gain or loss on derivative instruments in the Consolidated Statement of Operations. The aggregate fair value of the embedded derivative
instruments approximated a derivative obligation of $583.7 million at December 31, 2001, which has been classified as a component of debt in the Consolidated Balance Sheet, and the net
loss on derivative instruments recognized by Cox as a

67

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result of changes in the fair value of these embedded derivatives during the year ended December 31, 2001 was approximately $279.8 million.

Stock Purchase Warrants

Cox holds strategic investments in warrants to purchase equity securities of certain publicly-traded and privately-held entities. Warrants that can be
exercised and settled by delivery of net cash or net shares such that Cox would pay no cash upon exercise of the respective warrants are referred to asnet settleable
warrantsand meet the definition of a freestanding derivative instrument, as prescribed by SFAS No. 133. Net settleable warrants are measured at fair value and
recognized as a component of investments in the Consolidated Balance Sheet. The fair value of these net settleable warrants approximated a derivative asset of $90.5 million at
December 31, 2001.

Cox
has not designated its net settleable warrants as hedging instruments. Accordingly, changes in the fair value of these warrants are recognized in earnings and classified as a
component of gain or loss on derivative instruments in the Consolidated Statement of Operations. Cox recognized a net derivative loss of approximately $14.8 million during the year ended
December 31, 2001 as a result of changes in the fair value of its net settleable warrants.

10. Fair Value of Financial Instruments

Cox has estimated the fair value of its financial instruments as of December 31, 2001 and 2000 using available market information or other appropriate
valuation methodologies. Considerable judgment, however, is required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily
indicative of the amounts that Cox would realize in a current market exchange.

The
carrying amount of cash, accounts and other receivables, accounts and other payables and amounts due to/from CEI approximates fair value because of the short maturity of those
instruments. The fair value of Cox's investments stated at fair value are estimated and recorded based on quoted market prices as discussed in Note 5. "Investments." The fair value of Cox's
equity method investments and investments stated at cost cannot be estimated without incurring excessive costs. Cox is exposed to market price risk volatility with respect to investments in publicly
traded and privately held entities. Additional information pertinent to the value of those investments is discussed in Note 5. "Investments."

The
fair value of interest rate swaps used for hedging purposes was approximately $53.4 million and $35.2 million at December 31, 2001 and 2000, respectively, and
represents the estimated amount that Cox would receive upon termination of the swap agreements.

Cox's
outstanding commercial paper, revolving credit facilities, RHINOS and floating rate notes and debentures bear interest at current market rates and, thus, approximate fair value at
December 31, 2001 and 2000. Cox is exposed to interest rate volatility with respect to these variable-rate instruments.

The
estimated fair value of Cox's fixed-rate notes and debentures, exchangeable subordinated debentures and FELINE PRIDES at December 31, 2001 and 2000 are based on
quoted market prices or a discounted cash flow analysis using Cox's incremental borrowing rate for similar types of borrowing

68

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arrangements and dealer quotations. A summary of the carrying value and fair value of the fixed-rate instruments at December 31, 2001 and 2000 is as follows:

|                                     |  | December 31
|------------------------------------ |  | -----------
|
|
|
|Fixed-rate notes and debentures      |  | $          
|FELINE PRIDES                        |  |            
|Exchangeable subordinated debentures |  |            

11. Retirement Plans

Qualified Pension Plan

Cox maintains a qualified noncontributory defined benefit pension plan. Plan assets consist primarily of common stock, investment-grade corporate bonds, cash and
cash equivalents and U.S. government obligations. The pension plan calls for benefits to be paid to eligible employees at retirement based primarily upon years of service with Cox and compensation
rates near retirement. Current policy is to fund the plan in an amount that falls between the minimum contribution required by ERISA and maximum tax deductible contribution.

Total
pension expense was $17.5 million, $8.8 million, and $5.7 million for the years ended December 31, 2001, 2000 and 1999, respectively.

69

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The
changes in the projected benefit obligations and changes in plan assets and funded status of the pension plan for the periods ended December 31, 2001 and 2000 are as follows:

Year Ended December 312001

2000(Thousands of Dollars)Change in Projected Benefit ObligationProjected benefit obligation at beginning of year

$
134,594

$
100,818Service cost


19,674


11,380Interest cost


12,114


9,407Plan amendments


1,093


603Actuarial loss


13,654


13,832Benefits paid


(2,118
)

(1,446
)Projected benefit obligation at end of the year


179,011


134,594Change in Plan AssetsFair value of plan assets at beginning of year


150,625


134,874Actual return on plan assets


(6,510
)

9,097Employer contributions


16,104


8,100Benefits paid


(2,118
)

(1,446
)Fair value of plan assets at end of year


158,101


150,625Funded status of plan


(20,910
)

16,031Unrecognized actuarial gains (losses)


18,808


(15,029
)Unrecognized prior service cost


2,019


1,053Unrecognized net transition obligation


(153
)

(391
)Prepaid (accrued) benefit cost

$
(236
)
$
1,664


The
components of net periodic benefit cost and the weighted-average pension assumptions used in accounting for pension benefits are as follows:

|                                        |                                 | Year Ended December 31 |  
|--------------------------------------- | ------------------------------- | ---------------------- | -
|
|
|Components of net periodic benefit cost |                                 |                        |  
|                                        | Service cost                    |                        | $
|                                        | Interest cost                   |                        |  
|                                        | Expected return on plan assets  |                        |  
|                                        | Prior service cost amortization |                        |  
|                                        | Actuarial gain                  |                        |  
|                                        | Transition amount amortization  |                        |  
|                                        |                                 |                        |  
|                                        | Net periodic total cost         |                        | $
|                                        |                                 |                        |  
|Weighted-average pension assumptions    |                                 |                        |  
|                                        | Discount rate                   |                        |  
|                                        | Expected return on plan assets  |                        |  
|                                        | Rate of compensation increase   |                        |  

70

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Nonqualified Pension Plan

Certain key employees of Cox participate in an unfunded, nonqualified supplemental pension plan of CEI which has generally the same benefit payout formula as the
pension plan. Total pension expense recorded by Cox for the nonqualified CEI plan was $5.1 million, $3.1 million and $1.8 million for the years ended December 31, 2001,
2000 and 1999, respectively.

Other Retirement Plans

CEI provides certain health care and life insurance benefits to substantially all retirees of Cox. Post-retirement expense allocated to Cox by CEI was
$3.0 million, $2.6 million and $1.7 million for the years ended December 31, 2001, 2000 and 1999, respectively. The accumulated post-retirement benefit
obligation (APBO) attributable to Cox employees and retirees was $24.5 million and $26.3 million at December 31, 2001 and 2000, respectively. The funded status of the
post-retirement plan covering the employees of Cox is not determinable. The APBO for the post-retirement plan of CEI substantially exceeded the fair value of assets held in the
plan at December 31, 2001 and 2000.

Actuarial
assumptions used to determine the APBO include a discount rate of 7.25%, 7.50% and 8.00% for the years ended December 31, 2001, 2000 and 1999 respectively, and an
expected long-term rate of return on plan assets of 9.0% for all three years. For the years ended December 31, 2001, 2000 and 1999, the assumed health care cost trend rate for
retirees is 8.5%, 9.0% and 9.5%, respectively. For participants prior to age 65, the trend rate gradually decreases to 5.5% by year 2007 and remains level thereafter. For retirees at age 65 or older,
this rate decreases to 5.0% by year 2008. A 1% change in assumed health care cost trend rates would have the following effects as of December 31, 2001:

1% Increase

1% Decrease(Thousands of Dollars)Effect on service and interest cost components

$
416

$
(396
)Effect on other post-retirement benefit obligations


5,545


(4,886
)


In
addition, substantially all of Cox's employees are eligible to participate in the Savings and Investment plan. Under the terms of the plan, Cox matches 50% of employee contributions
up to a maximum of 6% of the employee's base salary. Cox's expense under the plan was $13.7 million, $11.9 million and $7.6 million for the years ended December 31, 2001,
2000 and 1999, respectively.

12. Stock Compensation Plans

At December 31, 2001, Cox had two stock-based compensation plans for employees: a Long-Term Incentive Plan (LTIP) and an Employee Stock
Purchase Plan (ESPP). Since the grant price of each LTIP award equals or exceeds the market price at the LTIP grant date, no compensation cost was recognized in 2001, 2000, and 1999. Further, the ESPP
qualifies as a noncompensatory plan under APB Opinion No. 25, and, as such, no compensation cost is recognized for ESPP awards. Had compensation cost for the LTIP and ESPP been determined based
on the fair value at the grant dates for awards in 2001, 2000 and 1999

71

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consistent with the provisions of SFAS No. 123, Cox's as reported and pro forma basic and diluted earnings per share before cumulative effect of change in accounting principle would have been
as indicated below:

|            |                                                                     | Year Ended December 31
|----------- | ------------------------------------------------------------------- | ----------------------
|
|
|As reported |                                                                     |                       
|            | Earnings before cumulative effect of change in accounting principle |                       
|            | Basic earnings per share                                            |                       
|            | Diluted earnings per share                                          |                       
|Pro forma   |                                                                     |                       
|            | Earnings before cumulative effect of change in accounting principle |                       
|            | Basic earnings per share                                            |                       
|            | Diluted earnings per share                                          |                       

Long-Term Incentive Plan

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions used for grants
made in 2001, 2000 and 1999: expected volatility at each grant date averaging 34.6%, 32.1% and 32.6%, respectively, no payment of dividends,
expected life of six years and risk-free interest rates calculated at each grant date and averaging 4.9%, 6.4% and 5.5%, respectively.

Under
the LTIP, executive officers and selected key employees are eligible to receive awards of various forms of equity-based incentive compensation, including stock options, stock
appreciation rights, stock bonuses, restricted stock awards, performance units and phantom stock. Cox has reserved 24,000,000 shares of Class A common stock for issuance under the LTIP. The
LTIP is to be administered by the Compensation Committee of the Board of Directors or its designee.

Options
granted may be "Incentive Stock Options" or "Nonqualified Stock Options." The exercise prices of the options are determined by the Compensation Committee when the options are
granted, subject to a minimum price of the fair market value of the Class A common stock on the date of grant. These options vest over a period of three to five years from the date of grant and
expire 10 years from the date of grant. For all options granted prior to July 1, 1999, an accelerated vesting schedule was provided such that the options become fully vested if the
market value of the shares exceeded the exercise price by 140% for ten consecutive trading days. All options granted prior to February 1, 1999 met the acceleration provisions and became fully
vested. The terms of options granted on and after July 1, 1999 do not contain an accelerated vesting provision.

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12. Stock Compensation Plans (Continued)

A
summary of the status of Cox's stock options granted under the LTIP as of December 31, 2001, 2000 and 1999 and changes during the years then ended is presented below:

|                                                                          |           | 2001 |           | 2000      |   | 1999 
|------------------------------------------------------------------------- | --------- | ---- | --------- | --------- | - | -----
|
|Outstanding at beginning of year                                          |           |      | 5,975,792 |           | $ | 26.45
|                                                                          | Granted   |      |           | 2,654,845 |   |      
|                                                                          | Exercised |      |           | (742,032  | ) |      
|                                                                          | Canceled  |      |           | (347,569  | ) |      
|                                                                          |           |      |           |           |   |      
|Outstanding at end of year                                                |           |      | 7,541,036 |           |   | 33.66
|                                                                          |           |      |           |           |   |      
|Options exercisable at year-end                                           |           |      | 3,436,856 |           | $ | 17.43
|Weighted-average grant date fair value of options granted during the year |           | $    | 19.86     |           |   |      

The
following table summarizes information about stock options outstanding and exercisable at December 31, 2001:

|  |               | Options Outstanding |           | Options Exercisable
|- | ------------- | ------------------- | --------- | -------------------
|
|$ | 8.49 - 11.31  |                     | 2,042,352 |                    
|  | 19.50 - 21.73 |                     | 682,005   |                    
|  | 33.59 - 39.66 |                     | 758,188   |                    
|  | 40.06 - 43.45 |                     | 146,147   |                    
|  | 45.31 - 51.44 |                     | 3,912,344 |                    
|  |               |                     |           |                    
|  |               |                     | 7,541,036 |                    
|  |               |                     |           |                    

Options
to purchase 3,893,157 shares of Class A common stock at $41.55 per share were granted on January 2, 2002.

Employee Stock Purchase Plans

In January 1998, Cox began administering its second ESPP, which had been adopted in April 1997 (the 1997 ESPP), under which Cox was authorized to
issue purchase rights totaling 2,500,000 shares of Class A common stock to substantially all employees who had completed six months of service. Purchase rights totaling 1,116,002 shares were
issued under the 1997 ESPP. Under the terms of the 1997 ESPP plan, the purchase price was 85% of the fair market value of the Class A common stock on October 31, 1997 and employees were
allowed to purchase the shares via payroll deductions through January 31, 2000, at which time the shares were issued to the employees. As of January 31, 2000, the 1997 ESPP was completed
and 883,269 shares were issued to employees. During 2000, no shares were issued to employees resulting from

73

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cancellation of employees' participation in the 1997 ESPP or termination of employment. The fair value of the employees' purchase rights granted in 1998 was estimated using the Black-Scholes model
with the following assumptions: expected volatility of 30.0%, no payment of dividends, expected life of 2.08 years and risk-free interest rate of 5.7%. The weighted average fair
value of each purchase right granted in 1998 was $8.67.

In
April 2000, Cox began administering its third ESPP (the 2000 ESPP), under which Cox is authorized to issue purchase rights totaling 2,000,000 shares of Class A common
stock. The 2000 ESPP has four alternate entry dates, two of which commenced in 2000 and two in 2001. Employees are eligible to participate in the 2000 ESPP as of the first entry date on which they are
employed and are regularly scheduled to work at least 20 hours per week and are employed as of the grant date corresponding to one of the entry dates. Under the terms of the 2000 ESPP, the
purchase price for entry date is the lower of 85% of the fair market value of the Class A common stock on the grant date (the initial purchase price) or 90% of the fair market value of the
Class A common stock on March 31, 2002, the end of the 2000 ESPP. The initial purchase price was set at $42.67, $34.72, $40.61 and $34.50 for the first, second, third and fourth entry
dates, respectively. Purchase rights totaling 741,457, 98,833, 41,861, and 17,477 shares were issued under the 2000 ESPP for the first, second, third and fourth entry dates, respectively. Employees
are allowed to purchase the shares via payroll deductions through March 31, 2002, at which time the shares will be issued. During 2001 and 2000, 9,295 shares and 1,420 shares, respectively,
were issued under the 2000 ESPP due to cancellation of employees' participation or termination of employment. The weighted-average fair value of each purchase right granted was $13.18,
$7.96, $10.78 and $8.43 for the first, second, third and fourth entry dates, respectively. The fair value of the employees' purchase rights granted in 2001 and 2000 was determined using the
Black-Scholes model with the following assumptions for the first, second, third and fourth entry dates: expected volatility of 30.0%, 34.0%, 35.4% and 34.2%, respectively, no payment of dividends,
expected life of 2.08 years, 1.54 years, 1.04 years and 0.54 years, respectively, and risk-free interest rate of 6.46%, 5.83%, 3.61% and 2.53%, respectively.

13. Shareholders' Equity

In May 1999, Cox effected a two-for-one stock split with respect to stockholders of record on May 14, 1999 and amended its
certificate of incorporation to increase the authorized convertible preferred stock to 10,000,000 shares, the authorized Class A common stock to 671,000,000 shares and the authorized
Class C common stock to 62,000,000 shares. All references to number of shares and per share information in the consolidated financial statements and notes herein have been restated to give
effect to this stock split.

Convertible Preferred Stock

The holders of Series A convertible preferred stock are entitled to one vote per share on all matters upon which holders of Class A common stock are
entitled to vote and pay dividends to the extent declared by Cox's Board of Directors. In addition, any time after October 1, 2028 or upon the occurrence of certain events, as defined, Cox may
redeem the Series A convertible preferred stock at the original issue price of $22.14 per share, plus accrued and unpaid dividends. The Series A convertible preferred stock is
convertible into registered shares of Class A common stock at the option of the holder, based upon a predetermined conversion formula, only after October 1, 2003, a change in control of
Cox or notification of liquidation. Also, these shares may automatically convert upon the occurrence of certain events, including the sale of substantially all of Cox's assets, as defined. Cox expects
to account for any

74

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appreciation realized upon conversion of the Series A convertible preferred stock as contingent purchase price in accordance with APB Opinion No. 16.

Common Stock

Cox's Class A common stock and Class C common stock are identical except with respect to certain voting, transfer and conversion rights. Holders of
Class A common stock are entitled to one vote per share and holders of Class C common stock are entitled to ten votes per share. The Class C common stock is subject to significant
transfer restrictions and is convertible on a share for share basis into Class A common stock at the option of the holder.

In
August 1999, Cox issued 38.3 million shares of Class A common stock with a fair value of $1.6 billion to TCA shareholders in connection with the TCA
merger, as described in Note 4. "Acquisitions, Dispositions and Exchange of Businesses."

In
August 1999, Cox issued 10,100,000 shares of Class A common stock under an existing shelf registration for aggregate proceeds of $350.3 million, less offering
costs of $12.4 million.

Earnings Per Share

The following table reconciles the numerator and the denominator of the basic and diluted earnings per share computations for the years ended December 31,
2001, 2000 and 1999:

Year Ended December 312001

2000

1999(Thousands of Dollars, excluding
per share dataIncome before cumulative effect of change in accounting principle(A)

$
37,911

$
1,925,525

$
881,928Basic weighted average shares outstanding(B)


600,366


601,952


572,609Effect of dilutive securities:Employee stock options


643


1,228


2,943Employee stock purchase plan


596


17


1,023Convertible preferred stock


7,138


4,997


4,114Forward purchase contracts forming a part of the FELINE PRIDES


74


355


2,393Diluted weighted average shares
outstanding(C)


608,817


608,549


583,082Earnings per share before cumulative effect of change in accounting principleBasic earnings per share(A/B)

$
0.06

$
3.20

$
1.54Diluted earnings per share(A/C)

$
0.06

$
3.16

$
1.51


Diluted
earnings per share for the years ended December 31, 2001 and 2000 exclude the effect of 10.9 million and 10.7 million shares, respectively, of Class A
common stock that may be issued upon redemption of the RHINOS because such effects would be antidilutive. Diluted earnings per share for the

75

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year ended December 31, 2001 excludes the effect of 6.7 million shares of Class A common stock that may be issued upon conversion of the convertible senior notes, because such
effect would be antidilutive.

Stock Repurchase Program

In April 2000, Cox approved a stock repurchase program whereby Cox is authorized to purchase up to $500.0 million of its outstanding Class A
common stock on the open market or through private transactions. During the year ended December 31, 2000, Cox repurchased 5.5 million shares of its Class A common stock on the
open market for an aggregate cost of $211.9 million. During 2001, Cox did not repurchase any shares of its Class A common stock under the stock repurchase program.

Other

At December 31, 2001 and 2000, CEI owned approximately 65.5% and 67.8%, respectively, of the outstanding shares of Cox common stock and held 75.6% and
77.2%, respectively, of the voting power of Cox.

14. Transactions with Affiliated Companies

CEI performs day to day cash management services for Cox. In addition, CEI provides certain other management services to Cox including legal, corporate
secretarial, tax, cash management, internal audit, risk management, benefits administration including self-insured health and other insured plans and other support services. Cox was
allocated expenses for the years ended December 31, 2001, 2000 and 1999 of approximately $5.3 million, $3.9 million and $3.3 million, respectively, related to these
services. Cox pays rent and certain other occupancy costs to CEI for its home office facilities, which approximated $7.2 million, $6.1 million and $5.6 million for the years ended
December 31, 2001, 2000 and 1999, respectively. Allocated expenses are based on CEI's estimate of expenses relative to the services provided to Cox in relation to those provided to other
divisions of CEI. Rent and occupancy expense is allocated based on occupied space. Management believes that these allocations were made on a reasonable basis. However, the allocations are not
necessarily indicative of the level of expenses that might have been incurred had Cox contracted directly with third parties. Management has not made a study or any attempt to obtain quotes from third
parties to determine what the cost of obtaining such services from third parties would have been. The fees and expenses to be paid by Cox to CEI are subject to change.

The
amounts due to CEI are generally due on demand and represent the net of various transactions, including those described above. Outstanding amounts due from CEI bear interest equal to
CEI's current commercial paper borrowing rate, which was 3.0% and 7.6% at December 31, 2001 and 2000, respectively.

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Included
in amounts due (to) from CEI are the following transactions:

(Thousands of Dollars)Intercompany due from CEI, December 31, 1999

$
114,821Cash transferred from CEI


(16,039
)Net operating expense allocations


(92,974
)Intercompany due from CEI, December 31, 2000


5,808Cash transferred to CEI


151,260Net operating expense allocations


(143,823
)Intercompany due from CEI, December 31, 2001

$
13,245


Cox
filed a shelf registration statement to register shares of its Class A common stock deliverable by CEI upon exchange of the 2% exchangeable senior notes due 2021 issued by CEI
in April 2001, and that shelf registration statement was declared effective by the SEC in July 2001. Pursuant to the indenture governing the exchangeable notes, CEI was obligated, at the
option of the holder, to purchase the exchangeable notes held by such holder if the notes were properly tendered and not withdrawn before the close of business on February 15, 2002. All of the
outstanding notes were tendered to CEI, and CEI repurchased all such notes in February 2002. Accordingly, in March 2002, Cox filed a post-effective amendment to its shelf
registration statement related to CEI's exchangeable notes to de-register the shares of Class A common stock covered by that registration statement.

In
October 2001, CEI sold 13.5 million shares of Cox Class A common stock it owned to two private investors. In connection with this transaction, Cox entered into
agreements providing the two private investors with certain demand and piggy-back registration rights.

Cox
pays fees to certain entities in which it has an ownership interest in exchange for cable programming. Programming fees paid to such affiliates for the years ended
December 31, 2001, 2000 and 1999 were approximately $69.7 million, $64.0 million and $47.0 million, respectively.

Cox
has invested in a series of local joint ventures with Cox Interactive Media, Inc., an indirect, wholly owned subsidiary of CEI, to develop, operate and promote advertising
supported local Internet content, orCity Sites, in the markets where Cox operates cable television systems featuring high speed Internet access. Cox is
a 49% equity holder in the joint ventures, has contributed approximately $22.3 million in the
aggregate and has agreed to certain non-compete provisions. Cox Interactive Media owns the remaining interest in these joint ventures and is responsible for
day-to-day operations of the joint ventures.

77

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15. Other Comprehensive Income

The following represents the components of other comprehensive income and related tax effects for the years ended December 31, 2001, 2000 and 1999:

|                                              |                                                                    | Before-Tax
Amount |            | Tax
(Expense)
or Benefit |   | Net-of-Tax
Amount |           
|--------------------------------------------- | ------------------------------------------------------------------ | ----------------- | ---------- | ------------------------ | - | ----------------- | ----------
|
|For the year ended December 31, 1999          |                                                                    |                   |            |                          |   |                   |           
|Unrealized gains on securities                |                                                                    |                   |            |                          |   |                   |           
|                                              | Unrealized holding gains arising during the period                 |                   | $          | 6,006,535                |   | $                 | (2,307,149
|                                              | Less: reclassification adjustment for gains realized in net income |                   |            | (706,528                 | ) |                   | 272,013   
|                                              |                                                                    |                   |            |                          |   |                   |           
|Other comprehensive income, December 31, 1999 |                                                                    | $                 | 5,300,007  |                          | $ | (2,035,136        | )         
|                                              |                                                                    |                   |            |                          |   |                   |           
|For the year ended December 31, 2000          |                                                                    |                   |            |                          |   |                   |           
|Unrealized gains on securities                |                                                                    |                   |            |                          |   |                   |           
|                                              | Unrealized holding gains arising during the period                 |                   | $          | (4,321,955               | ) | $                 | 1,660,910 
|                                              | Less: reclassification adjustment for gains realized in net income |                   |            | (2,293,132               | ) |                   | 882,856   
|                                              |                                                                    |                   |            |                          |   |                   |           
|Other comprehensive income, December 31, 2000 |                                                                    | $                 | (6,615,087 | )                        | $ | 2,543,766         |           
|                                              |                                                                    |                   |            |                          |   |                   |           
|For the year ended December 31, 2001          |                                                                    |                   |            |                          |   |                   |           
|Unrealized losses on securities               |                                                                    |                   |            |                          |   |                   |           
|                                              | Unrealized holding losses arising during the period                |                   | $          | 212,470                  |   | $                 | (81,801   
|                                              | Less: reclassification adjustment for gains realized in net income |                   |            | (408,762                 | ) |                   | 157,372   
|                                              | Cumulative effect of change in accounting principle                |                   |            | (315,382                 | ) |                   | 121,422   
|                                              |                                                                    |                   |            |                          |   |                   |           
|Other comprehensive income, December 31, 2001 |                                                                    | $                 | (511,674   | )                        | $ | 196,993           |           
|                                              |                                                                    |                   |            |                          |   |                   |           

Components
of accumulated other comprehensive income consisted of net unrealized gain on securities of $766.7 million ($473.1 million, net of tax) and
$1,285.8 million ($787.8 million, net of tax) at December 31, 2001 and 2000, respectively.

78

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16. Supplemental Financial Statement Information

Supplemental Consolidated Balance Sheet Information

|                                                                       |                              | December 31 |           
|---------------------------------------------------------------------- | ---------------------------- | ----------- | ----------
|
|
|Plant and equipment                                                    |                              |             |           
|Land                                                                   |                              | $           | 96,818    
|Buildings and building improvements                                    |                              |             | 468,357   
|Transmission and distribution plant                                    |                              |             | 8,336,686 
|Other equipment                                                        |                              |             | 963,121   
|Construction in progress                                               |                              |             | 463,550   
|                                                                       |                              |             |           
|                                                                       | Plant and equipment, at cost |             |           
|Less accumulated depreciation                                          |                              |             | (3,200,624
|                                                                       |                              |             |           
|                                                                       | Net plant and equipment      |             | $         
|                                                                       |                              |             |           
|Intangible assets                                                      |                              |             |           
|Franchise value and excess cost over fair value of net assets acquired |                              | $           | 14,905,681
|Other                                                                  |                              |             | 17,265    
|                                                                       |                              |             |           
|                                                                       | Total                        |             |           
|Less accumulated amortization                                          |                              |             | (1,412,052
|                                                                       |                              |             |           
|                                                                       | Net intangible assets        |             | $         
|                                                                       |                              |             |           

Supplemental Disclosure of Non-cash Investing and Financing Activities

|                                  |                                                | Year Ended December 31
|--------------------------------- | ---------------------------------------------- | ----------------------
|
|
|Significant non-cash transactions |                                                |                       
|                                  | Satisfaction of Excite@Home right              |                       
|                                  | AT&T cable system exchange                     |                       
|                                  | Receipt of Excite@Home right                   |                       
|                                  | Fort Walton Beach cable system acquisition.    |                       
|                                  | MediaOne cable system exchange                 |                       
|                                  | Cox Class A common stock issued in TCA merger  |                       
|                                  | Assumed TCA indebtedness and other liabilities |                       
|                                  | Cox PCS stock transaction                      |                       
|Additional cash flow information  |                                                |                       
|                                  | Cash paid for interest                         |                       
|                                  | Cash paid for income taxes                     |                       

79

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17. Commitments and Contingencies

Cox leases land, office facilities and various items of equipment under noncancellable operating leases. Rental expense under operating leases amounted to
$21.1 million, $17.8 million and $9.3 million in 2001, 2000 and 1999, respectively. Future minimum lease payments for each of the five years subsequent to December 31, 2001
are $21.4 million, $18.8 million, $14.2 million, $9.4 million and $7.1 million, respectively, and $7.6 million thereafter for all noncancellable operating
leases.

At
December 31, 2001, Cox had outstanding purchase commitments totaling approximately $191.1 million for additions to plant and equipment and $269.7 million to
rebuild certain existing cable systems. In addition, Cox had unused letters of credit outstanding totaling $3.6 million at December 31, 2001.

Cox
and certain subsidiaries are defendants in two putative subscriber class action suits in state courts in Louisiana and Texas initiated between October 17, 1997 and
December 17, 1998. The suits challenge the propriety of late fees charged by the subsidiaries to customers who fail to pay for services in a timely manner. The suits seek injunctive relief and
various formulations of damages under certain claimed causes of action under various bodies of state law. These actions are in various stages of defense and are being defended vigorously. The outcome
of these matters cannot be predicted at this time. Five similar suits that had been pending in Nevada, Indiana, Arizona and Florida have been settled and dismissed; one similar suit that had been
pending in Nebraska was dismissed with prejudice.

Cox's
subsidiary Cox California Telcom, L.L.C. (Cox Telcom) is a defendant in three putative class action lawsuits and two additional non-class action suits that were filed
in state and federal courts in California relating to the unauthorized publication of information pertaining to approximately 11,400 Cox Telcom telephone customers in the PacBell 2000 White Pages and
411 directory and in the Cox TelTrust information directory. The lawsuits assert various causes of action for breach of contract, invasion of privacy, negligence, commission of fraudulent or unfair
business acts and practices in violation of California Business & Professions Code Section 17-200 and violation of California Public Utilities Code Section 2891 and
2891.1. The suits seek damages and injunctive relief. Cox Telcom, along with PacBell, has completed the process of reclaiming tainted PacBell White Pages and reprinting and redistributing corrected
books. The parties to two of the class action lawsuits have entered into a stipulation of settlement, which was approved on March 30, 2001. The third class action has been settled and was
dismissed with prejudice on June 27, 2001. Cox intends to defend the remaining non-class actions vigorously, though the outcome cannot be predicted at this time.

Jerrold
Schaffer and Kevin J. Yourman, on May 26, 2000 and May 30, 2000, respectively, filed class action lawsuits in the Superior Court of the State of California for the
County of San Mateo on behalf of themselves and all other shareholders of At Home Corporation, also referred to as Excite@Home, as of March 28, 2000 seeking (a) to enjoin
consummation of a March 28, 2000 letter agreement among Excite@Home's principal investors, including Cox, and (b) unspecified compensatory damages. Cox and David Woodrow, Cox's former
Executive Vice President, Business Development, among others, are named defendants in both lawsuits. Mr. Woodrow formerly served on the Excite@Home board of directors. See Note 5.
"Investments." The plaintiffs, who continue to seek unspecified compensatory damages, assert that the defendants breached purported fiduciary duties of care, candor and loyalty to the plaintiffs by
entering into the letter agreement and/or taking certain actions to facilitate the consummation of the transactions contemplated by the letter agreement. Pursuant to an agreement with the plaintiffs,
the defendants have yet to answer the complaint. On February 26, 2001, the Court stayed the action on grounds of forum non conveniens. A related suit styled Linda Ward, et al. v. At Home
Corporation (No. 418233) was filed on September 6, 2001 in California Superior Court in San Mateo County. On February 7, 2002, the Court

80

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consolidated the Ward action with the Schaffer/Yourman action, thereby staying the case. Cox intends to defend these actions vigorously, though the outcome cannot be predicted at this time.

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

On
February 6, 2001, plaintiffs Kimberly D. and William L. Bova, on behalf of themselves individually and a putative class of subscribers, sued Cox in United States District Court
for the Western District of Virginia. The putative class includes persons outside of California, Nevada, Arizona and Idaho who on or after November 1, 2000 purchased broadband Internet access
services from Cox and paid a franchise fee on those services. The suit asserts that the collection of franchise fees by Cox from its broadband Internet access service subscribers outside of the Ninth
Circuit is unlawful under the Telecommunications Act of 1996 and seeks restitution of all such fees collected. On October 19, 2001, the Court took the matter off the trial calendar pending a
ruling by the United States Supreme Court in NCTA v. Gulf Power Co., No. 00-832. Cox intends to defend the action vigorously, though the outcome cannot be predicted at this time.

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

18. Unaudited Quarterly Financial Information

The following table sets forth selected historical quarterly financial information for Cox. This information is derived from unaudited quarterly financial
statements of Cox and includes, in the opinion of

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management, only normal and recurring adjustments that management considers necessary for a fair presentation of the results for such periods.

|                                                                         |                                                                          | 2001 |      
|------------------------------------------------------------------------ | ------------------------------------------------------------------------ | ---- | -----
|
|
|Revenues                                                                 |                                                                          | $    | 947.9
|Programming costs                                                        |                                                                          |      | 237.8
|Selling, general and administrative                                      |                                                                          |      | 352.0
|Depreciation                                                             |                                                                          |      | 259.6
|Amortization                                                             |                                                                          |      | 92.6 
|                                                                         |                                                                          |      |      
|Operating income (loss)                                                  |                                                                          | $    | 5.9  
|Income (loss) before cumulative effect of change in accounting principle |                                                                          | $    | (30.5
|Cumulative effect of change in accounting principle                      |                                                                          |      | 717.1
|                                                                         |                                                                          |      |      
|Net income (loss)                                                        |                                                                          | $    | 686.6
|                                                                         |                                                                          |      |      
|Basic net income (loss) per share                                        |                                                                          |      |      
|                                                                         | Income (loss) before cumulative effect of change in accounting principle |      | $    
|                                                                         | Cumulative effect of change in accounting principle                      |      |      
|                                                                         |                                                                          |      |      
|Basic net income (loss) per share                                        |                                                                          | $    | 1.14 
|                                                                         |                                                                          |      |      
|Diluted net income (loss) per share                                      |                                                                          |      |      
|                                                                         | Income (loss) before cumulative effect of change in accounting principle |      | $    
|                                                                         | Cumulative effect of change in accounting principle                      |      |      
|                                                                         |                                                                          |      |      
|Diluted net income (loss) per share                                      |                                                                          | $    | 1.14 
|                                                                         |                                                                          |      |      

|                                    |  | 2000 |        
|----------------------------------- |  | ---- | -------
|
|
|Revenues                            |  | $    | 779.8  
|Programming costs                   |  |      | 195.6  
|Selling, general and administrative |  |      | 284.5  
|Depreciation                        |  |      | 178.8  
|Amortization                        |  |      | 78.9   
|                                    |  |      |        
|Operating income                    |  | $    | 42.0   
|                                    |  |      |        
|Net income (loss)                   |  | $    | 1,067.5
|                                    |  |      |        
|Basic net income (loss) per share   |  | $    | 1.77   
|                                    |  |      |        
|Diluted net income (loss) per share |  | $    | 1.74   
|                                    |  |      |        

82

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To the Board of Directors and Shareholders of
Cox Communications, Inc.

We
have audited the accompanying consolidated balance sheets of Cox Communications, Inc. (Cox) as of December 31, 2001 and 2000, and the related consolidated statements of
operations, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2001. These financial statements are the responsibility of Cox's management. Our
responsibility is to express an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Cox at December 31, 2001 and 2000, and
the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in
the United States of America.

As
discussed in Note 9 to the consolidated financial statements, effective January 1, 2001, Cox changed its method of accounting for derivative instruments and hedging
activities to conform with Statement of Financial Accounting Standards No. 133, as amended.

DELOITTE &
TOUCHE LLP

Atlanta,
Georgia
March 14, 2002

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ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

PART III

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this Item is incorporated by reference to Cox's Proxy Statement for the 2002 Annual Meeting of Stockholders.

ITEM 11.    EXECUTIVE COMPENSATION

The information required by this Item is incorporated by reference to Cox's Proxy Statement for the 2002 Annual Meeting of Stockholders.

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this Item is incorporated by reference to Cox's Proxy Statement for the 2002 Annual Meeting of Stockholders.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this Item is incorporated by reference to Cox's Proxy Statement for the 2002 Annual Meeting of Stockholders.

PART IV

ITEM 14.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K



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Listed
below are the exhibits which are filed as part of this Report (according to the number assigned to them in Item 601 of Regulation S-K):

|Exhibit
Number |  |   |  | Description                                                                                                                                                                                                                                                                                                      
|-------------- |  | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1            |  |  |  | Asset Purchase Agreement between Multimedia Cablevision, Inc. and Cox Communications, Inc. (Incorporated by reference to Exhibit 2.1 to Cox's Current Report on Form 8-K dated and filed with the Commission on July 27,
1999).                                                                                  
|2.2            |  |  |  | Agreement and Plan of Reorganization among Cox Teleport Partners, Inc., TCI Holdings, Inc. and United Cable Television Corporation, dated as of July 6, 1999. (Incorporated by reference to Exhibit 2.1 to Cox's Current
Report on Form 8-K/A dated July 7, 1999 and filed with the Commission on July 28, 1999).
|3.1            |  |  |  | Amended Certificate of Incorporation of Cox Communications, Inc. (Incorporated by reference to Exhibit 3.1 to Cox's Quarterly Report on Form 10-Q, filed with the Commission on November 14, 2000.)                                                                                                              
|3.2            |  |  |  | Bylaws of Cox Communications, Inc. (Incorporated by reference to Exhibit 3.2 to Cox's Registration Statement on Form S-4, File No. 33-80152, filed with the Commission on December 16, 1994.)                                                                                                                    
|4.1            |  |  |  | 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
with the Commission on November 8, 1995.)                                           
|4.2            |  |  |  | First Supplemental Indenture, dated as of August 12, 1999, between Cox Communications, Inc. and The Bank of New York, as Trustee. (Incorporated by reference to Exhibit 4.4 to Cox's Current Report on Form 8-K, dated August
12, 1999 and filed with the Commission on August 23, 1999.)                        
|4.3            |  |  |  | Form of Preferred Securities Guarantee Agreement. (Incorporated by reference to Exhibit 4.5 to Cox's Registration Statement on Form S-3, File No. 333-82575, filed with the Commission on July 28, 1999.)                                                                                                        
|4.4            |  |  |  | Form of Capital Securities Guarantee Agreement. (Incorporated by reference to Exhibit 4.6 to Cox's Registration Statement on Form S-3, File No. 333-82575, filed with the Commission on August 6,
1999.)                                                                                                         
|4.5            |  |  |  | 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) of TCA's Registration Statement on Form S-3, File
No. 333-32015, filed with the Commission on July 24, 1997.)                          
|4.6            |  |  |  | First Supplemental Indenture, dated as of August 12, 1999, among TCA Cable TV, Inc., Cox Classic Cable, Inc. and Chase Bank of Texas, N.A., as Trustee. (Incorporated by reference to Exhibit 4.2 to Cox's Current Report on
Form 8-K, dated August 12, 1999 and filed with the Commission on August 25, 1999.)  
|4.7            |  |  |  | Second Supplemental Indenture, dated as of October 6, 1999, between Cox Communications, Inc., as Issuer and The Bank of New York, as Trustee. (Incorporated by reference to Exhibit 4.1 to Cox's Quarterly Report on Form
10-Q, filed with the Commission on November 8, 1999.)                                  

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|4.8  |  |  |  | Guarantee Agreement, dated as of October 6, 1999, between Cox Communications, Inc. and The Bank of New York. (Incorporated by reference to Exhibit 4.2 to Cox's Quarterly Report on Form 10-Q, filed with the Commission on
November 8, 1999.)                                                                                                                                                                                                                                                                                                                                                    
|---- |  | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.9  |  |  |  | Second Supplemental Indenture, dated as of March 14, 2000, between Cox Communications, Inc. and The Bank of New York, as Trustee. (Incorporated by reference to Exhibit 4.9 to the Annual Report on Form 10-K for Cox
Communications, Inc., filed with the Commission on March 23, 2000.)                                                                                                                                                                                                                                                                                                         
|4.10 |  |  |  | Third Supplemental Indenture, dated as of April 19, 2000, between Cox Communications, Inc. and The Bank of New York, as Trustee. (Incorporated by reference to Exhibit 4.2 of Cox's Current Report on Form 8-K, dated April
19, 2000 and filed with the Commission on April 24, 2000.)                                                                                                                                                                                                                                                                                                            
|4.11 |  |  |  | Form of PRIZES. (Incorporated by reference to Exhibit 4.2 of Cox's Registration Statement on Form 8-A, filed with the Commission on November 24, 1999.)                                                                                                                                                                                                                                                                                                                                                                                                                                           
|4.12 |  |  |  | Form of MOPPRS/CHEERS. (Incorporated by reference to Exhibit 4.3 to Cox's Current Report on Form 8-K, dated November 7, 2000 and filed with the Commission on November 9, 2000.)                                                                                                                                                                                                                                                                                                                                                                                                                  
|4.13 |  |  |  | Fourth Supplemental Indenture, dated as of February 23, 2001, between Cox Communications, Inc. and The Bank of New York, as Trustee. (Incorporated by reference to Exhibit 4.13 to Cox's Annual Report on Form 10-K, filed
with the Commission on March 19, 2001).                                                                                                                                                                                                                                                                                                                                
|4.14 |  |  |  | Registration Rights Agreement, dated as of October 1, 1998, among Cox Communications, Inc., G.C. Investments and Barbara J. Greenspun, as Trustee of the Unified Credit Trust. (Incorporated by reference to Exhibit 10.1 to
Cox's Current Report on Form 8-K, dated October 1, 1998 and filed with the Commission on October 15, 1998).                                                                                                                                                                                                                                                          
|4.15 |  |  |  | Registration Rights Agreement, dated as of February 23, 2001, by and among Cox Communications, Inc. and Salomon Smith Barney Inc., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Banc of
America Securities LLC, Credit Suisse First Boston Corporation, Morgan Stanley & Co. Incorporated, ABN AMRO Rothschild LLC, Fleet Securities, Inc., J.P. Morgan Securities Inc. and SG Cowen Securities Corporation. (Incorporated by reference to
Exhibit 4.1 to Cox's Current Report on Form 8-K/A, dated February 13, 2001 and filed with the Commission on March 8, 2001).
|4.16 |  |  |  | Registration Rights Agreement, dated as of October 29, 2001, among Cox Communications, Inc., Cox Enterprises, Inc. and Cascade Investment LLC (Incorporated by reference to Exhibit 4.1 to Cox's Quarterly Report on Form
10-Q/A, filed with the Commission on January 23, 2002).                                                                                                                                                                                                                                                                                                                 
|4.17 |  |  |  | Registration Rights Agreement, dated as of October 29, 2001, among Cox Communications, Inc., Cox Enterprises, Inc. and Bill & Melinda Gates Foundation. (Incorporated by reference to Exhibit 4.2 to Cox's Quarterly
Report on Form 10-Q/A, filed with the Commission on January 23, 2002).                                                                                                                                                                                                                                                                                                       
|10.1 |  |  |  | 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.)                                                                                                                                                                                                                                                                                                                                  

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|10.2 |  |  |  | Cox Communications, Inc. Amended and Restated Long-Term Incentive Plan. (Incorporated by reference to Appendix B of Cox's Definitive Proxy Statement on Schedule 14A, filed with the Commission on March 14, 2001.)
(Management contract or compensatory plan.)                                                                                                                                                                                                                                                                                 
|---- |  | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.3 |  |  |  | Cox Communications, Inc. Restricted Stock Plan for Non-Employee Directors. (Incorporated by reference to Exhibit 10.9 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.)                                                                                                                                                                                                                                                              
|10.4 |  |  |  | Merger and Contribution Agreement, dated as of February 6, 1998, among TCI Satellite Entertainment, Inc., PrimeStar Inc., Time Warner Entertainment Company L.P., Advance/Newhouse Partnership, Comcast Corporation, Cox
Communications, Inc., MediaOne of Delaware, Inc. and GE American Communications, Inc. (Incorporated by reference to Exhibit 10.24 to Cox's Annual Report on Form 10-K, filed with the Commission on March 19, 1998.)                                                                                                   
|10.5 |  |  |  | 364-Day Credit Agreement, dated as of September 26, 2000, by and among Cox Communications, The Chase Manhattan Bank, as Administrative Agent, Bank of America trust and Savings Association, as Syndication Agent, The Bank
of New York and Wachovia Bank, N.A., as Co-Documentation Agents and Chase Securities, Inc., as Sole Advisor, Arranger and Book Manager, and the other banks party thereto. (Incorporated by reference to Exhibit 10.1 to Cox's Quarterly Report on Form
10-Q, filed with the Commission on November 14, 2000.)      
|10.6 |  |  |  | Amended and Restated 364-Day Credit Agreement, dated as of June 29, 2001, among Cox Communications, Inc., the banks party thereto, The Chase Manhattan Bank, as Administrative Agent, The Bank of New York and Wachovia Bank,
N.A., as Documentation Agents and Bank of America, N.A. and Mizuho Bank as Syndication Agents. (Incorporated by reference to Exhibit 10.1 to Cox's Registration Statement on Form S-3, File No. 333-65102, filed with the Commission on July 13,
2001.)                                                           
|10.7 |  |  |  | Five-Year Credit Agreement, dated as of September 26, 2000, by and among Cox Communications, Inc., the banks party thereto, The Chase Manhattan Bank, as Administrative Agent, Bank of America National Trust and Savings
Association, as Syndication Agent, The Bank of New York and Wachovia Bank, N.A., as Co-Documentation Agents and Chase Securities Inc., as Sole Advisor, Arranger and Book Manager. (Incorporated by reference to Exhibit 10.2 to Cox's Quarterly Report on
Form 10-Q, filed with the Commission on November 14, 2000.)
|10.8 |  |  |  | First Amendment, dated as of June 29, 2001, in respect of the Five-Year Credit Agreement dated as of September 26, 2000, among Cox Communications, Inc., the banks party thereto, The Chase Manhattan Bank, as Administrative
Agent, The Bank of New York and Wachovia Bank, N.A., as Co-Documentation Agents and Bank of America, N.A., as Syndication Agent. (Incorporated by reference to Exhibit 10.2 to Cox's Registration Statement on Form S-3, File No. 333-65102, filed with
the Commission on July 13, 2001.)                         
|10.9 |  |  |  | Purchase Contract Agreement, dated as of August 12, 1999, between Cox Communications, Inc. and The First National Bank of Chicago, as Purchase Contract Agent. (Incorporated by reference to Exhibit 4.1 to Cox's Current
Report on Form 8-K, dated August 12, 1999 and filed with the Commission on August 23, 1999.)                                                                                                                                                                                                                          

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|10.10 |  |  |  | Remarketing Agreement, dated as of August 12, 1999, by and among Cox Communications, Inc., Cox Trust II, The First National Bank of Chicago, as Purchase Contract Agent and Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated, as Remarketing Agent. (Incorporated by reference to Exhibit 4.2 to Cox's Current Report on Form 8-K, dated August 12, 1999 and filed with the Commission on August 23, 1999.)                                                     
|----- |  | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.11 |  |  |  | Pledge Agreement, dated as of August 12, 1999, among Cox Communications, Inc., The Bank of New York, as Collateral Agent, Custodial Agent and Securities Intermediary and The First National Bank of Chicago, as Purchase
Contract Agent. (Incorporated by reference to Exhibit 4.3 to Cox's Current Report on Form 8-K, dated August 12, 1999 filed with the Commission on August 23, 1999.)                                                                                          
|10.12 |  |  |  | Remarketing Agreement, dated as of October 6, 1999, among Cox Communications, Inc., Cox RHINOS Trust and Banc of America Securities LLC. (Incorporated by reference to Exhibit 10.1 to Cox's Quarterly Report on Form 10-Q,
dated August 12, 1999 filed with the Commission on November 8, 1999.)                                                                                                                                                                                      
|10.13 |  |  |  | Letter Agreement and Term Sheets, dated March 28, 2000, among At Home Corporation, AT&T Corp., Comcast Corporation and Cox Communications, Inc. (Incorporated by reference to Exhibit 1 to Schedule 13D/A filed by
AT&T Corp. on March 30, 2000 with respect to At Home Corporation).                                                                                                                                                                                                  
|10.14 |  |  |  | Share Issuance Agreement, dated as of May 18, 2001, among Cox Communications, Inc., Cox@Home, Inc. and AT&T Corp. (Incorporated by reference to Exhibit 10.1 to Cox's Current Report on Form 8-K, dated May 8, 2001 and
filed with the Commission on May 25, 2001.)                                                                                                                                                                                                                    
|10.15 |  |  |  | Letter Agreement, dated as of December 3, 2001, among Comcast Cable Communications, Inc., Cox Communications, Inc., Rogers Cable Inc., Insight Communications Company, L.P., Insight Communications Midwest, LLC and
Insight Kentucky Partners II, L.P., Mediacom LLC and Mediacom Broadband LLC and affiliates, and Midcontinent Communications, the Official Committee of Unsecuried Creditors appointed in At Home Corporation's Chapter 11 bankruptcy case and At
Home Corporation.
|13    |  |  |  | Portions of the 2001 Summary Annual Report to Shareholders (expressly incorporated by reference in Part II, Item 5 of this report).                                                                                                                                                                                                                                                                                                                                                    
|21    |  |  |  | Subsidiaries of Cox Communications, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                               
|23    |  |  |  | Consent of Deloitte & Touche LLP.                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|24    |  |  |  | Power of Attorney (included on the signatures page to this report)                                                                                                                                                                                                                                                                                                                                                                                                                     

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Cox
filed one report on Form 8-K, dated October 22, 2001, during the fourth quarter of the year ended December 31, 2001 to file a press release announcing the
proposed sale to two private investors of 13.5 million shares of its Class A common stock owned by Cox Enterprises, Inc.

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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:                     
|Date: March 26, 2002 |  |                         

POWER OF ATTORNEY

Cox Communications, Inc., a Delaware corporation, and each person whose signature appears below, constitutes and appoints James O. Robbins and Jimmy W.
Hayes, and either of them, with full power to act without the other, such person's true and lawful attorneys-in-fact, with full power of substitution and resubstitution, for
him and in his name, place and stead, in any and all capacities, to sign this Annual Report on Form 10-K and any and all amendments to such Annual Report on
Form 10-K and other documents in connection therewith, and to file the same, and all exhibits thereto and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform each and every act and thing necessary or desirable to be done in
and about the premises, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorneys-in-fact, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

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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. KENNEDYJames C. Kennedy             |  | Chairman of the Board of Directors                                                                        |  | March 26, 2002
|/s/JAMES O. ROBBINSJames O. Robbins             |  | President and Chief Executive Officer; Director(principal executive officer)                              |  | March 26, 2002
|/s/JIMMY W. HAYESJimmy W. Hayes                 |  | Executive Vice President, Finance and Administration Chief Financial Officer(principal financial officer) |  | March 26, 2002
|/s/WILLIAM J. FITZSIMMONSWilliam J. Fitzsimmons |  | Vice President of Accounting & Financial Planning(principal accounting officer)                           |  | March 26, 2002
|/s/JANET M. CLARKEJanet M. Clarke               |  | Director                                                                                                  |  | March 26, 2002
|/s/DAVID E. EASTERLYDavid E. Easterly           |  | Director                                                                                                  |  | March 26, 2002
|/s/RODNEY W. SCHROCKRodney W. Schrock           |  | Director                                                                                                  |  | March 26, 2002
|/s/ROBERT C. O'LEARYRobert C. O'Leary           |  | Director                                                                                                  |  | March 26, 2002
|/s/ANDREW J. YOUNGAndrew J. Young               |  | Director                                                                                                  |  | March 26, 2002

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