##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549




---

Form 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,
    2002                                                 
|          
|OR        
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR
    15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934
|          
|           |  | For the transition period
    from          to                                                  

Commission File Number 1-6590



---

(COX COMMUNICATIONS LOGO)

Cox Communications, Inc.

(Exact name of registrant as specified in its
charter)


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

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


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 x         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.    o

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

As of February 28, 2003, the aggregate
market value of the Class A Common Stock held by
non-affiliates of the registrant was $6.315 billion based
on the closing price on the New York Stock Exchange on such date.

There were 592,612,071 shares of Class A
Common Stock and 27,597,792 shares of Class C Common Stock
outstanding as of February 28, 2003.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the 2002 Summary Annual Report are
incorporated by reference into Part II, and portions of the
Proxy Statement for the 2003 Annual Meeting of Stockholders are
incorporated by reference into Part III.



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TABLE OF CONTENTS



|                                                                                                        |                                                                                               |  |  |  |  |  |  | 
|------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|TABLE OF CONTENTS                                                                                      
|PART I                                                                                                 
|                                                                                                        | ITEM 1. BUSINESS                                                                             
|                                                                                                        | ITEM 2. PROPERTIES                                                                           
|                                                                                                        | ITEM 3. LEGAL PROCEEDINGS                                                                    
|                                                                                                        | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|PART II                                                                                                
|                                                                                                        | ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                
|                                                                                                        | ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA                                                 
|                                                                                                        | ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                                                                                        | ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                          
|                                                                                                        | ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                             
|                                                                                                        | ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 
|PART III                                                                                               
|                                                                                                        | ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                  
|                                                                                                        | ITEM 11. EXECUTIVE COMPENSATION                                                              
|                                                                                                        | ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                      
|                                                                                                        | ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                      
|                                                                                                        | ITEM 14. DISCLOSURE CONTROLS AND PROCEDURES                                                  
|PART IV                                                                                                
|                                                                                                        | ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K                     
|SIGNATURES                                                                                             
|CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934
|CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934
|EX-10.15 STOCK OPTION PLAN FOR NON EMPLOYEES                                                           
|EX-13 PORTIONS OF THE 2002 SUMMARY ANNUAL REPORT                                                       
|EX-21 SUBSIDIARIES OF COX COMMUNICATIONS, INC.                                                         
|EX-23 CONSENT OF DELOITTE AND TOUCHE LLP                                                               
|EX-99.1 SECTION 906 CERTIFICATION OF THE CEO                                                           
|EX-99.2 SECTION 906 CERTIFICATION OF THE CFO                                                           



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##### Table of Contents



COX COMMUNICATIONS, INC.

2002 FORM 10-K ANNUAL REPORT






TABLE OF CONTENTS


|                                                                                                       |  |                                                                                           |     |      |    | 
|------------------------------------------------------------------------------------------------------ |  | ----------------------------------------------------------------------------------------- | --- | ---- | -- | 
|                                                                                                       |  |                                                                                           |     | Page
|                                                                                                       |  |                                                                                           |     |     
|PART I                                                                                                
|Item 1.                                                                                                |  | Business                                                                                  |     |      | 2  | 
|Item 2.                                                                                                |  | Properties                                                                                |     |      | 25 | 
|Item 3.                                                                                                |  | Legal Proceedings                                                                         |     |      | 26 | 
|Item 4.                                                                                                |  | Submission of Matters to a Vote of Security
    Holders                                   |     |      | 28 | 
|PART II                                                                                               
|Item 5.                                                                                                |  | Market for Registrants Common Equity and
    Related Stockholder Matters                 |     |      | 28 | 
|Item 6.                                                                                                |  | Selected Consolidated Financial Data                                                      |     |      | 28 | 
|Item 7.                                                                                                |  | Managements Discussion and Analysis of
    Financial Condition and Results of Operations |     |      | 29 | 
|Item 7A.                                                                                               |  | Quantitative and Qualitative Disclosures about
    Market Risk                            |     |      | 50 | 
|Item 8.                                                                                                |  | Consolidated Financial Statements and
    Supplementary Data                              |     |      | 52 | 
|Item 9.                                                                                                |  | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure  |     |      | 94 | 
|PART III                                                                                              
|Item 10.                                                                                               |  | Directors and Executive Officers of the Registrant                                        |     |      | 94 | 
|Item 11.                                                                                               |  | Executive Compensation                                                                    |     |      | 94 | 
|Item 12.                                                                                               |  | Security Ownership of Certain Beneficial Owners
    and Management                        |     |      | 94 | 
|Item 13.                                                                                               |  | Certain Relationships and Related Transactions                                            |     |      | 94 | 
|Item 14.                                                                                               |  | Disclosure Controls and Procedures                                                        |     |      | 94 | 
|PART IV                                                                                               
|Item 15.                                                                                               |  | Exhibits, Financial Statement Schedules and
    Reports on Form 8-K                       |     |      | 95 | 
|Signatures                                                                                             |  |                                                                                           | 99  |     
|Certification of Chief Executive Officer Pursuant
    to Rule 13a-14 of the Securities Exchange Act of |  |                                                                                           |     |     
|1934                                                                                                   |  |                                                                                           | 101 |     
|Certification of Chief Financial Officer Pursuant
    to Rule 13a-14 of the Securities Exchange Act of |  |                                                                                           |     |     
|1934                                                                                                   |  |                                                                                           | 102 |     

PRELIMINARY NOTE

This Annual Report on Form10-K is for the year
ended December 31, 2002. This Annual Report modifies and
supersedes documents filed prior to this Annual Report. The SEC
allows Cox to incorporate by reference information
that Cox files with it, which means that Cox can disclose
important information to you by referring you directly to those
documents. Information incorporated by reference is considered
to be part of this Annual Report. In addition, information that
Cox files with the SEC in the future will automatically update
and supersede information contained in this Annual Report. In
this Annual Report, Cox, refers to Cox
Communications, Inc. and its subsidiaries, unless the context
requires otherwise.

1



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PART I




ITEM 1.     BUSINESS

Overview

Cox Communications, Inc. is a multi-service
broadband communications company serving approximately
6.5 million customers nationwide. Cox is the nations
fourth largest cable television provider and offers an array of
broadband products and services to both residential and
commercial customers in its markets. These services primarily
include analog and digital video, high-speed Internet access and
local and long-distance telephone.

Cox is an indirect 63.4% 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 2002 of approximately
$9.9 billion. CEI, which has a 105-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 78
radio stations clustered in 18 markets. CEI is also an operator
of wholesale auto auctions through Manheim Auctions, Inc., an
indirect wholly-owned subsidiary.

Business Strategy

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

Technology and Network
Infrastructure.Cox strives to
maintain the highest technological standards in the industry.
Available service offerings depend on bandwidth capacity. The
greater the bandwidth, the greater the capacity of the system.
Coxs cable systems have bandwidth capacities ranging from
400 to 750 megahertz or greater. At the end of 2002, Cox had
upgraded 90% of its networks to a bandwidth capacity of 750
megahertz or greater and anticipates that approximately 91% of
its networks will have a bandwidth capacity of 750 megahertz or
greater by the end of 2003. At the end of 2002, digital cable
was available to 97% of the homes passed by Coxs broadband
network, high-speed Internet was available to 96% of homes
passed and telephone was available to 40% of homes passed.

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, 2002, approximately 70% of Coxs
customers were served by Coxs 12 largest clusters, which
averaged approximately 368,000 customers each. These clusters,
represented by location, are:

|              |  |                   |  |              
|------------- |  | ----------------- |  | -------------
|Baton Rouge   |  | New England       |  | Orange County
|Hampton Roads |  | New Orleans       |  | Phoenix      
|Kansas        |  | Northern Virginia |  | San Diego    
|Las Vegas     |  | Oklahoma          |  | 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 who are better equipped to meet the new
competitive and regulatory challenges of todays
communications industry at the system level. 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.

Bundling.Bundling is a fundamental business strategy for Cox. A bundled
customer is one who subscribes to two or more of Coxs
primary services (video, high-speed Internet access and
telephone). Cox offers the full bundle of services supported by
a single, integrated back-office platform. That means customers
can make one call regarding any and all of their services, can
receive a single bill for all services and can

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receive multiple services at a discount. Cox
believes that the bundle increases penetration and operating
efficiencies, reduces customer churn and provides a competitive
advantage. In 2002, the number of bundled customers grew by 53%
to 1.7 million, and 25% of Coxs total customers now
subscribe to more than one service.


Customer
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 helps it compete more effectively as it
delivers its wide range of broadband 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 and the Federal Communications Commission (FCC).

Community
Service.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
include:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Cox Cable in the Classroom, which
    provides more than 5,900 schools and 3.5 million students
    with complimentary basic cable service and more than 540 hours
    of commercial-free educational cable programming on a monthly
    basis.                                                                                                                                                                                                                                                                                                                  
|
| |  | Cox Line to Learning, which provides
    complimentary high-speed Internet access, exclusive curricula
    and distance-learning experiences to students in accredited
    public and private schools in communities where high-speed
    digital services are available. The program is part of
    Coxs participation in Cables High-Speed
    Connection, a National Cable and Telecommunications
    Association initiative in which major broadband communications
    companies are providing high-speed Internet access to schools
    free of charge.
|
| |  | Cox Model Technology Schools,
    established by Cox in Chula Vista, California; Omaha; Norfolk;
    Phoenix; New Orleans; Las Vegas; Rhode Island; and Pensacola.
    These schools test future broadband services, such as
    interactive fiber optic links to local colleges, to determine
    their value in the classroom.                                                                                                                                                                                                                                 

Products and Services

Cox has one operating segment, broadband
communications, and offers video and high-speed Internet access
in almost all of its markets, telephone service in a growing
number of markets and new advanced services in select markets.

Video

Coxs cable operations represent the primary
element of its integrated broadband communications strategy.
Video revenues represented 68% of total revenues in 2002. Cox
offers customers a full range of video services and packages.
Customers generally pay initial connection charges and fixed
monthly fees for video service. As of December 31, 2002,
Coxs cable systems provided video service to approximately
6.3 million customers.

Coxs video service offerings consist of the
following:



| |   |                                                                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Basic Cable.Basic
    cable includes, for a monthly fee, local broadcast signals
    available off-air, a limited number of broadcast signals from
    so-called superstations, and public, governmental
    and educational access channels.  
|
| |  | Expanded Basic.Expanded service includes, for an additional monthly fee,
    numerous satellite-delivered non-broadcast programming (such as
    CNN, MTV, USA, ESPN, A&E, TNT, The Discovery Channel, The
    Learning Channel and Nickelodeon).

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Premium Services.Premium services include, for an additional monthly fee,
    satellite-delivered programming that consists principally of
    feature motion pictures presented without commercial
    interruption, sports events, concerts and other entertainment
    programming (such as Home Box Office, Showtime, Starz and
    Cinemax).                                                                                                                                                                                                                                                                                                                                            
|
| |  | Pay-Per-View.Pay-per-view service allows customers to order, for a fee, a
    single showing of a recently released movie, sporting event or
    music concert on a commercial-free basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | Cox Digital Cable.Digital compression technology currently allows up to 12 digital
    channels to be inserted into the space of only one traditional
    analog channel. A set-top video terminal converts the digital
    signal into analog signals that can be viewed on a television
    set. A Cox Digital Cable customer can currently receive up to
    approximately 250 channels, including enhanced pay-per-view
    service, digital music channels, new networks grouped by genre
    and an interactive program guide. Customers pay a monthly fee
    for digital cable, which varies based on level of service and
    number of digital converters selected by the customer.

In addition, Cox has introduced new video
services to enhance its competitive position and generate
additional revenues.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Entertainment On
    Demand.Entertainment On Demand is an
    interactive service that provides access to hundreds of movies
    and other programming with full VCR like functionality,
    including the ability to pause, rewind and fast forward
    programs. Customers can also start a program whenever they like,
    stop the selection before it is completed and view a program
    repeatedly during the 24 hour rental period. Customers
    generally pay on a per-selection basis. Cox has already launched
    Entertainment On Demand in some areas, and is working with
    technology vendors and others to make Entertainment On Demand as
    widely available as possible.
|
| |  | High-Definition
    Television.High definition television
    is high-resolution digital television. A high definition
    television signal has twice the color resolution, provides a
    picture that is six times sharper than that provided by a
    traditional analog television set and provides enhanced audio,
    such as Dolby Digital. Cox provides high definition television
    service in seven markets: Omaha, Las Vegas, Phoenix, Northern
    Virginia, San Diego, Oklahoma City and Cleveland. Altogether,
    Coxs high definition service is now available to more than
    50% of Coxs homes passed.                                                                  
|
| |  | Digital Video
    Recorders.A digital video recorder is
    a device that allows you to store television programming on a
    hard disk drive so that you can access this programming at any
    time. The digital video recorder functions like a VCR, except
    that there is no videotape and it offers more sophisticated
    recording options and playback features. Cox launched its first
    deployment of digital video recorder in its Gainesville, Florida
    market in the first quarter of 2003 and plans additional
    deployments of digital video recorder service in 2003.                                                                                                 

High-Speed Internet Access

Cox offers high-speed Internet access services
under the Cox High Speed Internet and Cox Express brand names.
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 Coxs broadband network. Cox uses its own
nationwide Internet Protocol 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 is also offering home networking as part of
its high-speed Internet product. A home network is a group of
personal computers and other devices that communicate with each
other through a common wired or wireless technology. Cox High
Speed Internet customers can purchase a home networking solution
that includes the necessary wired or wireless equipment, a
professional installation and 24-hour technical support.

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There is a one-time installation charge and a
monthly fee for ongoing technical support. Cox is currently
offering home networking service in the following markets: Baton
Rouge, Greater Oklahoma, Hampton Roads, Humboldt, New England,
Oklahoma City, Omaha, Orange County, San Diego, Tulsa and West
Texas, and is in the process of launching the service to all Cox
High Speed Internet customers in 2003.


Cox Digital Telephone

Cox utilizes the capacity and reliability of its
advanced broadband network by providing local telephone services
and reselling long-distance services. Cox provides traditional
circuit-based telephony, but is exploring technologies using
Internet protocol technology to transmit digital voice signals
over its systems.

Cox Business Services

Through both its dedicated fiber optic networks
and its hybrid fiber coaxial cable networks, Cox Business
Services provides a range of advanced communications services,
including high-speed Internet access, local and long distance
telephone and advanced voice and data transport solutions for
companies of all sizes.

Advertising Revenue

Cox also derives revenues from the sale of
advertising time on satellite-delivered networks such as ESPN,
MTV and CNN through its advertising sales division, Cox Media.
Currently, Cox inserts advertising on up to 49 analog channels
in each of its cable systems and inserts advertising on digital
channels in its major markets. In addition to advertising sales
in Cox markets, Cox Media represents the advertising sales
efforts of other cable operators.

Viewership to cable networks has continued to
increase over the past 15 years showing the gaining popularity
of the medium. Cox expects continued growth of this revenue
source as a result of this audience shift. In addition, Cox
participates in the regional and national cable advertising
market through its investment in National Cable Communications,
L.L.C., a partnership that represents cable companies in
connection with the sale of advertising space to advertisers.
National Cable Communications is the largest representation firm
in spot cable advertising sales.

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Customer Data

The following table presents operating statistics
for Coxs primary services as of December 31, 2002 and
2001:

|                                                                              |                             |             |            |           |  |  |           |           | 
|----------------------------------------------------------------------------- | --------------------------- | ----------- | ---------- | --------- |  |  | --------- | --------- | 
|                                                                              |                             |            
|                                                                              |                             | December 31
|                                                                              |                             |            
|                                                                              |                             | 2002        |            | 2001     
|                                                                              |                             |             |            |          
|Customer relationships                                                        |                             |             |            |           |  |  |           |          
|                                                                              | Basic video customers(a)(b) |             |            | 6,280,849 |  |  |           | 6,237,888 | 
|                                                                              | Non-video customers(c)      |             |            | 199,519   |  |  |           | 117,754   | 
|                                                                              |                             |             |            |           |  |  |           |          
|Total customer relationships(d)                                               |                             |             | 6,480,368  |           |  |  | 6,355,642 |          
|Revenue generating units                                                      |                             |             |            |           |  |  |           |          
|                                                                              | Basic video customers(a)(b) |             |            | 6,280,849 |  |  |           | 6,237,888 | 
|                                                                              | Advanced services(e)        |             |            | 3,923,734 |  |  |           | 2,723,173 | 
|                                                                              |                             |             |            |           |  |  |           |          
|Total revenue generating units(f)                                             |                             |             | 10,204,583 |           |  |  | 8,961,061 |          
|Video homes passed(b)(g)                                                      |                             |             | 10,210,091 |           |  |  | 9,979,207 |          
|Basic video penetration(h)                                                    |                             |             | 61.5       | %         |  |  | 62.5      | %        
|                                                                             
|Cox Digital Cable                                                             |                             |             |            |           |  |  |           |          
|Digital cable ready homes passed                                              |                             |             | 9,890,211  |           |  |  | 9,258,310 |          
|Customers(b)                                                                  |                             |             | 1,797,364  |           |  |  | 1,386,039 |          
|Penetration of customers to basic video customers                             |                             |             | 28.6       | %         |  |  | 22.2      | %        
|                                                                             
|High-Speed Internet Access                                                    |                             |             |            |           |  |  |           |          
|High-speed Internet access ready homes passed                                 |                             |             | 9,759,194  |           |  |  | 9,057,020 |          
|Customers                                                                     |                             |             | 1,407,950  |           |  |  | 883,562   |          
|Penetration of customers to high-speed Internet
    access ready homes passed |                             |             | 14.4       | %         |  |  | 9.8       | %        
|                                                                             
|Cox Digital Telephone                                                         |                             |             |            |           |  |  |           |          
|Telephone ready homes passed                                                  |                             |             | 4,101,158  |           |  |  | 3,338,097 |          
|Customers                                                                     |                             |             | 718,420    |           |  |  | 453,572   |          
|Penetration of customers to telephone ready homes
    passed                  |                             |             | 17.5       | %         |  |  | 13.6      | %        
|                                                                             
|Bundled Customers                                                             |                             |             |            |           |  |  |           |          
|Customers subscribing to two or more services                                 |                             |             | 1,650,709  |           |  |  | 1,079,421 |          
|Penetration of bundled customers to basic video
    customers                 |                             |             | 26.3       | %         |  |  | 17.3      | %        



---



|    |                                                                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | A home with one or more television sets connected
    to a cable system is counted as one basic customer.                                                                                                                                                                
|   
|(b) | Cox sold certain cable systems in 2002. After
    adjusting for such sales, basic video customers and Cox Digital
    Cable customers at December 31, 2001 were 6,221,235 and
    1,384,023, respectively, and video homes passed at
    December 31, 2001 was 9,947,664.
|   
|(c) | A non-video customer receives high-speed Internet
    or telephone service, but does not subscribe to video service.                                                                                                                                                     
|   
|(d) | Total customer relationships represent the number
    of customers who receive at least one level of service,
    encompassing video, high-speed Internet and telephony services,
    without regard to which service(s) customers purchase.                             
|   
|(e) | Advanced services include Cox Digital Cable,
    high-speed Internet access and Cox Digital Telephone.                                                                                                                                                                   



|    |                                                                                                                                                                                                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(f) | Each basic video customer and each advanced
    service is a revenue generating unit. In certain locations, a
    household may purchase more than one advanced service, each of
    which is counted as a separate revenue generating unit.



|    |                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------
|(g) | A home is deemed to be passed if it
    can be connected to the distribution system without any further
    extension of the distribution plant.
|   
|(h) | Basic video customers as a percentage of video
    homes passed.                                                                                  

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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 2003, Cox held approximately 850
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.

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
designed to protect cable operators against arbitrary denials of
renewal. 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.

Investments

Cox has certain investments in businesses focused
on cable programming, telecommunications and technology. The
following summarizes Coxs significant investments at
December 31, 2002.

Discovery Communications, Inc.Discovery provides nature, science
and technology, exploration and adventure programming, and is
distributed to customers in virtually all homes receiving cable
television in the U.S. The principal businesses of Discovery are
the advertiser-supported 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, Discovery is building a documentary programming
library. During 2002, Cox received a $27.1 million partial
return on its investment from Discovery. Since Coxs
cumulative proportionate share of equity in net losses
attributable to Discovery exceeded the carrying amount of its
investment in Discovery, this resulted in a pre-tax gain of
$27.1 million. At December 31, 2002, Cox owned a 24.9%
interest in Discovery.

Sprint PCS.Sprint Corporation offers personal
communications services through its PCS Group. In February and
March 2002, Cox terminated its series of costless equity collar
arrangements, which managed its exposure to market price
fluctuations of 15.8 million shares of Sprint PCS common
stock, for aggregate

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proceeds of approximately $151.6 million and
recognized an aggregate pre-tax derivative gain of approximately
$168.9 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 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 the collar arrangements for aggregate net
proceeds of approximately $82.8 million. Cox recognized an
aggregate pre-tax gain of $32.8 million on the sale of
these shares.


At December 31, 2002, Coxs investment
in Sprint PCS was comprised of 66.7 million shares of
Sprint PCS common stock, and warrants and convertible preferred
stock that are exercisable for, or convertible into,
approximately 10.3 million shares of Sprint PCS common
stock. 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 19.5 million
are pledged in connection with Coxs prepaid forward
contracts to sell up to 19.5 million shares of Sprint PCS
common stock. The estimated fair value of Coxs investment
in Sprint PCS was $349.2 million and $2,444.3 million
at December 31, 2002 and December 31, 2001,
respectively. Cox recognized an aggregate pre-tax investment
loss of $390.6 million during 2002 and an aggregate pre-tax
investment gain of $77.4 million during 2001 as a result of
the change in market value of its investment in Sprint PCS
common stock classified as trading. In addition, during 2002,
Cox recorded an aggregate pre-tax impairment charge of
approximately $795.7 million on its investment in Sprint
PCS common stock classified as available-for-sale as a result of
a decline in market value that was considered other than
temporary.

Other.Cox
also has ownership interests in 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.

The following summarizes Coxs significant
dispositions and sales of investments in 2002.

AT&T Corp. and AT&T Wireless
Services, Inc.AT&T provides
voice, video and data communications to businesses, consumers
and government agencies. AT&T Wireless provides wireless
voice and data services to consumers and businesses. In February
and March 2002, Cox terminated its costless equity collar
arrangements which managed its exposure to market price
fluctuations of 22.5 million shares of AT&T common
stock and 17.2 million shares of AT&T Wireless common
stock for aggregate proceeds of approximately
$112.8 million and recognized an aggregate pre-tax
derivative gain of $99.9 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 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. Cox
recognized an aggregate pre-tax loss of $170.1 million on
the sale of these shares. As a result of these transactions, Cox
no longer holds any shares of AT&T common stock or AT&T
Wireless common stock.

Cox Interactive Media Joint Ventures.From 1997 through 2002, Cox
entered into 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, or City Sites, in the markets
where Cox operates cable television systems featuring high-speed
Internet access. During 2002, Cox and Cox Interactive Media
agreed to terminate the relationship and entered into a
transition services agreement under which Cox paid Cox
Interactive Media approximately $7.0 million to continue to
operate Coxs city sites during a transition period. The
joint venture entities were dissolved as of December 31,
2002, and pursuant to a separate agreement dated
December 31, 2002, Cox purchased certain assets used in the
operation of the City Sites for insignificant cash
consideration. Cox will use those assets to develop the City
Sites as part of Cox High Speed Internet service.

Motorola, Inc.Motorola provides integrated
communications solutions and embedded electronic solutions,
including end-to-end systems for the delivery of interactive
digital video, voice and high-speed data solutions for broadband
operators. In June 2002, Cox sold its remaining 1.7 million
shares of Motorola common stock for aggregate net proceeds of
approximately $24.5 million and recognized an aggregate
pre-tax

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loss of $1.5 million. Cox acquired the
shares of Motorola common stock through the exercise of warrants
in June 2000 and June 2001.


Competition

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

Each of Coxs broadband services operates in
a competitive environment. Certain facilities-based competitors,
including local telephone companies and satellite program
distributors, offer cable and/or other communications services
in various areas where Cox operates its cable 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 and Internet Access
Competition.Coxs cable
systems compete with a variety of news, information and
entertainment providers. Coxs cable systems also face
competition from all media for advertising dollars. In the
communities in which Cox operates its cable systems, Cox may
compete with one or more of the following businesses:



| |   |                                                                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | direct broadcast satellite (commonly known as
    DBS) and direct-to-home satellite program distributors that
    transmit video programming, data and other information by
    satellite to customers receiving dishes;                   
|
| |  | multichannel multipoint distribution service
    (also known as MMDS or wireless cable) that uses low-power
    microwave frequencies to transmit video programming and other
    information over-the-air to subscribers receiving dishes;
|
| |  | local television broadcast stations providing
    free off-air programming that can be received using a roof-top
    antenna and television set;                                                                                            
|
| |  | satellite master antenna television systems (also
    known as SMATV or private cable systems) that serve
    condominiums, apartments, office complexes and private
    residential developments;                                          
|
| |  | competitive cable systems that have been
    franchised by local governments to provide cable television
    services in areas where Cox operates (commonly known as
    overbuilders);                                                     
|
| |  | distributors of home video products;                                                                                                                                                                                                        
|
| |  | interactive online computer and Internet services;                                                                                                                                                                                          
|
| |  | movie theaters;                                                                                                                                                                                                                             
|
| |  | live concerts and sporting events; and                                                                                                                                                                                                      
|
| |  | books, newspapers and magazines.                                                                                                                                                                                                            

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In order to compete effectively, Cox strives to
provide, at a reasonable price to its subscribers:



| |   |                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | new products and services, including digital
    video and audio programming, high definition video programming,
    high-speed Internet access and telephone services;
|
| |  | a greater variety of optional video programming
    packages;                                                                                                          
|
| |  | superior technical performance; and                                                                                                                                    
|
| |  | superior customer service.                                                                                                                                             

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, among others. Direct
broadcast satellite services are available throughout the
country through the installation of a small roof top or
side-mounted antenna. Direct broadcast satellite operators are
among the cable industrys largest competitors. The two
largest direct broadcast satellite companies, EchoStar
Communications Corporation and DirecTV, a subsidiary of Hughes
Electronics which is controlled by General Motors, are currently
offering nationwide high-power direct broadcast satellite
services and are each among the four largest providers of
multichannel video programming services on the basis of reported
subscriber numbers. Recently published articles report that SBC
Communications, the second largest local telephone company in
the United States, and Cablevision Systems Corp., which provides
cable to about three million subscribers and also owns the New
York Rangers hockey team and the New York Knicks basketball team
and stakes in cable networks, are each in preliminary
discussions to acquire DirecTV; and other news reports indicate
that News Corp, which currently controls direct satellite
broadcast operations in Europe, Asia and Latin America,
continues to be interested in acquiring DirecTV. The acquisition
of DirecTV by any of those companies could significantly enhance
DirecTVs ability to compete with Cox.

Direct broadcast satellite service subscribership
continues to grow. According to recent government reports,
conventional, medium and high-powered satellites provide video
programming to over 18.7 million subscribers in the U.S.,
which represents an approximate 21% share of the national
multichannel video program distributor market. Direct broadcast
satellite providers with high-power satellites typically offer
more than 300 channels of programming, including local
television broadcast stations and other programming services
substantially similar to those provided by Coxs cable
systems. Direct broadcast satellite 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. Direct broadcast satellite
systems have limited ability to offer locally produced
programming in each community and do not have a significant
local presence in most communities like cable operators.
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
direct broadcast satellite systems.

The direct broadcast satellite industry also
provides advanced communications services. Direct broadcast
satellite providers currently offer one-way high-speed Internet
access services using a telephone return path; however, DirecTV
is now providing two-way high-speed Internet access services.
Another satellite company 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 2004 using the Ka-band
and spot beam technology. EchoStar, according to a recent press
report, is planning to offer its video programming services with
the Internet services provided by EarthLink, an Internet service
provider, using digital subscriber line technology. Many of
Coxs cable systems offer high-speed Internet services that
compete with the Internet services offered by these direct
broadcast satellite providers and by existing Internet service
providers (also known as ISPs) and local and long-distance
telephone companies.

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

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communications facilities using various
technologies, including fixed wireless technology, that provide
access to the Internet and distribute interactive computer-based
services, data and other non-video services to homes and
businesses. Many Internet service providers offer access to the
Internet with dial-up services over ordinary telephone lines.
The deployment of Digital Subscriber Line technology, also known
as DSL, allows Internet access to subscribers at data
transmission speeds equal to or greater than that of modems over
conventional telephone lines. Monthly service fees for digital
subscriber line services are comparable to charges for
high-speed Internet services offered over cable systems, and
dial-up Internet services often have a pricing advantage.
Numerous companies, including telephone companies, have
introduced digital subscriber line service, and certain
telephone companies are seeking regulatory changes in order 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
(also known as VDSL) technology to distribute video, high-speed
Internet access and telephone service over existing copper phone
lines. In March 2003, BellSouth and Earthlink expanded their
agreement to provide high-speed digital subscriber line
technology to additional markets, including Baton Rouge and New
Orleans. Congress is expected to consider 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. The FCC also
has several rulemaking proceedings pending that may lead to a
reduction or elimination of certain regulatory restrictions
currently imposed on the offering of high-speed broadband
services by local telephone companies. See Legislation and
Regulation  Cable Television. Cox is unable to
predict the outcome of these legislative or regulatory
initiatives or the likelihood of success of competing video or
cable service ventures by telephone companies or other
businesses. Although Coxs high-speed Internet services are
very competitive with the Internet services delivered by
telephone companies, Cox cannot predict the impact these
competitive ventures might have on its business and operations.


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
significant competitor to traditional video services. As
high-speed Internet services over cable systems become more
ubiquitous, programming suppliers, such as the major movie
studios, may bypass cable operators and market their services
directly to consumers through video streaming over the Internet.
In March 2003, Yahoo Inc. introduced a video subscription
service that offers entertainment and sports content. Cox is
unable to predict the impact on its business and operations from
companies providing Internet services or companies using the
Internet to gain direct access to Coxs subscribers.

Coxs cable systems also compete for
subscribers with satellite master antenna television systems
that 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. Satellite master antenna television 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. The FCC has ruled that private cable systems can
distribute cable programming services across public
rights-of-way to subscribers in multiple buildings over leased
video distribution capacity acquired from local telephone
companies without obtaining a franchise from the local
governmental authorities. 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 residential and
commercial developments.

Cable systems also compete with multichannel
multipoint distribution service systems (also known as MMDS or
wireless cable systems), which are licensed by the FCC to serve
specific areas using low-power microwave frequencies. The FCC
amended its regulations in 1998 to provide wireless cable
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

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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 (also known as LMDS), which, like other wireless cable
systems, is capable of transmitting voice and high-speed
Internet access as well as video transmissions. Generally,
wireless cable operators are now focusing on data transmission
rather than video service. Several years ago the FCC authorized
a new terrestrial wireless service to provide video, voice, and
data transmission services over spectrum previously allocated
for direct broadcast satellite system 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 communications 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 (also known as DTV) licenses to incumbent television
broadcast licensees. Digital television stations are 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. Digital television stations are now operating in many of
Coxs cable television markets. In the five markets where
Cox is now offering high definition (HD) digital services,
Cox has reached agreements with many of these stations to carry
at least their primary digital broadcast signal on Coxs
cable systems.

Telephony
Competition.Coxs telephone
services compete with various providers of both landline and
wireless communications services, including cellular, personal
communications services (also known as PCS), specialized mobile
radio (also known as SMR) systems and satellite communications
services. The switched voice and data telecommunications market
currently is dominated by incumbent local telephone companies
(also known as incumbent local exchange carriers or ILECs);
however, wireless communications service providers also offer
competition to Cox in the delivery of both voice and Internet
services. Resellers of the incumbent local telephone
companys voice and Internet services also compete with
Coxs communications services. Resellers are typically
low-cost aggregators that serve price conscious market segments;
and value-added resellers target customers with special
communications needs. Companies offering telephone service via
the Internet (also know as IP telephony) also compete with
Coxs telephone services, although the availability and
quality of such services are not significant at this time.

Pursuant to changes in federal law in 1996, and
subject to certain limitations for rural telephone companies,
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.

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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 of 1934, as amended by the
Cable Communications Policy Act of 1984 (the 1984 Cable Act),
the Cable Television Consumer Protection and Competition Act of
1992 (the 1992 Cable Act), and the Telecommunications Act of
1996 (the 1996 Telecommunications Act), establishes
comprehensive national standards and guidelines for the
regulation of cable television systems and allocates
responsibility for enforcing federal 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 this federal law. The results of these
judicial and administrative proceedings may materially impact
Coxs business and operations.

The
Communications Act and FCC Regulations

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



| |   |                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------
| |  | subscriber rates;                                                                                                                            
|
| |  | the content of programming Cox offers to
    subscribers, as well as the manner in which Cox markets its
    program packages to subscribers;
|
| |  | the use of Coxs cable system facilities by
    local franchising authorities, the public and unrelated
    companies;                       
|
| |  | the use of utility poles and conduits;                                                                                                       
|
| |  | cable system and program ownership limitations;
    and                                                                                      
|
| |  | franchise agreements with local governmental
    authorities.                                                                                

Rate Regulation.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 system 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 its cable system 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:



| |   |                                                                                                                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | prohibit regulation of rates for non-basic
    multi-channel video service packages and video programming
    offered on a per channel or per program basis, as well as
    regulation of rates by local franchising authorities for other
    non-basic services provided over the cable system;

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| |   |                                                                                                                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | require operators to establish a uniform rate
    structure for cable services throughout each franchise area that
    is not subject to effective competition, subject to certain
    exceptions allowing operators to establish reasonable categories
    of customers and services;
|
| |  | permit operators to offer non-predatory bulk
    discount rates for subscribers in commercial and residential
    developments and to offer discounted rates to senior citizens
    and other economically disadvantaged groups; and                                                  
|
| |  | permit regulated basic equipment and installation
    rates to be computed by aggregating costs of broad categories of
    equipment at the franchise, system, regional or company level.                                                                                             

Approximately 220 communities served by
Coxs cable systems currently regulate Coxs basic
service and equipment rates. These communities represent
approximately 26% of total communities served by Cox and
approximately 21% of the total number of equivalent basic
subscribers served by Coxs cable systems. Cox does not
believe that the regulation of its basic service and equipment
rates in these communities will materially impact 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:



| |   |                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------
| |  | to carry the station on certain designated
    channel positions on the operators cable system (subject
    to certain exceptions); or         
|
| |  | to negotiate an agreement for the stations
    retransmission consent that permits the operator to
    carry the station on the cable system.

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 proposals for mandatory
carriage of digital television signals. In the first phase of
this proceeding, the FCC:



| |   |                                                                                                                                                                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | declined to order the carriage of both the analog
    and digital signals of television stations;                                                                                                                                                                                                    
|
| |  | implemented technical and operational standards
    for the carriage of digital television signals;                                                                                                                                                                                                  
|
| |  | determined that a television broadcast station
    licensee that is operating only on its authorized digital
    channel and/or that has surrendered its analog broadcast channel
    has mandatory carriage rights for its digital broadcast channel
    on cable systems in its local service area;
|
| |  | authorized the digital-only broadcast station to
    elect whether the operators cable system will carry the
    stations signal in a digital or converted analog format;
    and                                                                                                                  
|
| |  | authorized broadcasters with both analog and
    digital signals to tie the carriage of their digital signals
    with the carriage of their analog signals as a retransmission
    consent condition.                                                                                               

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.

Except in areas where Cox is subject to effective
competition, 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. Like many other cable operators, however, Cox was
not required to comply with this requirement until October 2002
for

14



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##### Table of Contents



any of its cable systems that did not have
addressable converters or that had other substantial
technological limitations. All of Coxs systems are in
compliance with this requirement.


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:



| |   |                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | precludes any satellite video programmer
    affiliated with a cable company, or with a common carrier
    providing video programming directly to its subscribers, from
    favoring an affiliated company over competitors;
|
| |  | requires such programmers to sell their
    programming to other multichannel video distributors; and                                                                                                                        
|
| |  | limits the ability of such programmers to offer
    exclusive programming arrangements to their affiliates.                                                                                                                  

The statutory prohibition on exclusive
programming distribution contracts between cable operators and
affiliated satellite program distributors expired in October
2002; however, as permitted by statute, the FCC extended the
prohibition for five years after determining that it was
necessary to protect competition and diversity in the
distribution of video programming.

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:



| |   |                                                                                              
| | - | ---------------------------------------------------------------------------------------------
| |  | use of syndicated and network programs and local
    sports broadcast programming;           
|
| |  | advertising in childrens programming;                                                       
|
| |  | political advertising;                                                                       
|
| |  | programming created or controlled by the cable
    operator (i.e., origination cablecasting);
|
| |  | sponsorship identification; and                                                              
|
| |  | closed captioning of video programming.                                                      

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. A federal appellate court recently vacated the
FCCs decision to require video programmers, including
cable operators, to provide simultaneous audio description of
video activity occurring on certain programming to assist
visually impaired persons.

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:



| |   |                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | permits franchising authorities to require that
    cable operators provide channel capacity for public, educational
    and governmental access programming; and                                                            
|
| |  | requires cable systems with 36 or more activated
    channels to designate a significant portion of their channel
    capacity for programming provided by unaffiliated third parties
    under regulated lease arrangements.

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.

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##### Table of Contents



Various consumer groups and companies, including
telephone companies and Internet service providers, 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
cable systems. Municipal efforts to impose unilaterally
so-called open access requirements on cable
operators have not generally been successful and have been
rejected by several federal courts, although the rationale for
each decision has 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 decided that the provision
of broadband Internet services over cable systems is an
interstate information service, and not a
cable service or telecommunications
service. The FCC confirmed that cable operators offering
integrated high-speed Internet services are not subject to
common carrier requirements to offer the transport functions
underlying their Internet services on a stand-alone basis to
unaffiliated Internet service providers. This decision is the
subject of a pending appeal in the U.S. Court of Appeals
for the Ninth Circuit. The FCC has a separate rulemaking pending
to assess issues concerning the 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 Internet service provided over cable systems as a
facilities-based interstate information service and the role, if
any, of state and local governmental authorities in regulating
such services. Similarly, in a rulemaking proceeding involving
regulation of incumbent local exchange carriers broadband
services, the FCC has proposed to classify broadband Internet
services provided by local telephone companies over their own
wireline facilities as information services. The
outcome of the pending appeal of the FCCs regulatory
classification of high-speed Internet services provided over
cable systems and the pending FCC broadband rulemaking
proceedings may affect significantly Coxs regulatory
obligations, including whether Cox will be required to obtain
additional local authority to use 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 high-speed Internet service revenues. Cox cannot
predict the ultimate outcome of these judicial and
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 in a dispute between
AT&T Broadband and the City of Portland that the Internet
service offered by AT&T Broadband was not a cable service.
As a result, Cox determined that it could incur liability in
those states if it continued to collect and remit franchise fees
on revenue derived from its high-speed Internet services.
Additionally, because the FCC ruled in March 2002 that
high-speed Internet services provided over cable systems are not
cable services, Cox notified all of its local franchising
authorities that it no longer could collect and remit franchise
fees on its high-speed Internet service revenues. For a
discussion of certain related matters, see Item 3.
Legal Proceedings. Although various local
franchising authorities have objected to the termination of
franchise fee payments on the revenues from Coxs
high-speed Internet services, the only franchising authorities
that have taken any formal action against Cox are the City of
Los Angeles, California and Jefferson Parish, Louisiana. Los
Angeles has given Cox and other cable operators doing business
in the City of Los Angeles a formal notice of default of their
franchise obligations for failure to pay franchise fees on
high-speed Internet service revenues. Jefferson Parish has filed
a lawsuit claiming, among other things, that Cox is obligated to
pay franchise fees on its high-speed Internet services. Cox
cannot predict the outcome of these franchise fee disputes, or
the impact of any adverse results in such disputes on its
business and operations.

Legislation has been introduced previously in
Congress, which, among other things, would have required cable
operators to offer interconnection to unaffiliated Internet
service providers 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.

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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.


The U.S. Supreme Court has 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 recently confirmed that the
FCCs rate formulas, as applied in a specific case, provide
just compensation under the Federal Constitution.
Several other recent federal appellate court decisions have also
upheld various aspects of the FCCs pole attachment
regulations and policies adopted pursuant to the 1996
Telecommunications Act, which decisions will provide more
certainty for Cox in its negotiations with various utilities for
the use of space on poles and in underground conduits.

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 challenges 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 Coxs
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:



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

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 its
regulations prohibiting the common ownership of other
broadcasting interests and cable systems in the same
geographical areas. This broadcast-cable cross-ownership 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. Although the FCC is
currently reevaluating many of its media ownership restrictions,
it has not proposed to implement a new broadcast-cable
cross-ownership prohibition. With the elimination of this FCC
cross-ownership restriction, Cox may obtain an enhanced degree
of flexibility in structuring its cable operations.

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



| |   |                                                                                                                                                                                                                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | eliminating federal legal barriers to competition
    in the local telephone and cable communications businesses,
    including repeal of the statutory telephone company/cable
    television cross-ownership prohibition (thereby allowing local
    telephone companies to offer video services in their local
    telephone service areas);
|
| |  | preempting legal barriers to competition that
    exist in state and local laws and regulations;                                                                                                                                                                                                                                               
|
| |  | setting basic standards for relationships between
    telecommunications providers; and                                                                                                                                                                                                                                                        
|
| |  | limiting acquisitions among cable systems and
    telephone companies in the same market and prohibiting certain
    joint ventures between local telephone companies and cable
    operators in the same market.                                                                                                                              

Under the 1996 Telecommunications Act, local
telephone companies and other entities may provide video
programming services as traditional cable operators or, among
other things, as open video system (also known as 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.
Open video system operators are exempt from several of the
regulatory obligations that currently apply to cable operators.
However, certain restrictions and requirements remain applicable
to open video system operators, including, without limitation,
the obligation to obtain FCC certification for open video system
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 Telecommunications Act, local
telephone companies providing cable service through cable
systems or open video systems are not bound by common carrier
obligations, which otherwise would require a telephone company
to make capacity available on its network on a nondiscriminatory
basis for the provision of cable service directly to subscribers
by unaffiliated third parties. 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 open video systems,
but only if they are subject to effective competition as defined
in the 1992 Cable Act and corresponding FCC regulations. The
FCCs rules prohibit a cable operator from terminating an
existing franchise agreement to become an open video system
operator. Cox does not operate any open video systems, and no
open video systems operate in any of Coxs franchise areas.

General Ownership
Limitations.The Communications
Act generally prohibits Cox, with certain limited exceptions,
from owning and/or operating a satellite master antenna
television system or a wireless cable system in any area where
Cox provides franchised cable television service. The FCCs
rules, however, permit a cable operator to offer service through
satellite master antenna television 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 rulemaking
proceeding, which, among other things, sought comments on
whether the FCC should implement cross-ownership restrictions
between direct broadcast satellite operators and cable
operators. That proceeding remains pending, and no FCC rule
currently prohibits cross-ownership between direct broadcast
satellite providers and cable system operators. The FCC has
stated that it would evaluate cross-ownership issues
case-by-case in the context of FCC 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:



| |   |                    
| | - | -------------------
| |  | customer service;  
|
| |  | subscriber privacy;

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| |   |                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | marketing practices;                                                                                                                                                     
|
| |  | equal employment opportunity;                                                                                                                                            
|
| |  | technical standards and equipment compatibility;                                                                                                                         
|
| |  | antenna structure notification, marking, and
    lighting;                                                                                                               
|
| |  | emergency alert system requirements; and                                                                                                                                 
|
| |  | the collection from cable operators of annual
    regulatory fees, which are calculated based on the number of
    subscribers served and the types of FCC licenses held.

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 building. Recent clarifications by the FCC of its
inside wiring rules are intended to facilitate the ability of
competitors to access incumbent cable operators internal
building distribution plant.

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
customer premises equipment by making available modular security
components that would function in set-top converters purchased
or leased by subscribers from retail outlets. Effective
January 1, 2005, Cox will be prohibited from selling or
leasing new navigation devices or set-top converters that
integrate both security and non-security functions. Cox,
however, will not be required to discontinue the leasing of
older set-top converters that include integrated security
functions if those converters are 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.

Cable Copyright
Matters

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 direct broadcast satellite
operators 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.

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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
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, and Cox
recently executed music performance license agreements with
these organizations. 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.

Cable
Franchising Matters

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. 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. 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:



| |   |                                                                             
| | - | ----------------------------------------------------------------------------
| |  | generally prohibits a cable operator from
    operating without a franchise;
|
| |  | encourages competition with existing cable
    systems by:                  



| |   |                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | allowing municipalities to operate their own
    cable systems without franchises; and                                                                                                          
|
| |  | preventing franchising authorities from granting
    exclusive franchises or from unreasonably refusing to award
    additional franchises covering an existing cable systems
    service area;



| |   |                                                                                                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | permits local authorities, when granting or
    renewing franchises, to establish requirements for cable-related
    facilities and equipment;                                                                                               
|
| |  | permits local authorities, in granting or
    reviewing a cable franchise, to require the provision of channel
    capacity for public, educational and governmental channels, and
    to require the construction of institutional networks;
|
| |  | prohibits franchising authorities from
    establishing requirements for specific video programming or
    information services other than in broad categories;                                                                              
|
| |  | permits a cable operator to seek modification of
    franchise requirements from the franchising authority or by
    judicial action if changed circumstances warrant the
    modification;                                                  
|
| |  | generally prohibits franchising authorities from:                                                                                                                                                                                            



| |   |                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | imposing requirements in the grant or renewal of
    a cable franchise that require, prohibit or restrict the
    provision of telecommunications services;
|
| |  | imposing cable franchise fees on revenues derived
    from providing telecommunications services over the cable
    system; or                             
|
| |  | restricting the use of any type of subscriber
    equipment or transmission technology;                                                                    



| |   |                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------
| |  | limits franchise fees to 5% of gross revenues
    derived from providing cable services over the cable system;

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| |   |                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | establishes formal and informal procedures for
    renewal of cable franchises that are designed to protect cable
    operators from arbitrary denials of renewal; and
|
| |  | permits state or local franchising authorities to
    adopt certain additional conditions regarding the transfer of
    cable system ownership.                       

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. The FCC has ruled that franchise
fees paid by cable operators on non-subscriber related revenue
generated from such things as cable advertising and home
shopping commissions may be passed through to subscribers and
itemized on subscriber bills regardless of the source of the
revenues on which they were assessed. Local franchising
authorities have appealed this FCC decision to a federal
appellate court. In connection with its March 2002 decision
classifying high-speed Internet services provided over a cable
system 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. That FCC decision has also been challenged
in a federal appellate court by local governmental and consumer
groups. Because of the FCCs decision, Cox notified all of
its local franchising authorities that it no longer could
collect and remit franchise fees on its high-speed Internet
service revenues. For a discussion of this and other related
matters, see Legislation and Regulation  Cable
Television  Use of Coxs Cable Systems by the
Government and Unrelated Third Parties. 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 requirements, such as upgrades in facilities and
services or increased franchise fees. 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 additional 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.

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 Telecommunications Act established a national policy of
promoting local exchange competition and set standards to govern
relationships among telecommunications providers, including,
among others, the intercon-

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nection of competitive carriers and the
unbundling of monopoly incumbent local telephone company
services. The statute expressly preempts legal barriers to
telecommunications competition under state and local laws. The
1996 Telecommunications Act also 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 local telephone companies and others
will be affected by the degree and form of regulatory
flexibility ultimately afforded by the FCC to incumbent local
telephone companies, 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 local telephone
companies, the 1996 Telecommunications Act presents
unprecedented opportunities for new entrants into these markets,
such as Cox. Because incumbent local telephone companies
historically had exclusive state franchises to provide telephone
services, they established monopoly relationships with their
customers. Under the 1996 Telecommunications 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 Telecommunications Act also imposes
access and interconnection requirements on incumbent local
telephone companies to open their networks to competitors. State
regulators generally are responsible for arbitrating
interconnection disputes that arise between incumbent local
telephone companies and new entrants. In addition, the 1996
Telecommunications Act specifies procedures for state
commissions to review and approve interconnection agreements
entered into between new entrants and incumbent local telephone
companies. The FCC adopted pricing standards and negotiation and
arbitration guidelines that the states must follow in reviewing
interconnection agreements between incumbent local telephone
companies 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 local telephone companies 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 were 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.

In February 2003, the FCC adopted modified
unbundling rules. These rules will:



| |   |                                                                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | limit the access of competitive carriers to new
    broadband facilities constructed by incumbent telephone
    companies;                                                
|
| |  | phase out line sharing, a mechanism
    that permits competitive providers of broadband services to
    purchase only a portion of the capacity on a telephone line; and
|
| |  | give state regulators new authority to determine
    whether incumbent telephone company switching facilities should
    continue to be unbundled.                        

It is expected that both incumbent telephone
companies and competitive carriers will appeal aspects of this
decision. The new rules are expected to disadvantage competitive
carriers, such as AT&T, WorldCom and Covad, that make
significant use of unbundled elements to provide local telephone
services.

In July 2000, a federal appellate court vacated
the FCCs pricing rules for incumbent local telephone
companies pricing of unbundled network elements and
interconnection, but in May 2002, the U.S. Supreme Court
reversed the appeals court and upheld the FCC rules. Although
its current rules were upheld by the Supreme Court, 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
local telephone companies, including incumbent local telephone
companies.

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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 local exchange carriers (also
known as ILECs and incumbent local telephone companies) 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 local telephone companies concerning their refusal to
pay reciprocal compensation for Internet-bound traffic. Cox
cannot be assured that it will recover reciprocal compensation
for traffic delivered to Internet service providers to which Cox
believes it is entitled under its existing interconnection
agreements.

Under the 1996 Telecommunications 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 Telecommunications Act required
the FCC to implement rules under which all local telephone
companies must provide telephone number portability, dialing
parity, reciprocal compensation for transport and termination of
local traffic, resale, and access to rights-of-way. 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 local
telephone companies 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.

The 1996 Telecommunications 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 local telephone companies. The Communications Act
permits carriers to appeal state commission decisions concerning
interconnection agreements to United States district courts.
Several state commissions challenged this provision based on the
Eleventh Amendment, which gives states immunity from suits in
federal court. On May 20, 2002, the U.S. Supreme Court held
that a carriers right to appeal state commission decisions
concerning interconnection agreements to United States district
courts did not violate the Eleventh Amendment, preserving the
appeal rights of Cox and other carriers.

Access
Charges.On April 27, 2001,
the FCC adopted an order to prevent competitive local telephone
companies 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 competitive local telephone companies to decrease over time
until they reach the rates charged by incumbent local telephone
companies. At the same time, the FCC held that a long distance
carriers refusal to serve the customers of a competitive
local telephone company 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 competitive local telephone companies, including
Cox, could decline under the FCCs order, the order also
will ensure that the competitive local telephone companys
customers have access to a fully interconnected
telecommunications network.

Bell Company Long Distance
Service.Prior to the passage of
the 1996 Telecommunications Act, the Bell telephone companies,
such as BellSouth, were prohibited from providing long distance
service in their local service territories. The 1996
Telecommunications Act included provisions that allow a Bell
company to provide long distance service after it meets a series
of statutory tests, including a competitive
checklist of compliance with the market-opening
requirements of the Communications Act. Obtaining long distance
authority in a state improves a Bell companys competitive
position with respect to other providers of local telephone
service and may reduce its incentive to continue to comply with
its obligations to open its market to local competition. As of
the end of 2002, the Bell companies had obtained long distance
authority in 35 of the 48 states and in the District of Columbia
where they had been subject to the prohibition on providing long
distance service, including the states of California,
Connecticut, Iowa, Louisiana, Nebraska, Oklahoma, Rhode Island
and Virginia where Cox provides local telephone service.

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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 local
telephone companies 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 local telephone
companies that possess this information generally have not made
it available for review and verification.

The 1996 Telecommunications 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 regarding
whether similar services provided by cable operators should be
subject to universal service fund contributions.

Under the contribution factors for 2002, Cox
contributed approximately $7.0 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 local telephone companies
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 Telecommunications 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 Telecommunications Act
requires the FCC to streamline its regulation of incumbent local
telephone companies and permits the FCC to refrain from
regulating particular classes of telecommunications services or
providers. The FCC has established a framework for granting
certain local telephone companies relief from the FCCs
rate level, rate structure and tariffing rules once these local
telephone companies satisfy certain competitive criteria. To
obtain relief, an incumbent must demonstrate that sufficient
competition has developed in the incumbents market for
high-speed dedicated connections and certain related services to
warrant relaxation of the FCC rules for that market. There
continues to be activity at the FCC, state public service
commissions and the courts by incumbent local telephone
companies requesting increased pricing flexibility, local
exchange service, special access and high-capacity transport
service. While the FCC has granted requests for regulatory
forbearance from competitive local telephone companies, it has
not granted such requests from incumbent local telephone
companies.

Telephone
Numbers.Local telephone companies
must have telephone numbers to provide service to their
customers. In a series of proceedings over the past six years,
the FCC has adopted rules that affect Coxs access to and
use of telephone numbers. The most significant FCC rules are
intended to promote the efficient use of telephone numbers 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

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before they can obtain additional telephone
numbers; 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 certain states a larger role in number
conservation, including expanded rights to ration access to
telephone numbers. 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 telecommunications providers including
those of Coxs 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 Telecommunications Act, state commissions also must review
interconnection agreements entered into between incumbent local
telephone companies 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 had determined that it
will not consider matters brought under the 1996
Telecommunications Act. The Virginia-related matters now pending
before the FCC include the arbitration of the terms of
interconnection agreements between Verizon and three competitive
local telephone companies, including Cox. The Virginia
legislature has passed legislation that requires the State
Corporation Commission to consider matters brought before it
pursuant to the 1996 Telecommunications Act.

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. Cox cannot
predict at this time the outcome of these proceedings or their
impact upon the cable or telecommunications industries or upon
Coxs business and operations.

Employees

At December 31, 2002, Cox had approximately
21,600 full-time-equivalent employees. Cox considers its
relations with its employees to be satisfactory.

Available Information

Coxs website address is
http://www.cox.com. You may obtain on or through this
website, free of charge, copies of Coxs annual reports on
Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K, and all amendments to those reports
filed or furnished pursuant to Section 13(a) or
15(d) of the Exchange Act. These reports are available on
Coxs website as soon as reasonably possible after they are
electronically filed with the SEC.




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 premise equipment consists of
decoding converters, cable modems and

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

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

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

In addition, on September 8, 2002, plaintiff
Daniel David, on behalf of himself and all others similarly
situated, filed a nearly identical case against Fax.com, Cox
Business Services and others in the Superior Court of
California, Alameda County. The complaint asserts various causes
of action including violation of the TCPA, trespass to chattels,
violation of Section 17-200 of the California Business and
Professions Code and unjust enrichment. The suit seeks damages
and injunctive relief similar to that sought in the related
federal suits. This action has been stayed until July 8,
2003 pending FCC action on its on-going TCPA rule-making. Cox
Business Services intends to defend this action vigorously. The
outcome cannot be predicted at this time.

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

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

On April 26, 2002, Frieda and Michael Eksler
filed an amended complaint naming Cox as a defendant in a
putative class action lawsuit in the United States District
Court for the Southern District of New York against AT&T
Corp. and certain former officers of Excite@Home, among others.
Cox was served on May 10, 2002. This case has been
consolidated with a related case captioned Semen Leykin v.
AT&T Corp., et al., and another related case, and an amended
complaint in that case, naming Cox as a defendant, was filed and
served on November 7, 2002. The putative class includes
persons who purchased shares of Excite@Home common stock between
the time period March 28, 2000 and September 28, 2001. The
sole count against Cox asserts a claim against Cox as a
controlling person of Excite@Home under
Section 20(a) of the Securities Exchange Act for
violations of Section 10(b) of the Securities Exchange
Act and Rule 10b-5 thereunder. The suit seeks from Cox
unspecified monetary damages, statutory compensation and other
relief. In addition, a claim against Coxs former Executive
Vice President, David Woodrow, who formerly served on board of
directors, is asserted for breach of purported fiduciary duties.
The suit seeks from Woodrow unspecified monetary and punitive
damages. On February 11, 2003, Cox and Woodrow filed a
dispositive motion to dismiss on various grounds, including
failure to state a claim. Cox intends to defend this action
vigorously. The outcome cannot be predicted at this time.

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

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

None.






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 2002 Summary
Annual Report. See Exhibit 13. Portions of the 2002
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 that 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, 2002.

|                             |                                                                              |                                                                              |   |          |       |      |   |         |      |      |   |         |      |  |   |         |      |  |   |         |      | 
|---------------------------- | ---------------------------------------------------------------------------- | ---------------------------------------------------------------------------- | - | -------- | ----- | ---- | - | ------- | ---- | ---- | - | ------- | ---- |  | - | ------- | ---- |  | - | ------- | ---- | 
|                             |                                                                              |                                                                             
|                             |                                                                              | Year Ended December 31                                                      
|                             |                                                                              |                                                                             
|                             |                                                                              | 2002                                                                         |   | 2001     |       | 2000 |   | 1999    |      | 1998
|                             |                                                                              |                                                                              |   |          |       |      |   |         |      |     
|                             |                                                                              |                                                                             
|                             |                                                                              | (Millions of Dollars, excluding per share data)                             
|Statement of Operations Data |                                                                              |                                                                              |   |          |       |      |   |         |      |      |   |         |      |  |   |         |      |  |   |        
|                             | Revenues                                                                     |                                                                              | $ | 5,038.6  |       |      | $ | 4,253.2 |      |      | $ | 3,673.7 |      |  | $ | 2,427.4 |      |  | $ | 1,797.8 |     
|                             | Operating income (loss)                                                      |                                                                              |   | 417.4    |       |      |   | (118.3  | )    |      |   | 140.8   |      |  |   | 262.9   |      |  |   | 201.4   |     
|                             | Interest expense                                                             |                                                                              |   | 550.6    |       |      |   | 565.9   |      |      |   | 550.8   |      |  |   | 305.7   |      |  |   | 223.3   |     
|                             | Gain (loss) on derivative instruments, net                                   |                                                                              |   | 1,125.6  |       |      |   | (212.0  | )    |      |   |        |      |  |   |        |      |  |   |        |     
|                             | Gain (loss) on investments, net                                              |                                                                              |   | (1,317.2 | )     |      |   | 1,151.2 |      |      |   | 3,282.0 |      |  |   | 1,569.4 |      |  |   | 2,484.2 |     
|                             | Equity in net losses of affiliated companies                                 |                                                                              |   | 32.2     |       |      |   | 40.0    |      |      |   | 7.3     |      |  |   | 90.5    |      |  |   | 547.2   |     
|                             | Income (loss) before cumulative effect of
    change in accounting principle |                                                                              |   | (274.0   | )     |      |   | 37.9    |      |      |   | 1,925.3 |      |  |   | 881.9   |      |  |   | 1,270.7 |     
|                             | Cumulative effect of change in accounting
    principle, net of tax          |                                                                              |   |         |       |      |   | 717.1   |      |      |   |        |      |  |   |        |      |  |   |        |     
|                             | Net income (loss)                                                            |                                                                              |   | (274.0   | )     |      |   | 755.0   |      |      |   | 1,925.3 |      |  |   | 881.9   |      |  |   | 1,270.7 |     
|                             | Basic net income (loss) per share(a)                                         |                                                                              |   |          |       |      |   |         |      |      |   |         |      |  |   |         |      |  |   |         |     
|                             |                                                                              | Income (loss) before cumulative effect of
    change in accounting principle |   | $        | (0.45 | )    |   | $       | .06  |      |   | $       | 3.20 |  |   | $       | 1.54 |  |   | $       | 2.33 | 
|                             |                                                                              | Cumulative effect of change in accounting
    principle, net of tax          |   |          |      |      |   |         | 1.20 |      |   |         |     |  |   |         |     |  |   |         |     | 
|                             |                                                                              |                                                                              |   |          |       |      |   |         |      |      |   |         |      |  |   |         |      |  |   |        
|                             | Basic net income (loss) per share                                            |                                                                              | $ | (0.45    | )     |      | $ | 1.26    |      |      | $ | 3.20    |      |  | $ | 1.54    |      |  | $ | 2.33    |     
|                             |                                                                              |                                                                              |   |          |       |      |   |         |      |      |   |         |      |  |   |         |      |  |   |        
|                             | Diluted net income (loss) per share(a)                                       |                                                                              |   |          |       |      |   |         |      |      |   |         |      |  |   |         |      |  |   |         |     
|                             |                                                                              | Income (loss) before cumulative effect of
    change in accounting principle |   | $        | (0.45 | )    |   | $       | .06  |      |   | $       | 3.16 |  |   | $       | 1.51 |  |   | $       | 2.30 | 
|                             |                                                                              | Cumulative effect of change in accounting
    principle, net of tax          |   |          |      |      |   |         | 1.18 |      |   |         |     |  |   |         |     |  |   |         |     | 
|                             |                                                                              |                                                                              |   |          |       |      |   |         |      |      |   |         |      |  |   |         |      |  |   |        
|                             | Diluted net income (loss) per share                                          |                                                                              | $ | (0.45    | )     |      | $ | 1.24    |      |      | $ | 3.16    |      |  | $ | 1.51    |      |  | $ | 2.30    |     
|                             |                                                                              |                                                                              |   |          |       |      |   |         |      |      |   |         |      |  |   |         |      |  |   |        

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|                   |                                                                         |                                                 |   |          |   |      |   |          |   |      |   |          |   |  |   |          |   |  |   |          |  
|------------------ | ----------------------------------------------------------------------- | ----------------------------------------------- | - | -------- | - | ---- | - | -------- | - | ---- | - | -------- | - |  | - | -------- | - |  | - | -------- | -
|                   |                                                                         |                                                
|                   |                                                                         | Year Ended December 31                         
|                   |                                                                         |                                                
|                   |                                                                         | 2002                                            |   | 2001     |   | 2000 |   | 1999     |   | 1998
|                   |                                                                         |                                                 |   |          |   |      |   |          |   |     
|                   |                                                                         |                                                
|                   |                                                                         | (Millions of Dollars, excluding per share data)
|Balance Sheet Data |                                                                         |                                                 |   |          |   |      |   |          |   |      |   |          |   |  |   |          |   |  |   |         
|As of December 31  |                                                                         |                                                 |   |          |   |      |   |          |   |      |   |          |   |  |   |          |   |  |   |         
|                   | Total assets                                                            |                                                 | $ | 25,005.1 |   |      | $ | 25,061.4 |   |      | $ | 24,720.8 |   |  | $ | 26,614.5 |   |  | $ | 12,878.1 |  
|                   | Debt (including amounts due to CEI)                                     |                                                 |   | 7,316.0  |   |      |   | 8,417.7  |   |      |   | 8,543.8  |   |  |   | 6,375.8  |   |  |   | 4,090.8  |  
|                   | Cox-obligated capital and preferred securities of
    subsidiary trusts |                                                 |   |         |   |      |   | 1,155.7  |   |      |   | 1,155.4  |   |  |   | 1,150.6  |   |  |   |         |  
|                  
|Cash Flow Data     |                                                                         |                                                 |   |          |   |      |   |          |   |      |   |          |   |  |   |          |   |  |   |         
|                   | Cash flows provided by operating activities                             |                                                 | $ | 1,772.8  |   |      | $ | 798.8    |   |      | $ | 306.2    |   |  | $ | 402.0    |   |  | $ | 667.2    |  
|                   | Cash flows used in investing activities                                 |                                                 |   | (608.2   | ) |      |   | (953.3   | ) |      |   | (2,077.0 | ) |  |   | (3,849.6 | ) |  |   | (1,600.4 | )
|                   | Cash flows provided by (used in) financing
    activities               |                                                 |   | (1,022.8 | ) |      |   | 163.0    |   |      |   | 1,815.9  |   |  |   | 3,450.3  |   |  |   | 935.6    |  

|                            |  |                   |            |         |  |         |           |      |  |      |           |   |  |  |           |   |  |  |           |  
|--------------------------- |  | ----------------- | ---------- | ------- |  | ------- | --------- | ---- |  | ---- | --------- | - |  |  | --------- | - |  |  | --------- | -
|                            |  |                  
|                            |  | As of December 31
|                            |  |                  
|                            |  | 2002              |            | 2001(c) |  | 2000(c) |           | 1999 |  | 1998
|                            |  |                   |            |         |  |         |           |      |  |     
|Customer Data               |  |                   |            |         |  |         |           |      |  |      |           |   |  |  |           |   |  |  |           |  
|Basic video customers(b)    |  |                   | 6,280,849  |         |  |         | 6,237,888 |      |  |      | 6,193,317 |   |  |  | 5,136,184 |   |  |  | 3,753,608 |  
|Advanced services(d)        |  |                   | 3,923,734  |         |  |         | 2,723,173 |      |  |      | 1,568,424 |   |  |  | 554,025   |   |  |  | 169,731   |  
|                            |  |                   |            |         |  |         |           |      |  |      |           |   |  |  |           |   |  |  |           |  
|Revenue generating units(e) |  |                   | 10,204,583 |         |  |         | 8,961,061 |      |  |      | 7,761,741 |   |  |  | 5,690,209 |   |  |  | 3,923,339 |  
|Video homes passed(f)       |  |                   | 10,210,091 |         |  |         | 9,979,207 |      |  |      | 9,710,963 |   |  |  | 8,031,340 |   |  |  | 5,923,428 |  
|Basic video penetration(g)  |  |                   | 61.5       | %       |  |         | 62.5      | %    |  |      | 63.8      | % |  |  | 64.0      | % |  |  | 63.4      | %



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | All historical per share amounts have been
    restated to reflect Coxs two-for-one stock split which was
    effective on May 21, 1999.                                                                                                                                                                                                                                                                   
|   
|(b) | A home with one or more television sets connected
    to a cable system is counted as one basic customer.                                                                                                                                                                                                                                                                                                   
|   
|(c) | Cox sold certain cable systems in 2002. After
    adjusting for such sales, basic video customers were 6,221,235
    and 6,175,340, respectively, at December 31, 2001 and 2000;
    customers for advanced services were 2,721,157 and 1,567,212,
    respectively, at December 31, 2001 and 2000; and video
    homes passed was 9,947,664 and 9,680,644, respectively, at
    December 31, 2001 and 2000.
|   
|(d) | Advanced services include Cox Digital Cable,
    high-speed Internet access and Cox Digital Telephone.                                                                                                                                                                                                                                                                                                      
|   
|(e) | Each basic video customer and each advanced
    service is a revenue generating unit. In certain locations, a
    household may purchase more than one advanced service, each of
    which is counted as a separate revenue generating unit.                                                                                                                                                                



|    |                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------
|(f) | A home is deemed to be passed if it
    can be connected to the distribution system without any further
    extension of the distribution plant.



|    |                                                                 
|--- | ----------------------------------------------------------------
|(g) | Basic video customers as a percentage of video
    homes passed.






|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|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 63.4%
majority-owned subsidiary of Cox Enterprises, Inc., is a
multi-service broadband communications company serving
approximately 6.5 million customers nationwide. Cox is the
nations fourth largest cable television provider and
offers an array of broadband products and

29



---



##### Table of Contents



services to both residential and commercial
customers in its markets. These services primarily include
analog and digital video, high-speed Internet access and local
and long-distance telephone.


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

Investments

See Investments in Part I,
Item 1. Business and Note 6.
Investments in Part II, Item 8.
Consolidated Financial Statements and Supplementary
Data.

Results of Operations

2002 compared with 2001

The following table sets forth summarized
consolidated financial information for the two years ended
December 31, 2002.

|                                                                    |  |                        |            |      |  |          |           |          |  |   |            |   |  |  |      |   
|------------------------------------------------------------------- |  | ---------------------- | ---------- | ---- |  | -------- | --------- | -------- |  | - | ---------- | - |  |  | ---- | --
|                                                                    |  |                        |            |      |  |         
|                                                                    |  | Year Ended December 31 |            |      |  |         
|                                                                    |  |                        |            |      |  |         
|                                                                    |  | 2002                   |            | 2001 |  | $ Change |           | % Change
|                                                                    |  |                        |            |      |  |          |           |         
|                                                                    |  |                        |            |      |  |         
|                                                                    |  | (Thousands of Dollars) |            |      |  |         
|Revenues                                                            |  | $                      | 5,038,598  |      |  | $        | 4,253,203 |          |  | $ | 785,395    |   |  |  | 18   | % 
|Costs and expenses                                                  |  |                        | 3,259,359  |      |  |          | 2,832,245 |          |  |   | 427,114    |   |  |  | 15   | % 
|Depreciation and amortization                                       |  |                        | 1,357,906  |      |  |          | 1,539,211 |          |  |   | (181,305   | ) |  |  | (12  | )%
|Loss on sale of cable systems                                       |  |                        | 3,916      |      |  |          |          |          |  |   | 3,916      |   |  |  | 100  | % 
|                                                                    |  |                        |            |      |  |          |           |          |  |   |            |   |  |  |      |   
|Operating income (loss)                                             |  |                        | 417,417    |      |  |          | (118,253  | )        |  |   | 535,670    |   |  |  | NM   |   
|Interest expense                                                    |  |                        | (550,645   | )    |  |          | (565,934  | )        |  |   | 15,289     |   |  |  | (3   | )%
|Gain (loss) on derivative instruments, net                          |  |                        | 1,125,588  |      |  |          | (211,963  | )        |  |   | 1,337,551  |   |  |  | NM   |   
|Gain (loss) on investments, net                                     |  |                        | (1,317,158 | )    |  |          | 1,151,172 |          |  |   | (2,468,330 | ) |  |  | NM   |   
|Equity in net losses of affiliated companies                        |  |                        | (32,175    | )    |  |          | (40,043   | )        |  |   | 7,868      |   |  |  | (20  | )%
|Other, net                                                          |  |                        | (5,080     | )    |  |          | (11,882   | )        |  |   | 6,802      |   |  |  | 57   | % 
|Income tax (expense) benefit                                        |  |                        | 125,286    |      |  |          | (94,039   | )        |  |   | (219,325   | ) |  |  | NM   |   
|Minority interest, net of tax                                       |  |                        | (37,272    | )    |  |          | (71,147   | )        |  |   | 33,875     |   |  |  | (48  | )%
|Cumulative effect of change in accounting
    principal, net of tax |  |                        |           |      |  |          | 717,090   |          |  |   | (717,090   | ) |  |  | (100 | )%
|                                                                    |  |                        |            |      |  |          |           |          |  |   |            |   |  |  |      |   
|Net income (loss)                                                   |  | $                      | (274,039   | )    |  | $        | 755,001   |          |  | $ | (1,029,040 | ) |  |  | (136 | )%
|                                                                    |  |                        |            |      |  |          |           |          |  |   |            |   |  |  |      |   



---



| |                                        
| | ---------------------------------------
| | NM denotes percentage is not meaningful

30



---



##### Table of Contents





| |         
| | --------
| | Revenues

The following table sets forth summarized revenue
information for the two years ended December 31, 2002.

|            |             |                           |   |           |           |      |  |       |     |          |   |           |           |  |  |    |     |   |   |         |         |  |  |     |    |  
|----------- | ----------- | ------------------------- | - | --------- | --------- | ---- |  | ----- | --- | -------- | - | --------- | --------- |  |  | -- | --- | - | - | ------- | ------- |  |  | --- | -- | -
|            |             |                           |   |           |           |     
|            |             | Year Ended December 31    |   |           |           |     
|            |             |                           |   |           |           |     
|            |             |                           |   | % of      |           |      |  | % of  |     |          |   |          
|            |             | 2002                      |   | Total     |           | 2001 |  | Total |     | $ Change |   | % Change 
|            |             |                           |   |           |           |      |  |       |     |          |   |          
|            |             |                           |   |           |           |     
|            |             | (Thousands of Dollars)    |   |           |           |     
|Residential |             |                           |   |           |           |      |  |       |     |          |   |           |           |  |  |    |     |   |   |         |         |  |  |    
|            | Video       |                           | $ | 3,439,755 |           |      |  | 68    | %   |          | $ | 3,184,786 |           |  |  | 75 | %   |   | $ | 254,969 |         |  |  | 8   | % 
|            | Data        |                           |   | 575,231   |           |      |  | 11    | %   |          |   | 277,921   |           |  |  | 7  | %   |   |   | 297,310 |         |  |  | 107 | % 
|            | Telephony   |                           |   | 344,171   |           |      |  | 7     | %   |          |   | 211,404   |           |  |  | 5  | %   |   |   | 132,767 |         |  |  | 63  | % 
|            | Other       |                           |   | 82,547    |           |      |  | 2     | %   |          |   | 97,234    |           |  |  | 2  | %   |   |   | (14,687 | )       |  |  | (15 | )%
|            |             |                           |   |           |           |      |  |       |     |          |   |           |           |  |  |    |     |   |   |         |         |  |  |    
|            |             | Total residential revenue |   |           | 4,441,704 |      |  |       | 88  | %        |   |           | 3,771,345 |  |  |    | 89  | % |   |         | 670,359 |  |  |     | 18 | %
|            | Commercial  |                           |   | 218,830   |           |      |  | 4     | %   |          |   | 144,279   |           |  |  | 3  | %   |   |   | 74,551  |         |  |  | 52  | % 
|            | Advertising |                           |   | 378,064   |           |      |  | 8     | %   |          |   | 337,579   |           |  |  | 8  | %   |   |   | 40,485  |         |  |  | 12  | % 
|            |             |                           |   |           |           |      |  |       |     |          |   |           |           |  |  |    |     |   |   |         |         |  |  |    
|            |             | Total revenues            |   | $         | 5,038,598 |      |  |       | 100 | %        |   | $         | 4,253,203 |  |  |    | 100 | % |   | $       | 785,395 |  |  |     | 18 | %
|            |             |                           |   |           |           |      |  |       |     |          |   |           |           |  |  |    |     |   |   |         |         |  |  |    

The 18% increase in total revenues is primarily
attributable to:



| |   |                                                                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a 44% increase in customers for advanced
    services, including digital cable, high-speed Internet access
    and telephony customers;                                                                                                                                                                                                           
|
| |  | a 6% increase in basic cable rates resulting from
    increased programming costs and inflation, as well as increased
    channel availability;                                                                                                                                                                                                   
|
| |  | an increase in commercial broadband customers;                                                                                                                                                                                                                                                                                                    
|
| |  | a continuing rebound in local and national
    advertising sales; and                                                                                                                                                                                                                                                                             
|
| |  | an increase due to costs associated with
    Coxs high-speed Internet service of approximately
    $91.6 million, which had been netted against revenues in
    2001 under a revenue sharing agreement with Excite@Home, and
    were included in cost of services in 2002 as Cox no longer has a
    revenue sharing agreement with Excite@Home.

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

31



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##### Table of Contents





| |                   
| | ------------------
| | Costs and expenses

The following table sets forth summarized
operating expenses for the two years ended December 31,
2002.

|                                    |                            |                                           |   |           |           |          |   |          |           |  |   |         |         |  |  |    |    |  
|----------------------------------- | -------------------------- | ----------------------------------------- | - | --------- | --------- | -------- | - | -------- | --------- |  | - | ------- | ------- |  |  | -- | -- | -
|                                    |                            |                                           |   |           |           |         
|                                    |                            | Year Ended December 31                    |   |           |           |         
|                                    |                            |                                           |   |           |           |         
|                                    |                            | 2002                                      |   | 2001      |           | $ Change |   | % Change
|                                    |                            |                                           |   |           |           |          |   |         
|                                    |                            |                                           |   |           |           |         
|                                    |                            | (Thousands of Dollars)                    |   |           |           |         
|Cost of services                    |                            |                                           |   |           |           |          |   |          |           |  |   |         |         |  |  |   
|                                    | Programming costs          |                                           | $ | 1,055,304 |           |          | $ | 944,422  |           |  | $ | 110,882 |         |  |  | 12 | % 
|                                    | Other cost of services     |                                           |   | 1,075,603 |           |          |   | 938,413  |           |  |   | 137,190 |         |  |  | 15 | % 
|                                    |                            |                                           |   |           |           |          |   |          |           |  |   |         |         |  |  |   
|                                    |                            | Total cost of services                    |   |           | 2,130,907 |          |   |          | 1,882,835 |  |   |         | 248,072 |  |  |    | 13 | %
|Selling, general and administrative |                            |                                           |   |           |           |          |   |          |           |  |   |         |         |  |  |   
|                                    | Marketing                  |                                           |   | 265,900   |           |          |   | 219,281  |           |  |   | 46,619  |         |  |  | 21 | % 
|                                    | General and administrative |                                           |   | 862,552   |           |          |   | 730,129  |           |  |   | 132,423 |         |  |  | 18 | % 
|                                    |                            |                                           |   |           |           |          |   |          |           |  |   |         |         |  |  |   
|                                    |                            | Total selling, general and administrative |   |           | 1,128,452 |          |   |          | 949,410   |  |   |         | 179,042 |  |  |    | 19 | %
|                                    |                            |                                           |   |           |           |          |   |          |           |  |   |         |         |  |  |   
|                                    |                            | Total costs and expenses                  |   | $         | 3,259,359 |          |   | $        | 2,832,245 |  |   | $       | 427,114 |  |  |    | 15 | %
|                                    |                            |                                           |   |           |           |          |   |          |           |  |   |         |         |  |  |   

Cost of services includes cable programming
costs, other direct costs and field service costs. Other direct
costs include costs that Cox incurs in conjunction with
providing its residential, commercial and advertising services.
Field service costs include costs associated with providing and
maintaining Coxs broadband network and customer care costs
necessary to maintain its customer base.

Cost of services increased 13% over 2001
primarily due to a 12% increase in programming costs reflecting
programming rate increases and customer growth. Approximately 9%
of the increase in programming costs was attributable to
programming rate increases, and 3% was related to digital
customer growth. Other cost of services increased 15%, primarily
due to:



| |   |                                                                                                                                                                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | increased labor costs due to the transition from
    upgrade construction and new product launches to maintenance and
    related customer costs directly associated with the growth of
    new subscribers;                                                                                                                       
|
| |  | costs associated with Coxs high-speed
    Internet service of approximately $91.6 million, which had
    been netted against revenues in 2001 under a revenue sharing
    agreement with Excite@Home, and were included in cost of
    services in 2002 as Cox no longer has a revenue sharing
    agreement with Excite@Home; and
|
| |  | a one-time non-recurring charge of approximately
    $9.8 million associated with the continuation of
    Excite@Home high-speed Internet service, as described below;
    partially offset by                                                                                                                                     
|
| |  | a one-time non-recurring net charge in 2001 of
    approximately $150.2 million associated with the continuation of
    Excite@Home high-speed Internet service and the transition to
    Cox High Speed Internet service following the bankruptcy of
    Excite@Home, as described below.                                         

In September 2001, Excite@Home, Coxs
primary high-speed Internet provider at that time, 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
$9.8 million was attributable to services provided in 2002,
and approximately $150.2 million was attributable to
services provided in 2001. In February 2002, Cox completed the
transition of its customers from Excite@Homes high-speed
Internet service to Cox High Speed Internet service.

32



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##### Table of Contents



Selling, general and administrative expenses
include marketing, salaries and benefits, maintenance and
support, commissions and bonuses, travel, facilities, insurance
and other administrative expenses. Selling, general and
administrative expenses increased 19% primarily due to:



| |   |                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a 21% increase in marketing expense relating to
    the promotion of new services and bundling alternatives; and                                                                                                         
|
| |  | an 18% increase in general and administrative
    expenses relating to increased salaries and benefits resulting
    from an increase in headcount, and increased property taxes
    resulting from capital expenditures.

Cox expects continued increases in programming
costs and will continue to pass through some portion of these
increases to its customers. In addition, Cox expects to have
continued growth in advanced services, which include digital
cable, high-speed Internet access and telephony, both as a
result of increased penetration where these services were
available in 2002 and continued roll-out of these services in
new areas. As a result of these trends, Cox expects its cost of
services and, to a lesser degree, selling, general and
administrative expenses to increase.



| |                              
| | -----------------------------
| | Depreciation and amortization

Depreciation and amortization for the year ended
December 31, 2002 decreased to $1.4 billion from
$1.5 billion for the comparable period in 2001 due to a
reduction of approximately $352.6 in amortization of intangible
assets determined to have an indefinite life upon adoption of
Statement of Financial Accounting Standards
(SFAS) No. 142, Goodwill and Other Intangible
Assets, offset by an increase in depreciation from
Coxs continuing investment in its broadband network in
order to deliver additional programming and services. Cox will
continue to invest in its broadband network and new services,
which management expects will result in increased revenues to
offset increased depreciation expense.



| |                        
| | -----------------------
| | Operating income (loss)

Operating income for the year ended
December 31, 2002 was $417.4 million compared to
operating loss of $118.3 million for the year ended
December 31, 2001. The operating loss in 2001 was primarily
due to a one-time non-recurring net charge of approximately
$150.2 million in the fourth quarter of 2001 associated
with the continuation of Excite@Home high-speed Internet service
and the transition to Cox High Speed Internet service following
the bankruptcy of Excite@Home. The increase in operating income,
after adjusting for the one-time charge, was primarily
attributable to the reduction in amortization of intangible
assets determined to have an indefinite life.



| |                 
| | ----------------
| | Interest expense

Interest expense decreased 3% to
$550.6 million primarily due to interest savings as a
result of Coxs interest rate swap agreements, repayment of
all commercial paper borrowings and a decrease in the interest
rate on Coxs exchangeable subordinated debentures, known
as the PRIZES, from 7.75% to 2% in November 2002 in accordance
with the terms of the PRIZES.



| |                                    
| | -----------------------------------
| | Gain on derivative instruments, net

Cox does not hold or issue derivative instruments
for trading purposes and is not a party to leveraged
instruments. From time to time, however, Cox uses derivative
instruments to manage its exposure to changes in the fair value
of certain of its assets or liabilities or to manage its
exposure to changes in interest rates or equity prices. These
derivative instruments are designated and accounted for by Cox
as hedges of the underlying exposure being managed, as
prescribed by SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities,as amended. During 2002
and 2001, Cox used the following derivative instruments in its
hedging activities:



| |   |                                                                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | four interest rate swap agreements with an
    aggregate principal amount of $1.2 billion that are
    designated and accounted for as fair value hedges. These
    interest rate swaps are designed to assist Cox

33



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##### Table of Contents



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | in maintaining a mix of fixed and floating rate
    debt by converting a portion of existing fixed rate debt into a
    floating rate obligation. These interest rate swaps derive their
    value primarily based on changes in interest rates. Coxs
    expectations with respect to its hedging strategy underlying
    these interest rate swaps have been met since the swap
    agreements have resulted in Cox increasing its proportion of
    floating rate debt; and                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | a series of costless equity collar arrangements
    that were designated and accounted for as fair value hedges to
    manage Coxs exposure to changes in the fair value of
    15.8 million shares of Sprint PCS common stock,
    22.5 million shares of AT&T common stock and 17.2
    million shares of AT&T Wireless common stock held by Cox.
    These equity collar arrangements derived their value primarily
    based on changes in the fair value of the underlying equity
    security. As described in Note 6. Investments in
    Part II, Item 8. Consolidated Financial Statements and
    Supplementary Data, Cox terminated all of these equity
    collar arrangements and sold the underlying shares of common
    stock during the first quarter of 2002. Hence, there were no
    active hedging activities with respect to Coxs investments
    at December 31, 2002.

In addition to the foregoing derivatives, upon
adoption of SFAS No. 133, certain of Coxs debt
instruments and investments contained embedded or freestanding
derivatives, as defined. Cox has not designated these embedded
and freestanding derivatives as hedges under SFAS No. 133
and, as such, changes in their fair value are being recognized
in earnings as derivative gains or losses. During 2002 and 2001,
Cox had the following embedded derivatives or freestanding
derivatives outstanding that have not been designated as hedges:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | embedded derivatives contained in Coxs
    outstanding series of three exchangeable subordinated debentures
    known as the PRIZES, the Premium PHONES and the Discount
    Debentures. These debentures are indexed to the trading price of
    Sprint PCS common stock. These embedded derivatives derive their
    value primarily based on changes in the fair value of Sprint PCS
    common stock, U.S. Treasury rates and Coxs credit spreads;
|
| |  | embedded derivatives contained in Coxs
    series of prepaid variable forward contracts covering
    19.5 million shares of Sprint PCS common stock, which Cox
    accounts for as zero-coupon debt. These embedded derivatives
    also derive their value primarily based on changes in the fair
    value of Sprint PCS common stock, U.S. Treasury rates and
    Coxs credit spreads; and                                                         
|
| |  | stock purchase warrants to purchase equity
    securities of certain publicly-traded or privately-held
    companies that can be exercised and settled by delivery of net
    shares, such that Cox pays no cash upon exercise. These warrants
    meet the definition of a freestanding derivative, as prescribed
    by SFAS No. 133, and derive their value primarily based on
    the change in the fair value of the underlying equity security.   

For a more detailed description of the
exchangeable subordinated debentures, zero-coupon debt and their
corresponding embedded derivatives, please refer to Note 8.
Debt and Note 10. Derivative Instruments and
Hedging Activities in Part II, Item 8.
Consolidated Financial Statements and Supplementary
Data.

During the year ended December 31, 2002, Cox
recorded a $1.1 billion pre-tax gain on derivative
instruments, which was comprised of the following:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a $268.8 million pre-tax gain due to the
    termination of Coxs series of costless equity collar
    arrangements referred to above;                                                                                                                                                                                                                                                                 
|
| |  | a $583.1 million pre-tax gain due to a
    decrease in the fair value of the embedded derivatives contained
    in Coxs exchangeable subordinated debentures. The decrease
    in fair value of these embedded derivatives was primarily
    attributed to the decrease in the trading price of Sprint PCS
    and the change in U.S. Treasury rates and Coxs credit
    spreads during the year; and
|
| |  | a $359.3 million pre-tax gain due to a
    decrease in the fair value of the embedded derivatives contained
    in Coxs zero-coupon debt. The decrease in fair value of
    these embedded derivatives was primarily                                                                                                                                                                                  

34



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##### Table of Contents



| |   |                                                                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | attributed to the decrease in the trading price
    of Sprint PCS and the change in U.S. Treasury rates and
    Coxs credit spreads during the year; partially offset
    by                                                                                                 
|
| |  | an $85.6 million pre-tax loss due to a
    decrease in the fair value of Coxs stock purchase
    warrants. The decrease in fair value of these warrants was
    primarily attributed to the decrease in the fair value of the
    underlying equity security during the year.



| |                         
| | ------------------------
| | Loss on investments, net

Net loss on investments for the year ended
December 31, 2002 of $1.3 billion includes:



| |   |                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | $170.4 million pre-tax loss related to the
    sale of 23.9 million shares of AT&T Wireless common
    stock;                                          
|
| |  | $390.6 million pre-tax loss as a result of
    the change in market value of Coxs investment in Sprint
    PCS common stock classified as trading; and
|
| |  | $807.9 million decline in the fair value of
    certain investments, primarily Sprint PCS, considered to be
    other than temporary.                  

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



| |                                                 
| | ------------------------------------------------
| | Equity in net losses of affiliated
    companies

Equity in net losses decreased 20% to
$32.2 million, primarily due to a $23.9 million loss
in 2001 related to Coxs investment in Discovery. Partially
offsetting the decrease was increased equity in net losses in
2002 due to additional equity investments. Generally, these
losses are attributable to Coxs proportionate share of the
investees income or loss. Although Cox has various levels
of ownership and rights with respect to the companies in which
it has equity investments, Cox has little, if any, control over
the financial position of these companies. Therefore, Cox cannot
predict the impact that its equity investments will have on its
future operations.



| |                              
| | -----------------------------
| | Minority interest, net of tax

Minority interest, net of tax, of
$37.3 million primarily represents distributions on
Coxs obligated capital and preferred securities of
subsidiary trusts, referred to as FELINE PRIDES and RHINOS.
During 2002, Cox settled the FELINE PRIDES primarily with the
issuance of Class A common stock and redeemed the RHINOS
with cash. Please refer to Note 9. Cox-Obligated Capital
and Preferred Securities of Subsidiary Trusts in
Part II, Item 8. Consolidated Financial
Statements and Supplementary Data for a more detailed
description of the FELINE PRIDES and RHINOS.



| |                  
| | -----------------
| | Net income (loss)

Net loss for the year ended December 31,
2002 was $274.0 million compared to net income of
$755.0 million for the comparable period in 2001, which
included an after-tax cumulative effect of change in accounting
principle from adoption of SFAS No. 133, which increased
earnings by $717.1 million.

35



---



##### Table of Contents





| |                        
| | -----------------------
| | 2001 compared with 2000

The following table sets forth summarized
consolidated financial information for the two years ended
December 31, 2001.

|                                                                    |  |                        |           |      |  |          |           |          |  |   |            |   |  |  |      |   
|------------------------------------------------------------------- |  | ---------------------- | --------- | ---- |  | -------- | --------- | -------- |  | - | ---------- | - |  |  | ---- | --
|                                                                    |  |                        |           |      |  |         
|                                                                    |  | Year Ended December 31 |           |      |  |         
|                                                                    |  |                        |           |      |  |         
|                                                                    |  | 2001                   |           | 2000 |  | $ Change |           | % Change
|                                                                    |  |                        |           |      |  |          |           |         
|                                                                    |  |                        |           |      |  |         
|                                                                    |  | (Thousands of Dollars) |           |      |  |         
|Revenues                                                            |  | $                      | 4,253,203 |      |  | $        | 3,673,748 |          |  | $ | 579,455    |   |  |  | 16   | % 
|Costs and expenses                                                  |  |                        | 2,832,245 |      |  |          | 2,296,426 |          |  |   | 535,819    |   |  |  | 23   | % 
|Depreciation and amortization                                       |  |                        | 1,539,211 |      |  |          | 1,236,487 |          |  |   | 302,724    |   |  |  | 24   | % 
|                                                                    |  |                        |           |      |  |          |           |          |  |   |            |   |  |  |      |   
|Operating income (loss)                                             |  |                        | (118,253  | )    |  |          | 140,835   |          |  |   | (259,088   | ) |  |  | (184 | )%
|Interest expense                                                    |  |                        | (565,934  | )    |  |          | (550,824  | )        |  |   | (15,110    | ) |  |  | 3    | % 
|Loss on derivative instruments, net                                 |  |                        | (211,963  | )    |  |          |          |          |  |   | (211,963   | ) |  |  | 100  | % 
|Gain on investments, net                                            |  |                        | 1,151,172 |      |  |          | 3,281,986 |          |  |   | (2,130,814 | ) |  |  | (65  | )%
|Equity in net losses of affiliated companies                        |  |                        | (40,043   | )    |  |          | (7,294    | )        |  |   | (32,749    | ) |  |  | NM   |   
|Other, net                                                          |  |                        | (11,882   | )    |  |          | 7,411     |          |  |   | (19,293    | ) |  |  | NM   |   
|Income tax expense                                                  |  |                        | (94,039   | )    |  |          | (877,031  | )        |  |   | (782,992   | ) |  |  | (89  | )%
|Minority interest, net of tax                                       |  |                        | (71,147   | )    |  |          | (69,828   | )        |  |   | (1,319     | ) |  |  | 2    | % 
|Cumulative effect of change in accounting
    principal, net of tax |  |                        | 717,090   |      |  |          |          |          |  |   | 717,090    |   |  |  | 100  | % 
|                                                                    |  |                        |           |      |  |          |           |          |  |   |            |   |  |  |      |   
|Net income                                                          |  | $                      | 755,001   |      |  | $        | 1,925,255 |          |  | $ | (1,170,254 | ) |  |  | (61  | )%
|                                                                    |  |                        |           |      |  |          |           |          |  |   |            |   |  |  |      |   



---

NM denotes percentage is not meaningful

In 2000, Cox completed an acquisition of cable
systems from Multimedia Cablevision, Inc., a subsidiary of
Gannett Co., Inc. and an exchange transaction with AT&T
Corp. The results of operations for 2000 include the effects of
these transactions as of their respective acquisition dates,
which are briefly described below:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In January 2000, Cox completed the
    acquisition of cable systems serving approximately 522,000
    customers in Kansas, Oklahoma and North Carolina from Multimedia
    for $2.7 billion.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | In March 2000, Cox and 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.; Peak Cablevision LLC, which has customers in Oklahoma,
    Arkansas, Utah and Nevada; and approximately $798.0 million
    in other assets and liabilities, including cash.

36



---



##### Table of Contents





| |         
| | --------
| | Revenues

The following table sets forth summarized revenue
information for the two years ended December 31, 2001.

|            |             |                           |   |           |           |      |  |       |     |          |   |           |           |  |  |    |     |   |   |         |         |  |  |     |    |  
|----------- | ----------- | ------------------------- | - | --------- | --------- | ---- |  | ----- | --- | -------- | - | --------- | --------- |  |  | -- | --- | - | - | ------- | ------- |  |  | --- | -- | -
|            |             |                           |   |           |           |     
|            |             | Year Ended December 31    |   |           |           |     
|            |             |                           |   |           |           |     
|            |             |                           |   | % of      |           |      |  | % of  |     |          |   |          
|            |             | 2001                      |   | Total     |           | 2000 |  | Total |     | $ Change |   | % Change 
|            |             |                           |   |           |           |      |  |       |     |          |   |          
|            |             |                           |   |           |           |     
|            |             | (Thousands of Dollars)    |   |           |           |     
|Residential |             |                           |   |           |           |      |  |       |     |          |   |           |           |  |  |    |     |   |   |         |         |  |  |    
|            | Video       |                           | $ | 3,184,786 |           |      |  | 75    | %   |          | $ | 2,902,128 |           |  |  | 79 | %   |   | $ | 282,658 |         |  |  | 10  | % 
|            | Data        |                           |   | 277,921   |           |      |  | 7     | %   |          |   | 137,532   |           |  |  | 4  | %   |   |   | 140,389 |         |  |  | 102 | % 
|            | Telephony   |                           |   | 211,404   |           |      |  | 5     | %   |          |   | 106,254   |           |  |  | 3  | %   |   |   | 105,150 |         |  |  | 99  | % 
|            | Other       |                           |   | 97,234    |           |      |  | 2     | %   |          |   | 82,256    |           |  |  | 2  | %   |   |   | 14,978  |         |  |  | 18  | % 
|            |             |                           |   |           |           |      |  |       |     |          |   |           |           |  |  |    |     |   |   |         |         |  |  |    
|            |             | Total residential revenue |   |           | 3,771,345 |      |  |       | 89  | %        |   |           | 3,228,170 |  |  |    | 88  | % |   |         | 543,175 |  |  |     | 17 | %
|            | Commercial  |                           |   | 144,279   |           |      |  | 3     | %   |          |   | 97,807    |           |  |  | 3  | %   |   |   | 46,472  |         |  |  | 48  | % 
|            | Advertising |                           |   | 337,579   |           |      |  | 8     | %   |          |   | 347,771   |           |  |  | 9  | %   |   |   | (10,192 | )       |  |  | (3  | )%
|            |             |                           |   |           |           |      |  |       |     |          |   |           |           |  |  |    |     |   |   |         |         |  |  |    
|            |             | Total revenues            |   | $         | 4,253,203 |      |  |       | 100 | %        |   | $         | 3,673,748 |  |  |    | 100 | % |   | $       | 579,455 |  |  |     | 16 | %
|            |             |                           |   |           |           |      |  |       |     |          |   |           |           |  |  |    |     |   |   |         |         |  |  |    

The 16% increase in total revenues is primarily
due to:



| |   |                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a 65% increase in residential digital video
    customers;                                                                                                                                                
|
| |  | a 5% increase in basic cable rates implemented
    primarily in the first quarter of 2001 resulting from increased
    programming costs and inflation, as well as increased channel
    availability; and
|
| |  | an 83% and 85% increase in residential high-speed
    Internet access and telephony customers, respectively;                                                                                              
|
| |  | growth in commercial high-speed Internet access
    and telephony customers; partially offset by                                                                                                          
|
| |  | a decrease in local and national advertising
    sales resulting from a general economic slowdown.                                                                                                        



| |                   
| | ------------------
| | Costs and expenses

The following table sets forth summarized
operating expenses for the two years ended December 31,
2001.

|                                    |                            |                                           |                          |         |           |           |   |          |           |           |   |         |         |         |  |    |    |    |  
|----------------------------------- | -------------------------- | ----------------------------------------- | ------------------------ | ------- | --------- | --------- | - | -------- | --------- | --------- | - | ------- | ------- | ------- |  | -- | -- | -- | -
|                                    |                            |                                           |                          |         |           |          
|                                    |                            | Year Ended December 31                    |                          |         |           |          
|                                    |                            |                                           |                          |         |           |          
|                                    |                            | 2001                                      |                          | 2000    |           | $ Change  |   | % Change
|                                    |                            |                                           |                          |         |           |           |   |         
|                                    |                            |                                           |                          |         |           |          
|                                    |                            | (Thousands of Dollars)                    |                          |         |           |          
|Cost of services                    |                            |                                           |                          |         |           |           |   |          |           |           |   |         |         |         |  |   
|                                    | Programming costs          |                                           | $                        | 944,422 |           |           | $ | 835,258  |           |           | $ | 109,164 |         |         |  | 13 | % 
|                                    | Other cost of services     |                                           |                          | 938,413 |           |           |   | 675,072  |           |           |   | 263,341 |         |         |  | 39 | % 
|                                    |                            |                                           |                          |         |           |           |   |          |           |           |   |         |         |         |  |   
|                                    |                            | Total cost of services                    |                          |         | 1,882,835 |           |   |          | 1,510,330 |           |   |         | 372,505 |         |  |    | 25 | % 
|Selling, general and administrative |                            |                                           |                          |         |           |           |   |          |           |           |   |         |         |         |  |   
|                                    | Marketing                  |                                           |                          | 219,281 |           |           |   | 172,822  |           |           |   | 46,459  |         |         |  | 27 | % 
|                                    | General and administrative |                                           |                          | 730,129 |           |           |   | 613,274  |           |           |   | 116,855 |         |         |  | 19 | % 
|                                    |                            |                                           |                          |         |           |           |   |          |           |           |   |         |         |         |  |   
|                                    |                            | Total selling, general and administrative |                          |         | 949,410   |           |   |          | 786,096   |           |   |         | 163,314 |         |  |    | 21 | % 
|                                    |                            |                                           |                          |         |           |           |   |          |           |           |   |         |         |         |  |   
|                                    |                            |                                           | Total costs and expenses |         | $         | 2,832,245 |   |          | $         | 2,296,426 |   |         | $       | 535,819 |  |    |    | 23 | %
|                                    |                            |                                           |                          |         |           |           |   |          |           |           |   |         |         |         |  |   

Cost of services increased 25% over 2000 due to a
13% increase in programming costs reflecting programming rate
increases, channel additions and customer growth. Approximately
10% of the increase in

37



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##### Table of Contents



programming costs was attributable to programming
rate increases, and 3% was related to digital customer growth.
Other cost of services increased 39%, primarily due to:




| |   |                                                                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | increased labor costs due to the transition from
    upgrade construction and new product launches to maintenance and
    related customer costs directly associated with the growth of
    new subscribers; and                                                      
|
| |  | a one-time non-recurring net charge in 2001 of
    approximately $150.2 million associated with the continuation of
    Excite@Home high-speed Internet service and the transition to
    Cox High Speed Internet service following the bankruptcy of
    Excite@Home.

Selling, general and administrative expenses
increased 21% primarily due to:



| |   |                                                                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a 27% increase in marketing expense related to
    campaigns aimed at enhancing customer awareness of new services
    and bundling alternatives; and                                                                                                                 
|
| |  | a 19% increase in general and administrative
    expenses relating to costs, including increased employee
    headcount, associated with the continued rollout of residential
    and commercial digital video, high-speed Internet access and
    telephony services.



| |                              
| | -----------------------------
| | Depreciation and amortization

Depreciation and amortization for the year ended
December 31, 2001 increased to $1.5 billion from
$1.2 billion 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 income (loss)

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. Coxs operating loss in 2001 was
attributable to increased depreciation and amortization expense,
as well as the one-time transition-related charge described
above. Coxs decrease in operating income from 2000 to 2001
was also attributable to an increase in depreciation and
amortization expense during that period that resulted from
capital expenditures incurred to upgrade Coxs broadband
network and from Coxs acquisition of certain cable systems.



| |                 
| | ----------------
| | Interest expense

Interest expense increased 3% to
$565.9 million primarily due to a net increase in notes and
debentures that were used principally to fund capital
expenditures. This net increase is described in further detail
under 2001 Uses and Sources of Cash.



| |                                    
| | -----------------------------------
| | Loss on derivative instruments, net

During the year ended December 31, 2001, Cox
recorded a $212.0 million pre-tax loss on derivative
instruments, which was comprised of the following:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a $239.0 million pre-tax loss due to an
    increase in the fair value of the embedded derivatives contained
    in Coxs exchangeable subordinated debentures and
    zero-coupon debt. The increase in fair value of these embedded
    derivatives was primarily attributed to the increase in the
    trading price of Sprint PCS and the change in U.S. Treasury
    rates and Coxs credit spreads during the year; and
|
| |  | a $19.3 million pre-tax loss due to a
    decrease in the fair value of Coxs series of costless
    equity collar arrangements and stock purchase warrants. The
    decrease in fair value of these warrants and collar arrangements
    was primarily attributed to the decrease in the respective
    underlying equity security prices during the year; partially
    offset by                                          
|
| |  | a $46.3 million pre-tax gain due to an
    increase in the fair value of Coxs right to sell its
    shares of Excite@Home common stock pursuant to an agreement that
    met the definition of a freestanding derivative instrument and
    was not designated or accounted for by Cox as a hedge. This
    derivative                                                                                                      

38



---



##### Table of Contents



| |  |                                                                                                                                                                                             
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | instrument derived its value primarily based on
    changes in the fair value of Excite@Home common stock. A more
    detailed description of this agreement is further described
    below.

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 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.
Following further discussion, in May 2001 AT&T issued
75.0 million shares of AT&T common stock to Cox, Cox
retained its common stock and Coxs right to sell its
Excite@Home shares to AT&T was deemed satisfied in full. Cox
recognized a $307.4 million pre-tax gain in the second
quarter of 2001 associated with the deemed satisfaction of the
right-to-sell agreement.



| |                         
| | ------------------------
| | Gain on investments, net

Net gain on investments for the year ended
December 31, 2001 of $1.2 billion includes:



| |   |                                                                                                                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | $239.3 million pre-tax gain associated with
    a one-time reclassification of 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;    
|
| |  | $77.4 million pre-tax gain on these shares
    as a result of the change in market value of Sprint PCS common
    stock for the year ended December 31, 2001;                                                                                            
|
| |  | $307.4 million pre-tax gain associated with
    the deemed satisfaction of Coxs Excite@Home right, as
    described above;                                                                                                                              
|
| |  | $213.5 million pre-tax gain related to the
    sale of 12.8 million shares of Sprint PCS common stock; and                                                                                                                                               
|
| |  | $436.1 million pre-tax gain related to the
    sale of Coxs 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.; partially
    offset by a
|
| |  | $73.5 million decline in the fair value of
    certain other investments considered to be other than temporary.                                                                                                                                          



| |                                                 
| | ------------------------------------------------
| | Equity in net losses of affiliated
    companies

Equity in net losses increased to
$40.0 million in 2001 from $7.3 million in 2000,
primarily due to a $23.9 million loss related to Coxs
investment in Discovery. Generally, these losses were
attributable to Coxs proportionate share of the
investees income or loss.



| |                  
| | -----------------
| | Minority interest

Minority interest, net of tax, of
$71.1 million primarily represents distributions on the
FELINE PRIDES and RHINOS.



| |           
| | ----------
| | Net income

On January 1, 2001, Cox adopted SFAS
No. 133, which resulted 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 $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.
The decrease in net income, after adjusting for the cumulative
effect of adopting SFAS No. 133, was primarily attributable
to a $3.3 billion net gain on investments in 2000.

39



---



##### Table of Contents



Liquidity and Capital Resources



| |                              
| | -----------------------------
| | 2002 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, technology and telecommunications. Cox
believes it will be able to meet its capital needs for the next
twelve months and beyond with amounts available under existing
revolving credit facilities and its commercial paper program.

During 2002, Cox made capital expenditures of
$1.9 billion. These expenditures were primarily directed at
costs related to electronic equipment located on customers
premises, costs to upgrade and rebuild Coxs broadband
network to allow for the delivery of advanced broadband services
and costs associated with network equipment used to enter new
service areas.

Capital expenditures for 2003 are expected to be
approximately $1.6 billion. Cox expects depreciation expense to
increase due to its continued investment in its broadband
network. However, management expects increased revenues to
offset increased depreciation expense. Cox does not expect to
make any material acquisitions or cable systems exchanges in
2003, although management continuously reviews industry and
economic conditions to identify opportunities.

In addition to improvement of its own networks,
Cox made strategic investments in businesses focused on cable
programming, technology and telecommunications. Investments in
affiliated companies of $18.8 million in 2002 included debt
and equity funding. Future funding requirements are expected to
total approximately $20.0 million over the next two years.
These capital requirements may vary significantly from the
amounts stated above and will depend on numerous factors as many
of these affiliates are growing businesses and specific
financing requirements will change depending on the evolution of
these businesses.

Net commercial paper repayments during 2002 were
$727.4 million. As a result, Cox had no outstanding
commercial paper borrowings at December 31, 2002. During
2002, Cox repaid $705.0 million of other debt, which
primarily consisted of the repurchase of a portion of its
convertible senior notes, the repurchase of its Floating Rate
MOPPRS/CHEERS and the repayment of its 6.5% senior notes upon
their maturity.

During 2002, Cox redeemed the senior notes held
by the Cox RHINOS Trust for approximately $502.6 million,
and the Cox RHINOS Trust, in turn, redeemed its preferred
securities, the RHINOS. Distributions paid on capital and
preferred securities of subsidiary trusts of $47.8 million
consisted of quarterly interest payments on the FELINE PRIDES
and RHINOS.

During 2002, Cox generated $1.8 billion from
operations. Proceeds from the sale and exchange of investments
of $1.3 billion primarily included:



| |   |                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the sale of 25.2 million shares of Sprint
    PCS common stock for aggregate net proceeds of approximately
    $238.7 million;                                                                                          
|
| |  | the sale of 35.0 million shares of AT&T
    common stock for aggregate net proceeds of approximately
    $542.6 million;                                                                                                
|
| |  | the sale of 23.9 million shares of AT&T
    Wireless common stock for aggregate net proceeds of
    approximately $248.2 million; and                                                                                   
|
| |  | the termination of all costless equity collar
    arrangements with respect to Sprint PCS common stock, AT&T
    common stock and AT&T Wireless common stock for aggregate
    proceeds of approximately $264.4 million.

Proceeds from the issuance of debt, net of debt
issuance costs, underwriting commissions and discounts included
the issuance of 7.125% notes due 2012 for net proceeds of
approximately $986.1 million. The proceeds from this
offering were primarily used to redeem the senior notes held by
the Cox RHINOS Trust, repurchase the Floating Rate MOPPRS/CHEERS
and repay the 6.5% senior notes.

40



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| |                              
| | -----------------------------
| | 2001 Uses and Sources of Cash

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. Investments in affiliated companies of
$54.0 million included debt and equity funding.

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 other 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 consisted
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 included:



| |   |                                                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the sale of 12.8 million shares of Sprint
    PCS common stock for aggregate net proceeds of approximately
    $318.2 million;                                                               
|
| |  | the sale of 25.0 million shares of AT&T
    common stock for aggregate net proceeds of approximately
    $525.5 million;                                                                     
|
| |  | the sale of 5.0 million shares of AT&T
    Wireless common stock for aggregate net proceeds of
    approximately $83.1 million; and                                                          
|
| |  | the sale of Coxs interests in Outdoor Life,
    Speedvision, and Cable Network Services to Fox Sports and Fox
    Sports CNS for aggregate net proceeds of approximately
    $439.7 million.

Proceeds from the issuance of debt, net of debt
issuance costs, underwriting commissions, discounts and
premiums, of $1.4 billion primarily included:



| |   |                                                                                                                                                                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the issuance of a series of prepaid forward
    contracts (accounted for as zero coupon debt) with maturity
    dates between 2004 and 2006 to sell up to 19.5 million
    shares of Coxs Sprint PCS common stock for net proceeds of
    approximately $389.4 million; and                   
|
| |  | the issuances of convertible senior notes, which
    mature in February 2021 and are convertible into shares of
    Coxs Class A common stock or, at Coxs option,
    cash, and 6.75% senior notes, which mature in March 2011, for
    aggregate net proceeds of approximately $1.0 billion.



| |                              
| | -----------------------------
| | 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.

During 2000, Cox repurchased 5.5 million
shares of its 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 consisted
of quarterly payments on the FELINE PRIDES and RHINOS.

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##### Table of Contents



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



| |   |                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------
| |  | the sale of 28.1 million shares of Sprint
    PCS common stock for net proceeds of approximately
    $1.4 billion;   
|
| |  | the sale of Coxs entire interest in
    Flextech for proceeds of approximately $522.3 million; and                  
|
| |  | the exchange of AT&T common stock held by Cox
    for AT&T subsidiaries and approximately $798.0 million
    in cash.

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,
net of debt issuance costs, underwriting commissions, discounts
and premiums of $2.5 billion, primarily included:



| |   |                                                                                          
| | - | -----------------------------------------------------------------------------------------
| |  | the issuance of a floating rate bridge loan for
    aggregate proceeds of $500.0 million;
|
| |  | the issuance of the Premium PHONES for net
    proceeds of $269.5 million;               
|
| |  | the issuance of the Discount Debentures for net
    proceeds of $764.0 million;          
|
| |  | the issuance of 7.75% notes due November 2010 for
    net proceeds of $792.5 million; and
|
| |  | the issuance of the Floating Rate MOPPRS/CHEERS
    for net proceeds of $206.3 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, 2002 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 comply with
accounting principles generally accepted in the U.S. In
addition, Cox has unused letters of credit outstanding totaling
$4.1 million at December 31, 2002.

|                                          |  |                        |          |           |  |       |         |       |  |         |         |  |  |   |       |  |  |   |           |        
|----------------------------------------- |  | ---------------------- | -------- | --------- |  | ----- | ------- | ----- |  | ------- | ------- |  |  | - | ----- |  |  | - | --------- | -------
|                                          |  |                       
|                                          |  | Payments Due by Period
|                                          |  |                       
|                                          |  |                        |          | Less than |  | 1  3 |         | 4  5 |  | After 5
|                                          |  | Total                  |          | 1 Year    |  | Years |         | Years |  | Years  
|                                          |  |                        |          |           |  |       |         |       |  |        
|                                          |  |                       
|                                          |  | (Millions of dollars) 
|Debt                                      |  | $                      | 9,557.8  |           |  | $     | 331.2(a | )     |  | $       | 1,184.7 |  |  | $ | 632.3 |  |  | $ | 7,409.6(b | )(c)(d)
|Capital leases                            |  |                        | 219.2    |           |  |       | 61.8    |       |  |         | 88.3    |  |  |   | 34.9  |  |  |   | 34.2      |        
|Operating leases                          |  |                        | 69.8     |           |  |       | 20.9    |       |  |         | 28.0    |  |  |   | 13.8  |  |  |   | 7.1       |        
|Nonbinding purchase and other commitments |  |                        | 570.7    |           |  |       | 280.3   |       |  |         | 89.0    |  |  |   | 76.9  |  |  |   | 124.5     |        
|                                          |  |                        |          |           |  |       |         |       |  |         |         |  |  |   |       |  |  |   |           |        
|Total contractual cash obligations        |  | $                      | 10,417.5 |           |  | $     | 694.2   |       |  | $       | 1,390.0 |  |  | $ | 757.9 |  |  | $ | 7,575.4   |        
|                                          |  |                        |          |           |  |       |         |       |  |         |         |  |  |   |       |  |  |   |           |        



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | In February 2003, Cox repurchased
    $422.7 million aggregate principal amount at maturity of
    its convertible notes due 2021 for aggregate cash consideration
    of $304.2 million, which represented the accreted value of
    the repurchased notes. As a result, $19.0 million aggregate
    principal amount at maturity of Coxs convertible notes
    remain outstanding. The $304.2 million repurchased on
    February 24, 2003 is included in payments due in less than
    one year, while the $19.0 million outstanding is included in
    payments due after five years. The holders of the remaining
    convertible senior notes have the right to require Cox to
    repurchase their notes on February 24, 2004, February 23,
    2005, February 23, 2006, February 23, 2011 and
    February 23, 2016. Cox may choose to repurchase tendered
    notes with cash or shares of its Class A common stock. If all of
    the holders of outstanding convertible notes were to exercise
    their right to require Cox to repurchase their convertible notes
    on February 24, 2004, the aggregate purchase price would be
    $13.9 million.

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | Includes a series of debt securities due 2033,
    representing $250.0 million aggregate principal amount, that is
    subject to remarketing in 2003. If the remarketing occurs, the
    maturity date will remain August 1, 2033. If the
    remarketing does not occur, Cox will be required to redeem such
    securities, and may pay a premium to the remarketing dealer. Cox
    has the positive intent and ability to refinance these
    securities in the event of a failed remarketing by using
    available capacity under existing credit facilities.                                                                                                                                                                                                       
|   
|(c) | Includes Coxs Discount Debentures due in
    2020 representing $1.8 billion aggregate principal amount at
    maturity. The holders have the right to require Cox to
    repurchase their discount debentures on April 19, 2005,
    April 19, 2010 and April 19, 2015 at a purchase price
    equal to the adjusted principal amount of the discount
    debentures, plus any accrued but unpaid cash interest. Cox may
    choose to repurchase the discount debentures with cash or shares
    of PCS common stock of Sprint Corporation. If all of the holders
    of the discount debentures were to exercise their right to
    require Cox to repurchase their discount debentures on
    April 19, 2005, the aggregate purchase price would be
    $958.1 million.
|   
|   
|(d) | The holders of Coxs $200.0 million
    aggregate principal amount 6.53% debentures due 2028, which were
    issued by TCA Cable TV prior to Coxs acquisition of TCA,
    have the right to require the Cox subsidiary that assumed
    TCAs obligations under the debentures to repurchase the
    debentures on February 1, 2008 at a purchase price equal to
    100% of the principal amount of such debentures, plus any
    accrued but unpaid cash interest.                                                                                                                                                                                                                                                                                                      



| |      
| | -----
| | Other

At December 31, 2002, Cox had approximately
$7.3 billion of outstanding indebtedness. The debt balance
is net of certain derivative adjustments made in accordance with
SFAS No. 133 which have reduced the reported debt balance
by approximately $1.4 billion. In addition, Cox had
approximately $2.0 billion of total available financing
capacity under its revolving credit facilities and commercial
paper program at December 31, 2002.

In February 2002, Cox was notified by
Moodys Investor Services that Coxs debt was being
evaluated for a potential credit rating downgrade. In November
2002, Moodys confirmed Coxs senior unsecured debt
rating of Baa2 with a negative outlook, which concluded
Moodys evaluation. Separately, 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 did not have a material
adverse impact on its liquidity.

Certain of Coxs debt instruments and credit
agreements contain covenants which, among other provisions,
contain certain restrictions on the payment of dividends and the
repurchase of capital stock. Certain of these agreements contain
financial covenants that require certain leverage ratios and
interest coverage (as defined in the covenants) be maintained.
Compliance with these ratios limits Coxs ability to incur
unlimited indebtedness; however, these covenants have not posed
a significant limitation on Coxs ability to finance its
capital requirements in the past. Cox was in compliance with all
financial covenants for all periods presented. Historically, Cox
has not paid dividends nor does Cox intend to pay dividends in
the foreseeable future. Cox intends to reinvest future earnings,
consistent with its business strategy.

Transactions with Affiliated
Companies

Cox receives certain services from, and has
entered into certain transactions with, CEI. Costs of the
services that are allocated to Cox are based on actual direct
costs incurred or on CEIs estimate of expenses relative to
the services provided to other subsidiaries of CEI. Cox believes
that these allocations were made on a reasonable basis, and that
receiving these services from CEI creates cost efficiencies;
however, there has been no 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.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Cox receives day-to-day cash management services
    from CEI, with settlements of outstanding balances between Cox
    and CEI occurring periodically at market interest rates. The
    amounts due to CEI are generally due on demand and represent the
    net balance of the intercompany transactions. Outstanding
    amounts due from CEI bear interest equal to CEIs current
    commercial paper borrowing

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | rate and outstanding amounts due to CEI bear
    interest at 50 basis points above CEIs current commercial
    borrowing rate as payment for the services provided. Amounts due
    from CEI to Cox were approximately $21.1 million and
    $13.2 million at December 31, 2002 and 2001,
    respectively, and the interest rate was 1.8% and 3.0% at
    December 31, 2002 and 2001, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | Cox receives certain management services from CEI
    including legal, corporate secretarial, tax, internal audit,
    risk management, employee benefit (including pension plan)
    administration, fleet and other support services. Cox was
    allocated expenses for the year ended December 31, 2002,
    2001 and 2000 of approximately $6.2 million, $5.3 million
    and $3.9 million, respectively, related to these services.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | In connection with these management services, Cox
    reimburses CEI for payments made to third-party vendors for
    certain goods and services provided to Cox under arrangements
    made by CEI on behalf of CEI and its affiliates, including Cox.
    Cox believes such arrangements result in Cox receiving such
    goods and services at more attractive pricing than Cox would be
    able to secure separately. Such reimbursed expenditures include
    insurance premiums for coverage through the CEI insurance
    program, which provides coverage for all of its affiliates,
    including Cox. Rather than self-insuring these risks, CEI
    purchases insurance for a fixed-premium cost from several
    insurance companies, including an insurance company indirectly
    owned by descendants of Governor James M. Cox, the founder
    of CEI, including James C. Kennedy, Chairman of Coxs Board
    of Directors, and his sister, who each own 25%. This insurance
    company is an insurer and reinsurer on various insurance
    policies purchased by CEI, and it employs an independent
    consulting actuary to calculate the annual premiums for
    general/auto liability and workers compensation insurance based
    on Coxs loss experience, consistent with insurance
    industry practice. Coxs portion of these insurance costs
    was approximately $27.2 million, $23.7 million and
    $19.7 million for 2002, 2001 and 2000, respectively.
|
| |  | Coxs employees participate in certain CEI
    employee benefit plans, and Cox made payments to CEI in 2002,
    2001 and 2000 for the costs incurred by reason of such
    participation, including self-insured employee medical insurance
    costs of approximately $77.5 million, $48.2 million
    and $28.0 million, respectively; retiree medical payments
    of approximately $3.9 million, $3.0 million and
    $2.6 million, respectively and executive pension plan
    payments of approximately $2.8 million, $5.1 million
    and $3.1 million, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Cox and CEI share resources relating to aircraft
    owned by each company. Depending on need, each occasionally uses
    aircraft owned by the other, paying a cost-based hourly rate.
    CEI also operates and maintains two airplanes owned by Cox. Cox
    pays CEI on a quarterly basis for fixed and variable operations
    and maintenance costs relating to these two airplanes. During
    2002, 2001 and 2000, Cox paid approximately $0.7 million,
    $0.9 million and $0.8 million, respectively, for use
    of CEIs aircraft and maintenance of Coxs aircraft by
    CEI, net of aircraft costs paid by CEI to Cox for use of
    Coxs aircraft.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | Cox pays rent and certain other occupancy costs
    to CEI for its corporate headquarters building. CEI holds the
    long-term lease of the Cox headquarters building and prior to
    2002, Cox and CEI and its other affiliates shared occupancy of
    the headquarters building. During 2002, CEI and its other
    affiliates moved to a new facility and Cox purchased from CEI
    business equipment located in that building at its depreciated
    net book value of approximately $7.2 million, which is
    believed to approximate fair value. Cox is now the sole occupant
    of its headquarters building. Related rent and occupancy expense
    is allocated based on occupied space and for the year ended
    December 31, 2002, 2001 and 2000 was approximately
    $7.4 million, $7.2 million and $6.1 million,
    respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | From 1997 through 2002, Cox entered into 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, or
    City Sites, in the markets where Cox operates cable
    television systems featuring high-speed Internet access. Cox
    contributed approximately $41.1 million in the aggregate to
    the joint ventures for the period from inception through
    May 31, 2002 to fund its share of operating costs. During
    2002, Cox and Cox Interactive Media agreed to terminate the
    relationship and entered into a transition services agreement
    under which Cox paid Cox Interactive Media approxi-                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | mately $7.0 million to continue to operate
    Coxs city sites during a transition period. The joint
    venture entities were dissolved as of December 31, 2002,
    and pursuant to a separate agreement dated December 31,
    2002, Cox purchased certain assets used in the operation of the
    City Sites for insignificant cash consideration. Cox will use
    those assets to develop the City Sites as part of Cox High Speed
    Internet service. Cox Interactive Media agreed to reimburse Cox
    approximately $0.2 million for certain expenses incurred in
    connection with obtaining certain software licenses related to
    the City Sites.                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | In connection with CEIs sale of shares of
    Cox Class A common stock to two private investors in 2001,
    Cox entered into agreements providing the two private investors
    with certain demand and piggyback registration rights. CEI has
    agreed to pay all fees and expenses associated with Coxs
    performance under these registration rights agreements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | In September 2002, Cox and CEI amended their tax
    allocation agreement to provide that if one of CEI or Cox has
    overpaid its taxes and the other has underpaid, the underpaid
    taxpayer may apply the overpayment to its taxes if such credit
    is permitted by the respective tax authority. The underpaid
    party will be obligated to immediately repay the borrowed amount
    to the overpaid party, to pay interest from the effective date
    of the credit until repayment, and to bear any other expenses
    incurred. The underpaid party will indemnify the overpaid party
    if subsequent tax adjustments cause any detriment to the
    overpaid party as a result of use of the credit by the underpaid
    party. For the tax year 2001, Cox overpaid, and CEI underpaid,
    its estimated federal income taxes. Pursuant to the amended
    agreement, on September 3, 2002, $20.0 million of
    Coxs overpayment of its 2001 federal income taxes was
    applied to CEIs 2001 federal income taxes, and CEI
    contemporaneously paid Cox $20.0 million, plus interest, in
    cash.

Recent Developments

In accordance with the terms of the indenture
governing Coxs convertible senior notes due 2021, Cox
became obligated to purchase for cash convertible notes tendered
and not withdrawn before the close of business on
February 24, 2003. Cox repurchased $422.7 million
aggregate principal amount at maturity of the convertible notes
that had been properly tendered and not withdrawn, for aggregate
cash consideration of $304.2 million, which represented the
accreted value of the repurchased notes. As a result,
$19.0 million aggregate principal amount at maturity of
Coxs convertible notes remains outstanding. To partially
fund the repurchase of the tendered convertible notes, Cox
borrowed $149.4 million under its commercial paper program.

In March 2003, Cox entered into two new interest
rate swap agreements expiring on August 1, 2008 with a
notional amount of $100.0 million each to convert
$200.0 million of fixed rate senior debt securities to a
floating rate. The swaps have been designated as fair value
hedges, as defined in SFAS No. 133, of the underlying debt
securities.

Critical Accounting Policies and
Estimates

The accompanying consolidated financial
statements and notes to consolidated financial statements
contain information that is pertinent to managements
discussion and analysis of financial condition and results of
operations. The preparation of financial statements in
conformity with accounting principles generally accepted in the
United States requires management to make estimates and
assumptions that affect the reported amounts of assets,
liabilities, revenue and expenses, and the related disclosure of
contingent assets and liabilities. Estimates are evaluated based
on available information and experience. Actual results could
differ from those estimates under different assumptions or
conditions. Cox believes that the critical accounting policies
and estimates discussed below involve additional management
judgment due to the sensitivity of the methods and assumptions
necessary in determining the related asset, liability, revenue
and expense amounts. 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.

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| |                    
| | -------------------
| | Plant and equipment

The costs associated with the construction of
cable transmission and distribution facilities and new cable
service installations are capitalized. 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.



| |                       
| | ----------------------
| | Derivative Instruments

Cox accounts for derivative financial instruments
in accordance with SFAS No. 133, which requires that an
entity recognize all derivatives as either assets or liabilities
measured at fair value. From time to time, Cox uses derivative
instruments, such as interest rate swaps and equity collar
arrangements, to manage its exposure to changes in the fair
value of certain of its assets or liabilities or to manage its
exposure to changes in interest rates or equity prices. In
addition, upon adoption of SFAS No. 133, certain of
Coxs debt instruments and investments contained embedded
or freestanding derivatives, as defined. Assumptions are made
regarding the valuation of derivative instruments, including
U.S. Treasury rates, Coxs credit spreads, volatility rates
and other market indices. Should actual rates differ from
Coxs estimates, revisions to the fair value of Coxs
derivative financial instruments may be required.



| |                  
| | -----------------
| | Intangible Assets

On January 1, 2002, Cox adopted SFAS
No. 142, Goodwill and Other Intangible Assets,which
requires that goodwill and certain intangible assets with
indefinite useful lies no longer be amortized, but instead be
tested for impairment at least annually. Coxs indefinite
lived intangible assets are comprised of cable franchise value,
which Cox obtained through acquisitions of cable systems. The
standard also requires the completion of a transitional
impairment test with any resulting impairment identified treated
as a cumulative effect of a change in accounting principle.

Prior to the adoption of SFAS No. 142, Cox
described the excess purchase price over the fair value of the
identified net assets acquired associated with its acquisitions
as either goodwill or franchise value and amortized these assets
over 40 years. Cox believes that the franchises, although
contractually non-exclusive, provide economic exclusivity for
broadband video services to an incumbent cable operator.
Accordingly, Cox does not believe it has any goodwill separate
and distinct from the value of its cable franchises, and, as
such, the nature of the recorded excess purchase price
associated with Coxs acquisitions is more appropriately
characterized as franchise value. Therefore, in connection with
the adoption of SFAS No. 142, Cox reclassified the net
carrying value of its goodwill of $3.7 billion to franchise
value in order to eliminate the distinction between these two
assets. In connection with this reclassification, Cox recorded
an additional deferred tax liability and a corresponding
increase to franchise value of $2.2 billion, in accordance
with the provisions of SFAS No. 109, Accounting for
Income Taxes,related to the difference in the tax basis
compared to the book basis of franchise value. This
reclassification, including the related deferred taxes, was not
reflected in Coxs consolidated balance sheet until
December 31, 2002. Accordingly, the previous quarterly
amounts in 2002 related to these items are not comparable. The
reclassification and the related deferred tax effects had no
impact on Coxs consolidated statements of operations.

In connection with the adoption of SFAS
No. 142, Cox completed a transitional impairment test of
its franchise value as of January 1, 2002. Based on the
guidance prescribed in Emerging Issues Task Force (EITF) Issue
No. 02-7, Unit of Accounting for Testing of Impairment
of Indefinite-Lived Intangible Assets,Cox determined that
the unit of accounting for testing franchise value for
impairment resides at the cable system cluster level, consistent
with Coxs management of its business as geographic
clusters. Cox assesses franchise value for impairment under SFAS
No. 142 by utilizing a residual approach whereby Cox
measures the implied fair value of each franchise value
intangible asset subject to the same unit of accounting by
deducting from the fair value of each cable system cluster the
fair value of the cable system clusters other net assets,
including previously unrecognized intangible assets. Upon
adoption of SFAS No. 142, Cox determined

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that no impairment of franchise value intangible
assets existed as of January 1, 2002. When Cox completes
its next annual impairment test as of January 1, 2003, Cox
will, when measuring the fair value of the cable system
clusters other net assets, consider the guidance contained
in EITF Issue No. 02-17, Recognition of Customer
Relationship Intangible Assets Acquired in a Business
Combination, which was issued in October 2002. Cox
anticipates that consideration of the guidance in EITF Issue
No. 02-17, whereby Cox will consider assumptions that
marketplace participants would consider, such as expectations of
future contract renewals and other benefits related to the
intangible asset, when measuring the fair value of the cable
system clusters other net assets will result in a non-cash
impairment charge as of January 1, 2003, and such charge
may be significant.


In determining the fair value of each cable
system cluster, Cox performs discounted cash flow analyses,
which require the use of assumptions and estimates. Cox believes
that its assumptions and estimates are consistent with those
that marketplace participants would use in their estimates of
fair value. The determination of fair value is critical to
assessing impairment of intangible assets with indefinite useful
lives under SFAS No. 142. If these estimates or their
related assumptions change in the future, significant impairment
in value, and hence impairment charges, may result.



| |                     
| | --------------------
| | Income Tax Estimates

Cox evaluates its effective tax rates regularly
and adjusts rates when appropriate based on currently available
information relative to statutory rates, apportionment factors
and the applicable taxable income in the jurisdictions in which
Cox operates, among other factors. Certain of Coxs
deferred tax assets are comprised of loss carryforwards for
federal and state income tax filing purposes for which recovery
is dependent on the amount and timing of taxable income Cox will
ultimately generate in the future, as well as other factors.
Based on Coxs estimate of future taxable income there are
no potential limitations to the utilization of these deferred
tax assets, and therefore, no valuation allowance has been
recorded. Tax liabilities are recorded based on Coxs
assessment of the risk of loss in accordance with SFAS
No. 5 to address potential exposures involving tax
positions it has taken that could be challenged by taxing
authorities. These potential exposures result from the varying
application of statutes, rules, regulations and interpretations.
Cox believes its estimate of tax liabilities is a critical
accounting estimate as it contains assumptions based on past
experiences and judgments about potential actions by taxing
jurisdictions. It is reasonably likely that the ultimate
resolution of these matters may be greater or less than the
amount that Cox has currently accrued.



| |                                        
| | ---------------------------------------
| | Pension and Postretirement
    Benefits

Cox follows the guidance of SFAS No. 87,
Employers Accounting for Pensions, and SFAS
No. 106, Employers Accounting for Postretirement
Benefits Other Than Pensions, when accounting for pension
and postretirement benefits. Under these accounting standards,
assumptions are made regarding the valuation of benefit
obligations and the performance of plan assets. Delayed
recognition of differences between actual results and expected
or estimated results is a guiding principle of these standards.
This delayed recognition of actual results allows for a smoothed
recognition of changes in benefit obligations and plan
performance over the working lives of the employees who benefit
under the plans. The primary assumptions, which are reviewed
annually by Cox, include the discount rate, expected return on
plan assets, rate of compensation increase and the rate of
increase in the per capita cost of covered health care benefits.

During 2002, Cox made changes to its assumptions
related to the discount rate, the rate of compensation increase
(for salary-related plans) and the rate of increase in the per
capita cost of covered health care benefits. Cox consults with
its independent actuaries when selecting each of these
assumptions.

In selecting the discount rate, Cox considers
fixed-income security yields, specifically AA rated corporate
bonds. At December 31, 2002 Cox decreased the discount rate
for its plans from 7.25% to 6.75% as a result of decreased
yields for AA rated corporate bonds.

In estimating the expected return on plan assets,
Cox considers past performance and future expectations for the
types of investments held by the plan as well as the expected
long-term allocation of plan assets to these investments. At
December 31, 2002 Cox made no change in the expected 9.0%
return on plan assets.

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In projecting the rate of compensation increase,
Cox considers past experience in light of movements in inflation
rates. At December 31, 2002 Cox decreased the rate of
compensation increase from 5.0% to 4.5% for its plans.

In selecting the rate of increase in the per
capita cost of covered health care benefits, the Company
considers past performance and forecasts of future health care
cost trends. At December 31, 2002 Cox increased its
previously assumed rate of increase in the per capita cost of
covered health care benefits. The weighted-average annual
assumed rate of increase in the per capita cost of covered
health care benefits (i.e., health care cost trend rate) for
retirees is 10.0% in 2003, gradually decreasing to 5.0% by the
year 2008, and remaining level thereafter.

A variance in the assumptions listed above would
have an impact on the projected benefit obligations, the accrued
other postretirement benefit liabilities, and the annual net
periodic pension and other postretirement benefit cost. For
additional information regarding pension and other
postretirement benefits see Note 12. Retirement
Plans in Part II, Item 8. Consolidated
Financial Statements and Supplementary Data.

Recently Issued Accounting
Pronouncements

On January 1, 2002, Cox adopted the guidance
prescribed in EITF Issue No. 01-14, Income Statement
Characterization of Reimbursements Received for
Out-of-Pocket Expenses Incurred, which specifies
that the collection and payment of certain fees must be
presented on a gross basis, as revenue and expense, rather than
on a net basis. Retroactive application of this standard was
required. Accordingly, collection and payment of fees by Cox,
primarily franchise fees, have been reclassified on a gross
basis for all periods presented in this report to conform to
this new guidance. Approximately $196.2 million,
$186.2 million and $166.8 million have been classified
to revenues for the years ended December 31, 2002, 2001 and
2000, respectively.

On January 1, 2003, Cox adopted 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. The adoption of SFAS No. 143 did not have a material
impact on Coxs financial position or results of operations.

In April 2002, the Financial Accounting Standards
Board (FASB) issued SFAS No. 145, Rescission of
FASB Statements No. 4, 44, and 64, Amendment of FASB
Statement No. 13, and Technical Corrections, which
provides for the rescission of several previously issued
accounting standards, new accounting guidance for the accounting
of certain lease modifications and various technical corrections
that are not substantive in nature to existing pronouncements.
Cox adopted SFAS No. 145 on January 1, 2003, except
for the provisions relating to the amendment of SFAS
No. 13, which was adopted for transactions occurring
subsequent to May 15, 2002. The adoption of SFAS
No. 145 did not have a material impact on Coxs
financial position and results of operations.

In July 2002, the FASB issued SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal
Activities, which requires companies to recognize costs
associated with exit or disposal activities when they are
incurred, rather than at the date of a commitment to an exit or
disposal plan. SFAS No. 146 will be applied prospectively
to exit or disposal activities initiated after December 31,
2002.

In November 2002, the FASB issued Interpretation
(FIN) No. 45, Guarantors Accounting and
Disclosure Requirements for Guarantors, Including Indirect
Guarantees of Indebtedness of Others. FIN No. 45
requires that upon issuance of a guarantee, the guarantor must
recognize a liability for the fair value of the obligation it
assumes under the guarantee. Guarantors will also be required to
meet expanded disclosure obligations. The initial recognition
and measurement provisions of FIN No. 45 are effective for
guarantees issued or modified after December 31, 2002. The
disclosure requirements are effective for annual and interim
financial statements that end after December 15, 2002. Cox
is currently assessing the impact of initial recognition and
measurement provisions of this interpretation on its
consolidated financial statements.

In December 2002, the FASB issued SFAS
No. 148, Accounting for Stock-Based Compensation 
Transition and Disclosure, which amends SFAS No. 123,
Stock-Based Compensation, to provide alternative methods
of transition for a voluntary change to the fair value based
method of accounting for stock-based

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employee compensation. In addition, SFAS
No. 148 amends the disclosure requirements of SFAS
No. 123 to require prominent disclosures in both annual and
interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method
used on reported results. The disclosure provisions of SFAS
No. 148 are effective for fiscal years ending after
December 15, 2002 and have been incorporated into these
financial statements and accompanying footnotes.


In January 2003, the FASB issued FIN No. 46,
Consolidation of Variable Interest Entities. FIN
No. 46 addresses consolidation by business enterprises of
variable interest entities. The interpretation is effective for
the first interim or annual reporting period beginning after
June 15, 2003. Cox has determined that it is not reasonably
possible that it will be required to consolidate or disclose
information about a variable interest entity upon the effective
date of FIN No. 46.

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 Coxs outlook for the future and
information about Coxs 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 Coxs prior
filings with the SEC. Factors to consider in connection with any
of Coxs forward-looking statements include, but are not
limited to:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Coxs ability to implement successfully
    Coxs growth strategies and the level of success of
    Coxs operating initiatives, including integration and
    upgrades of recently acquired cable properties, future
    expenditures on capital projects, terms and availability of
    capital, the actual level of revenue growth, adverse changes in
    the price of telephony interconnection or cable programming and
    disruptions in the supply of services and equipment. In
    addition, material changes in the cost of equipment or
    significant unanticipated capital expenditures could disrupt
    Coxs business plan and adversely affect Coxs
    business operations.                                                                                                                                                                                                                                                                                                                                          
|
| |  | Trends in Coxs businesses, particularly
    trends in the market for existing and new communications
    services and changes in Coxs business strategy and
    development plans.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | Coxs ability to increase penetration in
    existing markets, as well as those Cox enters through
    acquisitions or other business combinations, including
    Coxs ability to control costs and maintain high standards
    of customer service, the extent to which consumer demand for
    voice, video and data services increases, subscriber
    availability, retention and growth, subscriber demand and
    competition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Coxs ability to generate sufficient cash
    flow to meet its debt service obligations and to finance ongoing
    operations. Cox operates with a significant level of
    indebtedness. Cash generated from operating activities and
    borrowing has been sufficient to fund Coxs debt service,
    working capital obligations and capital expenditure
    requirements. Cox believes that it will continue to generate
    cash and obtain financing sufficient to meet these requirements.
    However, if Cox were unable to meet these requirements, Cox
    would have to consider refinancing its indebtedness or obtaining
    new financing. Although in the past Cox has been able to
    refinance its indebtedness and obtain new financing, there can
    be no assurance that Cox will be able to do so in the future or
    that, if Cox were able to do so, the terms available would be
    acceptable to Cox. In addition, Cox must manage exposure to
    interest rate risk due to variable rate debt instruments.
|
| |  | Coxs ability to obtain financing on
    attractive terms.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Changes in Coxs relationship with, the
    performance of, and the market value of companies in which Cox
    has significant investments, especially investments in
    telecommunications and technology companies, including Sprint
    PCS.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Competition from alternative methods of receiving
    and distributing signals and from other sources of news,
    information and entertainment, such as newspapers, movie
    theaters, online computer services and home video products.
    Because Coxs franchises are generally non-exclusive, there
    is potential for competition from other operators of cable
    systems and other distribution systems capable of delivering
    programming to homes or businesses, including direct broadcast
    satellite systems and multichannel multipoint distribution
    services. In addition, Cox faces general competitive factors,
    such as the introduction of new technologies (such as
    Internet-based services), changes in prices or demand for
    Coxs products as a result of competitive actions or
    economic factors and competitive pressures within the broadband
    communications industry.
|
| |  | Coxs ability to obtain the necessary FCC,
    as well as state and local, authorizations for new services, and
    Coxs response to adverse regulatory changes. The cable
    industry is subject to extensive regulation by federal, local
    and, in some instances, state governmental agencies. Advances in
    communications technology as well as changes in the marketplace
    and the regulatory and legislative environment are constantly
    occurring. As a result, it is not possible to predict the effect
    that ongoing developments might have on the broadband
    communications industry or on Coxs operations.                                                                                                                                                                                                                                                                                      






|          |                                                               
|--------- | --------------------------------------------------------------
|ITEM  7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
    MARKET RISK

Cox has estimated the fair value of its financial
instruments as of December 31, 2002 and 2001 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. Please refer to Note 2. Summary of
Significant Accounting Policies and Note 10.
Derivative Instruments and Hedging Activities in
Part II, Item 8. Consolidated Financial
Statements and Supplementary Data for detailed disclosures
regarding Coxs objectives, general strategy and the nature
of derivative financial instruments that Cox uses to manage its
exposure to market risk.

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 6. 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 $112.1 million and
$53.4 million at December 31, 2002 and 2001,
respectively, and represents the estimated amount that Cox would
receive upon termination of the swap agreements on those
respective dates.

Cox did not have any variable rate debt
instruments outstanding at December 31, 2002. Coxs
outstanding commercial paper, RHINOS and floating rate notes and
debentures bear interest at current market rates and, thus,
approximated fair value at December 31, 2001. Cox is
exposed to interest rate volatility with respect to these
variable-rate instruments when they are issued and outstanding.

The estimated fair value of Coxs fixed-rate
notes and debentures, exchangeable subordinated debentures and
FELINE PRIDES at December 31, 2002 and 2001 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

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percentage point decrease in interest rates on
the foregoing fixed-rate instruments at December 31, 2002
and 2001 is as follows:


|                                     |  |                       |         |                   |  |                 |         |                |  |            |         |                 |  |   |         |  |  |   |         |  |  |   |         | 
|------------------------------------ |  | --------------------- | ------- | ----------------- |  | --------------- | ------- | -------------- |  | ---------- | ------- | --------------- |  | - | ------- |  |  | - | ------- |  |  | - | ------- | 
|                                     |  |                       |         |                  
|                                     |  | December 31, 2002     |         | December 31, 2001
|                                     |  |                       |         |                  
|                                     |  |                       |         | Fair Value (1%    |  |                 |         | Fair Value (1%
|                                     |  | Carrying              |         |                   |  | Decrease in     |         | Carrying       |  |            |         | Decrease in    
|                                     |  | Value                 |         | Fair Value        |  | Interest Rates) |         | Value          |  | Fair Value |         | Interest Rates)
|                                     |  |                       |         |                   |  |                 |         |                |  |            |         |                
|                                     |  |                      
|                                     |  | (Millions of Dollars)
|Fixed-rate notes and debentures      |  | $                     | 5,978.6 |                   |  | $               | 6,386.5 |                |  | $          | 6,432.8 |                 |  | $ | 5,280.7 |  |  | $ | 5,258.0 |  |  | $ | 5,522.9 | 
|FELINE PRIDES                        |  |                       |        |                   |  |                 |        |                |  |            |        |                 |  |   | 652.3   |  |  |   | 717.0   |  |  |   | 719.0   | 
|Exchangeable subordinated debentures |  |                       | 1,296.1 |                   |  |                 | 1,409.1 |                |  |            | 1,637.6 |                 |  |   | 1,829.5 |  |  |   | 1,762.6 |  |  |   | 1,888.2 | 

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|         |                                                             
|-------- | ------------------------------------------------------------
|ITEM  8. | CONSOLIDATED FINANCIAL STATEMENTS AND
    SUPPLEMENTARY DATA

COX COMMUNICATIONS, INC.

CONSOLIDATED BALANCE SHEETS

|                                                                                               |                                                                                                                                                                                              |                                            |            |            |            |   |            |            |            | 
|---------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ---------- | ---------- | ---------- | - | ---------- | ---------- | ---------- | 
|                                                                                               |                                                                                                                                                                                              |                                           
|                                                                                               |                                                                                                                                                                                              | December 31                               
|                                                                                               |                                                                                                                                                                                              |                                           
|                                                                                               |                                                                                                                                                                                              | 2002                                       |            | 2001      
|                                                                                               |                                                                                                                                                                                              |                                            |            |           
|                                                                                               |                                                                                                                                                                                              |                                           
|                                                                                               |                                                                                                                                                                                              | (Thousands of Dollars)                    
|Assets                                                                                         |                                                                                                                                                                                              |                                            |            |            |            |   |            |           
|Current assets                                                                                 |                                                                                                                                                                                              |                                            |            |            |            |   |            |           
|Cash                                                                                           |                                                                                                                                                                                              | $                                          | 228,704    |            |            | $ | 86,860     |           
|Accounts and notes receivable, less allowance for
    doubtful accounts of $33,607 and $33,514 |                                                                                                                                                                                              |                                            | 354,928    |            |            |   | 421,111    |           
|Amounts due from Cox Enterprises, Inc. (CEI)                                                   |                                                                                                                                                                                              |                                            | 21,109     |            |            |   | 13,245     |           
|Other current assets                                                                           |                                                                                                                                                                                              |                                            | 267,341    |            |            |   | 211,460    |           
|                                                                                               |                                                                                                                                                                                              |                                            |            |            |            |   |            |           
|                                                                                               | Total current assets                                                                                                                                                                         |                                            |            | 872,082    |            |   |            | 732,676    |           
|                                                                                               |                                                                                                                                                                                              |                                            |            |            |            |   |            |           
|Net plant and equipment                                                                        |                                                                                                                                                                                              |                                            | 7,793,178  |            |            |   | 7,127,908  |           
|Investments                                                                                    |                                                                                                                                                                                              |                                            | 397,435    |            |            |   | 3,515,233  |           
|Intangible assets                                                                              |                                                                                                                                                                                              |                                            | 15,724,288 |            |            |   | 13,510,894 |           
|Other noncurrent assets                                                                        |                                                                                                                                                                                              |                                            | 218,166    |            |            |   | 174,725    |           
|                                                                                               |                                                                                                                                                                                              |                                            |            |            |            |   |            |           
|                                                                                               | Total assets                                                                                                                                                                                 |                                            | $          | 25,005,149 |            |   | $          | 25,061,436 |           
|                                                                                               |                                                                                                                                                                                              |                                            |            |            |            |   |            |           
|Liabilities and shareholders
    equity                                                       |                                                                                                                                                                                              |                                            |            |            |            |   |            |           
|Current liabilities                                                                            |                                                                                                                                                                                              |                                            |            |            |            |   |            |           
|Accounts payable and accrued expenses                                                          |                                                                                                                                                                                              | $                                          | 727,877    |            |            | $ | 674,426    |           
|Other current liabilities                                                                      |                                                                                                                                                                                              |                                            | 216,235    |            |            |   | 298,408    |           
|Current portion of long-term debt                                                              |                                                                                                                                                                                              |                                            | 393,040    |            |            |   | 43,741     |           
|                                                                                               |                                                                                                                                                                                              |                                            |            |            |            |   |            |           
|                                                                                               | Total current liabilities                                                                                                                                                                    |                                            |            | 1,337,152  |            |   |            | 1,016,575  |           
|                                                                                               |                                                                                                                                                                                              |                                            |            |            |            |   |            |           
|Deferred income taxes                                                                          |                                                                                                                                                                                              |                                            | 6,750,635  |            |            |   | 4,540,061  |           
|Other noncurrent liabilities                                                                   |                                                                                                                                                                                              |                                            | 175,912    |            |            |   | 170,216    |           
|Long-term debt, less current portion                                                           |                                                                                                                                                                                              |                                            | 6,922,957  |            |            |   | 8,373,934  |           
|                                                                                               |                                                                                                                                                                                              |                                            |            |            |            |   |            |           
|                                                                                               | Total liabilities                                                                                                                                                                            |                                            |            | 15,186,656 |            |   |            | 14,100,786 |           
|                                                                                               |                                                                                                                                                                                              |                                            |            |            |            |   |            |           
|Commitments and contingencies (Note 18)                                                        |                                                                                                                                                                                              |                                            |            |            |            |   |            |           
|Minority interest in equity of consolidated
    subsidiaries                                   |                                                                                                                                                                                              |                                            | 133,403    |            |            |   | 129,121    |           
|Cox-obligated capital and preferred securities of
    subsidiary trusts                        |                                                                                                                                                                                              |                                            |           |            |            |   | 1,155,738  |           
|Shareholders equity                                                                           |                                                                                                                                                                                              |                                            |            |            |            |   |            |           
|                                                                                               | Series A preferred stock 
    liquidation preference of $22.1375 per share, $1 par value;
    10,000,000 shares of preferred stock authorized; shares issued
    and outstanding: 4,836,372 |                                            |            | 4,836      |            |   |            | 4,836      |           
|                                                                                               | Class A common stock, $1 par value;
    671,000,000 shares authorized; shares issued: 598,076,894 and
    578,493,107; shares outstanding: 592,567,757 and 572,994,707                       |                                            |            | 598,077    |            |   |            | 578,493    |           
|                                                                                               | Class C common stock, $1 par value;
    62,000,000 shares authorized; shares issued and outstanding:
    27,597,792                                                                          |                                            |            | 27,598     |            |   |            | 27,598     |           
|                                                                                               | Additional paid-in capital                                                                                                                                                                   |                                            |            | 4,549,029  |            |   |            | 3,891,157  |           
|                                                                                               | Retained earnings                                                                                                                                                                            |                                            |            | 4,638,422  |            |   |            | 4,912,461  |           
|                                                                                               | Accumulated other comprehensive income                                                                                                                                                       |                                            |            | 79,465     |            |   |            | 473,135    |           
|                                                                                               | Class A common stock in treasury, at cost:
    5,509,137 and 5,498,400 shares                                                                                                                |                                            |            | (212,337   | )          |   |            | (211,889   | )         
|                                                                                               |                                                                                                                                                                                              |                                            |            |            |            |   |            |           
|                                                                                               |                                                                                                                                                                                              | Total shareholders equity                 |            |            | 9,685,090  |   |            |            | 9,675,791  | 
|                                                                                               |                                                                                                                                                                                              |                                            |            |            |            |   |            |           
|                                                                                               |                                                                                                                                                                                              | Total liabilities and shareholders equity |            | $          | 25,005,149 |   |            | $          | 25,061,436 | 
|                                                                                               |                                                                                                                                                                                              |                                            |            |            |            |   |            |           

See notes to consolidated financial statements.

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COX COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF
OPERATIONS

|                                                                                                                 |                                                                              |                                              |                            |           |           |           |             |           |           |           |             |           |           |           | 
|---------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------- | -------------------------------------------- | -------------------------- | --------- | --------- | --------- | ----------- | --------- | --------- | --------- | ----------- | --------- | --------- | --------- | 
|                                                                                                                 |                                                                              |                                             
|                                                                                                                 |                                                                              | Year Ended December 31                      
|                                                                                                                 |                                                                              |                                             
|                                                                                                                 |                                                                              | 2002                                         |                            | 2001      |           | 2000     
|                                                                                                                 |                                                                              |                                              |                            |           |           |          
|                                                                                                                 |                                                                              |                                             
|                                                                                                                 |                                                                              | (Thousands of Dollars, excluding share data)
|Revenues                                                                                                         |                                                                              |                                              |                            |           |           |           |             |           |           |           |             |          
|                                                                                                                 | Residential                                                                  |                                              |                            |           |           |           |             |           |           |           |             |           |          
|                                                                                                                 |                                                                              | Video                                        |                            | $         | 3,439,755 |           |             | $         | 3,184,786 |           |             | $         | 2,902,128 |          
|                                                                                                                 |                                                                              | Data                                         |                            |           | 575,231   |           |             |           | 277,921   |           |             |           | 137,532   |          
|                                                                                                                 |                                                                              | Telephony                                    |                            |           | 344,171   |           |             |           | 211,404   |           |             |           | 106,254   |          
|                                                                                                                 |                                                                              | Other                                        |                            |           | 82,547    |           |             |           | 97,234    |           |             |           | 82,256    |          
|                                                                                                                 |                                                                              |                                              |                            |           |           |           |             |           |           |           |             |          
|                                                                                                                 |                                                                              |                                              | Total residential revenues |           |           | 4,441,704 |             |           |           | 3,771,345 |             |           |           | 3,228,170 | 
|                                                                                                                 |                                                                              | Commercial                                   |                            |           | 218,830   |           |             |           | 144,279   |           |             |           | 97,807    |          
|                                                                                                                 |                                                                              | Advertising                                  |                            |           | 378,064   |           |             |           | 337,579   |           |             |           | 347,771   |          
|                                                                                                                 |                                                                              |                                              |                            |           |           |           |             |           |           |           |             |          
|                                                                                                                 |                                                                              |                                              | Total revenues             |           |           | 5,038,598 |             |           |           | 4,253,203 |             |           |           | 3,673,748 | 
|Costs and expenses                                                                                               |                                                                              |                                              |                            |           |           |           |             |           |           |           |             |          
|                                                                                                                 | Cost of services (excluding depreciation)                                    |                                              |                            | 2,130,907 |           |           |             | 1,882,835 |           |           |             | 1,510,330 |          
|                                                                                                                 | Selling, general and administrative expenses                                 |                                              |                            | 1,128,452 |           |           |             | 949,410   |           |           |             | 786,096   |          
|                                                                                                                 | Depreciation and amortization                                                |                                              |                            | 1,357,906 |           |           |             | 1,539,211 |           |           |             | 1,236,487 |          
|                                                                                                                 | Loss on sale and exchange of cable systems                                   |                                              |                            | 3,916     |           |           |             |          |           |           |             |          |          
|                                                                                                                 |                                                                              |                                              |                            |           |           |           |             |           |           |           |             |          
|Operating income (loss)                                                                                          |                                                                              |                                              | 417,417                    |           |           |           | (118,253    | )         |           |           | 140,835     |          
|Interest expense                                                                                                 |                                                                              |                                              | (550,645                   | )         |           |           | (565,934    | )         |           |           | (550,824    | )        
|Gain (loss) on derivative instruments, net                                                                       |                                                                              |                                              | 1,125,588                  |           |           |           | (211,963    | )         |           |           |            |          
|Gain (loss) on investments, net                                                                                  |                                                                              |                                              | (1,317,158                 | )         |           |           | 1,151,172   |           |           |           | 3,281,986   |          
|Equity in net losses of affiliated companies                                                                     |                                                                              |                                              | (32,175                    | )         |           |           | (40,043     | )         |           |           | (7,294      | )        
|Other, net                                                                                                       |                                                                              |                                              | (5,080                     | )         |           |           | (11,882     | )         |           |           | 7,411       |          
|                                                                                                                 |                                                                              |                                              |                            |           |           |           |             |           |           |           |             |          
|Income (loss) before income taxes, minority
    interest and cumulative effect of change in accounting principle |                                                                              |                                              | (362,053                   | )         |           |           | 203,097     |           |           |           | 2,872,114   |          
|Income tax expense (benefit)                                                                                     |                                                                              |                                              | (125,286                   | )         |           |           | 94,039      |           |           |           | 877,031     |          
|                                                                                                                 |                                                                              |                                              |                            |           |           |           |             |           |           |           |             |          
|Income (loss) before minority interest and
    cumulative effect of change in accounting principle               |                                                                              |                                              | (236,767                   | )         |           |           | 109,058     |           |           |           | 1,995,083   |          
|Minority interest, net of tax                                                                                    |                                                                              |                                              | (37,272                    | )         |           |           | (71,147     | )         |           |           | (69,828     | )        
|                                                                                                                 |                                                                              |                                              |                            |           |           |           |             |           |           |           |             |          
|Income (loss) before cumulative effect of
    change in accounting principle                                     |                                                                              |                                              | (274,039                   | )         |           |           | 37,911      |           |           |           | 1,925,255   |          
|Cumulative effect of change in accounting
    principle, net of tax                                              |                                                                              |                                              |                           |           |           |           | 717,090     |           |           |           |            |          
|                                                                                                                 |                                                                              |                                              |                            |           |           |           |             |           |           |           |             |          
|Net income (loss)                                                                                                |                                                                              | $                                            | (274,039                   | )         |           | $         | 755,001     |           |           | $         | 1,925,255   |          
|                                                                                                                 |                                                                              |                                              |                            |           |           |           |             |           |           |           |             |          
|Share data                                                                                                       |                                                                              |                                              |                            |           |           |           |             |           |           |           |             |          
|Basic net income (loss) per share                                                                                |                                                                              |                                              |                            |           |           |           |             |           |           |           |             |          
|Basic weighted-average shares outstanding                                                                        |                                                                              |                                              | 608,293,490                |           |           |           | 600,365,787 |           |           |           | 601,951,744 |          
|                                                                                                                 | Income (loss) before cumulative effect of
    change in accounting principle |                                              | $                          | (0.45     | )         |           | $           | 0.06      |           |           | $           | 3.20      |          
|                                                                                                                 | Cumulative effect of change in accounting
    principle, net of tax          |                                              |                            |          |           |           |             | 1.20      |           |           |             |          |          
|                                                                                                                 |                                                                              |                                              |                            |           |           |           |             |           |           |           |             |          
|Basic net income (loss) per share                                                                                |                                                                              | $                                            | (0.45                      | )         |           | $         | 1.26        |           |           | $         | 3.20        |          
|                                                                                                                 |                                                                              |                                              |                            |           |           |           |             |           |           |           |             |          
|Diluted net income (loss) per share                                                                              |                                                                              |                                              |                            |           |           |           |             |           |           |           |             |          
|Diluted weighted-average shares outstanding                                                                      |                                                                              |                                              | 608,293,490                |           |           |           | 608,816,689 |           |           |           | 608,548,749 |          
|                                                                                                                 | Income (loss) before cumulative effect of
    change in accounting principle |                                              | $                          | (0.45     | )         |           | $           | 0.06      |           |           | $           | 3.16      |          
|                                                                                                                 | Cumulative effect of change in accounting
    principle, net of tax          |                                              |                            |          |           |           |             | 1.18      |           |           |             |          |          
|                                                                                                                 |                                                                              |                                              |                            |           |           |           |             |           |           |           |             |          
|Diluted net income (loss) per share                                                                              |                                                                              | $                                            | (0.45                      | )         |           | $         | 1.24        |           |           | $         | 3.16        |          
|                                                                                                                 |                                                                              |                                              |                            |           |           |           |             |           |           |           |             |          

See notes to consolidated financial statements.

53



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##### Table of Contents



COX COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS
EQUITY

|                  |                                                                                                              |                        |       |              |  |            |         |          |  |               |        |           |  |         |           |               |  |               |           |           |   |   |           |            |   |   |          |          |   |   |            |            |   |  |   |            |  
|----------------- | ------------------------------------------------------------------------------------------------------------ | ---------------------- | ----- | ------------ |  | ---------- | ------- | -------- |  | ------------- | ------ | --------- |  | ------- | --------- | ------------- |  | ------------- | --------- | --------- | - | - | --------- | ---------- | - | - | -------- | -------- | - | - | ---------- | ---------- | - |  | - | ---------- | -
|                  |                                                                                                              |                        |       |              |  |            |         |          |  |               |        |           |  | Class A |           |               |  |              
|                  |                                                                                                              |                        |       |              |  |            |         |          |  | Accumulated   |        | Common    |  |         |           |              
|                  |                                                                                                              | Series A               |       | Common Stock |  | Additional |         |          |  | Other         |        | Stock in  |  |         |           |              
|                  |                                                                                                              | Preferred              |       |              |  | Paid-in    |         | Retained |  | Comprehensive |        | Treasury, |  |         |           | Comprehensive
|                  |                                                                                                              | Stock                  |       | Class A      |  | Class C    |         | Capital  |  | Earnings      |        | Income    |  | at Cost |           | Total         |  | Income (Loss)
|                  |                                                                                                              |                        |       |              |  |            |         |          |  |               |        |           |  |         |           |               |  |              
|                  |                                                                                                              |                       
|                  |                                                                                                              | (Thousands of Dollars)
|December 31, 1999 |                                                                                                              | $                      | 4,836 |              |  | $          | 576,169 |          |  | $             | 27,598 |           |  | $       | 3,835,639 |               |  | $             | 2,232,205 |           |   | $ | 4,859,137 |            |   | $ |         |          |   | $ | 11,535,584 |            |   |  |   |           
|                  | Net income                                                                                                   |                        |       |              |  |            |         |          |  |               |        |           |  |         |           |               |  |               |           | 1,925,255 |   |   |           |            |   |   |          |          |   |   |            | 1,925,255  |   |  | $ | 1,925,255  |  
|                  |                                                                                                              |                        |       |              |  |            |         |          |  |               |        |           |  |         |           |               |  |               |           |           |   |   |           |            |   |   |          |          |   |   |            |            |   |  |   |           
|                  | Issuance of stock related to stock compensation
    plans (including tax benefit on stock options exercised) |                        |       |              |  |            |         | 1,557    |  |               |        |           |  |         |           | 30,713        |  |               |           |           |   |   |           |            |   |   |          |          |   |   |            | 32,270     |   |  |   |            |  
|                  | Purchase of 5,498,400 shares of Class A
    common stock for treasury, at cost                               |                        |       |              |  |            |         |          |  |               |        |           |  |         |           |               |  |               |           |           |   |   |           |            |   |   |          | (211,889 | ) |   |            | (211,889   | ) |  |   |            |  
|                  | Proceeds from issuance of put options                                                                        |                        |       |              |  |            |         |          |  |               |        |           |  |         |           | 6,374         |  |               |           |           |   |   |           |            |   |   |          |          |   |   |            | 6,374      |   |  |   |            |  
|                  | Change in net accumulated unrealized gain on
    securities, net of tax                                      |                        |       |              |  |            |         |          |  |               |        |           |  |         |           |               |  |               |           |           |   |   |           |            |   |   |          |          |   |   |            |            |   |  |   | (4,071,321 | )
|                  |                                                                                                              |                        |       |              |  |            |         |          |  |               |        |           |  |         |           |               |  |               |           |           |   |   |           |            |   |   |          |          |   |   |            |            |   |  |   |           
|                  | Other comprehensive loss                                                                                     |                        |       |              |  |            |         |          |  |               |        |           |  |         |           |               |  |               |           |           |   |   |           | (4,071,321 | ) |   |          |          |   |   |            | (4,071,321 | ) |  |   | (4,071,321 | )
|                  |                                                                                                              |                        |       |              |  |            |         |          |  |               |        |           |  |         |           |               |  |               |           |           |   |   |           |            |   |   |          |          |   |   |            |            |   |  |   |           
|                  | Comprehensive loss                                                                                           |                        |       |              |  |            |         |          |  |               |        |           |  |         |           |               |  |               |           |           |   |   |           |            |   |   |          |          |   |   |            |            |   |  | $ | (2,146,066 | )
|                  |                                                                                                              |                        |       |              |  |            |         |          |  |               |        |           |  |         |           |               |  |               |           |           |   |   |           |            |   |   |          |          |   |   |            |            |   |  |   |           
|December 31, 2000 |                                                                                                              |                        | 4,836 |              |  |            | 577,726 |          |  |               | 27,598 |           |  |         | 3,872,726 |               |  |               | 4,157,460 |           |   |   | 787,816   |            |   |   | (211,889 | )        |   |   | 9,216,273  |            |   |  |   |           
|                  | Net income                                                                                                   |                        |       |              |  |            |         |          |  |               |        |           |  |         |           |               |  |               |           | 755,001   |   |   |           |            |   |   |          |          |   |   |            | 755,001    |   |  | $ | 755,001    |  
|                  |                                                                                                              |                        |       |              |  |            |         |          |  |               |        |           |  |         |           |               |  |               |           |           |   |   |           |            |   |   |          |          |   |   |            |            |   |  |   |           
|                  | Issuance of stock related to stock compensation
    plans (including tax benefit on stock options exercised) |                        |       |              |  |            |         | 767      |  |               |        |           |  |         |           | 18,431        |  |               |           |           |   |   |           |            |   |   |          |          |   |   |            | 19,198     |   |  |   |            |  
|                  | Change in net accumulated unrealized gain on
    securities, net of tax                                      |                        |       |              |  |            |         |          |  |               |        |           |  |         |           |               |  |               |           |           |   |   |           |            |   |   |          |          |   |   |            |            |   |  |   | (120,721   | )
|                  | Cumulative effect of change in accounting
    principle, net of tax                                          |                        |       |              |  |            |         |          |  |               |        |           |  |         |           |               |  |               |           |           |   |   |           |            |   |   |          |          |   |   |            |            |   |  |   | (193,960   | )
|                  |                                                                                                              |                        |       |              |  |            |         |          |  |               |        |           |  |         |           |               |  |               |           |           |   |   |           |            |   |   |          |          |   |   |            |            |   |  |   |           
|                  | Other comprehensive loss                                                                                     |                        |       |              |  |            |         |          |  |               |        |           |  |         |           |               |  |               |           |           |   |   |           | (314,681   | ) |   |          |          |   |   |            | (314,681   | ) |  |   | (314,681   | )
|                  |                                                                                                              |                        |       |              |  |            |         |          |  |               |        |           |  |         |           |               |  |               |           |           |   |   |           |            |   |   |          |          |   |   |            |            |   |  |   |           
|                  | Comprehensive income                                                                                         |                        |       |              |  |            |         |          |  |               |        |           |  |         |           |               |  |               |           |           |   |   |           |            |   |   |          |          |   |   |            |            |   |  | $ | 440,320    |  
|                  |                                                                                                              |                        |       |              |  |            |         |          |  |               |        |           |  |         |           |               |  |               |           |           |   |   |           |            |   |   |          |          |   |   |            |            |   |  |   |           
|December 31, 2001 |                                                                                                              |                        | 4,836 |              |  |            | 578,493 |          |  |               | 27,598 |           |  |         | 3,891,157 |               |  |               | 4,912,461 |           |   |   | 473,135   |            |   |   | (211,889 | )        |   |   | 9,675,791  |            |   |  |   |           
|                  | Net loss                                                                                                     |                        |       |              |  |            |         |          |  |               |        |           |  |         |           |               |  |               |           | (274,039  | ) |   |           |            |   |   |          |          |   |   |            | (274,039   | ) |  | $ | (274,039   | )
|                  |                                                                                                              |                        |       |              |  |            |         |          |  |               |        |           |  |         |           |               |  |               |           |           |   |   |           |            |   |   |          |          |   |   |            |            |   |  |   |           
|                  | Issuance of stock related to stock compensation
    plans (including tax benefit on stock options exercised) |                        |       |              |  |            |         | 846      |  |               |        |           |  |         |           | 26,611        |  |               |           |           |   |   |           |            |   |   |          |          |   |   |            | 27,457     |   |  |   |            |  
|                  | Issuance of stock for settlement of FELINE PRIDES                                                            |                        |       |              |  |            |         | 18,738   |  |               |        |           |  |         |           | 631,261       |  |               |           |           |   |   |           |            |   |   |          |          |   |   |            | 649,999    |   |  |   |            |  
|                  | Shares surrendered in connection with vesting of
    restricted stock                                        |                        |       |              |  |            |         |          |  |               |        |           |  |         |           |               |  |               |           |           |   |   |           |            |   |   |          | (448     | ) |   |            | (448       | ) |  |   |            |  
|                  | Change in net accumulated unrealized gain on
    securities, net of tax                                      |                        |       |              |  |            |         |          |  |               |        |           |  |         |           |               |  |               |           |           |   |   |           | (393,670   | ) |   |          |          |   |   |            | (393,670   | ) |  |   | (393,670   | )
|                  |                                                                                                              |                        |       |              |  |            |         |          |  |               |        |           |  |         |           |               |  |               |           |           |   |   |           |            |   |   |          |          |   |   |            |            |   |  |   |           
|                  | Other comprehensive loss                                                                                     |                        |       |              |  |            |         |          |  |               |        |           |  |         |           |               |  |               |           |           |   |   |           |            |   |   |          |          |   |   |            |            |   |  |   | (393,670   | )
|                  |                                                                                                              |                        |       |              |  |            |         |          |  |               |        |           |  |         |           |               |  |               |           |           |   |   |           |            |   |   |          |          |   |   |            |            |   |  |   |           
|                  | Comprehensive loss                                                                                           |                        |       |              |  |            |         |          |  |               |        |           |  |         |           |               |  |               |           |           |   |   |           |            |   |   |          |          |   |   |            |            |   |  | $ | (667,709   | )
|                  |                                                                                                              |                        |       |              |  |            |         |          |  |               |        |           |  |         |           |               |  |               |           |           |   |   |           |            |   |   |          |          |   |   |            |            |   |  |   |           
|December 31, 2002 |                                                                                                              | $                      | 4,836 |              |  | $          | 598,077 |          |  | $             | 27,598 |           |  | $       | 4,549,029 |               |  | $             | 4,638,422 |           |   | $ | 79,465    |            |   | $ | (212,337 | )        |   | $ | 9,685,090  |            |   |  |   |           
|                  |                                                                                                              |                        |       |              |  |            |         |          |  |               |        |           |  |         |           |               |  |               |           |           |   |   |           |            |   |   |          |          |   |   |            |            |   |  |   |           

See notes to consolidated financial statements.

54



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##### Table of Contents



COX COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF CASH
FLOWS

|                                                                                                                                 |                                                                     |                                                         |            |            |            |      |            |            |          |   |            |            |            |  
|-------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------- | ------------------------------------------------------- | ---------- | ---------- | ---------- | ---- | ---------- | ---------- | -------- | - | ---------- | ---------- | ---------- | -
|                                                                                                                                 |                                                                     |                                                        
|                                                                                                                                 |                                                                     | Year Ended December 31                                 
|                                                                                                                                 |                                                                     |                                                        
|                                                                                                                                 |                                                                     | 2002                                                    |            | 2001       |            | 2000
|                                                                                                                                 |                                                                     |                                                         |            |            |            |     
|                                                                                                                                 |                                                                     |                                                        
|                                                                                                                                 |                                                                     | (Thousands of Dollars)                                 
|Cash flows from operating activities                                                                                             |                                                                     |                                                         |            |            |            |      |            |            |          |   |            |           
|Net income (loss)                                                                                                                |                                                                     | $                                                       | (274,039   | )          |            | $    | 755,001    |            |          | $ | 1,925,255  |           
|Adjustments to reconcile net income
    (loss) to net cash provided by operating activities, net of
    effects of acquisitions: |                                                                     |                                                         |            |            |            |      |            |            |          |   |            |           
|                                                                                                                                 | Depreciation and amortization                                       |                                                         |            | 1,357,906  |            |      |            | 1,539,211  |          |   |            | 1,236,487  |           
|                                                                                                                                 | Loss on sale of cable systems                                       |                                                         |            | 3,916      |            |      |            |           |          |   |            |           |           
|                                                                                                                                 | (Gain) loss on derivative instruments, net                          |                                                         |            | (1,125,588 | )          |      |            | 211,963    |          |   |            |           |           
|                                                                                                                                 | Deferred income taxes                                               |                                                         |            | 194,370    |            |      |            | (306,814   | )        |   |            | 451,004    |           
|                                                                                                                                 | (Gain) loss on investments, net                                     |                                                         |            | 1,317,158  |            |      |            | (1,151,172 | )        |   |            | (3,281,986 | )         
|                                                                                                                                 | Equity in net losses of affiliated companies                        |                                                         |            | 32,175     |            |      |            | 40,043     |          |   |            | 7,294      |           
|                                                                                                                                 | Minority interest, net of tax                                       |                                                         |            | 37,272     |            |      |            | 71,147     |          |   |            | 63,227     |           
|                                                                                                                                 | Cumulative effect of change in accounting
    principle, net of tax |                                                         |            |           |            |      |            | (717,090   | )        |   |            |           |           
|(Increase) decrease in accounts and notes
    receivable                                                                         |                                                                     |                                                         | 52,918     |            |            |      | 848        |            |          |   | (156,278   | )         
|(Increase) decrease in other assets                                                                                              |                                                                     |                                                         | 60,502     |            |            |      | (40,324    | )          |          |   | 28,629     |           
|Increase (decrease) in accounts payable and
    accrued liabilities                                                              |                                                                     |                                                         | 99,805     |            |            |      | (30,363    | )          |          |   | 204,009    |           
|Increase (decrease) in taxes payable                                                                                             |                                                                     |                                                         | (161,197   | )          |            |      | 328,541    |            |          |   | (231,631   | )         
|Other, net                                                                                                                       |                                                                     |                                                         | 177,641    |            |            |      | 97,777     |            |          |   | 60,237     |           
|                                                                                                                                 |                                                                     |                                                         |            |            |            |      |            |            |          |   |            |           
|                                                                                                                                 |                                                                     | Net cash provided by operating activities               |            |            | 1,772,839  |      |            |            | 798,768  |   |            |            | 306,247    |  
|                                                                                                                                 |                                                                     |                                                         |            |            |            |      |            |            |          |   |            |           
|Cash flows from investing activities                                                                                             |                                                                     |                                                         |            |            |            |      |            |            |          |   |            |           
|Capital expenditures                                                                                                             |                                                                     |                                                         | (1,932,416 | )          |            |      | (2,205,451 | )          |          |   | (2,188,168 | )         
|Investments in affiliated companies                                                                                              |                                                                     |                                                         | (18,800    | )          |            |      | (53,991    | )          |          |   | (83,252    | )         
|Proceeds from the sale and exchange of investments                                                                               |                                                                     |                                                         | 1,345,952  |            |            |      | 1,316,192  |            |          |   | 2,859,872  |           
|(Increase) decrease in amounts due from CEI                                                                                      |                                                                     |                                                         | (7,864     | )          |            |      | (7,437     | )          |          |   | 109,013    |           
|Proceeds (payments) for the sale
    (purchase) of cable systems                                                                 |                                                                     |                                                         | 12,574     |            |            |      | (1,495     | )          |          |   | (2,777,717 | )         
|Other, net                                                                                                                       |                                                                     |                                                         | (7,616     | )          |            |      | (1,160     | )          |          |   | 3,235      |           
|                                                                                                                                 |                                                                     |                                                         |            |            |            |      |            |            |          |   |            |           
|                                                                                                                                 |                                                                     | Net cash used in investing activities                   |            |            | (608,170   | )    |            |            | (953,342 | ) |            |            | (2,077,017 | )
|                                                                                                                                 |                                                                     |                                                         |            |            |            |      |            |            |          |   |            |           
|Cash flows from financing activities                                                                                             |                                                                     |                                                         |            |            |            |      |            |            |          |   |            |           
|Revolving credit and commercial paper borrowings
    (repayments), net                                                           |                                                                     |                                                         | (727,384   | )          |            |      | (801,385   | )          |          |   | 1,013,672  |           
|Proceeds from issuance of debt, net of debt
    issuance costs                                                                   |                                                                     |                                                         | 985,546    |            |            |      | 1,405,887  |            |          |   | 2,539,747  |           
|Repayment of debt                                                                                                                |                                                                     |                                                         | (704,951   | )          |            |      | (386,728   | )          |          |   | (1,504,010 | )         
|Redemption of preferred securities of subsidiary
    trust                                                                       |                                                                     |                                                         | (502,610   | )          |            |      |           |            |          |   |           |           
|Proceeds from the exercise of stock options                                                                                      |                                                                     |                                                         | 24,291     |            |            |      | 10,595     |            |          |   | 21,954     |           
|Distributions paid on capital and preferred
    securities of subsidiary trusts                                                  |                                                                     |                                                         | (47,764    | )          |            |      | (75,955    | )          |          |   | (82,260    | )         
|Repurchase of Class A common stock                                                                                               |                                                                     |                                                         |           |            |            |      |           |            |          |   | (211,889   | )         
|Premium paid on repurchase of MOPPRS/CHEERS                                                                                      |                                                                     |                                                         | (25,951    | )          |            |      |           |            |          |   |           |           
|Other, net                                                                                                                       |                                                                     |                                                         | (24,002    | )          |            |      | 10,578     |            |          |   | 38,685     |           
|                                                                                                                                 |                                                                     |                                                         |            |            |            |      |            |            |          |   |            |           
|                                                                                                                                 |                                                                     | Net cash provided by (used in) financing
    activities |            |            | (1,022,825 | )    |            |            | 162,992  |   |            |            | 1,815,899  |  
|                                                                                                                                 |                                                                     |                                                         |            |            |            |      |            |            |          |   |            |           
|Net increase in cash                                                                                                             |                                                                     |                                                         | 141,844    |            |            |      | 8,418      |            |          |   | 45,129     |           
|Cash at beginning of period                                                                                                      |                                                                     |                                                         | 86,860     |            |            |      | 78,442     |            |          |   | 33,313     |           
|                                                                                                                                 |                                                                     |                                                         |            |            |            |      |            |            |          |   |            |           
|Cash at end of period                                                                                                            |                                                                     | $                                                       | 228,704    |            |            | $    | 86,860     |            |          | $ | 78,442     |           
|                                                                                                                                 |                                                                     |                                                         |            |            |            |      |            |            |          |   |            |           

See notes to consolidated financial statements.

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##### Table of Contents



COX COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

1.     Organization
and Basis of Presentation

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

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 accounting principles generally accepted in the
United States 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: 20 years for buildings and building
improvements; three to 12 years for cable systems; and three to
10 years for other plant and equipment. Depreciation
expense was $1,357.2 million and $1,185.8 million for
the years ended December 31, 2002 and 2001, respectively.
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. Costs associated with subsequent installations of
additional services are capitalized to the extent that they are
incremental and directly attributable to the installation of
expanded services; costs associated with subsequent
disconnection and reconnecting services to existing customers
are expensed as incurred.

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 depreciation expense.

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##### Table of Contents



COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |            
| | -----------
| | 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 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, with
unrealized gains and losses resulting from changes in fair value
of available-for-sale securities between measurement dates
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

On January 1, 2002, Cox adopted 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. Other intangible assets
continue to be amortized over their useful lives. Cox evaluated
its intangible assets and determined certain intangible assets
to have indefinite useful lives. Accordingly, on January 1,
2002 Cox discontinued the amortization of intangible assets with
indefinite lives, which consist primarily of franchise value.
See Note 5. Intangible Assets. The standard also
requires the completion of a transition impairment test within
six months of adoption, with any impairments identified treated
as a cumulative effect of change in accounting principle. The
adoption of SFAS No. 142 did not result in an impairment
charge, as the fair value of Coxs indefinite lived
intangible assets were greater than their carrying value.



| |                               
| | ------------------------------
| | Valuation of Long-Lived Assets

On January 1, 2002, Cox adopted 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.Cox evaluates the recoverability of long-lived
assets, other than indefinite lived intangible assets, for
impairment when events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable.
Conditions that would necessitate an impairment assessment
include a significant decline in the observable market value of
an asset, a significant change in the extent or manner in which
an asset is used, or a significant adverse change that would
indicate that the carrying amount of an asset or group of assets
is not recoverable. For long-lived assets to be held and used,
Cox recognizes an impairment loss only if its carrying amount is
not recoverable through its undiscounted cash flows and measures
the impairment loss based on the difference between the carrying
amount and fair value. Long-lived assets held for sale are
reported at the lower of cost or fair value less costs to sell.

57



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##### Table of Contents



COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |             
| | ------------
| | 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 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

Cox accounts for the revenue, costs and expense
related to residential cable services (i.e. video, data and
telephony) as the related services are performed in accordance
with SFAS No. 51, Financial Reporting by Cable
Television Companies. Installation revenue for residential
cable services is recognized to the extent of direct selling
costs incurred. Direct selling costs have exceeded installation
revenue in all reported periods. Credit risk is managed by
disconnecting services to customers who are delinquent.

All other revenue is accounted for in accordance
with Staff Accounting Bulletin (SAB) No. 101,
Revenue Recognition in Financial Statements. Revenue from
advertising sales is recognized as the advertising is
transmitted over Coxs broadband network. Revenue derived
from other sources, including commercial data and telephony, is
recognized as services are provided, as persuasive evidence of
an arrangement exists, the price to the customer is fixed and
determinable and collectability is reasonably assured.



| |                 
| | ----------------
| | Cost of Services

Cost of services includes cable programming
costs, other direct costs and field service costs. Other direct
costs include costs that Cox incurs in conjunction with
providing its residential, commercial and advertising services.
Field service costs include costs associated with providing and
maintaining Coxs broadband network and customer care costs
necessary to maintain its customer base.



| |                                                        
| | -------------------------------------------------------
| | 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 effect of Cox employees
participation in the plans.



| |                         
| | ------------------------
| | Stock Compensation Plans

At December 31, 2002, Cox had two
stock-based compensation plans for employees, a Long-Term
Incentive Plan (LTIP) and an Employee Stock Purchase Plan
(ESPP), which are more fully described in Note 13. Stock
Compensation Plans. Cox accounts for those plans under the
intrinsic value method, which follows the recognition and
measurement principles of Accounting Principles Board
(APB) Opinion No. 25, Accounting for Stock Issued
to Employees, and related interpretations. No stock-based
employee compensation cost is reflected in net income, as all
options granted under the LTIP had an exercise price equal to or
greater than the market value of the underlying common stock on
the grant date. Further, the ESPP qualifies

58



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##### Table of Contents



COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

as a noncompensatory plan under APB Opinion
No. 25, and, as such, no compensation cost was recognized
for ESPP awards.

The following table illustrates the effect on net
income (loss) and earnings (loss) per share if Cox had applied
the fair value recognition provisions of SFAS No. 123,
Accounting for Stock-Based Compensation, to stock-based
employee compensation:

|                                                                                                               |                                                     |                                                  |          |       |   |      |         |      |  |   |           |      | 
|-------------------------------------------------------------------------------------------------------------- | --------------------------------------------------- | ------------------------------------------------ | -------- | ----- | - | ---- | ------- | ---- |  | - | --------- | ---- | 
|                                                                                                               |                                                     |                                                 
|                                                                                                               |                                                     | Year Ended December 31                          
|                                                                                                               |                                                     |                                                 
|                                                                                                               |                                                     | 2002                                             |          | 2001  |   | 2000
|                                                                                                               |                                                     |                                                  |          |       |   |     
|                                                                                                               |                                                     |                                                 
|                                                                                                               |                                                     | (Thousands of Dollars, excluding per share data)
|Net income (loss), as reported                                                                                 |                                                     | $                                                | (274,039 | )     |   | $    | 755,001 |      |  | $ | 1,925,255 |     
|Add: Stock-based compensation, as reported                                                                     |                                                     |                                                  |         |       |   |      |        |      |  |   |          |     
|Deduct: Total stock based compensation determined
    under fair value based method for all awards, net of tax |                                                     |                                                  | (18,902  | )     |   |      | (14,824 | )    |  |   | (5,092    | )   
|                                                                                                               |                                                     |                                                  |          |       |   |      |         |      |  |   |           |     
|Pro forma net income (loss)                                                                                    |                                                     | $                                                | (292,941 | )     |   | $    | 740,177 |      |  | $ | 1,920,163 |     
|Earnings (loss) per share:                                                                                     |                                                     |                                                  |          |       |   |      |         |      |  |   |           |     
|                                                                                                               | Basic earnings (loss) per share  as
    reported   |                                                  | $        | (0.45 | ) |      | $       | 1.26 |  |   | $         | 3.20 | 
|                                                                                                               | Basic earnings (loss) per share  pro
    forma     |                                                  |          | (0.48 | ) |      |         | 1.23 |  |   |           | 3.19 | 
|                                                                                                              
|                                                                                                               | Diluted earnings (loss) per share  as
    reported |                                                  | $        | (0.45 | ) |      | $       | 1.24 |  |   | $         | 3.16 | 
|                                                                                                               | Diluted earnings (loss) per share  pro
    forma   |                                                  |          | (0.48 | ) |      |         | 1.22 |  |   |           | 3.16 | 



| |                   
| | ------------------
| | 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 that are convertible or exercisable for Cox
Class A common stock as further described in Note 14.
Shareholders Equity.



| |                                 
| | --------------------------------
| | 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 defined, 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 10. Derivative Instruments and Hedging
Activities.

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

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

59



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COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

losses in the event of nonperformance by the
counterparties, Cox does not expect such losses, if any, to be
significant.



| |                                              
| | ---------------------------------------------
| | Recently Issued Accounting
    Pronouncements

On January 1, 2002, Cox adopted the guidance
prescribed in Emerging Issues Task Force (EITF) Issue
No. 01-14, Income Statement Characterization of
Reimbursements Received for Out-of-Pocket Expenses
Incurred, which specifies that the collection and payment of
certain fees must be presented on a gross basis, as revenue and
expense, rather than on a net basis. Retroactive application of
this standard was required. Accordingly, collection and payment
of fees by Cox, primarily franchise fees, have been reclassified
on a gross basis for all periods presented herein to conform to
this new guidance. Approximately $196.2 million,
$186.2 million and $166.8 million have been classified
to revenues for the years ended December 31, 2002, 2001 and
2000, respectively.

On January 1, 2003, Cox adopted 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. The adoption of SFAS No. 143 did not have a material
impact on Coxs financial position or results of operations.

In April 2002, the Financial Accounting
Standards Board (FASB) issued SFAS No. 145,
Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical
Corrections, which provides for the rescission of several
previously issued accounting standards, new accounting guidance
for the accounting of certain lease modifications and various
technical corrections that are not substantive in nature to
existing pronouncements. Cox adopted SFAS No. 145 on
January 1, 2003, except for the provisions relating to the
amendment of SFAS No. 13, which was adopted for
transactions occurring subsequent to May 15, 2002. The
adoption of SFAS No. 145 did not have a material impact on
Coxs financial position and results of operations.

In July 2002, the FASB issued SFAS
No. 146, Accounting for Costs Associated with Exit or
Disposal Activities, which requires companies to recognize
costs associated with exit or disposal activities when they are
incurred, rather than at the date of a commitment to an exit or
disposal plan. SFAS No. 146 will be applied prospectively
to exit or disposal activities initiated after December 31,
2002.

In November 2002, the FASB issued Interpretation
(FIN) No. 45, Guarantors Accounting and
Disclosure Requirements for Guarantors, Including Indirect
Guarantees of Indebtedness of Others. FIN No. 45
requires that upon issuance of a guarantee, the guarantor must
recognize a liability for the fair value of the obligation it
assumes under the guarantee. Guarantors will also be required to
meet expanded disclosure obligations. The initial recognition
and measurement provisions of FIN No. 45 are effective for
guarantees issued or modified after December 31, 2002. The
disclosure requirements are effective for annual and interim
financial statements that end after December 15, 2002. Cox
is currently assessing the impact of the initial recognition and
measurement provisions of this interpretation on its
consolidated financial statements.

In December 2002, the FASB issued SFAS
No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure, which
amends SFAS No. 123, Stock-Based Compensation, to
provide alternative methods of transition for a voluntary change
to the fair value based method of accounting for stock-based
employee compensation. In addition, SFAS No. 148 amends the
disclosure requirements of SFAS No. 123 to require
prominent disclosures in both annual and interim financial
statements about the method of accounting for stock-based
employee compensation and the effect of the method used on
reported results. The disclosure provisions of SFAS No. 148
are effective for fiscal years ending after December 15,
2002 and have been incorporated into these financial statements
and accompanying footnotes.

In January 2003, the FASB issued FIN No. 46,
Consolidation of Variable Interest Entities. FIN
No. 46 addresses consolidation by business enterprises of
variable interest entities. The interpretation is effective for

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##### Table of Contents



COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

the first interim or annual reporting period
beginning after June 15, 2003. Cox has determined that it
is not reasonably possible that it will be required to
consolidate or disclose information about a variable interest
entity upon the effective date of FIN No. 46.



| |                  
| | -----------------
| | Reclassifications

Certain amounts in the 2001 and 2000 consolidated
financial statements have been reclassified for comparative
purposes with 2002.

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 $66.8 million and $90.7 million existed
at December 31, 2002 and 2001, 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
and Exchanges of Businesses

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.

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.

5.     Intangible
Assets

Cox constructs and operates its cable systems
under non-exclusive cable franchises that are granted by state
or local governmental authorities for varying lengths of time.
As of December 31, 2002, Cox held approximately 851
franchises in areas located throughout the United States. Cox
obtained these franchises primarily through acquisitions of
cable systems accounted for as purchase business combinations.
These acquisitions have primarily been for the purpose of
acquiring existing franchises and related infrastructure and, as
such, the primary asset acquired by Cox has historically been
cable franchises.

On January 1, 2002, Cox adopted SFAS No. 142,
Goodwill and Other Intangible Assets, which requires that
goodwill and certain intangible assets with indefinite useful
lives no longer be amortized, but instead be tested for
impairment at least annually. The standard also requires the
completion of a transitional impairment test with any resulting
impairment identified treated as a cumulative effect of a change
in accounting principle.

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COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Prior to the adoption of SFAS No. 142, Cox
described the excess purchase price over the fair value of the
identified net assets acquired associated with its acquisitions
as either goodwill or franchise value and amortized these assets
over 40 years. Cox believes that the franchises, although
contractually non-exclusive, provide economic exclusivity for
broadband video services to an incumbent cable operator.
Accordingly, Cox does not believe it has any goodwill separate
and distinct from the value of its cable franchises, and, as
such, the nature of the recorded excess purchase price
associated with Coxs acquisitions is more appropriately
characterized as franchise value. Therefore, in connection with
the adoption of SFAS No. 142, Cox reclassified the net
carrying value of its goodwill of $3.7 billion to franchise
value in order to eliminate the distinction between these two
assets. In connection with this reclassification, Cox recorded
an additional deferred tax liability and a corresponding
increase to franchise value of $2.2 billion, in accordance
with the provisions of SFAS No. 109, Accounting for
Income Taxes, related to the difference in the tax basis
compared to the book basis of franchise value. This
reclassification, including the related deferred taxes, was not
reflected in Coxs consolidated balance sheet until
December 31, 2002. Accordingly, the previous quarterly
amounts in 2002 related to these items are not comparable. The
reclassification and the related deferred tax effects had no
impact on Coxs consolidated statements of operations.

In addition, Cox assessed the expected useful
life of each of its cable franchises upon adoption of SFAS
No. 142, and concluded that all of its cable franchises
have an indefinite useful life. Accordingly, Cox ceased
amortizing its franchise value effective January 1, 2002.
Cox reached its conclusion regarding the indefinite useful life
of its cable franchises principally because (i) there are
no legal, regulatory, contractual, competitive, economic or
other factors limiting the period over which these rights will
continue to contribute to Coxs cash flows (ii) Cox
has never had a cable franchise right revoked, and has never
been denied a franchise renewal (iii) 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 and
(iv) under the 1984 Cable Act, a local franchising
authority may not unreasonably withhold the renewal of a cable
system franchise. Cox will continue to reevaluate the expected
life of its cable franchise rights each reporting period to
determine whether events and circumstances continue to support
an indefinite useful life.

In connection with the adoption of SFAS
No. 142, Cox completed a transitional impairment test of
its franchise value as of January 1, 2002. Based on the
guidance prescribed in EITF Issue No. 02-7, Unit of
Accounting for Testing of Impairment of Indefinite-Lived
Intangible Assets, Cox determined that the unit of
accounting for testing franchise value for impairment resides at
the cable system cluster level, consistent with Coxs
management of its business as geographic clusters. Cox assesses
franchise value for impairment under SFAS No. 142 by
utilizing a residual approach whereby Cox measures the implied
fair value of each franchise value intangible asset subject to
the same unit of accounting by deducting from the fair value of
each cable system cluster the fair value of the cable system
clusters other net assets, including previously
unrecognized intangible assets. Upon adoption of SFAS
No. 142, Cox determined that no impairment of franchise
value intangible assets existed as of January 1, 2002. When
Cox completes its next annual impairment test as of
January 1, 2003, Cox will, when measuring the fair value of
the cable system clusters other net assets, consider the
guidance contained in EITF Issue No. 02-17, Recognition
of Customer Relationship Intangible Assets Acquired in a
Business Combination, which was issued in October 2002. Cox
anticipates that consideration of the guidance in EITF Issue
No. 02-17, whereby Cox will consider assumptions that
marketplace participants would consider, such as expectations of
future contract renewals and other benefits related to the
intangible asset, when measuring the fair value of the cable
system clusters other net assets will result in a non-cash
impairment charge as of January 1, 2003, and such charge
may be significant.

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COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Had Cox been accounting for intangible assets
under SFAS No. 142 for all periods presented, Coxs
reported income (loss) before cumulative effect in change in
accounting principle, net income (loss) and net income (loss)
per share would have been as follows:

|                                                                                      |  |                           |          |      |  |      |           |  |  |   |           | 
|------------------------------------------------------------------------------------- |  | ------------------------- | -------- | ---- |  | ---- | --------- |  |  | - | --------- | 
|                                                                                      |  |                          
|                                                                                      |  | Year Ended December 31   
|                                                                                      |  |                          
|                                                                                      |  | 2002                      |          | 2001 |  | 2000
|                                                                                      |  |                           |          |      |  |     
|                                                                                      |  |                          
|                                                                                      |  | (Thousands of Dollars,   
|                                                                                      |  | excluding per share data)
|Reported income (loss) before cumulative effect
    of change in accounting principle |  | $                         | (274,039 | )    |  | $    | 37,911    |  |  | $ | 1,925,255 | 
|Franchise value amortization, net of tax                                              |  |                           |         |      |  |      | 250,214   |  |  |   | 256,397   | 
|                                                                                      |  |                           |          |      |  |      |           |  |  |   |           | 
|Adjusted income (loss) before cumulative effect
    of change in accounting principle |  |                           | (274,039 | )    |  |      | 288,125   |  |  |   | 2,181,652 | 
|Cumulative effect of change in accounting
    principle                               |  |                           |         |      |  |      | 717,090   |  |  |   |          | 
|                                                                                      |  |                           |          |      |  |      |           |  |  |   |           | 
|Adjusted net income (loss)                                                            |  | $                         | (274,039 | )    |  | $    | 1,005,215 |  |  | $ | 2,181,652 | 
|                                                                                      |  |                           |          |      |  |      |           |  |  |   |           | 
|Basic net income (loss) per share:                                                    |  |                           |          |      |  |      |           |  |  |   |           | 
|Reported income (loss) before cumulative effect
    of change in accounting principle |  | $                         | (0.45    | )    |  | $    | 0.06      |  |  | $ | 3.20      | 
|Add back franchise value amortization, net of tax                                     |  |                           |         |      |  |      | 0.42      |  |  |   | 0.42      | 
|                                                                                      |  |                           |          |      |  |      |           |  |  |   |           | 
|Adjusted income (loss) before cumulative effect
    of change in accounting principle |  |                           | (0.45    | )    |  |      | 0.48      |  |  |   | 3.62      | 
|Cumulative effect of change in accounting
    principle                               |  |                           |         |      |  |      | 1.20      |  |  |   |          | 
|                                                                                      |  |                           |          |      |  |      |           |  |  |   |           | 
|Adjusted basic net income (loss) per share                                            |  | $                         | (0.45    | )    |  | $    | 1.68      |  |  | $ | 3.62      | 
|                                                                                      |  |                           |          |      |  |      |           |  |  |   |           | 
|Diluted net income (loss) per share:                                                  |  |                           |          |      |  |      |           |  |  |   |           | 
|Reported income (loss) before cumulative effect
    of change in accounting principle |  | $                         | (0.45    | )    |  | $    | 0.06      |  |  | $ | 3.16      | 
|Add back franchise value amortization, net of tax                                     |  |                           |         |      |  |      | 0.41      |  |  |   | 0.42      | 
|                                                                                      |  |                           |          |      |  |      |           |  |  |   |           | 
|Adjusted income (loss) before cumulative effect
    of change in accounting principle |  |                           | (0.45    | )    |  |      | 0.47      |  |  |   | 3.58      | 
|Cumulative effect of change in accounting
    principle                               |  |                           |         |      |  |      | 1.18      |  |  |   |          | 
|                                                                                      |  |                           |          |      |  |      |           |  |  |   |           | 
|Adjusted diluted net income (loss) per share                                          |  | $                         | (0.45    | )    |  | $    | 1.65      |  |  | $ | 3.58      | 
|                                                                                      |  |                           |          |      |  |      |           |  |  |   |           | 

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COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Coxs other intangible assets that have a
finite useful life are comprised primarily of non-compete
agreements, contractual rights and cable franchise renewal
costs. These other intangible assets are amortized on a
straight-line basis over the term of the related agreement. Cox
evaluates the useful lives of its finite lived intangible assets
each reporting period to determine whether events or
circumstances warrant revised estimates of useful lives.

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

|                                          |  |                        |        |                   |  |          |        |          |  |              |            |          |  |   |        |  |  |   |        |  |  |   |            |    
|----------------------------------------- |  | ---------------------- | ------ | ----------------- |  | -------- | ------ | -------- |  | ------------ | ---------- | -------- |  | - | ------ |  |  | - | ------ |  |  | - | ---------- | ---
|                                          |  |                        |        |                  
|                                          |  | December 31, 2002      |        | December 31, 2001
|                                          |  |                        |        |                  
|                                          |  | Gross                  |        |                   |  | Net      |        | Gross    |  |              |            | Net     
|                                          |  | Carrying               |        | Accumulated       |  | Carrying |        | Carrying |  | Accumulated  |            | Carrying
|                                          |  | Value                  |        | Amortization      |  | Value    |        | Value    |  | Amortization |            | Value   
|                                          |  |                        |        |                   |  |          |        |          |  |              |            |         
|                                          |  |                       
|                                          |  | (Thousands of Dollars)
|Intangible assets subject to amortization |  | $                      | 47,095 |                   |  | $        | 15,788 |          |  | $            | 31,307     |          |  | $ | 34,027 |  |  | $ | 15,184 |  |  | $ | 18,843     |    
|Franchise value                           |  |                        |        |                   |  |          |        |          |  | $            | 15,692,981 |          |  |   |        |  |  |   |        |  |  | $ | 13,492,051 |    
|                                          |  |                        |        |                   |  |          |        |          |  |              |            |          |  |   |        |  |  |   |        |  |  |   |            |    
|Total intangible assets                   |  |                        |        |                   |  |          |        |          |  | $            | 15,724,288 |          |  |   |        |  |  |   |        |  |  | $ | 13,510,894 | (a)
|                                          |  |                        |        |                   |  |          |        |          |  |              |            |          |  |   |        |  |  |   |        |  |  |   |            |    



|    |                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------
|(a) | Includes $3.7 billion net carrying amount of
    goodwill that was reclassified to franchise value in 2002.

Aggregate intangible asset amortization expense
was $0.7 million for the year ended December 31, 2002. Cox
estimates amortization expense to be $3.0 million in 2003,
$2.8 million in 2004, $2.5 million in 2005,
$2.5 million in 2006 and $2.4 million in 2007,
primarily related to contractual rights and other agreements.
Actual amortization expense to be reported in future periods
could differ from these estimates as a result of new intangible
asset acquisitions, changes in useful lives and other relevant
factors.

6.     Investments

|                                  |                        |                        |         |         |  |   |           |           | 
|--------------------------------- | ---------------------- | ---------------------- | ------- | ------- |  | - | --------- | --------- | 
|                                  |                        |                       
|                                  |                        | December 31           
|                                  |                        |                       
|                                  |                        | 2002                   |         | 2001   
|                                  |                        |                        |         |        
|                                  |                        |                       
|                                  |                        | (Thousands of Dollars)
|Investments stated at fair value: |                        |                        |         |         |  |   |           |          
|                                  | Available-for-sale     |                        | $       | 262,939 |  |   | $         | 2,903,062 | 
|                                  | Trading securities     |                        |         | 85,410  |  |   |           | 475,995   | 
|                                  | Derivative instruments |                        |         | 6,137   |  |   |           | 90,494    | 
|Equity and other                  |                        |                        | 42,949  |         |  |   | 45,682    |          
|                                  |                        |                        |         |         |  |   |           |          
|Total Investments                 |                        | $                      | 397,435 |         |  | $ | 3,515,233 |          
|                                  |                        |                        |         |         |  |   |           |          

Investments Stated at Fair Value

The aggregate cost of Coxs investments
stated at fair value at December 31, 2002 and 2001 was
$175.0 million and $2,326.0 million, respectively.
Gross unrealized gains and losses on investments were
$129.6 million and $0.4 million, respectively, at
December 31, 2002 and $843.3 million and $76.6
million, respectively, at December 31, 2001. Gross realized
gains and losses on investments were $112.0 million and
$1,429.1 million, respectively, for the year ended
December 31, 2002; $1,339.2 million and
$188.0 million, respectively, for the year ended
December 31, 2001; and $3,306.9 million and
$24.9 million, respectively, for the year ended
December 31, 2000.

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

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COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Sprint PCS common stock 
Series 2. 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. For a further discussion, see
Note 8. Debt and Note 10. 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.

In February and March 2002, Cox terminated its
series of costless equity collar arrangements, which managed its
exposure to market price fluctuations of 15.8 million
shares of Sprint PCS common stock, for aggregate proceeds of
approximately $151.6 million and recognized an aggregate
pre-tax derivative gain of approximately $168.9 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 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 the collar arrangements for aggregate net proceeds of
approximately $82.8 million. Cox recognized an aggregate
pre-tax gain of $32.8 million on the sale of these shares.

Cox recognized an aggregate pre-tax investment
loss of $390.6 million during 2002 and an aggregate pre-tax
investment gain of $77.4 million during 2001 as a result of
the change in market value of its investment in shares of Sprint
PCS common stock classified as trading. In addition, during
2002, Cox recorded an aggregate pre-tax impairment charge of
approximately $795.7 million on its investment in shares of
Sprint PCS common stock classified as available-for-sale as a
result of a decline in market value that was considered other
than temporary. This charge is included in net gain (loss) on
investments in Coxs Consolidated Statement of Operations.

At December 31, 2002, Coxs investment
in Sprint PCS was comprised of 66.7 million shares of Sprint PCS
common stock, and warrants and convertible preferred stock which
are exercisable for, or convertible into, approximately
10.3 million shares of Sprint PCS common stock. 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 19.5 million are pledged in
connection with Coxs prepaid forward contracts to sell up
to 19.5 million shares of Sprint PCS common stock. The
estimated fair value of Coxs investment in Sprint PCS was
$349.2 million and $2,444.3 million at
December 31, 2002 and December 31, 2001, respectively.

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.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 Corp. pursuant to which
the ownership, voting control and management of Excite@Home were
restructured. In addition, as part of this agreement, 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. In
connection with the consummation of this agreement, Cox
recognized a pre-tax gain of approximately $990.5 million
in 2000, which was included in gain (loss) on investments in
Coxs consolidated statement of operations.

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COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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. After further discussion, in May
2001, AT&T issued 75.0 million shares of AT&T
common stock to Cox, Cox retained its common stock and
Coxs right to sell its Excite@Home shares to AT&T was
deemed satisfied in full. Cox recognized a $307.4 million
pre-tax gain in the second quarter of 2001 associated with the
deemed satisfaction of the right-to-sell agreement.

In September 2001, Excite@Home, Coxs
primary high-speed Internet provider at that time, 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 was attributable to services provided 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.

AT&T and AT&T Wireless Services, Inc.AT&T provides voice, video and
data communications to businesses, consumers and government
agencies. AT&T Wireless provides wireless voice and data
services to consumers and businesses. 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 February and March 2002, Cox terminated its
costless equity collar arrangements which managed its exposure
to market price fluctuations of 22.5 million shares of AT&T
common stock and 17.2 million shares of AT&T Wireless
common stock for aggregate proceeds of approximately
$112.8 million and recognized an aggregate pre-tax
derivative gain of $99.9 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 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. Cox
recognized an aggregate pre-tax loss of $170.1 million on
the sale of these shares.

As a result of these transactions, Cox no longer
holds any shares of AT&T common stock or AT&T Wireless
common stock. Cox had accounted for its interests in 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 AT&T and
AT&T Wireless were approximately $634.9 million and
$343.5 million, respectively. AT&T

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COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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
and recognized a pre-tax gain of $775.9 million. See
Note 4. Acquisitions and Exchanges of
Businesses.

Motorola, Inc.Motorola provides integrated communications solutions and
embedded electronic solutions, including end-to-end systems for
the delivery of interactive digital video, voice and high-speed
data solutions for broadband operators. In June 2002, Cox sold
its remaining 1.7 million shares of Motorola common stock
for aggregate net proceeds of approximately $24.5 million
and recognized an aggregate pre-tax loss of $1.5 million.
Cox acquired the shares of Motorola common stock through the
exercise of warrants in June 2000 and June 2001.

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. In 2001, Cox funded
Discovery with an additional contribution of $23.9 million,
however, since previously unrecognized equity in net losses
exceeded the amount of the additional funding, Cox recognized
equity in net losses on its investment in Discovery of
$23.9 million. In September 2002, Cox received a
$27.1 million partial return on its investment from
Discovery. Since Coxs carrying value of its investment in
Discovery had been reduced to zero, this resulted in a pre-tax
gain of $27.1 million.

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.

Summarized combined financial information for all
equity method investments and Coxs proportionate share
(determined using Coxs ownership interest in each
investment) for 2002, 2001 and 2000 is as follows:

|                       |  |                                |           |                           |  |      |           |      |  |      |           |      |  |   |         |   |  |   |         |   |  |   |         |  
|---------------------- |  | ------------------------------ | --------- | ------------------------- |  | ---- | --------- | ---- |  | ---- | --------- | ---- |  | - | ------- | - |  | - | ------- | - |  | - | ------- | -
|                       |  |                                |           |                          
|                       |  | Combined Financial Information |           | Coxs Proportionate Share
|                       |  | Year Ended December 31         |           | Year Ended December 31   
|                       |  |                                |           |                          
|                       |  | 2002                           |           | 2001                      |  | 2000 |           | 2002 |  | 2001 |           | 2000
|                       |  |                                |           |                           |  |      |           |      |  |      |           |     
|                       |  |                               
|                       |  | (Thousands of Dollars)        
|Revenues               |  | $                              | 2,069,282 |                           |  | $    | 1,940,486 |      |  | $    | 1,917,649 |      |  | $ | 477,294 |   |  | $ | 494,591 |   |  | $ | 494,137 |  
|Operating income(loss) |  |                                | (182,194  | )                         |  |      | (139,236  | )    |  |      | 210,339   |      |  |   | (48,967 | ) |  |   | (38,791 | ) |  |   | 49,958  |  
|Net loss               |  |                                | (196,479  | )                         |  |      | (184,127  | )    |  |      | (221,894  | )    |  |   | (49,341 | ) |  |   | (50,106 | ) |  |   | (56,930 | )

|                       |  |                                |           |      |  |   |           | 
|---------------------- |  | ------------------------------ | --------- | ---- |  | - | --------- | 
|                       |  |                               
|                       |  | Combined Financial Information
|                       |  | December 31                   
|                       |  |                               
|                       |  | 2002                           |           | 2001
|                       |  |                                |           |     
|                       |  |                               
|                       |  | (Thousands of Dollars)        
|Current assets         |  | $                              | 702,293   |      |  | $ | 664,892   | 
|Noncurrent assets      |  |                                | 2,762,644 |      |  |   | 2,853,576 | 
|Current liabilities    |  |                                | 893,331   |      |  |   | 733,566   | 
|Noncurrent liabilities |  |                                | 3,405,987 |      |  |   | 3,418,179 | 

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COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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.

The investment balance at December 31, 2001
included advances to affiliated companies of $1.5 million
in the form of interest-bearing long-term notes receivable,
which were repaid in 2002. Interest income recognized on notes
receivable was $0.1 million, $3.1 million and
$4.0 million in 2002, 2001 and 2000, respectively.



| |      
| | -----
| | Other

Cox has several other fair value, equity and cost
method investments that are not, individually or in the
aggregate, significant in relation to the Consolidated Balance
Sheets at December 31, 2002 and 2001.

7.     Income
Taxes

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

|         |         |                                  |   |          |          |      |   |          |          |   |   |         |         | 
|-------- | ------- | -------------------------------- | - | -------- | -------- | ---- | - | -------- | -------- | - | - | ------- | ------- | 
|         |         |                                 
|         |         | Year Ended December 31          
|         |         |                                 
|         |         | 2002                             |   | 2001     |          | 2000
|         |         |                                  |   |          |          |     
|         |         |                                 
|         |         | (Thousands of Dollars)          
|Current  |         |                                  |   |          |          |      |   |          |          |   |   |        
|         | Federal |                                  | $ | (324,171 | )        |      | $ | 408,770  |          |   | $ | 381,276 |        
|         | State   |                                  |   | 4,515    |          |      |   | (7,917   | )        |   |   | 44,751  |        
|         |         |                                  |   |          |          |      |   |          |          |   |   |        
|         |         | Total current                    |   |          | (319,656 | )    |   |          | 400,853  |   |   |         | 426,027 | 
|         |         |                                  |   |          |          |      |   |          |          |   |   |        
|Deferred |         |                                  |   |          |          |      |   |          |          |   |   |        
|         | Federal |                                  |   | 183,059  |          |      |   | (199,731 | )        |   |   | 362,498 |        
|         | State   |                                  |   | 11,311   |          |      |   | (107,083 | )        |   |   | 88,506  |        
|         |         |                                  |   |          |          |      |   |          |          |   |   |        
|         |         | Total deferred                   |   |          | 194,370  |      |   |          | (306,814 | ) |   |         | 451,004 | 
|         |         |                                  |   |          |          |      |   |          |          |   |   |        
|         |         | Net income tax expense (benefit) |   | $        | (125,286 | )    |   | $        | 94,039   |   |   | $       | 877,031 | 
|         |         |                                  |   |          |          |      |   |          |          |   |   |        

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 31
|                                                                         |                                  |                       
|                                                                         |                                  | 2002                   |          | 2001     |   | 2000
|                                                                         |                                  |                        |          |          |   |     
|                                                                         |                                  |                       
|                                                                         |                                  | (Thousands of Dollars)
|Federal tax expense at statutory rates on income
    before income taxes |                                  | $                      | (126,719 | )        |   | $    | 71,087 |        |  | $ | 1,005,240 |        
|State income taxes (benefit), net of federal
    benefit                 |                                  |                        | 10,288   |          |   |      | (8,593 | )      |  |   | 86,617    |        
|Dividends received deduction                                             |                                  |                        | (7,083   | )        |   |      | (407   | )      |  |   | (3,125    | )      
|Amortization of acquisition adjustments                                  |                                  |                        |         |          |   |      | 33,575 |        |  |   | 33,377    |        
|Gain on exchange of cable system                                         |                                  |                        |         |          |   |      |       |        |  |   | (271,567  | )      
|Other, net                                                               |                                  |                        | (1,772   | )        |   |      | (1,623 | )      |  |   | 26,489    |        
|                                                                         |                                  |                        |          |          |   |      |        |        |  |   |           |        
|                                                                         | Net income tax expense (benefit) |                        | $        | (125,286 | ) |      | $      | 94,039 |  |   | $         | 877,031 | 
|                                                                         |                                  |                        |          |          |   |      |        |        |  |   |           |        

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COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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

|                       |                            |                        |            |            |   |   |            |            |  
|---------------------- | -------------------------- | ---------------------- | ---------- | ---------- | - | - | ---------- | ---------- | -
|                       |                            |                       
|                       |                            | December 31           
|                       |                            |                       
|                       |                            | 2002                   |            | 2001      
|                       |                            |                        |            |           
|                       |                            |                       
|                       |                            | (Thousands of Dollars)
|Plant and equipment    |                            | $                      | (1,138,701 | )          |   | $ | (848,329   | )         
|Intangible assets      |                            |                        | (4,660,872 | )          |   |   | (2,352,507 | )         
|Investments            |                            |                        | (345,138   | )          |   |   | (954,514   | )         
|Derivative instruments |                            |                        | (592,829   | )          |   |   | (326,750   | )         
|Other, net             |                            |                        | (2,905     | )          |   |   | (56,188    | )         
|                       |                            |                        |            |            |   |   |            |           
|                       |                            |                        | (6,740,445 | )          |   |   | (4,538,288 | )         
|Less current portion   |                            |                        | 10,190     |            |   |   | 1,773      |           
|                       |                            |                        |            |            |   |   |            |           
|                       | Net deferred tax liability |                        | $          | (6,750,635 | ) |   | $          | (4,540,061 | )
|                       |                            |                        |            |            |   |   |            |           

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.

8.     Debt

|                                                                     |                      |                        |           |           |  |   |           |           | 
|-------------------------------------------------------------------- | -------------------- | ---------------------- | --------- | --------- |  | - | --------- | --------- | 
|                                                                     |                      |                       
|                                                                     |                      | December 31           
|                                                                     |                      |                       
|                                                                     |                      | 2002                   |           | 2001     
|                                                                     |                      |                        |           |          
|                                                                     |                      |                       
|                                                                     |                      | (Thousands of Dollars)
|Revolving credit facilities                                          |                      | $                      |          |           |  | $ |          |          
|Commercial paper                                                     |                      |                        |          |           |  |   | 727,384   |          
|Medium-term notes                                                    |                      |                        | 391,274   |           |  |   | 391,183   |          
|Notes and debentures                                                 |                      |                        | 5,352,489 |           |  |   | 4,939,985 |          
|Exchangeable Subordinated Debentures due
    November 15, 2029       |                      |                        | 671,809   |           |  |   | 981,283   |          
|Exchangeable Subordinated Debentures due
    March 14, 2030          |                      |                        | 122,346   |           |  |   | 151,823   |          
|Exchangeable Subordinated Discount Debentures due
    April 19, 2020 |                      |                        | 501,915   |           |  |   | 696,391   |          
|Zero coupon debt                                                     |                      |                        | 41,377    |           |  |   | 373,532   |          
|Capitalized lease obligations                                        |                      |                        | 219,217   |           |  |   | 140,866   |          
|Other                                                                |                      |                        | 15,570    |           |  |   | 15,228    |          
|                                                                     |                      |                        |           |           |  |   |           |          
|                                                                     |                      |                        | 7,315,997 |           |  |   | 8,417,675 |          
|Less current portion                                                 |                      |                        | 393,040   |           |  |   | 43,741    |          
|                                                                     |                      |                        |           |           |  |   |           |          
|                                                                     | Total long-term debt |                        | $         | 6,922,957 |  |   | $         | 8,373,934 | 
|                                                                     |                      |                        |           |           |  |   |           |          

The exchangeable subordinated debentures and
zero-coupon debt are presented net of certain embedded
derivative instruments. See Note 10. Derivative
Instruments and Hedging Activities for a more detailed
discussion.

Revolving Credit Agreements

Cox has a $1.1 billion 364-day credit
agreement available through June 27, 2003 and a
$0.9 billion 5-year credit agreement available through
September 26, 2005. The 364-day credit agreement has a
term-out feature that allows Cox to extend the
maturity of its 364-day credit agreement for an additional two
years at maturity. 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

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COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

agreements also impose a commitment fee on the
unused portion of the total amount available based on a ratio of
debt to operating cash flow, a measure of performance not
calculated in accordance with accounting principles generally
accepted in the United States of America, and a utilization fee
based on the level of borrowings. Cox had no borrowings
outstanding under either credit agreement at December 31,
2002 and 2001.

Commercial Paper

Cox had no commercial paper outstanding at
December 31, 2002, and approximately $0.7 billion of
commercial paper at December 31, 2001, which was repaid in
the first quarter of 2002. The weighted-average interest rate
for outstanding commercial paper was 5.4% for the year ended
December 31, 2001. In the first quarter of 2003, Cox issued
approximately $149.4 million of commercial paper to
partially fund the convertible senior note repurchase, as
described below under the caption Notes and
Debentures. Coxs commercial paper is backed by
amounts available under its revolving credit agreements.



| |                  
| | -----------------
| | Medium-Term Notes

At December 31, 2002 and 2001, Cox had
outstanding borrowings under several fixed rate medium-term
notes due in varying amounts through 2028 that pay interest in
cash at fixed rates ranging from 6.7% to 7.2% per annum.



| |                     
| | --------------------
| | Notes and Debentures

Cox had outstanding borrowings under several
fixed-rate notes and debentures of approximately
$5.4 billion and $5.1 billion at December 31,
2002 and 2001, 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. Also included
in notes and debentures are Coxs convertible senior notes
due 2021, as described below. Cox also had an outstanding
borrowing under a floating rate note, as described below, of
approximately $206.3 million at December 31, 2001 that
was repurchased in 2002.

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

During 2003, a series of debt securities due
2033, representing $250.0 million aggregate principal amount, is
subject to remarketing. If the remarketing occurs, the maturity
date will remain August 1, 2033. If the remarketing does
not occur, Cox will be required to redeem such securities, and
may pay a premium to the remarketing dealer. Cox intends to
refinance such securities with the issuance of new debt or use
of capacity from existing credit facilities. As a result, the
debt securities are included in long-term debt.

2002 Issuances and
Repayments.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 accreted value of the
repurchased notes. 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.

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COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

In September 2002, Cox issued a series of 7.125%
senior notes due October 1, 2012 with an aggregate
principal amount of $1.0 billion, less offering costs and
underwriting commissions of $13.9 million. The 7.125%
senior notes are unsecured and rank equally with Coxs
other senior unsecured indebtedness. In addition, the 7.125%
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. Interest
is payable on a semi-annual basis beginning April 1, 2003.

On November 7, 2002, Coxs
$200.0 million aggregate principal amount of Floating Rate
MOPPRS/CHEERS was subject to mandatory tender to the remarketing
dealers. However, the remarketing dealers did not elect to
remarket the MOPPRS/CHEERS, and Cox repurchased the
MOPPRS/CHEERS on November 7, 2002. The total aggregate
consideration paid to repurchase the MOPPRS/CHEERS was $227.2
million, which amount included the remarketing option value paid
to the remarketing dealers and accrued interest paid to the
holders. Accordingly, Cox recognized a pre-tax extinguishment
loss, classified as a component of interest expense, of
$27.2 million upon settlement of these securities.

Also in November 2002, Cox repaid its
$200.0 million aggregate principal amount of 6.5% senior
notes due November 15, 2002 upon their maturity.

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 by the holders thereof. This
registration statement was declared effective by the Securities
and Exchange Commission in July 2001.

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 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.



| |                                     
| | ------------------------------------
| | 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, and as of November 15, 2002,
the rate decreased from 7.75% to 2% per year on the original
principal amount in accordance with the terms of the PRIZES. The
original principal amount of each PRIZES is indexed to the
trading price of Sprint PCS common stock. The number of shares
of Sprint PCS common stock attributable to each PRIZES is two
shares.

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COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The payment upon maturity of the PRIZES will be
the maximum of either the aggregate principal amount or the
current market value of the 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 for an
amount of cash equal to the current market value of the number
of reference shares attributable to each PRIZES, subject to
adjustment under certain circumstances.

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.

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
maximum of either the aggregate principal amount or the current
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 cash, equal to the maximum of either the
aggregate principal amount or the then exchange market value of
the underlying shares plus accrued and unpaid interest and a
final period distribution, as defined.

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.

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 April 19, 2005,
April 19, 2010 and April 19, 2015 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.

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 10. 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 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

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COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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 10. Derivative Instruments and
Hedging Activities.



| |                    
| | -------------------
| | Interest Rate Swaps

Cox utilizes interest rate swap agreements to
manage its exposure to changes in interest rates associated with
certain of its fixed-rate debt obligations whereby these
fixed-rate debt obligations are effectively converted into
floating-rate debt obligations. The variable rates with respect
to Coxs interest rate swaps are adjusted quarterly or
semi-annually based on London Interbank Offered Rates. The
notional amounts with respect to the interest rate swaps do not
quantify risk, but are used in the determination of cash
settlements under the interest rate swap agreements. Cox is
exposed to a credit loss in the event of nonperformance by the
counterparties; however, Cox does not anticipate nonperformance
by the counterparties. For a further discussion regarding
Coxs accounting for interest rate swaps, see Note 10.
Derivative Instruments and Hedging Activities.

The following table summarizes the notional
amounts, weighted average interest rate data and maturities for
Coxs interest rate swaps at December 31, 2002 and
2001:

|                                              |  |             |             |      |  |   |             |  
|--------------------------------------------- |  | ----------- | ----------- | ---- |  | - | ----------- | -
|                                              |  |            
|                                              |  | December 31
|                                              |  |            
|                                              |  | 2002        |             | 2001
|                                              |  |             |             |     
|Notional amount (in thousands)                |  | $           | 1,150,000   |      |  | $ | 1,150,000   |  
|Weighted average fixed interest rate received |  |             | 7.38        | %    |  |   | 7.38        | %
|Weighted average floating interest rate paid  |  |             | 3.10        | %    |  |   | 4.84        | %
|Maturity                                      |  |             | 2004  2006 |      |  |   | 2004  2006 |  

As a result of the settlements under these
agreements, interest expense was reduced by $48.3 million
and $22.1 million during the years ended December 31, 2002
and 2001, respectively.

In March 2003, Cox entered into two new interest
rate swap agreements expiring on August 1, 2008 with a
notional amount of $100.0 million each to convert
$200.0 million of fixed rate senior debt securities to a
floating rate. The swaps have been designated as fair value
hedges, as defined in SFAS No. 133, of the underlying debt
securities.



| |           
| | ----------
| | Maturities

Maturities of long-term debt for each of the five
years subsequent to December 31, 2002 and thereafter, are
$88.8 million, $694.9 million, $578.0 million,
$654.3 million, $12.9 million and
$7,866.4 million, respectively. Included in the maturities
of long-term debt are obligations under capital leases of
$61.8 million, $52.6 million, $35.7 million,
$22.0 million, $12.9 million for each of the five years
subsequent to December 31, 2002, respectively, and
$34.2 million thereafter. The maturities of long-term debt
represent future contractual obligations and are reported gross
of any related discounts, premiums and other adjustments, such
as embedded derivatives, necessary to comply with accounting
principles generally accepted in the U.S. These amounts are
classified as a contra account within debt and were
approximately $2,579.4 million at December 31, 2002.
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 upon exchange.

73



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COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |               
| | --------------
| | Debt Covenants

Certain of Coxs debt instruments and credit
agreements contain covenants which, among other provisions,
contain certain restrictions on the payment of dividends and the
repurchase of capital stock. Certain of these agreements contain
financial covenants that require certain leverage ratios and
interest coverage (as defined in the covenants) be maintained.
Compliance with these ratios limits Coxs ability to incur
unlimited indebtedness. Cox was in compliance with all financial
covenants for all periods presented.

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



| |              
| | -------------
| | FELINE PRIDES

Cox Trust II (the Trust), a statutory business
trust formed under the laws of the State of Delaware and a
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
represented the sole assets of the Trust. The obligations of the
Trust related to the FELINE PRIDES and the Trust capital
securities were guaranteed by Cox.

The FELINE PRIDES consisted of 11.7 million
Income PRIDES and 1.3 million Growth PRIDES. Each Income
PRIDES consisted of a capital security of the Trust and a
forward purchase contract under which the holder was 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 paid
interest, in the form of distributions, at an annual rate of 7%
payable in cash on a quarterly basis. Each Growth PRIDES
consisted of a 5% undivided beneficial ownership interest in a
zero-coupon U.S. Treasury security, with a principal amount at
maturity equal to $1,000, and a forward purchase contract under
which the holder was required to purchase Class A common
stock from Cox on August 16, 2002. The forward purchase
contracts forming a part of the Growth PRIDES entitled 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 were 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
required 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.

On August 16, 2002, Cox issued approximately
18.7 million shares of Cox Class A common stock to
holders of its Income PRIDES and Growth PRIDES in settlement of
such holders underlying obligation to purchase Cox
Class A common stock. Also on August 16, 2002, Cox
retained approximately $590.4 million aggregate principal amount
(out of the original $650.0 million aggregate principal
amount) of the Debentures securing the purchase contract
obligations of the Income PRIDES holders in full satisfaction of
such holders obligations to purchase Cox Class A
common stock. On September 3, 2002, Cox repurchased
approximately $58.6 million of the remaining Debentures,
funded primarily with the proceeds from maturing Treasury
securities received upon settlement of the Growth PRIDES. After
such repurchase, approximately $1.0 million aggregate
principal amount of the Debentures remains outstanding. The
reset interest rate, effective August 16, 2002, for the
remaining Debentures is 4.05%. As a result of the foregoing,
approximately $650.0 million previously classified as
Cox-obligated capital securities of subsidiary trusts
attributable to the FELINE PRIDES has been settled with the
issuance of Cox Class A common stock. Additionally, Cox
wrote off approximately $7.9 million of unamortized
issuance costs upon settlement.

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COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |       
| | ------
| | RHINOS

Cox RHINOS Trust (the RHINOS Trust), a statutory
business trust formed under the laws of the State of Delaware
and a 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 were 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 represented the sole assets of the RHINOS Trust. The
obligations of the RHINOS Trust related to the RHINOS were
unconditionally guaranteed by Cox. The Notes paid interest and,
thus, the RHINOS paid distributions, at a floating rate based on
LIBOR plus 75 points per year payable in cash on a quarterly
basis. The weighted-average interest rate for the Notes was
2.64%, 5.08% and 7.19% for the years ended December 31,
2002, 2001 and 2000, respectively.

On August 28, 2002, Cox, Cox RHINOS Trust
and the holder of the RHINOS amended the terms of the RHINOS. As
a result of these amendments, among other things, Cox obtained
the discretionary right to redeem the Notes, in whole or in
part, at any time from August 28, 2002 to and including
October 1, 2002. On September 26, 2002, Cox redeemed
the Notes, which, in turn, resulted in Cox RHINOS Trust
repurchasing all of the outstanding RHINOS for
$502.6 million, which amount included interest accrued to
the redemption date. As a result of the RHINOS repurchase, Cox
no longer has any Cox-obligated preferred securities of
subsidiary trusts. Additionally, Cox wrote off approximately
$10.2 million of unamortized issuance costs upon repurchase.

The FELINE PRIDES, stand-alone Trust capital
securities and RHINOS have been presented as mezzanine equity in
Coxs Consolidated Balance Sheet at December 31, 2001.
The corresponding distributions on these securities, as well as
the contract adjustment payments described above, totaled
$33.0 million, $68.5 million and $57.5 million,
net of tax, for the years ended December 31, 2002, 2001 and
2000, respectively, and have been presented as minority interest
in the Consolidated Statement of Operations.



|    |                                                  
|--- | -------------------------------------------------
|10. | Derivative Instruments and Hedging
    Activities

Cox accounts for derivative instruments in
accordance with SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, as amended, which
requires all freestanding and embedded derivative instruments to
be measured at fair value and recognized on the balance sheet as
either assets or liabilities. In addition, all derivative
instruments used in hedging relationships must be designated,
reassessed and accounted for as either fair value hedges or cash
flow hedges pursuant to the provisions of SFAS No. 133.
Upon adoption of SFAS No. 133 on January 1, 2001, 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.

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

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COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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

Cox recorded a pre-tax gain on derivative
instruments of $1,125.6 million for the year ended
December 31, 2002, and a pre-tax loss on derivative
instruments of $212.0 million for the year ended
December 31, 2001. In addition, cumulative derivative
adjustments made in accordance with SFAS No. 133, which are
classified as a component of debt in the Consolidated Balance
Sheets, reduced reported indebtedness by approximately
$1.4 billion and $0.5 billion at December 31, 2002 and
2001, respectively. The following is a detail of Coxs gain
(loss) on derivative instruments for the years ended
December 31, 2002 and 2001 followed by a summary of
Coxs derivative instruments.

|                                     |                              |                       |       |         |  |   |        |        |  
|------------------------------------ | ---------------------------- | --------------------- | ----- | ------- |  | - | ------ | ------ | -
|                                     |                              |                      
|                                     |                              | Year Ended           
|                                     |                              | December 31          
|                                     |                              |                      
|                                     |                              | 2002                  |       | 2001   
|                                     |                              |                       |       |        
|                                     |                              |                      
|                                     |                              | (Millions of Dollars)
|Equity collar arrangements           |                              | $                     | 268.8 |         |  | $ | (4.4   | )     
|Zero-coupon debt                     |                              |                       | 359.3 |         |  |   | 40.8   |       
|Exchangeable subordinated debentures |                              |                       | 583.1 |         |  |   | (279.8 | )     
|Stock purchase warrants              |                              |                       | (85.6 | )       |  |   | (14.9  | )     
|Right-to-sell agreement              |                              |                       |      |         |  |   | 46.3   |       
|                                     |                              |                       |       |         |  |   |        |       
|                                     | Total derivative gain (loss) |                       | $     | 1,125.6 |  |   | $      | (212.0 | )
|                                     |                              |                       |       |         |  |   |        |       



| |                              
| | -----------------------------
| | Interest Rate Swap Agreements

Cox utilizes interest rate swap agreements
designed to assist Cox in maintaining a mix of fixed and
floating rate debt by converting a portion of existing fixed
rate debt into a floating rate obligation. Cox has designated
and accounted for its interest rate swap agreements as fair
value hedges whereby the fair value of the related interest rate
swap agreements are classified as a component of other assets
with the corresponding fixed-rate debt obligations being
classified as a component of debt in the Consolidated Balance
Sheets. Cox has assumed no ineffectiveness with regard to these
interest rate swap agreements as the agreements qualify for the
short-cut methodof accounting for fair value hedges of
debt instruments, as prescribed by SFAS No. 133. Coxs
interest rate swap agreements approximated a derivative asset of
$112.1 million and $53.4 million at December 31,
2002 and 2001, respectively.



| |                           
| | --------------------------
| | Equity Collar Arrangements

Cox had a series of costless equity collar
arrangements to manage its exposure to market price fluctuations
of approximately 15.8 million shares of its Sprint PCS
common stock. Cox also had costless equity collar arrangements
to manage its exposure to market price fluctuations of
17.2 million shares of its AT&T Wireless common stock
and of 22.5 million shares of its AT&T common stock.
Cox had designated and accounted for all of these costless
equity collars as fair value hedges. During the first quarter of
2002, Cox terminated these equity collar arrangements for
aggregate proceeds of $264.4 million and recognized a
pre-tax derivative gain of approximately $268.8 million.
For a further discussion of these transactions, see Note 6.
Investments.



| |                 
| | ----------------
| | Zero-Coupon Debt

In January 2001, Cox issued a series of prepaid
forward contracts to sell up to 19.5 million shares of its
Sprint PCS common stock with an aggregate fair value as of the
respective trade dates of $502.0 million for

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COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

aggregate 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, may be settled in cash or shares of Sprint
PCS common stock. These contracts meet the definition of a
hybrid instrument, as prescribed by SFAS No. 133. These
hybrid instruments are comprised of a zero-coupon debt
instrument, as the host contract, and an embedded derivative,
which derives its value, in part, based on the trading price of
Sprint PCS common stock. Cox has not designated these embedded
derivatives as a hedge of its investment in Sprint PCS common
stock. As a result, changes in the fair value of these embedded
derivatives are recognized in earnings and classified within
gain (loss) on derivative instruments in the Consolidated
Statements of Operations. The aggregate fair value of these
embedded derivatives approximated a derivative asset of
$400.1 million and $40.8 million at December 31,
2002 and 2001, respectively, and have been classified as a
component of the zero-coupon debt instruments. Accordingly, the
carrying value of the zero-coupon debt instruments, net of the
embedded derivative assets, amounted to a net liability of
$41.4 million and $373.5 million at December 31,
2002 and 2001, respectively, and have been classified within
debt in the Consolidated Balance Sheets.



| |                                     
| | ------------------------------------
| | Exchangeable Subordinated Debentures

Cox has three series of exchangeable subordinated
debentures outstanding, referred to as PRIZES, Premium PHONES
and Discount Debentures, as further described in Note 8.
Debt. The exchangeable subordinated debentures meet
the definition of a hybrid instrument, as prescribed by SFAS
No. 133. These hybrid instruments are comprised of an
exchangeable subordinated debt instrument, as the host contract,
and an embedded derivative, which derives, in part, its value
based on the trading price of Sprint PCS common stock, U.S.
Treasury rates and Coxs credit spreads. Cox has not
designated these embedded derivatives as a hedge of its
investment in Sprint PCS common stock. As a result, changes in
the fair value of these embedded derivatives are recognized in
earnings and classified within gain (loss) on derivative
instruments in the Consolidated Statements of Operations. The
aggregate fair value of these embedded derivatives approximated
a derivative obligation of $0.6 million and
$583.7 million at December 31, 2002 and 2001,
respectively, and has been classified as a component of the
corresponding exchangeable subordinated debentures. Accordingly,
the aggregate carrying value of the exchangeable subordinated
debentures, including the embedded derivative obligations,
amounted to $1,296.1 million and $1,829.5 million at
December 31, 2002 and 2001, respectively, and has been
classified within debt in the Consolidated Balance Sheets.



| |                        
| | -----------------------
| | Stock Purchase Warrants

Cox holds warrants to purchase equity securities
of certain publicly-traded and privately-held entities. Warrants
that can be exercised and settled by the delivery of net shares
such that Cox pays no cash upon exercise are deemed freestanding
derivative instruments, as prescribed by SFAS No. 133. Cox
has not designated net share warrants as hedging instruments;
accordingly, changes in the fair value of these warrants are
recognized in earnings and classified within gain (loss) on
derivative instruments in the Consolidated Statements of
Operations. The aggregate fair value of these warrants
approximated a derivative asset of $6.1 million and
$90.5 million at December 31, 2002 and 2001,
respectively, and has been classified as a component of
investments in the Consolidated Balance Sheets.



| |                        
| | -----------------------
| | 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 6. 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
deemed 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 comprehen-

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COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

sive 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, 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.

11.     Fair Value of
Financial Instruments

Cox has estimated the fair value of its financial
instruments as of December 31, 2002 and 2001 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 6.
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 6. Investments.

The fair value of interest rate swaps used for
hedging purposes was approximately $112.1 million and
$53.4 million at December 31, 2002 and 2001,
respectively, and represents the estimated amount that Cox would
receive upon termination of the swap agreements.

Cox did not have any variable rate debt
instruments outstanding at December 31, 2002. Coxs
outstanding commercial paper, RHINOS and floating rate notes and
debentures bear interest at current market rates and, thus,
approximated fair value at December 31, 2001. Cox is
exposed to interest rate volatility with respect to these
variable-rate instruments when they are issued and outstanding.

The estimated fair value of Coxs fixed-rate
notes and debentures, exchangeable subordinated debentures and
FELINE PRIDES at December 31, 2002 and 2001 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 and fair value of the fixed-rate instruments at
December 31, 2002 and 2001 is as follows:

|                                     |  |                       |         |       |  |          |         |       |  |   |         |  |  |   |         | 
|------------------------------------ |  | --------------------- | ------- | ----- |  | -------- | ------- | ----- |  | - | ------- |  |  | - | ------- | 
|                                     |  |                      
|                                     |  | December 31          
|                                     |  |                      
|                                     |  |                       |         |      
|                                     |  | 2002                  |         | 2001 
|                                     |  |                       |         |      
|                                     |  | Carrying              |         | Fair  |  | Carrying |         | Fair 
|                                     |  | Value                 |         | Value |  | Value    |         | Value
|                                     |  |                       |         |       |  |          |         |      
|                                     |  |                      
|                                     |  | (Millions of Dollars)
|Fixed-rate notes and debentures      |  | $                     | 5,978.6 |       |  | $        | 6,386.5 |       |  | $ | 5,280.7 |  |  | $ | 5,258.0 | 
|FELINE PRIDES                        |  |                       |        |       |  |          |        |       |  |   | 652.3   |  |  |   | 717.0   | 
|Exchangeable subordinated debentures |  |                       | 1,296.1 |       |  |          | 1,409.1 |       |  |   | 1,829.5 |  |  |   | 1,762.6 | 

78



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COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

12.     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. Coxs current policy is
to fund the plan in an amount that falls between the minimum
contribution required by ERISA and the maximum tax deductible
contribution.

Total pension expense was $17.0 million,
$17.5 million and $8.8 million for the years ended
December 31, 2002, 2001 and 2000, respectively.

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, 2002 and 2001 are as
follows:

|                                           |                                                   |                        |         |         |   |   |         |         |  
|------------------------------------------ | ------------------------------------------------- | ---------------------- | ------- | ------- | - | - | ------- | ------- | -
|                                           |                                                   |                       
|                                           |                                                   | Year Ended December 31
|                                           |                                                   |                       
|                                           |                                                   | 2002                   |         | 2001   
|                                           |                                                   |                        |         |        
|                                           |                                                   |                       
|                                           |                                                   | (Thousands of Dollars)
|Change in Projected Benefit
    Obligation |                                                   |                        |         |         |   |   |         |        
|                                           | Projected benefit obligation at beginning of year |                        | $       | 179,011 |   |   | $       | 134,594 |  
|                                           | Service cost                                      |                        |         | 20,073  |   |   |         | 19,674  |  
|                                           | Interest cost                                     |                        |         | 13,739  |   |   |         | 12,114  |  
|                                           | Plan amendments                                   |                        |         |        |   |   |         | 1,093   |  
|                                           | Actuarial loss                                    |                        |         | 6,075   |   |   |         | 13,654  |  
|                                           | Benefits paid                                     |                        |         | (2,655  | ) |   |         | (2,118  | )
|                                           |                                                   |                        |         |         |   |   |         |        
|                                           | Projected benefit obligation at end of the year   |                        |         | 216,243 |   |   |         | 179,011 |  
|                                           |                                                   |                        |         |         |   |   |         |        
|Change in Plan Assets                      |                                                   |                        |         |         |   |   |         |        
|                                           | Fair value of plan assets at beginning of year    |                        |         | 158,101 |   |   |         | 150,625 |  
|                                           | Actual return on plan assets                      |                        |         | (7,323  | ) |   |         | (6,510  | )
|                                           | Employer contributions                            |                        |         | 28,448  |   |   |         | 16,104  |  
|                                           | Benefits paid                                     |                        |         | (2,655  | ) |   |         | (2,118  | )
|                                           |                                                   |                        |         |         |   |   |         |        
|                                           | Fair value of plan assets at end of year          |                        |         | 176,571 |   |   |         | 158,101 |  
|                                           |                                                   |                        |         |         |   |   |         |        
|Funded status of plan                      |                                                   |                        | (39,672 | )       |   |   | (20,910 | )      
|Unrecognized actuarial losses              |                                                   |                        | 48,493  |         |   |   | 18,808  |        
|Unrecognized prior service cost            |                                                   |                        | 1,804   |         |   |   | 2,019   |        
|Unrecognized net transition obligation     |                                                   |                        |        |         |   |   | (153    | )      
|                                           |                                                   |                        |         |         |   |   |         |        
|Prepaid (accrued) benefit cost             |                                                   | $                      | 10,625  |         |   | $ | (236    | )      
|                                           |                                                   |                        |         |         |   |   |         |        

79



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##### Table of Contents



COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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
|                                            |                                 |                       
|                                            |                                 | 2002                   |   | 2001    |   | 2000
|                                            |                                 |                        |   |         |   |     
|                                            |                                 |                       
|                                            |                                 | (Thousands of Dollars)
|Components of net periodic benefit
    cost |                                 |                        |   |         |   |      |   |         |   |  |   |        
|                                            | Service cost                    |                        | $ | 20,073  |   |      | $ | 19,674  |   |  | $ | 11,380  |  
|                                            | Interest cost                   |                        |   | 13,739  |   |      |   | 12,114  |   |  |   | 9,407   |  
|                                            | Expected return on plan assets  |                        |   | (16,287 | ) |      |   | (13,671 | ) |  |   | (11,239 | )
|                                            | Prior service cost amortization |                        |   | 215     |   |      |   | 127     |   |  |   | 127     |  
|                                            | Actuarial gain                  |                        |   |        |   |      |   |        |   |  |   | (135    | )
|                                            | Transition amount amortization  |                        |   | (153    | ) |      |   | (239    | ) |  |   | (239    | )
|                                            |                                 |                        |   |         |   |      |   |         |   |  |   |        
|                                            | Net periodic total cost         |                        | $ | 17,587  |   |      | $ | 18,005  |   |  | $ | 9,301   |  
|                                            |                                 |                        |   |         |   |      |   |         |   |  |   |        
|Weighted-average pension assumptions        |                                 |                        |   |         |   |      |   |         |   |  |   |        
|                                            | Discount rate                   |                        |   | 6.75    | % |      |   | 7.25    | % |  |   | 7.50    | %
|                                            | Expected return on plan assets  |                        |   | 9.00    |   |      |   | 9.00    |   |  |   | 9.00    |  
|                                            | Rate of compensation increase   |                        |   | 4.50    |   |      |   | 5.00    |   |  |   | 5.25    |  



| |                          
| | -------------------------
| | Nonqualified Pension Plan

Certain key employees of Cox participate in an
unfunded, nonqualified supplemental pension plan of CEI that has
generally the same benefit payout formula as the pension plan.
Total pension expense recorded by Cox for the nonqualified CEI
plan was $2.8 million, $5.1 million and
$3.1 million for the years ended December 31, 2002,
2001 and 2000, 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
$3.9 million, $3.0 million and $2.6 million for
the years ended December 31, 2002, 2001 and 2000,
respectively. The accumulated post-retirement benefit obligation
(APBO) attributable to Cox employees and retirees was $35.6
million and $24.5 million at December 31, 2002 and
2001, 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, 2002
and 2001. In January 2003, Cox adopted its own
post-retirement medical plan to provide benefits to
substantially all retirees of Cox.

Actuarial assumptions used to determine the APBO
for the post-retirement plan of CEI include a discount rate of
6.75%, 7.25% and 7.50% for the years ended December 31,
2002, 2001 and 2000, respectively, and an expected long-term
rate of return on plan assets of 9.0% for all three years. The
weighted-average annual assumed rate of increase in the per
capita cost of covered health care benefits (i.e., health care
cost trend rate) for retirees is 10.0% in 2003, gradually
decreasing to 5.0% by the year 2008, and remaining level
thereafter. Increasing the assumed health care costs trend rate
by one percentage point would have resulted in an increase in
the CEI plans APBO of approximately 2.4% and an increase
in the aggregate of the service cost and interest cost
components of the net periodic post-retirement benefit cost of
approximately 1.5% for 2002. Decreasing the assumed health care
cost trend by one percentage point would have resulted in a
decrease in the CEI plans APBO of approximately 2.2% and a
decrease in the aggregate of the service cost and interest cost
components of the net periodic post-retirement benefit cost of
approximately 1.4% for 2002.

80



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COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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 $16.2 million, $13.7 million and $11.9 million for
the years ended December 31, 2002, 2001 and 2000,
respectively.

13.     Stock
Compensation Plans

At December 31,2002, Cox had two stock-based
compensation plans for employees, a Long-Term Incentive Plan
(LTIP) and an Employee Stock Purchase Plan (ESPP).



| |                         
| | ------------------------
| | Long-Term Incentive Plan

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.

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
2002, 2001 and 2000: weighted average expected volatilities at
each grant date averaging 27.6%, 35.0% and 30.6%, respectively,
no payment of dividends, expected life of six years and weighted
average risk-free interest rates calculated at each grant date
and averaging 5.0%, 4.9% and 6.7%, respectively.

A summary of the status of Coxs stock
options granted under the LTIP as of December 31, 2002,
2001 and 2000 and changes during the years then ended is
presented below:

|                                                                              |           |        |            |           |   |        |       |           |  |        |           |           |   |   |       |       |  |   |           |           |   |   |       |       | 
|----------------------------------------------------------------------------- | --------- | ------ | ---------- | --------- | - | ------ | ----- | --------- |  | ------ | --------- | --------- | - | - | ----- | ----- |  | - | --------- | --------- | - | - | ----- | ----- | 
|                                                                              |           |        |            |           |   |       
|                                                                              |           | 2002   |            | 2001      |   | 2000  
|                                                                              |           |        |            |           |   |       
|                                                                              |           |        |            | Weighted- |   |        |       | Weighted- |  |        |           | Weighted-
|                                                                              |           |        |            | Average   |   |        |       | Average   |  |        |           | Average  
|                                                                              |           |        |            | Exercise  |   |        |       | Exercise  |  |        |           | Exercise 
|                                                                              |           | Shares |            | Price     |   | Shares |       | Price     |  | Shares |           | Price    
|                                                                              |           |        |            |           |   |        |       |           |  |        |           |          
|Outstanding at beginning of year                                              |           |        | 7,541,036  |           |   | $      | 33.66 |           |  |        | 5,975,792 |           |   | $ | 26.45 |       |  |   | 4,945,831 |           |   | $ | 16.40 |      
|                                                                              | Granted   |        |            | 4,043,053 |   |        |       | 41.23     |  |        |           | 2,654,845 |   |   |       | 46.09 |  |   |           | 1,954,728 |   |   |       | 50.31 | 
|                                                                              | Exercised |        |            | (157,520  | ) |        |       | 17.71     |  |        |           | (742,032  | ) |   |       | 13.43 |  |   |           | (674,156  | ) |   |       | 13.68 | 
|                                                                              | Canceled  |        |            | (565,731  | ) |        |       | 45.51     |  |        |           | (347,569  | ) |   |       | 47.81 |  |   |           | (250,611  | ) |   |       | 48.60 | 
|                                                                              |           |        |            |           |   |        |       |           |  |        |           |           |   |   |       |       |  |   |           |           |   |   |       |      
|Outstanding at end of year                                                    |           |        | 10,860,838 |           |   |        | 36.09 |           |  |        | 7,541,036 |           |   |   | 33.66 |       |  |   | 5,975,792 |           |   |   | 26.45 |      
|                                                                              |           |        |            |           |   |        |       |           |  |        |           |           |   |   |       |       |  |   |           |           |   |   |       |      
|Options exercisable at year-end                                               |           |        | 3,310,409  |           |   | $      | 17.35 |           |  |        | 3,436,856 |           |   | $ | 17.43 |       |  |   | 4,057,265 |           |   | $ | 15.74 |      
|Weighted-average grant date fair value of options
    granted during the year |           | $      | 15.61      |           |   |        |       |           |  | $      | 19.86     |           |   |   |       |       |  | $ | 21.97     |           |   |   |       |      

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COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The following table summarizes information about
stock options outstanding and exercisable at December 31,
2002:

|                |  |                     |            |                     |  |           |           |             |  |             |       |           |  |  |           |  |  |  |           |  |  |   |       | 
|--------------- |  | ------------------- | ---------- | ------------------- |  | --------- | --------- | ----------- |  | ----------- | ----- | --------- |  |  | --------- |  |  |  | --------- |  |  | - | ----- | 
|                |  |                     |            |                    
|                |  | Options Outstanding |            | Options Exercisable
|                |  |                     |            |                    
|                |  |                     |            | Weighted-           |  |           |           |             |  | Weighted-   |       |          
|                |  |                     |            | Average             |  | Weighted- |           |             |  | Average     |       | Weighted-
|                |  |                     |            | Remaining           |  | Average   |           |             |  | Remaining   |       | Average  
|Range of        |  | Number              |            | Contractual         |  | Exercise  |           | Number      |  | Contractual |       | Exercise 
|Exercise Prices |  | Outstanding         |            | Life                |  | Price     |           | Exercisable |  | Life        |       | Price    
|                |  |                     |            |                     |  |           |           |             |  |             |       |          
|$ 8.49  11.31  |  |                     | 1,954,122  |                     |  |           | 3.1 years |             |  | $           | 10.02 |           |  |  | 1,954,122 |  |  |  | 3.1 years |  |  | $ | 10.02 | 
|19.50  27.56   |  |                     | 682,789    |                     |  |           | 5.3       |             |  |             | 20.01 |           |  |  | 647,155   |  |  |  | 5.0       |  |  |   | 19.65 | 
|33.59  39.66   |  |                     | 810,564    |                     |  |           | 6.6       |             |  |             | 34.54 |           |  |  | 615,764   |  |  |  | 6.1       |  |  |   | 34.12 | 
|40.06  43.45   |  |                     | 3,854,764  |                     |  |           | 9.0       |             |  |             | 41.56 |           |  |  | 50,986    |  |  |  | 7.8       |  |  |   | 41.12 | 
|45.31  51.44   |  |                     | 3,558,599  |                     |  |           | 7.6       |             |  |             | 47.93 |           |  |  | 42,382    |  |  |  | 7.6       |  |  |   | 48.11 | 
|                |  |                     |            |                     |  |           |           |             |  |             |       |           |  |  |           |  |  |  |           |  |  |   |       | 
|                |  |                     | 10,860,838 |                     |  |           | 7.1       |             |  | $           | 36.09 |           |  |  | 3,310,409 |  |  |  | 4.2       |  |  | $ | 17.35 | 
|                |  |                     |            |                     |  |           |           |             |  |             |       |           |  |  |           |  |  |  |           |  |  |   |       | 



| |                              
| | -----------------------------
| | Employee Stock Purchase Plans

In April 2000, Cox began administering its third
ESPP (the 2000 ESPP), under which Cox was authorized to issue
purchase rights totaling 2,000,000 shares of Class A common
stock. The 2000 ESPP had four alternate entry dates, two of
which occurred in 2000 and two in 2001. Employees were eligible
to participate in the 2000 ESPP as of the first entry date on
which they were employed and were regularly scheduled to work at
least 20 hours per week and were 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 was 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 shares, 98,833 shares, 41,861 shares, and 17,477 shares
were issued under the 2000 ESPP for the first, second, third and
fourth entry dates, respectively. Employees were allowed to
purchase the shares via payroll deductions through
March 31, 2002 at which time the shares were issued. As of
March 31, 2002, the 2000 ESPP was completed and 558,264
shares were issued to employees. 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.

In July 2002, Cox began administering its fourth
ESPP (the 2002 ESPP), under which Cox is authorized to issue
purchase rights totaling 3,000,000 shares of Class A common
stock. The 2002 ESPP has four alternate entry dates, two of
which occurred in 2002. Employees are eligible to participate in
the 2002 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 2002 ESPP, the
purchase price for each 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 June 30, 2004,
the end of the 2002 ESPP. The initial purchase price was set at
$29.80 and $24.19, for the first and second entry dates,
respectively. Purchase rights totaling 647,155 shares and 33,695
shares were issued in 2002 for the first and second entry dates,
respectively. Employees are allowed to purchase the shares

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COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

via payroll deductions through June 30,
2004, at which time the shares will be purchased. During 2002,
263 shares were issued under the Plan due to cancellation of
employees participation or termination of employment. The
weighted average fair value of each purchase right granted in
2002 was $7.44 and $8.26 for the first and second entry dates,
respectively. The fair value of the employees purchase
rights granted in 2002 was determined using the Black-Scholes
model with the following assumptions for the first and second
entry dates: expected volatility of 28.76% and 30.95%,
respectively, no payment of dividends, expected life of
2.04 years and 1.54 years, respectively, and risk-free
interest rate of 2.83% and 1.60%, respectively.

14.     Shareholders
Equity

Cox is authorized to issue 10,000,000 shares of
convertible preferred stock, 671,000,000 shares of Class A
common stock and 62,000,000 shares of Class C common stock.



| |                            
| | ---------------------------
| | 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 conversion formula specified in the agreement, 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 issued
the Series A convertible preferred stock in October 1998 in
conjunction with its acquisition of a cable system located in
Las Vegas, Nevada. Cox expects to account for any 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.

On August 16, 2002, Cox issued approximately
18.7 million shares of Cox Class A common stock to
holders of its Income PRIDES and Growth PRIDES in settlement of
such holders underlying obligation to purchase Cox
Class A common stock. See Note 9. Cox-Obligated
Capital and Preferred Securities of Subsidiary Trusts for
more information.

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COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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, 2002, 2001 and
2000:

|                                                                                         |                                                                    |                                      |          |       |   |      |         |       |  |   |           |       | 
|---------------------------------------------------------------------------------------- | ------------------------------------------------------------------ | ------------------------------------ | -------- | ----- | - | ---- | ------- | ----- |  | - | --------- | ----- | 
|                                                                                         |                                                                    |                                     
|                                                                                         |                                                                    | Year Ended December 31              
|                                                                                         |                                                                    |                                     
|                                                                                         |                                                                    | 2002                                 |          | 2001  |   | 2000
|                                                                                         |                                                                    |                                      |          |       |   |     
|                                                                                         |                                                                    |                                     
|                                                                                         |                                                                    | (Thousands of Dollars, excluding per
|                                                                                         |                                                                    | share data)                         
|Income (loss) before cumulative effect of
    change in accounting principle(A)          |                                                                    | $                                    | (274,039 | )     |   | $    | 37,911  |       |  | $ | 1,925,525 |      
|                                                                                         |                                                                    |                                      |          |       |   |      |         |       |  |   |           |      
|Basic weighted average shares outstanding(B)                                             |                                                                    |                                      | 608,293  |       |   |      | 600,366 |       |  |   | 601,952   |      
|Effect of dilutive securities:                                                           |                                                                    |                                      |          |       |   |      |         |       |  |   |           |      
|                                                                                         | Employee stock options                                             |                                      |          |      |   |      |         | 643   |  |   |           | 1,228 | 
|                                                                                         | Employee stock purchase plan                                       |                                      |          |      |   |      |         | 596   |  |   |           | 17    | 
|                                                                                         | Convertible preferred stock                                        |                                      |          |      |   |      |         | 7,138 |  |   |           | 4,997 | 
|                                                                                         | Forward purchase contracts forming a part of the
    FELINE PRIDES |                                      |          |      |   |      |         | 74    |  |   |           | 355   | 
|                                                                                         |                                                                    |                                      |          |       |   |      |         |       |  |   |           |      
|Diluted weighted average shares outstanding (C)                                          |                                                                    |                                      | 608,293  |       |   |      | 608,817 |       |  |   | 608,549   |      
|                                                                                         |                                                                    |                                      |          |       |   |      |         |       |  |   |           |      
|Earnings (loss) per share before cumulative
    effect of change in accounting principle |                                                                    |                                      |          |       |   |      |         |       |  |   |           |      
|                                                                                         | Basic earnings (loss) per share(A/B)                               |                                      | $        | (0.45 | ) |      | $       | 0.06  |  |   | $         | 3.20  | 
|                                                                                         |                                                                    |                                      |          |       |   |      |         |       |  |   |           |      
|                                                                                         | Diluted earnings (loss) per share(A/C)                             |                                      | $        | (0.45 | ) |      | $       | 0.06  |  |   | $         | 3.16  | 
|                                                                                         |                                                                    |                                      |          |       |   |      |         |       |  |   |           |      

For the year ended December 31, 2002,
27.9 million Class A common shares related to employee
stock-based compensation plans, convertible senior notes and
convertible preferred stock were not included in the computation
of diluted EPS, because such effects would have been
antidilutive for the period.

For the years ended December 31, 2001 and
2000, 17.6 million and 10.7 million Class A common
shares, respectively, related to convertible senior notes and
RHINOS were not included in the computation of diluted EPS,
because such effects would have been antidilutive for the
periods.

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
2002 and 2001, Cox did not repurchase any shares of its
Class A common stock under the stock repurchase program.

Other

At December 31, 2002 and 2001, CEI owned
approximately 63.4% and 65.5%, respectively, of the outstanding
shares of Cox common stock and held 73.9% and 75.6%,
respectively, of the voting power of Cox.

15.     Transactions
with Affiliated Companies

Cox receives certain services from, and has
entered into certain transactions with, CEI. Costs of the
services that are allocated to Cox are based on actual direct
costs incurred or on CEIs estimate of expenses relative to
the services provided to other subsidiaries of CEI. Cox believes
that these allocations were made on a reasonable basis, and that
receiving these services from CEI creates cost efficiencies;
however, there has

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COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

been no 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.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Cox receives day-to-day cash management services
    from CEI, with settlements of outstanding balances between Cox
    and CEI occurring periodically at market interest rates. The
    amounts due to CEI are generally due on demand and represent the
    balance of the intercompany transactions. Outstanding amounts
    due from CEI bear interest equal to CEIs current
    commercial paper borrowing rate and outstanding amounts due to
    CEI bear interest at 50 basis points above CEIs
    current commercial borrowing rate as payment for the services
    provided. Amounts due from CEI to Cox were approximately
    $21.1 million and $13.2 million at December 31,
    2002 and 2001, respectively, and the interest rate was 1.8% and
    3.0% at December 31, 2002 and 2001, respectively. Included
    in amounts due from CEI are the following transactions:

|                                             |                                                          |                        |         |          |  
|-------------------------------------------- | -------------------------------------------------------- | ---------------------- | ------- | -------- | -
|                                             |                                                          | (Thousands of Dollars)
|                                             |                                                          |                       
|Intercompany due from CEI, December 31, 1999 |                                                          | $                      | 114,821 |         
|                                             | Cash transferred from CEI                                |                        |         | (16,039  | )
|                                             | Net operating expense allocations and
    reimbursements |                        |         | (92,974  | )
|                                             |                                                          |                        |         |         
|Intercompany due from CEI, December 31, 2000 |                                                          |                        | 5,808   |         
|                                             | Cash transferred to CEI                                  |                        |         | 151,260  |  
|                                             | Net operating expense allocations and
    reimbursements |                        |         | (143,823 | )
|                                             |                                                          |                        |         |         
|Intercompany due from CEI, December 31, 2001 |                                                          |                        | 13,245  |         
|                                             | Cash transferred to CEI                                  |                        |         | 92,061   |  
|                                             | Net operating expense allocations and
    reimbursements |                        |         | (84,197  | )
|                                             |                                                          |                        |         |         
|Intercompany due from CEI, December 31, 2002 |                                                          | $                      | 21,109  |         
|                                             |                                                          |                        |         |         



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Cox receives certain management services from CEI
    including legal, corporate secretarial, tax, internal audit,
    risk management, employee benefit (including pension plan)
    administration, fleet and other support services. Cox was
    allocated expenses for the year ended December 31, 2002,
    2001 and 2000 of approximately $6.2 million,
    $5.3 million and $3.9 million, respectively, related
    to these services.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | In connection with these management services, Cox
    reimburses CEI for payments made to third-party vendors for
    certain goods and services provided to Cox under arrangements
    made by CEI on behalf of CEI and its affiliates, including Cox.
    Cox believes such arrangements result in Cox receiving such
    goods and services at more attractive pricing than Cox would be
    able to secure separately. Such reimbursed expenditures include
    insurance premiums for coverage through the CEI insurance
    program, which provides coverage for all of its affiliates,
    including Cox. Rather than self-insuring these risks, CEI
    purchases insurance for a fixed-premium cost from several
    insurance companies, including an insurance company indirectly
    owned by descendants of Governor James M. Cox, the founder of
    CEI, including James C. Kennedy, Chairman of Coxs
    Board of Directors, and his sister, who each own 25%. This
    insurance company is an insurer and reinsurer on various
    insurance policies purchased by CEI, and it employs an
    independent consulting actuary to calculate the annual premiums
    for general/auto liability and workers compensation insurance
    based on Coxs loss experience, consistent with insurance
    industry practice. Coxs portion of these insurance costs
    was approximately $27.2 million, $23.7 million and
    $19.7 million for 2002, 2001 and 2000, respectively.
|
| |  | Coxs employees participate in certain CEI
    employee benefit plans, and Cox made payments to CEI in 2002,
    2001 and 2000 for the costs incurred by reason of such
    participation, including self-insured employee medical insurance
    costs of approximately $77.5 million, $48.2 million
    and $28.0 million, respectively; retiree medical payments
    of approximately $3.9 million, $3.0 million and
    $2.6 million,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

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COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | respectively; and executive pension plan payments
    of approximately $2.8 million, $5.1 million and
    $3.1 million, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Cox and CEI share resources relating to aircraft
    owned by each company. Depending on need, each occasionally uses
    aircraft owned by the other, paying a cost-based hourly rate.
    CEI also operates and maintains two airplanes owned by Cox. Cox
    pays CEI on a quarterly basis for fixed and variable operations
    and maintenance costs relating to these two airplanes. During
    2002, 2001 and 2000 Cox paid approximately $0.7 million,
    $0.9 million and $0.8 million, respectively, for use
    of CEIs aircraft and maintenance of Coxs aircraft by
    CEI, net of aircraft costs paid by CEI to Cox for use of
    Coxs aircraft.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | Cox pays rent and certain other occupancy costs
    to CEI for its corporate headquarters building. CEI holds the
    long-term lease of the Cox headquarters building and prior to
    2002, Cox and CEI and its other affiliates shared occupancy of
    the headquarters building. During 2002, CEI and its other
    affiliates moved to a new facility and Cox purchased from CEI
    business equipment located in that building at its depreciated
    net book value of approximately $7.2 million, which is
    believed to approximate fair value. Cox is now the sole occupant
    of its headquarters building. Related rent and occupancy expense
    is allocated based on occupied space and for the year ended
    December 31, 2002, 2001 and 2000 was approximately
    $7.4 million, $7.2 million and $6.1 million,
    respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | From 1997 through 2002, Cox entered into 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, or
    City Sites, in the markets where Cox operates cable
    television systems featuring high-speed Internet access. Cox
    contributed approximately $41.1 million in the aggregate to
    the joint ventures for the period from inception through
    May 31, 2002 to fund its share of operating costs. During
    2002, Cox and Cox Interactive Media agreed to terminate the
    relationship and entered into a transition services agreement
    under which Cox paid Cox Interactive Media approximately
    $7.0 million to continue to operate Coxs city sites
    during a transition period. The joint venture entities were
    dissolved as of December 31, 2002, and pursuant to a
    separate agreement dated December 31, 2002, Cox purchased
    certain assets used in the operation of the City Sites for
    insignificant cash consideration. Cox will use those assets to
    develop the City Sites as part of Cox High Speed Internet
    service. Cox Interactive Media agreed to reimburse Cox
    approximately $0.2 million for certain expenses incurred in
    connection with obtaining certain software licenses related to
    the City Sites.
|
| |  | In connection with CEIs sale of shares of
    Cox Class A common stock to two private investors in 2001,
    Cox entered into agreements providing the two private investors
    with certain demand and piggyback registration rights. CEI has
    agreed to pay all fees and expenses associated with Coxs
    performance under these registration rights agreements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | In September 2002, Cox and CEI amended their tax
    allocation agreement to provide that if one of CEI or Cox has
    overpaid its taxes and the other has underpaid, the underpaid
    taxpayer may apply the overpayment to its taxes if such credit
    is permitted by the respective tax authority. The underpaid
    party will be obligated to immediately repay the borrowed amount
    to the overpaid party, to pay interest from the effective date
    of the credit until repayment, and to bear any other expenses
    incurred. The underpaid party will indemnify the overpaid party
    if subsequent tax adjustments cause any detriment to the
    overpaid party as a result of use of the credit by the underpaid
    party. For the tax year 2001, Cox overpaid, and CEI underpaid,
    its estimated federal income taxes. Pursuant to the amended
    agreement, on September 3, 2002, $20.0 million of
    Coxs overpayment of its 2001 federal income taxes was
    applied to CEI 2001 federal income taxes, and CEI
    contemporaneously paid Cox $20.0 million, plus interest, in
    cash.                                                                                                                                                                                                                                                                                                               

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COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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, 2002, 2001 and 2000 were approximately
$78.8 million, $69.7 million and $64.0 million,
respectively.

16.     Other
Comprehensive Loss

The following represents the components of other
comprehensive loss and related tax effects for the years ended
December 31, 2002, 2001 and 2000:

|                                                                                                                                                                                         |  |                        |          |      |  |      |          |   |  |   |            |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | -------- | ---- |  | ---- | -------- | - |  | - | ---------- | -
|                                                                                                                                                                                         |  |                       
|                                                                                                                                                                                         |  | Year Ended December 31
|                                                                                                                                                                                         |  |                       
|                                                                                                                                                                                         |  | 2002                   |          | 2001 |  | 2000
|                                                                                                                                                                                         |  |                        |          |      |  |     
|                                                                                                                                                                                         |  |                       
|                                                                                                                                                                                         |  | (Thousands of Dollars)
|Unrealized gains (losses), net of taxes of
    $611,326, $(81,801) and $1,660,910 in 2002, 2001 and 2000,
    respectively                                                               |  | $                      | (976,533 | )    |  | $    | 130,669  |   |  | $ | (2,661,045 | )
|Recognition of previously unrealized losses
    (gains) on available-for-sale securities, net of taxes of
    $(364,880), $157,372 and $882,856 in 2002, 2001 and 2000,
    respectively |  |                        | 582,863  |      |  |      | (251,390 | ) |  |   | (1,410,276 | )
|Cumulative effect of change in accounting
    principle, net of tax of $121,422 in 2001                                                                                                  |  |                        |         |      |  |      | (193,960 | ) |  |   |           |  
|                                                                                                                                                                                         |  |                        |          |      |  |      |          |   |  |   |            |  
|Total other comprehensive loss                                                                                                                                                           |  | $                      | (393,670 | )    |  | $    | (314,681 | ) |  | $ | (4,071,321 | )
|                                                                                                                                                                                         |  |                        |          |      |  |      |          |   |  |   |            |  

Components of accumulated other comprehensive
income consisted of net unrealized gain on securities of
$129.2 million ($79.5 million, net of tax) and
$766.7 million ($473.1 million, net of tax) at
December 31, 2002 and 2001, respectively.

17.     Supplemental
Financial Statement Information

Supplemental Consolidated Balance Sheet
Information

|                                    |                              |                        |            |            |  |   |            |            | 
|----------------------------------- | ---------------------------- | ---------------------- | ---------- | ---------- |  | - | ---------- | ---------- | 
|                                    |                              |                       
|                                    |                              | December 31           
|                                    |                              |                       
|                                    |                              | 2002                   |            | 2001      
|                                    |                              |                        |            |           
|                                    |                              |                       
|                                    |                              | (Thousands of Dollars)
|Plant and equipment                 |                              |                        |            |            |  |   |            |           
|Land                                |                              | $                      | 101,056    |            |  | $ | 96,818     |           
|Buildings and building improvements |                              |                        | 519,879    |            |  |   | 468,357    |           
|Transmission and distribution plant |                              |                        | 9,853,102  |            |  |   | 8,336,686  |           
|Other equipment                     |                              |                        | 1,193,286  |            |  |   | 963,121    |           
|Construction in progress            |                              |                        | 260,545    |            |  |   | 463,550    |           
|                                    |                              |                        |            |            |  |   |            |           
|                                    | Plant and equipment, at cost |                        |            | 11,927,868 |  |   |            | 10,328,532 | 
|Less accumulated depreciation       |                              |                        | (4,134,690 | )          |  |   | (3,200,624 | )         
|                                    |                              |                        |            |            |  |   |            |           
|                                    | Net plant and equipment      |                        | $          | 7,793,178  |  |   | $          | 7,127,908  | 
|                                    |                              |                        |            |            |  |   |            |           

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COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

|                          |                                 |                        |         |         |  |   |         |         | 
|------------------------- | ------------------------------- | ---------------------- | ------- | ------- |  | - | ------- | ------- | 
|                          |                                 |                       
|                          |                                 | December 31           
|                          |                                 |                       
|                          |                                 | 2002                   |         | 2001   
|                          |                                 |                        |         |        
|                          |                                 |                       
|                          |                                 | (Thousands of Dollars)
|Other current assets      |                                 |                        |         |         |  |   |         |        
|Inventory                 |                                 | $                      | 96,967  |         |  | $ | 154,736 |        
|Income tax receivable     |                                 |                        | 119,754 |         |  |   |        |        
|Prepaid assets            |                                 |                        | 41,522  |         |  |   | 51,034  |        
|Other                     |                                 |                        | 9,098   |         |  |   | 5,690   |        
|                          |                                 |                        |         |         |  |   |         |        
|                          | Total other current assets      |                        | $       | 267,341 |  |   | $       | 211,460 | 
|                          |                                 |                        |         |         |  |   |         |        
|Other current liabilities |                                 |                        |         |         |  |   |         |        
|Deposits and advances     |                                 | $                      | 80,816  |         |  | $ | 89,270  |        
|Income tax payable        |                                 |                        |        |         |  |   | 62,393  |        
|Other                     |                                 |                        | 135,419 |         |  |   | 146,745 |        
|                          |                                 |                        |         |         |  |   |         |        
|                          | Total other current liabilities |                        | $       | 216,235 |  |   | $       | 298,408 | 
|                          |                                 |                        |         |         |  |   |         |        



| |                                                                           
| | --------------------------------------------------------------------------
| | Supplemental Disclosure of Non-cash Investing
    and Financing Activities

|                                  |                                          |                        |   |          |   |      |   |           |  |  |   |           | 
|--------------------------------- | ---------------------------------------- | ---------------------- | - | -------- | - | ---- | - | --------- |  |  | - | --------- | 
|                                  |                                          |                       
|                                  |                                          | Year Ended December 31
|                                  |                                          |                       
|                                  |                                          | 2002                   |   | 2001     |   | 2000
|                                  |                                          |                        |   |          |   |     
|                                  |                                          |                       
|                                  |                                          | (Thousands of Dollars)
|Significant non-cash transactions |                                          |                        |   |          |   |      |   |           |  |  |   |          
|                                  | Settlement of FELINE                     |                        |   |          |   |      |   |           |  |  |   |           | 
|                                  | PRIDES                                   |                        | $ | 649,999  |   |      | $ |          |  |  | $ |          | 
|                                  | Deemed satisfaction of Excite@Home right |                        |   |         |   |      |   | 1,282,789 |  |  |   |          | 
|                                  | AT&T cable system exchange               |                        |   |         |   |      |   |          |  |  |   | 2,658,233 | 
|                                  | Receipt of Excite@Home right             |                        |   |         |   |      |   |          |  |  |   | 990,456   | 
|Additional cash flow information  |                                          |                        |   |          |   |      |   |           |  |  |   |          
|                                  | Cash paid for interest                   |                        | $ | 409,396  |   |      | $ | 476,355   |  |  | $ | 507,196   | 
|                                  | Cash paid (received) for income taxes    |                        |   | (201,011 | ) |      |   | 79,942    |  |  |   | 663,639   | 

18.     Commitments
and Contingencies

Cox leases land, office facilities and various
items of equipment under noncancellable operating leases. Rental
expense under operating leases amounted to $21.8 million,
$21.1 million and $17.8 million in 2002, 2001 and
2000, respectively. Future minimum lease payments for each of
the five years subsequent to December 31, 2002 are
$20.9 million, $16.6 million, $11.4 million,
$8.4 million and $5.4 million, respectively, and
$7.1 million thereafter for all noncancellable operating
leases.

At December 31, 2002, Cox had outstanding
purchase commitments totaling approximately $106.7 million
for additions to plant and equipment and $291.2 million to
rebuild certain existing cable systems. In addition, Cox had
unused letters of credit outstanding totaling $4.1 million
at December 31, 2002.

In connection with certain of Coxs recent
acquisitions and other transactions, Cox has provided certain
indemnities to the respective counterparties with respect to
future claims that may arise from state or federal taxing
authorities. The nature and terms of these indemnities vary by
transaction and generally remain in force through the requisite
statutory review periods. In addition, the events or
circumstances that would require Cox to perform under these
indemnities are transaction and circumstance specific. As of
December 31, 2002, Cox

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COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

believes the likelihood that it will be required
to perform under these indemnities is remote and that the
maximum potential future payments that Cox could be required to
make under these indemnifications are not determinable at this
time, as any future payments would be dependent on the type and
extent of the related claims, and all available defenses, which
are not reasonably estimable. Cox has not historically incurred
any material costs related to performance under these types of
indemnities.

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

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

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

In addition, on September 8, 2002, plaintiff
Daniel David, on behalf of himself and all others similarly
situated, filed a nearly identical case against Fax.com, Cox
Business Services and others in the Superior Court of
California, Alameda County. The complaint asserts various causes
of action including violation of the TCPA, trespass to chattels,
violation of Section 17-200 of the California Business and
Professions Code and unjust enrichment. The suit seeks damages
and injunctive relief similar to that sought in the related
federal suits. This action has been stayed until July 8,
2003 pending FCC action on its on-going TCPA rule-making. Cox
Business Services intends to defend this action vigorously. The
outcome cannot be predicted at this time.

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COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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

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

On April 26, 2002, Frieda and Michael Eksler
filed an amended complaint naming Cox as a defendant in a
putative class action lawsuit in the United States District
Court for the Southern District of New York against AT&T
Corp. and certain former officers of Excite@Home, among others.
Cox was served on May 10, 2002. This case has been
consolidated with a related case captioned Semen Leykin v.
AT&T Corp., et al., and another related case, and an amended
complaint in that case, naming Cox as a defendant, was filed and
served on November 7, 2002. The putative class includes
persons who purchased shares of Excite@Home common stock between
the time period March 28, 2000 and September 28, 2001. The
sole count against Cox asserts a claim against Cox as a
controlling person of Excite@Home under
Section 20(a) of the Securities Exchange Act for violations
of Section 10(b) of the Securities Exchange Act and
Rule 10b-5 thereunder. The suit seeks from Cox unspecified
monetary damages, statutory compensation and other relief. In
addition, a claim against Coxs former Executive Vice
President, David Woodrow, who formerly served on board of
directors, is asserted for breach of purported fiduciary duties.
The suit seeks from Woodrow unspecified monetary and punitive
damages. On February 11, 2003, Cox and Woodrow filed a
dispositive motion to dismiss on various grounds, including
failure to state a claim. Cox intends to defend this action
vigorously. The outcome cannot be predicted at this time.

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COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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

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

|                                          |  |                                                 |         |         |  |         |         |         |  |   |         |   |  |   |         | 
|----------------------------------------- |  | ----------------------------------------------- | ------- | ------- |  | ------- | ------- | ------- |  | - | ------- | - |  | - | ------- | 
|                                          |  |                                                
|                                          |  | 2002                                           
|                                          |  |                                                
|                                          |  | 1st                                             |         | 2nd     |  | 3rd     |         | 4th    
|                                          |  | Quarter                                         |         | Quarter |  | Quarter |         | Quarter
|                                          |  |                                                 |         |         |  |         |         |        
|                                          |  |                                                
|                                          |  | (Millions of dollars, excluding per share data)
|Revenues                                  |  | $                                               | 1,178.0 |         |  | $       | 1,244.6 |         |  | $ | 1,275.0 |   |  | $ | 1,340.9 | 
|Cost of services (excluding depreciation) |  |                                                 | 507.4   |         |  |         | 524.0   |         |  |   | 540.9   |   |  |   | 558.7   | 
|Selling, general and administrative       |  |                                                 | 278.5   |         |  |         | 278.8   |         |  |   | 280.7   |   |  |   | 290.4   | 
|Depreciation and amortization             |  |                                                 | 325.8   |         |  |         | 337.7   |         |  |   | 343.0   |   |  |   | 351.3   | 
|Loss on sale of cable system              |  |                                                 |        |         |  |         | 3.9     |         |  |   |        |   |  |   |        | 
|                                          |  |                                                 |         |         |  |         |         |         |  |   |         |   |  |   |         | 
|Operating income                          |  | $                                               | 66.3    |         |  | $       | 100.2   |         |  | $ | 110.4   |   |  | $ | 140.5   | 
|                                          |  |                                                 |         |         |  |         |         |         |  |   |         |   |  |   |         | 
|Net income (loss)                         |  | $                                               | 135.6   |         |  | $       | (516.2  | )       |  | $ | (73.1   | ) |  | $ | 179.6   | 
|                                          |  |                                                 |         |         |  |         |         |         |  |   |         |   |  |   |         | 
|Basic net income (loss) per share         |  | $                                               | 0.23    |         |  | $       | (0.86   | )       |  | $ | (0.12   | ) |  | $ | 0.29    | 
|                                          |  |                                                 |         |         |  |         |         |         |  |   |         |   |  |   |         | 
|Diluted net income (loss) per share       |  | $                                               | 0.22    |         |  | $       | (0.86   | )       |  | $ | (0.12   | ) |  | $ | 0.28    | 
|                                          |  |                                                 |         |         |  |         |         |         |  |   |         |   |  |   |         | 

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COX COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

|                                                                             |                                                                              |                                                 |       |         |   |         |         |         |  |   |         |      |  |   |         |       |  
|---------------------------------------------------------------------------- | ---------------------------------------------------------------------------- | ----------------------------------------------- | ----- | ------- | - | ------- | ------- | ------- |  | - | ------- | ---- |  | - | ------- | ----- | -
|                                                                             |                                                                              |                                                
|                                                                             |                                                                              | 2001                                           
|                                                                             |                                                                              |                                                
|                                                                             |                                                                              | 1st                                             |       | 2nd     |   | 3rd     |         | 4th    
|                                                                             |                                                                              | Quarter                                         |       | Quarter |   | Quarter |         | Quarter
|                                                                             |                                                                              |                                                 |       |         |   |         |         |        
|                                                                             |                                                                              |                                                
|                                                                             |                                                                              | (Millions of Dollars, excluding per share data)
|Revenues                                                                     |                                                                              | $                                               | 991.4 |         |   | $       | 1,048.0 |         |  | $ | 1,079.5 |      |  | $ | 1,134.2 |      
|Cost of services (excluding depreciation)(a)                                 |                                                                              |                                                 | 411.0 |         |   |         | 427.8   |         |  |   | 436.8   |      |  |   | 607.3   |      
|Selling, general and administrative                                          |                                                                              |                                                 | 222.3 |         |   |         | 238.0   |         |  |   | 246.4   |      |  |   | 242.4   |      
|Depreciation and amortization                                                |                                                                              |                                                 | 352.2 |         |   |         | 355.8   |         |  |   | 368.7   |      |  |   | 462.6   |      
|                                                                             |                                                                              |                                                 |       |         |   |         |         |         |  |   |         |      |  |   |         |      
|Operating income (loss)                                                      |                                                                              | $                                               | 5.9   |         |   | $       | 26.4    |         |  | $ | 27.6    |      |  | $ | (178.1  | )    
|Income (loss) before cumulative effect of
    change in accounting principle |                                                                              | $                                               | (30.5 | )       |   | $       | 30.7    |         |  | $ | 143.0   |      |  | $ | (105.2  | )    
|Cumulative effect of change in accounting
    principle, net of tax          |                                                                              |                                                 | 717.1 |         |   |         |        |         |  |   |        |      |  |   |        |      
|                                                                             |                                                                              |                                                 |       |         |   |         |         |         |  |   |         |      |  |   |         |      
|Net income (loss)                                                            |                                                                              | $                                               | 686.6 |         |   | $       | 30.7    |         |  | $ | 143.0   |      |  | $ | (105.2  | )    
|                                                                             |                                                                              |                                                 |       |         |   |         |         |         |  |   |         |      |  |   |         |      
|Basic net income (loss) per share                                            |                                                                              |                                                 |       |         |   |         |         |         |  |   |         |      |  |   |         |      
|                                                                             | Income (loss) before cumulative effect of change
    in accounting principle |                                                 | $     | (0.05   | ) |         | $       | 0.05    |  |   | $       | 0.24 |  |   | $       | (0.18 | )
|                                                                             | Cumulative effect of change in accounting
    principle, net of tax          |                                                 |       | 1.19    |   |         |         |        |  |   |         |     |  |   |         |      |  
|                                                                             |                                                                              |                                                 |       |         |   |         |         |         |  |   |         |      |  |   |         |      
|Basic net income (loss) per share                                            |                                                                              | $                                               | 1.14  |         |   | $       | 0.05    |         |  | $ | 0.24    |      |  | $ | (0.18   | )    
|                                                                             |                                                                              |                                                 |       |         |   |         |         |         |  |   |         |      |  |   |         |      
|Diluted net income (loss) per share                                          |                                                                              |                                                 |       |         |   |         |         |         |  |   |         |      |  |   |         |      
|                                                                             | Income (loss) before cumulative effect of change
    in accounting principle |                                                 | $     | (0.05   | ) |         | $       | 0.05    |  |   | $       | 0.23 |  |   | $       | (0.18 | )
|                                                                             | Cumulative effect of change in accounting
    principle                      |                                                 |       | 1.19    |   |         |         |        |  |   |         |     |  |   |         |      |  
|                                                                             |                                                                              |                                                 |       |         |   |         |         |         |  |   |         |      |  |   |         |      
|Diluted net income (loss) per share                                          |                                                                              | $                                               | 1.14  |         |   | $       | 0.05    |         |  | $ | 0.23    |      |  | $ | (0.18   | )    
|                                                                             |                                                                              |                                                 |       |         |   |         |         |         |  |   |         |      |  |   |         |      



---



|    |                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Cost of services increased in the fourth quarter
    of 2001 due to a one-time non-recurring net charge of
    $150.2 million associated with the continuation of
    Excite@Home high-speed Internet service.

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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, 2002 and 2001, and the related consolidated
statements of operations, shareholders equity, and cash
flows for each of the three years in the period ended
December 31, 2002. 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,
2002 and 2001, and the consolidated results of its operations
and its cash flows for each of the three years in the period
ended December 31, 2002, in conformity with accounting
principles generally accepted in the United States of America.

As discussed in Note 5 to the consolidated
financial statements, on January 1, 2002 Cox changed its
method of accounting for goodwill and other intangible assets to
conform to Statement of Financial Accounting Standards
(SFAS) No. 142. In addition, as discussed in
Note 10 to the consolidated financial statements, effective
January 1, 2001, Cox changed its method of accounting for
derivative instruments and hedging activities to conform to SFAS
No. 133, as amended.

DELOITTE & TOUCHE LLP

Atlanta, Georgia

March 31, 2003


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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
2003 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
2003 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
2003 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
2003 Annual Meeting of Stockholders.




ITEM 14.     DISCLOSURE
CONTROLS AND PROCEDURES

The Chief Executive Officer and the Chief
Financial Officer of Cox (its principal executive officer and
principal financial officer, respectively) have concluded, based
on their evaluation as of a date within 90 days prior to
the date of the filing of this Form 10-K, that Coxs
disclosure controls and procedures are effective to ensure that
information required to be disclosed by Cox in the reports filed
or submitted by it under the Securities Exchange Act of 1934, as
amended, is recorded, processed, summarized and reported within
the time periods specified in the SECs rules and forms;
and include controls and procedures designed to ensure that
information required to be disclosed by Cox in such reports is
accumulated and communicated to Coxs management, including
the Chief Executive Officer and the Chief Financial Officer, as
appropriate, to allow timely decisions regarding required
disclosure.

There were no significant changes in Coxs
internal controls or in other factors that could significantly
affect these controls subsequent to the date of such evaluation.

Coxs management, including the Chief
Executive Officer and Chief Financial Officer, do not expect
that Coxs disclosure controls and procedures or Coxs
internal controls will prevent all error and all fraud. A
control system, no matter how well conceived and operated,
provides reasonable assurance that the objectives of the control
system are met. The design of a control system reflects resource
constraints; the benefits of controls must be considered
relative to their costs. Because there are inherent limitations
in all control systems, no evaluation of controls can provide
absolute assurance that all control issues and instances of
fraud, if any, within the company have been or will be detected.
These inherent limitations include the realities that judgements
in decision-making can be faulty and that breakdowns occur
because of simple error or mistake. Controls can be circumvented
by the individual acts of some persons, by collusion of two or
more people, or by management override of the control. The
design of any system of controls is based in part upon certain
assumptions about the likelihood of future events. There can be
no assurance that any design will succeed in achieving its
stated goals under all future conditions; over time, controls
may become inadequate because of changes in conditions or
deterioration in the degree of compliance with the policies or
procedures. Because of

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the inherent limitations in a cost-effective
control system, misstatements due to error or fraud may occur
and not be detected.





PART IV






|         |                                                                    
|-------- | -------------------------------------------------------------------
|ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
    REPORTS ON FORM 8-K

(a) Documents incorporated by reference or
filed with this Report



| |                                                                                          
| | -----------------------------------------------------------------------------------------
| | (1) Listed below are the financial
    statements which are filed as part of this report:



| |   |                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------
| |  | Consolidated Balance Sheets at December 31,
    2002 and 2001;                                           
|
| |  | Consolidated Statements of Operations for the
    Years Ended December 31, 2002, 2001 and 2000;          
|
| |  | Consolidated Statements of Shareholders
    Equity for the Years Ended December 31, 2002, 2001 and 2000;
|
| |  | Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2002, 2001 and 2000; and      
|
| |  | Notes to Consolidated Financial Statements.                                                              



| |                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) No financial statement schedules are
    required to be filed by Items 8 and 14(d) of this report because
    they are not required or are not applicable, or the required
    information is set forth in the applicable financial statements
    or notes thereto.
|
| | (3) Exhibits required to be filed by
    Item 601 of Regulation S-K:                                                                                                                                                                                                    

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 |  |  |            |  | Certificate of Incorporation of Cox
    Communications, Inc., as amended (incorporated by reference to
    exhibit 3.1 to Coxs Quarterly Report on Form 10-Q,
    filed 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 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, relating to the debt securities (incorporated by
    reference to exhibit 4.1 to Coxs Registration Statement on
    Form S-1, file no. 33-99116, filed on November 8,
    1995).                              
|        | 4.2 |  |  |            |  | 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 |  |  |            |  | 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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|        |      |  |  |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|------- | ---- |  |  | ----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |  |  |            
|Number  |      |  |  | Description
|        |      |  |  |            
|        | 4.4  |  |  |            |  | 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 Coxs Annual Report on Form 10-K, filed
    on March 23, 2000).                                                                                                                                                                                                                                                                                                      
|        | 4.5  |  |  |            |  | Third Supplemental Indenture, dated as of
    April 19, 2000, by and between Cox Communications, Inc. and
    The Bank of New York, as Trustee (incorporated by reference to
    exhibit 4.1 to Coxs Current Report on Form 8-K, filed
    on April 24, 2000).                                                                                                                                                                                                                                                                                                
|        | 4.6  |  |  |            |  | 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 on March 19, 2001).                                                                                                                                                                                                                                                                                                  
|        | 4.7  |  |  |            |  | Fifth Supplemental Indenture, dated as of
    August 28, 2002, between Cox Communications, Inc. and The
    Bank of New York, as Trustee (incorporated by reference to
    exhibit 4.1 to Coxs Current Report on Form 8-K, dated
    August 16, 2002 and filed on September 3, 2002).                                                                                                                                                                                                                                                                         
|        | 4.8  |  |  |            |  | Indenture, dated as of January 30, 1998,
    between TCA Cable TV, Inc. and Chase Bank of Texas, National
    Association, as Trustee (incorporated by reference to exhibit
    4(a) to TCAs Registration Statement on Form S-3, file
    no. 333-32015, filed on July 24, 1997).                                                                                                                                                                                                                                                                             
|        | 4.9  |  |  |            |  | First Supplemental Indenture, dated as of
    August 12, 1999, among TCA Cable TV, Inc., Cox Classic
    Cable, Inc. and Chase Bank of Texas, National Association, as
    Trustee (incorporated by reference to exhibit 4.2 to Coxs
    Current Report on Form 8-K, filed on August 25, 1999).                                                                                                                                                                                                                                                               
|        | 4.10 |  |  |            |  | Certificate of Trust of Cox Trust I (incorporated
    by reference to exhibit 4.3 to Coxs Registration Statement
    on Form S-3, file no. 333-82575, filed on July 9,
    1999).                                                                                                                                                                                                                                                                                                                                                                             
|        | 4.11 |  |  |            |  | Declaration of Trust of Cox Trust I (incorporated
    by reference to exhibit 4.5 to Coxs Registration Statement
    on Form S-3, file no. 333-82575, filed on July 9,
    1999).                                                                                                                                                                                                                                                                                                                                                                             
|        | 4.12 |  |  |            |  | Form of Amended and Restated Declaration of Trust
    for Cox Trust I (incorporated by reference to exhibit 4.9 to
    Coxs registration statement on Form S-3, file no.
    33-82575, filed on July 28, 1999).                                                                                                                                                                                                                                                                                                                                               
|        | 4.13 |  |  |            |  | 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 on July 28, 1999).                                                                                                                                                                                                                                                                                                                                                               
|        | 4.14 |  |  |            |  | 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 on August 6, 1999).                                                                                                                                                                                                                                                                                                                                                                
|        | 4.15 |  |  |            |  | Guarantee Agreement, dated as of October 6,
    1999, by and between Cox Communications, Inc., as Guarantor, and
    The Bank of New York, as Guarantee Trustee (incorporated by
    reference to exhibit 4.2 to Coxs Quarterly Report on
    Form 10-Q, filed on November 8, 1999).                                                                                                                                                                                                                                                                          
|        | 4.16 |  |  |            |  | Registration Rights Agreement, dated as of
    October 1, 1998, between Cox Communications, Inc., on the
    one hand, and G.C. Investments and Barbara J. Greenspun as
    Trustee of the Unified Credit Trust created under a Declaration
    of Trust dated December 6, 1998 (the Barbara
    Greenspun Trust), on the other hand (incorporated by
    reference as exhibit 10.1 to Coxs current report on
    Form 8-K, filed on October 15, 1998).                                                                                                     
|        | 4.17 |  |  |            |  | Joinder Agreement and Acknowledgement of Rights
    and Obligations, dated as of August 31, 2002, by and among
    G.C. Investments, the Barbara Greenspun Trust, Greenspun Legacy
    Limited Partnership, 3G Capital, LLC and Cox Communications,
    Inc. (incorporated by reference to exhibit 10.1 to Coxs
    Quarterly Report on Form 10-Q, filed on November 12,
    2002).                                                                                                                                                                           
|        | 4.18 |  |  |            |  | Registration Rights Agreement, dated as of
    February 23, 2001, by and among Cox Communications, Inc.
    and Salomon Smith Barney Inc., 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, filed on
    March 8, 2001).
|        | 4.19 |  |  |            |  | 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 on January 23, 2002).                                                                                                                                                                                                                                                                                  

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|        |      |  |  |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|------- | ---- |  |  | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |  |  |            
|Number  |      |  |  | Description
|        |      |  |  |            
|        | 4.20 |  |  |            |  | 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 on January 23,
    2002).                                                                                                                                                                                                                                                                                         
|        | 4.21 |  |  |            |  | Form of PRIZES (incorporated by reference to
    exhibit 4.2 to Coxs Registration Statement on
    Form 8-A, filed on November 24, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        | 4.22 |  |  |            |  | 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).                                                                                                                                                                                                                                                                                                                                                                                        
|        | 10.1 |  |  |            |  | Amended and Restated 364-Day Credit Agreement,
    dated as of June 28, 2002, among Cox Communications, Inc.,
    the banks party thereto, JPMorgan Chase Bank, as administrative
    agent, Bank of America, N.A. and Wachovia Bank, N.A., as
    syndication agents (incorporated by reference to exhibit 10.1 to
    Coxs Quarterly Report on Form 10-Q, filed
    August 8, 2002).                                                                                                                                                                                            
|        | 10.2 |  |  |            |  | 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).
|        | 10.3 |  |  |            |  | 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).                           
|        | 10.4 |  |  |            |  | Second Amendment dated as of June 28, 2002
    in respect of the Five-Year Credit Agreement, dated as of
    September 26, 2000, by and among Cox Communications, Inc.,
    the banks party thereto, JPMorgan Chase Bank, as administrative
    agent, The Bank of New York and Wachovia Bank, National
    Association, as co-documentation agents, and Bank of America,
    N.A., as syndication agent (incorporated by reference to exhibit
    10.4 to Coxs Registration Statement on Form S-3/A, File
    No. 333-65102, filed with the Commission on December 20,
    2002).
|        | 10.5 |  |  |            |  | 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).                                                                                                                                                                                                                                                                                                
|        | 10.6 |  |  |            |  | 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).                                                                                                                                                                                                                                                                                                     
|        | 10.7 |  |  |            |  | 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).                                                                                                                                                                                                                                                                              
|        | 10.8 |  |  |            |  | 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).                                                                                                                                                                                                                                          
|        | 10.9 |  |  |            |  | 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).                                                                                                                  

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|        |       |  |  |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|------- | ----- |  |  | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |  |  |            
|Number  |       |  |  | Description
|        |       |  |  |            
|        | 10.10 |  |  |            |  | 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).                                                                                                                                                                                                                                    
|        | 10.11 |  |  |            |  | 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).                                                                                                                                                                                                                                                                                                                                        
|        | 10.12 |  |  |            |  | 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).                                                                                                                                                                                                                                                                                                                                                   
|        | 10.13 |  |  |            |  | 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).                                                                                                                                                                                                                                                                                                                                                                     
|        | 10.14 |  |  |            |  | 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 Unsecured Creditors appointed in At Home
    Corporations Chapter 11 bankruptcy case and At Home
    Corporation (incorporated by reference to Exhibit 10.15 to
    Coxs Annual Report on Form 10-K, filed with the
    Commission on March 26, 2002).
|        | 10.15 |  |  |            |  | Cox Communications, Inc. Stock Option Plan for
    Non-Employees (management contract or compensatory plan).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        | 13    |  |  |            |  | Portions of the 2002 Summary Annual Report
    (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    |  |  |            |  | Powers of Attorney (included on the signatures
    page to this report).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        | 99.1  |  |  |            |  | Certification of Chief Executive Officer Pursuant
    to 18 U.S.C. Section 1350, as Adopted Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | 99.2  |  |  |            |  | Certification of Chief Financial Officer Pursuant
    to 18 U.S.C. Section 1350, as Adopted Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

(b) Reports on Form 8-K



| |                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Form 8-K dated November 21, 2002 (filed
    November 21, 2002) filing under Item 5 certain financial
    information for incorporation by reference in its registration
    statements filed with the SEC.                                                                                                        
|
| | Form 8-K dated December 18, 2002 (filed
    December 23, 2002) filing under Item 5 the announcement of
    the retirement of David E. Easterly from Coxs Board of
    Directors, effective December 31, 2002, and the election of
    G. Dennis Berry to Coxs Board of Directors, effective
    January 1, 2003.

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SIGNATURES

Pursuant to the requirements of
Section 13 or 15(d) of the Securities Exchange Act of 1934,
Cox Communications, Inc. has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly
authorized.



| |                         
| | ------------------------
| | COX COMMUNICATIONS, INC.



| |     |                     
| | --- | --------------------
| | By: | /s/ JAMES O. ROBBINS

| |                                          
| | -----------------------------------------
| |                                          
| | James O. Robbins                         
| | President and Chief Executive
    Officer

Date: March 31, 2003

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.

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 31, 2003
|                                                
|/s/ JAMES O. ROBBINSJames O. Robbins             |  | President and Chief Executive Officer;
    Director(principal executive officer)           |  | March 31, 2003
|                                                
|/s/ JIMMY W. HAYESJimmy W. Hayes                 |  | Executive Vice President, Finance Chief Financial
    Officer(principal financial officer) |  | March 31, 2003
|                                                
|/s/ WILLIAM J. FITZSIMMONSWilliam J. Fitzsimmons |  | Vice President of Accounting & Financial
    Planning(principal accounting officer)        |  | March 31, 2003

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|                                       |  |          |  |                |  | 
|-------------------------------------- |  | -------- |  | -------------- |  | 
|                                       |  |          |  |               
|Signature                              |  | Title    |  | Date          
|                                       |  |          |  |               
|                                      
|/s/ JANET M. CLARKEJanet M. Clarke     |  | Director |  | March 31, 2003
|                                      
|/s/ G. DENNIS BERRYG. Dennis Berry     |  | Director |  | March 31, 2003
|                                      
|/s/ RODNEY W. SCHROCKRodney W. Schrock |  | Director |  | March 31, 2003
|                                      
|/s/ ROBERT C. OLEARYRobert C. OLeary |  | Director |  | March 31, 2003
|                                      
|/s/ ANDREW J. YOUNGAndrew J. Young     |  | Director |  | March 31, 2003

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CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13a-14 OF THE

SECURITIES EXCHANGE ACT OF 1934


I, James O. Robbins, President and Chief
Executive Officer of Cox Communications, Inc., certify that:

1. I have reviewed this annual report on
Form 10-K of Cox Communications, Inc.;

2. Based on my knowledge, this annual report
does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements made,
in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this
annual report;

3. Based on my knowledge, the financial
statements, and other financial information included in this
annual report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual
report;

4. The registrants other certifying
officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and have:



| |                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this annual report is being prepared;
|
| | (b) evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | (c) presented in this annual report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                

5. The registrants other certifying
officers and I have disclosed, based on our most recent
evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons
performing the equivalent functions):



| |                                                                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) all significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | (b) any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    

6. The registrants other certifying
officers and I have indicated in this annual report whether
there were significant changes in internal controls or in other
factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies
and material weaknesses.



| |     |                     
| | --- | --------------------
| | By: | /s/ JAMES O. ROBBINS

| |                                          
| | -----------------------------------------
| |                                          
| | James O. Robbins                         
| | President and Chief Executive
    Officer

March 31, 2003

101



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CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13a-14 OF THE

SECURITIES EXCHANGE ACT OF 1934


I, Jimmy W. Hayes, Executive Vice President,
Finance and Chief Financial Officer of Cox Communications, Inc.,
certify that:

1. I have reviewed this annual report on
Form 10-K of Cox Communications, Inc.;

2. Based on my knowledge, this annual report
does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements made,
in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this
annual report;

3. Based on my knowledge, the financial
statements, and other financial information included in this
annual report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual
report;

4. The registrants other certifying
officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and have:



| |                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this annual report is being prepared;
|
| | (b) evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | (c) presented in this annual report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                

5. The registrants other certifying
officers and I have disclosed, based on our most recent
evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons
performing the equivalent functions):



| |                                                                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) all significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | (b) any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    

6. The registrants other certifying
officers and I have indicated in this annual report whether
there were significant changes in internal controls or in other
factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies
and material weaknesses.



| |     |                   
| | --- | ------------------
| | By: | /s/ JIMMY W. HAYES

| |                                  
| | ---------------------------------
| |                                  
| | Jimmy W. Hayes                   
| | Executive Vice President, Finance
| | and Chief Financial Officer      

March 31, 2003

102



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##### Table of Contents



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