Cox Boosts Q4 Revenue

ATLANTA -- Cox Communications, Inc. (NYSE: COX) today reported financial results for the three months ended December 31, 2002. "Cox Communications achieved strong growth in the fourth quarter of 2002, contributing to another year of solid financial and operating performance," said Jim Robbins, CEO and President of Cox Communications. "We grew our total customer base more than 2% in 2002, with solid growth in basic subscribers and record growth in high-speed Internet and telephone subscriptions. With total RGUs now equal to total homes passed, we continue to prove that the digital bundle is the industry's growth engine. Our 2002 growth in bundled customers to 1.7 million, an increase of 53% over the previous year, validates our strategy of a bundled approach to selling and serving our customers." "With this momentum, Cox Communications is well poised to achieve continued strong growth in both operating cash flow and revenue and realize our goal of being free cash flow positive in 2003." Total pro forma revenues for the fourth quarter of 2002 increased 16% over the fourth quarter of 2001, primarily due to increased customers in new services (including digital cable, high-speed Internet access and telephony customers), higher basic cable rates and a $5 price increase in high-speed Internet access adopted in certain markets in the fourth quarter of 2002. Also contributing to the increase were an increase in commercial broadband customers and a continuing rebound in local and national advertising sales. Pro forma cost of services, which includes programming costs, other direct costs and field service costs, was $558.7 million for the fourth quarter of 2002, an increase of 16% over the same period in 2001. This was primarily due to an 11% increase in programming costs reflecting rate increases, channel additions and customer growth. The remaining increase reflects 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. Pro forma selling, general and administrative expenses was $290.4 million for the fourth quarter of 2002, an increase of 18% over the comparable period in 2001. This was due to increased salaries and benefits resulting from an increase in headcount and compensation, and increased property taxes resulting from capital expenditures. Pro forma operating cash flow (operating income before depreciation, amortization and loss on sale of cable systems) increased 14% to $491.9 million for the fourth quarter of 2002. The pro forma operating cash flow margin (pro forma operating cash flow as a percentage of revenues) for the fourth quarter of 2002 was 36.7%. For 2003, Cox expects revenue to increase by 14% to 15%, operating cash flow (a non-GAAP measure calculated as operating income before depreciation, amortization and loss on sale of cable systems) to increase by 14% to 15% (excluding the impact of the $9.8 million one-time charge taken in the first quarter of 2002 related to the continuation of Excite@Home) and capital expenditures to be approximately $1.6 billion. Basic video customers are expected to increase approximately 1.0% over 2002 and new-service RGU net additions are expected to be between 1.0 to 1.1 million. In addition, Cox expects to be free cash flow positive for the full year 2003. Cox Communications Inc.