Cox Reports Q1

ATLANTA -- Cox Communications, Inc. today reported financial results for the three months ended March 31, 2005.

"Cox employees hit the ball out of the park in the first quarter of 2005 -- our first full quarter since our recent privatization," said Jim Robbins, President and CEO of Cox Communications, Inc. "With intense focus on executing strategy, we once again leveraged the power of our bundle and delivered growth in every product category, increasing our total customer relationships to 6.7 million."

"Bolstered in part by the wider availability of advanced video services, such as DVR and High Definition service, our digital cable penetration is now 40%, as we added more than 90,000 digital video customers in the first quarter."

"Cox Communications continues to lead the industry in being a true full-service broadband telecommunications company. In the first quarter, we added more than 111,000 new Cox Digital Telephone customers and more than 177,000 Cox High Speed Internet customers. Combined, this is more than a quarter of a million new non-video service subscriptions achieved in just one quarter."

FIRST QUARTER HIGHLIGHTS

For the first quarter of 2005, Cox:

OPERATING RESULTS

Total revenues for the first quarter of 2005 were $1.7 billion, an increase of 11% over the first quarter of 2004. This was primarily due to growth in advanced-service subscriptions (which include digital cable, high-speed Internet access and telephony) and higher basic cable rates. An increase in Cox Business Services customers, with customer locations now surpassing 140,000, as well as an increase in advertising sales, also contributed to overall revenue growth.

Cost of services, which includes programming costs, other direct costs and field service costs, was $681.9 million for the first quarter of 2005, an increase of 7% over the same period in 2004. Programming costs increased 9% to $347.8 million, reflecting rate increases and customer growth. Other direct costs and field service costs in the aggregate increased 5% to $334.1 million, reflecting 11% growth in total RGUs over the last twelve months, partially offset by cost savings achieved through successful field service initiatives.

Selling, general and administrative expenses were $368.6 million for the first quarter of 2005, an increase of 9% over the comparable period in 2004. This was due to a 9% increase in general and administrative expenses and a 10% increase in marketing expense. The increase in general and administrative expenses was due to increased salaries and benefits. Marketing expense increased due to additional marketing related to new video products, as well as a 9% increase in costs associated with Cox Media, Cox's advertising sales business.

Operating income increased 25% to $219.4 million for the first quarter of 2005, and operating cash flow increased 15% to $653.6 million, compared to the same period in the 2004. Operating income margin (operating income as a percentage of revenues) for the first quarter of 2005 was 13%, compared to 11% for the first quarter of 2004. Operating cash flow margin (operating cash flow as a percentage of revenues) was 38% for the first quarter of 2005, compared to 37% for the first quarter of 2004.

Depreciation and amortization increased to $434.2 million from $392.1 million in the first quarter of 2004. This was due to an increase in depreciation from Cox's continuing investment in its broadband network in order to deliver additional services.

Net gain on investments for the first quarter of 2005 was nominal. Net gain on investments of $26.8 million for the first quarter of 2004 was due to a $19.5 million pre-tax gain on the sale of 0.1 million shares of Sprint PCS preferred stock and a $7.3 million pre-tax gain on the sale of certain other non-strategic investments.

Net income for the first quarter of 2005 was $27.0 million compared to $57.7 million for the first quarter of 2004.

Cox Communications Inc.