COX COMMUNICATIONS INC /DE/, 10-Q, 1999-08-16

COX COMMUNICATIONS INC /DE/
10-Q, 1999-08-16
CABLE & OTHER PAY TELEVISION SERVICES

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<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999

[ ] 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 1-13576
[GRAPHIC OMITTED]
COMMUNICATIONS
COX COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<CAPTION>
DELAWARE 58-2112281
<S> <C>
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)

1400 LAKE HEARN DRIVE, ATLANTA, GEORGIA 30319
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>

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

---------------

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 [ ]

---------------

Indicate the number of shares outstanding of each of the issuer's classes
of Common Stock, as of the latest practicable date.

There were 527,586,673 shares of Cox Class A Common Stock outstanding as
of August 2, 1999.

There were 27,597,792 shares of Cox Class C Common Stock outstanding as of
August 2, 1999.
<PAGE> 2

COX COMMUNICATIONS, INC.
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1999

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
PART I - FINANCIAL INFORMATION

<S> <C> <C>
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS................................................ 2

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS..................................................... 12

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK....................... 20

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS................................................................. 21

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS......................................... 21

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............................... 22

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.................................................. 22

SIGNATURES.......................................................................................... 24
</TABLE>

<PAGE> 3

PART I - FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

Cox Communications, Inc.
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1999 1998
------------ ------------
(UNAUDITED)

(THOUSANDS OF DOLLARS)

<S> <C> <C>
ASSETS
Cash .............................................................. $ 23,357 $ 30,604
Accounts and notes receivable, less allowance for doubtful
accounts of $8,563 and $7,872 ................................... 186,949 166,052
Net plant and equipment ........................................... 2,918,937 2,652,212
Investments ....................................................... 9,033,121 5,981,057
Intangible assets ................................................. 3,927,819 3,959,906
Other assets ...................................................... 78,556 88,273
------------ ------------

Total assets ................................................. $ 16,168,739 $ 12,878,104
============ ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued expenses ............................. $ 318,706 $ 296,950
Deferred income ................................................... 43,083 39,147
Deferred income taxes ............................................. 4,152,095 2,886,636
Other liabilities ................................................. 328,003 188,050
Debt .............................................................. 3,586,736 3,920,159
Amounts due to Cox Enterprises, Inc. (CEI) ........................ 110,676 170,596
------------ ------------
Total liabilities ............................................ 8,539,299 7,501,538
------------ ------------

Commitments and Contingencies (Note 8)

Shareholders' equity
Series A Preferred Stock - liquidation preference of $22.1375 per
share, $1 par value; 10,000,000 shares authorized; shares
issued and outstanding: 4,836,372 ............................ 4,836 4,836
Class A Common Stock, $1 par value; 650,000,000 shares
authorized; shares issued and outstanding: 527,548,353
and 527,111,512 .............................................. 527,548 527,112
Class C Common Stock, $1 par value; 60,000,000 shares
authorized; shares issued and outstanding: 27,597,792 ........ 27,598 27,598
Additional paid-in capital ...................................... 1,882,180 1,872,477
Retained earnings ............................................... 2,107,289 1,350,277
Accumulated other comprehensive income .......................... 3,079,989 1,594,266
------------ ------------
Total shareholders' equity ................................... 7,629,440 5,376,566
------------ ------------

Total liabilities and shareholders' equity ................... $ 16,168,739 $ 12,878,104
============ ============
</TABLE>

See notes to consolidated financial statements.

2
<PAGE> 4

Cox Communications, Inc.
Consolidated Statements of Operations

<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
--------------------------- -----------------------------
1999 1998 1999 1998
--------- --------- ---------- ---------
(UNAUDITED)
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)

<S> <C> <C> <C> <C>
REVENUES
Complete basic ............................... $ 355,176 $ 291,016 $ 706,491 $ 575,384
Premium service .............................. 52,374 46,548 104,446 92,195
Pay-per-view ................................. 17,230 7,990 41,622 18,350
Advertising .................................. 44,650 33,432 81,050 58,394
Data ......................................... 12,148 4,003 21,957 6,778
Telephony .................................... 20,437 6,607 36,657 11,579
Satellite .................................... -- -- -- 33,492
Other ........................................ 7,864 8,699 16,202 17,915
------------- ------------- ------------- -------------

Total revenues ............................. 509,879 398,295 1,008,425 814,087
COSTS AND EXPENSES
Programming costs ............................ 122,330 95,692 251,091 190,664
Plant operations ............................. 36,188 30,789 75,321 63,540
Marketing .................................... 30,895 25,005 57,525 47,115
General and administrative ................... 124,610 94,848 240,102 182,259
Satellite operating and administrative ....... -- -- -- 29,403
Depreciation ................................. 133,333 80,405 229,979 167,445
Amortization ................................. 25,984 17,794 52,638 36,351
------------- ------------- ------------- -------------

OPERATING INCOME ................................ 36,539 53,762 101,769 97,310
Interest expense ................................ (68,708) (51,004) (122,672) (104,128)
Equity in net losses of affiliated companies .... (29,588) (128,907) (76,041) (270,685)
Gain on investments, net ........................ 908,504 99,468 1,327,956 99,468
Gain on issuance of stock by affiliated companies -- 14,956 -- 14,956
Dividend income ................................. 11,073 -- 22,146 --
Other, net ...................................... 135 3,501 33 4,784
------------- ------------- ------------- -------------

INCOME (LOSS) BEFORE INCOME TAXES ............... 857,955 (8,224) 1,253,191 (158,295)
Income tax expense (benefit) .................... 352,122 4,022 496,179 (44,130)
------------- ------------- ------------- -------------

NET INCOME (LOSS) ............................... $ 505,833 $ (12,246) $ 757,012 $ (114,165)
============= ============= ============= =============

PER SHARE DATA
Basic net income (loss) per share ............. $ 0.91 $ (0.02) $ 1.36 $ (0.21)
Diluted net income (loss) per share ........... 0.90 (0.02) 1.34 (0.21)
Basic weighted-average shares outstanding ..... 555,102,807 542,690,970 555,000,151 542,536,304
Diluted weighted-average shares outstanding.... 564,223,150 542,690,970 564,070,955 542,536,304
</TABLE>

See notes to consolidated financial statements.

<PAGE> 5
COX COMMUNICATIONS, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
ACCUMULATED
SERIES A COMMON STOCK ADDITIONAL OTHER
PREFERRED -------------------- PAID-IN RETAINED COMPREHENSIVE
STOCK CLASS A CLASS C CAPITAL EARNINGS INCOME
--------- -------- --------- ---------- ----------- -------------
(UNAUDITED)
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1998,
AS ADJUSTED FOR THE TWO-FOR-ONE STOCK SPLIT ... $ 4,836 $ 527,112 $ 27,598 $ 1,872,477 $ 1,350,277 $ 1,594,266

Net income ...................................... 757,012

Issuance of stock related to
stock compensation plans ..................... 436 9,703
Foreign currency translation
adjustment ....................................
Change in net unrealized gain
on securities, net of
reclassification adjustment ...................
Other comprehensive income ...................... 1,485,723
Comprehensive income ............................

-------- --------- -------- ----------- ----------- -----------
BALANCE AT JUNE 30, 1999 .......................... $ 4,836 $ 527,548 $ 27,598 $ 1,882,180 $ 2,107,289 $ 3,079,989
======== ========= ======== =========== =========== ===========

COMPREHENSIVE
TOTAL INCOME
----------- --------------
<S> <C> <C>
BALANCE AT DECEMBER 31, 1998,
AS ADJUSTED FOR THE TWO-FOR-ONE STOCK SPLIT ... $ 5,376,566

Net income ...................................... 757,012 $ 757,012
-----------

Issuance of stock related to
stock compensation plans ..................... 10,139
Foreign currency translation
adjustment .................................... (13,671)
Change in net unrealized gain
on securities, net of
reclassification adjustment ................... 1,499,394
-----------
Other comprehensive income ...................... 1,485,723 1,485,723
-----------
Comprehensive income ............................ $ 2,242,735
===========
-----------
BALANCE AT JUNE 30, 1999 .......................... $ 7,629,440
===========
</TABLE>

See notes to consolidated financial statements.

<PAGE> 6
COX COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30
---------------------------
1999 1998
------------ -----------
(UNAUDITED)
(THOUSANDS OF DOLLARS)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) .................................................... $ 757,012 $ (114,165)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities, net of effects of acquisitions:
Depreciation ....................................................... 229,979 167,445
Amortization ....................................................... 52,638 36,351
Equity in net losses of affiliated companies ....................... 76,041 270,685
Deferred income taxes .............................................. 344,098 14,939
Gain on investments, net ........................................... (1,327,956) (99,468)
Gain on issuance of stock by affiliated companies .................. -- (14,956)
(Increase) decrease in accounts and notes receivable ................. (20,032) 6,534
Increase in accounts payable and accrued expenses .................... 14,677 6,314
Decrease in other current liabilities.................................. (31,925) (7,458)
Increase (decrease) in other long-term liabilities ................... 16,690 (1,702)
Increase (decrease) in taxes payable ................................. 76,384 (1,767)
Other, net ........................................................... 6,124 1,583
----------- -----------
Net cash provided by operating activities ..................... 193,730 264,335
----------- -----------

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures ................................................. (501,511) (357,035)
Investments in affiliated companies.................................... (22,980) (35,036)
Proceeds from sale of investments .................................... 742,611 137,140
Restricted cash invested ............................................. -- 204,210
Payments for purchases of cable television systems ................... -- (258,067)
Decrease in amounts due from CEI, net ................................ -- 50,856
Other, net ........................................................... 5,029 (4,486)
----------- -----------
Net cash provided by (used in) investing activities ........... 223,149 (262,418)
----------- -----------

CASH FLOWS FROM FINANCING ACTIVITIES
Revolving credit repayments, net ..................................... (350,000) (800,000)
Commercial paper borrowings, net ..................................... 180,977 522,009
Proceeds from issuance of debt ....................................... -- 199,337
Repayment of debt .................................................... (184,740) (9,825)
Proceeds from exercise of stock options .............................. 6,744 5,744
Increase (decrease) in amounts due to CEI, net ....................... (59,920) 49,689
Increase (decrease) in book overdrafts ............................... (17,187) 23,518
----------- -----------
Net cash used in financing activities ......................... (424,126) (9,528)
----------- -----------

Net decrease in cash ................................................. (7,247) (7,611)
Cash at beginning of period .......................................... 30,604 28,259
----------- -----------
Cash at end of period ................................................ $ 23,357 $ 20,648
=========== ===========
</TABLE>

See notes to consolidated financial statements.

5
<PAGE> 7

COX COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)

<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30
----------------------------
1999 1998
-------- --------
(UNAUDITED)
(THOUSANDS OF DOLLARS)

<S> <C> <C>
SIGNIFICANT NONCASH TRANSACTIONS
Cox PCS stock exchange ...................... $794,546 $ --
PrimeStar merger stock exchange ............. -- 94,696

ADDITIONAL CASH FLOW INFORMATION
Interest paid ............................... $125,885 $ 99,252
Income taxes paid (refunded) ................ 75,697 (57,302)
</TABLE>

See notes to consolidated financial statements.

6
<PAGE> 8
COX COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

JUNE 30, 1999

1. BASIS OF PRESENTATION AND OTHER INFORMATION

The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnote disclosures required by generally accepted accounting
principles for complete financial statements. In the opinion of management, the
financial statements reflect all adjustments considered necessary for a fair
statement of the results of operations and financial position for the interim
periods presented. All such adjustments are of a normal recurring nature. These
unaudited interim financial statements should be read in conjunction with the
audited consolidated financial statements and notes thereto contained in Cox's
Annual Report on Form 10-K for the year ended December 31, 1998.

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The results
of operations for the six months ended June 30, 1999 are not necessarily
indicative of the results to be expected for the year ending December 31, 1999
or any interim period.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Investments

Investments in affiliates are accounted for under the equity method or
cost basis depending upon the level of ownership in the investment and/or 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 investees'
undistributed income or losses.

Unrestricted publicly traded investments are classified as
available-for-sale under Statement of Financial Accounting Standards 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 between measurement dates recorded as a component of
other comprehensive income. Investments in privately held companies are stated
at cost, adjusted for any known diminution in value that is determined to be
other than temporary.

Derivative Financial Instruments

Cox uses certain derivative financial instruments to manage its exposure
to fluctuations in the price of Cox's investment in certain publicly traded
stock. These instruments are recorded in the financial statements at fair
market value, with unrealized gains and losses resulting from changes in fair
value between measurement dates recorded as a component of other comprehensive
income.

7
<PAGE> 9

Recently Issued Accounting Pronouncements

In 1998, SFAS No. 133, "Accounting for Derivative Financial Instruments and
Hedging Activities," was issued. This statement requires that all derivatives be
recognized in the statement of financial position as either assets or
liabilities and measured at fair value. In addition, all hedging relationships
must be designated, reassessed and documented pursuant to the provisions of SFAS
No. 133. SFAS No. 133, as amended, is effective for fiscal quarters of fiscal
years beginning after June 15, 2000. Management is in the process of assessing
the impact of SFAS No. 133 on the consolidated financial statements.

Reclassifications

Certain amounts in the 1998 quarterly financial statements have been
reclassified for comparative purposes.

3. ACQUISITIONS AND EXCHANGES OF BUSINESSES

In March 1999, Cox signed a definitive agreement to purchase from First
Commonwealth Communications, Inc. cable television systems serving
approximately 11,000 customers in Gloucester, New Kent, West Point and King and
Queen County, Virginia. Cox expects to complete this transaction, which is
subject to legal and regulatory review, during the third quarter of 1999.

Also in March 1999, Cox and MediaOne signed a definitive agreement to
trade selected cable television systems in Massachusetts, Rhode Island and
Connecticut. Under the terms of the agreement, Cox would trade its cable
television systems in Massachusetts, serving approximately 54,000 customers,
for MediaOne properties in Enfield, Connecticut and Westerly, Rhode Island,
serving 51,000 customers, and cash. Cox expects to complete this transaction,
which is subject to legal and regulatory review, during the third quarter of
1999.

In April 1999, Cox and Media General, Inc. entered into a definitive
agreement whereby Cox will purchase Media General's cable systems serving more
than 260,000 customers in Fairfax County and Fredericksburg, Virginia for $1.4
billion in cash. Cox expects to complete this transaction, which is subject to
legal and regulatory review, during the third quarter of 1999.

In May 1999, Cox entered into a definitive agreement to merge with TCA
Cable TV, Inc., a cable television operator serving approximately 883,000
customers in Texas, Arkansas, Louisiana and four other states for $3.9 billion.
Under the terms of the agreement, Cox will assume approximately $542.0 million
in TCA debt and each share of outstanding TCA common stock will be converted
into the right to receive $31.25 in cash and 0.7418 of a share of Cox Class A
common stock. Alternatively, TCA shareholders can elect to receive $62.50 in
cash per TCA share or 1.4836 shares of Cox Class A common stock per TCA share,
subject in each case to proration in the event that those elections would result
in the payment by Cox of more than $1.7 billion in cash or the issuance of more
than 39.6 million shares of Cox Class A common stock. TCA shareholders approved
the merger and the merger was completed on August 12, 1999.

In July 1999, Cox and AT&T Corp. entered into a definitive agreement
whereby Cox will exchange its shares of AT&T common stock, with a fair value of
approximately $2.8 billion at June 30, 1999, for certain cable television
systems serving approximately 316,000 customers in Tulsa, Oklahoma and Baton
Rouge, Louisiana; a 20% ownership in a partnership with TCA; Peak Cablevision
LLC, which has 117,000 customer in four states; and $750.0 million in other
consideration, including cash. Cox expects to complete this transaction, which
is subject to regulatory approval, in the first quarter of 2000.

Also in July 1999, Cox and Multimedia Cablevision, Inc., a subsidiary of
Gannett Co., Inc., entered into a definitive purchase agreement whereby Cox
will purchase for $2.7 billion in cash Multimedia's cable television operations
serving 522,000 customers in Kansas, Oklahoma and North Carolina. Cox expects
to

8
<PAGE> 10
complete this transaction, which is subject to legal and regulatory review, in
the first quarter of 2000.

4. INVESTMENTS

<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1999 1998
---------- ----------
(THOUSANDS OF DOLLARS)

<S> <C> <C>
Equity method investments .................... $ 149,206 $ 90,700
Fair value method investments ................ 8,874,841 5,886,502
Cost method investments ...................... 9,074 3,855
---------- ----------

Total investments ............................ $9,033,121 $5,981,057
========== ==========
</TABLE>

Cox's fair value method investments in publicly traded companies are
classified as available-for-sale securities pursuant to SFAS No. 115, and have
an aggregate cost at June 30, 1999 and December 31, 1998 of $3,780.9 million
and $3,281.2 million, respectively.

In December 1998, Cox entered into four costless collar agreements to
hedge its investment in 15.0 million shares of AT&T common stock. The
agreements contain a notional amount of $52.00 per share and mature at various
dates through January 2003. Cox has recorded the costless collar agreements at
their estimated fair market value, with unrealized losses resulting from
changes in fair value between measurement dates of $85.3 million and $4.3
million at June 30, 1999 and December 31, 1998, respectively, recorded as a
component of other comprehensive income.

During January 1999, Cox sold its 11.9% equity interest in Telewest
Communications plc for $727.9 million in cash and recorded a pre-tax gain of
$433.1 million.

Cox owns a 9.43% interest in Primestar, Inc., a provider of direct
broadcast satellite services, as of June 30, 1999. During fourth quarter 1998,
Cox concluded, after careful analysis, that it would not recover its investment
and recognized $131.4 million in charges related to its investment in
PrimeStar. In April 1999, PrimeStar sold its direct broadcast satellite service
to Hughes Electronics Corporation (a division of General Motors Corporation and
the parent company of DirecTV, a direct broadcast satellite service) for $1.8
billion in cash and stock. PrimeStar will use the $1.8 billion proceeds to
extinguish outstanding obligations and wind-down its remaining operations. In
June 1999, PrimeStar completed the sale of its remaining satellites and
frequencies to Hughes Electronics Corporation.

In May 1999, Cox exercised its right under the Cox Communications PCS, L.P.
partnership agreement to transfer its remaining 32.0% equity interest in Cox PCS
to Sprint Corporation in exchange for approximately 19.1 million shares of
Sprint's PCS Common Stock-Series 2. As a result of this transaction, Cox
recognized a pre-tax gain of $908.5 million.

<PAGE> 11

5. DEBT

<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1999 1998
----------- -----------
(THOUSANDS OF DOLLARS)

<S> <C> <C>
Revolving credit facilities ............ $ -- $ 349,998
Commercial paper ....................... 1,205,161 1,026,164
Medium-term notes ...................... 444,952 463,363
Reset put securities ................... 248,177 248,150
Floating rate reset notes .............. -- 147,425
Notes and debentures ................... 1,616,254 1,615,161
Capitalized lease obligations .......... 72,192 69,898
----------- -----------

Total debt ............................. $ 3,586,736 $ 3,920,159
=========== ===========
</TABLE>

In April 1999, Cox filed a Form S-3 Registration Statement with the
Securities and Exchange Commission under which Cox may from time to time offer
and issue debentures, notes, bonds or other evidences of indebtedness, shares
of preferred stock and shares of Class A common stock for a maximum aggregate
amount of $2.0 billion.

In July 1999, Cox and certain wholly-owned Cox financing trusts filed a
Form S-3 Registration Statement with the Securities and Exchange Commissions for
the offer and sale from time to time of Class A common stock, preferred stock,
stock purchase contracts, stock purchase units, debt securities and junior
subordinated debentures of Cox Communications, Inc., and trust preferred
securities and capital securities of Cox Trust I and Cox Trust II, with an
aggregate initial offering price not to exceed $8.0 billion. Upon filing of this
shelf registration statement, Cox transferred the $2.0 billion of securities
registered on its April 1999 shelf registration which included all of the
securities remaining on its July 1998 shelf registration, to the July 1999 shelf
registration.

In August 1999, Cox issued $2.0 billion aggregate principal amount of
senior debt securities under the July 1999 shelf registration with maturity
dates ranging from August 15, 2000 to August 15, 2009 and interest rates ranging
from LIBOR plus 60 basis points to 7.875%. The net proceeds to Cox were $1,988.5
million.

6. SHAREHOLDERS' EQUITY

The following table reconciles the numerator and the denominator of the
basic and diluted per-share computations for income from operations for the
three and six months ended June 30, 1999:

<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, 1999
-------------------------------------------------
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
------------- ------------ ---------

<S> <C> <C> <C>
Net income ................................. $ 505,833,000
-------------
Basic EPS .................................. 505,833,000 555,102,807 $ 0.91
=============

Effect of Dilutive Securities:
Options ................................. -- 2,931,863
ESPP .................................... -- 965,485
Preferred common stock equivalent ....... -- 5,222,995
------------ ----------

Diluted EPS ................................ $ 505,833,000 564,223,150 $ 0.90
============= =========== ========
</TABLE>

<PAGE> 12

SIX MONTHS ENDED JUNE 30, 1999
----------------------------------------------------
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
------------- ------------- ---------
<S> <C> <C> <C>
Net income ........................................................... $757,012,000
------------
Basic EPS ............................................................ 757,012,000 555,000,151 $1.36
=====

Effect of Dilutive Securities:
Options ........................................................... -- 2,884,717
ESPP .............................................................. -- 963,092
Preferred common stock equivalent ................................. -- 5,222,995
------------ -----------

Diluted EPS .......................................................... $757,012,000 564,070,955 $1.34
============ =========== =====
</TABLE>

As Cox was in a net loss position for the three and six months ended June
30, 1998, all potentially dilutive securities were anti-dilutive and were not
included in the diluted earnings per share calculations.

On March 18, 1999, the Cox Board of Directors approved a two-for-one stock
split that was distributed on May 21, 1999 with respect to shareholders of
record on May 14, 1999. Cox's certificate of incorporation was amended to
increase the authorized Series A preferred stock from 5,000,000 to 10,000,000
shares, Class A common stock from 316,000,000 to 650,000,000 shares and the
Class C common stock from 14,000,000 to 60,000,000 shares. All references to
number of shares and per share information in the accompanying consolidated
financial statements have been restated to give effect to this stock split.

In July 1999, Cox filed a Form S-4 Registration Statement with the
Securities and Exchange Commission to register shares of Class A common stock to
be issued to TCA shareholders in connection with the merger with TCA Cable TV,
Inc. (See Note 3). On August 12, 1999, Cox issued approximately 39.6 million
shares in conjunction with the closing of the TCA merger.

In August 1999, Cox issued 10.1 million shares of Class A common stock for
an aggregate offering of $350.3 million, less $12.6 million of offering costs
under the July 1999 shelf registration.

Also in August 1999, Cox issued 13 million FELINE PRIDES for an aggregate
offering of $650 million, less $20.3 million of offering costs and $15 million
allocated to the fair value of the forward contracts embedded in these
securities. These securities will be classified as mezzanine equity on Cox's
balance sheet.

7. TRANSACTIONS WITH AFFILIATED COMPANIES

Cash requirements are funded by internally generated funds, by various
external financing transactions and, as needed, through intercompany loans from
CEI. CEI performs day-to-day cash management services for Cox, with settlements
of credit or debit balances between Cox and CEI occurring periodically with
interest at market rates (5.7% at June 30, 1999).

Included in the amounts due to CEI are the following transactions:

(THOUSANDS OF DOLLARS)
---------------------
<S> <C>
Balance, December 31, 1998 ....................... $ 170,596
Cash transferred from CEI ........................ 111,268
Net operating expense reimbursements ............. (171,188)
---------

Balance, June 30, 1999 ........................... $ 110,676
=========
</TABLE>

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<PAGE> 13

8. COMMITMENTS AND CONTINGENCIES

Cox is a party to various legal proceedings that are ordinary and
incidental to its business. Management does not expect that any legal
proceedings currently pending, including the putative class actions, will have a
material adverse impact on Cox's consolidated financial position, consolidated
results of operations or consolidated cash flows. See "-- Part II - Other
Information -- Item 1. Legal Proceedings."

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following discussion should be read in conjunction with the
accompanying consolidated financial statements for the three- and six-month
periods ended June 30, 1999 and 1998.

The forward looking statements included in Management's Discussion and
Analysis of Financial Condition and Results of Operations and other parts of
this report, which reflect management's best judgement based on factors
currently known, involve risks, uncertainties and other factors which may cause
the actual performance of Cox to be materially different from the performance
indicated or implied by such statements. Such factors include, among others:
competitive pressures within the broadband communications industry; terms and
availability of capital; the level of success of Cox's operating initiatives;
changes in business strategy and development plans; the ability of Cox to
mitigate the impact of the Year 2000 issue; the impact from Cox's pending
acquisitions; and other factors included in the discussion below. Cox claims the
protection of the safe harbor for forward looking statements contained in
Section 21E of the Securities Exchange Act of 1934, as amended, for all forward
looking statements included in this report.

RECENT ACQUISITIONS AND EXCHANGES

In March 1999, Cox signed a definitive agreement to purchase from First
Commonwealth Communications, Inc. cable television systems serving approximately
11,000 customers in Gloucester, New Kent, West Point and King and Queen County,
Virginia. Cox expects to complete this transaction, which is subject to legal
and regulatory review, during the third quarter of 1999.

Also in March 1999, Cox and MediaOne signed a definitive agreement to trade
selected cable television systems in Massachusetts, Rhode Island and
Connecticut. Under the terms of the agreement, Cox would trade its cable
television systems in Massachusetts, serving approximately 54,000 customers, for
MediaOne properties in Enfield, Connecticut and Westerly, Rhode Island, serving
51,000 customers, and cash. Cox expects to complete this transaction, which is
subject to legal and regulatory review, during the third quarter of 1999.

In May 1999, Cox entered into a definitive agreement to merge with TCA
Cable TV, Inc., a cable television operator serving approximately 883,000
customers in Texas, Arkansas, Louisiana and four other states for $3.9 billion.
Under the terms of the agreement, Cox will assume approximately $542.0 million
in TCA debt and each share of outstanding TCA common stock will be converted
into the right to receive $31.25 in cash and 0.7418 of a share of Cox Class A
common stock. Alternatively, TCA shareholders can elect to receive $62.50 in
cash per TCA share or 1.4836 shares of Cox Class A common stock per TCA share,
subject in each case to proration in the event that those elections would result
in the payment by Cox of more than $1.7 billion in cash or the issuance of more
than 39.6 million shares of Cox Class A common stock to TCA shareholders. TCA
shareholders approved the merger and the merger was completed on August 12,
1999.

Also in May 1999, Cox exercised its right under the Cox Communication PCS,
L.P. partnership agreement to transfer its remaining 32.0% equity interest in
Cox PCS to Sprint Corporation in exchange for approximately 19.1 million shares
of Sprint's PCS Common Stock-Series 2. As a result of this transaction, Cox
recognized a pre-tax gain of $908.5 million.

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<PAGE> 14

Also in July 1999, Cox and Multimedia Cablevision, Inc., a subsidiary of
Gannett Co., Inc., entered into a definitive purchase agreement whereby Cox will
purchase for $2.7 billion in cash Multimedia's cable television operations
serving 522,000 customers in Kansas, Oklahoma and North Carolina. Cox expects to
complete this transaction, which is subject to legal and regulatory review, in
the first quarter of 2000.

RESULTS OF OPERATIONS

The results of operations discussed below include the June 1998 acquisition
of the Tucson and Sierra Vista, Arizona cable television system and the October
1998 acquisition of the Las Vegas, Nevada cable television system, which we
refer to collectively as the 1998 acquisitions, and the April 1998 sale of Cox's
partnership interests and net assets in and operations of PrimeStar Partners,
L.P.

THREE MONTHS ENDED JUNE 30, 1999 COMPARED WITH THREE MONTHS ENDED JUNE 30, 1998

Total revenues for the three months ended June 30, 1999 were $509.9
million, a 28% increase over revenues of $398.3 million for the three months
ended June 30, 1998. Basic customers were 3,780,574, a 2.9% increase over
customers at June 30, 1998 after adjusting for the 1998 acquisitions.

Complete basic revenues for the second quarter of 1999 increased 22% over
1998 to $355.2 million due to basic and digital customer growth at existing
cable television systems, the 1998 acquisitions and rate increases implemented
primarily during the fourth quarter of 1998. As of June 30, 1999, Cox Digital TV
was launched in ten markets and had 144,116 customers. The rate increases are
the result of channel additions, increased programming costs and the
pass-through of inflation adjustments.

Premium service revenues for the second quarter of 1999 increased 13% over
1998 to $52.4 million primarily due to the 1998 acquisitions. Pay-per-view
revenues were $17.2 million, up from $8.0 million from the same period in 1998
and primarily due to the 1998 acquisitions. Advertising revenues increased 34%
to $44.7 million due to the 1998 acquisitions and growth in local and national
advertising sales during 1999.

Data revenues for the second quarter of 1999 increased to $12.1 million
from $4.0 million due to growth in Cox's residential data service, Cox@Home. As
of June 30, 1999, Cox@Home was launched in ten markets and had 112,006
customers. Telephony revenues for the second quarter of 1999 increased to $20.4
million from $6.6 million due to growth in both residential and commercial
telephony offerings. As of June 30, 1999, Cox's residential telephone offering
was launched in six markets and had 59,793 customers.

Programming costs were $122.3 million for the second quarter of 1999, an
increase of 28% over the same period in 1998. This increase was due to basic and
digital customer growth at existing cable television systems, the 1998
acquisitions, January 1999 programming rate increases and channel additions.
Plant operations expenses increased 18% to $36.2 million due to the 1998
acquisitions, increased plant maintenance and costs related to new services.
Marketing costs increased 24% to $30.9 million for the current quarter due to
the 1998 acquisitions and costs primarily associated with the rollout of digital
video, high-speed data and

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<PAGE> 15

telephony services. General and administrative expenses for the second quarter
of 1999 increased 31% to $124.6 million due to the 1998 acquisitions and costs
primarily associated with digital video, high-speed data and telephony services
in newly launched markets.

Operating cash flow (operating income before depreciation and
amortization), a non-GAAP measure of performance, is a commonly used financial
analysis tool for measuring and comparing cable television companies in several
areas of liquidity, operating performance and leverage. Operating cash flow
increased 29% to $195.9 million for the second quarter of 1999. The operating
cash flow margin (operating cash flow as a percentage of revenues) for the
current quarter was 38.4%, an increase from 38.2% for the second quarter of
1998.

Depreciation increased to $133.3 million for the second quarter of 1999
compared to $80.4 million during the same period in 1998 due to the 1998
acquisitions and the continued upgrade and rebuild of the broadband network.
Amortization increased to $26.0 million for the second quarter of 1999 compared
to $17.8 million during 1998 due to the 1998 acquisitions. Operating income for
the second quarter of 1999 was $36.5 million, a decrease of 32% compared to the
same period in 1998.

Interest expense increased to $68.7 million for the second quarter 1999
compared to $51.0 million for the same period in 1998 primarily due to an
increase in the total debt outstanding and offset by more favorable average
interest rates during 1999. Equity in net losses of affiliated companies was
$29.6 million primarily due to losses associated with Cox PCS. Net gain on
investments of $908.5 million was due to the pre-tax gain on the put of Cox's
remaining interest in Cox PCS to Sprint PCS.

Net income for the current quarter was $505.8 million as compared to net
loss of $12.2 million for the second quarter of 1998.

SIX MONTHS ENDED JUNE 30, 1999 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1998

Total revenues for the six months ended June 30, 1999 were $1,008.4
million, a 24% increase over revenues of $814.1 million for the six months ended
June 30, 1998. Basic customers were 3,780,574, a 2.9% increase over customers at
June 30, 1998 after adjusting for the 1998 acquisitions.

Complete basic revenues for the six months ended June 30, 1999 increased
23% over 1998 to $706.5 million due to basic and digital customer growth at
existing cable television systems, the 1998 acquisitions and rate increases
implemented primarily during the fourth quarter of 1998. As of June 30, 1999,
Cox Digital TV was launched in ten markets and had 144,116 customers. The rate
increases are the result of channel additions, increased programming costs and
the pass-through of inflation adjustments.

Premium service revenues for the six months ended June 30, 1999 increased
13% over 1998 to $104.4 million primarily due to the 1998 acquisitions.
Pay-per-view revenues were $41.6 million, up from $18.4 million from the same
period in 1998 primarily due to the 1998 acquisitions and the Holyfield/Lewis,
Tyson/Botha and De La Hoya/Quartey national boxing events during the first
quarter 1999. Advertising revenues increased 39% to $81.1 million due to the
1998 acquisitions and growth in local and national advertising sales during
1999.

Data revenues for the six months ended June 30, 1999 increased to $22.0
million from $6.8 million due to growth in Cox's residential data service,
Cox@Home. As of June 30, 1999, Cox@Home was launched in ten markets and had
112,006 customers. Telephony revenues for the six months ended June 30, 1999
increased to $36.7 million from $11.6 million due to growth in both residential
and commercial telephony offerings. As of June 30, 1999, Cox's residential
telephone offering was launched in six markets and had 59,793 customers.

Programming costs were $251.1 million for the six months ended June 30,
1999, an increase of 32% over the same period in 1998. This increase was due to
basic and digital customer growth at existing cable television systems,

14
<PAGE> 16

the 1998 acquisitions, January 1999 programming rate increases, and the channel
additions and pay-per-view events discussed above. Plant operations expenses
increased 19% to $75.3 million due to the 1998 acquisitions and increased plant
maintenance and costs related to new services. Marketing costs increased 22% to
$57.5 million for the six months ended June 30, 1999 due to the 1998
acquisitions and costs primarily associated with the rollout of digital video,
high-speed data and telephony services. General and administrative expenses for
the six months ended June 30, 1999 increased 32% to $240.1 million due to the
1998 acquisitions and costs primarily associated with digital video, high-speed
data and telephony services in newly launched markets.

Operating cash flow, a non-GAAP measure of performance, is a commonly used
financial analysis tool for measuring and comparing cable television companies
in several areas of liquidity, operating performance and leverage. Operating
cash flow increased 28% to $384.4 million for the six months ended June 30,
1999. The operating cash flow margin for the six months ended June 30, 1999 was
38.1%, an increase from 37.0% for the comparable period in 1998.

Depreciation increased to $230.0 million for the six months ended June 30,
1999 compared to $167.4 million during the same period in 1998 due to the 1998
acquisitions and the continued upgrade and rebuild of the broadband network.
Amortization increased to $52.6 million for the six months ended June 30, 1999
compared to $36.4 million during 1998 due to the 1998 acquisitions. Operating
income for the six months ended 1999 was $101.8 million, an increase of 5%
compared to the same period in 1998.

Interest expense increased to $122.7 million for the six months ended June
30, 1999 compared to $104.1 million for the same period in 1998 primarily due to
an increase in the total debt outstanding and offset by more favorable average
interest rates during 1999. Equity in net losses of affiliated companies was
$76.0 million primarily due to losses associated with Cox PCS. Net gain on
investments of $1,328.0 million includes the $908.5 million pre-tax gain on the
put of Cox's remaining interest in Cox PCS to Sprint PCS in May 1999 and the
$433.1 million pre-tax gain on the sale of Cox's interest in Telewest
Communications plc in January 1999.

Net income for the six months ended June 30, 1999 was $757.0 million as
compared to net loss of $114.2 million for the comparable period in 1998.

LIQUIDITY AND CAPITAL RESOURCES

USES 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 affiliated companies primarily focused on
telephony, programming and communications-related activities.

During the six months ended June 30, 1999, Cox made capital expenditures of
$501.5 million. These expenditures were primarily directed at upgrading and
rebuilding its broadband network for the delivery of high-speed data and
telephony. Capital expenditures for 1999 are expected to range between $925.0
million and $975.0 million. This estimate does not include any additional
capital expenditures related to pending 1999 acquisitions.

Investments in affiliated companies during the six months ended June 30,
1999 consisted primarily of debt and equity funding to NextLink Nevada. Funding
requirements for the remainder of 1999 for investments in affiliated companies
are expected to range between $3.0 million and $5.0 million.

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<PAGE> 17

During the six months ended June 30, 1999, net repayments of $350.0 million
were made for revolving credit borrowings and principal repayment of $150.0
million was made on the Floating Rate Reset Notes.

SOURCES OF CASH

Cox generated $193.7 million from operating activities during the six
months ended June 30, 1999. Proceeds from the from the sale of investments of
$742.6 million relate primarily to the sale of Telewest during first quarter
1999. During the six months ended June 30, 1999, net borrowings on commercial
paper were $181.0 million.

Cox Enterprises continues to perform day-to-day cash management services
for Cox with settlements of balances between Cox and Cox Enterprises occurring
periodically bearing interest at 50 basis points above Cox Enterprises' current
commercial paper borrowings.

In July 1999, Cox filed a Form S-4 Registration Statement with the
Securities and Exchange Commission to register shares of Class A common stock.
Also in July 1999, Cox and certain wholly-owned Cox financing trusts filed a
Form S-3 Registration Statement with the Securities and Exchange Commission for
the offer and sale from time to time of Class A common stock, preferred stock,
stock purchase contracts, stock purchase units, debt securities and junior
subordinated debentures of Cox Communications, Inc., and trust preferred
securities and capital securities of Cox Trust I and Cox Trust II, with an
aggregate initial offering price not to exceed $8.0 billion. Upon filing of this
shelf registration statement, Cox transferred the $2.0 billion of securities
registered on its April 1999 shelf registration which included all of the
securities remaining on its July 1998 shelf registration, to the July 1999 shelf
registration.

In August 1999 under the July 1999 shelf registration, Cox issued:

- $2.0 billion aggregate principal amount of senior debt securities with
maturity dates ranging from August 15, 2000 to August 15, 2009 and interest
rates ranging from LIBOR plus 60 basis points to 7.875%. The net proceeds
to Cox were $1,988.5 million;

- 10.1 million shares of Class A common stock for an aggregate offering of
$350.3 million, less $12.6 million of offering costs; and

- 13 million FELINE PRIDES for an aggregate offering of $650 million,
less $20.3 million of offering costs and $15 million allocated to the
fair value of the forward contracts embedded in these securities. These
securities will be classified as mezzanine equity on Cox's balance sheet.

Cox intends to use these proceeds to partially finance pending
acquisitions, for capital expenditures, to retire commercial paper indebtedness
and for other general corporate purposes.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

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<PAGE> 18

OTHER MATTERS

YEAR 2000 READINESS DISCLOSURE

General

The Year 2000 issue is the potential impact of computer programs and
embedded computer microprocessors being unable to properly process dates or
date-sensitive calculations beyond December 31, 1999. Computer systems that
process dates or date-sensitive calculations may recognize only the last two
digits to identify the year in a date, or identify digits as an instruction.
Accordingly, the year "00" may be recognized as the year 1900 rather than the
year 2000, which may result in miscalculations or system failures. A computer
system is deemed to be year 2000 compliant when it continues to produce
understandable, accurate and predictable results that conform to the original
functional specifications, regardless of the millennium change. Cox recognizes
the importance of this issue and is actively managing an appropriate transition
into the year 2000.

Cox's following discussion addresses Year 2000 readiness for our current
operations. Pending acquisitions are then discussed separately.

State of Readiness

In June 1997, Cox appointed a project team, using both internal and
external resources, to develop its Year 2000 initiative. Cox is, as necessary,
upgrading and replacing affected information technology systems (such as
computer systems and software applications) and non-information technology
systems (such as equipment with embedded microprocessors). Cox is also designing
a contingency and business continuation plan and will implement these plans as
necessary.

The project team has developed a plan to assess, remediate, and test its
information technology and non-information technology systems sufficiently in
advance of the year 2000 to reduce the risk of an interruption in critical
services as a result of the millennium date change. The Year 2000 initiative
addresses the following systems:

- - Applications: custom and packaged software applications;
- - Infrastructure: local- and wide-area networks, hardware, processors and
operating systems;
- - Plant: the Cox plant, distribution network and programming components; and
- - Vendors: business-critical third party vendors.

The general phases of the Year 2000 initiative common to all systems are as
follows:

- - Phase 1: inventory of all business processes to document the Year 2000
status for each product and service;
- - Phase 2: assign priorities to identified items;
- - Phase 3: assess the Year 2000 compliance of items determined to be material
to Cox;
- - Phase 4: repair or replace material items that are determined not to be
Year 2000 compliant;
- - Phase 5: test material items;
- - Phase 6: integration testing of multiple information technology and
non-information technology assets, both custom and vendor-provided, to
determine correct manipulation of dates and date-related data; and
- - Phase 7: design and implement contingency and business continuation plans
for each organization and Cox location, where appropriate.

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<PAGE> 19

STATUS OF INITIATIVE AS OF AUGUST 1, 1999

<TABLE>
<CAPTION>
APPLICATIONS INFRASTRUCTURE PLANT VENDORS
------------ -------------- ----- -------
<S> <C> <C> <C> <C>
Phase 1-4 Complete Complete Complete Complete

Phase 5 Complete Complete Substantially Complete
complete

Phase 6 Complete Complete Substantially Substantially
complete complete

Phase 7 In progress In progress In progress In progress
</TABLE>

Applications. Applications consist of custom and packaged software. In
1995, Cox began a company-wide business systems replacement project to meet the
growth in the cable business and to meet emerging business needs. Accordingly,
Cox is in the process of replacing or upgrading substantially all applications
irrespective of the Year 2000 issue.

Cox's two most critical applications are its common financial system and
the cable operation support and billing system. The financial system is based on
packaged software from JDEdwards. This software was upgraded to version 7.5
during fourth quarter 1998. Cox has made appropriate inquiries and JDEdwards has
provided certification that Version 7.5 is Year 2000 compliant. Cox operates all
of its cable properties using the ICOMS subscriber management system licensed
from Convergys, Inc. Cox has made appropriate inquiries and Convergys, Inc. has
provided opinions indicating that ICOMS is Year 2000 compliant. Additionally,
Cox has conducted its own testing of its billing and customer care platform.
Such testing has included the testing of interfaces with numerous external
partners including @Home, bill printers and lockboxes. Such testing resulted in
no critical failures.

Cox has a very limited inventory of custom or in-house developed software.
Cox believes at this point in time, that all such software has been made Year
2000 compliant.

Infrastructure. Infrastructure consists of local- and wide-area networks,
hardware, processors and operating systems. Cox has received recommendations
from significant vendors as to the appropriate version of software needed to be
Year 2000 compliant. Cox has implemented such upgrades as are required for Year
2000 compliance on all central processor resources as well as all LAN and WAN
elements. The project team has also conducted reviews of non-information
technology systems (i.e., elevator, automated lighting, building security
systems, fire suppression systems, etc.). Based upon the project team's review,
Cox has concluded that exposure from non-information technology systems failing
to be Year 2000 compliant is limited and does not pose a material operational or
financial risk to the company. Systems that are found to be non-compliant will
be upgraded.

Plant. The cable plant is comprised of an integrated distribution network
providing video, voice and data services to its customers. In 1995, Cox began to
deploy fiber optic cable and to upgrade the technical quality of its hybrid
fiber-coaxial broadband network facilitating the delivery of additional
programming and services. As a result, substantially all of Cox's cable plant
equipment and software is state-of-the-art, which has helped to reduce the level
of plant Year 2000 issues. Certain equipment, primarily addressable control
systems, is known to require upgrades or replacement to operate properly. As of
August 1, 1999 some of these upgrades were not yet available from their
respective vendors. Cox expects that substantially all plant activities will be
completed through repair and replacement by the end of the third quarter of
1999. Cox has developed testing and integration testing procedures, and has
completed significant testing activity. Due to the nature of the cable plant
network, testing procedures are dependent on testing performed by vendors and
Cox in a non-production environment. Cox has evaluated all equipment used to
provide Emergency Alert Services. All such equipment has been certified by its
supplier to be Year 2000 compliant.

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<PAGE> 20

Vendors. Cox's assessment of its vendors includes a formal communication
program with Cox's significant vendors to determine the extent to which Cox is
vulnerable should those third parties fail to remediate their own Year 2000
non-compliance. In addition, Cox has completed testing with certain key vendors.
With respect to customers, most of Cox's customer base consists of individual
subscribers; thus, vulnerability to a few key customers is not a significant
risk to Cox. Cox is not aware of any anticipated Year 2000 non-compliance by its
vendors or customers that could materially affect Cox's business operations;
however, Cox does not control the systems of other companies and cannot assure
that such systems will be converted in a timely fashion and, if not converted,
would not have an adverse effect on Cox's business operations.

Like most other companies, Cox is dependent upon a variety of external
suppliers including vendors providing electrical power, local and long distance
telephone services, data networking services, water, fuel for vehicles and other
necessary commodities. Cox also relies upon the interstate banking system and
related electronic communications for such functions as transmitting financial
data from field locations to the home office and sweeping cash into lockboxes.
Cox is currently not aware of any material non-compliance by these vendors that
will materially affect Cox's business operations; however, Cox does not control
these systems and cannot assure that they will be converted in a timely fashion
and, if not converted, would not have an adverse effect on Cox's business
operations.

Costs

Total costs associated with Year 2000 compliance are not expected to be
material to Cox's financial position. Most of the costs associated with Cox's
applications systems, including subscriber equipment, upgrades and replacements
are being incurred irrespective of the Year 2000 initiative. In addition, the
timing of these upgrades and replacements has not been accelerated in order to
become Year 2000 compliant. As of August 1, 1999, the total incremental costs
expended on the Year 2000 initiative is approximately $2.1 million. Cox expects
that the total incremental costs of the Year 2000 initiative upon completion
will be less than $3.0 million.

Risks and Reasonably Likely Worst Case Scenarios

The failure to correct a material Year 2000 problem could result in system
failures leading to a disruption in, or failure of certain normal business
activities or operations. Such failures could materially and adversely affect
Cox's results of operations, liquidity and financial condition. Due to the
general uncertainty inherent in the Year 2000 problem, resulting in part from
the uncertainty of the Year 2000 readiness of third-party suppliers and
customers, Cox is unable to determine at this time whether the consequences of
Year 2000 failures will have a material impact on Cox's results of operations,
liquidity or financial condition. The Year 2000 initiative is expected to
significantly reduce Cox's level of uncertainty about the Year 2000 problem and,
in particular, about the Year 2000 compliance and readiness of its material
vendors. Cox believes that the new applications and cable plant business systems
implemented since 1995 and its Year 2000 initiative reduce the possibility of
significant disruptions to normal operations.

Pending Acquisitions

Cox is in the process of acquiring TCA and certain cable televisions
systems from Gannett, AT&T, Media General, MediaOne Group and First
Commonwealth Communications, Inc. Among these acquisitions, the TCA merger
closed on August 12, 1999 and Media General, MediaOne and First Commonwealth
have estimated closing dates prior to January 1, 2000. Each of the systems to
be acquired is implementing its own Year 2000 readiness initiative, and has
either covenanted, warranted or represented to Cox that it is either already
Year 2000 compliant, or that it will be compliant before the respective
acquisitions' closing dates, or is on track with its plan addressing the Year
2000 problem. Cox is in the process of verifying the compliance claims, and
further, has negotiated certain contractual rights in connection with the
acquisitions

19
<PAGE> 21
providing recourse against the sellers in the event that covenants,
representations and warranties relating to Year 2000 readiness are not met. To
date, due diligence regarding the acquired systems has not revealed any likely
failures relating to the Year 2000 that would be likely to have a material
adverse effect on Cox's operations or financial condition. After closing, Cox
intends to integrate the acquired cable television systems into its Year 2000
initiative. Additional information on Year 2000 readiness for systems to be
acquired from TCA, Gannett, AT&T, Media General and MediaOne, all of whom are
required to make periodic filings with the SEC and who, in the aggregate
account for 99% of the subscribers to be acquired in the pending acquisitions,
may be available in those companies' respective SEC filings.

Contingency and Business Continuation Plan

The Year 2000 initiative calls for suitable contingency planning for Cox's
at-risk business functions. Cox normally makes contingency plans in order to
avoid interrupted service providing video, voice and data products to Cox's
customers. The normal contingency planning will be revised in mid-1999, where
appropriate, to specifically address Year 2000 exposure with respect to service
to customers.

All statements relating to the Year 2000 made in Forms 10-K, 10-Q or
Registration Statements filed by Cox with the SEC after January 1, 1996 are
hereby incorporated by reference and designated as Year 2000 Readiness
Disclosures.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Cox has estimated the fair values of financial instruments using available
market information and 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 amounts of cash, accounts receivable, other assets, accounts
payable, deferred income and amounts due to/from Cox Enterprises are reasonable
estimates of their fair value at June 30, 1999 and December 31, 1998.

The estimated fair value of debt instruments are based on discounted cash
flow analyses using Cox's incremental borrowing rate for similar types of
borrowing arrangements and dealer quotations. The commercial paper at June 30,
1999 and the revolving credit agreements, commercial paper and Floating Rate
Reset Notes at December 31, 1998 bear interest at current market rates and,
thus, approximate fair value. Cox is exposed to interest rate volatility with
respect to the foregoing variable rate debt instruments.

The estimated fair value of Cox's remaining debt instruments at June 30,
1999 was $2,290.9 million compared to a carrying amount of $2,381.6 million. The
estimated fair value of the remaining debt instruments at December 31, 1998 was
$2,385.7 million compared to a carrying amount of $2,393.6 million. In addition,
the effect of a hypothetical one percentage point decrease in interest rates
would increase the estimated fair value of the remaining debt instruments with a
carrying amount of $2,381.6 million to $2,426.0 million at June 30, 1999 and
$2,393.6 million to $2,540.6 million at December 31, 1998.

In December 1998, Cox entered into four costless collar agreements to hedge
its investment in 15 million shares of AT&T common stock. The agreements contain
a notional amount of $52.00 per share and mature at various dates through
January 2003. Cox has recorded the costless collar agreements at their estimated
fair market value, with unrealized losses resulting from changes in fair value
between measurement dates of $85.3 million and $4.3 million at June 30, 1999 and
December 31, 1998, respectively, recorded as a component of other comprehensive
income.

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<PAGE> 22

The fair values of some of Cox's investments are estimated based on quoted
market prices for those or similar investments. For cost method investments for
which there are no quoted market prices, a reasonable estimate of fair value was
not practicable as such estimate could not be made without incurring excessive
costs.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On October 9, 1997, three individual subscribers filed a putative class
action suit in Superior Court of the State of California, County of San Diego
against Cox and its cable television system subsidiaries in California (the "Cox
California Systems") arising out of the manner in which the Cox California
Systems sell premium channel cable services. The suit alleges that the Cox
California Systems unlawfully require limited basic cable customers to purchase
the expanded basic services tier in order to purchase premium channels, i.e.,
channels sold on an a-la carte basis such as Home Box Office and Showtime. The
suit asserts causes of action under California antitrust and consumer protection
laws. The suit seeks injunctive relief as well as an order awarding the class
members compensatory damages, plus statutory damages, punitive damages, interest
and attorney's fees. On February 13, 1998, the Court granted Cox's motion to
stay the suit and referred it on grounds of Primary Jurisdiction to the Federal
Communications Commission for consideration of issues best addressed by the
FCC's expertise should the plaintiffs elect to file a complaint with the FCC.
The plaintiffs filed a Petition for Order to Show Cause against Cox on October
1, 1998. In addition, they sought to have the stay lifted by the court. On
January 15, 1999, the court denied the plaintiff's motion to lift the stay. On
July 19, 1999, the FCC dismissed the Petition without prejudice to any further
FCC action at a later date. In doing so, the FCC found that Cox has complied
with the rules at issue with regard to its southern San Diego operations where
the three named petitioners are subscribers. The FCC's decision is not final.
When it becomes final, if the plaintiff seeks a lifting of the stay and if the
court lifts the stay it had entered for further proceedings in the case, Cox
will defend the action vigorously. The outcome of this matter cannot be
predicted at this time.

Cox and certain subsidiaries are defendants in eight putative subscriber
class action suits in state courts in Arizona, Oklahoma, Louisiana, Florida,
Nebraska, Indiana, Texas and Nevada initiated between October 17, 1997 and
December 17, 1998. The suits all challenge the propriety of late fees charged by
the subsidiaries to customers who fail to pay for services in a timely manner.
The suits seek injunctive relief and various formulations of damages under
various claimed causes of action under various bodies of state law. These
actions are in various stages of defense and, in three cases, the parties have
reached settlement agreements, two of which have been approved by the court and
one of which is pending court approval. The court approval of the settlement of
the Florida case is on appeal, and Cox's brief in support of the court's
approval is due August 20, 1999. The remaining actions are being defended
vigorously. The outcome of these matters cannot be predicted at this time.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

Cox amended its Certificate of Incorporation to (a) increase the number of
shares of authorized capital stock and (b) effect a 2-for-1 stock split.

The number of authorized shares of capital stock was increased by
385,000,000 shares to 720,000,000 shares in the following classes:

- - Class A common stock was increased by 334,000,00 shares to 650,000,000
authorized shares;
- - Class C common stock was increased by 46,000,000 to 60,000,000 authorized
shares; and
- - preferred stock was increased by 5,000,000 to 10,000,000 authorized shares.

21
<PAGE> 23
The 2-for-1 stock split of the Class A common stock, Class C common stock
and Series A convertible preferred stock was effective on May 21, 1999.

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

Cox held its Annual Meeting of Stockholders on May 13, 1999. Four matters
were voted upon at the meeting: (a) the election of a Board of Directors of
seven members to serve until the 2000 Annual Meeting or until their successors
are duly elected and qualified; (b) the amendment of the Certificate of
Incorporation to increase the number of authorized shares of each class of
stock; (c) a 2-for-1 stock split of each class of stock; and (d) ratification of
the appointment by the Board of Directors of Deloitte & Touche LLP as
independent auditors for the fiscal year ending December 31, 1999.

The following directors were elected, and they received the votes
indicated:

<TABLE>
<CAPTION>
NOMINEE VOTES IN FAVOR VOTES WITHHELD
------- -------------- --------------
<S> <C> <C>
Janet Morrison Clarke 393,605,704 263,644
David E. Easterly 393,597,740 271,608
Robert F. Erburu 393,573,325 296,023
James C. Kennedy 393,598,099 271,249
Robert C. O'Leary 393,597,445 271,903
James O. Robbins 393,596,837 272,511
Andrew J. Young 393,163,651 705,697
</TABLE>

The amendment to Certificate of Incorporation to increase the authorized
number of shares was approved by each class of stockholders as follows:

<TABLE>
<CAPTION>
CLASS VOTES IN FAVOR VOTES OPPOSED VOTES ABSTAINED
----- -------------- ------------- ---------------
<S> <C> <C> <C>
Class A common 230,418,792 22,927,589 115,821
Class C common 137,988,960 - 0 - - 0 -
Series A convertible preferred 2,418,186 - 0 - - 0 -
----------- ---------- -------
All classes combined 370,825,938 22,927,589 115,821
</TABLE>

The 2-for-1 Stock split was approved by each class of Shareholders as
follows:

<TABLE>
<CAPTION>
CLASS VOTES IN FAVOR VOTES OPPOSED VOTES ABSTAINED
----- -------------- ------------- ---------------
<S> <C> <C> <C>
Class A common 252,710,160 665,773 86,269
Class C common 137,988,960 - 0 - - 0 -
Series A convertible preferred 2,418,186 - 0 - - 0 -
------------- ----------- ----------
All classes combined 393,117,306 665,773 86,269
</TABLE>

Ratification of Deloitte & Touche LLP as independent auditors of the fiscal
year ending December 31, 1999 was approved with 393,751,927 votes in favor,
29,237 votes opposed, and 88,184 abstentions.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

27 -- Financial Data Schedule

22
<PAGE> 24
(b) Reports on Form 8-K filed during the quarter ended June 30, 1999:

Form 8-K dated April 22, 1999 (filed April 30, 1999) reporting the
proposed acquisition by Cox of Media General, Inc.'s cable television
systems in Northern Virginia under Item 5, and filing the associated
Purchase Agreement s Exhibit 2.1 under Item 7.

Form 8-K dated May 12, 1999 (filed May 14, 1999) reporting the
proposed acquisition by Cox of TCA Cable TV, Inc. under Item 5, and
filing the associated Agreement and Plan of Merger and the Voting
Agreement as Exhibits 2.1 and 99.1, respectively, under Item 7. The
8-K was amended on July 20, 1999 by filing certain historical
financial statements of TCA and pro forma financial statements
reflecting the acquisition under Item 7.

Form 8-K dated May 17, 1999 (filed June 11, 1999) reporting the
transfer by Cox and its parent, Cox Enterprises, Inc., of the
remaining interest each held in Cox Communications PCS, L.P. to
Sprint Corporation in exchange for shares of Sprint's PCS Common
Stock - Series 2 under Item 5.

23
<PAGE> 25

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

COX COMMUNICATIONS, INC.

/s/ Jimmy W. Hayes Date: August 16, 1999
-----------------------------------
Jimmy W. Hayes
Executive Vice President,
Finance and Administration
and Chief Financial Officer
(Principal Financial Officer)

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR COX COMMUNICATIONS
EXTRACTED FROM FORM 10-Q FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 23,357
<SECURITIES> 0
<RECEIVABLES> 195,512
<ALLOWANCES> (8,563)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 4,167,447
<DEPRECIATION> (1,248,510)
<TOTAL-ASSETS> 16,168,739
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
(4,836)
<COMMON> (555,146)
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> (16,168,739)
<SALES> 0
<TOTAL-REVENUES> (1,008,425)
<CGS> 0
<TOTAL-COSTS> 326,412
<OTHER-EXPENSES> 282,617
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 122,672
<INCOME-PRETAX> 1,253,191
<INCOME-TAX> 496,179
<INCOME-CONTINUING> 757,012
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 757,012
<EPS-BASIC> 1.36<F1>
<EPS-DILUTED> 1.34<F1>
<FN>
<F1>EPS BASIC AND EPS DILUTED HAVE BEEN RESTATED TO REFLECT A TWO-FOR-ONE STOCK
SPLIT ON MAY 21, 1999. PRIOR FINANCIAL DATA SCHEDULES HAVE NOT BEEN RESTATED.
</FN>

</TABLE>