<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. 2)
Current Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 7, 1999
Cox Communications, Inc.
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(Exact name of Registrant as specified in its charter)
Delaware
-------------------------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)
1-6590 58-2112288
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(Commission File Number) (I.R.S. Employer Identification Number)
1400 Lake Hearn Drive
Atlanta, Georgia 30319
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(Address of principal executive offices) (Zip Code)
(404) 843-5000
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(Registrant's telephone number, including area code)
<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of business acquired:
Not Applicable.
(b) Unaudited pro forma and as adjusted combined condensed
financial information:
Unaudited pro forma and as adjusted combined condensed
financial information which gives effect to the planned
offering of 10.1 million shares of our Class A common stock,
13 million FELINE PRIDES, and $1,850 million of Senior
Debt Securities and the other financings and pending
acquisitions of TCA Cable TV, Inc. for shares of Class A
Common Stock and cash, of certain cable television systems
from Media General, Inc. for cash and of certain cable
television systems and other consideration from AT&T Corp. in
exchange for the AT&T common stock held by Cox are included in
this amended report beginning on page P-1.
(c) Exhibits:
None.
<PAGE> 3
COX COMMUNICATIONS, INC.
UNAUDITED PRO FORMA AND AS ADJUSTED COMBINED CONDENSED FINANCIAL INFORMATION
The following unaudited pro forma and as adjusted combined condensed
financial information has been derived from the historical financial statements
of Cox, Prime South Diversified, Inc., TCA, the cable television systems of
Media General, Inc. and certain cable television systems from AT&T, including
AT&T's unconsolidated investment in Peak Cablevision, LLC. Pursuant to the
purchase agreement, AT&T has agreed to acquire all of the remaining interest in
Peak prior to closing the transaction with Cox.
The unaudited pro forma and as adjusted combined condensed balance sheet as
of March 31, 1999 has been presented as if the offerings and the other
financings and pending acquisitions of TCA, the Media General cable systems and
the AT&T cable systems had been consummated on that date. The unaudited pro
forma and as adjusted combined condensed statements of operations for the year
ended December 31, 1998 and for the three months ended March 31, 1999 have been
presented as if the offerings and the other financings and pending acquisitions
of TCA, the Media General cable systems and the AT&T cable systems and the
acquisition of Prime South had been consummated on January 1, 1998. Cox acquired
Prime South on October 1, 1998.
The unaudited pro forma and as adjusted combined condensed financial
information gives effect to the acquisition of Prime South and the pending
acquisitions under the purchase method of accounting for business combinations
and is based upon the assumptions and adjustments described in the accompanying
notes to the unaudited pro forma and as adjusted combined condensed financial
information presented on the following pages. A final determination of required
purchase accounting adjustments, including the allocation of the purchase price
to the assets acquired and liabilities assumed based on their respective fair
values, has not yet been made. Accordingly, the purchase accounting adjustments
made in connection with the development of the unaudited pro forma and as
adjusted combined condensed financial information are preliminary and have been
made solely for purposes of developing such unaudited pro forma and as adjusted
combined condensed financial information. Upon determination of the final fair
values of certain assets and liabilities, assuming completion of the pending
cable systems acquisitions, the actual financial position and results of
operations will differ, perhaps significantly, from the unaudited pro forma and
as adjusted combined condensed amounts reflected herein because of a variety of
factors, including availability of additional information, changes in values
not currently identified and changes in operating results between the dates of
the unaudited pro forma and as adjusted combined condensed financial
information and the date on which the acquisitions are consummated and such
final fair values are determined.
The pro forma adjustments do not reflect any operating efficiencies and
cost savings that Cox may achieve with respect to the combined companies. The
pro forma adjustments do not include any adjustments to historical revenues for
any future price changes nor any adjustments to programming, operating,
marketing and general and administrative expenses for any future operating
changes.
The unaudited pro forma and as adjusted combined condensed results are not
necessarily indicative of the financial position or operating results that would
have occurred had the transactions been consummated on the date, or at the
beginning of the period, for which such transactions have been given effect. In
addition, the unaudited pro forma and as adjusted combined condensed results are
not necessarily indicative of the combined results of future operations.
All per share amounts reflected in the unaudited pro forma and as adjusted
combined condensed financial information below have been restated to reflect
Cox's two-for-one stock split which became effective May 21, 1999.
P-1
<PAGE> 4
COX COMMUNICATIONS, INC.
UNAUDITED PRO FORMA AND AS ADJUSTED COMBINED CONDENSED BALANCE SHEET
MARCH 31, 1999
(MILLIONS OF DOLLARS)
<TABLE>
<CAPTION> PRO FORMA
MEDIA PEAK ADJUSTMENTS PRO FORMA COX
GENERAL AT&T CABLEVISION FOR THE ADJUSTMENTS PRO FORMA
COX TCA CABLE SYSTEMS CABLE SYSTEMS LLC OFFERINGS FOR ACQUISITIONS AND AS
(A) (A) (A) (A) (A) (B) (C) ADJUSTED
---------- --------- ------------- ------------- ----------- ------------- ---------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Cash................. $ 90.4 $ 4.5 $ 0.1 $ 2.9 $ 0.1 $ 2,804.4 $ (0.1) $ 4.8
483.7
Accounts and notes (3,381.2)
receivable, less
allowance for
doubtful accounts.. 174.1 22.3 10.3 10.0 1.1 217.8
Net plant and
equipment.......... 2,782.4 309.4 110.8 202.3 47.5 102.4 3,724.4
167.2
2.4
Investments.......... 7,659.3 2.0 0.6 73.3 9.5 4,993.2
(2,751.5)
Intangible assets..... 3,944.2 724.2 2.6 1,252.3 32.2 4,266.2 12,064.9
1,135.5
707.7
Other assets.......... 76.6 13.2 14.5 5.4 1.0 (9.8) 90.7
(10.2)
--------- -------- ------ -------- ------ ---------- --------- ---------
Total assets.... $14,727.0 $1,075.6 $138.9 $1,546.2 $ 81.9 $ 2,804.4 $ 721.8 $21,095.8
========= ======== ====== ======== ====== ========== ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable &
accrued expenses.... $ 287.5 $ 52.8 $ 15.2 $ 2.8 $ 4.7 $ $ (10.0) $ 353.0
Deferred income....... 46.3 2.7 6.6 0.9 56.5
Deferred income
taxes............... 3,668.3 86.4 25.9 124.4 1,234.8 4,847.3
(25.9)
(266.6)
Other liabilities..... 372.4 4.2 12.0 (4.5) 343.5
(40.6)
Debt.................. 3,383.1 532.0 34.4 551.9 104.3 1,837.0 (332.0) 4,765.4
(34.4)
(1,310.9)
Amounts due to Cox
Enterprises, Inc.... 112.7 112.7
--------- -------- ------ -------- ------ ---------- --------- ---------
Total
liabilities. 7,870.3 678.1 94.1 680.0 109.0 1,837.0 (790.1) 10,478.4
--------- -------- ------ -------- ------ ---------- --------- ---------
Minority interest..... 193.8 (73.3) 120.5
Cox obligated capital
and other securities
of subsidiary trusts... 614.7 483.7 1,098.4
Shareholders' equity
Preferred stock..... 4.8 4.8
Class A common
stock............. 527.5 5.0 0.1 10.1 34.6 577.2
(0.1)
Class C common
stock............. 27.6 27.6
Additional paid-in
capital........... 1,879.8 55.5 28.5 866.2 (34.7) 342.6 1,605.0 3,882.8
(28.6)
(831.5)
Retained earnings... 1,601.5 151.2 16.2 7.6 (151.2) 2,555.1
(16.2)
946.0
Accumulated other
comprehensive
income............ 2,815.5 1.5 (1.5) 2,351.0
(464.5)
Less: treasury
stock............. (9.5) 9.5
--------- -------- ------ -------- ------ ---------- --------- ---------
Total
shareholders'
equity......... 6,856.7 203.7 44.8 866.2 (27.1) 352.7 1,101.5 9,398.5
--------- -------- ------ -------- ------ ---------- --------- ---------
Total liabilities
and shareholders'
equity.......... $14,727.0 $1,075.6 $138.9 $1,546.2 $ 81.9 $ 2,804.4 $ 721.8 $21,095.8
========= ======== ====== ======== ====== ========== ========= =========
</TABLE>
P-2
<PAGE> 5
COX COMMUNICATIONS, INC.
NOTES TO UNAUDITED PRO FORMA AND AS ADJUSTED
COMBINED CONDENSED BALANCE SHEET
MARCH 31, 1999
(A) Represents historical amounts for Cox as of March 31, 1999, TCA as of
January 31, 1999, the Media General cable systems as of March 28, 1999 and
the AT&T cable systems as of March 31, 1999.
(B) Represents net cash proceeds of $3,294.6 million expected to be received
as a result of the concurrent offering of:
- 10.1 million shares of Class A common stock for an aggregate offering
of $350.3 million, less $12.6 million of offering costs;
- 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; and
- $1,850 million senior debt securities, less offering costs of $13
million.
(C) Represents the net effect of Cox's other financings and acquisitions of
TCA, the Media General cable systems and the AT&T cable systems and the
preliminary adjustments to the historical balance sheet of the respective
acquisitions recorded in conjunction with applying purchase accounting. A
summary of the assumptions for these adjustments is as follows:
Other Financings
Anticipated financing transactions for the remaining purchase price of the
pending acquisitions for net proceeds of approximately $483.7 million.
<TABLE>
<CAPTION>
TCA (MILLIONS OF DOLLARS)
- --- ---------------------
<S> <C>
Purchase price plus net liabilities assumed in the
acquisition of TCA:
Cox Class A common stock to be issued to TCA shareholders
(see below)............................................ $1,700.1
Cash to be paid to TCA shareholders (funded with the proceeds
from the offerings).................................... 1,613.6
Assumption of TCA debt and accrued interest............... 542.0
Cox acquisition related costs (funded with the proceeds
from the offerings).................................... 23.5
--------
Total purchase price.............................. $3,879.2
--------
Allocation of purchase price to tangible assets:
Preliminary estimate to record acquired plant and
equipment at fair value................................ $ 411.8
Preliminary estimate of deferred taxes related to property
and equipment write-up................................. (40.4)
Preliminary estimate to record investments at fair
value.................................................. 11.5
Net working capital deficit and other assets/liabilities
of TCA assumed or acquired by Cox...................... (105.9)
Minority interest in TCA consolidated entities............ (193.8)
--------
Total allocation to tangible assets............... 83.2
--------
Excess of purchase price over tangible assets............... $3,796.0
========
</TABLE>
Cox anticipates the issuance of approximately 39.6 million shares of Cox Class A
common stock, which assumes TCA director options will be converted into Cox
Class A common stock, to TCA shareholders upon consummation of the TCA
acquisition.
In addition, the pro forma adjustments reflect:
- the elimination of TCA's equity accounts, certain intangible assets
(comprised primarily of goodwill which arose from previous acquisitions
by TCA) and $9.8 million of deferred debt issuance costs;
- the reclassification of accrued interest to debt of $10.0 million which
will be refinanced subsequent to the consummation of the TCA acquisition;
and
- deferred taxes and corresponding goodwill of $1,194.4 million related to
the excess purchase price over net tangible assets acquired.
<TABLE>
<CAPTION>
Media General (MILLIONS OF DOLLARS)
- ------------- ---------------------
<S> <C>
Purchase price plus net liabilities assumed in the
acquisition of the Media General cable systems:
Purchase price in cash (funded with the proceeds
from the offerings)....................................... $1,400.0
Cox acquisition related costs (funded with the proceeds
from the offerings)....................................... 2.0
--------
Total purchase price.............................. $1,402.0
========
</TABLE>
P-3
<PAGE> 6
COX COMMUNICATIONS, INC.
NOTES TO UNAUDITED PRO FORMA AND AS ADJUSTED
COMBINED CONDENSED BALANCE SHEET -- (CONTINUED)
<TABLE>
<CAPTION>
(MILLIONS OF DOLLARS)
---------------------
<S> <C>
Allocation of purchase price to tangible assets:
Preliminary estimate to record acquired plant and
equipment at fair value................................ $ 278.0
Preliminary estimate to record investments at fair
value.................................................. 0.6
Net working capital deficit and other assets/liabilities of
the Media General cable systems assumed or acquired by
Cox....................................................... (14.2)
--------
Total allocation to tangible assets............... 264.4
--------
Excess of purchase price over tangible assets............... $1,137.6
========
</TABLE>
In addition, the pro forma adjustments reflect:
- the elimination of the Media General cable systems' equity accounts,
certain intangible assets and certain other balances not assumed in the
acquisition including $0.1 million of cash, $10.1 million of intercompany
receivables, $5.0 million of other intercompany liabilities and $34.4
million of debt; and
- the elimination of deferred taxes.
<TABLE>
<CAPTION>
AT&T (Including Peak) (MILLIONS OF DOLLARS)
- --------------------- ---------------------
<S> <C>
Purchase price plus net liabilities assumed in the
acquisition of the AT&T cable systems:
Fair value of Cox's investment in AT&T common stock....... $2,890.1
Cash proceeds received upon exchange of Cox's investment
in AT&T's common stock which will be used to pay down
Cox's historical debt.................................. (750.0)
Cox acquisition related costs (funded with the proceeds
from the offerings).................................... 10.0
--------
Net purchase price of the AT&T cable systems...... $2,150.1
--------
Allocation of purchase price to tangible assets:
Preliminary estimate to record acquired plant and
equipment at fair value................................ $ 252.1
Preliminary estimate of deferred taxes related to property
and equipment write-up................................. (0.9)
Net working capital surplus and other assets/liabilities of
the AT&T cable systems assumed or acquired by Cox......... (112.5)
Acquisition of minority interest in TCA Cable Partners II... 73.3
--------
Total allocation to tangible assets............... 212.0
--------
Excess of purchase price over tangible assets..... $1,938.1
========
</TABLE>
In addition, the pro forma adjustments reflect:
- the adjustment to fair market value of Cox's investment in AT&T common
stock of approximately $212.0 million upon consummation of the
transaction;
- the reclassification of net unrealized gain of Cox's investment in AT&T
common stock from accumulated other comprehensive income on a net-of-tax
basis of $618.7 million to retained earnings on a pre-tax basis of
$1,005.8 million. The difference of approximately $387.1 million
represents the elimination of deferred income tax liabilities related to
the unrealized gain which was originally recorded through other
comprehensive income. The $1,005.8 million pre-tax gain will be
recognized in earnings upon consummation of the transaction with AT&T;
P-4
<PAGE> 7
COX COMMUNICATIONS, INC.
NOTES TO UNAUDITED PRO FORMA AND AS ADJUSTED
COMBINED CONDENSED BALANCE SHEET -- (CONTINUED)
- the elimination of $701.4 million deferred tax liabilities related to the
July 1998 exchange of Cox's equity investment in Teleport for shares of
AT&T common stock;
- the elimination of the AT&T cable systems' equity accounts, certain
intangible assets and certain other balances not assumed in the
acquisition including $104.4 million of bank debt and $551.8 million of
other intercompany debt;
- the elimination of the AT&T cable systems' equity investment in TCA Cable
Partners II;
- additional deferred taxes of $755.5 million related to the excess
purchase price over net tangible assets acquired; and
- the reclassification of net unrealized loss on Cox's four costless collar
agreements to hedge AT&T common stock from accumulated other
comprehensive loss on a net-of-tax basis of $52.4 million to retained
earnings on a pre-tax-basis of $85.3 million. The difference of
approximately $32.9 million represents the elimination of deferred income
tax assets related to the unrealized loss which was originally recorded
through other comprehensive income. The $85.3 million pre-tax loss will
be recognized in earnings upon settlement of the costless collar
agreements.
P-5
<PAGE> 8
COX COMMUNICATIONS, INC.
UNAUDITED PRO FORMA AND AS ADJUSTED COMBINED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
(MILLIONS OF DOLLARS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
MEDIA PRO FORMA PRO FORMA
GENERAL AT&T PEAK ADJUSTMENTS ADJUSTMENTS COX
PRIME CABLE CABLE CABLEVISION FOR THE FOR PRO FORMA
COX SOUTH TCA SYSTEMS SYSTEMS LLC OFFERINGS ACQUISITIONS AND AS
(A) (A) (A) (A) (A) (A) (B) (C) ADJUSTED
------------ ------- ------ -------- ------- ----------- ------------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES................. $ 1,716.8 $ 138.2 $385.7 $157.0 $145.5 $ 40.0 $ $ $ 2,583.2
COSTS AND EXPENSES
Programming costs...... 406.8 40.9 103.7 37.3 34.9 9.8 633.4
Plant operations....... 132.8 5.8 76.7 23.6 17.2 5.1 261.2
Marketing.............. 99.5 5.7 2.5 11.9 2.8 0.2 122.6
General and
administrative........ 389.2 24.9 34.1 27.3 25.3 7.8 508.6
Satellite operating and
administrative....... 29.4 29.4
Depreciation........... 373.5 29.7 36.5 24.4 30.8 2.9 (5.6) 527.1
15.0
22.0
(2.1)
Amortization........... 84.2 10.6 19.9 0.1 12.0 1.6 15.3 313.1
104.9
28.3
36.2
------------ ------- ------ ------ ------ ------ -------- --------- ------------
OPERATING INCOME......... 201.4 20.6 112.3 32.4 22.5 12.6 (214.0) 187.8
Interest expense......... (223.3) (106.6) (34.1) (3.3) (7.6) (138.6) 60.4 (382.1)
12.7
3.3
55.0
Equity in net earnings
(losses) of affiliated
companies............... (547.2) (1.6) 5.4 41.2 (502.2)
Gain on investments, net. 2,484.2 (1,902.6) 581.6
Gain on issuance of stock
by affiliated company... 165.3 165.3
Dividend income.......... 12.2 (12.2)
Other, net............... 0.9 (8.5) (1.9) 5.4 (4.1)
------------ ------- ------ ------ ------ ------ -------- --------- ------------
INCOME (LOSS) BEFORE
TAXES AND MINORITY
INTEREST................ 2,093.5 (87.6) 69.7 29.1 26.0 5.0 (138.6) (1,950.8) 46.3
Income tax expense
(benefit)............... 822.8 27.2 11.0 9.9 (54.1) (10.7) (6.5)
(76.5)
(53.6)
(682.5)
------------ ------- ------ ------ ------ ------ -------- --------- ------------
INCOME (LOSS) BEFORE
MINORITY INTEREST....... 1,270.7 (87.6) $ 42.5 18.1 16.1 5.0 (84.5) (1,127.5) 52.8
Minority Interest....... 30.8 25.5 56.3
------------ ------- ------ ------ ------ ------ -------- --------- ------------
NET INCOME (LOSS) $ 1,270.7 $ (87.6) $ 42.5 $ 18.1 $ 16.1 $ 5.0 $ (115.3) $(1,153.0) $ (3.5)
============ ======= ====== ====== ====== ===== ======== ========= ============
PER SHARE DATA:
Basic income (loss)
share of Class A
common stock.......... $ 2.33 $ (0.01)
============ ============
Diluted income (loss)
per share of Class A
common stock........... $ 2.30 $ (0.01)
============ ============
Basic weighted-average
shares of Class A
common stock
outstanding........... 545,626,528 594,427,457
============ ============
Diluted weighted-average
shares of Class A common
stock outstanding....... 552,421,730 594,427,457
============ ============
</TABLE>
P-6
<PAGE> 9
COX COMMUNICATIONS, INC.
NOTES TO UNAUDITED PRO FORMA AND AS ADJUSTED
COMBINED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
(A) Represents historical amounts for the years ended December 31, 1998 for
Cox, October 31, 1998 for TCA, December 27, 1998 for the Media General
cable systems and December 31, 1998 for the AT&T cable systems and for the
nine months ended September 30, 1998 for Prime South.
(B) Represents the effects of:
1. interest expense as a result of the $1.850 million offering of senior
debt securities using an average interest rate of 7.375%;
2. minority interest expense as a result of the $650 million FELINE PRIDES
offering using an effective rate of 7.625%; and
3. amortization of debt issuance costs as a result of the offering of
senior debt securities using an average period of 6.25 years.
(C) Represents the effects of:
Other Financings
----------------
1. minority interest expense as a result of the anticipated transactions to
finance the remaining purchase price of the pending acquisitions for an
aggregate offering of $500 million using an effective rate of 7.769%;
Prime South
-----------
2. elimination of certain interest expense accrued by Prime South offset by
the incremental interest expense from new borrowings to fund the Prime
South acquisition with interest calculated using Cox's average cost of
funds rate of 6.4%;
3. depreciation expense on the preliminary estimated fair value of acquired
plant and equipment from Prime South over the estimated average
remaining useful life of eight years;
4. amortization expense on the excess purchase price over net tangible
assets acquired from Prime South based on preliminary asset allocations,
primarily franchise value, over 40 years;
5. amortization expense on goodwill arising from the impact on deferred
taxes as a result of this the Prime South acquisition to be amortized
over 40 years;
6. the effects on Cox's income tax provision, using a statutory rate of
35%, on the adjustments reflected in items 2., 3. and 4. above and Prime
South current year operating losses for the nine months ended September
30, 1998;
TCA
---
7. elimination of TCA's historical interest expense relating to debt
refinanced by Cox;
8. depreciation expense on the preliminary estimated fair value of acquired
plant and equipment from TCA over the estimated average remaining useful
life of eight years;
9. amortization expense on the excess purchase price over net tangible
assets acquired from TCA based on preliminary asset allocations,
primarily franchise value, over 40 years;
10. amortization expense on goodwill arising from the impact on deferred
taxes as a result of the TCA acquisition to be amortized over 40 years;
11. the effects on Cox's income tax provision, using a statutory rate of
39.4%, on the adjustments reflected in items 7., 8. and 9. above;
Media General
-------------
12. elimination of Media General's historical interest expense;
13. depreciation expense on the preliminary estimated fair value of
acquired plant and equipment from Media General over the estimated
average remaining useful life of six years;
14. amortization expense on the excess purchase price over net tangible
assets acquired from Media General based on preliminary asset
allocations, primarily franchise value, over 40 years;
15. the effects on Cox's income tax provision, using a statutory rate of
39.4%, on the adjustments reflected in items 12., 13. and 14. above;
P-7
<PAGE> 10
COX COMMUNICATIONS, INC.
NOTES TO UNAUDITED PRO FORMA AND AS ADJUSTED
COMBINED CONDENSED STATEMENT OF OPERATIONS -- (CONTINUED)
AT&T (Including Peak)
----
16. elimination of AT&T's historical interest expense;
17. reduction in interest expense as a result of the pay down in Cox's
historical debt with the net proceeds received from the exchange of
Cox's investment in AT&T common stock for the AT&T cable systems of
$740.0 million using Cox's average cost of funds rate of 6.4%;
18. adjustment to depreciation expense on the preliminary estimated fair
value of acquired from AT&T plant and equipment over the estimated
remaining average life of eight years;
19. amortization expense on the excess purchase price over net tangible
assets acquired from AT&T based on preliminary asset allocations,
primarily franchise value, over 40 years;
20. the elimination of equity in net losses from Cox's investment in
Teleport of $46.6 million, realized gains from the July 1998 exchange
of Cox's equity investment in Teleport for shares of AT&T common stock
and the subsequent sale of 3.3 million shares in December 1998
totaling $1,902.6 million and dividends received on Cox's AT&T common
stock of $12.2 million;
21. the elimination of equity in net earnings of AT&T's investment in TCA
Cable Partners II; and
22. the effects on Cox's income tax provision, using a statutory rate of
39.0%, on the adjustments reflected in items 16. through 21. above.
P-8
<PAGE> 11
COX COMMUNICATIONS, INC.
UNAUDITED PRO FORMA AND AS ADJUSTED COMBINED CONDENSED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999
(MILLIONS OF DOLLARS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
MEDIA GENERAL AT&T PEAK ADJUSTMENTS ADJUSTMENTS COX
CABLE CABLE CABLEVISION FOR THE FOR PRO FORMA
COX TCA SYSTEMS SYSTEMS LLC OFFERINGS ACQUISITIONS AND AS
(A) (A) (A) (A) (A) (B) (C) ADJUSTED
------------ ------ -------------- ------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES..................... $ 498.5 $105.4 $ 40.4 $ 39.0 $ 10.5 $ $ $ 693.8
COSTS AND EXPENSES
Programming costs.......... 128.8 28.5 10.2 10.0 2.8 180.3
Plant operations........... 39.1 20.8 4.8 4.9 1.2 70.8
Marketing.................. 26.6 0.4 3.0 0.7 30.7
General and administrative. 115.5 8.9 8.5 6.9 1.8 141.6
Depreciation............... 96.6 9.9 6.1 8.0 0.9 3.0 129.0
5.5
(1.0)
Amortization............... 26.7 5.4 0.1 4.8 0.2 25.8 77.5
7.1
7.4
------------ ------ ------ ------ ------ ------ ------ ------------
OPERATING INCOME............. 65.2 31.5 7.7 3.7 3.6 (47.8) 63.9
Interest expense............. (54.0) (9.2) (0.6) 0.1 (1.7) (34.6) 3.9 (82.3)
0.6
13.2
Equity in net earnings
(losses) of affiliated
companies.................. (46.5) 0.4 2.4 (2.4) (46.1)
Gain on investments, net..... 419.5 419.5
Dividend income.............. 11.1 (11.1)
Other, net................... (0.1) (2.7) (0.1) 2.4 (0.5)
------------ ------ ------ ------ ------ ------ ------ ------------
INCOME BEFORE TAXES
AND MINORITY INTEREST...... 395.2 19.6 7.5 6.1 1.9 (34.6) (41.2) 354.5
Income tax expense........... 144.0 7.6 2.8 3.0 (13.5) (18.1) 110.8
(13.3)
(1.7)
------------ ------ ------ ------ ------ ------ ------ ------------
INCOME BEFORE
MINORITY INTEREST.......... 251.2 12.0 4.7 3.1 1.9 (21.1) (8.1) 243.7
Minority interest............ 7.7 6.4 14.1
------------ ------ ------ ------ ------ ------ ------ ------------
NET INCOME................... $ 251.2 $ 12.0 $ 4.7 $ 3.1 $ 1.9 $(28.8) $(14.5) $ 229.6
============ ====== ====== ====== ====== ====== ====== ============
PER SHARE DATA
Basic income per share of
Class A common stock..... $ 0.45 $ 0.38
============ ============
Diluted income per share
of Class A common stock.. $ 0.45 $ 0.38
============ ============
Basic weighted-average
shares of Class A
common stock
outstanding.............. 554,896,354 603,697,283
============ ============
Diluted weighted-average
shares of Class A common
stock outstanding........ 562,837,952 611,638,881
============ ============
</TABLE>
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<PAGE> 12
================================================================================
COX COMMUNICATIONS, INC.
NOTES TO UNAUDITED PRO FORMA AND AS ADJUSTED
COMBINED CONDENSED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999
(A) Represents historical amounts for the three months ended March 31, 1999 for
Cox, January 31, 1999 for TCA, March 28, 1999 for the Media General cable
systems and March 31, 1999 for certain cable television systems of AT&T.
(B) Represents the effects of:
1. interest expense as a result of the $1,850 million offering of senior
debt securities using an average interest rate of 7.375%;
2. minority interest expense as a result of the $650 million FELINE PRIDES
offering using an effective rate of 7.625%; and
3. amortization of debt issuance costs as a result of the offering of
senior debt securities using an average period of 6.25 years.
(C) Represents the effects of:
Other Financings
----------------
1. minority interest expense as a result of the anticipated transactions to
finance the remaining purchase price of the pending acquisitions for an
aggregate offering of $500 million using an effective rate of 7.769%;
TCA
---
2. elimination of TCA's historical interest expense relating to debt
refinanced by Cox;
3. depreciation expense on the preliminary estimated fair value of acquired
plant and equipment from TCA over the estimated average remaining useful
life of eight years;
4. amortization expense on the excess purchase price over net tangible
assets acquired from TCA based on preliminary asset allocations,
primarily franchise value, over 40 years;
5. amortization expense on goodwill arising from the impact on deferred
taxes as a result of the TCA acquisition to be amortized over 40 years;
6. the effects on Cox's income tax provision, using a statutory rate of
39.4%, on the adjustments reflected in items 2., 3. and 4. above;
Media General
-------------
7. elimination of Media General's historical interest expense;
8. depreciation expense on the preliminary estimated fair value of acquired
plant and equipment from Media General over the estimated average
remaining useful life of six years;
9. amortization expense on the excess purchase price over net tangible
assets acquired from Media General based on preliminary asset
allocations, primarily franchise value, over 40 years;
10. the effects on Cox's income tax provision, using a statutory rate of
39.4%, on the adjustments reflected in items 7., 8. and 9. above;
AT&T (Including Peak)
----
11. elimination of AT&T's historical interest expense;
12. reduction in interest expense as a result of the pay down in Cox's
historical debt with the net proceeds received from the exchange of
Cox's investment in AT&T common stock for the AT&T cable systems of
$740.0 million using Cox's average cost of funds rate of 6.2%;
13. adjustment to depreciation expense on the preliminary estimated fair
value of acquired plant from AT&T and equipment over the estimated
remaining average life of eight years;
14. amortization expense on the excess purchase price over net tangible
assets acquired from AT&T based on preliminary asset allocations,
primarily franchise value, over 40 years;
15. the elimination of dividends received on Cox's shares of AT&T common
stock of $11.1 million;
16. the elimination of equity in net earnings of AT&T's in TCA Cable
Partners II; and
17. the effects on Cox's income tax provision, using a statutory rate of
39.0%, on the adjustments reflected in items 11. through 16. above.
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<PAGE> 13
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this amended report to be signed on its behalf by
the undersigned hereunto duly authorized.
COX COMMUNICATIONS, INC.
Dated: August 9, 1999 By: /s/ Andrew A. Merdek
---------------------------------
Andrew A. Merdek
Corporate Secretary