Cox Communications Q2 Financial Results for 1999 - Company Financial Information

Edge: Work-Group Computing Report, August 2, 1999

Cox Communications, Inc. (NYSE:COX) Tuesday reported financial results for the three months ended June 30, 1999.

"We had a very strong second quarter and first half of 1999 on several strategic fronts," said Jim Robbins, President and Chief Executive Officer. "Operationally, we achieved solid customer growth of 2.9% in our cable television business during the second quarter, as well as continued growth of our new advanced communications services. Financially, total pro forma revenues and operating cash flow increased 12% and 11%, respectively.

"We also have made tremendous progress in advancing our overall growth strategy during 1999," Robbins continued. "Since the end of the first quarter, we have announced four major acquisitions that will strengthen our presence in several key geographic areas and propel us to the 6-million-customer milestone. This size and scale will allow us to compete successfully in the vast and rapidly growing communications marketplace, while also maintaining the tight customer and community bonds that have made Cox the industry leader in service for many years."

In addition to the recently announced Media General and TCA Cable TV acquisitions, and the exchange of Cox's AT&T stock for cable systems and other consideration including cash, Robbins noted that Cox Tuesday announced the acquisition of the cable television assets of Gannett Co. "We are delighted to receive Gannett's 522,000 cable customers in several attractive markets. In particular, we are very excited to acquire the operation in Oklahoma City, which will consolidate this important Cox market and increase our system there to 240,000 customers. Following the completion of our pending transactions, we will serve more than 2.4 million customers in a six-state region stretching from Nebraska to Texas, and east to Arkansas and Louisiana. This highly-clustered regional presence creates enormous growth potential and will be especially valuable as we accelerate the deployment of advanced services in these markets."

Robbins concluded, "Above all, the Gannett cable systems acquisition, and the three transactions that came before it, exemplify our aggressive but prudent growth strategy to ensure the long-term strength of Cox Communications for our shareholders, customers, employees, and communities. Following the close of these transactions, our focus will turn to the integration of all newly acquired systems as we continue to execute on the rollout of new services."

PRO FORMA RESULTS OF OPERATIONS

The pro forma results discussed below reflect the 1998 acquisitions of cable television systems and the sale of Cox's partnership interests and net assets in and operations of PrimeStar Partners, L.P. as if such transactions had occurred on January 1, 1998.

Pro Forma three months ended June 30, 1999 compared with pro forma three months ended June 30, 1998

Total revenues for the three months ended June 30, 1999, were $509.9 million, a 12% increase over revenues of $455.5 million for the three months ended June 30, 1998. Total cable revenues for the second quarter of 1999 increased 7% to $477.3 million compared to the same period in 1998. Basic customers were 3,780,574, a 2.9% increase over June 30, 1998.

Complete basic revenues for the second quarter of 1999 increased 9% over 1998 to $355.2 million due to basic and digital customer growth and rate increases implemented primarily during the fourth quarter of 1998. As of June 30, 1999, Cox Digital TV had 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. Advertising revenues increased 19% to $44.7 million due to growth in local and national advertising sales during 1999.

Data revenues for the second quarter of 1999 increased to $12.1 million from $4.6 million in 1998 due to growth in Cox's residential data service, Cox@Home. As of June 30, 1999, Cox@Home had 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 9% over the same period in 1998 due to basic and digital customer growth, January 1999 programming rate increases and channel additions. Plant operations expenses increased 7% to $36.2 million due to increased plant maintenance and costs related to new services. Marketing costs increased 14% to $30.9 million for the current quarter due in part to costs associated with the rollout of digital video, high-speed data and telephony services. General and administrative expenses for the second quarter of 1999 increased 18% to $124.6 million due primarily to costs associated with digital video, high-speed data and telephony services.