• 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.
  
  

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.

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 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.

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