2000 Financial Highlights
Entering the year, we also set aggressive financial expectations. We met those expectations, growing from $2.3 billion in total revenues to $3.5 billion. That 51% increase over 1999 was due to the addition of new Cox operations and to the growth in cable customers, advanced-service RGUs and advertising sales at existing operations. Operating cash flow (operating income before depreciation, amortization and gain on sale and exchange of cable systems), which we consider the key indicator of our financial performance, increased 53% to $1.4 billion. Operating cash flow margin (operating cash flow as a percentage of revenues) increased to 39.3% from 38.9% in 1999. Net income was $1.9 billion, up from $881.9 million in 1999, due primarily to the addition of new operations and the difference in gains on investments in both years. Customer growth in our core cable business was 1.8% after adjusting for the close of several cable system transactions during 2000 and 1999. At year-end, the percentage of our homes passed subscribing to at least one Cox service increased from 63.8% to 64.2%.

As has been our strategy for a number of years, we continued to maximize the value of our non-strategic investments. We sold our interest in Flextech, a television programming company in the United Kingdom, and sold a portion of our stake in Sprint PCS. Total proceeds from these two transactions were approximately $2 billion. Additionally, early in 2001, we exercised our right to transfer our ownership in Excite@Home for shares of AT&T common stock.

Serving Business Customers
In 2000, we set and met aggressive expectations in our areas of business that serve commercial customers. CableRep, our advertising sales organization, registered another stellar year, with advertising sales revenues increasing significantly over 1999. CableRep has grown consistently over the years and has proved to be an important growth engine for Cox. We expect the organization to tap increased opportunities in 2001 due to deployment of digital ad insertion technology, which will increase the offerings CableRep can provide business clients.

In 2000, we also focused intensely on growing our commercial broadband business, providing video, voice and data services to businesses, schools and government entities. As a competitive local exchange carrier, Cox Business Services has a tremendous advantage of being able to leverage both the embedded broadband plant running through business districts in our service areas, as well as Cox's strong brand and reputation. At the end of 2000, Cox Business Services had installed more than 1.2 million voice grade equivalent lines in more than 4,500 buildings on our network. We've witnessed excellent growth in our commercial sales over the past few years. Commercial revenues were $98 million in 2000, the third consecutive year in which they doubled from the prior year, and we expect continued growth in 2001.

Bundles of Success
An important lesson we've learned through our transformation into a full-service broadband communications company is that being able to deliver services is vital, but it's not enough. We must also market them in a compelling way. As a result, we've made tremendous strides in our approach to marketing multiple services and have invested a great deal of effort into our "bundling" strategy. Bundling allows customers to purchase multiple services, often at a discount, while enjoying the simplicity of receiving them from one company. Early results indicate that in Cox markets where our cable, telephone and Internet services are all available, 17% of our customers take a bundle of services. That represents a doubling of our bundling performance in just one year. Although the results are early, we've seen encouraging indications that bundling is helping improve customer retention. In one area, for instance, the percentage of multiple-product customers who remain with the company over a six-month period is a full 10% greater than customers with one service. By the end of 2001, we expect to have two-product bundles available to 88% of our total homes passed and three-product bundles available to 35% of homes passed.

Our ability to bundle services is enabled by our powerful IT platform. Early on in our transformation into a broadband communications company, we invested heavily in developing a universal back-office IT platform that enables us to sell and bill our services through one central gateway. This allows us to provide our customers with, among other benefits, more control over how and when they want to pay their bill - what we call "flex statementing." This option will allow customers of bundled services to choose to have all of their services appear on one bill or on separate bills. We launched trials of flex statementing in 2000 and plan to begin launching it widely to customers this year. At Cox, we feel it is our obligation to help customers simplify and enhance their lives - not just through the services we offer, but also by how we offer them. Initiatives such as flex statementing and bundling are vital components of that commitment.