Jimmy Hayes (left) with Jim Kennedy

When the stock market crashed in 1929, few were prepared for the financial conditions that followed. But throughout the Great Depression, Cox's single newspaper business, the Dayton Daily News, continued to do what it had done best for more than thirty years – serve its community as the best local source of news and information. Just a few years later, in the midst of continued challenges in the economy, Cox was poised to grow, as the company expanded into radio with the creation of WHIO in Dayton.

This time-tested model of being our audiences' and customers' trusted provider of market-leading service continues to fuel our success today. Even after the challenging market conditions we experienced in 2009, we remain a leader in each of our industries. And as it has throughout Cox's history, a firm commitment to customer service and to our other core values guides us – in good times and bad – and keeps us positioned for growth. While many companies struggled in 2009, Cox finished the year with record cash flow and momentum in all of our businesses. Just as we did eighty years ago, we are emerging from the economic downturn not only healthy, but poised for growth and ready for the future.

Positioned for Growth

At Cox, we take a long-term view. In keeping with our philosophy, Cox businesses took actions in 2009 to pave the way for us to remain strong.

We took Cox Radio, our only publicly traded company, private. With all of our operating companies now privately held, we can better focus on the long-term growth interests of all Cox businesses. This was also an important step in the evolution of our media business, Cox Media Group (CMG).

CMG restructured, integrating and aligning the business operations of our TV, radio and newspaper businesses, as well as Cox Reps, under common leadership. We developed cross-platform opportunities for advertisers across all three media and the Internet. Also, with the restructure, each CMG business benefits tremendously from shared research, sales and digital resources, among others. This model is charting new territory within the changing media landscape.

In 2009, we laid the groundwork for Cox Communications (CCI) to launch wireless telecommunication services in 2010. This enables CCI to complement its existing digital cable TV, telephone and high-speed Internet offerings and deliver even greater value to customers who “bundle” their services with us.  Cox wireless will soon be available in three markets – Hampton Roads, Va., Omaha, Neb., and Orange County, Calif. – with more markets to follow.

All of our businesses continue to expand their digital capabilities. Manheim has enhanced automotive buying and selling opportunities through the development of Manheim.com, the 24/7 primary access point for customers to search the largest selection of wholesale inventory in the industry. Through products like OVE.com and Simulcast, Manheim.com offers more than 100,000 vehicles for sale every day and is a fast and convenient alternative for time-constrained customers. Currently, nearly 20 percent of all the vehicles Manheim sells are sold to an online buyer.

As consumer preferences continued to shift from traditional print to online information sources, we sold our community newspaper properties in Texas, North Carolina and Colorado – a difficult decision for Cox, because of our history as a newspaper company. Similarly, we exited the majority of our print automotive classified publications in early 2009.

These changes help explain why our year-over-year revenues were down in 2009 for the first time in decades. But revenues alone do not present the full picture of Cox's financial health. Our cash flow is strong – in fact, stronger than ever – and that financial measure is the most important to our long-term goals. By maximizing our cash flow, we are best positioned to reinvest in our businesses with the longest-term growth potential and also acquire cash-generating businesses that align with our values.

Values That Endure

The guiding principles we have followed through 111 years of doing business remain the same. We provide the highest level of service to our customers. We not only deliver our communities important news, information and services, but we also give back through volunteerism and financial contributions. And we treat our employees as our most important resource.

This value was never more important than in 2009 as each Cox business and our corporate offices eliminated many jobs. Decisions to eliminate positions helped Cox remain strong despite difficult economic conditions, yet they were some of the toughest decisions we have had to make. Our goal was to be transparent, to treat employees fairly and with respect and to help make their transitions smooth. Whenever possible, we sought other opportunities within the company for those whose jobs were affected, and we expanded eligibility for retiree benefits to employees approaching retirement. Above all, we wanted to make sure we did the right thing for each affected employee.

Community service and environmental stewardship are inseparable from who we are as a company. We are proud of our employees across the country, in each Cox division and operating location, who give their time, energy and resources to build better communities, not only locally, but wherever there is need. January's devastating earthquake in Haiti affected all of us, and we responded by providing in-kind donations of airtime for public service announcements through our media outlets. The James M. Cox Foundation also provided $250,000 in support to the American Red Cross and CARE for the relief effort. In typical Cox fashion, employees gave generous support to the relief effort, as well.

We continue to reduce our carbon footprint through our Cox Conserves program. In fact, our efforts were recently recognized by The Georgia Conservancy with the Distinguished Conservationist of the Year award for inspiring employees, vendors and industry leaders to work toward environmental sustainability. We have also been pleased to recognize environmental heroes in four Cox markets in 2009 for creating, preserving or improving shared outdoor spaces through our Cox Conserves Heroes program, created in partnership with The Trust for Public Land.

As we have for more than a century, we will continue to provide our best for our communities and customers in good times and bad. Our future is bright, and we sincerely thank you – our dedicated employees, loyal customers and neighbors in the community – for your continued support. We never forget that it starts with you.

Sincerely,


Jim Kennedy
Chairman


Jimmy Hayes
President and Chief Executive Officer