Jim Kennedy (left)
with Jimmy Hayes

Focusing forward at Cox has been fundamental to our company's growth for more than a century. Early on, that meant providing exceptional news coverage to local readers through our single newspaper, the Dayton Daily News. As the decades have passed, it's also meant expanding our portfolio to include other media – radio, television, cable TV and Internet – and other industries such as automotive and direct mail with the acquisition of Manheim and Valpak. And sometimes it's meant building companies from the ground up, as we did with AutoTrader.com.

Whether we evolve our existing businesses or invest in, acquire or build new ones, Cox's focus on our future has kept the company moving forward and positioned us for continued growth throughout our 112-year history. And that long-term focus continues to move our company forward today.

Keeping Our Focus

In 2010, we continued focusing on what we do best – operating industry-leading businesses that provide real value for our customers and real opportunity for our employees.

Cox Communications launched wireless service in three of its markets to give customers an even bigger bundle of communication and entertainment services. Cox Communications is also changing the way customers pay for their wireless service, giving customers more control over what they pay based on their usage, with cash back for unused minutes. In addition to strong performance in the residential market, Cox Communications has seen tremendous growth in its Cox Business division, which provides voice, video and data solutions for commercial customers. Cox Business brought in $1 billion in revenue in 2010 – a milestone for this growing segment of the business.

Cox Media Group's integrated media approach, leveraging sales, research, and digital functions across its newspaper, television and radio businesses, has met with great success in its first full year. It has provided new, unique opportunities for advertisers, as well as returned our traditional media properties to profitability. Not surprisingly, our media properties continue to occupy top rating spots in their respective markets.

Despite automotive industry challenges and a tough year, Manheim is transforming. The company developed a new market-based strategy that provides a more consistent experience for customers and allows Manheim operating locations to more easily share best practices and benefit from a dedicated sales force. Manheim also continued to strengthen its long-standing customer relationships, expanded its online offerings and received numerous industry awards, while continuing to expand Total Resource Auctions, its auto salvage business.

AutoTrader.com continues to offer innovative new products to customers. In 2010, the company launched Trade-in Marketplace, which offers consumers a purchase or trade-in offer for their vehicle that's 100% backed by AutoTrader.com. After a successful pilot, the program went nationwide in October and reached $1.9 million in monthly revenue by the end of 2010.

All Cox businesses offer customers and audiences more mobile technology than ever before. In addition to taking advantage of wireless voice and data service, Cox Communications customers can stream content to Internet-connected devices and laptop computers in and outside the home and schedule their DVR remotely. Manheim dealer customers can use the company's "app" to scan a vehicle's bar code and obtain detailed vehicle information, including condition reports. All of Cox Media Group's businesses continue to cater to mobile application users, and The Atlanta Journal-Constitution and Dayton Daily News recently developed Apple® iPad® apps, with Cox's other metro newspapers soon to follow. And AutoTrader.com continues to offer car shoppers the ability to shop on the go with its mobile sites.

Moving Forward

Sound decision-making has positioned us to strengthen our business not only through growth of existing operations, but through strategic investments, acquisitions and partnerships. In keeping with our ten-year growth strategy, which we announced in 2010, we're exploring opportunities to diversify and expand our portfolio, while continuing to invest in our current businesses. As we grow, we will continue to leverage our core competencies in operating best-in-class businesses.

One tangible example in 2010 was our partnership with Providence Equity Partners to help grow AutoTrader.com. This supported AutoTrader in its acquisition of vAuto, HomeNet Automotive and Kelley Blue Book, all of which enhance the product offerings of the Internet's largest auto classified marketplace and consumer information website.

In 2010, Cox's total revenue was up, and we once again experienced record cash flow – every single month. Free cash flow is the fuel for our growth, so we pay close attention to that measure, since it's vitally important to our goals. We're proud to say that we've continued to exceed our free cash flow goals and expect to continue that trend.

As we look toward the future, we also have strong leadership plans in place. As a family-owned company, we're pleased that we have members of the fourth generation of the Cox family in leadership roles within our company to continue the rich legacy established by our founder, Governor Cox. Additionally, we have internal and external board members, along with more than 60,000 employees, bringing fresh perspective to ensure that we stay focused on the future.

In all that we do, Cox's values remain central. We continue to make every effort to do the right thing for our employees and customers, and to make our communities better places through volunteerism and financial support. We're proud of our employees, who personally give back to our communities nationwide on a regular basis by building homes, mentoring students, cleaning up rivers and green space and countless other activities. We also continue our commitment to reduce our environmental impact through the Cox Conserves program. As we move forward, we will never lose our focus on these important responsibilities.

So, thanks to contributions from our employees, customers and stakeholders, it's been another successful year. And it's because of your support that we're positioned well for continued growth. Our future is promising – and as it has been for more than a century, our focus is forward.

Sincerely,


Jim Kennedy
Chairman


Jimmy Hayes
President and Chief Executive Officer