[February 05, 2013] |
|
CSG Systems International Reports Record Fourth Quarter and Full Year Revenues
ENGLEWOOD, Colo. --(Business Wire)--
CSG Systems International, Inc. (Nasdaq: CSGS), a global provider of
software- and services-based business support solutions that help
clients generate revenue and maximize customer relationships, today
reported results for the quarter and full year ended December 31, 2012.
Key Financial Highlights:
-
Fourth quarter 2012 results:
-
Total revenues were $198.0 million.
-
Non-GAAP operating income was $33.0 million, or 16.7%
of total revenues and GAAP operating income was $22.1 million,
or 11.2% of total revenues.
-
Non-GAAP earnings per diluted share (EPS) was $0.67,
which includes an unexpected benefit of $0.13 as a
result of a lower than previously anticipated effective income
tax rate. GAAP EPS was $0.48.
-
Full year 2012 results:
-
Total revenues were $756.9 million.
-
Non-GAAP operating income was $135.5 million, or 17.9%
of total revenues and GAAP operating income was $96.6 million,
or 12.8% of total revenues.
-
Non-GAAP earnings per diluted share (EPS) was $2.33,
which includes an unexpected benefit of $0.13 as a
result of a lower than previously anticipated effective income
tax rate. GAAP EPS was $1.51.
-
Cash flows from operations for the quarter were $19.1 million, and
$127.5 million for the year ended December 31, 2012.
"We enter 2013 in a position of strength as a result of the actions we
have taken over the past several years," said Peter Kalan, chief
executive officer and president of CSG Systems International, Inc. "We
have a solid base of over 500 clients worldwide that depend upon us to
help them execute upon their business plans. We have invested in our
people, our products and our clients to ensure that they are successful.
We have demonstrated our ability to manage our costs in a difficult and
challenging business environment. And finally, we have a solid business
model that is based on highly visible, recurring revenues, resulting in
strong cash flows."
Financial Overview (unaudited)
(in thousands, except per share amounts and percentages):
|
|
Quarter Ended December 31,
|
|
Year Ended December 31,
|
|
|
2012
|
|
2011
|
|
Percent Change
|
|
2012
|
|
2011
|
|
Percent Change
|
Revenues
|
|
$
|
198,007
|
|
|
$
|
187,574
|
|
|
6
|
%
|
|
$
|
756,866
|
|
|
$
|
734,731
|
|
|
3
|
%
|
Non-GAAP Results:
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
$
|
33,018
|
|
|
$
|
39,987
|
|
|
(17
|
)%
|
|
$
|
135,535
|
|
|
$
|
139,031
|
|
|
(3
|
)%
|
Operating Income Margin
|
|
|
16.7
|
%
|
|
|
21.3
|
%
|
|
-
|
|
|
|
17.9
|
%
|
|
|
18.9
|
%
|
|
-
|
|
EPS
|
|
$
|
0.67
|
|
|
$
|
0.64
|
|
|
5
|
%
|
|
$
|
2.33
|
|
|
$
|
2.25
|
|
|
4
|
%
|
GAAP Results:
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
$
|
22,149
|
|
|
$
|
27,043
|
|
|
(18
|
)%
|
|
$
|
96,574
|
|
|
$
|
96,285
|
|
|
0
|
%
|
Operating Income Margin
|
|
|
11.2
|
%
|
|
|
14.4
|
%
|
|
-
|
|
|
|
12.8
|
%
|
|
|
13.1
|
%
|
|
-
|
|
EPS
|
|
$
|
0.48
|
|
|
$
|
0.35
|
|
|
37
|
%
|
|
$
|
1.51
|
|
|
$
|
1.28
|
|
|
18
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For additional information and reconciliations regarding CSG's use of
non-GAAP financial measures, please refer to the attached Exhibit 2 and
the Investor Relations section of CSG's website at www.csgi.com.
Results of Operations
Revenues: Total revenues for the
fourth quarter of 2012 were $198.0 million, a 6% increase when compared
to revenues of $187.6 million for the fourth quarter of 2011, and a 4%
increase when compared to $190.0 million for the third quarter of 2012.
Total revenues for the full year 2012 were $756.9 million, a 3% increase
when compared to revenues of $734.7 million for full year 2011. The
year-over-year revenue increases can be primarily attributed to
increased revenues from various ancillary services and software sales
during the current quarter and year and from the revenues generated from
the Ascade business that CSG acquired in mid-July 2012, while the
sequential quarterly increase is due primarily to a strong fourth
quarter of software sales.
Non-GAAP Results: Non-GAAP operating
income for the fourth quarter of 2012 was $33.0 million, or 16.7% of
total revenues, compared to $40.0 million, or 21.3%, for the fourth
quarter of 2011. Non-GAAP operating income for the third quarter of 2012
was $31.1 million, or 16.4% of total revenues. Non-GAAP operating income
for the full year 2012 was $135.5, or 17.9% of total revenues, which
compares to $139.0 million, or 18.9%, for the full year 2011. The
year-over-year decreases in operating income and operating income margin
is mainly due to the expected increases in data processing and
employee-related costs. The sequential quarterly increase in operating
income and operating income margin reflects the higher sequential
revenues, mainly associated with the strong software sales.
Non-GAAP EPS for the fourth quarter of 2012 was $0.67, compared to
non-GAAP EPS of $0.64 for the fourth quarter of 2011, and $0.50 for the
third quarter of 2012. Non-GAAP EPS for the full year 2012 was $2.33,
compared to non-GAAP EPS of $2.25 for the full year 2011. Both the
fourth quarter and full year of 2012 non-GAAP EPS include an unexpected
benefit of $0.13 as a result of a lower than previously anticipated
effective income tax rate for 2012. The year-over-year improvement in
the 2012 full year non-GAAP EPS performance relates mainly to a lower
effective income rate between years.
GAAP Results: GAAP operating income
for the fourth quarter of 2012 was $22.1 million, or 11.2% of
total revenues, compared to $27.0 million, or 14.4%, for the same period
in 2011. GAAP operating income for the full year 2012 was $96.6 million,
or 12.8% of total revenues, compared to $96.3 million, or 13.1%, for the
full year 2011.
GAAP EPS for the fourth quarter of 2012 was $0.48, compared to $0.35 for
the fourth quarter of 2011. GAAP EPS for the full year 2012 was $1.51,
compared to $1.28 for the full year 2011.
Balance Sheet and Cash Flows
Balance Sheet: Certain key balance
sheet items as of the indicated dates are as follows (in thousands):
|
|
December 31, 2012
|
|
September 30, 2012
|
|
December 31, 2011
|
Cash, cash equivalents, and short-term investments (1)
|
|
$
|
169,321
|
|
|
$
|
184,769
|
|
|
$
|
158,830
|
|
Net billed trade accounts receivable
|
|
|
191,943
|
|
|
|
174,137
|
|
|
|
179,804
|
|
Total long-term debt (1):
|
|
|
|
|
|
|
Par value
|
|
$
|
300,000
|
|
|
$
|
318,000
|
|
|
$
|
340,000
|
|
Unamortized OID
|
|
|
(25,302
|
)
|
|
|
(26,576
|
)
|
|
|
(30,256
|
)
|
Net debt carrying amount
|
|
$
|
274,698
|
|
|
$
|
291,424
|
|
|
$
|
309,744
|
|
(1)
|
|
The sequential decrease in cash and short-term investments in the
fourth quarter of 2012 is primarily due to an $18 million debt
payment made in November 2012 in conjunction with CSG's debt
refinancing.
|
|
|
|
Cash Flows: Certain key operating
cash flow items for the indicated quarters then ended are as follows (in
thousands):
|
|
Quarter Ended December 31,
|
|
Year Ended December 31,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
Operations
|
|
$
|
34,921
|
|
|
$
|
34,348
|
|
|
$
|
126,317
|
|
|
$
|
130,337
|
|
Changes in operating assets and liabilities
|
|
|
(15,866
|
)
|
|
|
(2,523
|
)
|
|
|
1,160
|
|
|
|
(69,378
|
)
|
Net cash provided by operating activities (2)
|
|
$
|
19,055
|
|
|
$
|
31,825
|
|
|
$
|
127,477
|
|
|
$
|
60,959
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
$
|
(12,733
|
)
|
|
$
|
(2,582
|
)
|
|
$
|
(33,221
|
)
|
|
$
|
(22,197
|
)
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
Repurchase of common stock under stock repurchase program
|
|
$
|
-
|
|
|
$
|
(2,268
|
)
|
|
$
|
(13,349
|
)
|
|
$
|
(9,930
|
)
|
Net proceeds from/(payments on) long-term debt
|
|
|
(18,000
|
)
|
|
|
(2,500
|
)
|
|
|
(40,000
|
)
|
|
|
(70,149
|
)
|
(2)
|
|
Cash flows from operating activities for the year ended December 31,
2011 was negatively impacted by the unfavorable changes in working
capital items, primarily related to the following items: (i) the
change in the monthly invoice timing for DISH Network, which was
included as part of its contract renewal terms in January 2011 and
had a negative $20 million impact in the first quarter of 2011; (ii)
the timing of payments for several items specific to the first
quarter of 2011, including approximately $8 million of Intec
acquisition-related expenses, which were accrued expenses as of
December 31, 2010; and (iii) $6 million payment of deferred income
tax liabilities that became due in 2011 as a result of the
repurchase of our 2004 Convertible Debt Securities.
|
|
|
|
2013 Financial Guidance
|
|
|
Revenues
|
|
$755 - $775 million
|
Non-GAAP EPS
|
|
$2.23 - $2.33
|
GAAP EPS from continuing operations
|
|
$1.59 - $1.70
|
Adjusted EBITDA
|
|
$162 - $167 million
|
|
|
|
CSG is currently in negotiations with one of its largest customers for a
longer-term renewal of the current contract that expires at the end of
February. The above current financial guidance assumes no material
change in the revenue earned from this customer during 2013 pursuant to
the terms of the existing agreement; as it is impossible to predict with
certainty at this time what impact, if any, the terms of a longer-term
contract extension will have on CSG's 2013 results of operations. When
this contract is extended in the future, CSG will determine what updates
may be necessary to the above guidance.
For additional information and reconciliations regarding CSG's use of
non-GAAP financial measures, please refer to the attached Exhibit
2 and the Investor Relations section of CSG's website at www.csgi.com.
Conference Call
CSG will host a one-hour conference call on February 5, 2013, at 5:00
p.m. ET, to discuss CSG's fourth quarter and year end results. The call
will be carried live and archived on the Internet. A link to the
conference call is available at www.csgi.com.
In addition, to reach the conference by phone, dial (877) 941-0844 and
ask the operator for the CSG International conference call and Liz
Bauer, chairperson.
Additional Information
For information about CSG, please visit CSG's web site at www.csgi.com.
Additional information can be found in the Investor Relations section of
the web site.
About CSG International
CSG
Systems International, Inc. (NASDAQ:
CSGS) is a market-leading business support solutions and services
company serving the majority of the top 100 global communications
service providers, including leaders in fixed, mobile and
next-generation networks such as AT&T, Comcast, DISH Network, France
Telecom, MasterCard, Orange, T-Mobile, Telefonica, Time Warner Cable,
Vodafone, Vivo and Verizon. With over 25 years of experience and
expertise in voice, video, data and content services, CSG International
offers a broad portfolio of licensed and Software-as-a-Service
(SaaS)-based products and solutions that help clients compete more
effectively, improve business operations and deliver a more impactful
customer experience across a variety of touch points. For more
information, visit our website at www.csgi.com.
Forward-Looking Statements
This news release contains forward-looking statements as defined under
the Securities Act of 1933, as amended, that are based on assumptions
about a number of important factors and involve risks and uncertainties
that could cause actual results to differ materially from what appears
in this news release. Some of these key factors include, but are not
limited to the following items:
-
CSG derives approximately forty percent of its revenues from its three
largest clients;
-
Continued market acceptance of CSG's products and services;
-
CSG's ability to continuously develop and enhance products in a
timely, cost-effective, technically advanced and competitive manner;
-
CSG's ability to deliver its solutions in a timely fashion within
budget, particularly large and complex software implementations;
-
CSG's dependency on the global telecommunications industry, and in
particular, the North American telecommunications industry;
-
CSG's ability to meet its financial expectations as a result of
increased dependency on software sales, which are subject to greater
volatility;
-
Increasing competition in CSG's market from companies of greater size
and with broader presence in the communications sector;
-
CSG's ability to successfully integrate and manage acquired businesses
or assets to achieve expected strategic, operating and financial goals;
-
CSG's ability to protect its intellectual property rights;
-
CSG's ability to maintain a reliable, secure computing environment;
-
CSG's ability to conduct business in the international marketplace;
-
CSG's ability to comply with applicable U.S. and International laws
and regulations; and
-
Fluctuations in credit market conditions, general global economic and
political conditions, and foreign currency exchange rates.
This list is not exhaustive and readers are encouraged to review the
additional risks and important factors described in CSG's reports on
Forms 10-K and 10-Q and other filings made with the SEC.
CSG SYSTEMS INTERNATIONAL, INC.
|
CONDENSED CONSOLIDATED BALANCE SHEETS-UNAUDITED
|
(in thousands, except per share amounts)
|
|
|
|
December 31, 2012
|
|
December 31, 2011
|
ASSETS
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
136,473
|
|
|
$
|
146,733
|
|
Short-term investments
|
|
|
32,848
|
|
|
|
12,097
|
|
Total cash, cash equivalents, and short-term investments
|
|
|
169,321
|
|
|
|
158,830
|
|
Trade accounts receivable:
|
|
|
|
|
Billed, net of allowance of $3,147 and $2,421
|
|
|
191,943
|
|
|
|
179,804
|
|
Unbilled and other
|
|
|
33,859
|
|
|
|
30,981
|
|
Deferred income taxes
|
|
|
22,244
|
|
|
|
19,982
|
|
Income taxes receivable
|
|
|
6,469
|
|
|
|
4,139
|
|
Other current assets
|
|
|
17,099
|
|
|
|
16,224
|
|
Total current assets
|
|
|
440,935
|
|
|
|
409,960
|
|
Non-current assets:
|
|
|
|
|
Property and equipment, net of depreciation of $120,643 and $116,125
|
|
|
39,429
|
|
|
|
41,154
|
|
Software, net of amortization of $68,513 and $56,521
|
|
|
36,729
|
|
|
|
29,966
|
|
Goodwill
|
|
|
233,365
|
|
|
|
220,013
|
|
Client contracts, net of amortization of $184,763 and $159,225
|
|
|
76,388
|
|
|
|
98,403
|
|
Deferred income taxes
|
|
|
2,596
|
|
|
|
1,008
|
|
Income taxes receivable
|
|
|
1,292
|
|
|
|
-
|
|
Other assets
|
|
|
16,207
|
|
|
|
14,393
|
|
Total non-current assets
|
|
|
406,006
|
|
|
|
404,937
|
|
Total assets
|
|
$
|
846,941
|
|
|
$
|
814,897
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Current maturities of long-term debt
|
|
$
|
15,000
|
|
|
$
|
27,000
|
|
Client deposits
|
|
|
33,807
|
|
|
|
30,523
|
|
Trade accounts payable
|
|
|
30,473
|
|
|
|
27,198
|
|
Accrued employee compensation
|
|
|
61,083
|
|
|
|
42,005
|
|
Income taxes payable
|
|
|
2,116
|
|
|
|
2,334
|
|
Deferred revenue
|
|
|
47,691
|
|
|
|
44,824
|
|
Other current liabilities
|
|
|
21,562
|
|
|
|
23,501
|
|
Total current liabilities
|
|
|
211,732
|
|
|
|
197,385
|
|
Non-current liabilities:
|
|
|
|
|
Long-term debt, net of unamortized original issue discount of
$25,302 and $30,256
|
|
|
259,698
|
|
|
|
282,744
|
|
Deferred revenue
|
|
|
6,504
|
|
|
|
8,631
|
|
Income taxes payable
|
|
|
1,168
|
|
|
|
4,114
|
|
Deferred income taxes
|
|
|
21,674
|
|
|
|
28,188
|
|
Other non-current liabilities
|
|
|
19,526
|
|
|
|
19,121
|
|
Total non-current liabilities
|
|
|
308,570
|
|
|
|
342,798
|
|
Total liabilities
|
|
|
520,302
|
|
|
|
540,183
|
|
Stockholders' equity:
|
|
|
|
|
Preferred stock, par value $.01 per share; 10,000 shares authorized;
zero shares issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
Common stock, par value $.01 per share; 100,000 shares authorized;
33,734 shares and 33,822 shares outstanding
|
|
|
653
|
|
|
|
645
|
|
Additional paid-in capital
|
|
|
461,497
|
|
|
|
449,376
|
|
Treasury stock, at cost, 31,530 and 30,707 shares
|
|
|
(728,243
|
)
|
|
|
(714,893
|
)
|
Accumulated other comprehensive income (loss):
|
|
|
|
|
Unrealized gain on short-term investments, net of tax
|
|
|
3
|
|
|
|
1
|
|
Unrecognized pension plan losses and prior service costs, net of tax
|
|
|
(1,761
|
)
|
|
|
(1,794
|
)
|
Unrealized loss on change in fair value of interest rate swaps, net
of tax
|
|
|
(658
|
)
|
|
|
(618
|
)
|
Cumulative foreign currency translation adjustments
|
|
|
2,274
|
|
|
|
(1,998
|
)
|
Accumulated earnings
|
|
|
592,874
|
|
|
|
543,995
|
|
Total stockholders' equity
|
|
|
326,639
|
|
|
|
274,714
|
|
Total liabilities and stockholders' equity
|
|
$
|
846,941
|
|
|
$
|
814,897
|
|
|
|
|
|
|
|
|
|
|
|
CSG SYSTEMS INTERNATIONAL, INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME-UNAUDITED
|
(in thousands, except per share amounts)
|
|
|
|
Quarter Ended
|
|
Year Ended
|
|
|
December 31, 2012
|
|
December 31, 2011
|
|
December 31, 2012
|
|
December 31, 2011
|
Revenues:
|
|
|
|
|
|
|
|
|
Processing and related services
|
|
$
|
135,980
|
|
|
$
|
133,076
|
|
|
$
|
544,649
|
|
|
$
|
524,666
|
|
Software, maintenance and services
|
|
|
62,027
|
|
|
|
54,498
|
|
|
|
212,217
|
|
|
|
210,065
|
|
Total revenues
|
|
|
198,007
|
|
|
|
187,574
|
|
|
|
756,866
|
|
|
|
734,731
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues (exclusive of depreciation, shown separately below):
|
|
|
|
|
|
|
|
|
Processing and related services
|
|
|
66,501
|
|
|
|
60,548
|
|
|
|
258,380
|
|
|
|
244,776
|
|
Software, maintenance and services
|
|
|
34,415
|
|
|
|
30,474
|
|
|
|
125,436
|
|
|
|
120,874
|
|
Total cost of revenues
|
|
|
100,916
|
|
|
|
91,022
|
|
|
|
383,816
|
|
|
|
365,650
|
|
Other operating expenses:
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
28,696
|
|
|
|
26,663
|
|
|
|
112,938
|
|
|
|
111,142
|
|
Selling, general and administrative
|
|
|
39,396
|
|
|
|
31,470
|
|
|
|
138,783
|
|
|
|
128,346
|
|
Depreciation
|
|
|
5,202
|
|
|
|
6,511
|
|
|
|
22,286
|
|
|
|
25,435
|
|
Restructuring charges
|
|
|
1,648
|
|
|
|
4,865
|
|
|
|
2,469
|
|
|
|
7,873
|
|
Total operating expenses
|
|
|
175,858
|
|
|
|
160,531
|
|
|
|
660,292
|
|
|
|
638,446
|
|
Operating income
|
|
|
22,149
|
|
|
|
27,043
|
|
|
|
96,574
|
|
|
|
96,285
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(3,647
|
)
|
|
|
(4,185
|
)
|
|
|
(15,983
|
)
|
|
|
(17,026
|
)
|
Amortization of original issue discount
|
|
|
(1,274
|
)
|
|
|
(1,179
|
)
|
|
|
(4,954
|
)
|
|
|
(5,206
|
)
|
Interest and investment income, net
|
|
|
220
|
|
|
|
169
|
|
|
|
855
|
|
|
|
764
|
|
Other, net
|
|
|
208
|
|
|
|
292
|
|
|
|
732
|
|
|
|
1,155
|
|
Total other
|
|
|
(4,493
|
)
|
|
|
(4,903
|
)
|
|
|
(19,350
|
)
|
|
|
(20,313
|
)
|
Income before income taxes
|
|
|
17,656
|
|
|
|
22,140
|
|
|
|
77,224
|
|
|
|
75,972
|
|
Income tax provision
|
|
|
(1,866
|
)
|
|
|
(10,846
|
)
|
|
|
(28,345
|
)
|
|
|
(33,690
|
)
|
Net income
|
|
$
|
15,790
|
|
|
$
|
11,294
|
|
|
$
|
48,879
|
|
|
$
|
42,282
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding - Basic:
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
32,002
|
|
|
|
32,257
|
|
|
|
32,142
|
|
|
|
32,624
|
|
Participating restricted stock
|
|
|
-
|
|
|
|
127
|
|
|
|
17
|
|
|
|
189
|
|
Total
|
|
|
32,002
|
|
|
|
32,384
|
|
|
|
32,159
|
|
|
|
32,813
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding - Diluted:
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
32,568
|
|
|
|
32,520
|
|
|
|
32,459
|
|
|
|
32,833
|
|
Participating restricted stock
|
|
|
-
|
|
|
|
127
|
|
|
|
17
|
|
|
|
189
|
|
Total
|
|
|
32,568
|
|
|
|
32,647
|
|
|
|
32,476
|
|
|
|
33,022
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.49
|
|
|
$
|
0.35
|
|
|
$
|
1.52
|
|
|
$
|
1.29
|
|
Diluted
|
|
|
0.48
|
|
|
|
0.35
|
|
|
|
1.51
|
|
|
|
1.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CSG SYSTEMS INTERNATIONAL, INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS-UNAUDITED
|
(in thousands)
|
|
|
|
Year Ended
|
|
|
December 31, 2012
|
|
December 31, 2011
|
Cash flows from operating activities:
|
|
|
|
|
Net income
|
|
$
|
48,879
|
|
|
$
|
42,282
|
|
Adjustments to reconcile net income to net cash provided by
operating activities -
|
|
|
|
|
Depreciation
|
|
|
22,286
|
|
|
|
25,435
|
|
Amortization
|
|
|
44,178
|
|
|
|
42,173
|
|
Amortization of original issue discount
|
|
|
4,954
|
|
|
|
5,206
|
|
Impairment of client contract
|
|
|
3,783
|
|
|
|
-
|
|
Gain on short-term investments and other
|
|
|
(72
|
)
|
|
|
(60
|
)
|
Deferred income taxes
|
|
|
(10,707
|
)
|
|
|
3,977
|
|
Excess tax benefit of stock-based compensation awards
|
|
|
(415
|
)
|
|
|
(828
|
)
|
Stock-based employee compensation
|
|
|
13,431
|
|
|
|
12,152
|
|
Subtotal
|
|
|
126,317
|
|
|
|
130,337
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
Trade accounts and other receivables, net
|
|
|
(9,481
|
)
|
|
|
(31,552
|
)
|
Other current and non-current assets
|
|
|
(1,715
|
)
|
|
|
3,210
|
|
Income taxes payable/receivable
|
|
|
(6,543
|
)
|
|
|
7,573
|
|
Trade accounts payable and accrued liabilities
|
|
|
18,474
|
|
|
|
(20,074
|
)
|
Deferred revenue
|
|
|
425
|
|
|
|
(28,535
|
)
|
Net cash provided by operating activities
|
|
|
127,477
|
|
|
|
60,959
|
|
Cash flows from investing activities:
|
|
|
|
|
Purchases of property and equipment
|
|
|
(33,221
|
)
|
|
|
(22,197
|
)
|
Purchases of short-term investments
|
|
|
(62,742
|
)
|
|
|
(37,798
|
)
|
Proceeds from sale/maturity of short-term investments
|
|
|
42,063
|
|
|
|
43,450
|
|
Acquisition of business, net of cash acquired
|
|
|
(19,085
|
)
|
|
|
-
|
|
Acquisition of and investments in client contracts
|
|
|
(4,629
|
)
|
|
|
(9,133
|
)
|
Net cash used in investing activities
|
|
|
(77,614
|
)
|
|
|
(25,678
|
)
|
Cash flows from financing activities:
|
|
|
|
|
Proceeds from issuance of common stock
|
|
|
1,896
|
|
|
|
1,486
|
|
Repurchase of common stock
|
|
|
(16,558
|
)
|
|
|
(14,365
|
)
|
Payments on acquired equipment financing
|
|
|
(1,698
|
)
|
|
|
(1,587
|
)
|
Proceeds from long-term debt
|
|
|
150,000
|
|
|
|
-
|
|
Payments on long-term debt
|
|
|
(190,000
|
)
|
|
|
(70,149
|
)
|
Payments of deferred financing costs
|
|
|
(2,450
|
)
|
|
|
(205
|
)
|
Excess tax benefit of stock-based compensation awards
|
|
|
415
|
|
|
|
828
|
|
Net cash used in financing activities
|
|
|
(58,395
|
)
|
|
|
(83,992
|
)
|
Effect of exchange rate fluctuations on cash
|
|
|
(1,728
|
)
|
|
|
(2,414
|
)
|
Net decrease in cash and cash equivalents
|
|
|
(10,260
|
)
|
|
|
(51,125
|
)
|
Cash and cash equivalents, beginning of period
|
|
|
146,733
|
|
|
|
197,858
|
|
Cash and cash equivalents, end of period
|
|
$
|
136,473
|
|
|
$
|
146,733
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
Net cash paid during the period for -
|
|
|
|
|
Interest
|
|
$
|
13,124
|
|
|
$
|
13,921
|
|
Income taxes
|
|
|
43,379
|
|
|
|
22,836
|
|
|
|
|
|
|
|
|
|
|
EXHIBIT 1
CSG SYSTEMS INTERNATIONAL, INC.
|
SUPPLEMENTAL REVENUE ANALYSIS
|
|
Revenues by Geography
|
|
|
|
Quarter Ended December 31, 2012
|
|
Quarter Ended September 30, 2012
|
|
Quarter Ended December 31, 2011
|
Americas
|
|
83
|
%
|
|
87
|
%
|
|
85
|
%
|
Europe, Middle East and Africa
|
|
11
|
%
|
|
9
|
%
|
|
10
|
%
|
Asia Pacific
|
|
6
|
%
|
|
4
|
%
|
|
5
|
%
|
Total Revenues
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
|
|
|
|
|
Revenues by Significant Customers: 10% or
more of Revenues
|
|
|
|
Quarter Ended December 31, 2012
|
|
Quarter Ended September 30, 2012
|
|
Quarter Ended December 31, 2011
|
Comcast
|
|
19
|
%
|
|
21
|
%
|
|
19
|
%
|
DISH
|
|
13
|
%
|
|
13
|
%
|
|
13
|
%
|
Time Warner
|
|
11
|
%
|
|
10
|
%
|
|
10
|
%
|
|
|
|
|
|
|
|
ACP Customer Accounts (in thousands, at
end of period)
|
|
|
|
December 31, 2012
|
|
September 30, 2012
|
|
December 31, 2011
|
Cable/Satellite Customer Accounts
|
|
48,870
|
|
|
49,224
|
|
|
48,837
|
|
|
|
|
|
|
|
|
|
|
|
EXHIBIT 2 CSG SYSTEMS INTERNATIONAL, INC. DISCLOSURES
FOR NON-GAAP FINANCIAL MEASURES
Use of Non-GAAP Financial Measures and
Limitations
To supplement its condensed consolidated financial statements presented
in accordance with generally accepted accounting principles (GAAP), CSG
uses non-GAAP operating income, non-GAAP EPS, non-GAAP adjusted EBITDA,
and non-GAAP free cash flow. CSG believes that these non-GAAP financial
measures, when reviewed in conjunction with its GAAP financial measures,
provide investors with greater transparency to the information used by
CSG's management in its financial and operational decision making. CSG
uses these non-GAAP financial measures for the following purposes:
-
Certain internal financial planning, reporting, and analysis;
-
Forecasting and budgeting purposes;
-
Certain management compensation incentives; and
-
Communications with CSG's Board of Directors, stockholders, financial
analysts, and investors.
These non-GAAP financial measures are provided with the intent of
providing investors with the following information:
-
A more complete understanding of CSG's underlying operational results,
trends, and cash generating capabilities;
-
Consistency and comparability with CSG's historical financial results;
and
-
Comparability to similar companies, many of which present similar
non-GAAP financial measures to investors.
Non-GAAP financial measures are not measures of performance under GAAP,
and therefore should not be considered in isolation or as a substitute
for GAAP financial information. Limitations with the use of non-GAAP
financial measures include the following items:
-
Non-GAAP financial measures are not based on any comprehensive set of
accounting rules or principles;
-
The way in which CSG calculates non-GAAP financial measures may differ
from the way in which other companies calculate similar non-GAAP
financial measures;
-
Non-GAAP financial measures do not include all items of income and
expense that affect CSG's operations and that are required by GAAP to
be included in financial statements;
-
Certain adjustments to CSG's non-GAAP financial measures result in the
exclusion of items that are recurring and will be reflected in CSG's
financial statements in future periods; and
-
Certain charges excluded from CSG's non-GAAP financial measures are
cash expenses, and therefore do impact CSG's cash position.
CSG compensates for these limitations by relying primarily on its GAAP
results and using non-GAAP financial measures as a supplement only.
Additionally, CSG provides specific information regarding the treatment
of GAAP amounts considered in preparing the non-GAAP financial measures
and reconciles each non-GAAP financial measure to the most directly
comparable GAAP measure.
Non-GAAP Financial Measures: Basis of
Presentation
The table below outlines the exclusions from CSG's non-GAAP financial
measures:
Non-GAAP Exclusions
|
|
Operating Income
|
|
EPS
|
Restructuring charges
|
|
X
|
|
X
|
Ascade acquisition-related charges
|
|
X
|
|
X
|
Stock-based compensation
|
|
X
|
|
X
|
Amortization of acquired intangible assets
|
|
X
|
|
X
|
Amortization of original issue discount ("OID")
|
|
-
|
|
X
|
Unusual income tax matters
|
|
-
|
|
X
|
|
|
|
|
|
CSG believes that excluding certain items in calculating its non-GAAP
financial measures provides meaningful supplemental information
regarding CSG's performance and these items are excluded for the
following reasons:
-
Restructuring charges are infrequent expenses that result from cost
reduction initiatives and/or significant changes to CSG's business, to
include such things as involuntary employee terminations, and facility
consolidations and abandonments. These charges are not considered
reflective of CSG's recurring core business operating results. The
exclusion of these items in calculating CSG's non-GAAP financial
measures allows management and investors an additional means to
compare CSG's current operating results with historical and future
periods.
-
The Ascade acquisition-related charges relate to certain direct and
incremental expenses related to the acquisition of Ascade, and thus,
are not considered reflective of CSG's recurring core business
operating results. These charges include expenses related to legal,
accounting, and other professional services. The exclusion of these
charges in calculating CSG's non-GAAP financial measures allows
management and investors an additional means to compare CSG's current
financial results with historical and future periods.
-
Stock-based compensation results from CSG's issuance of its common
stock to its employees under incentive compensation programs. The
amount of this incentive compensation in any period is not generally
linked to the level of performance by employees or CSG, but instead is
more dependent on CSG's stock price at the stock grant date, and the
employee service period over which the equity awards vest. The
exclusion of these expenses in calculating CSG's non-GAAP financial
measures allows management and investors an additional means to
evaluate the non-cash expense related to compensation included in
CSG's results of operations, and therefore, the exclusion of this item
allows investors to further evaluate the cash generating capabilities
of CSG's business.
-
Amortization of acquired intangible assets is the result of business
acquisitions. A portion of the purchase price in an acquisition is
allocated to acquired intangible assets (e.g., software, client
relationships, etc.), which are then amortized to expense over their
estimated useful lives. This annual amortization expense is generally
unchanged from the initial estimates, regardless of performance of the
acquired business in any one period. Also, the value assigned to
acquired intangible assets in a business combination is based on
various estimates and valuation techniques, and does not necessarily
represent the costs CSG would incur to develop such capabilities
internally. Additionally, amortization of acquired intangible assets
can be inconsistent in amount and frequency, and can be significantly
affected by the timing and size of an acquisition. The exclusion of
these expenses in calculating CSG's non-GAAP financial measures allows
management and investors an additional means to evaluate the non-cash
expense related to acquisitions included in CSG's subsequent results
of operations, and therefore, the exclusion of this item allows
investors to further evaluate the cash generating capabilities of
CSG's business.
-
The convertible debt securities OID is the result of allocating a
portion of the principal balance of the debt at issuance to the equity
component of the instrument, as required under current accounting
rules. This OID is then amortized to interest expense over the life of
the respective convertible debt instrument. The interest expense
related to the amortization of the OID is a non-cash expense, and
therefore, the exclusion of this item allows investors to further
evaluate the cash interest costs of CSG's convertible debt securities
for cash flow, liquidity, and debt service purposes.
-
Unusual items within CSG's quarterly and/or annual income tax expense
can occur from such things as income tax accounting timing matters,
income taxes related to unusual events, or as a result of different
treatment of certain items for book accounting and income tax
purposes. Consideration of such items in calculating CSG's non-GAAP
financial measures allows management and investors an additional means
to compare CSG's current financial results with historical and future
periods.
CSG also reports non-GAAP adjusted EBITDA and non-GAAP free cash flow.
Management believes non-GAAP adjusted EBITDA is a useful measure to
investors in evaluating CSG's operating performance, liquidity, debt
servicing capabilities, and enterprise valuation. CSG defines adjusted
EBITDA as income before interest, income taxes, depreciation,
amortization, stock-based compensation, foreign currency transaction
adjustments, and unusual items, such as restructuring charges, as
discussed above. Additionally, management uses non-GAAP free cash flow,
among other measures, to assess its financial performance and cash
generating capabilities, and believes that it is useful to investors
because it shows CSG's cash available to service debt, make strategic
acquisitions and investments, repurchase its common stock, and fund
ongoing operations. CSG defines non-GAAP free cash flow as net cash
flows from operating activities less the purchases of property and
equipment.
Non-GAAP Financial Measures
Non-GAAP Operating Income:
The reconciliations of GAAP operating income to non-GAAP operating
income for the indicated periods are as follows (in thousands, except
percentages):
|
|
Quarter Ended December 31, 2012
|
|
Quarter Ended December 31, 2011
|
|
|
Amounts
|
|
% of Revenues
|
|
Amounts
|
|
% of Revenues
|
GAAP operating income
|
|
$
|
22,149
|
|
11.2
|
%
|
|
$
|
27,043
|
|
14.4
|
%
|
Restructuring charges
|
|
|
1,648
|
|
0.8
|
%
|
|
|
4,865
|
|
2.6
|
%
|
Stock-based compensation
|
|
|
3,441
|
|
1.8
|
%
|
|
|
2,468
|
|
1.3
|
%
|
Amortization of acquired intangible assets
|
|
|
5,780
|
|
2.9
|
%
|
|
|
5,611
|
|
3.0
|
%
|
Non-GAAP operating income
|
|
$
|
33,018
|
|
16.7
|
%
|
|
$
|
39,987
|
|
21.3
|
%
|
|
|
|
|
|
|
|
Year Ended December 31, 2012
|
|
Year Ended December 31, 2011
|
|
|
Amounts
|
|
% of Revenues
|
|
Amounts
|
|
% of Revenues
|
GAAP operating income
|
|
$
|
96,574
|
|
12.8
|
%
|
|
$
|
96,285
|
|
13.1
|
%
|
Restructuring charges
|
|
|
2,469
|
|
0.3
|
%
|
|
|
7,873
|
|
1.1
|
%
|
Ascade acquisition-related charges
|
|
|
344
|
|
0.0
|
%
|
|
|
-
|
|
-
|
|
Stock-based compensation
|
|
|
13,431
|
|
1.8
|
%
|
|
|
12,152
|
|
1.6
|
%
|
Amortization of acquired intangible assets
|
|
|
22,717
|
|
3.0
|
%
|
|
|
22,721
|
|
3.1
|
%
|
Non-GAAP operating income
|
|
$
|
135,535
|
|
17.9
|
%
|
|
$
|
139,031
|
|
18.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP EPS:
The reconciliations of GAAP EPS to non-GAAP EPS for the indicated
periods are as follows (in thousands, except per share amounts):
|
|
Quarter Ended December 31, 2012
|
|
Quarter Ended December 31, 2011
|
|
|
Pretax Amount (1)
|
|
Per Diluted Share Impact (2)
|
|
Pretax Amount (1)
|
|
Per Diluted Share Impact (3)
|
GAAP income before income taxes
|
|
$
|
17,656
|
|
$
|
0.48
|
|
$
|
22,140
|
|
$
|
0.35
|
Restructuring charges
|
|
|
1,648
|
|
|
0.03
|
|
|
4,865
|
|
|
0.10
|
Stock-based compensation
|
|
|
3,441
|
|
|
0.05
|
|
|
2,468
|
|
|
0.05
|
Amortization of acquired intangible assets
|
|
|
5,780
|
|
|
0.09
|
|
|
5,611
|
|
|
0.12
|
Amortization of OID
|
|
|
1,274
|
|
|
0.02
|
|
|
1,179
|
|
|
0.02
|
Non-GAAP income before income taxes
|
|
$
|
29,799
|
|
$
|
0.67
|
|
$
|
36,263
|
|
$
|
0.64
|
|
|
|
|
|
|
|
Year Ended December 31, 2012
|
|
Year Ended December 31, 2011
|
|
|
Pretax Amount (1)
|
|
Per Diluted Share Impact (2)
|
|
Pretax Amount (1)
|
|
Per Diluted Share Impact (3)
|
GAAP income before income taxes
|
|
$
|
77,224
|
|
$
|
1.51
|
|
$
|
75,972
|
|
$
|
1.28
|
Restructuring charges
|
|
|
2,469
|
|
|
0.04
|
|
|
7,873
|
|
|
0.16
|
Ascade acquisition-related charges
|
|
|
344
|
|
|
0.01
|
|
|
-
|
|
|
-
|
Stock-based compensation
|
|
|
13,431
|
|
|
0.25
|
|
|
12,152
|
|
|
0.25
|
Amortization of acquired intangible assets
|
|
|
22,717
|
|
|
0.43
|
|
|
22,721
|
|
|
0.46
|
Amortization of OID
|
|
|
4,954
|
|
|
0.09
|
|
|
5,206
|
|
|
0.10
|
Non-GAAP income before income taxes
|
|
$
|
121,139
|
|
$
|
2.33
|
|
$
|
123,924
|
|
$
|
2.25
|
(1)
|
|
These items (on a pretax basis) are calculated in accordance with
GAAP, and are reflected as part of the results of operations in the
accompanying Unaudited Condensed Consolidated Statements of Income.
|
(2)
|
|
These items represent the estimated after-tax impact to net income
on a per diluted share basis using the following: (i) the estimated
income taxes related to these items, which includes the impact of
the difference between GAAP and non-GAAP pretax income, and includes
the benefit from the R&D and related income tax credits related to
2012 operations. This resulted in estimated effective income rates
for non-GAAP purposes for the quarter and year ended December 31,
2012 of approximately 27% and 38%, respectively; and (ii) the
weighted-average diluted shares outstanding for the quarter and year
ended December 31, 2012 of 32.6 million and 32.5 million,
respectively.
|
(3)
|
|
These items represent the estimated after-tax impact to net income
on a per diluted share basis using the following: (i) the estimated
income taxes related to these items, which includes the impact of
the difference between GAAP and non-GAAP pretax income. This
resulted in estimated effective income rates for non-GAAP purposes
for the quarter and year ended December 31, 2011 of approximately
42% and 40%, respectively; and (ii) the weighted-average diluted
shares outstanding for the quarter and year ended December 31, 2011
of 32.6 million and 33.0 million, respectively.
|
|
|
|
Non-GAAP Adjusted EBITDA:
CSG's calculation of non-GAAP adjusted EBITDA and the reconciliation of
CSG's non-GAAP adjusted EBITDA measure to net income and cash flows from
operating activities are provided below for the indicated periods (in
thousands):
|
|
Quarter Ended December 31,
|
|
Year Ended December 31,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
GAAP operating income
|
|
$
|
22,149
|
|
|
$
|
27,043
|
|
|
$
|
96,574
|
|
|
$
|
96,285
|
|
Restructuring charges
|
|
|
1,648
|
|
|
|
4,865
|
|
|
|
2,469
|
|
|
|
7,873
|
|
Ascade acquisition-related charges
|
|
|
-
|
|
|
|
-
|
|
|
|
344
|
|
|
|
-
|
|
Depreciation
|
|
|
5,202
|
|
|
|
6,511
|
|
|
|
22,286
|
|
|
|
25,435
|
|
Amortization of acquired intangible assets (4)
|
|
|
5,780
|
|
|
|
5,611
|
|
|
|
22,717
|
|
|
|
22,721
|
|
Amortization of other intangible assets (4)
|
|
|
4,502
|
|
|
|
4,236
|
|
|
|
18,748
|
|
|
|
16,454
|
|
Stock-based compensation
|
|
|
3,441
|
|
|
|
2,468
|
|
|
|
13,431
|
|
|
|
12,152
|
|
Adjusted EBITDA
|
|
$
|
42,722
|
|
|
$
|
50,734
|
|
|
$
|
176,569
|
|
|
$
|
180,920
|
|
Adjusted EBITDA as a percentage of revenues
|
|
|
22
|
%
|
|
|
27
|
%
|
|
|
23
|
%
|
|
|
25
|
%
|
|
|
|
|
|
|
|
Quarter Ended December 31,
|
|
Year Ended December 31,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Net income
|
|
$
|
15,790
|
|
|
$
|
11,294
|
|
|
$
|
48,879
|
|
|
$
|
42,282
|
|
Interest expense (5)
|
|
|
3,647
|
|
|
|
4,185
|
|
|
|
15,983
|
|
|
|
17,026
|
|
Amortization of OID
|
|
|
1,274
|
|
|
|
1,179
|
|
|
|
4,954
|
|
|
|
5,206
|
|
Interest and investment income and other, net
|
|
|
(428
|
)
|
|
|
(461
|
)
|
|
|
(1,587
|
)
|
|
|
(1,919
|
)
|
Income tax provision
|
|
|
1,866
|
|
|
|
10,846
|
|
|
|
28,345
|
|
|
|
33,690
|
|
Depreciation
|
|
|
5,202
|
|
|
|
6,511
|
|
|
|
22,286
|
|
|
|
25,435
|
|
Amortization of acquired intangible assets (4)
|
|
|
5,780
|
|
|
|
5,611
|
|
|
|
22,717
|
|
|
|
22,721
|
|
Amortization of other intangible assets (4)
|
|
|
4,502
|
|
|
|
4,236
|
|
|
|
18,748
|
|
|
|
16,454
|
|
Stock-based compensation
|
|
|
3,441
|
|
|
|
2,468
|
|
|
|
13,431
|
|
|
|
12,152
|
|
Ascade acquisition-related charges
|
|
|
-
|
|
|
|
-
|
|
|
|
344
|
|
|
|
-
|
|
Restructuring charges
|
|
|
1,648
|
|
|
|
4,865
|
|
|
|
2,469
|
|
|
|
7,873
|
|
Adjusted EBITDA
|
|
$
|
42,722
|
|
|
$
|
50,734
|
|
|
$
|
176,569
|
|
|
$
|
180,920
|
|
|
|
|
|
|
|
|
Quarter Ended December 31,
|
|
Year Ended December 31,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Cash flows from operating activities
|
|
$
|
19,055
|
|
|
$
|
31,825
|
|
|
$
|
127,477
|
|
|
$
|
60,959
|
|
Income tax provision
|
|
|
1,866
|
|
|
|
10,846
|
|
|
|
28,345
|
|
|
|
33,690
|
|
Changes in operating assets and liabilities and deferred taxes
|
|
|
18,784
|
|
|
|
183
|
|
|
|
9,547
|
|
|
|
65,401
|
|
Impairment of client contract
|
|
|
(1,283
|
)
|
|
|
-
|
|
|
|
(3,783
|
)
|
|
|
-
|
|
Interest expense (5)
|
|
|
3,647
|
|
|
|
4,185
|
|
|
|
15,983
|
|
|
|
17,026
|
|
Interest and investment income and other, net
|
|
|
(428
|
)
|
|
|
(461
|
)
|
|
|
(1,587
|
)
|
|
|
(1,919
|
)
|
Ascade acquisition-related charges
|
|
|
-
|
|
|
|
-
|
|
|
|
344
|
|
|
|
-
|
|
Restructuring charges
|
|
|
1,648
|
|
|
|
4,865
|
|
|
|
2,469
|
|
|
|
7,873
|
|
Other
|
|
|
(567
|
)
|
|
|
(709
|
)
|
|
|
(2,226
|
)
|
|
|
(2,110
|
)
|
Adjusted EBITDA
|
|
$
|
42,722
|
|
|
$
|
50,734
|
|
|
$
|
176,569
|
|
|
$
|
180,920
|
|
|
|
|
|
|
(4) Amortization on the cash flows statement is made up of the
following items for the indicated periods (in thousands):
|
|
|
|
Quarter Ended December 31,
|
|
Year Ended December 31,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Amortization of acquired intangible assets
|
|
$
|
5,780
|
|
|
$
|
5,611
|
|
|
$
|
22,717
|
|
|
$
|
22,721
|
|
Amortization of other intangible assets
|
|
|
4,502
|
|
|
|
4,236
|
|
|
|
18,748
|
|
|
|
16,454
|
|
Amortization of deferred financing costs
|
|
|
602
|
|
|
|
727
|
|
|
|
2,713
|
|
|
|
2,998
|
|
Total amortization
|
|
$
|
10,884
|
|
|
$
|
10,574
|
|
|
$
|
44,178
|
|
|
$
|
42,173
|
|
|
|
|
|
|
|
|
|
|
(5) Interest expense includes amortization of deferred financing
costs as provided in Note 4 above.
|
|
Free Cash Flow:
CSG's calculation of non-GAAP free cash flow and the reconciliation of
CSG's non-GAAP free cash flow measure to cash flows from operating
activities are provided below for the indicated periods (in thousands):
|
|
Quarter Ended December 31,
|
|
Year Ended December 31,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011 (6)
|
Cash flows from operating activities
|
|
$
|
19,055
|
|
|
$
|
31,825
|
|
|
$
|
127,477
|
|
|
$
|
60,959
|
|
Purchases of property and equipment
|
|
|
(12,733
|
)
|
|
|
(2,582
|
)
|
|
|
(33,221
|
)
|
|
|
(22,197
|
)
|
Non-GAAP free cash flow
|
|
$
|
6,322
|
|
|
$
|
29,243
|
|
|
$
|
94,256
|
|
|
$
|
38,762
|
|
(6)
|
|
Cash flows from operating activities for the year ended December 31,
2011 was negatively impacted by the unfavorable changes in working
capital items, primarily related to the following items: (i) the
change in the monthly invoice timing for DISH Network, which was
included as part of its contract renewal terms in January 2011 and
had a negative $20 million impact in the first quarter of 2011; (ii)
the timing of payments for several items specific to the first
quarter of 2011, including approximately $8 million of Intec
acquisition-related expenses, which were accrued expenses as of
December 31, 2010; and (iii) $6 million payment of deferred income
tax liabilities that became due in 2011 as a result of the
repurchase of our 2004 Convertible Debt Securities.
|
|
|
|
Non-GAAP Financial Measures - 2013 Financial
Guidance
Non-GAAP Operating Income Margin:
The reconciliation of GAAP operating income margin to non-GAAP operating
income margin, as included in CSG's 2013 full year financial guidance,
is as follows:
|
|
2013 Guidance
|
GAAP operating income margin
|
|
12.0
|
%
|
Restructuring charges (7)
|
|
0.5
|
%
|
Stock-based compensation (8)
|
|
2.0
|
%
|
Amortization of acquired intangible assets (9)
|
|
2.5
|
%
|
Non-GAAP operating income margin ("approximately 17%")
|
|
17.0
|
%
|
(7)
|
|
This represents the pretax impact of restructuring charges of an
estimated $2 million on CSG's operating income margin as a
percentage of the midpoint of 2013 revenue guidance.
|
|
(8)
|
|
This represents the pretax impact of stock-based compensation
expense of an estimated $14 million on CSG's operating income margin
as a percentage of the midpoint of 2013 revenue guidance.
|
|
(9)
|
|
This represents the pretax impact of amortization of acquired
intangible assets expense of an estimated $20 million on CSG's
operating income margin as a percentage of the midpoint of 2013
revenue guidance.
|
|
|
|
Non-GAAP EPS:
The reconciliation of GAAP EPS to non-GAAP EPS as included in CSG's 2013
full year financial guidance is as follows:
|
|
2013 Guidance Range (10)
|
|
|
Low Range
|
|
High Range
|
GAAP EPS
|
|
$
|
1.59
|
|
$
|
1.70
|
Restructuring charges (11)
|
|
|
0.03
|
|
|
0.03
|
Stock-based compensation (12)
|
|
|
0.22
|
|
|
0.22
|
Amortization of acquired intangible assets (13)
|
|
|
0.31
|
|
|
0.30
|
Amortization of OID (14)
|
|
|
0.08
|
|
|
0.08
|
Non-GAAP EPS
|
|
$
|
2.23
|
|
$
|
2.33
|
(10)
|
|
The estimated after-tax impact of these items is calculated using:
(i) the estimated income taxes related to these items, which
includes the impact of the difference between GAAP and non-GAAP
pretax income, and excludes the benefit of R&D and related income
tax credits related to 2012 operations, as these credits are
reflected in our 2012 effective income rate for non-GAAP purposes
(see Note 2 above). This resulted in an estimated effective income
tax rate for non-GAAP purposes of approximately 36%; and (ii) the
estimated weighted-average diluted shares outstanding of 32.8
million.
|
|
(11)
|
|
This represents the estimated after-tax impact on a per diluted
share basis of the full year restructuring charges of approximately
$2 million.
|
|
(12)
|
|
This represents the estimated after-tax impact on a per diluted
share basis of the full year stock-based compensation expense of
approximately $14 million.
|
|
(13)
|
|
This represents the estimated after-tax impact on a per diluted
share basis of the full year amortization of acquired intangible
assets expense of approximately $20 million.
|
|
(14)
|
|
This represents the estimated after-tax impact on a per diluted
share basis of the full year expense related to the amortization of
the OID expense for CSG's convertible debt securities of
approximately $5 million.
|
|
|
|
Non-GAAP Adjusted EBITDA:
CSG's calculation of non-GAAP adjusted EBITDA and the reconciliation of
CSG's non-GAAP adjusted EBITDA measure to net income and cash flows from
operations are provided below for CSG's 2013 full year financial
guidance at the mid-point (in thousands):
|
|
2013
|
GAAP operating income
|
|
$
|
92,000
|
|
Restructuring charges
|
|
|
2,000
|
|
Depreciation
|
|
|
23,000
|
|
Amortization of acquired intangible assets
|
|
|
20,000
|
|
Amortization of other intangible assets
|
|
|
13,000
|
|
Stock-based compensation
|
|
|
14,000
|
|
Adjusted EBITDA
|
|
$
|
164,000
|
|
Adjusted EBITDA as a percentage of revenues
|
|
|
21
|
%
|
|
|
|
|
|
2013
|
Net income
|
|
$
|
54,000
|
|
Interest expense
|
|
|
13,000
|
|
Amortization of OID
|
|
|
5,000
|
|
Interest and investment income and other, net
|
|
|
(2,000
|
)
|
Income tax provision
|
|
|
22,000
|
|
Depreciation
|
|
|
23,000
|
|
Amortization of acquired of intangible assets
|
|
|
20,000
|
|
Amortization of other intangible assets
|
|
|
13,000
|
|
Stock-based compensation
|
|
|
14,000
|
|
Restructuring charges
|
|
|
2,000
|
|
Adjusted EBITDA
|
|
$
|
164,000
|
|
|
|
|
|
|
2013
|
Cash flows from operating activities (midpoint of guidance)
|
|
$
|
123,000
|
|
Income tax provision
|
|
|
22,000
|
|
Changes in operating assets and liabilities and deferred taxes
|
|
|
6,000
|
|
Interest expense
|
|
|
13,000
|
|
Interest and investment income and other, net
|
|
|
(2,000
|
)
|
Restructuring charges
|
|
|
2,000
|
|
Adjusted EBITDA
|
|
$
|
164,000
|
|
|
|
|
|
|
Free Cash Flow:
CSG's calculation of non-GAAP free cash flow and the reconciliation of
CSG's non-GAAP free cash flow measure to cash flows from operating
activities is provided below for the indicated period (in thousands):
|
|
2013
|
Cash flows from operating activities (midpoint of guidance)
|
|
$
|
123,000
|
|
Purchases of property and equipment
|
|
|
(35,000
|
)
|
Non-GAAP free cash flow
|
|
$
|
88,000
|
|
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