[February 03, 2016] |
|
CSG Systems International Reports Results for Fourth Quarter and Full Year 2015
CSG Systems International, Inc. (Nasdaq: CSGS), a leading global
provider of interactive transaction-driven solutions and services, today
reported results for the quarter and year ended December 31, 2015.
Key Highlights:
• Fourth quarter 2015 results:
• Total revenues were $197.3 million.
• Non-GAAP operating income was $43.5 million, or 22.1%
of total revenues and GAAP operating income was $34.1 million, or 17.3%
of total revenues.
• Non-GAAP earnings per diluted share (EPS) was $0.77.
GAAP EPS was $0.70.
• Cash flows from operations for the quarter were $52.6 million.
• Full year 2015 results:
• Total revenues were $752.5 million.
• Non-GAAP operating income was $149.6 million, or 19.9%
of total revenues and GAAP operating income was $113.1 million,
or 15.0% of total revenues.
• Non-GAAP earnings per diluted share (EPS) was $2.62.
GAAP EPS was $1.87.
• Cash flows from operations for the year were $137.0 million.
• CSG paid its quarterly cash dividend of $0.175 per share of
common stock, or a total of approximately $6 million, to
shareholders, bringing the total 2015 dividend to approximately $23
million.
• In January 2016, CSG's Board of Directors approved an approximately 6%
increase in the Company's cash dividend, effective with the first
quarterly payment of $0.185 per share of common stock.
• During 2015, CSG converted approximately 2 million Comcast
customer accounts onto its cloud-based Advanced Convergent Platform.
• In December 2015, CSG received the final share settlement for its $50
million accelerated share repurchase (ASR) agreement, entered into
in March 2015.
"During 2015 we executed well in a challenging environment," said Bret
Griess, president and chief executive officer for CSG International. "We
accomplished these strong results as a result of several activities we
took throughout the year, including making cost improvements in our
overall operations, migrating new customers to our cloud-based
solutions, divesting non-core solutions and the continuing maturation
and scale benefits of our newer offerings.
"As the new CEO of CSG, I am leading a company that is well positioned
to expand its relevance and leadership position in the global
communications industry," Griess added. "We have unrivaled domain
expertise in the cable and video markets. We work with some of the
largest and most innovative communications service providers in the
world. We have proven technology and a well-earned reputation for
operating our solutions really well. We have a financially sound
company. And finally, and most important, we have skilled employees who
live our values in achieving our mission."
Financial Overview (unaudited)
(in thousands, except per share amounts and percentages):
|
|
|
Quarter Ended December 31,
|
|
|
|
Year Ended December 31,
|
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
Percent Change
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
Percent Change
|
|
Revenues
|
|
|
$
|
197,288
|
|
|
|
$
|
193,697
|
|
|
|
|
2
|
%
|
|
|
$
|
752,520
|
|
|
|
$
|
751,286
|
|
|
|
|
0
|
%
|
Non-GAAP Results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
$
|
43,537
|
|
|
|
$
|
32,082
|
|
|
|
|
36
|
%
|
|
|
$
|
149,568
|
|
|
|
$
|
121,722
|
|
|
|
|
23
|
%
|
Operating Income Margin
|
|
|
|
22.1
|
%
|
|
|
|
16.6
|
%
|
|
|
|
-
|
|
|
|
|
19.9
|
%
|
|
|
|
16.2
|
%
|
|
|
|
-
|
|
EPS
|
|
|
$
|
0.77
|
|
|
|
$
|
0.61
|
|
|
|
|
26
|
%
|
|
|
$
|
2.62
|
|
|
|
$
|
2.12
|
|
|
|
|
24
|
%
|
GAAP Results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
$
|
34,070
|
|
|
|
$
|
19,125
|
|
|
|
|
78
|
%
|
|
|
$
|
113,140
|
|
|
|
$
|
75,690
|
|
|
|
|
49
|
%
|
Operating Income Margin
|
|
|
|
17.3
|
%
|
|
|
|
9.9
|
%
|
|
|
|
-
|
|
|
|
|
15.0
|
%
|
|
|
|
10.1
|
%
|
|
|
|
-
|
|
EPS
|
|
|
$
|
0.70
|
|
|
|
$
|
0.38
|
|
|
|
|
84
|
%
|
|
|
$
|
1.87
|
|
|
|
$
|
1.10
|
|
|
|
|
70
|
%
|
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 2015 were $197.3 million, a 2% increase when compared
to revenues of $193.7 million for the fourth quarter of 2014, and a 6%
increase when compared to $187.0 million for the third quarter of 2015.
Total revenues for the full year 2015 were $752.5 million, a slight
increase when compared to revenues of $751.3 million for the full year
2014. These increases can be primarily attributed to strong processing
revenues. Year-over-year, these increases more than offset unfavorable
foreign currency movements, which had a negative impact to total
revenues for the fourth quarter and full year 2015 of approximately $4
million and $15 million, respectively.
Non-GAAP Results: Non-GAAP operating
income for the fourth quarter of 2015 was $43.5 million, or 22.1% of
total revenues, compared to $32.1 million, or 16.6% of total revenues
for the fourth quarter of 2014, and $40.3 million, or 21.6% of total
revenues for the third quarter of 2015. Non-GAAP operating income for
the full year 2015 was $149.6 million, or 19.9% of total revenues,
compared to $121.7 million, or 16.2% of total revenues for the full year
2014.
Non-GAAP EPS for the fourth quarter of 2015 was $0.77, compared to
non-GAAP EPS of $0.61 for the fourth quarter of 2014, and $0.72 for the
third quarter of 2015. Non-GAAP EPS for the full year 2015 was $2.62,
compared to non-GAAP EPS of $2.12 for the full year 2014.
The year-over-year quarterly and annual increases in non-GAAP operating
income and non-GAAP EPS are due primarily to lower operating expenses
(driven mainly by foreign currency movements and focus on cost
management), while the sequential quarterly increases can be primarily
attributed to higher revenues.
GAAP Results: GAAP operating income
for the fourth quarter of 2015 was $34.1 million, or 17.3% of total
revenues, compared to $19.1 million, or 9.9% of total revenues, for the
same period in 2014. GAAP operating income for the full year 2015 was
$113.1 million, or 15.0% of total revenues, compared to $75.7 million,
or 10.1% of total revenues for the full year 2014.
GAAP EPS for the fourth quarter of 2015 was $0.70 compared to $0.38 for
the fourth quarter of 2014. GAAP EPS for the full year 2015 was $1.87
compared to $1.10 for the full year 2014.
Balance Sheet and Cash Flows
Balance Sheet: Cash, cash
equivalents and short term investments at December 31, 2015 was $240.9
million, compared to $199.8 million at September 30, 2015 and $201.8
million at December 31, 2014.
For the quarter and year ended December 31, 2015, CSG generated $52.6
million and $137.0 million, respectively, of net cash flows from
operations and had non-GAAP free cash flow of $50.5 million and $118.1
million, respectively.
2016 Financial Guidance
CSG's financial guidance for the full year 2016 is as follows:
Revenues
|
|
|
$735 - $760 million
|
Non-GAAP EPS
|
|
|
$2.59 - $2.69
|
GAAP EPS
|
|
|
$1.84 - $1.94
|
Non-GAAP Adjusted EBITDA
|
|
|
$177 - $182 million
|
Cash flows from operating activities
|
|
|
$110 - $130 million
|
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 conference call on February 3, 2016, at 5:00 p.m. ET, to
discuss CSG's fourth quarter and full year results for 2015, as well as
CSG's 2016 financial guidance. The call will be carried live and
archived on the Internet. A link to the conference call is available at http://ir.csgi.com.
In addition, to reach the conference by phone, dial 1-888-438-5491 and
ask the operator for the CSG International conference call and Liz
Bauer, chairperson. A replay of the conference call will also be
available until 8:00 p.m. ET on March 4, 2016, and can be accessed by
calling 1-888-203-1112 and access code of 4128956.
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, Charter Communications, Comcast,
DISH, Orange, Reliance, SingTel Optus, Telefonica, Time Warner Cable,
T-Mobile, Verizon, Vivo and Vodafone. With over 30 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 over forty percent of its revenues from its three largest
clients;
• Continued market acceptance of CSG's products and services;
• Timing and success of previously announced client customer account
migrations to CSG's billing platform;
• 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, 2015
|
|
|
|
December 31, 2014
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
132,631
|
|
|
|
$
|
81,712
|
|
Short-term investments
|
|
|
|
108,305
|
|
|
|
|
120,088
|
|
Total cash, cash equivalents, and short-term investments
|
|
|
|
240,936
|
|
|
|
|
201,800
|
|
Trade accounts receivable:
|
|
|
|
|
|
|
|
|
|
|
Billed, net of allowance of $3,600 and $3,323
|
|
|
|
178,854
|
|
|
|
|
184,369
|
|
Unbilled
|
|
|
|
41,110
|
|
|
|
|
42,439
|
|
Deferred income taxes
|
|
|
|
18,135
|
|
|
|
|
13,204
|
|
Income taxes receivable
|
|
|
|
4,038
|
|
|
|
|
7,851
|
|
Other current assets
|
|
|
|
35,153
|
|
|
|
|
28,470
|
|
Total current assets
|
|
|
|
518,226
|
|
|
|
|
478,133
|
|
Non-current assets:
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net of depreciation of $112,282 and $138,065
|
|
|
|
35,992
|
|
|
|
|
38,326
|
|
Software, net of amortization of $95,094 and $86,797
|
|
|
|
35,095
|
|
|
|
|
44,732
|
|
Goodwill
|
|
|
|
219,724
|
|
|
|
|
225,269
|
|
Client contracts, net of amortization of $87,890 and $88,585
|
|
|
|
39,738
|
|
|
|
|
46,903
|
|
Deferred income taxes
|
|
|
|
8,382
|
|
|
|
|
8,890
|
|
Income taxes receivable
|
|
|
|
-
|
|
|
|
|
1,333
|
|
Other assets
|
|
|
|
20,076
|
|
|
|
|
16,142
|
|
Total non-current assets
|
|
|
|
359,007
|
|
|
|
|
381,595
|
|
Total assets
|
|
|
$
|
877,233
|
|
|
|
$
|
859,728
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
Current maturities of long-term debt, net of unamortized original
discount of $7,923 and zero
|
|
|
$
|
149,577
|
|
|
|
$
|
22,500
|
|
Client deposits
|
|
|
|
33,694
|
|
|
|
|
35,791
|
|
Trade accounts payable
|
|
|
|
43,392
|
|
|
|
|
37,052
|
|
Accrued employee compensation
|
|
|
|
59,607
|
|
|
|
|
51,441
|
|
Deferred revenue
|
|
|
|
41,907
|
|
|
|
|
40,004
|
|
Income taxes payable
|
|
|
|
8,962
|
|
|
|
|
984
|
|
Other current liabilities
|
|
|
|
22,980
|
|
|
|
|
23,375
|
|
Total current liabilities
|
|
|
|
360,119
|
|
|
|
|
211,147
|
|
Non-current liabilities:
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, net of unamortized original issue discount of zero
and $14,169
|
|
|
|
135,000
|
|
|
|
|
233,331
|
|
Deferred revenue
|
|
|
|
9,828
|
|
|
|
|
9,648
|
|
Income taxes payable
|
|
|
|
4,413
|
|
|
|
|
1,613
|
|
Deferred income taxes
|
|
|
|
9,237
|
|
|
|
|
20,445
|
|
Other non-current liabilities
|
|
|
|
12,791
|
|
|
|
|
15,821
|
|
Total non-current liabilities
|
|
|
|
171,269
|
|
|
|
|
280,858
|
|
Total liabilities
|
|
|
|
531,388
|
|
|
|
|
492,005
|
|
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;
32,555 shares and 33,945 shares outstanding
|
|
|
|
672
|
|
|
|
|
667
|
|
Common stock warrants, 2,851 and 2,851 warrants issued and
outstanding
|
|
|
|
7,310
|
|
|
|
|
6,694
|
|
Additional paid-in capital
|
|
|
|
503,254
|
|
|
|
|
486,414
|
|
Treasury stock, at cost, 34,601 and 32,763 shares
|
|
|
|
(814,437
|
)
|
|
|
|
(757,478
|
)
|
Accumulated other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on short-term investments, net of tax
|
|
|
|
(97
|
)
|
|
|
|
6
|
|
Cumulative foreign currency translation adjustments
|
|
|
|
(26,288
|
)
|
|
|
|
(13,386
|
)
|
Accumulated earnings
|
|
|
|
675,431
|
|
|
|
|
644,806
|
|
Total stockholders' equity
|
|
|
|
345,845
|
|
|
|
|
367,723
|
|
Total liabilities and stockholders' equity
|
|
|
$
|
877,233
|
|
|
|
$
|
859,728
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CSG SYSTEMS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME-UNAUDITED
(in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
Year Ended
|
|
|
|
|
December 31, 2015
|
|
|
|
December 31, 2014
|
|
|
|
December 31, 2015
|
|
|
|
December 31, 2014
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Processing and related services
|
|
|
$
|
148,401
|
|
|
|
$
|
142,413
|
|
|
|
$
|
577,410
|
|
|
|
$
|
562,109
|
|
Software and services
|
|
|
|
25,377
|
|
|
|
|
30,032
|
|
|
|
|
93,678
|
|
|
|
|
102,585
|
|
Maintenance
|
|
|
|
23,510
|
|
|
|
|
21,252
|
|
|
|
|
81,432
|
|
|
|
|
86,592
|
|
Total revenues
|
|
|
|
197,288
|
|
|
|
|
193,697
|
|
|
|
|
752,520
|
|
|
|
|
751,286
|
|
Cost of revenues (exclusive of depreciation, shown separately
below):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Processing and related services
|
|
|
|
69,260
|
|
|
|
|
72,068
|
|
|
|
|
270,715
|
|
|
|
|
277,084
|
|
Software and services
|
|
|
|
15,685
|
|
|
|
|
18,941
|
|
|
|
|
68,597
|
|
|
|
|
79,640
|
|
Maintenance
|
|
|
|
10,552
|
|
|
|
|
8,078
|
|
|
|
|
40,429
|
|
|
|
|
32,619
|
|
Total cost of revenues
|
|
|
|
95,497
|
|
|
|
|
99,087
|
|
|
|
|
379,741
|
|
|
|
|
389,343
|
|
Other operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
|
25,383
|
|
|
|
|
26,939
|
|
|
|
|
101,950
|
|
|
|
|
104,712
|
|
Selling, general and administrative
|
|
|
|
37,578
|
|
|
|
|
40,013
|
|
|
|
|
139,839
|
|
|
|
|
153,488
|
|
Depreciation
|
|
|
|
3,508
|
|
|
|
|
3,605
|
|
|
|
|
14,776
|
|
|
|
|
14,084
|
|
Restructuring and reorganization charges
|
|
|
|
1,252
|
|
|
|
|
4,928
|
|
|
|
|
3,074
|
|
|
|
|
13,969
|
|
Total operating expenses
|
|
|
|
163,218
|
|
|
|
|
174,572
|
|
|
|
|
639,380
|
|
|
|
|
675,596
|
|
Operating income
|
|
|
|
34,070
|
|
|
|
|
19,125
|
|
|
|
|
113,140
|
|
|
|
|
75,690
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
(2,536
|
)
|
|
|
|
(2,553
|
)
|
|
|
|
(10,967
|
)
|
|
|
|
(10,453
|
)
|
Amortization of original issue discount
|
|
|
|
(1,607
|
)
|
|
|
|
(1,487
|
)
|
|
|
|
(6,246
|
)
|
|
|
|
(5,781
|
)
|
Interest and investment income, net
|
|
|
|
364
|
|
|
|
|
191
|
|
|
|
|
1,038
|
|
|
|
|
798
|
|
Other, net
|
|
|
|
(1,050
|
)
|
|
|
|
1,439
|
|
|
|
|
(624
|
)
|
|
|
|
1,268
|
|
Total other
|
|
|
|
(4,829
|
)
|
|
|
|
(2,410
|
)
|
|
|
|
(16,799
|
)
|
|
|
|
(14,168
|
)
|
Income before income taxes
|
|
|
|
29,241
|
|
|
|
|
16,715
|
|
|
|
|
96,341
|
|
|
|
|
61,522
|
|
Income tax provision
|
|
|
|
(5,573
|
)
|
|
|
|
(4,083
|
)
|
|
|
|
(33,774
|
)
|
|
|
|
(24,563
|
)
|
Net income
|
|
|
$
|
23,668
|
|
|
|
$
|
12,632
|
|
|
|
$
|
62,567
|
|
|
|
$
|
36,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
30,944
|
|
|
|
|
32,256
|
|
|
|
|
31,051
|
|
|
|
|
32,449
|
|
Diluted
|
|
|
|
34,029
|
|
|
|
|
33,372
|
|
|
|
|
33,438
|
|
|
|
|
33,736
|
|
Earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
0.76
|
|
|
|
$
|
0.39
|
|
|
|
$
|
2.01
|
|
|
|
$
|
1.14
|
|
Diluted
|
|
|
|
0.70
|
|
|
|
|
0.38
|
|
|
|
|
1.87
|
|
|
|
|
1.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per common share
|
|
|
$
|
0.1750
|
|
|
|
$
|
0.1575
|
|
|
|
$
|
0.7000
|
|
|
|
$
|
0.6225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CSG SYSTEMS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS-UNAUDITED
(in thousands)
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
|
December 31, 2015
|
|
|
|
December 31, 2014
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
62,567
|
|
|
|
$
|
36,959
|
|
Adjustments to reconcile net income to net cash provided by
operating activities -
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
14,776
|
|
|
|
|
14,084
|
|
Amortization
|
|
|
|
29,281
|
|
|
|
|
33,553
|
|
Amortization of original issue discount
|
|
|
|
6,246
|
|
|
|
|
5,781
|
|
Asset impairment
|
|
|
|
1,685
|
|
|
|
|
-
|
|
Loss on short-term investments and other
|
|
|
|
177
|
|
|
|
|
1,123
|
|
Gain on disposition of business operations
|
|
|
|
(3,733
|
)
|
|
|
|
(222
|
)
|
Deferred income taxes
|
|
|
|
(16,106
|
)
|
|
|
|
41
|
|
Excess tax benefit of stock-based compensation awards
|
|
|
|
(2,185
|
)
|
|
|
|
(2,060
|
)
|
Stock-based employee compensation
|
|
|
|
21,130
|
|
|
|
|
16,655
|
|
Subtotal
|
|
|
|
113,838
|
|
|
|
|
105,914
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
Trade accounts receivable, net
|
|
|
|
1,831
|
|
|
|
|
(14,326
|
)
|
Other current and non-current assets
|
|
|
|
(5,387
|
)
|
|
|
|
(3,230
|
)
|
Income taxes payable/receivable
|
|
|
|
8,953
|
|
|
|
|
(3,508
|
)
|
Trade accounts payable and accrued liabilities
|
|
|
|
13,916
|
|
|
|
|
4,359
|
|
Deferred revenue
|
|
|
|
3,808
|
|
|
|
|
(5,558
|
)
|
Net cash provided by operating activities
|
|
|
|
136,959
|
|
|
|
|
83,651
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
|
(18,845
|
)
|
|
|
|
(25,985
|
)
|
Purchases of short-term investments
|
|
|
|
(181,553
|
)
|
|
|
|
(190,427
|
)
|
Proceeds from sale/maturity of short-term investments
|
|
|
|
192,994
|
|
|
|
|
197,466
|
|
Acquisition of and investment in businesses, net of cash acquired
|
|
|
|
(1,300
|
)
|
|
|
|
-
|
|
Acquisition of and investments in client contracts
|
|
|
|
(8,018
|
)
|
|
|
|
(5,600
|
)
|
Proceeds from the disposition of business operations
|
|
|
|
-
|
|
|
|
|
1,130
|
|
Net cash used in investing activities
|
|
|
|
(16,722
|
)
|
|
|
|
(23,416
|
)
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock
|
|
|
|
1,547
|
|
|
|
|
1,394
|
|
Payment of cash dividends
|
|
|
|
(22,238
|
)
|
|
|
|
(20,530
|
)
|
Repurchase of common stock
|
|
|
|
(65,027
|
)
|
|
|
|
(25,138
|
)
|
Payments on acquired equipment financing
|
|
|
|
(829
|
)
|
|
|
|
(1,097
|
)
|
Proceeds from long-term debt
|
|
|
|
150,000
|
|
|
|
|
-
|
|
Payments on long-term debt
|
|
|
|
(127,500
|
)
|
|
|
|
(15,000
|
)
|
Payments of deferred financing costs
|
|
|
|
(2,742
|
)
|
|
|
|
-
|
|
Excess tax benefit of stock-based compensation awards
|
|
|
|
2,185
|
|
|
|
|
2,060
|
|
Net cash used in financing activities
|
|
|
|
(64,604
|
)
|
|
|
|
(58,311
|
)
|
Effect of exchange rate fluctuations on cash
|
|
|
|
(4,714
|
)
|
|
|
|
(2,898
|
)
|
Net increase (decrease) in cash and cash equivalents
|
|
|
|
50,919
|
|
|
|
|
(974
|
)
|
Cash and cash equivalents, beginning of period
|
|
|
|
81,712
|
|
|
|
|
82,686
|
|
Cash and cash equivalents, end of period
|
|
|
$
|
132,631
|
|
|
|
$
|
81,712
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
Net cash paid during the period for -
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
|
$
|
8,380
|
|
|
|
$
|
8,265
|
|
Income taxes
|
|
|
|
41,860
|
|
|
|
|
25,153
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXHIBIT 1
CSG SYSTEMS INTERNATIONAL, INC.
SUPPLEMENTAL REVENUE ANALYSIS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues by Geography
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended December 31,
2015
|
|
|
|
Quarter Ended September 30,
2015
|
|
|
|
Quarter Ended December 31,
2014
|
|
Americas
|
|
|
|
83
|
%
|
|
|
|
84
|
%
|
|
|
|
83
|
%
|
Europe, Middle East and Africa
|
|
|
|
11
|
%
|
|
|
|
11
|
%
|
|
|
|
11
|
%
|
Asia Pacific
|
|
|
|
6
|
%
|
|
|
|
5
|
%
|
|
|
|
6
|
%
|
Total Revenues
|
|
|
|
100
|
%
|
|
|
|
100
|
%
|
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
2015
|
|
|
|
Year Ended December 31,
2014
|
|
Americas
|
|
|
|
84
|
%
|
|
|
|
85
|
%
|
Europe, Middle East and Africa
|
|
|
|
11
|
%
|
|
|
|
10
|
%
|
Asia Pacific
|
|
|
|
5
|
%
|
|
|
|
5
|
%
|
Total Revenues
|
|
|
|
100
|
%
|
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Revenues by Significant Customers: 10% or more
of Revenues
|
|
|
Quarter Ended December 31,
2015
|
|
|
|
Quarter Ended September 30,
2015
|
|
|
|
Quarter Ended December 31,
2014
|
|
Comcast
|
|
|
|
24
|
%
|
|
|
|
24
|
%
|
|
|
|
22
|
%
|
DISH
|
|
|
|
13
|
%
|
|
|
|
14
|
%
|
|
|
|
14
|
%
|
Time Warner
|
|
|
|
11
|
%
|
|
|
|
12
|
%
|
|
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
2015
|
|
|
|
Year Ended December 31,
2014
|
|
Comcast
|
|
|
|
24
|
%
|
|
|
|
22
|
%
|
DISH
|
|
|
|
14
|
%
|
|
|
|
15
|
%
|
Time Warner
|
|
|
|
12
|
%
|
|
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
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;
-
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 and reorganization charges
|
|
|
|
|
X
|
|
|
|
|
X
|
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 and reorganization 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, changes in management structure, divestitures of
businesses, facility consolidations and abandonments, impairment of
acquired intangible assets, and fundamental reorganizations impacting
operational focus and direction. 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 financial results with historical and future
periods.
-
Acquisition-related charges relate to direct and incremental expenses
related to business acquisitions, and thus, are not considered
reflective of CSG's recurring core business operating results. These
charges typically 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 equity awards
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 date the equity award is
granted, 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 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 non-GAAP
adjusted EBITDA as income before interest, income taxes, depreciation,
amortization, stock-based compensation, foreign currency transaction
adjustments, and unusual items, such as restructuring and reorganization
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, pay
cash dividends, 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, 2015
|
|
|
|
Quarter Ended December 31, 2014
|
|
|
|
|
Amounts
|
|
|
|
% of Revenues
|
|
|
|
Amounts
|
|
|
|
% of Revenues
|
|
GAAP operating income
|
|
|
$
|
34,070
|
|
|
|
|
17.3
|
%
|
|
|
$
|
19,125
|
|
|
|
|
9.9
|
%
|
Restructuring and reorganization charges
|
|
|
|
1,252
|
|
|
|
|
0.6
|
%
|
|
|
|
4,928
|
|
|
|
|
2.5
|
%
|
Stock-based compensation (1)
|
|
|
|
5,511
|
|
|
|
|
2.8
|
%
|
|
|
|
4,405
|
|
|
|
|
2.3
|
%
|
Amortization of acquired intangible assets
|
|
|
|
2,704
|
|
|
|
|
1.4
|
%
|
|
|
|
3,624
|
|
|
|
|
1.9
|
%
|
Non-GAAP operating income
|
|
|
$
|
43,537
|
|
|
|
|
22.1
|
%
|
|
|
$
|
32,082
|
|
|
|
|
16.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2015
|
|
|
|
Year Ended December 31, 2014
|
|
|
|
|
Amounts
|
|
|
|
% of Revenues
|
|
|
|
Amounts
|
|
|
|
% of Revenues
|
|
GAAP operating income
|
|
|
$
|
113,140
|
|
|
|
|
15.0
|
%
|
|
|
$
|
75,690
|
|
|
|
|
10.1
|
%
|
Restructuring and reorganization charges
|
|
|
|
3,074
|
|
|
|
|
0.4
|
%
|
|
|
|
13,969
|
|
|
|
|
1.9
|
%
|
Stock-based compensation (1)
|
|
|
|
21,371
|
|
|
|
|
2.9
|
%
|
|
|
|
16,655
|
|
|
|
|
2.2
|
%
|
Amortization of acquired intangible assets
|
|
|
|
11,983
|
|
|
|
|
1.6
|
%
|
|
|
|
15,408
|
|
|
|
|
2.0
|
%
|
Non-GAAP operating income
|
|
|
$
|
149,568
|
|
|
|
|
19.9
|
%
|
|
|
$
|
121,722
|
|
|
|
|
16.2
|
%
|
(1)
|
|
Stock-based compensation included in the tables above and following
excludes amounts that have been recorded in restructuring and
reorganization charges.
|
|
|
|
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, 2015
|
|
|
|
Quarter Ended December 31, 2014
|
|
|
|
Pretax Amount (2)
|
|
|
|
EPS (4)
|
|
|
|
Pretax Amount (2)
|
|
|
|
EPS (5)
|
GAAP income before income taxes
|
|
|
$
|
29,241
|
|
|
|
$
|
0.70
|
|
|
|
$
|
16,715
|
|
|
|
$
|
0.38
|
Restructuring and reorganization charges
|
|
|
|
1,252
|
|
|
|
|
|
|
|
|
|
4,928
|
|
|
|
|
|
Stock-based compensation (1)
|
|
|
|
5,511
|
|
|
|
|
|
|
|
|
|
4,405
|
|
|
|
|
|
Amortization of acquired intangible assets
|
|
|
|
2,704
|
|
|
|
|
|
|
|
|
|
3,624
|
|
|
|
|
|
Amortization of OID
|
|
|
|
1,607
|
|
|
|
|
|
|
|
|
|
1,487
|
|
|
|
|
|
Non-GAAP income before income taxes (3)
|
|
|
$
|
40,315
|
|
|
|
$
|
0.77
|
|
|
|
$
|
31,159
|
|
|
|
$
|
0.61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2015
|
|
|
|
Year Ended December 31, 2014
|
|
|
|
Pretax Amount (2)
|
|
|
|
EPS (4)
|
|
|
|
Pretax Amount (2)
|
|
|
|
EPS (5)
|
GAAP income before income taxes
|
|
|
$
|
96,341
|
|
|
|
$
|
1.87
|
|
|
|
$
|
61,522
|
|
|
|
$
|
1.10
|
Restructuring and reorganization charges
|
|
|
|
3,074
|
|
|
|
|
|
|
|
|
|
13,969
|
|
|
|
|
|
Stock-based compensation (1)
|
|
|
|
21,371
|
|
|
|
|
|
|
|
|
|
16,655
|
|
|
|
|
|
Amortization of acquired intangible assets
|
|
|
|
11,983
|
|
|
|
|
|
|
|
|
|
15,408
|
|
|
|
|
|
Amortization of OID
|
|
|
|
6,246
|
|
|
|
|
|
|
|
|
|
5,781
|
|
|
|
|
|
Non-GAAP income before income taxes (3)
|
|
|
$
|
139,015
|
|
|
|
$
|
2.62
|
|
|
|
$
|
113,335
|
|
|
|
$
|
2.12
|
(2)
|
|
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.
|
|
|
|
(3)
|
|
Non-GAAP EPS is calculated by taking the non-GAAP income before
income taxes and deducting from this amount non-GAAP income taxes
calculated by using the non-GAAP effective income tax rate for the
period, and then dividing the result of this calculation by the
outstanding diluted shares for the period.
|
|
|
|
(4)
|
|
For the fourth quarter and year ended December 31, 2015, the GAAP
effective income tax rate was approximately 19% and 35%,
respectively, the non-GAAP effective income tax rate was
approximately 35% and 37%, respectively, and the outstanding diluted
shares were 34.0 million and 33.4 million, respectively. The fourth
quarter difference between the GAAP and the non-GAAP effective
income tax rates relates primarily to the timing of the 2015 R&D tax
credit legislation. The anticipated quarterly benefit of the credits
is included in each of the quarters of 2015 for non-GAAP purposes;
however, the fourth quarter GAAP tax rate reflects the entire
benefit of the full year impact of the R&D tax credits, as the
legislation was not passed until December.
|
|
|
|
(5)
|
|
For the fourth quarter and year ended December 31, 2014, the GAAP
effective income tax rate was approximately 24% and 40%,
respectively, the non-GAAP effective income tax rate was
approximately 34% and 37%, respectively, and the outstanding diluted
shares were 33.4 million and 33.7 million, respectively. The fourth
quarter difference between the GAAP and the non-GAAP effective
income tax rates relates primarily to the timing of the 2014 R&D tax
credit legislation. The anticipated quarterly benefit of the credits
is included in each of the quarters of 2014 for non-GAAP purposes;
however, the fourth quarter GAAP tax rate reflects the entire
benefit of the full year impact of the R&D tax credits, as the
legislation was not passed until December.
|
|
|
|
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, except percentages):
|
|
|
Quarter Ended December 31,
|
|
|
|
Year Ended December 31,
|
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
2015
|
|
|
|
2014
|
|
GAAP operating income
|
|
|
$
|
34,070
|
|
|
|
$
|
19,125
|
|
|
|
$
|
113,140
|
|
|
|
$
|
75,690
|
|
Restructuring and reorganization charges
|
|
|
|
1,252
|
|
|
|
|
4,928
|
|
|
|
|
3,074
|
|
|
|
|
13,969
|
|
Depreciation
|
|
|
|
3,508
|
|
|
|
|
3,605
|
|
|
|
|
14,776
|
|
|
|
|
14,084
|
|
Amortization of acquired intangible assets (6)
|
|
|
|
2,704
|
|
|
|
|
3,624
|
|
|
|
|
11,983
|
|
|
|
|
15,408
|
|
Amortization of other intangible assets (6)
|
|
|
|
3,762
|
|
|
|
|
4,152
|
|
|
|
|
14,547
|
|
|
|
|
15,820
|
|
Stock-based compensation (1)
|
|
|
|
5,511
|
|
|
|
|
4,405
|
|
|
|
|
21,371
|
|
|
|
|
16,655
|
|
Adjusted EBITDA
|
|
|
$
|
50,807
|
|
|
|
$
|
39,839
|
|
|
|
$
|
178,891
|
|
|
|
$
|
151,626
|
|
Adjusted EBITDA as a percentage of revenues
|
|
|
|
26
|
%
|
|
|
|
21
|
%
|
|
|
|
24
|
%
|
|
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended December 31,
|
|
|
|
Year Ended December 31,
|
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
2015
|
|
|
|
2014
|
|
Net income
|
|
|
$
|
23,668
|
|
|
|
$
|
12,632
|
|
|
|
$
|
62,567
|
|
|
|
$
|
36,959
|
|
Interest expense (7)
|
|
|
|
2,536
|
|
|
|
|
2,553
|
|
|
|
|
10,967
|
|
|
|
|
10,453
|
|
Amortization of OID
|
|
|
|
1,607
|
|
|
|
|
1,487
|
|
|
|
|
6,246
|
|
|
|
|
5,781
|
|
Interest and investment income and other, net
|
|
|
|
686
|
|
|
|
|
(1,630
|
)
|
|
|
|
(414
|
)
|
|
|
|
(2,066
|
)
|
Income tax provision
|
|
|
|
5,573
|
|
|
|
|
4,083
|
|
|
|
|
33,774
|
|
|
|
|
24,563
|
|
Depreciation
|
|
|
|
3,508
|
|
|
|
|
3,605
|
|
|
|
|
14,776
|
|
|
|
|
14,084
|
|
Amortization of acquired intangible assets (6)
|
|
|
|
2,704
|
|
|
|
|
3,624
|
|
|
|
|
11,983
|
|
|
|
|
15,408
|
|
Amortization of other intangible assets (6)
|
|
|
|
3,762
|
|
|
|
|
4,152
|
|
|
|
|
14,547
|
|
|
|
|
15,820
|
|
Stock-based compensation (1)
|
|
|
|
5,511
|
|
|
|
|
4,405
|
|
|
|
|
21,371
|
|
|
|
|
16,655
|
|
Restructuring and reorganization charges
|
|
|
|
1,252
|
|
|
|
|
4,928
|
|
|
|
|
3,074
|
|
|
|
|
13,969
|
|
Adjusted EBITDA
|
|
|
$
|
50,807
|
|
|
|
$
|
39,839
|
|
|
|
$
|
178,891
|
|
|
|
$
|
151,626
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended December 31,
|
|
|
|
Year Ended December 31,
|
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
2015
|
|
|
|
2014
|
|
Cash flows from operating activities
|
|
|
$
|
52,613
|
|
|
|
$
|
47,745
|
|
|
|
$
|
136,959
|
|
|
|
$
|
83,651
|
|
Income tax provision
|
|
|
|
5,573
|
|
|
|
|
4,083
|
|
|
|
|
33,774
|
|
|
|
|
24,563
|
|
Changes in operating assets and liabilities and deferred taxes
|
|
|
|
(14,375
|
)
|
|
|
|
(17,136
|
)
|
|
|
|
(7,015
|
)
|
|
|
|
22,222
|
|
Interest expense (7)
|
|
|
|
2,536
|
|
|
|
|
2,553
|
|
|
|
|
10,967
|
|
|
|
|
10,453
|
|
Interest and investment income and other, net
|
|
|
|
686
|
|
|
|
|
(1,630
|
)
|
|
|
|
(414
|
)
|
|
|
|
(2,066
|
)
|
Restructuring and reorganization charges (8)
|
|
|
|
3,300
|
|
|
|
|
4,928
|
|
|
|
|
5,122
|
|
|
|
|
14,191
|
|
Other
|
|
|
|
474
|
|
|
|
|
(704
|
)
|
|
|
|
(502
|
)
|
|
|
|
(1,388
|
)
|
Adjusted EBITDA
|
|
|
$
|
50,807
|
|
|
|
$
|
39,839
|
|
|
|
$
|
178,891
|
|
|
|
$
|
151,626
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6) Amortization on the statement of cash flows is made up of the
following items for the indicated periods (in thousands):
|
|
|
Quarter Ended December 31,
|
|
|
|
Year Ended December 31,
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
2015
|
|
|
|
2014
|
Amortization of acquired intangible assets
|
|
|
$
|
2,704
|
|
|
|
$
|
3,624
|
|
|
|
$
|
11,983
|
|
|
|
$
|
15,408
|
Amortization of other intangible assets
|
|
|
|
3,762
|
|
|
|
|
4,152
|
|
|
|
|
14,547
|
|
|
|
|
15,820
|
Amortization of deferred financing costs
|
|
|
|
462
|
|
|
|
|
570
|
|
|
|
|
2,751
|
|
|
|
|
2,325
|
Total amortization
|
|
|
$
|
6,928
|
|
|
|
$
|
8,346
|
|
|
|
$
|
29,281
|
|
|
|
$
|
33,553
|
(7)
|
|
Interest expense includes amortization of deferred financing costs
as provided in Note 6 above.
|
|
|
|
(8)
|
|
Restructuring and reorganization costs exclude the impact of the
asset impairment for the fourth quarter and year ended December 31,
2015, and the gain on disposition of business operations for the
fourth quarter and years ended December 31, 2015 and 2014, as these
amounts are already excluded from cash flows from operating
activities.
|
|
|
|
Non-GAAP 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,
|
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
2015
|
|
|
|
2014
|
|
Cash flows from operating activities
|
|
|
$
|
52,613
|
|
|
|
$
|
47,745
|
|
|
|
$
|
136,959
|
|
|
|
$
|
83,651
|
|
Purchases of property and equipment
|
|
|
|
(2,069
|
)
|
|
|
|
(4,579
|
)
|
|
|
|
(18,845
|
)
|
|
|
|
(25,985
|
)
|
Non-GAAP free cash flow
|
|
|
$
|
50,544
|
|
|
|
$
|
43,166
|
|
|
|
$
|
118,114
|
|
|
|
$
|
57,666
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures - 2016 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 2016 full year financial guidance,
is as follows:
|
|
|
2016 Guidance
|
|
GAAP operating income margin
|
|
|
|
16.0
|
%
|
Stock-based compensation (9)
|
|
|
|
3.0
|
%
|
Amortization of acquired intangible assets (10)
|
|
|
|
1.0
|
%
|
Non-GAAP operating income margin ("approximately 20%")
|
|
|
|
20.0
|
%
|
(9)
|
|
This represents the pretax impact of stock-based compensation
expense of an estimated $24 million on CSG's operating income margin
as a percentage of the midpoint of 2016 revenue guidance.
|
|
|
|
(10)
|
|
This represents the pretax impact of amortization of acquired
intangible assets expense of an estimated $9 million on CSG's
operating income margin as a percentage of the midpoint of 2016
revenue guidance.
|
|
|
|
Non-GAAP EPS:
The reconciliation of GAAP EPS to non-GAAP EPS as included in CSG's 2016
full year financial guidance is as follows (in thousands, except per
share amounts):
|
|
|
2016 Guidance Range
|
|
|
|
Low Range
|
|
|
|
High Range
|
|
|
|
Pretax Amount (11)
|
|
|
|
EPS (13)
|
|
|
|
Pretax Amount (11)
|
|
|
|
EPS (13)
|
GAAP income before income taxes
|
|
|
$
|
98,000
|
|
|
|
$
|
1.84
|
|
|
|
$
|
103,000
|
|
|
|
$
|
1.94
|
Stock-based compensation
|
|
|
|
24,000
|
|
|
|
|
|
|
|
|
|
24,000
|
|
|
|
|
|
Amortization of acquired intangible assets
|
|
|
|
9,000
|
|
|
|
|
|
|
|
|
|
9,000
|
|
|
|
|
|
Amortization of OID
|
|
|
|
7,000
|
|
|
|
|
|
|
|
|
|
7,000
|
|
|
|
|
|
Non-GAAP income before income taxes (12)
|
|
|
$
|
138,000
|
|
|
|
$
|
2.59
|
|
|
|
$
|
143,000
|
|
|
|
$
|
2.69
|
(11)
|
|
These items (on a pretax basis) are calculated in accordance with
GAAP, and will be reflected as part of the results of operations in
CSG's Unaudited Condensed Consolidated Statements of Income.
|
|
|
|
(12)
|
|
Non-GAAP EPS is calculated by taking the non-GAAP income before
income taxes and deducting from this amount non-GAAP income taxes
calculated by using the non-GAAP effective income tax rate for the
period, and then dividing the result of this calculation by the
outstanding diluted shares for the period.
|
|
|
|
(13)
|
|
For 2016, the estimated effective income tax rate for non-GAAP
purposes is expected to be approximately 37%. The weighted-average
diluted shares outstanding are expected to be 33.5 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 2016 full year financial
guidance at the mid-point (in thousands, except percentages):
|
|
|
|
|
|
|
|
2016
|
|
GAAP operating income
|
|
|
|
|
|
|
|
$
|
116,500
|
|
Depreciation
|
|
|
|
|
|
|
|
|
15,000
|
|
Amortization of acquired intangible assets
|
|
|
|
|
|
|
|
|
9,000
|
|
Amortization of other intangible assets
|
|
|
|
|
|
|
|
|
15,000
|
|
Stock-based compensation
|
|
|
|
|
|
|
|
|
24,000
|
|
Non-GAAP Adjusted EBITDA
|
|
|
|
|
|
|
|
$
|
179,500
|
|
Non-GAAP Adjusted EBITDA as a percentage of revenues
|
|
|
|
|
|
|
|
|
24.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
Net income
|
|
|
|
|
|
|
|
|
$
|
63,000
|
|
Interest expense
|
|
|
|
|
|
|
|
|
|
11,000
|
|
Amortization of OID
|
|
|
|
|
|
|
|
|
|
7,000
|
|
Interest income
|
|
|
|
|
|
|
|
|
|
(1,500
|
)
|
Income tax provision
|
|
|
|
|
|
|
|
|
|
37,000
|
|
Depreciation
|
|
|
|
|
|
|
|
|
|
15,000
|
|
Amortization of acquired of intangible assets
|
|
|
|
|
|
|
|
|
|
9,000
|
|
Amortization of other intangible assets
|
|
|
|
|
|
|
|
|
|
15,000
|
|
Stock-based compensation
|
|
|
|
|
|
|
|
|
|
24,000
|
|
Non-GAAP Adjusted EBITDA
|
|
|
|
|
|
|
|
|
$
|
179,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
Cash flows from operating activities (midpoint of guidance)
|
|
$
|
120,000
|
|
Income tax provision
|
|
|
37,000
|
|
Changes in operating assets and liabilities and deferred taxes
|
|
|
10,000
|
|
Interest expense
|
|
|
11,000
|
|
Interest income
|
|
|
(1,500
|
)
|
Other
|
|
|
3,000
|
|
Non-GAAP Adjusted EBITDA
|
|
$
|
179,500
|
|
|
|
|
|
|
Non-GAAP 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):
|
|
|
|
|
|
2016
|
|
Cash flows from operating activities (midpoint of guidance)
|
|
|
|
|
|
$
|
120,000
|
|
Purchases of property and equipment
|
|
|
|
|
|
|
(20,000
|
)
|
Non-GAAP free cash flow
|
|
|
|
|
|
$
|
100,000
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20160203006416/en/
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