CSG Meets Expectations: Revenues From Continuing Operations at $93.2 Million
and EPS From Continuing Operations at $0.09
ENGLEWOOD, Colo., Jan. 24 /PRNewswire-FirstCall/ -- CSG Systems
International, Inc. (Nasdaq: CSGS), a leading provider of customer care and
billing solutions, today reported results for the quarter ended December 31,
2005.
(Logo: http://www.newscom.com/cgi-bin/prnh/20020627/CSGSLOGO)
Fourth Quarter 2005 Highlights:
* During the quarter, CSG extended its agreement with EchoStar
Communications through the end of 2008.
* On December 9, 2005, CSG completed the sale of its GSS business to
Comverse, Inc. In addition, on December 30, 2005, CSG completed the
sale of its plaNet Consulting business to a group of private investors
led by the plaNet management team. As a result, the GSS and the plaNet
Consulting businesses are reflected as discontinued operations in CSG's
results of operations for all periods presented.
* Revenues and earnings per diluted share from continuing operations were
both within the range of CSG's previously communicated financial
guidance. Results from continuing operations were as follows: total
revenues were $93.2 million; operating income was $6.5 million; and
income from continuing operations (net of tax) was $4.3 million, or
$0.09 per diluted share.
* Cash flows from operations for the quarter were $15.7 million, which
were negatively impacted by approximately $10 million due to a key
client delaying payment of an invoice until after quarterend. This
amount was received in January 2006.
* During the fourth quarter, CSG's Board of Directors increased the total
number of authorized shares to be repurchased under CSG's stock
repurchase program by five million shares. For the quarter, CSG
repurchased approximately 645,000 shares of its common stock for
$15.0 million (weighted-average price of $23.24 per share) under its
stock repurchase program.
"We enter 2006 in a position of strength," Ed Nafus, chief executive
officer and president for CSG Systems International, Inc. said. "Over
two-thirds of our cable clients are on our Advanced Convergent Platform. We
have no major contracts up for renewal. And, our clients are rolling out new
products like wireless and commercial services. We believe that we are in a
great position to help our clients be successful in an increasingly
competitive environment."
Summary GAAP Results of Operations Information (unaudited)
(in thousands, except per share amounts and percentages):
Three Months Ended Twelve Months Ended
December 31, December 31,
Percent Percent
2005 2004 Change 2005 2004 Change
Continuing
operations:
Total revenues $93,199 $90,630 3% $377,317 $351,401 7%
Operating income 6,498 22,795 (71%) 76,433 96,473 (21%)
Income from
continuing
operations 4,284 13,412 (68%) 46,742 50,998 (8%)
Discontinued
operations, net
of tax 9,784 (1,150) NM (2,044) (3,814) 46%
Net income 14,068 12,262 15% 44,698 47,184 (5%)
Diluted earnings
(loss) per share:
Income from
continuing
operations $0.09 $0.26 (65%) $0.96 $0.99 (3%)
Discontinued
operations, net
of tax 0.20 (0.02) NM (0.04) (0.07) 43%
Net income $0.29 $0.24 21% $0.92 $0.92 --
Fourth Quarter 2005 Results
Total revenues from continuing operations for the fourth quarter of 2005
were $93.2 million, an increase of three percent, when compared to
$90.6 million for the same period in 2004, and down one percent when compared
to $94.1 million for the third quarter of 2005. The components of total
revenues from continuing operations are as follows: processing revenues for
the fourth quarter of 2005 were $87.1 million, up three percent when compared
to $84.2 million for the same period last year, and relatively flat when
compared to $87.5 million for the third quarter of 2005; and software,
maintenance and services revenues were $6.1 million for the current quarter, a
four percent decrease when compared to $6.4 million for the same period last
year, and a decrease of seven percent when compared to $6.6 million for the
third quarter of 2005.
Income from continuing operations (net of tax) for the fourth quarter of
2005 was $4.3 million, or $0.09 per diluted share, down 68 percent when
compared to $13.4 million, or $0.26 per diluted share, for the fourth quarter
of 2004, and down 71 percent when compared to $14.8 million, or $0.31 per
diluted share, for the third quarter of 2005. The decrease in income from
continuing operations for the fourth quarter of 2005 when compared to these
two previous periods relates primarily to $14.5 million of restructuring
charges recorded in the fourth quarter of 2005, which are discussed in greater
detail below.
Income (loss) from discontinued operations (net of tax) was $9.8 million,
or $0.20 per diluted share, for the fourth quarter of 2005 (which includes a
$10.0 million net pretax gain on the sale of the GSS and plaNet businesses),
compared to ($1.2) million, or ($0.02) per diluted share, for the same period
in 2004, and compared to ($1.3) million, or ($0.03) per diluted share, for the
third quarter of 2005. Net income for the fourth quarter of 2005 was
$14.1 million, or $0.29 per diluted share, an increase of 15 percent when
compared to $12.3 million, or $0.24 per diluted share, for the fourth quarter
of 2004, and an increase of four percent when compared to $13.5 million, or
$0.28 per diluted share, for the third quarter of 2005.
Broadband Division (Continuing Operations)
As a result of the sale of the GSS and plaNet businesses, CSG's results of
operations from continuing operations consist of the Broadband Services
Division (excluding the portion of the plaNet business sold that was
previously included in the Broadband Services Division) and corporate overhead
expense related to CSG's ongoing business, which were as follows for the
periods ended December 31, 2005 and 2004 (in thousands):
Three Months Ended Twelve Months Ended
December 31, December 31,
2005 2004 2005 2004
Total revenues $93,199 $90,630 $377,317 $351,401
Operating expenses:
Broadband Services Division 63,003 57,350 237,667 213,531
Corporate overhead expense:
Restructuring charges
(see below for further
details) 14,525 277 14,534 1,292
Neal Hansen retirement
benefits (1) 185 516 8,855 516
All other corporate
overhead expense 8,988 9,692 39,828 39,589
Total corporate overhead
expense 23,698 10,485 63,217 41,397
Total operating expenses 86,701 67,835 300,884 254,928
Operating income 6,498 22,795 76,433 96,473
Other income (expense),
net (2) 125 (1,672) (3,472) (16,158)
Income from continuing
operations, before income
taxes 6,623 21,123 72,961 80,315
Income tax provision (2,339) (7,711) (26,219) (29,317)
Income from continuing
operations $4,284 $13,412 $46,742 $50,998
(1) Corporate overhead includes the expense for benefits related to the
retirement of CSG's former CEO, Neal Hansen, effective June 30, 2005.
(2) Other income (expense) includes the write-off of deferred financing
costs of $6.6 million during the twelve months ended December 31,
2004.
Total domestic customer accounts processed on CSG's systems as of
December 31, 2005 were 45.2 million, compared to 44.7 million as of
September 30, 2005. To date, over 22 million subscribers have migrated to
CSG's Advanced Convergent Platform. The annualized revenue per processing
unit ("ARPU") for the fourth quarter of 2005 was $7.72 compared to $7.86 for
the third quarter of 2005. The reduction in the fourth quarter 2005 ARPU is
related primarily to the new EchoStar contract which went into effect on
November 1, 2005.
During the fourth quarter of 2005, CSG extended its agreement with
EchoStar Communications through the end of 2008.
Restructuring Charges
During the fourth quarter of 2005, CSG incurred charges related to several
restructuring activities. A summary of the restructuring charges for all
periods presented are as follows (in thousands):
Three Months Ended Twelve Months Ended
December 31, December 31,
2005 2004 2005 2004
Stock-based compensation
related to change in control
provision (3) $3,783 $-- $3,783 $--
Involuntary termination of
executive officer (3) 1,357 -- 1,357 --
Involuntary termination of
certain corporate support
staff (3) 590 -- 590 --
Management incentive bonuses
related to the GSS business
sale (3) 1,409 -- 1,409 --
Disposal of corporate
aircraft (3) 1,556 -- 1,556 --
Termination of the FairPoint
Communications contract (4) 6,209 -- 6,209 --
Facility abandonments (397) 277 (389) 1,045
All other restructuring charges 18 -- 19 247
Total restructuring charges $14,525 $277 $14,534 $1,292
(3) CSG incurred certain nonrecurring charges in conjunction with the
closing of the sale of the GSS business, and the disposition of its
corporate aircraft. These items were discussed in detail in CSG's
Form 8-K dated December 15, 2005.
(4) CSG incurred certain nonrecurring charges in conjunction with the
termination of its agreement with FairPoint Communications
("FairPoint"). This item was discussed in greater detail in CSG's
Form 8-K dated November 9, 2005.
Discontinued Operations
On December 9, 2005, CSG completed the previously announced sale of its
GSS business to Comverse, Inc. The cash purchase price received upon closing
was approximately $239 million (net of approximately $8 million of cash
included in the GSS business sold), which resulted in a pretax gain on the
sale of the GSS business of $22.8 million. The final purchase price is
subject to certain post-closing adjustments.
On December 30, 2005, CSG completed the sale of its plaNet Consulting
business to a group of private investors led by the plaNet management team.
The plaNet business sold excludes the Broadband Professional Services Group
and the ICMS Service Bureau processing business (which consists entirely of
the FairPoint contract), both of which were retained by CSG, and as a result,
are included in CSG's results of continuing operations in all periods
presented. The cash purchase price received upon closing was $1.5 million,
which resulted in a pretax loss on the sale of the plaNet business of
$12.8 million. The final purchase price is subject to certain post-closing
adjustments.
See Exhibit 1 to this press release for CSG's restated historical
financial statements to reflect the impact of reporting the GSS and plaNet
businesses as discontinued operations.
The components of the GSS and plaNet businesses included in discontinued
operations are as follows (in thousands):
Three Months Ended Twelve Months Ended
December 31, December 31,
2005 2004 2005 2004
GSS business:
Total revenues $33,501 $42,895 $161,737 $166,446
Total operating expenses 35,453 44,151 178,540 175,567
Operating loss (1,952) (1,256) (16,803) (9,121)
Other income (expense), net 356 (1,161) 3,631 4
Gain on sale of business (5) 22,779 -- 22,779 --
Discontinued operations,
before income taxes 21,183 (2,417) 9,607 (9,117)
Income tax benefit (5) 1,166 1,811 2,736 6,568
Discontinued operations,
net of income taxes $22,349 $(606) $12,343 $(2,549)
Three Months Ended Twelve Months Ended
December 31, December 31,
2005 2004 2005 2004
plaNet business:
Total revenues $2,912 $3,121 $10,597 $11,900
Total operating expenses 3,482 3,984 14,018 13,904
Operating loss (570) (863) (3,421) (2,004)
Other income (expense), net -- 6 4 12
Loss on sale of business (12,756) -- (12,756) --
Discontinued operations,
before income taxes (13,326) (857) (16,173) (1,992)
Income tax benefit 761 313 1,786 727
Discontinued operations,
net of income taxes $(12,565) $(544) $(14,387) $(1,265)
(5) The determination of the gain and the related income tax impact
associated with the accounting for the sale of the GSS business are
unusually complex and are still under review by the company, and thus
may change as the company finalizes its analysis.
Supplemental Data -- Continuing Operations
The following information is provided to assist readers in further
evaluating CSG's continuing operations performance (in thousands, except per
share amounts):
Three Months Ended Three Months Ended
December 31, 2005 December 31, 2004
Per Diluted Per Diluted
Share Share
Amount (8) Impact (9) Amount (8) Impact (9)
Certain key operating
income items:
Neal Hansen retirement
benefits $185 $0.00 $516 $0.01
Restructuring charges 14,525 0.20 277 0.00
Revenue adjustment
related to
FairPoint (6) 773 0.01 -- --
Total $15,483 $0.21 $793 $0.01
Certain non-cash
expenses (7):
Depreciation $2,446 $0.03 $2,537 $0.03
Amortization 3,429 0.05 3,166 0.04
Stock-based employee
compensation 7,194 0.10 2,440 0.03
Total $13,069 $0.18 $8,143 $0.10
Twelve Months Ended Twelve Months Ended
December 31, 2005 December 31, 2004
Per Diluted Per Diluted
Share Share
Amount (8) Impact (9) Amount (8) Impact (9)
Certain key operating
income items:
Neal Hansen retirement
benefits $8,855 $0.12 $516 $0.01
Write-off of deferred
financing costs -- -- 6,569 0.08
Revenue adjustment
related to
FairPoint (6) 773 0.01 -- --
Restructuring charges 14,534 0.19 1,292 0.02
Total $24,162 $0.32 $8,377 $0.11
Certain non-cash
expenses (7):
Depreciation $9,862 $0.13 $10,412 $0.13
Amortization 13,586 0.18 11,598 0.14
Stock-based employee
compensation 17,047 0.22 10,620 0.13
Total $40,495 $0.53 $32,630 $0.40
(6) In addition to the restructuring charges of $6.2 million noted under
note (4) above, CSG also recorded a reduction of revenue of
$0.8 million in the fourth quarter of 2005 related to the termination
of its contract with FairPoint.
(7) These items are calculated in accordance with GAAP, and are reflected
as part of continuing operations in the accompanying Unaudited
Condensed Consolidated Statements of Income. There is $4.2 million
of stock-based compensation included in restructuring charges for the
three and twelve months ended December 31, 2005, respectively.
(8) These items (on a pretax basis) are included in CSG's determination
of income from continuing operations on a GAAP basis.
(9) This represents the after tax impact to income from continuing
operations on a per diluted share basis using CSG's annual effective
income tax rates from continuing operations of 35% and 36%,
respectively, for the three and twelve months ended December 31,
2005, and 36.5% for both the three and twelve months ended
December 31, 2004.
Financial Condition
As of December 31, 2005, CSG had cash, cash equivalents and short-term
investments of $392.2 million, compared to $161.4 million as of September 30,
2005. The significant increase between periods relates primarily to the cash
proceeds received from the sale of the GSS business. Net billed accounts
receivable related to continuing operations were $104.8 million as of
December 31, 2005, compared to $94.3 million as of September 30, 2005 and
$91.9 million as of December 31, 2004 (exclusive of amounts related to the GSS
and plaNet businesses).
Cash flows related to continuing operations have not been segregated from
cash flows related to discontinued operations in the accompanying Condensed
Consolidated Statements of Cash Flows. Cash flows from operations for the
quarter ended December 31, 2005 were $15.7 million, compared to $24.7 million
for the quarter ended September 30, 2005, and $22.3 million for the quarter
ended December 31, 2004. Cash flows from operations for the fourth quarter of
2005 were negatively impacted by approximately $10 million due to a key client
delaying payment of an invoice until after quarterend. This amount was
received in January 2006.
Stock Repurchase Program
During the fourth quarter of 2005, CSG's Board of Directors increased the
total number of authorized shares to be repurchased under CSG's stock
repurchase program by five million shares.
In April 2005, CSG established a Rule 10b5-1 Plan to repurchase shares of
CSG common stock on the open market. Any shares repurchased under the Rule
10b5-1 Plan are counted towards the 20 million share limit authorized under
the terms of CSG's stock repurchase program. The Rule 10b5-1 Plan supplements
any other stock repurchases that CSG may decide to purchase under the existing
terms of the stock repurchase program. The maximum quarterly repurchase
limitation established under the Rule 10b5-1 Plan is $15 million.
During the fourth quarter of 2005, CSG repurchased approximately
645,000 shares of its common stock at a total purchase price of $15.0 million
(a weighted-average price of $23.24 per share). Including these shares, the
total shares repurchased under CSG's stock repurchase program since its
inception in August 1999 is 13.1 million shares, at a total repurchase price
of $325.6 million (a weighted-average price of $24.80 per share). As of
December 31, 2005, the remaining number of shares authorized for repurchase
under the stock repurchase program is 6.9 million shares.
First Quarter 2006 and Full Year 2006 Financial Guidance
CSG's financial guidance for continuing operations for the first quarter
2006 and for the full year 2006 is as follows:
First Quarter - 2006 Full Year - 2006
Revenues $90 - $92 million $365 - $375 million
GAAP EPS $0.30 - $0.31 $1.25 - $1.35
Cash flows from
operations $16 - $18 million $90 - $100 million
Diluted shares
outstanding Approximately 47.5 million Approximately 46.5 million
There are certain expected key operating income items and non-cash items
included in CSG's first quarter 2006 and full year 2006 GAAP earnings per
diluted share guidance noted above. The following table outlines the expected
impact of these items, and is provided to assist readers in further evaluating
CSG's expected financial performance for these periods (in thousands, except
per share amounts):
First Quarter - 2006 Full Year - 2006
Per Diluted Per Diluted
Share Share
Amount Impact Amount Impact
Certain key operating income
items:
Operating loss on FairPoint
contract $487 $0.01 $2,130 $0.03
Restructuring charges 805 0.01 2,710 0.04
Total $1,292 $0.02 $4,840 $0.07
Certain non-cash expenses:
Depreciation $2,477 $0.03 $10,199 $0.14
Amortization 3,712 0.05 16,647 0.23
Stock-based employee
compensation 2,805 0.04 11,052 0.15
Total $8,994 $0.12 $37,898 $0.52
Conference Call
CSG will host a one-hour conference call on Tuesday, January 24, at
5 p.m. EST, to discuss CSG's fourth quarter results. The call will be carried
live and archived on the Internet. A link to the conference call is available
at http://www.csgsystems.com.
Additional Information
For additional information about CSG, please visit CSG's web site at
http://www.csgsystems.com. Additional information can be found in the Investor
Relations section of the web site.
About CSG Systems International
Headquartered in Englewood, Colorado, CSG Systems International
(Nasdaq: CSGS) is the leading provider of outsourced billing, customer care
and print and mail solutions and services supporting the North American
convergent broadband and direct broadcast satellite markets. CSG's solutions
support some of the world's largest and most innovative providers of bundled
multi-channel video, Internet, voice and IP-based services. CSG's unique
combination of solutions, services and expertise ensure that cable and
satellite operators can continue to rapidly launch new service offerings,
improve operational efficiencies and deliver a high-quality customer
experience in a competitive and ever-changing marketplace. CSG is a S&P
Midcap 400 company. For more information, visit our website at
http://www.csgsystems.com.
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. These factors include, but are not limited to: 1) CSG's ability to
continue to perform satisfactorily and maintain good customer relations with
its three largest clients, Comcast Corporation, EchoStar Communications, and
Time Warner, Inc., which combined make up over 50% of CSG's revenues from
continuing operations; 2) the continued acceptance of CSG ACP and its related
products and services; 3) CSG's ability to enhance current products and
develop new technology that will retain existing clients and capture new
market share; 4) significant forays into new markets, which may prove costly
and unprofitable; 5) the degree to which CSG's expectations of market
penetration and consumer acceptance of advanced IP services prove true -- and
even if realized, CSG's ability to meet the billing and customer care needs of
those markets; 6) client consolidation, which has decreased the number of
potential buyers for many of CSG's products and services; 7) CSG's ability to
renew contracts and sell additional products and services to existing and new
clients; and 8) CSG's ability to successfully deliver on lengthy and/or
complex implementation projects, which by their nature, carry much more risk.
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 share and per share amounts)
December 31, December 31,
2005 2004
ASSETS
Current assets:
Cash and cash equivalents $346,113 $133,551
Short-term investments 46,111 23,927
Total cash, cash equivalents and short-term
investments 392,224 157,478
Trade accounts receivable-
Billed, net of allowance of $1,324 and
$4,818 104,812 142,056
Unbilled and other 6,660 14,030
Deferred income taxes 12,565 5,336
Income taxes receivable -- 4,064
Other current assets 17,874 11,723
Total current assets 534,135 334,687
Property and equipment, net of depreciation
of $61,333 and $87,068 21,143 34,476
Software, net of amortization of $41,009 and
$77,086 -- 24,695
Goodwill 623 218,346
Client contracts, net of amortization of
$68,634 and $62,898 41,661 50,427
Deferred income taxes 31,139 39,478
Other assets 6,236 8,298
Total assets $634,937 $710,407
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Client deposits $19,651 $19,497
Trade accounts payable 17,306 22,412
Accrued employee compensation 32,428 31,859
Deferred revenue 10,771 53,250
Income taxes payable 3,872 15,085
Other current liabilities 15,613 19,909
Total current liabilities 99,641 162,012
Non-current liabilities:
Long-term debt 230,000 230,000
Deferred revenue 7,747 6,844
Other non-current liabilities 7,750 3,481
Total non-current liabilities 245,497 240,325
Total liabilities 345,138 402,337
Stockholders' equity:
Preferred stock, par value $.01 per share;
10,000,000 shares authorized; zero shares
issued and outstanding -- --
Common stock, par value $.01 per share;
100,000,000 shares authorized;
47,886,480 shares and 51,016,326 shares
outstanding 601 595
Additional paid-in capital 316,764 298,767
Deferred employee compensation -- (1,320)
Treasury stock, at cost, 12,290,485 shares
and 8,482,496 shares (296,976) (224,008)
Accumulated other comprehensive income
(loss):
Unrealized gain (loss) on short-term
investments, net of tax 71 (5)
Cumulative translation adjustments -- 9,400
Accumulated earnings 269,339 224,641
Total stockholders' equity 289,799 308,070
Total liabilities and stockholders' equity $634,937 $710,407
CSG SYSTEMS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME-UNAUDITED
(in thousands, except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
2005 2004 2005 2004
Revenues:
Processing and related
services $87,073 $84,231 $346,463 $326,556
Software, maintenance and
services 6,126 6,399 30,854 24,845
Total revenues 93,199 90,630 377,317 351,401
Cost of revenues:
Processing and related
services 44,217 41,101 170,344 146,837
Software, maintenance and
services 5,073 5,379 19,720 25,047
Total cost of revenues 49,290 46,480 190,064 171,884
Gross margin (exclusive of
depreciation) 43,909 44,150 187,253 179,517
Operating expenses:
Research and development 9,067 7,994 33,932 31,887
Selling, general and
administrative 11,373 10,547 52,492 39,453
Depreciation 2,446 2,537 9,862 10,412
Restructuring charges 14,525 277 14,534 1,292
Total operating expenses 37,411 21,355 110,820 83,044
Operating income 6,498 22,795 76,433 96,473
Other income (expense):
Interest expense (1,771) (1,932) (7,537) (10,261)
Write-off of deferred
financing costs -- -- -- (6,569)
Interest and investment
income, net 1,901 414 4,059 975
Other, net (5) (154) 6 (303)
Total other 125 (1,672) (3,472) (16,158)
Income from continuing
operations before income
taxes 6,623 21,123 72,961 80,315
Income tax provision (2,339) (7,711) (26,219) (29,317)
Income from continuing
operations 4,284 13,412 46,742 50,998
Discontinued operations:
Income (loss) from
discontinued operations,
includes net gain on 2005
disposals of $10,023 7,857 (3,274) (6,566) (11,109)
Income tax benefit 1,927 2,124 4,522 7,295
Discontinued operations, net
of tax 9,784 (1,150) (2,044) (3,814)
Net income $14,068 $12,262 $44,698 $47,184
Basic earnings (loss) per
common share:
Income from continuing
operations $0.09 $0.27 $0.98 $1.01
Discontinued operations, net
of tax 0.21 (0.02) (0.04) (0.08)
Net income $0.30 $0.25 $0.94 $0.93
Diluted earnings (loss) per
common share:
Income from continuing
operations $0.09 $0.26 $0.96 $0.99
Discontinued operations, net
of tax 0.20 (0.02) (0.04) (0.07)
Net income $0.29 $0.24 $0.92 $0.92
Weighted-average common
shares outstanding:
Basic shares 46,906 49,375 47,851 50,477
Diluted shares 47,837 50,216 48,571 51,223
CSG SYSTEMS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS-UNAUDITED
(in thousands)
Twelve Months Ended
December 31, December 31,
2005 2004
Cash flows from operating activities:
Net income $44,698 $47,184
Adjustments to reconcile net income to net
cash provided by operating activities -
Depreciation 13,690 15,091
Amortization 25,130 27,310
Restructuring charges for abandonment of
facilities and impairment of assets 10,451 909
Net gain on disposition of discontinued
operations (10,023) --
Gain on short-term investments (336) (49)
Write-off of deferred financing costs -- 6,569
Deferred income taxes (2,811) 17,887
Tax benefit of stock-based compensation
awards 2,001 1,312
Stock-based employee compensation 20,358 14,886
Changes in operating assets and liabilities:
Trade accounts and other receivables, net (17,271) (4,003)
Other current and non-current assets 2,939 (338)
Arbitration charge payable -- (25,181)
Income taxes payable/receivable 1,949 26,231
Accounts payable and accrued liabilities 8,618 (10,075)
Deferred revenue 3,181 1,535
Net cash provided by operating activities 102,574 119,268
Cash flows from investing activities:
Proceeds from the sale of discontinued
operations 239,760 --
Purchases of property and equipment (12,798) (9,655)
Purchase of aircraft held for sale (8,712) --
Purchases of short-term investments (88,058) (45,094)
Proceeds from sale/maturity of short-term
investments 66,286 26,210
Acquisition of and investments in assets (579) (834)
Acquisition of and investments in client
contracts (6,060) (3,466)
Net cash provided by (used in) investing
activities 189,839 (32,839)
Cash flows from financing activities:
Proceeds from issuance of common stock 5,316 6,926
Repurchase of common stock (81,320) (55,898)
Proceeds from long-term debt -- 230,000
Payments on long-term debt -- (228,925)
Payments of deferred financing costs (87) (8,213)
Net cash used in financing activities (76,091) (56,110)
Effect of exchange rate fluctuations on cash (3,760) 2,835
Net increase in cash and cash equivalents 212,562 33,154
Cash and cash equivalents, beginning of period 133,551 100,397
Cash and cash equivalents, end of period $346,113 $133,551
Supplemental disclosures of cash flow
information:
Cash paid (received) during the period for -
Interest $6,177 $8,237
Income taxes 25,923 (23,009)
CSG SYSTEMS INTERNATIONAL, INC.
EXHIBIT 1- CONDENSED CONSOLIDATED STATEMENTS OF INCOME-UNAUDITED
RESTATED TO REFLECT THE GSS AND PLANET BUSINESSES AS DISCONTINUED OPERATIONS
(in thousands, except per share amounts)
For the
Year
For the Quarter Ended, Ended,
March 31, June 30, Sept. 30, Dec. 31, Dec. 31,
2005 2005 2005 2005 2005
Revenues:
Processing and
related services $83,281 $88,631 $87,478 $87,073 $346,463
Software,
maintenance and
services 9,895 8,219 6,614 6,126 30,854
Total revenues 93,176 96,850 94,092 93,199 377,317
Cost of revenues:
Processing and
related services 41,983 41,691 42,453 44,217 170,344
Software,
maintenance and
services 5,043 5,003 4,601 5,073 19,720
Total cost of
revenues 47,026 46,694 47,054 49,290 190,064
Gross margin
(exclusive of
depreciation) 46,150 50,156 47,038 43,909 187,253
Operating expenses:
Research and
development 7,999 7,857 9,009 9,067 33,932
Selling, general
and administrative 14,607 15,045 11,467 11,373 52,492
Depreciation 2,591 2,501 2,324 2,446 9,862
Restructuring charges 3 3 3 14,525 14,534
Total operating
expenses 25,200 25,406 22,803 37,411 110,820
Operating income 20,950 24,750 24,235 6,498 76,433
Other income
(expense):
Interest expense (2,120) (1,759) (1,887) (1,771) (7,537)
Interest and
investment
income, net 549 822 787 1,901 4,059
Other, net (2) 5 8 (5) 6
Total other (1,573) (932) (1,092) 125 (3,472)
Income from
continuing
operations before
income taxes 19,377 23,818 23,143 6,623 72,961
Income tax
provision (6,975) (8,574) (8,331) (2,339) (26,219)
Income from
continuing
operations 12,402 15,244 14,812 4,284 46,742
Discontinued
operations:
Income (loss) from
discontinued
operations,
includes fourth
quarter net gain
on disposals of
$10,023 (5,311) (9,806) 694 7,857 (6,566)
Income tax
(provision)
benefit 1,490 3,109 (2,004) 1,927 4,522
Discontinued
operations, net
of tax (3,821) (6,697) (1,310) 9,784 (2,044)
Net income $8,581 $8,547 $13,502 $14,068 $44,698
Basic earnings
(loss) per common
share:
Income from
continuing
operations $0.25 $0.32 $0.32 $0.09 $0.98
Discontinued
operations, net
of tax (0.08) (0.14) (0.03) 0.21 (0.04)
Net income $0.17 $0.18 $0.29 $0.30 $0.94
Diluted earnings
(loss) per common
share:
Income from
continuing
operations $0.25 $0.31 $0.31 $0.09 $0.96
Discontinued
operations, net
of tax (0.08) (0.14) (0.03) 0.20 (0.04)
Net income $0.17 $0.17 $0.28 $0.29 $0.92
Weighted-average
common shares
outstanding:
Basic shares 49,045 48,151 47,303 46,906 47,851
Diluted shares 49,584 48,881 47,983 47,837 48,571
CSG SYSTEMS INTERNATIONAL, INC.
EXHIBIT 1- CONDENSED CONSOLIDATED STATEMENTS OF INCOME-UNAUDITED
RESTATED TO REFLECT THE GSS AND PLANET BUSINESSES AS DISCONTINUED OPERATIONS
(in thousands, except per share amounts)
For the
Year
For the Quarter Ended, Ended,
March 31, June 30, Sept. 30, Dec. 31, Dec. 31,
2004 2004 2004 2004 2004
Revenues:
Processing and
related services $80,973 $80,744 $80,608 $84,231 $326,556
Software,
maintenance and
services 6,359 6,049 6,038 6,399 24,845
Total revenues 87,332 86,793 86,646 90,630 351,401
Cost of revenues:
Processing and
related services 33,624 34,431 37,681 41,101 146,837
Software,
maintenance and
services 5,831 7,133 6,704 5,379 25,047
Total cost of
revenues 39,455 41,564 44,385 46,480 171,884
Gross margin
(exclusive of
depreciation) 47,877 45,229 42,261 44,150 179,517
Operating expenses:
Research and
development 7,776 7,725 8,392 7,994 31,887
Selling, general
and administrative 10,648 9,709 8,549 10,547 39,453
Depreciation 2,691 2,604 2,580 2,537 10,412
Restructuring
charges 949 (39) 105 277 1,292
Total operating
expenses 22,064 19,999 19,626 21,355 83,044
Operating income 25,813 25,230 22,635 22,795 96,473
Other income
(expense):
Interest expense (3,613) (2,744) (1,972) (1,932) (10,261)
Write-off of
deferred financing
costs -- (6,569) -- -- (6,569)
Interest and
investment income,
net 153 165 243 414 975
Other, net (97) (50) (2) (154) (303)
Total other (3,557) (9,198) (1,731) (1,672) (16,158)
Income from
continuing
operations before
income taxes 22,256 16,032 20,904 21,123 80,315
Income tax
provision (8,123) (5,852) (7,631) (7,711) (29,317)
Income from
continuing
operations 14,133 10,180 13,273 13,412 50,998
Discontinued
operations:
Income (loss) from
discontinued
operations (4,756) (3,569) 490 (3,274) (11,109)
Income tax benefit 1,456 1,145 2,570 2,124 7,295
Discontinued
operations, net
of tax (3,300) (2,424) 3,060 (1,150) (3,814)
Net income $10,833 $7,756 $16,333 $ 12,262 $47,184
Basic earnings
(loss) per common
share:
Income from
continuing
operations $0.27 $0.20 $0.27 $0.27 $1.01
Discontinued
operations, net
of tax (0.06) (0.05) 0.06 (0.02) (0.08)
Net income $0.21 $0.15 $0.33 $0.25 $0.93
Diluted earnings
(loss) per common
share:
Income from
continuing
operations $0.27 $0.20 $0.26 $0.26 $0.99
Discontinued
operations, net
of tax (0.06) (0.05) 0.06 (0.02) (0.07)
Net income $0.21 $0.15 $0.32 $0.24 $0.92
Weighted-average
common shares
outstanding:
Basic shares 51,682 51,285 49,565 49,375 50,477
Diluted shares 52,255 52,096 50,324 50,216 51,223
SOURCE CSG Systems International, Inc.
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Related links:
http://www.csgsystems.com
Photo Notes:
NewsCom:
http://www.newscom.com/cgi-bin/prnh/20020627/CSGSLOGO
AP Archive: http://photoarchive.ap.org
PRN Photo Desk, photodesk@prnewswire.com
CONTACT:
Liz Bauer, Senior Vice President of CSG
Systems International, Inc., +1-303-804-4065,
liz_bauer@csgsystems.com
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