Exhibit 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE
For more information, contact:
Liz Bauer, Senior Vice President
(303) 804-4065
E-mail: liz_bauer@csgsystems.com
CSG SYSTEMS INTERNATIONAL, INC. REPORTS
FOURTH QUARTER 2003 RESULTS
Revenues of $129.9 Million;
GAAP Net Income at $0.14 Per Diluted Share;
ENGLEWOOD, COLO. (January 27, 2004) — CSG Systems International, Inc. (Nasdaq: CSGS), a leading provider of customer care and billing solutions, today reported results for the quarter ended December 31, 2003.
Fourth Quarter 2003 Highlights:
| • | GAAP results were as follows:total revenues were $129.9 million;operating income was $16.4 million; andnet incomeper diluted share was $0.14. |
| • | Cash flows from operations for the quarter ended December 31, 2003 were negative $(38.5) million, which reflects the impact of the $94.4 million arbitration payments made to Comcast during the current quarter (see CSG’s Form 10-Q dated November 14, 2003 for additional discussion of the arbitration ruling). |
| • | CSG signed a number ofcontractsduring the quarter including: Time Warner, Tata, BSNL, Cesky Mobile, British Telecom, and BskyB. |
| • | CSG continued to see strong interest in its newly introduced Kenan FX business framework. Since its September introduction, six carriers have chosen to upgrade or implement the solution. |
| • | CSG successfullycompleted its exchange program for certain outstanding stock options held by CSG employees (see press release dated December 19, 2003). |
| • | CSGadopted the fair value method of accounting for stock-based awards in accordance with Statement of Financial Accounting Standards(“SFAS”) No. 123 (see press release dated December 10, 2003). |
| • | CSGfavorably amended itsBank Credit Agreement (see press release dated December 8, 2003). |
“I am very pleased with our execution this past quarter in what continues to be a challenging environment,” said Neal Hansen, chairman and chief executive officer of CSG Systems International, Inc., “We executed flawlessly on our cost reduction program. We favorably amended our credit agreement so that we are in compliance. We have put an incentive program in place to ensure that our employees’ and shareholders’ interests are aligned for the long-term. We continue to generate strong cash flows, which allowed us to pay $94.4 million of the arbitration award to Comcast during this quarter. And, we continue to strengthen our relationships with our customer base.”
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Summary Results of Operations Information (unaudited)
(in thousands, except per share amounts and percentages):
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||
| 2003 | 2002 | Percent Change | 2003 (1) | 2002 | Percent Change | ||||||||||||||
Total revenues, net | $ | 129,857 | $ | 155,205 | (16 | )% | $ | 439,660 | $ | 610,932 | (28 | )% | |||||||
Operating income (loss) | 16,358 | 33,400 | (51 | )% | (39,561 | ) | 101,157 | (139 | )% | ||||||||||
Net income (loss) | 7,071 | 17,057 | (59 | )% | (26,277 | ) | 44,618 | (159 | )% | ||||||||||
Net income (loss) per diluted share | 0.14 | 0.33 | (58 | )% | (0.51 | ) | 0.85 | (160 | )% | ||||||||||
Certain non-cash expenses (2): | |||||||||||||||||||
Depreciation | 3,916 | 4,929 | (21 | )% | 17,378 | 18,839 | (8 | )% | |||||||||||
Amortization | 5,619 | 6,448 | (13 | )% | 24,303 | 22,138 | 10 | % | |||||||||||
Stock-based compensation | 1,491 | 1,091 | 37 | % | 5,559 | 1,413 | 293 | % | |||||||||||
Total | $ | 11,026 | $ | 12,468 | (12 | )% | $ | 47,240 | $ | 42,390 | 11 | % | |||||||
| (1) | The $119.6 million Comcast arbitration award was recorded as a charge to revenue in the third quarter of 2003. |
| (2) | These items are calculated in accordance with GAAP, and are reflected in the accompanying Condensed Consolidated Statements of Cash Flows. |
Fourth Quarter 2003 Results
Processing revenues for the fourth quarter of 2003 were $80.8 million, compared to $96.9 million for the same period last year. This reduction between quarters relates primarily to the lower revenues from Comcast as a result of the arbitration ruling. CSG’s processing revenues for the third quarter of 2003, net of the impact of the $13.5 million arbitration award attributed to processing revenues for the third quarter of 2003, were approximately $79.4 million.
Software revenues decreased 31 percent year-over-year to $8.5 million and decreased 20 percent from the third quarter of 2003. Compared to the fourth quarter last year, maintenance revenues decreased 10 percent to $24.7 million, however increased 4 percent from the third quarter of 2003. Professional services generated $15.9 million of revenue in the quarter, a 14 percent decrease when compared to the same period last year and a 9 percent decrease when compared to the third quarter of 2003.
Net income presented under generally accepted accounting principles (“GAAP”) for the fourth quarter of 2003 was $7.1 million, or $0.14 per diluted share. The fourth quarter results for 2003 were reduced by restructuring charges of approximately $4.2 million, or $0.04 per diluted share. GAAP net income for the fourth quarter of 2002 was $17.1 million, or $0.33 per diluted share. The fourth quarter 2002 results were reduced by approximately $1.2 million, or $0.01 per diluted share, due to restructuring charges and Kenan Business acquisition-related expenses. This represents a decrease in GAAP net income between the fourth quarters of 2003 and 2002 of approximately $10.0 million, or $0.19 per diluted share, with the decrease related primarily to lower revenues between periods.
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January 27, 2004
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Adoption of SFAS No. 123
As discussed in a press release dated December 10, 2003, CSG adopted the fair value method of accounting for stock-based awards in accordance with SFAS No. 123 during the fourth quarter of 2003, using the prospective method of transition as outlined in SFAS No. 148.
The adoption of this accounting standard was effective as of January 1, 2003. Total stock-based compensation expense included in the results of operations for the fourth quarter of 2003 was approximately $1.5 million, with approximately $0.5 million attributed to the adoption of this accounting standard. The $0.6 million impact of adopting SFAS No. 123 for the first three quarters of 2003 is not included in the fourth quarter results of operations, but is included in the results of operations for the year ended December 31, 2003.
Impact to the Fourth Quarter from the Arbitration Ruling
CSG’s fourth quarter reduction in processing revenues reflects the impact of the arbitrator’s ruling from October 7, 2003. For more information regarding the Comcast arbitration and the ruling, see CSG’s Form 10-Q filed on November 14, 2003.
During the fourth quarter of 2003, CSG paid approximately $94.4 million of the $119.6 million arbitration award to Comcast, using available corporate funds. On January 23, 2004, CSG paid the remaining $25.2 million of the award, using available corporate funds. The arbitration payments are deductible for income tax purposes. As a result, CSG expects to receive an income tax refund in the first half of 2004 of approximately $35 million as a result of CSG’s ability to carry back its 2003 net operating loss to previous years.
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January 27, 2004
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Divisional Results
CSG is organized into two divisions: the Broadband Services Division and the Global Software Services Division. CSG excludes its restructuring charges and Kenan Business acquisition-related expenses in the determination of its GAAP segment results. The results of operations for the divisions were as follows (in thousands, except percentages):
| Three Months Ended December 31, 2003 | ||||||||||||||||
| Broadband Services Division | GSS Division | Corporate | Total | |||||||||||||
Processing revenues | $ | 79,323 | $ | 1,476 | $ | — | $ | 80,799 | ||||||||
Software revenues | 1,109 | 7,410 | — | 8,519 | ||||||||||||
Maintenance revenues | 3,998 | 20,659 | — | 24,657 | ||||||||||||
Professional services revenues | 658 | 15,224 | — | 15,882 | ||||||||||||
Total revenues | 85,088 | 44,769 | — | 129,857 | ||||||||||||
Segment operating expenses (3) | 51,541 | 43,987 | 13,724 | 109,252 | ||||||||||||
Contribution margin (loss) (3) | $ | 33,547 | $ | 782 | $ | (13,724 | ) | $ | 20,605 | |||||||
Contribution margin (loss) percentage | 39.4 | % | 1.7 | % | N/A | 15.9 | % | |||||||||
| Three Months Ended December 31, 2002 | ||||||||||||||||
| Broadband Services Division | GSS Division | Corporate | Total | |||||||||||||
Processing revenues | $ | 96,736 | $ | 193 | $ | — | $ | 96,929 | ||||||||
Software revenues | 939 | 11,426 | — | 12,365 | ||||||||||||
Maintenance revenues | 5,078 | 22,383 | — | 27,461 | ||||||||||||
Professional services revenues | 372 | 18,078 | — | 18,450 | ||||||||||||
Total revenues | 103,125 | 52,080 | — | 155,205 | ||||||||||||
Segment operating expenses (3) | 51,824 | 52,417 | 16,371 | 120,612 | ||||||||||||
Contribution margin (loss) (3) | $ | 51,301 | $ | (337 | ) | $ | (16,371 | ) | $ | 34,593 | ||||||
Contribution margin (loss) percentage | 49.7 | % | (0.6 | )% | N/A | 22.3 | % | |||||||||
| Year Ended December 31, 2003 (4) | ||||||||||||||||
| Broadband Services Division | GSS Division | Corporate | Total | |||||||||||||
Processing revenues (Broadband Division inclusive in 2003 of $13,472 charge for arbitration ruling attributable to the third quarter of 2003) | $ | 338,936 | $ | 3,449 | $ | — | $ | 342,385 | ||||||||
Software revenues | 5,141 | 36,290 | — | 41,431 | ||||||||||||
Maintenance revenues (Broadband Division inclusive in 2003 of $450 charge for arbitration ruling attributable to the third quarter of 2003) | 18,755 | 74,809 | — | 93,564 | ||||||||||||
Professional services revenues | 1,550 | 66,409 | — | 67,959 | ||||||||||||
Subtotal | 364,382 | 180,957 | — | 545,339 | ||||||||||||
Charge for arbitration ruling attributable to periods prior to July 1, 2003 | (105,679 | ) | — | — | (105,679 | ) | ||||||||||
Total revenues, net | 258,703 | 180,957 | — | 439,660 | ||||||||||||
Segment operating expenses (3) | 211,103 | 190,166 | 66,102 | 467,371 | ||||||||||||
Contribution margin (loss) (3) | $ | 47,600 | $ | (9,209 | ) | $ | (66,102 | ) | $ | (27,711 | ) | |||||
Contribution margin (loss) percentage | 18.4 | % | (5.1 | )% | N/A | (6.3 | )% | |||||||||
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| Year Ended December 31, 2002 | ||||||||||||||||
| Broadband Services Division | GSS Division | Corporate | Total | |||||||||||||
Processing revenues | $ | 372,426 | $ | 607 | $ | — | $ | 373,033 | ||||||||
Software revenues | 24,233 | 44,143 | — | 68,376 | ||||||||||||
Maintenance revenues | 20,274 | 68,801 | — | 89,075 | ||||||||||||
Professional services revenues | 2,267 | 78,181 | — | 80,448 | ||||||||||||
Total revenues | 419,200 | 191,732 | — | 610,932 | ||||||||||||
Segment operating expenses (3) | 212,087 | 203,809 | 51,201 | 467,097 | ||||||||||||
Contribution margin (loss) (3) | $ | 207,113 | $ | (12,077 | ) | $ | (51,201 | ) | $ | 143,835 | ||||||
Contribution margin (loss) percentage | 49.4 | % | (6.3 | )% | N/A | 23.5 | % | |||||||||
| (3) | CSG’s segment operating expenses and contribution margin (loss), determined in accordance with GAAP, exclude: (i) restructuring charges of: $4.2 million and $11.9 million, respectively, for the three months and year ended December 31, 2003; and $0.7 million and $12.7 million, respectively, for the three months and year ended December 31, 2002; and (ii) Kenan Business acquisition-related expenses of $0.5 million and $30.0 million, respectively, for the three months and year ended December 31, 2002. |
| (4) | CSG recorded the impact from the Comcast arbitration ruling in the third quarter ended September 30, 2003 as a charge to revenue. Based on the arbitrator’s ruling, the $119.6 million award was segregated such that $105.7 million was attributable to periods prior to July 1, 2003, and $13.9 million was attributable to the third quarter of 2003. |
Broadband Services Division
The Broadband Services Division continued to strengthen its relationships with key customers, including Time Warner. Time Warner expanded its use of several solutions aimed at decreasing churn, automating the dispatch and technician functions, and increasing cash flow through the automation of several financial areas.
In addition, the Company showcased its advanced convergent solution for the North American broadband industry at the Western Show in December.
Total domestic customer accounts processed on CSG’s system are shown in the table below (in thousands).
| December 31, 2003 | September 30, 2003 | Percent Change | |||||
Video | 42,522 | 42,215 | 1 | % | |||
Internet | 1,572 | 1,589 | (1 | )% | |||
Telephony | 54 | 75 | (28 | )% | |||
Total | 44,148 | 43,879 | 1 | % | |||
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January 27, 2004
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Global Software Services Division
The GSS Division signed several new and expanded contracts during the quarter, including an expansion of its relationship with Tata Group, India’s leading provider of convergent telecommunications services; British Telecommunications, Britain’s largest telecommunications provider; BSNL, one of India’s leading wireless providers; BskyB, one of Europe’s leading direct broadcast satellite providers; and Cesky Mobile, Czechoslovakia’s leading wireless provider.
The division continued to see strong interest in its newly introduced Kenan FX business framework. Since its September 2003 introduction, six carriers have chosen to upgrade or implement this pre-integrated, modular customer management, revenue enablement and billing solution.
Financial Condition
As of December 31, 2003, CSG had cash and short-term investments of $105.4 million, compared to $144.5 million, as of September 30, 2003. Billed net accounts receivable were $130.7 million as of December 31, 2003, compared to $149.1 million as of September 30, 2003.
In December 2003, CSG favorably amended its credit agreement (see press release dated December 8, 2003) and is in compliance with its financial and non-financial covenants. As part of the amendment, CSG agreed to a 75 basis point increase in the interest rate spread on its debt. CSG also agreed to a number of other modifications to the credit agreement, including a mandatory payment of $30 million in July 2004, a reduction in its revolver to $40 million and additional limitations on certain investments, acquisitions and capital expenditures. The $30 million payment is expected to be paid with the proceeds from CSG’s estimated $35 million income tax refund that is expected to be received in the first half of 2004. Including this payment, CSG’s scheduled principal payments within the next 12 months are $45.1 million, with the first payment due on June 30, 2004 in the amount of $1.9 million.
Cash flows from operations for the quarter ended December 31, 2003 were negative $(38.5) million, which reflects the impact of the $94.4 million arbitration payment made to Comcast during the fourth quarter of 2003. Absent these payments, CSG generated strong cash flows from operations for the quarter, primarily as a result of continued success in collecting on its accounts receivables.
As of January 23, 2004 (after the final arbitration payment of $25.2 million was made to Comcast), CSG had approximately $90 million of cash available for operations. CSG believes that its current cash, together with cash expected to be generated from future operating activities, will be sufficient to meet its anticipated cash requirements going forward.
During the fourth quarter of 2003, CSG did not acquire any of its common stock under its authorized stock repurchase program.
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January 27, 2004
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First Quarter and Full Year 2004 Financial Guidance
“Our financial guidance for the first quarter reflects a stabilization in our business,” Peter Kalan, chief financial officer, said. “For the first quarter, we are expecting revenues of between $125 million and $132 million, pre-tax income of between $13 million and $17 million and earnings per diluted share, using a 38 percent effective income tax rate, of between 15 and 20 cents.
“In 2004, we are expecting revenues of between $520 million and $535 million,” Kalan added. “In addition, we expect earnings per diluted share of between 77 cents and 87 cents, based on an estimated effective income tax rate of 38 percent, which is significantly lower than 2003’s effective income tax rate.
“In addition, there are a number of non-cash items included in our earnings per share guidance,” Kalan said. “These non-cash items include amortization of approximately $23 million or 27 cents per diluted share, depreciation expense of approximately $16 million or 19 cents per diluted share, and stock-based compensation expense of approximately $14 million or 17 cents per diluted share. Our guidance does not include any restructuring charges that may be incurred during 2004 as we are not able to estimate them today.”
Conference Call
CSG will host a one-hour conference call on Tuesday, January 27, at 5 p.m. EDT, 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 atwww.csgsystems.com.
Additional Information
For additional information about CSG, please visit CSG’s web site atwww.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) and its wholly-owned subsidiaries serve more than 265 service providers in more than 40 countries. CSG is a leader in next-generation billing and customer care solutions for the cable television, direct broadcast satellite, advanced IP services, next generation mobile, and fixed wireline markets. CSG’s unique combination of proven and future-ready solutions, delivered in both outsourced and licensed formats, empowers its clients to deliver unparalleled customer service, improve operational efficiencies and rapidly bring new revenue-generating products to market. CSG is an S&P Midcap 400 company. For more information, visit our Web site at 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, CSG’s ability to continue to perform satisfactorily under the terms of its existing contract with Comcast, as well as the level of cooperation between CSG and Comcast on the opportunities and obligations presented by the contract. Further, should Comcast terminate the Master Subscriber Agreement unilaterally and only be liable to CSG for contract damages in the amount of $44 million, it would have a material adverse impact on the financial condition of CSG and its overall future operations. Additional risk factors include: 1) the continued acceptance of CSG CCS/BP, CSG Kenan FX and their related products and services; 2) CSG’s ability to enhance current products and develop new technology that will retain existing clients and capture new market share; 3) significant forays into new markets, which may prove costly and unprofitable; 4) the degree to which CSG’s expectations of market
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penetration and consumer acceptance of broadband, wireline and wireless services prove true — and even if realized, CSG’s ability to meet the billing and customer care needs of that market; 5) client consolidation, which has decreased the number of potential buyers for many of CSG’s products and services; 6) CSG’s ability to expand and effectively operate its business internationally; 7) CSG’s ability to renew software maintenance contracts and sell additional software products and services to existing and new clients, both domestically and internationally; 8) CSG’s ability to successfully deliver on lengthy and/or complex implementation projects, which by their nature, carry much more risk; 9) CSG’s ability to properly manage its international operations, which are much more complex and carry higher collections risk; and 10) CSG’s ability to implement a cost reduction program, with a risk of material restructuring charges, that achieves the expected savings over the next five quarters while simultaneously not jeopardizing its revenue opportunities.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.
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CSG SYSTEMS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS-UNAUDITED
(in thousands, except share and per share amounts)
December 31, 2003 | December 31, 2002 | |||||||
| ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 105,397 | $ | 94,424 | ||||
Short-term investments | — | 1,013 | ||||||
Total cash, cash equivalents and short-term investments | 105,397 | 95,437 | ||||||
Trade accounts receivable- | ||||||||
Billed, net of allowance of $11,145 and $12,079 | 130,691 | 160,417 | ||||||
Unbilled and other | 18,042 | 28,856 | ||||||
Purchased Kenan Business accounts receivable | — | 603 | ||||||
Deferred income taxes | 9,134 | 8,355 | ||||||
Income tax receivable | 35,076 | — | ||||||
Other current assets | 11,697 | 10,568 | ||||||
Total current assets | 310,037 | 304,236 | ||||||
Property and equipment, net of depreciation of $89,529 and $74,023 | 38,218 | 46,442 | ||||||
Software, net of amortization of $62,957 and $48,582 | 37,780 | 50,478 | ||||||
Goodwill | 219,199 | 220,065 | ||||||
Client contracts, net of amortization of $50,973 and $42,954 | 57,458 | 63,805 | ||||||
Deferred income taxes | 53,327 | 37,163 | ||||||
Other assets | 8,756 | 9,128 | ||||||
Total assets | $ | 724,775 | $ | 731,317 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Current maturities of long-term debt | $ | 45,137 | $ | 16,370 | ||||
Client deposits | 17,175 | 16,350 | ||||||
Trade accounts payable | 21,291 | 24,810 | ||||||
Accrued employee compensation | 32,415 | 26,707 | ||||||
Deferred revenue | 52,655 | 45,411 | ||||||
Income taxes payable | 20,723 | 30,469 | ||||||
Arbitration charge payable | 25,181 | — | ||||||
Other current liabilities | 25,818 | 24,337 | ||||||
Total current liabilities | 240,395 | 184,454 | ||||||
Non-current liabilities: | ||||||||
Long-term debt, net of current maturities | 183,788 | 253,630 | ||||||
Deferred revenue | 3,270 | 2,090 | ||||||
Other non-current liabilities | 6,537 | 9,038 | ||||||
Total non-current liabilities | 193,595 | 264,758 | ||||||
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; 53,788,062 shares and 51,726,528 shares outstanding | 593 | 577 | ||||||
Additional paid-in capital | 281,784 | 255,452 | ||||||
Deferred employee compensation | (4,458 | ) | (3,904 | ) | ||||
Accumulated other comprehensive income (loss): | ||||||||
Unrealized gain (loss) on short-term investments, net of tax | 1 | (6 | ) | |||||
Cumulative translation adjustments | 6,519 | 1,060 | ||||||
Treasury stock, at cost, 5,499,796 shares and 5,979,796 shares | (171,111 | ) | (186,045 | ) | ||||
Accumulated earnings | 177,457 | 214,971 | ||||||
Total stockholders’ equity | 290,785 | 282,105 | ||||||
Total liabilities and stockholders’ equity | $ | 724,775 | $ | 731,317 | ||||
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CSG SYSTEMS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS-UNAUDITED
(in thousands, except per share amounts)
| Three Months Ended | Year Ended | |||||||||||||||
December 31, 2003 | December 31, 2002 | December 31, 2003 | December 31, 2002 | |||||||||||||
Revenues: | ||||||||||||||||
Processing and related services (inclusive in 2003 of $13,472 charge for arbitration ruling attributable to the third quarter of 2003) | $ | 80,799 | $ | 96,929 | $ | 342,385 | $ | 373,033 | ||||||||
Software | 8,519 | 12,365 | 41,431 | 68,376 | ||||||||||||
Maintenance (inclusive in 2003 of $450 charge for arbitration ruling attributable to the third quarter of 2003) | 24,657 | 27,461 | 93,564 | 89,075 | ||||||||||||
Professional services | 15,882 | 18,450 | 67,959 | 80,448 | ||||||||||||
Subtotal | 129,857 | 155,205 | 545,339 | 610,932 | ||||||||||||
Charge for arbitration ruling attributable to periods prior to July 1, 2003 | — | — | (105,679 | ) | — | |||||||||||
Total revenues, net | 129,857 | 155,205 | 439,660 | 610,932 | ||||||||||||
Cost of revenues: | ||||||||||||||||
Cost of processing and related services | 35,043 | 35,605 | 141,242 | 141,069 | ||||||||||||
Cost of software and maintenance | 18,452 | 18,368 | 72,703 | 57,580 | ||||||||||||
Cost of professional services | 13,904 | 18,235 | 63,910 | 64,343 | ||||||||||||
Total cost of revenues | 67,399 | 72,208 | 277,855 | 262,992 | ||||||||||||
Gross margin (exclusive of depreciation) | 62,458 | 82,997 | 161,805 | 347,940 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 16,181 | 15,524 | 62,924 | 73,674 | ||||||||||||
Selling, general and administrative | 21,756 | 27,951 | 109,214 | 111,592 | ||||||||||||
Depreciation | 3,916 | 4,929 | 17,378 | 18,839 | ||||||||||||
Restructuring charges | 4,247 | 694 | 11,850 | 12,721 | ||||||||||||
Kenan Business acquisition-related expenses | — | 499 | — | 29,957 | ||||||||||||
Total operating expenses | 46,100 | 49,597 | 201,366 | 246,783 | ||||||||||||
Operating income (loss) | 16,358 | 33,400 | (39,561 | ) | 101,157 | |||||||||||
Other income (expense): | ||||||||||||||||
Interest expense | (4,070 | ) | (3,675 | ) | (14,717 | ) | (14,033 | ) | ||||||||
Interest and investment income, net | 325 | 282 | 1,437 | 1,906 | ||||||||||||
Other | 799 | 170 | 4,381 | (1,486 | ) | |||||||||||
Total other | (2,946 | ) | (3,223 | ) | (8,899 | ) | (13,613 | ) | ||||||||
Income (loss) before income taxes | 13,412 | 30,177 | (48,460 | ) | 87,544 | |||||||||||
Income tax (provision) benefit | (6,341 | ) | (13,120 | ) | 22,183 | (42,926 | ) | |||||||||
Net income (loss) | $ | 7,071 | $ | 17,057 | $ | (26,277 | ) | $ | 44,618 | |||||||
Basic net income (loss) per common share: | ||||||||||||||||
Net income (loss) available to common stockholders | $ | 0.14 | $ | 0.33 | $ | (0.51 | ) | $ | 0.86 | |||||||
Weighted average common shares | 51,610 | 51,257 | 51,432 | 52,116 | ||||||||||||
Diluted net income (loss) per common share: | ||||||||||||||||
Net income (loss) available to common stockholders | $ | 0.14 | $ | 0.33 | $ | (0.51 | ) | $ | 0.85 | |||||||
Weighted average common shares | 51,836 | 51,559 | 51,432 | 52,525 | ||||||||||||
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CSG SYSTEMS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS-UNAUDITED
(in thousands)
| Year Ended | ||||||||
December 31, 2003 | December 31, 2002 | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | (26,277 | ) | $ | 44,618 | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities - | ||||||||
Depreciation | 17,378 | 18,839 | ||||||
Amortization | 24,303 | 22,138 | ||||||
Charge for in-process purchased research and development | — | 19,300 | ||||||
Restructuring charge for abandonment of facilities | 4,424 | 6,797 | ||||||
Gain on short-term investments | (19 | ) | (49 | ) | ||||
Deferred income taxes | 2,018 | (600 | ) | |||||
Tax benefit of stock options exercised | 33 | 449 | ||||||
Stock-based employee compensation | 5,559 | 1,413 | ||||||
Impairment of intangible assets | — | 1,906 | ||||||
Changes in operating assets and liabilities: | ||||||||
Trade accounts and other receivables, net | 45,604 | (17,870 | ) | |||||
Other current and non-current assets | (1,536 | ) | (2,288 | ) | ||||
Arbitration charge payable | 25,181 | — | ||||||
Income taxes payable/receivable | (41,244 | ) | 12,994 | |||||
Accounts payable and accrued liabilities | (2,003 | ) | 7,008 | |||||
Deferred revenues | 6,932 | (26,531 | ) | |||||
Net cash provided by operating activities | 60,353 | 88,124 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (9,021 | ) | (12,666 | ) | ||||
Purchases of short-term investments | (7,763 | ) | (4,201 | ) | ||||
Proceeds from sale of short-term investments | 8,795 | 56,568 | ||||||
Acquisition of businesses and assets, net of cash acquired | (2,613 | ) | (270,567 | ) | ||||
Acquisition of and investments in client contracts | (1,767 | ) | (3,387 | ) | ||||
Net cash used in investing activities | (12,369 | ) | (234,253 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of common stock | 1,670 | 2,784 | ||||||
Repurchase/cancellation of common stock | (207 | ) | (18,919 | ) | ||||
Proceeds from long-term debt | — | 300,000 | ||||||
Payments on long-term debt | (41,075 | ) | (61,500 | ) | ||||
Proceeds from revolving credit facility | — | 5,000 | ||||||
Payments on revolving credit facility | — | (5,000 | ) | |||||
Payments of deferred financing costs | (1,077 | ) | (8,365 | ) | ||||
Net cash provided by (used in) financing activities | (40,689 | ) | 214,000 | |||||
Effect of exchange rate fluctuations on cash | 3,678 | (3,612 | ) | |||||
Net increase in cash and cash equivalents | 10,973 | 64,259 | ||||||
Cash and cash equivalents, beginning of period | 94,424 | 30,165 | ||||||
Cash and cash equivalents, end of period | $ | 105,397 | $ | 94,424 | ||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid during the period for - | ||||||||
Interest | $ | 11,251 | $ | 12,021 | ||||
Income taxes | $ | 13,035 | $ | 30,767 | ||||