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
SECOND QUARTER 2006 RESULTS
CSG Exceeds Expectations: Revenues of $95.0 million;
GAAP EPS of $0.33 per share.
ENGLEWOOD, COLO. (July 25, 2006) — CSG Systems International, Inc. (Nasdaq: CSGS), a leading provider of customer care and billing solutions, today reported results for the quarter ended June 30, 2006.
Second Quarter 2006 Highlights:
| | • | | CSG exceeded its financial expectations for the second quarter of 2006, primarily as a result of its strong operating performance for the quarter. GAAP results were as follows:total revenues were$95.0 million;operating income was$21.8 million; andnet income was$15.6 million, or$0.33 per diluted share. |
| | • | | Cash flows from operations for the quarter were $38.7 million, which were higher than expectations primarily as a result of favorable changes in working capital. |
| | • | | For the quarter, CSG repurchased approximately 241,000 shares of its common stock for $5.9 million (weighted-average price of $24.41 per share) under its stock repurchase program. |
| | • | | In July, CSG’s Board of Directors authorized the repurchase of up to $350 million of the company’s outstanding common stock through a Rule 10b5-1 stock repurchase plan. |
| | • | | To date, the company has 24 million cable customer accounts on its Advanced Convergent Platform (ACP), including the nation’s largest cable site, Time Warner New York City, which successfully migrated its customer base to ACP. |
| | • | | In July, Mike Scott was named Chief Operating Officer. He will continue as an Executive Vice President for the company. |
“We continue to execute on the objectives that we outlined a year ago,” Ed Nafus, chief executive officer and president of CSG Systems International, Inc., said. “These objectives include: focusing on our core strengths and maximizing the opportunities that are in front of us; helping our clients be successful; and driving shareholder value by creating a long-term sustainable and profitable business. We continue to migrate customer accounts to our Advanced Convergent Platform and help our clients rollout new advanced service offerings. This, in turn, allows our clients to introduce new services and drive revenues. In addition, we recently announced a stock buyback program which allows us to return value to our shareholders. We are in a strong position because we have a business model that generates strong cash flows. This provides us with the confidence that we have enough financial resources to pursue acquisitions and execute on our organic growth opportunities going forward.”
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-more-
Summary GAAP Results of Operations Information (unaudited)
(in thousands, except per share amounts and percentages):
| | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| | | 2006 | | 2005 | | | Percent
Change | | | 2006 | | 2005 | | | Percent Change | |
Continuing operations: | | | | | | | | | | | | | | | | | | | | |
Total revenues | | $ | 95,053 | | $ | 96,850 | | | (2 | %) | | $ | 188,013 | | $ | 190,026 | | | (1 | %) |
Operating income | | | 21,792 | | | 24,750 | | | (12 | %) | | | 43,993 | | | 45,700 | | | (4 | %) |
Income from continuing operations | | | 15,605 | | | 15,244 | | | 2 | % | | | 31,071 | | | 27,646 | | | 12 | % |
Discontinued operations, net of tax | | | — | | | (6,697 | ) | | NM | | | | — | | | (10,518 | ) | | NM | |
Net income | | | 15,605 | | | 8,547 | | | 83 | % | | | 31,071 | | | 17,128 | | | 81 | % |
Diluted earnings (loss) per share: | | | | | | | | | | | | | | | | | | | | |
Income from continuing operations | | $ | 0.33 | | $ | 0.31 | | | 6 | % | | $ | 0.66 | | $ | 0.56 | | | 18 | % |
Discontinued operations, net of tax | | | — | | | (0.14 | ) | | NM | | | | — | | | (0.21 | ) | | NM | |
| | | | | | | | | | | | | | | | | | | | |
Net income | | $ | 0.33 | | $ | 0.17 | | | 94 | % | | $ | 0.66 | | $ | 0.35 | | | 89 | % |
| | | | | | | | | | | | | | | | | | | | |
Second Quarter 2006 Results
Total revenues for the second quarter of 2006 were $95.0 million, down two percent when compared to $96.8 million for the same period in 2005, and up two percent when compared to $93.0 million for the first quarter of 2006. The components of total revenues are as follows: (i) processing revenues for the second quarter of 2006 were $87.7 million, down one percent when compared to $88.6 million for the same period last year, and up two percent when compared to $86.4 million for the first quarter of 2006; and (ii) software, maintenance and services revenues were $7.3 million for the current quarter, an eleven percent decrease when compared to $8.2 million for the same period last year, however, a increase of twelve percent when compared to $6.6 million for the first quarter of 2006.
Income from continuing operations presented in accordance with generally accepted accounting principles (“GAAP”) for the second quarter of 2006 was $15.6 million, or $0.33 per diluted share, compared to $15.2 million, or $0.31 per diluted share, for the same period last year, and $15.5 million, or $0.33 per diluted share, for the first quarter of 2006. Income from continuing operations for the second quarter of 2006 included $1.1 million, or $0.02 per diluted share, of restructuring expenses, with no comparable amounts in the second quarter of 2005. Income from continuing operations for the second quarter of 2005 was reduced by $4.3 million, or $0.05 per diluted share, of retirement benefits for our former CEO, with no comparable amount in the current quarter.
Total customer accounts processed on CSG’s systems as of June 30, 2006 were 44.9 million, compared to 45.0 million as of March 31, 2006. To date, approximately 75% of CSG’s cable customer accounts have migrated to CSG’s Advanced Convergent Platform, or ACP. The annualized revenue per processing unit (“ARPU”) for the second quarter of 2006 was $7.79 compared to $7.66 for the first quarter of 2006. The sequential quarterly
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increase in ARPU relates primarily to the continued high usage of marketing services and customer care solutions by CSG’s clients.
Supplemental Data
The following information is provided to assist readers in further evaluating CSG’s performance (in thousands, except per share amounts):
| | | | | | | | | | | | |
| | | Three Months Ended June 30, 2006 | | Three Months Ended June 30, 2005 |
| | | Amount (1) | | Per Diluted
Share
Impact (2) | | Amount (1) | | Per Diluted
Share
Impact (2) |
Certain key operating income items: | | | | | | | | | | | | |
Former CEO retirement benefits | | $ | 78 | | $ | 0.00 | | $ | 4,268 | | $ | 0.05 |
Restructuring charges | | | 1,141 | | | 0.02 | | | 3 | | | 0.00 |
| | | | | | | | | | | | |
Total | | $ | 1,219 | | $ | 0.02 | | $ | 4,271 | | $ | 0.05 |
| | | | | | | | | | | | |
Certain non-cash expenses: | | | | | | | | | | | | |
Depreciation | | $ | 2,699 | | $ | 0.04 | | $ | 2,501 | | $ | 0.03 |
Amortization of intangible assets | | | 3,796 | | | 0.05 | | | 3,399 | | | 0.04 |
Stock-based employee compensation | | | 3,195 | | | 0.04 | | | 3,473 | | | 0.05 |
| | | | | | | | | | | | |
Total | | $ | 9,690 | | $ | 0.13 | | $ | 9,373 | | $ | 0.12 |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | Six Months Ended June 30, 2006 | | Six Months Ended June 30, 2005 |
| | | Amount (1) | | Per Diluted
Share
Impact (2) | | Amount (1) | | Per Diluted
Share
Impact (2) |
Certain key operating income items: | | | | | | | | | | | | |
Former CEO retirement benefits | | $ | 155 | | $ | 0.00 | | $ | 8,489 | | $ | 0.11 |
Restructuring charges | | | 2,290 | | | 0.03 | | | 6 | | | 0.00 |
| | | | | | | | | | | | |
Total | | $ | 2,445 | | $ | 0.03 | | $ | 8,495 | | $ | 0.11 |
| | | | | | | | | | | | |
Certain non-cash expenses: | | | | | | | | | | | | |
Depreciation | | $ | 5,051 | | $ | 0.07 | | $ | 5,092 | | $ | 0.07 |
Amortization of intangible assets | | | 7,531 | | | 0.10 | | | 6,708 | | | 0.09 |
Stock-based employee compensation | | | 6,029 | | | 0.08 | | | 6,724 | | | 0.09 |
| | | | | | | | | | | | |
Total | | $ | 18,611 | | $ | 0.25 | | $ | 18,524 | | $ | 0.25 |
| | | | | | | | | | | | |
| (1) | These items (on a pretax basis) are calculated in accordance with GAAP, and are reflected as part of continuing operations in the accompanying Unaudited Condensed Consolidated Statements of Income. |
| (2) | This represents the after tax impact to income from continuing operations on a per diluted share basis using CSG’s effective income tax rates from continuing operations of 38% for the three and six months ended June 30, 2006 and 36% for the three and six months ended June 30, 2005. |
Financial Condition
As of June 30, 2006, CSG had cash, cash equivalents and short-term investments of $414.3 million, compared to $384.6 million as of March 31, 2006, and $392.2 million as of December 31, 2005. Net billed accounts receivable were $96.3 million as of June 30, 2006, compared to $109.4 million as of March 31, 2006, and $104.8 million as of December 31, 2005. The sequential quarterly decrease of approximately $13 million relates to normal fluctuations in the timing of invoicing and payments between quarters. Cash flows from operations for the quarter ended June 30, 2006 were $38.7 million, compared to $22.0 million for the quarter ended March 31, 2006, and $43.3 million for
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the quarter ended June 30, 2005. The second quarter of 2006 cash flows from operations were higher than expectations as a result of favorable changes in working capital balances during the quarter, primarily related to the reduction in the accounts receivable balance mentioned above.
Stock Repurchase Program
During the second quarter of 2006, CSG repurchased approximately 241,000 shares of its common stock at a total purchase price of $5.9 million (a weighted-average price of $24.41 per share). Including these shares, the total shares repurchased under CSG’s stock repurchase program since its inception in August 1999 is 14.0 million shares, at a total repurchase price of $346.5 million (a weighted-average price of $24.68 per share).
In July, CSG announced that its Board of Directors authorized the repurchase of up to $350 million of the company’s outstanding common stock through a new Rule 10b5-1 stock repurchase plan. In conjunction with this action, the Board approved a 10 million share increase in the number of shares authorized for repurchase under CSG’s stock repurchase program, bringing the total number of authorized shares under the program to 30 million. As a result, the remaining number of shares authorized for repurchase under the stock repurchase program is 16.0 million shares. CSG expects to begin repurchasing shares under its new Rule 10b5-1 plan in early August 2006, and expects to complete the $350 million of stock repurchases within 12 to 15 months.
Remaining 2006 Financial Guidance
“The company continues to execute on its financial objectives,” Randy Wiese, chief financial officer, said. “Based on our performance during the first six months of the year, we are raising the lower end of our full-year revenue guidance from $371 million to $377 million. In addition, based on our expected operating performance for the year, and considering the impact of our recently announced $350 million stock repurchase plan, we believe our full year income from continuing operations will now range between $1.34 and $1.38 per diluted share.”
CSG’s financial guidance for continuing operations for the third and fourth quarter 2006, and for the full year 2006 is as follows (in millions, except for per share amounts and percentages):
| | | | | | | | | |
| | | Third Quarter | | | Fourth Quarter | | | Full Year | |
Revenues | | $95 - $97 | | | $94 - $96 | | | $377 - $381 | |
Operating Margins | | 23 | % | | 23 | % | | 23 | % |
Earnings per Diluted Share | | $0.34 - $0.36 | | | $0.34 -$0.36 | | | $1.34 - $1.38 | |
Income Tax Rate | | 34% - 35% | | | 34% - 35% | | | 36% - 37% | |
Average Diluted Shares Outstanding | | 46.6 | | | 43.9 | | | 46.3 | |
Cash Flows from Operations | | $25 - $27 | | | $24 - $26 | | | $110 -$114 | |
Capital Expenditures | | $2 - $3 | | | $2 - $3 | | | $8 - $10 | |
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July 25, 2006
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There are certain non-cash items included in CSG’s third and fourth 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):
| | | | | | | | | |
| | | Third
Quarter | | Fourth
Quarter | | Full
Year |
Certain non-cash expenses (3): | | | | | | | | | |
Depreciation | | $ | 2,500 | | $ | 2,400 | | $ | 10,000 |
Amortization of intangible assets | | | 4,100 | | | 4,200 | | | 15,800 |
Stock-based employee compensation | | | 3,000 | | | 2,900 | | | 11,900 |
| | | | | | | | | |
Total | | $ | 9,600 | | $ | 9,500 | | $ | 37,700 |
| | | | | | | | | |
Per diluted share impact (4) | | $ | 0.13 | | $ | 0.14 | | $ | 0.52 |
| (3) | These items (on a pretax basis) are calculated in accordance with GAAP. |
| (4) | This represents the after tax impact to income from continuing operations on a per diluted share basis using CSG’s estimated effective income tax rates from continuing operations as noted above. |
Conference Call
CSG will host a one-hour conference call on Tuesday, July 25, at 5 p.m. EDT, to discuss CSG’s second quarter results. The call will be carried live and archived on the Internet. A link to the conference call is available at www.csgsystems.com.
Additional Information
For additional information about CSG, please visit CSG’s web site at 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 a leading provider of outsourced billing, customer care and print and mail solutions and services supporting the North American cable 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 www.csgsystems.com.
Safe-Harbor Statement
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 five largest clients, Comcast Corporation, Echostar Communications, Time Warner, Inc., Charter Communications and Adelphia Communications, which combined make up approximately 70% of CSG’s revenues; 2) the continued acceptance of CSG Advanced Convergent Platform 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; 8) CSG’s ability to successfully deliver on lengthy and/or complex implementation projects, which by their nature, carry much
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more risk, and 9) CSG’s ability to successfully integrate and manage acquired businesses or assets in order to achieve the expected strategic, operating and financial goals established for such acquisitions. 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.
FINANCIALS TO FOLLOW
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July 25, 2006
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CSG SYSTEMS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS-UNAUDITED
(in thousands, except share and per share amounts)
| | | | | | | | |
| | | June 30, 2006 | | | December 31, 2005 | |
| ASSETS | | | | | | | | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 343,957 | | | $ | 346,113 | |
Short-term investments | | | 70,296 | | | | 46,111 | |
| | | | | | | | |
Total cash, cash equivalents and short-term investments | | | 414,253 | | | | 392,224 | |
Trade accounts receivable- | | | | | | | | |
Billed, net of allowance of $1,059 and $1,324 | | | 96,345 | | | | 104,812 | |
Unbilled and other | | | 5,854 | | | | 6,660 | |
Deferred income taxes | | | 8,994 | | | | 9,565 | |
Income taxes receivable | | | — | | | | 5,032 | |
Other current assets | | | 6,471 | | | | 17,145 | |
| | | | | | | | |
Total current assets | | | 531,917 | | | | 535,438 | |
Property and equipment, net of depreciation of $65,232 and $61,333 | | | 19,941 | | | | 21,143 | |
Software, net of amortization of $32,363 and $31,945 | | | 8,351 | | | | — | |
Goodwill | | | 9,228 | | | | 623 | |
Client contracts, net of amortization of $75,565 and $68,634 | | | 36,402 | | | | 41,661 | |
Deferred income taxes | | | 28,865 | | | | 33,275 | |
Other assets | | | 7,957 | | | | 6,236 | |
| | | | | | | | |
Total assets | | $ | 642,661 | | | $ | 638,376 | |
| | | | | | | | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | |
Current liabilities: | | | | | | | | |
Client deposits | | $ | 24,034 | | | $ | 19,651 | |
Trade accounts payable | | | 12,420 | | | | 17,306 | |
Accrued employee compensation | | | 16,788 | | | | 32,447 | |
Deferred revenue | | | 13,523 | | | | 9,575 | |
Income taxes payable | | | 5,549 | | | | — | |
Other current liabilities | | | 11,807 | | | | 15,783 | |
| | | | | | | | |
Total current liabilities | | | 84,121 | | | | 94,762 | |
| | | | | | | | |
Non-current liabilities: | | | | | | | | |
Long-term debt | | | 230,000 | | | | 230,000 | |
Deferred revenue | | | 8,545 | | | | 8,943 | |
Other non-current liabilities | | | 2,646 | | | | 6,341 | |
| | | | | | | | |
Total non-current liabilities | | | 241,191 | | | | 245,284 | |
| | | | | | | | |
Total liabilities | | | 325,312 | | | | 340,046 | |
| | | | | | | | |
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; 47,751,055 shares and 47,886,480 shares outstanding | | | 609 | | | | 601 | |
Additional paid-in capital | | | 325,624 | | | | 316,764 | |
Treasury stock, at cost, 13,199,996 shares and 12,290,485 shares | | | (317,860 | ) | | | (296,976 | ) |
Accumulated other comprehensive income: | | | | | | | | |
Unrealized gain on short-term investments, net of tax | | | 35 | | | | 71 | |
Accumulated earnings | | | 308,941 | | | | 277,870 | |
| | | | | | | | |
Total stockholders’ equity | | | 317,349 | | | | 298,330 | |
| | | | | | | | |
Total liabilities and stockholders’ equity | | $ | 642,661 | | | $ | 638,376 | |
| | | | | | | | |
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July 25, 2006
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CSG SYSTEMS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME-UNAUDITED
(in thousands, except per share amounts)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Six Months Ended | |
| | | June 30, 2006 | | | June 30, 2005 | | | June 30, 2006 | | | June 30, 2005 | |
Revenues: | | | | | | | | | | | | | | | | |
Processing and related services | | $ | 87,715 | | | $ | 88,631 | | | $ | 174,136 | | | $ | 171,912 | |
Software, maintenance and services | | | 7,338 | | | | 8,219 | | | | 13,877 | | | | 18,114 | |
| | | | | | | | | | | | | | | | |
Total revenues | | | 95,053 | | | | 96,850 | | | | 188,013 | | | | 190,026 | |
| | | | | | | | | | | | | | | | |
Cost of revenues: | | | | | | | | | | | | | | | | |
Processing and related services | | | 41,686 | | | | 41,691 | | | | 84,590 | | | | 83,674 | |
Software, maintenance and services | | | 5,210 | | | | 5,003 | | | | 9,726 | | | | 10,046 | |
| | | | | | | | | | | | | | | | |
Total cost of revenues | | | 46,896 | | | | 46,694 | | | | 94,316 | | | | 93,720 | |
| | | | | | | | | | | | | | | | |
Gross margin (exclusive of depreciation) | | | 48,157 | | | | 50,156 | | | | 93,697 | | | | 96,306 | |
| | | | | | | | | | | | | | | | |
Operating expenses: | | | | | | | | | | | | | | | | |
Research and development | | | 10,874 | | | | 7,857 | | | | 20,775 | | | | 15,856 | |
Selling, general and administrative | | | 11,651 | | | | 15,045 | | | | 21,588 | | | | 29,652 | |
Depreciation | | | 2,699 | | | | 2,501 | | | | 5,051 | | | | 5,092 | |
Restructuring charges | | | 1,141 | | | | 3 | | | | 2,290 | | | | 6 | |
| | | | | | | | | | | | | | | | |
Total operating expenses | | | 26,365 | | | | 25,406 | | | | 49,704 | | | | 50,606 | |
| | | | | | | | | | | | | | | | |
Operating income | | | 21,792 | | | | 24,750 | | | | 43,993 | | | | 45,700 | |
| | | | | | | | | | | | | | | | |
Other income (expense): | | | | | | | | | | | | | | | | |
Interest expense | | | (1,903 | ) | | | (1,759 | ) | | | (3,788 | ) | | | (3,879 | ) |
Interest and investment income, net | | | 5,277 | | | | 822 | | | | 9,947 | | | | 1,371 | |
Other, net | | | 3 | | | | 5 | | | | (52 | ) | | | 3 | |
| | | | | | | | | | | | | | | | |
Total other | | | 3,377 | | | | (932 | ) | | | 6,107 | | | | (2,505 | ) |
| | | | | | | | | | | | | | | | |
Income from continuing operations before income taxes | | | 25,169 | | | | 23,818 | | | | 50,100 | | | | 43,195 | |
Income tax provision | | | (9,564 | ) | | | (8,574 | ) | | | (19,029 | ) | | | (15,549 | ) |
| | | | | | | | | | | | | | | | |
Income from continuing operations | | | 15,605 | | | | 15,244 | | | | 31,071 | | | | 27,646 | |
| | | | | | | | | | | | | | | | |
Discontinued operations: | | | | | | | | | | | | | | | | |
Loss from discontinued operations | | | — | | | | (9,806 | ) | | | — | | | | (15,117 | ) |
Income tax benefit | | | — | | | | 3,109 | | | | — | | | | 4,599 | |
| | | | | | | | | | | | | | | | |
Discontinued operations, net of tax | | | — | | | | (6,697 | ) | | | — | | | | (10,518 | ) |
| | | | | | | | | | | | | | | | |
Net income | | $ | 15,605 | | | $ | 8,547 | | | $ | 31,071 | | | $ | 17,128 | |
| | | | | | | | | | | | | | | | |
Basic earnings (loss) per common share: | | | | | | | | | | | | | | | | |
Income from continuing operations | | $ | 0.34 | | | $ | 0.32 | | | $ | 0.67 | | | $ | 0.57 | |
Discontinued operations, net of tax | | | — | | | | (0.14 | ) | | | — | | | | (0.22 | ) |
| | | | | | | | | | | | | | | | |
Net income | | $ | 0.34 | | | $ | 0.18 | | | $ | 0.67 | | | $ | 0.35 | |
| | | | | | | | | | | | | | | | |
Diluted earnings (loss) per common share: | | | | | | | | | | | | | | | | |
Income from continuing operations | | $ | 0.33 | | | $ | 0.31 | | | $ | 0.66 | | | $ | 0.56 | |
Discontinued operations, net of tax | | | — | | | | (0.14 | ) | | | — | | | | (0.21 | ) |
| | | | | | | | | | | | | | | | |
Net income | | $ | 0.33 | | | $ | 0.17 | | | $ | 0.66 | | | $ | 0.35 | |
| | | | | | | | | | | | | | | | |
Weighted-average shares outstanding: | | | | | | | | | | | | | | | | |
Basic | | | 46,527 | | | | 48,151 | | | | 46,714 | | | | 48,598 | |
Diluted | | | 47,121 | | | | 48,881 | | | | 47,265 | | | | 49,233 | |
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CSG SYSTEMS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS-UNAUDITED
(in thousands)
| | | | | | | | |
| | | Six Months Ended | |
| | | June 30, 2006 | | | June 30, 2005 | |
Cash flows from operating activities: | | | | | | | | |
Net income | | $ | 31,071 | | | $ | 17,128 | |
Adjustments to reconcile net income to net cash provided by operating activities - | | | | | | | | |
Depreciation | | | 5,051 | | | | 7,518 | |
Amortization | | | 8,126 | | | | 14,372 | |
Restructuring charge for abandonment of facilities and impairment of assets | | | 401 | | | | 3,492 | |
Gain on short-term investments | | | (209 | ) | | | (170 | ) |
Deferred income taxes | | | 5,849 | | | | 3,788 | |
Excess tax benefits from stock-based compensation awards | | | (1,088 | ) | | | 1,073 | |
Stock-based employee compensation | | | 6,029 | | | | 8,650 | |
Changes in operating assets and liabilities: | | | | | | | | |
Trade accounts and other receivables, net | | | 11,081 | | | | 5,787 | |
Other current and non-current assets | | | (2,699 | ) | | | (2,692 | ) |
Income taxes payable/receivable | | | 11,666 | | | | (398 | ) |
Accounts payable and accrued liabilities | | | (17,164 | ) | | | 2,916 | |
Deferred revenue | | | 2,615 | | | | 684 | |
| | | | | | | | |
Net cash provided by operating activities | | | 60,729 | | | | 62,148 | |
| | | | | | | | |
Cash flows from investing activities: | | | | | | | | |
Net proceeds (payments) from the disposition of discontinued operations | | | (436 | ) | | | — | |
Purchases of property and equipment | | | (3,525 | ) | | | (6,458 | ) |
Proceeds from sale of aircraft held for sale | | | 7,376 | | | | — | |
Purchases of short-term investments | | | (97,695 | ) | | | (31,535 | ) |
Proceeds from sale/maturity of short-term investments | | | 73,700 | | | | 21,538 | |
Acquisition of business, net of cash acquired | | | (20,777 | ) | | | (297 | ) |
Acquisition of and investments in client contracts | | | (3,002 | ) | | | (3,964 | ) |
| | | | | | | | |
Net cash used in investing activities | | | (44,359 | ) | | | (20,716 | ) |
| | | | | | | | |
Cash flows from financing activities: | | | | | | | | |
Proceeds from issuance of common stock | | | 3,154 | | | | 1,683 | |
Repurchase of common stock | | | (22,287 | ) | | | (43,816 | ) |
Payments on acquired equipment financing | | | (481 | ) | | | — | |
Excess tax benefits from stock-based compensation awards | | | 1,088 | | | | — | |
Payments of deferred financing costs | | | — | | | | (87 | ) |
| | | | | | | | |
Net cash used in financing activities | | | (18,526 | ) | | | (42,220 | ) |
| | | | | | | | |
Effect of exchange rate fluctuations on cash | | | — | | | | (1,976 | ) |
| | | | | | | | |
Net decrease in cash and cash equivalents | | | (2,156 | ) | | | (2,764 | ) |
Cash and cash equivalents, beginning of period | | | 346,113 | | | | 133,551 | |
| | | | | | | | |
Cash and cash equivalents, end of period | | $ | 343,957 | | | $ | 130,787 | |
| | | | | | | | |
Supplemental disclosures of cash flow information: | | | | | | | | |
Cash paid during the period for - | | | | | | | | |
Interest | | $ | 3,067 | | | $ | 3,063 | |
Income taxes | | | 1,518 | | | | 9,405 | |
