8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 or 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): July 28, 2009

CSG SYSTEMS INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Delaware	0-27512	47-0783182
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

9555 Maroon Circle, Englewood, CO	80112
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (303) 200-2000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

The following information is furnished pursuant to Item 2.02 (Results of Operations and Financial Condition). This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

On July 28, 2009, CSG Systems International, Inc. (“CSG”) issued a press release relating to the results of its operations for the quarter and six months ended June 30, 2009. A copy of such press release is attached to this Form 8-K as Exhibit 99.1 and hereby incorporated by reference.

In the attached press release, CSG makes reference to non-GAAP financial measures. 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. There are limitations with the use of non-GAAP financial measures since they are not based on any comprehensive set of accounting rules or principles, and 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. A more detailed discussion of CSG’s use of non-GAAP financial measures, to include reconciliations of the non-GAAP financial measures to the comparable GAAP financial measures, are contained in the attached press release and will be posted to the Company’s website at www.csgsystems.com.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

99.1    Press release of CSG Systems International, Inc. dated July 28, 2009

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: July 28, 2009

CSG SYSTEMS INTERNATIONAL, INC.
By:	/s/    Randy R. Wiese
	Randy R. Wiese,
	Chief Financial Officer and
	Principal Accounting Officer

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CSG Systems International, Inc.

Form 8-K

Exhibit Index

99.1     Press release of CSG Systems International, Inc. dated July 28, 2009

4

EX-99.1

Exhibit 99.1

NEWS RELEASE

FOR IMMEDIATE RELEASE

CSG SYSTEMS REPORTS

SECOND QUARTER 2009 RESULTS

Revenues of $124.8 million;

Non-GAAP EPS of $0.40; GAAP EPS of $0.31;

Increases Full Year 2009 Guidance.

ENGLEWOOD, COLO. (July 28, 2009) — CSG Systems International, Inc. (Nasdaq: CSGS), a leading provider of customer interaction management and billing solutions, today reported results for the quarter ended June 30, 2009.

Key Highlights:

• Results for the quarter ended June 30, 2009 were as follows:

• Total revenues were $124.8 million, an increase of seven percent when compared to $116.9 million for the same period in 2008.

• Non-GAAP operating income was $22.3 million, or 17.8% of total revenues, and GAAP operating income was $19.6 million, or 15.7% of total revenues.

• Non-GAAP adjusted EBITDA was $34.3 million for the quarter, and $67.3 million for the six months ended June 30, 2009.

• Non-GAAP earnings per diluted share (“EPS”) was $0.40, and GAAP EPS was $0.31.

• Cash flows from operations for the quarter were $43.6 million, and $59.6 million for the six months ended June 30, 2009.

• Cash and short-term investments totaled $132.9 million as of June 30, 2009, up from $120.3 million from last quarter-end.

• CSG repurchased $15.0 million of its previously outstanding convertible debt securities.

“CSG continued to deliver upon our 2009 goals and long-term strategy during the second quarter, as reflected in our increased financial guidance for the year,” said Peter Kalan, chief executive officer and president of CSG Systems. “CSG’s solid capital structure and cash flow generation have held firm during these challenging economic times. We continue to establish the foundation for future success and continued growth by converting new subscribers, increasing penetration levels of our solutions, and diversifying our revenues into attractive new verticals.”

CSG Systems International, Inc.

July 28, 2009

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Results of Operations

Revenues: Total revenues for the second quarter of 2009 were $124.8 million, a seven percent increase when compared to $116.9 million for the same period in 2008 and up sequentially when compared to $123.5 million for the first quarter of 2009, with the year-over-year increase related to both organic and inorganic (acquisitions) sources.

Operating Income: Non-GAAP operating income for the second quarter of 2009 was $22.3 million, or 17.8% of total revenues, which compares to 18.7% for the same period last year. Non-GAAP operating income excludes $2.7 million of expenses related to CSG’s transition of its data center services from First Data Corporation to Infocrossing (“Data Center Transition Expenses”), which began in the first quarter of 2009. GAAP operating income for the second quarter of 2009 was $19.6 million, or 15.7% of total revenues.

Earnings per Share: Non-GAAP EPS for the second quarter of 2009 was $0.40, compared to non-GAAP EPS of $0.38 for the second quarter of 2008. Non-GAAP EPS excludes the impact of the following items on a tax-affected, per diluted share basis: (i) Data Center Transition Expenses; and (ii) amortization of the original issue discount (“OID”) for CSG’s convertible debt securities. GAAP EPS for the second quarter of 2009 was $0.31, compared to $0.34 for the same period last year.

Adjusted EBITDA: Non-GAAP adjusted EBITDA for the second quarter of 2009 was $34.3 million, compared to $34.1 million in the same period last year, and was $67.3 million for the first six months of 2009, compared to $68.4 million for the same period in 2008. Adjusted EBITDA is net income before interest, taxes, depreciation, amortization, stock based compensation, and unique and infrequent items, such as the Data Center Transition Expenses and the gain on the repurchase of CSG’s convertible debt securities.

Additional disclosures and reconciliations related to CSG’s use of non-GAAP financial measures are included in Exhibit 1 at the end of this press release.

Balance Sheet and Cash Flows

Balance Sheet: Certain key balance sheet items as of the end of the indicated quarters are as follows (in thousands):

	June 30, 2009			March 31, 2009			December 31, 2008
Cash, cash equivalents and short-term investments	$	132,858		$	120,345		$	141,217
Net trade accounts receivable		110,464			130,210			120,278
Long-term debt:
Par value	$	170,300		$	185,300		$	200,300
Unamortized OID		(16,927	)		(20,568	)		(24,512	)
Net debt carrying amount	$	153,373		$	164,732		$	175,788

The sequential increase of $13 million in cash and investments in the second quarter of 2009 relates primarily to the cash flows generated from operations during the current quarter.

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July 28, 2009

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The net trade accounts receivable of $110 million as of June 30, 2009, decreased approximately $20 million from the previous quarter, with the decrease primarily attributed to the receipt of an $11 million first quarter client payment received after quarter-end on April 1, resulting in the payment of four monthly invoices by this client in the second quarter, and favorable timing of payments from various other clients. CSG’s days billed outstanding for the second quarter were 58 days, which has been consistent across the last several quarters.

During the quarter, CSG repurchased $15.0 million of its convertible debt at a cost of $13.5 million (weighted-average price of approximately 90% of par). After these debt repurchases, the par value of CSG’s outstanding convertible debt balance as of June 30, 2009 is $170.3 million, down from $185.3 million as of March 31, 2009 and $230.0 million at issuance in 2004.

Cash Flows: Certain key operating cash flow items for the indicated quarters then ended are as follows (in thousands):

	June 30, 2009			March 31, 2009			June 30, 2008
Cash Flows from Operating Activities:
Operations	$	29,658		$	30,449		$	28,225
Changes in operating assets and liabilities		13,895			(14,436	)		19,052
Net cash provided by operating activities	$	43,553		$	16,013		$	47,277
Cash Flows from Investing Activities:
Purchases of property and equipment	$	(14,360	)	$	(10,024	)	$	(5,902	)

Cash flows from operations for the second quarter of 2009 of $43.6 million were positively impacted by the $20 million reduction in the accounts receivable balance, as discussed above.

CSG spent $14.4 million on capital expenditures in the second quarter, which includes approximately $11 million for hardware and related infrastructure items required to setup and replicate the computing environment at the new Infocrossing data center location.

Supplemental Data

The following information is provided to assist readers in further evaluating CSG’s financial performance (in thousands, except per share amounts):

	Quarter Ended June 30, 2009				Quarter Ended June 30, 2008
	Pretax Amount (1)		Per Diluted Share Impact (2)		Pretax Amount (1)		Per Diluted Share Impact (2)
Certain non-cash expenses:
Depreciation	$	4,901	$	0.09	$	4,007	$	0.07
Amortization of intangible assets (3)		3,964		0.08		5,253		0.10
Stock-based employee compensation		3,223		0.06		2,982		0.05
Total	$	12,088	$	0.23	$	12,242	$	0.22

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	Six Months Ended June 30, 2009				Six Months Ended June 30, 2008
	Pretax Amount (1)		Per Diluted Share Impact (2)		Pretax Amount (1)		Per Diluted Share Impact (2)
Certain non-cash expenses:
Depreciation	$	9,141	$	0.17	$	7,644	$	0.14
Amortization of intangible assets (3)		6,722		0.13		10,016		0.19
Stock-based employee compensation		6,238		0.12		5,568		0.10
Total	$	22,101	$	0.42	$	23,228	$	0.43

(1) These items (on a pretax basis) are calculated in accordance with GAAP, and are reflected as part of results of operations in the accompanying Unaudited Condensed Consolidated Statements of Income.

(2) These items represent the after-tax impact to net income on a per diluted share basis using: (i) CSG’s effective income tax rates of approximately 35% for the quarter and six months ended June 30, 2009, and 37% and 36%, respectively, for the quarter and six months ended June 30, 2008; and (ii) weighted-average diluted shares outstanding of 34.4 million for the quarter and six months ended June 30, 2009, and 35.0 million and 34.8 million, respectively, for the quarter and six months ended June 30, 2008.

(3) The decrease in amortization of intangible assets in the quarter and six months ended June 30, 2009, as compared to the quarter and six months ended June 30, 2008, is primarily due to the change in the life of the Comcast client contract intangible asset as a result of the extension of the contractual arrangement with Comcast effective July 1, 2008.

Total customer accounts processed on CSG’s systems as of June 30, 2009, were 45.4 million, consistent with the number of customer accounts processed as of March 31, 2009.

2009 Financial Guidance

A summary of CSG’s financial guidance for the full year 2009 is as follows. Overall, CSG’s current expectations have increased over its previous financial guidance.

Revenues	$495 - $500 million
Non-GAAP EPS	$1.55 - $1.60
GAAP EPS	$1.10 - $1.13

Non-GAAP EPS shown above is a non-GAAP financial measure and is explained in greater detail and reconciled to the comparable GAAP measure in the attached Exhibit 1.

Conference Call

CSG will host a one-hour conference call on July 28, 2009, 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, Inc.

Headquartered in Englewood, Colorado, CSG Systems International, Inc. (NASDAQ: CSGS) is a customer interaction management company that provides software- and services-based solutions that help clients engage and transact with their customers. With a

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July 28, 2009

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25-year heritage in providing customer management and billing solutions to North American cable and direct broadcast satellite companies, CSG has broadened its customer interaction management capabilities to proudly serve this client base as well as new, highly competitive industries including financial services, healthcare, utilities and more. Today, CSG’s solutions reach more than half of all U.S. households each month and manage over $36 billion in transactions annually on its clients’ behalf. For more information, visit our website at www.csgsystems.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. These factors include, but are not limited to: 1) the concentration of approximately two-thirds of CSG’s revenues with four clients; as a result, the loss of business from any one of those clients could potentially have a material adverse impact to CSG’s financial results; 2) continued market acceptance of CSG’s Advanced Convergent Platform (ACP) and related products and services; 3) CSG’s ability to continuously develop and enhance products in a timely, cost-effective, technically advanced and competitive manner; 4) CSG’s ability to implement new solutions, and migrate or convert clients to our solutions in a timely and effective manner; 5) CSG’s dependency on the North American communications industry; as a result, key market factors such as further industry consolidation, new market entrants that may not be clients of CSG, macroeconomic conditions affecting the credit and equity markets generally, and/or the financial status of CSG clients may affect CSG’s ability to maintain and expand market share; 6) increasing competition in our market from companies of greater size and with broader presence in the communications sector, thus exerting greater influence over client buying decisions; 7) CSG’s ability to successfully integrate and manage acquired businesses, technology or assets to achieve the expected strategic, operating and financial goals established for such acquisitions; 8) CSG’s continued ability to protect its intellectual property rights; and 9) CSG’s dependency on a variety of computing environments and communications networks, as well as risks inherent to transitioning data centers, thus subjecting CSG to the risks of extended interruptions, outages, unauthorized access and corruption of data. 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.

For more information, contact:

Kathleen Marvin, Director of Investor Relations

(303) 804-4941

E-mail: kathleen_marvin@csgsystems.com

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CSG SYSTEMS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS-UNAUDITED

(in thousands, except share and per share amounts)

	June 30, 2009			December 31, 2008
				(See Note)
ASSETS
Current assets:
Cash and cash equivalents	$	97,385		$	83,886
Short-term investments		35,473			57,331
Total cash, cash equivalents and short-term investments		132,858			141,217
Trade accounts receivable-
Billed, net of allowance of $2,148 and $2,999		110,464			120,278
Unbilled and other		9,255			9,210
Deferred income taxes		11,791			12,755
Income taxes receivable		2,638			—
Other current assets		5,898			4,468
Total current assets		272,904			287,928
Property and equipment, net of depreciation of $81,743 and $80,854		56,593			42,594
Software, net of amortization of $37,984 and $36,385		10,897			9,835
Goodwill		104,899			103,971
Client contracts, net of amortization of $118,000 and $112,675		33,517			34,244
Other assets		6,074			6,199
Total assets	$	484,884		$	484,771
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Client deposits	$	28,230		$	28,629
Trade accounts payable		23,752			22,943
Accrued employee compensation		17,708			22,997
Deferred revenue		17,430			11,487
Income taxes payable		—			4,301
Other current liabilities		7,038			12,896
Total current liabilities		94,158			103,253
Non-current liabilities:
Long-term debt, net of unamortized original issue discount of $16,927 and $24,512		153,373			175,788
Deferred revenue		8,867			9,914
Income taxes payable		5,921			5,132
Deferred income taxes		30,516			20,338
Other non-current liabilities		5,040			5,659
Total non-current liabilities		203,717			216,831
Total liabilities		297,875			320,084
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; 35,122,036 shares and 34,720,191 shares outstanding		636			629
Additional paid-in capital		403,388			400,626
Treasury stock, at cost, 28,456,808 shares and 28,206,808 shares		(675,623	)		(671,841	)
Accumulated other comprehensive income (loss):
Unrealized gain on short-term investments, net of tax		48			241
Unrecognized pension plan losses and prior service costs, net of tax		(919	)		(919	)
Accumulated earnings		459,479			435,951
Total stockholders’ equity		187,009			164,687
Total liabilities and stockholders’ equity	$	484,884		$	484,771

Note: Effective January 1, 2009, CSG adopted FSP APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)”, and FSP EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” on a retrospective basis. As a result, our prior year consolidated financial statements have been restated to reflect the adoption of these new accounting principles. Additional information on the impact of adopting these new accounting pronouncements was included in CSG’s most recent Form 10-Q for the quarter ended March 31, 2009.

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CSG SYSTEMS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME-UNAUDITED

(in thousands, except per share amounts)

	Quarter Ended						Six Months Ended
	June 30, 2009			June 30, 2008			June 30, 2009			June 30, 2008
				(See Note)						(See Note)
Revenues:
Processing and related services	$	114,859		$	109,305		$	229,587		$	213,474
Software, maintenance and services		9,977			7,565			18,795			16,992
Total revenues		124,836			116,870			248,382			230,466
Cost of revenues (exclusive of depreciation, shown separately below):
Processing and related services		58,575			55,887			117,440			109,024
Software, maintenance and services		6,552			4,775			12,954			9,990
Total cost of revenues		65,127			60,662			130,394			119,014
Other operating expenses:
Research and development		17,558			17,053			34,709			32,925
Selling, general and administrative		14,989			13,247			28,807			25,669
Data center transition expenses		2,668			—			4,057			—
Depreciation		4,901			4,007			9,141			7,644
Restructuring charges		6			8			108			64
Total operating expenses		105,249			94,977			207,216			185,316
Operating income		19,587			21,893			41,166			45,150
Other income (expense):
Interest expense		(1,394	)		(1,800	)		(2,967	)		(3,531	)
Amortization of original issue discount		(2,083	)		(2,465	)		(4,308	)		(4,881	)
Gain on repurchase of convertible debt securities		—			—			1,468			—
Interest and investment income, net		356			1,124			838			2,703
Other, net		—			1			—			15
Total other		(3,121	)		(3,140	)		(4,969	)		(5,694	)
Income before income taxes		16,466			18,753			36,197			39,456
Income tax provision		(5,763	)		(6,914	)		(12,669	)		(14,289	)
Net income	$	10,703		$	11,839		$	23,528		$	25,167
Net income attributed to common stock and participating security:
Common stock	$	10,366		$	11,256		$	22,695		$	24,021
Participating restricted stock		337			583			833			1,146
Total	$	10,703		$	11,839		$	23,528		$	25,167
Weighted-average shares outstanding - Basic
Common stock		33,201			33,209			33,136			33,147
Participating restricted stock		1,080			1,720			1,216			1,581
Total		34,281			34,929			34,352			34,728
Weighted-average shares outstanding - Diluted
Common stock		33,274			33,232			33,193			33,170
Participating restricted stock		1,080			1,720			1,216			1,581
Total		34,354			34,952			34,409			34,751
Earnings per share – Basic and Diluted:
Common stock	$	0.31		$	0.34		$	0.68		$	0.72
Participating restricted stock	$	0.31		$	0.34		$	0.68		$	0.72
Total	$	0.31		$	0.34		$	0.68		$	0.72

Note: Effective January 1, 2009, CSG adopted FSP APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)”, and FSP EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” on a retrospective basis. As a result, our prior year consolidated financial statements have been restated to reflect the adoption of these new accounting principles. Additional information on the impact of adopting these new accounting pronouncements was included in CSG’s most recent Form 10-Q for the quarter ended March 31, 2009.

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CSG SYSTEMS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS-UNAUDITED

(in thousands)

	Six Months Ended
	June 30, 2009			June 30, 2008
				(See Note)
Cash flows from operating activities:
Net income	$	23,528		$	25,167
Adjustments to reconcile net income to net cash provided by operating activities -
Depreciation		9,141			7,644
Amortization		7,125			10,455
Amortization of original issue discount		4,308			4,881
Gain on short-term investments and other		(443	)		(152	)
Gain on repurchase of convertible debt securities		(1,468	)		—
Deferred income taxes		11,820			6,343
Excess tax benefit of stock-based compensation awards		(142	)		(143	)
Stock-based employee compensation		6,238			5,568
Changes in operating assets and liabilities:
Trade accounts and other receivables, net		10,298			12,533
Other current and non-current assets		(2,563	)		294
Income taxes payable/receivable		(6,961	)		3,369
Trade accounts payable and accrued liabilities		(5,965	)		(5,678	)
Deferred revenue		4,650			(2,152	)
Net cash provided by operating activities		59,566			68,129
Cash flows from investing activities:
Purchases of property and equipment		(24,384	)		(9,853	)
Purchases of short-term investments		(22,215	)		(19,102	)
Proceeds from sale/maturity of short-term investments		44,200			9,345
Acquisition of businesses, net of cash acquired		(7,373	)		(39,982	)
Acquisition of and investments in client contracts		(3,748	)		(2,346	)
Net cash used in investing activities		(13,520	)		(61,938	)
Cash flows from financing activities:
Proceeds from issuance of common stock		645			536
Repurchase of common stock		(6,157	)		(1,362	)
Payments on acquired equipment financing		(463	)		(34	)
Repurchase of convertible debt securities		(26,714	)		—
Excess tax benefit of stock-based compensation awards		142			143
Net cash used in financing activities		(32,547	)		(717	)
Net increase in cash and cash equivalents		13,499			5,474
Cash and cash equivalents, beginning of period		83,886			123,416
Cash and cash equivalents, end of period	$	97,385		$	128,890
Supplemental disclosures of cash flow information:
Net cash paid during the period for -
Interest	$	2,408		$	2,979
Income taxes		7,801			4,565

Note: Effective January 1, 2009, CSG adopted FSP APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)”, and FSP EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” on a retrospective basis. As a result, our prior year consolidated financial statements have been restated to reflect the adoption of these new accounting principles. Additional information on the impact of adopting these new accounting pronouncements was included in CSG’s most recent Form 10-Q for the quarter ended March 31, 2009.

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EXHIBIT 1

CSG SYSTEMS INTERNATIONAL, INC.

DISCLOSURES FOR NON-GAAP FINANCIAL MEASURES

Use of Non-GAAP Financial Measures and Limitations

To supplement its consolidated financial statements presented in accordance with GAAP, CSG uses the following non-GAAP financial measures: non-GAAP operating income, non-GAAP earnings per share (“EPS”), and non-GAAP adjusted EBITDA. CSG believes that these non-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: (i) certain internal financial planning, reporting, and analysis; (ii) forecasting and budgeting purposes; (iii) certain management compensation incentives; and (iv) 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 a more complete understanding of CSG’s underlying operational results, trends, performance, and cash generating capabilities, in addition to providing consistency and comparability with CSG’s historical financial results, as well as comparability to similar companies in the industry, many of which present similar non-GAAP financial measures to investors.

Non-GAAP financial measures are not a measure 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 statements result in the exclusion of items that are recurring and will be reflected in its financial statements in future periods.

• 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 GAAP amounts excluded from the non-GAAP financial measures and reconciles each non-GAAP financial measure to the most directly comparable GAAP measure.

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July 28, 2009

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Non-GAAP Financial Measures – Historical Results

Non-GAAP Operating Income: CSG’s calculation of non-GAAP operating income begins with GAAP operating income and adds back the impact of CSG’s transition of its data center services from First Data Corporation to Infocrossing (“Data Center Transition Expenses”). Non-GAAP operating income as a percentage of total revenues (also referred to as “non-GAAP operating income margin”) is calculated by taking non-GAAP operating income and dividing it by total revenues for the respective period. The Data Center Transition Expenses are considered a unique and infrequent occurrence for CSG, and therefore are not reflective of CSG’s recurring core business operating results. The exclusion of these costs in calculating CSG’s non-GAAP operating income and non-GAAP operating income margin allows management and investors an additional means to compare CSG’s current operating results with historical and future periods.

The reconciliations of GAAP operating income to non-GAAP operating income for the indicated quarters and six months then ended are as follows (in thousands, except percentages):

	Quarter Ended June 30, 2009				Quarter Ended June 30, 2008
	Amounts		% of Revenues		Amounts		% of Revenues
GAAP operating income	$	19,587	15.7	%	$	21,893	18.7	%
Data Center Transition Expenses		2,668	2.1	%		—	—
Non-GAAP operating income	$	22,255	17.8	%	$	21,893	18.7	%

	Six Months Ended June 30, 2009				Six Months Ended June 30, 2008
	Amounts		% of Revenues		Amounts		% of Revenues
GAAP operating income	$	41,166	16.6	%	$	45,150	19.6	%
Data Center Transition Expenses		4,057	1.6	%		—	—
Non-GAAP operating income	$	45,223	18.2	%	$	45,150	19.6	%

Non-GAAP EPS: CSG’s calculation of non-GAAP earnings per share (“EPS”) begins with GAAP EPS and then excludes the following items on a tax-affected, per diluted share basis: (i) CSG’s Data Center Transition Expenses; (ii) amortization of the original issue discount (“OID”) for CSG’s convertible debt securities; and (iii) the gain on the repurchase of CSG’s convertible debt securities. CSG believes this presentation provides meaningful supplemental information regarding CSG’s performance, and these items are included in CSG’s determination of non-GAAP financial information for the following reasons:

• The Data Center Transition Expenses and any gains on the repurchase of CSG’s convertible debt securities are unique and infrequent in occurrence for CSG, and therefore may not be reflective of CSG’s recurring core business operating results. The exclusion of these items in calculating CSG’s non-GAAP financial measures allows management and investors an additional means to compare CSG’s current operating results with historical and future periods.

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July 28, 2009

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• The amortization of the convertible debt securities OID is additional interest expense as a result of the adoption of a new accounting pronouncement effective January 1, 2009. The exclusion of these costs in calculating CSG’s non-GAAP financial measures allows management and investors an additional means to compare CSG’s current interest expense with historical periods prior to the adoption of this new accounting pronouncement. In addition, 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.

The reconciliations of GAAP EPS to non-GAAP EPS for the indicated quarters and six months then ended are as follows (in thousands, except per share amounts):

	Quarter Ended June 30, 2009				Quarter Ended June 30, 2008
	Pretax Amount (1)		Per Diluted Share Impact (2)		Pretax Amount (1)		Per Diluted Share Impact (2)
GAAP income before income taxes	$	16,466	$	0.31	$	18,753	$	0.34
Data Center Transition Expenses		2,668		0.05		—		—
Amortization of original issue discount		2,083		0.04		2,465		0.04
Non-GAAP income before income taxes	$	21,217	$	0.40	$	21,218	$	0.38

	Six Months Ended June 30, 2009						Six Months Ended June 30, 2008
	Pretax Amount (1)			Per Diluted Share Impact (2)			Pretax Amount (1)		Per Diluted Share Impact (2)
GAAP income before income taxes	$	36,197		$	0.68		$	39,456	$	0.72
Data Center Transition Expenses		4,057			0.08			—		—
Amortization of original issue discount		4,308			0.08			4,881		0.09
Gain on repurchase of convertible debt securities		(1,468	)		(0.03	)		—		—
Non-GAAP income before income taxes	$	43,094		$	0.81		$	44,337	$	0.81

(1) These items (on a pretax basis) are calculated in accordance with GAAP, and are reflected as part of results of operations in the accompanying Unaudited Condensed Consolidated Statements of Income.

(2) These items represent the after-tax impact to net income on a per diluted share basis using: (i) CSG’s effective income tax rates of approximately 35% for the quarter and six months ended June 30, 2009, and 37% and 36%, respectively, for the quarter and six months ended June 30, 2008; and (ii) weighted-average diluted shares outstanding of 34.4 million for the quarter and six months ended June 30, 2009, and 35.0 million and 34.8 million, respectively, for the quarter and six months ended June 30, 2008.

Non-GAAP Adjusted EBITDA: CSG defines adjusted EBITDA as income before interest, taxes, depreciation, amortization, stock based compensation, and unique and infrequent items, such as the Data Center Transition Expenses and the gain on the repurchase of CSG’s convertible debt securities, discussed above. CSG’s calculation of adjusted EBITDA begins with CSG’s non-GAAP operating income, shown above, which excludes interest income and expense, income taxes, and unique and infrequent items, and adds back CSG’s non-cash charges: depreciation, amortization of intangible assets, and stock-based compensation. CSG believes that adjusted EBITDA is useful to investors and other users of its financial statements as it provides additional information in evaluating the following: (i) operating performance; (ii) liquidity and debt servicing capabilities; and (iii) enterprise valuation purposes.

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July 28, 2009

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CSG’s calculation of adjusted EBITDA and the reconciliations of CSG’s adjusted EBITDA measure to net income and cash flows from operations for the indicated quarters and six months then ended are as follows (in thousands):

	Quarter Ended June 30,				Six Months Ended June 30,
	2009		2008		2009		2008
Non-GAAP operating income	$	22,255	$	21,893	$	45,223	$	45,150
Depreciation		4,901		4,007		9,141		7,644
Amortization of intangible assets		3,964		5,253		6,722		10,016
Stock-based employee compensation		3,223		2,982		6,238		5,568
Adjusted EBITDA	$	34,343	$	34,135	$	67,324	$	68,378

	Quarter Ended June 30,						Six Months Ended June 30,
	2009			2008			2009			2008
Net income	$	10,703		$	11,839		$	23,528		$	25,167
Interest expense		1,394			1,800			2,967			3,531
Amortization of original issue discount		2,083			2,465			4,308			4,881
Interest and investment income and other, net		(356	)		(1,125	)		(838	)		(2,718	)
Income tax provision		5,763			6,914			12,669			14,289
Depreciation		4,901			4,007			9,141			7,644
Amortization of intangible assets		3,964			5,253			6,722			10,016
Stock-based employee compensation		3,223			2,982			6,238			5,568
Data Center Transition Expenses		2,668			—			4,057			—
Gain on repurchase of convertible debt securities		—			—			(1,468	)		—
Adjusted EBITDA	$	34,343		$	34,135		$	67,324		$	68,378

	Quarter Ended June 30,						Six Months Ended June 30,
	2009			2008			2009			2008
Cash flows from operating activities	$	43,553		$	47,277		$	59,566		$	68,129
Income tax provision		5,763			6,914			12,669			14,289
Changes in operating assets and liabilities		(13,895	)		(19,052	)		541			(8,366	)
Deferred income taxes		(4,842	)		(1,548	)		(11,820	)		(6,343	)
Data Center Transition Expenses		2,668			—			4,057			—
Interest expense		1,394			1,800			2,967			3,531
Interest and investment income and other, net		(356	)		(1,125	)		(838	)		(2,718	)
Other		58			(131	)		182			(144	)
Adjusted EBITDA	$	34,343		$	34,135		$	67,324		$	68,378

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July 28, 2009

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Non-GAAP Financial Measures – 2009 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 2009 full year financial guidance is as follows:

	2009 Guidance
GAAP operating income margin	14.2	%
Data Center Transition Expenses as a percentage of total revenues (3)	3.5	%
Non-GAAP operating income margin (“mid- to upper- 17% range”)	17.7	%

(3) This represents the pretax impact of the estimated 2009 Data Center Transition Expenses of approximately $17 million to $18 million on CSG’s operating income margin.

The reconciliation of GAAP EPS to non-GAAP EPS as included in CSG’s 2009 full year financial guidance is as follows:

	2009 Guidance Range (4)
GAAP EPS	$	1.10		$	1.13
Data Center Transition Expenses (5)		0.32			0.34
Amortization of original issue discount (6)		0.16			0.16
Gain on repurchase of convertible debt securities (7)		(0.03	)		(0.03	)
Non-GAAP EPS	$	1.55		$	1. 60

(4) The after-tax impact of these items is calculated using CSG’s estimated full year 2009 effective income tax rate of approximately 35%, and using the estimated weighted-average diluted shares outstanding of 34.5 million for 2009.

(5) This represents the after-tax impact of the estimated 2009 Data Center Transition Expenses of approximately $17 million to $18 million on a per diluted share basis.

(6) This represents the after-tax impact of the estimated 2009 expense related to the amortization of the OID expense for CSG’s convertible debt securities of approximately $8.4 million on a per diluted share basis.

(7) This represents the after-tax impact of the gain on the repurchase of convertible debt securities of $1.5 million on a per diluted share basis. At this time, CSG’s 2009 full year guidance assumes that there will be no additional debt repurchases.