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): February 5, 2013
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) |
Registrants 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 February 5, 2013, CSG Systems International, Inc. (CSG) issued a press release relating to the results of its operations for the quarter and year ended December 31, 2012. 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 CSGs use of non-GAAP financial measures, to include reconciliations of the non-GAAP financial measures to the comparable GAAP financial measures, is contained in the attached press release and is posted to the Companys website at www.csgi.com.
Item 9.01. Financial Statements and Exhibits.
(d) | Exhibits |
99.1 | Press release of CSG Systems International, Inc. dated February 5, 2013 |
2
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: February 5, 2013
CSG SYSTEMS INTERNATIONAL, INC. | ||
By: | /s/ Randy R. Wiese | |
Randy R. Wiese, | ||
Chief Financial Officer and | ||
PrincipalAccounting Officer |
3
CSG Systems International, Inc.
Form 8-K
Exhibit Index
99.1 | Press release of CSG Systems International, Inc. dated February 5, 2013 |
4
Exhibit 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE
CSG SYSTEMS INTERNATIONAL REPORTS
RECORD FOURTH QUARTER AND FULL YEAR REVENUES
ENGLEWOOD, COLO. (February 5, 2013) CSG Systems International, Inc. (Nasdaq: CSGS), a global provider of software- and services-based business support solutions that help clients generate revenue and maximize customer relationships, today reported results for the quarter and full year ended December 31, 2012.
Key Financial Highlights:
| Fourth quarter 2012 results: |
| Total revenues were $198.0 million. |
| Non-GAAP operating income was $33.0 million, or 16.7% of total revenues and GAAP operating income was $22.1 million, or 11.2% of total revenues. |
| Non-GAAP earnings per diluted share (EPS) was $0.67, which includes an unexpected benefit of $0.13 as a result of a lower than previously anticipated effective income tax rate. GAAP EPS was $0.48. |
| Full year 2012 results: |
| Total revenues were $756.9 million. |
| Non-GAAP operating income was $135.5 million, or 17.9% of total revenues and GAAP operating income was $96.6 million, or 12.8% of total revenues. |
| Non-GAAP earnings per diluted share (EPS) was $2.33, which includes an unexpected benefit of $0.13 as a result of a lower than previously anticipated effective income tax rate. GAAP EPS was $1.51. |
| Cash flows from operations for the quarter were $19.1 million, and $127.5 million for the year ended December 31, 2012. |
We enter 2013 in a position of strength as a result of the actions we have taken over the past several years, said Peter Kalan, chief executive officer and president of CSG Systems International, Inc. We have a solid base of over 500 clients worldwide that depend upon us to help them execute upon their business plans. We have invested in our people, our products and our clients to ensure that they are successful. We have demonstrated our ability to manage our costs in a difficult and challenging business environment. And finally, we have a solid business model that is based on highly visible, recurring revenues, resulting in strong cash flows.
CSG Systems International, Inc.
February 5, 2013
Page 2
Financial Overview (unaudited)
(in thousands, except per share amounts and percentages):
Quarter Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||
2012 | 2011 | Percent Change |
2012 | 2011 | Percent Change |
|||||||||||||||||||
Revenues |
$ | 198,007 | $ | 187,574 | 6 | % | $ | 756,866 | $ | 734,731 | 3 | % | ||||||||||||
Non-GAAP Results: |
||||||||||||||||||||||||
Operating Income |
$ | 33,018 | $ | 39,987 | (17 | )% | $ | 135,535 | $ | 139,031 | (3 | )% | ||||||||||||
Operating Income Margin |
16.7 | % | 21.3 | % | | 17.9 | % | 18.9 | % | | ||||||||||||||
EPS |
$ | 0.67 | $ | 0.64 | 5 | % | $ | 2.33 | $ | 2.25 | 4 | % | ||||||||||||
GAAP Results: |
||||||||||||||||||||||||
Operating Income |
$ | 22,149 | $ | 27,043 | (18 | )% | $ | 96,574 | $ | 96,285 | 0 | % | ||||||||||||
Operating Income Margin |
11.2 | % | 14.4 | % | | 12.8 | % | 13.1 | % | | ||||||||||||||
EPS |
$ | 0.48 | $ | 0.35 | 37 | % | $ | 1.51 | $ | 1.28 | 18 | % |
For additional information and reconciliations regarding CSGs use of non-GAAP financial measures, please refer to the attached Exhibit 2 and the Investor Relations section of CSGs website at www.csgi.com.
Results of Operations
Revenues: Total revenues for the fourth quarter of 2012 were $198.0 million, a 6% increase when compared to revenues of $187.6 million for the fourth quarter of 2011, and a 4% increase when compared to $190.0 million for the third quarter of 2012. Total revenues for the full year 2012 were $756.9 million, a 3% increase when compared to revenues of $734.7 million for full year 2011. The year-over-year revenue increases can be primarily attributed to increased revenues from various ancillary services and software sales during the current quarter and year and from the revenues generated from the Ascade business that CSG acquired in mid-July 2012, while the sequential quarterly increase is due primarily to a strong fourth quarter of software sales.
Non-GAAP Results: Non-GAAP operating income for the fourth quarter of 2012 was $33.0 million, or 16.7% of total revenues, compared to $40.0 million, or 21.3%, for the fourth quarter of 2011. Non-GAAP operating income for the third quarter of 2012 was $31.1 million, or 16.4% of total revenues. Non-GAAP operating income for the full year 2012 was $135.5, or 17.9% of total revenues, which compares to $139.0 million, or 18.9%, for the full year 2011. The year-over-year decreases in operating income and operating income margin is mainly due to the expected increases in data processing and employee-related costs. The sequential quarterly increase in operating income and operating income margin reflects the higher sequential revenues, mainly associated with the strong software sales.
Non-GAAP EPS for the fourth quarter of 2012 was $0.67, compared to non-GAAP EPS of $0.64 for the fourth quarter of 2011, and $0.50 for the third quarter of 2012. Non-GAAP EPS for the full year 2012 was $2.33, compared to non-GAAP EPS of $2.25 for the full year 2011. Both the fourth quarter and full year of 2012 non-GAAP EPS include an unexpected benefit of $0.13 as a result of a lower than previously anticipated effective income tax rate for 2012. The year-over-year improvement in the 2012 full year non-GAAP EPS performance relates mainly to a lower effective income rate between years.
CSG Systems International, Inc.
February 5, 2013
Page 3
GAAP Results: GAAP operating income for the fourth quarter of 2012 was $22.1 million, or 11.2% of total revenues, compared to $27.0 million, or 14.4%, for the same period in 2011. GAAP operating income for the full year 2012 was $96.6 million, or 12.8% of total revenues, compared to $96.3 million, or 13.1%, for the full year 2011.
GAAP EPS for the fourth quarter of 2012 was $0.48, compared to $0.35 for the fourth quarter of 2011. GAAP EPS for the full year 2012 was $1.51, compared to $1.28 for the full year 2011.
Balance Sheet and Cash Flows
Balance Sheet: Certain key balance sheet items as of the indicated dates are as follows (in thousands):
December 31, 2012 |
September 30, 2012 |
December 31, 2011 |
||||||||||
Cash, cash equivalents, and short-term investments (1) |
$ | 169,321 | $ | 184,769 | $ | 158,830 | ||||||
Net billed trade accounts receivable |
191,943 | 174,137 | 179,804 | |||||||||
Total long-term debt (1): |
||||||||||||
Par value |
$ | 300,000 | $ | 318,000 | $ | 340,000 | ||||||
Unamortized OID |
(25,302 | ) | (26,576 | ) | (30,256 | ) | ||||||
|
|
|
|
|
|
|||||||
Net debt carrying amount |
$ | 274,698 | $ | 291,424 | $ | 309,744 | ||||||
|
|
|
|
|
|
(1) | The sequential decrease in cash and short-term investments in the fourth quarter of 2012 is primarily due to an $18 million debt payment made in November 2012 in conjunction with CSGs debt refinancing. |
Cash Flows: Certain key operating cash flow items for the indicated quarters then ended are as follows (in thousands):
Quarter
Ended December 31, |
Year
Ended December 31, |
|||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
Cash Flows from Operating Activities: |
||||||||||||||||
Operations |
$ | 34,921 | $ | 34,348 | $ | 126,317 | $ | 130,337 | ||||||||
Changes in operating assets and liabilities |
(15,866 | ) | (2,523 | ) | 1,160 | (69,378 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Net cash provided by operating activities (2) |
$ | 19,055 | $ | 31,825 | $ | 127,477 | $ | 60,959 | ||||||||
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|
|||||||||
Cash Flows from Investing Activities: |
||||||||||||||||
Purchases of property and equipment |
$ | (12,733 | ) | $ | (2,582 | ) | $ | (33,221 | ) | $ | (22,197 | ) | ||||
Cash Flows from Financing Activities: |
||||||||||||||||
Repurchase of common stock under stock repurchase program |
$ | | $ | (2,268 | ) | $ | (13,349 | ) | $ | (9,930 | ) | |||||
Net proceeds from/(payments on) long-term debt |
(18,000 | ) | (2,500 | ) | (40,000 | ) | (70,149 | ) |
CSG Systems International, Inc.
February 5, 2013
Page 4
(2) | Cash flows from operating activities for the year ended December 31, 2011 was negatively impacted by the unfavorable changes in working capital items, primarily related to the following items: (i) the change in the monthly invoice timing for DISH Network, which was included as part of its contract renewal terms in January 2011 and had a negative $20 million impact in the first quarter of 2011; (ii) the timing of payments for several items specific to the first quarter of 2011, including approximately $8 million of Intec acquisition-related expenses, which were accrued expenses as of December 31, 2010; and (iii) $6 million payment of deferred income tax liabilities that became due in 2011 as a result of the repurchase of our 2004 Convertible Debt Securities. |
2013 Financial Guidance
Revenues |
$755 -$775 million | |
Non-GAAP EPS |
$2.23 - $2.33 | |
GAAP EPS from continuing operations |
$1.59 - $1.70 | |
Adjusted EBITDA |
$162 - $167 million |
CSG is currently in negotiations with one of its largest customers for a longer-term renewal of the current contract that expires at the end of February. The above current financial guidance assumes no material change in the revenue earned from this customer during 2013 pursuant to the terms of the existing agreement; as it is impossible to predict with certainty at this time what impact, if any, the terms of a longer-term contract extension will have on CSGs 2013 results of operations. When this contract is extended in the future, CSG will determine what updates may be necessary to the above guidance.
For additional information and reconciliations regarding CSGs use of non-GAAP financial measures, please refer to the attached Exhibit 2 and the Investor Relations section of CSGs website at www.csgi.com.
Conference Call
CSG will host a one-hour conference call on February 5, 2013, at 5:00 p.m. ET, to discuss CSGs fourth quarter and year end results. The call will be carried live and archived on the Internet. A link to the conference call is available at www.csgi.com. In addition, to reach the conference by phone, dial (877) 941-0844 and ask the operator for the CSG International conference call and Liz Bauer, chairperson.
Additional Information
For information about CSG, please visit CSGs web site at www.csgi.com. Additional information can be found in the Investor Relations section of the web site.
About CSG International
CSG Systems International, Inc. (NASDAQ: CSGS) is a market-leading business support solutions and services company serving the majority of the top 100 global communications service providers, including leaders in fixed, mobile and next-generation networks such as AT&T, Comcast, DISH Network, France Telecom, MasterCard, Orange, T-Mobile, Telefonica, Time Warner Cable, Vodafone, Vivo and Verizon. With over 25 years of experience and expertise in voice, video, data and content services, CSG International offers a broad portfolio of licensed and Software-as-a-Service (SaaS)-based products and solutions that help clients compete more effectively, improve business operations and deliver a more impactful customer experience across a variety of touch points. For more information, visit our website at www.csgi.com.
CSG Systems International, Inc.
February 5, 2013
Page 5
Forward-Looking Statements
This news release contains forward-looking statements as defined under the Securities Act of 1933, as amended, that are based on assumptions about a number of important factors and involve risks and uncertainties that could cause actual results to differ materially from what appears in this news release. Some of these key factors include, but are not limited to the following items:
| CSG derives approximately forty percent of its revenues from its three largest clients; |
| Continued market acceptance of CSGs products and services; |
| CSGs ability to continuously develop and enhance products in a timely, cost-effective, technically advanced and competitive manner; |
| CSGs ability to deliver its solutions in a timely fashion within budget, particularly large and complex software implementations; |
| CSGs dependency on the global telecommunications industry, and in particular, the North American telecommunications industry; |
| CSGs ability to meet its financial expectations as a result of increased dependency on software sales, which are subject to greater volatility; |
| Increasing competition in CSGs market from companies of greater size and with broader presence in the communications sector; |
| CSGs ability to successfully integrate and manage acquired businesses or assets to achieve expected strategic, operating and financial goals; |
| CSGs ability to protect its intellectual property rights; |
| CSGs ability to maintain a reliable, secure computing environment; |
| CSGs ability to conduct business in the international marketplace; |
| CSGs ability to comply with applicable U.S. and International laws and regulations; and |
| Fluctuations in credit market conditions, general global economic and political conditions, and foreign currency exchange rates. |
This list is not exhaustive and readers are encouraged to review the additional risks and important factors described in CSGs reports on Forms 10-K and 10-Q and other filings made with the SEC.
For more information, contact:
Liz Bauer, Senior Vice President of Investor Relations & Strategic Communications
(303) 804-4065
E-mail: liz.bauer@csgi.com
CSG Systems International, Inc.
February 5, 2013
Page 6
CSG SYSTEMS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS-UNAUDITED
(in thousands, except per share amounts)
December 31, 2012 |
December 31, 2011 |
|||||||
ASSETS | ||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 136,473 | $ | 146,733 | ||||
Short-term investments |
32,848 | 12,097 | ||||||
|
|
|
|
|||||
Total cash, cash equivalents, and short-term investments |
169,321 | 158,830 | ||||||
Trade accounts receivable: |
||||||||
Billed, net of allowance of $3,147 and $2,421 |
191,943 | 179,804 | ||||||
Unbilled and other |
33,859 | 30,981 | ||||||
Deferred income taxes |
22,244 | 19,982 | ||||||
Income taxes receivable |
6,469 | 4,139 | ||||||
Other current assets |
17,099 | 16,224 | ||||||
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|
|
|
|||||
Total current assets |
440,935 | 409,960 | ||||||
Non-current assets: |
||||||||
Property and equipment, net of depreciation of $120,643 and $116,125 |
39,429 | 41,154 | ||||||
Software, net of amortization of $68,513 and $56,521 |
36,729 | 29,966 | ||||||
Goodwill |
233,365 | 220,013 | ||||||
Client contracts, net of amortization of $184,763 and $159,225 |
76,388 | 98,403 | ||||||
Deferred income taxes |
2,596 | 1,008 | ||||||
Income taxes receivable |
1,292 | | ||||||
Other assets |
16,207 | 14,393 | ||||||
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|
|
|||||
Total non-current assets |
406,006 | 404,937 | ||||||
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|
|||||
Total assets |
$ | 846,941 | $ | 814,897 | ||||
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LIABILITIES AND STOCKHOLDERS EQUITY | ||||||||
Current liabilities: |
||||||||
Current maturities of long-term debt |
$ | 15,000 | $ | 27,000 | ||||
Client deposits |
33,807 | 30,523 | ||||||
Trade accounts payable |
30,473 | 27,198 | ||||||
Accrued employee compensation |
61,083 | 42,005 | ||||||
Income taxes payable |
2,116 | 2,334 | ||||||
Deferred revenue |
47,691 | 44,824 | ||||||
Other current liabilities |
21,562 | 23,501 | ||||||
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Total current liabilities |
211,732 | 197,385 | ||||||
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Non-current liabilities: |
||||||||
Long-term debt, net of unamortized original issue discount of $25,302 and $30,256 |
259,698 | 282,744 | ||||||
Deferred revenue |
6,504 | 8,631 | ||||||
Income taxes payable |
1,168 | 4,114 | ||||||
Deferred income taxes |
21,674 | 28,188 | ||||||
Other non-current liabilities |
19,526 | 19,121 | ||||||
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Total non-current liabilities |
308,570 | 342,798 | ||||||
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Total liabilities |
520,302 | 540,183 | ||||||
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Stockholders equity: |
||||||||
Preferred stock, par value $.01 per share; 10,000 shares authorized; zero shares issued and outstanding |
| | ||||||
Common stock, par value $.01 per share; 100,000 shares authorized; 33,734 shares and 33,822 shares outstanding |
653 | 645 | ||||||
Additional paid-in capital |
461,497 | 449,376 | ||||||
Treasury stock, at cost, 31,530 and 30,707 shares |
(728,243 | ) | (714,893 | ) | ||||
Accumulated other comprehensive income (loss): |
||||||||
Unrealized gain on short-term investments, net of tax |
3 | 1 | ||||||
Unrecognized pension plan losses and prior service costs, net of tax |
(1,761 | ) | (1,794 | ) | ||||
Unrealized loss on change in fair value of interest rate swaps, net of tax |
(658 | ) | (618 | ) | ||||
Cumulative foreign currency translation adjustments |
2,274 | (1,998 | ) | |||||
Accumulated earnings |
592,874 | 543,995 | ||||||
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|
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Total stockholders equity |
326,639 | 274,714 | ||||||
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Total liabilities and stockholders equity |
$ | 846,941 | $ | 814,897 | ||||
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CSG Systems International, Inc.
February 5, 2013
Page 7
CSG SYSTEMS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME-UNAUDITED
(in thousands, except per share amounts)
Quarter Ended | Year Ended | |||||||||||||||
December 31, 2012 |
December 31, 2011 |
December 31, 2012 |
December 31, 2011 |
|||||||||||||
Revenues: |
||||||||||||||||
Processing and related services |
$ | 135,980 | $ | 133,076 | $ | 544,649 | $ |
524,666 |
| |||||||
Software, maintenance and services |
62,027 | 54,498 | 212,217 | 210,065 | ||||||||||||
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|
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Total revenues |
198,007 | 187,574 | 756,866 | 734,731 | ||||||||||||
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Cost of revenues (exclusive of depreciation, shown separately below): |
||||||||||||||||
Processing and related services |
66,501 | 60,548 | 258,380 | 244,776 | ||||||||||||
Software, maintenance and services |
34,415 | 30,474 | 125,436 | 120,874 | ||||||||||||
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|
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Total cost of revenues |
100,916 | 91,022 | 383,816 | 365,650 | ||||||||||||
Other operating expenses: |
||||||||||||||||
Research and development |
28,696 | 26,663 | 112,938 | 111,142 | ||||||||||||
Selling, general and administrative |
39,396 | 31,470 | 138,783 | 128,346 | ||||||||||||
Depreciation |
5,202 | 6,511 | 22,286 | 25,435 | ||||||||||||
Restructuring charges |
1,648 | 4,865 | 2,469 | 7,873 | ||||||||||||
|
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|
|
|
|
|
|
|||||||||
Total operating expenses |
175,858 | 160,531 | 660,292 | 638,446 | ||||||||||||
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|
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Operating income |
22,149 | 27,043 | 96,574 | 96,285 | ||||||||||||
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Other income (expense): |
||||||||||||||||
Interest expense |
(3,647 | ) | (4,185 | ) | (15,983 | ) | (17,026 | ) | ||||||||
Amortization of original issue discount |
(1,274 | ) | (1,179 | ) | (4,954 | ) | (5,206 | ) | ||||||||
Interest and investment income, net |
220 | 169 | 855 | 764 | ||||||||||||
Other, net |
208 | 292 | 732 | 1,155 | ||||||||||||
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|
|
|
|
|||||||||
Total other |
(4,493 | ) | (4,903 | ) | (19,350 | ) | (20,313 | ) | ||||||||
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|
|||||||||
Income before income taxes |
17,656 | 22,140 | 77,224 | 75,972 | ||||||||||||
Income tax provision |
(1,866 | ) | (10,846 | ) | (28,345 | ) | (33,690 | ) | ||||||||
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|
|||||||||
Net income |
$ | 15,790 | $ | 11,294 | $ | 48,879 | $ | 42,282 | ||||||||
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Weighted-average shares outstanding Basic: |
||||||||||||||||
Common stock |
32,002 | 32,257 | 32,142 | 32,624 | ||||||||||||
Participating restricted stock |
| 127 | 17 | 189 | ||||||||||||
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|
|
|
|||||||||
Total |
32,002 | 32,384 | 32,159 | 32,813 | ||||||||||||
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Weighted-average shares outstanding Diluted: |
||||||||||||||||
Common stock |
32,568 | 32,520 | 32,459 | 32,833 | ||||||||||||
Participating restricted stock |
| 127 | 17 | 189 | ||||||||||||
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|
|
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|
|
|||||||||
Total |
32,568 | 32,647 | 32,476 | 33,022 | ||||||||||||
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Earnings per common share: |
||||||||||||||||
Basic |
$ | 0.49 | $ | 0.35 | $ | 1.52 | $ | 1.29 | ||||||||
Diluted |
0.48 | 0.35 | 1.51 | 1.28 |
CSG Systems International, Inc.
February 5, 2013
Page 8
CSG SYSTEMS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS-UNAUDITED
(in thousands)
Year Ended | ||||||||
December 31, 2012 |
December 31, 2011 |
|||||||
Cash flows from operating activities: |
||||||||
Net income |
$ | 48,879 | $ | 42,282 | ||||
Adjustments to reconcile net income to net cash provided by operating activities - |
||||||||
Depreciation |
22,286 | 25,435 | ||||||
Amortization |
44,178 | 42,173 | ||||||
Amortization of original issue discount |
4,954 | 5,206 | ||||||
Impairment of client contract |
3,783 | | ||||||
Gain on short-term investments and other |
(72 | ) | (60 | ) | ||||
Deferred income taxes |
(10,707 | ) | 3,977 | |||||
Excess tax benefit of stock-based compensation awards |
(415 | ) | (828 | ) | ||||
Stock-based employee compensation |
13,431 | 12,152 | ||||||
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|
|
|
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Subtotal |
126,317 | 130,337 | ||||||
Changes in operating assets and liabilities: |
||||||||
Trade accounts and other receivables, net |
(9,481 | ) | (31,552 | ) | ||||
Other current and non-current assets |
(1,715 | ) | 3,210 | |||||
Income taxes payable/receivable |
(6,543 | ) | 7,573 | |||||
Trade accounts payable and accrued liabilities |
18,474 | (20,074 | ) | |||||
Deferred revenue |
425 | (28,535 | ) | |||||
|
|
|
|
|||||
Net cash provided by operating activities |
127,477 | 60,959 | ||||||
|
|
|
|
|||||
Cash flows from investing activities: |
||||||||
Purchases of property and equipment |
(33,221 | ) | (22,197 | ) | ||||
Purchases of short-term investments |
(62,742 | ) | (37,798 | ) | ||||
Proceeds from sale/maturity of short-term investments |
42,063 | 43,450 | ||||||
Acquisition of business, net of cash acquired |
(19,085 | ) | | |||||
Acquisition of and investments in client contracts |
(4,629 | ) | (9,133 | ) | ||||
|
|
|
|
|||||
Net cash used in investing activities |
(77,614 | ) | (25,678 | ) | ||||
|
|
|
|
|||||
Cash flows from financing activities: |
||||||||
Proceeds from issuance of common stock |
1,896 | 1,486 | ||||||
Repurchase of common stock |
(16,558 | ) | (14,365 | ) | ||||
Payments on acquired equipment financing |
(1,698 | ) | (1,587 | ) | ||||
Proceeds from long-term debt |
150,000 | | ||||||
Payments on long-term debt |
(190,000 | ) | (70,149 | ) | ||||
Payments of deferred financing costs |
(2,450 | ) | (205 | ) | ||||
Excess tax benefit of stock-based compensation awards |
415 | 828 | ||||||
|
|
|
|
|||||
Net cash used in financing activities |
(58,395 | ) | (83,992 | ) | ||||
|
|
|
|
|||||
Effect of exchange rate fluctuations on cash |
(1,728 | ) | (2,414 | ) | ||||
|
|
|
|
|||||
Net decrease in cash and cash equivalents |
(10,260 | ) | (51,125 | ) | ||||
Cash and cash equivalents, beginning of period |
146,733 | 197,858 | ||||||
|
|
|
|
|||||
Cash and cash equivalents, end of period |
$ | 136,473 | $ | 146,733 | ||||
|
|
|
|
|||||
Supplemental disclosures of cash flow information: |
||||||||
Net cash paid during the period for - |
||||||||
Interest |
$ | 13,124 | $ | 13,921 | ||||
Income taxes |
43,379 | 22,836 |
CSG Systems International, Inc.
February 5, 2013
Page 9
EXHIBIT 1
CSG SYSTEMS INTERNATIONAL, INC.
SUPPLEMENTAL REVENUE ANALYSIS
Revenues by Geography
Quarter Ended December 31, 2012 |
Quarter Ended September 30, 2012 |
Quarter Ended December 31, 2011 |
||||||||||
Americas |
83 | % | 87 | % | 85 | % | ||||||
Europe, Middle East and Africa |
11 | % | 9 | % | 10 | % | ||||||
Asia Pacific |
6 | % | 4 | % | 5 | % | ||||||
|
|
|
|
|
|
|||||||
Total Revenues |
100 | % | 100 | % | 100 | % | ||||||
|
|
|
|
|
|
Revenues by Significant Customers: 10% or more of Revenues
Quarter Ended December 31, 2012 |
Quarter Ended September 30, 2012 |
Quarter Ended December 31, 2011 |
||||||||||
Comcast |
19 | % | 21 | % | 19 | % | ||||||
DISH |
13 | % | 13 | % | 13 | % | ||||||
Time Warner |
11 | % | 10 | % | 10 | % |
ACP Customer Accounts (in thousands, at end of period)
December 31, 2012 |
September 30, 2012 |
December 31, 2011 |
||||||||||
Cable/Satellite Customer Accounts |
48,870 | 49,224 | 48,837 |
CSG Systems International, Inc.
February 5, 2013
Page 10
EXHIBIT 2
CSG SYSTEMS INTERNATIONAL, INC.
DISCLOSURES FOR NON-GAAP FINANCIAL MEASURES
Use of Non-GAAP Financial Measures and Limitations
To supplement its condensed consolidated financial statements presented in accordance with generally accepted accounting principles (GAAP), CSG uses non-GAAP operating income, non-GAAP EPS, non-GAAP adjusted EBITDA, and non-GAAP free cash flow. CSG believes that these non-GAAP financial measures, when reviewed in conjunction with its GAAP financial measures, provide investors with greater transparency to the information used by CSGs management in its financial and operational decision making. CSG uses these non-GAAP financial measures for the following purposes:
| Certain internal financial planning, reporting, and analysis; |
| Forecasting and budgeting purposes; |
| Certain management compensation incentives; and |
| Communications with CSGs Board of Directors, stockholders, financial analysts, and investors. |
These non-GAAP financial measures are provided with the intent of providing investors with the following information:
| A more complete understanding of CSGs underlying operational results, trends, and cash generating capabilities; |
| Consistency and comparability with CSGs historical financial results; and |
| Comparability to similar companies, many of which present similar non-GAAP financial measures to investors. |
Non-GAAP financial measures are not measures of performance under GAAP, and therefore should not be considered in isolation or as a substitute for GAAP financial information. Limitations with the use of non-GAAP financial measures include the following items:
| Non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles; |
| The way in which CSG calculates non-GAAP financial measures may differ from the way in which other companies calculate similar non-GAAP financial measures; |
| Non-GAAP financial measures do not include all items of income and expense that affect CSGs operations and that are required by GAAP to be included in financial statements; |
| Certain adjustments to CSGs non-GAAP financial measures result in the exclusion of items that are recurring and will be reflected in CSGs financial statements in future periods; and |
| Certain charges excluded from CSGs non-GAAP financial measures are cash expenses, and therefore do impact CSGs cash position. |
CSG Systems International, Inc.
February 5, 2013
Page 11
CSG compensates for these limitations by relying primarily on its GAAP results and using non-GAAP financial measures as a supplement only. Additionally, CSG provides specific information regarding the treatment of GAAP amounts considered in preparing the non-GAAP financial measures and reconciles each non-GAAP financial measure to the most directly comparable GAAP measure.
Non-GAAP Financial Measures: Basis of Presentation
The table below outlines the exclusions from CSGs non-GAAP financial measures:
Non-GAAP Exclusions |
Operating Income |
EPS | ||||||
Restructuring charges |
X | X | ||||||
Ascade acquisition-related charges |
X | X | ||||||
Stock-based compensation |
X | X | ||||||
Amortization of acquired intangible assets |
X | X | ||||||
Amortization of original issue discount (OID) |
| X | ||||||
Unusual income tax matters |
| X |
CSG believes that excluding certain items in calculating its non-GAAP financial measures provides meaningful supplemental information regarding CSGs performance and these items are excluded for the following reasons:
| Restructuring charges are infrequent expenses that result from cost reduction initiatives and/or significant changes to CSGs business, to include such things as involuntary employee terminations, and facility consolidations and abandonments. These charges are not considered reflective of CSGs recurring core business operating results. The exclusion of these items in calculating CSGs non-GAAP financial measures allows management and investors an additional means to compare CSGs current operating results with historical and future periods. |
| The Ascade acquisition-related charges relate to certain direct and incremental expenses related to the acquisition of Ascade, and thus, are not considered reflective of CSGs recurring core business operating results. These charges include expenses related to legal, accounting, and other professional services. The exclusion of these charges in calculating CSGs non-GAAP financial measures allows management and investors an additional means to compare CSGs current financial results with historical and future periods. |
| Stock-based compensation results from CSGs issuance of its common stock to its employees under incentive compensation programs. The amount of this incentive compensation in any period is not generally linked to the level of performance by employees or CSG, but instead is more dependent on CSGs stock price at the stock grant date, and the employee service period over which the equity awards vest. The exclusion of these expenses in calculating CSGs non-GAAP financial measures allows management and investors an additional means to evaluate the non-cash expense related to compensation included in CSGs results of operations, and therefore, the exclusion of this item allows investors to further evaluate the cash generating capabilities of CSGs business. |
CSG Systems International, Inc.
February 5, 2013
Page 12
| Amortization of acquired intangible assets is the result of business acquisitions. A portion of the purchase price in an acquisition is allocated to acquired intangible assets (e.g., software, client relationships, etc.), which are then amortized to expense over their estimated useful lives. This annual amortization expense is generally unchanged from the initial estimates, regardless of performance of the acquired business in any one period. Also, the value assigned to acquired intangible assets in a business combination is based on various estimates and valuation techniques, and does not necessarily represent the costs CSG would incur to develop such capabilities internally. Additionally, amortization of acquired intangible assets can be inconsistent in amount and frequency, and can be significantly affected by the timing and size of an acquisition. The exclusion of these expenses in calculating CSGs non-GAAP financial measures allows management and investors an additional means to evaluate the non-cash expense related to acquisitions included in CSGs subsequent results of operations, and therefore, the exclusion of this item allows investors to further evaluate the cash generating capabilities of CSGs business. |
| The convertible debt securities OID is the result of allocating a portion of the principal balance of the debt at issuance to the equity component of the instrument, as required under current accounting rules. This OID is then amortized to interest expense over the life of the respective convertible debt instrument. The interest expense related to the amortization of the OID is a non-cash expense, and therefore, the exclusion of this item allows investors to further evaluate the cash interest costs of CSGs convertible debt securities for cash flow, liquidity, and debt service purposes. |
| Unusual items within CSGs quarterly and/or annual income tax expense can occur from such things as income tax accounting timing matters, income taxes related to unusual events, or as a result of different treatment of certain items for book accounting and income tax purposes. Consideration of such items in calculating CSGs non-GAAP financial measures allows management and investors an additional means to compare CSGs current financial results with historical and future periods. |
CSG also reports non-GAAP adjusted EBITDA and non-GAAP free cash flow. Management believes non-GAAP adjusted EBITDA is a useful measure to investors in evaluating CSGs operating performance, liquidity, debt servicing capabilities, and enterprise valuation. CSG defines adjusted EBITDA as income before interest, income taxes, depreciation, amortization, stock-based compensation, foreign currency transaction adjustments, and unusual items, such as restructuring charges, as discussed above. Additionally, management uses non-GAAP free cash flow, among other measures, to assess its financial performance and cash generating capabilities, and believes that it is useful to investors because it shows CSGs cash available to service debt, make strategic acquisitions and investments, repurchase its common stock, and fund ongoing operations. CSG defines non-GAAP free cash flow as net cash flows from operating activities less the purchases of property and equipment.
CSG Systems International, Inc.
February 5, 2013
Page 13
Non-GAAP Financial Measures
Non-GAAP Operating Income:
The reconciliations of GAAP operating income to non-GAAP operating income for the indicated periods are as follows (in thousands, except percentages):
Quarter Ended December 31, 2012 |
Quarter Ended December 31, 2011 |
|||||||||||||||
Amounts | % of Revenues |
Amounts | % of Revenues |
|||||||||||||
GAAP operating income |
$ | 22,149 | 11.2 | % | $ | 27,043 | 14.4 | % | ||||||||
Restructuring charges |
1,648 | 0.8 | % | 4,865 | 2.6 | % | ||||||||||
Stock-based compensation |
3,441 | 1.8 | % | 2,468 | 1.3 | % | ||||||||||
Amortization of acquired intangible assets |
5,780 | 2.9 | % | 5,611 | 3.0 | % | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Non-GAAP operating income |
$ | 33,018 | 16.7 | % | $ | 39,987 | 21.3 | % | ||||||||
|
|
|
|
|
|
|
|
Year Ended December 31, 2012 |
Year Ended December 31, 2011 |
|||||||||||||||
Amounts | % of Revenues |
Amounts | % of Revenues |
|||||||||||||
GAAP operating income |
$ | 96,574 | 12.8 | % | $ | 96,285 | 13.1 | % | ||||||||
Restructuring charges |
2,469 | 0.3 | % | 7,873 | 1.1 | % | ||||||||||
Ascade acquisition-related charges |
344 | 0.0 | % | | | |||||||||||
Stock-based compensation |
13,431 | 1.8 | % | 12,152 | 1.6 | % | ||||||||||
Amortization of acquired intangible assets |
22,717 | 3.0 | % | 22,721 | 3.1 | % | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Non-GAAP operating income |
$ | 135,535 | 17.9 | % | $ | 139,031 | 18.9 | % | ||||||||
|
|
|
|
|
|
|
|
Non-GAAP EPS:
The reconciliations of GAAP EPS to non-GAAP EPS for the indicated periods are as follows (in thousands, except per share amounts):
Quarter Ended December 31, 2012 |
Quarter Ended December 31, 2011 |
|||||||||||||||
Pretax Amount (1) |
Per Diluted Share Impact (2) |
Pretax Amount (1) |
Per Diluted Share Impact (3) |
|||||||||||||
GAAP income before income taxes |
$ | 17,656 | $ | 0.48 | $ | 22,140 | $ | 0.35 | ||||||||
Restructuring charges |
1,648 | 0.03 | 4,865 | 0.10 | ||||||||||||
Stock-based compensation |
3,441 | 0.05 | 2,468 | 0.05 | ||||||||||||
Amortization of acquired intangible assets |
5,780 | 0.09 | 5,611 | 0.12 | ||||||||||||
Amortization of OID |
1,274 | 0.02 | 1,179 | 0.02 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Non-GAAP income before income taxes |
$ | 29,799 | $ | 0.67 | $ | 36,263 | $ | 0.64 | ||||||||
|
|
|
|
|
|
|
|
CSG Systems International, Inc.
February 5, 2013
Page 14
Year Ended December 31, 2012 |
Year Ended December 31, 2011 |
|||||||||||||||
Pretax Amount (1) |
Per Diluted Share Impact (2) |
Pretax Amount (1) |
Per Diluted Share Impact (3) |
|||||||||||||
GAAP income before income taxes |
$ | 77,224 | $ | 1.51 | $ | 75,972 | $ | 1.28 | ||||||||
Restructuring charges |
2,469 | 0.04 | 7,873 | 0.16 | ||||||||||||
Ascade acquisition-related charges |
344 | 0.01 | | | ||||||||||||
Stock-based compensation |
13,431 | 0.25 | 12,152 | 0.25 | ||||||||||||
Amortization of acquired intangible assets |
22,717 | 0.43 | 22,721 | 0.46 | ||||||||||||
Amortization of OID |
4,954 | 0.09 | 5,206 | 0.10 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Non-GAAP income before income taxes |
$ | 121,139 | $ | 2.33 | $ | 123,924 | $ | 2.25 | ||||||||
|
|
|
|
|
|
|
|
(1) | These items (on a pretax basis) are calculated in accordance with GAAP, and are reflected as part of the results of operations in the accompanying Unaudited Condensed Consolidated Statements of Income. |
(2) | These items represent the estimated after-tax impact to net income on a per diluted share basis using the following: (i) the estimated income taxes related to these items, which includes the impact of the difference between GAAP and non-GAAP pretax income, and includes the benefit from the R&D and related income tax credits related to 2012 operations. This resulted in estimated effective income rates for non-GAAP purposes for the quarter and year ended December 31, 2012 of approximately 27% and 38%, respectively; and (ii) the weighted-average diluted shares outstanding for the quarter and year ended December 31, 2012 of 32.6 million and 32.5 million, respectively. |
(3) | These items represent the estimated after-tax impact to net income on a per diluted share basis using the following: (i) the estimated income taxes related to these items, which includes the impact of the difference between GAAP and non-GAAP pretax income. This resulted in estimated effective income rates for non-GAAP purposes for the quarter and year ended December 31, 2011 of approximately 42% and 40%, respectively; and (ii) the weighted-average diluted shares outstanding for the quarter and year ended December 31, 2011 of 32.6 million and 33.0 million, respectively. |
Non-GAAP Adjusted EBITDA:
CSGs calculation of non-GAAP adjusted EBITDA and the reconciliation of CSGs non-GAAP adjusted EBITDA measure to net income and cash flows from operating activities are provided below for the indicated periods (in thousands):
Quarter
Ended December 31, |
Year
Ended December 31, |
|||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
GAAP operating income |
$ | 22,149 | $ | 27,043 | $ | 96,574 | $ | 96,285 | ||||||||
Restructuring charges |
1,648 | 4,865 | 2,469 | 7,873 | ||||||||||||
Ascade acquisition-related charges |
| | 344 | | ||||||||||||
Depreciation |
5,202 | 6,511 | 22,286 | 25,435 | ||||||||||||
Amortization of acquired intangible assets (4) |
5,780 | 5,611 | 22,717 | 22,721 | ||||||||||||
Amortization of other intangible assets (4) |
4,502 | 4,236 | 18,748 | 16,454 | ||||||||||||
Stock-based compensation |
3,441 | 2,468 | 13,431 | 12,152 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted EBITDA |
$ | 42,722 | $ | 50,734 | $ | 176,569 | $ | 180,920 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted EBITDA as a percentage of revenues |
22 | % | 27 | % | 23 | % | 25 | % | ||||||||
|
|
|
|
|
|
|
|
CSG Systems International, Inc.
February 5, 2013
Page 15
Quarter
Ended December 31, |
Year
Ended December 31, |
|||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
Net income |
$ | 15,790 | $ | 11,294 | $ | 48,879 | $ | 42,282 | ||||||||
Interest expense (5) |
3,647 | 4,185 | 15,983 | 17,026 | ||||||||||||
Amortization of OID |
1,274 | 1,179 | 4,954 | 5,206 | ||||||||||||
Interest and investment income and other, net |
(428 | ) | (461 | ) | (1,587 | ) | (1,919 | ) | ||||||||
Income tax provision |
1,866 | 10,846 | 28,345 | 33,690 | ||||||||||||
Depreciation |
5,202 | 6,511 | 22,286 | 25,435 | ||||||||||||
Amortization of acquired intangible assets (4) |
5,780 | 5,611 | 22,717 | 22,721 | ||||||||||||
Amortization of other intangible assets (4) |
4,502 | 4,236 | 18,748 | 16,454 | ||||||||||||
Stock-based compensation |
3,441 | 2,468 | 13,431 | 12,152 | ||||||||||||
Ascade acquisition-related charges |
| | 344 | | ||||||||||||
Restructuring charges |
1,648 | 4,865 | 2,469 | 7,873 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted EBITDA |
$ | 42,722 | $ | 50,734 | $ | 176,569 | $ | 180,920 | ||||||||
|
|
|
|
|
|
|
|
Quarter
Ended December 31, |
Year
Ended December 31, |
|||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
Cash flows from operating activities |
$ | 19,055 | $ | 31,825 | $ | 127,477 | $ | 60,959 | ||||||||
Income tax provision |
1,866 | 10,846 | 28,345 | 33,690 | ||||||||||||
Changes in operating assets and liabilities and deferred taxes |
18,784 | 183 | 9,547 | 65,401 | ||||||||||||
Impairment of client contract |
(1,283 | ) | | (3,783 | ) | | ||||||||||
Interest expense (5) |
3,647 | 4,185 | 15,983 | 17,026 | ||||||||||||
Interest and investment income and other, net |
(428 | ) | (461 | ) | (1,587 | ) | (1,919 | ) | ||||||||
Ascade acquisition-related charges |
| | 344 | | ||||||||||||
Restructuring charges |
1,648 | 4,865 | 2,469 | 7,873 | ||||||||||||
Other |
(567 | ) | (709 | ) | (2,226 | ) | (2,110 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted EBITDA |
$ | 42,722 | $ | 50,734 | $ | 176,569 | $ | 180,920 | ||||||||
|
|
|
|
|
|
|
|
(4) | Amortization on the cash flows statement is made up of the following items for the indicated periods (in thousands): |
Quarter
Ended December 31, |
Year
Ended December 31, |
|||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
Amortization of acquired intangible assets |
$ | 5,780 | $ | 5,611 | $ | 22,717 | $ | 22,721 | ||||||||
Amortization of other intangible assets |
4,502 | 4,236 | 18,748 | 16,454 | ||||||||||||
Amortization of deferred financing costs |
602 | 727 | 2,713 | 2,998 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total amortization |
$ | 10,884 | $ | 10,574 | $ | 44,178 | $ | 42,173 | ||||||||
|
|
|
|
|
|
|
|
(5) | Interest expense includes amortization of deferred financing costs as provided in Note 4 above. |
CSG Systems International, Inc.
February 5, 2013
Page 16
Free Cash Flow:
CSGs calculation of non-GAAP free cash flow and the reconciliation of CSGs non-GAAP free cash flow measure to cash flows from operating activities are provided below for the indicated periods (in thousands):
Quarter
Ended December 31, |
Year
Ended December 31, |
|||||||||||||||
2012 | 2011 | 2012 | 2011 (6) | |||||||||||||
Cash flows from operating activities |
$ | 19,055 | $ | 31,825 | $ | 127,477 | $ | 60,959 | ||||||||
Purchases of property and equipment |
(12,733 | ) | (2,582 | ) | (33,221 | ) | (22,197 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Non-GAAP free cash flow |
$ | 6,322 | $ | 29,243 | $ | 94,256 | $ | 38,762 | ||||||||
|
|
|
|
|
|
|
|
(6) | Cash flows from operating activities for the year ended December 31, 2011 was negatively impacted by the unfavorable changes in working capital items, primarily related to the following items: (i) the change in the monthly invoice timing for DISH Network, which was included as part of its contract renewal terms in January 2011 and had a negative $20 million impact in the first quarter of 2011; (ii) the timing of payments for several items specific to the first quarter of 2011, including approximately $8 million of Intec acquisition-related expenses, which were accrued expenses as of December 31, 2010; and (iii) $6 million payment of deferred income tax liabilities that became due in 2011 as a result of the repurchase of our 2004 Convertible Debt Securities. |
Non-GAAP Financial Measures 2013 Financial Guidance
Non-GAAP Operating Income Margin:
The reconciliation of GAAP operating income margin to non-GAAP operating income margin, as included in CSGs 2013 full year financial guidance, is as follows:
2013 Guidance |
||||
GAAP operating income margin |
12.0 | % | ||
Restructuring charges (7) |
0.5 | % | ||
Stock-based compensation (8) |
2.0 | % | ||
Amortization of acquired intangible assets (9) |
2.5 | % | ||
|
|
|||
Non-GAAP operating income margin (approximately 17%) |
17.0 | % | ||
|
|
(7) | This represents the pretax impact of restructuring charges of an estimated $2 million on CSGs operating income margin as a percentage of the midpoint of 2013 revenue guidance. |
(8) | This represents the pretax impact of stock-based compensation expense of an estimated $14 million on CSGs operating income margin as a percentage of the midpoint of 2013 revenue guidance. |
(9) | This represents the pretax impact of amortization of acquired intangible assets expense of an estimated $20 million on CSGs operating income margin as a percentage of the midpoint of 2013 revenue guidance. |
CSG Systems International, Inc.
February 5, 2013
Page 17
Non-GAAP EPS:
The reconciliation of GAAP EPS to non-GAAP EPS as included in CSGs 2013 full year financial guidance is as follows:
2013 Guidance Range (10) | ||||||||
Low Range | High Range | |||||||
GAAP EPS |
$ | 1.59 | $ | 1.70 | ||||
Restructuring charges(11) |
0.03 | 0.03 | ||||||
Stock-based compensation (12) |
0.22 | 0.22 | ||||||
Amortization of acquired intangible assets (13) |
0.31 | 0.30 | ||||||
Amortization of OID (14) |
0.08 | 0.08 | ||||||
|
|
|
|
|||||
Non-GAAP EPS |
$ | 2.23 | $ | 2.33 | ||||
|
|
|
|
(10) | The estimated after-tax impact of these items is calculated using: (i) the estimated income taxes related to these items, which includes the impact of the difference between GAAP and non-GAAP pretax income, and excludes the benefit of R&D and related income tax credits related to 2012 operations, as these credits are reflected in our 2012 effective income rate for non-GAAP purposes (see Note 2 above). This resulted in an estimated effective income tax rate for non-GAAP purposes of approximately 36%; and (ii) the estimated weighted-average diluted shares outstanding of 32.8 million. |
(11) | This represents the estimated after-tax impact on a per diluted share basis of the full year restructuring charges of approximately $2 million. |
(12) | This represents the estimated after-tax impact on a per diluted share basis of the full year stock-based compensation expense of approximately $14 million. |
(13) | This represents the estimated after-tax impact on a per diluted share basis of the full year amortization of acquired intangible assets expense of approximately $20 million. |
(14) | This represents the estimated after-tax impact on a per diluted share basis of the full year expense related to the amortization of the OID expense for CSGs convertible debt securities of approximately $5 million. |
Non-GAAP Adjusted EBITDA:
CSGs calculation of non-GAAP adjusted EBITDA and the reconciliation of CSGs non-GAAP adjusted EBITDA measure to net income and cash flows from operations are provided below for CSGs 2013 full year financial guidance at the mid-point (in thousands):
2013 | ||||
GAAP operating income |
$ | 92,000 | ||
Restructuring charges |
2,000 | |||
Depreciation |
23,000 | |||
Amortization of acquired intangible assets |
20,000 | |||
Amortization of other intangible assets |
13,000 | |||
Stock-based compensation |
14,000 | |||
|
|
|||
Adjusted EBITDA |
$ | 164,000 | ||
|
|
|||
Adjusted EBITDA as a percentage of revenues |
21 | % | ||
|
|
CSG Systems International, Inc.
February 5, 2013
Page 18
2013 | ||||
Net income |
$ | 54,000 | ||
Interest expense |
13,000 | |||
Amortization of OID |
5,000 | |||
Interest and investment income and other, net |
(2,000 | ) | ||
Income tax provision |
22,000 | |||
Depreciation |
23,000 | |||
Amortization of acquired of intangible assets |
20,000 | |||
Amortization of other intangible assets |
13,000 | |||
Stock-based compensation |
14,000 | |||
Restructuring charges |
2,000 | |||
|
|
|||
Adjusted EBITDA |
$ | 164,000 | ||
|
|
2013 | ||||
Cash flows from operating activities (midpoint of guidance) |
$ | 123,000 | ||
Income tax provision |
22,000 | |||
Changes in operating assets and liabilities and deferred taxes |
6,000 | |||
Interest expense |
13,000 | |||
Interest and investment income and other, net |
(2,000 | ) | ||
Restructuring charges |
2,000 | |||
|
|
|||
Adjusted EBITDA |
$ | 164,000 | ||
|
|
Free Cash Flow:
CSGs calculation of non-GAAP free cash flow and the reconciliation of CSGs non-GAAP free cash flow measure to cash flows from operating activities is provided below for the indicated period (in thousands):
2013 | ||||
Cash flows from operating activities (midpoint of guidance) |
$ | 123,000 | ||
Purchases of property and equipment |
(35,000 | ) | ||
|
|
|||
Non-GAAP free cash flow |
$ | 88,000 | ||
|
|