Welcome to the CSG Systems Q4 earnings conference call. (Operator Instructions) I would now like to turn the conference over to Mr. Roger Metz.

Thank you, Arianna, and thanks to everyone on the call for joining us. Today’s discussion will contain a number of forward-looking statements. In particular, these will include statements regarding our projected financial results, our ability to meet our clients’ needs through our products and services and performance, and our ability to successfully integrate and manage acquired businesses in order to achieve their expected strategic, operating and financial goals. While these statements reflect our best current judgment, they are subject to risks and uncertainties that could cause our actual results to vary. In addition to factors noted during this call, a more comprehensive discussion of our risk factors can be found in our most recently filed 10-Q and 10-K. Currently, the company does not intend to update this information during the quarter. If you did not receive a copy of our press release, you can obtain a copy from our website. Today on the phone we have Peter Kalan, Chief Executive Officer; and Randy Wiese, Chief Financial Officer. Peter will begin.

Thank you, Roger. And thanks to all of you for joining us today. As most of you know I took over the reigns from Ed Nafus as Chief Executive Officer at the end of 2007. And speaking for the management team and all our employees we are thankful for Ed’s many years of service to CSG. I am honored to now have the opportunity to guide CSG into the future. I’ve been here for about 11 years and have learned over that time that this is a company with great capabilities. I have been fortunate to have had the opportunity to serve the company in many different capacities and I am excited to use the collective experiences of my roles at the company for the benefits of our clients, shareholders and employees. My primary objective going into this job is to build upon the great foundation of products, solutions, clients and employees that together have made CSG as strong as it is, while furthering CGS’ capabilities, expanding the markets we serve and delivering financial performance. As you’ve seen in the fourth quarter financial results we released this afternoon, CSG delivered another solid quarter capping off a strong year of both financial and operational performance. Our revenue of $113 million in the fourth quarter and $419 million for the year were at the top end of our guidance. In addition, we completed our $350 million share repurchase program in the fourth quarter, fulfilling our commitment to use the excess capital that primarily came from the sale of our international division for share repurchases. Randy will take you through the financial results in more detail and provide 2008 guidance at the conclusion of my comments. Just as important as our achievement of financial objectives, CSG continued to execute on the business objectives…

Thank you, Peter and welcome to all of you on the call today. I’m pleased to share with you today the financial results for our fourth quarter 2007 as well as our outlook for 2008. Total revenues for the fourth quarter were $113.5 million, which is slightly above the high end of the range of our previous guidance for the quarter. This represents an increase of 17% when compared to $96.6 million of revenues for the same period in 2006, and an increase of 5% when compared to $107.6 million for the third quarter of 2007. For the full year, revenues came in at approximately $419 million, which represents a 9% increase over 2006. These revenue increases relate to both organic growth factors as well as the impact of the ComTec and Prairie businesses, which were acquired by CSG in the third quarter of 2007. Revenues from Comcast and EchoStar made up approximately 26% and 19% respectively of our total revenues for the fourth quarter. In both cases, we saw the absolute amount of revenues from each of these clients increase in the fourth quarter when compared to that of the third quarter. We finished the quarter with 45.1 million subscriber accounts on our processing system, unchanged from the number of subscribers at the end of the third quarter. Income from continuing operations for the quarter was $13.6 million or $0.40 per diluted share. This compares to $0.30 per diluted share for the same period last year and $0.39 per diluted share for third quarter of 2007. For the full year, income from continuing operations came in at $1.50 per diluted share, which represents a 13% increase over 2006. The financial results for the fourth quarter include several non-cash charges related to depreciation and amortization expense and stock-based compensation. These…

Our first question comes from Tom Roderick - Thomas Weisel Partners.

This is actually Chris in for Tom this afternoon. I just had a quick question if you could remind me, sorry if I missed this in the last call, but I noticed a sequential decrease in the software license and maintenance line. Could you maybe give us a little color on whether that was related to, I don’t know,how you’re recognizing the acquisition-related revenue or there was anything that factored into that?

You’re talking about the $9.8 million decrease down to $9.1 sequentially?

Yes.

There’s nothing significant there. It can relate to the timing of recognition of certain software sales. So there’s nothing significant that’s going on between the quarters.

And Chris, those are not coming from the acquisition because those business models were not (software-oriented?).

Okay, so those are all the revenues from ComTec and Prairie Interactive are going to go into the processing lines?

Yes, entirely.

Okay. And I know you modeled the lower operating margins and you mentioned you were going to do a little more R&D in ‘08. Can you give a little color as far as what areas your customers are asking to do this for, what you’re going to focus on? And then also, do you believe there’s going to be any upside to the operating margins, or are you pretty committed to spending the R&D?

Chris, first of all as we look at the marketplace and work alongside our clients we feel like there are business issues that they’re facing in the new competitive market that they haven’t seen before. And we do want to make sure that we bring products to market on an accelerated basis to make sure that we’re helping them in their customer service and in their delivery of products. So we think it is important. It is broadly across really the ACP platform with the new functionality that we’re bringing in and everything from the desktop that’s used by the CSR all the way down to how orders are managed and how the interactions occur with the customer service rep. So it’s functionality that we’re bringing to market that is core to what their needs are. I don’t anticipate at this point that the competitive environment that our clients are facing is going to change substantially and that would cause us to slow down that investment. Their business needs are changing from everywhere from the consumer side to the business services side. And within that we think it’s important to stay with them and in front of them on what their business needs are. But if the business dynamics change, we’ll revisit that, but we don’t anticipate it at this point.

Great, fair enough, thanks. How well do you feel like you’re positioned in the event you were to lose a customer that you could reduce your operating expenses in concert with that?

Chris, the scenario that you’re suggesting is that we lose a client, then would have to be first viewed that something like that if it was to occur, you have to determine what the client is taking away, because much of our products are components, and we do many different things for our clients that we could have we believe long-lasting relationships of different forms depending upon where our clients drive their own operations. With that being said, we’ve shown ourselves to be very good stewards of the business. When we’ve had setbacks in the past, back in 2002, 2003, we did a very good job of managing our expenses to align our investment in the business with what the opportunities are in the marketplace. So we’ve had a good history of that. But that is not a near-term concern for me, because I think we’ve still got a lot of value that we intend to be delivering for our clients.

Our next question comes from Liz Grausam - Goldman Sachs.

Question, and I don’t know if you are going to be able answer this directly, but if you can provide some color. When thinking about forming your 2008 guidance, both in the top line and looking at your operating margin, what types of assumptions have you built into those ranges on your contract renewal process, both in terms of timing of the renewals with your two major customers up this year as well as potential changes in either price or scope that could happen through those renewals?

That’s a nice complex question that you gave me for my first call, so thanks. Our guidance – as the management team works on establishing what we think our opportunities are for the year, a lot goes into it. We do have two large clients that are up for renewal at the end of 2008. We take into account the market dynamics of how the economy is and what spending behavior is by our clients and their competitive environment, as well as any time you’re in a renewal period there is always concessions about what you get paid for a new product versus how much they pay you for your existing products. It’s not an unusual situation for us to face. We’ve done it over many years. And we build that all in. I can’t tell you that we assumed a certain specific assumption for any one client, but when we look at the opportunities, we look at it broadly and factor in all of those macro aspects. So we do consider that in our guidance, the dynamics in the marketplace and our clients, and feel comfortable that we can perform based on the market opportunities we have.

And do you think those contracts will still renew within the year, is it towards the front-end of the year, or is it really up until December 31, 2008?

I hate to speculate because the business needs and what drives our clients will vary from client to client. Where Comcast is versus EchoStar is hard to pin down and I don’t want to try to put an artificial date from my speculating of what I think will happen on that, so I prefer not to.

Okay. And then in the revenue guidance, could you help us just understand the organic revenue growth versus that provided by the two acquisitions so we can get a sense of what this acquisitions are contributing to top line in ‘08?

We generally don’t like to break it out in that format, Liz, but to help you out, if you look at 2007 and 2006, about half of the revenue growth for year-over-year 6 to 7 was organic, another half was from acquisitions. I think that’s a fairly decent assumption that you could assume for ‘08 as well.

And then just last, in terms of the outlook for your share count, I know you are not including any more buybacks, so should we essentially model our shares to look like the fourth quarter of ‘07 throughout 2008?

That would be a reasonable assumption.

Our next question comes from Ashwin Shirvaikar - Citigroup.

My question is, is M&A still a possibility for you? You stayed at pretty good, strong cash flow and you still have about $133 million left. So how much is something you’d need to just have on your balance sheet to show clients and to make clients feel comfortable versus how much is available for inorganic initiatives?

We do believe that there is opportunities for us to add to our capabilities through M&A and partnership activities, Ashwin, and that is something that, as I said in some of my general opening comments, that we think are important because as both our clients’ needs change and their businesses get more complex, we don’t believe the only way to solve those is through our own research and development activities. And so we will look to add capabilities to our business that way, but we will also be looking as we add capabilities to be able to expand our addressable markets that we’ve already entered into through the Prairie and ComTec acquisitions. In general, we look to get more diversity in our business and if you were to look at 2008, our revenues would assume approximately about 10% of our revenues were coming from non-cable and DBS markets, because we’ve already been able to break into that and that is something we want to continue to get some expansion into and some diversity. So all said, those are things that we do view as important aspects of running this business both from what we do for cable and DBS clients, as well as what we do for generating more opportunities for the broader business. I don’t have a set number of how much cash we should have on the balance sheet, and I don’t think Randy does either that says we should have x amount. We know there’s always a certain amount you need for working capital, but as we look at it and in this marketplace we think that it’s very prudent to have cash that we can use to make acquisitions as well as to make investments from clients if those opportunities came. So at this point we do have a focus on making sure we do the right things with our cash towards investing in the business.

Got it. From a strategic standpoint and you’ve mentioned this a couple of times, but it seems clear to me that in 3 to 5 years from now, you don’t want to be a cable bidder, I mean not just a cable bidder. So is there a proportion of revenue target that you want to get x percent of revenue from non-cable businesses and the 10% that you have right now, what do the margin and cash characteristics of that 10% of revenue that’s from non-cable look like?

First, as we look out in the future, I don’t like to try to predict of how much revenue would be coming from outside the cable and DBS space because we still think that we’d like to see ourselves get more market share there, it’s just difficult to predict that; we’d love to have even more of our clients’ businesses on our platform. So, if we were successful on all our efforts, we could see that we grow the business and still have more business or have high levels of business from cable and DBS, but we do believe that there is some capabilities and really some solutions that we can bring to other markets other than the cable and DBS market and that’s because we really believe that we facilitate customer service and the value of that customer service in our clients’ operations to our solutions and technology. The future of what we see as the business is continuing to build on what we do today, but being able to address other markets relative to the general cash and profit characteristics of what we do in the other markets, Randy, I think we’d say it’s fairly similar, but if you wanted color a little bit on that.

I’d say it’s fairly similar to slightly less, but it’s very comparable.

And one of the things we have not done in those other markets is get the same diversity of products into other markets as we have in the cable and DBS space. So, looking at it, we may have one or two products penetrated in one of these marketplaces while in the cable and DBS, it’s much more penetrated across a boarder spectrum and we believe there is great value in the suite and the value that the integrated suite brings to our clients.

Yes, those other markets also have the same characteristics of the core cable market, which is, they are usually long term contracts with a recurring nature of revenues, so strong cash flow capabilities.

Okay. But when you say fairly similar to slightly less, that’s a pretty wide range. Can you characterize it a little bit more? Is it 18% margin type of thing or 15 or?

Actually I don’t know if we can be that specific. I think if you use comparable margins to slightly less I think you could get there.

Okay. I missed the ARPU and sub count?

The sub count was the same as the end of the third quarter, Ashwin. It was 45.1 and ARPU, we haven’t disclosed for several quarters. So we did not provide any ARPU measure. If you recall we went away from that a couple of quarters ago as the dynamics of our company were changing such that the metric was less meaningful, so we have not provided that for several quarters.

Okay. I just thought you’d still provide that in Q&A.

Our next question comes from Kerry Rice - Wedbush Morgan.

Touched on a couple of questions I had and just wanted to follow-up on the previous question on the contribution from ComTec and Prairie Services for 2008; you said it would be about 50% of the growth. Should I assume that’s similar to what occurred in Q4 or can you give any color on the Q4 contribution from those two acquisitions?

Kerry you are asking how much of our growth in the fourth quarter would have been from the two acquisitions?

That’s correct.

You’re looking at sequential growth, Q3 versus Q4?

Yes.

Okay. The growth was about 5%; you can assume a little less and half of that related to the ComTec acquisition and Prairie combined.

Okay. And then on the subscribers; this is the second consecutive quarter that has been about 45.1. What should we look at or maybe you can describe or give us some color on the growth prospects there and what you see for 2008?

Kerry, the general dynamics that we face or what our clients are facing they are having a challenge on growing their absolute number of subs that they process; they are generating fewer; they’ve been losing some basic subs and are growing them at a slower rate and what they have historically have, but they have been able to push more products across their clients to be able to get triple plays. And really the idea of the triple play is something that’s changing because now they are pushing HD, DVRs, services over the net that are really changing the dynamics of their business, so the sheer number of subs that they are providing services for is undergoing a dynamic change, which I think has the impact of us not growing number of subscribers on our system in any sizeable way unless there is market share shifts.

Is there a better way to think about then with the growth of additional services versus subscribers? Or is there some other metric we should maybe focus on?

What I would tell you Kerry is from my perspective, then I’ll have Randy chime in. One of the reasons we went away from ARPU is, we didn’t think ARPU was the right way to look at the business because it tried to draw our revenue directly to the number of subs. And that’s not always the best way because we’re breaking out from having just pure subs on our system that we get revenue from in other markets. And so for us we think that you have to try to look at the business differently than that. The number of subs is still I think valuable for you to see how much market share we have and whether or not we are retaining or expanding our market share as it relates to the clients we support, but I don’t know if I’d use that as much as the driver for thinking about how our revenues come in the business, which is a similar situation of what our clients are facing.

I would say, yes. I think you got to focus on the top line revenue growth aspects because the linkage to subs is not a direct correlation to the top line revenue growth anymore. So I think you got to look at some of our top line growth expectations and use those for your modeling purposes.

Okay, fair enough. And then as you talked about renewals for ’08, I think historically the price concessions have been around 10% to I think 15%, is that fair, can you comment on that, I know you mentioned timing was hard to ascertain?

I think it’s hard to put any type of financial metrics of what the history has been because I think most people look back to some of the renegotiation that we did with EchoStar in 2005 in which there was some restructuring of the contract and some changes around the statement services we provide for EchoStar. And so, that was a unique situation, I think it’s very difficult to try to draw that history and correlate it to anything else.

The only thing I’d add to what Peter said, if there is a price concession, generally we also get something of value in return. If you look back at the EchoStar renewal, even though there were some price concessions on the print and mail that Peter mentioned, we also got a longer-term contract with EchoStar and also got exclusivity and some minimums. So there is always a trade-off; it’s not all just one way with respect to the price concessions.

Okay. Sales and marketing increased a lot in Q4 and I didn’t know if that was particularly related to the acquisitions and integrating those but is that something that we should see stay at this level or can you just add some details?

It went up about $2.8 million, I think as you referenced there, went from about 10% to almost 12% of revenues and there is a couple of things, one is I mentioned the impact of the retirement benefits from our Chief Executive Officer. That’s a big portion of it. You also have the full quarter impact of the ComTec and Prairie businesses. They were only partially in there on Q3, so you have that impact coming through. So if you look at those two components, those are the lion’s share of that increase, which you would expect going forward is the one-time benefits related to the retirement benefits to go away. So I think you’ll see that going forward the SG&A will be more in line with the previous quarters, which is about 10% of revenues.

Our next question comes from Donna Jaegers - Janco Partners.

Peter, you mentioned during your first comments the business services platform that you’d rolled out. Can you talk a little bit more about whether you have customers signed for this product or how many customers you have in test for the product?

We do have a customer signed for the product, and we’re just waiting for deployment of it this year.

Has the name of that customer been announced?

No, we’ve not provided the name of that customer yet.

That a big customer?

I think it’s a way for us to get comfortable, but the client can operate comfortably on it and importantly, they have a sizeable business operation and we think that’s a good thing.

Great. And then on the e-care product that you offer, I think that’s the name of it where you do online customer subscriber management?

Our Care Express product?

Yes, Care Express. Does Comcast use that product currently?

Yes, they do.

Is that like a price per sub kind of charge or how do you charge for that product, how is it structured?

Yes, it’s generally on a price per subscriber. It’s registered subscribers, so as the consumer signs up they get recharged on that account.

So it’s not across the whole subscriber base, it’s by usage.

Okay. Any guidance as far as a price per subscriber ballpark – do you charge on that?

In the past we’ve talked about the different ancillary products; products with this nature we usually get pennies per subscriber so it’s in that range; it’s not the nickels or dimes it’s the smaller amounts.

Our next question comes from Karl Keirstead - Kaufman Brothers.

A couple of questions, just to dig a little deeper on some of these issues. On Comcast in particular, if memory serves correct, on the last call you mentioned that you might be in a position to update the street even with some general comments in the first half of ‘08. Can you update the timing that you might be in a position to offer some news, is it still the first half, is it second quarter?

I think it’s premature to try to say there is a timing that when we think we’ll have something to announce on where our relationship with Comcast goes as far as the renewal. We will update every quarter on how we’re doing with those. We continue to think that we’ll have a business relationship outside of the contract that expires in 2008 and we think that there’s a lot that we provide to them in value. But I’m not ready to say that we think it’s three or six months or nine months away from getting completed or what we believe the financial terms of those services would be.

And then secondly, you’ve had a couple of questions on the organic growth, but let’s just be specific. On the last call, I think you said ComTec in the fourth quarter was going to contribute $5.5 million and Prairie $4.9 million for a total of $10.4 million. Can you just indicate whether that’s where those two acquisitions came in so we can back it out and get to an organic growth?

I don’t think we gave the specific amounts. I think it was more than $9 to $10 million range, and I’d say that they came in at the lower end of that range.

That’s helpful. And then lastly, given that you’re shifting to an annual from a quarterly guidance, can you just take this occasion to give us some notion as to whether the quarters throughout ‘08 are going to adhere to similar seasonality as in the past, and specifically if you do plan to increase R&D, will it be steady throughout the year? Will it be weighted to the front half or back half? Just a little bit of color on the quarter-to-quarter without of course giving specific quarterly guidance?

Couple of modeling tips for you on the revenue side. I would say that you should model the revenue going ratably throughout the year. I would say that the first quarter as your starting point, you should look at the range of the guidance we gave for the fourth quarter and look at the range for the fourth quarter as maybe the midpoint or the lower end of that range as a good starting point, just to give yourself a modeling starting point and that’ll grow ratably throughout the year. On the R&D, I would expect it to ramp up ratably throughout the year, probably more towards the end of ‘08.

Our next question comes from Todd Rosenbluth - Standard & Poor’s Equity. Todd Rosenbluth - Standard & Poor’s Equity: Real brief on it, the gross margins seem to have dipped a little bit in the fourth quarter. I’m wondering if that was as much related to the timing of some of the software license recognition or is there more going on in the business we should be aware of?

There’s two sources. One is, you mentioned the software services, but the bigger portion is that the fourth quarter had the full impact of the two acquired businesses. Their gross margins are slightly less than the historical business. So, the full-quarter inclusion of those brought it down a little bit. Todd Rosenbluth - Standard & Poor’s Equity: Now that Prairie is yours and now that you’ve been offering the different services for going on six months now, as it’s become part of the sales force’s offerings, the pickup that there has been in that time period?

I think we have to first start to say that there was – I’m cautious to use the word “combined” – sales activities before we acquired Prairie, but through the partnership we work together to explore what the opportunities within our clients. We’ve seen a strong interest in the products from our clients. As any sales cycle is, you’ll have ebbs and flows, and some sales cycles will take longer with clients versus others that can be more accelerated, but what I would tell you, Todd, is that we have great enthusiasm for what this product does for us and how we’ll be able to explore and expand the capabilities of Prairie and their messaging services into other waves of our clients and other parts of their business. So we’re still very enthusiastic and excited about having Prairie as part of us and we think that will be great opportunities with our clients. Todd Rosenbluth - Standard & Poor’s Equity: Okay, thank you. You mentioned to an earlier question being comfortable with your cash level but you are generating a nice amount of operating cash flow or free cash flow after the CapEx. Stock has pulled back since you completed your share buyback plan. Can you just talk about thoughts as we move into 2008?

First I’ll comment and then Randy. It seems like everything in my investment portfolio has pulled back since we completed our stock repurchase, it seems like the whole market has made some move. We look at this as being a time that there could be good opportunities for us to expand what our investment or acquisition opportunities could be, and we think it’s appropriate to make sure that we take a cautious approach of how we deploy our capital. And so that’s something that you’ll look for us to do as we go through 2008. We think this is a great time to really look at what we’re doing as a business and how we can expand it.

I’d say one other point to note is that the $350 million stock buyback was an unusual situation; if you recall that money was really sourced back to the divestiture of our international business back in ‘05 when we were in a unique position with a lot of excess capital, made a commitment to disburse $350 million of that capital. So we set up a 10b5-1, so that was the completion of that program. So now we’re probably back to more of a normal assessment of the use of capital for deployment into the business as opposed to buying shares.

We have a follow-up question from Karl Keirstead.

If we on the total revenue side pull out what you indicated was the revenue contribution from the acquisitions, we’re left with an organic growth rate, by my calculations, 7%-8%. That’s up quite a bit from the year-over-year growth rate throughout ‘07 and quite frankly ‘06. So could you talk a little bit about where the strength in the business was to get you up to that organic growth rate, or are my numbers wrong?

Are you specifically looking at the organic growth rate of the fourth quarter?

I am, yes. So year-over-year it looks like 8%, which is quite high historically.

During the fourth quarter, we had an outstanding quarter on the marketing services side, and not necessarily a normal growth rate that you could expect going forward, but they had an outstanding quarter, mainly client-driven requests. So the organic growth rate for that quarter is higher than normal, is the way to put it.

Our next question is to follow-up question from Donna Jaegers.

On the cash flow for fourth quarter you commented that it was due to change in working capital. Last time when this happened it was due to a client shifting their payment from fourth quarter into first quarter, I was just curious if that payment’s been to be received already in the first quarter and is that a similar situation?

Couple of things, Donna. I think the one you referenced there was probably three or four quarters ago. We had a large client who let a payment slip across quarter end. If you look back at the third quarter, I think we had a positive working capital increase of about $7.5 million that was a multitude of items and this time it was also a multitude of items, I think of the $10 million, we missed our guidance say half of it relates to AR and it wasn’t one specific client and I will tell you that most of that cash was collected within the first week of January. So again just normal timing items, nothing of great concern. As I mentioned in my comments, if you look at the cash flow from operations for last two years 2006 and 2007 the working capital net impact for the full year, I think for 2006 was less than $2 million, I think it was less than $2 million for ‘07. So again, over long periods of time the working capital items do just balance out to essentially an insignificant amount.

And one other quick question. BendBroadband, was that the customer of yours?

Bend was, yes.

There are no further questions. Please continue with any closing remarks.

We want to thank everybody for the time on the call today. We continue to be very focused on operating and managing CSG Systems for the long term to do the right thing for our clients and for our shareholders, and we look forward to very positive results in the coming quarters. Thank you.