Good afternoon ladies and gentlemen. Thank you for standing by. Welcome to the CSG Systems fourth quarter earnings conference call. (Operator Instructions) This conference is being recorded today, Tuesday, January 27, 2009. Now I’d like to turn the conference over to Miss Kathleen Marvin. Please go ahead.

Thank you David 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, services and performance; and our ability to successfully integrate and manage acquired businesses in order to achieve their 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 differ materially. Please note that these forward-looking statements reflect our opinions only as of the date of this call. And we undertake no obligation to revise or publicly release any revisions to these forward-looking statements in light of new information or future events. In addition to factors noted during this call, a more comprehensive discussion of our risk factors can be found in today’s press release as well as in our most recently filed 10-K and 10-Q, which are all available in the Investor Relations section of our website. Also we will discuss certain financial information that is not prepared in accordance with GAAP. We use this non-GAAP information in our internal analysis in order to exclude significant items that may have a disproportionate affect in a particular period. Accordingly, we believe isolating the effects of such events enables us as well as investors to consistently analyze the critical components of our operating results and to add meaningful comparisons to prior periods. For more information regarding our use of non-GAAP financial measures, we refer you to today’s earnings release on our website, which will also be furnished to the SEC on Form 8-K. With me today on the phone are Peter Kalan, our Chief Executive Officer and Randy Wiese, our Chief Financial Officer. I would now like to turn the call over to Peter.

Thank you Kathleen and thanks to all of you for joining us today. Before I get started I’d like to welcome Kathleen Marvin to her first quarterly earnings call. And as many of you may know, Roger Metz our former head of Investor Relations and Treasury accepted a CFO position with a local Denver software company in the fourth quarter. Kathleen has been assisting in our Investor Relations efforts over the past several years and took on these responsibilities upon Roger’s departure. We congratulate Kathleen on her expanded Investor Relations duties for CSG and we welcome her to this call. Now onto the results. I’m pleased to report that CSG continued to perform well in the recent fourth quarter, posting revenues of $124 million and net income of $0.59 per share for the quarter and revenues of $472 million and net income of $1.84 per share for the full year. These results included a $7 million gain or $0.14 per share, resulting from the repurchase of some of our convertible debt during the fourth quarter. We’re pleased with our solid financial performance in 2008 and also with our execution from an operational perspective on behalf of our clients. We also made good progress in 2008 on our plans to grow and diversify our business and advance our product suite, which I’ll discuss in more detail later. Randy will share more details on our financial performance after I conclude. During the earnings call last October, I commented on the tumultuous economic and credit situations that the world and our country were facing. Since that time, the economic and financial markets have worsened, corporate restructurings have increased, and government bailouts have become more the norm. As I look back on 2008 and also into 2009, I’m appreciative of the areas of strength…

Thank you Peter and welcome to all of you on the call today. I’m happy to share with you the financial results for the fourth quarter and the year ended December 31, 2008, as well as our outlook for 2009. Total revenues for the fourth quarter were $123.6 million. This represents an increase of 9% when compared to $113.5 million for the same period in 2007, a sequential increase of 5% when compared to $118 million for the third quarter of 2008. Our full year revenues for 2008 were $472.1 million, an increase of 13% over the same period in 2007. We came in at the high end of our revenue guidance at $472 million for the year. These quarterly and full year results are reflective of the success we have experienced in our plan to grow top line revenues and achieve market diversification through both acquisitions and organic growth. Comcast continued as our largest client, comprising approximately 26% of our total revenues for the fourth quarter, consistent with that of the third quarter. DISH Network continued as our second largest client and represented approximately 17% of our total revenues for the quarter compared to 18% for the third quarter. We finished the quarter with 45.3 million subscriber counts on our processing system, consistent with the previous quarter. EPS from continuing operations for the fourth quarter was $0.59 per share, compared to $0.40 per share for the same period last year. EPS for the full year 2008 was $1.84 per share compared to $1.50 per share for 2007. Both the quarter and the full year 2008 results include a $7 million gain or approximately $0.14 per share related to our repurchase of some of our convertible debt during the quarter, which I will discuss later. Absent the impact of this…

Thank you sir. (Operator Instructions) Your first question comes from Ashwin Shirvaikar - Citigroup Investment.

The first question is, the core bidding service that you guys provided, that’s relatively stable for the managed services part of it, but it also includes like you mentioned the marketing services portion of that can be discretionary. But can you actually break out what proportion of the owe it all is this kind of marketing service? And also for the acquisitions that you made over the past couple of years, could you go through a sort of similar exercise of discretionary versus required?

I would say Ashwin we typically don’t break that out into the various components of the processing revenues, so that information is not available. I would say that as I said in my comments, we have good visibility in terms of our revenues each year of about 90% which includes revenues under contract, and it’s dependent upon the continued usage of some of the items such as statement production. So we feel very good about the 90%. The remaining 10% that you’re referring to is very discretionary in nature. It’s generally special projects. It can be additional marketing services and things of that nature; software and professional services.

I guess just to first follow-up on the first component where there is discretionary spending, we believe that many of the discretionary spend dollars that our clients have do generate value for them, whether it’s the marketing services where they’re sending messages to their consumers, either on their behalf or a third party’s, we believe that there is value that’s derived from it. And there would be an impact to their business. But we don’t project to say that our clients may have to think about some of those things as they run their business in 2009. But we still have a fairly good confidence on many of what we view as the discretionary items that they have, based on the success of those components we’ve brought to their business in the past. Relative to the acquisitions, if you think about Dataprose and [contect] that we acquired in the last 12 to 24 months, much of that business is associated with sending out core invoices to customers on behalf of service providers. We believe that’s very sustainable. We don’t believe there’s a lot of discretionary income in those businesses that we have in those parts of our business. There is a piece where we do work for nonprofits and we recognize that the nonprofit organizations sometimes may struggle in a down economy, and some of their solicitation work or work with their sponsors, and we recognize that could be soft. But that’s not a big piece of those overall businesses that we have for our print services or our marketing services businesses. From the interactive messaging business that we acquired from [Prairie] back in 2008, that business has been – 2007, I’m sorry, 2007 – the interactive messaging business is a key part of collections management, appointment management, fraud detection services, and we don’t see those as really being so much discretionary. Now a client could come back and say I view collection management as not being core, but in a down economy we believe that those are pretty critical to the operations. And then lastly Quaero is primarily marketing services, analytics and the marketing programs advisor for companies. And in some cases that can be viewed as more discretionary as clients decide whether or not they want to push for retention programs or new prospect programs. But so far we still believe that there’s a good stickiness to that business as well.

So your 90% plus comment was for the owe-it-all business, wasn’t it?

Correct. That’s correct, Ashwin. Yes.

One question about the move to Infocrossing from First Data. What’s the – you mentioned the cost side of it of course, what’s the benefit? I mean, what’s the cost benefit, over what time period and is it going to lower your operating costs in 2010 onwards?

Well, you know, I’ll respond first, Ashwin. We do believe that for our business as it evolves and how we bring products to market and how we deliver our products in a processing model, we thought it was important to have a partner whose core business really is working with companies like CSG to make sure their products evolve from a data center perspective and we believe that it was important to have someone whose sole business was providing data center services and also IT services as well. So we thought one is that we would be able to build upon the success that we’d had with First Data, but lift it up even further from where we’ve been by having that type of partner. And we’re clearly making investments. Randy can talk about the investments and how that can have some value back to us in the future. And I’ll let you comment on that, Randy.

Yes, a couple of things, Ashwin, I think on this topic here. I think first of all on the pricing, the specifics to the pricing are something we’re not going to disclose or comment on going forward, just because of the competitive nature and the confidentiality that’s needed around such an item. But I can tell you, though, from a financial perspective is we do believe there are financial benefits that we will realize over the five year term of this agreement. The financial benefits come in many different forms. It can be pricing. It can be different hardware needs, different network needs. So we think there’s financial benefits that we’ll have over the life. What I can tell you is that we’re comfortable that the financial benefits that we will have will more than recoup the amount of investment it’s going to take for us to transition to the new data center. And also from an operating margin perspective, I think what you can look at, Ashwin, is as I mentioned in my comments that there’s going to be a 350 basis point reduction in our operating margin for 2009 as relates to this. When we make the full transition over to Infocrossing that 350 basis points should come out of our business and beyond that we would expect over the five year period for the additional lift on the operating margin as it relates to this contract to be slightly additive.

Any thoughts on DISH, why they chose to sign up the one year option as opposed to a longer time period which might have been more beneficial to them?

Well, Ashwin, as we kind of came through our third quarter earnings call, we had confidence of about our renewal activities, and we negotiated with the management team and leads at DISH through the fourth quarter on a longer term renewal. And as we approached the end of the year, we couldn’t come to an agreement on all the terms and so we thought it was best, both parties to agree to a one year renewal since the agreement was expiring on 12/31. I don’t want to go into any of the specifics, but we do believe that we can use 2009 to build on our history and hopefully complete a longer term, an extension. And we still have confidence that that this doable.

Your next question comes from [Unidentified Analyst] - Thomas Weisel Partners.

Just wanted to kind of following up on Ashwin’s question on the discretionary spend that you mentioned, the 10% that you don’t have visibility going into a year, like how did that come out going into Q4, i.e., like what had you baked in as far as discretionary going in Q4? And did that come in better than you had expected? What’s the trend there on the discretionary spend?

We didn’t see and I’ll answer it this way, we didn’t see any meaningful change in the fourth quarter on some of these categories where clients may have more discretion on how much they spend with us. We saw fairly consistent behavior in the fourth quarter versus the third quarter, so inherently what we were expecting was a in our guidance more or less came through. That being said, we are cautious because we know that as our clients start to see their own customers behavior, that they may start taking a different tact as they move forward into 2009 and how they manage their business. So we’re being cautious as we look at 2009 to see if there’s any softness that comes through that. And that would be across not just our cable and DBS clients but really across all the different pieces that we talked about with Ashwin, whether it’s on some of the activities we do on interactive messaging across our broader marketplace; some of our statement services; our nonprofit work that we do across. But overall in the fourth quarter I think we more or less came in line on those. Randy, do you have any other comments?

I would say one other thing, just on your comment there, Chris, about we don’t have visibility into the other 10% of revenues that you referred to. We do have some visibility in what our prospects are to achieve that additional 10%, but it obviously doesn’t have the same degree of certainty as what we talked about on the 90%. So it’s not like we don’t enter the year without some prospects, some good prospects, to fill the remaining 10% but I think we’re just being cautious just because of the current environment we see in front of us.

And then I guess just on the margins here, you guys broke it out nicely on the data center costs and thanks for that. That was helpful. But as far as given that the DISH extension wound up only being for ’09, I guess maybe I would’ve expected, let me know if this is incorrect, but I might have expected a bit of a margin boost from where you guys had previously guided, given that you expect pricing to be a little bit stronger on a one year renewal as opposed to what might have occurred on a longer term deal. How should we think about that? Is that just more conservatism on your part as far as margin assumptions?

As we set our guidance, Chris, we look at many different aspects. There’s a lot of moving parts and various scenarios that we build into our guidance. And as Peter mentioned before, it’s our expectation to continue to look for a longer term renewal with DISH during the year and we think it’s the benefit of both parties to get something in place. And because of that, our guidance for 2009 reflects not only the one year renewal but also some expectations of us able to get a longer term renewal with DISH during the year.

So your ’09 guidance does reflect some assumption of a longer term deal?

It has a wide range of scenarios that we’ve put into place. One scenario is the renewal and the other is we expect some longer term renewal for the year.

Your next question comes from Karl Keirstead - Kaufman Bros.

First a question on the data center move. I just want to understand if I’m thinking about it the right way. I think in your latest K you indicated that your annual spend with First Data ran about $45, $46 million so it seems to me that you would have to reduce your annual spend by over 10% a year in order to breakeven over a five year period and cover the $17, $18 million up front transition costs. So is that 10% plus price cuts each year sort of the right way to look at this?

I think, Karl, I’d look at it the way in which I stated and I think your math is not so far off, which is again we’re not going to specifically talk about the price, but we will recover those costs that we will incur to transition. And the math that you went through has some logic to it.

And then the second question also for you, Randy, the share count beginning in the March quarter, I would presume would be a little lower given that you bought in some of your convert. Could you walk us through that please?

The convert, Karl, currently are the strike price on the convert is $26.77 so there’s no dilution in our EPS calculation as it relates to convert until it gets to $26.77. So there’s no impact on EPS going forward because of the buyback.

Your next question comes from DeForest Hinman - Walthausen & Company. DeForest Hinman - Walthausen & Company: I just had a couple of questions on the mechanics of the transition. When we talk about that First Data contract ending in mid-2010, if we had the implementation finished with the new vendor ahead of time, would we buy out that contract in some way or impair the remainder of that contract, something along those lines?

Well, I think first of all those are pieces that would have to be determined. You know, options and how things would work out with the current vendor in our existing contract, so I don’t want to go in and speculate of how that would play out. Right now we’re targeting a conversion that would be in line with the ending of our contract with First Data. And the way that Randy looked at his financials, I think he could comment to say that was in tune with the scheduled agreement that we have with First Data.

Yes, I agree, Peter. I think the plan right now is to make the cut over on the most effective and efficient manner as possible. Our biggest concern is that we make sure that our clients are taken care of in this situation and we do not impact their business in any way at all. That’s job one. The timing of the cut over will be, you know, take that into consideration as well as the economics of that. DeForest Hinman - Walthausen & Company: And then can you explain for me the CapEx component of the transition? I guess –

There’s one thing that – you didn’t finish your question. Go ahead and finish. DeForest Hinman - Walthausen & Company: I’m just a little bit confused on the cash component versus the income statement.

Yes. Two different things. Let’s take the CapEx first. The purpose of the CapEx which is about $15 million as I stated in my comments, one thing that we’re going to do which I think is pretty consistent with how people transition data centers of this nature is that we will build out the computing environment and replicate it in its entirety in the Infocrossing Data Center as it sits in First Data, and therefore there’s no impact to the First Data computing environment whatsoever as we set this up. That allows us to test the environment totally before we make any cut over, so you really have duplicate hardware in both locations for a period of time. So that’s the big capital outlay. It includes mainly servers and really network gears is what makes up the $15 million. On the $9 to $10 million, if you look at the $17 to $18 million, there’s a small amount that’s depreciation. There’s a pretty insignificant amount but we’ll get a tax deduction for that $17, $18 million so I think if you back out $2 to $3 million of depreciation in tax effect that’s how you get the $9 to $10 million. DeForest Hinman - Walthausen & Company: And then on the legacy contract with First Data how long have we had an agreement with these guys?

First Data’s been our provider ever since we were an independent company in 1994 and prior to that when we were a division of First Data obviously First Data was providing the services. So we’ve been there for a long time, ever since the business has been in operation.

And the most recent contract that will be expiring in June of 2010 was a five year, so it’s a five year agreement. DeForest Hinman - Walthausen & Company: And then separately, can you guys talk about the trends in the other verticals that were in, we did when that [Brinks] business I believe even, we started to go after some utilities and also financial vertical. Can you kind of just give us an update on that business and outlook going forward?

Within the different verticals where we have client relationships, it’s primarily driven around print services and interactive messaging services today. Those businesses have been steady. We’ve seen no degradation of their relationships with us from any economic impacts so far. We believe those are areas that we can bring more services to in the coming years as we bring out some more of our capabilities that currently haven’t been sold to those. But we expect that the soft economy and down economy that we’re facing in 2009 won’t drive the opportunities that we originally thought in the near term just because of longer sell cycles and more people are watching how they spend their money and whether they want to make changes in any of their service providers at this point. But we still believe that there’s opportunities for growth in there, but as reflected in the guidance that Randy gave we’re cautious to think that we’re going to make significant inroads in 2009 in any of those areas.

Your next question comes from Shyam Patil - Raymond James & Associates, Inc. Shyam Patil - Raymond James & Associates, Inc.: I was just wondering if you guys could provide a little bit more color around your earlier comments about your assumptions for DISH and guidance. I wasn’t very clear on what exactly you guys have assumed.

What I said earlier was that we take into account many different scenarios when we establish our guidance. That’s how we provide such a large range on the revenue side. And the current guidance reflects the impact of the one year renewal as well as the possibility of a longer term renewal that may happen this year.

So, Shyam, just to take a different kind of way to think about that is within that range, if we don’t do a long term agreement with DISH, we believe we could still perform within that range. If we did a longer term deal we believe the range also would anticipate and include any discounts that could be given to DISH as part of that. So we tried to build that in as part of our broad assumptions of the multiple facets that go into running the business and the places where we generate revenues. Shyam Patil - Raymond James & Associates, Inc.: And along the lines of that, what kind of timing have you assumed in terms of a possible longer term renewal with DISH?

Well, I’m not going to try to suggest that we have an idea of if and when a longer term agreement would be done in our financial modeling. As Randy has built his financials, he could share on this in more detail but he’s taken many different ideas and scenarios of how we generate revenue, where it comes from, what the possibilities are from not from just DISH but from all our clients. And therefore there’s no one single assumption in our guidance.

I would agree. You couldn’t have said it better. Shyam Patil - Raymond James & Associates, Inc.: And then I was wondering if you guys might be able to provide a little bit of guidance around gross margins in ’09.

I would say looking at ’09 if you look at Q4, I think there’s a couple of things to consider. And I think Peter mentioned it before. We had a very strong fourth quarter. Revenues came in at the high end of our range and a lot of that revenue was very good margin revenue. So you see a pretty good up-tick in our gross margin in Q4 versus Q3, it’s about 200 basis points higher. I would say that as we go into 2009 obviously as we commented we’re not likely to sustain that level of profitability going into next year. You know, showing the different operating levels that I have gone through. So I would think that Q3 is probably a better range in which you can look at, Q3 of ’08 is probably a better range for gross margin as you go into 2009. Shyam Patil - Raymond James & Associates, Inc.: The next questions are on the cost structure. You guys mentioned that approximately 90% of revenue is booked heading into the year. But if you were to experience some softness in that 90% number, how should we think about your ability to maintain your cash flow guidance or stay within a tight range of that?

I think a couple of different things. You have to look at our cost structure. About half of our cost structure is people costs so that’s not necessarily variable in nature. But a lot of our other costs have a high degree of variability into our data processing costs, our on a per usage basis, our paper, envelopes, of all the production type of equipment, the toner and all the supplies that go with that are variable in nature. So as the revenues come down, the usage of all the third party costs of that nature come down as well. So there’s a certain degree of variability in our cost structure I think that allows us to manage that down.

And I think that’s somewhat reflected in the EPS guidance you gave that’s got a fairly tight range for a broader revenue range that shows we think we can manage our expenses down for those variable costs that are associated with the business. Shyam Patil - Raymond James & Associates, Inc.: You guys renewed your contract with Comcast but it appears that it still includes similar declining minimums as the previous contract. And it looks like one of your top competitors just won a very large strategic upgrade for their existing business and has been gaining share in other areas. Can you just comment around your relationship with Comcast and what gives you guys confidence that you can maintain your subscriber share there, you know, going into 2010 and beyond, especially as the minimum starts to decline?

Well, there’s a couple of points on that, Shyam. One is you know we’ve had a good history when we’ve had declining minimums in the past with Comcast to be able to outperform the minimums as we continued to deliver solutions to them. We provide a very wide range of services to Comcast and as we know Comcast and we do have a good relationship with them, the technology needs of Comcast will evolve over time. And we’ve had a very good history of evolving our products and services to support our clients, not only Comcast but all of our clients as their businesses evolve. And you can see this going back to all of their services that they’ve rolled out and how we’ve helped them. You know the specifics of Comcast and whether what our large competitor against us is commenting on and where they stand, I’m not going to try to speculate of where things really stand on that. But we do recognize that the plans of Comcast include evolving their systems that support their business and they plan to do this over time. They do have long term plans to develop a solution that will be viewed more of a Best of Breed. And we believe that we have several capabilities and solutions that can be deployed across the Comcast enterprise in this Best of Breed solution which allow us to generate value for our shareholders as well as delivering services to Comcast as part of that. So even though we typically see our solutions offered in an integrated fashion, we have been modularizing our components. The capabilities that we’ve been bringing to market are stand alone in nature where they can tie in with other components of other system providers on behalf of our clients. And we see in our relationship with Comcast that they are embracing these new things that we come out with, whether it’s their commitment to migrate to full color statements; their roll out of our order workflow tool that we came out in 2008; the use of workforce for interactive messaging. We’ve deployed technology with clients that really sit across billing systems regardless of who the underlying biller or components are that really facilitate everything from web care and others. So we think that we have a means to continue to compete. Our business solutions to our clients do continue to evolve and we recognize will likely evolve with Comcast and our history has proven that we have great success at doing that. Randy do you want to?

I would say, Peter, those are great points and I’d say a fact to illustrate that is that the revenues for the fourth quarter for Comcast, if you do the math on all the disclosures made, you’ll see that the revenues for the fourth quarter from Comcast were the highest quarter of this year. So that indicates a huge endorsement of our products and this is subsequent to contract renewal. So I think that’s a good endorsement and illustrative of what Peter just mentioned. Shyam Patil - Raymond James & Associates, Inc.: And then just a follow-up on that, when you talk about Comcast migrating to more of a Best of Breed approach, does that mean ideally when they implement the Best of Breed strategy that they’ll be a single billing vendor, maybe the same or different OSS vendor but a single one and then maybe a single [CR] vendor? Is that when you mean by Best of Breed?

Not necessarily. I think it just means that where they’re going is that they’ll look at different components that they’ll look to manage the integration points versus historically a company like CSG manages many of those integration points. It doesn’t mean that there’ll be a definitively single solution provider for any one component. And so from a – whether it’s statement services, interactive messaging, workforce, any of those pieces that we provide; billing services, rating, any of those could come from multiple platforms and if they so chose. So I think the biggest piece when you think of a Best of Breed is that they’re really looking from much of the integration management. But the key is that as we have been rolling out our services and as we have been doing this both with Comcast and other clients in this space, we work with others in making sure that our solutions integrate and work with other providers. We had a large – as an example, in the fourth quarter our product catalog has been rolled out for a large client to effectively manage and really deliver upon all their web ordering and customer service across multiple platforms and across multiple billing systems. That’s reflective of what we’ve been doing with our systems. We do believe that there is value in our integrated solution sets but we also know that we’ll evolve and meet the needs of our clients with stand alone components as well and integrating with other solution sets. So that’s what that all means when you think about Best of Breed.

All right. And I have no further questions in the queue. I’d like to turn the call back over to management for any closing remarks.

Well, thanks, David. I just want to thank all our investors who were on the call. Our clients and our employees who with the work that we do with each other really builds the foundation of our business as well as making their businesses successful. So we look forward to sharing our future successes with you in 2009 and we’re hopeful that the return to stability in our economy and world economy happens quicker than what some of the pundits are saying. So hold on tight, we look forward to 2009 and continuing to perform for everybody. Thanks.

Ladies and gentlemen this concludes CSG Systems fourth quarter earnings conference call. This conference will be available for replay after 5:00 Mountain Standard Time today through Tuesday, February 3 at midnight. You may access the replay system at any time by dialing 303-590-3000 or 800-405-2236 and entering the access code number of 11124228. Thank you for your participation. You may now disconnect.