Ladies and gentlemen, thank you for standing by. Welcome to the CSG Systems Third Quarter Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for question. (Operator Instructions). This conference is being recorded today Tuesday, October, 27thof 2009. I would now like to turn the conference over to Liz Bauer, Vice President of Investor Relations. Please go ahead ma'am.

Thank you, Dale. And thanks to everyone 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 client's needs through our products, 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 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 revision 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 on 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 the significant items that may have a disproportionate effect in a particular period. Accordingly, we believe isolating the effect of such events enables us as well as investors to consistently analyze the critical components of our operating results and to have meaningful comparisons to prior period. 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 in 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, Liz and welcome back to CSG. Liz rejoined us just a few weeks ago and will lead our Investor Relations efforts with the help of Catherine, Randy and myself. And for those of who worked with Liz in the past, I'm sure you will agree that she brings a unique perspective and a tremendous amount of energy to our team. So welcome back. Now let's talk about the third quarter. I'm pleased to report that CSG continues to execute very well in this difficult business environment. For the third quarter, we posted revenues of $125 million and a non-GAAP EPS of $0.43 per share. The non-GAAP EPS includes an unexpected $0.03 a share tax benefit. For the first nine months of the year, we generated cash flows of approximately $97 million and adjusted EBITDA of approximately $101 million. We're proud of our ability to execute while continuing to invest over 14% of our revenues in research and development. Our strong business model, prudent cost management, stable capital structure and long term relationships with our clients provide us with comfort during these difficult times. As I've shared throughout the years, CSG is committed to creating shareholder value by growing revenues, profits and cash flows. We plan to achieve this by executing on three strategies. First, we will expand our market share as a leading provider of interaction management solutions to North American communication providers. Second, we plan on growing our relationships with providers in the vertical markets where we already have relationships. And finally, we'll improve the profitability of our business. Let me give you an update as how we are performing on these strategies. I'm pleased to report that in the third quarter, we converted 500,000 new customers on to our ACP platform. We converted another 700,000 customers…

Thank you, Peter. And welcome to all of you in the call today. I'm happy to share with you the financial results for the quarter as well as our future outlook. Overall, we are very pleased with our execution and our continued progress for meeting our 2009 goals. More importantly, our continued strong operational and financial performance have put us in a solid position going forward as I will discuss in a few minutes. First, I would like to review our financial results for the quarter. Total revenues for the quarter were approximately $125 million, in line with our expectations, relatively consistent with our revenues in the second quarter. This represents an increase of 6% year-over-year resulting primarily from our continued success in increasing the penetration of our products and services within our existing client base with the remaining portion due to the timing impact of our 2008 acquisition of Coral. We are very pleased with our organic revenue growth especially considering the fact that this is the first year-over-year fully measured that reflects the impact of the Comcast extension that was signed in July 2008. Revenues generated from Comcast and DISH Network were relatively consistent with the second quarter, accounting for 25% and 18% respectively of our total revenues for the third quarter. Our non-GAAP operating income for the quarter was $22 million or an approximate 18% margins. This non-GAAP operating income excludes $5 million of expenses related to the transition of our data center services which began earlier this year. Our 18% non-GAAP operating income margin for the quarter is consistent with the second quarter but did come in slightly better than our full year margin guidance of mid to upper 17% range primarily due to a slightly higher gross margin percentage and our prudent management of expenses…

Thank you sir. (Operator Instructions). Our first question comes from the line of Shyam Patil with Raymond James. Please go ahead.

Good afternoon. This is Varun Chedda filling in for Shyam.

Hi there.

Could you just give us an update on DISH renewal?

Sure. This is Peter. Discussions and negotiations with the management team of DISH continue pursuing a multi-year deal. I don't have any specifics to give you on expected timing that we are working hard and continuing in those discussions and negotiations. Our goal is to build upon the 12 year relationship that's 12 plus year relationship that we have had with DISH, that they've grown their business. And we're really focused on being a valued and trusted partner going forward with them. And I'll tell you I'm confident that we can be successful as we work on this during the remainder of this fourth quarter and remain confident that we can be successful in achieving a multi year deal. We've been successful and continuing to bring new products to them over the recent years and continue to support them from an operational and business perspective this year and we have confidence as we finish out this year.

All right got it. So, could you just comment briefly on your source (ph) for the gross margins, how should we think about that going forward?

Yeah, this is really Randy. I think if you look at this -- I think I mentioned this in past quarters the software can be lumpy at times on the revenue side. So, I think if you look over the last several quarters it's ranged if you include this quarter it's been in the low 20s up to the 40s. It's highly depended upon the level of software market software revenues. So I think as you look in your model probably that range is what you are going to have to look at.

Got it, thank you.

Thanks.

Thank you and our next question comes from the line of Ashwin Shirvaikar with Citigroup. Please go ahead.

Thanks hey guys.

Hey.

Hi Ashwin.

Hi Ashwin.

My question is do you guys see any reason why free cash flow in 2010 should not be higher than in 2009?

I think you should expect free cash flow to grow in the same relative pace as our revenue growth Ashwin. I think our margins look like they could be comparable year-over-year. So, there never is much exchange in our working capital. So, I think if you use those two assumptions you should be able to get to a pretty good answer.

Okay, and when I is there a schedule that you can share with regards to when the remaining subscribers that you want are going to come on board first quarter versus second?

No Ashwin we are hesitant to try to get that exactly in our projections in our outlook for you, just because there is a as we know complexity of the conversions can cause the actual definitive timing to shift and we just don't want to get ourselves in front of the expectations of what we can do with our clients. So we'll just leave it as that general range that what we gave you in the comments.

Okay. One question I had just is moving away from the cable side of things. If you sort of separate out cable versus non-cable, what is each segment growing at and do they have similar adjusted EBITDA margins the way you define them?

Let me first take the perspective on the growth and then I'll let Randy talk about some of the other components of the profitability. But from a growth perspective we believe that these other vertical markets can slash the products that we are bringing to those vertical markets have inherently higher growth potential. One is the diversity the number of potential clients and prospects that we can sell into as well as just the sheer size that we are starting with the day means that the growth rates should be higher but there are more clients and prospects from which to sell through. So we believe that, that can generate higher growth rate than what we are seeing in the traditional core market where we have a high concentration of clients. The clients that are still very important to us and ones that we have been able to grow on their own right by delivering more services and products. From a profitability perspective Randy,

The things on that Ashwin is these markets that we're in are not as mature as our core business. So you wouldn't expect the margin to be as good as our core business. We are making improvements there but right now they are not at the same level of profitability.

If I try to quantify that first in terms of growth, higher growth that what does that mean are you talking upper single digits or are you talking low double-digits growth and then on the margins part of the reason I asked for adjusted EBITDA is because I thought maybe...wash out some of that lack of maturity in the market. Has that helped?

Well I think it does. I guess first from kind of trying to give you some specifics of how to think about the growth. I am hesitant to try to say one is a 5% and one is our X rate higher what that specific rate could be because there is still lot of economic factors in play, the timing of when we think those sales could accelerate. And so I am hesitant to do that but I think overall we do believe over the long-term and we believe this strongly that those markets can substantiate really more of a double-digit growth rate then the single digit growth rates that we've been experiencing from our traditional market.

And last question. That higher level of growth should that in your opinion affect the cash flow characteristics of the company.

I don't know I think it will change the characteristics of our cash flows.

Okay great, thank you.

Ashwin, one clarifying point in your first question. Your question was on free cash flow, my answer was regarding cash flow from operations I think that the other component of your free cash flow calculation is probably the CapEx. You look at our CapEx for this year, it's 40 to 45. So it's about $20 million higher because of data centre. I think if you looked at 2010 you would not expect a similar amount of CapEx, probably more in line with our historical range of about to 20 to 25 is probably a better estimation.

Okay thank you very useful. Thank you.

Thank you. And our next question comes from the line of Scott Sutherland with Wedbush Securities. Please go ahead.

Hi thanks and congrats on the quarter. This is Sohail sitting for Scott.

Hey.

Hi there.

How are you doing?

Good thanks. So two quick questions really. Obviously you are seeing sustained cash generation, any color on plans investments of this cash, internal versus external?

Well, we've continue to believe that there with the markets that we are supporting and the changes that are going on in the Cable and DBS market and the direction of our solution step that there will be opportunities for us to continue to invest both from R&D prospective as we've done in the past and still continue to invest 14% of our revenues into supporting our future capabilities. But we also believe that there is going to be opportunities and strong opportunities for us to find acquisitions that can accelerate the time the market that can accelerate the gains in market share and bring some functionalities to our solutions set that would be a use of our cash. We continue to look at stock repurchases and debt repurchase but number one on our list to still acquisitions as the priority use of our cash. We like the market we serve, we think there is interesting dynamics happening in the near end and intermediate term and we want to make sure we're well position to really capture those and maintain our leading positions with those relationships.

Great, thanks. And if I may, quick house keeping question. So data and transaction costs in our much lower is the 15-16 indicating about 6.3 maybe for Q4. And so, the transition is it going to be completed by December '09 or is there going be any transition cost in fiscal 2010?

No, we expect to be completed with data center transition by the middle of 2010. So you should expect additional cost going into 2010 as well.

Okay. But there won't be any CapEx there. Just going to be transition cost?

There maybe some CapEx at that transition over the end of the year depends upon the timing of some of the acquisitions of some of the additional year that we need. But I would not -- probably would not expect it to be same level as 2009 as I just mentioned earlier.

Sure, great. At least give maybe some kind, some time maybe fraction of '09 CapEx and all the transition cost?

I think what you can probably do for just would make sense, you should able to now determine what the exit rate is out of 2009 and make your estimations of that going into 2010.

Okay, great. Thanks.

Thank you. And our next question comes from the line of Tom Roderick with Thomas Wiesel and Partners. Please go ahead.

Hey guys, this is Chris Co in for Tom Roderick. How are you guys?

Yeah..

Good, how are you Chris.

Hi Chris.

Great. Good to hear. So just a quick question as far as the subscriber migration you guys mentioned. Was that so I think it's about 1.2 million now. And I know you guys don't want to comment to exact timing. But was that faster or slower or about on target with what you had been expecting as far as you see internally.

It's pretty much on track with what our expectations were. And I think we are pleased with how they've gone because of the success that we have had with supporting the clients. But as I commented earlier Chris, we're very cautious of making sure we set the right expectations with our clients of what to do on this and how they progress forward and so. They're on track with what we expect and we saw the lot of work in front of us for the remaining subscribers that we have to convert between now and the first half, next year.

Sounds good. And can you disclose whether the migrated subscribers are all charter or was it some mix of the 2 million charter plus the 1 million other market share wins.

The majority of it is charter. I don't want to get into any specifics but because the vast majority of the subs that were scheduled to convert to charter, that would also play into what was done in the third quarter and the first couple of weeks of this month.

Got it. Okay, thanks guys. And then also on a follow up on the DISH network I know that's everyone's favorite topic but as far as would you guys be opening to another one year extension if you are unable to get price point that you had before?

Well our focus and goal is and as is the goal for DISH is to do a multiple year agreement that really meets the business needs of them and us. We weren't wanting to do a one year agreement at the end of last year but we thought it was a right thing for the company. Depending upon how things progress we will evaluate that at that point, but I don't want to speculate right now what we would be willing to do by the end of this year.

Okay. And I guess as I come out of another angle then it sounds like tone wise things are still making quite full some ahead. Has there been a difference between say the larger cable providers versus the smaller guys as far as the overall minutes spend discretionary or not on software.

Well I don't want to just package it down to software but I think we have to really look at all our solutions, our clients whether they are large clients or some of medium size or small clients we have had success in rolling out product in feature functionality to all of them. That the footprint has -- the capabilities have expanded, we have pretty much grown revenues across all our cable clients, really all our cable and satellite clients and they have all embraced and grown with the amount of services and revenue that we then get for those services. So I don't want to say there has been anything that I can think of this proportionate one way or another but every company whether it's a cable or a satellite operator or any industry you are looking at in these economic times is really watching how they spend money, making sure they get return on it and making sure it's something that they really critically need for the operations of their business and the operations of their customer relationship. So, there is cautiousness by all businesses that we've come across and especially around those solutions that are more marketing oriented because those are the ones that right now it seems like companies are very focused on retention and deepening those relationships versus how do they go out and try to get the next big slug of new customer growth. Because that's been more difficult these days with the economic situation.

Great thanks guys. Good Job.

Thank you. And our next question comes from the line of Shaul Eyal with Oppenheimer & Company. Please go ahead. Shaul Eyal - Oppenheimer & Co.: Thank you. Hi good afternoon everybody and Liz welcome back.

Thanks a lot. Shaul Eyal - Oppenheimer & Co.: Two quick questions, three as a matter of fact, you guys talked in the past of kind of taking your billing, your billing platform in some additional direction you guys probably know convert it and we've got taken their billing and rating engine towards the utilities, what's kind of your thinking on that end? Are you also still kind of active in pursing couple of similar opportunities?

Well, Shaul, we are very focused on growing in new vertical markets and we've been taking capabilities such as interactive messaging, our statement-ing or our CI capabilities and those types of solutions to those markets. We think very highly of our advanced convergent billing platform that we have and that we've got widely deployed in the communication space but we don't think that's the right asset to go to those other vertical markets and has never been our focus to try to take it to those places. We are leading with what I would call the one -- the solution sets that are really closer to the actual interaction with the customer and then will work to deepen those relationships and see how we progress forward from that. Shaul Eyal - Oppenheimer & Co.: Got it. That's fair enough. On the business intelligence side what's the current status with the current thinking?

The customer intelligence piece? Shaul Eyal - Oppenheimer & Co.: Yeah customers, intelligence business, BI yeah.

Well our we have customers analytics focus that allows us to through and do analytics for analysis and working on in conjunction with our clients to have solutions that would give us and our clients ability to determine the success with their marketing and retention programs, understand what's the next product most likely to be sold or taken by their customers set and this is focusing again in the cable and DBS base. And we've been working to get the Coral capabilities that we acquired at the beginning of this year, integrated into our solution set, we're making good progress on that. We think there is a strong need for this in marketplace as our clients advance where they are from a the marketing and sales perspective and it's really part of our overall strategy of how we help our clients in managing their business and their customer services. We don't have anything to announce from our first roll out of success or win on that but we still believe that this is a strong business proposition and we continue to investment in that integration of our acquired business to solve that. Shaul Eyal - Oppenheimer & Co.: Fair enough. I might have missed that in your prepared remarks that relate to Coral, have you talked about capitalization? I know that's a question that kind of keeps coming back quite regularly given your strong cash flow, cash generation other than buy back M&A pretty much it?

So I did comment a little bit earlier but in a prepared remarks is much from the capital structure we want, we feel very fortunate to have the strong balance sheet as we do with the strong cash balance and a good solid capital structure of our equity and our debt in place. Our focus on our use of our cash flow and our cash balances is to first and foremost, look for ways to grow the business. We would do that through continuing to invest in our businesses we have done from internal R&D but we'd also look to augment like we've done over the last two to three years with acquisitions. And so, that's our highest priority but as we have done earlier this year, we've been willing to repurchase some debt. You'll see in the press release in Randy's comments that we didn't repurchase any in the third quarter. But that's an area that we have been willing to do in the past and we repurchased shares in the past as well but when we put all the priorities together, we have looked and said reinvestment in growing this business and growing the markets we serve is the top priority and where you should look for us to use our capital going forward. Shaul Eyal - Oppenheimer & Co.: Okay. Thank you very much.

You bet. Shaul Eyal - Oppenheimer & Co.: Good luck

Thanks.

Thank you. (Operator Instructions) And our next question comes from the line Karl Keirstead with Kaufman Bros. Please go ahead.

Hi. This is Sitel (ph) filling in for Karl.

Hey how are you doing?

Hey, how's it going? Question on growth. This quarter, you said well, growth was about 6% on the top line. Organically last quarter, we back into about 3.5% it's safe to say that growth is up six in this quarter.

It's probably about three-fourths of the 6%. So a slightly greater than 3.5.

Okay. And are you still comfortable with for 2010 above 5 to 6% organic growth?

As I said in my comments earlier, we feel good about the momentum we've developed here and is in 2009 and we are excited about some of our opportunities. So the preliminary planning targets of mid single digits of 5 to 6% are still pretty good. That's a very reasonable target at this point in time.

Okay, great. And then on the margin line, margins came in a little bit higher than expected it. One is just try that what could help you out there. It could have been the Comcast deal maybe less pricing pressure, what exactly whether it helped you out.

Well the margin is relatively consistent with the second quarter. It's only about 20 basis points higher, so there is not a significant change, it's very consistent I think if you look at two things, I think if you look at the gross margin on the processing side it jumped up pretty good this quarter, mainly because there is just some profitable jobs that we are reimburse the previous period. So nothing you need to look at there but it did provide a little bit of uptick to the overall margin. And we continue to control our cost very well as we continue to deliver our operational and financial goals. So I think it's a couple of things just good prudent management of business.

Okay. And then last question on 2010 margin. Margins can be comparable to maybe slightly up. What have you backed in for DISH contracts you expect -- you baked in a multi year contract or you baked in a single year contract with a margin expectations for 2010?

We've got multiple scenarios in there as you do with any type of planning targets, you look for different scenarios to make sure you got more covered. I'd say that either a single year multi year would be covered by that but I think as Peter mentioned, we think it is in the best interest of both parties to look for multi year. And I think considering that, there those many other factors than DISH for 2010.

Okay. Great. Thanks for taking my questions.

Thank you. And our next question comes from the line of Larry Bowan with First Analysis. Please go ahead.

Good evening guys. Welcome back Liz

Hi Larry.

You sounded so happy Liz reading the law, legal stuff upfront.

Yeah. I'm always good with the legal stuff Larry.

Yes I know. Hey just quick question on the software maintenance and service revenue line we had a bit of jump in the June quarter and bit of drop off from there. Just curious what the... what was in the June if you could remind me that is not occurring in the September. And then should we look forward to which one would be to better look out towards December.

I think Larry, from the second quarter I mean, I think I mentioned in the last quarter it was couple of larger software deal that happened in the second quarter. Those are very much depended upon discretionary spends by our clients so they are difficult to predict. The other thing is that timing of some professional services projects is sometimes that amount of revenue to fluctuate between periods. I think if you look forward, look at the last three or fours quarters you can kind of see that it's generally in the 7.5 to 8.5 range and I think that's probably a good estimate going forward.

Okay thanks for the reminder appreciate it.

Thank you Larry.

Thank you. Now I am not showing any further questions in the queue, I'll turn back over to management for the closing comments.

Thank you Dale and thank you for all our investors and analysts who were on the call. We continue to perform well, we look forward to a fourth quarter where we will continue to perform both operationally and financially. And we look forward to January of next year when we report our results and until that time we will continue to keep our heads down and focused on performing for all our constituents. Thanks.

Thank you sir. Ladies and gentlemen that does conclude today's CSG's third quarter conference call. (Operator Instructions). Thank you for your participation using for ACT conferencing. You may now disconnect.