10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2013

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-27512

CSG SYSTEMS INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Delaware	47-0783182
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

9555 Maroon Circle

Englewood, Colorado 80112

(Address of principal executive offices, including zip code)

(303) 200-2000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES   x           NO   ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES   x           NO   ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES  ¨            NO   x

Shares of common stock outstanding at November 4, 2013: 33,842,370

   

CSG SYSTEMS INTERNATIONAL, INC.

FORM 10-Q for the Quarter Ended September 30, 2013

INDEX

		Page No.
Part I -FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Balance Sheets as of September 30, 2013 and December 31, 2012 (Unaudited)	3
	Condensed Consolidated Statements of Income for the Quarters and Nine Months Ended September 30, 2013 and 2012 (Unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income for the Quarters and Nine Months Ended September 30, 2013 and 2012 (Unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2013 and 2012 (Unaudited)	6
	Notes to Condensed Consolidated Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	25
Part II -OTHER INFORMATION
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 6.	Exhibits	33
	Signatures	34
	Index to Exhibits	35

   

 2 

CSG SYSTEMS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS—UNAUDITED

(in thousands, except per share amounts)

	September 30, 2013			December 31, 2012
ASSETS
Current assets:
Cash and cash equivalents	$	92,736		$	133,747
Short-term investments		101,162			35,574
Total cash, cash equivalents and short-term investments		193,898			169,321
Trade accounts receivable:
Billed, net of allowance of $3,043 and $3,147		174,757			191,943
Unbilled		41,347			28,463
Deferred income taxes		14,095			22,244
Income taxes receivable		5,903			6,469
Other current assets		27,891			21,915
Total current assets		457,891			440,355
Non-current assets:
Property and equipment, net of depreciation of $132,020 and $120,643		34,674			39,429
Software, net of amortization of $77,106 and $68,496		41,099			38,372
Goodwill		231,235			233,365
Client contracts, net of amortization of $74,137 and $182,182		61,187			75,303
Deferred income taxes		5,475			2,596
Income taxes receivable		2,299			1,291
Other assets		16,004			16,230
Total non-current assets		391,973			406,586
Total assets	$	849,864		$	846,941
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt	$	15,000		$	15,000
Client deposits		30,239			33,807
Trade accounts payable		33,211			30,473
Accrued employee compensation		48,622			61,083
Deferred revenue		50,961			47,691
Income taxes payable		2,360			2,116
Other current liabilities		17,193			21,562
Total current liabilities		197,586			211,732
Non-current liabilities:
Long-term debt, net of unamortized original issue discount of $21,327 and $25,302		252,423			259,698
Deferred revenue		9,750			6,504
Income taxes payable		2,068			1,168
Deferred income taxes		18,364			21,674
Other non-current liabilities		15,126			19,526
Total non-current liabilities		297,731			308,570
Total liabilities		495,317			520,302
Stockholders’ equity:
Preferred stock, par value $.01 per share; 10,000 shares authorized; zero shares issued and outstanding		—			—
Common stock, par value $.01 per share; 100,000 shares authorized; 33,839 and 33,734 shares outstanding		659			653
Additional paid-in capital		469,878			461,497
Treasury stock, at cost, 32,030 and 31,530 shares		(738,372	)		(728,243	)
Accumulated other comprehensive income (loss):
Unrealized gain on short-term investments, net of tax		28			3
Unrecognized pension plan losses and prior service costs, net of tax		(1,355	)		(1,761	)
Unrecognized loss on change in fair value of interest rate swaps, net of tax		(235	)		(658	)
Cumulative foreign currency translation adjustments		(1,056	)		2,274
Accumulated earnings		625,000			592,874
Total stockholders’ equity		354,547			326,639
Total liabilities and stockholders’ equity	$	849,864		$	846,941

The accompanying notes are an integral part of these condensed consolidated financial statements.

 3 

CSG SYSTEMS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME—UNAUDITED

(in thousands, except per share amounts)

	Quarter Ended						Nine Months Ended
	September 30, 2013			September 30, 2012			September 30, 2013			September 30, 2012
Revenues:
Processing and related services	$	133,294		$	138,993		$	399,112		$	408,669
Software, maintenance and services		52,886			51,008			153,807			150,190
Total revenues		186,180			190,001			552,919			558,859
Cost of revenues (exclusive of depreciation, shown separately below):
Processing and related services		65,184			67,585			189,725			191,879
Software, maintenance and services		29,714			32,826			93,285			91,021
Total cost of revenues		94,898			100,411			283,010			282,900
Other operating expenses:
Research and development		27,600			28,526			83,693			84,242
Selling, general and administrative		38,444			33,963			110,629			99,387
Depreciation		4,609			5,373			14,379			17,084
Restructuring charges		76			—			939			821
Total operating expenses		165,627			168,273			492,650			484,434
Operating income		20,553			21,728			60,269			74,425
Other income (expense):
Interest expense		(2,615	)		(4,078	)		(8,724	)		(12,336	)
Amortization of original issue discount		(1,351	)		(1,251	)		(3,975	)		(3,680	)
Interest and investment income, net		174			263			517			635
Other, net		(130	)		452			950			524
Total other		(3,922	)		(4,614	)		(11,232	)		(14,857	)
Income before income taxes		16,631			17,114			49,037			59,568
Income tax provision		(1,331	)		(7,701	)		(6,767	)		(26,479	)
Net income	$	15,300		$	9,413		$	42,270		$	33,089
Weighted-average shares outstanding—Basic:
Common stock		32,084			31,980			32,114			32,189
Participating restricted stock		—			—			—			22
Total		32,084			31,980			32,114			32,211
Weighted-average shares outstanding—Diluted:
Common stock		32,664			32,398			32,553			32,423
Participating restricted stock		—			—			—			22
Total		32,664			32,398			32,553			32,445
Earnings per common share:
Basic	$	0.48		$	0.29		$	1.32		$	1.03
Diluted		0.47			0.29			1.30			1.02
Cash dividends declared per common share	$	0.15		$	—		$	0.30		$	—

The accompanying notes are an integral part of these condensed consolidated financial statements.

 4 

CSG SYSTEMS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME—UNAUDITED

(in thousands)

	Quarter Ended						Nine Months Ended
	September 30, 2013			September 30, 2012			September 30, 2013			September 30, 2012
Net income	$	15,300		$	9,413		$	42,270		$	33,089
Other comprehensive income:
Foreign currency translation adjustments		6,359			6,091			(3,330	)		4,609
Unrealized holding gains on short-term investments arising during period		81			2			25			2
Defined benefit pension plan:
Net loss arising from period (net of tax effect of $0, $0, $(119), and $0)		—			—			(183	)		—
Amortization of prior service cost included in net periodic pension cost (net of tax effect of $0, $0, $28, and $0)		—			—			43			(9	)
Partial settlement of pension plan liability (net of tax effect of $0, $0, $336, and $0)		—			—			546			—
Net change in defined benefit pension plan		—			—			406			(9	)
Cash flow hedges:
Unrealized gains on change in fair value of interest rate swap contracts (net of tax effect of $199, $37, $549, and $27)		313			58			865			42
Reclassification adjustment for losses included in other income (expense) (net of tax effect of $(101), $(49), $(280), and $(101))		(160	)		(78	)		(442	)		(160	)
Net change in cash flow hedges		153			(20	)		423			(118	)
Other comprehensive income, net of tax		6,593			6,073			(2,476	)		4,484
Total comprehensive income	$	21,893		$	15,486		$	39,794		$	37,573

The accompanying notes are an integral part of these condensed consolidated financial statements.

 5 

CSG SYSTEMS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS—UNAUDITED

(in thousands)

	Nine Months Ended
	September 30, 2013			September 30, 2012
Cash flows from operating activities:
Net income	$	42,270		$	33,089
Adjustments to reconcile net income to net cash provided by operating activities-
Depreciation		14,379			17,084
Amortization		28,413			33,294
Amortization of original issue discount		3,975			3,680
Impairment of client contract		—			2,500
(Gain) loss on short-term investments and other		1,264			(46	)
Deferred income taxes		1,083			(7,789	)
Excess tax benefit of stock-based compensation awards		(619	)		(406	)
Stock-based employee compensation		11,497			9,990
Changes in operating assets and liabilities:
Trade accounts receivable, net		75			13,358
Other current and non-current assets		(4,641	)		(2,293	)
Income taxes payable/receivable		1,359			(151	)
Trade accounts payable and accrued liabilities		(15,724	)		(92	)
Deferred revenue		3,251			6,204
Net cash provided by operating activities		86,582			108,422
Cash flows from investing activities:
Purchases of property and equipment		(18,986	)		(20,488	)
Purchases of short-term investments		(129,259	)		(45,499	)
Proceeds from sale/maturity of short-term investments		62,720			33,152
Acquisition of business, net of cash acquired		—			(19,085	)
Acquisition of and investments in client contracts		(5,349	)		(4,253	)
Proceeds from disposition of business		1,734			—
Net cash used in investing activities		(89,140	)		(56,173	)
Cash flows from financing activities:
Proceeds from issuance of common stock		1,283			1,572
Repurchase of common stock		(15,124	)		(16,323	)
Payment of cash dividends		(9,630	)		—
Payments on acquired equipment financing		(1,894	)		(765	)
Payments on long-term debt		(11,250	)		(22,000	)
Excess tax benefit of stock-based compensation awards		619			406
Net cash used in financing activities		(35,996	)		(37,110	)
Effect of exchange rate fluctuations on cash		(2,457	)		(1,564	)
Net increase (decrease) in cash and cash equivalents		(41,011	)		13,575
Cash and cash equivalents, beginning of period		133,747			146,733
Cash and cash equivalents, end of period	$	92,736		$	160,308
Supplemental disclosures of cash flow information:
Net cash paid during the period for-
Interest	$	8,247		$	11,193
Income taxes		3,554			33,196

The accompanying notes are an integral part of these condensed consolidated financial statements.

 6 

CSG SYSTEMS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. GENERAL

We have prepared the accompanying unaudited condensed consolidated financial statements as of September 30, 2013 and December 31, 2012, and for the third quarters and nine months ended September 30, 2013 and 2012, in accordance with accounting principles generally accepted in the United States of America (“U.S.”) (“GAAP”) for interim financial information, and pursuant to the instructions to Form 10-Q and the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of our management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of our financial position and operating results have been included. The unaudited Condensed Consolidated Financial Statements (the “Financial Statements”) should be read in conjunction with the Consolidated Financial Statements and notes thereto, together with Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), contained in our Annual Report on Form 10-K for the year ended December 31, 2012 (our “2012 10-K”), filed with the SEC. The results of operations for the quarter and nine months ended September 30, 2013 are not necessarily indicative of the expected results for the entire year ending December 31, 2013.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates in Preparation of Financial Statements. The preparation of the accompanying Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of our Financial Statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Reclassifications.  Certain 2012 amounts have been reclassified to conform to the September 30, 2013 presentation.

Postage. We pass through to our clients the cost of postage that is incurred on behalf of those clients, and typically require an advance payment on expected postage costs. These advance payments are included in “Client deposits” in the accompanying Condensed Consolidated Balance Sheets (the “Balance Sheet” or “Balance Sheets”) and are classified as current liabilities regardless of the contract period. We net the cost of postage against the postage reimbursements for those clients where we require advance deposits, and include the net amount in processing and related services revenues.

Cash and Cash Equivalents. We consider all highly liquid investments with original maturities of three months or less at the date of the purchase to be cash equivalents. As of September 30, 2013, our cash equivalents consist primarily of institutional money market funds, commercial paper, and time deposits held at major banks.

As of September 30, 2013, we had $4.9 million of restricted cash that serves to collateralize outstanding letters of credit. This restricted cash is included in “Cash and cash equivalents” in our Balance Sheet.

Short-term Investments and Other Financial Instruments. Our financial instruments as of September 30, 2013 include cash and cash equivalents, short-term investments, accounts receivable, accounts payable, interest rate swap contracts, and debt. Because of their short maturities, the carrying amounts of cash equivalents, accounts receivable, and accounts payable approximate their fair value.

Our short-term investments and certain of our cash equivalents are considered “available-for-sale” and are reported at fair value in our Balance Sheets, with unrealized gains and losses, net of the related income tax effect, excluded from earnings and reported in a separate component of stockholders’ equity. Realized and unrealized gains and losses were not material in any period presented.

All short-term investments held by us as of September 30, 2013 and December 31, 2012 have contractual maturities of less than two years. Proceeds from the sale/maturity of short-term investments for the nine months ended September 30, 2013 and 2012 were $62.7 million and $33.2 million, respectively.

 7 

The following table represents the fair value hierarchy based upon three levels of inputs, of which Levels 1 and 2 are considered observable and Level 3 is unobservable, for financial assets and liabilities measured at fair value on a recurring basis (in thousands):

	September 30, 2013						December 31, 2012
	Level 1			Level 2		Total	Level 1		Level 2		Total
Assets:
Cash equivalents:
Money market funds	$	33,365	$	—	$	33,365	$	23,119	$	—	$	23,119
Commercial paper		—		20,798		20,798		—		35,856		35,856
Short-term investments:
Commercial paper		—		48,574		48,574		—		34,826		34,826
Municipal bonds		—		29,353		29,353		—		—		—
U.S. government agency bonds		—		23,235		23,235		—		748		748
Total	$	33,365	$	121,960	$	155,325	$	23,119	$	71,430	$	94,549
Liabilities:
Interest rate swap contracts (1)	$	—	$	377	$	377	$	—	$	1,069	$	1,069
Total	$	—	$	377	$	377	$	—	$	1,069	$	1,069

(1) As of September 30, 2013, the fair value of the interest rate swap contract was classified on our Balance Sheet in “Other current liabilities”. As of December 31, 2012, the fair value of the interest rate swap contracts were classified on our Balance Sheet in “Other non-current liabilities”.

Valuation inputs used to measure the fair values of our money market funds were derived from quoted market prices. The fair values of all other financial instruments are based upon pricing provided by third-party pricing services. These prices were derived from observable market inputs.

We have chosen not to measure our debt at fair value.  The following table indicates the carrying value and estimated fair value of our debt as of the indicated periods (in thousands):

	September 30, 2013				December 31, 2012
	Carrying Value		Fair Value		Carrying Value		Fair Value
Credit Agreement (carrying value including current maturities)	$	138,750	$	138,750	$	150,000	$	150,000
Convertible debt (par value)		150,000		182,355		150,000		158,400

The fair value for our Credit Agreement was estimated using a discounted cash flow methodology, while the fair value for our convertible debt was estimated based upon quoted market prices or recent sales activity, both of which are considered Level 2 inputs.

Income Taxes. During the third quarter of 2013, we recognized incremental research and development (“R&D”) tax credits claimed for development activities from previous years and the reduction of certain tax allowances related to foreign operations.  The benefit of these events is reflected in our results of operations for the three and nine months ended September 30, 2013.

Additionally, during the first quarter of 2013, we recognized an income tax benefit related to R&D tax credits that we generated during 2012. As a result of the American Taxpayer Relief Act of 2012 being signed into law on January 2, 2013, we were unable to include these credits in our 2012 results of operations, as a change in tax law is accounted for in the period of enactment. Thus, the benefit of these credits is reflected in our results of operations for the nine months ended September 30, 2013.

3. STOCKHOLDERS’ EQUITY AND EQUITY COMPENSATION PLANS

Stock Repurchase Program. We currently have a stock repurchase program, approved by our Board of Directors, authorizing us to repurchase our common stock from time-to-time as market and business conditions warrant (the “Stock Repurchase Program”). During the nine months ended September 30, 2013 and 2012, we repurchased 0.5 million shares of our common stock under the Stock Repurchase Program for $10.1 million (weighted-average price of $20.23 per share), and 0.8 million shares of our common stock for $13.3 million (weighted-average price of $16.23 per share), respectively. As of September 30, 2013, the total remaining number of shares available for repurchase under the Stock Repurchase Program totaled 2.1 million shares.

 8 

Stock Repurchases for Tax Withholdings. In addition to the above mentioned stock repurchases, during the nine months ended September 30, 2013 and 2012, we repurchased and then cancelled 0.3 million shares of common stock for $5.0 million and 0.2 million shares of common stock for $3.0 million, respectively, in connection with minimum tax withholding requirements resulting from the vesting of restricted common stock under our stock incentive plans.

Cash Dividend.  On June 25, 2013, our Board of Directors (the “Board”) approved the initiation of a quarterly cash dividend to be paid to our stockholders.  The Board approved an initial cash dividend of $0.15 per share of common stock, totaling $5.1 million to stockholders of record on July 10, 2013, of which $4.8 million was paid on July 25, 2013 (with the remaining amount attributed to unvested shares to be paid upon vesting).  On August 22, 2013, the Board approved a third quarter cash dividend of $0.15 per share of common stock, totaling $5.1 million to stockholders of record on September 10, 2013, of which $4.8 million was paid on September 25, 2013 (with the remaining amount attributed to unvested shares to be paid upon vesting).

Stock-Based Awards. A summary of our unvested restricted common stock activity during the third quarter and nine months ended September 30, 2013 is as follows (shares in thousands):

	Quarter Ended September 30, 2013					Nine Months Ended September 30, 2013
	Shares			Weighted- Average Grant Date Fair Value		Shares			Weighted- Average Grant Date Fair Value
Unvested awards, beginning		2,094		$	18.44		1,956		$	17.63
Awards granted		43			24.32		952			19.72
Awards forfeited/cancelled		(11	)		18.26		(72	)		18.41
Awards vested		(41	)		19.72		(751	)		17.70
Unvested awards, ending		2,085		$	18.54		2,085		$	18.54

Included in the awards granted during the nine months ended September 30, 2013, are performance-based awards for 175,384 restricted common stock shares issued to members of executive management, which vest in equal installments over three years upon meeting either pre-established financial performance objectives or pre-established stock price objectives. The performance-based awards become fully vested upon a change in control, as defined, and the subsequent involuntary termination of employment.

All other restricted common stock shares granted during the quarter and nine months ended September 30, 2013 are time-based awards, which vest annually over four years with no restrictions other than the passage of time. Certain shares of the restricted common stock become fully vested upon a change in control, as defined, and the subsequent involuntary termination of employment.

We recorded stock-based compensation expense for the third quarters of 2013 and 2012 of $4.0 million and $3.5 million, respectively, and for the nine months ended September 30, 2013 and 2012 of $11.5 million and $10.0 million, respectively.

4. EARNINGS PER COMMON SHARE

Basic and diluted earnings per common share (“EPS”) amounts are presented on the face of the accompanying Condensed Consolidated Statements of Income (the “Income Statement” or “Income Statements”).

The amounts attributed to both common stock and participating restricted common stock used as the numerators in both the basic and diluted EPS calculations are as follows (in thousands):

	Quarter Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Net Income attributed to:
Common stock	$	15,300	$	9,413	$	42,270	$	33,066
Participating restricted common stock		—		—		—		23
Total	$	15,300	$	9,413	$	42,270	$	33,089

 9 

The weighted-average shares outstanding used in the basic and diluted EPS denominators related to common stock and participating restricted common stock are as follows (in thousands):

	Quarter Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Weighted-average shares outstanding – Basic:
Common stock		32,084		31,980		32,114		32,189
Participating restricted common stock		—		—		—		22
Total		32,084		31,980		32,114		32,211
Weighted-average shares outstanding – Diluted:
Common stock		32,664		32,398		32,553		32,423
Participating restricted common stock		—		—		—		22
Total		32,664		32,398		32,553		32,445

The reconciliation of the basic and diluted EPS denominators related to the common shares is included in the following table (in thousands):

	Quarter Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Basic weighted-average common shares		32,084		31,980		32,114		32,189
Dilutive effect of common stock options		—		9		1		11
Dilutive effect of non-participating restricted common stock		580		409		438		223
Dilutive effect of 2010 Convertible Notes		—		—		—		—
Diluted weighted-average common shares		32,664		32,398		32,553		32,423

Potentially dilutive common shares related to stock options and non-participating unvested shares of restricted common stock for the third quarters of 2013 and 2012 of zero for both periods, and for the nine months ended September 30, 2013 and 2012 of zero and 0.3 million, respectively, were excluded from the computation of diluted EPS related to common shares as their effect was antidilutive.

The 2010 Convertible Notes have a dilutive effect only in those quarterly periods in which our average stock price exceeds the current effective conversion price (see Note 5).

5. DEBT

Our long-term debt, as of September 30, 2013 and December 31, 2012, was as follows (in thousands):

	September 30, 2013			December 31, 2012
2012 Credit Agreement:
Term loan, due November 2017 (or December 2016 if certain conditions exist), interest at adjusted LIBOR plus 2.00% (combined rate of 2.26% at September 30, 2013 and 2.31% at December 31, 2012)	$	138,750		$	150,000
$100 million revolving loan facility, due November 2017 (or December 2016 if certain conditions exist), interest at adjusted LIBOR plus applicable margin		—			—
Convertible Debt Securities:
2010 Convertible Notes – senior subordinated convertible notes; due March 1, 2017; cash interest at 3.0%; net of unamortized OID of $21,327 and $25,302, respectively		128,673			124, 698
		267,423			274,698
Current portion of long-term debt		(15,000	)		(15,000	)
Total long-term debt, net	$	252,423		$	259,698

Credit Agreement. During the nine months ended September 30, 2013, we made $11.3 million of principal repayments.

As of September 30, 2013, we were in compliance with the financial ratios and other covenants related to the Credit Agreement and had no borrowings outstanding on our revolving loan facility and had the entire $100 million available to us.

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2010 Convertible Notes.  Upon conversion of the 2010 Convertible Notes, we will settle our conversion obligation as follows: (i) we will pay cash for 100% of the par value of the 2010 Convertible Notes that are converted; and (ii) to the extent the value of our conversion obligation exceeds the par value, we will satisfy the remaining conversion obligation in our common stock, cash or any combination of our common stock and cash.

As the result of us declaring a cash dividend in August 2013 (see Note 3), the previous conversion rate for the 2010 Convertible Notes of 41.1794 shares of our common stock for each $1,000 in principal amount of the 2010 Convertible Notes (equivalent to a conversion price of $24.28 per share of our common stock) has been adjusted to 41.4371 shares of our common stock for each $1,000 in principal amount of the 2010 Convertible Notes (equivalent to a conversion price of $24.13 per share of our common stock).

Refer to Note 6 in our 2012 10-K for disclosure of the 2010 Convertible Notes’ three contingent conversion features. As a result of the cash dividend declaration in August 2013, prior to September 1, 2016, holders of the 2010 Convertible Notes can convert their securities at any time the price of our common stock trades over $31.37 per share, or 130% of the $24.13 conversion price (previously $31.56, or 130% of the previous $24.28 conversion price) for a specified period of time.

As of September 30, 2013, none of the contingent conversion features have been achieved, and thus, the 2010 Convertible Notes are not convertible by the holders.

6. DERIVATIVES

In May 2011, we entered into three interest rate swap contracts with the objective of managing our exposure to fluctuations in interest rate movements, thereby eliminating the variability of cash flows on certain portions of the interest payments related to our variable-rate debt.

A summary of our one remaining interest rate swap contract as of September 30, 2013 is as follows (in thousands, except percentages):

	Beginning of Term	End of Term	Weighted-Average Notional Amount Over Remaining Term		Fixed Rate
2013 Swap	March 13, 2013	March 13, 2014	$	44,000		2.181	%

We have designated our interest rate swap contracts as cash flow hedges. Swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty over the lives of the contracts in exchange for us making fixed-rate payments to the counterparty over the lives of the contracts without exchange of the underlying notional amount.

As of September 30, 2013, the fair value of the remaining interest rate swap contract, reflected in other current liabilities in our Balance Sheet, was $0.4 million, with the loss, net of tax, reflected as a reduction in other comprehensive income.

Changes in the fair value of interest rate swap contracts, designated as hedging instruments of the variability of cash flows associated with floating-rate, long-term debt obligations, are reported in accumulated other comprehensive income (“AOCI”) in the stockholders’ equity section of our Balance Sheet. These amounts subsequently are reclassified into interest expense as a yield adjustment of the hedged debt obligation in the same period in which the related interest on the floating-rate debt obligations affects earnings. The amount of gains/losses reclassified from AOCI to income/loss (effective portions) for the quarter and nine months ended September 30, 2013 were not material. The estimated net losses on the interest rate swap contract that will be reclassified into earnings within the next twelve months are not expected to be material. Our interest rate swap contracts qualify as effective relationship, and as a result, hedge ineffectiveness was not material during the quarter and nine months ended September 30, 2013.

We are exposed to credit-related losses in the event of non-performance by the counterparty to the interest rate swap contracts. The counterparty to the interest rate swap contracts is a major institution with investment grade credit ratings. We evaluated the counterparty credit risk before entering into the interest rate swap contracts and will continue to closely monitor the financial markets and the risk that the counterparty will default on its obligations. This credit risk is generally limited to the unrealized gains in such contracts, should the counterparty fail to perform as contracted.

We do not use derivative financial instruments for speculative purposes.

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7. LONG-LIVED ASSETS

Goodwill. The changes in the carrying amount of goodwill for the nine months ended September 30, 2013, were as follows (in thousands):

January 1, 2013 balance	$	233,365
Adjustments related to prior acquisitions		(149	)
Adjustment for the disposition of business operations		(1,417	)
Effects of changes in foreign currency exchange rates		(564	)
September 30, 2013 balance	$	231,235

On July 1, 2013, we sold one of our small print and mail facilities and certain of its business operations, which resulted in an adjustment to our goodwill balance of $1.4 million.  The net proceeds from this disposition were $1.7 million and the gain from the sale was not material.

Other Intangible Assets. Our intangible assets subject to ongoing amortization consist primarily of client contracts and software. As of September 30, 2013 and December 31, 2012, the carrying values of these assets were as follows (in thousands):

	September 30, 2013							December 31, 2012
	Gross Carrying Amount		Accumulated Amortization			Net Amount		Gross Carrying Amount		Accumulated Amortization			Net Amount
Client contracts	$	135,324	$	(74,137	)	$	61,187	$	257,485	$	(182,182	)	$	75,303
Software		118,205		(77,106	)		41,099		106,868		(68,496	)		38,372
Total	$	253,529	$	(151,243	)	$	102,286	$	364,353	$	(250,678	)	$	113,675

The decrease in the gross carrying amount and accumulated amortization of our client contracts between December 31, 2012 and September 30, 2013 is due primarily to the removal of fully-amortized assets related to client incentives for the Comcast Corporation (“Comcast”) and Time Warner Cable, Inc. (“Time Warner”) contracts that came to end of term during the first quarter of 2013.

The total amortization expense related to intangible assets for the third quarters of 2013 and 2012 were $9.1 million and $11.5 million, respectively, and for the nine months ended September 30, 2013 and 2012 were $26.6 million and $31.2 million, respectively. Based on the September 30, 2013 net carrying value of our intangible assets, the estimated total amortization expense for each of the five succeeding fiscal years ending December 31 are: 2013 – $35.0 million; 2014 – $28.6 million; 2015 – $17.7 million; 2016 – $13.2 million; and 2017 – $10.6 million.

8. COMMITMENTS, GUARANTEES AND CONTINGENCIES

Warranties. We generally warrant that our solutions and related offerings will conform to published specifications, or to specifications provided in an individual client arrangement, as applicable. The typical warranty period is 90 days from delivery of the solution or offering. For certain service offerings we provide a limited warranty for the duration of the services provided. We generally warrant that services will be performed in a professional and workmanlike manner. The typical remedy for breach of warranty is to correct or replace any defective deliverable, and if not possible or practical, we will accept the return of the defective deliverable and refund the amount paid under the client arrangement that is allocable to the defective deliverable. Our contracts also generally contain limitation of damages provisions in an effort to reduce our exposure to monetary damages arising from breach of warranty claims. Historically, we have incurred minimal warranty costs, and as a result, do not maintain a warranty reserve.

Product and Services Indemnifications. Our arrangements with our clients generally include an indemnification provision that will indemnify and defend a client in actions brought against the client that claim our products and/or services infringe upon a copyright, trade secret, or valid patent. Historically, we have not incurred any significant costs related to such indemnification claims, and as a result, do not maintain a reserve for such exposure.

Claims for Company Non-performance. Our arrangements with our clients typically cap our liability for breach to a specified amount of the direct damages incurred by the client resulting from the breach. From time-to-time, these arrangements may also include provisions for possible liquidated damages or other financial remedies for our non-performance, or in the case of certain of our outsourced customer care and billing solutions, provisions for damages related to service level performance requirements. The service level performance requirements typically relate to system availability and timeliness of service delivery. As of September 30, 2013, we believe we have adequate reserves, based on our historical experience, to cover any reasonably anticipated exposure as a result of our nonperformance for any past or current arrangements with our clients.

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Indemnifications Related to Officers and the Board of Directors. We have agreed to indemnify members of our Board and certain of our officers if they are named or threatened to be named as a party to any proceeding by reason of the fact that they acted in such capacity. We maintain directors’ and officers’ (D&O) insurance coverage to protect against such losses. We have not historically incurred any losses related to these types of indemnifications, and are not aware of any pending or threatened actions or claims against any officer or member of our Board. As a result, we have not recorded any liabilities related to such indemnifications as of September 30, 2013. In addition, as a result of the insurance policy coverage, we believe these indemnification agreements are not significant to our results of operations.

Legal Proceedings. From time-to-time, we are involved in litigation relating to claims arising out of our operations in the normal course of business.

In addition, we have encountered the following matters:

· We received an administrative subpoena from the U.S. Department of the Treasury, Office of Foreign Assets Control (“OFAC”), dated February 27, 2012, requesting documents and information related to the possibility of direct or indirect transactions with or to Iranian entities. We have conducted an internal review to identify transactions by us involving the subject matter of the subpoena as well as with any other sanctioned or embargoed entity or jurisdiction. On July 13, 2012, we delivered to OFAC a response to the administrative subpoena.

· On July 13, 2012, we submitted an initial voluntary disclosure to OFAC relating to certain business dealings in Syria. On October 5, 2012, we submitted a voluntary disclosure relating to these business dealings.

· On August 8, 2013, we submitted an initial voluntary disclosure to OFAC relating to certain business dealings in Iran and another sanctioned/embargoed country.

These business dealings represented an insignificant amount of our consolidated revenues and income, and generally consisted of software licenses and related services. We cannot predict the ultimate outcome of these matters or the total costs which may be involved. We believe there is a likelihood that a loss may be realized related to these matters, but that no reasonable estimate of the loss can be made.

Other than the OFAC matters described above, we are not presently a party to any material pending or threatened legal proceedings.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The information contained in this MD&A should be read in conjunction with the Financial Statements and Notes thereto included in this Form 10-Q and the audited consolidated financial statements and notes thereto in our 2012 10-K.

Forward-Looking Statements

This report contains a number of forward-looking statements relative to our future plans and our expectations concerning our business and the industries we serve.  These forward-looking statements are based on assumptions about a number of important factors, and involve risks and uncertainties that could cause actual results to differ materially from estimates contained in the forward-looking statements.  Some of the risks that are foreseen by management are outlined within Part II Item 1A. Risk Factors (“Risk Factors”).  Our Risk Factors constitute an integral part of this report, and readers are strongly encouraged to review this section closely in conjunction with MD&A.

Company Overview

We are one of the world’s largest and most established Business Support Solutions (“BSS”) providers primarily serving the communications industry.  Our proven approach and solutions are based on our broad and deep experience in serving clients in the communications industry as their businesses have evolved from a single product offering to a highly complex, highly competitive, multi-product service offering.  Our approach has centered on using the best technology for the various functions required to provide world-class solutions.

Our solutions help service providers streamline and scale operations, introduce and adapt products and services to meet customer demands, and address the challenges and opportunities brought about by change.   Our broad suite of solutions helps our clients improve their business operations by creating more compelling product offerings and an enhanced customer experience through more relevant and targeted interactions, while at the same time, more efficiently managing the service provider’s cost structure.  Over the years, we have focused our R&D and acquisition investments on expanding our solution set to address the ever expanding needs of communications service providers to provide a differentiated, real-time, and personal experience for their consumers.  This extensive suite of solutions includes revenue management, content management and monetization, customer interaction management, as well as analytics and intelligence.  

We generate approximately 65% of our revenues from the North American cable and satellite markets, approximately 25% of our revenues from wireline and wireless communication providers, and the remainder from a variety of other verticals, such as financial services, logistics, and transportation.  Additionally, through September 30, 2013, we have generated approximately 85% of our year-to-date revenues from the Americas region, approximately 10% of our year-to-date revenues from the Europe, Middle East and Africa region, and approximately 5% of our year-to-date revenues from the Asia Pacific region.

We are a S&P Small Cap 600 company.

Iran Threat Reduction and Syria Human Rights Act

The Iran Threat Reduction and Syria Human Rights Act of 2012 (“TRA”), which was signed into law on August 10, 2012, requires disclosure regarding certain activities relating to Iran undertaken by us or our affiliates.

Background. Our policy is to conduct business in compliance with all laws and regulations, wherever we do business. We strive to comply with U.S. export control and economic sanction laws, regulations and requirements relating to Iran. We have established a Total Compliance Program and a Code of Conduct for all of our employees. The Code of Conduct requires all of our employees to abide by legal regulations that govern our business, including compliance with national and international laws relating to trade restrictions. Our revised Code of Conduct, released in May 2012, confirms that such restrictions include U.S. and international economic sanctions, as well as export control laws, antiboycott laws, anti-corruption laws and data privacy laws. We do not have a subsidiary or other affiliate organized under the laws of Iran. We do not have any employees based in Iran.

Nature and Extent of the Activity. On July 13, 2012 (prior to the enactment of the TRA), we acquired Ascade AB (“Ascade”), a Sweden-based provider of trading and routing software and services solutions that help clients generate revenue and maximize customer and partner relationships.  Ascade supplies business support systems to more than 100 customers across the global telecommunications industry. Until we acquired Ascade on July 13, 2012 Ascade was headquartered in Sweden.

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Ascade’s offerings include a service known as “Assure.”  Assure allows mobile carriers to verify quality and detect fraud in network traffic.  The solution is provided to telecommunications companies as a service.  The service is currently used by approximately 80 non-Iranian telecommunications service providers.  Customers using Assure are able to test approximately 410 mobile networks in approximately 130 countries.  

To allow for testing of networks, Ascade enters into contracts with individuals acting as “hosts.”  Ascade provides one or more functioning devices to the host and directs the host to obtain cellular services from one or more networks available in their location.  To test call quality and detect fraud for Ascade customers, calls are then placed to the hosted cellular devices.  Ascade’s customers decide which networks they want to test.

Ascade has not entered into any contracts with the Government of Iran or entities owned or controlled by the government of Iran.  At the time of acquisition, Ascade was party to an agreement with a non-Iranian individual residing in Iran (the “Agreement”) in connection with the Assure network testing.  Under the terms of the Agreement, the individual was required to acquire and activate subscriber identity module (“SIM”) cards and obtain cellular services from three Iranian mobile telecommunications providers, two of which the Government of Iran maintains either majority or total ownership.  The Agreement provided that Ascade was to pay the individual a hosting service fee of 750 euros per year and reimburse the individual for the costs of acquiring the SIM card and obtaining cellular services.  We have terminated the Agreement.  An initial voluntary disclosure has been submitted to the Department of the Treasury, Office of Foreign Assets Control regarding the Agreement.

Gross Revenues and Net Profits Attributable to the Activity.  No gross revenues or net profits are directly attributable to the Agreement.  The services provided under the Agreement are only an insignificant component of the overall aggregated Assure solution, and are not sold as a separate, identifiable component of the Assure solution to our clients.  The gross revenues and net profits of the overall Assure service, however, are not material to our overall financial results (less than 1% of our total revenues).

Whether We or Our Affiliates Intend to Conduct Future Activities.  We and our affiliates have either suspended or terminated all known activities in Iran and will not undertake future activities without prior U.S. governmental authorization.

Management Overview of Quarterly Results

Third Quarter Highlights.  A summary of our results of operations for the third quarter of 2013, when compared to the third quarter of 2012, is as follows (in thousands, except per share amounts and percentages):  

	Quarter Ended
	September 30, 2013			September 30, 2012
Revenues	$	186,180			$	190,001
Operating Results:
Operating income		20,553				21,728
Operating income margin		11.0	%			11.4	%
Diluted EPS	$	0.47			$	0.29
Supplemental Data:
ACP customer accounts (end of period)		49,151				49,224
Restructuring charges	$	76			$	—
Stock-based compensation		3,979				3,461
Amortization of acquired intangible assets		4,757				5,882
Amortization of OID		1,351				1,251

Revenues.  Our revenues for the third quarter of 2013 were $186.2 million, a decrease of 2% when compared to $190.0 million for the same period in 2012.  The decrease in revenues can be attributed to the negative impact of the pricing adjustments associated with the Comcast and Time Warner contract extensions, discussed in further detail below, and to a lesser degree, approximately $2 million of divested revenues from the sale of a small print and mail facility on July 1, 2013.  The year-over-year impact of these reductions have been partially offset by growth in the other areas of our business.

Operating Results.  Operating income for the third quarter of 2013 was $20.6 million, or an 11.0% operating income margin percentage, compared to $21.7 million, or an 11.4% operating income margin percentage, for the third quarter of 2012.  The decreases in operating income and operating income margin percentages are driven by the impact of the Comcast and Time Warner pricing adjustments and an increase in selling, general and administrative (“SG&A”) expenses, as discussed below.

Diluted EPS.  Diluted EPS for the third quarter of 2013 was $0.47 compared to $0.29 for the third quarter of 2012, with the increase primarily related to an unusually low effective income tax rate for the current quarter of 8%.  This third quarter income tax rate benefited primarily from the recognition of incremental R&D income tax credits claimed for development activities from previous

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years and partially by the reduction of certain tax allowances related to foreign operations.  The lower tax rate provided a benefit of approximately $6 million, or $0.17 per diluted share for the third quarter of 2013.

Cash and Cash Flows.  As of September 30, 2013, we had cash, cash equivalents and short-term investments of $193.9 million, as compared to $189.3 million as of June 30, 2013, and $169.3 million as of December 31, 2012.  Our cash flows from operating activities for the third quarter of 2013 were $25.2 million.  See the Liquidity section below for further discussion of our cash flows.

Significant Client Relationships

Client Concentration.  A large percentage of our historical revenues have been generated from our three largest clients, which are Comcast, DISH Network Corporation (“DISH”), and Time Warner.  Revenues from these clients represented the following percentages of our total revenues for the indicated periods:

	Quarter Ended
	September 30, 2013			June 30, 2013			September 30, 2012
Comcast		19	%		18	%		21	%
DISH		15	%		15	%		13	%
Time Warner		11	%		10	%		10	%

The percentages of net billed accounts receivable balances attributable to our largest clients as of the indicated dates were as follows:

	As of
	September 30, 2013			June 30, 2013			December 31, 2012
Comcast		21	%		20	%		19	%
DISH		14	%		14	%		19	%
Time Warner		11	%		11	%		14	%

See our 2012 10-K for additional discussion of our business relationships and contractual terms with the above mentioned significant clients.

Comcast.  On March 26, 2013, we entered into a new agreement with Comcast to extend our relationship for an additional four years through February 28, 2017.  See our Form 10-Q for the three months ended March 31, 2013 (our “Q1-13 10-Q”) for additional details of the new Comcast agreement.  

The new Comcast agreement was effective March 1, 2013 and included a pricing discount over their previous contract rates, which is expected to reduce 2013 revenues for the comparable services by approximately 10%, when considering the discount is in effect for ten months of 2013.The anticipated revenue impact in both the near and long terms may vary depending on the actual level of products and services purchased by Comcast, and therefore, there can be no assurances as to the level of revenues to be generated from Comcast in the future.  

A copy of the new Comcast agreement and related amendments, with confidential information redacted, is included in the exhibits to our periodic filings with the SEC.  

Time Warner.  On December 28, 2012, we entered into a contract with Time Warner to extend our relationship for an additional four years through March 31, 2017.  See our Q1-13 10-Q for additional details of the new Time Warner agreement.  

The new Time Warner agreement was effective April 1, 2013 and included a pricing discount over their previous contract rates, which is expected to reduce 2013 revenues for the comparable services by approximately 7.5%, when considering the discount is in effect for nine months of 2013.The anticipated revenue impact in both the near term and long term may vary depending on the actual level of products and services purchased by Time Warner, and therefore, there can be no assurances as to the level of revenues to be generated from Time Warner in the future.  

A copy of the Time Warner processing agreement and related amendments, with confidential information redacted, is included in the exhibits to our periodic filings with the SEC.  

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Risk of Client Concentration.  We expect to continue to generate a significant percentage of our future revenues from our three largest clients mentioned above.  There are inherent risks whenever a large percentage of total revenues are concentrated with a limited number of clients.  Should a significant client: (i) terminate or fail to renew their contracts with us, in whole or in part, for any reason; (ii) significantly reduce the number of customer accounts processed on our solutions, the price paid for our services, or the scope of services that we provide; or (iii) experience significant financial or operating difficulties, it could have a material adverse effect on our financial condition and results of operations.  

Stock-Based Compensation Expense

Stock-based compensation expense is included in the following captions in the accompanying Income Statements (in thousands):

	Quarter Ended				Nine Months Ended
	September 30, 2013		September 30, 2012		September 30, 2013		September 30, 2012
Cost of processing and related services	$	678	$	669	$	1,911	$	1,908
Cost of software, maintenance and services		333		222		943		627
R&D expense		423		370		1,263		1,099
SG&A expense		2,545		2,200		7,380		6,356
Total stock-based compensation expense	$	3,979	$	3,461	$	11,497	$	9,990

Amortization of Acquired Intangible Assets

Amortization of acquired intangible assets is included in the following captions in the accompanying Income Statements (in thousands):

	Quarter Ended				Nine Months Ended
	September 30, 2013		September 30, 2012		September 30, 2013		September 30, 2012
Cost of processing and related services	$	483	$	824	$	1,634	$	2,351
Cost of software, maintenance and services		4,274		5,058		13,036		14,586
Total amortization of acquired intangible assets	$	4,757	$	5,882	$	14,670	$	16,937

Critical Accounting Policies

The preparation of our Financial Statements in conformity with accounting principles generally accepted in the U.S. requires us to select appropriate accounting policies, and to make judgments and estimates affecting the application of those accounting policies.  In applying our accounting policies, different business conditions or the use of different assumptions may result in materially different amounts reported in our Financial Statements.

We have identified the most critical accounting policies that affect our financial position and the results of our operations.  Those critical accounting policies were determined by considering the accounting policies that involve the most complex or subjective decisions or assessments.  The most critical accounting policies identified relate to: (i) revenue recognition; (ii) allowance for doubtful accounts receivable; (iii) impairment assessments of goodwill and other long-lived assets; (iv) income taxes; (v) business combinations and asset purchases; and (vi) loss contingencies.  These critical accounting policies, as well as our other significant accounting policies, are discussed in our 2012 10-K.

Results of Operations

Total Revenues.  Total revenues for the:  (i) third quarter of 2013 were $186.2 million, a 2% decrease when compared to $190.0 million for the third quarter of 2012; and (ii) nine months ended September 30, 2013 were $552.9 million, a 1% decrease when compared to $558.9 million for the nine months ended September 30, 2012.  The components of total revenues, discussed in more detail below, are as follows (in thousands):

	Quarter Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Revenues:
Processing and related services	$	133,294	$	138,993	$	399,112	$	408,669
Software, maintenance and services		52,886		51,008		153,807		150,190
Total revenues	$	186,180	$	190,001	$	552,919	$	558,859

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We use the location of the client as the basis of attributing revenues to individual countries.  Revenues by geographic regions for the third quarters and nine months ended September 30, 2013 and 2012 were as follows (in thousands):

	Quarter Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Americas (principally the U.S.)	$	158,209	$	164,689	$	470,422	$	487,088
Europe, Middle East and Africa		20,613		17,850		57,564		50,834
Asia Pacific		7,358		7,462		24,933		20,937
Total revenues	$	186,180	$	190,001	$	552,919	$	558,859

Processing and related services revenues.  Processing and related services revenues for the:  (i) third quarter of 2013 decreased 4% to $133.3 million, from $139.0 million for the third quarter of 2012; and (ii) nine months ended September 30, 2013 decreased 2% to $399.1 million, from $408.7 million for the nine months ended September 30, 2012.  The decrease in processing and related services revenues are driven mainly by the impact of the pricing adjustments related to the new Comcast and Time Warner agreements, both discussed in the Significant Client Relationships section above and in our Q1-13 10-Q, and to a lesser degree, by the approximately $2 million of divested revenues from the sale of a small print and mail facility.

Additional information related to processing and related services revenues is as follows:

· Amortization of our client contracts intangible assets related to investments in client contracts (reflected as a reduction of processing and related services revenues) for the:  (i) third quarters of 2013 and 2012 were $1.5 million and $1.9 million, respectively; and (ii) nine months ended September 30, 2013 and 2012 were $4.6 million and $5.7 million, respectively.

· Total customer accounts processed on our ACP solution as of September 30, 2013 were 49.2 million, compared to 49.1 million as of June 30, 2013 and 49.2 million as of September 30, 2012.  

Software, Maintenance and Services Revenues.  Software, maintenance and services revenues for the:  (i) third quarter of 2013 increased 4% to $52.9 million, from $51.0 million for the third quarter of 2012; and (ii) nine months ended September 30, 2013 increased 2% to $153.8 million, from $150.2 million for the nine months ended September 30, 2012.  The year-over-year increases in software, maintenance and services revenues can be attributed to the normal fluctuations between periods in our software and professional services business.

Total Expenses.  Our operating expenses for the:  (i) third quarter of 2013 were $165.6 million, a decrease of 2% when compared to $168.3 million for the third quarter of 2012; and (ii) nine months ended September 30, 2013 were $492.7 million, an increase of 2% when compared to $484.4 million for the nine months ended September 30, 2012.  

The components of total expenses are discussed in more detail below.

Cost of Revenues.  See our 2012 10-K for a description of the types of costs that are included in the individual line items for cost of revenues.

Cost of Processing and Related Services.  The cost of processing and related services for the:  (i) third quarter of 2013 decreased 4%, to $65.2 million, from $67.6 million for the third quarter of 2012; and (ii) nine months ended September 30, 2013 decreased 1%, to $189.7 million, from $191.9 million for the nine months ended September 30, 2012.   These decreases can be primarily attributed:  (i) to an impairment charge of $2.5 million that we recorded in the third quarter of 2012 to cost of processing and related services associated with the cancellation of a managed services arrangement where we had previously capitalized conversion/set-up costs; and (ii) the disposition of a small print and mail facility.  These decreases were offset to a certain degree by expected increases in data processing and employee-related costs.  Total processing and related services cost as a percentage of our processing and related services revenues for the:  (i) third quarters of 2013 and 2012 were 48.9% and 48.6%, respectively; and (ii) nine months ended September 30, 2013 and 2012 were 47.5% and 47.0%, respectively.

Cost of Software, Maintenance and Services.  The cost of software, maintenance and services for the:  (i)  third quarter of 2013 decreased 9% to $29.7 million, from $32.8 million for the third quarter of 2012; and (ii) nine months ended September 30, 2013 increased 2% to $93.3 million, from $91.0 million for the nine months ended September 30, 2012.  

· The quarter-over-quarter decrease is a result of a reassignment of personnel and the related costs previously assigned internally to software maintenance and consulting projects to other projects, and to a lesser degree, a decrease in amortization expense for certain acquired technology assets that became fully amortized during the year.

· The increase in the year-to-date cost of software are related services are primarily due to the incremental costs incurred from the Ascade business, acquired in July 2012.  

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The cost of software, maintenance and services as a percentage of our software, maintenance and services revenues for the:  (i) third quarters of 2013 and 2012 were 56.2% and 64.4%, respectively; and (ii) nine months ended September 30, 2013 and 2012 were 60.7% and 60.6%, respectively.

Variability in quarterly revenues and operating results are inherent characteristics of companies that sell software licenses and perform professional services.  Our quarterly revenues for software licenses and professional services may fluctuate, depending on various factors, including the timing of executed contracts and revenue recognition, and the delivery of solutions.  However, the costs associated with software and professional services revenues are not subject to the same degree of variability (e.g., these costs are generally fixed in nature within a relatively short period of time), and thus, fluctuations in our cost of software, maintenance and services as a percentage of our software, maintenance and services revenues may occur between periods.  

R&D Expense.  R&D expense remained relatively consistent between periods.  For the: (i) third quarter of 2013, R&D expense was $27.6 million, compared to $28.5 million for the third quarter of 2012; and (ii) nine months ended September 30, 2013 it was $83.7 million, compared to $84.2 million for the nine months ended September 30, 2012.  As a percentage of total revenues, R&D expense was 14.8% for the third quarter of 2013 compared to 15.0% for the third quarter of 2012.  We did not capitalize any internal development costs during the third quarters of 2013 and 2012.  

Our R&D efforts are focused on the continued evolution of our solutions that enable service providers worldwide to provide a more personalized customer experience while turning transactions into revenues.  This includes the continued investment in our BSS solutions aimed at improving a providers’ time-to-market, flexibility, scalability, and total cost of ownership.  We expect that our R&D investment activities in the near-term will be relatively consistent with this past quarter, with the level of R&D spend highly dependent upon the opportunities that we see in our markets.  

SG&A Expense.  SG&A expense for the: (i) third quarter of 2013 increased 13% to $38.4 million, from $34.0 million for the third quarter of 2012; and (ii) nine months ended September 30, 2013 increased 11% to $110.6 million, from $99.4 million for the nine months ended September 30, 2012.  The increases in SG&A are mainly due to additional investments we are making in business development aimed at new verticals and industries, with the year-to-date increase also reflective of the full year impact of the additional SG&A costs related to the Ascade business.  Our SG&A costs as a percentage of total revenues increased to 20.6% for the third quarter of 2013, compared to 17.9% for the third quarter of 2012.

Depreciation Expense.  Depreciation expense for the:  (i) third quarter of 2013 decreased 14% to $4.6 million, from $5.4 million for the third quarter of 2012; and (ii) nine months ended September 30, 2013 decreased 16% to $14.4 million, from $17.1 million for the nine months ended September 30, 2012.  The decreases are a result of certain assets that are still in use becoming fully depreciated over the past year.

Operating Income. Operating income and operating income margin percentage for the:  (i) third quarter of 2013 was $20.6 million, or 11.0% of total revenues, compared to $21.7 million, or 11.4 % of total revenues for the third quarter of 2012; and (ii) nine months ended September 30, 2013 was $60.3 million, or 10.9% of total revenues, compared to $74.4 million or 13.3% of total revenues for the nine months ended September 30, 2012.  The decreases in operating income and operating income margin percentages are driven mainly by the impact of the Comcast and Time Warner pricing adjustments and an increase in SG&A expenses, discussed above.

Interest Expense.  Interest expense for the:  (i)  third quarter of 2013 decreased 36% to $2.6 million, from $4.1 million for the third quarter of 2012; and (ii) nine months ended September 30, 2013 decreased 29% to $8.7 million, from $12.3 million for the nine months ended September 30, 2012.  These decreases are primarily due to the refinancing of our Credit Agreement in November 2012, which reduced the fixed portion of the interest rate by 175 basis points, and due to a lower average debt balance outstanding.

Income Tax Provision.  The effective income tax rates for the third quarters of 2013 and 2012 and nine months ended September 30, 2013 and 2012 were as follows:

Quarter Ended September 30,				Nine Months Ended September 30,
2013		2012		2013		2012
8	%	45	%	14	%	44	%

For the third quarter and nine months ended September 30, 2013, the effective income tax rate was unusually low driven mainly by incremental R&D income tax credits claimed for development activities from previous years and partially by the reduction of certain tax allowances related to foreign operations.  The lower tax rates provided a benefit of approximately $6 million for both the quarter and nine months ended September 30, 2013.  

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In addition, the rate for the nine months ended September 30, 2013 benefited from the recognition approximately $6 million of R&D tax credits that we generated in 2012 but were recorded in the first quarter of 2013.  As a result of the American Taxpayer Relief Act of 2012 being signed into law on January 2, 2013, we were unable to include these credits in the determination of our 2012 effective income tax rate, as a change in tax law is accounted for in the period of enactment.  Thus, the benefit of these credits is reflected in the year-to-date 2013 effective income tax rate.

For the full year 2013, we are estimating an effective income tax rate of 20%.  This rate primarily reflects the benefit of the R&D tax credits discussed above.   

Liquidity

Cash and Liquidity

As of September 30, 2013, our principal sources of liquidity included cash, cash equivalents, and short-term investments of $193.9 million, compared to $189.3 million as of June 30, 2013 and $169.3 million as of December 31, 2012.  We generally invest our excess cash balances in low-risk, short-term investments to limit our exposure to market and credit risks.  

As part of our Credit Agreement, we have a five-year, $100 million senior secured revolving loan facility (“Revolver”) with a syndicate of financial institutions that expires in November 2017 (or December 31, 2016 if certain conditions exist).  As of September 30, 2013, there were no borrowings outstanding on the Revolver.  The Credit Agreement contains customary affirmative covenants and financial covenants.  As of September 30, 2013, and the date of this filing, we believe that we are in compliance with the provisions of the Credit Agreement.  

Our cash, cash equivalents, and short-term investment balances as of the end of the indicated periods were located in the following geographical regions (in thousands):

	September 30, 2013		December 31, 2012
Americas (principally the U.S.)	$	178,820	$	137,291
Europe, Middle East and Africa		10,615		28,763
Asia Pacific		4,463		3,267
Total cash, equivalents and short-term investments	$	193,898	$	169,321

We generally have ready access to substantially all of our cash, cash equivalents, and short-term investment balances, but may face limitations on moving cash out of certain foreign jurisdictions due to currency controls.  As of September 30, 2013, we had $4.9 million of cash restricted as to use to collateralize outstanding letters of credit.

Cash Flows From Operating Activities

We calculate our cash flows from operating activities in accordance with GAAP, beginning with net income, adding back the impact of non-cash items or non-operating activity (e.g., depreciation, amortization, amortization of OID, impairments, deferred income taxes, stock-based compensation, etc.), and then factoring in the impact of changes in operating assets and liabilities.  See our 2012 10-K for a description of the primary uses and sources of our cash flows from operating activities.  

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Our 2012 and 2013 net cash flows from operating activities, broken out between operations and changes in operating assets and liabilities, for the quarters ended are as follows (in thousands):

	Operations		Changes in Operating Assets and Liabilities			Net Cash Provided by Operating Activities – Totals
Cash Flows from Operating Activities:
2012:
March 31	$	28,890	$	19,299		$	48,189
June 30		29,898		6,681			36,579
September 30		32,608		(8,954	)		23,654
Year-to-date total	$	91,396	$	17,026		$	108,422
2013:
March 31	$	41,320	$	(18,776	)	$	22,544
June 30		31,308		7,494			38,802
September 30		29,634		(4,398	)		25,236
Year-to-date total	$	102,262	$	(15,680	)	$	86,582

We believe the above table illustrates our ability to consistently generate strong cash flows from operations, and the importance of managing our working capital items.  As the table above illustrates, the operations portion of our cash flows from operating activities remains a consistently strong measure for us.  The variations in our net cash provided by operating activities are related mostly to the changes in our operating assets and liabilities (related mostly to normal fluctuations in timing at quarter-end for such things as client payments and changes in accrued expenses), and generally over longer periods of time, do not significantly impact our cash flows from operations.    

Significant fluctuations in key operating assets and liabilities between 2013 and 2012 that impacted our cash flows from operating activities are as follows:

Billed Trade Accounts Receivable

Management of our billed accounts receivable is one of the primary factors in maintaining consistently strong quarterly cash flows from operating activities.  Our billed trade accounts receivable balance includes significant billings for several non-revenue items (primarily postage, sales tax, and deferred revenue items).  As a result, we evaluate our performance in collecting our accounts receivable through our calculation of days billings outstanding (“DBO”) rather than a typical days sales outstanding (“DSO”) calculation.  DBO is calculated based on the billings for the period (including non-revenue items) divided by the average monthly net trade accounts receivable balance for the period.  

Our gross and net billed trade accounts receivable and related allowance for doubtful accounts receivable (“Allowance”) as of the end of the indicated quarterly periods, and the related DBOs for the quarters then ended, are as follows (in thousands, except DBOs):

Quarter Ended	Gross		Allowance			Net Billed		DBOs
2012:
March 31	$	173,834	$	(2,925	)	$	170,909	61
June 30		166,194		(2,802	)		163,392	62
September 30		177,055		(2,918	)		174,137	61
December 31		195,090		(3,147	)		191,943	62
2013:
March 31		182,711		(3,618	)		179,093	64
June 30		176,271		(3,750	)		172,521	65
September 30		177,800		(3,043	)		174,757	65

The increase in gross and net billed accounts receivable in the fourth quarter of 2012 can be primarily attributed to the fluctuations in the timing of client payments at year-end and to several billing milestones being met towards the end of the quarter.  All other changes in our gross and net billed trade accounts receivable shown in the table above reflect the normal fluctuations in the timing of client payments made at quarter-end, evidenced by our consistent DBO metric over the past several quarters.

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As a global provider of software and professional services, a portion of our accounts receivable balance relates to clients outside the U.S.  As a result, this diversity in the geographic composition of our client base may adversely impact our DBOs as longer billing cycles (i.e., billing terms and cash collection cycles) are an inherent characteristic of international software and professional services transactions.  For example, our ability to bill (i.e., send an invoice) and collect arrangement fees may be dependent upon, among other things: (i) the completion of various client administrative matters, local country billing protocols and processes (including local cultural differences), and/or non-client administrative matters; (ii) us meeting certain contractual invoicing milestones; or (iii) the overall project status in certain situations in which we act as a subcontractor to another vendor on a project.  

Unbilled Trade Accounts Receivable

Unbilled trade accounts receivable as September 30, 2013 was $41.3 million, a $12.8 million increase when compared to the December 31, 2012 balance of $28.5 million.  The increase between periods consists primarily of several transactions with various milestone and contractual billing dates which have not yet been reached.  Unbilled accounts receivable are an inherent characteristic of certain software and professional services transactions and may fluctuate between quarters, as these type of transactions typically have scheduled invoicing terms over several quarters, as well as certain milestone billing events.  

Accrued Employee Compensation

Accrued employee compensation decreased $12.5 million, from $61.1 million as of December 31, 2012, to $48.6 million as of September 30, 2013.  This decrease is primarily due to:  (i) the payment of the 2012 employee incentive performance bonuses in March 2013 that were fully accrued at December 31, 2012, offset to a certain degree by the accrual for the 2013 employee incentive performance bonuses, and (ii) the timing of payment of employee wages and other benefits.   

Deferred Revenue

Total deferred revenue (current and non-current) increased $6.5 million, from $54.2 as of December 31, 2012, to $60.7 million as of September 30, 2013, mainly as the result of annual recurring services that are typically billed in the first quarter of each year.

Cash Flows From Investing Activities

Our typical investing activities consist of purchases/sales of short-term investments, purchases of property and equipment, and investments in client contracts, which are discussed below.  Additionally, during the third quarter of 2013, we sold a small print and mail facility which resulted in net proceeds from the disposition of $1.7 million, and in the third quarter of 2012 we acquired the Ascade business for $19.1 million, net of cash acquired.

Purchases/Sales of Short-term Investments.  During the nine months ended September 30, 2013 and 2012, we purchased $129.3 million and $45.5 million, respectively, and sold (or had mature) $62.7 million and $33.2 million, respectively, of short-term investments.  We continually evaluate the appropriate mix of our investment of excess cash balances between cash equivalents and short-term investments in order to maximize our investment returns and will likely purchase and sell additional short-term investments in the future.

Property and Equipment/Client Contracts.  Our capital expenditures for the nine months ended September 30, 2013 and 2012, for property and equipment, and investments in client contracts were as follows (in thousands):

	Nine Months Ended September 30,
	2013		2012
Property and equipment	$	18,986	$	20,488
Client contracts		5,349		4,253

The property and equipment expenditures during the nine months ended September 30, 2013 consisted principally of investments in: (i) computer hardware, software and related equipment, and (ii) facilities and internal infrastructure items.

The investments in client contracts for the nine months ended September 30, 2013 and 2012 relate to client incentive payments ($4.7 million and $0.5 million, respectively) and the deferral of costs related to conversion/set-up services provided under long-term processing contracts ($0.6 million and $3.8 million, respectively).  

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Cash Flows From Financing Activities

Our financing activities typically consist of activities associated with our common stock and our long-term debt.  

Repurchase of Common Stock.  During the nine months ended September 30, 2013 and 2012, we repurchased approximately 0.5 million shares and 0.8 million shares, respectively, of our common stock under the guidelines of our Stock Repurchase Program for $10.1 million and $13.3 million, respectively.  In addition, outside of our Stock Repurchase Program, during the nine months ended September 30, 2013 and 2012, we repurchased from our employees and then cancelled approximately 0.3 million and 0.2 million shares, respectively, of our common stock in each period for $5.0 million and $3.0 million, respectively, in connection with minimum tax withholding requirements resulting from the vesting of restricted common stock under our stock incentive plans.

Cash Dividends Paid on Common Stock.  During the nine months ended September 30, 2013, the Board approved dividend payments totaling $10.2 million, of which $9.6 million had been paid through September 30, 2013 (with the remaining amount attributed to unvested shares to be paid upon vesting).

Long-term Debt.  During the nine months ended September 30, 2013 and 2012, we made $11.3 million and $22.0 million, respectively, of principal repayments.

Capital Resources

The following are the key items to consider in assessing our sources and uses of capital resources:

Current Sources of Capital Resources.

· Cash, Cash Equivalents and Short-term Investments. As of September 30, 2013, we had cash, cash equivalents, and short-term investments of $193.9 million, of which approximately 91% is in U.S. Dollars and held in the U.S.  We have $4.9 million of restricted cash, used primarily to collateralize outstanding letters of credit. For the remainder of the monies denominated in foreign currencies and/or located outside the U.S., we do not anticipate any material amounts being unavailable for use in running our business.

· Operating Cash Flows.  As described in the Liquidity section above, we believe we have the ability to consistently generate strong cash flows to fund our operating activities and act as a source of funds for our capital resource needs.

· Revolving Loan Facility.  We have a $100 million senior secured revolving loan facility with a syndicate of financial institutions that expires in November 2017 (or December 2016 if certain conditions exist).  As of the date of this filing, we have $100 million of the revolving loan facility available to us.  

Uses/Potential Uses of Capital Resources.  Below are the key items to consider in assessing our uses/potential uses of capital resources:  

· Common Stock Repurchases.  We have made significant repurchases of our common stock in the past under our Stock Repurchase Program.  During the nine months ended September 30, 2013, we repurchased 0.5 million shares of our common stock for $10.1 million (weighted-average price of $20.23 per share) under our Stock Repurchase Program.  As of September 30, 2013, we have 2.1 million shares authorized for repurchase remaining under our Stock Repurchase Program.  Our Credit Agreement places certain limitations on our ability to repurchase our common stock.  We continue to evaluate the best use of our capital going forward, which from time-to-time, may include additional share repurchases as market and business conditions warrant.

· Cash Dividends.  On June 25, 2013, our Board approved the initiation of a quarterly cash dividend to be paid to our stockholders.  During the nine months ended September 30, 2013, the Board approved dividend payments totaling $10.2 million, of which $9.6 million had been paid through September 30, 2013 (with the remaining amount attributed to unvested shares to be paid upon vesting).  Going forward, we expect to pay cash dividends quarterly each year in March, June, September, and December, with the amount and timing subject to the Boards’ approval.  

· Acquisitions.  As part of our growth strategy, we are continually evaluating potential business and/or asset acquisitions and investments in market share expansion with our existing and potential new clients.  Most recently, in July 2012, we acquired Ascade for approximately $19 million in cash.  

· Capital Expenditures.  During the nine month ended September 30, 2013, we spent $19.0 million on capital expenditures. At this time, we expect our 2013 capital expenditures to be approximately $35 million.  As of September 30, 2013, we have made no significant capital expenditure commitments.

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· Investments in Client Contracts.   In the past, we have provided incentives to new or existing U.S. processing clients to convert their customer accounts to, or retain their customer’s accounts on, our customer care and billing solutions. During the nine months ended September 30, 2013, we made client incentive payments of $5.3 million.  As of September 30, 2013, we had commitments to make $7.5 million of client incentive payments, $1.5 million for the remainder of 2013, $3.0 million in 2014, and $1.5 million in 2015 and 2016, respectively.

· Long-Term Debt Service.  As of September 30, 2013, our long-term debt consisted of: (i) 2010 Convertible Notes with a par value of $150.0 million; and (ii) Credit Agreement term loan borrowings of $138.8 million.  During the next twelve months, there are no scheduled conversion triggers on our 2010 Convertible Notes, and therefore, our expected cash debt service at this time related to the 2010 Convertible Notes is the $4.5 million of interest payments.  Over the next 12 months, the mandatory repayments and the cash interest expense (based upon current interest rates) for our Credit Agreement are $15.0 million and $3.8 million, respectively.  We have the ability to make prepayments on our Credit Agreement without penalty.

We continue to evaluate the best use of our capital going forward, which from time-to-time, may include common stock repurchases, payment of cash dividends, repurchases of our 2010 Convertible Notes, and/or prepayments on our Credit Agreement, as market and business conditions warrant.

In summary, we expect to continue to have material needs for capital resources going forward, as noted above. We believe that our current cash, cash equivalents and short-term investments balances and our revolving loan facility, together with cash expected to be generated in the future from our current operating activities, will be sufficient to meet our anticipated capital resource requirements for at least the next 12 months.  We also believe we could obtain additional capital through other debt sources which may be available to us if deemed appropriate.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk is the potential loss arising from adverse changes in market rates and prices.  As of September 30, 2013, we are exposed to various market risks, including changes in interest rates, fluctuations and changes in the market value of our cash equivalents and short-term investments, and changes in foreign currency exchange rates.  We have not historically entered into derivatives or other financial instruments for trading or speculative purposes.  

Interest Rate Risk.

The interest rate on our convertible debt is fixed, and thus, as it relates to our convertible debt borrowings, we are not exposed to changes in interest rates.  

The interest rates under our Credit Agreement are based upon an adjusted LIBOR rate plus an applicable margin, or an alternate base rate plus an applicable margin.  See Note 5 to our Financial Statements for further details of our long-term debt.

As of September 30, 2013, we are a party to an interest rate swap contract with the objective of managing our exposure to fluctuations in interest rate movements, thereby eliminating the variability of cash flows on a portion of the interest payments related to our variable-rate debt.  See Note 6 to our Financial Statements for further details on the interest rate swap contract.  

As a result of the interest rate swap contract, as of September 30, 2013, we were exposed to fluctuations in interest rate movements on $91.3 million of our Term Loan.  We expect our exposure amount to fluctuate over the remaining term of the interest rate swap contract as the notional amount of the interest rate swap declines and the balance due under the Credit Agreement is repaid through mandatory repayments or prepayments.

A hypothetical adverse change of 10% in the September 30, 2013 adjusted LIBOR rate would not have had a material impact upon our results of operations.

Market Risk Related to Cash Equivalents and Short-term Investments.  

Our cash and cash equivalents as of September 30, 2013 and December 31, 2012 were $92.7 million and $133.7 million, respectively.Certain of our cash balances are “swept” into overnight money market accounts on a daily basis, and at times, any excess funds are invested in low-risk, somewhat longer term, cash equivalent instruments and short-term investments.  Our cash equivalents are invested primarily in institutional money market funds, commercial paper, and time deposits held at major banks.  We have minimal market risk for our cash and cash equivalents due to the relatively short maturities of the instruments.  

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Our short-term investments as of September 30, 2013 and December 31, 2012 were $101.2 million and $35.6 million, respectively.  Currently, we utilize short-term investments as a means to invest our excess cash, primarily in the U.S.  The day-to-day management of our U.S. short-term investments is performed by a large financial institution, using strict and formal investment guidelines approved by our Board.  Under these guidelines, short-term investments are limited to certain acceptable investments with:  (i) a maximum maturity; (ii) a maximum concentration and diversification; and (iii) a minimum acceptable credit quality.  At this time, we believe we have minimal liquidity risk associated with the short-term investments included in our portfolio.

Foreign Currency Exchange Rate Risk.

Due to foreign operations around the world, our balance sheet and income statement are exposed to foreign currency exchange risk due to the fluctuations in the value of currencies in which we conduct business.  While we attempt to maximize natural hedges by incurring expenses in the same currency in which we contract revenue, the related expenses for that revenue could be in one or more differing currencies than the revenue stream.

During the nine months ended September 30, 2013, we generated approximately 87% of our revenues in U.S. dollars.  We expect that, in the foreseeable future, we will continue to generate a very large percentage of our revenues in U.S. dollars.

As of September 30, 2013 and December 31, 2012, the carrying amounts of our monetary assets and monetary liabilities on the books of our non-U.S. subsidiaries in currencies denominated in a currency other than the functional currency of those non-U.S. subsidiaries are as follows (in thousands, in U.S. dollar equivalents):

	September 30, 2013					December 31, 2012
	Monetary Liabilities			Monetary Assets		Monetary Liabilities			Monetary Assets
Pounds sterling	$	—		$	1,047	$	(36	)	$	1,439
Euro		(31	)		4,472		(40	)		5,090
U.S. Dollar		(123	)		13,294		(94	)		23,719
Other		(1	)		2,293		(20	)		3,311
Totals	$	(155	)	$	21,106	$	(190	)	$	33,559

A hypothetical adverse change of 10% in the September 30, 2013 exchange rates would not have had a material impact upon our results of operations.

Item 4. Controls and Procedures

(a) Disclosure Controls and Procedures

As required by Rule 13a-15(b), our management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), conducted an evaluation as of the end of the period covered by this report of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e). Based on that evaluation, the CEO and CFO concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

(b) Internal Control Over Financial Reporting

As required by Rule 13a-15(d), our management, including the CEO and CFO, also conducted an evaluation of our internal control over financial reporting, as defined by Rule 13a-15(f), to determine whether any changes occurred during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, the CEO and CFO concluded that there has been no such change during the quarter covered by this report.

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CSG SYSTEMS INTERNATIONAL, INC.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time-to-time, we are involved in litigation relating to claims arising out of our operations in the normal course of business.

As previously disclosed, we have encountered the following matters:

· We received an administrative subpoena from OFAC, dated February 27, 2012, requesting documents and information related to the possibility of direct or indirect transactions with or to Iranian entities. We have conducted an internal review to identify transactions by us involving the subject matter of the subpoena as well as with any other sanctioned or embargoed entity or jurisdiction. On July 13, 2012, we delivered to OFAC a response to the administrative subpoena.

· On July 13, 2012, we submitted an initial voluntary disclosure to OFAC relating to certain business dealings in Syria. On October 5, 2012, we submitted a voluntary disclosure relating to these business dealings.

· On August 8, 2013, we submitted an initial voluntary disclosure to OFAC relating to certain business dealings in Iran and another sanctioned/embargoed country.

These business dealings represented an insignificant amount of our consolidated revenues and income, and generally consisted of software licenses and related services. We cannot predict the ultimate outcome of these matters or the total costs which may be involved. We believe there is a likelihood that a loss may be realized related to these matters, but that no reasonable estimate of the loss can be made.

Other than the OFAC matters described above, we are not presently a party to any material pending or threatened legal proceedings.

Item 1A. Risk Factors

We or our representatives from time-to-time may make or may have made certain forward-looking statements, whether orally or in writing, including without limitation, any such statements made or to be made in MD&A contained in our various SEC filings or orally in conferences or teleconferences. We wish to ensure that such statements are accompanied by meaningful cautionary statements, so as to ensure, to the fullest extent possible, the protections of the safe harbor established in the Private Securities Litigation Reform Act of 1995.

Accordingly, the forward-looking statements are qualified in their entirety by reference to and are accompanied by the following meaningful cautionary statements identifying certain important risk factors that could cause actual results to differ materially from those in such forward-looking statements. This list of risk factors is likely not exhaustive. We operate in rapidly changing and evolving markets throughout the world addressing the complex needs of communication service providers, financial institutions, and many others, and new risk factors will likely emerge. Further, as we enter new market sectors such as financial services, as well as new geographic markets, we are subject to new regulatory requirements that increase the risk of non-compliance and the potential for economic harm to us and our clients. Management cannot predict all of the important risk factors, nor can it assess the impact, if any, of such risk factors on our business or the extent to which any risk factor, or combination of risk factors, may cause actual results to differ materially from those in any forward-looking statements. Accordingly, there can be no assurance that forward-looking statements will be accurate indicators of future actual results, and it is likely that actual results will differ from results projected in forward-looking statements and that such differences may be material.

We Derive a Significant Portion of Our Revenues From a Limited Number of Clients, and the Loss of the Business of a Significant Client Could Have a Material Adverse Effect on Our Financial Position and Results of Operations.

Over the past decade, the worldwide communications industry has experienced significant consolidation, resulting in a large percentage of the market being served by a limited number of service providers with greater size and scale. Consistent with this market concentration, we generate over 40% of our revenues from three clients, which are (in order of size) Comcast, DISH, and Time Warner, that each individually accounted for approximately 10% or more of our total revenues. See the Significant Client Relationships section of MD&A for key renewal dates and a brief summary of our business relationship with these clients.

There are inherent risks whenever a large percentage of total revenues are concentrated with a limited number of clients. One such risk is that a significant client could: (i) undergo a formalized process to evaluate alternative providers for services we provide; (ii) terminate or fail to renew their contracts with us, in whole or in part for any reason; (iii) significantly reduce the number of customer accounts processed on our solutions, the price paid for our services, or the scope of services that we provide; or (iv) experience significant financial or operating difficulties. Any such development could have a material adverse effect on our financial position and results of operations and/or trading price of our common stock.

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Our industry is highly competitive, and as a result, it is possible that a competitor could increase its footprint and share of customers processed at our expense or a provider could develop their own internal solutions. While our clients may incur some costs in switching to our competitors or their own internally-developed solutions, they may do so for a variety of reasons, including: (i) price; (ii) if we do not provide satisfactory solutions; or (iii) if we do not maintain favorable relationships.

Variability of Our Quarterly Revenues and Our Failure to Meet Revenue and Earnings Expectations Would Negatively Affect the Market Price for Our Common Stock.

Variability in quarterly revenues and operating results are inherent characteristics of the software and professional services industries. Common causes of a failure to meet revenue and operating expectations in these industries include, among others:

· The inability to close and/or recognize revenue on one or more material transactions that may have been anticipated by management in any particular period;

· The inability to renew timely one or more material software maintenance agreements, or renewing such agreements at lower rates than anticipated; and

· The inability to complete timely and successfully an implementation project and meet client expectations, due to factors discussed in greater detail below.

Software license, professional services, and software maintenance services revenues are a significant percentage of our total revenues. As our total revenues grow, so too does the risk associated with meeting financial expectations for revenues derived from our software licenses, professional services, and software maintenance services offerings. As a result, there is a proportionately increased likelihood that we may fail to meet revenue and earnings expectations of the investment community. Should we fail to meet analyst expectations, by even a relatively small amount, it would most likely have a disproportionately negative impact upon the market price of our common stock.

We May Not Be Successful in the Integration of Our Acquisitions.

As part of our growth strategy, we seek to acquire assets, technology, and businesses which will provide the technology and technical personnel to expedite our product development efforts, provide complementary solutions, or provide access to new markets and clients.

Acquisitions involve a number of risks and difficulties, including: (i) expansion into new markets and business ventures; (ii) the requirement to understand local business practices; (iii) the diversion of management’s attention to the assimilation of acquired operations and personnel; (iv) being bound by client or vendor contracts with unfavorable terms; and (v) potential adverse effects on a company’s operating results for various reasons, including, but not limited to, the following items: (a) the inability to achieve financial targets; (b) the inability to achieve certain operating goals and synergies; (c) costs incurred to exit current or acquired contracts or activities; (d) costs incurred to service any acquisition debt; and (e) the amortization or impairment of intangible assets.

Due to the multiple risks and difficulties associated with any acquisition, there can be no assurance that we will be successful in achieving our expected strategic, operating, and financial goals for any such acquisition.

The Delivery of Our Solutions is Dependent on a Variety of Computing Environments and Communications Networks Which May Not Be Available or May Be Subject to Security Attacks.

Our processing services are generally delivered through a variety of computing environments operated by us, which we will collectively refer to herein as “Systems.” We provide such computing environments through both outsourced arrangements, such as our current data processing arrangement with Infocrossing, as well as internally operating numerous distributed servers in geographically dispersed environments. The end users are connected to our Systems through a variety of public and private communications networks, which we will collectively refer to herein as “Networks.” Our solutions are generally considered to be mission critical customer management systems by our clients. As a result, our clients are highly dependent upon the high availability and uncompromised security of our Networks and Systems to conduct their business operations.

Our Networks and Systems are subject to the risk of an extended interruption or outage due to many factors such as: (i) planned changes to our Systems and Networks for such things as scheduled maintenance and technology upgrades, or migrations to other technologies, service providers, or physical location of hardware; (ii) human and machine error; (iii) acts of nature; and (iv) intentional, unauthorized attacks from computer “hackers”, or cyber attacks.

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In addition, we continue to expand our use of the Internet with our product offerings thereby permitting, for example, our clients’ customers to use the Internet to review account balances, order services or execute similar account management functions. Allowing access to our Networks and Systems via the Internet has the potential to increase their vulnerability to unauthorized access and corruption, as well as increasing the dependency of our Systems’ reliability on the availability and performance of the Internet and end users’ infrastructure they obtain through other third party providers.

The method, manner, cause and timing of an extended interruption or outage in our Networks or Systems are impossible to predict. As a result, there can be no assurances that our Networks and Systems will not fail, or that our business continuity plans will adequately mitigate the negative effects of a disruption to our Networks or Systems. Further, our property and business interruption insurance may not adequately compensate us for losses that we incur as a result of such interruptions. Should our Networks or Systems: (i) experience an extended interruption or outage; (ii) have their security breached; or (iii) have their data lost, corrupted or otherwise compromised, it would impede our ability to meet product and service delivery obligations, and likely have an immediate impact to the business operations of our clients. This would most likely result in an immediate loss to us of revenue or increase in expense, as well as damaging our reputation. An information breach in our Systems or Networks and loss of confidential information such as credit card numbers and related information could have a longer and more significant impact on our business operations than a hardware-related failure. The loss of confidential information could result in losing the customers’ confidence, as well as imposition of fines and damages. Any of these events could have both an immediate, negative impact upon our financial position and our short-term revenue and profit expectations, as well as our long-term ability to attract and retain new clients.

The Occurrence or Perception of a Security Breach or Disclosure of Confidential Personally Identifiable Information Could Harm Our Business.

In providing processing services to our clients, we process, transmit, and store confidential and personally identifiable information, including social security numbers and financial information. Our treatment of such information is subject to contractual restrictions and federal, state, and foreign data privacy laws and regulations. We use various data encryption strategies and have implemented measures to protect against unauthorized access to such information, and comply with these laws and regulations. These measures include standard industry practices such as periodic security reviews of our systems by independent parties, network firewalls, procedural controls, intrusion detection systems, and antivirus applications. Because of the inherent risks and complexities involved in protecting this information, these measures may fail to adequately protect this information. Any failure on our part to protect the privacy of personally identifiable information or comply with data privacy laws and regulations may subject us to contractual liability and damages, loss of business, damages from individual claimants, fines, penalties, criminal prosecution, and unfavorable publicity. Even the mere perception of a security breach or inadvertent disclosure of personally identifiable information could inhibit market acceptance of our solutions. In addition, third party vendors that we engage to perform services for us may unintentionally release personally identifiable information or otherwise fail to comply with applicable laws and regulations. The occurrence of any of these events could have an adverse effect on our business, financial position, and results of operations.

We May Not Be Able to Respond to Rapid Technological Changes.

The market for business support solutions, such as customer care and billing solutions, is characterized by rapid changes in technology and is highly competitive with respect to the need for timely product innovations and new product introductions. As a result, we believe that our future success in sustaining and growing our revenues depends upon: (i) our ability to continuously expand, adapt, modify, maintain, and operate our solutions to address the increasingly complex and evolving needs of our clients, without sacrificing the reliability or quality of the solutions; (ii) the integration of acquired assets and their widely distributed, complex worldwide operations; and (iii) the integration of other acquired technologies such as rating, wholesale billing, and data analytics, as well as creating an integrated suite of customer care and billing solutions, which are portable to new verticals such as utilities, financial services, and content distribution. In addition, the market is demanding that our solutions have greater architectural flexibility and interoperability, and that we are able to meet the demands for technological advancements to our solutions at a greater pace. Our attempts to meet these demands subjects our R&D efforts to greater risks.

As a result, substantial R&D and product investment will be required to maintain the competitiveness of our solutions in the market. Technical problems may arise in developing, maintaining, integrating, and operating our solutions as the complexities are increased. Development projects can be lengthy and costly, and may be subject to changing requirements, programming difficulties, a shortage of qualified personnel, and/or unforeseen factors which can result in delays. In addition, we may be responsible for the implementation of new solutions and/or the migration of clients to new solutions, and depending upon the specific solution, we may also be responsible for operations of the solution.

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There is an inherent risk in the successful development, implementation, migration, integration, and operation of our solutions as the technological complexities, and the pace at which we must deliver these solutions to market, continue to increase. The risk of making an error that causes significant operational disruption to a client, or results in incorrect customer or vendor data processing that we perform on behalf of our clients, increases proportionately with the frequency and complexity of changes to our solutions and new delivery models. There can be no assurance: (i) of continued market acceptance of our solutions; (ii) that we will be successful in the development of enhancements or new solutions that respond to technological advances or changing client needs at the pace the market demands; or (iii) that we will be successful in supporting the implementation, migration, integration, and/or operations of enhancements or new solutions.

Our International Operations Subject Us to Additional Risks.

We currently conduct a portion of our business outside the U.S. We are subject to certain risks associated with operating internationally including the following items:

· Product development not meeting local requirements;

· Fluctuations in foreign currency exchange rates for which a natural or purchased hedge does not exist or is ineffective;

· Staffing and managing foreign operations;

· Longer sales cycles for new contracts;

· Longer collection cycles for client billings or accounts receivable, as well as heightened client collection risks, especially in countries with highly inflationary economies and/or with restrictions on the movement of cash out of the country;

· Trade barriers;

· Governmental sanctions;

· Complying with varied legal and regulatory requirements across jurisdictions;

· Reduced protection for intellectual property rights in some countries;

· Inability to recover value added taxes and/or goods and services taxes in foreign jurisdictions;

· Political instability and threats of terrorism; and

· A potential adverse impact to our overall effective income tax rate resulting from, among other things:

· Operations in foreign countries with higher tax rates than the U.S.;

· The inability to utilize certain foreign tax credits; and

· The inability to utilize some or all of losses generated in one or more foreign countries.

One or more of these factors could have a material adverse effect on our international operations, which could adversely impact our results of operations and financial position.

Our International Operations Require Us To Comply With Applicable U.S. and International Laws and Regulations.

Doing business on a worldwide basis requires our company and our subsidiaries to comply with the laws and the regulations of the U.S. government and various international jurisdictions. These regulations place restrictions on our operations, trade practices and trade partners. In particular, our international operations are subject to U.S. and foreign anti-corruption laws and regulations such as the Foreign Corrupt Practices Act (“FCPA”), the U.K. Anti-Bribery Act and economic sanction programs administered by OFAC.

The FCPA prohibits us from providing anything of value to foreign officials for the purposes of influencing official decisions or obtaining or retaining business. In addition, the FCPA imposes accounting standards and requirements on publicly traded U.S. corporations and their foreign affiliates, which are intended to prevent the diversion of corporate funds to the payment of bribes and other improper payments, and to prevent the establishment of “off books” slush funds from which such improper payment can be made. As part of our business, we regularly deal with state-owned business enterprises, the employees of which are considered foreign officials for purposes of the FCPA. In addition, some of the international locations in which we operate lack a developed legal system and have higher than normal levels of corruption. We inform our personnel and third-party sales representatives of the requirements of the FCPA and other anti-corruption laws, including, but not limited to their reporting requirements. We have also developed and will continue to develop and implement systems for formalizing contracting processes, performing due diligence on agents and improving our recordkeeping and auditing practices regarding these regulations. However, there is no guarantee that our employees, third-party sales representatives or other agents have not or will not engage in conduct undetected by our processes and for which we might be held responsible under the FCPA or other anti-corruption laws.

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Economic sanctions programs restrict our business dealings with certain countries and individuals. From time to time, certain of our foreign subsidiaries have had limited business dealings with entities in jurisdictions subject to OFAC-administered sanctions. As a result of the above activities, we are exposed to a heightened risk of violating anti-corruption laws and OFAC regulations. Violations of these laws and regulations are punishable by civil penalties, including fines, injunctions, asset seizures, debarment from government contracts and revocations or restrictions of licenses, as well as criminal fines and imprisonment.

We have encountered the following matters:

· We received an administrative subpoena from OFAC, dated February 27, 2012, requesting documents and information related to the possibility of direct or indirect transactions with or to Iranian entities. We have conducted an internal review to identify transactions by us involving the subject matter of the subpoena as well as with any other sanctioned or embargoed entity or jurisdiction. On July 13, 2012, we delivered to OFAC a response to the administrative subpoena.

· On July 13, 2012, we submitted an initial voluntary disclosure to OFAC relating to certain business dealings in Syria. On October 5, 2012, we submitted a voluntary disclosure relating to these business dealings.

· On August 8, 2013, we submitted an initial voluntary disclosure to OFAC relating to certain business dealings in Iran and another sanctioned/embargoed country.

These business dealings represented an insignificant amount of our consolidated revenues and income, and generally consisted of software licenses and related services. We cannot predict the ultimate outcome of these matters or the total costs which may be involved. We believe there is a likelihood that a loss may be realized related to these matters, but that no reasonable estimate of the loss can be made. In addition, as set forth in the MD&A section of this report, we have disclosed certain activities relating to Iran undertaken by us or our affiliates as required by the TRA.

Our Use of Open Source Software May Subject Us to Certain Intellectual Property-Related Claims or Require Us to Re-Engineer Our Software, Which Could Harm Our Business.

We use open source software in connection with our solutions, processes, and technology. Companies that use or incorporate open source software into their products have, from time to time, faced claims challenging their use, ownership and/or licensing rights associated with that open source software. As a result, we could be subject to suits by parties claiming certain rights to what we believe to be open source software. Some open source software licenses require users who distribute open source software as part of their software to publicly disclose all or part of the source code in their software and make any derivative works of the open source code available on unfavorable terms or at no cost. In addition to risks related to license requirements, use of open source software can lead to greater risks than use of third party commercial software, as open source licensors generally do not provide warranties, support, or controls with respect to origin of the software. Use of open source software also complicates compliance with export-related laws. While we take measures to protect our use of open source software in our solutions, open source license terms may be ambiguous, and many of the risks associated with usage of open source software cannot be eliminated. If we were found to have inappropriately used open source software, we may be required to release our proprietary source code, re-engineer our software, discontinue the sale of certain solutions in the event re-engineering cannot be accomplished on a timely basis, or take other remedial action that may divert resources away from our development efforts, any of which could adversely affect our business, financial position, and results of operations.

A Reduction in Demand for Our Key Business Support Solutions Could Have a Material Adverse Effect on Our Financial Position and Results of Operations.

Historically, a substantial percentage of our total revenues have been generated from our core outsourced processing product, ACP, and related solutions. These solutions are expected to continue to provide a large percentage of our total revenues in the foreseeable future. Any significant reduction in demand for ACP and related solutions could have a material adverse effect on our financial position and results of operations. Likewise, a large percentage of revenues derived from our software license and services business have been derived from wholesale billing, retail billing and mediation products which are typically associated with large implementation projects. A sudden downward shift in demand for these products or for our professional services associated with these products could have a material adverse effect on our financial position and results of operations.

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We May Not Be Able to Efficiently and Effectively Implement New Solutions or Convert Clients onto Our Solutions.

Our continued growth plans include the implementation of new solutions, as well as converting both new and existing clients to our solutions. Such implementations or conversions, whether they involve new solutions or new customers, have become increasingly more difficult because of the sophistication, complexity, and interdependencies of the various computing and network environments impacted, combined with the increasing complexity of the clients’ underlying business processes. In addition, the complexity of the implementation work increases when the arrangement includes additional vendors participating in the overall project, including, but not limited to, prime and subcontractor relationships with our company. For these reasons, there is a risk that we may experience delays or unexpected costs associated with a particular implementation or conversion, and our inability to complete implementation or conversion projects in an efficient and effective manner could have a material adverse effect on our results of operations.

Our Business is Dependent Upon the Economic and Market Condition of the Global Communications Industry.

Since the majority of our clients operate within the global communications industry sector, the economic state of this industry directly impacts our business. The global communications industry has undergone significant fluctuations in growth rates and capital investment cycles in the past decade. Current economic indices suggest a slow stabilization of the industry, but it is impossible to predict whether this stabilization will persist or be subject to future instability. In addition, consolidation amongst providers continues as service providers look for ways to expand their markets and increase their revenues.

Continued consolidation, a significant retrenchment in investment by communications providers, or even a material slowing in growth (whether caused by economic, geo-political, competitive, or consolidation factors) could cause delays or cancellations of sales and services currently included in our forecasts. This could cause us to either fall short of revenue expectations or have a cost model that is misaligned with revenues, either or both of which could have a material adverse effect on our financial position and results of operations.

We expect to continue to generate a significant portion of our future revenues from our North American cable and satellite operators. These clients operate in a highly competitive environment. Competitors range from traditional wireline and wireless providers to new entrants like new digital lifestyle service providers such as Hulu, YouTube, Google, Netflix, Apple, and Amazon. Should these competitors be successful in their strategies, it could threaten our clients’ market share, and thus our source of revenues, as generally speaking these companies do not use our core solutions and there can be no assurance that new entrants will become our clients. In addition, demand for spectrum, network bandwidth and content continues to increase and any changes in the regulatory environment could have a significant impact to not only our clients’ businesses, but in our ability to help our clients be successful.

We Face Significant Competition in Our Industry.

The market for our solutions is highly competitive. We directly compete with both independent providers and in-house solutions developed by existing and potential clients. In addition, some independent providers are entering into strategic alliances with other independent providers, resulting in either new competitors, or competitors with greater resources. Many of our current and potential competitors have significantly greater financial, marketing, technical, and other competitive resources than our company, many with significant and well-established domestic and international operations. There can be no assurance that we will be able to compete successfully with our existing competitors or with new competitors.

Failure to Protect Our Intellectual Property Rights or Claims by Others That We Infringe Their Intellectual Property Rights Could Substantially Harm Our Business, Financial Position and Results of Operations.

We rely on a combination of trade secret, copyright, trademark, and patent laws in the U.S. and similar laws in other countries, and non-disclosure, confidentiality, and other types of contractual arrangements to establish, maintain, and enforce our intellectual property rights in our solutions. Despite these measures, any of our intellectual property rights could be challenged, invalidated, circumvented, or misappropriated. Further, our contractual arrangements may not effectively prevent disclosure of our confidential information or provide an adequate remedy in the event of unauthorized disclosure of our confidential information. Others may independently discover trade secrets and proprietary information, which may complicate our assertion of trade secret rights against such parties. Costly and time consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position. In addition, the laws of certain countries do not protect proprietary rights to the same extent as the laws of the U.S. Therefore, in certain jurisdictions, we may be unable to protect our proprietary technology adequately against unauthorized third party copying or use, which could adversely affect our competitive position.

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Although we hold a limited number of patents and patent applications on some of our newer solutions, we do not rely upon patents as a primary means of protecting our rights in our intellectual property. In any event, there can be no assurance that our patent applications will be approved, that any issued patents will adequately protect our intellectual property, or that such patents will not be challenged by third parties. Also, much of our business and many of our solutions rely on key technologies developed or licensed by third parties, and we may not be able to obtain or continue to obtain licenses and technologies from these third parties at all or on reasonable terms.

Finally, third parties may claim that we, our clients, licensees or other parties indemnified by us are infringing upon their intellectual property rights. Even if we believe that such claims are without merit, they can be time consuming and costly to defend and distract management’s and technical staff’s attention and resources. Claims of intellectual property infringement also might require us to redesign affected solutions, enter into costly settlement or license agreements or pay costly damage awards, or face a temporary or permanent injunction prohibiting us from marketing or selling certain of our solutions. Even if we have an agreement to indemnify us against such costs, the indemnifying party may be unable to uphold its contractual obligations. If we cannot or do not license the infringed technology on reasonable pricing terms or at all, or substitute similar technology from another source, our business, financial position, and results of operations could be adversely impacted. Our failure to adequately establish, maintain, and protect our intellectual property rights could have a material adverse impact on our business, financial position, and results of operations.

Client Bankruptcies Could Adversely Affect Our Business.

In the past, certain of our clients have filed for bankruptcy protection. As a result of the current economic conditions and the additional financial stress this may place on companies, the risk of client bankruptcies is heightened. Companies involved in bankruptcy proceedings pose greater financial risks to us, consisting principally of the following: (i) a financial loss related to possible claims of preferential payments for certain amounts paid to us prior to the bankruptcy filing date, as well as increased risk of collection for accounts receivable, particularly those accounts receivable that relate to periods prior to the bankruptcy filing date; and/or (ii) the possibility of a contract being unilaterally rejected as part of the bankruptcy proceedings, or a client in bankruptcy may attempt to renegotiate more favorable terms as a result of their deteriorated financial condition, thus, negatively impacting our rights to future revenues subsequent to the bankruptcy filing. We consider these risks in assessing our revenue recognition and our ability to collect accounts receivable related to our clients that have filed for bankruptcy protection, and for those clients that are seriously threatened with a possible bankruptcy filing. We establish accounting reserves for our estimated exposure on these items which can materially impact the results of our operations in the period such reserves are established. There can be no assurance that our accounting reserves related to this exposure will be adequate. Should any of the factors considered in determining the adequacy of the overall reserves change adversely, an adjustment to the accounting reserves may be necessary. Because of the potential significance of this exposure, such an adjustment could be material.

We May Incur Material Restructuring Charges in the Future.

In the past, we have recorded restructuring charges related to involuntary employee terminations, various facility abandonments, and various other restructuring activities. We continually evaluate ways to reduce our operating expenses through new restructuring opportunities, including more effective utilization of our assets, workforce, and operating facilities. As a result, there is a risk, which is increased during economic downturns and with expanded global operations, that we may incur material restructuring charges in the future.

Substantial Impairment of Goodwill and Other Long-lived Assets in the Future May Be Possible.

As a result of various acquisitions and the growth of our company over the last several years, we have approximately $231 million of goodwill, and $137 million of long-lived assets other than goodwill (principally, property and equipment, software, and client contracts). These long-lived assets are subject to ongoing assessment of possible impairment summarized as follows:

· Goodwill is required to be tested for impairment on an annual basis. We have elected to do our annual test for possible impairment as of July 31 of each year. In addition to this annual requirement, goodwill is required to be evaluated for possible impairment on a periodic basis (e.g., quarterly) if events occur or circumstances change that could indicate a possible impairment may have occurred.

· Long-lived assets other than goodwill are required to be evaluated for possible impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable.

We utilize our market capitalization and/or cash flow models as the primary basis to estimate the fair value amounts used in our goodwill and other long-lived asset impairment valuations. If an impairment was to be recorded in the future, it could materially impact our results of operations in the period such impairment is recognized, but such an impairment charge would be a non-cash expense, and therefore would have no impact on our cash flows.

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Failure to Attract and Retain Our Key Management and Other Highly Skilled Personnel Could Have a Material Adverse Effect on Our Business.

Our future success depends in large part on the continued service of our key management, sales, product development, professional services, and operational personnel. We believe that our future success also depends on our ability to attract and retain highly skilled technical, managerial, operational, and sales and marketing personnel, including, in particular, personnel in the areas of R&D, professional services, and technical support. Competition for qualified personnel at times can be intense, particularly in the areas of R&D, conversions, software implementations, and technical support. This risk is heightened with a widely dispersed customer base and employee populations. For these reasons, we may not be successful in attracting and retaining the personnel we require, which could have a material adverse effect on our ability to meet our commitments and new product delivery objectives.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table presents information with respect to purchases of company common stock made during the third quarter of 2013 by CSG Systems International, Inc. or any “affiliated purchaser” of CSG Systems International, Inc., as defined in Rule 10b-18(a)(3) under the Exchange Act.

Period	Total Number of Shares Purchased (1)		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plan or Programs
July 1 – July 31		7,900	$	22.72		5,700		2,130,881
August 1 – August 31		2,554		24.82		—		2,130,881
September 1 – September 30		—		—		—		2,130,881
Total		10,454	$	23.24		5,700

(1) The total number of shares purchased that are not part of the Stock Repurchase Program represents shares purchased and cancelled in connection with stock incentive plans.

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

None

Item 5. Other Information

None

Item 6. Exhibits

The Exhibits filed or incorporated by reference herewith are as specified in the Exhibit Index.

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SIGNATURES

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

Dated: November 7, 2013

CSG SYSTEMS INTERNATIONAL, INC.

/s/ Peter E. Kalan 

Peter E. Kalan

Chief Executive Officer and President

(Principal Executive Officer)

/s/ Randy R. Wiese

Randy R. Wiese

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

/s/ Rolland B. Johns

Rolland B. Johns

Chief Accounting Officer

(Principal Accounting Officer)

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CSG SYSTEMS INTERNATIONAL, INC.

INDEX TO EXHIBITS

Exhibit Number	Description
10.22B*	Second Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems, Inc. and Comcast Cable Communications Management, LLC
10.22C*	Third Amendment to the Restated and Amended CSG Master Subscriber Management System Agreement between CSG Systems, Inc. and Comcast Cable Communications Management, LLC
10.22D*	Fourth Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems, Inc. and Comcast Cable Communications Management, LLC
10.23AB*	Thirty-Fifth Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems, Inc. and DISH Network L.L.C.
10.23AC*	Thirty-Sixth Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems, Inc. and DISH Network L.L.C.
10.24T*	Seventy-Third Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems, Inc. and Time Warner Cable Inc.
10.24U*	Seventy-Sixth Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems, Inc. and Time Warner Cable Inc.
10.83	Forms of Agreement for Equity Compensation
31.01	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.02	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.01	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Portions of the exhibit have been omitted pursuant to an application for confidential treatment, and the omitted portions have been filed separately with the Commission.

 35 

EX-10

Pages where confidential treatment has been requested are stamped “Confidential Treatment Requested and
the Redacted Material has been separately filed with the Commission,” and places where information has
been redacted have been marked with (***).

EXHIBIT 10.22B

SECOND AMENDMENT

TO THE

CSG MASTER SUBSCRIBER MANAGEMENT SYSTEM AGREEMENT

BETWEEN

CSG SYSTEMS, INC.

AND

COMCAST CABLE COMMUNICATIONS MANAGEMENT, LLC

This SECOND AMENDMENT (the “Amendment”) is made by and between CSG Systems, Inc. (“CSG”) and Comcast Cable Communications Management, LLC (“Customer”). The Effective Date of this Amendment is the date last signed below. CSG and Customer entered into a certain CSG Master Subscriber Management System Agreement (CSG document #2501940) with an effective date of March 1, 2013 (the “Agreement”) and now desire to amend the Agreement in accordance with the terms and conditions set forth in this Amendment. If the terms and conditions set forth in this Amendment shall be in conflict with the Agreement, the terms and conditions of this Amendment shall control. Any terms in initial capital letters or all capital letters used as a defined term but not defined in this Amendment shall have the meaning set forth in the Agreement. Upon execution of this Amendment by the Parties, any subsequent reference to the Agreement between the Parties shall mean the Agreement as amended by this Amendment. Except as amended by this Amendment, the terms and conditions set forth in the Agreement shall continue in full force and effect according to their terms.

CSG and Customer agree to the following as of the Effective Date:

I. TECHNET THROUGH APPLE ENVIRONMENT

1. CSG has enhanced its CSG TechNet^® Product to provide functionality now available for the Product on Apple devices (iOS). CSG and Customer agree to amend the Agreement to reflect such enhanced functionality. Therefore, Exhibit B-1, entitled “Enterprise Products,” of the Agreement is amended to add the following:

TechNet iOS

2. CSG and Customer further agree to amend and restate the Product Description set forth in Exhibit B-1 for CSG TechNet^® by deleting the current description in its entirety and replacing it with the following:

Product Description:

CSG TechNet ^® enables technicians to access jobs/work orders and account information through wireless devices (including large screen devices such as laptops) to manage and complete jobs without calling dispatch. Text messaging functionality allows tech-to-tech and tech-to-dispatch communication and provides technicians with alerts that may affect their scheduled appointments. TechNet includes equipment capabilities, allowing techs to update inventory real time when equipment is removed, added or swapped.

TechNet iOS is an application that runs on the iOS device that includes all the standard features available within CSG TechNet^® and is designed to leverage enhanced functionality within the operating system on Apple devices (iOS) through direct integration with the iOS Safari browser. This application is designed to operate on Apple iOS devices only per current iOS versions as defined in CSG’s designated environment guide. This application will need to be downloaded and installed on the iOS device. In addition, CSG hereby grants Customer ownership rights to the archive file created using the Customer’s certificate received from Apple, which shall not include any CSG Intellectual Property created or used in the development of the archive file. Customer further agrees that it shall not enforce any ownership rights granted in the foregoing sentence against CSG or any other CSG customer.

Apple deployment method and implementation is as outlined and provided in SOW #2502990, TechNet to Customer Apple Developer Application Archive Library. Customer will provide an annual Apple Push Notification certificate update to CSG. Upon receipt of an annual Apple Push Notification certificate update from Customer, CSG will add the update to Customer’s production configuration. Upon an identified application change, CSG will publish a new application.

Configurable TechNet features specific to this TechNet iOS application include:

*** Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

EXHIBIT 10.22B

— Audible Alerts – leverages Apple’s Push Notification Service for audible alerts which also enables alerts when the device is in battery saving mode (black screen).

— Bar Code Scanning – enables scanning if the device has a bar code scanning application installed.

— Credit Card Scanning – magnetic card reader functionality available when headphone jack scanning device (third-party optional device) is present.

— Jump out URL – enables the ability to link to external web-based applications from within CSG TechNet and provides the user option to seamlessly link back to TechNet.

3. CSG and Customer agree that Customer’s use and deployment of the TechNet iOS is contingent upon Customer’s agreement to the following additional terms of use:

a) The License for use TechNet iOS is non-transferable and subject to and governed by the Usage Rules set forth in the App Store Terms of Service.

b) The License granted pursuant to the terms of the Agreement is between CSG and Customer and not Apple.

c) Customer agrees that CSG, not Apple, shall be solely responsible for any claims related to Customer’s possession and/or use of the TechNet iOS and that Apple has no obligation to furnish maintenance and support services with respect to the TechNet iOS.

d) Customer acknowledges that Apple and Apple’s subsidiaries are third party beneficiaries of the license terms of the TechNet iOS.

e) Customer represents and warrants that it is not located in a country subject to a U.S. Government embargo, or that has been designated by the U.S. Government as a “terrorist supporting” country; and Customer is not listed on any U.S. Government list of prohibited or restricted parties.

II. CSG WORKFORCE EXPRESS^®-XFINITY HOME NATIONAL DISPATCH CENTER AND CAPACITY PLANNING

1. Customer desires to use, and CSG agrees to provide, a standalone instance of CSG Workforce Express^® (“WFX”) for use in Customer’s Xfinity Home National Dispatch Center (“NDC”) for the purpose of providing Customer with field management capabilities for in-home consultations by its Xfinity Home Direct Sales Representatives (“DSR”). CSG shall provide an implementation of **** *** fulfillment centers (“FC”) to support all Connected Subscribers in Customer markets processed by CSG’s ACP platform and an additional *** *** FCs to support all markets processed by another Customer billing system other than CSG’s ACP platform (“CSG WFX for Xfinity Home NDC in non-CSG ACP platform markets”). The use of WFX for Xfinity Home NDC for CSG markets shall be in accordance with the terms defined in the Agreement. The use of WFX for Xfinity Home in another Customer billing market shall be in accordance with the terms of this Amendment.

2. Customer desires to use, and CSG agrees to provide, CSG Workforce Express^® (“WFX”) Capacity Planning (“WFX Capacity Planning”) in accordance with the terms of this Amendment. CSG and Customer agree that CSG will provide an initial implementation of WFX Capacity Planning into the **** *** Customer fulfillment centers (“FC”) to support the CSG markets in a standalone instance of WFX for the Xfinity Home NDC. Implementation shall occur in Customer’s production environment, as directed by Customer, for a ***** ****** ** ****** **** **** (the “Trial Period”) pursuant to the terms and conditions provided in the WFX Capacity Planning Statement of Work under CSG #2502358 (“WFX Capacity Planning SOW”). Within ******* **** **** prior to the successful completion of the Trial Period, as provided in the WFX Capacity Planning SOW, Customer shall provide written notice (email shall constitute written notice) to CSG of either (i) its acceptance of WFX Capacity Planning for Customer’s continued use, or (ii) discontinuance of Customer’s use of WFX Capacity Planning at the completion of the Trial Period. In the event CSG does not receive notice from Customer of its acceptance or discontinuance of use of WFX Capacity Planning provided for in this Subsection 2 of this Section II., the Parties agree CSG shall consider that the trial has been deemed accepted by Customer.

3. Upon Customer’s acceptance of WFX Capacity Planning pursuant to Subsection 2 above of Section II., and upon Customer’s request, WFX Capacity Planning will be implemented into additional FCs of Customer pursuant to the terms and conditions of a mutually agreed upon Statement of Work between the Parties. Accordingly, Exhibit B-1, Enterprise Products, is hereby amended as follows:

a) Schedule B-1, “Enterprise Products,” is amended to add the following to the list of Product Names:

CSG Workforces Express^® (WFX) Capacity Planning

2 / 6

*** Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

EXHIBIT 10.22B

b) Additionally, Exhibit B-1, Enterprise Products, of the Agreement shall be further amended by adding CSG Workforce Express^® (WFX) Capacity Planning to “Product Descriptions” as follows:

“CSG Workforce Express^® (“WFX”) Capacity Planning. CSG Workforce Express^® (“WFX”) Capacity Planning (“WFX Capacity Planning”) is an enhancement to WFX that will effectively manage and monitor management of Customer’s technical field resources for scheduling Subscriber-requested service calls by providing integration from WFX to CCS^®. WFX Capacity Planning has the ability to provide automation, intelligent guidance and recommendations to allocate field resource capacity and make adjustments as necessary to meet operational demands (promotional campaigns, time to install/repair, regulatory) and other business factors.”

4. Upon execution of this Amendment and pursuant to the terms and conditions of the Agreement, Schedule F, CSG Licensed Products, Section I. Product installation and other associated items, Subsection A., Product installation and other associated items, Subsection 8., Workforce Management, shall be amended to add a new Subsection j) to include the fees set forth below for WFX for Xfinity Home National Dispatch Centers in non-CSG ACP platform markets described in this Amendment.

Description of Item/Unit of Measure		Frequency		Fee
j)WFX for Xfinity Home National Dispatch Centers in non-CSG ACP platform markets
—	Implementation Fee, per *********** ****** **** ***** ***		*** *******		*****
—	******* Support Fee (***** ***) (**** **) (**** **)		*******	$	*********

Note 11: Implementation of WFX for Xfinity Home National Dispatch Center in non-CSG ACP platform markets shall be set forth in a mutually agreed upon Statement of Work.

Note 12: The ******* Support Fee is a ***** fee that provides right to use and support services for the *** *** fulfillment centers established in the standalone instance of WFX in the Xfinity Home National Dispatch Center for non-CSG billing markets. Invoicing for such ******* Support Fee shall not commence until the ****** 2013 billing cycle.

Note 13: Should Customer agree to extend the use of WFX across its remaining enterprise not currently processed by CSG’s ACP platform, per the terms set forth in Section 4 of the Agreement, the Parties agree that ******* Support Fee for WFX for Xfinity Home National Dispatch Center in non-CSG ACP platform markets shall be superseded by the Monthly Workforce Management Enterprise fee. As of the effective date of such agreement, the Parties shall work in good faith to define *** *** ***** ************* ** *** Monthly Support Fee for *** *** ******* **** ******** ******** ****** ** ******* *** ******** ******* ***** ** ******* ** * ******** amount of *** **** *********** ** *** ******* ********* ********** ********** ***.

5. Upon execution of this Amendment and pursuant to the terms and conditions of the Agreement, Schedule F, CSG Licensed Products, Section I. Product installation and other associated items, Subsection A., Product installation and other associated items, Subsection 8., Workforce Management, shall be amended to add a new subsection k) to include the fees set forth below for WFX Capacity Planning described in this Amendment.

Description of Item/Unit of Measure		Frequency		Fee
k)WFX Capacity Planning
—	Implementation Fee, *** *********** ****** **** (**** **) (**** **) (**** **)		*** *******		*****
—	******* Support Fee (*** ********* ******* **** **********) (**** **)		*******	$	******
—	******* Support Fee (******* *** ** ** ******* *** *****)		*******	$	********

Note 14: Implementation of WFX Capacity Planning shall be set forth in a mutually agreed upon Statement of Work.

Note 15: The initial implementation for the Trial Period will include **** *** FC and *** *** training session at *** *** Customer location to be conducted during the Trial Period.

Note 16: If requested by Customer, CSG shall implement additional FCs, which will include *** *** training session at *** *** Customer location, as set forth in an agreed upon Statement of Work or a Change Order to the Statement of Work referenced in Note 14 above.

3 / 6

*** Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

EXHIBIT 10.22B

Note 17: The ******* Support Fee shall commence the first day following conclusion of the Trial Period, as defined in the Statement of Work referenced in Note 14 above. The number of Connected Xfinity Home Subscribers shall be identified as an ****** **** ******** ********** ** *** ********** ****** **** *** ****** ******** ****** ** *** **** ********** *** ** * ********** *****.

6. All fees set forth in this Amendment are subject to annual fee adjustment pursuant to Section 5.4 of the Agreement.

III. ******* SERVICE ALERT

1. Customer desires to utilize the services of CSG’s Professional Services Group to design, develop, and implement a solution that will alert a Customer Account Executive of Customer when a subscriber is in a location which is serviceable by Customer’s vendor, *******.

2. Therefore, Schedule F, Fees, CSG Service, sub-section II. Interfaces shall be amended to add a new Section D. entitled “******* Service Alert,” as follows:

D. ******* Service Alert Solution

Description of Item/Unit of Measure	Frequency		Fee
1. Production Support and Maintenance Fee (**** *) (**** *) (**** *)		******	$	*********
2. Hosting Fee (**** *)		*******	$	******

Note 1: Design, development and implementation services and lead times will be set forth in a mutually agreeable Statement of Work.

Note 2: Production Support will commence after the deployment of ******* Service Alert Solution to production. Production Support is limited to ********** (**) ***** per year. Additional fees will be charged for ***** exceeding this annual limit and will be set forth in a separate Statement of Work or Letter of Authorization.

Note 3: The ****** Production Support and Maintenance fee covers post deployment support, including answering functional questions and resolving Customer reported concerns, CSG operating support and operating systems software licensing. CSG will be responsible for resolution of ******* Service Alert Solution defects. Future enhancement and changes to the solution will be set forth in a mutually agreeable Statement of Work. Future enhancements may include, but are not limited to, changing the solution to operate with systems other than ACSR^®. Production Support and Maintenance is intended to address production issues only and does not include pre-release testing, or any changes to the ******* Service Alert Solution required by the use of new features, functions, products, or substantive configuration changes.

Note 4: If Customer ceases to use the ******* Service Alert solution the production support *** ** *** ******** upon Customer’s written request (email notification will suffice).

The fees set forth in the fee table above are subject to increase pursuant to Section 5.4, Adjustment to Fees, of the Agreement.

Note 5: CSG will host the ******* Service Alert solution on its servers and provide *** (*) ******* ******** to run the solution. Customer may cancel the CSG hosting option by providing CSG no less than ****** (**) **** written notice (email notification will suffice).

IV. EXTEND CSG WORKFORCE MANAGEMENT^® ACROSS ENTERPRISE

WHEREAS, pursuant to the terms and conditions outlined in Article 4 of the Agreement, the CSG and Customer desire to enter into an agreement to extend CSG Workforce Management^® capabilities across those divisions or markets not currently processed by CSG (“Customer’s Remaining Enterprise”); and

WHEREAS , Customer currently pays CSG $****** per ********* ********** per ***** for Workforce Management maintenance and $****** per ********* ********** per ***** for Workforce Management operations, per Schedule F of the Agreement, “FEES,” section entitled “CSG LICENSED PRODUCTS,” Section I.A.8.b) and c), respectively; and

WHEREAS, CSG agrees to provide Workforce Management capabilities across Customer’s Remaining Enterprise for the fixed “Monthly Workforce Management Enterprise Fee” as defined in Subsection 1. Below of Section IV.

4 / 6

*** Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

EXHIBIT 10.22B

NOW, THEREFORE, CSG and Customer hereby agree to the following as of the Effective Date:

1. Pursuant to the Agreement, Customer hereby accepts CSG’s offer to extend CSG Workforce Management^® capabilities across Customer’s Remaining Enterprise as defined in Article 4 of the Agreement, and Customer agrees to the pricing as provided in Subsection 2 of Section IV. of this Amendment for enterprise Workforce Management (which, for purposes of the Agreement and this Amendment, shall be referred to as the “******* Workforce Management Enterprise Fee”). CSG and Customer agree that **** *** **** shall be the date of Customer’s election to extend Workforce Management capabilities across Customer’s Remaining Enterprise pursuant to the terms and conditions of Section 4.1 of the Agreement and this amendment shall serve as Customer’s notice to CSG of such election. As a result, the Workforce Management capabilities and related fees shall be for the Customer subscriber base as of **** *** ****, including any natural growth, but excluding any additional subscribers as a result of subsequently acquired or controlled entities, permitted entities or Affiliates as described in Section 1.6 of the Agreement as they may be subject to additional fees.

2. ******* Workforce Management Enterprise Fee

2.1 Pursuant to the terms and conditions of Section 4.2 of the Agreement, the ******* Workforce Management Enterprise Fee shall be calculated as set forth in this Subsection 2.1 of Section IV of this Amendment. All fees and Connected Subscriber values are valid as of the Effective Date of this Amendment:

The ******* per ********* ********** fee for Workforce Management maintenance as of the Effective Date ********** by ****, multiplied ** *** ****** ** ********* *********** ** **** *** ****; ****

The ******* per ********* ********** fee for Workforce Management operations as of the Effective Date ********** by ****, ********** ** *** ****** ** ********* *********** ** **** *** ****.

The actual number of Connected Subscribers on **** *** **** ** **********.

Using the above formula, CSG and Customer agree that the ******* Workforce Management Enterprise Fee shall be equal to the *** ** (*) and (*) calculated as follows:

(A)—******* Workforce Management Enterprise maintenance fee = (****** * **** * ********** ) = $**********

(B)—******* Workforce Management Enterprise operations fee = ($****** * **** * ********** ) = $**********

(C)—Total ******* Management Enterprise Fee = (** + **) = $********** covering all of Customer’s enterprise as of **** *** ****.

2.2 ********* the ******* Workforce Management Enterprise Fee

CSG and Customer agree that the value to be ******** shall be the ********** between the *** ** *** ******* Workforce Management maintenance and operation fees ******** ** *** ** ******** ****** *** **** **** processing ***** and the ******* Workforce Management Enterprise Fee provided in Subsection 2.1 above of Section IV. of this Amendment. The following identifies and calculates these figures by *********** (*) from (*):

(C)—***** Monthly Management Enterprise Fee = $********** covering all of Customer’s enterprise as of **** *** ****.

(D)—******* Workforce Management maintenance and operation fees ******** ** *** ** ******** ****** *** **** **** ********** ***** = $**********

(E) – Value to be ******** = *** * *** = $********* being the amount to prorate based on the implementation plan defined in the Statement of Work entered into between the Parties (CSG document number 2502531).

As a result, CSG and Customer agree to the following ******** ********* ******** of the ******* Workforce Management Enterprise Fee:

*** **** **********	$	*********
—***** **** **********
$*********
—**********************	$	*********
—********************	$	*********

Beginning in the **** **** ********** *****, CSG shall provide a ****** ******* to Customer equal to the value of (*); and in ********, CSG will ******** such amount by the value of (*) ******** based on the ********* schedule immediately preceding this sentence for the additional regions implemented. For clarification purposes, in the ******** processing *****, CSG shall provide a ****** ******* for the ******* Management Enterprise fee in the amount of $********** for each ***** thereafter in accordance with the terms of this Agreement. The payment terms shall be in accordance with the Agreement.

*** Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

EXHIBIT 10.22B

5 / 6

3. As a result, Schedule F of this Agreement, “FEES,” section entitled “CSG LICENSED PRODUCTS”, Section I.A.8 entitled “Workforce Management” shall be deleted and replaced with the following fee table. As a point of clarification, Note 6 is restated. All other “Notes” in Section I.A. are as set forth in the Agreement.

Description of Item/Unit of Measure	Frequency	Fee
8. Workforce Management
a) Workforce Management installation (**** *)(**** *)	*** *******		*****
b) Monthly Management Enterprise Fee (**** *)	*******	$	**********
c) RESERVEDd) Workforce Management (Citrix Web-Enabled) installation (*** ****) (**** *) (**** *)	*** *******	$	********
e) Workforce Management (Citrix Web-Enabled) facilities management (*** ****)********		$	********
f) Receipt Storage and Retrieval
— Setup	*** *******		** ******
— Receipt Storage and Retrieval Pricing (per *** of data stored per *****)	*******	$	******
g) GPS (handheld devices)
—* to *** Units (per **********)	*******	$	*******
—*** to ***** Units (per **********)	*******	$	*******
—***** and Greater Units (per **********)	*******	$	*******
h) CSG Workforce Express Vehicle Mounted GPS System Via Gateway (**** *) (**** *)i) GPS System Service Fee via Gateway (per ****) (******)
—* – ***** units	*******	$	*******
—***** – ***** units	*******	$	******
—***** – ****** units	*******	$	******
—******+ units	*******	$	******

Note 6: Includes *********** for CSG Workforce Management, CSG Workforce Management (Citrix web enabled), and CSG TechNet.

IN WITNESS WHEREOF the Parties hereto have caused this Amendment to be executed by their duly authorized representatives.

COMCAST CABLE COMMUNICATIONS MANAGEMENT, LLC (“CUSTOMER”)	CSG SYSTEMS, INC. (“CSG”)
By: /s/ Peter Kiriacoulacos	By: /s/ Joseph T. Ruble
Name: Peter Kiriacoulacos	Name: Joseph T. Ruble
Title: Executive Vice President & Chief Procurement Officer	Title: EVP, CAO & General Counsel
Date: 7-15-13	Date: 17, July 2013

6 / 6

                       

EX-10

Pages where confidential treatment has been requested are stamped “Confidential Treatment Requested and

the Redacted Material has been separately filed with the Commission,” and places where information has been

redacted have been marked with (***).

EXHIBIT 10.22C

THIRD AMENDMENT

TO THE

RESTATED AND AMENDED

CSG MASTER SUBSCRIBER MANAGEMENT SYSTEM AGREEMENT

BETWEEN

CSG SYSTEMS, INC.

AND

COMCAST CABLE COMMUNICATIONS MANAGEMENT, LLC

This THIRD AMENDMENT (the “Amendment”) is made by and between CSG Systems, Inc. (“CSG”) and Comcast Cable Communications Management, LLC (“Customer”). The Effective Date of this Amendment is the date last signed below. CSG and Customer entered into a certain CSG Master Subscriber Management System Agreement (CSG document #2501940) with an effective date of March 1, 2013 (the “Agreement”) and now desire to amend the Agreement in accordance with the terms and conditions set forth in this Amendment. If the terms and conditions set forth in this Amendment shall be in conflict with the Agreement, the terms and conditions of this Amendment shall control. Any terms in initial capital letters or all capital letters used as a defined term but not defined in this Amendment shall have the meaning set forth in the Agreement. Upon execution of this Amendment by the Parties, any subsequent reference to the Agreement between the Parties shall mean the Agreement as amended by this Amendment. Except as amended by this Amendment, the terms and conditions set forth in the Agreement shall continue in full force and effect according to their terms.

CSG and Customer agree to the following:

I. BCE TRAINING DEVELOPMENT

1. Customer desires CSG to develop on-line self-paced, individual training modules.

2. Schedule F, “Fees,” Section entitled “CSG SERVICES,” Section VI entitled “Additional training and documentation,” is amended to add a new subsection F. as follows:

F. BCE Training Development-West Division

Description of Item/Unit of Measure	Frequency		Fee
1. Training Module (*** ******) (**** *)		******	$	********

Note 1: Each training module includes up to *** (**) ***** of developoment work per ****. If more hours are required for a module, Customer will be billed at the Development hourly rate for each hour in excess of *** (**) *****. Subsequent training modules shall be developed pursuant to a Statement of Work executed by both Parties. Customer shall be invoiced the ****** *** per ******** ****** created pursuant to a Statement of Work.

The fee set forth in the fee table above is subject to increase pursuant to Section 5.4, Adjustment to Fees, of the Agreement.

II. ON BOARDING WEB SERVICE SOLUTION

1. Customer desires to utilize, and CSG agrees to provide, the services of CSG’s Professional Services Group to design, develop, and implement a solution that will provide a web service to Customer’s current Precision eMail^® Gateway.

2. Schedule F, Fees, CSG Services, Section III. Payment Procurement, Subsection G., Precision eMail^®, shall be amended to add a new Subsection 5. entitled “On Boarding Web Service Solution” as follows:

Description of Item/Unit of Measure	Frequency		Fee
5. CSG On Boarding Web Service Solution (**** *)
a)Production Support and Maintenance Fee (**** *) (**** *)		******	$	*********

Note 5: Design, development and implementation services and lead times will be set forth in a mutually agreeable Statement of Work.

Note 6: Production Support will commence after the deployment of On Boarding Web Service Solution to production. Production Support is limited to *** ******* *****-**** (***) ***** *** ****. Additional fees will be charged for hours exceeding this ****** limit and will be set forth in a separate Statement of Work or Letter of Authorization

Note 7: The ****** Production Support and Maintenance fee covers post deployment support, including answering functional questions and resolving Customer reported concerns, CSG operating support and operating systems software licensing. CSG will be responsible for resolution of On Boarding Web Service Solution defects. Future enhancement and changes to the solution will be set forth in a mutually agreeable Statement of Work. Future enhancements include, but are not limited to, changing the solution to operate with systems other than ACSR^®. Production Support and Maintenance is intended to address production issues only and does not include pre-release testing, or any changes to the On Boarding Web Service Solution required by the use of new features, functions, products, or substantive configuration changes.

The fees set forth in the fee table above are subject to increase pursuant to Section 5.4, Adjustment to Fees, of the Agreement.

III. VANTAGE UPDATE OPTIONAL TABLES

1. Schedule F, “Fees,” section entitled “CSG SERVICES,” Section I entitled “Processing,” Subsection I entitled “CSG Vantage setup and database modifications and other services,” is amended to add recurring fees for Vantage Update Optional Tables in CSG Vantage^® as follows:

Description of Item/Unit of Measure		Frequency		Fee
5. Vantage Update Optional Tables
a) Processing Fees (**** * - *)
·	Tier 1 - ** ** *********** ******* (per ******* ******* *********)		*******	$	*****
·	Tier 2 - *********** ** *** *** ******* ******* (per ******* ******* *********)		*******	$	*****
·	Tier 3 - ******* **** *** *** ******* ******* (per ******* ******* *********)		*******	$	*****

Note 5: The retention period for Vantage updates will be ***** (*) ****.

Note 6: ******* recurring fees apply for Vantage updates. Fee is based on records processed.

Note 7: Fee for tier pricing is for Vantage updates which process on a ******* basis.

Note 8: The tiers are incremental and not cumulative.

Note 9: Excludes Order, Job and Item Update Table in CSG Vantage^® which have recurring fees covered under the Agreement.

The fees set forth in the fee table above are subject to increase pursuant to Section 5.4, Adjustment to Fees, of the Agreement

2 / 3

IV AMENDMENT TO EXHIBIT C-25

1 CSG and Customer agree that Exhibit C-25 of the Agreement contains a typographical error relating to the days that transactions will be retained for Order, Job and Item Updates Tables in CSG Vantage^®. As a result, Exhibit C-25 is deleted in its entirety and replaced with the following:

Exhibit C-25

Order, Job and Item Updates Optional Table in CSG Vantage^®

Order, Job and Item Updates Optional Tables in CSG Vantage^®. Customer shall have access to CSG’s Order, Job and Item Updates Optional Tables in CSG Vantage^®. The Order, Job and Item Updates Optional Table in CSG Vantage^® provides Customer with a set of tables that reflect only changes to Orders, Jobs, and Items that were processed for a given day. Each record is tagged with an identifier (Insert, Change, or Delete). These tables may be queried to extract records for feeding data warehouses, or may be queried in Vantage to identify activity pertaining to that particular day. These transactions will be retained in Vantage for ***** (*) ****. Pricing for Order, Job, and Item updates applies up to *** *** ******* ******* *** *****. Additional fees may apply beyond * ******* ******* *** *****.

IN WITNESS WHEREOF the parties hereto have caused this Amendment to be executed by their duly authorized representatives.

COMCAST CABLE COMMUNICATIONS MANAGEMENT, LLC (“CUSTOMER”)	CSG SYSTEMS, INC. (“CSG”)
By: /s/ Peter Kiriacoulacos	By: /s/ Peter E. Kalan
Name: Peter Kiriacoulacos	Name: Peter E. Kalan
Title: CPO	Title: President & CEO
Date: July 26, 2013	Date: July 25, 2013

3 / 3

   

EX-10

Pages where confidential treatment has been requested are stamped “Confidential Treatment Requested and

the Redacted Material has been separately filed with the Commission,” and places where information has

been redacted have been marked with (***).

EXHIBIT 10.22D

FOURTH AMENDMENT

TO THE

CSG MASTER SUBSCRIBER MANAGEMENT SYSTEM AGREEMENT

BETWEEN

CSG SYSTEMS, INC.

AND

COMCAST CABLE COMMUNICATIONS MANAGEMENT, LLC

This FOURTH AMENDMENT (the “Amendment”) is made by and between CSG Systems, Inc. (“CSG”) and Comcast Cable Communications Management, LLC (“Customer”). The Effective Date of this Amendment is August 1, 2013. CSG and Customer entered into a certain CSG Master Subscriber Management System Agreement (CSG document #2501940) with an effective date of March 1, 2013 (the “Agreement”) and now desire to amend the Agreement in accordance with the terms and conditions set forth in this Amendment. If the terms and conditions set forth in this Amendment shall be in conflict with the Agreement, the terms and conditions of this Amendment shall control. Any terms in initial capital letters or all capital letters used as a defined term but not defined in this Amendment shall have the meaning set forth in the Agreement. Upon execution of this Amendment by the Parties, any subsequent reference to the Agreement between the Parties shall mean the Agreement as amended by this Amendment. Except as amended by this Amendment, the terms and conditions set forth in the Agreement shall continue in full force and effect according to their terms.

CSG and Customer agree to the following:

1. CSG and Customer desire to change the existing pricing structure of Customer’s Precision eCare^® Payment Kiosk to a subscription pricing model (the “Kiosk Subscription Program”). Therefore, Exhibit C-4, Attachment A, to the Agreement, section entitled “Module E – Branded Payment Kiosk” shall be amended to add the description for Module E – Kiosk Subscription Program on Exhibit A to this Amendment.

2. As a result, Schedule F, Fees, CSG SERVICES, subsection III. Payment Procurement, subsection D, shall be amended to add a new fee table for Precision eCare^® (Payment Kiosk) Module E-Kiosk Subscription Program, as follows:

D.1. Precision eCare^® (Payment Kiosk) Module E-Kiosk Subscription Program

Description of Item/Unit of Measure	Frequency	Fee
1. Kiosk Subscription Fee (per ****) (**** *) (**** *)	********	$	********

Note 1: Regarding kiosks purchased after the Effective Date of this Amendment, the Kiosk Subscription Fee shall be invoiced ******** for a period of ***** (*) ***** during the life of each unit. The first payment shall be invoiced upon delivery of such Kiosk unit, and the remaining *** (*) ******** will be invoiced each **** on the *********** ***** of when such Kiosk unit was initially delivered. The Kiosk Subscription Fee is ************* and ***-**********, subject to the terms of Exhibit A and the Agreement, and is subject to adjustments upon an increase in fees by CSG’s third party providers and is subject to annual increases pursuant to Section 5.4, Adjustment to Fees, of the Agreement. In the event the Kiosk Subscription is terminated for any reason other than cause by Customer, subsequent annual fees not already invoiced will be invoiced in accordance with the terms of Exhibit A, section 2 entitled “Cancelation/Termination Policy”.

***Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

EXHIBIT 10.22D

Note 2: Kiosk Subscription Fee includes:

· Kiosk unit enclosure

· Integration and delivery of unit’s peripheral devices including the required drivers/firmware. Those Hardware components include and are limited to the components set forth in Attachment 1 to Exhibit A to this Amendment.

· The custom paint, decals and labels that Customer has selected for its units as of the Effective Date of this Amendment. If these items are modified or updated in the future by Customer, CSG reserves the right to increase the subscription price.

· Payment Kiosk Maintenance which includes annual maintenance and support of the Software and future CSG defined enhancements specific to CSG Software.

· Any required third party software license, including the PC’s operating system, and the third party touchscreen and device software.

· CSG project management / implementation of new units and replacement units.

· Solutions Support Center, Web Operations and Strategic Business Unit support.

· Extended *****-*** **** ***** On-Site Field Service and Warranty Plan as set forth in Attachment 2 to Exhibit A to this Amendment.

· Life-cycle management provided by CSG including end of life notifications and replacement unit ordering, planning, and coordination.

· Vendor designated environment (for purposes of kiosk units “Vendor DEG”) compliance and support provided by CSG for the *****-*** **** ***** life span of each unit is included in the subscription model program. CSG will not fund Hardware upgrades, but will ensure all kiosk units will be Vendor DEG compliant throughout their *****-*** **** ***** life.

· In the event a kiosk has a remaining life span upon expiration or termination of the Agreement, the terms of Exhibit A, section 2 entitled “Cancelation/Termination Policy”, shall govern payment of fees.

3. For existing kiosks not purchased under the Module E – Kiosk Subscription Program, CSG and Customer agree to continue to support these units within the CSG Care Express (Payment Kiosk) Module E, Part 1 pricing structure, as set forth in Schedule F, Fees, CSG SERVICES, subsection III. Payment Procurement, subsection D. CSG Care Express (Payment Kiosk) Module E, Part 1, through the end of their life (*****-*** **** ****** from initial deployment). As set forth in Note 2 in subsection D. referenced in the preceeding sentence, the Payment Kiosk Maintenance (per ****) fee includes ****** maintenance and support of the Software and future CSG defined enhancements specific to CSG’s software. In addition to ****** Payment Kiosk Maintenance invoices for such kiosk, each existing kiosk unit not purchased under the Kiosk Subscription Program will also be ******** ** ****** ******* (“Subscription Model Benefit Premium”) as set forth in the fee table below. This premium will continue through the *****-*** **** ***** life of the unit, which will allow each unit to be included in the Kiosk Subscription Program and receive all the same benefits of new units brought into the Kiosk Subscription Program (some exclusions and conditions apply as set forth in Exhibit A to this Amendment). Existing Kiosks will be identified in Exhibit B and shall be updated via a mutually agreed upon Statement of work. CSG and Customer agree that a subsequent Statement of Work under this Amendment shall update the list of existing kiosks owned by Customer, the life of the unit and the time frame for replacement of the unit. As a result, Schedule F, Fees, CSG SERVICES, subsection III. Payment Procurement, subsection D, shall be amended to add the following new fees as follows:

Description of Item/Unit of Measure	Frequency		Fee
10. Subscription Model Benefits Premium (for existing units as of *** ** ****, only) (fee is assessed and counted on a ******* basis but is invoiced on an ****** basis along with the ****** CSG software maintenance and license fee for each unit) (**** *) (**** **		*******	$	*****

2 / 13

***Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

EXHIBIT 10.22D

Note 7: Subscription Model Benefits Premium Fee for existing units includes:

· Solutions Support Center, Web Operations and Strategic Business Unit support.

· On-Site Field Service and Warranty Plan as set forth in Attachment 2 to Exhibit A to this Amendment. The period of this warranty is equal to the months during which the monthly premium is invoiced and paid. Each unit will be covered by the warranty through the *****-****** ****** ***** of its life from original deployment.

· Life-cycle management provided by CSG including end of life notifications and replacement unit ordering, planning, and coordination.

· Vendor DEG compliance and support provided by CSG for the *****-*** **** ***** life span of each unit included in the subscription model program. CSG will not fund Hardware upgrades, but will ensure all kiosk units will be Vendor DEG compliant throughout their *****-*** **** ***** life. This benefit will only apply to units purchased on or after **** ** **** and/or units that have received the Kiosk 2.0 software upgrade. Units deployed before this date that are running the Kiosk 1.0 software will be covered by the warranty benefits and will receive end of life management and support, but are not guaranteed by CSG to be Vendor DEG compliant. Additionally, units that have a ********** **** ****** cash acceptor may receive this benefit, but this specific device will be excluded from the warranty and onsite agreement.

· A kiosk unit will not officially begin its coverage period or receive the benefits of the support model until any and *** ******** ******* ** ****** *** ******** *** ******** have been settled for the unit.

· For clarification purposes the Subscription Model Benefits Premium Fee for existing units does not include CSG’s Payment Kiosk Maintenance.

· The Parties acknowledge and agree as existing kiosks conclude the *****-****** ****** ***** of their life span, CSG shall no longer invoice Customer the CSG Payment Kiosk Maintenance for the kiosk and disposal of the kiosk shall occur in accordance with Exhibit A to this Amendment.

Note 8: Pricing exception for units with an existing warranty plan:

· An exception will exist for units that already have purchased some form of warranty. The remaining value of the warranty (calculated by the ****** **** *** *** ******** ******* ** *** **** ******* **** ** *** ******** ********** ** *** ********* ****** **** ** ********) will be deducted from the $**/***** to reach an applicable fee for these units. Once the initial coverage period is reached, the unit will revert to the standard monthly premium throughout its remaining life. Upon identification of the existing models, CSG will provide via Statement of Work or LOA a unit-by-unit breakdown of the fees owed.

IN WITNESS WHEREOF the parties hereto have caused this Amendment to be executed by their duly authorized representatives.

COMCAST CABLE COMMUNICATIONS MANAGEMENT, LLC (“CUSTOMER”)	CSG SYSTEMS, INC. (“CSG”)
By: /s/ Peter Kiriacoulacos	By: /s/ Joseph T Ruble
Name: Peter Kiriacoulacos	Name: Joseph T. Ruble
Title: Executive Vice President & Chief Procurement Officer	Title: EVP, CAO & General Counsel
Date: 9-9-13	Date: 16 Sept 2013

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***Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

EXHIBIT 10.22D

EXHIBIT A

Module E – Kiosk Subscription Program:

· This module extends the Precision eCare^® application, in an integrated fashion, to self-service kiosks. The Kiosk application allows for subscribers to view and pay their bill using Cash, Credit, Debit, or Check. This is accomplished by extending the Precision eBPP^® web application to the self-service Kiosk and updates the subscribers account on the CSG billing system through a common interface. As of the ***** ******* ** ****, CSG worked with Customer to deploy this solution enterprise by way of the Customer’s service layer in order for the Precision eBPP^® web application to post transactions to multiple Customer billing systems.

· Additional terms and conditions specific to Module E, the Kiosk Subscription Program and the Thinman kiosk Hardware unit and operating system software are as follows:

(a) Ownership. Rights to the Hardware shall transfer from the manufacturer to Customer upon delivery of the Hardware. Customer assumes risk of loss upon delivery. Upon delivery Customer assumes any and all responsibility and liability for the Hardware, including but not limited to: the Hardware location; installation site; accessibility; connectivity; compliance with ordinances, regulations and/or statues whether federal, state or locally imposed, except for the applicable provisions of the Americans with Disabilities Act.

(b) Kiosk Subscription Program.

1. Term Commitment

· A ***** *** **** fee commitment by Customer shall be required per unit which provides *****-*** **** ****** of coverage under the Kiosk Subscription Program

· The Kiosk Subscription Program fees shall begin on the date the kiosk unit is delivered to Customer’s site. Placing a unit into an inactive or stored state does not suspend the warranty or shelf life timelines.

· In the event the Agreement ends while there are active subscription commitments remaining under the Kiosk Subscription Program, Customer shall pay the termination fees to CSG as set forth in the “Cancelation/Termination Policy” below.

2. Cancelation/Termination Policy:

· Customer may cancel the Kiosk Subscription Program for any given kiosk unit at any point during that unit’s life. The Subscription Program termination fees will be applicable when the subscription is canceled by Customer for any given unit at any point. The Subscription Program termination fee policy requires payment by Customer of *****-***** ***** of the remaining Subscription Fee which would have been due over the remaining term which is payable to CSG upon cancellation of that unit’s subscription. As ***** *** equal Subscription Fee payments are committed to and due over the life of the unit for each unit purchased by Customer, the fee for cancelling the Kiosk Subscription Program will be equal to the *** ** *** ********* Subscription Fee due for the specified unit ********** ** *****-***** *****. Upon cancellation of, or election not to renew, the Kiosk Subscription Program for any unit, that kiosk unit will no longer have access to CSG’s kiosk software application. Customer may sell or otherwise transfer title of the Hardware to another party (“Transferee”), provided, however, that Customer may not sell or transfer any software provided by CSG and in order for Customer to transfer any Hardware to another party, Customer must first be compliant with the provisions of Subsection (d) of this Exhibit A.

· By way of example, if the unit’s subscription fee was **** ******** *** ******* ********$********* *** ****, and the subscription was canceled when *** *** ***** of fees were remaining under the Kiosk Subscription Program, Customer would pay CSG a termination fee of *****-***** ***%* of the sum of the fees due. $******** + $******** = $********** ***** *** = $********* due to CSG.

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***Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

EXHIBIT 10.22D

· In the event Customer chooses not to renew the subscription and replace the existing kiosk, Customer shall not incur or be invoiced any additional fees, but all fees duly invoiced shall be paid and any amounts previously paid shall be non-refundable.

3. Life Cycle Management

· Each kiosk unit will be assigned a *****-*** **** ***** life that shall commence when the Kiosk Subscription Program fees begin.

· CSG will facilitate the life cycle management and replacement schedule of all units before or on the last day of the *****-*** **** ***** mark of each unit’s life

· CSG will provide Customer with written notice of end of life of the unit and will allow Customer to select whether or not to renew its kiosk subscription for that unit no later than the **** *** ** *** ********* ****** ***** of each unit’s life by giving CSG written notice of its desire to renew its kiosk subscription for that unit. All notices given by CSG to Customer will be via email and will include the renewal price. All notices by Customer to CSG of Customer’s election to renew a kiosk subscription will be via email. In the event CSG fails to notify Customer as provided in this paragraph, CSG shall extend Customers use of the existing Kiosk.

· Customer must make an election to renew and replace or accept the end of life and discontinue its kiosk subscription for a unit no later than the last day ** *** ******-***** ****** ***** of each unit’s life. If no election is made, the subscription for a unit will be automatically renewed at the then-current price.

· If Customer elects to renew the subscription, a new kiosk will be delivered and installed within the ***** ** *****-*** ***-*** ***** window of the previous kiosk unit’s life. In the event CSG has not delivered the replacement kiosk, CSG shall permit Customer to continue using the kiosk and CSG shall continue to be responsible as though the kiosk continued in the Subscription Program.

· If Customer elects not to renew the subscription for a given kiosk unit, the unit will remain operational and fully covered by warranty until the end of the *****-****** ****** ***** of that unit’s life. At the end of the *****-*** **** ***** mark, a unit’s software and access to CSG’s kiosk software application will be shut off, and the unit will no longer be operational.

4. Warranty Coverage

· During the period a kiosk unit is under the Kiosk Subscription Program, that kiosk unit will be covered under CSG’s third party full parts and on-site service warranty as set forth in Attachment 2 to this Exhibit A.

· Kiosk units will be covered by a *****-***** **** **** on-site Service Commitment as defined below for all component and configuration issues. The *****-***** **** **** Service Commitment applies only to weekdays (Monday through Friday excluding holidays). The *****-***** **** **** Service Commitment will commence once the initial troubleshooting has been completed and it has been determined that a new device and/or technician visit is required. Out of scope labor and part charges, as defined in Attachment 2 to this Exhibit A, will be separately billed by CSG to Customer.

· Units with the **** **** **** ******** may be enrolled into the program, but the Hardware warranty and onsite maintenance agreement will not cover any issues relating to this bill acceptor. If issues occur with the **** **** **** ********, Customer may elect to fund the upgrade to Vendor DEG bill acceptor (MEI), disable the cash option on the relevant unit, or purchase a new kiosk unit

· Service levels of warranty:

· Customer’s kiosk units will be covered by a *****-***** **** **** on-site service for all component and configuration issues (“Service Commitment”). The *****-***** **** **** on-site Service Commitment applies only to weekdays (Monday through Friday excluding holidays). The *****-***** **** **** Service Commitment is measured from completion of the initial troubleshooting and proper diagnosis, and it is determined that a new device and/or technician visit is necessary.

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***Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

EXHIBIT 10.22D

· Technician visits resulting from a warranty claim will be tracked and reported on a ******* basis.

· CSG will report those instances in which the Service Commitment is not met. The remedy for CSG’s failure to meet the Service Commitment specified above will be as follows:

— Customer will be ******** $****** *** ***** ****, *** *** which the Service Commitment is missed. For purposes of clarification: in the event a technician does not make a site visit for a properly diagnosed issue for a Customer kiosk unit for **** *** ****, and *** *** ** ***** **** *** **** occur after the *****-***** **** **** service level commitment described above has expired, Customer will be *** * ****** ** $****** (i.e., *** *** **** * $****** *** *** * *** *** **** = $******).

— The remedy will include a tolerance of a **** ******* **** of the ***** ****** ** ******* ***** ********** ****** that ** *** **** *** *****-***** **** **** service level commitment; i.e., CSG will be not be responsible for payment of any service level credits should CSG meet the response goal ** ***** ******-**** ******* ***%* ** *** **** ******** ** * ******* *****.

— For any field technician visits that are within the **** ******* *** ********* specified above, the Service Commitment will ****** ** * ******-*** **** **** service level; any period in excess of such ******-*** **** **** period will not be subject to any such ***** period.

— The following events will be deemed exceptions to the Service Commitment and will, as a result, not be subject to the remedy specified above:

— Shipping carrier delays/errors (for example UPS or FedEx delivery issues).

— Acts of God, such as weather disasters, etc.

— Misdiagnosis of the issue due to ineffective troubleshooting efforts.

— As the owner of the Hardware, Customer has the right to move a kiosk from one site to another. The movement between sites in itself does not void any warranty, but any damage that may occur during the move will be considered out of scope and will not be covered under the warranty or Service Commitment terms.

— Additionally, Customer must notify CSG promptly when a kiosk is moved to a new location. Miscommunication with CSG and/or a kiosk technician regarding the new location may result in out of scope charges.

— To reduce the number of out of scope charges and to enhance the performance of the devices, Customer must perform routine day to day device and unit maintenance

5. Unit Ownership and Liability

— Customer will own the kiosk Hardware. Customer assumes full responsibility for damage and/or theft to any kiosk unit that is covered under the Kiosk Subscription Program. If a kiosk unit is damaged or stolen, Customer will be obligated to CSG for the fees set forth in Section (b)5 in the provisions of the “Cancelation/Termination Policy”.

— It shall be Customer’s sole responsibility to dispose of the unit once it reaches its end of life and is no longer active. Customer shall have the legal obligation to remove any CSG owned/provided software and customer data. CSG will help to schedule the unit disposal in the event a new Kiosk has been ordered to replace the existing unit that requires disposal. Customer will provide CSG with the site level steps regarding the disposal arrangements. CSG will assist in the coordination of disposal, but the site shall be held accountable for being available for the exchange with the shipper/agency selected to dispose of the unit.

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***Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

EXHIBIT 10.22D

6. Vendor DEG Compliance:

— CSG will use commercially reasonable efforts to ensure that a kiosk unit’s components are in compliance with CSG’s Vendor DEG.

— New units shipped under the Kiosk Subscription Program (or installed post **** *** ****), will be Vendor DEG compliant with the most recent CSG published Vendor DEG when that unit shipped. If Customer modifies the environment and effectively takes the unit out of Vendor DEG compliance, the warranty and onsite agreement will no longer apply until the proper steps are taken to get the unit back to Vendor DEG compliance

— Throughout the life of the units under the Kiosk Subscription Program, CSG will use commercially reasonably efforts to ensure all components will remain supported under a CSG managed and defined Vendor DEG configuration.

— Existing kiosk units in the field on or ****** **** *** **** that are scheduled to be enrolled into the Kiosk Subscription Program shall be provided in a mutually agreed Statement of Work executed by the Parties and will be validated and Customer agrees to keep the kiosk units in Vendor DEG compliance upon upgrade to the Kiosk 2.0 software. If a unit is determined by CSG to be out of scope for the 2.0 upgrade due to age of the unit or the specs of the components, the standard *****-*** **** ***** end of life will be assigned to that unit, and it will be covered under the Hardware and on-site maintenance warranty until that point. Units falling under this category may not be Vendor DEG compliant and may continue to run the Kiosk 1.0 software; note that this will not void warranty on these units.

7. Unit volume commitment for program eligibility:

— The Kiosk Subscription Program pricing and support model shall only be available when one ******* ***** or more active units are in Customer’s markets. If the number of Customer’s units in the field falls below *** ******* *****, all new purchases after that point will be subject to a new fee structure that will be created and agreed upon at that time. Existing units previously purchased under the Subscription Model will remain in the model and subject to the model’s pricing terms for the remainder of its useful life.

— In this event? all existing units would remain under the Kiosk Subscription Program for the remainder of the unit’s useful life.

Customer Indemnification. Customer shall indemnify and hold harmless CSG, its officers, board of directors and employees from and against all claims, damages, losses, and expenses, including, but not limited to attorney’s fees arising out of or resulting from installation and use of the Hardware under the terms of the this Amendment or the Agreement, provided that any such claim, damage, loss or expense is attributable to bodily injury, sickness, disease or death, or to injury to or destruction of tangible property other than goods furnished under the Agreement, including any resulting loss of use resulting therefrom and is caused in whole or part, but only to the extent of its apportioned negligence, by any negligent act or omission of Customer, its contractor or subcontractor, or anyone directly or indirectly employed by any one of them or anyone for whose acts made by any of them may be liable.

(c) Termination. Upon expiration or termination of the Agreement, or upon Customer’s discontinued use of CSG’s Precision eCare^® Payment Kiosk solution, all rights to the software granted under this Amendment will cease, and Customer will promptly (i) purge all terminated software, including but not limited to any third party software provided by CSG as applicable, from the Hardware and all of Customer’s other computer systems, storage media and other files; (ii) destroy CSG’s Confidential Information and all copies thereof; and (iii) deliver to CSG an affidavit which certifies that Customer has complied with these termination obligations, as applicable.

(d) The provisions above and those in the Attachments 1, and 2 (which provides a pass through warranty from third party Hardware vendor and description of Hardware) attached hereto and any other terms set forth herein which expressly or by their nature are to continue after termination or expiration of this Amendment shall survive and remain in effect for the Hardware and software purchased herein so long as said items are in use by Customer (including Customer’s affiliates and subsidiaries).

7 / 13

***Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

EXHIBIT 10.22D

ATTACHMENT 1

BASE KIOSK PRODUCT CONFIGURATION (See note at bottom)

Kiosk Hardware and system software (the “Hardware”)

1. Enclosure – Thinman model; standalone indoor bill payment enclosure designed for 17” LCD, all metal standard powder-coat finish, internal service keyboard w/trackball for PC servicing and updating

2. Security – Key Entry: Lock-n-key entry with front and rear service doors

3. Security – Intrusion alarm: includes door sensors and external key switch

4. Speakers: Amplified Dual Speaker System

5. Magnetic Card Reader: ID Tech CCR, insert 2 track, USB/CDC interface, includes standard bezel and cable

6. Receipt Printer: Swecoin TTP20320 80mm Thermal Printer, USB interface, Includes power supply, paper guide, and spindle

7. Bar Code Scanner: Scanner, Honeywell/Metrologic’s IS3480 Quantum E with USB interface cable

8. Cash/bill Acceptor: MEI 2800 series, 1000 note cassettes, USB interface

9. Additional Cash Cassette: 1000 note capacity for MEI 2800 series

10. Check Scanner: RDM 7000 Check scanner, p/n EC7011F

11. Monitor: 17” Monitor

12. Touch Screen: 17” resistive touch screen overlay with USB interface

13. 17” Privacy Filter

14. PC: Dell OptiPlex GX 7010, 3-2120 CPU, 2GB RAM, 250GB HD, Win7 Pro 32-bit, DVD +/- RW

15. Warranty: One Year Parts Warranty – Repair Depot to KIOSK. See KIOSK Customer Services Document for details

16. Packaging: Pallet & Cardboard Packaging

17. Assembly: KIOSK Assembly & Electronics System Integration labor included

18. Quality: KIOSK QA and Electronics Testing to ISO9001/2000 standard, labor included

19. Design Standards: Design & Built to UL & FCC Class A Product Approval Standards

20. Artwork and Color Options: Two standard colors on body and art options a. and b. are standard. Graphics options not included in the standard price (c, d, and e) are listed below. All artwork and branding to be provided customer: Graphic guidelines will be provided. Includes Setup, Print, and Application of artwork

a. Thinman Main Header, See Graphics guidelines for sizing, Includes Setup, Print, and Application

b. Thinman Vinyl logo, approx. 12”X12”. Includes Setup, Print, and Application

c. Thinman Lower Face Graphics

d. Thinman Side Graphics

e. Thinman Side Logo (approx. 12”X12”)

21. Software loading and testing done remotely by third party provider, Nanonation

22. Thinman User’s Manual

23. Low/out of paper sensor for Swecoin TTP 2030

24. Caster Wheels for Thinman

25. Eyebolt mounted on the back of the kiosk unit

8 / 13

***Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

EXHIBIT 10.22D

ATTACHMENT 2

On-Site Field Service and Warranty Plan

Definitions

End of Life – Date at which a kiosk is considered to no longer have a useful life. This date is defined as after ** ****** from the original date in which the kiosk was shipped from Kiosk, Inc.’s (“KIOSK”) manufacturing facility.

Useful Life – Period between ship date and ** ****** from ship date.

Existing Units – Units that have been purchased prior to the date listed on this Amendment.

New Units – Units that have been purchased after the execution of the contract and include the Service and Warranty on original order.

Warranty and Onsite coverage terms

(a) On-Site Field Maintenance and Warranty Services:

(i) Under the Subscription Program, incoming service phone calls from CSG will be received by KIOSK’s Customer Service Professionals with support provided from *:** ** ** *:** ** Mountain Standard Time (MST), ****** ******* ****** for same-day phone diagnostic response. The majority of calls and incoming email requests for service will be answered in real time; response is guaranteed to within two hours. This service is provided directly from the KIOSK factory (not outsourced).

(ii) The KIOSK Service Representative will promptly work through a series of questions with Customer to provide basic diagnostics of the issue and determine if a replacement part and Field Service Technician needs to be sent out. If this is the case, KIOSK arranges for ********* shipment of replacement parts and schedules the Field Technician Visit to arrive typically within ******-**** **** ***** of call receipt. While the Field Technician is scheduled as part of this ****-*** process, the customer site visit does not occur until the ********* *** when the part has been delivered. For most instances KIOSK will ship the replacement part to the customer site, however, in some cases it may be necessary to ship the part directly to the Field Service Technician. KIOSK will utilizes the best ********* shipping delivery available for the defined location – ***** ******** ********* ** *** **** *** ***. Following this chronology eliminates the cost and interruption involved with duplicate site visits. Getting the replacement parts in the Field Service Technician’s hands (as part of the repair process) provides a streamlined, productive service call and has been proven to be the most effective way to minimize down-time on mission critical applications. The faulty part return and shipping cost will be the responsibility of KIOSK Field Technician.

(b) On-site Field Maintenance and Warranty Service Exceptions for the Subscription Program:

(i) Requests for Field Service Technician service request calls must be received by *:** pm MST, ****** ******* ******, to be eligible for the **** *** site arrival (**-****) service metric. Field Service Technician request calls received after *:** pm MST will be scheduled on the following ******** ***.

(ii) Requests for Warranty Parts support must also be received by *:** ** MST, ****** ******* ****** to be eligible for **** *** ********* shipment and **** *** site arrival. KIOSK will utilize the best ********* shipping delivery available for the specified location (i.e., ***** ******** ********* ** *** **** *** ***). Replacement part requests received after *:** ** MST will be shipped ********* air on the **** ******** ***, as supported by the best ********* shipping delivery for the specified location.

(iii) This warranty is voided by misuse, accident, modification, and unsuitable physical or operating environment, improper cleaning or maintenance by Customer or Customer’s other service organizations, removal or alternation of part identification, or failure caused by product or component not supplied by KIOSK or for which KIOSK is not responsible, or any modifications or changes to components or to the kiosk without KIOSK’s written approval.

(iv) If merchandise/component is determined to be a “non valid warranty issue” or “no defect found” or “outside of warranty” then Customer will be charged fees associated with repairing or replacing the merchandise/component that has been returned from the field service call. Upon completion of inspection for components in the KIOSK lab and a “Non valid warranty” status is determined, a $***** fee will be charged for the handling, diagnosis, and/or cleaning of the faulty component. When a faulty component is determined to be a “non valid warranty issue”, KIOSK will provide an “out of scope” charge to Customer that will includes parts and labor cost for repairs or replacement of the merchandise/component returned from the field service call. KIOSK labor cost will be invoiced to Customer at the rate of $****** *** ****.

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***Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

EXHIBIT 10.22D

(v) Warranty service is guaranteed for ****** **** **** for workmanship after such warranty service is completed.

(vi) The warranty on part defects is not extended if replacement parts are provided in a maintenance action.

(vii) The warranty does not apply to expendable items (i.e. normal wear and tear of external graphics, etc.). Paint damage due to normal wear and tear is not covered under the warranty. Paint damage resulting from manufacturing defects will be covered under the warranty.

(viii) Damage caused by vandalism, physical abuse, or environmental acts of God are not covered under the warranty.

(ix) The warranty includes the original kiosk enclosure and all components as shipped from KIOSK’s factory. It does not include consigned components, customer software, network, connectivity service, custom modifications or changes made to the system, or cleaning, installation or repositioning of the system.

(x) Customer will provide updated onsite contacts and addresses for each location and kiosk remote monitoring access required for service call management. Exceptions to fulfillment of onsite service can include holidays or events that prohibit access to the location.

(xi) Warranty and On-Site Maintenance services will be purchased by Customer at the time of sale (before the kiosk is shipped, installed or in active use). The warranty coverage term cannot be adjusted at a later date without a paid field inspection visit and on-site review by a KIOSK technician, except where otherwise specified in this Amendment.

(xii) Replacement components are not guaranteed to be new components and may come from KIOSK refurbished and tested stock (at the discretion of KIOSK).

(xiii) If original components are no longer obtainable through reasonable efforts, KIOSK will replace the component with an equal quality component as well as cover any cabinet modifications and labor needed to physically install equal quality component.

(xiv) The KIOSK Field Service Technician must be able to access the Comcast kiosk unit during the scheduled time. Keys must be available on-site prior to dispatch of a Field Service Technician. In those instances in which the KIOSK Field Service Technician is not able to access the Comcast kiosk unit or the Customer site or if keys are not onsite, all at the Customer-approved, scheduled time, such instance will result in a duplicate Field Service Technician site visit and CSG will invoice Customer an additional $****** ***. In the event CSG no longer provides Services related to kiosks to Customer, the invoice shall be provided by Kiosk to Customer.

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***Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

EXHIBIT 10.22D

EXHIBIT B

Existing Kiosk units in the field scheduled to be enrolled into the Kiosk Subscription Program

This list of units represents the existing Comcast Kiosk units that are going to be inducted into the subscription price and support model. Fee considerations for each unit and life cycle milestones for each unit will be defined and documented in a subsequent legal document.

ID	SERIAL	DELIVERY DATE		** ***** EOL
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********

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***Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

EXHIBIT 10.22D

Kiosk List Continued

ID	SERIAL	DELIVERY DATE		** ***** EOL
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********

12 / 13

***Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

EXHIBIT 10.22D

Kiosk List Continued

ID	SERIAL	DELIVERY DATE		** ***** EOL
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********
**********	******		**********		**********

13 / 13

   

EX-10

Pages where confidential treatment has been requested are stamped “Confidential Treatment Requested and

the Redacted Material has been separately filed with the Commission,” and places where information has

been redacted have been marked with (***).

EXHIBIT 10.23AB

THIRTY-FIFTH AMENDMENT

TO

CSG MASTER SUBSCRIBER MANAGEMENT SYSTEM AGREEMENT

BETWEEN

CSG SYSTEMS, INC.

AND

DISH NETWORK L.L.C.

This THIRTY-FIFTH AMENDMENT (this “Amendment”) is made by and between CSG Systems, Inc., a Delaware corporation (“CSG”), and DISH Network L.L.C., a Colorado limited liability company (“Customer”). This Amendment shall be effective as of the date last signed below (the “Effective Date”). CSG and Customer entered into a certain CSG Master Subscriber Management System Agreement (Document #2301656) effective as of January 1, 2010 (the “Agreement”), and now desire to further amend the Agreement in accordance with the terms and conditions set forth in this Amendment. If the terms and conditions set forth in this Amendment shall be in conflict with the Agreement, the terms and conditions of this Amendment shall control. Any terms in initial capital letters or all capital letters used as a defined term but not defined in this Amendment shall have the meaning set forth in the Agreement. Upon execution of this Amendment by the parties, any subsequent reference to the Agreement between the parties shall mean the Agreement as amended by this Amendment. Except as amended by this Amendment, the terms and conditions set forth in the Agreement shall continue in full force and effect according to their terms.

CSG and Customer agree as follows as of the Effective Date:

1. CSG agrees to ****** Precision eCare^®—Consolidator Services (Module C) ******* fee to $**** per *********** for the term of the Agreement.

2. As a result, Schedule F, “FEES,” CSG SERVICES, Section III. entitled “Payment Procurement,” is hereby AMENDED to delete in its entirety subsection B. entitled “Precision eCare™—Consolidator Services (Module C)” and replace it with the following:

B. Precision eCare^®—Consolidator Services (Module C) (Note 3) (Note 5)

Description of Item/Unit of Measure	Frequency	Fee
1. Installation Services (Note 1)	*** *******		*****
2. Consolidator Services (per ***********) (**** *) ***** *)	*******	$	******

Note 1: All installation services and the associated fees must be set forth in a mutually agreed upon statement of work.

Note 2: “Transaction” means a bill distributed. Customer will be charged a Transaction Fee for ***** ******* ****** **** by CSG on behalf of the Customer, to the Consolidator Services provider **** *****.

Note 3: In the event Customer wishes to utilize additional functionality provided by the Precision eCare Suite, Customer recognizes that such additional functionality must be provided pursuant to a subsequent Amendment to the Agreement and an implementation SOW.

Note 4: Notwithstanding the ****** price ******** outlined in the Agreement (Section 4 entitled “Increase in Fees”) CSG shall not ******** the Consolidator Services per *********** fee until ******** *** **** at which time the parties may enter into negotiation for any on-going fees related to the Consolidator Service. In the event the parties are unable to agree, CSG shall no longer be obligated to provide and Customer shall no longer be obligated to pay for such Service.

Note 5: Upon installation of the Precision eCare^®—Consolidator Services (Module C), CSG shall provide and Customer is committed to use and pay for such Service through the expiration of the Agreement (including any applicable Termination Assistance) or the earlier termination of the Agreement or the Service in accordance with Section 19. Termination.

* * * * * * *

[Remainder of page intentionally left blank. Signature page follows.]

       

*** Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

EXHIBIT 10.23AB

IN WITNESS THEREOF the parties hereto have caused this Amendment to be executed by their duly authorized representatives.

DISH NETWORK L.L.C.	CSG SYSTEMS, INC.
By: /s/ Michael K McClaskey	By: /s/ Michael J Henderson
Name: Michael K. McClaskey	Name: Michael J. Henderson
Title: Senior Vice President and Chief Information Officer	Title: EVP Sales & Marketing
Date: 8/20/13	Date: 8/22/13

[Signature page to Thirty-fifth Amendment to

CSG Master Subscriber Management System Agreement Between CSG Systems, Inc. and Dish Network L.L.C.]

2 / 2

   

EX-10

Pages where confidential treatment has been requested are stamped “Confidential Treatment
Requested and the Redacted Material has been separately filed with the Commission,” and places
where information has been redacted have been marked with (***).

EXHIBIT 10.23AC

THIRTY-SIXTH AMENDMENT

TO THE

CSG MaSTER SUBSCRIBER MANAGEMENT SYSTEM AGREEMENT

BETWEEN

CSG SYSTEMS, INC.

AND

DISH NETWORK L.L.C.

This THIRTY-SIXTH AMENDMENT (this “Amendment”) is made by and between CSG Systems, Inc., a Delaware corporation (“CSG”), and DISH Network L.L.C., a Colorado limited liability company (“Customer”). This Amendment shall be effective as of the date last signed below (the “Effective Date”). CSG and Customer entered into a certain CSG Master Subscriber Management System Agreement (Document #2301656) effective as of January 1, 2010 (the “Agreement”), and now desire to further amend the Agreement in accordance with the terms and conditions set forth in this Amendment. If the terms and conditions set forth in this Amendment shall be in conflict with the Agreement, the terms and conditions of this Amendment shall control. Any terms in initial capital letters or all capital letters used as a defined term but not defined in this Amendment shall have the meaning set forth in the Agreement. Upon execution of this Amendment by the parties, any subsequent reference to the Agreement between the parties shall mean the Agreement as amended by this Amendment. Except as amended by this Amendment, the terms and conditions set forth in the Agreement shall continue in full force and effect according to their terms.

As of the Effective Date CSG and Customer agree to amend the Agreement as follows:

1. Pursuant to the terms and conditions of Item 4(i) of Section I.E. under CSG SERVICES in Schedule F of the Agreement, including, without limitations the fees set forth therein, as such fees have been adjusted pursuant to Section 4 of the Agreement, as of the date of this Amendment, Customer shall purchase from CSG, and CSG shall provide to Customer, an ********** ***** ******* ***** ******** ** ************ *** ****** “MIPS” to Customer’s production environment, which shall not be included in the ratio of ** **** *** ******* ****** ***********, beginning ********* ** ****. CSG agrees Customer may terminate its use of the ********** MIPS provided in this Amendment upon providing CSG *** *** *** notice (e-mail shall suffice) and Customer will pay the MIPS fees below on a ******** basis for any ***** in which the ********** MIPS provided in this Amendment were made available to Customer. Upon the earlier of the expiration of the *** *** *** notice or the date of termination of the additional MIPS provided in the notice, CSG shall no longer be required to make the additional MIPS provided in this Amendment available to Customer.

2. In accordance with Item 4(i) of Section I.E. under CSG SERVICES in Schedule F of the Agreement and Section 4 of the Agreement, for the purchase of an aggregate of *** **** as set forth in Section 1 above, CSG shall invoice Customer a fee of $********** per month (i.e., $****** *** *** *** *****).

IN WITNESS WHEREOF the parties hereto have caused this Amendment to be executed by their duly authorized representatives.

DISH NETWORK L.L.C. (“CUSTOMER”)	CSG SYSTEMS, INC. (“CSG”)
By: /s/ Michael K McClaskey	By: /s/ Michael J Henderson
Name: Michael K. McClaskey	Name: Michael J Henderson
Title: Senior Vice President and Chief Information Officer	Title: EVP Sales & Marketing
Date: 9/3/13	Date: 9/4/13

   

EX-10

Pages where confidential treatment has been requested are stamped “Confidential Treatment Requested and
the Redacted Material has been separately filed with the Commission,” and places where information has
been redacted have been marked with (***).

EXHIBIT 10.24T

SEVENTY-THIRD AMENDMENT

TO THE

CSG MASTER SUBSCRIBER MANAGEMENT SYSTEM AGREEMENT

BETWEEN

CSG SYSTEMS, INC.

AND

TIME WARNER CABLE INC.

This Seventy-third Amendment (the “Amendment”) is made by and between CSG Systems, Inc., a Delaware corporation (“CSG”), and Time Warner Cable Inc. (“TWC”). CSG and TWC entered into a certain CSG Master Subscriber Management System Agreement executed March 13, 2003, and effective as of April 1, 2003, as amended (the “Agreement”), and now desire to further amend the Agreement in accordance with the terms and conditions set forth in this Amendment. If the terms and conditions set forth in this Amendment shall be in conflict with the Agreement, the terms and conditions of this Amendment shall control. Any terms in initial capital letters or all capital letters used as a defined term but not defined in this Amendment, shall have the meaning set forth in the Agreement. Upon execution of this Amendment by the parties, any subsequent reference to the Agreement between the parties shall mean the Agreement as amended by this Amendment. Except as amended by this Amendment, the terms and conditions set forth in the Agreement shall continue in full force and effect according to their terms.

CSG and TWC agree as follows:

1. TWC desires to use, and CSG agrees to provide, CSG Digital Mailbox (“Digital Mailbox Services”) under the Agreement. Therefore, upon execution of this Amendment the following changes are hereby made to the Agreement:

a) The “Additional Services” section of Schedule C, “Basic Services and Additional Services and Associated Exhibits,” of the Agreement shall be amended to include Digital Mailbox Services, as described in Exhibit C-10, attached hereto (“Exhibit C-10”); and

b) Schedule C, entitled “Basic Services and Additional Services and Associated Exhibits,” of the Agreement shall be amended to add the following under “Additional Services”:  CSG Digital Mailbox—Exhibit C-10

2. CSG and TWC agree that ******* ***. will be the Digital Mailbox Vendor to provide the Digital Mailbox Services pursuant to this Amendment. The parties agree, further, that at such time as any additional CSG digital mailbox vendor is selected by TWC, CSG and TWC shall enter into a subsequent amendment to the Agreement for such services.

3. Further, upon execution of this Amendment and pursuant to the terms and conditions of the Agreement, Schedule F of the Agreement, “Fee Schedule,” “CSG SERVICES”, Section III. “Payment Procurement” shall be amended to add a new subsection G, titled “CSG Digital Mailbox”, to include the following fees for Digital Mailbox Services:

G. CSG Digital Mailbox

Description of Item/Unit of Measure	Frequency		Fee
CSG Digital Mailbox Services
1. Implementation Fees (**** *)		***		** ******
2. ******* Recurring *********** Fees (per ***********) (**** *) (**** *)		*******	$	******
3. Customizations (**** *)		*** *******		*****

       

*** Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

EXHIBIT 10.24T

Note 1: The parties agree to execute a Statement of Work for implementation of Digital Mailbox (CSG document no. 2502680).

Note 2: For purposes of this Amendment, a *********** is defined as the ********** ************ ** ** ********** ********* by CSG to Digital Mailbox Vendor. TWC will be charged a *********** Fee for each monthly statement successfully sent by CSG on behalf of TWC to the Digital Mailbox of those registered Subscribers who have, upon or following such Subscribers’ registration for Digital Mailbox, also suppressed hard paper statements and elected paperless receipt of statements via Digital Mailbox, as indicated by the relevant flag on the CSG billing system at the time of the electronic statement distribution.

Note 3: The ******* Recurring *********** Fee will be subject to increase pursuant to Section 5.4 of the Agreement.

Note 4: Custom formatting and customizations to the standard Digital Mailbox banner will be at TWC’s contractual development rate.

4. For avoidance of doubt, Participating Affiliates may use and receive Digital Mailbox without incurring any additional fees hereunder, without any requirement that such Digital Mailbox service be set forth in any such Participating Affiliate’s Affiliate Addendum. In addition to TWC’s termination rights set forth above and in Article 6 of the Agreement, TWC shall also have the right to terminate any Participating Affiliate’s use of the Interface, if applicable, for convenience, without notice to CSG.

IN WITNESS WHEREOF the parties hereto have caused this Amendment to be executed by their duly authorized representatives.

TIME WARNER CABLE INC. (“TWC”)		CSG SYSTEMS, INC. (“CSG”)
By:	/s/ Rob Roy	By:	/s/ Joseph T Ruble
Name:	Rob Roy	Name:	Joseph T. Ruble
Title:	Group Vice President	Title:	EVP, CAO & General Counsel
Date:	7/29/13	Date:	1 August 2013

2 / 3

Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

EXHIBIT 10.24T

Schedule C

Exhibit C-10

CSG DIGITAL MAILBOX

CSG Digital Mailbox Description:

CSG Digital Mailbox. CSG Digital Mailbox is a pre-integrated CSG service offering by which Customers’ Subscribers’ statements will be delivered in a secure electronic environment to a third party platform so that Customer’s Subscribers who have registered for Digital Mailbox can receive their statements and any related documents in a single online location.

TWC will select and retain *** *** or more CSG-certified third party Digital Mailbox vendors (“Digital Mailbox Vendor”) to provide registered Subscribers with the ability to receive the Digital Mailbox service over an interface established and maintained by Digital Mailbox Vendor (“Digital Mailbox Interface”).

CSG Digital Mailbox will provide Customers’ Subscribers with the following functionalities via the secure electronic environment provided by Digital Mailbox Vendor:

— Receive all statements and other documents in a single online location

— Electronically organize and securely store documents with automatic categorization and unlimited storage

— In accordance with applicable law, suppress paper statements upon registration or after registration; provided, however, that Subscribers will still have the ability to print a paper copy of the statements from its digital mailbox.

— Receive alerts and notifications through multiple electronic channels (i.e., email, SMS, mobile applications)

By its execution of the Amendment, TWC acknowledges that:

TWC authorizes CSG to provide Digital Mailbox Vendor with registered Subscribers’ statements, in accordance with the terms of this Amendment, and agrees that, following delivery to Digital Mailbox Vendor and subject to the terms of this Amendment, CSG is not responsible for Digital Mailbox Vendor’s use of such Subscriber statements and related documents under the terms of the Agreement. Notwithstanding the foregoing, CSG shall discontinue sending such Subscriber statements and related documents to Digital Mailbox Vendor upon TWC’s written request (email is sufficient).

Additional Terms:

1. CSG Termination. CSG can terminate Digital Mailbox upon not less than ********** **** ****’ noticed to TWC if Digital Mailbox Services become unavailable due to the failure of Digital Mailbox Vendor to provide services

2. Disaster Recovery. Schedule L, Disaster Recovery Plan, of the Agreement is amended to add Digital Mailbox under the **** ** classification.

3. Support. CSG shall provide support for Digital Mailbox and problems shall be reported and resolved, in accordance with ******** ***** * as set forth in Section II of Schedule H of the Agreement. CSG’s support obligations shall continue through the earlier of (a) termination or expiration of the Agreement (and any Termination Assistance Period, as defined in the Agreement) or (b) such time as Participating Affiliate ceases its use of Digital Mailbox services.

4. Use of Connected Subscriber Information. CSG agrees that all Connected Subscriber information and data accessed through the Digital Mailbox services is “Confidential Information” of TWC and, except as provided herein, shall be kept strictly confidential in accordance with the Agreement.

3 / 3

   

EX-10

Pages where confidential treatment has been requested are stamped “Confidential Treatment Requested and
the Redacted Material has been separately filed with the Commission,” and places where information has
been redacted have been marked with (***).

EXHIBIT 10.24U

SEVENTY-SIXTH AMENDMENT

TO THE

CSG MASTER SUBSCRIBER MANAGEMENT SYSTEM AGREEMENT

BETWEEN

CSG SYSTEMS, INC.

AND

TIME WARNER CABLE INC.

This Seventy-sixth Amendment (the “Amendment”) is made by and between CSG Systems, Inc., a Delaware corporation (“CSG”), and Time Warner Cable Inc. (“TWC”). CSG and TWC entered into a certain CSG Master Subscriber Management System Agreement executed March 13, 2003, and effective as of April 1, 2003, as amended (the “Agreement”), and now desire to further amend the Agreement in accordance with the terms and conditions set forth in this Amendment. If the terms and conditions set forth in this Amendment shall be in conflict with the Agreement, the terms and conditions of this Amendment shall control. Any terms in initial capital letters or all capital letters used as a defined term but not defined in this Amendment, shall have the meaning set forth in the Agreement. Upon execution of this Amendment by the parties, any subsequent reference to the Agreement between the parties shall mean the Agreement as amended by this Amendment. Except as amended by this Amendment, the terms and conditions set forth in the Agreement shall continue in full force and effect according to their terms.

CSG and TWC agree as follows as of the date last signed below:

1. Amended and Restated Schedule P. Schedule P to the Agreement is hereby amended and restated to read in its entirety, as set forth in the document that is labeled as “Schedule P” and attached to this Amendment.

IN WITNESS WHEREOF the parties hereto have caused this Amendment to be executed by their duly authorized representatives.

TIME WARNER CABLE INC. (“TWC”)		CSG SYSTEMS, INC. (“CSG”)
By:	/s/ Scott Cannada	By:	/s/ Joseph T Ruble
Name:	Scott Cannada	Name:	Joseph T. Ruble
Title:	Vice President	Title:	EVP, CAO & General Counsel
Date:	August 26, 2013	Date:	30 August 2013

*** Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

EXHIBIT 10.24U

SCHEDULE P

EXPORT APPROVED PRODUCTS AND EXPORT APPROVED COUNTRIES

Foreign Countries	Products
*********	*ACSR
****** ***** **** ********* ******** ********* ***** ****** ****** *********** ********* ** ******** ******** ** ******** ************ ** ********	*ACSR (web-enabled) Product Configurator
	* These products include the following software or product modules: 1. CIT 2. Leads Tracking 3. OWF 4. Enhanced Campaigns 5. Offer Management 6. Equipment (OPE) 7. Billing Calculator 8. Credit Verification 9. Risk Management 10.ACSR Voice 11.EAR / AR 12.Account Hierarchies 13.Statement Express 14.Outage Detection 15.Enhanced Statement Screen 16.AOI / AIT 17.LOB indicators (HSD, Voice, Data), a/k/a ACSR HSD module 18.Unbilled Usage
2/2

       

EX-10

EXHIBIT 10.83

This exhibit contains forms of agreements used by the company to grant restricted stock awards to its executive officers and non-employee directors under the company’s 2005 Stock Incentive Plan. Readers should note that these are forms of agreement only and particular agreements with executive officers and directors may contain terms that differ but not in material respects.

2005

RESTRICTED STOCK AWARD AGREEMENT

Name of Grantee (the “Grantee):

Date of Restricted Stock Award (the “Award Date”):

Number of Shares Covered by Restricted Stock Award (the “Award Shares”):

This Restricted Stock Award Agreement (this “Agreement”) is entered into as of the Date of Restricted Stock Award set forth above (the “Award Date”) by and between CSG SYSTEMS INTERNATIONAL, INC., a Delaware corporation (the “Company”), and the Grantee named above (the “Grantee”).

* * *

WHEREAS, the Company has adopted a 2005 Stock Incentive Plan (the “Plan”); and

WHEREAS, pursuant to the Plan, as of the Award Date the Company granted to Grantee a Restricted Stock Award (the “Award”) covering the number of shares of the Common Stock of the Company (the “Common Stock”) set forth above (the “Award Shares”) and is executing this Agreement with Grantee for the purpose of setting forth the terms and conditions of the Award;

NOW, THEREFORE, in consideration of the premises and the covenants and conditions contained herein, the Company and Grantee agree as follows:

1. Award of Restricted Shares.

(a) The Company hereby confirms the grant of the Award to Grantee as of the Award Date. The Award is subject to all of the terms and conditions of this Agreement.

(b) Promptly after the execution of this Agreement, the Company will cause the transfer agent for the Common Stock (the “Transfer Agent”) to (i) either establish a separate account in its records in the name of Grantee (the “Restricted Stock Account”) and credit the Award Shares to the Restricted Stock Account as of the Award Date or credit the Award Shares to a previously existing Restricted Stock Account of Grantee as of the Award Date and (ii) confirm such actions to Grantee in writing.

2. Vesting of Award Shares.

(a) Twenty-five percent (25%) of the Award Shares (rounded to the nearest whole number) automatically will vest in Grantee on each of the first four (4) anniversaries of the Award Date (each such anniversary being referred to in this Agreement as a “Vesting Date”); provided, however, that no Award Shares shall vest in Grantee on a particular Vesting Date unless Grantee has been continuously employed by the Company from the Award Date until such Vesting Date.

(b) For purposes of this Agreement, a “Termination of Employment” of Grantee means the effective time when the employer-employee relationship between Grantee and the Company terminates for any reason whatsoever.

(c) In determining the existence of continuous employment of Grantee by the Company or the existence of an employer-employee relationship between Grantee and the Company for purposes of this Agreement, the term “Company” shall include a Subsidiary (as defined in the Plan); and neither a transfer of Grantee from the employ of the Company to the employ of a Subsidiary nor the transfer of Grantee from the employ of a Subsidiary to the employ of the Company or another Subsidiary shall be deemed to be a Termination of Employment of Grantee.

(d) After the Grantee has become vested in any of the Award Shares and, if applicable, after the cancellation of certain of the Award Shares as provided for in Section 12(b) has occurred, the Company will instruct the Transfer Agent to remove all restrictions on the transfer, assignment, pledge, encumbrance, or other disposition of the then remaining vested Award Shares in the Restricted Stock Account. Grantee thereafter may dispose of such remaining vested Award Shares in Grantee’s sole discretion, subject

to compliance with securities and other applicable laws and Company policies with respect to dispositions of Company stock, and may request the Transfer Agent to issue a certificate for such remaining vested Award Shares in Grantee’s name free of any restrictions.

3. Cancellation of Unvested Award Shares.

Upon a Termination of Employment of Grantee, all of the rights and interests of Grantee in any of the Award Shares which have not vested in Grantee pursuant to Section 2 prior to such Termination of Employment of Grantee automatically shall completely and forever terminate; and, at the direction of the Company, the Transfer Agent shall remove from the Restricted Stock Account and cancel all of such unvested Award Shares.

4. Employment.

Nothing contained in this Agreement (i) obligates the Company or a Subsidiary to continue to employ Grantee in any capacity whatsoever or (ii) prohibits or restricts the Company or a Subsidiary from terminating the employment of Grantee at any time or for any reason whatsoever. In the event of a Termination of Employment of Grantee, Grantee shall have only the rights set forth in this Agreement with respect to the Award Shares.

5. Dividends and Changes in Capitalization.

If at any time that any of the Award Shares have not vested in Grantee the Company declares or pays any ordinary cash dividend, any non-cash dividend of securities or other property or rights to acquire securities or other property, any liquidating dividend of cash or property, or any stock dividend or there occurs any stock split or other change in the character or amount of any of the outstanding securities of the Company, then in such event any and all cash and new, substituted, or additional securities or other property relating or attributable to those unvested Award Shares immediately and automatically will become subject to this Agreement, will be delivered to the Transfer Agent or to an independent Escrow Agent selected by the Company to be held by the Transfer Agent or such Escrow Agent pursuant to the terms of this Agreement (including but not limited to the provisions of Sections 2, 4, and 8), and will have the same status with respect to vesting and transfer as the unvested Award Shares upon which such dividend was paid or with respect to which such new, substituted, or additional securities or other property was distributed. No interest will accrue on any cash or cash equivalents received by the Transfer Agent or such Escrow Agent pursuant to the first sentence of this Section 5. Grantee and the Company agree that the provisions of this Section 5 amend, supersede and/or replace any conflicting provisions contained in any Restricted Stock Award Agreements between the Company and Grantee covering Restricted Stock Awards previously granted to Grantee by the Company.

6. Representations of Grantee.

Grantee hereby represents and warrants to the Company as follows:

(a) Grantee had full legal power, authority, and capacity to execute and deliver this Agreement and to perform Grantee’s obligations under this Agreement; and this Agreement is a valid and binding obligation of Grantee, enforceable in accordance with its terms, except that the enforcement of this Agreement may be subject to bankruptcy, insolvency, reorganization, moratorium, or other similar laws now or hereafter in effect relating to creditors’ rights generally and to general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law).

(b) Grantee is aware of the public availability on the Internet at www.sec.gov of the Company’s periodic and other filings made with the United States Securities and Exchange Commission.

7. Representations and Warranties of the Company.

The Company hereby represents and warrants to Grantee as follows:

(a) The Company is a corporation duly organized, validly existing, and in good standing under the laws of Delaware and has all requisite corporate power and authority to enter into this Agreement, to issue the Award Shares to Grantee, and to perform its obligations under this Agreement.

(b) The execution and delivery of this Agreement by the Company have been duly and validly authorized; and all necessary corporate action has been taken to make this Agreement a valid and binding obligation of the Company, enforceable in accordance with its terms, except that the enforcement of this Agreement may be subject to bankruptcy, insolvency, reorganization, moratorium, or other similar laws now or hereafter in effect relating to creditors’ rights generally and to general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law).

(c) When issued to Grantee as provided for in this Agreement, the Award Shares will be duly and validly issued, fully paid, and non-assessable.

 2 

8. Restriction on Sale or Transfer of Award Shares.

None of the Award Shares that have not vested in Grantee pursuant to Section 2 (and no beneficial interest in any of such Award Shares) may be sold, transferred, assigned, pledged, encumbered, or otherwise disposed of in any way (including a transfer by operation of law); and any attempt to make any such sale, transfer, assignment, pledge, encumbrance, or other disposition shall be null and void and of no effect.

9. Enforcement.

The Company and Grantee acknowledge that the Company’s remedy at law for any breach or violation or attempted breach or violation of the provisions of Section 8 will be inadequate and that, in the event of any such breach or violation or attempted breach or violation, the Company shall be entitled to injunctive relief in addition to any other remedy, at law or in equity, to which the Company may be entitled.

10. Violation of Transfer Provisions.

Neither the Company nor the Transfer Agent shall be required to transfer on the stock records of the Company maintained by either of them any Award Shares which have been sold, transferred, assigned, pledged, encumbered, or otherwise disposed of in violation of any of the provisions of this Agreement or to treat as the owner of such Award Shares or accord the right to vote or receive dividends to any purported transferee or pledgee to whom such Award Shares shall have been so sold, transferred, assigned, pledged, encumbered, or otherwise disposed of in violation of any of the provisions of this Agreement.

11. Section 83(b) Election.

Grantee shall have the right to make an election pursuant to Treasury Regulation § 1.83-2 with respect to the Award Shares and, if Grantee makes such election, promptly will furnish to the Company a copy of the form of election Grantee has filed with the Internal Revenue Service for such purpose and evidence that such an election has been made in a timely manner.

12. Withholding.

(a) Upon Grantee’s making of the election referred to in Section 11 with respect to any of the Award Shares, Grantee shall pay to or provide for the payment to or withholding by the Company of all amounts which the Company is required to withhold from Grantee’s compensation for federal, state, or local tax purposes by reason of or in connection with such election. Notwithstanding any provision of this Agreement to the contrary, neither the Company nor the Transfer Agent shall be obligated to release from the Restricted Stock Account any of the Award Shares with respect to which Grantee has made such election and which have vested in Grantee until Grantee’s obligations under this Section 12 have been satisfied.

(b) Upon the vesting in Grantee of any of the Award Shares as to which the election referred to in Section 11 was not made by Grantee, the Company shall compute as of the applicable vesting date the amounts which the Company is required to withhold from Grantee’s compensation for federal, state, or local tax purposes by reason of or in connection with such vesting, based upon the Fair Market Value (as defined in the Plan) of such Award Shares. After making such computation, the Company shall direct the Transfer Agent to remove from the Restricted Stock Account and cancel that number of the Award Shares whose Fair Market Value (as defined in the Plan) as of the applicable vesting date is equal to the aggregate of such amounts required to be withheld by the Company; provided, that for such purpose the number of Award Shares to be removed from the Restricted Stock Account and cancelled shall be rounded up to the nearest whole Award Share. After the actions prescribed by the preceding provisions of this Section 12(b) have been taken, the Company when required by law to do so shall pay to the applicable tax authorities in cash the amounts required to have been withheld from Grantee’s compensation by reason of or in connection with the vesting referred to in the first sentence of this Section 12(b), with any excess amount resulting from such rounding being treated as federal income tax withholding; and Grantee shall have (i) no further obligation with respect to such amounts required to be withheld and (ii) no further rights or interests in the Award Shares withdrawn from the Restricted Stock Account and cancelled pursuant to this Section 12(b), unless the Company has miscomputed such amounts or the number of such Award Shares.

13. Voting and Other Stockholder Rights.

Grantee shall have the right to vote with respect to all of the Award Shares which are outstanding and credited to the Restricted Stock Account as of a record date for determining stockholders of the Company entitled to vote, whether or not such Award Shares are vested in Grantee as of such record date. Except as expressly limited or restricted by this Agreement and except as otherwise provided in this Agreement, Grantee shall have all of the other rights of a stockholder of the Company with respect to all of the Award Shares which are outstanding and credited to the Restricted Stock Account at a particular time, whether or not such Award Shares are vested in Grantee at such time.

 3 

14. Application of Plan.

The relevant provisions of the Plan relating to Restricted Stock Awards and the authority of the Committee under the Plan shall be applicable to this Agreement to the extent that this Agreement does not otherwise expressly address the subject matter of such provisions.

15. General Provisions.

(a) No Assignments. Grantee may not sell, transfer, assign, pledge, encumber, or otherwise dispose of any of Grantee’s rights or obligations under this Agreement without the prior written consent of the Company; and any such attempted sale, transfer, assignment, pledge, encumbrance, or other disposition shall be void.

(b) Notices. All notices, requests, consents, and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given and made upon personal delivery to the person for whom such item is intended (including by a reputable overnight delivery service which shall be deemed to have effected personal delivery) or upon deposit, postage prepaid, registered or certified mail, return receipt requested, in the United States mail as follows:

(i) if to Grantee, addressed to Grantee at Grantee’s address shown on the stockholder records maintained by the Transfer Agent or at such other address as Grantee may specify by written notice to the Transfer Agent, or

(ii) if to the Company, addressed to the Chief Financial Officer of the Company at the principal office of the Company or at such other address as the Company may specify by written notice to Grantee.

Each such notice, request, consent, and other communication shall be deemed to have been given upon receipt thereof as set forth above or, if sooner, three (3) business days after deposit as described above. An address for purposes of this Section 15(b) may be changed by giving written notice of such change in the manner provided in this Section 15(b) for giving notice. Unless and until such written notice is received, the addresses referred to in this Section 15(b) shall be deemed to continue in effect for all purposes of this Agreement.

(c) Choice of Law. This Agreement shall be governed by and construed in accordance with the internal laws, and not the laws of conflicts of laws, of the State of Delaware.

(d) Severability. The Company and Grantee agree that the provisions of this Agreement are reasonable and shall be binding and enforceable in accordance with their terms and, in any event, that the provisions of this Agreement shall be enforced to the fullest extent permitted by law. If any provision of this Agreement for any reason shall be adjudged to be unenforceable or invalid, then such unenforceable or invalid provision shall not affect the enforceability or validity of the remaining provisions of this Agreement, and the Company and Grantee agree to replace such unenforceable or invalid provision with an enforceable and valid arrangement which in its economic effect shall be as close as possible to the unenforceable or invalid provision.

(e) Parties in Interest. All of the terms and provisions of this Agreement shall be binding upon, inure to the benefit of, and be enforceable by the respective heirs, personal representatives, successors, and assigns of the Company and the Grantee; provided, that the provisions of this Section 15(e) shall not authorize any sale, transfer, assignment, pledge, encumbrance, or other disposition of the Award Shares which is otherwise prohibited by this Agreement.

(f) Modification, Amendment, and Waiver. No modification, amendment, or waiver of any provision of this Agreement shall be effective against the Company or Grantee unless such modification, amendment, or waiver (i) is in writing, (ii) is signed by the party sought to be bound by such modification, amendment, or waiver, (iii) states that it is intended to modify, amend, or waive a specific provision of this Agreement, and (iv) in the case of the Company, has been authorized by the Committee. However, Grantee acknowledges and agrees that the Committee, in the exercise of its sole discretion and without Grantee’s consent, may modify or amend this Agreement in any manner and delay either the payment of any amounts payable pursuant to this Agreement or the release of any Award Shares which have vested pursuant to this Agreement to the minimum extent necessary to satisfy the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and any regulations thereunder; and the Company will provide Grantee with notice of any such modification or amendment. The failure of the Company or Grantee at any time to enforce any of the provisions of this Agreement shall not be construed as a waiver of such provisions and shall not affect the right of the Company or Grantee thereafter to enforce each and every provision of this Agreement in accordance with its terms.

(g) Integration. This Agreement constitutes the entire agreement of the Company and Grantee with respect to the subject matter of this Agreement and supersedes all prior negotiations, understandings, and agreements, written or oral, with respect to such subject matter.

(h) Headings. The headings of the sections and paragraphs of this Agreement have been inserted for convenience of reference only and do not constitute a part of this Agreement.

(i) Counterparts. This Agreement may be executed in counterparts with the same effect as if both the Company and Grantee had signed the same document. All such counterparts shall be deemed to be an original, shall be construed together, and shall constitute one and the same instrument.

 4 

(j) Further Assurances. The Company and Grantee agree to use their best efforts and act in good faith in carrying out their obligations under this Agreement. The Company and Grantee also agree to execute and deliver such additional documents and to take such further actions as reasonably may be necessary or desirable to carry out the purposes and intent of this Agreement.

IN WITNESS WHEREOF, the Company and Grantee have executed this Restricted Stock Award Agreement on the dates set forth below, effective on the Award Date.

COMPANY:	GRANTEE:
CSG SYSTEMS INTERNATIONAL, INC.,
a Delaware corporation
	(Name)
By:	Date:
Title:
Date:

           

 5 

EX-31

EXHIBIT 31.01

CERTIFICATIONS PURSUANT TO

SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Peter E. Kalan, certify that:

1. I have reviewed this report on Form 10-Q of CSG Systems International, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 7, 2013	/s/ Peter E. Kalan
	Peter E. Kalan
	Chief Executive Officer and President

   

EX-31

EXHIBIT 31.02

CERTIFICATIONS PURSUANT TO

SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Randy R. Wiese, certify that:

1. I have reviewed this report on Form 10-Q of CSG Systems International, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 7, 2013	/s/ Randy R. Wiese
	Randy R. Wiese
	Executive Vice President and Chief Financial Officer

       

EX-32

EXHIBIT 32.01

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The certification set forth below is being submitted in connection with the Quarterly Report on Form 10-Q (the “Report”) for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code.

Peter E. Kalan, the Chief Executive Officer and Randy R. Wiese, the Chief Financial Officer of CSG Systems International Inc., each certifies that, to the best of his knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of CSG Systems International, Inc.

November 7, 2013

/s/ Peter E. Kalan

Peter E. Kalan

Chief Executive Officer and President

November 7, 2013

/s/ Randy R. Wiese

Randy R. Wiese

Executive Vice President and Chief Financial Officer

       

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2013

Fair Value Measurements

The following table represents the fair value hierarchy based upon three levels of inputs, of which Levels 1 and 2 are considered observable and Level 3 is unobservable, for financial assets and liabilities measured at fair value on a recurring basis (in thousands):

	September 30, 2013							December31, 2012
	Level 1			Level 2		Total	Level 1				Level 2			Total
Assets:
Cash equivalents:
Money market funds	$	33,365	$	—	$	33,365	$		23,119	$		—	$		23,119
Commercial paper		—		20,798		20,798			—			35,856			35,856
Short-term investments:
Commercial paper		—		48,574		48,574			—			34,826			34,826
Municipal bonds		—		29,353		29,353			—			—			—
U.S. government agency bonds		—		23,235		23,235			—			748			748
Total	$	33,365	$	121,960	$	155,325	$		23,119	$		71,430	$		94,549
Liabilities:
Interest rate swap contracts (1)	$	—	$	377	$	377	$		—	$		1,069	$		1,069
Total	$	—	$	377	$	377	$		—	$		1,069	$		1,069

(1)As of September 30, 2013, the fair value of the interest rate swap contract was classified on our Balance Sheet in “Other current liabilities”. As of December31, 2012, the fair value of the interest rate swap contracts were classified on our Balance Sheet in “Other non-current liabilities”.

Carrying Value and Estimated Fair Value of Debt

We have chosen not to measure our debt at fair value.The following table indicates the carrying value and estimated fair value of our debt as of the indicated periods (in thousands):

	September30,2013				December31,2012
	Carrying Value		Fair Value		Carrying Value			Fair Value
Credit Agreement (carrying value including current maturities)	$	138,750	$	138,750		$	150,000		$	150,000
Convertible debt (par value)		150,000		182,355			150,000			158,400

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Condensed Consolidated Statements of Income - Unaudited (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Revenues:
Processing and related services	$ 133,294	$ 138,993	$ 399,112	$ 408,669
Software, maintenance and services	52,886	51,008	153,807	150,190
Total revenues	186,180	190,001	552,919	558,859
Cost of revenues (exclusive of depreciation, shown separately below):
Processing and related services	65,184	67,585	189,725	191,879
Software, maintenance and services	29,714	32,826	93,285	91,021
Total cost of revenues	94,898	100,411	283,010	282,900
Other operating expenses:
Research and development	27,600	28,526	83,693	84,242
Selling, general and administrative	38,444	33,963	110,629	99,387
Depreciation	4,609	5,373	14,379	17,084
Restructuring charges	76		939	821
Total operating expenses	165,627	168,273	492,650	484,434
Operating income	20,553	21,728	60,269	74,425
Other income (expense):
Interest expense	(2,615)	(4,078)	(8,724)	(12,336)
Amortization of original issue discount	(1,351)	(1,251)	(3,975)	(3,680)
Interest and investment income, net	174	263	517	635
Other, net	(130)	452	950	524
Total other	(3,922)	(4,614)	(11,232)	(14,857)
Income before income taxes	16,631	17,114	49,037	59,568
Income tax provision	(1,331)	(7,701)	(6,767)	(26,479)
Net income	$ 15,300	$ 9,413	$ 42,270	$ 33,089
Weighted-average shares outstanding - Basic:
Common stock	32,084	31,980	32,114	32,189
Participating restricted stock				22
Total	32,084	31,980	32,114	32,211
Weighted-average shares outstanding - Diluted:
Common stock	32,664	32,398	32,553	32,423
Participating restricted stock				22
Total	32,664	32,398	32,553	32,445
Earnings per common share:
Basic	$ 0.48	$ 0.29	$ 1.32	$ 1.03
Diluted	$ 0.47	$ 0.29	$ 1.30	$ 1.02
Cash dividends declared per common share	$ 0.15		$ 0.30

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Stockholders' Equity and Equity Compensation Plans

9 Months Ended

Sep. 30, 2013

Stockholders' Equity and Equity Compensation Plans

3. STOCKHOLDERS’ EQUITY AND EQUITY COMPENSATION PLANS

Stock Repurchase Program. We currently have a stock repurchase program, approved by our Board of Directors, authorizing us to repurchase our common stock from time-to-time as market and business conditions warrant (the “Stock Repurchase Program”). During the nine months ended September 30, 2013 and 2012, we repurchased 0.5 million shares of our common stock under the Stock Repurchase Program for $10.1 million (weighted-average price of $20.23 per share), and 0.8 million shares of our common stock for $13.3 million (weighted-average price of $16.23 per share), respectively. As of September 30, 2013, the total remaining number of shares available for repurchase under the Stock Repurchase Program totaled 2.1 million shares.

Stock Repurchases for Tax Withholdings. In addition to the above mentioned stock repurchases, during the nine months ended September 30, 2013 and 2012, we repurchased and then cancelled 0.3 million shares of common stock for $5.0 million and 0.2 million shares of common stock for $3.0 million, respectively, in connection with minimum tax withholding requirements resulting from the vesting of restricted common stock under our stock incentive plans.

Cash Dividend.  On June25, 2013, our Board of Directors (the “Board”) approved the initiation of a quarterly cash dividend to be paid to our stockholders.  The Board approved an initial cash dividend of $0.15 per share of common stock, totaling $5.1 million to stockholders of record on July 10, 2013, of which $4.8 million was paid on July 25, 2013 (with the remaining amount attributed to unvested shares to be paid upon vesting).  On August 22, 2013, the Board approved a third quarter cash dividendof $0.15 per share of common stock, totaling $5.1 million to stockholders of record on September 10, 2013, of which $4.8 million was paid on September 25, 2013 (with the remaining amount attributed to unvested shares to be paid upon vesting).

Stock-Based Awards. A summary of our unvested restricted common stock activity during the third quarter and nine months ended September 30, 2013 is as follows (shares in thousands):

	Quarter Ended September30,2013						Nine Months Ended September30,2013
	Shares			Weighted- AverageGrant DateFairValue		Shares				Weighted- AverageGrant DateFairValue
Unvested awards, beginning		2,094		$	18.44			1,956		$	17.63
Awards granted		43			24.32			952			19.72
Awards forfeited/cancelled		(11	)		18.26			(72	)		18.41
Awards vested		(41	)		19.72			(751	)		17.70
Unvested awards, ending		2,085		$	18.54			2,085		$	18.54

Included in the awards granted during the nine months ended September 30, 2013, are performance-based awards for 175,384 restricted common stock shares issued to members of executive management, which vest in equal installments over three years upon meeting either pre-established financial performance objectives or pre-established stock price objectives. The performance-based awards become fully vested upon a change in control, as defined, and the subsequent involuntary termination of employment.

All other restricted common stock shares granted during the quarter and nine months ended September 30, 2013 are time-based awards, which vest annually over four years with no restrictions other than the passage of time. Certain shares of the restricted common stock become fully vested upon a change in control, as defined, and the subsequent involuntary termination of employment.

We recorded stock-based compensation expense for the third quarters of 2013 and 2012 of $4.0 million and $3.5 million, respectively, and for the nine months ended September 30, 2013 and 2012 of $11.5 million and $10.0 million, respectively.

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Summary of Significant Accounting Policies (Details 1) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Carrying value and estimated fair value of debt
Carrying value	$ 267,423	$ 274,698
Credit Agreement Debt | Carrying Value
Carrying value and estimated fair value of debt
Carrying value	138,750	150,000
Credit Agreement Debt | Fair Value
Carrying value and estimated fair value of debt
Fair Value	138,750	150,000
Convertible Debt | Carrying Value
Carrying value and estimated fair value of debt
Carrying Value	150,000	150,000
Convertible Debt | Fair Value
Carrying value and estimated fair value of debt
Fair Value	$ 182,355	$ 158,400

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Stockholders' Equity and Equity Compensation Plans (Tables)

9 Months Ended

Sep. 30, 2013

Summary of Unvested Restricted Common Stock Activity

Stock-Based Awards. A summary of our unvested restricted common stock activity during the third quarter and nine months ended September 30, 2013 is as follows (shares in thousands):

	Quarter Ended September30,2013						Nine Months Ended September30,2013
	Shares			Weighted- AverageGrant DateFairValue		Shares				Weighted- AverageGrant DateFairValue
Unvested awards, beginning		2,094		$	18.44			1,956		$	17.63
Awards granted		43			24.32			952			19.72
Awards forfeited/cancelled		(11	)		18.26			(72	)		18.41
Awards vested		(41	)		19.72			(751	)		17.70
Unvested awards, ending		2,085		$	18.54			2,085		$	18.54

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Long-Lived Assets (Details Textual) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Long-Lived Assets (Textual) [Abstract]
Total amortization expense	$ 9,100,000	$ 11,500,000	$ 26,600,000	$ 31,200,000
Estimated total amortization expense 2013	35,000,000		35,000,000
Estimated total amortization expense 2014	28,600,000		28,600,000
Estimated total amortization expense 2015	17,700,000		17,700,000
Estimated total amortization expense 2016	13,200,000		13,200,000
Estimated total amortization expense 2017	10,600,000		10,600,000
Write-down of goodwill			1,417,000
Proceeds from disposition of business			$ 1,734,000

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Stockholders Equity and Equity Compensation Plans (Details Textual) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended			9 Months Ended
	Sep. 30, 2013	Jun. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Stockholders Equity and Equity Compensation Plans (Additional Textual) [Abstract]
Shares repurchased				500,000	800,000
Total amount paid				$ 10.1	$ 13.3
Weighted-average price per share				$ 20.23	$ 16.23
Remaining number of shares available for repurchase	2,100,000			2,100,000
Repurchase of common stock for employee tax withholdings, shares				300,000	200,000
Repurchase of common stock for tax withholdings, value				5.0	3.0
Cash dividends declared per common share	$ 0.15	$ 0.15		$ 0.30
Cash dividend	5.1	5.1
Payment of cash dividends	4.8	4.8
Date of Dividend Approval	Aug. 22, 2013	Jun. 25, 2013
Shareholders of Record Date	Sep. 10, 2013	Jul. 10, 2013
Dividend payment date	Sep. 25, 2013	Jul. 25, 2013
Performance based awards granted to executive management shares				175,384
Stock-based compensation expense	$ 4.0		$ 3.5	$ 11.5	$ 10.0
Performance Shares
Stockholders' Equity and Equity Compensation Plans (Textual) [Abstract]
Common stock shares issued to members of executive management vesting installments				3 years
Restricted common stock
Stockholders' Equity and Equity Compensation Plans (Textual) [Abstract]
Common stock shares issued to members of executive management vesting installments				4 years

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Stockholders' Equity and Equity Compensation Plans (Details) (Restricted common stock, USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2013
Restricted common stock
Shares
Shares, Unvested awards, beginning balance	2,094	1,956
Shares, Awards granted	43	952
Shares, Awards forfeited/cancelled	(11)	(72)
Shares, Awards vested	(41)	(751)
Shares, Unvested awards, ending balance	2,085	2,085
Weighted average grant date fair value
Weighted-Average Grant Date Fair Value, Unvested awards, beginning balance	$ 18.44	$ 17.63
Weighted-Average Grant Date Fair Value, Awards granted	$ 24.32	$ 19.72
Weighted-Average Grant Date Fair Value, Awards forfeited/cancelled	$ 18.26	$ 18.41
Weighted-Average Grant Date Fair Value, Awards vested	$ 19.72	$ 17.70
Weighted-Average Grant Date Fair Value, Unvested awards, ending balance	$ 18.54	$ 18.54

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Derivatives (Details) (2013 Swap, USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013
2013 Swap
Summary of interest rate swap contracts
Beginning of Term	Mar. 13, 2013
End of Term	Mar. 13, 2014
Weighted-Average Notional Amount Over Remaining Term	$ 44,000
Fixed Rate	2.181%

XML

Earnings Per Common Share (Details Textual) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Disclosure Earnings Per Common Share Details Textual [Line Items]
Anti dilutive common shares excluded from calculation of earning per share	0	0	0	0.3

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Summary of Significant Accounting Policies (Details Textual) (USD $)	9 Months Ended		12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Summary of Significant Accounting Policies (Textual) [Abstract]
Restricted cash	$ 4,900,000
Cash equivalents, maturity period	Three months or less
Proceeds from sale/maturity of short-term investments	$ 62,720,000	$ 33,152,000
Short-term investment contractual maturities	2 years		2 years

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Condensed Consolidated Statements of Comprehensive Income - Unaudited (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Net loss arising from period, tax	$ 0	$ 0	$ (119)	$ 0
Amortization of prior service cost included in net periodic pension cost, tax	0	0	28	0
Partial settlement of pension plan liability, tax	0	0	336	0
Unrealized gains (losses) on change in fair value of interest rate swap contracts, tax	199	37	549	27
Reclassification adjustment for (gains) losses included in net income, tax	$ (101)	$ (49)	$ (280)	$ (101)

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General

9 Months Ended

Sep. 30, 2013

General

1. GENERAL

We have prepared the accompanying unaudited condensed consolidated financial statements as of September 30, 2013 and December31, 2012, and for the third quarters and nine months ended September 30, 2013 and 2012, in accordance with accounting principles generally accepted in the United States of America (“U.S.”) (“GAAP”) for interim financial information, and pursuant to the instructions to Form 10-Q and the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of our management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of our financial position and operating results have been included. The unaudited Condensed Consolidated Financial Statements (the “Financial Statements”) should be read in conjunction with the Consolidated Financial Statements and notes thereto, together with Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), contained in our Annual Report on Form 10-K for the year ended December31, 2012 (our “2012 10-K”), filed with the SEC. The results of operations for the quarter and nine months ended September 30, 2013 are not necessarily indicative of the expected results for the entire year ending December31, 2013.

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Earnings Per Common Share

9 Months Ended

Sep. 30, 2013

Earnings Per Common Share

4. EARNINGS PER COMMON SHARE

Basic and diluted earnings per common share (“EPS”) amounts are presented on the face of the accompanying Condensed Consolidated Statements of Income (the “Income Statement” or “Income Statements”).

The amounts attributed to both common stock and participating restricted common stock used as the numerators in both the basic and diluted EPS calculations are as follows (in thousands):

	Quarter Ended September 30,					Nine Months Ended September 30,
	2013		2012		2013			2012
Net Income attributed to:
Common stock	$	15,300	$	9,413	$		42,270	$	33,066
Participating restricted common stock		—		—			—		23
Total	$	15,300	$	9,413	$		42,270	$	33,089

The weighted-average shares outstanding used in the basic and diluted EPS denominators related to common stock and participating restricted common stock are as follows (in thousands):

	Quarter Ended September 30,					Nine Months Ended September 30,
	2013		2012		2013			2012
Weighted-average shares outstanding – Basic:
Common stock		32,084		31,980			32,114		32,189
Participating restricted common stock		—		—			—		22
Total		32,084		31,980			32,114		32,211
Weighted-average shares outstanding – Diluted:
Common stock		32,664		32,398			32,553		32,423
Participating restricted common stock		—		—			—		22
Total		32,664		32,398			32,553		32,445

The reconciliation of the basic and diluted EPS denominators related to the common shares is included in the following table (inthousands):

	Quarter Ended September 30,					Nine Months Ended September 30,
	2013		2012		2013			2012
Basic weighted-average common shares		32,084		31,980			32,114		32,189
Dilutive effect of common stock options		—		9			1		11
Dilutive effect of non-participating restricted common stock		580		409			438		223
Dilutive effect of 2010 Convertible Notes		—		—			—		—
Diluted weighted-average common shares		32,664		32,398			32,553		32,423

Potentially dilutive common shares related to stock options and non-participating unvested shares of restricted common stock for the third quarters of 2013 and 2012 of zerofor both periods, and for the nine months ended September 30, 2013 and 2012 of zero and 0.3 million, respectively, were excluded from the computation of diluted EPS related to common shares as their effect was antidilutive.

The 2010 Convertible Notes have a dilutive effect only in those quarterly periods in which our average stock price exceeds the current effective conversion price (see Note 5).

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2013

Summary of Significant Accounting Policies

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates in Preparation of Financial Statements. The preparation of the accompanying Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of our Financial Statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Reclassifications.  Certain 2012 amounts have been reclassified to conform to the September 30, 2013 presentation.

Postage. We pass through to our clients the cost of postage that is incurred on behalf of those clients, and typically require an advance payment on expected postage costs. These advance payments are included in “Client deposits” in the accompanying Condensed Consolidated Balance Sheets (the “Balance Sheet” or “Balance Sheets”) and are classified as current liabilities regardless of the contract period. We net the cost of postage against the postage reimbursements for those clients where we require advance deposits, and include the net amount in processing and related services revenues.

Cash and Cash Equivalents.We consider all highly liquid investments with original maturities of three months or less at the date of the purchase to be cash equivalents. As of September 30, 2013, our cash equivalents consist primarily of institutional money market funds, commercial paper, and time deposits held at major banks.

As of September 30, 2013, we had $4.9 million of restricted cash that serves to collateralize outstanding letters of credit. This restricted cash is included in “Cash and cash equivalents” in our Balance Sheet.

Short-term Investments and Other Financial Instruments. Our financial instruments as of September 30, 2013 include cash and cash equivalents, short-term investments, accounts receivable, accounts payable, interest rate swap contracts, and debt. Because of their short maturities, the carrying amounts of cash equivalents, accounts receivable, and accounts payable approximate their fair value.

Our short-term investments and certain of our cash equivalents are considered “available-for-sale” and are reported at fair value in our Balance Sheets, with unrealized gains and losses, net of the related income tax effect, excluded from earnings and reported in a separate component of stockholders’ equity. Realized and unrealized gains and losses were not material in any period presented.

All short-term investments held by us as of September 30, 2013 and December31, 2012 have contractual maturities of less than two years. Proceeds from the sale/maturity of short-term investments for the nine months ended September 30, 2013 and 2012 were $62.7million and $33.2 million, respectively.

The following table represents the fair value hierarchy based upon three levels of inputs, of which Levels 1 and 2 are considered observable and Level 3 is unobservable, for financial assets and liabilities measured at fair value on a recurring basis (in thousands):

	September 30, 2013							December31, 2012
	Level 1			Level 2		Total	Level 1				Level 2			Total
Assets:
Cash equivalents:
Money market funds	$	33,365	$	—	$	33,365	$		23,119	$		—	$		23,119
Commercial paper		—		20,798		20,798			—			35,856			35,856
Short-term investments:
Commercial paper		—		48,574		48,574			—			34,826			34,826
Municipal bonds		—		29,353		29,353			—			—			—
U.S. government agency bonds		—		23,235		23,235			—			748			748
Total	$	33,365	$	121,960	$	155,325	$		23,119	$		71,430	$		94,549
Liabilities:
Interest rate swap contracts (1)	$	—	$	377	$	377	$		—	$		1,069	$		1,069
Total	$	—	$	377	$	377	$		—	$		1,069	$		1,069

(1)As of September 30, 2013, the fair value of the interest rate swap contract was classified on our Balance Sheet in “Other current liabilities”. As of December31, 2012, the fair value of the interest rate swap contracts were classified on our Balance Sheet in “Other non-current liabilities”.

Valuation inputs used to measure the fair values of our money market funds were derived from quoted market prices. The fair values of all other financial instruments are based upon pricing provided by third-party pricing services. These prices were derived from observable market inputs.

We have chosen not to measure our debt at fair value.The following table indicates the carrying value and estimated fair value of our debt as of the indicated periods (in thousands):

	September30,2013				December31,2012
	Carrying Value		Fair Value		Carrying Value			Fair Value
Credit Agreement (carrying value including current maturities)	$	138,750	$	138,750		$	150,000		$	150,000
Convertible debt (par value)		150,000		182,355			150,000			158,400

The fair value for our Credit Agreement was estimated using a discounted cash flow methodology, while the fair value for our convertible debt was estimated based upon quoted market prices or recent sales activity, both of which are considered Level 2 inputs.

Income Taxes.During the third quarter of 2013, we recognized incremental research and development (“R&D”) tax credits claimed for development activities from previous years and the reduction of certain tax allowances related to foreign operations.  The benefit of these events is reflected in our results of operations for the three and nine months ended September 30, 2013.

Additionally, during the first quarter of 2013, we recognized an income tax benefit related to R&D tax credits that we generated during 2012. As a result of the American Taxpayer Relief Act of 2012 being signed into law on January2, 2013, we were unable to include these credits in our 2012 results of operations, as a change in tax law is accounted for in the period of enactment. Thus, the benefit of these credits is reflected in our results of operations for the nine months ended September 30, 2013.

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Earnings Per Common Share (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Net Income attributed to:
Net income	$ 15,300	$ 9,413	$ 42,270	$ 33,089
Common Shares
Net Income attributed to:
Net income	15,300	9,413	42,270	33,066
Participating restricted common stock
Net Income attributed to:
Net income				$ 23

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Debt (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Long-term debt
Carrying value of debt	$ 267,423	$ 274,698
Current portion of long-term debt	(15,000)	(15,000)
Total long-term debt, net	252,423	259,698
Senior Subordinated Convertible Notes 2010
Long-term debt
Carrying value of debt	128,673	124,698
2012 Credit Agreement | Term Loan
Long-term debt
Carrying value of debt	138,750	150,000
2012 Credit Agreement | Revolving Credit Facility
Long-term debt
Carrying value of debt

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Long-Lived Assets (Details 1) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Summary of carrying value of assets
Gross Carrying Amount, Client contracts	$ 135,324	$ 257,485
Client contracts, Accumulated Amortization	(74,137)	(182,182)
Client contracts, Net Amount	61,187	75,303
Gross Carrying Amount, Software	118,205	106,868
Software, Accumulated Amortization	(77,106)	(68,496)
Software, Net Amount	41,099	38,372
Gross Carrying Amount, Total	253,529	364,353
Accumulated Amortization, Total	(151,243)	(250,678)
Net Amount, Total	$ 102,286	$ 113,675

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Condensed Consolidated Balance Sheets - Unaudited (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Trade accounts receivable-billed, allowance	$ 3,043	$ 3,147
Property and equipment, net of depreciation	132,020	120,643
Software, net of amortization	77,106	68,496
Client contracts, net of amortization	74,137	182,182
Long-term debt, unamortized original issue discount	$ 21,327	$ 25,302
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	10,000	10,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	100,000	100,000
Common stock, shares outstanding	33,839	33,734
Treasury stock, shares	32,030	31,530

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Long-Lived Assets

9 Months Ended

Sep. 30, 2013

Long-Lived Assets

7. LONG-LIVED ASSETS

Goodwill. The changes in the carrying amount of goodwill for the nine months ended September30, 2013, were as follows (inthousands):

January1, 2013 balance	$	233,365
Adjustments related to prior acquisitions		(149	)
Adjustment for the disposition of business operations		(1,417	)
Effects of changes in foreign currency exchange rates		(564	)
September 30, 2013 balance	$	231,235

On July 1, 2013, we sold one of our small print and mail facilities and certain of its business operations, which resulted in an adjustment to our goodwill balance of $1.4 million.  The net proceeds from this disposition were $1.7 million and the gain from thesale was not material.

Other Intangible Assets. Our intangible assets subject to ongoing amortization consist primarily of client contracts and software. As of September 30, 2013 and December31, 2012, the carrying values of these assets were as follows (in thousands):

	September30, 2013								December31, 2012
	Gross Carrying Amount		Accumulated Amortization			Net Amount		Gross Carrying Amount			Accumulated Amortization			Net Amount
Client contracts	$	135,324	$	(74,137	)	$	61,187	$		257,485	$	(182,182	)	$	75,303
Software		118,205		(77,106	)		41,099			106,868		(68,496	)		38,372
Total	$	253,529	$	(151,243	)	$	102,286	$		364,353	$	(250,678	)	$	113,675

The decrease in the gross carrying amount and accumulated amortization of our client contracts between December 31, 2012 and September 30, 2013 is due primarily to the removal of fully-amortized assets related to client incentives for the Comcast Corporation (“Comcast”) and Time Warner Cable, Inc. (“Time Warner”) contracts that came to end of term during the first quarter of 2013.

The total amortization expense related to intangible assets for the third quarters of 2013 and 2012 were $9.1 million and $11.5 million, respectively, and for the nine months ended September 30, 2013 and 2012 were $26.6 million and $31.2 million, respectively. Based on the September 30, 2013 net carrying value of our intangible assets, the estimated total amortization expense for each of the five succeeding fiscal years ending December31 are: 2013 – $35.0 million; 2014 – $28.6 million; 2015 – $17.7 million; 2016 – $13.2 million; and 2017 – $10.6 million.

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Condensed Consolidated Statements of Comprehensive Income - Unaudited (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Net income	$ 15,300	$ 9,413	$ 42,270	$ 33,089
Other comprehensive income:
Foreign currency translation adjustments	6,359	6,091	(3,330)	4,609
Unrealized holding gains on short-term investments arising during period	81	2	25	2
Defined benefit pension plan:
Net loss arising from period (net of tax effect of $0, $0, $(119), and $0)			(183)
Amortization of prior service cost included in net periodic pension cost (net of tax effect of $0, $0, $28, and $0)			43	(9)
Partial settlement of pension plan liability (net of tax effect of $0, $0, $336, and $0)			546
Net change in defined benefit pension plan			406	(9)
Cash flow hedges:
Unrealized gains on change in fair value of interest rate swap contracts (net of tax effect of $199, $37, $549, and $27)	313	58	865	42
Reclassification adjustment for losses included in other income (expense) (net of tax effect of $(101), $(49), $(280), and $(101))	(160)	(78)	(442)	(160)
Net change in cash flow hedges	153	(20)	423	(118)
Other comprehensive income, net of tax	6,593	6,073	(2,476)	4,484
Total comprehensive income	$ 21,893	$ 15,486	$ 39,794	$ 37,573

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Condensed Consolidated Balance Sheets - Unaudited (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 92,736	$ 133,747
Short-term investments	101,162	35,574
Total cash, cash equivalents and short-term investments	193,898	169,321
Trade accounts receivable:
Billed, net of allowance of $3,043 and $3,147	174,757	191,943
Unbilled	41,347	28,463
Deferred income taxes	14,095	22,244
Income taxes receivable	5,903	6,469
Other current assets	27,891	21,915
Total current assets	457,891	440,355
Non-current assets:
Property and equipment, net of depreciation of $132,020 and $120,643	34,674	39,429
Software, net of amortization of $77,106 and $68,496	41,099	38,372
Goodwill	231,235	233,365
Client contracts, net of amortization of $74,137 and $182,182	61,187	75,303
Deferred income taxes	5,475	2,596
Income taxes receivable	2,299	1,291
Other assets	16,004	16,230
Total non-current assets	391,973	406,586
Total assets	849,864	846,941
Current liabilities:
Current maturities of long-term debt	15,000	15,000
Client deposits	30,239	33,807
Trade accounts payable	33,211	30,473
Accrued employee compensation	48,622	61,083
Deferred revenue	50,961	47,691
Income taxes payable	2,360	2,116
Other current liabilities	17,193	21,562
Total current liabilities	197,586	211,732
Non-current liabilities:
Long-term debt, net of unamortized original issue discount of $21,327 and $25,302	252,423	259,698
Deferred revenue	9,750	6,504
Income taxes payable	2,068	1,168
Deferred income taxes	18,364	21,674
Other non-current liabilities	15,126	19,526
Total non-current liabilities	297,731	308,570
Total liabilities	495,317	520,302
Stockholders’ equity:
Preferred stock, par value $.01 per share; 10,000 shares authorized; zero shares issued and outstanding
Common stock, par value $.01 per share; 100,000 shares authorized; 33,839 and 33,734 shares outstanding	659	653
Additional paid-in capital	469,878	461,497
Treasury stock, at cost, 32,030 and 31,530 shares	(738,372)	(728,243)
Accumulated other comprehensive income (loss):
Unrealized gain on short-term investments, net of tax	28	3
Unrecognized pension plan losses and prior service costs, net of tax	(1,355)	(1,761)
Unrecognized loss on change in fair value of interest rate swaps, net of tax	(235)	(658)
Cumulative foreign currency translation adjustments	(1,056)	2,274
Accumulated earnings	625,000	592,874
Total stockholders’ equity	354,547	326,639
Total liabilities and stockholders’ equity	$ 849,864	$ 846,941

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Earnings Per Common Share (Details 1) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Weighted-average shares outstanding - Basic:
Common stock	32,084	31,980	32,114	32,189
Participating restricted stock				22
Total	32,084	31,980	32,114	32,211
Weighted-average shares outstanding - Diluted:
Common stock	32,664	32,398	32,553	32,423
Participating restricted stock				22
Total	32,664	32,398	32,553	32,445

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Summary of Significant Accounting Policies (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013		Dec. 31, 2012
Assets:
Total	$ 155,325		$ 94,549
Liabilities:
Total	377		1,069
Interest rate swap contracts
Liabilities:
Total	377	[1]	1,069	[1]
Cash equivalents | Money market funds
Assets:
Total	33,365		23,119
Cash equivalents | Commercial paper
Assets:
Total	20,798		35,856
Short-term Investments | Municipal bonds
Assets:
Total	29,353
Short-term Investments | Commercial paper
Assets:
Total	48,574		34,826
Short-term Investments | U.S. government agency bonds
Assets:
Total	23,235		748
Level 1
Assets:
Total	33,365		23,119
Liabilities:
Total
Level 1 | Interest rate swap contracts
Liabilities:
Total		[1]
Level 1 | Cash equivalents | Money market funds
Assets:
Total	33,365		23,119
Level 1 | Cash equivalents | Commercial paper
Assets:
Total
Level 1 | Short-term Investments | Municipal bonds
Assets:
Total
Level 1 | Short-term Investments | Commercial paper
Assets:
Total
Level 1 | Short-term Investments | U.S. government agency bonds
Assets:
Total
Level 2
Assets:
Total	121,960		71,430
Liabilities:
Total	377		1,069
Level 2 | Interest rate swap contracts
Liabilities:
Total	377	[1]	1,069	[1]
Level 2 | Cash equivalents | Money market funds
Assets:
Total
Level 2 | Cash equivalents | Commercial paper
Assets:
Total	20,798		35,856
Level 2 | Short-term Investments | Municipal bonds
Assets:
Total	29,353
Level 2 | Short-term Investments | Commercial paper
Assets:
Total	48,574		34,826
Level 2 | Short-term Investments | U.S. government agency bonds
Assets:
Total	$ 23,235		$ 748

[1] As of September 30, 2013, the fair value of the interest rate swap contract was classified on our Balance Sheet in “Other current liabilities”. As of December 31, 2012, the fair value of the interest rate swap contracts were classified on our Balance Sheet in “Other non-current liabilities”.

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Commitments, Guarantees and Contingencies (Details Textual)	9 Months Ended
	Sep. 30, 2013
Commitments, Guarantees and Contingencies (Textual) [Abstract]
Warranty Period	90 days

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Derivatives (Details Textual) (USD $) In Millions, unless otherwise specified	Sep. 30, 2013
Derivatives (Textual) [Abstract]
Fair value of the interest rate swap contracts	$ 0.4

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Long-Lived Assets (Details ) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013
Schedule of Goodwill
Goodwill	$ 233,365
Adjustments related to prior acquisitions	(149)
Adjustment for the disposition of business operations	(1,417)
Effects of changes in foreign currency exchange rates	(564)
Ending balance	$ 231,235

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Derivatives

9 Months Ended

Sep. 30, 2013

Derivatives

6. DERIVATIVES

In May 2011, we entered into three interest rate swap contracts with the objective of managing our exposure to fluctuations in interest rate movements, thereby eliminating the variability of cash flows on certain portions of the interest payments related to our variable-rate debt.

A summary of our one remaining interest rate swap contract as of September30, 2013 is as follows (in thousands, except percentages):

	Beginningof Term	EndofTerm	Weighted-Average Notional Amount OverRemaining Term		FixedRate
2013 Swap	March13,2013	March13,2014	$	44,000		2.181	%

We have designated our interest rate swap contracts as cash flow hedges. Swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty over the lives of the contracts in exchange for us making fixed-rate payments to the counterparty over the lives of the contracts without exchange of the underlying notional amount.

As of September30, 2013, the fair value of the remaining interest rate swap contract, reflected in other current liabilities in our Balance Sheet, was $0.4 million, with the loss, net of tax, reflected as a reduction in other comprehensive income.

Changes in the fair value of interest rate swap contracts, designated as hedging instruments of the variability of cash flows associated with floating-rate, long-term debt obligations, are reported in accumulated other comprehensive income (“AOCI”) in the stockholders’ equity section of our Balance Sheet. These amounts subsequently are reclassified into interest expense as a yield adjustment of the hedged debt obligation in the same period in which the related interest on the floating-rate debt obligations affects earnings. The amount of gains/losses reclassified from AOCI to income/loss (effective portions) for the quarter and nine months ended September30, 2013 were not material. The estimated net losses on the interest rate swap contract that will be reclassified into earnings within the next twelve months are not expected to be material. Our interest rate swap contracts qualify as effective relationship, and as a result, hedge ineffectiveness was not material during the quarter and nine months ended September30, 2013.

We are exposed to credit-related losses in the event of non-performance by the counterparty to the interest rate swap contracts. The counterparty to the interest rate swap contracts is a major institution with investment grade credit ratings. We evaluated the counterparty credit risk before entering into the interest rate swap contracts and will continue to closely monitor the financial markets and the risk that the counterparty will default on its obligations. This credit risk is generally limited to the unrealized gains in such contracts, should the counterparty fail to perform as contracted.

We do not use derivative financial instruments for speculative purposes.

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Earnings Per Common Share (Details 2) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Reconciliation of the basic and diluted EPS denominators
Common stock	32,084	31,980	32,114	32,189
Dilutive effect of common stock options		9	1	11
Dilutive effect of non-participating restricted common stock	580	409	438	223
Dilutive effect of 2010 Convertible Notes
Diluted weighted-average common shares	32,664	32,398	32,553	32,423

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2013

Use of Estimates in Preparation of Financial Statements

Use of Estimates in Preparation of Financial Statements. The preparation of the accompanying Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of our Financial Statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Reclassifications

Reclassifications.  Certain 2012 amounts have been reclassified to conform to the September 30, 2013 presentation.

Postage

Postage. We pass through to our clients the cost of postage that is incurred on behalf of those clients, and typically require an advance payment on expected postage costs. These advance payments are included in “Client deposits” in the accompanying Condensed Consolidated Balance Sheets (the “Balance Sheet” or “Balance Sheets”) and are classified as current liabilities regardless of the contract period. We net the cost of postage against the postage reimbursements for those clients where we require advance deposits, and include the net amount in processing and related services revenues.

Cash and Cash Equivalents

Cash and Cash Equivalents.We consider all highly liquid investments with original maturities of three months or less at the date of the purchase to be cash equivalents. As of September 30, 2013, our cash equivalents consist primarily of institutional money market funds, commercial paper, and time deposits held at major banks.

As of September 30, 2013, we had $4.9 million of restricted cash that serves to collateralize outstanding letters of credit. This restricted cash is included in “Cash and cash equivalents” in our Balance Sheet.

Short-term Investments and Other Financial Instruments

Short-term Investments and Other Financial Instruments. Our financial instruments as of September 30, 2013 include cash and cash equivalents, short-term investments, accounts receivable, accounts payable, interest rate swap contracts, and debt. Because of their short maturities, the carrying amounts of cash equivalents, accounts receivable, and accounts payable approximate their fair value.

Our short-term investments and certain of our cash equivalents are considered “available-for-sale” and are reported at fair value in our Balance Sheets, with unrealized gains and losses, net of the related income tax effect, excluded from earnings and reported in a separate component of stockholders’ equity. Realized and unrealized gains and losses were not material in any period presented.

All short-term investments held by us as of September 30, 2013 and December31, 2012 have contractual maturities of less than two years. Proceeds from the sale/maturity of short-term investments for the nine months ended September 30, 2013 and 2012 were $62.7million and $33.2 million, respectively.

Income Taxes

Income Taxes.During the third quarter of 2013, we recognized incremental research and development (“R&D”) tax credits claimed for development activities from previous years and the reduction of certain tax allowances related to foreign operations.  The benefit of these events is reflected in our results of operations for the three and nine months ended September 30, 2013.

Additionally, during the first quarter of 2013, we recognized an income tax benefit related to R&D tax credits that we generated during 2012. As a result of the American Taxpayer Relief Act of 2012 being signed into law on January2, 2013, we were unable to include these credits in our 2012 results of operations, as a change in tax law is accounted for in the period of enactment. Thus, the benefit of these credits is reflected in our results of operations for the nine months ended September 30, 2013.

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Debt

9 Months Ended

Sep. 30, 2013

Debt

5. DEBT

Our long-term debt, as of September 30, 2013 and December31, 2012, was as follows (in thousands):

	September30, 2013			December31, 2012
2012 Credit Agreement:
Term loan, due November 2017 (or December 2016 if certain conditions exist), interest at adjusted LIBOR plus 2.00% (combined rate of 2.26% at September 30, 2013 and 2.31% at December31, 2012)	$	138,750		$	150,000
$100 million revolving loan facility, due November 2017 (or December 2016 if certain conditions exist), interest at adjusted LIBOR plus applicable margin		—			—
Convertible Debt Securities:
2010 Convertible Notes – senior subordinated convertible notes; due March1, 2017; cash interest at 3.0%; net of unamortized OID of $21,327 and $25,302, respectively		128,673			124, 698
		267,423			274,698
Current portion of long-term debt		(15,000	)		(15,000	)
Total long-term debt, net	$	252,423		$	259,698

Credit Agreement. During the nine months ended September 30, 2013, we made $11.3 million of principal repayments.

As of September 30, 2013, we were in compliance with the financial ratios and other covenants related to the Credit Agreement and had no borrowings outstanding on our revolving loan facility and had the entire $100 million available to us.

2010 Convertible Notes.  Upon conversion of the 2010 Convertible Notes, we will settle our conversion obligation as follows: (i)we will pay cash for 100% of the par value of the 2010 Convertible Notes that are converted; and (ii)to the extent the value of our conversion obligation exceeds the par value, we will satisfy the remaining conversion obligation in our common stock, cash or any combination of our common stock and cash.

As the result of us declaring a cash dividend in August 2013 (see Note 3), the previousconversion rate for the 2010 Convertible Notes of 41.1794 shares of our common stock for each $1,000 in principal amount of the 2010 Convertible Notes (equivalent to a conversion price of $24.28 per share of our common stock) has been adjusted to 41.4371 shares of our common stock for each $1,000 in principal amount of the 2010 Convertible Notes (equivalent to a conversion price of $24.13 per share of our common stock).

Refer to Note 6 in our 2012 10-K for disclosure of the 2010 Convertible Notes’ three contingent conversion features. As a result of the cash dividend declaration in August 2013, prior to September 1, 2016, holders of the 2010 Convertible Notes can convert their securities at any time the price of our common stock trades over $31.37 per share, or 130% of the $24.13 conversion price (previously $31.56, or 130% of the previous $24.28conversion price) for a specified period of time.

As of September 30, 2013, none of the contingent conversion features have been achieved, and thus, the 2010 Convertible Notes are not convertible by the holders.

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Condensed Consolidated Statements of Cash Flows - Unaudited (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Cash flows from operating activities:
Net income	$ 42,270	$ 33,089
Adjustments to reconcile net income to net cash provided by operating activities-
Depreciation	14,379	17,084
Amortization	28,413	33,294
Amortization of original issue discount	3,975	3,680
Impairment of client contract		2,500
(Gain) loss on short-term investments and other	1,264	(46)
Deferred income taxes	1,083	(7,789)
Excess tax benefit of stock-based compensation awards	(619)	(406)
Stock-based employee compensation	11,497	9,990
Changes in operating assets and liabilities:
Trade accounts receivable, net	75	13,358
Other current and non-current assets	(4,641)	(2,293)
Income taxes payable/receivable	1,359	(151)
Trade accounts payable and accrued liabilities	(15,724)	(92)
Deferred revenue	3,251	6,204
Net cash provided by operating activities	86,582	108,422
Cash flows from investing activities:
Purchases of property and equipment	(18,986)	(20,488)
Purchases of short-term investments	(129,259)	(45,499)
Proceeds from sale/maturity of short-term investments	62,720	33,152
Acquisition of business, net of cash acquired		(19,085)
Acquisition of and investments in client contracts	(5,349)	(4,253)
Proceeds from disposition of business	1,734
Net cash used in investing activities	(89,140)	(56,173)
Cash flows from financing activities:
Proceeds from issuance of common stock	1,283	1,572
Repurchase of common stock	(15,124)	(16,323)
Payment of cash dividends	(9,630)
Payments on acquired equipment financing	(1,894)	(765)
Payments on long-term debt	(11,250)	(22,000)
Excess tax benefit of stock-based compensation awards	619	406
Net cash used in financing activities	(35,996)	(37,110)
Effect of exchange rate fluctuations on cash	(2,457)	(1,564)
Net increase (decrease) in cash and cash equivalents	(41,011)	13,575
Cash and cash equivalents, beginning of period	133,747	146,733
Cash and cash equivalents, end of period	92,736	160,308
Net cash paid during the period for-
Interest	8,247	11,193
Income taxes	$ 3,554	$ 33,196

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Debt (Details Textual) (USD $)	9 Months Ended				9 Months Ended	12 Months Ended	9 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012	Sep. 30, 2013 Revolving Credit Facility	Sep. 30, 2013 2012 Credit Agreement	Dec. 31, 2012 2012 Credit Agreement	Sep. 30, 2013 2010 Convertible Notes	Dec. 31, 2012 2010 Convertible Notes	Sep. 30, 2013 2010 Convertible Notes Pre August Dividend	Sep. 30, 2013 2010 Convertible Notes Post August Dividend
Debt (Textual) [Abstract]
Term loan description					LIBOR plus 2.00%
Basis Spread on Term Loan					2.00%
Term Loan Combined Interest Rate					2.26%	2.31%
Maturity period					2017-11
2012 Credit Agreement Early Termination Date					Dec. 01, 2016
Amount available under revolving credit facility				$ 100,000,000
Shares of common stock prior conversion									41.1794	41.4371
In principal amount of convertible notes									1,000	1,000
Conversion price on 2010 Convertible Notes									$ 24.28	$ 24.13
Common stock price trigger									$ 31.56	$ 31.37
Rate of conversion price									130.00%	130.00%
Interest rate on senior subordinated convertible notes							3.00%
Long-term debt, unamortized original issue discount	21,327,000		25,302,000				21,327,000	25,302,000
Maturity date of 2010 Convertible Notes							Mar. 01, 2017
Payments on long-term debt	$ 11,250,000	$ 22,000,000			$ 11,250,000
Cash payable on conversion of 2010 Convertible Notes							100.00%

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Earnings Per Common Share (Tables)

9 Months Ended

Sep. 30, 2013

Net Income Attributed to Common Stock and Participating Restricted Common Stock

The amounts attributed to both common stock and participating restricted common stock used as the numerators in both the basic and diluted EPS calculations are as follows (in thousands):

	Quarter Ended September 30,					Nine Months Ended September 30,
	2013		2012		2013			2012
Net Income attributed to:
Common stock	$	15,300	$	9,413	$		42,270	$	33,066
Participating restricted common stock		—		—			—		23
Total	$	15,300	$	9,413	$		42,270	$	33,089

Weighted-Average Shares Outstanding and Reconciliation of Basic and Diluted EPS Denominators

The weighted-average shares outstanding used in the basic and diluted EPS denominators related to common stock and participating restricted common stock are as follows (in thousands):

	Quarter Ended September 30,					Nine Months Ended September 30,
	2013		2012		2013			2012
Weighted-average shares outstanding – Basic:
Common stock		32,084		31,980			32,114		32,189
Participating restricted common stock		—		—			—		22
Total		32,084		31,980			32,114		32,211
Weighted-average shares outstanding – Diluted:
Common stock		32,664		32,398			32,553		32,423
Participating restricted common stock		—		—			—		22
Total		32,664		32,398			32,553		32,445

Common Shares

Weighted-Average Shares Outstanding and Reconciliation of Basic and Diluted EPS Denominators

The reconciliation of the basic and diluted EPS denominators related to the common shares is included in the following table (inthousands):

	Quarter Ended September 30,					Nine Months Ended September 30,
	2013		2012		2013			2012
Basic weighted-average common shares		32,084		31,980			32,114		32,189
Dilutive effect of common stock options		—		9			1		11
Dilutive effect of non-participating restricted common stock		580		409			438		223
Dilutive effect of 2010 Convertible Notes		—		—			—		—
Diluted weighted-average common shares		32,664		32,398			32,553		32,423

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Commitments, Guarantees and Contingencies

9 Months Ended

Sep. 30, 2013

Commitments, Guarantees and Contingencies

8. COMMITMENTS, GUARANTEES AND CONTINGENCIES

Warranties. We generally warrant that our solutions and related offerings will conform to published specifications, or to specifications provided in an individual client arrangement, as applicable. The typical warranty period is 90 days from delivery of the solution or offering. For certain service offerings we provide a limited warranty for the duration of the services provided. We generally warrant that services will be performed in a professional and workmanlike manner. The typical remedy for breach of warranty is to correct or replace any defective deliverable, and if not possible or practical, we will accept the return of the defective deliverable and refund the amount paid under the client arrangement that is allocable to the defective deliverable. Our contracts also generally contain limitation of damages provisions in an effort to reduce our exposure to monetary damages arising from breach of warranty claims. Historically, we have incurred minimal warranty costs, and as a result, do not maintain a warranty reserve.

Product and Services Indemnifications. Our arrangements with our clients generally include an indemnification provision that will indemnify and defend a client in actions brought against the client that claim our products and/or services infringe upon a copyright, trade secret, or valid patent. Historically, we have not incurred any significant costs related to such indemnification claims, and as a result, do not maintain a reserve for such exposure.

Claims for Company Non-performance. Our arrangements with our clients typically cap our liability for breach to a specified amount of the direct damages incurred by the client resulting from the breach. From time-to-time, these arrangements may also include provisions for possible liquidated damages or other financial remedies for our non-performance, or in the case of certain of our outsourced customer care and billing solutions, provisions for damages related to service level performance requirements. The service level performance requirements typically relate to system availability and timeliness of service delivery. As of September 30, 2013, we believe we have adequate reserves, based on our historical experience, to cover any reasonably anticipated exposure as a result of our nonperformance for any past or current arrangements with our clients.

Indemnifications Related to Officers and the Board of Directors. We have agreed to indemnify members of our Board and certain of our officers if they are named or threatened to be named as a party to any proceeding by reason of the fact that they acted in such capacity. We maintain directors’ and officers’ (D&O) insurance coverage to protect against such losses. We have not historically incurred any losses related to these types of indemnifications, and are not aware of any pending or threatened actions or claims against any officer or member of our Board. As a result, we have not recorded any liabilities related to such indemnifications as of September 30, 2013. In addition, as a result of the insurance policy coverage, we believe these indemnification agreements are not significant to our results of operations.

Legal Proceedings. From time-to-time, we are involved in litigation relating to claims arising out of our operations in the normal course of business.

In addition, we have encountered the following matters:

• We received an administrative subpoena from the U.S. Department of the Treasury, Office of Foreign Assets Control (“OFAC”), dated February27, 2012, requesting documents and information related to the possibility of direct or indirect transactions with or to Iranian entities. We have conducted an internal review to identify transactions by us involving the subject matter of the subpoena as well as with any other sanctioned or embargoed entity or jurisdiction. On July13, 2012, we delivered to OFAC a response to the administrative subpoena.

• On July13, 2012, we submitted an initial voluntary disclosure to OFAC relating to certain business dealings in Syria. On October5, 2012, we submitted a voluntary disclosure relating to these business dealings.

• On August8, 2013, we submitted an initial voluntary disclosure to OFAC relating to certain business dealings in Iran and another sanctioned/embargoed country.

These business dealings represented an insignificant amount of our consolidated revenues and income, and generally consisted of software licenses and related services. We cannot predict the ultimate outcome of these matters or the total costs which may be involved. We believe there is a likelihood that a loss may be realized related to these matters, but that no reasonable estimate of the loss can be made.

Other than the OFAC matters described above, we are not presently a party to any material pending or threatened legal proceedings.

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Long-Lived Assets (Tables)

9 Months Ended

Sep. 30, 2013

Goodwill Rollforward

Goodwill. The changes in the carrying amount of goodwill for the nine months ended September30, 2013, were as follows (inthousands):

January1, 2013 balance	$	233,365
Adjustments related to prior acquisitions		(149	)
Adjustment for the disposition of business operations		(1,417	)
Effects of changes in foreign currency exchange rates		(564	)
September 30, 2013 balance	$	231,235

Summary of Carrying Value of Assets

On July 1, 2013, we sold one of our small print and mail facilities and certain of its business operations, which resulted in an adjustment to our goodwill balance of $1.4 million.  The net proceeds from this disposition were $1.7 million and the gain from thesale was not material.

Other Intangible Assets. Our intangible assets subject to ongoing amortization consist primarily of client contracts and software. As of September 30, 2013 and December31, 2012, the carrying values of these assets were as follows (in thousands):

	September30, 2013								December31, 2012
	Gross Carrying Amount		Accumulated Amortization			Net Amount		Gross Carrying Amount			Accumulated Amortization			Net Amount
Client contracts	$	135,324	$	(74,137	)	$	61,187	$		257,485	$	(182,182	)	$	75,303
Software		118,205		(77,106	)		41,099			106,868		(68,496	)		38,372
Total	$	253,529	$	(151,243	)	$	102,286	$		364,353	$	(250,678	)	$	113,675

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Debt (Tables)

9 Months Ended

Sep. 30, 2013

Long-Term Debt

Our long-term debt, as of September 30, 2013 and December31, 2012, was as follows (in thousands):

	September30, 2013			December31, 2012
2012 Credit Agreement:
Term loan, due November 2017 (or December 2016 if certain conditions exist), interest at adjusted LIBOR plus 2.00% (combined rate of 2.26% at September 30, 2013 and 2.31% at December31, 2012)	$	138,750		$	150,000
$100 million revolving loan facility, due November 2017 (or December 2016 if certain conditions exist), interest at adjusted LIBOR plus applicable margin		—			—
Convertible Debt Securities:
2010 Convertible Notes – senior subordinated convertible notes; due March1, 2017; cash interest at 3.0%; net of unamortized OID of $21,327 and $25,302, respectively		128,673			124, 698
		267,423			274,698
Current portion of long-term debt		(15,000	)		(15,000	)
Total long-term debt, net	$	252,423		$	259,698

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Document and Entity Information	9 Months Ended
	Sep. 30, 2013	Nov. 04, 2013
Document Document And Entity Information [Line Items]
Entity Registrant Name	CSG SYSTEMS INTERNATIONAL INC
Entity Central Index Key	0001005757
Document Type	10-Q
Document Period End Date	Sep. 30, 2013
Amendment Flag	false
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		33,842,370

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Derivatives (Tables)

9 Months Ended

Sep. 30, 2013

Summary of Interest Rate Swap Contracts

A summary of our one remaining interest rate swap contract as of September30, 2013 is as follows (in thousands, except percentages):

	Beginningof Term	EndofTerm	Weighted-Average Notional Amount OverRemaining Term		FixedRate
2013 Swap	March13,2013	March13,2014	$	44,000		2.181	%