<PAGE>
FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
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 (I.R.S. Employer
of incorporation or organization) Identification No.)
7887 East Belleview, Suite 1000
Englewood, Colorado 80111
(Address of principal executive offices, including zip code)
(303) 796-2850
(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 _____
-----
Shares of common stock outstanding at May 10, 2000: 52,153,448
<PAGE>
CSG SYSTEMS INTERNATIONAL, INC.
FORM 10-Q For the Quarter Ended March 31, 2000
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Balance Sheets as of March 31, 2000
and December 31, 1999................................................................ 3
Condensed Consolidated Statements of Income for the Three Months
Ended March 31, 2000 and 1999 ....................................................... 4
Condensed Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 2000 and 1999 ................................................ 5
Notes to Condensed Consolidated Financial Statements................................. 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................................ 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk........................... 13
Part II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K..................................................... 14
Signatures........................................................................... 15
Index to Exhibits.................................................................... 16
</TABLE>
2
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CSG SYSTEMS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
------------- ------------
(unaudited)
ASSETS
------
<S> <C> <C>
Current assets:
Cash and cash equivalents.................................................................... $ 66,277 $ 48,676
Accounts receivable-
Trade-
Billed, net of allowance of $3,246 and $2,975............................................ 65,264 67,477
Unbilled................................................................................. 4,871 8,311
Other...................................................................................... 1,199 909
Deferred income taxes........................................................................ 1,788 1,972
Other current assets......................................................................... 3,932 2,850
---------- -----------
Total current assets....................................................................... 143,331 130,195
---------- -----------
Property and equipment, net of depreciation of $34,164 and $31,864............................ 30,130 26,507
Software, net of amortization of $37,716 and $37,251.......................................... 5,680 6,145
Noncompete agreements and goodwill, net of amortization of $29,866 and $29,727................ 2,462 2,652
Client contracts and related intangibles, net of amortization of $25,789 and $24,779.......... 54,333 55,343
Deferred income taxes......................................................................... 51,582 52,845
Other assets.................................................................................. 1,091 1,281
---------- -----------
Total assets............................................................................... $ 288,609 $ 274,968
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Current maturities of long-term debt......................................................... $ 23,130 $ 21,711
Customer deposits............................................................................ 11,128 10,549
Trade accounts payable....................................................................... 11,543 9,450
Accrued employee compensation................................................................ 9,841 16,386
Deferred revenue............................................................................. 8,941 16,746
Accrued income taxes......................................................................... 13,749 11,710
Other current liabilities.................................................................... 10,790 11,551
---------- -----------
Total current liabilities.................................................................. 89,122 98,103
---------- -----------
Non-current liabilities:
Long-term debt, net of current maturities.................................................... 52,870 59,289
Deferred revenue............................................................................. 470 714
---------- -----------
Total non-current liabilities.............................................................. 53,340 60,003
---------- -----------
Stockholders' equity:
Preferred stock, par value $.01 per share; 10,000,000 shares authorized;
zero shares issued and outstanding......................................................... - -
Common stock, par value $.01 per share; 100,000,000 shares authorized;
52,095,189 shares and 51,638,629 shares outstanding........................................ 529 523
Common stock warrants; 3,000,000 warrants outstanding......................................... 26,145 26,145
Additional paid-in capital.................................................................... 148,391 136,373
Deferred employee compensation................................................................ (18) (48)
Notes receivable from employee stockholders................................................... (61) (115)
Accumulated other comprehensive income-cumulative translation adjustments..................... (223) (120)
Treasury stock, at cost, 815,986 shares and 722,486 shares.................................... (23,403) (20,374)
Accumulated deficit........................................................................... (5,213) (25,522)
---------- -----------
Total stockholders' equity................................................................. 146,147 116,862
---------- -----------
Total liabilities and stockholders' equity................................................. $ 288,609 $ 274,968
========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
<PAGE>
CSG SYSTEMS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three months ended
-------------------------------------
March 31, March 31,
2000 1999
----------- -------------
<S> <C> <C>
Revenues:
Processing and related services..................................... $ 70,627 $ 59,951
Software and professional services.................................. 21,436 11,136
----------- ------------
Total revenues.............................................. 92,063 71,087
----------- ------------
Cost of Revenues:
Cost of processing and related services............................. 25,770 24,036
Cost of software and professional services.......................... 10,516 5,849
----------- ------------
Total cost of revenues...................................... 36,286 29,885
----------- ------------
Gross margin (exclusive of depreciation)............................... 55,777 41,202
----------- ------------
Operating expenses:
Research and development............................................ 9,888 7,620
Selling, general and administrative................................. 10,088 10,946
Depreciation........................................................ 2,812 2,409
----------- ------------
Total operating expenses.................................... 22,788 20,975
----------- ------------
Operating income....................................................... 32,989 20,227
----------- ------------
Other income (expense):
Interest expense.................................................. (1,541) (2,224)
Interest income................................................... 1,263 641
Other............................................................. 7 (21)
----------- ------------
Total other................................................. (271) (1,604)
----------- ------------
Income before income taxes.............................................. 32,718 18,623
Income tax provision................................................ (12,409) (7,041)
----------- ------------
Net income............................................................. $ 20,309 $ 11,582
=========== ============
Basic net income per common share:
Net income available to common stockholders......................... $ 0.39 $ 0.22
=========== ============
Weighted average common shares...................................... 51,857 51,565
=========== ============
Diluted net income per common share:
Net income available to common stockholders......................... $ 0.36 $ 0.21
=========== ============
Weighted average common shares...................................... 56,830 54,216
=========== ============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
<PAGE>
CSG SYSTEMS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(in thousands)
<TABLE>
<CAPTION>
Three months ended
------------------------------
March 31, March 31,
2000 1999
------------- -------------
Cash flows from operating activities:
<S> <C> <C>
Net income..................................................................................... $ 20,309 $ 11,582
Adjustments to reconcile net income to net cash provided by operating activities-
Depreciation................................................................................. 2,812 2,409
Amortization................................................................................. 1,838 3,899
Deferred income taxes........................................................................ 1,446 4,796
Stock-based employee compensation............................................................ 30 73
Changes in operating assets and liabilities:
Trade accounts and other receivables, net.................................................. 5,345 345
Other current and noncurrent assets........................................................ (1,087) (294)
Accounts payable and accrued liabilities................................................... (5,645) (517)
------------- -------------
Net cash provided by operating activities............................................... 25,048 22,293
------------- -------------
Cash flows from investing activities:
Purchases of property and equipment, net....................................................... (6,442) (2,317)
Conversion and other incentive payments........................................................ - (4,601)
------------- -------------
Net cash used in investing activities................................................... (6,442) (6,918)
------------- -------------
Cash flows from financing activities:
Proceeds from issuance of common stock......................................................... 7,059 2,305
Repurchase of common stock..................................................................... (2,987) -
Payments on notes receivable from employee stockholders........................................ 27 181
Payments on long-term debt..................................................................... (5,000) (17,250)
------------- -------------
Net cash used in financing activities................................................... (901) (14,764)
------------- -------------
Effect of exchange rate fluctuations on cash...................................................... (104) (169)
------------- -------------
Net increase in cash and cash equivalents......................................................... 17,601 442
Cash and cash equivalents, beginning of period.................................................... 48,676 39,593
------------- -------------
Cash and cash equivalents, end of period.......................................................... $ 66,277 $ 40,035
============= =============
Supplemental disclosures of cash flow information:
Cash paid during the period for-
Interest........................................................................................ $ 1,393 $ 1,950
Income taxes.................................................................................... $ 3,942 $ 96
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
<PAGE>
CSG SYSTEMS INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
The condensed consolidated financial statements at March 31, 2000, and for the
three months then ended are unaudited and reflect all adjustments (consisting
only of normal recurring adjustments) which are, in the opinion of management,
necessary for a fair presentation of the financial position and operating
results for the interim period. The condensed consolidated 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, contained in the Company's Annual Report on
Form 10-K for the year ended December 31, 1999, filed with the Securities and
Exchange Commission (the Company's 1999 10-K). The results of operations for
the three months ended March 31, 2000, are not necessarily indicative of the
results for the entire year ending December 31, 2000.
2. STOCKHOLDERS' EQUITY
Common Stock Warrants. AT&T holds 3.0 million warrants to purchase the
Company's Common Stock at an exercise price of $12 per share. The warrants
expire in September 2002. See additional discussion of the Common Stock
Warrants in the Company's 1999 10-K.
Stock Repurchase Plan. In August 1999, the Company's Board of Directors
approved a stock repurchase plan which authorized the Company at its discretion
to purchase up to a total of 5.0 million shares of its Common Stock from time to
time as market and business conditions warrant. This program represents
approximately 10% of the Company's outstanding shares. During the three months
ended March 31, 2000, the Company repurchased 75,000 shares of Common Stock for
approximately $3.0 million ($39.92 per share). The Company has purchased a
total of 730,500 shares for approximately $23.2 million (a weighted-average
price of $31.81 per share) since the program was announced. The repurchased
shares are held as treasury shares.
3. NET INCOME PER COMMON SHARE
Basic net income per common share is computed by dividing income available to
common stockholders by the weighted average number of common shares outstanding
during the period. Diluted net income per common share is consistent with the
calculation of basic net income per common share while giving effect to dilutive
potential common shares outstanding during the period. Basic and diluted
earnings per share ("EPS") are presented on the face of the Company's Condensed
Consolidated Statements of Income. No reconciliation of the EPS numerator is
necessary as the basic and diluted net income available to common stockholders
is the same for all periods presented. The reconciliation of the EPS denominator
is as follows (in thousands):
Three Months Ended
March 31,
------------------
2000 1999
---- ----
Basic common shares outstanding....................... 51,857 51,565
Dilutive effect of common stock options............... 2,693 2,651
Dilutive effect of common stock warrants.............. 2,280 ---
------ ------
Diluted common shares outstanding..................... 56,830 54,216
====== ======
6
<PAGE>
Common Stock options of 23,000 shares and 5,000 shares for the three months
ended March 31, 2000 and 1999, respectively, have been excluded from the
computation of diluted EPS because the exercise prices of these options were
greater than the average market price of the common shares for the respective
periods.
The diluted potential common shares related to the Common Stock warrants were
excluded from the computation of diluted common shares outstanding for the three
months ended March 31, 1999, as the warrants were not considered exercisable.
During the three months ended March 31, 2000, all of the 3.0 million warrants
were considered exercisable.
5. COMPREHENSIVE INCOME
The Company's components of comprehensive income were as follows (in thousands):
Three Months Ended
March 31,
---------------------
2000 1999
---- ----
Net income.............................. $20,309 $11,582
Foreign currency translation
Adjustments............................ (103) (164)
------- -------
Comprehensive income.................... $20,206 $11,418
======= =======
6. RECLASSIFICATION OF PRIOR PERIOD AMOUNTS
Certain March 31, 1999 amounts have been reclassified to conform with the March
31, 2000 presentation.
7. SERVICE AGREEMENTS
The Company has service agreements with First Data Corporation ("FDC") and its
subsidiaries for data processing services, communication charges and other
related services. FDC provides data processing and related services required for
the operation of the Company's CCS system. Effective April 1, 2000, the Company
extended its contract with FDC for data processing services through June 30,
2005. The contract was previously scheduled to expire on December 31, 2001.
8. ACCOUNTING PRONOUNCEMENTS ISSUED BUT NOT YET EFFECTIVE
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin ("SAB") No. 101, "Revenue Recognition". This SAB provides additional
guidance on revenue recognition criteria and related disclosure requirements.
This SAB is effective for the Company in the second quarter of 2000. Adoption of
this SAB is not expected to have a significant effect on the Company's
consolidated financial statements.
In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44, "Accounting for Certain Transactions involving Stock
Compensation, an interpretation of APB Opinion No. 25". The Interpretation
clarifies the application of APB Opinion 25 for certain issues involving
employee stock compensation. The Interpretation is generally effective July 1,
2000. Adoption of this Interpretation is not expected to have a significant
effect on the Company's consolidated financial statements.
7
<PAGE>
CSG SYSTEMS INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
- ---------------------
The following table sets forth certain financial data and the percentage of
total revenues of the Company for the periods indicated (in thousands):
<TABLE>
<CAPTION>
Three months ended March 31,
--------------------------------------------------------------
2000 1999
--------------------------------------------------------------
% of % of
Amount Revenue Amount Revenue
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Revenues:
Processing and related services................... $ 70,627 76.7% $ 59,951 84.3%
Software and professional services................ 21,436 23.3 11,136 15.7
----------- ---------- ----------- ----------
Total revenues........................... 92,063 100.0 71,087 100.0
----------- ---------- ----------- ----------
Cost of Revenues:
Cost of processing and related services........... 25,770 28.0 24,036 33.8
Cost of software and professional services........ 10,516 11.4 5,849 8.2
----------- ---------- ----------- ----------
Total cost of revenues................... 36,286 39.4 29,885 42.0
----------- ---------- ----------- ----------
Gross margin (exclusive of depreciation)............ 55,777 60.6 41,202 58.0
----------- ---------- ----------- ----------
Operating expenses:
Research and development.......................... 9,888 10.7 7,620 10.7
Selling, general and administrative............... 10,088 11.0 10,946 15.4
Depreciation...................................... 2,812 3.1 2,409 3.4
----------- ---------- ----------- ----------
Total operating expenses................. 22,788 24.8 20,975 29.5
----------- ---------- ----------- ----------
Operating income.................................... 32,989 35.8 20,227 28.5
----------- ---------- ----------- ----------
Other income (expense):
Interest expense................................ (1,541) (1.7) (2,224) (3.1)
Interest income................................. 1,263 1.4 641 0.8
Other........................................... 7 - (21) -
----------- ---------- ----------- ----------
Total other.............................. (271) (0.3) (1,604) (2.3)
----------- ---------- ----------- ----------
Income before income taxes.......................... 32,718 35.5 18,623 26.2
Income tax provision.............................. (12,409) (13.4) (7,041) (9.9)
----------- ---------- ----------- ----------
Net income.......................................... $ 20,309 22.1% $ 11,582 16.3%
=========== ========== =========== ==========
</TABLE>
8
<PAGE>
Three Months Ended March 31, 2000 Compared to Three Months Ended March 31, 1999
Revenues. Total revenues for the three months ended March 31, 2000, increased
29.5% to $92.1 million, from $71.1 million for the three months ended March 31,
1999.
Revenues from processing and related services for the three months ended March
31, 2000, increased 17.8% to $70.6 million, from $60.0 million for the three
months ended March 31, 1999. Of the total increase in revenue, approximately
74% resulted from an increase in the number of customers of the Company's
clients which were serviced by the Company and approximately 26% was due to
increased revenue per customer. Customers serviced as of March 31, 2000 and
1999, respectively, were 34.3 million and 30.5 million, an increase of 12.5%.
The increase in the number of customers serviced was due to the conversion of
additional customers by new and existing clients to the Company's systems, and
internal customer growth experienced by existing clients. From January 1, 2000
through March 31, 2000, the Company converted and processed approximately 0.2
million new customers on its systems.
Revenues from software and professional services for the three months ended
March 31, 2000, increased 92.5% to $21.5 million, from $11.1 million for the
three months ended March 31, 1999. The Company sells its software products and
professional services principally to its existing client base to (i) enhance the
core functionality of its service bureau processing application, (ii) increase
the efficiency and productivity of its clients' operations, and (iii) allow
clients to effectively rollout new products and services to new and existing
markets. The increase in revenue between years relates to the continued strong
demand for the Company's existing software products and the rollout of
additional new products and services to meet the changing needs of the Company's
client base.
Total annualized domestic revenue per customer account for the first quarter of
2000 was $10.78, compared to $9.10 for the same period in 1999, an increase of
18.5%. Revenue per customer increased primarily due to increased software sales
to new and existing clients, and to a lesser degree, increased processing
revenue per customer, as follows:
Three Months
Ended March 31
---------------
2000 1999
------ -----
Processing and related services................... $ 8.29 $7.96
Software and professional services................ 2.49 1.14
------ -----
Total.......................................... $10.78 $9.10
====== =====
Cost of Processing and Related Services. Direct processing costs as a
percentage of related processing revenues were 36.5% (63.5% gross margin) for
the three months ended March 31, 2000, compared to 40.1% (59.9% gross margin)
for the three months ended March 31, 1999. The improvement between periods
relates primarily to better overall leveraging of processing costs as a result
of the continued growth of the customer base processed on the Company's system,
and to a lesser degree, a decrease in amortization of client contracts from the
CSG Acquisition, which became fully amortized as of November 30, 1999. Such
amortization was $0.75 million for the first quarter of 1999.
Cost of Software and Professional Services. The cost of software and
professional services as a percentage of related revenues was 49.1% (50.9% gross
margin) for the three months ended March 31, 2000, compared to 52.5% (47.5%
gross margin) for the three months ended March 31, 1999. The improvement
between periods relates primarily to (i) better overall leveraging of costs as a
result of higher software and professional services revenues for the quarter,
and (ii) the timing of the sales cycle for new products and services.
Gross Margin. Overall gross margin for the three months ended March 31, 2000,
increased 35.4% to $55.8 million, from $41.2 million for the three months ended
March 31, 1999, due primarily to revenue growth. The gross margin percentage
increased to 60.6% for the three months ended March 31, 2000, compared to 58.0%
9
<PAGE>
for the three months ended March 31, 1999. The overall increase in the gross
margin percentage is due primarily to the increase in gross margin for
processing and related services due to the factors discussed above.
Research and Development Expense. Research and development (R&D) expense for
the three months ended March 31, 2000, increased 29.8% to $9.9 million, from
$7.6 million for the three months ended March 31, 1999. As a percentage of
total revenues, R&D expense stayed the same at 10.7% for the three months ended
March 31, 2000 and 1999. The Company did not capitalize any software
development costs during the three months ended March 31, 2000 and 1999.
The overall increase in the R&D expenditures between periods is due primarily to
increased efforts on several products which are in development and enhancements
of the Company's existing products. The Company's development efforts for the
first quarter of 2000 were focused primarily on the development of products to
(i) increase the efficiencies and productivity of its clients' operations, (ii)
address the systems needed to support the convergence of the communications
markets, (iii) support a web-enabled, customer self-care and electronic bill
presentment/payment application, and (iv) allow clients to effectively rollout
new products and services to new and existing markets, such as residential
telephony, High-Speed Data/ISP and IP markets. The Company expects its
development efforts to focus on similar tasks through the remainder of 2000.
Selling, General and Administrative Expense. Selling, general and
administrative (SG&A) expense for the three months ended March 31, 2000,
decreased 7.8% to $10.1 million, from $10.9 million for the three months ended
March 31, 1999. As a percentage of total revenues, SG&A expense decreased to
11.0% for the three months ended March 31, 2000, from 15.4% for the three months
ended March 31, 1999. The decrease in SG&A expense relates primarily to the
noncompete agreement from the CSG Acquisition becoming fully amortized as of
November 30, 1999. Such amortization was $1.2 million for the first quarter of
1999.
Depreciation Expense. Depreciation expense for the three months ended March 31,
2000, increased 16.7% to $2.8 million, from $2.4 million for the three months
ended March 31, 1999. The increase in expense relates to capital expenditures
made during the last nine months of 1999 and the first three months of 2000 in
support of the overall growth of the Company, consisting principally of (i)
computer hardware and related equipment, (ii) statement processing equipment,
and (iii) facilities expansion. Depreciation expense for all property and
equipment is reflected separately in the aggregate and is not included in the
other components of operating expenses.
Operating Income. Operating income for the three months ended March 31, 2000,
was $33.0 million or 35.8% of total revenues, compared to $20.2 million or 28.5%
of total revenues for the three months ended March 31, 1999. The increase
between years relates to the factors discussed above.
Interest Expense. Interest expense for the three months ended March 31, 2000,
decreased 30.7% to $1.5 million, from $2.2 million for the three months ended
March 31, 1999, with the decrease attributable primarily to (i) scheduled
principal payments on the Company's long-term debt, and (ii) optional
prepayments on long-term debt during 1999. The balance of the Company's long-
term debt as of March 31, 2000, was $76.0 million, compared to $111.0 million as
of March 31, 1999, a decrease of $35.0 million.
Interest Income. Interest income for the three months ended March 31, 2000,
increased 97.0% to $1.3 million, from $0.6 million for the three months ended
March 31, 1999, with the increase attributable primarily to an increase in
operating funds available for investment.
Income Tax Provision. For the three months ended March 31, 2000, the Company
recorded an income tax provision of $12.4 million, or an effective income tax
rate of approximately 38%, which represents the Company's estimate of the
effective book income tax rate for 2000. The Company's effective income tax
rate for 1999 was also approximately 38%. As of March 31, 2000, management
continues to believe that sufficient taxable income will be generated to realize
the entire benefit of its deferred tax assets. The
10
<PAGE>
Company's assumptions of future profitable operations are supported by its
strong operating performances over the last several years.
Financial Condition, Liquidity and Capital Resources
- ----------------------------------------------------
As of March 31, 2000, the Company's principal sources of liquidity included cash
and cash equivalents of $66.3 million. The Company also has a revolving credit
facility in the amount of $40.0 million, of which there were no borrowings
outstanding. The Company's ability to borrow under the revolving credit
facility is subject to maintenance of certain levels of eligible receivables.
At March 31, 2000, all of the $40.0 million revolving credit facility was
available to the Company. The revolving credit facility expires in September
2002.
As of March 31, 2000 and December 31, 1999, respectively, the Company had $65.3
million and $67.5 million in net billed trade accounts receivable. The Company's
billed trade accounts receivable balance includes billings for several non-
revenue items, such as postage, communication lines, travel and entertainment
reimbursements, sales tax, and deferred items. As a result, the Company
evaluates its performance in collecting its accounts receivable through its
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 net billed trade
accounts receivable balance for the period. The Company's DBO calculations for
the quarters ended March 31, 2000 and 1999 were 54 days and 60 days,
respectively. Total deferred revenues decreased by approximately $8.0 million
from December 31, 1999 to March 31, 2000, due primarily to performance on
several contracts during the current quarter that had previously been signed and
billed in the latter part of 1999.
During the three months ended March 31, 2000, the Company generated $25.0
million of net cash flow from operating activities. Cash generated from these
sources and the proceeds of $7.1 million from the issuance of common stock
through the Company's stock incentive plans were used to (i) fund capital
expenditures of $6.4 million, (ii) repurchase 75,000 shares of the Company's
Common Stock for $3.0 million under its stock repurchase plan, and (iii) repay
long-term debt of $5.0 million, which included $4.2 million of scheduled
payments and an optional prepayment of $0.8 million.
Earnings before interest, taxes, depreciation and amortization (EBITDA) for the
three months ended March 31, 2000 was $37.5 million or 40.7% of total revenues,
compared to $26.3 million or 36.9% of total revenues for the three months ended
March 31, 1999. EBITDA is presented here as a measure of the Company's debt
service ability and is not intended to represent cash flows for the periods.
Interest rates for the term and revolving credit facilities are chosen at the
option of the Company and are based on the LIBOR rate or the prime rate, plus an
additional spread, with the spread dependent upon the Company's leverage ratio.
As of March 31, 2000, the spread on the LIBOR rate and the prime rate was 0.50%
and 0%, respectively. As of March 31, 2000, the entire amount of the debt was
under a six-month LIBOR contract with an interest rate of 6.54% (i.e., LIBOR at
6.04% plus spread of 0.50%), compared to a weighted average rate of 6.55% at
December 31, 1999.
In August 1999, the Company's Board of Directors approved a stock repurchase
plan which authorized the Company at its discretion to purchase up to a total of
5.0 million shares of its Common Stock from time to time as market and business
conditions warrant. During the three months ended March 31, 2000, the Company
repurchased 75,000 shares of Common Stock for approximately $3.0 million ($39.92
per share). The Company has purchased a total of 730,500 shares for
approximately $23.2 million (a weighted-average price of $31.81 per share) since
the program was announced. The repurchased shares are held as treasury shares.
The Company continues to make significant investments in capital equipment,
facilities, research and development, and at its discretion, may continue to
make stock repurchases. The Company had no
11
<PAGE>
significant capital commitments as of March 31, 2000. The Company believes that
cash generated from operations, together with the current cash and cash
equivalents and the amount available under its current revolving credit facility
will be sufficient to meet its anticipated cash requirements for operations,
income taxes, debt service, capital expenditures, and stock repurchases for both
its short and long-term purposes. The Company also believes it has significant
unused borrowing capacity and could obtain additional cash resources by amending
its current credit facility and/or establishing a new credit facility.
Forward-Looking Statements
- --------------------------
This report contains a number of forward-looking statements relative to future
plans of the Company and its expectations concerning the customer care and
billing industry, as well as the converging telecommunications industry it
serves, and similar matters. Such 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 contained in Exhibit 99.01 of this report.
Exhibit 99.01 constitutes an integral part of this report, and readers are
strongly encouraged to read that section closely in conjunction with
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
AT&T Contract and Merger
- ------------------------
AT&T completed its merger with Tele-Communications, Inc. (TCI) in March 1999 and
has consolidated the TCI operations into AT&T Broadband. During the three
months ended March 31, 2000 and 1999, revenues from AT&T and affiliated
companies generated under the AT&T Contract represented approximately 50.0% and
44.2% of total revenues, respectively. The AT&T Contract had an original term
of 15 years and expires in 2012. The AT&T Contract has minimum financial
commitments over the term of the contract and includes exclusive rights to
provide customer care and billing products and services for AT&T's offerings of
wireline video, all Internet/high-speed data services, residential wireline
telephony services, and print and mail services. The AT&T Contract provides
certain performance criteria and other obligations to be met by the Company. The
Company is required to perform certain remedial efforts and is subject to
certain penalties if it fails to meet the performance criteria or other
obligations. The Company is also subject to an annual technical audit to
determine whether the Company's products and services include innovations in
features and functions that have become standard in the wireline video industry.
To date, the Company believes it has complied with the terms of the contract.
Since execution of the AT&T Contract in September 1997 through March 31, 2000,
the Company has successfully converted approximately 11 million AT&T cable
television customers onto its system.
AT&T began its efforts to provide convergent communications services in several
United States cities during 1999 and is expected to continue these efforts in
2000. The Company is working closely with AT&T to provide customer care and
billing services to customers in those cities.
The Company expects to continue performing successfully under the AT&T Contract,
and is hopeful that it can continue to sell products and services to AT&T that
are in excess of the minimum financial commitments and exclusive rights included
in the contract.
Year 2000
- ---------
As of the date of this filing, the Company has not experienced any significant
disruptions in its operations as a result of its computer systems rollover to,
and processing of dates within, the year 2000 ("Y2K"). Although the Company has
not experienced any significant disruptions to date, there is no assurance that
the Company will not experience any future Y2K-related disruptions.
12
<PAGE>
Quantitative and Qualitative Disclosures About Market Risk
- ----------------------------------------------------------
There have been no material changes to the Company's market risks during the
three months ended March 31, 2000. See the Company's 1999 10-K for additional
discussion regarding the Company's market risks.
13
<PAGE>
CSG SYSTEMS INTERNATIONAL, INC.
PART II. OTHER INFORMATION
Item 1-5. None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
2.19L* Thirty-Seventh, Fortieth, Forty-Fourth and Forty-Fifth
Amendments to Restated and Amended CSG Master Subscriber
Management System Agreement between CSG Systems, Inc. and
TCI Cable Management Corporation.
2.27 Third Amendment to Loan Agreement among CSG Systems, Inc.
and CSG Systems International, Inc. as co-borrowers, and
certain lenders and Paribas, as Agent, dated January 24,
2000.
27.01 Financial Data Schedule (EDGAR Version only)
99.01 Safe Harbor for Forward-Looking Statements Under the
Private Securities Litigation Reform Act of 1995-Certain
Cautionary Statements and Risk Factors
(b) Reports on Form 8-K
None
__________________
* 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.
14
<PAGE>
SIGNATURES
- ----------
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: May 15, 2000
CSG SYSTEMS INTERNATIONAL, INC.
/s/ Neal C. Hansen
------------------
Chairman and Chief Executive Officer
(Principal Executive Officer)
/s/ Greg A. Parker
-------------------
Vice President and Chief Financial Officer
(Principal Financial Officer)
/s/ Randy R. Wiese
------------------
Randy R. Wiese
Vice President and Controller
(Principal Accounting Officer)
15
<PAGE>
CSG SYSTEMS INTERNATIONAL, INC.
INDEX TO EXHIBITS
Exhibit
Number Description
- ------ -----------
2.19L* Thirty-Seventh, Fortieth, Forty-Fourth and Forty-Fifth Amendments
to Restated and Amended CSG Master Subscriber Management
System Agreement between CSG Systems, Inc. and TCI Cable
Management Corporation.
2.27 Third Amendment to Loan Agreement among CSG Systems, Inc. and CSG
Systems International, Inc. as co-borrowers, and certain
lenders and Paribas, as Agent, dated January 24, 2000
27.01 Financial Data Schedule (EDGAR Version only)
99.01 Safe Harbor for Forward-Looking Statements Under the Private
Securities Litigation Reform Act of 1995-Certain Cautionary
Statements and Risk Factors
__________________
* 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.
16
<PAGE>
EXHIBIT 2.19L
THIRTY SEVENTH AMENDMENT
TO
RESTATED AND AMENDED CSG MASTER
SUBSCRIBER MANAGEMENT SYSTEM AGREEMENT
BETWEEN
CSG SYSTEMS, INC.
AND
TCI CABLE MANAGEMENT CORPORATION
This Thirty Seventh Amendment (the "Amendment") is executed this 31st day of
March, 2000, and is made by and between CSG Systems, Inc., a Delaware
corporation ("CSG") and TCI Cable Management Corporation ("Customer"). CSG and
Customer entered into a certain Restated and Amended CSG Master Subscriber
Management System Agreement dated August 10, 1997, which has subsequently been
amended pursuant to separately executed amendments (collectively, 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 as follows:
1. As of the date of execution of this Amendment, the Agreement does not
specify the System Sites at which Customer may use the Products or receive
the Services. For clarification purposes, CSG and Customer have set forth
in Attachment A hereto a list of such System Sites. Accordingly, any
references to System Sites in Schedule A, C or F shall refer to the sites
listed in Attachment A. If, however, Customer obtains from CSG Product
licenses or additional Services for use only at certain System Sites,
Customer and CSG shall agree as such in writing, in form acceptable to CSG.
As applicable, Customer shall promptly notify CSG in writing (to the
attention of CSG's Associate Counsel) of its intent to add or delete System
Sites.
THIS AMENDMENT is executed on the day and year first shown above.
CSG SYSTEMS, INC. ("CSG") TCI CABLE MANAGEMENT CORPORATION ("Customer")
By: /s/ Joseph T. Ruble By: /s/ Joe W. Bagan
---------------------------------- ---------------------------------
Name: Joseph T. Ruble Name: Joe W. Bagan
-------------------------------- -------------------------------
Title: V.P. & General Counsel Title: Chief Information Officer
------------------------------- ------------------------------
CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF
THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE
THEIR RESPECTIVE COMPANIES
1
<PAGE>
ATTACHMENT A
------------
Sys/Prin System Site
- -----------------------------------------------------------------------------
S083451700 LOWER BUCKS (TIME WARNER)
- -----------------------------------------------------------------------------
S083452000 AMERICAN CABLEVISION (TIME WARNER)
- -----------------------------------------------------------------------------
S083455000 ITHACA (TIME WARNER)
- -----------------------------------------------------------------------------
S083455200 DANVILLE (TIME WARNER)
- -----------------------------------------------------------------------------
S083455400 DEKALB (TIME WARNER)
- -----------------------------------------------------------------------------
S083501400 WALLED LAKE
- -----------------------------------------------------------------------------
S083701100 GLOUCESTER
- -----------------------------------------------------------------------------
S083701600 BEACH HAVEN
- -----------------------------------------------------------------------------
S083702000 WILDWOOD
- -----------------------------------------------------------------------------
S084931000 TCI OF PITTSBURGH
- -----------------------------------------------------------------------------
S084931100 TCI OF GREENSBURG
- -----------------------------------------------------------------------------
S084931200 TCI OF WASHINGTON BEAVER FALLS
- -----------------------------------------------------------------------------
S084931300 TCI OF DALLAS
- -----------------------------------------------------------------------------
S084931800 TCI OF BERLIN CT
- -----------------------------------------------------------------------------
S084931900 TCI OF BOLTON CT
- -----------------------------------------------------------------------------
S084932000 TCI OF BRANFORD CT
- -----------------------------------------------------------------------------
S084932100 TCI OF GARY
- -----------------------------------------------------------------------------
S084932200 TCI OF NORTHERN INDIANA
- -----------------------------------------------------------------------------
S084932300 TCI OF CHICAGO IL
- -----------------------------------------------------------------------------
S084932400 TCI OF HARVEY
- -----------------------------------------------------------------------------
S084932500 TCI OF CHICAGO BUSINESS SERV.
- -----------------------------------------------------------------------------
S084932600 TCI OF ILLINOIS
- -----------------------------------------------------------------------------
S084932700 TCI OF CHICAGO HEIGHTS IL
- -----------------------------------------------------------------------------
S084938300 TCI TELEPHONY OF DALLAS
- -----------------------------------------------------------------------------
S084938800 TCI TELEPHONY OF HARTFORD, CT
- -----------------------------------------------------------------------------
S084939300 TCI TELEPHONY OF PLANO, TX
- -----------------------------------------------------------------------------
S084941000 TCI OF WAUKEEGAN IL
- -----------------------------------------------------------------------------
S084941100 TCI OF MERRILLVILLE IN
- -----------------------------------------------------------------------------
S084941200 TCI OF BALTIMORE
- -----------------------------------------------------------------------------
S084941400 TCI OF ROYAL OAK
- -----------------------------------------------------------------------------
S084941500 TCI OF BATTLE CREEK
- -----------------------------------------------------------------------------
S084941600 WOODHAVEN MI
- -----------------------------------------------------------------------------
S084941700 BELLEVILLE IL
- -----------------------------------------------------------------------------
S084941800 TCI OF OVERLAND
- -----------------------------------------------------------------------------
S084941900 TCI OF ST. LOUIS
- -----------------------------------------------------------------------------
S084942000 TCI OF ST. PETERS
- -----------------------------------------------------------------------------
S084942300 SPRINGFIELD MO
- -----------------------------------------------------------------------------
S084942400 TCI OF GRAND RAPIDS MI
- -----------------------------------------------------------------------------
S084942500 TCI OF SPOKANE
- -----------------------------------------------------------------------------
S084942600 TCI OF CARPENTERSVILLE
- -----------------------------------------------------------------------------
S084942700 TCI OF HIGHLAND PARK
- -----------------------------------------------------------------------------
S084942800 TCI OF MCHENRY
- -----------------------------------------------------------------------------
S084943000 TCI OF COLUMBUS GA
- -----------------------------------------------------------------------------
S084943100 TCI OF OREGON
- -----------------------------------------------------------------------------
S084943300 TCI OF GREELEY
- -----------------------------------------------------------------------------
S084943400 TCI OF SALEM
- -----------------------------------------------------------------------------
S084943500 TCI OF ST. HELENS
- -----------------------------------------------------------------------------
S084943600 TCI OF EUGENE OR
- -----------------------------------------------------------------------------
S084943700 TCI OF ASPEN
- -----------------------------------------------------------------------------
S084943900 TCI OF AVON
- -----------------------------------------------------------------------------
S084944000 TCI OF SILVERTHORNE
- -----------------------------------------------------------------------------
S084944100 TCI OF GLENWOOD SPRINGS
- -----------------------------------------------------------------------------
S084944400 TCI OF MOUNT PROSPECT
- -----------------------------------------------------------------------------
S084944500 TCI OF SKOKIE
- -----------------------------------------------------------------------------
S084944600 TCI OF STREAMWOOD
- -----------------------------------------------------------------------------
S084945400 TCI OF BEDFORD
- -----------------------------------------------------------------------------
S084945500 TCI OF SOMERSET
- -----------------------------------------------------------------------------
S084945600 TCI OF BEAVERTON
- -----------------------------------------------------------------------------
S084945700 TCI OF MILWAUKIE
- -----------------------------------------------------------------------------
S084945800 TCI OF VANCOUVER
- -----------------------------------------------------------------------------
S084945900 TCI OF MCMINNVILLE
- -----------------------------------------------------------------------------
S084946000 TCI OF MUSKEGON
- -----------------------------------------------------------------------------
S084946100 TCI OF EAST LANSING
- -----------------------------------------------------------------------------
S084946200 TCI OF OCEAN CITY
- -----------------------------------------------------------------------------
S084946300 TCI OF OAK LAWN
- -----------------------------------------------------------------------------
S084946400 TCI OF CASPER
- -----------------------------------------------------------------------------
S084946500 TCI OF ELKTON
- -----------------------------------------------------------------------------
S084946600 TCI GRAND JUNCTION
- -----------------------------------------------------------------------------
S084946700 TCI OF SANTA FE
- -----------------------------------------------------------------------------
S084947100 TCI OF LAS CRUCES
- -----------------------------------------------------------------------------
S084947300 TCI OF BATON ROUGE
- -----------------------------------------------------------------------------
S084947400 TCI JACKSON, MI
- -----------------------------------------------------------------------------
S084947700 LANSING (MEDIA ONE)
- -----------------------------------------------------------------------------
S084948000 TCI PORTLAND
- -----------------------------------------------------------------------------
S084948100 TCI OF LIBERTYVILLE
- -----------------------------------------------------------------------------
S084948200 TCI OF LAKE ZURICH
- -----------------------------------------------------------------------------
S084948300 TCI OF WHEATON
- -----------------------------------------------------------------------------
S084948400 TCI OF AURORA
- -----------------------------------------------------------------------------
S084948500 TCI OF NAPERVILLE
- -----------------------------------------------------------------------------
S084948600 TCI OF ORLAND PARK
- -----------------------------------------------------------------------------
S084948700 TCI OF MATTESON
- -----------------------------------------------------------------------------
S084948800 TCI ELMHURST
- -----------------------------------------------------------------------------
S084948900 TCI ELMHURST
- -----------------------------------------------------------------------------
S084949000 TCI COOK, IL
- -----------------------------------------------------------------------------
S084949100 TCI DUPAGE, IL
- -----------------------------------------------------------------------------
S084949200 TCI PORTAGE, IN
- -----------------------------------------------------------------------------
S084949400 TCI TELEPHONY OF MT. PROSPECT
- -----------------------------------------------------------------------------
S084949600 TCI TELEPHONY OF SCHAUMBURG
- -----------------------------------------------------------------------------
S084951100 TCI OF RATON
- -----------------------------------------------------------------------------
S084951200 TCI OF MILBANK
- -----------------------------------------------------------------------------
S084951300 TCI OF WILLISTON
- -----------------------------------------------------------------------------
S084951400 TCI OF RIVERDALE
- -----------------------------------------------------------------------------
CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF
THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE
THEIR RESPECTIVE COMPANIES
2
<PAGE>
- -----------------------------------------------------------------------------
S084951500 TCI OF TWIN FALLS
- -----------------------------------------------------------------------------
S084951600 TCI OF POCATELLO
- -----------------------------------------------------------------------------
S084951700 TCI OF ADRIAN
- -----------------------------------------------------------------------------
S084952100 TCI OF AUBURN
- -----------------------------------------------------------------------------
S084952400 TCI OF WASHINGTON
- -----------------------------------------------------------------------------
S084952500 TCI OF FARMINGTON
- -----------------------------------------------------------------------------
S084952600 TCI OF GALLUP
- -----------------------------------------------------------------------------
S084952700 TCI OF BOISE
- -----------------------------------------------------------------------------
S084953000 TCI OF DES MOINES
- -----------------------------------------------------------------------------
S084953100 TCI OF DUBUQUE
- -----------------------------------------------------------------------------
S084953600 TCI OF KEOKUK
- -----------------------------------------------------------------------------
S084953700 TCI OF PEORIA
- -----------------------------------------------------------------------------
S084953800 TCI OF PERU
- -----------------------------------------------------------------------------
S084953900 TCI OF GALESBURG
- -----------------------------------------------------------------------------
S084954000 TCI OF FORT COLLINS
- -----------------------------------------------------------------------------
S084954100 TCI OF MISHAWAKA
- -----------------------------------------------------------------------------
S084954200 TCI OF ST JOSEPH
- -----------------------------------------------------------------------------
S084954300 TCI OF THREE RIVERS
- -----------------------------------------------------------------------------
S084954400 TCI OF SALT LAKE CITY
- -----------------------------------------------------------------------------
S084954500 TCI OF PROVO
- -----------------------------------------------------------------------------
S084954600 TCI OF IDAHO FALLS
- -----------------------------------------------------------------------------
S084954700 TCI OF LEWISTON
- -----------------------------------------------------------------------------
S084954800 TCI OF RENO
- -----------------------------------------------------------------------------
S084954900 TCI OF CARSON CITY
- -----------------------------------------------------------------------------
S084955000 TCI OF GARDNERVILLE
- -----------------------------------------------------------------------------
S084955200 TCI OF NORMAL
- -----------------------------------------------------------------------------
S084955300 TCI OF KINGS BEACH
- -----------------------------------------------------------------------------
S084955400 TCI OF ELKO
- -----------------------------------------------------------------------------
S084955500 TCI OF SOUTH LAKE TAHOE
- -----------------------------------------------------------------------------
S084955600 TCI TULSA
- -----------------------------------------------------------------------------
S084955700 TCI QUINCY, IL
- -----------------------------------------------------------------------------
S084955800 TCI MORTON, IL
- -----------------------------------------------------------------------------
S084955900 TCI PEKIN, IL
- -----------------------------------------------------------------------------
S084956000 TCI DADE/BROWARD, FL
- -----------------------------------------------------------------------------
S084956100 TCI SO. DADE, FL
- -----------------------------------------------------------------------------
S084956200 TCI MIAMI, FL
- -----------------------------------------------------------------------------
S084956300 TCI MARGATE, FL
- -----------------------------------------------------------------------------
S084956400 TCI KEY WEST, FL
- -----------------------------------------------------------------------------
S084956500 TCI VERO BEACH/FT. PIERCE, FL
- -----------------------------------------------------------------------------
S084956600 TCI LINCOLN, IL
- -----------------------------------------------------------------------------
S084956700 TCI KEWANEE, IL
- -----------------------------------------------------------------------------
S084956800 TCI FREEPORT, IL
- -----------------------------------------------------------------------------
S084956900 TCI OROVILLE, CA
- -----------------------------------------------------------------------------
S084957000 TCI GRASS VALLEY, CA
- -----------------------------------------------------------------------------
S084970000 TCI OF DENVER CORPORATE
- -----------------------------------------------------------------------------
S084980000 TCI OF WASHINGTON CORPORATE
- -----------------------------------------------------------------------------
S085781000 TCI OF CITY OF INDUSTRY
- -----------------------------------------------------------------------------
CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF
THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE
THEIR RESPECTIVE COMPANIES
3
<PAGE>
- -----------------------------------------------------------------------------
S085781100 TCI OF VENTURA
- -----------------------------------------------------------------------------
S085781200 TCI HEMET, CA
- -----------------------------------------------------------------------------
S085781300 TCI VAN NUYS, CA
- -----------------------------------------------------------------------------
S085781400 TCI REDLANDS, CA
- -----------------------------------------------------------------------------
S085801000 TCI TELEPHONY OF PITTSBURGH, PA
- -----------------------------------------------------------------------------
S085801100 TCI TELEPHONY OF GREENSBURGH, PA
- -----------------------------------------------------------------------------
S085801200 TCI TELEPHONY OF WASHINGTON, PA
- -----------------------------------------------------------------------------
S085811400 TCI TELEPHONY OF SALT LAKE CITY, UT
- -----------------------------------------------------------------------------
S085814400 TCI TELEPHONY OF SALT LAKE CITY, UT
- -----------------------------------------------------------------------------
S085814500 TCI TELEPHONY OF SALT LAKE CITY, UT
- -----------------------------------------------------------------------------
S085825600 TCI TELEPHONY OF BEAVERTON, OR
- -----------------------------------------------------------------------------
S085825900 TCI TELEPHONY OF VANCOUVER, WA
- -----------------------------------------------------------------------------
S085909000 TCI TELEPHONY OF PITTSBURGH, PA
- -----------------------------------------------------------------------------
S085913100 TCI TELEPHONY OF TACOMA, WA
- -----------------------------------------------------------------------------
S085913200 TCI TELEPHONY OF SEATTLE, WA
- -----------------------------------------------------------------------------
S085913300 TCI TELEPHONY OF SEATTLE, WA
- -----------------------------------------------------------------------------
S085913400 TCI TELEPHONY OF TACOMA, WA
- -----------------------------------------------------------------------------
S085913500 TCI TELEPHONY OF TACOMA, WA
- -----------------------------------------------------------------------------
S085925500 TCI TELEPHONY OF OLYMPIA, WA
- -----------------------------------------------------------------------------
S085925600 TCI TELEPHONY OF BELLINGHAM, WA
- -----------------------------------------------------------------------------
S085934300 TCI TELEPHONY OF SAN JOSE, CA
- -----------------------------------------------------------------------------
S085941000 TCI ATT TELEPHONY DENVER
- -----------------------------------------------------------------------------
S085942000 TCI TELEPHONY OF DENVER, CO
- -----------------------------------------------------------------------------
S085943000 TCI TELEPHONY OF DENVER, CO
- -----------------------------------------------------------------------------
S085944000 TCI TELEPHONY OF DENVER, CO
- -----------------------------------------------------------------------------
S087200400 TCI@HOME OLYMPIA, WA
- -----------------------------------------------------------------------------
S087200500 TCI@HOME SPOKANE, WA
- -----------------------------------------------------------------------------
S087200600 TCI@HOME BELLINGHAM, WA
- -----------------------------------------------------------------------------
S087200700 TCI@HOME BREMERTON, WA
- -----------------------------------------------------------------------------
S087200800 TCI@HOME BEAVERTON, OR
- -----------------------------------------------------------------------------
S087201000 TCI@HOME OAK HARBOR, WA
- -----------------------------------------------------------------------------
S087201100 TCI@HOME VANCOUVER, WA
- -----------------------------------------------------------------------------
S087201200 TCI@HOME EAST KING COUNTY, WA
- -----------------------------------------------------------------------------
S087201300 TCI@HOME SEATTLE, WA
- -----------------------------------------------------------------------------
S087201400 TCI@HOME SNOHOMISH, WA
- -----------------------------------------------------------------------------
S087201500 TCI@HOME SOUTH KING COUNTY, WA
- -----------------------------------------------------------------------------
S087201600 TCI@HOME PIERCE COUNTY, WA
- -----------------------------------------------------------------------------
S087202000 TCI@HOME PORTLAND, OR
- -----------------------------------------------------------------------------
S087202100 TCI@HOME CORVALLIS, OR
- -----------------------------------------------------------------------------
S087202200 TCI@HOME EUGENE, OR
- -----------------------------------------------------------------------------
S087202300 TCI@HOME MCMINNVILLE, OR
- -----------------------------------------------------------------------------
S087202400 TCI@HOME LEWISTON, ID
- -----------------------------------------------------------------------------
S087203000 TC@HOME SALEM, OR
- -----------------------------------------------------------------------------
S087204000 TCI@HOME SALT LAKE CITY, UT
- -----------------------------------------------------------------------------
S087204100 TCI@HOME OGDEN (RIVERDALE), UT
- -----------------------------------------------------------------------------
S087204200 TCI@HOME PROVO (SANDY) UT
- -----------------------------------------------------------------------------
S087204300 TCI@HOME MILWAUKEE, OR
- -----------------------------------------------------------------------------
CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF
THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE
THEIR RESPECTIVE COMPANIES
4
<PAGE>
- -----------------------------------------------------------------------------
S087210100 TCI@HOME FREEMONT, CA
- -----------------------------------------------------------------------------
S087210200 TCI@HOME SAN FRANCISCO, CA
- -----------------------------------------------------------------------------
S087210300 TCI@HOME SANTA CLARA/MILPITAS, CA
- -----------------------------------------------------------------------------
S087210400 TCI@HOME SAN MATEO/SAN CARLOS, CA
- -----------------------------------------------------------------------------
S087210600 TCI@HOME PETALUMA, CA
- -----------------------------------------------------------------------------
S087210900 TCI@HOME PITTSBURG, CA
- -----------------------------------------------------------------------------
S087211000 TCI@HOME FOSTER CITY/HILLSBOROUGH, CA
- -----------------------------------------------------------------------------
S087211100 TCI@HOME SOUTH SAN FRANCISCO, CA
- -----------------------------------------------------------------------------
S087211200 TCI@HOME PACIFICA/DALY CITY, CA
- -----------------------------------------------------------------------------
S087211300 TCI@HOME SUNNYVALE, CA
- -----------------------------------------------------------------------------
S087211400 TCI@HOME SAN JOSE, CA
- -----------------------------------------------------------------------------
S087211600 TCI@HOME MARIN, CA
- -----------------------------------------------------------------------------
S087211700 TCI@HOME BURLINGAME, CA
- -----------------------------------------------------------------------------
S087211800 TCI@HOME CUPERTINO, CA
- -----------------------------------------------------------------------------
S087211900 TCI@HOME HAYWARD, CA
- -----------------------------------------------------------------------------
S087212000 TCI@HOME ALAMEDA, CA
- -----------------------------------------------------------------------------
S087212100 TCI@HOME TRI VALLEY, CA
- -----------------------------------------------------------------------------
S087212200 TCI@HOME PINOLE, CA
- -----------------------------------------------------------------------------
S087212300 TCI@HOME RICHMOND, CA
- -----------------------------------------------------------------------------
S087212400 TCI@HOME MARTINEZ, CA
- -----------------------------------------------------------------------------
S087220400 TCI@HOME DALLAS METRO, TX
- -----------------------------------------------------------------------------
S087220800 TCI@HOME AVON/VAIL, CO
- -----------------------------------------------------------------------------
S087221000 TCI OF PUEBLO, CO
- -----------------------------------------------------------------------------
S087221100 TCI OF GREELEY, CO
- -----------------------------------------------------------------------------
S087221200 TCI@HOME FT COLLINS, CO
- -----------------------------------------------------------------------------
S087222000 TCI@HOME TULSA, OK
- -----------------------------------------------------------------------------
S087223000 TCI@HOME WATERTOWN, SD
- -----------------------------------------------------------------------------
S087223100 TCI@HOME GREAT FALLS, MT
- -----------------------------------------------------------------------------
S087223200 TCI@HOME RENO, NV
- -----------------------------------------------------------------------------
S087223300 TCI@HOME BOISE, ID
- -----------------------------------------------------------------------------
S087223400 TCI@HOME SOUTH LAKE TAHOE, CA
- -----------------------------------------------------------------------------
S087223500 TCI@HOME FALLON, MT
- -----------------------------------------------------------------------------
S087223600 TCI@HOME GRAND JUNCTION, CO
- -----------------------------------------------------------------------------
S087223700 TCI@HOME BILLINGS, MT
- -----------------------------------------------------------------------------
S087223800 TCI@HOME HELENA, MT
- -----------------------------------------------------------------------------
S087223900 TCI@HOME RAPID CITY, SD
- -----------------------------------------------------------------------------
S087224000 TCI@HOME CARSON CITY, NV
- -----------------------------------------------------------------------------
S087224100 TCI@HOME KINGS BEACH/N. LAKE TAHOE, CA
- -----------------------------------------------------------------------------
S087230100 TCI@HOME ARLINGTON HTS/PROSPECT HTS, IL
- -----------------------------------------------------------------------------
S087230200 TCI@HOME CARPENTERSVILLE, IL
- -----------------------------------------------------------------------------
S087230300 TCI@HOME MCHENRY, IL
- -----------------------------------------------------------------------------
S087230400 TCI@HOME CEDAR RAPIDS, IA
- -----------------------------------------------------------------------------
S087230600 TCI@HOME WOODHAVEN, MI
- -----------------------------------------------------------------------------
S087230700 TCI@HOME E. LANSING, MI
- -----------------------------------------------------------------------------
S087231000 TCI@HOME ROYAL OAK, MI
- -----------------------------------------------------------------------------
S087231100 TCI@HOME MOLINE, IL
- -----------------------------------------------------------------------------
S087231200 TCI@HOME ROCK ISLAND, IL
- -----------------------------------------------------------------------------
CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF
THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE
THEIR RESPECTIVE COMPANIES
5
<PAGE>
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
S087231300 TCI@HOME SKOKIE, IL
- -----------------------------------------------------------------------------
S087231400 TCI@HOME CHICAGO AREA 1, 4, & 5, IL
- -----------------------------------------------------------------------------
S087231500 TCI@HOME IOWA CITY, IA
- -----------------------------------------------------------------------------
S087231600 TCI@HOME HIGHLAND PARK, IL
- -----------------------------------------------------------------------------
S087231700 TCI@HOME GRAND RAPIDS, MI
- -----------------------------------------------------------------------------
S087231800 TCI@HOME SCHAUMBURG/STREAMWOOD, IL
- -----------------------------------------------------------------------------
S087231900 TCI@HOME DES MOINES, IA
- -----------------------------------------------------------------------------
S087232000 TCI@HOME WATERLOO/CEDAR FALLS, IA
- -----------------------------------------------------------------------------
S087232100 TCI@HOME CHICAGO AREA 1, 4, & 5, IL
- -----------------------------------------------------------------------------
S087232200 TCI@HOME BATTLE CREEK, MI
- -----------------------------------------------------------------------------
S087232300 TCI@HOME MUSCATINE, IA
- -----------------------------------------------------------------------------
S087232400 TCI@HOME HAMMOND, IN
- -----------------------------------------------------------------------------
S087232500 TCI@HOME DUBUQUE, IA
- -----------------------------------------------------------------------------
S087232600 TCI@HOME HARVEY, IL
- -----------------------------------------------------------------------------
S087232700 TCI@HOME PEORIA, IL
- -----------------------------------------------------------------------------
S087232800 TCI@HOME MUSKEGAN
- -----------------------------------------------------------------------------
S087232900 TCI@HOME DECATUR, IL
- -----------------------------------------------------------------------------
S087233000 TCI@HOME BLOOMINGTON, IL
- -----------------------------------------------------------------------------
S087233100 TCI@HOME GALESBURG, IL
- -----------------------------------------------------------------------------
S087233200 TCI@HOME PERU, IL
- -----------------------------------------------------------------------------
S087233300 TCI@HOME OAK LAWN, IL
- -----------------------------------------------------------------------------
S087233400 TCI@HOME MAYWOOD, IL
- -----------------------------------------------------------------------------
S087233500 TCI@HOME CHICAGO HEIGHTS, IL
- -----------------------------------------------------------------------------
S087233600 TCI@HOME GARY, IN
- -----------------------------------------------------------------------------
S087233700 TCI@HOME MERRILLVILLE/GRIFFITH, IN
- -----------------------------------------------------------------------------
S087233800 TCI@HOME WALLED LAKE, MI
- -----------------------------------------------------------------------------
S087233900 TCI@HOME WAUKEGAN, IL
- -----------------------------------------------------------------------------
S087234000 TCI@HOME BURLINGTON, IA
- -----------------------------------------------------------------------------
S087234100 TCI@HOME LANSING, MI (MEDIA ONE)
- -----------------------------------------------------------------------------
S087234200 TCI@HOME ADRIAN, MI
- -----------------------------------------------------------------------------
S087234300 TCI@HOME KANKAKEE, IL
- -----------------------------------------------------------------------------
S087234400 TCI@HOME SPRINGFIELD, IL
- -----------------------------------------------------------------------------
S087234500 TCI@HOME SOUTH BEND, IN
- -----------------------------------------------------------------------------
S087234600 TCI@HOME CHAMPAIGN/URBANA, IL
- -----------------------------------------------------------------------------
S087234700 TCI@HOME DANVILLE, IL
- -----------------------------------------------------------------------------
S087234800 TCI@HOME AMES, IA
- -----------------------------------------------------------------------------
S087234900 TCI@HOME KNOXVILLE, IA
- -----------------------------------------------------------------------------
S087240100 TCI@HOME BATON ROUGE, LA
- -----------------------------------------------------------------------------
S087240200 TCI@HOME HOMEWOOD/HUEYTOWN/TARRANT, AL
- -----------------------------------------------------------------------------
S087240300 TCI@HOME HOOVER, AL
- -----------------------------------------------------------------------------
S087240400 TCI@HOME MONTGOMERY, AL
- -----------------------------------------------------------------------------
S087240500 TCI@HOME OVERLAND, MO
- -----------------------------------------------------------------------------
S087240600 TCI@HOME ST. CHARLES/ST. PETERS, MO
- -----------------------------------------------------------------------------
S087240700 TCI@HOME ST. LOUIS, MO
- -----------------------------------------------------------------------------
S087240800 TCI@HOME ALTON, IL
- -----------------------------------------------------------------------------
S087240900 TCI@HOME AUBURN, AL
- -----------------------------------------------------------------------------
S087241000 TCI@HOME BELLEVILLE, IL
- -----------------------------------------------------------------------------
CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF
THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE
THEIR RESPECTIVE COMPANIES
7
<PAGE>
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
S087241100 TCI@HOME IMPERIAL, MO
- -----------------------------------------------------------------------------
S087241200 TCI@HOME COLUMBIA/JEFFERSON CITY, MO
- -----------------------------------------------------------------------------
S087241300 TCI@HOME SPRINGFIELD, MO
- -----------------------------------------------------------------------------
S087241400 TCI@HOME COLUMBUS/HARRIS COUNTY, GA
- -----------------------------------------------------------------------------
S087250100 TCI@HOME HARTFORD/BRISTOL, CT
- -----------------------------------------------------------------------------
S087250200 TCI@HOME PITTSBURGH, PA
- -----------------------------------------------------------------------------
S087250300 TCI@HOME WARREN, OH
- -----------------------------------------------------------------------------
S087250400 TCI@HOME STATE COLLEGE, PA
- -----------------------------------------------------------------------------
S087250500 TCI@HOME STEUBENVILLE, OH
- -----------------------------------------------------------------------------
S087250600 TCI@HOME WASHINGTON, DC
- -----------------------------------------------------------------------------
S087250700 TCI@HOME GREENSBURG, PA
- -----------------------------------------------------------------------------
S087250800 TCI@HOME BRANFORD, CT
- -----------------------------------------------------------------------------
S087250900 TCI@HOME BEAVER FALLS/WASHINGTON, PA
- -----------------------------------------------------------------------------
S087261000 TCI@HOME DENVER (NORTH), CO
- -----------------------------------------------------------------------------
S087262000 TCI@HOME DENVER (EAST), CO
- -----------------------------------------------------------------------------
S087263000 TCI@HOME DENVER (CENTRAL), CO
- -----------------------------------------------------------------------------
S087264000 TCI@HOME (WEST), CO
- -----------------------------------------------------------------------------
S087701000 SAN JOSE
- -----------------------------------------------------------------------------
S087703000 TCI OF MONTEREY CA
- -----------------------------------------------------------------------------
S087703100 TCI OF SANTA CLARA
- -----------------------------------------------------------------------------
S087703200 TCI OF SCOTTS VALLEY CA
- -----------------------------------------------------------------------------
S087703400 TCI OF LIVERMORE CA
- -----------------------------------------------------------------------------
S087703500 TCI OF SAN RAFAEL CA
- -----------------------------------------------------------------------------
S087703600 TCI OF PETALUMA
- -----------------------------------------------------------------------------
S087703700 TCI OF NAPA
- -----------------------------------------------------------------------------
S087703800 TCI OF HEALDSBURG
- -----------------------------------------------------------------------------
S087703900 TCI OF PINOLE
- -----------------------------------------------------------------------------
S087704000 TCI OF RICHMOND
- -----------------------------------------------------------------------------
S087704100 TCI OF VALLEJO
- -----------------------------------------------------------------------------
S087704300 TCI OF LIVERMORE
- -----------------------------------------------------------------------------
S087704400 TCI OF FREMONT
- -----------------------------------------------------------------------------
S087704500 TCI OF BRENTWOOD
- -----------------------------------------------------------------------------
S087704600 TCI OF PITTSBURG
- -----------------------------------------------------------------------------
S087704700 TCI OF OAKLAND
- -----------------------------------------------------------------------------
S087704800 TCI OF VACAVILLE
- -----------------------------------------------------------------------------
S087704900 TCI OF ALAMEDA
- -----------------------------------------------------------------------------
S087705100 TCI OF HAYWARD
- -----------------------------------------------------------------------------
S087705200 TCI OF CONCORD
- -----------------------------------------------------------------------------
S087705300 TCI OF MARTINEZ
- -----------------------------------------------------------------------------
S087705400 TCI OF MARTINEZ
- -----------------------------------------------------------------------------
S087705500 TCI MERCED, CA
- -----------------------------------------------------------------------------
S087705600 TCI LOS BANOS, CA
- -----------------------------------------------------------------------------
S087705900 TCI TRACY, CA
- -----------------------------------------------------------------------------
S087706000 TCI SONORA, CA
- -----------------------------------------------------------------------------
S087706100 TCI DAVIS, CA
- -----------------------------------------------------------------------------
S087708000 TCI TELEPHONY OF SAN JOSE
- -----------------------------------------------------------------------------
S087901000 COOKE-KANKAKEE
- -----------------------------------------------------------------------------
CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF
THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE
THEIR RESPECTIVE COMPANIES
8
<PAGE>
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
S087904000 TCI OF DECATUR
- -----------------------------------------------------------------------------
S087904100 TCI OF EFFINGHAM
- -----------------------------------------------------------------------------
S087905100 PRINCETON ROCKFALLS
- -----------------------------------------------------------------------------
S087905200 MARION
- -----------------------------------------------------------------------------
S087905400 EAST ALTON
- -----------------------------------------------------------------------------
S087905800 ROCK ISLAND
- -----------------------------------------------------------------------------
S087906500 DIXON
- -----------------------------------------------------------------------------
S087906600 CHARLESTON
- -----------------------------------------------------------------------------
S087907300 CARBONDALE
- -----------------------------------------------------------------------------
S087907400 MORRIS
- -----------------------------------------------------------------------------
S087907500 MACOMB
- -----------------------------------------------------------------------------
S087909000 CANAAN
- -----------------------------------------------------------------------------
S087909700 TCI OF SPRINGFIELD IL
- -----------------------------------------------------------------------------
S087913300 TCI HEBBRONVILLE
- -----------------------------------------------------------------------------
S087914000 TCI OF STEAMBOAT SPRINGS CO
- -----------------------------------------------------------------------------
S087914300 TCI OF CODY WY
- -----------------------------------------------------------------------------
S087914400 TCI OF JACKSON WY
- -----------------------------------------------------------------------------
S087914500 TCI OF RIVERTON WY
- -----------------------------------------------------------------------------
S087915500 PUEBLO
- -----------------------------------------------------------------------------
S087915600 CHEYENNE
- -----------------------------------------------------------------------------
S087915900 WYOMING-GILLETTE
- -----------------------------------------------------------------------------
S087916700 WAHPENTON
- -----------------------------------------------------------------------------
S087916800 DURANGO
- -----------------------------------------------------------------------------
S087917700 TCI OF WATERTOWN
- -----------------------------------------------------------------------------
S087917800 TCI MINOT ND
- -----------------------------------------------------------------------------
S087918300 TCI OF BEEVILLE TX
- -----------------------------------------------------------------------------
S087918400 TCI OF ALICE TX
- -----------------------------------------------------------------------------
S087918500 CORPUS CHRISTI TX
- -----------------------------------------------------------------------------
S087918700 CANON CITY, CO
- -----------------------------------------------------------------------------
S087919000 TCI OF LARAMIE WY
- -----------------------------------------------------------------------------
S087919100 TCI OF FT. MORGAN CO
- -----------------------------------------------------------------------------
S087919400 TCI OF COLORADO
- -----------------------------------------------------------------------------
S087919500 TCI OF STERLING CO
- -----------------------------------------------------------------------------
S087919600 TCI SHERIDAN, WY
- -----------------------------------------------------------------------------
S087926100 CULPEPER
- -----------------------------------------------------------------------------
S087935000 GRAND FORKS
- -----------------------------------------------------------------------------
S087935500 RAPID CITY
- -----------------------------------------------------------------------------
S087935700 BURLINGTON
- -----------------------------------------------------------------------------
S087935800 OTTUMWA
- -----------------------------------------------------------------------------
S087935900 CARROL
- -----------------------------------------------------------------------------
S087936600 IMPERIAL
- -----------------------------------------------------------------------------
S087936700 JEFFERSON CITY
- -----------------------------------------------------------------------------
S087936800 WATERLOO
- -----------------------------------------------------------------------------
S087937000 KNOXVILLE
- -----------------------------------------------------------------------------
S087937100 AMES
- -----------------------------------------------------------------------------
S087937200 FT. DODGE
- -----------------------------------------------------------------------------
S087937300 IOWA CITY
- -----------------------------------------------------------------------------
CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF
THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE
THEIR RESPECTIVE COMPANIES
9
<PAGE>
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
S087937400 MASON CITY
- -----------------------------------------------------------------------------
S087937500 RED OAK
- -----------------------------------------------------------------------------
S087937600 CLINTON
- -----------------------------------------------------------------------------
S087937700 MARSHALLTOWN
- -----------------------------------------------------------------------------
S087938900 MOBERLY
- -----------------------------------------------------------------------------
S087939100 HANNIBAL
- -----------------------------------------------------------------------------
S087939400 BURLINGTON
- -----------------------------------------------------------------------------
S087939500 MOLINE
- -----------------------------------------------------------------------------
S087939600 CEDAR RAPIDS
- -----------------------------------------------------------------------------
S087939700 TCI NORTH LIBERTY
- -----------------------------------------------------------------------------
S087946100 STATE COLLEGE
- -----------------------------------------------------------------------------
S087946400 CARROLLTOWN
- -----------------------------------------------------------------------------
S087947300 COLUMBIANA
- -----------------------------------------------------------------------------
S087947900 LOCK HAVEN
- -----------------------------------------------------------------------------
S087948000 RIDGEWAY
- -----------------------------------------------------------------------------
S087948100 KANE
- -----------------------------------------------------------------------------
S087948200 MONTGOMERY
- -----------------------------------------------------------------------------
S087948300 TOWANDA
- -----------------------------------------------------------------------------
S087948400 CLARION
- -----------------------------------------------------------------------------
S087949000 TCI OF WEIRTON WV
- -----------------------------------------------------------------------------
S087955600 VALDOSTA
- -----------------------------------------------------------------------------
S087955700 BIRMINGHAM
- -----------------------------------------------------------------------------
S087955800 BIRMINGHAM
- -----------------------------------------------------------------------------
S087957300 FAIRHOPE
- -----------------------------------------------------------------------------
S087957500 ALBANY
- -----------------------------------------------------------------------------
S087957900 BAINBRIDGE
- -----------------------------------------------------------------------------
S087958200 CAIRO
- -----------------------------------------------------------------------------
S087958800 TROY
- -----------------------------------------------------------------------------
S087958900 SYLACAUGA
- -----------------------------------------------------------------------------
S087959200 BIRMINGHAM
- -----------------------------------------------------------------------------
S087959300 TCI OF FITZGERALD
- -----------------------------------------------------------------------------
S087959400 TCI OF MONTGOMERY
- -----------------------------------------------------------------------------
S087965200 ABERDEEN
- -----------------------------------------------------------------------------
S087965400 PACIFICA
- -----------------------------------------------------------------------------
S087965500 OLYMPIA
- -----------------------------------------------------------------------------
S087965600 BELLINGHAM
- -----------------------------------------------------------------------------
S087966200 SUNNYVALE
- -----------------------------------------------------------------------------
S087966500 SAN CARLOS
- -----------------------------------------------------------------------------
S087966700 KALISPELL
- -----------------------------------------------------------------------------
S087966800 MISSOULA
- -----------------------------------------------------------------------------
S087966900 BILLINGS
- -----------------------------------------------------------------------------
S087967000 HELENA
- -----------------------------------------------------------------------------
S087967100 GREAT FALLS
- -----------------------------------------------------------------------------
S087967500 BREMERTON
- -----------------------------------------------------------------------------
S087967800 BOZEMAN
- -----------------------------------------------------------------------------
S087967900 HAVRE
- -----------------------------------------------------------------------------
S087968200 SAN MATEO
- -----------------------------------------------------------------------------
CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF
THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE
THEIR RESPECTIVE COMPANIES
10
<PAGE>
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
S087968300 TCI CABLEVISION HILLSBOROUGH
- -----------------------------------------------------------------------------
S087968400 TCI BURLINGAME
- -----------------------------------------------------------------------------
S087968600 TCI OF SOUTH SAN FRANCISCO
- -----------------------------------------------------------------------------
__________ TCI OF FT. LOGAN, UT
- -----------------------------------------------------------------------------
CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF
THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE
THEIR RESPECTIVE COMPANIES
11
<PAGE>
EXHIBIT 2.19L
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 (***).
FORTIETH AMENDMENT
TO
RESTATED AND AMENDED CSG MASTER
SUBSCRIBER MANAGEMENT SYSTEM AGREEMENT
BETWEEN
CSG SYSTEMS, INC.
AND
TCI CABLE MANAGEMENT CORPORATION
This Fortieth Amendment (the "Amendment") is executed this 17th day of February,
2000, and is made by and between CSG Systems, Inc., a Delaware corporation
("CSG") and TCI Cable Management Corporation ("Customer"). CSG and Customer
entered into a certain Restated and Amended CSG Master Subscriber Management
System Agreement dated August 10, 1997, which has subsequently been amended
pursuant to separately executed amendments (collectively, 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 as follows:
1. Customer is hereby licensed to use (*** ******** **** *******) (***)
additional workstations of Statement Express pursuant to the terms and
conditions of the Agreement (as amended), including, but not limited to,
the fees set forth below:
Statement Express
-----------------
Perpetual License for (***) workstations $(***)
Price excludes third party software, hardware, implementation,
installation and customization.
Annual Maintenance for (***) workstations:
. Initial maintenance period from the date of
execution of this Amendment through December 31, 2000 $(***)
. Annual maintenance for the calendar year beginning
January 1, 2001 $(***)
. Annual maintenance for each subsequent calendar
year beginning January 1, 2002 $(***)
Implementation services will be outlined in a Statement of Work mutually
agreed upon and executed by CSG and Customer. Reimbursable Expenses are
additional.
CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF
THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE
THEIR RESPECTIVE COMPANIES
1
<PAGE>
"Confidential Treatment Requested
and the Redacted Material has
been separately filed with
the Commission."
2. The statement archival fee, which includes six (6) months of online
statement image storage, is set forth in Schedule D (as amended by the
Thirty-Fourth Amendment). The statement archival fee, as of the date of
execution of the Thirty-Fourth Amendment, was equal to $(***) per data
frame, per month. In the event that Customer also desires to receive CD-
ROM Archival, the fee for such service is set forth in Section 6, Item I.D.
of Schedule D (as amended by the Twenty-Seventh Amendment). The CD-ROM
Archival fee, as of the date of execution of the Twenty-Seventh Amendment,
was equal to $(***) per data frame, per month for 24,000,001 and greater
total data frames.
3. CSG shall provide Customer one (1) master copy of Statement Express for the
purpose of installing Statement Express on the (** ******** **** *******)
(***) workstations referenced above.
4. Customer also desires to utilize CSG's Print and Mail Services for its High
Speed Data (HSD) subscribers. Print and Mail Services are set forth in
Schedule F. The fees for such services are set forth in Section 6 of
Schedule D (as amended).
CSG shall charge Customer the ESP processing fee for all of Customer's HSD
subscribers for which an ESP statement is processed. Effective January 1,
1999, the ESP processing fee was equal to $(***) per statement, per month.
In addition, Schedule D shall be amended to include the following fees.
Such fees shall only be applicable to Customer's HSD subscribers for whom
an ESP statement is actually printed and mailed:
. ESP Statement Printing Fee (per statement, per month) $(***)
5. Start Up Fees for ESP services for Customer's HSD subscribers will be
outlined in a Statement of Work mutually agreed upon and executed by CSG
and Customer. The start up fees shall not exceed the rates set forth in
Section 6 of Schedule D (as amended) for such services. Reimbursable
Expenses are additional.
6. Payment Terms:
Except as noted in this paragraph 6, the terms and conditions set forth in
the Agreement shall apply with respect to the products or services provided
as part of this Amendment. Payment of the license fees and maintenance
fees for the initial maintenance period shall be as follows:
. Billable March 31, 2000 $(***)
- Portion due no later than April 30, 2000 $(***)
- Portion due no later than July 31, 2000 $(***)
- Portion due no later than October 31, 2000 $(***)
Implementation services will be invoiced upon completion of work.
THIS AMENDMENT is executed on the day and year first shown above.
<TABLE>
<S> <C>
CSG SYSTEMS, INC. ("CSG") TCI CABLE MANAGEMENT CORPORATION ("Customer")
By: /s/ Joseph T. Ruble By: /s/ Jerry Kulin
---------------------------- ------------------------------------------
Name: Joseph T. Ruble Name: Jerry Kulin
-------------------------- ---------------------------------------
Title: V.P. & General Counsel Title: V.P., Billing & Cust. Info. Syst.
------------------------- ---------------------------------------
</TABLE>
CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES FOR
THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE
THEIR RESPECTIVE COMPANIES
2
<PAGE>
EXHIBIT 2.19L
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 (***).
FORTY-FOURTH AMENDMENT
TO
RESTATED AND AMENDED CSG MASTER
SUBSCRIBER MANAGEMENT SYSTEM AGREEMENT
BETWEEN
CSG SYSTEMS, INC.
AND
TCI CABLE MANAGEMENT CORPORATION
This Forty-Fourth Amendment (the "Amendment") is executed this 17th day of
February, 2000, and is made by and between CSG Systems, Inc., a Delaware
corporation ("CSG") and TCI Cable Management Corporation ("Customer"). CSG and
Customer entered into a certain Restated and Amended CSG Master Subscriber
Management System Agreement dated August 10, 1997, which has subsequently been
amended pursuant to separately executed amendments (collectively, 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 as follows:
1. With respect to the (***) workstations of ACSR, CIT with CBT, Screen
Express and the ACSR module of HSD, respectively, as licensed by Customer
in the Thirty-Eighth Amendment to the Agreement dated September 30, 1999,
CSG shall provide Customer with a credit to be applied against Customer's
annual maintenance for the calendar year beginning January 1, 2001 equal to
the following amounts:
. ACSR annual maintenance credit $(***)
. CIT with CBT annual maintenance credit $(***)
. Screen Express annual maintenance credit $(***)
. ACSR module of HSD annual maintenance credit $(***)
Such credit shall only be applicable to the workstation licenses, as
referenced in this paragraph, and shall be applied against Customer's
invoice for annual maintenance for the calendar year beginning January
1, 2001.
THIS AMENDMENT is executed on the day and year first shown above.
CSG SYSTEMS, INC. ("CSG") TCI CABLE MANAGEMENT CORPORATION
("Customer")
By: /s/ Joseph T. Ruble By: /s/ Ann Montgomery
------------------------ ----------------------------
Name: Joseph T. Ruble Name: Ann Montgomery
------------------------ ----------------------------
Title: V. P. & General Counsel Title: EVP Fulfillment & Operations
------------------------ ----------------------------
CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF
THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE
THEIR RESPECTIVE COMPANIES
1
<PAGE>
EXHIBIT 2.19L
FORTY-FIFTH AMENDMENT
TO
RESTATED AND AMENDED CSG MASTER
SUBSCRIBER MANAGEMENT SYSTEM AGREEMENT
BETWEEN
CSG SYSTEMS, INC.
AND
TCI CABLE MANAGEMENT CORPORATION
This Forty-Fifth Amendment (the "Amendment") is executed this 31st day of March,
2000, and is made by and between CSG Systems, Inc., a Delaware corporation
("CSG") and TCI Cable Management Corporation ("Customer"). CSG and Customer
entered into a certain Restated and Amended CSG Master Subscriber Management
System Agreement dated August 10, 1997, which has subsequently been amended
pursuant to separately executed amendments (collectively, 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 as follows:
1. Customer desires to utilize one (1) additional license of ACSR AOI pursuant
to the terms and conditions of the Agreement, as amended. As a result, for
the fees set forth in Schedule D of the Agreement, Customer shall be
licensed to use ACSR AOI at the following System Site and for the following
application:
System Site Sys/Prin Application
----------- -------- -----------
Plantation, FL 8495-6300 TeleDirect Predictive Dialer
THIS AMENDMENT is executed on the day and year first shown above.
CSG SYSTEMS, INC. ("CSG") TCI CABLE MANAGEMENT CORPORATION
("Customer")
By: /s/ Joseph T. Ruble By: /s/ Joe W. Bagan
----------------------- -----------------
Name: Joseph T. Ruble Name: Joe W. Bagan
----------------------- -----------------
Title: V.P. & General Counsel Title: CIO
----------------------- -----------------
CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF
THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE
THEIR RESPECTIVE COMPANIES
1
<PAGE>
EXHIBIT 2.27
THIRD AMENDMENT TO LOAN AGREEMENT
This Third Amendment to Loan Agreement (this "Amendment") is made and
entered into as of January 24, 2000, by and among CSG Systems, Inc., a Delaware
corporation ("CSG"), and CSG Systems International, Inc., a Delaware corporation
("Holdings"), as co-borrowers on a joint and several basis (each individually
being from time to time referred to herein as a "Borrower" and collectively as
the "Borrowers"), the Lenders named in the Loan Agreement (as defined below),
and Paribas (formerly known as Banque Paribas), not in its individual capacity
but solely in its capacity as the agent on behalf of the Lenders (in such
capacity, the "Agent").
Recitals
A. The Borrowers, the Lenders and the Agent have entered into that
certain Loan Agreement, dated as of September 18, 1997 (as amended by that
certain First Amendment to Loan Agreement, dated as of November 21, 1997, and
that certain Second Amendment to Loan Agreement, dated as of November 16, 1998,
and as such may be further amended, modified, supplemented or restated from time
to time, the "Loan Agreement"), by and among the Borrowers, the Lenders and the
Agent, pursuant to which the Lenders have extended and have agreed to extend and
make available to the Borrowers certain advances of credit in accordance with
their respective Commitments and upon the terms and conditions set forth in the
Loan Agreement and the other Loan Documents.
B. The Borrowers have requested that the Lenders amend the Loan Agreement
as provided below.
C. The Lenders and the Agent are willing to accommodate the Borrowers'
requests, but only on the terms and subject to the conditions specified herein.
Capitalized terms not otherwise defined herein shall have the same meanings
given to such terms in the Loan Agreement.
Agreement
Now, Therefore, in consideration of the foregoing recitals and the mutual
covenants herein set forth, and intending to be legally bound, the parties
hereto agree as follows:
1. Amendment to Loan Agreement.
(a) Amendment to Section 8.8 (Capital Expenditures). Section 8.8 of
the Loan Agreement is deleted in its entirety and replaced with the following:
Section 8.8 Capital Expenditures. (a) Except as otherwise provided in
Section 8.8(b), the Borrowers shall not, and shall not permit any of their
respective Subsidiaries
1.
<PAGE>
to, make or commit to make Capital Expenditures during any of the following
Fiscal Years in excess of the following amounts:
Fiscal Year Capital Expenditures
1999 $25,000,000
2000 $40,000,000
2001 and thereafter $45,000,000
plus any unutilized portion of the immediately preceding Fiscal Year's
permitted Capital Expenditures provided that any such unutilized portion
carried forward shall not for any Fiscal Year exceed $7,500,000. For
purposes of this Section 8.8 only, the term "Capital Expenditures" shall
mean an amount equal to "Capital Expenditures," as defined in Section 1.1
of this Agreement, exclusive of the amount of the SUMMITrak/Phoenix Capex
Adjustment.
(b) In addition to and without limiting the Capital Expenditures
permitted to be made pursuant to Subsection 8.8(a), the Borrowers may make
Capital Expenditures up to an aggregate amount of $30,000,000 for the sole
purpose of constructing (including site acquisition and preparation) and
equipping (including capitalized software) new data processing facilities
(either mainframe or open-systems based, or both) for the Borrowers (the
additional Capital Expenditures permitted pursuant to this subsection (b)
being referred to herein as the "Data Center Capex").
2. Limited Amendment; Full Force and Effect. The amendment set forth in
this Amendment shall be limited precisely as written and shall not be deemed (a)
to be an amendment, consent or waiver of any other term or condition of the Loan
Agreement or the other Loan Documents, to prejudice any right or remedy which
the Agent or the Lenders may now have or may have in the future under or in
connection with the Loan Agreement or the other Loan Documents or (b) to be a
consent to any future amendment, consent or waiver or departure from the terms
and conditions of the Loan Agreement or the other Loan Documents. This Amendment
shall be construed in connection with and as part of the Loan Documents, and all
terms, conditions, representations, warranties, covenants and agreements set
forth in the Loan Documents, except as herein waived or amended, are hereby
ratified and confirmed and shall remain in full force and effect.
3. Representations and Warranties. In order to induce the Agent and the
Lenders to enter into this Amendment, each of the Borrowers hereby jointly and
severally represents and warrants to each Lender and the Agent as follows:
(a) Corporate Power and Authority. Each of the Borrowers has all
requisite corporate power and authority to enter into this Amendment and to
carry out the transactions contemplated hereby. The certificates of
incorporation and bylaws of each of the Borrowers have not been amended since
September 18, 1997.
2.
<PAGE>
(b) Authorization of Agreements. The execution and delivery of this
Amendment and the performance hereof have been duly authorized by all necessary
corporate action on the part of the Borrowers.
(c) No Conflict. The execution and delivery by the Borrowers of this
Amendment and the performance by the Borrowers of the Loan Agreement as amended
hereby do not and will not contravene (i) any law or regulation binding on or
affecting either Borrower or any of its Subsidiaries, (ii) the certificate of
incorporation or by-laws of either Borrower or its Subsidiaries, (iii) any
order, judgment or decree of any court or other agency of government binding on
either Borrower or its Subsidiaries or (iv) any contractual restriction binding
on or affecting either Borrower or its Subsidiaries.
(d) Governmental Consents, Filings. The execution, delivery and
performance by the Borrowers of this Amendment and the performance by the
Borrowers of the Loan Agreement as amended hereby do not and will not require
any authorization or approval of, or other action by, or notice to or filing
with any Governmental Authority or regulatory body or the consent of any third
party which has not yet been obtained.
(e) Binding Obligation. This Amendment has been duly executed and
delivered by each of the Borrowers and is the binding obligation of each of the
Borrowers, enforceable against each of them in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency, reorganization,
liquidation, moratorium or other similar laws of general application and
equitable principles relating to or affecting creditors' rights generally.
(f) Absence of Default and Modification of Agreements with Other
Creditors. After giving effect to this Amendment, no event has occurred and is
continuing or will result from the consummation of the transactions contemplated
by this Amendment that would constitute an Event of Default as defined in the
Loan Agreement. Neither Borrower has modified any agreement with any creditor of
such Person other than (i) by this Amendment and (ii) modifications of
agreements with trade creditors made in the ordinary course of business.
(g) Restatement of Representations and Warranties in Loan Agreement.
Each Borrower, with respect to the representations and warranties set forth in
Article 5 of the Loan Agreement, represents and warrants that each of such
representations and warranties is true, correct and complete as of the date of
this Amendment (except to the extent such representations and warranties
expressly relate to another date or as specifically described therein in which
case such representations and warranties are true, correct and complete as of
such other date).
4. Reaffirmation. Each Borrower hereby reaffirms its obligations under
each Loan Document to which it is a party.
5. Effectiveness. This Amendment shall be effective upon the execution
and delivery to the Agent of a copy of this Amendment by each Borrower, the
Agent and by Lenders representing Required Lenders.
3.
<PAGE>
6. Miscellaneous.
(a) Reference to and Effect on the Loan Agreement and the Other Loan
Documents. On and after the date on which this Amendment is effective in
accordance with Section 5 hereof, each reference in the Loan Agreement or the
other Loan Documents to "this Agreement," "hereunder," "hereof," "herein" or
words of like import shall mean and be a reference to such agreement after
giving effect hereto.
(b) Headings. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
(c) Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
(d) Counterparts. This Amendment may be executed in counterparts,
each of which when so executed shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
[INTENTIONALLY BLANK]
4.
<PAGE>
Witness the due execution hereof by the respective duly authorized officers
of the undersigned as of the date first written above.
Borrowers:
CSG Systems, Inc., a Delaware corporation
By: /s/ Greg A. Parker
-----------------------------------------
Name: Greg A. Parker
Title: CFO
CSG Systems International, Inc., a Delaware
corporation
By: /s/ Greg A. Parker
-----------------------------------------
Name: Greg A. Parker
----------------------------------
Title: CFO
----------------------------------
<PAGE>
Agent: Paribas
By: /s/ Susan M. Bowes
-----------------------------------------
Printed Name: Susan M. Bowes
-------------------------------
Title: Vice President
--------------------------------------
By: /s/ Robert N. Pinkerton
-----------------------------------------
Printed Name: Robert N. Pinkerton
-------------------------------
Title: Director
-------------------------------------
Lenders: Paribas
By: /s/ Susan M. Bowes
--------------------------------------
Printed Name: Susan M. Bowes
-------------------------------
Title: Vice President
--------------------------------------
By: /s/ Robert N. Pinkerton
-----------------------------------------
Printed Name: Robert N. Pinkerton
-------------------------------
Title: Director
--------------------------------------
Norwest Bank Colorado, N.A.
By: /s/ John R. Hall
-----------------------------------------
Printed Name: John R. Hall
-------------------------------
Title: Vice President
--------------------------------------
Bank of Montreal
By:__________________________________________
Printed Name:________________________________
Title:_______________________________________
The Fuji Bank Limited, Los Angeles Agency
By: /s/ Masahiro Fukuda
-----------------------------------------
Printed Name: Masahiro Fukuda
-------------------------------
Title: Senior Vice President
--------------------------------------
<PAGE>
Union Bank of California, N.A.
By: /s/ Stender E. Sweeney
--------------------------------------
Printed Name: Stender E. Sweeney
----------------------------
Title: Assistant Vice President
-----------------------------------
National City Bank
By: /s/ Wilmer J. Jacobs
--------------------------------------
Printed Name: Wilmer J. Jacobs
----------------------------
Title: Assistant Vice President
-----------------------------------
Bank Austria Creditanstalt Corporate Finance, Inc.
By: /s/ Geoffrey C. Haadington
--------------------------------------
Printed Name: Geoffrey C. Haadington
----------------------------
Title: Senior Associate
-----------------------------------
By: /s/ Jack R. Bertges
--------------------------------------
Printed Name: Jack R. Bertges
----------------------------
Title: Senior Vice President
-----------------------------------
Bank of Hawaii
By: /s/ Luke Yah
---------------------------------------
Printed Name: Luke Yah
----------------------------
Title: Assistant Vice President
-----------------------------------
Credit Lyonnais New York Branch
By: /s/ Robert Ivosevich
--------------------------------------
Printed Name: Robert Ivosevich
----------------------------
Title: Senior Vice President
-----------------------------------
<PAGE>
General Electric Capital Corporation
By: /s/ W. Jerome McDermott
------------------------------------
Printed Name: W. Jerome McDermott
--------------------------
Title: Duly Authorized Signatory
---------------------------------
Banque Nationale de Paris
By: /s/ C. Bettles
----------------------------------
Printed Name: C. Bettles
--------------------------
Title: Sr. V.P. & Manager
-------------------------------
By: /s/ Janice Ho
----------------------------------
Printed Name: Janice Ho
--------------------------
Title: Vice President
-------------------------------
BBL (USA) Capital Corp.
By:____________________________________
Printed Name:__________________________
Title:_________________________________
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
AS OF MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 66,277
<SECURITIES> 0
<RECEIVABLES> 74,580
<ALLOWANCES> 3,246
<INVENTORY> 0
<CURRENT-ASSETS> 143,331
<PP&E> 64,294
<DEPRECIATION> 34,164
<TOTAL-ASSETS> 288,609
<CURRENT-LIABILITIES> 89,122
<BONDS> 52,870
0
0
<COMMON> 529
<OTHER-SE> 145,618
<TOTAL-LIABILITY-AND-EQUITY> 288,609
<SALES> 92,063
<TOTAL-REVENUES> 92,063
<CGS> 36,286
<TOTAL-COSTS> 36,286
<OTHER-EXPENSES> 9,888
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,541
<INCOME-PRETAX> 32,718
<INCOME-TAX> (12,409)
<INCOME-CONTINUING> 20,309
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,309
<EPS-BASIC> 0.39
<EPS-DILUTED> 0.36
</TABLE>
<PAGE>
Exhibit 99.01
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS UNDER THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995
CERTAIN CAUTIONARY STATEMENTS AND
RISK FACTORS
CSG Systems International, Inc. and its subsidiaries (collectively, the Company)
or their 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 the Management's
Discussion and Analysis of Financial Condition and Results of Operations
contained in its various SEC filings or orally in conferences or
teleconferences. The Company wishes 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 FACTORS THAT COULD CAUSE ACTUAL RESULTS
TO DIFFER MATERIALLY FROM THOSE IN SUCH FORWARD-LOOKING STATEMENTS.
This list of factors is likely not exhaustive. The Company operates in a rapidly
changing and evolving business involving the converging communications markets,
and new risk factors will likely emerge. Management cannot predict all of the
important risk factors, nor can it assess the impact, if any, of such risk
factors on the Company's business or the extent to which any factor, or
combination of 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.
RELIANCE ON CCS
- ---------------
The Company derived approximately 78.3% and 78.0% of its total revenues from its
primary product, Communications Control System, and related products and
services (collectively, "CCS") in the years ended December 31, 1999 and 1998,
respectively. CCS is expected to provide the substantial majority of the
Company's total revenues in the foreseeable future.
The Company continues to develop new products and services to address the
evolving needs of its new and existing clients as they roll out new product
offerings and enter new markets. A substantial portion of the Company's new
products and services require enhancements to the core functionality of CCS.
There is an inherent risk of technical problems in maintaining and operating CCS
as its complexity is increased. The Company's results will depend upon
continued market acceptance of CCS, as well as the Company's ability to continue
to adapt, modify, maintain, and operate CCS to meet the changing needs of its
clients without sacrificing the reliability or quality of service. Any
reduction in demand for CCS would have a material adverse effect on the
financial condition and results of operations of the Company.
AT&T RELATIONSHIP
- -----------------
<PAGE>
Contract Rights and Obligations
- -------------------------------
The AT&T Contract had an original term of 15 years and expires in 2012. The
AT&T Contract includes minimum financial commitments by AT&T over the life of
the contract, and includes exclusive rights for the Company to provide customer
care and billing products and services for AT&T's offerings of wireline video,
all Internet/high speed data services, residential wireline telephony services,
and print and mail services. Since execution of the AT&T Contract in September
1997 through March 31, 2000, the Company has successfully converted
approximately 11 million AT&T cable television customers onto its system,
bringing the total of AT&T and affiliated customers on the Company's system to
approximately 13.6 million.
The AT&T Contract provides certain performance criteria and other obligations to
be met by the Company. The Company is subject to various remedies and penalties
if it fails to meet the performance criteria or other obligations. The Company
is also subject to an annual technical audit to determine whether the Company's
products and services include innovations in features and functions that have
become standard in the wireline video industry. If an audit determines the
Company is not providing such an innovation and it fails to do so in the manner
and time period dictated by the contract, then AT&T would be released from its
exclusivity obligation to the extent necessary to obtain the innovation from a
third party.
To fulfill the AT&T Contract and to remain competitive, the Company believes it
will be required to develop new and advanced features to existing products and
services, as well as new products and services, all of which will require
substantial research and development and implementation and operational
aptitude. AT&T has the right to terminate the AT&T Contract in the event of
certain defaults by the Company. To date, the Company believes it has complied
with the terms of the contract. The termination of the AT&T Contract or of any
of AT&T's commitments under the contract would have a material adverse effect on
the financial condition and results of operations of the Company.
Business Activities and Dependence On AT&T
- ------------------------------------------
AT&T completed its merger with TCI in March 1999 and has consolidated the TCI
operations into AT&T Broadband. During the year ended December 31, 1999 and
1998, revenues from AT&T and affiliated companies represented approximately
50.5% and 37.4% of total revenues, respectively. The Company expects a similar
percentage of its total revenues to be generated from AT&T in 2000.
AT&T began its efforts to provide convergent communications services in several
United States cities during 1999 and is expected to continue these efforts in
2000. The Company is working closely with AT&T to provide customer care and
billing services to customers in those cities. The convergence of video,
telephony and Internet services in the residential market is still in its
infancy. As a result, the degree to which converged, broadband services meet
with consumer acceptance and capture significant market share is speculative.
Further, there may be customer care and billing needs of the broadband consumer
that are not foreseen by the Company, or the Company's technological solutions
may prove unable to meet the new and unique needs of the converging
communications markets. The Company expects to continue performing successfully
under the AT&T Contract, but its failure to do so would have a material adverse
effect on the financial condition and results of operations of the Company.
Historically, a substantial portion of the Company's revenue growth resulted
from the sale of software and professional services to AT&T, both of which are
in excess of the minimum financial commitments included in the contract. There
can be no assurance that the Company will continue to sell products and services
to AT&T in excess of the minimum financial commitments included in the contract.
AT&T's Planned Merger with MediaOne
- -----------------------------------
AT&T and MediaOne have agreed to merge, with AT&T being the surviving entity.
MediaOne has approximately 5.2 million cable television customers, and
approximately 1.0 million of these customers are currently being processed on
the Company's system. The Company is hopeful that it will have the opportunity
to convert the remaining MediaOne customers onto its system soon after the
acquisition is complete. However, there are a number of uncertainties concerning
the transaction, including (i) any preexisting MediaOne contractual obligations,
(ii) the timing of when the transaction is closed, (iii) the structure of the
combined entities, and (iv) operational or other limitations that may be
<PAGE>
imposed by governmental authorities. Should the transaction not be consummated,
should it be significantly delayed or its structure or operational authority be
altered materially, it may have a material adverse impact upon the company's
ability to sustain its growth in the wireline video customer care and billing
market.
RENEWAL OF TIME WARNER CONTRACTS
- --------------------------------
During the years ended December 31, 1999 and 1998, revenues from Time Warner
represented approximately 10.2% and 14.1% of total revenues, respectively. The
Company provides services to Time Warner under multiple, separate contracts with
various Time Warner affiliates. These contracts are scheduled to expire on
various dates. The failure of Time Warner to renew contracts representing a
significant part of its business with the Company would have a material adverse
effect on the financial condition and results of operations of the Company.
America Online, Inc. ("AOL") and Time Warner have announced their intention to
merge their companies. It would be premature to predict the impact, if any, the
successful consummation of this transaction would have on the financial
condition or results of operations of the Company.
CONVERSION TO THE COMPANY'S SYSTEMS
- -----------------------------------
The Company's ability to convert new client sites to its customer care and
billing systems on a timely and accurate basis is necessary to meet the
Company's contractual commitments and to achieve its business objectives.
Converting multiple sites under the schedules required by contracts or business
requirements is a difficult and complex process. One of the difficulties in the
conversion process is that competition for the necessary qualified personnel is
intense and the Company may not be successful in attracting and retaining the
personnel necessary to complete conversions on a timely and accurate basis. The
inability of the Company to perform the conversion process timely and accurately
would have a material adverse effect on the results of operations of the
Company.
INDUSTRY CONSOLIDATION AND DEPENDENCE ON CABLE TELEVISION AND DBS INDUSTRIES
- ----------------------------------------------------------------------------
The Company's business is concentrated in the cable television and Direct
Broadcast Satellite ("DBS") industries, making the Company susceptible to a
downturn in those industries. During the years ended December 31, 1999 and 1998,
the Company derived 75.8% and 77.7%, and 15.5% and 13.0% of its total revenues
from companies in the U.S. cable television and U.S. and Canadian DBS
industries, respectively. A decrease in the number of customers served by the
Company's clients, loss of business due to non-renewal of client contracts,
industry consolidation, and/or changing consumer demand for services would
adversely effect the results of operations of the Company.
There can be no assurance that new entrants into the cable television market
will become clients of the Company. Also, there can be no assurance that cable
television providers will be successful in expanding into other segments of the
converging communications markets. Even if major forays into new markets are
successful, the Company may be unable to meet the special billing and customer
care needs of that market. The cable television industry is undergoing
significant ownership changes at an accelerated pace. One facet of these
changes is that cable television providers are consolidating, decreasing the
potential number of buyers for the Company's products and services. Currently,
seven providers account for 85% of the U.S. cable television market and two
providers account for almost the entire U.S. DBS market. The Company processes
at least a portion of the customers for five of the seven cable television
providers, and for both of the DBS providers. For the year ended December 31,
1999, approximately 83% of the Company's total revenues were generated from
companies either under the control of, or expected to come under the control of,
these seven providers. Consolidation in the industry may put at risk the
Company's ability to leverage its existing relationships. Should this
consolidation result in a concentration of cable
<PAGE>
television customer accounts being owned by companies with whom the Company does
not have a relationship, or with whom competitors are entrenched, it could
negatively effect the Company's ability to maintain or expand its market share,
thereby adversely effecting the results of operations.
NEW PRODUCTS AND RAPID TECHNOLOGICAL CHANGE
- -------------------------------------------
The market for customer care and billing systems is characterized by rapid
changes in technology and is highly competitive with respect to the need for
timely product innovations and new product introductions. The Company believes
that its future success in sustaining and growing the annual revenue per
customer account depends upon continued market acceptance of its current
products, including CCS, and its ability to enhance its current products and
develop new products that address the increasingly complex and evolving needs of
its clients. Substantial research and development will be required to maintain
the competitiveness of the Company's products and services in the market.
Development projects can be lengthy and costly, and are subject to changing
requirements, programming difficulties, a shortage of qualified personnel, and
unforeseen factors which can result in delays. In addition, the Company is
typically responsible for the implementation of new products, and depending upon
the specific product, may also be responsible for operations of the product.
There is an inherent risk in the successful implementation and operations of
these products as the technological complexity increases. There can be no
assurance (i) of continued market acceptance of the Company's current products,
(ii) that the Company will be successful in the timely development of product
enhancements or new products that respond to technological advances or changing
client needs, or (iii) that the Company will be successful in supporting the
implementation and/or operations of product enhancements or new products.
CONVERGING COMMUNICATIONS MARKETS
- ---------------------------------
The Company's growth strategy is based in large part on the continuing
convergence and growth of the cable television, DBS, telecommunications, and on-
line services markets. If these markets fail to converge, grow more slowly than
anticipated, or if providers in the converging markets do not accept the
Company's solution for combining multiple communications services for a
customer, there could be a material adverse effect on the Company's growth.
COMPETITION
- -----------
The market for the Company's products and services is highly competitive. The
Company directly competes with both independent providers of products and
services and in-house systems developed by existing and potential clients. In
addition, some independent providers are entering into strategic alliances with
other independent providers, resulting in either a new competitor, or a
competitor(s) with greater resources. Many of the Company's current and
potential competitors have significantly greater financial, marketing,
technical, and other competitive resources than the Company, and many already
have significant international operations. There can be no assurance that the
Company will be able to compete successfully with its existing competitors or
with new competitors.
ATTRACTION AND RETENTION OF PERSONNEL
- -------------------------------------
The Company's future success depends in large part on the continued service of
its key management, sales, product development, and operational personnel. The
Company is particularly dependent on its executive officers. The Company
believes that its future success also depends on its ability to attract and
retain highly skilled technical, managerial, operational, and marketing
personnel, including, in particular, additional personnel in the areas of
research and development and technical support. Competition for qualified
personnel is intense, particularly in the areas of research and development and
technical support.
<PAGE>
The Company may not be successful in attracting and retaining the personnel it
requires, which would adversely effect the Company's ability to meet its
commitments and new product delivery objectives.
VARIABILITY OF QUARTERLY RESULTS
- --------------------------------
The Company's quarterly revenues and results, particularly relating to software
and professional services, may fluctuate depending on various factors, including
the timing of executed contracts and the delivery of contracted services or
products, the cancellation of the Company's services and products by existing or
new clients, the hiring of additional staff, new product development and other
expenses, and changes in sales commission policies. No assurance can be given
that results will not vary due to these factors. As the Company's overall
revenue grows, so too does the risk associated with meeting financial
expectations for revenue derived from its software and services offerings. As a
result, there is a proportionately increased likelihood that the Company may
fail to meet revenue and earnings expectations of the analyst community. With
the current volatility of the stock market, should the Company fail to meet
analyst expectations by even a relatively small amount it would most likely have
a disproportionately negative impact upon the market price for the Company's
common stock.
DEPENDENCE ON PROPRIETARY TECHNOLOGY
- ------------------------------------
The Company relies on a combination of trade secret and copyright laws,
nondisclosure agreements, and other contractual and technical measures to
protect its proprietary rights in its products. The Company also holds a limited
number of patents on some of its newer products, and does not rely upon patents
as a primary means of protecting its rights in its intellectual property. There
can be no assurance that these provisions will be adequate to protect its
proprietary rights. Although the Company believes that its intellectual
property rights do not infringe upon the proprietary rights of third parties,
there can be no assurance that third parties will not assert infringement claims
against the Company or the Company's clients.
INTERNATIONAL OPERATIONS
- ------------------------
The Company's business strategy includes a commitment to the marketing of its
products and services internationally, and the Company has acquired and
established operations outside of the U.S. The Company is subject to certain
inherent risks associated with operating internationally. Risks include product
development to meet local requirements such as the conversion to EURO currency,
difficulties in staffing and management, reliance on independent distributors or
strategic alliance partners, fluctuations in foreign currency exchange rates,
compliance with foreign regulatory requirements, variability of foreign economic
conditions, changing restrictions imposed by U.S. export laws, and competition
from U.S.-based companies which have firmly established significant
international operations. There can be no assurance that the Company will be
able to manage successfully the risks related to selling its products and
services in international markets.
INTEGRATION OF ACQUISITIONS
- ---------------------------
As part of its growth strategy, the Company seeks to acquire assets, technology,
and businesses which would provide the technology and technical personnel to
expedite the Company's product development efforts, provide complementary
products or services or provide access to new markets and clients. Acquisitions
involve a number of risks and difficulties, including expansion into new
geographic markets and business areas, the requirement to understand local
business practices, the diversion of management's attention to the assimilation
of acquired operations and personnel, potential adverse short-term effects on
the Company's operating results, and the amortization of acquired intangible
assets.
<PAGE>
SYSTEM SECURITY
- ----------------
The end users of the Company systems are continuously connected to the Company's
products through a variety of public and private telecommunications networks.
The Company has plans to integrate the Internet more closely into its product
offerings thereby permitting, for example, a customer to use the Internet to
review account balances, order a pay per view event or execute similar account
management functions. The Company also operates an extensive internal network
of computers and systems used to manage internal communications, financial
information, development data and the like. The Company's product and internal
communications networks and systems carry an inherent risk of failure as a
result of human error, acts of nature and intentional, unauthorized attacks from
computer "hackers." Opening up these networks and systems to permit access via
the Internet increases their vulnerability to unauthorized access and
corruption, as well as increasing the dependency of the systems' reliability on
the availability and performance of the Internet's infrastructure. Certain
system security and other controls for CCS are reviewed annually by an
independent party. The Company has recently undergone a security review of its
internal systems by an independent party, and is currently implementing a plan
intended to minimize the risk of an unauthorized access to the networks and
systems.
The method, manner, cause and timing of an extended interruption or outage in
the Company's networks or systems is impossible to predict. As a result, there
can be no assurances that the networks and systems will not fail, nor that the
Company's business recovery plans will adequately mitigate any damages incurred
as a consequence. In addition, should the Company's networks or systems be
significantly compromised, it would most likely have a material adverse effect
on the operations of the Company, including its ability to meet product delivery
obligations or client expectations. Likewise, should the Company's networks or
systems experience an extended interruption or outage, have their security
compromised or data lost or corrupted, it would most likely result in an
immediate loss of revenue, as well as damaging the reputation of the Company.
Any of these events could have both an immediate, negative impact upon the
Company's short term revenue and profit expectations, as well as its long term
ability to attract and retain new clients.
PRODUCT OPERATIONS AND SYSTEM AVAILABILITY
- ------------------------------------------
The Company's product operations are run in both mainframe and distributed
system computing environments, as follows:
Mainframe Environment
---------------------
CCS operates in a mainframe data processing center managed by FDC (the "FDC
Data Center"), with end users dispersed throughout the United States and
Canada. These services are provided under an agreement with FDC, which was
recently extended and is now scheduled to expire June 30, 2005. The Company
believes it could obtain mainframe data processing services from alternative
sources, if necessary. The Company has a business recovery plan as part of
its agreement with FDC should the FDC Data Center suffer an extended business
interruption or outage. This plan is tested on an annual basis.
Distributed Systems Environment
-------------------------------
The Company also operates certain of its new product applications in its own
distributed systems data processing center (the "CSG Data Center") for the
benefit of certain clients. Typically, these distributed product applications
interface to and operate in conjunction with CCS via telecommunication
networks. The Company is currently implementing its business recovery plan for
the CSG Data Center. The Company has extensive experience in running
applications within the mainframe computing platform, and only within the last
few years, began running applications within the CSG Data Center. In
addition, the mainframe computing environment and related technology is mature
and has proven to be a highly reliable and scaleable computing platform. The
distributed
<PAGE>
systems computing platform is not at the same level of maturity as the
mainframe computing platform.
The end users of the Company systems are continuously connected to the Company's
products through a variety of public and private telecommunications networks,
and are highly dependent upon the continued availability of the Company's
systems to conduct their business operations. Should the FDC Data Center or CSG
Data Center, or any particular product application or internal system which is
operated within the data centers, as well as the connecting telecommunications
networks, experience an extended business interruption or outage, it could have
an immediate impact to the business operations of the Company's clients, which
could have a material adverse effect on the financial condition and results of
operations of the Company.
YEAR 2000
- ---------
The Company's business is dependent upon various computer software programs and
operating systems that utilize dates and process data beyond the year 2000. If
the actions taken by the Company to mitigate its risks associated with the year
2000 are inadequate, there could be a material adverse effect on the financial
condition and results of operations of the Company. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" for
additional discussion of the Company's efforts to address the year 2000 risks.
