Back to GetFilings.com

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 2002

OR

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

(State or other jurisdiction of incorporation or organization)

47-0783182

(I.R.S. Employer 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)

Securities Registered Pursuant to Section 12(b) of the Act: None

Securities Registered Pursuant to Section 12(g) of the Act:

Common Stock, Par Value $0.01 Per Share

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x    No ¨

Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to the Form 10-K.  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes x    No ¨

The aggregate market value of the voting stock held by non-affiliates of the registrant, computed by reference to the last sales price of such stock, as of the close of trading on June 30, 2002 was $711,600,509.

Shares of common stock outstanding at March 24, 2003: 52,247,243.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s Proxy Statement for its 2003 Annual Meeting of Stockholders to be filed on or prior to April 30, 2003, are incorporated by reference into Part III of the Form 10-K.

CSG SYSTEMS INTERNATIONAL, INC.

2002 FORM 10-K

TABLE OF CONTENTS

2

Item 1.    Business

Company Overview

CSG Systems International, Inc. (the “Company” or “CSG”) and its wholly-owned subsidiaries serve more than 265 telecommunications service providers in more than 40 countries. The Company is a leader in next-generation billing and customer care solutions for the cable television, satellite, advanced IP services, next-generation mobile, and fixed wireline markets. The Company’s combination of proven and future-ready solutions, delivered in both outsourced and licensed formats, enables its clients to deliver high quality customer service, improve operational efficiencies and rapidly bring new revenue-generating products to market. CSG is a S&P Midcap 400 company. The Company serves its clients through its two operating segments: the Broadband Services Division (the “Broadband Division”) and the Global Software Services Division (the “GSS Division”). The Company generated revenue of $610.9 million in 2002 compared to $476.9 million in 2001, an increase of 28%, and revenue grew at a compound annual growth rate of 30% over the seven-year period ended December 31, 2002.

The Company’s principal executive offices are located at 7887 East Belleview, Suite 1000, Englewood, Colorado 80111, and the telephone number at that address is (303) 796-2850. The Company’s Common Stock is listed on the Nasdaq National Market under the symbol “CSGS”.

General Development of Business

The Company was formed in October 1994 and acquired all of the outstanding stock of CSG Systems, Inc. (formerly Cable Services Group, Inc.) from First Data Corporation (“FDC”) in November 1994 (the “CSG Acquisition”). CSG Systems, Inc. had been a subsidiary or division of FDC from 1982 until the CSG Acquisition.

In September 1997, the Company entered into a 15-year exclusive contract (the “Master Subscriber Agreement”) with Tele-Communications, Inc. (“TCI”) to consolidate all TCI customers onto the Company’s customer care and billing system. In 1999 and 2000, respectively, AT&T completed its mergers with TCI and MediaOne Group, Inc. (“MediaOne”), and consolidated the merged operations into AT&T Broadband (“AT&T”), and the Company continued to service the merged operations under the terms of the Master Subscriber Agreement. On November 18, 2002, Comcast Corporation (“Comcast”) completed its merger with AT&T, and now under Comcast’s ownership, the Company continues to service the former AT&T operations under the terms of the Master Subscriber Agreement. The Company generates a significant percentage of its total revenues under the Master Subscriber Agreement, and is currently in arbitration with Comcast regarding the Master Subscriber Agreement. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) for additional discussion of the Master Subscriber Agreement and the Company’s business relationship with Comcast.

On February 28, 2002, the Company closed on its agreement to acquire the billing and customer care assets of Lucent Technologies Inc. (“Lucent”). Lucent’s billing and customer care business consists primarily of: (i) software products and related consulting services acquired by Lucent when it purchased Kenan Systems Corporation in February 1999; (ii) BILLDATS Data Manager mediation software; and (iii) elements of Lucent’s client support, product support, and sales and marketing organizations (collectively, the “Kenan Business”). See MD&A and Note 3 to the Company’s Consolidated Financial Statements for additional discussion of the Kenan Business and further details of the acquisition.

Industry Overview

Customer care and billing systems coordinate many aspects of the customer’s interaction with a telecommunications operator, from the initial set-up and activation of customer accounts, to support of various service activities, through the monitoring of customer invoicing and accounts receivable management. These

3

systems enable telecommunications service providers to manage the lifecycle of their customer interactions. The telecommunications industry experienced one of the most difficult periods in its history in 2002. Mounting debt combined with limited access to capital resulted in reduced capital expenditures by operators for the second year in a row. Operators focused their attention on reducing their operational costs, improving margins and rolling out new revenue generating services with little investment in new solutions. This resulted in a decrease in spending on business support and operational support systems aimed at helping operators manage the increasing complexity and cost of managing the interaction between communications companies and their customers.

As operators continue to consolidate and begin rolling out new products to help generate new revenue streams, they will require additional functionality and flexibility within their customer care and billing solutions. This need continues to drive additional revenues into the customer care and billing industry, albeit at a smaller rate than previous years.

Business Strategy

The Company’s business strategy is designed to provide revenue and profit growth. The key elements of the strategy include:

Expand Core Processing Business.    The Company will continue to leverage its investment and expertise in high-volume transaction processing to expand its processing business. The processing business provides highly predictable recurring revenues through multi-year contracts with a client base that includes leading telecommunications service providers. The Company increased the number of customers processed on its systems from 18.0 million as of December 31, 1995 to 45.8 million as of December 31, 2002, a compound annual growth rate for this period of 14%. The Company provides a full suite of customer care and billing products and services that combine the reliability and high volume transaction processing capabilities of a mainframe platform with the flexibility of client/server architecture.

Increase Market Share in Telecommunications Verticals.    The Company will pursue new relationships with telecommunications service providers in the wireline, wireless, IP and worldwide broadband markets with its CSG Kenan/BP product suite. While the telecommunications market continues to be in a depressed state, providers continue to look for solutions to specific problems like churn management, content settlement, converged pre-paid/post-paid offerings and more. The Company will continue to look for ways to establish relationships with those providers in which it has not done business with before, or with divisions of large telecommunications service providers in which the Company products have not traditionally had any visibility.

Enter New Markets.    As communications markets converge, the Company’s products and services can facilitate efficient entry into new markets by existing or new clients. The Company also intends to leverage its transaction processing engines into new verticals that require scaleable technology that is flexible and open, much like it has done with Italgas, a European utility, and eBay, the world’s online marketplace.

Enhance Growth Through Focused Acquisitions.    The Company follows a disciplined approach in acquiring assets and businesses which 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 or clients.

Continue Technology Leadership.    The Company believes that its technology in customer care and billing solutions gives telecommunications service providers a competitive advantage. The Company’s continuing investment in research and development (“R&D”) is designed to position the Company to meet the growing and evolving needs of existing and potential clients.

Pursue International Opportunities.    The Company’s growth strategy includes a commitment to the marketing of its products and services internationally. The Company has conducted international operations in

4

the past and has significantly increased the level of its international operations as a result of the acquisition of the Kenan Business.

Financial Information about Segments

After the closing of the Kenan Business acquisition in February 2002, the Company organized its business around two operating segments: the Broadband Division and the GSS Division. In addition, costs managed at the corporate level, which are not attributable to the operating segments, are reflected in a Corporate overhead segment. Revenues and contribution margin attributable to reporting segments and financial information about geographical areas can be found in Note 4 to the Company’s Consolidated Financial Statements and are incorporated herein by reference.

Narrative Description of Business

The Broadband Division

General Description.    The Broadband Division consists principally of the historical processing operations and related software products of the Company. Products and services from the Broadband Division generated approximately 69%, 99%, and 100% of the Company’s total revenues for the years ended December 31, 2002, 2001, and 2000, respectively. The Broadband Division generates a substantial percentage of its revenues by providing customer care and billing services to the United States (“U.S.”) and Canadian cable television and satellite industries. The Broadband Division’s full suite of processing, software, and professional services allows clients to automate their customer care and billing functions. These functions include: (i) set-up and activation of customer accounts; (ii) sales support; (iii) order processing; (iv) invoice calculation; (v) production and mailing of invoices; (vi) management reporting; (vii) electronic presentment and payment of invoices; (viii) deployment and management of the client’s field technicians; and (ix) customer analysis for target marketing and churn management.

Total domestic customer accounts (i.e., clients’ subscribers) on the Broadband Division’s processing system as of December 31, 2002 were 45.8 million, compared to 43.3 million as of December 31, 2001, an increase of 5.9%. The Company converted approximately 0.7 million new customer accounts onto its processing system during 2002. On an annualized basis, the Broadband Division received $8.90 in processing revenue per video account for 2002, compared to $8.68 for 2001, and $3.77 in processing revenue per Internet account for 2002, compared to $4.40 for 2001.

Clients.    The Broadband Division works with the leading cable and satellite providers located in the U.S. and Canada. A partial list of those providers is included below:

During the years ended December 31, 2002, 2001, and 2000: (i) revenues from Comcast (formerly AT&T Broadband) represented approximately 28.0%, 55.8%, and 50.4% of total revenues; (ii) revenues from Echostar Communications Corporation (“Echostar”) represented approximately 10.6%, 10.0%, and 9.3% of the Company’s total revenues; and (iii) revenues from AOL Time Warner Inc. and its affiliated companies (“AOL Time Warner”) represented approximately 6.4%, 7.5%, and 8.3% of total revenues, respectively. The substantial decrease in the percentage between 2002 and 2001 for Comcast relates primarily to a decrease in the amount of software and professional services purchased by Comcast (formerly AT&T Broadband) in 2002 when compared to 2001, as well as an increase in the Company’s total revenues between periods from all other clients, including revenue related to the acquisition of the Kenan Business. See MD&A for discussion of the Company’s contract with Comcast.

5

Products and Services.    The Broadband Division’s primary product offerings include its core service bureau processing product, CSG CCS/BP (formerly CCS), and related services and software products. A background in high-volume transaction processing, complemented with world-class applications software, allows the Broadband Division to offer one of the most comprehensive, pre-integrated products and services solutions to the telecommunications market, serving video, data and voice providers and handling many aspects of the customer lifecycle. The Company believes this pre-integrated approach has allowed operators to get to market quickly as well as reduce the total cost of ownership for their solution.

Over the past seven years, the Company has introduced over 20 products and services ranging from workforce automation to churn management to electronic bill presentment and payment. The Broadband Division licenses its software products (e.g., ACSR, Workforce Express, etc.) and provides its professional services principally to its existing base of processing clients to: (i) enhance the core functionality of its service bureau processing application; (ii) increase the efficiency and productivity of the clients’ operations; and (iii) allow clients to effectively roll out new products and services to new and existing markets, such as high-speed data/ISP, IP markets, and residential telephony. CSG CCS/BP processing services and related software products are expected to provide a large percentage of the Company’s, and substantially all of the Broadband Division’s, total revenues in the foreseeable future.

In addition to its core processing services, through CSG Direct Solutions, service providers can access the Company’s state-of-the-art customer statement presentation solutions regardless of the billing system in use, providing an attractive cost-saving advantage to in-house statement printing.

FDC Data Processing Facility.    The Broadband Division outsources to FDC the data processing and related computer services required for operation of its processing services. The CSG CCS/BP proprietary software is run in FDC’s facility to obtain the necessary mainframe computer capacity and other computer support services without making the substantial capital and infrastructure investments that would be necessary for the Company to provide these services internally. The Broadband Division’s clients are connected to the FDC facility through a combination of private and commercially-provided networks. The Company’s services agreement with FDC expires June 30, 2005, and is cancelable only for cause, as defined in the agreement. 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 processing center suffer an extended business interruption or outage. This plan is tested on an annual basis.

Client and Product Support.    The Broadband Division’s clients typically rely on the Company for ongoing support and training needs relating to the Broadband Division’s products. The Broadband Division has a multi-level support environment for its clients. In 2001, the Broadband Division established strategic business units (“SBUs”) to support the business, operational and functional requirements of each client. These dedicated account management teams help clients resolve strategic and business issues and are supported by the Broadband Division’s Product Support Center, which operates 24 hours a day, seven days a week. Clients call an 800 number and through an automated voice response unit, direct their calls to the specific product support personnel where their questions are answered. The Broadband Division has a full-time training staff and conducts ongoing training sessions both in the field and at its training facilities located in Denver, Colorado and Omaha, Nebraska.

Sales and Marketing.    The Broadband Division has organized its sales efforts within its SBUs, with senior level account managers who are responsible for new revenues and renewal of existing contracts within an account. The SBUs are supported by sales support personnel who are experienced in the various products and services that the Broadband Division provides.

Competition.    The market for customer care and billing systems in the converging telecommunications industries is highly competitive. The Broadband Division competes with both independent outsourced providers and in-house developers of customer management systems. The Company believes that the Broadband Division’s most significant competitors are DST Systems, Inc., Convergys Corporation, and in-house systems. Some of the

6

Broadband Division’s actual and potential competitors have substantially greater financial, marketing and technological resources than the Company.

The Company believes that the principal competitive factors for its Broadband Division include the functionality, scalability, flexibility and architecture of the CCS/BP system, the breadth and depth of pre-integrated product solutions, product quality, client service and support, quality of R&D efforts, and price.

The GSS Division

General Description.    The GSS Division consists of the Company’s stand-alone software products and related services, which includes the Kenan Business. Products and services from the GSS Division generated approximately 31%, 1%, and 0%, respectively, of the Company’s total revenues for the years ended December 31, 2002, 2001, and 2000. The GSS Division has more than 230 customers in more than 40 countries. Historically, the majority of the Kenan Business revenues have been generated from international operations. For 2002, approximately 79% of the GSS Division’s revenues were generated outside the U.S., and the Company expects that a similar percentage of the GSS Division’s revenues will be generated outside the U.S. in the foreseeable future. There are certain inherent risks associated with operating internationally. Such risks are described in this report in Exhibit 99.01, “Safe Harbor for Forward-Looking Statements Under the Private Securities Litigation Reform Act of 1995—Certain Cautionary Statements and Risk Factors”.

The GSS Division is a global provider of convergent billing and customer care software and services that enables telecommunications service providers to bill their customers for existing and next-generation services, including mobile, Internet, wireline, cable television, and satellite. The GSS Division’s revenues consist of software license and maintenance fees, and various professional and consulting services related to its software products (principally, implementation services).

Clients.    The GSS Division provides its products and services to the leading providers in the global telecommunications industry. Some of the Division’s 230+ clients include AT&T Wireless, BellSouth, Bharti Airtel, British Telecom, Cingular, eBay, Embratel, France Telecom, MobileOne, Singapore Telec, Telecom Italia, and Telefonica Data.

Products and Services.    The GSS Division’s primary product offerings include: (i) the Kenan Business software product suite, a core convergent billing platform, and its key components and modules, which include, among others, billing mediation, threshold servers, real-time rating engines, revenue settlement solutions and pre-paid/post-paid convergent billing solutions, aimed at helping telecommunication service providers manage their operations more effectively and efficiently; and (ii) professional services. The GSS Division’s professional services organizations provide a variety of consulting services, such as product implementation and customization, business consulting, project management and training services.

Client and Product Support.    The GSS Division has a multi-level support environment for its clients. Primary client support for the GSS Division is provided in three regions: (i) the Americas (North, South and Central America); (ii) Europe/Middle East/Africa (“EMEA”); and (iii) Asia Pacific (“APAC”). Regional account management teams are supported by a centralized customer support organization located in the U.S. and a product support center, which operates 24 hours a day, seven days a week.

Sales and Marketing.    The GSS Division’s primary method of distribution is through direct sales by employees assigned to these three regions. The principal sales office for each region are as follows: (i) the Americas (Denver and Miami); (ii) EMEA (London); and (iii) APAC (Singapore). In addition to the principal sales offices in each region, the GSS Division has various sales offices located throughout the world.

Competition.    The market for customer care management systems in the global telecommunications industries is highly competitive. The GSS Division competes with other providers of customer management

7

systems, and in-house developers of customer management systems. The Company believes that the GSS Division’s most significant competitors are Amdocs Corporation, ADC/Saville, Convergys Corporation, Portal Software, Inc., SchlumbergerSema, and in-house systems. Some of the GSS Division’s actual and potential competitors have substantially greater financial, marketing and technological resources than the Company.

The Company believes that the principal competitive factors for its GSS Division include the functionality, scalability, flexibility and architecture of the software products, the breadth and depth of pre-integrated product solutions, product quality, professional services capabilities, client service and support, quality of R&D efforts, and price.

Proprietary Rights and Licenses

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.

Historically, the vast majority of the Company’s revenue has come from domestic sources, limiting the need to develop a strong international intellectual property protection program. With the Kenan Business acquisition, the Company has clients using its products in more than 40 countries. As a result, the Company needs to continually assess whether there is any risk to its intellectual property rights in many countries throughout the world. Should these risks be improperly assessed or if for any reason should the Company’s right to develop, produce and distribute its products anywhere in the world be successfully challenged or be significantly curtailed, it could have a material impact on the Company’s financial condition and results of operations.

Research and Development

The Company’s product development efforts are focused on developing new products and improving existing products. The Company believes that the timely development of new applications and enhancements is essential to maintaining its competitive position in the marketplace. The Company’s development efforts for 2002 were focused primarily on:

The Company’s total R&D expense was $73.7 million, $52.2 million, and $42.3 million for the years ended December 31, 2002, 2001, and 2000, or 12.1%, 10.9%, and 10.6% of total revenues, respectively. The increase in R&D expenditures between 2002 and 2001 is due primarily to the inclusion of R&D for the various Kenan Business products since the closing of the acquisition on February 28, 2002. Since 1995, the Company has invested an average of 10-12% of its total revenues into R&D. The Company expects to spend a similar percentage of its total revenues on R&D in the future.

8

Employees

As of December 31, 2002, the Company had a total of 2,752 employees, an increase of 725 from December 31, 2001. The increase between these points in time relates primarily to the Kenan Business acquisition. The Company’s success is dependent upon its ability to attract and retain qualified employees. None of the Company’s U.S.-based employees are subject to a collective bargaining agreement. Certain non U.S.-based employees are covered under national or company-specific collective bargaining agreements. The Company believes that its relations with its employees are good.

Available Information

The Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act are available free of charge on the Company’s web-site at www.csgsystems.com. Additionally, these reports are available at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549 or on the SEC’s website at www.sec.gov. Information on the operation of the Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330.

Further information on the Company’s products, services and clients is available on the Company’s website at www.csgsystems.com.

Item 2.    Properties

As of December 31, 2002, the Company was operating from approximately 40 leased sites around the world, representing approximately 766,000 square feet under lease. This amount excludes approximately 213,000 square feet of leased space that has been abandoned by the Company, which the Company has subleased or is currently attempting to sublease.

North American Region (“NAR”).

The Company leases office facilities, totaling approximately 488,000 square feet in the following metropolitan areas within the U.S.: Cambridge, Massachusetts; Columbus, Ohio; Dallas, Texas; Denver, Colorado; Miami, Florida; New Providence, New Jersey; Omaha, Nebraska; and Washington, DC. The Company utilizes these office facilities primarily for: (i) corporate headquarters; (ii) client services, training and product support; (iii) sales and marketing activities; (iv) systems and programming activities; (v) R&D activities; (vi) professional services staff; and (vii) general and administrative functions. The leases for these office facilities expire in the years 2003 through 2010. The office facilities in Denver and Omaha are used by both the Broadband Division and the GSS Division, as well as for corporate functions, with the remaining office facilities used primarily by the GSS Division.

The Company leases statement production and mailing facilities, totaling approximately 172,000 square feet in Omaha, Nebraska and Wakulla County, Florida. The leases for these facilities expire in the years 2011 through 2013. These facilities are used by the Broadband Division.

The Company leases office space totaling 13,000 square feet in Toronto, Canada for its Canadian GSS Division operations. The lease for this facility expires in 2003.

Central and Latin America Region (“CALA”).

The Company leases office facilities, totaling approximately 9,000 square feet in Buenos Aires, Argentina; Rio de Janeiro and Campinas, Brazil; and Mexico City, Mexico. The Company utilizes these office facilities primarily for: (i) client services, training and product support; (ii) sales and marketing activities; (iii) professional

9

services staff; and (iv) general and administrative functions. These CALA office facilities support the GSS Division. The leases for these office facilities expire in the year 2003.

Europe, Middle East and Africa Region (“EMEA”).

The Company leases office facilities, totaling approximately 66,000 square feet in Brussels, Belgium; Paris, France; Munich, Germany; Rome, Italy; Madrid, Spain; and Slough, Berkshire and London, United Kingdom. The Company utilizes these office facilities primarily for: (i) client services, training and product support; (ii) sales and marketing activities; (iii) professional services staff; (iv) R&D activities; and (v) general and administrative functions. These EMEA office facilities support the GSS Division. The leases for these office facilities expire in the years 2003 through 2015.

Asia/Pacific Region (“APAC”).

The Company leases office facilities, totaling approximately 18,000 square feet in Sidney, Australia; Beijing, China; New Delhi, India; Tokyo, Japan; Seoul, Korea; and Singapore. The Company utilizes these office facilities primarily for: (i) client services, training and product support; (ii) sales and marketing activities; (iii) professional services staff; and (iv) general and administrative functions. These APAC office facilities support the GSS Division. The leases for these office facilities expire in the years 2003 through 2005.

The Company believes that its facilities are adequate for its current needs and that additional suitable space will be available as required. The Company also believes that it will be able to extend leases as they terminate at comparable rates. See Note 9 to the Company’s Consolidated Financial Statements for information regarding the Company’s obligations under its facility leases.

Item 3.    Legal Proceedings

The Company is currently in arbitration with its largest client, Comcast. Discussions of this matter can be found in “MD&A—Comcast and AT&T Broadband Business Relationship” included in this document and is incorporated herein by reference.

From time-to-time, the Company is involved in litigation relating to claims arising out of its operations in the normal course of business. In the opinion of the Company’s management, the Company is not presently a party to any other material pending or threatened legal proceedings.

Item 4.    Submission of Matters to a Vote of Security Holders

None.

Executive Officers of the Registrant

As of December 31, 2002, the executive officers of the Company were Neal C. Hansen (Chairman of the Board and Chief Executive Officer), John P. Pogge (President and Chief Operating Officer), Peter E. Kalan (Senior Vice President and Chief Financial Officer), Edward C. Nafus (President of the Company’s Broadband Services Division), and William E. Fisher (President of the Company’s Global Software Services Division). The Company has employment agreements with each of the executive officers. Information concerning such executive officers appears in the following paragraphs:

Mr. Hansen, 62, is a co-founder of the Company and has been the Chairman of the Board and Chief Executive Officer and a director of the Company since its inception in 1994. From 1991 until co-founding the Company, Mr. Hansen served as a consultant to several software companies, including FDC. From 1989 to 1991, Mr. Hansen was a General Partner in Hansen, Haddix and Associates, a partnership that provided advisory

10

management services to suppliers of software products and services. From 1983 to 1989, Mr. Hansen was Chairman and Chief Executive Officer of US WEST Applied Communications, Inc. and President of US WEST Data Systems Group. Mr. Hansen earned a BS in electrical engineering from the University of Nebraska.

Mr. Pogge, 49, joined the Company in 1995 and has served as President, Chief Operating Officer and a director of the Company since September 1997. Prior to that time, Mr. Pogge was an Executive Vice President of the Company and General Manager, Business Units. From 1992 to 1995, Mr. Pogge was Vice President, Corporate Development for US WEST, Inc. From 1987 to 1991, Mr. Pogge served as Vice President and General Counsel of Applied Communications, Inc. Mr. Pogge holds a J.D. degree from Creighton University School of Law and a BBA in Finance from the University of Houston.

Mr. Kalan, 43, joined the Company in January 1997 and was named Chief Financial Officer in October 2000. Prior to joining the Company, he was Chief Financial Officer at Bank One, Chicago, and he also held various other financial management positions with Bank One in Texas and Illinois from 1985 through 1996. Mr. Kalan holds a Bachelor of Arts degree in Business Administration from the University of Texas at Arlington.

Mr. Nafus, 62, joined the Company in August 1998 as Executive Vice President and was named President of the Company’s Broadband Services Division in January 2002. From 1992 to 1998, Mr. Nafus served as Executive Vice President of FDC and President of First Data International. Mr. Nafus was President of First Data Resources from 1989 to 1992 and Executive Vice President of First Data Resources from 1984 to 1989. During his 14-year tenure at First Data, Mr. Nafus held various other management positions. Mr. Nafus holds a Bachelor of Science degree in Mathematics from Jamestown College.

Mr. Fisher, 56, joined the Company in September 2001 as Executive Vice President and was named President of the Company’s Global Software Services Division in January 2002. Prior to joining the Company, Mr. Fisher was Chairman of plaNet Consulting, an e-business solutions and services group that the Company acquired in 2001. Prior to his association with plaNet, Mr. Fisher served as Chairman and Chief Executive Officer of Transaction Systems Architects, Inc. (“TSAI”), and served 14 years in numerous roles including President and Chief Executive Officer of ACI, which was acquired by TSAI. Mr. Fisher also served as President of First Data Resources’ government services division. Mr. Fisher holds a Bachelor’s degree in Management from Indiana State University and a Master’s degree in Business Administration from the University of Nebraska.

11

PART II

Item 5.    Market for Registrant’s Common Equity and Related Stockholder Matters

The Company’s Common Stock is listed on the Nasdaq National Market (“NASDAQ/NMS”) under the symbol “CSGS”. The following table sets forth, for the fiscal quarters indicated, the high and low sale prices of the Company’s Common Stock as reported by NASDAQ/NMS.

On March 24, 2003, the last sale price of the Company’s Common Stock as reported by NASDAQ/NMS was $9.85 per share. On January 31, 2003, the number of holders of record of Common Stock was 311.

Dividends

The Company has not declared or paid cash dividends on its Common Stock since its incorporation. The Company did, however, complete a 2-for-1 stock split, effected in the form of a stock dividend, in March 1999. The Company intends to retain any earnings to finance the growth and development of its business, and at this time, does not plan to pay cash dividends in the foreseeable future. The Company’s debt agreement contains certain restrictions on the payment of dividends. See Note 5 to the Company’s Consolidated Financial Statements for additional discussion of the Company’s debt agreement.

Equity Compensation Plan Information

The Equity Compensation Plan Information required in this section is included in Note 11 to the Company’s Consolidated Financial Statements in this document and is incorporated herein by reference.

12

Item 6.    Selected Financial Data

The following selected financial data have been derived from the audited financial statements of the Company. The selected financial data presented below should be read in conjunction with, and is qualified by reference to MD&A and the Company’s Consolidated Financial Statements. The information below is not necessarily indicative of the results of future operations.