Roger Metz – VP, IR Peter Kalan – President and CEO Randy Wiese – EVP and CFO

Tom Roderick – Thomas Weisel Peter Jacobson – Brean Murray Karl Keirstead – Kaufman Brothers Todd Rosenbluth – Standard & Poor's Ashwin Shirvaikar – Citigroup Scott Sutherland – Wedbush Morgan Securities Shaul Eyal – Oppenheimer & Company

Thank you, Michael, and thanks to everyone on the call for joining us. Today’s discussion will contain a number of forward-looking statements.

In particular, these will include statements regarding our projected financial results, our ability to meet our client’s needs through our products, services and performance and our ability to successfully integrate and manage, acquired businesses in order to achieve their expected strategic operating and financial goals. While these statements reflect our best current judgment, they are subject to risks and uncertainties that could cause our actual results to differ materially.

Please note that these forward-looking statements reflect our opinions only as of the date of this presentation and we undertake no obligation to revise or publicly release any revisions to these forward-looking statements in light of new information or future events. In addition to factors noted during this call, a more comprehensive discussion of our risk factors can be found in today’s press release as well as in our most recently filed 10-K and 10-Q which are all available in the Investor Relations section of our website.

With me today on the phone are Peter Kalan, Chief Executive Officer and Randy Wiese, Chief Financial Officer. Peter will begin.

Thank you, Roger, and thanks to all of you on the call today for joining us today. CSG continued to perform well on the recent third quarter, posting revenues of $118 million and net income of $0.40 per share.

We also generated strong cash flows and continue to execute on our plans to grow and diversify our business. Randy will share more details on our financial performance after I conclude.

Now we all know that the last two months, we’ve seen some of the most multiuse times and decades. Despite the economic and credit market term all-round us, CSG remains on very solid ground.

Our capital structure continues to provide us security, stability and investment options while other businesses might be constrained in current economic conditions. Additionally our clients have stable financial capital and business models that generally performed well in down economies.

History has shown that economic downturns have not resulted in any meaningful negative trends for the communication service providers in terms of customer losses. If nothing else consumers are inclined to keep or even increase their PayTV and information services when times get tough, as it is a relatively inexpensive entertainment option compared to going out to dinner and a movie, taking a vacation or other things that may get cut back in a tough economy.

Additionally the triple play bundle being offered by our clients is a very compelling product offering for consumers looking for ways to save on their monthly expenses. So, the historical strength of our clients businesses combined with our business model of delivering key business services under a recurring revenue business model creates visibility and consistency of results.

Our business model and strong client relationships have set the foundation of CSG’s financial stability thus far, and we see these client’s ties strengthening in the future as we become an even more and valued partner. We have established strong relationships with our clients, which were reflected in the 10-year of these relationships in the high contract renewal rates.

We have been very successful in recent quarters and renewing relationships with key clients and we are actively negotiating with DISH networks on a renewal of our credit contract which we expect to ramp up in the fourth quarter. We’ve talk to you in the past about the dramatically changing landscape that are largest vertical market, the cable in DBS providers face right now with increase complexity of services and deliver models and increasing competition from AT&A and Verizon.

The current economic conditions will only add to this list of challenges and our clients will need to continue looking for ways to deepen their customer relationships. Fortunately, CSG is well positioned to help our clients to work through these challenges and continue on with their growth strategies.

Many of the solutions that CSG offers come with measurable return on investment propositions because they help our clients to work smarter and more effectively. For example, our interactive messaging solutions, which we continue to deploy to our clients help deliver better customer service at a fraction of the cost of using customer service reps.

Our workforce management solutions including new GPS functionality ensure that our clients get the right employee to the right home at the right time, alleviating many of the inefficiencies generally associated with managing a large base of filed employees. Our Order Workflow to all helps our clients interface with customers in a fast and accurate manner, cutting down on call times in the call centers and reducing follow-up call for further information.

Our product catalog and offer management solutions make the process of getting the highest value service offerings built, identified, sold and deployed to consumers in an efficient manner. Our business services platform is designed to help our clients more efficiently sell to and manage their relationships with small and medium-size business customers an important growth vehicle for them going forward.

We recently launched our Intelligent Business Reporting platform designed to help service providers transform transactional data into meaningful business information across the enterprise. Our Print and Electronic Statement capabilities, which are integrated with our other customer interaction management and receivables management solutions ensure accurate and timely billing and cash collections to protect our client revenue streams and we have recently implemented full color statement technology that provide your clients with enhance marketing and messaging capabilities, so that they can better communicate with their customers.

These are just a few examples of the way CSG’s clients rely on us, as a trusted business partner each and everyday. To help them maximize the value and minimize the costs associated with each interaction they have with their customers both of these which are extremely important in today’s world.

In adding to our value is that our business model allows us to turn on these new capabilities and services for clients without high upfront capital cost or significant implementation fees, which helps to drive the financial benefits back into our clients operations very rapidly and with low risk. Finally, I’d like to update you on several other initiatives that we’ve been focusing on in recent months.

As I mentioned earlier, we are working with DISH Network’s on the renewal of their business relationship with us and we remain confident that the fourth quarter will bring an extension that this long tenured business relationship. We’ve also been working with clients and prospects to deploy our new capabilities and expand the reach of our current solutions.

We’ve recently received sign commitments from clients to bring over a $1 million new customer accounts onto our Advanced Convergent Platform. This is a result of our investment in the ACP solution and client seeing how the capabilities enhance their business operations.

These incremental new subscribers are from clients of all sizes and result from clients deciding to consolidate more of their existing business onto CSG solutions and also client requiring customer basis. We expect to see these customer accounts converted under our systems in the next 12-months to 18-months, but most importantly, we believe that this is a strong statement about the solutions and services that we deliver to the marketplace.

Along with expanding relationships with our existing clients, we are actively working on strategies to improve our client and the industry concentration. In the past, we derive virtually all of our revenue from the cable and DBS market.

During the second quarter of 2008, we generated approximately 12% of over revenue from industries outside of this core video market and during the third quarter, this improved to approximately 13%. While much of this diversification has been a direct result of our acquisitions, we fully expect to further our diversification organically going forward.

A great example of this is the Brink's Home Security contract we announced in late July, which brought over 670,000 new statements onto our output solutions platform and solidifies our position as a leading service provider to the home security market. We continue to use our solutions and services to develop relationships in new vertical markets and as we continue to invest in these types of solutions, we are targeting to further diversify our business.

We continued to invest in our products, as you’re seeing with our research and development spending and are very pleased with our progress, including greater focus on the modularization of our products to provide improved flexibility to run applications, independent of our core billing environment and to serve other industry verticals. Going forward, we will continue this focus and also invest in new and expanded capabilities, such as advancements in customer self care applications, which elevate the online experience for customers and we also planned to continue to explore ways to add customer intelligence and analytics capabilities that will provide detailed information about customers, so that our clients get the maximum value-added in marketing dollars.

We also view this information as being very important to our clients to use across their operations to enhance our customer’s or service. As you can see, though there is significant volatility in the world around us, CSG continues to deliver results for our clients and shareholders, with a solid balance sheet, with plenty of liquidity with which to make smart investments in our business, we have very strong relationship with our clients, the long-term contracts that provide visibility to our business and a broad portfolio of products that our clients want and need to better navigate their ever changing market environments.

Overall, we are well positioned for the coming periods and we like our opportunities. We appreciate your continued support of CSG especially in light of what’s going on in the world around us and look forward to having the opportunity to continue delivering results for our clients and shareholders alike.

With that, I’ll turn it over to Randy to walk through our financial performance and outlook.

Thank you, Peter, and welcome to all of you on the call today. I’m happy to share with you the financial results for our third quarter 2008, as well as our outlook for the remainder of the year.

Total revenues for the third quarter were $118 million; this represents an increase of 10% when compared to $107.6 million for the same period in 2007 and up sequentially when compared to $116.9 million for the second quarter of 2008. Our year-to-date revenues for 2008 were $348.4 million, an increase of 14% over the same period in 2007.

These results are reflective of the success we are seeing in our planned to growth top-line revenues and achieve market diversification through both acquisition and organic growth means. Comcast continues as our largest client comprising approximately 26% of our total revenues for the third quarter compared to 27% for the second quarter.

DISH Network continues as our second largest client and represented in approximately 18% of our total revenues for the quarter consistent with that over the second quarter. We finished the quarter with $45.4 million subscriber accounts on our processing systems, which was consistent with a previous quarter.

Income from continuing operations for the quarter was $13.4 million or $0.40 per diluted share. This compares to $0.39 per diluted share for the same period last year and $0.40 per share for the second quarter of 2008.

The operating margin percentage for the third quarter came at approximately 18% down from 19% for the second quarter as we expected, however we performed better than the 17% we have anticipated in our previous guidance, primarily as a result of good cost management during the quarter. Our effective income tax rate for the third quarter was 34% slightly better than our previous expectations with the improvement due to the recognition of higher than expected income tax benefit during the quarter realizing conjunction with the filing of our 2007 tax return during the quarter.

The financial results for CSG includes several non-cash charges related to depreciation, amortization and stock based compensation. These non-cash charges for the second quarter totaled $10.3 million or approximately $0.20 per share.

As anticipated this is down from $12.2 million for the second quarter primarily as a result of the decrease in the Comcast, client contract amortization due to the change in the life of the intangible asset as a result of the contract extension with Comcast this quarter. Turning to the balance sheet as of September 30, cash and short-term investments totaled $165 million up approximately $17 million from last quarter.

Our net billed trade accounts receivable totaled $118 million up approximately $2 million from the previous quarter with the increase related to normal timing. We are not experiencing any negative payment trends with our clients as a result of the current economic downturn our country is experiencing.

Our days build outstanding for the third quarter remained very good at 55 days this measure has been consistent across the last several quarters. Cash flows from operations for the third quarter were $27.6 million a decrease of approximately $20 million over the second quarter.

As you may recall the second quarter’s cash flows were positively impacted by the decrease in accounts receivable primarily as a result the clients delayed first quarter payment that resulted in the payment of four monthly invoices by this client in the second quarter, thus the current quarter’s cash flow measure is a more reflective of a normal quarter. Our cash flows from operations continue to be very strong.

We have not repurchased any shares through our stock repurchase program during the current quarter. Before I get to our financial guidance for the remainder of the year, I though it would be good to expand on some of the comments Peter mentioned earlier and take a bit more detailed look at how CSG stands up in this difficult economic times and volatile financial markets.

We believe this financial strength at CSG and of the key clients and markets we serve puts us in a solid position to deal with the current economic conditions in our country. CSG’s financial strength is a result of our strong operating model and sound capital structure.

Our strong operating model has the following key characteristics which are even more attractive in tough economic times. First, we have the benefit of long-term service contracts which generally range in length of term of three to five years.

Our business model provides a recurring profitable and predictable source of revenues and cash flows on an annual basis. As a result as we have stated in the past we generally enter any given year with greater than 90% visibility for expected revenues and cash flows for that year.

This type of revenue visibility into our business also allows us to plan and manage our operating cost structure accordingly. All businesses will be impacted by the current economic downturn in some manner, including CSG.

However, we believe our recurring revenue model ROI prove a new product rollouts that were outlined by Peter early in his comments and our strong focus on controlling costs, will helps us navigate through these difficult economic times without a significant impact to our business. Second, as a result of our continued focus on delivering superior products and services to our clients, we had developed strong business relationships with our clients.

These strong business relationships allow us to continually show value to our clients and help them solve their business problems. In particular, we believe our products help our clients to operate more efficiently and cost effectively and at a very competitive price point, which will be even more important now than never during these difficult economic times.

In addition, to ensure we continue to evolve with our clients needs. We invest the large portion of our revenues back into R&D each year.

During 2008, our R&D spend is expected to be in excess of 14% of our revenues and the last point I’d like to make on this topic, the strong business relationships we have developed with our clients are evidenced by the continued successes, we have in contract renewal time. Our contract renewal rate is extremely high in fact we have not lost a major client as part of our renewal event.

With the exception of the DISH Network contract, Peter mentioned earlier, which we are actively negotiating at this time and expect to get ramped up in the fourth quarter. CSG has not faced any large contract renewals again for several years.

In addition to our strong operating model, CSG also has a sound capital structure that has the following key characteristics that are vitally important in these difficult economic conditions. First, we have a $165 million of cash and short-term investments as at the end of the quarter.

These funds are held in safe and highly liquid investments with major financial institutions in the USA that we believe are financially solid. In addition, as I mentioned earlier, we generated a significant amount cash flows from operation on a predictable and recurring basis.

So our operations are significantly additive to our cash balances. To illustrate at this point, our cash flows from operations for the first nine months of 2008, were approximately $96 million.

Second, we have a large un-drawn revolving credit facility that is also available to us as an additional source of liquidity if needed, and the last point on this topic, our current debt structure is sound, our overall debt leverage ratio is relatively low. As of the end of the third quarter, we had $230 million in contingent convertible debt outstanding, which matures in the year 2024.

Considering our current cash balance of $165 million, our net debt position will be $65 million as of the end of the quarter. The coupon interest rate on our debt is 2.5%.

So the annual debt service cost is only $6 million. In addition this debt and instrument provide us a significant tax deferred advantage as we are allowing 9% interest expense reduction for tax purpose even though the coupon rate is 2.5%.

There is no near-term schedule repayment event for this debt as the first schedule protocol option for reduction of these securities is in June 2011. All those of our debt can convert in anytime after CSG’s common stock trades enterprise in excess of $34.80 for a set period of time.

In summary CSG is a strong company financially. Our business model provides a recurring source of profitable revenues and cash flows.

This business model provides CSG with sufficient liquidity and capital resources to not only whether these difficult times, but also keeps us well positioned to fund the future growth of the company as well. Next, I would like to provide you with an update to our financial expectations for reminder of the year.

Overall, our expectations are generally consistent with our previous guidance. Revenues are expected to range between $470 million and $472 million, which represents an increase in revenue approximately 12% for 2008, when compared to 2007.

As I mentioned earlier we continue to execute on our plan to grow revenues and diversify our business. This guidance does represent the slight reduction and the high end of the range of our previous revenue guidance, which is reflective of the current economic conditions we all face.

As you would expect we are seeing clients scrutinize some of the discretionary spending such as marketing activities and the timing of rollout of new products. However, as I mentioned earlier our strong business model with predictable recurring revenue sources minimizes the impact of the pressures from the slowing economy for CSG, and will help us navigate through this difficult economic times without a significant impact to our business.

We expect our earnings for 2008 to range between $1.64 and $1.66 per diluted share, which reflects an operating margin expectation of approximately 18.5% for the full year 2008. Also these earnings measures are slightly better than our previous expectation as a result and greater emphasis on cost management over the last six months of 2008 in response to the downturn economy.

This EPS guidance represents growth of approximately 10% over 2007 EPS, which reflects both strong operational results and effective management of our capital resources in the form of stock buybacks during 2007. Over the years we have proven to be good stewards of the business in both good times and bad and you should expect the same from us going forward.

We expect our full year effective income tax rate to be approximately 35%, which is at the bottom end of our previous range. With the slight improvement related to higher R&D tax credits in the fourth quarter than previously anticipated.

We expect our cash flow from operations to range between approximately $118 million and $120 million, which represents a tightening of the previous range. This assumes there is no significant net impact related to unexpected fluctuations and working capital items for the remainder of the year.

At this time we expect our capital expenditures for 2008 to come in approximately $25 million, which is towards the high-end of our previous range of expectations. We expect the total of our non-cash items and depreciation, amortization and stock based compensation to be approximately $44 million.

We do not assume any stock repurchases in our guidance. We will continually evaluate the best use of our capital through the remainder of 2008, which may or may not include additional share repurchases.

In summary we have another solid quarter. Our operating model and capital structure provides us the necessary stability and the financial strength to operate our business during these tough economic times.

We are committed to and focused on continue to grow the revenues and profitability of our company and creating value for both our customers and our investors. We look forward to reporting on our year-end results in January.

I will now turn it over to the moderator for questions.

Hi, guys thanks and good afternoon. Peter you had briefly touched upon by $1 million subscribers you expect coming onto the ACP platform here on the next year, can you give a little bit more granularity, where are these share gains coming from, and how do they sort of impact the way you think about organic growth in the year 2009?

Thanks.

Well, Tom, I am not a liberty to disclose which clients thus are for and where they are coming from, but they are coming from competitors' platforms. I would tell you that bulk of that the subscribers are driven by clients who are consolidating their business operations from competitors systems at least parts of their business of competitors systems and ours and as I mentioned in my comments, we think is a strong statement and testimony to our client view our solutions, but we feel very confident that by having more of our client subscribers on us that our business solutions will help them run new business more efficiently and then we will also be able to sell some of our ancillary additional products to drive them some more.

From the, what’s the organic growth rate any time that we add subscribers it’s added to us. The timing of how those subs come on is going to have an impact, because we have do migration efforts and bring those subs over and speaking for Randy, and he can chime in, since we haven’t given specific guidance for 2009 yet, we’re reticent to say anything more about how this if we change any of those kind of previous high level targets that Randy’s laid out.

Randy you got anything to add there?

I think you said it very well Peter.

Well, I tried.

One last question for me, just in terms of talking to your customers and thinking about the pace of some of their transformation projects in the way that they’re building their business; as we look at the Telco businesses and talking about and hearing them slowing down their CapEx, are you hearing the same thing from your cable customers and is this building into your plans for next year or do your customers use it as a chance to gain more share from the life of the Telcos and the wireline side?

Well, I think it’s a very interesting dichotomy of what’s going on in the marketplace. In a down economy, everybody wants to watch their spending and I think we see that cautious spending starting to rise in any of the communication service providers including the cable and DBS, but at the same time.

The competition will only accelerate and probably be accentuated during this time and so certain projects we think will continue to be pushed and we’re hope will be pushed whether it’d be marketing, whether it’d be some of the ancillary services that enhance customer service, but we don’t know for assurance how we see to help things play out, but because our products don’t have large lead times to deploy large capital that has to be deployed. In general it can be flipped on fairly quickly relative to big kind of implementation projects that other software solution providers have, we think we can be there ready to serve when their needs arise and we continue to pitch those capabilities and expanding our capabilities as part of our core business and we don’t see this as a time for us to back-off necessarily.

Randy, do you want to comment any as we think about 2009 around this?

Say for 2009, as Peter mentioned earlier, we haven’t provided any guidance. I provided some high level targets back in July to help people kind of understand the impacts of the most recent client renewals on two of our large contracts, but I would say if I look at 2009, I look at some positive factors to consider in our business and then some that are not so positive.

On the positive side, as we mentioned earlier, we do have some additional subs coming on over the year, a very positive factor for us. We have additional businesses acquired over the last 18-months that provide us additional service opportunities in cross selling our services.

So that’s a very positive factor for us, and also we additionally rolled out new products, our business services platform, our order management and our PC. So we have a good group of products, so I look at some positive factors as I look at our 2009 outlook, but then you got overlay that with the macroeconomic concerns about the economy and I think the biggest concern that I think that it raises to CSG is whether or not we see some cutbacks and some discretionary spending from our clients which was probably mainly around some marketing activities, as Peter mentioned.

So, I think there’s a lot of positive factors going into 2009 to consider for CSG, but we also have to consider the macroeconomic factors that are going on as well.

And Tom some of the variable discretionary expenditure that our client may have, the good part is that those parts of our business also have variable expenses so that we don’t have a significant risk to the bottom line of how these play out, so…

Yes, I think the other thing to mention and I mentioned several times in my comments is you look at CSG going into 2009, the recurring revenue model is a theme that we continue to explain the people that as we head into the year a large percentage of our revenues we usually refer to greater than 90%, are basic under contract and really not subject to a lot risk and the remaining portion of our revenues have some degree of discretion around them, but it’s a very small portion of our revenue. Certainly, we can’t predict what’s going to happen, but again the macroeconomic factors are something to consider and as Peter mentioned the nature of those revenues have a very direct correlation to the variable cost, so if the revenue’s coming sort you can manage down cost very well.

So, I think we feel pretty optimistic going to 2009 in light of the economic environment.

Got it. Thanks very much.

Thanks, Tom.

Thanks. So with respect to 2009, is it fair to say that your growth targets are unchanged from the last conference call?

I would say that the growth targets for 2009 that I provided back in July, I think there is still a reasonable estimation of what we can do right now. Again I would predicate that on the some of the other comments that I mentioned.

We are still going through our planning for 2009. The full impacts of the economy on our business is not fully determined yet so I think its difficult to be definitive on that, but as of now I’d say it’s still a reasonable estimate for the company to target those for 2009.

Okay, and can you just describe a little bit your methodology for forecasting the number of subscribers that are going to be processed on the CSG System for upcoming quarters, particularly relative to, not specifically but sort of general thought process and methodology associated with your larger customers.

Sure, we do a couple of different things one is history is the best indicator of the future if you look at the last couple of quarters and you look at the trends of what’s going on in the environment and the subscriber base of many of our larger clients which are most of those are publicly traded. You can see that their subscriber base is relative flat to slightly declining, so it’s not real difficult to predict out four quarters or five quarter as to what our expectations are.

I guess Peter the other thing that’s important to recognize about our businesses. We’ve continued to drive incremental ancillary products that we can deliver to our customers.

This has become much more than a organic subscriber growth or market share growth business and it’s one that by continuing to add to our suite of interactions management that we do have on behalf of our clients drives incremental revenue as well and I think the traditional model of where we were probably five or six years ago where organic sub growth was the one of the more dramatic foretelling aspects of the business is no longer relevant.

Yes I think that’s a good point Peter. As I mentioned you see some of the basic subscriber levels of our clients staying relative flat, but they’ve had a great success in their RGU growth and RGU growth generally for us means additional services that our clients provide for us.

Even though sub base is relatively flat there is a generous amount of revenue from that RGU growth.

Okay, very good that’s all I have. Thank you very much.

Thanks Peter.

Yes hi, good afternoon, a couple of questions. The first on the EPS guidance revision for 2008; I’m wondering Randy if you could just confirm that the upward guidance revision has nothing to do with the intangible asset amortization change given the Comcast renewal, but that was already baked into your prior guidance so that this change is entirely due to other factors and I guess part two of this is if you could just offer a little bit more color on what cost management efforts you made to enable your to boost the EPS as much you are?

Thank you.

Sure, first one Karl the answer is that all the amortization change related to the Comcast contract has been in my guidance all years so there has been no change at all during my guidance throughout the year for that. I think the math is pretty easy if you look at the improvement in the EPS.

Our overall operating margin for the year went from 18 to 18.5 and that half a percentage point is worth about $0.05 of share, so if you do the math you can see it’s really the improvement in the operations which has nothing to do with the amortization. Okay The second part, if you look at where we had some good cost controls for the quarter is you focus on your biggest expense items obviously when you do that; our employee base, our cost and wages is the biggest; so, we did a pretty good job managing our headcount levels during the current quarter and I think you look at some of the other things that people do in this situation which is control your travel cost, control you seminar cost, control those areas in which you can differ caution in one or two quarters, maybe you buy some equipment one or two quarters later; so it’s really just been very prudent in your management of business without a detriment to the business itself.

Okay great and then just a follow-up to that; in terms of ’09 you’ve answered the question around whether you feel comfortable with that 4% target by saying it’s still reasonable although early and just to be perfectly clear, you also indicated if I’m not mistaken that you felt comfortable with the rough target range of 17% to 18% operating margins in ’09? Do you still feel that that margin range is reasonable?

I still it’s a reasonable target with the caveat of two things; one is, there is no significant change to our business such as their large acquisition or something of their nature and also again predicate on the fact of the economic conditions, the environment that we’re operating, but again as a reasonable basis going into the year, it’s a good target for us to focus on.

Karl, as Randy and I both commented earlier typically, if there is any economic weakness that affects our business, we’ve shown ourselves to be prudent managers and would look to try to manage to the optimum levels for both our shareholders and clients and employees so.

If you look at the somewhat implicit guidance that would be in our four quarter based on our full-year guidance, you will see that will be in the 17% to 17.5% operating margins range as an actual rate gone into 2009. So, we would be, probably gravitating towards more to the bottom end of that 17% to 18% range Karl.

Okay. Great, if I might sneak in one more, it look like your CapEx in the third quarter bumped up a little bit to somewhere close to $10 million and I think you’ve admitted that your full-year CapEx is going to come out at the high-end.

I just wondering, if you might offer a little bit of color on what went on in the third quarter to cause that.

Absolutely, it actually some of the comments that Peter mentioned in his statement as well as message we delivered back in July; is that where we’re get into the full color printing capabilities. We brought several machines or some equipment at the end of the Q2, but we bought a lot that equipment in the third quarters.

So, a very large percentage of that $10 million relate to color printing capabilities Karl.

Just real briefly, if you could touch a little bit more on the gross margin and the impact either the acquisition that were made and that were seeing more of a calendar effect in the second half of the year or the contract renewal, which is those two percentage is more really having an impact on the sequential in lower gross margin?

You’re talking about the gross margin on going from 48.1 to 46.7 in the second quarter, correct?

Correct.

Yes, a couple of things. I would first point you to look at the overall change in our operating margin; it went from 18.7% to 17.9% and look at the factors there and then we can see how those relate to the gross margin.

If you look at the change in the operating margin, there is two primary pieces; one is Q3 was a full-quarter in which DataProse was included that had a slight dilution to the operating margin and also we have our employee wage increases that take place in the second quarter in August, so those two combined are major portion of the decrease. If you look at the gross margin, a large percentage of DataProse’s expenses are in cost of goods sold.

So, those are the downward pressure point on the gross margin and also a big component of the cost and cost of goods sold our wages as well. I think the other thing if you look at, the operating margin you would have see deprecation jump up a little bit this quarter and that relates to the statement I just mentioned to Karl is that we bought some equipment towards the end of the second quarter and the third quarter, which is the other factor.

Okay and then on the other hand, the cash balance of about $165 million or nearly four bucks a share, is that a level you’re comfortable with in this economic environment, might could there be cash usage for acquisitions or you just wanted to see how the macro environment plays out?

Well I love having $165 million of cash in the bank, but I don’t think we’re here to sit on the cash; we’re looking to deploy it through many different ways. We’re going to be very prudent, because of the economic times, but we’re still looking to grow the company.

We’re looking for opportunities for acquisitions. We’re looking for opportunities to deploy capital, maybe back through stock repurchases.

So it’s good to have a large cash balance, its good to have a business that’s throws off a lot of cash, but we’re now looking to sit on our hands here during these times, we’re looking to grow the company.

Okay thank you.

Thanks Todd.

Guys, congratulations on the quarter.

Thanks, Ashwin.

I’ve always liked the Peter and Randy show.

I don’t know what to think about that.

I know this got asked, but just to confirm the incremental $1 million subs, that wasn’t in your 2009 guideline back in July, so the offset, is your caution due to the environment?

First I’ll say Ashwin, that this was not something we typically don’t try to project out market share wins, and this is clearly a market share win and so we are more cautious of trying to project out wins that are somewhere at the discretion and timing of our clients agreeing to do that. Randy from the financial side do you want to …

I would just say, what I said earlier that is there is many positive and negative factor that go into consideration to 2009, that’s clearly is a positive factor. As Peter mentioned, though they are coming over 12 months to 18 months, so we will not get the full benefit these subscribers during 2009, so they’ll come on ratably throughout the year maybe some of those were actually back ended into 2009, so I guess that’s…

Yes, and that as we didn’t expect that or know that we’ve had that for 2009, but as you said Ashwin we don’t know how the full economic factors are going to play out to us and with the timing of these subs over a period of time we’re going to remain optimistic, but at the same time cautious as we look at 2009 as we kind of come to the year-end of 2009.

I can’t be too careful now, so let me just ask where your $165 million is invested?

I mentioned it earlier, most of it’s I’d probably say 95% of it is in investment for the AAA rated or higher some commercial paper, some money market, accounts and overnight investments, very low risk, highly liquid.

And you’ve not had any kind of trouble and hiccups in placing that commercial paper?

We’ve had no problems, our treasurer who is sitting near Roger Metz can chime if he likes, but he keeps in close contact with our financial institutions and we feel pretty comfortable where we are.

We’re very lucky to have good people working that money for us Ashwin and for instance last year, when there were issues with auction rate securities. They were smart enough to get as out of the couple of those that we had well before it hit the headlines of the Wall Street Journal so, we’re very lucky there.

Once you assign DISH, you won’t have like you said any major contract up for renewal for several years, in this kind of an environment what should we, I’m talking beyond even 2009, it’s a longer-term. What should we expect with regards to your margin structure being, can you get back your historical margin levels of a couple of years-ago?

Ashwin just to make sure we understand your question is, once we have all our clients under contract in any type of adjustments they come through those renegotiations. Where do we think we can drive margins to…

Yes, can you get back basically the margin that level a couple years back?

I think Ashwin, it’s going to be difficult to get back to the margin level of couple years-ago we were probably in a low 20’s. I think in today’s environment, it is very competitive it’d be difficult for us to get back to that level.

I think we mentioned this on the last couple of calls that we’re going to be at an actual rate of 17% for Q4 of ’08, but it is not a realistic for us to target it a couple hundred basis points improvements over the next three to four years.

So, you can do a couple of hundred, you can head in that direction, but you won’t get the 20?

I think it will be difficult, I’d love to get there and we’re also going through a period of time, in which we’re growing the company through acquisitions, and I think the acquisitions just because of nature in which they come in with the amortization so forth, I think it will be difficult to get back in the low-20s.

Okay and on DISH specifically, to the extent you can answer this question. How are you looking at, what you might offer them in the term for renewal and obviously it was different situation a few years back, when DISH was actually growing quite fast, you could anticipate that volume growth and give them a discount, but now they’re not really growing that fast, so how do you think with that?

I would kind of frame, how we think about our negotiations with DISH in this way that their business continues to evolve, they are looking to do some things in their business that we want to be a part of and which will cost us to continue to invest in the platforms that support them and so, I think you should expect us to be really summoning a relationship that’s go into to kind of show a real partnership going forward. I don’t want to get into, what we think is going to happen into economics of that contract, if I think that right now, we feel pretty confident that we start some early guidelines out of where we thought we’ve been when we even Randy said guidance and we feel pretty confident.

We’re tracking in a general direction of that and so if we can meet the expectations that we internally set and really end up with a structure that provides a good system solutions set for EchoStar for the coming years that’s huge win-win for us and if it really somewhat the tenure of this relationship, we think that will be a win-win for us.

Okay and my last question are on the new business, the non-cable business. Can you break that out into sort of how much is more stable processing versus discretionary?

Well, I guess it goes into what is discretionary versus what is more stable if it presentment of customer invoices, that go out to consumers another verticals whether at some security financial institutions and so forth, it said that was very kind of stable business, it’s not likely to go away, if you say its doing collection management services, appointment management services, surveys fraud notifications anything like. You stated that’s discretionary, but at the same time, I think our businesses is that we support view those as being core and critical of how they run their business.

We do have some business such around some marketing services and around some non-profit businesses those to be subject to kind of discretionary, because in the nature of how consumers are behaving. So, I can’t give you specific percentages because we don’t look at the business that way, but I would tell you that overall we think most of that business is pretty sticky even though it doesn’t have some of the core assets that we use in the cable and DBS space.

First question I had yet for you guys is on, the 34% tax you had this quarter, is this something expect Q4 and going forward to 2009 or any changes there?

No, I think if you look at my guidance for the full-year Scott, I think it would equate to about a 33% tax rate in the fourth quarter and that’s really down from our normal run rate mainly because the R&D tax credit bill is passed by congress in October. So, we’re able to bring the R&D credits through, I’d say on normalized basis going forward into 2009, you should look at something that is generally in the range of 35% to 37%.

Okay, great DataProse and Prairie you didn’t have, you only had a part of the quarter in Q3 of ’07 matched with the others numbers, but DataProse how much was that in the quarter?

Well we haven’t disclosed the specific amounts of those businesses after we acquired them, I think we provided some general guidance early on as the size of those businesses, but we haven’t reported specifically those subsequent to the acquisition and it’s not really our attention to do so Scott.

Would you just say, performed inline with expectations and we…

They’re generally performing inline with our expectations yes.

Last question, I had is kind of a follow on Ashwin’s question there. You know with DataProse, Commtech, you are on bill printing and presentment business, obviously it seems like its becoming a fairly decent part of your business in more than 10% and maybe close to 10%.

Can you talk about maybe how material it is to the business, a little more detail on the margin structure and how that’s growing compared to the rest of the business?

First of all Scott from the perspective of the presentment business where there is paper electronic, when you produce 70 million statements month on behalf of our client, so we’re talking of hundreds a millions of year. I guess if did my math, I’d say $840 million, you’d say that’s a pretty piece of size piece of our business, but I think what’s important is that business is really not just standalone by itself because there are things that, we’ve done to tie the business in with how mail is traced through the postal systems and then it’s reported back to the customer service reps were payments cycles are.

It’s tied into how you do collection management through interactive voice messaging; it’s tied into the marketing services that can go into the bill. It’s tied into the web when you do presentment of the statement then how you do up sale selling or how do you customer services and so.

The business is really very interrelated and we believe that as we’ve been able to expand that platform of kind of print relationships and E-bill relationships that we can now bring more of these other capabilities to it and we’ve really look at this very holistically as a business. The acquisitions that we’ve done have been in general, their histories has been that they have growing faster than what our traditional business had been growing and in many cases some of those acquisitions were double-digit growth, but on a much smaller revenue base and what we’ve seen before.

So overall, Scott it was that it has some maybe faster growth models for us, but probably the greatest value is this how do we start tying these capabilities together to this new group of client, so that they get extended more and more for obviously the products from CSG.

The second part to your question Scott, is kind of what kind of margin that we realize on this type of business and I’d say, there is really no disparity between the Print and Mail capability of the company and rest of the general core processing business, they are very comparable margins.

It’s last question; you might have the kind of the same answer for this last question. You gave as a metric on non-traditional verticals I think its 12% moving to 13% of your revenue.

How about non-traditional products, I mean you have been worked for management, you have moved into managing the workers and the advertising in marketing in this print billing. How much would you say is non-traditional products from what the CSG was a few years ago now?

I probably won’t satisfy you on this answers but the business has been evolving really since 1997, when I joined the business and probably before we started doing E-bill presentment which was something very different in the paper billing in the AR management side. We came out with workforce in probably 1999 to 2000 and that these are the capabilities that we’ve been out there and we bundled so much of this together, that is really does drive kind of a broad relationship and we don’t look at it as, these are non-traditional products.

We’ve done some acquisitions recently, which are truly something incrementally new to us in the last 12-months to 15-months, but I’d say, those are pretty identifiable based on what we did from the acquisitions, but so much of other capabilities have been part and partial to what we’ve been doing for sometime. It’s very difficult for us to try to carve that out.

Couple of quick questions, the credit facility is that Randy mention during his remarks, what you guys keep it what who is the provider? What’s the bank or banks that provide us credit facility.

Are you talking about the revolving credit facility..

Yes.

There is indication of I think approximately six banks and they all have a different degree of commitment to the…

None of them had any financial issue as of late, I would imagine..

There is one in there that’s a small percentage of the overall, it’s a $100 million revolver there is a potential of about 10% of that which may difficult to drawn on, but again a it still would leave about $90 million but we are very confident that we can drawn and we have drawn of revolver ever since I have been at CSG, so its kind of a safety net for us.

Back into summary in July you got some extended your contract of that you Comcast back I believe in late September one of your major competitors was awarded a different contract by Comcast. Were you guys bidding for the second contract as well or what’s it kind of Comcast it setting to award the initial part to extend part with you and then award Amdocs the second part of it or different part of it..

I think Shaul as you look at how the Comcast business divided up between CSG and Amdocs we do about 60% of the subscriber in defined set of markets and Amdocs is doing the other, 35% to 40% is the rough estimate of the customers and our applications today do not cross over top of each other and as Amdocs I think as set forth with their relationship with Comcast is to during the process of displacing their existing assets that are deployed at Comcast the business they bought from DST end of thus was their latest solution set. They have been working on this to get this done I think over the last three year to get their new solution out there and we have been waiting for this to happen because they made a significant investment in buying at business from DST, as well as investing in the new platform that we are looking to bring forward.

So, as much as we had already upgraded our solution set to Comcast over the last few years we see Amdocs doing this on their share of the business of they support. We are excited to see that Comcast continues to embrace the products that we deliver and whether it be color statement services or some of the additional products that we set forth in my comments earlier and what we reported in previous quarters and we think we have a very fruitful and valuable relationship with Comcast and we are compete in that space against Amdocs.

Peter more of the maybe personal question to you. You’ve been with CSG for the past many years.

You have been around I think you have seen the tech crisis of the bubble burst of 2001, 2002 maybe at that time fair to say it was more maybe capacity, flash technology driven. From your own perspective and view, what’s kind of the difference that you think right now the marketplace between ’01, ’02 and 2008 as we go into 2009.

I would say probably the biggest thing in the communication space that I view as different than in other times then we’ve had economic changes and the kind of the that the impact from the stock market and any type of economic changes is that there is a level of competition that never existed before and I think that level of competition for consumers small business account will cause providers to have to make sure that they don’t under invest during these times. Doesn’t means they won’t have to be prudent and rational in how they rollout projects and how much money they deployed to different areas but that competition I don’t think they sit back and especially with well funded competitors and again sit back and just they (inaudible) go through this economic time.

We have to see that bear out but I don’t know if I have seen the competition in the communication space as broadly beyond what we have seen in past on the wireless side, but you haven’t seen it as broadly on the wire line data and video services as what we’re seeing today, and we think as provider in the marketplace that’s good for consumers, it good for services providers and its good for companies like CSG.

Thank you very much good quarter.

Thank you, Shaul.

In closing, I want to thank all our investors those on the call and those who may happen to listen on the replay, our clients, who we work tirelessly for to make sure that we can help run their business as well as our employees who just do a phenomenal job everyday to make sure that our clients can run their business at a level and at level of professionalism to their and consumers and advance their business and we really look forward to sharing our future success with you because we are excited about where we sit. We’ll talk to you next quarter.