Investor Information

West Corporation Reports Third Quarter 2006 Results

Oct 16, 2006

OMAHA, Neb., Oct 16, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- West Corporation (Nasdaq: WSTC), a leading provider of outsourced communication solutions, today announced its third quarter 2006 results.

    Financial Summary (unaudited)
    (In millions, except per share amounts and percentages)

                      Three Months Ended         Nine Months Ended
                         September 30,             September 30,
                                       Percent                    Percent
                       2006      2005   Change   2006      2005    Change
    Revenue           $473.2    $389.8   21.4% $1,359.7  $1,119.2   21.5%
    Operating income   $83.2     $68.7   21.2%   $231.1    $193.8   19.2%
    Net income         $42.9     $37.8   13.5%   $121.7    $108.8   11.9%
    Earnings per share
     (basic)           $0.61     $0.55   10.9%    $1.73     $1.58    9.5%
    Earnings per share
     (diluted)         $0.59     $0.53   11.3%    $1.67     $1.53    9.2%

"We are pleased to report continued growth for the third quarter," said Thomas B. Barker, Chief Executive Officer of West Corporation. "Our organic growth continues to be in line with our expectations and the integrations of our recent acquisitions are progressing well."

Consolidated Operating Results

For the third quarter ended September 30, 2006, revenues were $473.2 million compared to $389.8 million for the same quarter last year, an increase of 21.4%. Revenue from acquired entities(1) accounted for $59.7 million of this increase. Operating income for the third quarter was $83.2 million, an increase of 21.2%, versus $68.7 million in the third quarter of 2005. Net income was $42.9 million, up 13.5% compared to $37.8 million in the same quarter last year. Diluted earnings per share were $0.59 versus $0.53 in the same period of 2005.

The company reported consolidated operating margin of 17.6% in the third quarter of 2006, the same as that of the comparable quarter last year.

Balance Sheet and Liquidity

At September 30, 2006, West Corporation had cash and cash equivalents totaling $26.3 million and working capital of $118.1 million. Net cash flows from operating activities were $71.7 million for the third quarter. Depreciation expense was $25.0 million for the quarter and amortization expense was $10.8 million for the quarter. Quarterly adjusted EBITDA(2) was $123.5 million. Interest expense was $12.6 million for the third quarter of 2006, an increase of $7.9 million over the third quarter of 2005 due to the debt incurred to fund the Intrado and Raindance acquisitions.

At September 30, 2006, borrowings under the revolving credit facility totaled $665.0 million. The effective variable interest rate on the credit facility for the three months ended September 30, 2006 was approximately 6.2 percent.

"During the quarter, we invested $17.2 million in capital expenditures for equipment and infrastructure and to expand facilities domestically," stated Paul Mendlik, Chief Financial Officer of West Corporation, "Additionally, we purchased a building for $30.5 million which had previously been subject to a synthetic lease. We added approximately 150 workstations during the quarter, bringing our overall capacity to approximately 20,200 workstations."

Proposed Recapitalization

On May 31, 2006, West Corporation entered into a definitive agreement to recapitalize the Company in a transaction sponsored by an investor group led by Thomas H. Lee Partners and Quadrangle Group LLC.

Definitive proxy materials were filed with the SEC on September 19, 2006. The transaction is currently expected to close in the fourth quarter of 2006 and is subject to customary closing conditions including the approval of West Corporation's stockholders. The stockholders of West will vote on the recapitalization at a special meeting to be held on October 23, 2006.

Conference Call

The company will not host a conference call to discuss its third quarter results due to the proposed recapitalization. Several operating metrics normally discussed during the call are included in the attached tables.

About West Corporation

West Corporation is a leading provider of outsourced communication solutions to many of the world's largest companies, organizations and government agencies. West helps its clients communicate effectively, maximize the value of their customer relationships and drive greater profitability from every interaction. The company's integrated suite of customized solutions includes customer acquisition, customer care, automated voice services, emergency communications, conferencing and accounts receivable management services.

Founded in 1986 and headquartered in Omaha, Nebraska, West has a team of 29,000 employees based in North America, Europe and Asia. For more information, please visit .

Forward Looking Statements

This news release contains forward looking statements within the meaning of the Federal securities laws. You can identify these and other forward looking statements by the use of such words as "will," "expect," "plans," "believes," "estimates," "intend," "continue," or the negative of such terms, or other comparable terminology. Forward looking statements also include the assumptions underlying or relating to any of the foregoing statements.

Actual results could differ materially from the expectations expressed in these statements. Factors that could cause actual results to differ include risks related to the satisfaction of the conditions to complete the proposed recapitalization, including the receipt of the required stockholder or regulatory approvals; the actual terms and availability of the financing that must be obtained for completion of the proposed recapitalization; substantial indebtedness incurred in connection with the consummation of the proposed recapitalization; the occurrence of any event, change or other circumstances that could give rise to the termination of the proposed recapitalization and the payment of a termination fee by West; the outcome of any legal proceedings that may be instituted against us and others following announcement of the proposed recapitalization; the failure of the proposed recapitalization to close for any other reason; the amount of the costs, fees, expenses and charges relating to the proposed recapitalization; the difficulty in retaining employees or clients as a result of the proposed recapitalization; the risk of unforeseen material adverse changes to the business or operations; the disruption of current plans, operations, and technology and product development efforts caused by the proposed transaction; and other factors described in West's SEC reports, including its annual report on Form 10-K for the year ended December 31, 2005 and quarterly report on Form 10-Q for the quarter ended June 30, 2006. West Corporation assumes no obligation to update any forecast or forward-looking statements included in this document, except as required by law.

Additional Information and Where to Find It

In connection with the proposed transaction, West Corporation filed a definitive proxy statement with the Securities and Exchange Commission ("SEC") on September 19, 2006. West Corporation has also filed other relevant documents with the SEC in connection with the proposed transaction. BEFORE MAKING ANY VOTING DECISION WITH RESPECT TO THE PROPOSED TRANSACTION, STOCKHOLDERS OF WEST CORPORATION ARE URGED TO READ THE PROXY STATEMENT AND OTHER RELEVANT MATERIALS BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. The proxy statement and other relevant materials, and any other documents filed by West Corporation with the SEC, may be obtained (when available) free of charge at the SEC's website at . In addition, stockholders of West Corporation may obtain free copies of the documents filed with the SEC by directing a request through the Investors Relations portion of West Corporation's website at or by mail to West Corporation, 11808 Miracle Hills Drive, Omaha, NE, 68154, attention: Investor Relations, telephone: (402) 963-1500. You may also read and copy any reports, statements and other information filed by West Corporation with the SEC at the SEC public reference room at 450 Fifth Street, N.W. Room 1200, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 or visit the SEC's website for further information on its public reference room.

Participants in the Solicitation

West Corporation and certain of its executive officers and directors may, under the rules of the SEC, be deemed to be "participants" in the solicitation of proxies from West Corporation stockholders in favor of the proposed transaction. Certain executive officers and directors of West Corporation have interests in the transaction that may differ from the interests of stockholders generally. Information regarding the persons who may be considered "participants" in the solicitation of proxies, their interests in the transaction and their beneficial ownership of West Corporation common stock is set forth in the West Corporation proxy statement described above.

    (1) Acquired entities include Sprint Corporation's conferencing assets
        (acquired in June 2005) and Raindance (acquired in April 2006) in the
        Conferencing segment and Intrado (acquired in April 2006) in the
        Communications Services segment.
    (2) See attached reconciliation of financial measures.

                               WEST CORPORATION
    (Unaudited, in thousands except per share and selected operating data)

                      Three Months Ended          Nine Months Ended
                        September 30,     %         September 30,      %
                       2006      2005   Change     2006       2005   Change

    Revenue          $473,245  $389,814  21.4% $1,359,661 $1,119,159  21.5%
    Cost of services  206,733   174,239  18.6%    604,147    505,473  19.5%
    Selling, general
     and administrative
     expenses         183,315   146,911  24.8%    524,425    419,838  24.9%
    Operating income   83,197    68,664  21.2%    231,089    193,848  19.2%
    Other expense,
     net               11,461     4,293 167.0%     25,910      9,333 177.6%
    Income before tax  71,736    64,371  11.4%    205,179    184,515  11.2%
    Income tax expense 25,105    22,344  12.4%     73,110     63,656  14.9%
    Minority Interest   3,710     4,202 -11.7%     10,334     12,036 -14.1%
    Net income        $42,921   $37,825  13.5%   $121,735   $108,823  11.9%

    Earnings per share:
      Basic             $0.61     $0.55  10.9%      $1.73      $1.58   9.5%
      Diluted           $0.59     $0.53  11.3%      $1.67      $1.53   9.2%
    Weighted average
     common shares
      Basic            70,709    69,089            70,363     68,752
      Diluted          72,728    71,586            72,941     71,185

       Services      $259,106  $213,476  21.4%   $736,833   $644,002  14.4%
      Conferencing    156,099   123,068  26.8%    448,816    315,192  42.4%
       Management      59,465    54,453   9.2%    178,641    163,413   9.3%
      Inter segment
       eliminations    (1,425)   (1,183) 20.5%     (4,629)    (3,448) 34.3%
      Total          $473,245  $389,814  21.4% $1,359,661 $1,119,159  21.5%

    Operating Income:
       Services       $29,149   $28,461   2.4%    $85,321    $88,518  -3.6%
      Conferencing     43,428    30,692  41.5%    113,959     75,605  50.7%
       Management      10,620     9,511  11.7%     31,809     29,725   7.0%
      Total           $83,197   $68,664  21.2%   $231,089   $193,848  19.2%

    Operating Margin:
       Services         11.2%     13.3% -15.8%      11.6%      13.7% -15.3%
      Conferencing      27.8%     24.9%  11.6%      25.4%      24.0%   5.8%
       Management       17.9%     17.5%   2.3%      17.8%      18.2%  -2.2%
      Total             17.6%     17.6%   0.0%      17.0%      17.3%  -1.7%

     compensation expense
     recognized ($M)      3.8       0.1
    Cash flow from
     operations ($M)     71.7      48.0
    Revolving Line of
     Credit ending
     balance ($M)       665.0     282.0

     Metrics ($M):
    Revenue from
     portfolios sales     5.5       4.5  22.2%
    Ending portfolio
     receivables        123.7      89.4  38.4%
    Ending non-recourse
     debt                65.9      32.8 100.9%

    Ending number
     of workstations   20,198    18,188  11.1%
    Ending number
     of international
     workstations       3,329     2,928  13.7%
    Ending number of
     West at Home
     agents            11,158     7,300  52.8%

                                         Condensed Balance Sheets
                                       September 30,   December 31,    %
                                           2006           2005       Change
    Current assets:
       Cash and cash equivalents         $26,274        $30,835      -14.8%
       Trust cash                          6,983          3,727       87.4%
    Accounts and notes receivable,
     net                                 274,762        217,806       26.1%
       Portfolio receivables,
        current                           52,118         35,407       47.2%
       Other current assets               37,464         28,567       31.1%
         Total current assets            397,601        316,342       25.7%
    Net property and equipment           298,218        234,871       27.0%
    Portfolio receivables, net            71,563         59,043       21.2%
    Goodwill                           1,145,613        717,624       59.6%
    Other assets                         237,359        170,782       39.0%
         Total assets                 $2,150,354     $1,498,662       43.5%
    Current liabilities                 $279,521       $206,295       35.5%
    Long Term Obligations                687,832        233,245      194.9%
    Other liabilities & minority
     interest                             50,407         87,254      -42.2%
    Stockholders' equity               1,132,594        971,868       16.5%
       Total liabilities and
        stockholders' equity          $2,150,354     $1,498,662       43.5%

    Reconciliation of Financial Measures

The common definition of EBITDA is "Earnings Before Interest Expense, Taxes, Depreciation and Amortization." In evaluating financial performance, we use earnings before interest, taxes, depreciation and amortization, share based compensation and minority interest or Adjusted EBITDA. EBITDA and Adjusted EBITDA are not measures of financial performance or liquidity under generally accepted accounting principles ("GAAP"). EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitution for net income, cash flow from operations or other income or cash flow data prepared in accordance with GAAP. Adjusted EBITDA, as presented, may not be comparable to similarly titled measures of other companies. Adjusted EBITDA is presented as we understand certain investors use it as one measure of our historical ability to service debt. Adjusted EBITDA is also used in our debt covenants. Set forth below is a reconciliation of EBITDA and adjusted EBITDA to cash flow from operations. We use EBITDA and adjusted EBITDA for its debt covenants as these are viewed as measures of liquidity.

    Amounts in thousands
    Three Months Ended September 30,           2006               2005
    Cash flow from operating activities      $71,658            $47,978
    Income tax expense                        25,105             22,344
    Deferred income tax (expense) benefit      1,593                789
    Interest expense                          12,646              4,773
    Minority interest in earnings, net of
     distributions                             1,078                (97)
    Share based compensation                  (3,808)              (132)
    Other                                       (441)            (1,441)
    Changes in operating assets and
     liabilities, net of business
     acquisitions                              8,616             18,868
    EBITDA                                   116,447             93,082
    Minority interest                          3,710              4,202
    Interest income                             (488)              (389)
    Provision for share based compensation     3,808                132
    ADJUSTED EBITDA                         $123,477            $97,027

    Nine Months Ended September 30,           2006               2005
    Cash flow from operating activities     $228,758           $184,302
    Income tax expense                        73,110             63,656
    Deferred income tax (expense) benefit    (15,887)             1,934
    Interest expense                          29,072             10,917
    Minority interest in earnings, net of
     distributions                             4,216             (3,505)
    Share based compensation                 (11,095)              (429)
    Other                                     (1,010)            (2,553)
    Changes in operating assets and
     liabilities, net of business
     acquisitions                             16,525              9,425
    EBITDA                                   323,689            263,747
    Minority interest                         10,334             12,036
    Interest income                           (1,651)            (1,138)
    Provision for share based compensation    11,095                429
    ADJUSTED EBITDA                         $343,467           $275,074

SOURCE West Corporation

David Pleiss, Investor Relations of West Corporation, +1-402-963-1500,

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