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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-K
     
þ
  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
    For The Fiscal Year Ended December 31, 2004
 
or
 
o
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
    For the transition period from           to
Commission File Number 000-21771
West Corporation
(Exact name of registrant as specified in its charter)
     
DELAWARE   47-0777362
(State or other jurisdiction of incorporation of organization)   (IRS Employer Identification No.)
 
11808 Miracle Hills Drive, Omaha, Nebraska   68154
(Address of principal executive offices)   (Zip Code)
Registrant’s telephone number, including area code: (402) 963-1200
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
(Title of class)
      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 þ          No o
      Indicate by 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 this Form 10-K.     o
      Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).     Yes þ          No o
      The aggregate market value of the voting common equity held by non-affiliates (computed by reference to the average bid and asked price of such common equity) as of June 30, 2004, the last business day of the registrant’s most recently completed second fiscal quarter was approximately $566.3 million. At February 18, 2005, 68,386,683 shares of common stock of the registrant were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
      Portions of the registrant’s proxy statement for the 2005 annual meeting of stockholders are incorporated into Part III.
 
 


TABLE OF CONTENTS
             
        Page
         
 PART I
   Business     2  
   Properties     15  
   Legal Proceedings     16  
   Submission of Matters to a Vote of Security Holders     17  
    Executive Officers of the Registrant     17  
 Part II
   Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities     19  
   Selected Financial Data     20  
   Management’s Discussion and Analysis of Financial Condition and Results of Operations     22  
   Quantitative and Qualitative Disclosures About Market Risk.     41  
   Financial Statements and Supplementary Data     42  
   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure     42  
   Controls and Procedures     42  
 Part III
   Directors and Executive Officers of the Registrant     45  
   Executive Compensation     45  
   Security Ownership of Certain Beneficial Owners and Management     45  
   Certain Relationships and Related Transactions     45  
   Principal Accounting Fees and Services     45  
 PART IV
   Exhibits and Financial Statement Schedules     46  
 Signatures     49  
 Employment Agreement with Thomas B. Barker
 Employment Agreement with Paul M. Mendlik
 Employment Agreement with Nancee R. Berger
 Employment Agreement with Mark V. Lavin
 Employment Agreement with Steven M. Stangl
 Employment Agreement with Michael M. Sturgeon
 Employment Agreement with Jon R. (Skip) Hanson
 Employment Agreement between West Direct, Inc. and Todd B. Strubbe
 Employment Agreement with Michael E. Manzour
 Employment Agreement with Joseph Scott Etzler
 Amended and Restated Nonqualified Credit Agreement
 Employment Agreement with Jim Richards
 Third Amendment to Participation Agreement
 Fourth Amendment to Participation Agreement
 Subsidiaries
 Consent of Deloitte & Touche LLP
 Section 302 Certification
 Section 302 Certification
 Section 906 Certification
 Section 906 Certification

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FORWARD LOOKING STATEMENTS
      This report contains forward-looking statements. These forward-looking statements include estimates regarding:
  •  our 2005 financial outlook;
 
  •  the adequacy of our available capital for future capital requirements;
 
  •  our future contractual obligations;
 
  •  our capital expenditures;
 
  •  the amount of consumer debt outstanding;
 
  •  the availability of charged-off receivable portfolios at acceptable terms for our purchase;
 
  •  the impact of foreign currency fluctuations;
 
  •  the impact of pending litigation;
 
  •  the impact of changes in interest rates; and
 
  •  the impact of changes in government regulation and related litigation.
      Forward-looking statements can be identified by the use of words such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “intends,” “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. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including the risks discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Factors and elsewhere in this report.
      All forward-looking statements included in this report are based on information available to us on the date hereof. We assume no obligation to update any forward-looking statements.
PART I.
Item 1. Business
Overview
      West Corporation provides business process outsourcing services focused on helping our clients communicate more effectively with their customers. We help our clients maximize the value of their customer relationships and derive greater value from each transaction that we process. Some of the nation’s leading enterprises trust us to manage their most important customer contacts and communication transactions. Companies in highly competitive industries choose us for our ability to efficiently and cost effectively deliver large and complex services and our ability to provide a broad portfolio of voice transaction services. We deliver our services through three segments; Communication Services, Conferencing Services and Receivables Management. Each segment leverages our core competencies of managing technology, telephony and human capital.
      Our communication services include both agent and automated services. Our agent services provide clients with a comprehensive portfolio of services driven by both customer–initiated (inbound) and West-initiated (outbound) transactions. We offer our clients large volume transaction processing capabilities, including order processing, customer acquisition, customer retention and customer care. Our agent communication services are primarily consumer applications but we also support business-to-business applications. Our automated services operate over 137,000 Interactive Voice Response ports, which provide large-volume, automated voice response services to clients. Examples of our automated services include automated credit card activation, prepaid calling card services, automated product information requests, answers to frequently

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asked questions, utility power outage reporting, and call routing and call transfer services. Our Communication Services segment operates a network of customer contact centers and automated voice and data processing centers throughout the United States and in Canada, India, Jamaica and the Philippines. Our home agent service utilizes agents throughout the United States.
      Our conferencing services include an integrated suite of audio, video and web conferencing services. These worldwide services range from basic automated solutions to highly complex, operator-assisted and event driven solutions. Our video conferencing services provide basic video conferencing with the additional ability to visually share documents and presentations. Our web conferencing services provide web conferencing and interactive web-casting services. Our Conferencing Services segment operates facilities in the United States, the United Kingdom, Canada, Singapore, Australia, Hong Kong, Japan and New Zealand.
      Our receivables management operations include first party collections, contingent/ third-party collections, governmental collections, commercial collections and purchasing and collecting charged-off consumer and commercial debt. Charged-off debt consists of defaulted obligations of individuals and companies to credit originators, such as credit card issuers, consumer finance companies, and other holders of debt. The Receivables Management segment also provides contingent/ third party collections, first party collection efforts on pre-charged-off receivables and collection services for the U.S. Department of Education and other governmental agencies. Our Receivables Management segment operates facilities in the United States, Jamaica and Mexico.
      West Corporation, a Delaware corporation, is headquartered in Omaha, Nebraska. Our principal executive offices are located at 11808 Miracle Hills Drive, Omaha, Nebraska. Our telephone number is (402) 963-1200. Our website address is www.west.com. All of our SEC reports are available free of charge on our website.
      None of the information on our website or any other website identified herein is part of this report. All website addresses in this report are intended to be inactive textual references only.
Communication Services
Customer Relationship Management Industry
      Our Communication Services segment operates in the customer relationship management (“CRM”) industry. The CRM function generally refers to a company’s direct marketing and customer service functions especially those that are provided through customer contact centers. Once intended to serve as a pure marketing or support function, contact centers have undergone significant changes in functionality over the last several years. In particular, the scope of customer interaction has expanded greatly from single purpose — usually only support or marketing — to multi-dimensional, often combining customer support, sales, marketing and technical support.
      Contact centers experience significant fluctuations in support and service demand. Many companies have found that it is not cost-effective to maintain excess contact center capacity and that they are not well equipped to accommodate fluctuations in demand.
      Companies traditionally relied on in-house personnel and infrastructure to perform sales, direct marketing and customer service. However, driven by increasing competition and the evolution of the customer service function, businesses continue to outsource CRM activities to focus on their core competencies and reduce costs. Outsourced CRM providers may offer clients lower overall contact center costs due to economies of scale, sharing the cost of new technology among a larger base of users, and higher capacity utilization rates. By turning to an outsourced CRM provider, companies get access to leading edge contact center technology without the cash outlay or maintenance costs that accompany such top-tier platforms.
      The outsourced CRM industry has evolved from primarily single-facility, low technology environments to large, full service organizations with multi-location, large-volume contact centers that use advanced systems. Some independent CRM providers have invested in large-volume state-of-the-art contact centers and advanced network technology. Larger service providers, who can achieve greater economies of scale, can more

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easily justify ongoing investment in sophisticated call management software, predictive dialers and automatic call distributors, which generally provide better quality and more cost-effective services.
Services
      We are one of the few providers that offers a comprehensive portfolio of outsourced CRM services. These services are driven predominately by customer-initiated transactions that include order processing, customer acquisition, customer retention, customer service and product sales applications. This segment has four primary service offerings: dedicated agent, shared agent, business services and automated services.
     
Service   Description
     
Dedicated Agent
  Customized solutions provided by dedicated agents who have extensive knowledge of a single client and its products.
    Includes traditional customer care and sales.
Shared Agent
  Multiple contact centers and home agents are combined in a virtual contact center solution designed to handle large volumes of transactions that typically occur over short periods of time. National print or television advertising campaigns have historically driven these volumes.
    Agents are trained on the proprietary call handling system, not on specific client applications. The agents are highly efficient because they are shared across many different client programs.
    Performance-based marketing programs are used to upsell products/ services specifically selected to match the caller’s profile to maximize the value of the transaction.
Business
  Dedicated to more complex business marketing services for clients that target small to medium sized businesses.
    Addresses need for clients that cannot cost effectively serve a diverse and small client base with the appropriate level of attention.
    Applications include sales, order management, technical support and customer life cycle management.
Automated Services
  State of the art proprietary platform of 137,000 interactive voice response (“IVR”) ports
    Services are highly customized and frequently combined with other service offerings. Examples include: front-end customer service applications; credit card activation; prepaid calling services; automated product information request; answers to frequently asked questions; utility power outage reporting; and call routing and transfer services.
Strategy
      We aim to enhance our position as a leading provider of integrated CRM solutions. To this end, our strategy is to offer an integrated suite of agent-based and automated CRM solutions that are customized to address each client’s unique needs. We implement this strategy by providing high quality services, providing integrated service solutions, emphasizing recurring and large volume programs, capitalizing on state-of-the-art technology and leveraging our strong management experience.

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      Integrated Service Solutions. We develop customized and integrated service solutions that are capable of incorporating multiple service offerings. We integrate our service offerings by using our voice and data networking technology and our software systems and hardware platforms. We also design and implement highly flexible applications, combining the large volume capacity of automated voice response with our specialized agent services. Integration of our services provides a cost-effective, comprehensive solution for the client and increases the effectiveness of our agents. We believe our ability to offer integrated service solutions is critical to growing, expanding and retaining our client relationships. During 2004, we generated over 50% of our revenue from clients that use two or more of our service offerings.
      Recurring and Large Volume Programs. Our strategy is to target clients with large volume programs. We generally seek growth-oriented clients who need customized applications, which often leads to long-term relationships. We have established a track record of successfully managing large volume client programs.
      Technology. Our technology platform enables us to offer premium quality, flexible and cost-effective service solutions that are tailored to each client’s unique needs. We currently employ more than 950 information technology professionals to modify and enhance our operating systems and to design client programs. Examples of our technology include:
  •  computer/telephone and Internet protocol (IP) systems integration;
 
  •  proprietary CRM software systems;
 
  •  proprietary IVR technology including advanced speech recognition;
 
  •  high speed, fault-tolerant computer systems;
 
  •  centralized network control;
 
  •  intelligent upsells; and
 
  •  proprietary staffing and scheduling.
      Strong Management Experience. We have distinguished ourselves through our ability to attract and retain some of the most talented managers in the outsourced CRM industry. The executive officers who are responsible for our day-to-day management have, on average, over ten years of experience.
      We develop a detailed understanding of our clients’ unique business requirements to more effectively manage interaction with our clients’ current and prospective customers. This allows us to create customized solutions that consistently meet and exceed our clients’ needs. As a result, we can cross-sell our services and proactively offer new applications. Our top 10 clients have been using our services for an average of over seven years.
      We believe that service quality is a critical factor in a potential client’s decision to outsource its customer service and sales functions. We differentiate the quality of our services through our ability to:
  •  respond quickly to new client programs;
 
  •  efficiently address staffing needs;
 
  •  effectively employ operating systems that can process client campaign data; and
 
  •  provide timely and meaningful reports.
We provide premium quality service through an extensive training program and an experienced management team. We believe that the quality of our service is one of our competitive advantages.
Facilities and Service Security
      We recognize the importance of providing uninterrupted service for our clients. We have invested significant resources to develop, install and maintain facilities and systems that are designed to be highly reliable. Our facilities and systems are designed to maximize system in-service time and minimize the possibility of a telecommunications outage, a commercial power loss or an equipment failure.

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      We use redundant network architecture, which substantially reduces the possibility of a system failure and the interruption of telecommunications service. Most of our contact centers are serviced by dual central office switches, providing split access flexible egress routing capabilities, as well as backup access into each facility, using dual fiber ring SONET-based self-healing network architectures. Most telephone numbers that are directed to our contact centers are appended with dual routing instructions in the event of an error on the primary network path. These capabilities allow incoming calls to be redirected via an alternate long distance switch and/or through a backup access line in the unlikely event of a long distance or local network failure.
      Our systems also feature operational redundancy. We use automatic call distributors with dual cores (CPU & I/ O modules) and online automatic backup, as well as fault-tolerant mainframe computers with spontaneous dual backup for processors, disk management and mechanical functions. We store copies of all proprietary software systems and client application software in a secure off-site storage facility. We actively monitor all critical components of our contact centers 24 hours per day, 365 days per year. Many of our facilities also have stand-alone primary power systems, which include both battery backup and diesel generator backup power systems
Call Management Systems
      We specialize in processing large and recurring transaction volumes. We work closely with our clients to accurately project future transaction volumes. We use the following practices to efficiently manage our transaction volumes:
      Historical Trend Analyses. We track weekly, daily and hourly trends for individual client programs. We believe that the key to a cost efficient CRM program begins with the effective planning of future volumes to determine the optimal number of sites, employees, workstations and voice response ports that need to be deployed each hour. We have years of data that we use to determine the transaction patterns of different applications such as order capture, lead generation and customer service.
      Forecasting Call Volumes and Establishing Production Plans. We forecast volumes for inbound calls to shared agents for each one-half hour increment for each day. We then use historical data regarding average handle time, average wait time, average speed of answer and service level targets to determine the actual number of transactions that may be processed by a workstation or voice response port during a specific one-half hour increment. This process enables the effective determination of the number of workstations and voice response ports needed for a given campaign.
      Staffing and Scheduling Plans. Based upon the total number of workstations required to be staffed, we create a detailed staffing schedule. These schedules are typically forecasted six to eight weeks in advance to assist the personnel and training departments in hiring and training the desired number of personnel. Agents are given regular work schedules that are designed to coincide with anticipated transaction patterns and trends. We have developed a proprietary scheduling system, known as Spectrum, that efficiently identifies variances between staff scheduled and staff needed. The system accommodates real-time adjustments for personnel schedules as volume projections fluctuate. Agent personnel directly interact with the system through kiosks located in the contact center or the Internet to schedule additional hours or excused time.
      Network Control Center. Our multiple remote sites present unique challenges in delivering consistent premium quality service. Our Network Control Center, based in Omaha, Nebraska, operates 24 hours a day, 365 days a year and uses both internal and external systems to effectively create and operate this remote site environment. We interface directly with long distance carriers and have the ability to allocate call volumes among our various contact centers on command with the assistance of sophisticated third party routing products. Our traffic control specialists compare actual volumes and trends to stated staffing and scheduling plans. When necessary, we can adjust for minor variances between actual and projected volumes and personnel by facility. As a result, transactions are optimally directed to available personnel, which maximizes the utilization of personnel and improves efficiency. The Network Control Center monitors the status of processing activities on a minute-by-minute basis. Minor real time variances between projected and actual trends are promptly entered into our database and used to develop future campaigns and staffing levels. During times of unexpected events, such as weather-related situations, we can immediately react and, whenever

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possible, redirect transactions to an unaffected site to satisfy the business needs of our clients. We have global call handling capabilities with approximately 13,200 seats in the U.S., 5,500 U.S. home agents and 2,500 seats in other countries. For each individual client, we determine how best to deliver the optimal mix of service quality and cost through the use of automation and available labor sources. We identify the optimal solution from our “best shore” alternatives including automated, domestic, offshore, home agent offerings, or a combination thereof.
      Our proprietary home agent service offers an attractive midpoint price solution between domestic shared agent service and offshore solutions. Our home agent solution also offers a number of other advantages:
  •  Superior level of customer service from ability to attract a highly educated workforce.
 
  •  Highly efficient labor model.
 
  •  Lower personnel costs.
 
  •  Significantly less capital intensive.
Sales and Marketing
      We offer our clients large-scale, cost-effective solutions on an outsourced basis to help companies acquire, retain and grow their customer relationships. Our sales and marketing strategy focuses on leveraging our expertise, integrated service capabilities and reputation for premium quality service to cross-sell our services to existing clients and to develop new long-term client relationships. We also identify potential new clients with aggressive growth objectives and premium brands in industries that face increased competition.
      We formulate detailed annual sales and marketing plans for our Communication Services segment. These plans contain objectives and milestones, which we track regularly throughout the year. Our sales organization is organized and trained to focus on specific industries and overall client needs. Our objective is to sell integrated solutions to prospective and existing clients. We pay commissions on both new sales and incremental revenues generated from new and existing clients to sales professionals.
Competition
      Our competitors in the CRM solutions industry range from very small firms catering to specialized programs and short-term projects, to large independent firms. We also compete with the in-house operations of many existing clients and potential clients. We believe that only one or two competitors have the capability to provide a full suite of outsourced CRM solutions. The principal competitive factors in this industry include: quality of service, range of service offerings, flexibility and speed of implementing customized solutions to meet clients’ needs, capacity, industry-specific experience, technological expertise and price.
Contact Management Systems
      We specialize in processing large and recurring volumes on behalf of our clients. Our ability to consistently staff and manage our agents across geographically dispersed contact centers is critical to providing premium quality service. We apply standardized practices in our contact centers to ensure uniform quality of service. We maintain strong centralized control to assure rigorous adherence to management practices, including quality assurance, and to provide daily staffing plans for each individual site.
Quality Assurance
      We continuously monitor and evaluate the performance of our agents to ensure that we meet or exceed both our own and our clients’ quality standards. Our quality assurance testing includes monitoring agent and consumer contacts. We encourage our clients to participate in all aspects of the quality assessment.
      We have direct contact with our clients’ customers. Given the importance of this role, we believe that our ability to provide premium quality service is critical. West and our clients shadow-monitor and evaluate the performance of agents to confirm that clients’ programs are properly implemented using clients’ approved

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scripts and that the agents meet clients’ customer service standards. We regularly measure the quality of our services by reviewing such variables as average handle time, volume, average speed of answer, sales per hour, rate of abandonment, quota attainment and order conversion percentages. We provide clients with regular reports on the status of ongoing campaigns and transmit summary data and captured information electronically to clients.
      We maintain quality assurance functions throughout our various agent-based service offering organizations. These quality assurance groups are responsible for the overall quality of the services being provided. We use statistical summaries of the performance appraisal information for our training and operations departments to provide feedback and to identify agents who may need additional training.
      See Note 13 to our Consolidated Financial Statements for a summary of the revenues, operating income and total assets for our Communication Services segment for each of the last three fiscal years.
Conferencing Services
Conferencing Industry
      The conferencing services industry consists of audio, video and web conferencing services that are marketed to businesses and individuals worldwide. Web services include data conferencing, collaboration, web-casting, and the delivery of commercial, online training and education applications.
      An important trend in the conferencing services industry is the growth of unattended conferencing, which are services that do not use an operator. Customers like unattended conferencing because it is easy to use and it costs less than attended conferencing calls. Over the last several years, the market for conferencing services has been subject to significant demand and pricing fluctuations. From a demand perspective, efforts by businesses, private organizations and state governments to reduce costs have led to business travel reductions, which has increased demand for conferencing services. From a pricing perspective, increasing competition and financial instability among some of the larger audio conferencing providers has led providers to reduce prices. In addition, as long distance telephone rates have fallen competition between carriers and service providers has caused additional reductions in conferencing prices.

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Services
      Our Conferencing Services segment offers an integrated suite of conferencing services including audio, video and web conferencing. Our capabilities include a broad spectrum of conferencing solutions from the most basic automated audio solutions (reservationless) to highly complex, operator-assisted, event-driven and multimedia solutions. Our Conferencing Services’ client base includes many Fortune 500 companies. In addition to a strong presence in the United States, including 29 domestic sales offices, the segment’s reach extends to sales offices and operations facilities around the world in Europe, Canada, Australia, New Zealand, Singapore, Hong Kong and Japan. This segment has four primary service offerings: operator assisted, automated, video conferencing and web conferencing.
     
Service   Description
     
Operator Assisted
 
Events and large-scale conferences.
   
Provides a wide range of features and enhancements such as ability to record, broadcast, schedule and administer meetings.
Automated
 
Reservationless conferencing without an operator.
   
Available for fast, convenient and dependable conferencing solutions.
Video Conferencing
 
Video conferencing services through our product InView.
   
Basic video conferencing services with the additional ability to share documents and PowerPoint presentations and stream conferences to the Internet.
Web Conferencing
 
Web conferencing services through a proprietary product as well as through a re-sale agreement with WebEx and Microsoft products.
Strategy
      We have positioned ourselves as a leading provider of high-touch conferencing services. Unlike many of our competitors, we maintain a direct sales force that is focused exclusively on understanding our clients’ needs and delivering conferencing solutions. We train “Meeting Consultants” to assist clients in cultivating strong meeting leadership skills and in techniques to increase participation in geographically dispersed meetings. This high-touch, service-intensive effort is a differentiating characteristic of our conferencing services business relative to our competitors. Our strategy is to:
  •  drive increased usage within the existing client base;
 
  •  market to new and existing clients a comprehensive service offering that provides high personal touch;
 
  •  continue to improve operating efficiencies; and
 
  •  leverage our financial stability and brand equity as a leading provider of outsourced CRM services in sales and marketing efforts.
Sales and Marketing
      Our Conferencing Services segment manages sales and marketing through three dedicated channels, National Accounts, Direct Sales and the Internet. National Accounts sales representatives sell to Fortune 500 companies with each representative working eight to twelve assigned accounts. Direct Sales consultants primarily focus on “non-Fortune 500 accounts.” Direct Sales meeting consultants cover a much larger client base, primarily through a call center, and are assigned a number of prospects to call each week. We also have international professional sales representatives providing local market expertise and intelligence.
      Our subsidiary ConferenceCall.com uses Internet marketing to acquire customers. ConferenceCall.com’s primary customer acquisition vehicle involves using Internet-based search engines to identify potential

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purchasers of conferencing services. ConferenceCall.com places paid advertisements on search pages of major Internet search engine sites. When a potential customer searches for “conference calls” or similar keywords, our paid advertisements are among the first search results to appear. Search engine companies auction off positioning for selected search terms in a dynamic fashion thus allowing individual advertisers to bid on the “next click through” for any given search term. The strength of ConferenceCall.com’s marketing program lies in its ability to automatically monitor ad placement on all of the major search engines and ensure optimal positioning on each of these search sites.
Competition
      A December 31, 2003 study by Frost and Sullivan, indicates that, based on revenue, we are the third largest provider of conferencing services in the world. This market is highly competitive. Our competitors in the conferencing solutions industry range from large long distance carriers such as AT&T, MCI, Sprint and Global Crossing to independent providers such as Premier Global Services, Inc. and Genesys Conferencing. We believe that we have been able to grow market share in recent years due to our relatively large, geographically dispersed sales force dedicated solely to providing conferencing solutions on a global basis. Some competitors sell conferencing services as part of a bundled product and therefore may not be as focused on meeting specific conferencing solution needs.
      The competitive outlook in the conferencing services industry varies across the types of conferencing services provided. The number of competitors in the audio conferencing services industry is steadily decreasing as the industry continues to consolidate in the wake of pricing pressures and technological advances. However, as video and web conferencing services continue to develop, new vendors are entering the marketplace and offering a broader range of conferencing solutions.
      See Note 13 to our Consolidated Financial Statements for a summary of the revenues, operating income and total assets for our Conferencing Services segment for each of the last three fiscal years.
Receivables Management
Receivables Management Industry
      We entered the receivables management market through our acquisition of Attention in August 2002 and significantly expanded our presence in this industry through our August 2004 acquisition of Worldwide.
      Debt collection companies have existed since the emergence of consumer credit. The sale of distressed debt to recovery specialists, however, arose in the 1980s. As the distressed debt market developed in the 1980s, regular buyers of debt emerged and banks began selling not only distressed commercial and industrial loans but also charged-off consumer credit card debt.
      The receivables management market is large, growing and highly fragmented, with outstanding non-mortgage consumer debt alone expected to reach $2.8 trillion by 2010. Approximately 6,000 companies generate roughly $10 billion in annual revenue within the distressed consumer debt recovery industry, 15 of which purchase about 80% of the debt sold annually.

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Services
      We provide first-party and third-party collection services to companies in various industries including healthcare, automotive, telecommunications, financial services and retail. We also provide commercial collection services, government collections and debt purchasing. The service offerings for the receivables management segment include: first-party collections, contingent/third-party, government, commercial and debt purchasing.
     
Service   Description
     
First Party Collections
 
Pre-charged-off debt.
   
Typically large scale placements.
   
Scripted, customer-service oriented agents are required.
   
Dollar per hour revenue model.
Contingent/ Third Party
 
Charged-off debt.
   
Focused on industry verticals (e.g., healthcare, credit card, telecom and auto deficiency).
   
Percentage of collection revenue model.
   
Collection approach determined by age of receivables and previous collection efforts.
Government
 
Three-year U.S. Department of Education contract signed in November 2004 Unique student loan default prevention used at 141 campus locations
Commercial
 
Broad suite of business services designed to maximize long term return on receivables.
   
Ability to leverage pre-legal and legal services.
   
Acquiring small business clients utilizing telesales.
Debt Purchasing
 
Strong analysis to identify and purchase large charged-off portfolios.
   
Large forward-flow arrangements.
   
Strong financial partners — Cargill Financial Services Corp. and SLM Corporation (Sallie Mae).
   
Recovery strategies that include use of legal services.
Strategy
      We were attracted to the receivables management business for a number of reasons: (i) the market is large, growing and highly fragmented; (ii) we believe we can leverage our technology and scale efficiencies; and (iii) the segment represents a higher growth and higher margin business to which over time we can transition a portion of our outbound capacity.
      We purchase distressed and defaulted accounts and consumer credit receivables. We service these defaulted portfolios via telephone, mailings and litigation with the goal of recovering all or a portion of the amount due on the individual loans purchased within the portfolio. We use two portfolio lenders who advance 80% to 85% of the purchase price with West financing the remaining 15% to 20% of each portfolio. The debt from the financing companies has a variable interest rate, with the lenders also sharing in the final profits of the portfolio after all collection efforts, principal, and interest has been repaid. The debt from the financing company is non-recourse to us and is collateralized by all receivable portfolios within a loan series. Each loan series contains a group of portfolio asset pools, which have an aggregate original principal amount of approximately $20 million.

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Competition
      The receivables management and collection industry is highly competitive and fragmented. We compete with a large number of providers including large national companies as well as regional and local firms. Many large clients retain multiple receivables management and collection providers, which exposes us to continuous competition in order to remain a preferred vendor. We believe that the primary competitive factors in obtaining and retaining clients are the ability to provide customized solutions to a client’s requirements, personalized service, sophisticated call and information systems and price.
      Debt purchasing is subject to additional competitive factors. Competitive pressures affect the availability and pricing of receivable portfolios. In addition, there continues to be a consolidation of credit card issuers, which have been a principal source of receivable purchases. This consolidation has decreased the number of sellers in the market and, consequently, could over time, give the remaining sellers increasing market strength in the price and terms of the sale of charged-off credit card accounts.
      See Note 13 to our Consolidated Financial Statements for a summary of the revenues, operating income and total assets for our Receivables Management segment for each of the last three fiscal years.
      The remainder of this section applies to our entire consolidated enterprise.
Personnel and Training
      We believe that a key component of our success is the quality of our employees. As a large-scale service provider, we continually refine our approach to recruiting, training and managing our employees. We have established procedures for the efficient weekly hiring, scheduling and training of hundreds of qualified employees. These procedures enable us to provide flexible scheduling and staffing solutions to meet client needs.
      We offer extensive classroom and on-the-job training programs for personnel, including instruction regarding call-processing procedures, direct sales techniques, customer service guidelines, telephone etiquette and proper use of voice inflections. Operators receive professional training lasting from four to 35 days, depending upon the client program and the nature of the services being provided. In addition to training designed to enhance job performance, employees are also given a detailed description of our organizational structure, standard operating procedures and business philosophies.
      At December 31, 2004, we employed approximately 28,000 employees. Approximately 24,600 were employed in the Communication Services segment, approximately 1,900 were employed in the Conferencing Services segment, and approximately 1,500 were employed in the Receivables Management segment. Approximately 5,000 of these employees were employed in management, staff and administrative positions. We consider our relations with our employees to be good. None of our employees are represented by a labor union.
Technology and Systems Development
      Our software and hardware systems, as well as our network infrastructure, are designed to offer high-quality and integrated solutions. We have made significant investments in reliable hardware systems and integrate commercially available software when appropriate. Because our technology is client focused, we often rely on proprietary software systems developed in-house to customize our services. Our significant achievements include:
  •  development of sophisticated data collection tools and data warehousing systems to analyze and measure the success of clients’ programs;
 
  •  design of a proprietary system that web-enables our workstations, enhancing our agents’ effectiveness in interacting with our clients’ customers;
 
  •  development of a proprietary, highly responsive scripting system; and
 
  •  development of a proprietary, state-of-the-art workforce management and scheduling system.

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      Our network facilities and systems are designed to maximize system in-service time and minimize the possibility of failure. Our infrastructure is designed to reduce the possibility of system or site downtime or interruption of the telecommunications service. We use commercially available and time-proven voice switching equipment. Our back-end systems, including client billing are primarily internally developed.
Proprietary Rights and Licenses
      We rely on a combination of applicable copyright, patent, trademark and trade secret laws, as well as on confidentiality procedures, to establish and protect our proprietary rights. We have been issued six patents, two of which came through the InterCall acquisition, and have 60 pending patent applications pertaining to intelligent upsells, transaction processing, call center and agent management, data collection, reporting and verification, micro payments, conferencing and credit card processing. Despite these precautions, we cannot assure you that third-parties will not misappropriate our proprietary technology. Although we believe that our intellectual property rights do not infringe upon the proprietary rights of third parties, we cannot assure you that third parties will not assert infringement claims against us. Further, we operate in many foreign jurisdictions. We cannot assure you that we will be able to protect our intellectual property in these or other foreign jurisdictions.
Reliance on Major Clients
      A significant portion of our revenue is generated from relatively few clients. The loss of a significant client could seriously harm us. We had two customers that accounted for approximately 18% of our total revenue in 2004. The revenue generated by these two customers results from over 40 programs which utilize technology from agent based, automated and conferencing services. During 2004, our 100 largest clients represented 69% of our revenues.
Foreign Operations
      At December 31, 2004, our total revenue and assets outside the United States were less than 10% of our consolidated revenue and assets.
      Our Communication Services segment operates facilities in Victoria, British Columbia, Makati City, Philippines and Kingston and Montego Bay, Jamaica. Our Communication Services segment also contracts for workstation capacity in Mumbai, India. Currently, these contracts are denominated in U.S. dollars. These call centers receive or initiate calls only from or to customers in North America. Under the Mumbai arrangement, we do not own the assets or directly employ any personnel.
      Our Conferencing Services segment has international sales offices in Canada, Australia, Hong Kong, Ireland, the United Kingdom, Singapore, Germany, Japan and France. Our conferencing services segment operates facilities in the United States, the United Kingdom, Canada, Singapore, Australia, Hong Kong and New Zealand.
      Our Receivables Management segment operates facilities in Jamaica and Mexico.
Government Regulation
      Teleservices sales practices are regulated at both the federal and state level. The Telephone Consumer Protection Act (“the TCPA”), which was enacted in 1991, authorized and directed the Federal Communications Commission (the “FCC”) to enact rules to regulate the telemarketing industry. In December 1992, the FCC enacted rules, which place restrictions on the methods and timing of telemarketing sales calls.
      On July 3, 2003, the FCC issued a Report and Order setting forth amended rules and regulations implementing the TCPA. The rules, with a few exceptions, became effective August 25, 2003. These rules included: (1) restrictions on calls made by automatic dialing and announcing devices; (2) limitations on the use of predictive dialers for outbound calls; (3) institution of a national “do-not-call” registry in conjunction with the Federal Trade Commission (the “FTC”); (4) guidelines on maintaining an internal “do-not-call” list and honoring “do-not-call” requests; and (5) requirements for transmitting caller identification information.

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The “do-not-call” restrictions took effect October 1, 2003. The caller identification requirements became effective January 29, 2004. The FCC also included rules restricting facsimile advertisements. These rules became effective July 1, 2004.
      The Federal Telemarketing Consumer Fraud and Abuse Act of 1994 authorizes the FTC to issue regulations designed to prevent deceptive and abusive telemarketing acts and practices. The FTC issued its Telemarketing Sales Rule (the “TSR”), which went into effect in January 1996. The TSR applies to most direct teleservices telemarketing calls and certain operator teleservices telemarketing calls and generally prohibits a variety of deceptive, unfair or abusive practices in telemarketing sales.
      The FTC amended the TSR in January 2003. The majority of the amendments became effective March 31, 2003. The changes that were adopted that could materially adversely affect the Company, the Company’s clients and/or the Company’s industry include: (1) subjecting a portion of the Company’s inbound calls to additional disclosure requirements from which such calls were previously exempt; (2) prohibiting the disclosure or receipt, for consideration, of unencrypted consumer account numbers for use in telemarketing; (3) application of the TSR to charitable solicitations; (4) additional disclosure statements relating to certain products and services; (5) additional authorization requirements for payment methods that do not have consumer protections comparable to those available under the Electronic Funds Transfer Act or the Truth in Lending Act, or for telemarketing transactions involving pre-acquired account information and fee-to-pay conversion offers; (6) institution of a national “do-not-call” registry; (7) limitations on the use of predictive dialers for outbound calls; and (8) additional disclosure requirements relating to upsells, especially those involving negative option features. The “do-not-call” restrictions became effective October 1, 2003.
      In addition to the federal legislation and regulations, there are numerous state statutes and regulations governing telemarketing activities, which do or may apply to the Company. For example, some states also place restrictions on the methods and timing of telemarketing calls and require that certain mandatory disclosures be made during the course of a telemarketing call. Some states also require that telemarketers register in the state before conducting telemarketing business in the state. Many of these statutes have an exemption for publicly-traded companies.
      The Company employees who are involved in certain types of sales activity, such as activity regarding insurance or mortgage loans, are required to be licensed by various state commissions or regulatory bodies and to comply with regulations enacted by those entities.
      The industries served by the Company are also subject to varying degrees of government regulation, including laws and regulations relating to contracting with the government and data security. The Company is subject to some of the laws and regulations associated with government contracting as a result of the Company’s contracts with its clients and also as a result of contracting directly with the United States and its agencies. With respect to marketing scripts, the Company relies on its clients and their advisors to develop the scripts to be used by the Company in making consumer solicitations on behalf of its clients. The Company generally requires its clients to indemnify the Company against claims and expenses arising with respect to the scripts provided by its clients.
      The Company specifically trains its marketing representatives to handle calls in an approved manner and believes it is in compliance in all material respects with all federal and state telemarketing regulations. There can be no assurance, however, that the Company would not be subject to regulatory challenge for a violation of federal or state law.
      The accounts receivable management and collection business is regulated both at the federal and state level. The federal Fair Debt Collection Practices Act (the “FDCPA”) regulates any person who regularly collects or attempts to collect, directly or indirectly, consumer debts owed or asserted to be owed to another person. The FDCPA establishes specific guidelines and procedures that debt collectors must follow in communicating with consumer debtors, including the time, place and manner of such communications. Further, it prohibits harassment or abuse by debt collectors, including the threat of violence or criminal prosecution, obscene language or repeated telephone calls made with the intent to abuse or harass. The FDCPA also places restrictions on communications with individuals other than consumer debtors in

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connection with the collection of any consumer debt and sets forth specific procedures to be followed when communicating with such third parties for purposes of obtaining location information about the consumer debtor. Additionally, the FDCPA contains various notice and disclosure requirements and prohibits unfair or misleading representations by debt collectors. The accounts receivable management and collection business is also subject to the Fair Credit Reporting Act (the “FCRA”), which regulates the consumer credit reporting industry and which may impose liability to the extent that the adverse credit information reported on a consumer to a credit bureau is false or inaccurate. The FTC has the authority to investigate consumer complaints against debt collection companies and to recommend enforcement actions and seek monetary penalties. The accounts receivable management and collection business is also subject to state regulation. Some states require that debt collection companies be licensed.
      The Receivable Management and Communication Services segments provide services to healthcare clients, which as providers of healthcare services are considered “covered entities” under the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”). As covered entities, our clients must comply with standards for privacy, transaction and code sets, and data security. Under HIPAA, we are a “business associate”, which requires that we protect the security and privacy of “protected health information” provided to us by our clients for the collection of payments for healthcare services. We have implemented HIPAA compliance training and awareness programs for our healthcare service employees. We also have undertaken an ongoing process to test data security at all relevant levels. In addition, we have reviewed physical security at all healthcare operation centers and have implemented systems to control access to all work areas.
      Several of the industries served by each of the three segments are also subject to varying degrees of government regulation. Although compliance with these regulations is generally the responsibility of the clients, the Company could be subject to a variety of enforcement or private actions for our failure or the failure of our clients to comply with such regulations.
Item 2. Properties
      Our corporate headquarters is located in Omaha, Nebraska. Our owned headquarters facility encompass approximately 125,000 square feet of office space.
      We own four facilities totaling approximately 236,000 square feet, which we use as Communication Services contact centers. We own one facility in Omaha, Nebraska totaling 27,000 square feet, which is used for administrative activities. Through a synthetic lease agreement, we lease one location encompassing approximately 158,000 square feet. This location is used for both administrative and Communication Services production activities.
      As of December 31, 2004, our Communications Services segment leased or contracted for the use of contact centers and automated voice and data processing centers totaling approximately 1,400,000 square feet in 17 states and four foreign countries: Mumbai, India, Victoria, British Columbia, Canada; Makati City, Philippines and Montego Bay and Kingston, Jamaica.
      As of December 31, 2004, our Conferencing Services segment owned two operator assisted conferencing centers totaling approximately 42,000 square feet in two U.S. locations and leased another totaling approximately 52,000 square feet. Our Conferencing Service segment leased two operator assisted conferencing centers in the United Kingdom and Australia totaling approximately 8,000 and 7,000 square feet, respectively. Our Conferencing Services segment also leased approximately 140,000 square feet of office space for sales and administrative offices in 16 states and 7 foreign countries. Our Conferencing Services segment also owned a facility of approximately 68,000 square feet used for administrative activities in the U.S.
      As of December 31, 2004, our Receivables Management segment leases twelve contact centers totaling approximately 300,000 square feet in nine U.S. locations. Also, our Receivables Management segment leases approximately 60,000 square feet of office space for administrative activities and a contact center totaling approximately 4,000 square feet in Jalisco, Mexico.

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      The following table summarizes the geographic location of and the number of computer-assisted telephone workstations, voice response ports or conferencing ports by geographic region at our contact centers as of December 31, 2004.
                           
    Number of   Number of    
    Computer   Voice   Number of
    Assisted   Response   Conferencing
Geographic Location   Workstations   Ports   Ports
             
South
    7,844       73,782       35,207  
Midwest
    2,999       16,812       3,672  
Northwest
    292              
West
    598       46,582        
Northeast
    1,480             5,040  
                   
 
Total U.S. based
    13,213       137,176       43,919  
Foreign
    2,563             12,054  
                   
 
Total
    15,776       137,176       55,973  
                   
      We believe that our facilities are adequate for our current requirements and that additional space will be available as required. See Note 5 of Notes to Consolidated Financial Statements included elsewhere in this report for information regarding our lease obligations.
Item 3. Legal Proceedings
      From time to time, we are subject to lawsuits and claims which arise out of our operations in the normal course of our business. West and certain of our subsidiaries are defendants in various litigation matters in the ordinary course of business, some of which involve claims for damages that are substantial in amount. We believe, except for the items discussed below for which we are currently unable to predict the outcome, the disposition of claims currently pending will not have a material adverse effect on our financial position, results of operations or cash flows.
      Sanford v. West Corporation et al., No. GIC 805541, was filed February 13, 2003 in the San Diego County, California Superior Court. The original complaint alleged violations of the California Consumer Legal Remedies Act, Cal. Civ. Code §§ 1750 et seq., unlawful, fraudulent and unfair business practices in violation of Cal. Bus. & Prof. Code §§ 17200 et seq., untrue or misleading advertising in violation of Cal. Bus. & Prof. Code §§ 17500 et seq., and common law claims for conversion, unjust enrichment, fraud and deceit, and negligent misrepresentation, and sought monetary damages, including punitive damages, as well as restitution, injunctive relief and attorneys fees and costs. The complaint was brought on behalf of a purported class of persons in California who were sent a Memberworks, Inc. (“MWI”) membership kit in the mail, were charged for an MWI membership program, and were allegedly either customers of what the complaint contended was a joint venture between MWI and West Corporation (“West”) or West Telemarketing Corporation (“WTC”) or wholesale customers of West or WTC. WTC and West filed a demurrer in the trial court on July 7, 2004. The court sustained the demurrer as to all causes of action in plaintiff’s complaint, with leave to amend. WTC and West received an amended complaint and filed a renewed demurrer. The Court on January 24, 2005 entered an order sustaining West and WTC’s demurrer with respect to five of the seven causes of action including all causes of action that allow punitive damages.
      Plaintiffs had previously filed a complaint in the United States District Court for the Southern District of California against WTC and West and MemberWorks Incorporated alleging, among other things, claims under 39 U.S.C. § 3009. The federal court dismissed the federal claims against WTC and West and declined to exercise supplemental jurisdiction over the remaining state law claims. Plaintiff proceeded to arbitrate her claims with MemberWorks Incorporated and refiled her claims as to WTC and West in the Superior Court of San Diego County, California as set forth above. Plaintiff in the state action has contended in her pleadings that the order of dismissal in federal court was not a final order and that the federal case is still pending. The District Court on December 30, 2004 affirmed the arbitration award between plaintiff and Memberworks

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Incorporated. Plaintiff filed a Notice of Appeal on January 28, 2005. WTC and West are currently unable to predict the outcome or reasonably estimate the possible loss, if any, or range of losses associated with these claims.
      Brandy L. Ritt, et al. v. Billy Blanks Enterprises, et al. was filed in January 2001 in the Court of Common Pleas in Cuyahoga County, Ohio, against two of West’s clients. The suit, a purported class action, was amended for the third time in July 2001 and West Corporation was added as a defendant at that time. The suit, which seeks statutory, compensatory, and punitive damages as well as injunctive and other relief, alleges violations of various provisions of Ohio’s consumer protection laws, negligent misrepresentation, fraud, breach of contract, unjust enrichment and civil conspiracy in connection with the marketing of certain membership programs offered by West’s clients. On February  6, 2002, the court denied the plaintiffs’ motion for class certification. On July 21, 2003, the Ohio Court of Appeals reversed and remanded the case to the trial court for further proceedings. The plaintiffs have filed a Fourth Amended Complaint naming West Telemarketing Corporation as an additional defendant and a renewed motion for class certification. One of the defendants, NCP Marketing Group, filed bankruptcy and on July 12, 2004 removed the case to federal court. Plaintiffs have filed a motion to remand the case back to state court. All defendants opposed that motion. In addition, one of the defendants moved to transfer the case from the United States District Court for the Northern District of Ohio to the Bankruptcy Court in Nevada. Plaintiffs objected to the transfer. On October 29, 2004, the district court referred the case to the Bankruptcy Court for the Northern District of Ohio. It is uncertain when the case will be tried. West Corporation and West Telemarketing Corporation are currently unable to predict the outcome or reasonably estimate the possible loss, if any, or range of losses associated with this claim.
Item 4. Submission of Matters to a Vote of Security Holders
      No matter was submitted to a vote of security holders in the fourth quarter of the fiscal year covered by this report.
Executive Officers
      Our executive officers are as follows:
             
Name   Age   Position
         
Gary L. West
    59     Chairman of the Board and Director
Mary E. West
    59     Vice Chair of the Board, Secretary and Director
Thomas B. Barker
    50     Chief Executive Officer and Director
Nancee R. Berger
    44     President and Chief Operating Officer
J. Scott Etzler
    52     President — InterCall, Inc.
Jon R. Hanson
    38     Executive Vice President — Administrative Services and Chief Administrative Officer
Mark V. Lavin
    46     President — West Telemarketing, LP
Michael E. Mazour
    44     President — West Business Services, LP
Paul M. Mendlik
    51     Chief Financial Officer and Treasurer, Executive Vice President — Finance
James F. Richards
    52     President — West Asset Management, Inc.
Steven M. Stangl
    46     President — Communication Services
Todd B. Strubbe
    41     President — West Direct, Inc. and West Interactive Corporation
Michael M. Sturgeon
    43     Executive Vice President — Sales and Marketing
      Gary L. West co-founded WATS Marketing of America (“WATS”) in 1978 and remained with that company until 1985. Mr. West joined us in July 1987 after the expiration of a noncompetition agreement with

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WATS. Mr. West has served as Chairman of the Board since joining us. Mr. West and Mary E. West are husband and wife.
      Mary E. West co-founded WATS and remained with that company until 1985. In January 1986, she founded West. Mrs. West has served as our Vice Chair since 1987. Mrs. West and Mr. West are wife and husband.
      Thomas B. Barker joined us in 1991 as Executive Vice President of West Interactive Corporation. Mr. Barker was promoted to President and Chief Operating Officer in March 1995. Mr. Barker was promoted to President and Chief Executive Officer in September 1998.
      Nancee R. Berger joined West Interactive Corporation in 1989 as Manager of Client Services. Ms. Berger was promoted to Vice President of West Interactive Corporation in May 1994. She was promoted to Executive Vice President of West Interactive Corporation in March 1995, and to President of West Interactive Corporation in October 1996. She was promoted to Chief Operating Officer in September 1998 and to President and Chief Operating Officer in January 2004.
      J. Scott Etzler joined InterCall in June 1998 as President and Chief Operating Officer and was Chief Executive Officer from March 1999 until InterCall was acquired by us in May, 2003. Mr. Etzler has served as President of InterCall since the acquisition in May 2003.
      Jon R. (Skip) Hanson joined us in 1991 as a Business Analyst. In October 1999, he was promoted to Chief Administrative Officer and Executive Vice President of Corporate Services.
      Mark V. Lavin joined us in 1996 as Executive Vice President — West Telemarketing Corporation, was promoted to President in September 1998. From 1991 until 1996, he served in several key management roles within the hotel industry organizations, including Vice President of Carlson Hospitality Worldwide Reservation Center and General Manager of the Hyatt Reservation Center.
      Michael E. Mazour joined West Telemarketing Corporation in 1987 as Director — Data Processing Operations. Mr. Mazour was promoted to Vice President, Information Services of West Telemarketing Corporation Outbound in 1990, to Senior Vice President, Client Operations in 1995, to Executive Vice President in 1997 and to President in January 2004. He was named President of West Business Services, LP in November 2004.
      Paul M. Mendlik joined us in 2002 as Executive Vice President, Chief Financial Officer & Treasurer. Prior to joining us, he was a partner in the accounting firm of Deloitte & Touche LLP from 1984 to 2002.
      Jim Richards serves as President of West Asset Management, Inc. Previously, Mr. Richards co-founded and served as President of Attention LLC which was acquired by us in August 2002. Mr. Richards has over 30 years of industry experience.
      Steve M. Stangl joined West Interactive Corporation in 1993 as Controller. In 1998, Mr. Stangl was promoted to President of West Interactive Corporation. In January 2004, Mr. Stangl was promoted to President, Communication Services.
      Todd B. Strubbe joined West Direct, Inc. in July 2001, as President and was appointed President of West Interactive Corporation in January 2004. Previously, he was President and Chief Operating Officer of CompuBank, N.A. He was with First Data Corporation from 1995 to 2000 as Managing Director, Systems Architecture and Product Development and Vice President of Corporate Planning and Development. Prior to joining First Data, Mr. Strubbe was with McKinsey & Company, Inc.
      Michael M. Sturgeon joined us in 1991 as a National Account Manager, West Interactive Corporation. In September 1994, Mr. Sturgeon was promoted to Vice President of Sales and Marketing. In March 1997, Mr. Sturgeon was promoted to Executive Vice President, Sales and Marketing for the Company.

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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
      Our common stock is traded on the Nasdaq National Market under the symbol “WSTC.” The following table sets forth, for the periods indicated, the high and low sales prices of our common stock as reported on the Nasdaq National Market.
                 
    High   Low
         
2003
               
First Quarter
  $ 17.97     $ 13.17  
Second Quarter
  $ 28.55     $ 17.70  
Third Quarter
  $ 27.90     $ 22.45  
Fourth Quarter
  $ 26.35     $ 20.30  
2004
               
First Quarter
  $ 26.15     $ 22.15  
Second Quarter
  $ 27.40     $ 24.03  
Third Quarter
  $ 29.95     $ 23.34  
Fourth Quarter
  $ 36.29     $ 28.12  
      As of February 18, 2005, there were 66 holders of record of our common stock. As of the same date, we had 68,458,927 shares of common stock issued and 68,386,683 outstanding. No dividends have been declared with respect to our common stock since our initial public offering. We currently intend to use earnings to finance the growth and development of our business and do not anticipate paying cash dividends on our common stock in the foreseeable future. Any payment of dividends will be at the discretion of our Board of Directors and will depend upon earnings, financial condition, capital requirements, level of indebtedness, contractual restrictions with respect to payment of dividends and other factors.
Equity Compensation Plan Information
                         
            Number of Securities
            Remaining Available for
    Number of Securities to be   Weighted-Average Exercise   Future Issuance Under
    Issued upon Exercise of   Price of Outstanding   Equity Compensation Plans
    Outstanding Options,   Options, Warrant and   (Excluding Securities
    Warrants and Rights   Rights   Reflected in Column (a))
Plan category   (a)   (b)   (c)
             
Equity compensation plans approved by security holders
    6,771,858 *   $ 19.10       947,408  
Equity compensation plans not approved by security holders
                 
                   
Total
    6,771,858     $ 19.10       947,408  
                   
 
Does not include securities that may be issued under our Employee Stock Purchase Plan or the Executive Deferred Compensation Plan. The Stock Purchase Plan provides employees an opportunity to purchase our common stock through annual offerings. Each employee participating in any offering is granted an option to purchase as many full common shares as the participating employee may elect so long as the purchase price for such common stock does not exceed 10% of the compensation received by such employee from us during the annual offering period or 1,000 shares. The purchase price is to be paid through payroll deductions. The purchase price for each share is equal to 100% of the fair market value of the common stock on the date of the grant, determined by the average of the high and low market price on such date. On the last day of the offering period, the option to purchase common stock becomes exercisable. If at the end of the offering, the fair market value of the common stock is less than 100% of the fair market value at the date of grant, then

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the options lapse and the payroll deductions made with respect to the options will be applied to the next offering unless the employee elects to have the payroll deductions withdrawn from the Plan. No shares were issued under the plan in 2004. The maximum number of shares of common stock available for sale under the 2002 Stock Purchase Plan was 1,937,362.
      Pursuant to the terms of the Deferred Compensation Plan, eligible management, non-employee directors or highly compensated employees may elect to defer a portion of their compensation and have such deferred compensation invested in the same investments made available to participants of the 401(k) plan or notionally in our common stock. We match 50% of any amounts notionally invested in common stock, where matched amounts are subject to a five-year vesting schedule with 20% vesting each year. The maximum number of shares of common stock available under the Deferred Compensation Plan was 1,000,000.
Item 6. Selected Financial Data
      The following table sets forth, for the periods presented and at the dates indicated, our selected historical consolidated financial data. The selected consolidated historical income statement and balance sheet data has been derived from our audited historical consolidated financial statements. Our consolidated financial statements as of December 31, 2004 and 2003, and for the years ended December 31, 2004, 2003 and 2002, which have been audited by Deloitte & Touche LLP, independent auditors, are included elsewhere in this Annual Report. The information is qualified in its entirety by the detailed information included elsewhere in this Annual Report and should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and the “Consolidated Financial Statements and Notes” thereto included elsewhere in this Annual Report.
                                             
    Year Ended December 31,
     
    2004   2003   2002   2001   2000
                     
    (Dollars in thousands, except for per share and selected operating data)
Income Statement Data:
                                       
 
Revenue
  $ 1,217,383     $ 988,341     $ 820,665     $ 780,159     $ 724,505  
 
Cost of services
    541,979       440,260       399,276       398,892       371,549  
 
Selling, general and administrative expenses
    487,513       404,972       314,886       260,426       243,573  
                               
 
Operating income
    187,891       143,109       106,503       120,841       109,383  
 
Other income (expense)
    (6,368 )     (3,289 )     2,145       81       1,539  
                               
 
Income before income tax expense and minority interest
    181,523       139,820       108,648       120,922       110,922  
 
Income tax expense
    65,762       51,779       39,706       44,633       40,663  
                               
 
Income before minority interest
    115,761       88,041       68,942       76,289       70,259  
 
Minority interest in net income of a consolidated subsidiary
    2,590       165       300       503        
                               
 
Net income
  $ 113,171     $ 87,876     $ 68,642     $ 75,786     $ 70,259  
                               
 
Earnings per share:
                                       
   
Basic
  $ 1.67     $ 1.32     $ 1.04     $ 1.17     $ 1.10  
   
Diluted
  $ 1.63     $ 1.28     $ 1.01     $ 1.11     $ 1.03  
 
Weighted average number of common shares outstanding:
                                       
   
Basic
    67,643       66,495       65,823       64,895       64,043  
   
Diluted
    69,469       68,617       68,129       68,130       67,950  

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    Year Ended December 31,
     
    2004   2003   2002   2001   2000
                     
    (Dollars in thousands, except for per share and selected operating data)
Selected Operating Data:
                                       
 
Adjusted EBITDA(1)
  $ 288,978     $ 231,068     $ 170,022     $ 169,596     $ 154,756  
 
Adjusted EBITDA margin(2)
    23.7 %     23.4 %     20.7 %     21.7 %     21.4 %
 
Net cash flows from operating activities
  $ 222,475     $ 196,173     $ 121,218     $ 101,784     $ 111,050  
 
Net cash flows from investing activities
  $ (263,222 )   $ (475,461 )   $ (122,685 )   $ (39,461 )   $ (68,514 )
 
Net cash flows from financing activities
  $ 48,281     $ 166,765     $ (12,126 )   $ (18,916 )   $ 3,712  
 
Operating margin(3)
    15.4 %     14.5 %     13.0 %     15.5 %     15.1 %
 
Net income margin(4)
    9.3 %     8.9 %     8.4 %     9.7 %     9.7 %
 
Number of workstations (at end of period)
    15,776       13,231       14,230       11,675       10,147  
 
Number of IVR ports (at end of period)
    137,176       143,148       151,759       78,287       50,573  
                                           
    As of December 31,
     
    2004   2003   2002   2001   2000
                     
Balance Sheet Data:
                                       
 
Working capital
  $ 121,305     $ 80,793     $ 223,263     $ 235,180     $ 151,006  
 
Property and equipment, net
    223,110       234,650       213,641       202,671       197,178  
 
Total assets
    1,271,206       1,015,863       670,822       591,435       553,907  
 
Total debt
    258,498       192,000       29,647       30,271       41,355  
 
Stockholders’ equity
  $ 789,455     $ 656,238     $ 549,592     $ 468,159     $ 378,125  
 
(1)  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 and minority interest (“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. Also adjusted EBITDA is used in our debt covenants. The following is a reconciliation of EBITDA and adjusted EBITDA to net income.
                                         
    2004   2003   2002   2001   2000
                     
Net income
  $ 113,171     $ 87,876     $ 68,642     $ 75,786     $ 70,259  
Depreciation and amortization
    100,185       86,466       61,783       50,353       45,167  
Income taxes
    65,762       51,779       39,706       44,633       40,663  
Interest expense
    8,165       5,503       2,419       3,015       3,107  
                               
EBITDA
    287,283       231,624       172,550       173,787       159,196  
                               
Minority interest
    2,590       165       300       503        
Interest income
    (895 )     (721 )     (2,828 )     (4,694 )     (4,440 )
                               
Adjusted EBITDA
  $ 288,978     $ 231,068     $ 170,022     $ 169,596     $ 154,756  
                               
(2)  Represents adjusted EBITDA as a percentage of revenue. Adjusted EBITDA margin is not a measure of financial performance or liquidity under GAAP and should not be considered in isolation or as a substitution for other GAAP measures.
 
(3)  Represents operating income as a percentage of revenue.
 
(4)  Represents net income as a percentage of revenue.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Key 2004 Events
  •  Acquired Worldwide on August 1, 2004 and ECI on December 1, 2004.
 
  •  Began reporting results in three reportable segments: Communication Services, Conferencing Services and Receivables Management.
 
  •  Amended our bank credit facility and synthetic lease (see below for a discussion of the amendments).
 
  •  23.2% increase in consolidated revenue.
 
  •  Operating margins increased to 15.4% in 2004 compared to 14.5% in 2003.
 
  •  31.3% increase in operating income to $187.9 million.
 
  •  25.1% increase in Adjusted EBITDA to $289.0 million.
 
  •  Increased contact center workstations by 19%.
 
  •  Increased our foreign contact center capacity by over 100%.
Recent Events
      On December 1, 2004, we acquired ECI Conference Call Services LLC (ECI) for approximately $52 million. ECI is a provider of conferencing services, particularly operator-assisted calls. ECI is being integrated into our Conferencing Services segment, but will maintain its separate brand and market presence. The results of operations of ECI have been consolidated with our operating results since the acquisition date, December 1, 2004.
      On November 15, 2004, we amended our bank credit facility and synthetic lease. The amendments to the bank credit facility: (i) terminate the previously outstanding $200 million term loan, (ii) increase the revolving credit available to us from $250 million to $400 million; (iii) reduce the minimum and maximum interest rates; (iv) reduce the minimum and maximum commitment fees; (v) release the previously granted security interest; and (vi) amend certain negative covenants to provide us with more operating flexibility.
      The amendments to the synthetic lease: (i) reduce the minimum amount payable over LIBOR for advances in excess of 12% of the property costs from 100 basis points to 75 basis points; (ii) reduce the maximum amount payable over LIBOR for advances in excess of 12% of the property costs from 200 basis points to 125 basis points; (iii) reduce the minimum amount payable over LIBOR for advances not in excess of 12% of the property costs from 150 basis points to 125 basis points; (iv) reduce the maximum amount payable over LIBOR for advances not in excess of 12% of the property costs from 200 basis points to 175 basis points; (v) reduce the maximum amount payable over the alternative base rate for advances in excess of 12% of the property cost from 75 basis points to 25 basis points; and (vi) reduce the maximum amount payable over the alternative base rate for advances not in excess of 12% of the property costs from 125 basis points to 75 basis points.
Outlook
      On December 15, 2004, we announced our 2005 financial outlook. In that announcement, we stated that revenue expectations for our Communication Services segment are between $835 and $850 million with expected operating margins between 12% and 13%. Revenue expectations for our Conferencing Services segment are between $355 and $375 million with operating margins between 21.5% and 22.5%. Revenue expectations for the Receivables Management segment are between $185 million and $200 million with operating margins between 17% and 17.5%.

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Results of Operations
      In 2003 we began reporting results in two reportable segments: Communication Services and Conferencing Services. With the acquisition of Worldwide on August 1, 2004, we began reporting results in a third reportable segment, Receivables Management. Prior to the Worldwide acquisition the financial results of Attention were included in the Communication Services segment. Prior period segment disclosures have been reclassified to reflect this change.
      The following table sets forth our Consolidated Statement of Operations Data as a percentage of revenue for the periods indicated:
                         
    Year Ended December 31,
     
    2004   2003   2002
             
Revenue
    100.0 %     100.0 %     100.0 %
Cost of services
    44.6       44.5       48.6  
Selling, general and administrative expenses
    40.0       41.0       38.4  
Operating income
    15.4       14.5       13.0  
Other income (expense)
    (0.5 )     (0.4 )     0.2  
Income before income tax expense and minority interest
    14.9       14.1       13.2  
Income tax expense
    5.4       5.2       4.8  
Minority interest
    0.2              
                   
Net Income
    9.3 %     8.9 %     8.4 %
                   
Years Ended December 31, 2004 and 2003
      Revenue: Revenue increased $229.0 million, or 23.2%, to $1,217.3 million in 2004 from $988.3 million in 2003. $165.3 million of this increase was derived from the acquisitions of InterCall, ConferenceCall.com, Worldwide and ECI, which closed on May 9, 2003, November 1, 2003, August 1, 2004 and December 1, 2004, respectively. During 2004, revenue from our largest 100 customers, included $28.5 million of revenue derived from new clients.
      During the year ended December 31, 2004, our largest 100 clients represented 69% of revenues compared to 77% and 89% for the years ended December 31, 2003 and 2002, respectively. This reduced concentration is due to the acquisitions in 2004 and 2003 and reduced revenue from AT&T. We had one customer, AT&T, that accounted for 9% of total revenue for the year ended December 31, 2004 compared to 15% and 19% of total revenue for the years ended December 31, 2003 and 2002, respectively.
Revenue by business segment:
                                                   
    For the Year Ended,        
             
        % of Total       % of Total        
    2004   Revenue   2003   Revenue   Change   % Change
                         
Revenue in thousands:
                                               
 
Communication Services
  $ 817,718       67.2 %   $ 794,043       80.3 %   $ 23,675       3.0 %
 
Conferencing Services
    302,469       24.8 %     160,796       16.3 %     141,673       88.1 %
 
Receivables Management
    99,411       8.2 %     34,134       3.5 %     65,277       191.2 %
 
Intersegment eliminations
    (2,215 )     (0.2 )%     (632 )     (0.1 )%     (1,583 )     250.5 %
                                     
 
Total
  $ 1,217,383       100.0 %   $ 988,341       100.0 %   $ 229,042       23.2 %
                                     

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      Communication Services revenue increased $23.6 million, or 3.0%, to $817.7 million. This revenue increase was offset by a decline in outbound consumer revenue of $46.1 million due to a planned reduction in outbound consumer calling. Automated services decreased $35.1 million due largely to a reduction in volume of prepaid calling services. We believe this trend in prepaid calling services will continue.
      Conferencing Services revenue increased $141.7 million, or 88.1%, to $302.5 million. The increase in revenue included $106.3 million from the full year impact of the 2003 acquisitions of InterCall and ConferenceCall.com, which were acquired on May 9, 2003 and November 1, 2003, respectively, and the acquisition of ECI which occurred on December 1, 2004.
      Receivables Management revenue increased $65.3 million to $99.4 million. The 2004 and 2003 Receivables Management revenue includes Attention (previously included in Communication Services) and 2004 Receivables Management revenue includes Worldwide since its acquisition on August 1, 2004. The increase in revenue included $56.4 million from the acquisition of Worldwide. Sales of portfolio receivables during the five months ended December 31, 2004 resulted in net revenue of $2.4 million.
      Cost of Services: Cost of services represents direct labor, variable telephone expense and other costs directly related to providing services to clients. Cost of services increased $101.7 million, or 23.1%, to $542.0 million, from $440.3 million for the comparable period of 2003. The acquisitions of InterCall, ConferenceCall.com, Worldwide and ECI increased cost of services by $55.2 million. As a percentage of revenue, cost of services increased to 44.6% for 2004, compared to 44.5% in 2003.
Cost of Services by business segment:
                                                     
    For the Year Ended,        
             
    2004   % of Revenue   2003   % of Revenue   Change   % Change
                         
Cost of services in thousands:
                                               
 
Communication Services
  $ 396,979       48.5 %   $ 372,332       46.9 %     24,647       6.6 %
 
Conferencing Services
    96,100       31.8 %     48,825       30.4 %     47,275       96.8 %
 
Receivables Management
    50,649       50.9 %     19,695       57.7 %     30,954       157.2 %
 
Intersegment eliminations
    (1,749 )     79.0 %     (592 )     93.7 %     (1,157 )     195.4 %
                                     
   
Total
  $ 541,979       44.6 %   $ 440,260       44.5 %   $ 101,719       23.1 %
                                     
      Communication Services cost of services increased $24.6 million, or 6.6%, in 2004 to $397.0 million. The increase is primarily due to higher labor costs associated with the increase in revenue. As a percentage of revenue, communication services cost of services increased to 48.5% in 2004, compared to 46.9%, in 2003. During 2004, new contact centers were opened in Niles, Ohio and in Makati City, Philippines. In addition, two outbound contact centers and approximately 800 workstations were converted to the inbound dedicated agent business. The transition costs from this activity contributed to an increase in cost of services.
      Conferencing Services cost of services increased $47.3 million, or 96.8%, in 2004 to $96.1 million. The 2003 cost of services represents a partial year as InterCall and ConferenceCall.com were acquired on May 9, 2003 and November  1, 2003, respectively. As a percentage of revenue, Conferencing Services cost of services increased to 31.8% in 2004, compared to 30.4%, for the comparable period in 2003.
      Receivables Management cost of services increased $31.0 million, or 157.2%, in 2004 to $50.6 million. The 2004 and 2003 Receivables Management cost of services includes Attention (previously included in Communication Services) and Worldwide since its acquisition on August 1, 2004. As a percentage of revenue, Receivable Management cost of services decreased to 50.9% in 2004, compared to 57.7%, for the comparable

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period in 2003. This reduction as a percentage of revenue is due to the acquisition of Worldwide, which historically had a lower percentage of cost of services to revenue than did Attention.
      Selling, General and Administrative Expenses: SG&A expenses increased $82.5 million, or 20.4%, to $487.5 million in 2004 from $405.0 million for the comparable period of 2003. The acquisitions of InterCall, ConferenceCall.com, Worldwide and ECI increased SG&A expense by $62.1 million. As a percentage of revenue, SG&A expenses decreased to 40.0% in 2004, compared to 41.0% in 2003. This decrease is partially attributed to the acquisition of Worldwide, which historically had a lower percentage of SG&A to revenue than our previously consolidated entities. This decrease as a percentage of revenue was accomplished despite an increase in depreciation of $6.4 million and amortization of $7.3 million in 2004.
Selling, general and administrative expenses by business segment:
                                                     
    For the Year Ended,        
             
    2004   % of Revenue   2003   % of Revenue   Change   % Change
                         
Selling, general and administrative expenses in thousands
                                               
 
Communication Services
  $ 315,101       38.5 %   $ 311,730       39.3 %   $ 3,371       1.1 %
 
Conferencing Services
    139,105       46.0 %     78,791       49.0 %     60,314       76.5 %
 
Receivables Management
    33,773       34.0 %     14,491       42.5 %     19,282       133.1 %
 
Intersegment elimination
    (466 )     21.0 %     (40 )     6.3 %     (426 )     1,065.0 %
                                     
   
Total
  $ 487,513       40.0 %   $ 404,972       41.0 %   $ 82,541       20.4 %
                                     
      Communication Services SG&A expenses increased $3.4 million, or 1.1%, to $315.1 million. The conversion of workstations from outbound to inbound, discussed previously under cost of services, increased SG&A expenses as a percent of revenue. Also, during 2004, site expansion activities took place in seven domestic contact centers and three international contact centers contributing to increases in SG&A and capital expenditures. As a percentage of revenue, Communication Services SG&A expenses decreased to 38.5% in 2004 compared to 39.3% in 2003. This reduction was partially due to lower bad debt expense, which decreased to $3.2 million in 2004 compared to $8.8 million in 2003.
      Conferencing Services SG&A expenses increased $60.3 million, or 76.5%, to $139.1 million. The 2003 SG&A represents a partial year as InterCall and ConferenceCall.com were acquired on May 9, 2003 and November 1, 2003, respectively. As a percentage of revenue, Conferencing Services SG&A expenses decreased to 46.0% in 2004 compared to 49.0% in 2003. The decline in SG&A as a percentage of revenue is partially due to synergies achieved with the acquisition of ConferenceCall.com.
      Receivables Management SG&A expenses increased $19.3 million, or 133.1%, to $33.8 million. The 2004 and 2003 Receivables Management SG&A includes Attention (previously included in Communication Services) and Worldwide since its acquisition on August 1, 2004. As a percentage of revenue, Receivables Management SG&A decreased to 34.0% in 2004, compared to 42.5% in 2003. This reduction as a percentage of revenue is due to the acquisition of Worldwide, which historically had a lower percentage of SG&A to revenue than did Attention as well as the ability to spread these expenses over a larger revenue base.
      Operating Income: Operating income increased by $44.8 million, or 31.3%, to $187.9 million in 2004 from $143.1 million for the comparable period of 2003. As a percentage of revenue, operating income increased to 15.4% in 2004 compared to 14.5% in 2003 due to the factors discussed above for revenue, cost of services and SG&A expenses.

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Operating income by business segment:
                                                     
    For the Year Ended,            
                 
    2004   % of Revenue   2003   % of Revenue   Change   % Change
                         
Operating income in thousands
                                               
 
Communication Services
  $ 105,638       12.9 %   $ 109,981       13.9 %   $ (4,343 )     (3.9 )%
 
Conferencing Services
    67,264       22.2 %     33,180       20.6 %     34,084       102.7 %
 
Receivables Management
    14,989       15.1 %     (52 )     (0.2 )%     15,041        
                                     
   
Total
  $ 187,891       15.4 %   $ 143,109       14.5 %   $ 44,782       31.3 %
                                     
      Communication Services operating income decreased by $4.3 million, or 3.9%, to $105.6 million in 2004. As a percentage of revenue, Communication Services operating income decreased to 12.9% in 2004 compared to 13.9% in 2003 due to the factors discussed above for revenue, cost of services and SG&A expenses.
      Conferencing Services operating income increased by $34.1 million, or 102.7%, to $67.3 million in 2004. The 2003 operating income represents a partial year as InterCall and ConferenceCall.com were acquired on May 9, 2003 and November 1, 2003, respectively. As a percentage of revenue, Conferencing Services operating income increased to 22.2% in 2004 compared to 20.6% in 2003.
      Receivables Management operating income increased by $15.0 million, in 2004. The 2004 and 2003 Receivables Management operating income includes Attention (previously included in Communication Services) and 2004 operating income includes Worldwide since its acquisition on August 1, 2004. As a percentage of revenue, Receivables Management operating income increased to 15.1% in 2004, compared to (0.2)% in 2003.
      Other Income (Expense): Other income (expense) includes sub-lease rental income, interest income from short-term investments and interest expense from short-term and long-term borrowings under credit facilities and portfolio notes payable. Other income (expense) in 2004 was $(6.4) million compared to $(3.3) million in 2003. The change in other expense in 2004 is primarily due to interest expense on increased outstanding debt incurred for acquisitions and interest expense on portfolio notes payable.
      Minority Interest: Effective September 30, 2004, one of our portfolio receivable lenders, CFSC Capital Corp. XXXIV, exchanged its rights to share profits in certain portfolio receivables for an approximate 30% minority interest in one of our subsidiaries, Worldwide Asset Purchasing, LLC. We became a party to the CFSC Capital Corp. relationship as a result of the Worldwide acquisition. The minority interest in the earnings of Worldwide Asset Purchasing, LLC for 2004 was $2.6 million.
      Net Income: Net income increased $25.3 million, or 28.8%, to $113.2 million in 2004 compared to $87.9 million in 2003. Diluted earnings per share were $1.63 compared to $1.28 in 2003.
      Net income includes a provision for income tax expense at an effective rate of approximately 36.8% for 2004. This compares to 37.0% in 2003.
Years Ended December 31, 2003 and 2002
      Revenue: Revenues increased $167.6 million, or 20.4%, to $988.3 million in 2003 from $820.7 million in 2002. The increase in revenue included $10.4 million of revenue derived from new clients and $187.3 million derived from the acquisitions of Dakotah Direct, Attention, InterCall and ConferenceCall.com, which closed on March 1, 2002, August 1, 2002, May 9, 2003 and November 1, 2003, respectively. The overall revenue increase was partially offset by lower call volumes in certain product lines in the Communication Services segment. In addition, pricing pressures and concessions continue in both the Communication Services and Conferencing Services segments.

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      During the year ended December 31, 2003, our largest 100 clients represented 77% of revenues compared to 89% and 86% for the years ended December 31, 2002 and 2001, respectively. This reduced concentration is due to the InterCall acquisition. For the year ended December 31, 2003, InterCall had over 27,000 customers. We had one customer, AT&T, that accounted for 15% of total revenue for the year ended December 31, 2003 and 19% and 21% of total revenue for the years ended December 31, 2002 and 2001, respectively. These percentages do not include the former Wireless and Broadband units of AT&T, which were divested from AT&T in 2002.
Revenue by business segment:
                                                     
    For the Year Ended,        
             
        % of Total       % of Total        
    2003   Revenue   2002   Revenue   Change   % Change
                         
Revenue in thousands:
                                               
 
Communication Services
  $ 794,043       80.3 %   $ 808,276       98.5 %   $ (14,233 )     (1.8 )%
 
Conferencing Services
    160,796       16.3 %     n/a       n/a       160,796       n/a  
 
Receivables Management
    34,134       3.5 %     12,389       1.5 %     21,745       175.5 %
 
Intersegment eliminations
    (632 )     (0.1 )%     n/a       n/a       (632 )     n/a  
                                     
   
Total
  $ 988,341       100.0 %   $ 820,665       100.0 %   $ 167,676       20.4 %
                                     
      Communication Services revenue for the year ended December 31, 2003, decreased $14.2 million, or 1.8%, to $794.0 million for the year ended December 31, 2002.
      Conferencing Services revenue for 2003 was $160.7 million. This 2003 revenue is derived from the acquisitions of InterCall and ConferenceCall.com During 2003, the average rate per minute declined while total minutes grew. This is consistent with a recent trend of declining rates offset by increasing minute volumes.
      Receivables Management revenue for 2003 was $34.1 million. This represents a full year of operation for Attention. The 2002 Receivable Management revenue represented Attention’s revenue from the date of acquisition, August 1, 2002.
      Cost of Services: Cost of services represents direct labor, telephone expense and other costs directly related to providing services to clients. Cost of services increased $41.0 million, or 10.3%, in 2003 to $440.3 million, from $399.3 million for the comparable period of 2002. As a percentage of revenue, cost of services decreased to 44.5% for 2003, compared to 48.7%, for the comparable periods in 2002. This reduction was primarily due to the acquisition of InterCall, which historically has had a lower percentage of direct costs to revenue than our Communication Services segment.
Cost of Services by business segment:
                                                     
    For the Year Ended,        
             
    2003   % of Revenue   2002   % of Revenue   Change   % Change
                         
Cost of services in thousands:
                                               
 
Communication Services
  $ 372,332       46.9 %   $ 391,814       48.5 %   $ (19,482 )     (5.0) %
 
Conferencing Services
    48,825       30.4 %     n/a       n/a       48,825       n/a  
 
Receivables Management
    19,695       57.7 %     7,462       60.2 %     12,233       163.9 %
 
Intersegment eliminations
    (592 )     93.7 %     n/a       n/a       (592 )     n/a  
                                     
   
Total
  $ 440,260       44.5 %   $ 399,276       48.7 %   $ 40,984       10.3 %
                                     

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      Communication Services costs of services decreased $19.5 million, or 5.0%, in 2003 to $372.3 million, from $391.8 million for the comparable period of 2002. As a percentage of revenue, Communication Services cost of services decreased to 46.9% for 2003, compared to 48.5% in 2002. The decrease in cost of services as a percentage of revenue can be attributed primarily to continued control of variable labor costs, a greater percentage of call volumes of certain product lines which traditionally have a lower direct cost as a percent of revenue than other Communication Services operations and the exiting of the 900 services provided by the Communication Services segment during 2002 which had higher direct costs as a percentage of revenue than other Communication Services product offerings. In 2003, the Communication Services segment incurred a $3.0 million charge related to the sale of one contact center and closing of three other contact centers. Similarly, in 2002, the Communication Services segment incurred a $2.5 million charge related to the closing of several contact centers.
      Conferencing Services cost of services for 2003 was $48.8 million or 30.4% of revenue and represents cost of services incurred since the acquisition of InterCall and ConferenceCall.com on May 9, 2003 and November  1, 2003, respectively.
      Receivables Management cost of services for 2003 was $19.7 million. This represents a full year of operation for Attention. The 2002 Receivable Management cost of services represented Attention’s cost of services from the date of acquisition, August 1, 2002.
      Selling, General and Administrative Expenses: SG&A expenses increased $90.1 million, or 28.6%, to $405.0 million for 2003 from $314.9 million for the comparable period of 2002. The acquisition of InterCall and ConferenceCall.com increased SG&A expense by $78.8 million. As a percentage of revenue, SG&A expenses increased to 41.0% for 2003, compared to 38.4% in 2002. This increase is partially attributed to increases in depreciation of $16.7 million and amortization of $7.9 million for 2003. Salaries and benefits in the Communications Services segment increased $10.5 million or 6.6%. Partially offsetting the increase in SG&A for 2003 was a $14.5 million reduction of bad debt expense to $10.0 million for 2003.
Selling, general and administrative expenses by business segment:
                                                     
    For the Year Ended,        
             
    2003   % of Revenue   2002   % of Revenue   Change   % Change
                         
Selling, general and administrative expenses in thousands
                                               
 
Communication Services
  $ 311,730       39.3 %   $ 310,962       38.5 %   $ 768       0.2 %
 
Conferencing Services
    78,791       49.0 %     n/a       n/a       78,791       n/a  
 
Receivables Management
    14,491       42.5 %     3,924       31.7 %     10,567       269.3 %
 
Intersegment eliminations
    (40 )     6.3 %     n/a       n/a       (40 )     n/a  
                                     
   
Total
  $ 404,972       41.0 %   $ 314,886       38.4 %   $ 90,086       28.6 %
                                     
      Communication Services SG&A expenses increased by $0.7 million, or 0.2%, to $311.7 million for 2003 from $311.0 million for the comparable period of 2002. As a percentage of revenue, SG&A expenses increased to 39.3% in 2003, compared to 38.5% in 2002. Bad debt expense decreased $15.6 million to $8.9 million for 2003 from $24.5 million for 2002. This reduction in bad debt expense was due to improvements in the quality of our accounts and notes receivable. We believe that the bad debt expense experienced in 2002 was unusual and that this year’s experience is more representative of normal historical trends.
      Conferencing Services SG&A expenses were $78.8 million or 49.0% of revenue and represents cost of services incurred since the acquisition of InterCall and ConferenceCall.com on May 9, 2003 and November 1, 2003, respectively.
      Receivables Management SG&A expenses for 2003 was $14.5 million. This represents a full year of operation for Attention. The 2002 Receivable Management SG&A expenses represented Attention’s SG&A expenses from the date of acquisition, August 1, 2002.

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      Operating Income: Operating income increased by $36.6 million, or 34.4%, to $143.1 million for 2003 from $106.5 million for the comparable period of 2002. As a percentage of revenue, operating income increased to 14.5% for 2003 compared to 13.0% in 2002 due to the factors discussed above for revenue, cost of services and SG&A expenses.
Operating income by business segment:
                                                     
    For the Year Ended,        
             
    2003   % of Revenue   2002   % of Revenue   Change   % Change
                         
Operating income in thousands
                                               
 
Communication Services
  $ 109,981       13.9 %   $ 105,500       13.1 %   $ 4,481       4.2 %
 
Conferencing Services
    33,180       20.6 %     n/a       n/a       33,180       n/a  
 
Receivables Management
    (52 )     (0.2 )%     1,003       8.1 %     (1,055 )     (105.2 )%
                                     
   
Total
  $ 143,109       14.5 %   $ 106,503       13.0 %   $ 36,606       34.4 %
                                     
      Communication Services operating income increased by $4.5 million, or 4.2%, to $110.0 million for 2003 up from $105.5 million for the comparable period of 2002.
      Conferencing Services operating income was $33.2 million or 20.6% of revenue and represents operating income since the acquisition of InterCall and ConferenceCall.com on May 9, 2003 and November 1, 2003, respectively.
      Receivables Management operating income for 2003 was $(0.1) million. This represents a full year of operation for Attention. The 2002 Receivable Management operating income represented Attention’s operating income from the date of acquisition, August 1, 2002.
      Other Income (Expense): Other income (expense) includes sub-lease rental income, interest income from short-term investments and interest expense from short-term and long-term obligations. Other income (expense) totaled $(3.3) million in 2003 compared to $2.1 million in 2002. The change is primarily due to interest expense of $4.8 million on the debt incurred for the acquisitions of InterCall and ConferenceCall.com. Interest expense in 2003 totaled $5.5 million compared to $2.4 million in 2002. Interest income was $0.7 million in 2003 compared to $2.8 million in 2002. The change in interest income is primarily due to lower average cash balances and lower average interest rates during 2003.
      Net Income: Net income increased $19.3 million, or 28.1%, to $87.9 million in 2003 compared to $68.6 million in 2002. Diluted earnings per share were $1.28 compared to $1.01 in 2002.
      Net income includes a provision for income tax expense at an effective rate of approximately 37.0% for 2003. This compares to 36.6% in 2002.
Liquidity and Capital Resources
      The following table summarizes our cash flows by category for the periods presented (in thousands):
                                 
    For the Years Ended        
    December 31,        
             
    2004   2003   Change   % Change
                 
Net cash provided by operating activities
  $ 222,475     $ 196,173     $ 26,302       13.4 %
Net cash used in investing activities
  $ (263,222 )   $ (475,461 )   $ 212,239       (44.6 )%
Net cash flows from financing activities
  $ 48,281     $ 166,765     $ (118,484 )     (71.0 )%

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      Our primary cash requirements include the funding of the following:
  •  operating expenses;
 
  •  acquisitions;
 
  •  tax payments;
 
  •  capital expenditures, including the purchase of property and equipment;
 
  •  purchase of portfolio receivables; and
 
  •  interest payments and the repayment of principal on debt;
      Our primary source of liquidity has been cash flow from operations, supplemented by borrowings under our bank credit facilities. In addition, we had unrestricted cash of $21.3 million as of December 31, 2004, which is available to meet our cash requirements.
      Net cash flow from operating activities increased $26.3 million, or 13.4%, to $222.5 million for 2004, compared to net cash flows from operating activities of $196.2 million for 2003. The increase in net cash flows from operating activities is due primarily to an increase in net income, accounts payable and other liabilities. Non-cash depreciation and amortization expense also contributed to the increase in operating cash flows. This increase in operating cash flow was partially offset by an increase in accounts receivable and other assets.
      Days sales outstanding, a key performance indicator we utilize to monitor the accounts receivable average collection period and assess overall collection risk, was 50 days at December 31, 2004, and ranged from 48 to 50 days during the year. At December 31, 2003, the days sales outstanding was 49 days and ranged from 48 to 52 days during the year.
      Net cash used in investing activities decreased $212.2 million or 44.6% to $263.2 million for 2004, compared to net cash used in investing activities of $475.4 million for 2003. The decrease in cash used in investing activities was due to acquisition costs incurred in 2003 for the acquisition of InterCall and ConferenceCall.com relative to the acquisition costs incurred in 2004 for the acquisitions of Worldwide and ECI. We invested $59.9 million in capital expenditures during 2004 compared to $46.3 million for 2003. Investing activities also included the purchase of receivable portfolios for $28.7 million and the cash proceeds applied to amortization of receivable portfolios of $19.7 million. We did not utilize any new capital lease financing during 2004.
      Net cash from financing activities decreased $118.5 million or 71.0% to $48.3 million for 2004, compared to net cash flow from financing activities of $166.8 million for 2003. The primary source of financing in 2004 was $230.0 million in net borrowings on our revolving credit facility, which we used for the acquisitions of Worldwide and ECI. The primary source of financing in 2003 was the $200.0 million term loan that we used for the acquisition of InterCall. During 2004, net cash from financing activities was partially offset by repaying the outstanding balance on the term loan of $192.0 million and payments on portfolio notes payable (which we assumed in the Worldwide acquisition) of $28.5 million. Proceeds from issuance of portfolio notes payable were $25.3 million. Proceeds from our stock-based employee benefit programs were $14.6 million in 2004 compared to $8.9 million in 2003.
      We funded the acquisition of Worldwide with approximately $49.1 million of cash on hand and approximately $95.0 million of borrowings from our revolving credit facility. In addition, we assumed approximately $49.0 million of Worldwide liabilities. We funded the acquisition of ECI with approximately $13.2 million of cash on hand and approximately $40.0 million of borrowings from our revolving credit facility.
      We have a $400 million revolving bank credit facility for general cash requirements. We also have two specialized credit facilities for the purchase of receivable portfolios.
      Bank Facility. On November 15, 2004, we amended and restated the two bank credit facilities we entered into during 2003. The effect of this amendment and restatement was to terminate the $200.0 million four-year term loan, that had a $137.5 million unpaid balance and increase the borrowing capacity of the revolving credit facility from $250.0 million to $400.0 million. The maturity date of the new credit facility is

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November 15, 2009. The facility bears interest at a variable rate over a selected LIBOR based on our leverage. At December 31, 2004, $230.0 million was outstanding on the revolving credit facility, which was the highest period end balance of the revolving credit facility. The average daily outstanding balance of the revolving credit facility during 2004, was $57.8 million. The effective annual interest rate, inclusive of debt amortization costs, on the revolving credit facility for the year ended December 31, 2004 was 3.42%. The commitment fee on the unused revolving credit facility at December 31, 2004, was 0.175%. The amended and restated facility bears interest at a minimum of 75 basis points over the selected LIBOR and a maximum of 125 basis points over the selected LIBOR. All our obligations under the facility are unconditionally guaranteed by substantially all of our domestic subsidiaries. The facility contains various financial covenants, which include a consolidated leverage ratio of funded debt to adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) which may not exceed 2.5 to 1.0 and a consolidated fixed charge coverage ratio of adjusted EBITDA to the sum of consolidated interest expense, scheduled funded debt payments, scheduled payments on acquisition earn-out obligations and income taxes paid, which must exceed 1.2 to 1.0. Both ratios are measured on a rolling four-quarter basis. We were in compliance with the financial covenants at December 31, 2004.
      Cargill Facility. As of September 30, 2004, through a majority-owned subsidiary, Worldwide Asset Purchasing, LLC (WAP), we amended WAP’s revolving financing facility with a third party specialty lender, CFSC Capital Corp. XXXIV. The lender is also a minority interest holder in WAP. Pursuant to this arrangement, we will borrow 80% to 85% of the purchase price of each portfolio purchase made from CFSC Capital Corp. XXXIV and we will fund the remainder. Interest accrues on the debt at a variable rate of 2% over prime. The debt is non-recourse and is collateralized by all receivable portfolios within a loan series. Each loan series contains a group of portfolio asset pools that have an aggregate original principal amount of approximately $20 million. Payments are due monthly over two years from the date of origination. At December 31, 2004, we had $28.5 million of non-recourse portfolio notes payable outstanding under this facility.
      Sallie Mae Facility. In December 2003, we, through our wholly-owned subsidiary Attention, LLC, established a $20 million revolving financing facility with a third-party specialty lender and capitalized a consolidated special purpose entity (“SPE”) for the sole purpose of purchasing defaulted accounts receivable portfolios. We have agreed to finance under the amended facility the purchase of $60.0 million in receivable portfolios over the next three years as follows: $10.0 million by July 31, 2005, $25.0 million of cumulative purchases by July 31, 2006 and the balance by July 31, 2007. Pursuant to this credit facility, we will be required to finance a minimum of $12.0 million of the purchases and the third party lender will finance the remainder of the purchases on a non-recourse basis. Interest accrues on the debt at a variable rate equal to the greater of (i) prime plus 2% or (ii) 50 basis points above the lenders actual cost of funds. In certain circumstances, we may extend the three-year period to four years. These assets will be purchased by us, transferred to the SPE and sold to a non-consolidated qualified special purpose entity (“QSPE”).
      We will perform collection services on the receivable portfolio for a fee, recognized when cash is received. The SPE and the third party lender will also be entitled to a portion of the profits of the QSPE to the extent cash flows from collections are greater than amounts owed by the QSPE, after repayment of all servicing fees, loan expense and return of capital. On December 31, 2004, the SPE had a note receivable from the QSPE for $1.6 million. Also, on December 31, 2004, $2.6 million of the $20.0 million revolving financing facility had been utilized.
Contractual Obligations
      As described in “Financial Statements and Supplementary Data,” we have contractual obligations that may affect our financial condition. However, based on management’s assessment of the underlying provisions and circumstances of our material contractual obligations, there is no known trend, demand, commitment, event or uncertainty that is reasonably likely to occur which would have a material effect on our financial condition or results of operations.

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      The following table summarizes our contractual obligations at December 31, 2004 (dollars in thousands):
                                         
        Less than           After
Contractual Obligations   Total   1 Year   1 - 3 Years   4 - 5 Years   5 Years
                     
Revolving credit facility
  $ 230,000     $     $     $ 230,000     $  
Operating leases
    92,149       21,430       32,197       17,845       20,677  
Contractual minimums under telephony agreements
    102,978       66,766       36,212              
Purchase obligations*
    23,484       23,484                    
Acquisition earn out
commitments**
    20,169       8,919       11,250              
Commitments under forward flow agreements***
    32,175       32,175                    
                               
Total contractual cash obligations
  $ 500,955     $ 152,774     $ 79,659     $ 247,845     $ 20,677  
                               
 
  Represents future obligations for capital and expense projects that are in progress or are committed.
  **  Represents the minimum amounts payable. If the earnout conditions were fully satisfied an additional $28.5 million would be payable over the next 1-3 years.
***  Up to 85% of this obligation could be funded by non-recourse financing.
The table above excludes variable interest expense under our credit facility and amounts paid for taxes.
      The acquisition earn out commitments, noted above, represent commitments incurred for the acquisitions of Tel Mark Sales and Attention, which were completed in 2002. Under the Tel Mark Sales commitment there is a provision for a contingent earn-out with a maximum earn-out of $5.0 million per year based on revenue growth. In 2004, the final year of this contingent earn-out, an accrual of $3.67 million was recorded. In the Attention acquisition, additional consideration is payable over the three year period between 2005 and 2007, which will range from a minimum of $16.5 million to a maximum of $25.0 million, based on Attention satisfying certain earnings objectives during the years ending December 31, 2004 through 2006. During 2004, $5.0 million was paid under this commitment. At December 31, 2004, the remaining $16.5 minimum payment was accrued in accrued expenses and other long term liabilities.
Capital Expenditures
      Our operations continue to require significant capital expenditures for technology, capacity expansion and upgrades. Capital expenditures were $59.9 million for the year ended December 31, 2004, which were funded through operations and use of our bank credit facility. Capital expenditures were $46.3 million for the year ended December 31, 2003. Capital expenditures for the year ended December 31, 2004 consisted primarily of equipment purchases, the cost of new call centers in the Philippines and Ohio as well as upgrades at existing facilities. We currently project our capital expenditures for 2005 to be approximately $60.0 to $70.0 million primarily for capacity expansion and upgrades at existing facilities.
      We believe that the cash flows from operations, together with existing cash and cash equivalents and available borrowings under our bank credit facility will be adequate to meet our capital requirements for at least the next 12 months. Our credit facility, discussed above, includes covenants which allow us the flexibility to issue additional indebtedness that is pari passu with or subordinated to the existing credit facilities in an aggregate principal amount not to exceed $400.0 million, allow us to incur capital lease indebtedness in an aggregate principal amount not to exceed $25.0 million and allow us to incur accounts receivable securitization indebtedness in an aggregate principal amount not to exceed $100.0 million and non-recourse indebtedness in an aggregate principal amount not to exceed $150.0 million without requesting a waiver from the lender. We may pledge additional property or assets of our subsidiaries, which are not already pledged as collateral securing existing credit facilities or any of our affiliates. We or any of our affiliates may be required to guarantee any existing or additional credit facilities.

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Off-Balance Sheet Arrangements
      We amended a lease for two buildings from a development company in 2003. The development company is not a variable interest entity as defined by Financial Accounting Standards Board (“FASB”) Interpretation No. 46R, Consolidation of Variable Interest Entities (an interpretation of ARB No. 51) (“FIN 46R”). The initial lease term expires in 2008. There are three renewal options of five years each subject to mutual agreement of the parties. The lease facility bears interest at a variable rate over a selected LIBOR, which resulted in an annual effective interest rate of 2.80% at December 31, 2004. On December 13, 2004, the San Antonio building was sold and is therefore no longer subject to the terms of the synthetic lease agreement. We may, at any time, elect to exercise a purchase option of approximately $30.5 million for the Omaha building. If we elect not to purchase the building or renew the lease, the building would be returned to the lessee for remarketing. We have guaranteed a residual value of 85% to the lessor upon the sale of the building. At December 31, 2004, the fair value of the guaranteed residual value for the Omaha building was approximately $1.149 million and is included in other long term assets and other long term liabilities.
      Sallie Mae Facility. In December 2003, we established a $20.0 million revolving financing facility with a third-party specialty lender and capitalized a consolidated special purpose entity (“SPE”) for the sole purpose of purchasing defaulted accounts receivable portfolios. These assets will be purchased by us, transferred to the SPE and sold to a non-consolidated qualified special purpose entity (“QSPE”).
      We will perform collection services on the receivable portfolios for a fee, recognized when cash is received. The SPE and the third party lender will also be entitled to a portion of the profits of the QSPE to the extent cash flows from collections are greater than amounts owed by the QSPE, after repayment of all servicing fees, loan expense and return of capital. At December 31, 2004, the SPE had a note receivable from the QSPE for $1.6 million. Also, at December 31, 2004, $2.6 million of the $20.0 million revolving financing facility had been utilized.
      During 2004 we amended this financing facility. We agreed to finance under the amended facility the purchase of $60.0 million in receivable portfolios over the next three years as follows: $10.0 million by July 31, 2005, $25.0 million of cumulative purchases by July 31, 2006 and the balance by July 31, 2007. Pursuant to this facility, we will be required to finance a minimum of $12.0 million of the purchases and the third party lender will finance the remainder of the purchases on a non-recourse basis. In certain circumstances, we may extend the three year period to four years.
Inflation
      We do not believe that inflation has had a material effect on our results of operations. However, there can be no assurance that our business will not be affected by inflation in the future.
Critical Accounting Policies
      The process of preparing financial statements requires the use of estimates on the part of management. The estimates used by management are based on our historical experiences combined with management’s understanding of current facts and circumstances. Certain of our accounting policies are considered critical as they are both important to the portrayal of our financial condition and results and require significant or complex judgment on the part of management. We believe the following represent our critical accounting policies as contemplated by Securities and Exchange Commission Financial Reporting Release No. 60, “Cautionary Advice Regarding Disclosure About Critical Accounting Policies.”
      Revenue Recognition. The Communication Services segment recognizes revenue for customer-initiated, agent based services, including order processing, customer acquisition, customer retention and customer care in the month that calls are answered by an agent based on the number of calls and/or minutes received and processed on behalf of clients. For agent based services that we initiate including order processing, customer acquisition, customer retention and customer care, revenue is recognized on an hourly basis or on a success rate basis in the month that we place calls to consumers on behalf of clients. Automated services revenue is

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recognized in the month that the calls are received or sent by automated voice response units and is billed based on call duration.
      The Conferencing Services segment recognizes revenue when services are provided and generally consists of per-minute charges. Revenues are reported net of any volume or special discounts.
      The Receivables Management segment recognizes contingency fee revenue in the month collection payments are received based upon a percentage of cash collected or other agreed upon contractual parameters.
      The acquisition of Worldwide on August 1, 2004 resulted in us adopting a critical accounting policy for revenue recognition of purchased receivables. We believe that the amounts and timing of cash collections for our purchased receivables can be reasonably estimated and therefore, we utilize the effective interest method of accounting for our purchased receivables as set forth in Accounting Standards Executive Committee Practice Bulletin 6 (“PB6”). Selection of this revenue recognition policy, versus the cash recovery method, is based on our historical results and our knowledge of the industry. In accordance with this revenue recognition policy, each pool of receivables is recorded at historical cost and statistically modeled to determine its projected cash flows based on historical cash collections for pools with similar characteristics. The relevant factors in computing the cash flow are the timing, which typically averages from 50 to 60 months, and amount of cash to be received. An internal rate of return (“IRR”) is established for each pool of receivables based on the projected cash flows and applied to the balance of the pool. The resulting revenue recognized is based on the IRR applied to the remaining balance of each pool of accounts. The effective interest method is used to allocate cash collections between revenue and amortization of the portfolios (principal reduction). Revenue is recognized over the period of the purchased receivables anticipated cash flow using the resulting yield. In the event that cash collected would be inadequate to amortize the carrying value, an impairment charge would be taken. In the event that cash collected would result in an excess amortization of the carrying value, the IRR would be adjusted. Periodically the receivables management segment will sell all or a portion of a pool to third parties. Proceeds of these sales are also recognized in revenue under the effective interest method.
      Application of PB6 requires the use of estimates to calculate a projected IRR for each pool. These estimates are based on historical cash collections. If future cash collections are materially different in amount or timing than projected cash collections, earnings could be affected either positively or negatively. Higher collection amounts or cash collections that occur earlier than projected cash collections will have a favorable impact on IRR, revenues and amortization of portfolios. Lower collection amounts or cash collections that occur later than projected cash collections will have an unfavorable impact on IRR, revenues and amortization of portfolios. For the five months ended December 31, 2004, that Worldwide’s operations were included in our results, every 100 basis point change in the average amortization rate for all pools would have affected year-to-date revenue by approximately $0.5 million.
      Allowance for Doubtful Accounts and Notes Receivable. Our allowance for doubtful accounts and notes receivable reflects reserves for receivables to reduce receivables and notes receivable to amounts expected to be collected. Management uses significant judgment in estimating uncollectible amounts. In estimating uncollectible amounts, management considers factors such as overall economic conditions, industry-specific economic conditions, historical customer performance and anticipated customer performance. While management believes the processes effectively address our exposure to doubtful accounts, changes in the economy, industry or specific customer conditions may require adjustment to the allowance for doubtful accounts recorded.
      Goodwill and Other Intangible Assets. As a result of acquisitions made from 2002 through 2004, our recorded goodwill as of December 31, 2004 was $573.9 million and the recorded value of other intangible assets as of December 31, 2004 was $99.0 million. Two matters arise with respect to these assets that require significant management estimates and judgment: 1) the valuation in connection with the initial purchase price allocation and 2) the ongoing evaluation of goodwill and other intangible assets for impairment. In connection with these acquisitions, a third-party valuation was performed to assist management in the determination of the purchase price allocation between goodwill and other intangible assets. The purchase price allocation process requires estimates and judgments as to certain expectations and business strategies. If the actual results differ from the assumptions and judgments made, the amounts recorded in the consolidated financial

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statements could result in a possible impairment of the intangible assets and goodwill or require acceleration in amortization expense. In addition, SFAS No. 142 Goodwill and Other Intangible Assets, requires that goodwill be tested annually using a two-step process. The first step is to identify a potential impairment. The second step measures the amount of the impairment loss, if any. Any changes in key assumptions about the businesses and their prospects, or changes in market conditions or other externalities, could result in an impairment charge and such a charge could have a material effect on our financial condition and results of operations.
      Stock Options. Our employees are periodically granted stock options by the Compensation Committee of the Board of Directors. As allowed under accounting principles generally accepted in the United States of America (“GAAP”), we do not record any compensation expense on the income statement with respect to options granted to employees. Alternatively, under GAAP, we could have recorded a compensation expense based on the fair value of employee stock options. As described in Note 1 in the Consolidated Financial Statements, had we recorded a fair value-based compensation expense for stock options, diluted earnings per share would have been $0.07 to $0.20 less than what we reported for 2004, 2003 and 2002.
      Income Taxes. We account for income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes.” We recognize current tax liabilities and assets based on an estimate of taxes payable or refundable in the current year for each of the jurisdictions in which we transact business. As part of the determination of our current tax liability, we exercise considerable judgment in evaluating positions we have taken in our tax returns. We have established reserves for probable tax exposures. These reserves, included in current tax liabilities, represent our estimate of amounts expected to be paid, which we adjust over time as more information becomes available. We also recognize deferred tax assets and liabilities for the estimated future tax effects attributable to temporary differences (e.g., book depreciation versus tax depreciation, etc.). The calculation of current and deferred tax assets and liabilities requires management to apply significant judgment related to the application of complex tax laws, changes in tax laws or related interpretations, uncertainties related to the outcomes of tax audits and changes in our operations or other facts and circumstances. Further, we must continually monitor changes in these factors. Changes in such factors may result in changes to management estimates and could require us to adjust our tax assets and liabilities and record additional income tax expense or benefits.
Recent Accounting Pronouncements
      In December 2004, the Financial Accounting Standards Board issued SFAS No. 123R, “Share-Based Payment” (“SFAS 123R”), which requires companies to measure and recognize compensation expense for all stock-based payments at fair value. SFAS 123R is effective for all interim periods beginning after June 15, 2005 and thus, will be effective for West beginning with the third quarter of 2005. Early adoption is encouraged and retroactive application of the provisions of SFAS 123R to the beginning of the year that includes the effective date is permitted, but not required. Based on the unvested outstanding options at December 31, 2004, we estimate the effect on 2005 net income of adopting SFAS 123R in July will be approximately $5.0 million.
      In December 2003, the Accounting Standards Executive Committee issued Statement of Position 03-3, “Accounting for Certain Loans of Debt Securities Acquired in a Transfer”. This Statement of Position (“SOP”) addresses accounting for differences between contractual cash flows and cash flows expected to be collected from an investor’s initial investment in loans or debt if those differences are attributable, at least in part, to credit quality. Increases in expected cash flows should be recognized prospectively through adjustment of IRR while decreases in expected cash flows should be recognized as an impairment. The SOP is effective for loans acquired in fiscal years beginning after December 15, 2004 and should be applied prospectively to loans acquired on or before December 15, 2004 as it applies to decreases in expected cash flows. Our preliminary evaluation of the effects of this SOP indicate the impact on our results of operations will not be material.

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Risk Factors
      An investment in our common stock involves risks. You should carefully consider the following risks before making an investment decision. If any of these risks occurs, our business, financial condition, liquidity and results of operations could be seriously harmed, in which case the price of our common stock could decline and you could lose all or a part of your investment.
We face risks in connection with completed or potential acquisitions.
      Our growth has been enhanced through acquisitions of other businesses. We continue to pursue strategic acquisitions. If we are unable to make appropriate acquisitions on reasonable terms our financial results may be below the expectations of securities analysts and our investors.
      In addition, when considering an acquisition, we determine whether such acquisition will allow us to achieve certain objectives including: operational synergies, reduced costs and expenses, increased revenues, additional clients, increased market share, new products and capabilities. To the extent that we are unable to achieve our planned objectives from an acquisition, this may affect our financial results.
We are subject to extensive regulation that could limit or restrict our activities and impose financial requirements or limitations on the conduct of our business.
      The United States Congress, FCC, FTC and various states have promulgated and enacted rules and laws that govern the methods and processes of making and completing telephone solicitations and sales and the collection of consumer debt. We believe that our operating procedures currently comply in all material respects with presently effective provisions of these rules and laws. There can be no assurance, however, that we would not be subject to agency or state proceedings alleging violation of such rules and laws. Future rules and laws may require us to modify our operations or service offerings in order to effectively meet our clients’ service requirements, and there can be no assurance that additional regulations would not limit our activities or significantly increase the cost of regulatory compliance. For further discussion of regulatory issues, see Item 1 — Business “Government Regulations.”
      Even if we comply with the rules and laws, the restrictions imposed by such regulations may generally adversely impact our business. Our clients may reduce the volume of business they outsource. Regulations regarding the use of technology, such as restrictions on automated dialers or the required transmittal of caller-identification information, may further reduce the efficiency or effectiveness of our operations. However, we cannot predict the impact state and federal regulations may have on our business or whether such impact may adversely affect or limit our operations. Our clients are also subject to varying degrees of government regulation, particularly in the telecommunications, insurance and financial services industries. We may be subject to a variety of enforcement or private actions for non-compliance or our clients’ non-compliance with such regulations. There is increasing Federal and state interest in privacy protection, some aspects of which could impose additional regulatory pressure on the business of our clients and, less directly, on our business. Such pressures could impact our business if it has the effect of reducing the demand for our services or exposes us to potential liability.
We cannot be certain that we will be able to compete successfully in our highly competitive industries.
      We face significant competition in our markets and expect this competition will intensify. The principal competitive factors in our industries are technological expertise, service quality, sales and marketing skills, the ability to develop and implement customized products and services and the cost of services. In addition, we believe there has been an industry trend to move agent-based operations towards offshore sites. Such movement could result in excess capacity in the United States where most of our current capacity exists. The trend towards international expansion by foreign and domestic competitors and continuous technological changes may bring new and different competitors into our markets and may erode profits because of reduced prices. Our competitors’ products and services and pricing practices, as well as the timing and circumstances of the entry of additional competitors into our markets may harm our business.

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      Our Communication Services segment’s business and growth depends in large part on the industry trend toward outsourcing CRM solutions and services. There can be no assurance that this trend will continue, as organizations may elect to perform such services themselves. A significant change in this trend could seriously harm our business, financial condition, results of operations and cash flows. Additionally, there can be no assurance that our cross-selling efforts will cause clients to purchase additional services from us or adopt a single-source outsourcing approach.
      Our Conferencing Services segment faces competitive pressures as the audio conferencing services industry continues to consolidate in response to pricing pressures and technological advances. Video and web conferencing services continue to develop as new vendors are entering the marketplace offering a broader range of conferencing solutions.
      The consumer debt collection industry is highly competitive and fragmented. We compete with a wide range of other purchasers of charged-off consumer receivables, third party collection agencies, other financial service companies and credit originators and other owners of debt that manage their own charged-off consumer receivables. Some of these companies have substantially greater personnel and financial resources than we do. Furthermore, during the past year some of our competitors have raised substantial amounts of capital, the proceeds from which may be used, at least in part, to fund expansion and to increase their purchases of charged-off portfolios. In addition, companies with greater financial resources than we have may elect in the future to enter the consumer debt collection business. Competitive pressures affect the availability and pricing of receivable portfolios as well as the availability and cost of qualified debt collectors.
      We face bidding competition in our acquisition of charged-off consumer receivable portfolios. We believe successful bids generally are awarded based on a combination of price, service and relationships with the debt sellers. Some of our current competitors, and possible new competitors, may have more effective pricing and collection models, greater adaptability to changing market needs and more established relationships in our industry than we have. Moreover, our competitors may elect to pay prices for portfolios that we determine are not reasonable and, in that event, our volume of portfolio purchases may be diminished. In addition, there continues to be a consolidation of credit card issuers, which have been a principal source of our receivable purchases. This consolidation has decreased the number of sellers in the market which may, over time, give the remaining sellers increasing market strength and adversely affect the price and other terms of charged-off credit card accounts.
      If we are unable to adapt to changing market conditions, we may experience reduced access to portfolios of charged-off consumer receivables in sufficient amounts at appropriate prices. If this were to occur, our business may be seriously harmed.
Our ability to recover on our charged-off consumer receivables may be limited under federal and state laws.
      Federal and state consumer protection, privacy and related laws and regulations extensively regulate the relationship between debt collectors and debtors. Federal and state laws may limit our ability to recover on our charged-off consumer receivables regardless of any act or omission on our part. Some laws and regulations applicable to credit card issuers may preclude us from collecting on charged-off consumer receivables we purchase if the credit card issuer previously failed to comply with applicable law in generating or servicing those receivables. Additional consumer protection and privacy protection laws may be enacted that would impose additional or more stringent requirements on the enforcement of and collection on consumer receivables.
      Any new laws, rules or regulations as well as existing consumer protection and privacy protection laws, may adversely affect our ability to collect on our charged-off consumer receivable portfolios and seriously harm our business. In addition, federal and state governments are considering, and may consider in the future, other legislative proposals that would further regulate the collection of consumer receivables. Although we cannot predict if or how any future legislation would impact our business, any failure to comply with any current or future laws applicable to us could limit our ability to collect on our charged-off consumer receivable portfolios, which could reduce our profitability and harm our business.

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Our operating results may be harmed if we are unable to maximize our call center capacity utilization.
      Our profitability is influenced significantly by our call center capacity utilization. We attempt to maximize utilization. However, we have significantly higher utilization during peak periods. From time to time we assess the expected long-term capacity utilization of our contact centers. Accordingly, we may, if deemed necessary, consolidate or close under-performing centers in order to maintain or improve utilization and margins. We may not be able to achieve or maintain optimal contact center capacity utilization. If we lose one or more significant clients, or if the volume of calls from any such client or clients decline, or if a significant contract is not implemented in the time frame and budget anticipated, our operating results are likely to be harmed unless and until we are able to reduce expenses proportionally or successfully negotiate contracts with new clients to generate additional revenues at a comparable level.
Increases in the cost of telephone and data services or significant interruptions in such services could seriously harm our business.
      We depend on telephone and data service provided by various local and long distance telephone companies. Because of this dependence, any change to the telecommunications market that would disrupt these services or limit our ability to obtain services at favorable rates could harm our business. We have taken steps to mitigate our exposure to the risks associated with rate fluctuations and service disruption by entering into long-term contracts. There is no obligation, however, for these vendors to renew their contracts with us or to offer the same or lower rates in the future, and such contracts are subject to termination or modification for various reasons outside of our control. A significant increase in the cost of telephone services that is not recoverable through an increase in the price of our services, or any significant interruption in telephone services, could seriously harm our business.
The financial results of our Receivables Management segment depend on our ability to purchase charged-off receivable portfolios on acceptable terms and in sufficient amounts. If we are unable to do so, our business will be harmed.
      If we are unable to purchase charged-off consumer receivables from credit originators on acceptable terms and in sufficient amounts, our business will be harmed. The availability of portfolios that generate an appropriate return on our investment depends on a number of factors both within and outside of our control, including:
  •  continued growth in the levels of consumer debt;
 
  •  continued growth in the number of industries selling charged-off consumer receivable portfolios;
 
  •  continued sales of charged-off consumer receivable portfolios by credit originators;
 
  •  competition from other buyers of consumer receivable portfolios; and
 
  •  our ability to purchase portfolios in industries in which we have little or no experience with the resulting risk of lower returns if we do not successfully purchase and collect these receivables.
Our inability to continue to attract and retain a sufficient number of qualified employees could seriously harm our business.
      The CRM and receivables management industries are very labor intensive and experience high personnel turnover. Many of our employees receive modest hourly wages and, although we employ a significant number of full-time employees, many are nevertheless employed on a part-time basis. Some of our operations require specially trained employees. We must recruit and train qualified personnel at an accelerated rate from time to time. We may not be able to continue to hire, train and retain a sufficient labor force of qualified employees. A significant portion of our costs consists of wages to hourly workers. An increase in hourly wages, costs of employee benefits or employment taxes could seriously harm our business.

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Because we have operations in countries outside of the United States, we may be subject to political, economic and other conditions affecting such countries that could result in increased operating expenses and regulation on our business.
      We operate or rely upon businesses in numerous countries outside the United States. We may expand into additional countries and regions. There are risks inherent in conducting business internationally, including: exposure to currency fluctuations, longer payment cycles, greater difficulties in accounts receivable collection, uncertainty regarding intellectual property protection, difficulties in complying with a variety of foreign laws, unexpected changes in regulatory requirements, difficulties in staffing and managing foreign operations, political instability and potentially adverse tax consequences. If one or more of such factors occurs our business could be harmed.
The loss of one or more key clients would result in the loss of net revenues.
      In 2004, 2003 and 2002, our 100 largest clients represented 69%, 77% and 89% of total revenue, respectively. One customer, AT&T, accounted for 9% of our total revenue in 2004 and 15% and 19% of total revenue in 2003 and 2002, respectively. If we fail to retain a significant amount of business from AT&T or any of our other significant clients, our business could be seriously harmed. Many of our contracts are cancelable by the client at any time or on short-term notice, and clients may unilaterally reduce their use of our services under these contracts without penalty. Thus, our contracts with our clients do not ensure that we will generate a minimum level of revenue.
      We serve clients and industries that have experienced a significant level of consolidation in recent years. Additional consolidating transactions could occur in which our clients acquire additional businesses or are acquired. The loss of any significant client could seriously harm our business.
Because of the length of time involved in collecting charged-off consumer receivables on acquired portfolios and the volatility in the timing of our collections, we may not be able to identify trends and make changes in our purchasing strategies in a timely manner.
      We entered into a number of forward-flow contracts during 2004. These contracts commit a debt seller to regularly sell charged-off receivables to us and commit us to purchase receivables for a fixed percentage of the face amount. Consequently, our results of operations could be harmed if the fixed percentage price is higher than the appropriate market value. Worldwide has entered into such contracts in the past and plans to do so in the future depending on market conditions. To the extent new or existing competitors enter into forward-flow contracts, the pool of portfolios available for purchase may be diminished.
We are exposed to the risks that third parties may violate our proprietary rights. Our intellectual property rights may not be well protected in foreign countries.
      Third parties may infringe or misappropriate our patents, trademarks, trade names, trade secrets or other intellectual property rights, which could seriously harm our business. The actions we take to protect our intellectual property may not be adequate. Litigation may be necessary to enforce our intellectual property rights, protect our trade secrets or determine the validity and scope of the proprietary rights of others. We may not be able to prevent infringement of our intellectual property rights or misappropriation of our proprietary information. Any infringement or misappropriation could harm any competitive advantage we currently derive or may derive from our proprietary rights. In addition, third parties may assert infringement claims against us. Any claims and any resulting litigation could subject us to significant liability for damages. An adverse determination in any litigation of this type could require us to design around a third party’s patent or to license alternative technology from another party. In addition, litigation is time-consuming and expensive to defend and could result in the diversion of our time and resources. Any claims from third parties may also result in limitations on our ability to use the intellectual property subject to these claims.

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Our networks are exposed to the risks of software failure.
      The software that we have purchased and developed to provide our products and services may contain undetected errors. Although we generally engage in extensive testing of our software prior to introducing the software onto any of our networks and/or product equipment, errors may be found in the software after the software goes into use. Any of these errors may result in partial or total failure of our networks, additional and unexpected expenses to fund further product development or to add programming personnel to complete a development project, and loss of revenue because of the inability of clients to use our service or the cancellation of services by significant customers.
Our clients may be affected by rapid technological change and systems availability. We may be unable to introduce solutions on a timely basis.
      We have invested in sophisticated and specialized computer and telephone technology. Our business relies on this technology to provide customized solutions to meet our client’s needs. We anticipate that it will be necessary to continue to select, invest in and develop new and enhanced technology on a timely basis in the future in order to maintain our competitiveness. Our future success will depend in part on our ability to continue to develop technology solutions that keep pace with evolving industry standards and changing client demands. Our products and services are dependent upon our ability to protect the equipment and data at our facilities against damage that may be caused by fire, power loss, technical failures, unauthorized intrusion, natural disasters, sabotage and other similar events. Despite taking a variety of precautions, we have experienced downtime in our infrastructure from time to time and we may experience downtime in the future. These types of service interruptions could result in the loss of significant clients and revenue.
The market price of our common stock may be volatile.
      The market price of our common stock has fluctuated significantly during the past several years and may continue to do so in the future. The market price of our common stock could be subject to significant fluctuations in response to various factors or events, including among other things, the depth and liquidity of the trading market of the common stock, quarterly variations in actual liquidity of the trading market of our common stock, quarterly variations in actual and anticipated operating results, growth rates, changes in estimates by analysts, change of analyst coverage, market conditions in the industries in which we compete, announcements by competitors, the loss of a significant client or a significant change in our relationships with a significant client, regulatory actions, litigation, including class action litigation, and general economic conditions.
We could be subject to class action litigation due to stock price volatility, which would distract management, result in substantial costs and could result in significant judgments against us.
      In the past, securities class action litigation often has been brought against companies following periods of volatility in the market price of their securities. We may be the target of similar litigation in the future. Securities litigation could result in substantial costs and divert management’s attention and resources, which could cause serious harm to our business, financial condition and results of operations.
Gary and Mary West can exercise significant control over us.
      Gary West, our Chairman, and Mary West, our Vice Chair of the Board of Directors, beneficially own approximately 68% of our outstanding common stock. As a result, Mr. and Mrs. West can exercise significant control over the outcome of substantially all matters requiring action by our stockholders. Mr. and Mrs. West can demand registration of their shares, which may have a material affect on our stock price volatility.
Terrorist acts and acts of war may seriously harm our business.
      The risks of war and potential terrorist attacks on our operations cannot be estimated. However, we believe war and terrorist attacks could disrupt our operations. For example the agent-based business may

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experience significant reductions in call volume during the initial phases of any significant event, and the conferencing business may experience significant increases in call volume.
Pending and future litigation may divert management time and attention and result in substantial costs of defense damages or settlement, which would seriously harm our business.
      We face uncertainties relating to the pending litigation described in “Item 3. Legal Proceedings.” We also cannot predict whether any other material suits, claims, or investigations may arise in the future based on the same claims as those described in “Item 3. Legal Proceedings” or other claims that may arise in the ordinary course of business. Regardless of the outcome of any of these lawsuits or any future actions, claims, or investigations relating to the same or any other subject matter, we may incur substantial defense costs and such actions may cause a diversion of management time and attention. Also, it is possible that we may be required to pay substantial damages or settlement costs which could seriously harm our business, financial condition, results of operations and cash flows.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk Management
      Market risk is the potential loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and changes in the market value of investments.
Interest Rate Risk
      As of December 31, 2004, we had $230.0 million outstanding under our revolving bank credit facility and $30.5 million of a synthetic lease obligation. The revolving bank credit facility and the synthetic lease obligation bear interest at a variable rate.
      On November 15, 2004, we amended and restated the two bank credit facilities we entered into during 2003. The effect of this amendment and restatement was to terminate the $200.0 million four-year term loan, that had a $137.5 million unpaid balance and increase the borrowing capacity of the revolving credit facility from $250.0 million to $400.0 million. The new maturity date of the credit facility is November 15, 2009. The facility bears interest at a variable rate over a selected LIBOR based on our leverage. At December 31, 2004, $230.0 million was outstanding on the revolving credit facility. The highest period end balance of the revolving credit facility was on December 31, 2004. The average daily outstanding balance of the revolving credit facility during 2004 was $57.8 million. The effective annual interest rate, inclusive of debt amortization costs, on the revolving credit facility for the year ended December 31, 2004 was 3.42%. The commitment fee on the unused revolving credit facility at December 31, 2004, was 0.175%. The amended and restated facility bears interest at a minimum of 75 basis points over the selected LIBOR and a maximum of 125 basis points over the selected LIBOR. At December 31, 2004 the contractual interest rate was 87.5 basis points over the selected LIBOR. Based on our obligation under this facility at December 31, 2004, a 50 basis point change would increase or decrease annual interest expense by approximately $1.2 million.
      We are party to a synthetic lease agreement that had an outstanding balance of $30.5 million at December 31, 2004. The synthetic lease has interest terms similar to that of the revolving credit facility and bears interest at a variable rate over a selected LIBOR based on our leverage, which adjusts quarterly in 12.5 or 25 basis point increments. The weighted average annual interest rate at December 31, 2004 was 4.0%. The lease bears interest at a minimum of 75 basis points over the selected LIBOR and a maximum of 125 basis points over the selected LIBOR. Based on our obligation under this synthetic lease at December 31, 2004, a 50 basis point change would increase or decrease annual interest expense by approximately $153,000.
      We do not believe that changes in future interest rates on these variable rate obligations would have a material effect on our financial position, results of operations, or cash flows. We have not hedged our exposure to interest rate fluctuations.

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Foreign Currency Risk
      On December 31, 2004, the Communication Services segment had no material revenue or assets outside the United States. The Communication Services segment has a contract for workstation capacity in Mumbai, India, which is denominated in U.S. dollars. This contact center receives or initiates calls only from or to customers in North America. We have no ownership of the personnel or assets at this foreign location. The facilities in Canada, Jamaica and the Philippines operate under revenue contracts denominated in U.S. dollars. These contact centers receive calls only from customers in North America under contracts denominated in U.S. dollars.
      In addition to the United States, the Conferencing Services segment operates facilities in the United Kingdom, Canada, Singapore, Australia, Hong Kong, Japan and New Zealand. Revenues and expenses from these foreign operations are typically denominated in local currency, thereby creating exposure to changes in exchange rates. Changes in exchange rates may positively or negatively affect our revenues and net income attributed to these subsidiaries.
      For the year ended December 31, 2004, revenues and assets from non-U.S. countries were less than 10% of consolidated revenues and assets. We do not believe that changes in future exchange rates would have a material effect on our financial position, results of operations, or cash flows. We have not entered into forward exchange or option contracts for transactions denominated in foreign currency to hedge against foreign currency risk.
Investment Risk
      We do not use derivative financial or commodity instruments. Our financial instruments include cash and cash equivalents, accounts and notes receivable, accounts payable and long-term obligations. Our cash and cash equivalents, accounts receivable and accounts payable balances are short-term in nature and do not expose us to material investment risk.
Item 8. Financial Statements and Supplementary Data
      The information called for by this item is incorporated from our Consolidated Financial Statements and Notes thereto set forth on pages F-1 through F-28.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
      None.
Item 9A. Controls and Procedures
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
      Under the supervision and with the participation of our management, including the principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act). Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this annual report.
      Additionally, our principal executive officer and our principal financial officer determined that there have been no significant changes to our internal control over financial reporting during the last quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
Management’s Report on Internal Control Over Financial Reporting
      Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of management, including our principal executive officer, we conducted an evaluation of the

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effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control — Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2004.
      Our management’s assessment of the effectiveness of our internal control over financial reporting as of December 31, 2004 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which is included herein.
February 17, 2005

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
West Corporation
Omaha, Nebraska
      We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control Over Financial Reporting, that West Corporation and subsidiaries (the “Company”) maintained effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.
      We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.
      A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
      Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
      In our opinion, management’s assessment that the Company maintained effective internal control over financial reporting as of December 31, 2004, is fairly stated, in all material respects, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
      We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, 2004 of the Company and our report dated February 18, 2005 expressed an unqualified opinion on those consolidated financial statements and financial statement schedule.
  /s/ Deloitte & Touche LLP
 
 
  Deloitte & Touche LLP
Omaha, Nebraska
February 18, 2005

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PART III
Item 10. Directors and Executive Officers of the Registrant
      The information required by Item 10 is incorporated by reference from our definitive proxy statement for the 2005 annual meeting of stockholders.
      Our Code of Ethical Business Conduct is located on our website at www.west.com under Investor Relations.
Item 11. Executive Compensation
      The information required by Item 11 is incorporated by reference from our definitive proxy statement for the 2005 annual meeting of stockholders.
Item 12. Security Ownership of Certain Beneficial Owners and Management
      The information required by Item 12 is incorporated by reference from our definitive proxy statement for the 2005 annual meeting of stockholders.
Item 13. Certain Relationships and Related Transactions
      The information required by Item 13 is incorporated by reference from our definitive proxy statement for the 2005 annual meeting of stockholders.
Item 14. Principal Accounting Fees and Services
      The information required by Item 14 is incorporated by reference from our definitive proxy statement for the 2005 annual meeting of stockholders.

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PART IV
Item 15. Exhibits and Financial Statement Schedules
           
(a) Documents filed as a part of the report:
       
 
(1) Financial Statements:
       
 
Report of Independent Registered Public Accounting Firm
    F-1  
 
Consolidated statements of operations for the years ended December 31, 2004, 2003 and 2002
    F-2  
 
Consolidated balance sheets as of December 31, 2004 and 2003
    F-3  
 
Consolidated statements of cash flows for the years ended December 31, 2004, 2003 and 2002
    F-4  
 
Consolidated statements of stockholders’ equity for the years ended December 31, 2004, 2003 and 2002
    F-5  
 
Notes to the Consolidated Financial Statements
    F-6  
(2) Financial Statement Schedules:
       
 
Schedule II (Consolidated valuation accounts for the three years ended December 31, 2004)
    S-1  
(3) Exhibits
       
      Exhibits identified in parentheses below, on file with the SEC, are incorporated by reference into this report.
         
Exhibit    
Number   Description
     
  2.01     Purchase Agreement, dated as of July 23, 2002, by and among the Company, Attention, LLC, the sellers and the sellers’ representative named therein (incorporated by reference to Exhibit 2.1 to Form 8-K dated August 2, 2002)
  2.02     Agreement and Plan of Merger, dated as of March 27, 2003, by and among West Corporation, Dialing Acquisition Corp., ITC Holding Company, Inc. and, for purposes of Sections 3.6, 4.1 and 8.13 and Articles 11 and 12 only, the Stockholder Representative (incorporated by reference to Exhibit 2.1 to Form 8-K dated April  1, 2003)
  2.03     Purchase Agreement, dated as of July 22, 2004, by and among Worldwide Asset Management, LLC; National Asset Management Enterprises, Inc.; Worldwide Asset Collections, LLC; Worldwide Asset Purchasing, LLC, BuyDebtCo; The Debt Depot, LLC; Worldwide Assets, Inc., Frank J. Hanna, Jr., Darrell T. Hanna, West Corporation and West Receivable Services, Inc. (incorporated by reference to Exhibit 2.1 to Current Report on Form 8-K filed on August 9, 2004)
  2.04     Purchase Agreement, dated as of July 22, 2004, by and among Asset Direct Mortgage, LLC, Frank J. Hanna, Jr., Darrell T. Hanna and West Corporation (incorporated by reference to Exhibit 2.2 to Current Report on Form 8-K filed on August 9, 2004)
  3.01     Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 99.02 to Form 8-K dated December 29, 2001)
  3.02     Amended and Restated By-Laws of the Company (incorporated by reference to Exhibit 3.01 to Form 8-K dated February 16, 2005)
  10.01     Form of Registration Rights Agreement (incorporated by reference to Exhibit 10.01 to Registration Statement under Form S-1 (Amendment No. 1) dated November 12, 1996, File No. 333-13991)
  10.02     Amended and Restated 1996 Stock Incentive Plan
  10.03     Employment Agreement between the Company and Thomas B. Barker dated January 1, 1999, as amended February 11, 2005
  10.04     Employment Agreement between the Company and Paul M. Mendlik dated November 4, 2002, as amended February 11, 2005

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Exhibit    
Number   Description
     
  10.05     Stock Redemption Agreement, dated April 9, 1996, by and among Gary L. West and Mary E. West (incorporated by reference to Exhibit 10.11 to Registration Statement under Form S-1 (Amendment No. 1) dated November 12, 1996, File No. 333-13991)
  10.06     Assignment and Assumption Agreement, dated as of November 12, 1996, by and among Gary L. West, Mary E. West, and the Company (incorporated by reference to Exhibit 10.12 to Registration Statement under Form S-1 (Amendment No. 2) dated November 21, 1996, File No. 333-13991)
  10.07     Lease, dated September 1, 1994, by and between West Telemarketing Corporation and 99-Maple Partnership, amended December 10, 2003
  10.08     Employment Agreement between the Company and Nancee R. Berger, dated January 1, 1999, as amended February 11, 2005
  10.09     Amended and Restated Employee Stock Purchase Plan
  10.10     Employment Agreement between the Company and Mark V. Lavin dated July 1, 1999, as amended February 11, 2005
  10.11     Employment Agreement between the Company and Steven M. Stangl dated January 1, 1999, as amended February 11, 2005
  10.12     Employment Agreement between the Company and Michael M. Sturgeon, dated January 1, 1999, as amended February 11, 2005
  10.13     Employment Agreement between the Company and Jon R. (Skip) Hanson, dated October 4, 1999, as amended February 11, 2005
  10.14     Employment Agreement between West Direct, Inc. and Todd B. Strubbe, dated July 30, 2001, as amended February 11, 2005
  10.15     Employment Agreement between the Company and Michael E. Mazour, dated January 9, 2004 as amended February 11, 2005
  10.16     Restricted Stock Agreement between the Company and Paul M. Mendlik dated September 12, 2002 (incorporated by reference to Exhibit 10.02 to Form 10-Q dated November 4, 2002)
  10.17     Amended and Restated Nonqualified Deferred Compensation Plan
  10.18     Employment Agreement between the Company and Joseph Scott Etzler, dated May 7, 2003, as amended February 11, 2005
  10.19     Amended and Restated Credit Agreement, dated November 15, 2004, among the Company and Wachovia Bank National Association as Administrative Agent and the banks named therein
  10.20     Employment Agreement between the Company and James F. Richards, dated July 23, 2002, as amended February 11, 2005
  10.21     Participation Agreement, dated May 9, 2003, among West Facilities Corporation, Wachovia Development Corporation and Wachovia Bank, National Association as Agent for the Secured Parties and the banks named therein (incorporated by reference to Exhibit 10.22 to Form 10-K filed on March 8, 2004)
  10.22     First amendment to the Participation Agreement, dated October 31, 2003, among West Facilities Corporation, Wachovia Development Corporation and Wachovia Bank, National Association as Agent for the Secured Parties and the banks named therein (incorporated by reference to Exhibit 10.23 to Form 10-K filed on March 8, 2004)
  10.23     Second amendment to the Participation Agreement, dated January  22, 2004, among West Facilities Corporation, Wachovia Development Corporation and Wachovia Bank, National Association as Agent for the Secured Parties and the banks named therein (incorporated by reference to Exhibit 10.24 to Form 10-K filed on March 8, 2004)
  10.24     Third amendment to the Participation Agreement, dated August 9, 2004, among West Facilities Corporation, Wachovia Development Corporation and Wachovia Bank, National Association as Agent for the Secured Parties and the banks named therein
  10.25     Fourth amendment to the Participation Agreement, dated November  15, 2004, among West Facilities Corporation, Wachovia Development Corporation and Wachovia Bank, National Association as Agent for the Secured Parties and the banks named therein

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Exhibit    
Number   Description
     
  21.01     Subsidiaries
  23.01     Consent of Deloitte & Touche LLP
  31.01     Certification pursuant to 18 U.S.C. section 7241 as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002
  31.02     Certification pursuant to 18 U.S.C. section 7241 as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002
  32.01     Certification pursuant to 18 U.S.C. section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002
  32.02     Certification pursuant to 18 U.S.C. section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002

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SIGNATURES
      Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
  West Corporation
  By:  /s/ Thomas B. Barker
 
 
  Thomas B. Barker
  Chief Executive Officer
  (Principal Executive Officer)
February 25, 2005
      Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
             
Signatures   Title   Date
         
 
/s/ Gary L. West
 
Gary L. West
  Chairman of the Board and Director   February 25, 2005
 
/s/ Mary E. West
 
Mary E. West
  Vice Chair of the Board and Director   February 25, 2005
 
/s/ Thomas B. Barker
 
Thomas B. Barker
  Chief Executive Officer and Director (Principal Executive Officer)   February 25, 2005
 
/s/ Paul M. Mendlik
 
Paul M. Mendlik
  Executive Vice President — Chief Financial Officer and Treasurer (Principal Financial and
Accounting Officer)
  February 25, 2005
 
/s/ William E. Fisher
 
William E. Fisher
  Director   February 25, 2005
 
/s/ George H. Krauss
 
George H. Krauss
  Director   February 25, 2005
 
/s/ Greg T. Sloma
 
Greg T. Sloma
  Director   February 25, 2005

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
West Corporation
Omaha, Nebraska
      We have audited the accompanying consolidated balance sheets of West Corporation and subsidiaries (the “Company”) as of December 31, 2004 and 2003, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2004. Our audits also included the consolidated financial statement schedule list in Item 15. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audits.
      We conducted our audits in accordance the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
      In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2004 in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic financial statements take as a whole, presents fairly, in all material respects, the information set forth therein.
      We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company’s internal control over financial reporting as of December 31, 2004, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 18, 2005 expressed an unqualified opinion on management’s assessment of the effectiveness of the Company’s internal control over financial reporting and an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
  /s/ Deloitte & Touche LLP
 
 
  Deloitte & Touche LLP
Omaha, Nebraska
February 18, 2005

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WEST CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
                             
    Years Ended December 31,
     
    2004   2003   2002
             
    (Amounts in thousands except
    per share amounts)
REVENUE
  $ 1,217,383     $ 988,341     $ 820,665  
COST OF SERVICES
    541,979       440,260       399,276  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
    487,513       404,972       314,886  
                   
OPERATING INCOME
    187,891       143,109       106,503  
OTHER INCOME (EXPENSE):
                       
 
Interest Income
    895       721       2,828  
 
Interest Expense
    (9,381 )     (5,503 )     (2,419 )
 
Other, net
    2,118       1,493       1,736  
                   
   
Other income (expense)
    (6,368 )     (3,289 )     2,145  
INCOME BEFORE INCOME TAX EXPENSE AND MINORITY INTEREST
    181,523       139,820       108,648  
INCOME TAX EXPENSE
    65,762       51,779       39,706  
INCOME BEFORE MINORITY INTEREST
    115,761       88,041       68,942  
MINORITY INTEREST IN NET INCOME OF CONSOLIDATED SUBSIDIARY
    2,590       165       300  
                   
NET INCOME
  $ 113,171     $ 87,876     $ 68,642  
                   
EARNINGS PER COMMON SHARE:
                       
 
Basic
  $ 1.67     $ 1.32     $ 1.04  
                   
 
Diluted
  $ 1.63     $ 1.28     $ 1.01  
                   
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
                       
 
Basic common shares
    67,643       66,495       65,823  
 
Dilutive impact of potential common shares from stock options
    1,826       2,122       2,306  
                   
 
Diluted common shares
    69,469       68,617       68,129  
                   
The accompanying notes are an integral part of these financial statements.

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WEST CORPORATION
CONSOLIDATED BALANCE SHEETS
                     
    December 31,
     
    2004   2003
         
    (Amounts in thousands)
ASSETS
CURRENT ASSETS:
               
 
Cash and cash equivalents
  $ 32,572     $ 25,563  
 
Accounts and notes receivable, net
    195,598       153,428  
 
Portfolio receivables, current portion
    26,646        
 
Other current assets
    27,244       23,423  
             
   
Total current assets
    282,060       202,414  
PROPERTY AND EQUIPMENT:
               
 
Property and equipment
    552,073       508,300  
 
Accumulated depreciation and amortization
    (328,963 )     (273,650 )
             
   
Property and equipment, net
    223,110       234,650  
             
PORTFOLIO RECEIVABLES, NET OF CURRENT PORTION
    56,897        
GOODWILL
    573,885       452,848  
INTANGIBLES, net
    99,028       97,564  
NOTES RECEIVABLE AND OTHER ASSETS
    36,226       28,387  
             
TOTAL ASSETS
  $ 1,271,206     $ 1,015,863  
             
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
               
 
Accounts payable
  $ 39,420     $ 19,691  
 
Accrued expenses
    101,191       79,430  
 
Current maturities of portfolio notes payable
    20,144        
 
Current maturities of long-term obligations
          22,500  
             
   
Total current liabilities
    160,755       121,621  
PORTFOLIO NOTES PAYABLE , less current maturities
    8,354        
LONG-TERM OBLIGATIONS, less current maturities
    230,000       169,500  
DEFERRED INCOME TAXES
    42,733       42,626  
OTHER LONG TERM LIABILITIES
    27,769       25,878  
MINORITY INTEREST
    12,140        
COMMITMENTS AND CONTINGENCIES (Notes 5, 8 and 12)
               
STOCKHOLDERS’ EQUITY
               
 
Preferred stock $0.01 par value, 10,000 shares authorized, no shares issued and outstanding
           
 
Common stock $0.01 par value, 200,000 shares authorized, 68,452 shares issued and 68,380 outstanding and 67,327 shares issued and 67,255 outstanding
    685       673  
 
Additional paid-in capital
    244,747       223,806  
 
Retained earnings
    549,416       436,245  
 
Accumulated other comprehensive income (loss)
    (193 )     1,031  
 
Treasury stock at cost (72 shares)
    (2,697 )     (2,697 )
 
Unearned restricted stock (157 and 188 shares)
    (2,503 )     (2,820 )
             
   
Total stockholders’ equity
    789,455       656,238  
             
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
  $ 1,271,206     $ 1,015,863  
             
The accompanying notes are an integral part of these financial statements.

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WEST CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
                               
    Years Ended December 31,
     
    2004   2003   2002
             
    (Amounts in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
                       
 
Net income
  $ 113,171     $ 87,876     $ 68,642  
 
Adjustments to reconcile net income to net cash flows from operating activities:
                       
   
Depreciation
    81,317       74,882       58,133  
   
Amortization
    18,868       11,584       3,650  
   
Provision for bad debts
    5,706       9,979       24,487  
   
Other
    48       815       385  
   
Deferred income tax expense (benefit)
    6,177       (2,492 )     6,502  
   
Minority interest in earnings, net of distributions of $1,184, $0 and $0
    1,406       165       300  
 
Changes in operating assets and liabilities, net of business acquisitions:
                       
   
Accounts receivable
    (32,190 )     (4,358 )     (10,513 )
   
Other assets
    (8,710 )     4,775       (10,469 )
   
Accounts payable
    13,513       (8,525 )     (13,326 )
   
Accrued expenses and other liabilities
    23,169       21,472       (6,573 )
                   
     
Net cash flows from operating activities
    222,475       196,173       121,218  
                   
CASH FLOWS FROM INVESTING ACTIVITIES:
                       
 
Business acquisitions, net of cash acquired of $11,256, $16,878 and $5,010
    (193,885 )     (424,553 )     (80,382 )
 
Purchase of property and equipment
    (59,886 )     (46,252 )     (43,911 )
 
Proceeds from disposal of property and equipment
    1,998       513       897  
 
Purchase of portfolio receivables, net
    (28,683 )            
 
Collections applied to principal of portfolio receivables
    19,713              
 
Issuance of notes receivable
    (5,200 )            
 
Proceeds from payments of notes receivable
    2,721       3,531       711  
 
Purchase of licensing agreement
          (8,700 )      
                   
   
Net cash flows from investing activities
    (263,222 )     (475,461 )     (122,685 )
                   
CASH FLOWS FROM FINANCING ACTIVITIES:
                       
 
Proceeds from issuance of debt
          200,000        
 
Net change in revolving credit facility
    230,000       32,000        
 
Payments of long-term obligations
    (192,000 )     (69,647 )     (20,499 )
 
Payments of portfolio notes payable
    (28,534 )            
 
Proceeds from issuance of portfolio notes payable
    25,316              
 
Debt issuance costs
    (1,068 )     (4,506 )      
 
Proceeds from stock options exercised
    14,567       8,918       8,373  
                   
   
Net cash flows from financing activities
    48,281       166,765       (12,126 )
                   
 
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS
    (525 )     159        
NET CHANGE IN CASH AND CASH EQUIVALENTS
    7,009       (112,364 )     (13,593 )
CASH AND CASH EQUIVALENTS, Beginning of period
    25,563       137,927       151,520  
                   
CASH AND CASH EQUIVALENTS, End of period
  $ 32,572     $ 25,563     $ 137,927  
                   
The accompanying notes are an integral part of these financial statements.

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WEST CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
                                                           
        Additional           Unearned       Total
    Common   Paid-in   Retained   Treasury   Restricted   Comprehensive   Stockholders’
    Stock   Capital   Earnings   Stock   Stock   Income (Loss)   Equity
                             
    (Amounts in thousands )
BALANCE, January 1, 2002
  $ 654     $ 191,821     $ 279,727     $ (4,043 )   $     $     $ 468,159  
 
Net income
                    68,642                               68,642  
 
Stock options exercised including related tax benefits (877 shares)
    8       12,514                                       12,522  
 
Issuance of restricted stock (80 shares)
                            1,346       (1,346 )              
 
Amortization of restricted stock
                                    269               269  
                                           
BALANCE, December 31, 2002
    662       204,335       348,369       (2,697 )     (1,077 )           549,592  
Comprehensive income:
                                                       
 
Net income
                    87,876                               87,876  
 
Foreign currency translation adjustment, net of tax of $618
                                            1,031       1,031  
                                           
Total comprehensive income
                                                    88,907  
 
Stock options exercised including related tax benefits (830 shares) and ESPP shares granted (28 shares)
    9       13,153                                       13,162  
 
Issuance of common and restricted stock (240 shares)
    2       6,590                       (2,418 )             4,174  
 
Amortization of restricted stock
            (272 )                     675               403  
                                           
BALANCE, December 31, 2003
    673       223,806       436,245       (2,697 )     (2,820 )     1,031       656,238  
Comprehensive income:
                                                       
 
Net income
                    113,171                               113,171  
 
Foreign currency translation adjustment, net of tax of ($411)
                                            (1,224 )     (1,224 )
                                           
Total comprehensive income
                                                    111,947  
 
Stock options exercised including related tax benefits (1,086 shares)
    11       20,777                                       20,788  
 
Issuance of common and restricted stock (40 shares)
    1       999                       (1,000 )              
 
Amortization of restricted stock
            (835 )                     1,317               482  
                                           
BALANCE, December 31, 2004
  $ 685     $ 244,747     $ 549,416     $ (2,697 )   $ (2,503 )   $ (193 )   $ 789,455  
                                           
The accompanying notes are an integral part of these financial statements.

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WEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Dollars in Thousands Except Per Share Amounts)
1. Summary of Significant Accounting Policies
      Business Description — West Corporation provides business process outsourcing services focused on helping our clients communicate more effectively with their customers. We help our clients maximize the value of their customer relationships and derive greater value from each transaction that we process. Some of the nation’s leading enterprises trust us to manage their most important customer contacts and communication transactions. Companies in highly competitive industries choose us for our ability to efficiently and cost effectively deliver large and complex services and our ability to provide a broad portfolio of voice transaction services. We deliver our services through three segments; Communication Services, Conferencing Services and Receivables Management. Each segment leverages our core competencies of managing technology, telephony and human capital.
      Our communication services include both agent and automated services. Our agent services provide clients with a comprehensive portfolio of services driven by both customer–initiated (inbound) and West-initiated (outbound) transactions. We offer our clients large volume transaction processing capabilities, including order processing, customer acquisition, customer retention and customer care. Our agent communication services are primarily consumer applications but we also support business-to-business applications. Our automated services operate over 137,000 Interactive Voice Response ports, which provide large-volume, automated voice response services to clients. Examples of our automated services include automated credit card activation, prepaid calling card services, automated product information requests, answers to frequently asked questions, utility power outage reporting, and call routing and call transfer services. Our Communication Services segment operates a network of customer contact centers and automated voice and data processing centers throughout the United States and in Canada, India, Jamaica and the Philippines. Our home agent service utilizes agents throughout the United States.
      Our conferencing services include an integrated suite of audio, video and web conferencing services. These worldwide services range from basic automated solutions to highly complex, operator-assisted and event driven solutions. Our video conferencing services provide basic video conferencing with the additional ability to visually share documents and presentations. Our web conferencing services provide web conferencing and interactive web-casting services. Our Conferencing Services segment operates facilities in the United States, the United Kingdom, Canada, Singapore, Australia, Hong Kong, Japan and New Zealand.
      Our receivables management operations include first party collections, contingent/ third-party collections, governmental collections, commercial collections and purchasing and collecting charged-off consumer and commercial debt. Charged-off debt consists of defaulted obligations of individuals and companies to credit originators, such as credit card issuers, consumer finance companies, and other holders of debt. The Receivables Management segment also provides contingent/ third party collections, first party collection efforts on pre-charged-off receivables and collection services for the U.S. Department of Education and other governmental agencies. Our Receivables Management segment operates facilities in the United States, Jamaica and Mexico.
      Basis of Consolidation — The consolidated financial statements include our accounts and the accounts of our wholly owned and majority owned subsidiaries. All intercompany transactions and balances have been eliminated in the consolidated financial statements.
      Use of Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

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WEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Dollars in Thousands Except Per Share Amounts)
      Revenue recognition — The Communication Services segment recognizes revenue for customer-initiated, agent-based services, including order processing, customer acquisition, customer retention and customer care in the month that calls are processed by an agent, based on the number of calls and/or time processed on behalf of clients. For agent-based services that are initiated by us including order processing, customer acquisition, customer retention and customer care, revenue is recognized on an hourly basis or on a success rate basis in the month that we place calls to consumers on behalf of our clients. Automated services revenue is recognized in the month that the calls are received or sent by automated voice response units and is billed based on call duration or per call.
      The Conferencing Services segment recognizes revenue when services are provided and generally consists of per-minute charges. Revenues are reported net of any volume or special discounts.
      The Receivables Management segment recognizes revenue for contingent/ third party collection services and governmental collection services in the month collection payments are received based upon a percentage of cash collected or other agreed upon contractual parameters. First party collection services on pre-charged off receivables are recognized on an hourly rate basis. We believe that the amounts and timing of cash collections for our purchased receivables can be reasonably estimated and therefore, we utilize the effective interest method of accounting for our purchased receivables as set forth in Accounting Standards Executive Committee Practice Bulletin 6 (“PB6”). Selection of this revenue recognition policy, versus the cash recovery method, is based on our historical results and our knowledge of the industry. In accordance with this revenue recognition policy, each pool of receivables is recorded at historical cost and statistically modeled to determine its projected cash flows based on historical cash collections for pools with similar characteristics. The relevant factors in computing the cash flow are the timing, which typically averages from 50 to 60 months, and amount of cash to be received. An internal rate of return (“IRR”) is established for each pool of receivables based on the projected cash flows and applied to the balance of the pool. The resulting revenue recognized is based on the IRR applied to the remaining balance of each pool of accounts. The effective interest method is used to allocate cash collections between revenue and amortization of the portfolios (principal reduction). Revenue is recognized over the period of the purchased receivables anticipated cash flow using the resulting yield. In the event that cash collected would be inadequate to amortize the carrying value, an impairment charge would be taken. In the event that cash collected would result in an excess amortization of the carrying value, the IRR would be adjusted. Periodically the Receivables Management segment will sell all or a portion of a pool to third parties. Proceeds of these sales are also recognized in revenue under the effective interest method.
      The agreements to purchase receivables typically include customary representations and warranties from the sellers covering account status, which permit us to return non-conforming accounts to the seller. Purchases are pooled based on similar risk characteristics and the time period when the pools are purchased, typically quarterly. The receivables portfolios are purchased at a substantial discount from their face amounts and are initially recorded at our cost to acquire the portfolio. Returns are applied against the carrying value of the pool.
      Cost of Services — Cost of services includes labor, sales commissions, telephone and other expenses directly related to service activities.
      Selling, General and Administrative Expenses — Selling, general and administrative expenses consist of expenses that support the ongoing operation of our business. These expenses include costs related to division management, facilities costs, equipment depreciation and maintenance, amortization of finite lived intangible assets, sales and marketing activities, client support services, bad debt expense and corporate management costs.
      Other income (expense) — Other income (expense) includes interest income from short-term investments, interest expense from short-term and long-term obligations and rental income.

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WEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Dollars in Thousands Except Per Share Amounts)
      Cash and Cash Equivalents — We consider short-term investments with original maturities of three months or less at acquisition to be cash equivalents. Included in the December 31, 2004, and 2003 cash balances are restricted cash of $11,287 and $1,602, respectively, included in trust accounts. This restricted cash represents cash collected on behalf of our clients that has not yet been remitted to them. A corresponding liability is recorded in accounts payable.
      Financial Instruments — Cash and cash equivalents, accounts receivable and accounts payable are short-term in nature and the net values at which they are recorded are considered to be reasonable estimates of their fair values. The carrying values of notes receivable, notes payable and long-term obligations are deemed to be reasonable estimates of their fair values. Interest rates that are currently available to us for the reissuance of notes with similar terms and remaining maturities are used to estimate fair values of the notes receivable, notes payable and long-term obligations.
      Accounts and Notes Receivable — Short-term accounts and notes receivable from customers are presented net of an allowance for doubtful accounts of $10,022 in 2004 and $9,131 in 2003.
      Property and Equipment — Property and equipment are recorded at cost. Depreciation expense is based on the estimated useful lives of the assets or remaining lease terms and is calculated on the straight-line method. Our owned buildings have estimated useful lives ranging from 20 to 39 years and the majority of the other assets have estimated useful lives of three to five years. We review property, plant and equipment for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. Recoverability of an asset “held-for-use” is determined by comparing the carrying amount of the asset to the undiscounted net cash flows expected to be generated from the use of the asset. If the carrying amount is greater than the undiscounted net cash flows expected to be generated by the asset, the asset’s carrying amount is reduced to its fair value. An asset “held-for-sale” is reported at the lower of the carrying amount or fair value less cost to sell.
      Goodwill and other Intangible Assets — Goodwill and other intangible assets with indefinite lives are not amortized, but are tested for impairment on an annual basis. We have determined that presently goodwill and other intangible assets with indefinite lives are not impaired and therefore no write-off is necessary. Finite lived intangible assets are reviewed for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable.
      Notes Receivable and Other Assets — At December 31, 2004 and 2003, long-term notes receivable from customers of $5,406 and $4,737, respectively, are presented net of an allowance for doubtful accounts of $0 and $2,077, respectively. Other assets primarily includes assets held in non-qualified deferred compensation plans and the unamortized balance of a licensing agreement and debt acquisition costs.
      Income Taxes — We file a consolidated United States income tax return. We use an asset and liability approach for the financial reporting of income taxes in accordance with SFAS No. 109, Accounting for Income Taxes. Deferred income taxes arise from temporary differences between financial and tax reporting. Income tax expense has been provided on the portion of foreign source income that we have determined will be repatriated to the United States.
      Earnings Per Common Share — Basic earnings per share is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share is computed using the weighted-average number of common shares and dilutive potential common shares outstanding during the period. Dilutive potential common shares result from the assumed exercise of outstanding stock options, by application of the treasury stock method, that have a dilutive effect on earnings per share. At December 31, 2004, 2003 and 2002, respectively, 0; 1,387,765; and 869,526 stock

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WEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Dollars in Thousands Except Per Share Amounts)
options were outstanding with an exercise price exceeding the average market value of common stock that were therefore excluded from the computation of shares contingently issuable upon exercise of the options.
      Comprehensive Income — Results of operations for foreign subsidiaries are translated using the average exchange rates during the period. Assets and liabilities are translated at the exchange rates in effect on the balance sheet dates. Currency translation adjustment is our only component of other comprehensive income.
      Stock Based Compensation — We account for our stock-based compensation plans under the provisions of Accounting Principles Board Opinion 25, Accounting for Stock Issued to Employees, which utilizes the intrinsic value method. As a result of the exercise price being equal to the market price at the date of grant, we did not recognize compensation expense for the years ended December 31, 2004, 2003 and 2002. For purposes of the following disclosures, the estimated fair value of the options is amortized over the options’ vesting period. Had our stock option and stock purchase plan been accounted for under Statement of Financial Accounting Standards (“SFAS”) No. 123, Accounting for Stock-Based Compensation; 2004, 2003 and 2002 net income and earnings per share would have been reduced to the following amounts:
                           
    Year Ended December 31,
     
    2004   2003   2002
             
Net Income:
                       
 
As reported
  $ 113,171     $ 87,876     $ 68,642  
 
Pro forma
  $ 101,603     $ 74,227     $ 64,300  
Earnings per common share:
                       
 
Basic as reported
  $ 1.67     $ 1.32     $ 1.04  
 
Diluted as reported
  $ 1.63     $ 1.28     $ 1.01  
 
Pro forma basic
  $ 1.50     $ 1.12     $ 0.98  
 
Pro forma diluted
  $ 1.46     $ 1.08     $ 0.94  
      The weighted average fair value per share of options granted in 2004, 2003, and 2002 was $8.32, $16.57 and $18.19, respectively. The fair value for options granted under the above described plans was estimated at the date of grant using the Black Scholes pricing model with the following weighted average assumptions:
                         
    2004   2003   2002
             
Risk-free interest rate
    2.5 %     2.2 %     2.2 %
Dividend yield
    0.0 %     0.0 %     0.0 %
Expected volatility
    32.5 %     105.0 %     120.0 %
Expected life (years)
    4.7       4.4       4.4  
      Minority Interest — Effective September 30, 2004, one of our portfolio receivable lenders, CFSC Capital Corp. XXXIV, exchanged its rights to share profits in certain portfolio receivables for a 30% minority interest in one of our subsidiaries, Worldwide Asset Purchasing, LLC. We became a party to the CFSC Capital Corp. relationship as a result of the Worldwide acquisition. As a result of this exchange our $10,734 loan participation obligation to CFSC Capital Corp. XXXIV, which had previously been included as a liability, to lender was converted to minority interest.
      On April 1, 2003, we acquired all of the remaining outstanding capital stock of our 87.75% owned subsidiary, West Direct, Inc. (“West Direct”) that we did not already own. As a result, we now own 100% of West Direct. Each share of common stock of West Direct (other than those already held by us) was automatically converted into the right to receive 1.9625 shares of our Common Stock. Holders of outstanding and unexercised options exercisable for shares of common stock of West Direct received options of equivalent

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WEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Dollars in Thousands Except Per Share Amounts)
value exercisable for 97,143 shares of our Common Stock pursuant to our Restated 1996 Stock Incentive Plan. We accounted for this transaction as a purchase of minority interest. The fair market value of the shares of West Direct common stock was based on the results of an appraisal performed by an independent investment banking firm. The value of the shares of our Common Stock was the average of the highest and lowest prices on the Nasdaq National Market during the day preceding the effective date of the Merger. As a result of this purchase, the minority interest of $1,096 was eliminated, restricted stock of $2,418 was recognized and an additional $3,129 of goodwill was recorded, as the previously recorded minority interest was less than the fair market value of the shares of West Direct common stock received.
      Restricted Stock — Restricted stock totaled 157,116 and 187,640 shares at December 31, 2004 and 2003, respectively. At December 31, 2004, there were 81,558 restricted shares related to compensation agreements with two senior executive officers. These shares carry voting rights; however, sale or transfer of the shares is restricted until the shares vest. The fair value of these restricted shares on the respective grant dates were $25.04 and $16.825 per share or $2,346. These restricted shares vest through July, 2008 and will be recognized as compensation expense over that time period. During 2004, 2003 and 2002, $482, $403 and $269 was recognized as compensation expense, respectively.
      As a result of the West Direct minority interest transaction, discussed above, each share of common stock of West Direct (other than those held by us) was automatically converted into the right to receive 1.9625 shares of our Common Stock. The four minority stockholders of West Direct, who are each our executive officers or executive officers of West Direct, received an aggregate of 240,411 shares of our Common Stock in the transaction, of which 139,340 shares were subject to vesting. At December 31, 2004, there were 75,558 shares subject to vesting.
      Preferred Stock — Our Board of Directors has the authority, without any further vote or action by the stockholders, to provide for the issuance of up to ten million shares of preferred stock from time to time in one or more series with such designations, rights, preferences and limitations as the Board of Directors may determine, including the consideration received therefore. The Board also has the authority to determine the number of shares comprising each series, dividend rates, redemption provisions, liquidation preferences, sinking fund provisions, conversion rights and voting rights without approval by the holders of common stock.
      Recent Accounting Pronouncements — In December 2004, the Financial Accounting Standards Board issued SFAS No. 123R, “Share-Based Payment” (“SFAS 123R”), which requires companies to measure and recognize compensation expense for all stock-based payments at fair value. SFAS 123R is effective for all interim periods beginning after June 15, 2005 and thus, will be effective for West beginning with the third quarter of 2005. Early adoption is encouraged and retroactive application of the provisions of SFAS 123R to the beginning of the year that includes the effective date is permitted, but not required. Based on the unvested outstanding options at December 31, 2004, we estimate the effect on 2005 net income of adopting SFAS 123R in July will be approximately $5,000.
      In December 2003, the Accounting Standards Executive Committee issued Statement of Position 03-3, “Accounting for Certain Loans of Debt Securities Acquired in a Transfer”. This Statement of Position (“SOP”) addresses accounting for differences between contractual cash flows and cash flows expected to be collected from an investor’s initial investment in loans or debt if those differences are attributable, at least in part, to credit quality. Increases in expected cash flows should be recognized prospectively through adjustment of the IRR while decreases in expected cash flows should be recognized as an impairment. The SOP is effective for loans acquired in fiscal years beginning after December 15, 2004 and should be applied prospectively to loans acquired on or before December 15, 2004 as it applies to decreases in expected cash flows. Our preliminary evaluation of the effects of this SOP indicate the impact on our results of operations will not be material.

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WEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Dollars in Thousands Except Per Share Amounts)
      Reclassifications — Certain reclassifications have been made to the prior years’ financial statements to conform to the current year presentation.
2. Acquisitions
Worldwide
      On August 1, 2004, we acquired 100% of the equity interests of Worldwide for cash of $133,443, net of cash received of $10,639, assumed debt and other liabilities. The acquisition was funded with a combination of cash on hand and borrowings under our existing bank credit facility. Worldwide is a leading purchaser and collector of delinquent accounts receivable portfolios from consumer credit originators. Its primary areas of operations include, purchasing and collecting charged-off consumer debt, governmental collections and contingent/ third-party collections. The results of operations of Worldwide have been consolidated with our operating results since the acquisition date, August 1, 2004.
      The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at August 1, 2004. We are in the process of finalizing the third-party valuation of certain intangible assets. Thus, the allocation of the purchase price is subject to refinement.
           
    August 1, 2004
     
    (Amounts in
    thousands)
Current assets
  $ 22,306  
Portfolio receivables
    74,573  
Property and equipment
    3,345  
Other assets
    111  
Intangible assets
    16,100  
Goodwill
    76,658  
       
 
Total assets acquired
    193,093  
       
Current liabilities
    6,237  
Portfolio notes payable
    31,769  
Other liabilities
    1,135  
Liability to lender from loan participation feature
    9,870  
       
 
Total liabilities assumed
    49,011  
       
 
Net assets acquired
  $ 144,082  
       
ECI
      On December 1, 2004, we acquired 100% of the equity interests in ECI Conference Call Services LLC (“ECI”) for cash of $53,207, net of cash received of $617, assumed debt and other liabilities. The acquisition was funded with a combination of cash on hand and borrowings under our existing bank credit facility. ECI is a provider of conferencing services, particularly operator-assisted calls. ECI was acquired from an investment group. ECI is being integrated into our conferencing segment, but will maintain its separate brand and market presence. The results of operations of ECI have been consolidated with our operating results since the acquisition date, December 1, 2004.

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WEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Dollars in Thousands Except Per Share Amounts)
InterCall
      During 2003, we acquired 100% of the equity interests in ITC Holding Company, Inc., the parent company of InterCall, Inc. (“InterCall”) for cash of $388,261, net of cash received of $13,904, assumed debt and other liabilities which was paid with proceeds from bank facilities and cash from operations. The results of operations of InterCall have been consolidated with our operating results since the acquisition date, May 9, 2003.
      The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at May 9, 2003. During 2004, we finalized the third-party valuation of certain intangible assets.
           
    May 9, 2003
     
    (Amounts in
    thousands)
Current assets
  $ 58,085  
Property and equipment
    51,617  
Intangible assets
    61,450  
Goodwill
    297,213  
Non-current assets
    1,330  
       
 
Total assets acquired
    469,695  
       
Current liabilities
    47,663  
Deferred income taxes
    19,867  
       
 
Total liabilities assumed
    67,530  
       
 
Net assets acquired
  $ 402,165  
       
ConferenceCall.com
      On November 1, 2003, we acquired Scherer Communications, Inc. (d/b/a ConferenceCall.com) for $35,661 net of cash received of $2,974. ConferenceCall.com, a privately held corporation headquartered in Dallas, Texas is a provider of conferencing solutions to companies of all sizes. ConferenceCall.com was integrated into our Conferencing Services segment, but will maintain its separate brand and market presence. The results of operations of ConferenceCall.com have been consolidated with our operating results since the acquisition date, November 1, 2003.
      Assuming the acquisitions referred to above occurred as of the beginning of the periods presented, our unaudited pro forma results of operations for the years ended December 31, 2004 and 2003 would have been:
                 
    2004   2003
         
Revenue
  $ 1,321,678     $ 1,197,726  
Net Income
  $ 118,458     $ 101,651  
Earnings per common share-basic
  $ 1.75     $ 1.53  
Earnings per common share-diluted
  $ 1.71     $ 1.48  
      The pro forma results above are not necessarily indicative of the operating results that would have actually occurred if the acquisitions had been in effect on the dates indicated, nor are they necessarily indicative of future results of the combined companies.

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WEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Dollars in Thousands Except Per Share Amounts)
3. Goodwill and Other Intangible Assets
      The following table presents the activity in goodwill by reporting segment for the years ended December 31, 2004 and 2003:
                                 
    Communication   Conferencing   Receivables    
    Services   Services   Management   Combined
                 
    (Dollars in thousands except per share amounts)
Balance at January 1, 2003
  $ 70,821     $     $ 43,325     $ 114,146  
Acquisitions
          326,489             326,489  
Purchase price allocation finalization
                6,914       6,914  
Tel Mark Sales, Inc. earn out adjustment
    2,170                   2,170  
Minority interest purchase
    3,129                   3,129  
                         
Balance at December 31, 2003
    76,120       326,489       50,239       452,848  
Acquisitions
          37,229       76,658       113,887  
Purchase price allocation finalization
          3,481             3,481  
Tel Mark Sales, Inc. earn out adjustment
    3,669                   3,669  
                         
Balance at December 31, 2004
  $ 79,789     $ 367,199     $ 126,897     $ 573,885  
                         
      We have allocated the excess of the Worldwide acquisition cost over the fair value of the assets acquired, liabilities assumed and other finite-lived intangible assets to goodwill based on an independent third-party preliminary appraisal. The process of obtaining a third-party appraisal involves numerous time consuming steps for information gathering, analysis, verification and review. We do not expect to finalize the Worldwide purchase price allocation and appraisal until the second quarter of 2005. Goodwill recognized in this transaction is currently estimated at $76,658 and is deductible for tax purposes.
      We allocated the excess of the ECI acquisition cost over the fair value of the assets acquired, liabilities assumed and other finite-lived intangible assets to goodwill based on preliminary estimates. We are in the process of obtaining a third-party appraisal. We do not expect to finalize the ECI appraisal until the second quarter of 2005. Goodwill recognized in this transaction is currently estimated at $37,229 and is deductible for tax purposes.
      We allocated the excess of the InterCall acquisition cost over the fair value of the assets acquired, including trade names and other intangible assets, and liabilities assumed to goodwill, based on an independent third-party appraisal. Goodwill recognized in this transaction is $297,214 and is not deductible for tax purposes.
      We allocated the excess of the ConferenceCall.com acquisition cost over the fair value of the assets acquired, including, trade names and other finite lived intangible assets, and liabilities assumed to goodwill based on an independent third-party appraisal. Goodwill recognized in this transaction is $32,758 and is not deductible for tax purposes.
      Two acquisitions made in 2002, Tel Mark Sales and Attention included earn out provisions. Under the Tel Mark Sales commitment there is a provision for a three-year revenue based contingent earn-out with a maximum earn-out of $5,000 per year. Based on the revenue growth achieved by this entity in 2004, the final year of the earn out, an accrual of $3,669 was recorded. In the Attention acquisition additional consideration is payable over the four year period between 2004 and 2008, which will range from a minimum of $21,500 to a maximum of $30,000, based on Attention satisfying certain earnings objectives during the years ending

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Table of Contents

WEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Dollars in Thousands Except Per Share Amounts)
December 31, 2003 thru 2006. During 2004, $5,000 was paid under this commitment. At December 31, 2004, the remaining $16,500 minimum payment was accrued in accrued expenses and other long term liabilities.
Factors contributing to the recognition of goodwill
      Factors that contributed to the Worldwide purchase price resulting in goodwill included synergies with other parts of our business, such as, Worldwide’s experience with purchased receivable portfolios, the relationship Worldwide has with sellers of portfolios, the relationship Worldwide has with experienced portfolio lenders, Worldwide’s historical cash flow, Worldwide’s executive experience (not tied to non-competition agreements) and the value of the workforce in place.
      Factors that contributed to the ECI purchase price resulting in goodwill included: synergies with other parts of our business and strengthening our position in managing operator assisted calls.
      Factors that contributed to a purchase price resulting in goodwill for the InterCall acquisition included technological synergies with other business units, InterCall’s cash flow and operating margins exceeding our current operations, InterCall’s international presence, their distributed sales force and the affect the acquisition had on diversifying our revenue base.
      Factors that contributed to a purchase price resulting in goodwill for the ConferenceCall.com acquisition included technological synergies with other business units; ConferenceCall.com’s cash flow and operating margins exceeding our current operations; process and system synergies and further diversification of our revenue base.
Other intangible assets
      Below is a summary of the major intangible assets and weighted average amortization periods for each identifiable intangible asset:
                                   
    As of December 31, 2004   Weighted
        Average
    Acquired   Accumulated   Net Intangible   Amortization
Intangible assets   Cost   Amortization   Assets   Period
                 
Customer lists
  $ 77,181     $ (22,243 )   $ 54,938       6.4  
Trade names
    29,243             29,243       Indefinite  
Patents
    14,753       (4,050 )     10,703       17.0  
Trade names
    1,511       (1,468 )     43       2.8  
Other intangible assets
    5,705       (1,604 )     4,101       5.4  
                         
 
Total
  $ 128,393     $ (29,365 )   $ 99,028          
                         

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WEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Dollars in Thousands Except Per Share Amounts)
                                   
    As of December 31, 2003   Weighted
        Average
    Acquired   Accumulated   Net Intangible   Amortization
Intangible assets   Cost   Amortization   Assets   Period
                 
Customer lists
  $ 67,197     $ (9,415 )   $ 57,782       5.6  
Trade names
    24,110             24,110       Indefinite  
Patents
    14,850       (3,182 )     11,668       17.0  
Trade names
    1,466       (957 )     509       2.6  
Other intangible assets
    4,676       (1,181 )     3,495       5.1  
                         
 
Total
  $ 112,299     $ (14,735 )   $ 97,564          
                         
      Amortization expense for finite lived intangible assets was $14,630, $9,865 and $3,381 for the years ended December 31, 2004, 2003 and 2002 respectively. Estimated amortization expense for the intangible assets acquired in all acquisitions for the next five years is as follows:
         
2005
  $ 17,331  
2006
  $ 14,826  
2007
  $ 13,590  
2008
  $ 6,919  
2009
  $ 3,602  
      The amount of other finite-lived intangible assets recognized in the Worldwide acquisition is currently estimated to be $16,100 and is comprised of $14,000 for customer lists, $1,500 for covenants not to compete and $600 for an attorney network relationship. These finite lived intangible assets are being amortized over five to ten years based on the estimated lives of the intangible assets. Amortization expense for the Worldwide finite lived intangible assets was $914 for the five months ended December 31, 2004.
      The amount of other finite and indefinite lived intangible assets recognized in the ECI acquisition are currently estimated to be $10,231 and is comprised of $4,354 for customer lists, $544 for covenants not to compete and $5,333 for trade name. The customer lists and covenants not to compete are being amortized over five years. The trade name intangible asset was preliminarily determined to have an indefinite life. Amortization expense for the ECI finite lived intangible assets was $251 for the month of December, 2004.
      The amount of other finite and indefinite lived intangible assets recognized in the InterCall acquisition were $61,450 and is comprised of $41,540 for customer lists and $19,910 for trade names. The customer relationships intangible asset is being amortized over five years. The trade names intangible asset was determined to have an indefinite life. Amortization expense for the InterCall finite lived intangible assets was $7,987 and $5,860 for 2004 and 2003, respectively.
      The amount of other finite and indefinite lived intangible assets recognized in the ConferenceCall.com acquisition were $7,215 and is comprised of $4,000 for trade names, $2,600 for customer lists, $435 for non-competition agreements and $180 for software. The trade names intangible asset was determined to have an indefinite life. The finite lived intangible assets are being amortized over one and one-half to five years based on the estimated remaining useful lives of the intangible assets. Amortization expense for the ConferenceCall.com finite lived intangible assets was $1,870 and $360 for 2004 and 2003, respectively.
      The intangible asset trade names for InterCall, ConferenceCall.com and ECI were determined to have an indefinite life based on management’s current intentions. We periodically review the underlying factors

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Table of Contents

WEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Dollars in Thousands Except Per Share Amounts)
relative to these intangible assets. If factors were to change, which would indicate the need to assign a definite life to these assets, we will do so and commence amortization.
      Below is a summary of other intangible assets, at acquired cost, by reporting segment as of December 31, 2004 and 2003:
                                   
    Communication   Conferencing   Receivables    
    Services   Services   Management   Combined
                 
    (Dollars in thousands except per share amounts)
As of December 31, 2004
                               
Customer lists
  $ 5,677     $ 48,494     $ 23,010     $ 77,181  
Trade names
    831       29,288       635       30,754  
Patents
    14,753                   14,753  
Other intangible assets
    1,996       1,159       2,550       5,705  
                         
 
Total
  $ 23,257     $ 78,941     $ 26,195     $ 128,393  
                         
As of December 31, 2003
                               
Customer lists
  $ 5,677     $ 52,510     $ 9,010     $ 67,197  
Trade names
    831       24,110       635       25,576  
Patents
    14,753       97             14,850  
Other intangible assets
    1,996       2,230       450       4,676  
                         
 
Total
  $ 23,257     $ 78,947     $ 10,095     $ 112,299  
                         
4. Portfolio Receivables
      Changes in purchased receivable portfolios since the acquisition of Worldwide on August 1, 2004 through December 31, 2004, were as follows:
         
    Amount in thousands
Beginning balance
  $  
Amounts acquired through Worldwide acquisition
    74,573  
Investment in purchased receivables, net of returned accounts
    28,683  
Collections applied to principal of portfolio receivable
    (19,713 )
       
Balance at December 31, 2004
    83,543  
Less: current portion
    26,646  
       
Portfolio receivables, net of current portion
  $ 56,897  
       

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WEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Dollars in Thousands Except Per Share Amounts)
5. Property and Equipment
      Property and equipment, at cost consisted of the following:
                 
    December 31,
     
    2004   2003
         
Land and improvements
  $ 7,400     $ 7,580  
Buildings
    58,947       58,314  
Telephone and computer equipment
    358,697       309,984  
Office furniture and equipment
    57,652       65,492  
Leasehold improvements
    64,501       61,634  
Construction in progress
    4,876       5,296  
             
    $ 552,073     $ 508,300  
             
      We lease certain land, buildings and equipment under operating leases which expire at varying dates through July 2024. Rent expense on operating leases was $21,234, $17,175 and $10,983 for the years ended December 31, 2004, 2003 and 2002, respectively, exclusive of related-party lease expense. We lease certain office space owned by a partnership whose partners are our majority stockholders. The lease was renewed on December 10, 2003 and expires in 2014. Related party lease expense was $939, $1,035 and $976 for the years ended December 31, 2004, 2003 and 2002, respectively. On all real estate leases, we pay real estate taxes, insurance and maintenance associated with the leased sites. Certain of the leases offer extension options ranging from month to month to five years.
      Future minimum payments under non-cancelable operating leases with initial or remaining terms of one year or more are as follows:
                           
    Non-Related   Related-Party   Total
    Party Operating   Operating   Operating
    Leases   Lease   Leases
             
Year Ending December 31,
                       
 
2005
  $ 18,688     $ 667     $ 19,355  
 
2006
    18,081       667       18,748  
 
2007
    12,782       667       13,449  
 
2008
    10,372       667       11,039  
 
2009
    6,139       667       6,806  
 
2010 and thereafter
    17,244       3,433       20,677  
                   
Total minimum obligations
  $ 83,306     $ 6,768     $ 90,074  
                   
      We entered into an amended lease for two buildings from a development company in 2003. The development company is not a variable interest entity as defined by Financial Accounting Standards Board (“FASB”) Interpretation No. 46R, Consolidation of Variable Interest Entities (an interpretation of ARB No. 51) (“FIN 46R”). The initial lease term expires in 2008. There are three renewal options of five years each subject to mutual agreement of the parties. The lease facility bears interest at a variable rate over a selected LIBOR, which resulted in an annual effective interest rate of 2.80%, 2.42% and 2.83% for 2004, 2003 and 2002, respectively. The aggregate lease expense on these leases with the development company and under the prior arrangement for the three years ended December 31, 2004, 2003 and 2002 were $1,130, $973 and $278, respectively. On December 13, 2004, the San Antonio building was sold and is therefore no longer

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WEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Dollars in Thousands Except Per Share Amounts)
subject to the terms of the synthetic lease agreement. Based on our variable-rate obligation at December 31, 2004, each 50 basis point rate increase would increase annual interest expense by approximately $153. We may, at any time, elect to exercise a purchase option of approximately $30,535 for the Omaha building. If we elect not to purchase the building or renew the lease, the building would be returned to the lessee for remarketing. We have guaranteed a residual value of 85% to the lessor upon the sale of the building. At December 31, 2004 and 2003, the fair value of the guaranteed residual value for the Omaha building was approximately $1,149 and $1,368, respectively and is included in other long term assets and other long term liabilities.
6. Accrued Expenses
      Accrued expenses consisted of the following as of:
                 
    December 31,   December 31,
    2004   2003
         
Accrued wages
  $ 40,789     $ 23,926  
Accrued employee benefit costs
    10,101       8,107  
Accrued phone
    9,734       11,352  
Acquisition earnout commitments
    8,919       7,170  
Accrued other taxes (non-income related)
    6,132       8,077  
Customer deposits
    3,359       4,927  
Deferred revenue
    3,917       2,102  
Federal income tax payable
    3,294        
Other current liabilities
    14,946       13,769  
             
    $ 101,191     $ 79,430  
             
7. Portfolio Notes Payable
      Our portfolio notes payable consisted of:
         
    December 31,
    2004
     
Non-recourse portfolio notes payable, monthly payments bearing a variable interest at prime plus 2%, due in various installments over 20 months from date of origination, secured by receivable portfolio asset pools
  $ 28,498  
Less current maturities
    20,144  
       
Portfolio notes payable, due in 2006
  $ 8,354  
       
      As of September 30, 2004, through a majority-owned subsidiary, Worldwide Asset Purchasing, LLC (“WAP”), we amended WAP’s revolving financing facility with a third party specialty lender, CFSC Capital Corp. XXXIV. The lender is also a minority interest holder in WAP. Pursuant to this arrangement, we can borrow from CFSC Capital Corp. XXXIV 80% to 85% of the purchase price of each portfolio purchase made and we will fund the remainder. Interest accrues on the debt at a variable rate of 2% over prime. The debt is non-recourse and is collateralized by all receivable portfolios within a loan series. Each loan series contains a group of portfolio asset pools that have an aggregate original principal amount of approximately $20,000. Payments are due monthly over two years from the date of origination. At December 31, 2004, we had $28,498 of non-recourse portfolio notes payable outstanding under this facility.

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WEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Dollars in Thousands Except Per Share Amounts)
8. Long-Term Obligations and Credit Arrangements
      On November 15, 2004, we amended and restated the two bank credit facilities we entered into during 2003. The effect of this amendment and restatement was to terminate the $200,000 four-year term loan, that had a $137,500 unpaid balance and increase the borrowing capacity of the revolving credit facility from $250,000 to $400,000. This amendment and restatement was treated as a modification as our borrowing capacity was increased. The new maturity date of the credit facility is November 15, 2009. The facility bears interest at a variable rate over a selected LIBOR based on our leverage. At December 31, 2004, $230,000 was outstanding on the revolving credit facility, which was the highest period end balance. The average daily outstanding balance of the revolving credit facility during 2004, was $57,822. The effective annual interest rate, inclusive of debt amortization costs, on the revolving credit facility for 2004 and 2003 was 3.42% and 2.87%, respectively. The commitment fee on the unused revolving credit facility at December 31, 2004, was 0.175%. The amended and restated facility bears interest at a minimum of 75 basis points over the selected LIBOR and a maximum of 125 basis points over the selected LIBOR. All our obligations under the facility are unconditionally guaranteed by substantially all of our domestic subsidiaries. The facility contains various financial covenants, which include a consolidated leverage ratio of funded debt to adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) which may not exceed 2.5 to 1.0 and a consolidated fixed charge coverage ratio of adjusted EBITDA to the sum of consolidated interest expense, scheduled funded debt payments, scheduled payments on acquisition earn-out obligations and income taxes paid, which must exceed 1.2 to 1.0. Both ratios are measured on a rolling four-quarter basis. We were in compliance with the financial covenants at December 31, 2004.
      There were no current maturities under this credit facility at December 31, 2004. There were $22,500 of current maturities under the term loan outstanding as of December 31, 2003, which were repaid in 2004.
9. Income Taxes
      Components of income tax expense were as follows:
                           
    Year Ended December 31,
     
    2004   2003   2002
             
Current income tax expense:
                       
 
Federal
  $ 51,486     $ 49,868     $ 30,477  
 
State
    2,819       2,337       2,727  
 
Foreign
    5,280       2,066        
                   
      59,585       54,271       33,204  
                   
Deferred income tax expense (benefit):
                       
 
Federal
    5,895       (2,326 )     6,069  
 
State
    282       (166 )     433  
                   
      6,177       (2,492 )     6,502  
                   
    $ 65,762     $ 51,779     $ 39,706  
                   

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WEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Dollars in Thousands Except Per Share Amounts)
      A reconciliation of income tax expense computed at statutory tax rates compared to effective income tax rates was as follows:
                         
    Year Ended
    December 31,
     
    2004   2003   2002
             
Statutory rate
    35.0 %     35.0 %     35.0 %
State income tax effect
    1.0 %     1.1 %     1.6 %
Other
    0.8 %     0.9 %     0.0 %
                   
      36.8 %     37.0 %     36.6 %
                   
      Significant temporary differences between reported financial and taxable earnings that give rise to deferred tax assets and liabilities were as follows:
                   
    December 31,
     
    2004   2003
         
Deferred tax assets:
               
 
Allowance for doubtful accounts
  $ 3,217     $ 4,045  
 
Benefit plans
    1,643       642  
 
Accrued expenses
    1,419       1,304  
             
Total deferred tax assets
    6,279       5,991  
             
Deferred tax liabilities:
               
 
Depreciation and amortization
  $ 38,775     $ 43,706  
 
Prepaid expenses
    3,048        
 
Cost Recovery
    3,458        
 
Foreign currency translation
    213       618  
             
Total deferred tax liabilities
    45,494       44,324  
             
Net deferred tax liability
  $ 39,215     $ 38,333  
             
      The deferred tax assets at December 31, 2004 and 2003 were included in other current assets. Deferred tax liabilities at December 31, 2004 and 2003 were included in other accrued liabilities.
      In 2004, 2003, and 2002, income tax benefits attributable to employee stock option transactions of $6,221, $4,244 and $4,149, respectively were allocated to shareholders’ equity.
      In preparing our tax returns, we are required to interpret complex tax laws and regulations. On an ongoing basis, we are subject to examinations by federal and state tax authorities that may give rise to different interpretations of these complex laws and regulations. Due to the nature of the examination process, it generally takes years before these examinations are completed and matters are resolved. At year-end, we believe the aggregate amount of any additional tax liabilities that may result from these examinations, if any, will not have a material adverse effect on our financial condition, results of operations or cash flows.
10. Off-Balance Sheet Arrangements
      In addition to the synthetic lease agreement discussed in Note 5, we, through our wholly-owned subsidiary Attention, LLC, established a $20,000 revolving financing facility with a third-party specialty

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WEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Dollars in Thousands Except Per Share Amounts)
lender and capitalized a consolidated special purpose entity (“SPE”) for the sole purpose of purchasing defaulted accounts receivable portfolios. These assets will be purchased by Attention, transferred to the SPE and sold to a non-consolidated qualified special purpose entity (“QSPE”).
      We will perform collection services on the receivable portfolios for a fee, recognized when cash is received. The SPE and the third party lender will also be entitled to a portion of the profits of the QSPE to the extent cash flows from collections are greater than amounts owed by the QSPE, after repayment of all servicing fees, loan expense and return of capital. At December 31, 2004, the SPE had a note receivable from the QSPE for $1,578. Also, at December 31, 2004, $2,648 of the $20,000 revolving financing facility had been utilized.
      During 2004 we amended this financing facility. We agreed to finance under the amended facility the purchase of $60,000 in receivable portfolios over the next three years as follows: $10,000 by July 31, 2005, $25,000 of cumulative purchases by July 31, 2006 and the balance by July 31, 2007. Pursuant to this facility, we will be required to finance a minimum of $12,000 of the purchases and the third party lender will finance the remainder of the purchases on a non-recourse basis. In certain circumstances, we may extend the three year period to four years. The QSPE will be funded through an interest bearing note issued to the third party specialty lender for 80% of each purchase and a 20% contribution from us for each purchase. The note to the third party lender is collateralized by the assets of the QSPE. In addition, we have pledged our interest in the QSPE to the third party lender to the extent cash flows generated by the portfolios cannot repay amounts owed for interest and principle due to the third party lender.
11. Employee Benefits and Incentive Plans
      We have a 401(k) plan, which covers substantially all employees twenty-one years of age or older who will also complete a minimum of 1,000 hours of service in each calendar year. Under the plan, we match 50% of employees’ contributions up to 14% of their gross salary if the employee satisfies the 1,000 hours of service requirement during the calendar year. Our matching contributions vest 25% per year beginning after the second service anniversary date. The matching contributions are 100% vested after the employee has attained five years of service. Total employer contributions under the plan were $2,484, $2,741 and $1,634 for the years ended December 31, 2004, 2003 and 2002, respectively. The 401(k) plans of Tel Mark Sales, Inc., Attention, LLC and InterCall, Inc. were merged into our 401(k) plan in 2003. The Dakotah Direct II, LLC 401(k) plan was merged into our plan during 2002.
      We maintain a grantor trust under the West Corporation Executive Retirement Savings Plan (“Trust”). The principal of the Trust, and any earnings thereon shall be held separate and apart from our other funds and shall be used exclusively for the uses and purposes of plan participants and general creditors. Participation in the Trust is voluntary and is restricted to highly compensated individuals as defined by the Internal Revenue Service. We will match 50% of employee contributions, limited to the same maximums as those of the 401(k) plan. Our total contributions under the plan were $644, $599 and $428 for the years ended December 31, 2004, 2003 and 2002.
      Effective January 2003, we established our Nonqualified Deferred Compensation Plan (the “Deferred Compensation Plan”). Pursuant to the terms of the Deferred Compensation Plan, eligible management, non-employee directors or highly compensated employees may elect to defer a portion of their compensation and have such deferred compensation invested in the same investments made available to participants of the 401(k) plan or notionally in our Common Stock (“Common Shares”). We match 50% of any amounts notionally invested in Common Shares, where matched amounts are subject to a five-year vesting schedule with 20% vesting each year. The Deferred Compensation Plan and any earnings thereon shall be held separate and apart from our other funds and shall be used exclusively for the uses and purposes of plan participants and

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WEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Dollars in Thousands Except Per Share Amounts)
general creditors. Our total contributions under the plan were $655 and $478 for the years ended December 31, 2004 and 2003.
      In June 2002, we amended our 1996 Stock Incentive Plan (the “Plan”), which authorizes the grant to our employees, consultants and non-employee directors of options to purchase Common Shares, as well as other incentive awards based on the Common Shares. Awards covering a maximum of 12,499,500 Common Shares may be granted under the Plan. The expiration date of the Plan, after which no awards may be granted, is September 24, 2006. However, the administration of the Plan shall continue in effect until all matters relating to the payment of options previously granted have been settled.
      The following table presents the activity of the stock options for each of the fiscal years ended December 31, 2004, 2003 and 2002 and the stock options outstanding at the end of the respective fiscal years:
                   
    Stock Option   Weighted Average
    Shares   Exercise Price
         
Outstanding at January 1, 2002
    5,198,240     $ 11.4626  
 
Granted
    338,000       23.1665  
 
Canceled
    (279,165 )     9.9765  
 
Exercised
    (876,619 )     9.7803  
             
Outstanding at December 31, 2002
    4,380,456       12.7981  
 
Granted
    2,797,973       19.9348  
 
Canceled
    (119,331 )     15.7876  
 
Exercised
    (830,116 )     9.9879  
             
Outstanding at December 31, 2003
    6,228,982       16.3210  
 
Granted
    1,764,001       25.6800  
 
Canceled
    (135,141 )     22.7600  
 
Exercised
    (1,085,984 )     13.4200  
             
Outstanding at December 31, 2004
    6,771,858     $ 19.1000  
             
Shares available for future grants at December 31, 2004
    947,408          
             

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WEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Dollars in Thousands Except Per Share Amounts)
      The following table summarizes information about our employee stock options outstanding at December 31, 2004:
                                         
        Weighted            
        Average   Weighted       Weighted
    Stock Option   Remaining   Average       Average
    Shares   Contractual   Exercise   Stock Option   Exercise
Range of Exercise Prices   Outstanding   Life in Years   Price   Shares Exercisable   Price
                     
$ 8.00   - $ 9.68
    4,000       4.4     $ 8.00       4,000     $ 8.00  
$ 9.69   -  12.648
    1,840,998       4.7     $ 9.73       1,747,898     $ 9.74  
$12.6481 -  15.81
    135,075       8.1     $ 14.15       60,189     $ 14.17  
$15.82   -  18.972
    1,614,873       8.1     $ 17.68       297,072     $ 17.96  
$18.973  -  22.134
    136,630       6.5     $ 20.86       97,910     $ 20.88  
$22.135  -  25.296
    1,870,131       8.8     $ 24.33       217,788     $ 23.86  
$25.2961 -  28.458
    677,333       7.8     $ 26.39       260,311     $ 26.38  
$28.459  -  31.62
    492,818       9.4     $ 29.75       31,019     $ 31.62  
                               
$ 8.00   - $31.62
    6,771,858       7.4     $ 19.10       2,716,187     $ 14.11  
                               
      During May 1997, we and our stockholders adopted the 1997 Employee Stock Purchase Plan (the “1997 Stock Purchase Plan”). The 1997 Stock Purchase Plan provides employees an opportunity to purchase Common Shares through annual offerings. Each employee participating in any offering is granted an option to purchase as many full Common Shares as the participating employee may elect so long as the purchase price for such Common Shares does not exceed 10% of the compensation received by such employee from us during the annual offering period or 1,000 Common Shares. The purchase price is to be paid through payroll deductions. The purchase price for each Common Share is equal to 100% of the fair market value of the Common Share on the date of the grant, determined by the average of the high and low NASDAQ National Market quoted market price. On the last day of the offering period, the option to purchase Common Shares becomes exercisable. If at the end of the offering, the fair market value of the Common Shares is less than 100% of the fair market value at the date of grant, then the options will not be deemed exercised and the payroll deductions made with respect to the options will be applied to the next offering unless the employee elects to have the payroll deductions withdrawn from the 1997 Stock Purchase Plan. The maximum number of Common Shares available for sale under the 1997 Stock Purchase Plan was 1,965,532 Common Shares. In accordance with its terms, the 1997 Stock Purchase Plan expired on June 30, 2002.
      During June 2002, we adopted the 2002 Employee Stock Purchase Plan (The “2002 Stock Purchase Plan”). The terms of the 2002 Stock Purchase Plan are substantially the same as the terms of the 1997 Stock Purchase Plan described above. The purchase price for each Common Share is equal to 100% of the fair market value of the Common Share on the date of the grant, determined by the average of the high and low NASDAQ National Market quoted market price ($26.51 at July 1, 2004). No shares were issued under the plan in 2004. On June 30, 2003, 28,170 shares were issued under the plan. After this distribution the maximum number of Common Shares available for sale under the 2002 Stock Purchase Plan was 1,937,362 Common Shares.
12. Commitments and Contingencies
      From time to time, we are subject to lawsuits and claims which arise out of our operations in the normal course of our business. West Corporation and certain of our subsidiaries are defendants in various litigation matters in the ordinary course of business, some of which involve claims for damages that are substantial in

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WEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Dollars in Thousands Except Per Share Amounts)
amount. We believe, except for the items discussed below for which we are currently unable to predict the outcome, the disposition of claims currently pending will not have a material adverse effect on our financial position, results of operations or cash flows.
      Sanford v. West Corporation et al., No. GIC 805541, was filed February 13, 2003 in the San Diego County, California Superior Court. The original complaint alleged violations of the California Consumer Legal Remedies Act, Cal. Civ. Code §§ 1750 et seq., unlawful, fraudulent and unfair business practices in violation of Cal. Bus. & Prof. Code §§ 17200 et seq., untrue or misleading advertising in violation of Cal. Bus. & Prof. Code §§ 17500 et seq., and common law claims for conversion, unjust enrichment, fraud and deceit, and negligent misrepresentation, and sought monetary damages, including punitive damages, as well as restitution, injunctive relief and attorneys fees and costs. The complaint was brought on behalf of a purported class of persons in California who were sent a Memberworks, Inc. (“MWI”) membership kit in the mail, were charged for an MWI membership program, and were allegedly either customers of what the complaint contended was a joint venture between MWI and West Corporation (“West”) or West Telemarketing Corporation (“WTC”) or wholesale customers of West or WTC. WTC and West filed a demurrer in the trial court on July 7, 2004. The court sustained the demurrer as to all causes of action in plaintiff’s complaint, with leave to amend. WTC and West received an amended complaint and filed a renewed demurrer. The Court on January 24, 2005 entered an order sustaining West and WTC’s demurrer with respect to five of the seven causes of action including all causes of action that allow punitive damages.
      Plaintiffs had previously filed a complaint in the United States District Court for the Southern District of California against WTC and West and MemberWorks Incorporated alleging, among other things, claims under 39 U.S.C. § 3009. The federal court dismissed the federal claims against WTC and West and declined to exercise supplemental jurisdiction over the remaining state law claims. Plaintiff proceeded to arbitrate her claims with MemberWorks Incorporated and refiled her claims as to WTC and West in the Superior Court of San Diego County, California. Plaintiff in the state action has contended in her pleadings that the order of dismissal in federal court was not a final order and that the federal case is still pending. The District Court on December 30, 2004 affirmed the arbitration award between plaintiff and Memberworks Incorporated. Plaintiff filed a Notice of Appeal on January 28, 2005. WTC and West are currently unable to predict the outcome or reasonably estimate the possible loss, if any, or range of losses associated with these claims.
      Brandy L. Ritt, et al. v. Billy Blanks Enterprises, et al. was filed in January 2001 in the Court of Common Pleas in Cuyahoga County, Ohio, against two of West’s clients. The suit, a purported class action, was amended for the third time in July 2001 and West Corporation was added as a defendant at that time. The suit, which seeks statutory, compensatory, and punitive damages as well as injunctive and other relief, alleges violations of various provisions of Ohio’s consumer protection laws, negligent misrepresentation, fraud, breach of contract, unjust enrichment and civil conspiracy in connection with the marketing of certain membership programs offered by West’s clients. On February 6, 2002, the court denied the plaintiffs’ motion for class certification. On July 21, 2003, the Ohio Court of Appeals reversed and remanded the case to the trial court for further proceedings. The plaintiffs have filed a Fourth Amended Complaint naming West Telemarketing Corporation as an additional defendant and a renewed motion for class certification. One of the defendants, NCP Marketing Group, filed bankruptcy and on July 12, 2004 removed the case to federal court. Plaintiffs have filed a motion to remand the case back to state court. All defendants opposed that motion. In addition, one of the defendants moved to transfer the case from the United States District Court for the Northern District of Ohio to the Bankruptcy Court in Nevada. Plaintiffs objected to the transfer. On October 29, 2004, the district court referred the case to the Bankruptcy Court for the Northern District of Ohio. It is uncertain when the case will be tried. West Corporation and West Telemarketing Corporation are currently unable to predict the outcome or reasonably estimate the possible loss, if any, or range of losses associated with this claim.

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Table of Contents

WEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Dollars in Thousands Except Per Share Amounts)
13. Business Segments
      We operate in three segments, Communication Services, Conferencing Services and Receivables Management. These segments are consistent with our management of the business and operating focus. Previously, the financial results of Attention were included in the Communication Services segment. With the acquisition of Worldwide, the financial results of Attention are included with Worldwide in the Receivables Management segment. Prior period segment disclosures have been reclassified to reflect this change.
      Communication Services is composed of agent-based (dedicated agent services, shared agent services, and business services), and automated services. Conferencing Services is composed of audio, video and web conferencing services. Receivables Management is composed of contingent/ third party collection services, governmental collection services, first party collection services, commercial collections and purchasing and collecting of charged-off consumer debt. The following year-to-date results for 2004 include Worldwide and ECI from the dates of acquisition, August 1, 2004 and December 1, 2004, respectively. The following year-to-date results for 2003 include InterCall and ConferenceCall.com from their dates of acquisition, May 9, 2003 and November 1, 2003, respectively.
                             
    For the Year Ended December 31,
     
    2004   2003   2002
             
Revenue:
                       
 
Communication Services
  $ 817,718     $ 794,043     $ 808,276  
 
Conferencing Services
    302,469       160,796       n/a  
 
Receivables Management
    99,411       34,134       12,389  
 
Intersegment eliminations
    (2,215 )     (632 )      
                   
   
Total
  $ 1,217,383     $ 988,341     $ 820,665  
                   
Operating Income:
                       
 
Communication Services
  $ 105,638     $ 109,981     $ 105,500  
 
Conferencing Services
    67,264       33,180       n/a  
 
Receivables Management
    14,989       (52 )     1,003  
                   
   
Total
  $ 187,891     $ 143,109     $ 106,503  
                   
Depreciation and Amortization (Included in Operating Income):
                       
 
Communication Services
  $ 64,426     $ 65,210     $ 60,411  
 
Conferencing Services
    29,593       18,576       n/a  
 
Receivables Management
    6,166       2,680       1,372  
                   
   
Total
  $ 100,185     $ 86,466     $ 61,783  
                   
Capital Expenditures:
                       
 
Communication Services
  $ 41,871     $ 31,007     $ 45,690  
 
Conferencing Services
    13,440       5,710       n/a  
 
Receivables Management
    2,396       1,157       174  
 
Corporate
    2,179       8,378       14,185  
                   
   
Total
  $ 59,886     $ 46,252     $ 60,049  
                   

F-25


Table of Contents

WEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Dollars in Thousands Except Per Share Amounts)
                             
    As of   As of   As of
    December 31,   December 31,   December 31,
    2004   2003   2002
             
Assets:
                       
 
Communication Services
  $ 370,527     $ 380,821     $ 441,588  
 
Conferencing Services
    549,540       501,826       n/a  
 
Receivables Management
    271,977       69,903       67,180  
 
Corporate
    79,162       63,313       162,054  
                   
   
Total
  $ 1,271,206     $ 1,015,863     $ 670,822  
                   
      There are no material revenues, or assets outside the United States.
      For the years ended December 31, 2004, 2003 and 2002, our largest 100 clients represented 69%, 77% and 89% of total revenue. We had one customer, AT&T, who accounted for 9% of total revenue for the year ended December 31, 2004 and 15% and 19% of total revenue for the years ended December 31, 2003 and 2002, respectively.
14. Concentration of Credit Risk
      Our accounts receivable subject us to the potential for credit risk with our customers. At December 31, 2004, three customers accounted for $38,792 or 18.9% of gross accounts receivable, compared to $56,231, or 34.8% of gross receivables at December 31, 2003. We perform ongoing credit evaluations of our customers’ financial condition. We maintain an allowance for doubtful accounts for potential credit losses based upon historical trends, specific collection problems, historical write-offs, account aging and other analysis of all accounts and notes receivable. As of February 7, 2005, $30,968 of the $38,792 of the December 31, 2004 gross accounts receivable, noted above had been collected.

F-26


Table of Contents

WEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Dollars in Thousands Except Per Share Amounts)
15. Supplemental Cash Flow Information
      The following table summarizes supplemental information about our cash flows for the years ended December 31, 2004, 2003 and 2002:
                           
    Years Ended December 31,
     
    2004   2003   2002
             
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
                       
 
Cash paid during the period for interest
  $ 8,680     $ 4,744     $ 2,286  
 
Cash paid during the period for income taxes
  $ 48,778     $ 42,749     $ 29,709  
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES:
                       
 
Acquisition of property through assumption of long-term obligations
  $     $     $ 16,138  
 
Future obligation related to acquisitions
  $ 3,669     $ 2,170     $ 24,252  
 
Acquisition of minority interest in subsidiary
  $     $ 3,129     $  
 
Restricted stock issued in the purchase of minority interest in a subsidiary
  $     $ 2,418     $  
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES:
                       
 
Issuance of restricted stock
  $ 1,000     $     $ 1,346  
16. Quarterly Results of Operations (Unaudited)
      The following is the summary of the unaudited quarterly results of operations for the two years ended December 31, 2004 and 2003.
                                   
    Three Months Ended
     
    March 31,   June 30,   September 30,   December 31,
    2004   2004   2004   2004
                 
Revenue
  $ 289,368     $ 283,684     $ 307,613     $ 336,718  
Cost of services
    125,934       123,550       137,858       154,637  
                         
Gross Profit
    163,434       160,134       169,755       182,081  
                         
Net income
  $ 27,427     $ 26,755     $ 28,511     $ 30,478  
                         
Earnings per common share:
                               
 
Basic
  $ 0.41     $ 0.40     $ 0.42     $ 0.45  
 
Diluted
  $ 0.40     $ 0.39     $ 0.41     $ 0.43  

F-27


Table of Contents

WEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Dollars in Thousands Except Per Share Amounts)
                                   
    Three Months Ended
     
    March 31,   June 30,   September 30,   December 31,
    2003   2003   2003   2003
                 
Revenue
  $ 216,186     $ 237,559     $ 263,551     $ 271,045  
Cost of services
    103,262       106,224       112,804       117,970  
                         
Gross Profit
    112,924       131,335       150,747       153,075  
                         
Net income
  $ 20,095     $ 20,861     $ 24,368     $ 22,552  
                         
Earnings per common share:
                               
 
Basic
  $ 0.30     $ 0.31     $ 0.37     $ 0.34  
 
Diluted
  $ 0.30     $ 0.30     $ 0.35     $ 0.33  

F-28


Table of Contents

Schedule II
WEST CORPORATION AND SUBSIDIARIES
CONSOLIDATED VALUATION ACCOUNTS
THREE YEARS ENDED DECEMBER 31, 2004
                                         
        Reserves   Additions —        
    Balance   Obtained   Charged to   Deductions —    
    Beginning   with   Cost and   Amounts   Balance
Description   of Year   Acquisitions   Expenses   Charged-Off   End of Year
                     
    (Amounts in thousands)
December 31, 2004 — Allowance for doubtful accounts — Accounts and notes receivable
  $ 11,208     $ 1,107     $ 5,706     $ 7,999     $ 10,022  
                               
December 31, 2003 — Allowance for doubtful accounts — Accounts and notes receivable
  $ 6,139     $ 2,007     $ 9,979     $ 6,917     $ 11,208  
                               
December 31, 2002 — Allowance for doubtful accounts — Accounts and notes receivable
  $ 9,893     $ 155     $ 24,487     $ 28,396     $ 6,139  
                               
      The year end balance in the allowance for doubtful accounts — accounts and notes receivable (current) for the years ended 2004, 2003 and 2002 was $10,022, $9,131 and $5,139, respectively. The year end balance in the allowance for doubtful accounts — long-term notes receivable for the years ended 2004, 2003 and 2002 was $0, $2,077 and $1,000, respectively.

S-1


Table of Contents

EXHIBIT INDEX
      Exhibits identified in parentheses below, on file with the SEC are incorporated by reference into this report.
                 
        Sequential
Exhibit       Page
Number   Description   Number
         
  2.01     Purchase Agreement, dated as of July 23, 2002, by and among the Company, Attention, LLC, the sellers and the sellers’ representative named therein (incorporated by reference to Exhibit 2.1 to Form 8-K dated August 2, 2002)     *  
  2.02     Agreement and Plan of Merger, dated as of March 27, 2003, by and among West Corporation, Dialing Acquisition Corp., ITC Holding Company, Inc. and, for purposes of Sections 3.6, 4.1 and 8.13 and Articles 11 and 12 only, the Stockholder Representative (incorporated by reference to Exhibit 2.1 to Form 8-K dated April 1, 2003)     *  
  2.03     Purchase Agreement, dated as of July 22, 2004, by and among Worldwide Asset Management, LLC; National Asset Management Enterprises, Inc.; Worldwide Asset Collections, LLC; Worldwide Asset Purchasing, LLC; BuyDebtCo; The Debt Depot, LLC; Worldwide Assets, Inc., Frank J. Hanna, Jr., Darrell T. Hanna, West Corporation and West Receivable Services, Inc. (incorporated by reference to Exhibit 2.1 to Current Report on Form 8-K filed on August 9, 2004.        
  2.04     Purchase Agreement, dated as of July 22, 2004, by and among Asset Direct Mortgage, LLC, Frank J. Hanna, Jr., Darrell T. Hanna and West Corporation (incorporated by reference to Exhibit 2.2 to Current Report on Form 8-K filed on August 9, 2004).        
  3.01     Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 99.02 to Form 8-K dated December 29, 2001)     *  
  3.02     Amended and Restated By-Laws of the Company (incorporated by reference to Exhibit 3.01 to Form 8-K dated February 16, 2005)     *  
  10.01     Form of Registration Rights Agreement (incorporated by reference to Exhibit 10.01 to Registration Statement under Form S-1 (Amendment No. 1) dated November 12, 1996, File No. 333-13991)     *  
  10.02     Amended and Restated 1996 Stock Incentive Plan     *  
  10.03     Employment Agreement between the Company and Thomas B. Barker dated January 1, 1999, as amended February 11, 2005     **  
  10.04     Employment Agreement between the Company and Paul M. Mendlik dated November 4, 2002, as amended February 11, 2005     **  
  10.05     Stock Redemption Agreement, dated April 9, 1996, by and among Gary L. West and Mary E West (incorporated by reference to Exhibit 10.11 to Registration Statement under Form S-1 (Amendment No. 1) dated November 12, 1996, File No. 333-13991)     *  
  10.06     Assignment and Assumption Agreement, dated as of November 12, 1996, by and among Gary L West, Mary E. West and the Company (incorporated by reference to Exhibit 10.12 to Registration Statement under Form S-1 (Amendment No. 2) dated November 21, 1996, File No. 333-13991)     *  
  10.07     Lease, dated September 1, 1994, by and between West Telemarketing Corporation and 99-Maple Partnership, amended December 10, 2003     *  
  10.08     Employment Agreement between the Company and Nancee R. Berger, dated January 1, 1999, as amended February 11, 2005     **  
  10.09     Amended and Restated Employee Stock Purchase Plan     *  
  10.10     Employment Agreement between the Company and Mark V. Lavin dated July 1, 1999, as amended February 11, 2005     **  
  10.11     Employment Agreement between the Company and Steven M. Stangl dated January 1, 1999, as amended February 11, 2005     **  
  10.12     Employment Agreement between the Company and Michael M. Sturgeon, dated January 1, 1999, as amended February 11, 2005     **  


Table of Contents

                 
        Sequential
Exhibit       Page
Number   Description   Number
         
  10.13     Employment Agreement between the Company and Jon R. (Skip) Hanson, dated October 4, 1999, as amended February 11, 2005     **  
  10.14     Employment Agreement between West Direct, Inc. and Todd B. Strubbe, dated July 30, 2001, as amended February 11, 2005     **  
  10.15     Employment Agreement between the Company and Michael E. Mazour, dated January 9, 2004 as amended February 11, 2005     **  
  10.16     Restricted Stock Agreement between the Company and Paul M. Mendlik dated September 12, 2002 (incorporated by reference to Exhibit 10.02 to Form 10-Q dated November 4, 2002)     *  
  10.17     Amended and Restated Nonqualified Deferred Compensation Plan     *  
  10.18     Employment Agreement between the Company and Joseph Scott Etzler, dated May 7, 2003, as amended February 11, 2005     **  
  10.19     Amended and Restated Credit Agreement, dated November 15, 2004, among the Company and Wachovia Bank National Association as Administrative Agent and the banks named therein     **  
  10.20     Employment Agreement between the Company and James F. Richards, dated July 23, 2002, as amended February 11, 2005     **  
  10.21     Participation Agreement, dated May 9, 2003, among West Facilities Corporation, Wachovia Development Corporation and Wachovia Bank, National Association as Agent for the Secured Parties and the banks named therein (incorporated by reference to Exhibit 10.22 to Form 10-K filed on March  8, 2004)     *  
  10.22     First amendment to the Participation Agreement, dated October 31, 2003, among West Facilities Corporation, Wachovia Development Corporation and Wachovia Bank, National Association as Agent for the Secured Parties and the banks named therein (incorporated by reference to Exhibit 10.23 to Form 10-K filed on March 8, 2004)     *  
  10.23     Second amendment to the Participation Agreement, dated January 22, 2004, among West Facilities Corporation, Wachovia Development Corporation and Wachovia Bank, National Association as Agent for the Secured Parties and the banks named therein (incorporated by reference to Exhibit 10.24 to Form 10-K filed on March 8, 2004)     *  
  10.24     Third amendment to the Participation Agreement, dated August 9, 2004, among West Facilities Corporation, Wachovia Development Corporation and Wachovia Bank, National Association as Agent for the Secured Parties and the banks named therein     **  
  10.25     Fourth amendment to the Participation Agreement, dated November 15, 2004, among West Facilities Corporation, Wachovia Development Corporation and Wachovia Bank, National Association as Agent for the Secured Parties and the banks named therein     **  
  21.01     Subsidiaries     **  
  23.01     Consent of Deloitte & Touche LLP     **  
  31.01     Certification pursuant to 15 U.S.C. section 7241 as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002     **  
  31.02     Certification pursuant to 15 U.S.C. section 7241 as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002     **  
  32.01     Certification pursuant to 18 U.S.C. section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002     **  
  32.02     Certification pursuant to 18 U.S.C. section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002     **  
 
  *  Indicates that the page number for such item is not applicable.
**  Filed herewith
<PAGE>
                                                               EXHIBIT NO. 10.03

                                 (WEST (R) LOGO)

TO:     THOMAS B. BARKER
FROM:   WSTC COMP. COMMITTEE
DATE:   FEBRUARY 11, 2005
RE:     2005 COMPENSATION PLAN - EXHIBIT A
--------------------------------------------------------------------------------

The compensation plan for 2005 while you are employed as Chief Executive Officer
for West Corporation is outlined below:

1.   Your base salary will be $750,000.00. Should you elect to voluntarily
     terminate your employment, you will be compensated for your services as an
     employee through the date of your actual termination per your Employment
     Agreement.

2.   Effective January 1, 2005, you will be eligible to receive a performance
     bonus based on consolidated net income growth for West Corporation in 2005.
     Net income for each quarter will be compared to the same quarter in the
     previous year. Non cash expenses resulting from expensing options as a
     result of any amendments to FASB123 will be excluded from this calculation.
     Each $1M increase of Net Income over 2004 Net Income will result in a
     $60,000 bonus. 75% of the quarterly bonus earned will be paid within thirty
     (30) days from the end of the quarter. 100% of the total bonus earned will
     be paid within thirty (30) days of the final determination of 2005 Net
     Income.

     Should Net Income exceed $130M for the year, you will eligible to receive
     $75,000 for
 every $1M of Net Income above that threshold.

     Please note that if there is a negative year-to date profit calculation at
     the end of any quarter, this will result in a "loss carry forward" to be
     applied to the next quarterly or year-to-date calculation.

3.   All Net Income objectives are based upon West Corporation operations and
     will not include net income derived from mergers or acquisitions unless
     specifically and individually approved by West Corporation's Compensation
     Committee.

4.   At the discretion of management, you may receive an additional bonus based
     on the Company's and your individual performance.

5.   Your Compensation Plan for the year 2006 will be presented in December,
     2005.

6.   The benefit plans, as referenced in Section 7(i), shall include insurance
     plans based upon eligibility pursuant to the plans. If the insurance plans
     do not provide for continued participation, the continuation of benefits
     shall be pursuant to COBRA. In the event Employee's benefits continue
     pursuant to COBRA and Employee accepts new employment during the consulting
     term, Employee may continue benefits thereafter to the extent allowed under
     COBRA. In no event shall benefits plans include the 401K Plan or the 1996
     Stock Incentive Plan.


                                        /s/ Thomas B. Barker
                                        ----------------------------------------
                                        Employee - Thomas B. Barker

<PAGE>
                                                               EXHIBIT NO. 10.04

                                 (WEST (R) LOGO)

TO:     PAUL M. MENDLIK
FROM:   TOM BARKER
DATE:   FEBRUARY 11, 2005
RE:     2005 COMPENSATION PLAN - EXHIBIT A
--------------------------------------------------------------------------------

The compensation plan for 2005 while you are employed as Chief Financial Officer
for West Corporation is outlined below:

1.   Your base salary will be $385,000.00. Should you elect to voluntarily
     terminate your employment, you will be compensated for your services as an
     employee through the date of your actual termination per your Employment
     Agreement.

2.   Effective January 1, 2005, you will be eligible to receive a performance
     bonus based on consolidated net income growth for West Corporation in 2005.
     Net income for each quarter will be compared to the same quarter in the
     previous year. Non cash expenses resulting from expensing options as a
     result of any amendments to FASB123 will be excluded from this calculation.
     Each $1M increase of Net Income over 2004 Net Income will result in a
     $12,500 bonus. 75% of the quarterly bonus earned will be paid within thirty
     (30) days from the end of the quarter. 100% of the total bonus earned will
     be paid within thirty (30) days of the final determination of 2005 Net
     Income.

     Should Net Income exceed $130M for the year, you will eligible to receive
     $15,625 for every $1M
 of Net Income above that threshold.

     Please note that if there is a negative year-to date profit calculation at
     the end of any quarter, this will result in a "loss carry forward" to be
     applied to the next quarterly or year-to-date calculation.

3.   All Net Income objectives are based upon West Corporation operations and
     will not include net income derived from mergers or acquisitions unless
     specifically and individually approved by West Corporation's Compensation
     Committee.

4.   At the discretion of management, you may receive an additional bonus based
     on the Company's and your individual performance.

5.   Your Compensation Plan for the year 2006 will be presented in December,
     2005.

6.   The benefit plans, as referenced in Section 7(i), shall include insurance
     plans based upon eligibility pursuant to the plans. If the insurance plans
     do not provide for continued participation, the continuation of benefits
     shall be pursuant to COBRA. In the event Employee's benefits continue
     pursuant to COBRA and Employee accepts new employment during the consulting
     term, Employee may continue benefits thereafter to the extent allowed under
     COBRA. In no event shall benefits plans include the 401K Plan or the 1996
     Stock Incentive Plan.


                                        /s/ Paul M. Mendlik
                                        ----------------------------------------
                                        Employee - Paul M. Mendlik

<PAGE>
                                                               EXHIBIT NO. 10.08

                                 (WEST (R) LOGO)

TO:     NANCEE R. BERGER
FROM:   WSTC COMP. COMMITTEE
DATE:   FEBRUARY 11, 2005
RE:     2005 COMPENSATION PLAN - EXHIBIT A
--------------------------------------------------------------------------------

The compensation plan for 2005 while you are employed as President and Chief
Operating Officer for West Corporation is outlined below:

1.   Your base salary will be $500,000.00. Should you elect to voluntarily
     terminate your employment, you will be compensated for your services as an
     employee through the date of your actual termination per your Employment
     Agreement.

2.   Effective January 1, 2005, you will be eligible to receive a performance
     bonus based on consolidated net income growth for West Corporation in 2005.
     Net income for each quarter will be compared to the same quarter in the
     previous year. Non cash expenses resulting from expensing options as a
     result of any amendments to FASB123 will be excluded from this calculation.
     Each $1M increase of Net Income over 2004 Net Income will result in a
     $40,000 bonus. 75% of the quarterly bonus earned will be paid within thirty
     (30) days from the end of the quarter. 100% of the total bonus earned will
     be paid within thirty (30) days of the final determination of 2005 Net
     Income.

     Should Net Income exceed $130M for the year, you will eligible to receive

     $50,000 for every $1M of Net Income above that threshold.

     Please note that if there is a negative year-to date profit calculation at
     the end of any quarter, this will result in a "loss carry forward" to be
     applied to the next quarterly or year-to-date calculation.

3.   All Net Income objectives are based upon West Corporation operations and
     will not include net income derived from mergers or acquisitions unless
     specifically and individually approved by West Corporation's Compensation
     Committee.

4.   At the discretion of management, you may receive an additional bonus based
     on the Company's and your individual performance.

5.   Your Compensation Plan for the year 2006 will be presented in December,
     2005.

6.   The benefit plans, as referenced in Section 7(i), shall include insurance
     plans based upon eligibility pursuant to the plans. If the insurance plans
     do not provide for continued participation, the continuation of benefits
     shall be pursuant to COBRA. In the event Employee's benefits continue
     pursuant to COBRA and Employee accepts new employment during the consulting
     term, Employee may continue benefits thereafter to the extent allowed under
     COBRA. In no event shall benefits plans include the 401K Plan or the 1996
     Stock Incentive Plan.


                                        /s/ Nancee R. Berger
                                        ----------------------------------------
                                        Employee - Nancee R. Berger

<PAGE>
                                                               EXHIBIT NO. 10.10

                                 (WEST (R) LOGO)

TO:     MARK V. LAVIN
FROM:   STEVE STANGL
DATE:   FEBRUARY 11, 2005
RE:     2005 COMPENSATION PLAN - EXHIBIT A
--------------------------------------------------------------------------------

The compensation plan for 2005 while you are employed as President of West
Telemarketing, LP, including COS and DR, is outlined below:

1.   Your base salary will be $250,000.00. Should you elect to voluntarily
     terminate your employment, you will be compensated for your services as an
     employee through the date of your actual termination per your Employment
     Agreement.

2.   You are eligible to receive up to a $250,000 annual performance bonus for
     meeting your plan objective in Net Operating Income before corporate
     allocations. The percent of plan achieved will apply to this bonus
     calculation, but will not exceed a total of $250,000 for the year. Up to
     $46,875 of this bonus will be available to be paid quarterly and trued up
     annually.

3.   You are also eligible to receive an additional bonus for Net Operating
     Income before corporate allocations in excess of your plan objectives. The
     bonus will be calculated by multiplying the excess Net Operating Income
     before corporate allocation times .02. This bonus will be calculated at the
     end of the 2005 plan year and will be paid no later than February 28, 2006.

4.   Two
 significant financial statement factors must be achieved in 2005. Each
     has a $25,000 bonus available for achieving the following:

     1.)  West Telemarketing, LP "Gross Margin" at or exceeding 45%.

     2.)  West Telemarketing, LP "Net Operating Income" after corporate
          allocations at or exceeding 13.5%.

5.   In addition, if West Corporation achieves its publicly stated 2005 Net
     Income range provided in December 2004, you will be eligible to receive an
     additional one-time bonus of $50,000. This bonus is not to be combined or
     netted together with any other bonus set forth in this agreement.

6.   You will be paid the amount due for any quarterly bonuses within thirty
     (30) days after the quarter ends, except for the 4th Quarter and annual
     true-up amounts which will be paid no later than February 28, 2006.

7.   All objectives are based upon West Telemarketing, LP and West Corporation
     operations and will not include profit and income derived from mergers,
     acquisitions, joint ventures, stock buybacks or other non-operating income
     unless specifically and individually approved by West Corporation's
     Compensation Committee.

8.   At the discretion of executive management, you may also receive an
     additional bonus based on your individual performance. This bonus is not to
     be combined or netted together with any other bonus set forth in this
     agreement.


<PAGE>

9.   The benefit plans, as referenced in Section 7(i), shall include insurance
     plans based upon eligibility pursuant to the plans. If the insurance plans
     do not provide for continued participation, the continuation of benefits
     shall be pursuant to COBRA. In the event Employee's benefits continue
     pursuant to COBRA and Employee accepts new employment during the consulting
     term, Employee may continue benefits thereafter to the extent allowed under
     COBRA. In no event shall benefits plans include the 401K Plan or the 1996
     Stock Incentive Plan.


                                        /s/ Mark V. Lavin
                                        ----------------------------------------
                                        Employee - Mark V. Lavin

<PAGE>
                                                               EXHIBIT NO. 10.11

                                 (WEST (R) LOGO)

TO:     STEVEN M. STANGL
FROM:   NANCEE BERGER
DATE:   FEBRUARY 11, 2005
RE:     2005 COMPENSATION PLAN - EXHIBIT A
--------------------------------------------------------------------------------

The compensation plan for 2005 while you are employed by West Corporation as
President of West Communication Services (West Telemarketing, LP, West Business
Services, LP, West Interactive Corporation, West Direct, Inc.), is outlined
below:

1.   Your base salary will be $325,000.00. Should you elect to voluntarily
     terminate your employment, you will be compensated for your services as an
     employee through the date of your actual termination per your Employment
     Agreement.

2.   You will also be eligible to earn up to $300,000 for achieving the pre-tax
     Net Income plan for the Communication Services division. The percent of
     plan achieved will apply to the bonus calculation, but will not exceed a
     total of $300,000. Up to $56,250 of this bonus will be available to be paid
     quarterly and trued up annually.

3.   You are also eligible to receive an additional bonus for Net Operating
     Income in excess of the plan. The bonus will be calculated by multiplying
     the excess Net Operating Income after corporate allocations times .02. This
     bonus will be calculated at the end of the 2005 plan year and will be paid
     no later than
 February 28, 2006.

4.   In addition, if West Corporation achieves its 2005 Net Income range
     provided in December 2004, you will be eligible to receive an additional
     one-time bonus of $75,000. This bonus is not to be combined or netted
     together with any other bonus set forth in this agreement.

4.   You will be paid the amount due for any quarterly bonuses within thirty
     (30) days after the quarter ends, except for the 4th Quarter and annual
     true-up amounts which will be paid no later than February 28, 2006.

5.   All objectives are based upon West Corporation operations and will not
     include profit and income derived from mergers, acquisitions, joint
     ventures, stock buy backs or other non-operating income unless specifically
     and individually approved by the West Corporation Compensation Committee.

7.   At the discretion of executive management, you may also receive an
     additional bonus based on your individual performance. This bonus is not to
     be combined or netted together with any other bonus set forth in this
     agreement.

8.   The benefit plans, as referenced in Section 7(i), shall include insurance
     plans based upon eligibility pursuant to the plans. If the insurance plans
     do not provide for continued participation, the continuation of benefits
     shall be pursuant to COBRA. In the event Employee's benefits continue
     pursuant to COBRA and Employee accepts new employment during the consulting


<PAGE>

     term, Employee may continue benefits thereafter to the extent allowed under
     COBRA. In no event shall benefits plans include the 401K Plan or the 1996
     Stock Incentive Plan.


                                        /s/ Steven M. Stangl
                                        ----------------------------------------
                                        Employee - Steven M. Stangl

<PAGE>
                                                               EXHIBIT NO. 10.12

                                 (WEST (R) LOGO)

TO:     MIKE STURGEON
FROM:   NANCEE BERGER
DATE:   FEBRUARY 11, 2005
RE:     2005 COMPENSATION PLAN - EXHIBIT A
--------------------------------------------------------------------------------

The compensation plan for 2005 while you are employed as Executive
Vice-President of Sales and Marketing for West Corporation is outlined below:

1.   Your base salary will be $235,000.00. Should you elect to voluntarily
     terminate your employment, you will be compensated for your services as an
     employee through the date of your actual termination per your Employment
     Agreement.

2.   You are eligible to receive up to a $200,000 annual performance bonus for
     West's Communication Services and West Asset Management (Consumer,
     Commercial and 1st Party Collections only) aggregate revenue achieving plan
     of $936M. The percent of plan achieved will apply to the bonus calculation
     provided a minimum of 85% or $796M is achieved. This bonus will not exceed
     $200,000. Up to $37,500 of this bonus will be available to be paid
     quarterly and the total bonus will be trued up at the end of the year.
     Revenue dollars which exceed the plan amount stated above will be bonused
     at a rate factor of .0045. The excess bonus will be calculated at the end
     of 2005 and will be paid no later than February 28, 2006.

3.   You may also receive a quarterly
 performance bonus for three specific
     revenue goals as outlined below. These specific revenue growth bonuses will
     be calculated by applying year-to-date growth times the rate factor
     indicated on the schedules below:


<TABLE>
<CAPTION>
                                                                    RATE FACTOR
                                                                    -----------
<S>                                                                 <C>
     -    2005 West Asset Management, Inc. Revenue Growth Bonus
             (schedule attached)

             Up to $10M of revenue growth                               .005
             $10M+                                                       .01

     -    2005 Home Agent Revenue Growth Bonus.

             Revenue Growth                                              .01
             (not to include any West-designated DR transactions)

     -    2005 West Interactive Corporation Growth Bonus

             (no Account Services included in either year)               .02
</TABLE>


4.   Bonuses will not be combined nor netted with any other bonus outlined in
     this compensation plan. A maximum of 75% of each bonus calculation will be
     paid thirty (30) days after the end of the quarter. A negative quarterly
     calculation will result in a loss carry forward and will be trued up each
     quarter and the total (100%) bonus true up will occur at the year end 2005
     and will be paid no later than February 28, 2006.


<PAGE>

5.   In addition, if West Corporation achieves its publicly stated 2005 Net
     Income range provided in December 2004, you will be eligible to receive an
     additional one-time bonus of $50,000. This bonus is not to be combined or
     netted together with any other bonus set forth in this agreement.

6.   All objectives are based upon West Corporation operations and will not
     include revenue derived from mergers, acquisitions, joint ventures, stock
     buy backs or other non-operating income unless specifically and
     individually approved by West Corporation's Compensation Committee.

7.   At the discretion of executive management, you may also receive an
     additional bonus based on your individual performance.

8.   The benefit plans, as referenced in Section 7(i), shall include insurance
     plans based upon eligibility pursuant to the plans. If the insurance plans
     do not provide for continued participation, the continuation of benefits
     shall be pursuant to COBRA. In the event Employee's benefits continue
     pursuant to COBRA and Employee accepts new employment during the consulting
     term, Employee may continue benefits thereafter to the extent allowed under
     COBRA. In no event shall benefits plans include the 401K Plan or the 1996
     Stock Incentive Plan.


                                        /s/ Mike Sturgeon
                                        ----------------------------------------
                                        Employee - Mike Sturgeon


<PAGE>

                                    SCHEDULE


<TABLE>
<CAPTION>
                        2004     2005    GROWTH
                       ------   ------   ------
<S>                    <C>      <C>      <C>
COMMERCIAL              3,600    7,200    100%
FIRST PARTY             1,500    8,000    433%
CONSUMER - ATTENTION   11,100   13,000     17%
CONSUMER - WORLDWIDE   12,000   12,500      4%
                       ------   ------    ---
                       28,200   40,700     44%
                       ------   ------    ---
</TABLE>


<PAGE>
                                                               EXHIBIT NO. 10.13

                                 (WEST (R) LOGO)

TO:     JON (SKIP) HANSON
FROM:   NANCEE BERGER
DATE:   FEBRUARY 11, 2005
RE:     2005 COMPENSATION PLAN - EXHIBIT A
--------------------------------------------------------------------------------

The compensation plan for 2005 while you are employed as Executive Vice
President & Chief Administrative Officer for West Corporation is outlined below:

1.   Your base salary will be $225,000.00. Should you elect to voluntarily
     terminate your employment, you will be compensated for your services as an
     employee through the date of your actual termination per your Employment
     Agreement.

2.   Effective January 1, 2005, you will be eligible to receive a performance
     bonus based on consolidated net income growth for West Corporation in 2005.
     Net income for each quarter will be compared to the same quarter in the
     previous year. Non cash expenses resulting from expensing options as a
     result of any amendments to FASB123 will be excluded from this calculation.
     Each $1M increase of Net Income over 2004 Net Income will result in a
     $10,700 bonus. 75% of the quarterly bonus earned will be paid within thirty
     (30) days from the end of the quarter. 100% of the total bonus earned will
     be paid within thirty (30) days of the final determination of 2005 Net
     Income.

     Please note that if there is a negative year-to date profit
 calculation at
     the end of any quarter, this will result in a "loss carry forward" to be
     applied to the next quarterly or year-to-date calculation.

3.   All Net Income objectives are based upon West Corporation operations and
     will not include net income derived from mergers or acquisitions unless
     specifically and individually approved by West Corporation's Compensation
     Committee.

4.   At the discretion of management, you may receive an additional bonus based
     on the Company's and your individual performance.

5.   Your Compensation Plan for the year 2006 will be presented in December,
     2005.

6.   The benefit plans, as referenced in Section 7(i), shall include insurance
     plans based upon eligibility pursuant to the plans. If the insurance plans
     do not provide for continued participation, the continuation of benefits
     shall be pursuant to COBRA. In the event Employee's benefits continue
     pursuant to COBRA and Employee accepts new employment during the consulting
     term, Employee may continue benefits thereafter to the extent allowed under
     COBRA. In no event shall benefits plans include the 401K Plan or the 1996
     Stock Incentive Plan.


                                        /s/ Skip Hanson
                                        ----------------------------------------
                                        Employee - Jon (Skip) Hanson

<PAGE>
                                                               EXHIBIT NO. 10.14

                                 (WEST (R) LOGO)

TO:     TODD B. STRUBBE
FROM:   STEVE STANGL
DATE:   FEBRUARY 11, 2005
RE:     2005 COMPENSATION PLAN - EXHIBIT A
--------------------------------------------------------------------------------

The compensation plan for 2005 while you are employed as President of West
Direct, Inc. ("WDI") and West Interactive Corporation ("WIC") is outlined below:

1.   Your base salary will be $250,000.00. Should you elect to voluntarily
     terminate your employment, you will be compensated for your services as an
     employee through the date of your actual termination per your Employment
     Agreement.

2.   You are eligible to receive up to a $100,000 annual performance bonus for
     meeting your WDI objective in Net Operating Income before corporate
     allocations. The percent of plan achieved will apply to this bonus
     calculation, but will not exceed a total of $100,000 for the year. Up to
     $18,750 of this bonus will be available to be paid quarterly and trued up
     annually. This bonus is not to be combined or netted together with any
     other bonus set forth in this agreement.

3.   You are also eligible to receive up to a $100,000 annual performance bonus
     for meeting your WIC objective Net Operating Income before corporate
     allocations. The percent of plan achievement will apply to this bonus
     calculation, but will not exceed a total
 of $100,000 for the year. Up to
     $18,750 of this bonus will be available to be paid quarterly and trued up
     annually. This bonus is not to be combined or netted together with any
     other bonus set forth in this agreement.

4.   You are also eligible to receive an additional bonus for Net Operating
     Income before corporation allocations in excess of WDI's and/or WIC's plan
     objectives. The bonus will be calculated by multiplying the respective
     excess Net Operating Income before corporate allocations times .02. This
     bonus will be calculated at the end of the 2005 plan year and will be paid
     no later than February 28, 2006. This bonus is not to be combined or netted
     together with any other bonus set forth in this agreement.

5.   In addition, if West Corporation achieves its publicly stated 2005 Net
     Income range provided in December 2004, you will be eligible to receive an
     additional one-time bonus of $50,000. This bonus is not to be combined or
     netted together with any other bonus set forth in this agreement.

6.   You will be paid the amount due for any quarterly bonuses within thirty
     (30) days after the quarter ends, except for the 4th Quarter and annual
     true-up amounts which will be paid no later than February 28, 2006.

7.   All objectives are based upon each company's operations and will not
     include profit and income derived from mergers, acquisitions, joint
     ventures, stock buy backs or other non-operating income unless specifically
     and individually approved by West Corporation's Compensation Committee.


<PAGE>

8.   At the discretion of executive management, you may also receive an
     additional bonus based on your individual performance. This bonus is not to
     be combined or netted together with any other bonus set forth in this
     agreement.

9.   The benefit plans, as referenced in Section 7(h), shall include insurance
     plans based upon eligibility pursuant to the plans. If the insurance plans
     do not provide for continued participation, the continuation of benefits
     shall be pursuant to COBRA. In the event Employee's benefits continue
     pursuant to COBRA and Employee accepts new employment during the consulting
     term, Employee may continue benefits thereafter to the extent allowed under
     COBRA. In no event shall benefits plans include the 401K Plan or the 1996
     Stock Incentive Plan.


                                        /s/ Todd B. Strubbe
                                        ----------------------------------------
                                        Employee - Todd B. Strubbe

<PAGE>
                                                               EXHIBIT NO. 10.15

                                 (WEST (R) LOGO)

TO:     MICHAEL E. (MICK) MAZOUR
FROM:   STEVE STANGL
DATE:   FEBRUARY 11, 2005
RE:     2005 COMPENSATION PLAN - EXHIBIT A
--------------------------------------------------------------------------------

The compensation plan for 2005 while you are employed as President of West
Business Services, LP is outlined below:

1.   Your base salary will be $250,000.00. Should you elect to voluntarily
     terminate your employment, you will be compensated for your services as an
     employee through the date of your actual termination per your Employment
     Agreement.

2.   You are eligible to receive up to a $200,000 annual performance bonus for
     meeting your plan objective in Net Operating Income before corporate
     allocations. The percent of plan achievement will apply to this bonus
     calculation, but will not exceed a total of $200,000 for the year. Up to
     $37,500 of this bonus will be available to be paid quarterly and trued up
     annually.

3.   You are also eligible to receive an additional bonus for Net Operating
     Income before corporate allocations in excess of your plan objectives. The
     bonus will be calculated by multiplying the excess Net Operating Income
     before corporate allocations times .02. This bonus will be calculated at
     the end of 2005 plan year and will be paid no later than February 28, 2006.

4.   In addition,
 if West Corporation achieves its publicly stated 2005 Net
     Income range provided in December 2004, you will be eligible to receive an
     additional one-time bonus of $50,000. This bonus is not to be combined or
     netted together with any other bonus set forth in this agreement.

5.   You will be paid the amount due for any quarterly bonuses within thirty
     (30) days after the quarter ends, except for the 4th Quarter and annual
     true-up amounts which will be paid no later than February 28, 2006.

6.   All objectives are based upon West Business Services, LP and West
     Corporation operations and will not include profit and income derived from
     mergers, acquisitions, joint ventures or other non-operating income unless
     specifically and individually approved by West Corporation's Compensation
     Committee.

7.   At the discretion of executive management, you may also receive an
     additional bonus based on your individual performance. This bonus is not to
     be combined or netted together with any other bonus set forth in this
     agreement.

8.   The benefit plans, as referenced in Section 7(i), shall include insurance
     plans based upon eligibility pursuant to the plans. If the insurance plans
     do not provide for continued participation, the continuation of benefits
     shall be pursuant to COBRA. In the event Employee's benefits continue
     pursuant to COBRA and Employee accepts new employment during the consulting
     term, Employee may continue benefits thereafter to the extent allowed under
     COBRA. In no event shall benefits plans include the 401K Plan or the 1996
     Stock Incentive Plan.


                                        /s/ Mick Mazour
                                        ----------------------------------------
                                        Employee - Michael E. (Mick) Mazour

<PAGE>
                                                               EXHIBIT NO. 10.18

                                 (WEST (R) LOGO)

TO:     JOSEPH SCOTT ETZLER
FROM:   NANCEE BERGER
DATE:   FEBRUARY 11, 2005
RE:     2005 COMPENSATION PLAN
--------------------------------------------------------------------------------

Your 2005 compensation plan ("Plan Year") for your employment as President for
Intercall, Inc. (the "Company"), including ConferenceCall.com and ECI Conference
Call Services LLC, for 2005 is as follows:

1.   Your base salary will be $425,000 per year.

2.   You may also receive additional bonuses pursuant to Paragraph 3 of your
     Employment Agreement. The Company intends to calculate those bonuses as
     follows:

     a)   First, you will be eligible to receive a bonus based upon the
          Company's results ("Company Profitability Bonus"). The Company intends
          to calculate this Company Profitability Bonus as follows:

          1)   The Target Company Profitability Bonus shall be $350,000.

          2)   Each cumulative quarter's net operating income for the Company
               ("Plan Year Company NOI") will be compared to the cumulative
               budgeted net operating income for the Company for the same period
               ("Company NOI Budget").

          3)   The percentage by which the cumulative Plan Year Company NOI
               exceeds (i.e., a positive percentage) or is less than (i.e., a
               negative percentage) the cumulative Company NOI Budget shall be
               the "Company Profit Variance Percentage."

          4)   Each quarter's cumulative
 revenue for the Company ("Plan Year
               Company Revenue") will be compared to the cumulative budgeted
               revenue for the Company for the same period ("Company Revenue
               Budget").

          5)   The percentage by which the cumulative Plan Year Company Revenue
               exceeds (i.e., a positive percentage) or is less than (i.e., a
               negative percentage) the cumulative Company Revenue Budget shall
               be the "Company Revenue Variance Percentage."

          6)   The sum of one hundred percentage points (100%), plus the product
               of (i) the average of the Company Profit Variance Percentage and
               the Company Revenue Variance Percentage, multiplied by (ii) three
               (3), is the "Company Bonus Factor."

          7)   The product of the Company Bonus Factor and the Target Company
               Profitability Bonus, less any amounts paid to you for prior
               Company Profitability Bonuses during the Plan Year, will be paid
               to you in the month following each quarter end.

     b)   In no event shall the Company Profitability Bonus exceed $550,000.

3.   In addition, if West Corporation achieves its publicly stated 2005 Net
     Income range provided in December 2004, you will be eligible to receive an
     additional one-time bonus of $50,000. This bonus is not to be combined or
     netted together with any other bonus set forth in this agreement.

4.   All bonus calculations will be based upon the Company's operations and will
     not include profit and income derived from mergers, acquisitions, joint
     ventures, stock buybacks, other non-operating income or loss, or financing
     changes associated with such events unless specifically and individually
     approved by West Corporation's Compensation Committee


                                        /s/ Joseph Scott Etzler
                                        ----------------------------------------
                                        Employee - Joseph Scott Etzler

<PAGE>
                                                                   Exhibit 10.19

                                                                  EXECUTION COPY
--------------------------------------------------------------------------------

                                  $400,000,000

                      AMENDED AND RESTATED CREDIT AGREEMENT

                                      among

                                WEST CORPORATION,
                                   as Borrower

                                       and

                  CERTAIN DOMESTIC SUBSIDIARIES OF THE BORROWER
                        FROM TIME TO TIME PARTIES HERETO,
                                 as Guarantors,

                           THE LENDERS PARTIES HERETO

                                       and

                      WACHOVIA BANK, NATIONAL ASSOCIATION,
                            as Administrative Agent,

                         U.S. BANK NATIONAL ASSOCIATION
                                       and
                     WELLS FARGO BANK, NATIONAL ASSOCIATION
                             as Syndication Agents,

                              BANK OF AMERICA, N.A.
                                       and
                                   BNP PARIBAS
                           as Co-Documentation Agents

                                       and

                         WACHOVIA CAPITAL MARKETS, LLC,
                      as Lead Arranger and Sole Book Runner

                          Dated as of November 15, 2004

--------------------------------------------------------------------------------


<PAGE>

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                        Page
                                                                                        ----
<S>               <C>                                                                   <C>
ARTICLE I  DEFINITIONS...............................................................     1
   Section 1.1    Defined Terms......................................................     1
   Section 1.2    Other Definitional Provisions......................................    23
   Section 1.3    Accounting Terms...................................................    24

ARTICLE II  THE LOANS; AMOUNT AND TERMS..............................................    24
   Section 2.1    Revolving Loans....................................................    24
   Section 2.2    Incremental Facilities.............................................    26
   Section 2.3    Letter of Credit Subfacility.......................................    27
   Section 2.4    Swingline Loan Subfacility.........................................    30
   Section 2.5    Fees...............................................................    32
   Section 2.6    Commitment Reductions..............................................    32
   Section 2.7    Repayments and Prepayments.........................................    33
   Section 2.8    Minimum Principal Amount of Tranches...............................    34
   Section 2.9    Default Rate and Payment Dates.....................................    34
   Section 2.10   Conversion Options.................................................    34
   Section 2.11   Computation of Interest and
 Fees...................................    35
   Section 2.12   Pro Rata Treatment and Payments....................................    36
   Section 2.13   Non-Receipt of Funds by the Administrative Agent...................    38
   Section 2.14   Inability to Determine Interest Rate...............................    38
   Section 2.15   Illegality.........................................................    39
   Section 2.16   Requirements of Law................................................    39
   Section 2.17   Indemnity..........................................................    41
   Section 2.18   Taxes..............................................................    41
   Section 2.19   Indemnification; Nature of Issuing Lender's Duties.................    43
   Section 2.20   Replacement of Lenders.............................................    44

ARTICLE III  REPRESENTATIONS AND WARRANTIES..........................................    45
   Section 3.1    Financial Condition................................................    45
   Section 3.2    No Change..........................................................    45
   Section 3.3    Corporate Existence; Corporate Power; Compliance with Law..........    46
   Section 3.4    Authorization; Enforceable Obligations.............................    46
   Section 3.5    No Legal Bar; No Default...........................................    47
   Section 3.6    No Material Litigation.............................................    47
   Section 3.7    Investment Company Act.............................................    47
   Section 3.8    Margin Regulations.................................................    47
   Section 3.9    ERISA..............................................................    48
   Section 3.10   Environmental Matters..............................................    48
   Section 3.11   Purpose of Loans...................................................    49
   Section 3.12   Subsidiaries.......................................................    49
   Section 3.13   Ownership..........................................................    49
   Section 3.14   Indebtedness.......................................................    49
   Section 3.15   Taxes..............................................................    50
   Section 3.16   Solvency...........................................................    50
</TABLE>



<PAGE>


<TABLE>
<S>               <C>                                                                   <C>
   Section 3.17   Investments........................................................    50
   Section 3.18   Location of Assets.................................................    50
   Section 3.19   No Burdensome Restrictions.........................................    50
   Section 3.20   Brokers' Fees......................................................    51
   Section 3.21   Labor Matters......................................................    51
   Section 3.22   Accuracy and Completeness of Information...........................    51
   Section 3.23   Material Agreements................................................    51
   Section 3.24   Insurance..........................................................    51
   Section 3.25   Anti-Terrorism Laws................................................    52

ARTICLE IV  CONDITIONS PRECEDENT.....................................................    52
   Section 4.1    Conditions to Closing Date and Initial Revolving Loans.............    52
   Section 4.2    Conditions to All Extensions of Credit.............................    55

ARTICLE V  AFFIRMATIVE COVENANTS.....................................................    56
   Section 5.1    Financial Statements...............................................    56
   Section 5.2    Certificates; Other Information....................................    57
   Section 5.3    Payment of Obligations.............................................    58
   Section 5.4    Conduct of Business and Maintenance of Existence...................    58
   Section 5.5    Maintenance of Property; Insurance.................................    59
   Section 5.6    Inspection of Property; Books and Records; Discussions.............    59
   Section 5.7    Notices............................................................    59
   Section 5.8    Environmental Laws.................................................    60
   Section 5.9    Financial Covenants................................................    61
   Section 5.10   Additional Subsidiary Guarantors...................................    61
   Section 5.11   Compliance with Law................................................    61
   Section 5.12   Further Assurances.................................................    62

ARTICLE VI  NEGATIVE COVENANTS.......................................................    62
   Section 6.1    Indebtedness.......................................................    62
   Section 6.2    Liens..............................................................    64
   Section 6.3    Nature of Business.................................................    64
   Section 6.4    Consolidation, Merger, Sale or Purchase of Assets, etc.............    64
   Section 6.5    Advances, Investments and Loans....................................    65
   Section 6.6    Transactions with Affiliates.......................................    65
   Section 6.7    Ownership of Subsidiaries; Restrictions............................    65
   Section 6.8    Fiscal Year; Organizational Documents; Material Agreements.........    66
   Section 6.9    Limitation on Restricted Actions...................................    66
   Section 6.10   Restricted Payments................................................    66
   Section 6.11   Prepayments of Subordinated Debt, etc..............................    67
   Section 6.12   Sale Leasebacks....................................................    67
   Section 6.13   No Further Negative Pledges........................................    67

ARTICLE VII  EVENTS OF DEFAULT.......................................................    68
   Section 7.1    Events of Default..................................................    68
   Section 7.2    Acceleration; Remedies.............................................    70

ARTICLE VIII  THE AGENT..............................................................    71
   Section 8.1    Appointment........................................................    71
</TABLE>



<PAGE>


<TABLE>
<S>               <C>                                                                   <C>
   Section 8.2    Delegation of Duties...............................................    71
   Section 8.3    Exculpatory Provisions.............................................    71
   Section 8.4    Reliance by Administrative Agent...................................    72
   Section 8.5    Notice of Default..................................................    72
   Section 8.6    Non-Reliance on Administrative Agent and Other Lenders.............    72
   Section 8.7    Indemnification....................................................    73
   Section 8.8    Administrative Agent in Its Individual Capacity....................    73
   Section 8.9    Successor Administrative Agent.....................................    74
   Section 8.10   Other Agents; Arrangers and Managers...............................    74

ARTICLE IX  MISCELLANEOUS............................................................    74
   Section 9.1    Amendments and Waivers.............................................    74
   Section 9.2    Notices............................................................    76
   Section 9.3    No Waiver; Cumulative Remedies.....................................    77
   Section 9.4    Survival of Representations and Warranties.........................    77
   Section 9.5    Payment of Expenses and Taxes......................................    77
   Section 9.6    Successors and Assigns; Participations; Purchasing Lenders.........    78
   Section 9.7    Adjustments; Set-off...............................................    81
   Section 9.8    Table of Contents and Section Headings.............................    82
   Section 9.9    Counterparts.......................................................    82
   Section 9.10   Effectiveness......................................................    82
   Section 9.11   Severability.......................................................    82
   Section 9.12   Integration........................................................    82
   Section 9.13   Governing Law......................................................    82
   Section 9.14   Consent to Jurisdiction and Service of Process.....................    83
   Section 9.15   Confidentiality....................................................    83
   Section 9.16   Acknowledgments....................................................    84
   Section 9.17   Waivers of Jury Trial..............................................    84
   Section 9.18   Patriot Act Notice.................................................    84

ARTICLE X  GUARANTY..................................................................    85
   Section 10.1   The Guaranty.......................................................    85
   Section 10.2   Bankruptcy.........................................................    85
   Section 10.3   Nature of Liability................................................    86
   Section 10.4   Independent Obligation.............................................    86
   Section 10.5   Authorization......................................................    86
   Section 10.6   Reliance...........................................................    87
   Section 10.7   Waiver.............................................................    87
   Section 10.8   Limitation on Enforcement..........................................    88
   Section 10.9   Confirmation of Payment............................................    88
</TABLE>



<PAGE>

Schedules


<TABLE>
<S>                  <C>
Schedule 1.1(a)      Notice of Account Designation
Schedule 1.1(b)      Permitted Liens
Schedule 2.1(a)      Schedule of Lenders and Commitments
Schedule 2.1(b)(i)   Form of Notice of Borrowing
Schedule 2.1(e)      Form of Revolving Note
Schedule 2.4(d)      Form of Swingline Note
Schedule 2.10        Form of Notice of Conversion/Extension
Schedule 2.18        Section 2.18 Certificate
Schedule 3.12        Subsidiaries
Schedule 3.18(a)     Location of Real Property
Schedule 3.18(b)     Chief Executive Offices
Schedule 3.21        Labor Matters
Schedule 3.24        Insurance
Schedule 4.1(b)      Form of Secretary's Certificate
Schedule 4.1(e)      Form of Solvency Certificate
Schedule 5.10        Form of Joinder Agreement
Schedule 6.1(b)      Indebtedness
Schedule 9.2         Schedule of Lenders' Lending Offices
Schedule 9.6(c)      Form of Commitment Transfer Supplement
</TABLE>



<PAGE>

     AMENDED AND RESTATED CREDIT AGREEMENT, dated as of November 15, 2004, among
WEST CORPORATION, a Delaware corporation (the "Borrower"), those Domestic
Subsidiaries of the Borrower identified as a "Guarantor" on the signature pages
hereto and such other Domestic Subsidiaries of the Borrower as may from time to
time become a party hereto (collectively, the "Guarantors"), the several banks
and other financial institutions as may from time to time become parties to this
Credit Agreement (collectively, the "Lenders"; and individually, a "Lender") and
WACHOVIA BANK, NATIONAL ASSOCIATION, as administrative agent for the Lenders
hereunder (in such capacity, the "Administrative Agent").

                                   WITNESSETH:

     WHEREAS, the Borrower, the guarantors party thereto, the lenders party
thereto and Wachovia Bank, National Association, as administrative agent,
entered into that certain Credit Agreement, dated as of May 9, 2003, pursuant to
which such lenders agreed to provide credit facilities to the Borrower in the
aggregate amount of $325,000,000 (as amended, modified or supplemented prior to
the date hereof, the "Existing Credit Agreement");

     WHEREAS, the Borrower has requested that the credit facilities provided
under the Existing Credit Agreement be increased and restructured and that, in
connection therewith, the Existing Credit Agreement be amended and restated in
accordance with the terms hereof; and

     WHEREAS, the Lenders have agreed to amend and restate the Existing Credit
Agreement and to make the loans and other financial accommodations contemplated
hereby to the Borrowers on the terms and conditions contained herein.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto hereby agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

     Section 1.1 Defined Terms.

     As used in this Credit Agreement, terms defined in the preamble to this
Credit Agreement have the meanings therein indicated, and the following terms
have the following meanings:

     "Account Designation Letter" shall mean the Notice of Account Designation
dated as of the Closing Date from the Borrower to the Administrative Agent
substantially in the form attached hereto as Schedule 1.1(a).

     "Additional Credit Party" shall mean each Person that becomes a Guarantor
by execution of a Joinder Agreement in accordance with Section 5.10.


<PAGE>

     "Additional Loan" shall have the meaning set forth in Section 2.2.

     "Administrative Agent" shall have the meaning set forth in the first
paragraph of this Credit Agreement and any successors in such capacity.

     "Affiliate" shall mean as to any Person, any other Person (excluding any
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with, such Person. For purposes of this definition, a
Person shall be deemed to be "controlled by" a Person if such Person possesses,
directly or indirectly, power either (a) to vote ten percent (10%) or more of
the securities having ordinary voting power for the election of directors of
such Person or (b) to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.

     "Aggregate Revolving Committed Amount" shall have the meaning set forth in
Section 2.1.

     "Alternate Base Rate" shall mean, for any day, a rate per annum equal to
the greater of (a) the Prime Rate in effect on such day and (b) the Federal
Funds Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof:
"Prime Rate" shall mean, at any time, the rate of interest per annum publicly
announced from time to time by Wachovia at its principal office in Charlotte,
North Carolina as its prime rate. Each change in the Prime Rate shall be
effective as of the opening of business on the day such change in the Prime Rate
occurs. The parties hereto acknowledge that the rate announced publicly by
Wachovia as its Prime Rate is an index or base rate and shall not necessarily be
its lowest or best rate charged to its customers or other banks; and "Federal
Funds Effective Rate" shall mean, for any day, the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is not so
published on the next succeeding Business Day, the average of the quotations for
the day of such transactions received by the Administrative Agent from three
federal funds brokers of recognized standing selected by it. If for any reason
the Administrative Agent shall have determined (which determination shall be
conclusive in the absence of manifest error) that it is unable to ascertain the
Federal Funds Effective Rate, for any reason, including the inability or failure
of the Administrative Agent to obtain sufficient quotations in accordance with
the terms thereof, the Alternate Base Rate shall be determined without regard to
clause (b) of the first sentence of this definition, as appropriate, until the
circumstances giving rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective on the opening of business on the date of such
change.

     "Alternate Base Rate Loans" shall mean Loans that bear interest at an
interest rate based on the Alternate Base Rate.

     "Applicable Percentage" shall mean, for any day, the rate per annum set
forth below opposite the applicable level then in effect:


                                        2


<PAGE>


<TABLE>
<CAPTION>
                                                           APPLICABLE PERCENTAGE
                                   APPLICABLE PERCENTAGE       FOR LIBOR RATE
              CONSOLIDATED           FOR ALTERNATE BASE     LOANS AND LETTER OF
LEVEL        LEVERAGE RATIO              RATE LOANS              CREDIT FEE        COMMITMENT FEE
-----   ------------------------   ---------------------   ---------------------   --------------
<S>     <C>                        <C>                     <C>                     <C>
 I              < 0.50x                    0.00%                   0.75%                0.15%
 II     > or = 0.50x but < 1.00x           0.00%                   .875%               0.175%
 III    > or = 1.00x but < 1.50x           0.00%                   1.00%                0.20%
 IV           > or = 1.50x                 0.25%                   1.25%                0.25%
</TABLE>


     The Applicable Percentage shall be determined and adjusted quarterly on the
date five (5) Business Days after the date on which the Administrative Agent has
received from the Borrower the quarterly financial information and
certifications required to be delivered to the Administrative Agent and the
Lenders in accordance with the provisions of Sections 5.1(b) and 5.2(b) pursuant
to which the Borrower notifies the Administrative Agent of a change in the
applicable pricing level based on the financial information contained therein
(each an "Interest Determination Date"). Such Applicable Percentage shall be
effective from such Interest Determination Date until the next such Interest
Determination Date. If the Borrower shall fail to provide the quarterly
financial information and certifications in accordance with the provisions of
Sections 5.1(b) and 5.2(b), the Applicable Percentage from such Interest
Determination Date shall, on the date five (5) Business Days after the date by
which the Borrower was so required to provide such financial information and
certifications to the Administrative Agent and the Lenders, be based on Level IV
until such time as such information and certifications are provided, whereupon
the Level shall be determined by the then current Consolidated Leverage Ratio.

     "Arranger" shall mean Wachovia Capital Markets, LLC.

     "Asset Disposition" shall mean the disposition of any or all of the assets
(including, without limitation, the Capital Stock of a Subsidiary or any
ownership interest in a joint venture) of any Credit Party or any Subsidiary
whether by sale, lease, transfer or otherwise. The term "Asset Disposition"
shall not include (i) Specified Sales, (ii) the sale, lease or transfer of
assets permitted by Section 6.4(a)(iii) or (iv) hereof, or (iii) any Equity
Issuance.

     "Bankruptcy Code" shall mean the Bankruptcy Code in Title 11 of the United
States Code, as amended, modified, succeeded or replaced from time to time.

     "Borrower" shall have the meaning set forth in the first paragraph of this
Credit Agreement.

     "Borrowing Date" shall mean, in respect of any Loan, the date such Loan is
made.

     "Business" shall have the meaning set forth in Section 3.10(b).

     "Business Day" shall mean a day other than a Saturday, Sunday or other day
on which commercial banks in Charlotte, North Carolina or New York, New York are
authorized or required by law to close; provided, however, that when used in
connection with a rate


                                        3


<PAGE>

determination, borrowing or payment in respect of a LIBOR Rate Loan, the term
"Business Day" shall also exclude any day on which banks in London, England are
not open for dealings in Dollar deposits in the London interbank market.

     "Capital Lease" shall mean any lease of property, real or personal, the
obligations with respect to which are required to be capitalized on a balance
sheet of the lessee in accordance with GAAP.

     "Capital Stock" shall mean (i) in the case of a corporation, capital stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
capital stock, (iii) in the case of a partnership, partnership interests
(whether general or limited), (iv) in the case of a limited liability company,
membership interests and (v) any other interest or participation that confers on
a Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.

     "Cash Equivalents" shall mean (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than twelve months from the date of acquisition ("Government Obligations"), (ii)
U.S. dollar denominated (or foreign currency fully hedged or other non-hedged
foreign currency in an aggregate amount not to exceed $5,000,000) time deposits,
certificates of deposit, Eurodollar time deposits and Eurodollar certificates of
deposit of (x) any domestic commercial bank of recognized standing having
capital, surplus and retained earnings in excess of $250,000,000, (y) any
domestic commercial bank having capital and surplus of less than $250,000,000,
provided that no more than $25,000,000 of such investments shall be deemed "Cash
Equivalents" at any time, or (z) any bank whose short-term commercial paper
rating from S&P is at least A-1 or the equivalent thereof or from Moody's is at
least P-1 or the equivalent thereof (any such bank being an "Approved Bank"), in
each case with maturities of not more than 364 days from the date of
acquisition, (iii) commercial paper and variable or fixed rate notes issued by
any Approved Bank (or by the parent company thereof) or any variable rate notes
issued by, or guaranteed by any domestic corporation rated A-1 (or the
equivalent thereof) or better by S&P or P-1 (or the equivalent thereof) or
better by Moody's and maturing within six months of the date of acquisition,
(iv) repurchase agreements with a bank or trust company (including a Lender) or
a recognized securities dealer having capital, surplus and retained earnings in
excess of $500,000,000 for direct obligations issued by or fully guaranteed by
the United States of America and (v) obligations of any state of the United
States or any political subdivision thereof for the payment of the principal and
redemption price of and interest on which there shall have been irrevocably
deposited Government Obligations maturing as to principal and interest at times
and in amounts sufficient to provide such payment.

     "Change of Control" shall mean any Person or two or more Persons acting in
concert (other than members of the West Family Group) shall have acquired
"beneficial ownership," directly or indirectly, of, or shall have acquired by
contract or otherwise, or shall have entered into a contract or arrangement
that, upon consummation, will result in its or their acquisition of, or control
over, Voting Stock of the Borrower (or other securities convertible into such
Voting Stock) representing 50% or more of the combined voting power of all
Voting Stock of the Borrower. As used herein,


                                        4


<PAGE>

"beneficial ownership" shall have the meaning provided in Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of 1934.

     "Closing Date" shall mean the date of this Credit Agreement.

     "Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.

     "Commitment" shall mean the Revolving Commitment, the LOC Commitment, and
the Swingline Commitment, individually or collectively, as appropriate.

     "Commitment Fee" shall have the meaning set forth in Section 2.5(a).

     "Commitment Percentage" shall mean, for each Lender, the percentage
identified as its Commitment Percentage on Schedule 2.1(a), as such percentage
may be modified in connection with any assignment made in accordance with the
provisions of Section 9.6(c).

     "Commitment Period" shall mean the period from and including the Closing
Date to but not including the Maturity Date.

     "Commitment Transfer Supplement" shall mean a Commitment Transfer
Supplement, substantially in the form of Schedule 9.6(c).

     "Commonly Controlled Entity" shall mean an entity, whether or not
incorporated, which is under common control with the Borrower within the meaning
of Section 4001 of ERISA or is part of a group which includes the Borrower and
which is treated as a single employer under Section 414 of the Code.

     "Consolidated Capital Expenditures" shall mean, for any period, all capital
expenditures of the Consolidated Group on a consolidated basis for such period,
as determined in accordance with GAAP. The term "Consolidated Capital
Expenditures" shall not include capital expenditures in respect of the
reinvestment of proceeds derived from Recovery Events received by the Borrower
and its Subsidiaries to the extent that such reinvestment is permitted under the
Credit Documents.

     "Consolidated EBITDA" shall mean, as of any date for the four fiscal
quarter period ending on such date with respect to the Consolidated Group on a
consolidated basis, the sum of (a) Consolidated Net Income, plus (b) an amount
which, in the determination of Consolidated Net Income, has been deducted for
(i) Consolidated Interest Expense, (ii) total federal, state, local and foreign
income, value added and similar taxes, (iii) depreciation and amortization
expense, all as determined in accordance with GAAP, (iv) non-cash charges
relating to equity and other performance-related compensation, including stock
options and (v) minority equity interests in an amount not to exceed $15,000,000
during any such period. Notwithstanding the above, Consolidated EBITDA shall be
(A) $78,189,000 for the fiscal quarter ended March 31, 2004, (B) $80,149,000 for
the fiscal quarter ended June 30, 2004 and (C) $77,359,000 for the fiscal
quarter ended September 30, 2004.


                                        5


<PAGE>

     "Consolidated Fixed Charge Coverage Ratio" shall mean, as of the end of
each fiscal quarter of the Consolidated Group for the four fiscal quarter period
ending on such date with respect to the Consolidated Group on a consolidated
basis, the ratio of (i) Consolidated EBITDA for the applicable period minus
Consolidated Capital Expenditures for the applicable period to (ii) the sum of
Consolidated Interest Expense for the applicable period plus Scheduled Funded
Debt Payments for the applicable period plus payments made in connection with
earnout obligations for the applicable period to the extent permitted hereunder
plus cash taxes paid during the applicable period.

     "Consolidated Group" shall mean the Borrower and its Consolidated
Subsidiaries.

     "Consolidated Interest Expense" shall mean, for any period, all cash
interest expense of the Consolidated Group (including, without limitation, the
interest component under Capital Leases), as determined in accordance with GAAP.

     "Consolidated Leverage Ratio" shall mean, as of the end of any fiscal
quarter of the Consolidated Group for the four fiscal quarter period ending on
such date with respect to the Consolidated Group on a consolidated basis, the
ratio of (a) Funded Debt of the Consolidated Group on a consolidated basis on
the last day of such period to (b) the sum of (i) Consolidated EBITDA for such
period plus (ii) any payments made by the Credit Parties during such period
under Synthetic Leases (including, without limitation, pursuant to the Operative
Agreements).

     "Consolidated Net Income" shall mean, as of any date for the four fiscal
quarter period ending on such date with respect to the Consolidated Group on a
consolidated basis, net income (excluding extraordinary items) after
Consolidated Interest Expense, income taxes and depreciation and amortization,
all as determined in accordance with GAAP.

     "Consolidated Subsidiary" shall mean, as to any Person, any Subsidiary of
such Person which under the rules of GAAP consistently applied should have its
financial results consolidated with those of such Person for purposes of
financial accounting statements.

     "Contractual Obligation" shall mean, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or undertaking to
which such Person is a party or by which it or any of its property is bound.

     "Credit Agreement" shall mean this Credit Agreement, as amended, modified
or supplemented from time to time in accordance with its terms.

     "Credit Documents" shall mean this Credit Agreement, each of the Notes, any
Joinder Agreement, the Letters of Credit, LOC Documents and all other
agreements, documents, certificates and instruments delivered to the
Administrative Agent or any Lender by any Credit Party in connection therewith
(other than any agreement, document, certificate or instrument related to a
Hedging Agreement).

     "Credit Party" shall mean any of the Borrower and the Guarantors.


                                        6


<PAGE>

     "Credit Party Obligations" shall mean, without duplication, (a) all of the
obligations of the Credit Parties to the Lenders (including the Issuing Lender)
and the Administrative Agent, whenever arising, under this Credit Agreement, the
Notes or any of the other Credit Documents (including, but not limited to, any
interest accruing after the occurrence of a filing of a petition of bankruptcy
under the Bankruptcy Code with respect to any Credit Party, regardless of
whether such interest is an allowed claim under the Bankruptcy Code) and (b) all
liabilities and obligations, whenever arising, owing from any Credit Party or
any of its Subsidiaries to any Hedging Agreement Provider arising under any
Hedging Agreement permitted pursuant to Section 6.1.

     "Debt Issuance" shall mean the issuance of any Indebtedness for borrowed
money by any Credit Party or any of its Subsidiaries (excluding, for purposes
hereof, any Equity Issuance or any Indebtedness of the Borrower and its
Subsidiaries permitted to be incurred pursuant to Section 6.1 hereof).

     "Default" shall mean any of the events specified in Section 7.1, whether or
not any requirement for the giving of notice or the lapse of time, or both, or
any other condition, has been satisfied.

     "Defaulting Lender" shall mean, at any time, any Lender that, at such time
(a) has failed to make a Loan required pursuant to the term of this Credit
Agreement, including the funding of a Participation Interest in accordance with
the terms hereof, (b) has failed to pay to the Administrative Agent or any
Lender an amount owed by such Lender pursuant to the terms of this Credit
Agreement, or (c) has been deemed insolvent or has become subject to a
bankruptcy or insolvency proceeding or to a receiver, trustee or similar
official.

     "Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.

     "Domestic Lending Office" shall mean, initially, the office of each Lender
designated as such Lender's Domestic Lending Office shown on Schedule 9.2; and
thereafter, such other office of such Lender as such Lender may from time to
time specify to the Administrative Agent and the Borrower as the office of such
Lender at which Alternate Base Rate Loans of such Lender are to be made.

     "Domestic Subsidiary" shall mean any Subsidiary that is organized and
existing under the laws of the United States or any state or commonwealth
thereof or under the laws of the District of Columbia.

     "Environmental Laws" shall mean any and all applicable foreign, Federal,
state, local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any Governmental Authority or other
Requirement of Law (including common law) regulating, relating to or imposing
liability or standards of conduct concerning protection of human health or the
environment, as now or may at any time be in effect during the term of this
Credit Agreement.


                                        7


<PAGE>

     "Equity Issuance" shall mean any issuance by any Credit Party or any
Subsidiary to any Person which is not a Credit Party of (a) shares of its
Capital Stock, (b) any shares of its Capital Stock pursuant to the exercise of
options or warrants or (c) any shares of its Capital Stock pursuant to the
conversion of any debt securities to equity. The term "Equity Issuance" shall
not include any equity issued in connection with any Asset Disposition, any Debt
Issuance, or any Purchase Paper Facility.

     "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.

     "Eurodollar Reserve Percentage" shall mean for any day, the percentage
(expressed as a decimal and rounded upwards, if necessary, to the next higher
1/100th of 1%) which is in effect for such day as prescribed by the Federal
Reserve Board (or any successor) for determining the maximum reserve requirement
(including without limitation any basic, supplemental or emergency reserves) in
respect of Eurocurrency liabilities, as defined in Regulation D of such Board as
in effect from time to time, or any similar category of liabilities for a member
bank of the Federal Reserve System in New York City.

     "Event of Default" shall mean any of the events specified in Section 7.1;
provided, however, that any requirement for the giving of notice or the lapse of
time, or both, or any other condition, has been satisfied.

     "Excluded Subsidiaries" shall mean Attention Funding Corporation and
Attention Funding Trust.

     "Existing Credit Agreement" shall have the meaning set forth in the
recitals hereto.

     "Extension of Credit" shall mean, as to any Lender, the making of a Loan by
such Lender or the issuance of, or participation in, a Letter of Credit by such
Lender.

     "Federal Funds Effective Rate" shall have the meaning set forth in the
definition of "Alternate Base Rate".

     "Fee Letter" shall mean the letter agreement dated October 1, 2004
addressed to the Borrower from the Administrative Agent and the Arranger, as
amended, modified or otherwise supplemented.

     "Foreign Target" shall have the meaning set forth in the definition of
Permitted Acquisition.

     "Foreign Subsidiary" shall mean any Subsidiary that is not a Domestic
Subsidiary.

     "Funded Debt" shall mean, with respect to any Person, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or similar instruments, or
upon which interest payments are customarily made, (iii) all obligations of such
Person under conditional sale or other title retention agreements relating to
property purchased by such Person (other than customary reservations or
retentions of


                                        8


<PAGE>

title under agreements with suppliers entered into in the ordinary course of
business), (iv) all obligations of such Person issued or assumed as the deferred
purchase price of property or services purchased by such Person (other than (A)
trade debt incurred in the ordinary course of business and due within twelve
months of the incurrence thereof and (B) obligations under earnout agreements in
existence as of the Closing Date) which would appear as liabilities on a balance
sheet of such Person, (v) the principal portion of all obligations of such
Person under Capital Leases, (vi) all Guaranty Obligations of such Person with
respect to Funded Debt of another Person, (vii) the maximum available amount of
all letters of credit or bankers' acceptances facilities issued or created for
the account of such Person, (viii) all Funded Debt of another Person secured by
a Lien on any property of such Person, whether or not such Funded Debt has been
assumed, provided that for purposes hereof the amount of such Funded Debt shall
be limited to the greater of (A) the amount of such Funded Debt as to which
there is recourse to such Person and (B) the fair market value of the property
which is subject to such Lien, (ix) the outstanding attributed principal amount
under any securitization transaction, (x) the principal balance outstanding
under any Synthetic Lease to which such Person is a party and (xi) all preferred
Capital Stock issued by such Person and which by the terms thereof could be (at
the request of the holders thereof or otherwise) subject to mandatory sinking
fund payments, redemption or other acceleration prior to the date that is 6
months after the Maturity Date. The Funded Debt of any Person shall (i) include
the Funded Debt of any partnership or joint venture in which such Person is a
general partner or joint venturer, but only to the extent to which there is
recourse to such Person for the payment of such Funded Debt and (ii) exclude
non-recourse Indebtedness of such Person.

     "GAAP" shall mean generally accepted accounting principles in effect in the
United States of America applied on a consistent basis, subject, however, in the
case of determination of compliance with the financial covenants set out in
Section 5.9 to the provisions of Section 1.3.

     "Government Acts" shall have the meaning set forth in Section 2.19.

     "Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.

     "Guaranty Obligations" shall mean, with respect to any Person, without
duplication, any obligations of such Person (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or collection)
guaranteeing or intended to guarantee any Indebtedness of any other Person in
any manner, whether direct or indirect, and including without limitation any
obligation, whether or not contingent, (i) to purchase any such Indebtedness or
any property constituting security therefor, (ii) to advance or provide funds or
other support for the payment or purchase of any such Indebtedness or to
maintain working capital, solvency or other balance sheet condition of such
other Person (including without limitation keep well agreements, maintenance
agreements, comfort letters or similar agreements or arrangements) for the
benefit of any holder of Indebtedness of such other Person, (iii) to lease or
purchase Property, securities or services primarily for the purpose of assuring
the holder of such Indebtedness, or (iv) to otherwise assure or hold harmless
the holder of such Indebtedness against loss in respect thereof. The amount of
any Guaranty Obligation hereunder shall (subject to any limitations set forth
therein) be deemed to be an


                                        9


<PAGE>

amount equal to the outstanding principal amount (or maximum principal amount,
if larger) of the Indebtedness in respect of which such Guaranty Obligation is
made.

     "Guarantor" shall mean any of the Subsidiaries identified as a "Guarantor"
on the signature pages hereto and the Additional Credit Parties which execute a
Joinder Agreement, together with their successors and permitted assigns.

     "Guaranty" shall mean the guaranty of the Guarantors set forth in Article
X.

     "Hedging Agreement Provider" shall mean any Person that enters into a
Hedging Agreement with a Credit Party or any of its Subsidiaries that is
permitted by Section 6.1 to the extent such Person is a (a) Lender, (b) an
Affiliate of a Lender or (c) any other Person that was a Lender (or an Affiliate
of a Lender) at the time it entered into the Hedging Agreement but has ceased to
be a Lender (or whose Affiliate has ceased to be a Lender) under the Credit
Agreement.

     "Hedging Agreements" shall mean, with respect to any Person, any agreement
entered into to protect such Person against fluctuations in interest rates, or
currency or raw materials values, including, without limitation, any interest
rate swap, cap or collar agreement or similar arrangement between such Person
and one or more counterparties, any foreign currency exchange agreement,
currency protection agreements, commodity purchase or option agreements or other
interest or exchange rate or commodity price hedging agreements.

     "Incremental Facility" shall have the meaning set forth in Section 2.2.

     "Indebtedness" shall mean, with respect to any Person, without duplication,
(a) all obligations of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, debentures, notes or similar instruments, or
upon which interest payments are customarily made, (c) all obligations of such
Person under conditional sale or other title retention agreements relating to
property purchased by such Person (other than customary reservations or
retentions of title under agreements with suppliers entered into in the ordinary
course of business), (d) all obligations of such Person issued or assumed as the
deferred purchase price of property or services purchased by such Person (other
than trade debt incurred in the ordinary course of business and due within six
months of the incurrence thereof) which would appear as liabilities on a balance
sheet of such Person, (e) all obligations of such Person under take-or-pay or
similar arrangements or under commodities agreements, (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on, or payable out of
the proceeds of production from, property owned or acquired by such Person,
whether or not the obligations secured thereby have been assumed, (g) all
Guaranty Obligations of such Person with respect to Indebtedness of another
Person, (h) the principal portion of all obligations of such Person under
Capital Leases, (i) all obligations of such Person under Hedging Agreements, (j)
the maximum amount of all letters of credit issued or bankers' acceptances
facilities created for the account of such Person and, without duplication, all
drafts drawn thereunder (to the extent unreimbursed), (k) all preferred Capital
Stock issued by such Person and which by the terms thereof could be (at the
request of the holders thereof or otherwise) subject to mandatory sinking fund
payments, redemption or other acceleration, (l) the principal balance
outstanding under any


                                       10


<PAGE>

Synthetic Lease, and (m) the Indebtedness of any partnership or unincorporated
joint venture in which such Person is a general partner or a joint venturer.

     "Insolvency" shall mean, with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of such term as used in
Section 4245 of ERISA.

     "Insolvent" shall mean being in a condition of Insolvency.

     "Interest Determination Date" shall have the meaning assigned thereto in
the definition of "Applicable Percentage".

     "Interest Payment Date" shall mean (a) as to any Alternate Base Rate Loan,
the last day of each March, June, September and December, (b) as to any LIBOR
Rate Loan having an Interest Period of three months or less, the last day of
such Interest Period, (c) as to any LIBOR Rate Loan having an Interest Period
longer than three months, each day which is three months after the first day of
such Interest Period and the last day of such Interest Period and (d) with
respect to any Alternate Base Rate Loan or LIBOR Rate Loan, the Maturity Date.

     "Interest Period" shall mean, with respect to any LIBOR Rate Loan,

          (i) initially, the period commencing on the Borrowing Date or
     conversion date, as the case may be, with respect to such LIBOR Rate Loan
     and ending one, two, three or six months thereafter, as selected by the
     Borrower in the Notice of Borrowing or Notice of Conversion given with
     respect thereto; and

          (ii) thereafter, each period commencing on the last day of the
     immediately preceding Interest Period applicable to such LIBOR Rate Loan
     and ending one, two, three or six months thereafter, as selected by the
     Borrower by irrevocable notice to the Administrative Agent not less than
     three Business Days prior to the last day of the then current Interest
     Period with respect thereto;

               provided that the foregoing provisions are subject to the
               following:

               (A) if any Interest Period pertaining to a LIBOR Rate Loan would
          otherwise end on a day that is not a Business Day, such Interest
          Period shall be extended to the next succeeding Business Day unless
          the result of such extension would be to carry such Interest Period
          into another calendar month in which event such Interest Period shall
          end on the immediately preceding Business Day;

               (B) any Interest Period pertaining to a LIBOR Rate Loan that
          begins on the last Business Day of a calendar month (or on a day for
          which there is no numerically corresponding day in the calendar month
          at the end of such Interest Period) shall end on the last Business Day
          of the relevant calendar month;

               (C) if the Borrower shall fail to give notice as provided above,
          then, so long as no Default or Event of Default has occurred and is
          continuing, the


                                       11


<PAGE>

          Borrower shall be deemed to have requested an extension of such LIBOR
          Rate Loan at the end of the Interest Period applicable thereto for
          another Interest Period of equal duration in accordance with Section
          2.10(b);

               (D) any Interest Period in respect of any Loan that would
          otherwise extend beyond the applicable Maturity Date; and

               (E) no more than seven (7) LIBOR Rate Loans may be in effect at
          any time. For purposes hereof, LIBOR Rate Loans with different
          Interest Periods shall be considered as separate LIBOR Rate Loans,
          even if they shall begin on the same date and have the same duration,
          although borrowings, extensions and conversions may, in accordance
          with the provisions hereof, be combined at the end of existing
          Interest Periods to constitute a new LIBOR Rate Loan with a single
          Interest Period.

     "Investment" shall mean all investments, in cash or by delivery of property
made, directly or indirectly in, to or from any Person, whether by acquisition
of shares of Capital Stock, property, assets, indebtedness or other obligations
or securities or by loan advance, capital contribution or otherwise.

     "Issuing Lender" shall mean Wachovia.

     "Issuing Lender Fees" shall have the meaning set forth in Section 2.5(c).

     "Joinder Agreement" shall mean a Joinder Agreement substantially in the
form of Schedule 5.10, executed and delivered by an Additional Credit Party in
accordance with the provisions of Section 5.10.

     "Lender" shall have the meaning set forth in the first paragraph of this
Credit Agreement.

     "Letters of Credit" shall mean any letter of credit issued by the Issuing
Lender pursuant to the terms hereof, as such Letters of Credit may be amended,
modified, extended, renewed or replaced from time to time.

     "Letter of Credit Facing Fee" shall have the meaning set forth in Section
2.5(b).

     "Letter of Credit Fee" shall have the meaning set forth in Section 2.5(b).

     "LIBOR" shall mean, for any LIBOR Rate Loan for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in Dollars at approximately 11:00
A.M. (London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any reason such
rate is not available, the term "LIBOR" shall mean, for any LIBOR Rate Loan for
any Interest Period therefor, the rate per annum (rounded upwards, if necessary,
to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London
interbank offered rate for deposits in Dollars at approximately


                                       12


<PAGE>

11:00 A.M. (London time) two Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period; provided,
however, if more than one rate is specified on Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such rates (rounded upwards,
if necessary, to the nearest 1/100 of 1%). If, for any reason, neither of such
rates is available, then "LIBOR" shall mean the rate per annum at which, as
determined by the Administrative Agent, Dollars in an amount comparable to the
Loans then requested are being offered to leading banks at approximately 11:00
A.M. London time, two (2) Business Days prior to the commencement of the
applicable Interest Period for settlement in immediately available funds by
leading banks in the London interbank market for a period equal to the Interest
Period selected.

     "LIBOR Lending Office" shall mean, initially, the office of each Lender
designated as such Lender's LIBOR Lending Office shown on Schedule 9.2; and
thereafter, such other office of such Lender as such Lender may from time to
time specify to the Administrative Agent and the Borrower as the office of such
Lender at which the LIBOR Rate Loans of such Lender are to be made.

     "LIBOR Rate" shall mean a rate per annum (rounded upwards, if necessary, to
the next higher 1/100th of 1%) determined by the Administrative Agent pursuant
to the following formula:

                                      LIBOR
          LIBOR Rate = ------------------------------------
                       1.00 - Eurodollar Reserve Percentage

     "LIBOR Rate Loan" shall mean Loans the rate of interest applicable to which
is based on the LIBOR Rate.

     "Lien" shall mean any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any Capital Lease having
substantially the same economic effect as any of the foregoing).

     "Loan" shall mean a Revolving Loan and/or Swingline Loan, as appropriate.

     "LOC Commitment" shall mean the commitment of the Issuing Lender to issue
Letters of Credit and with respect to each Lender, the commitment of such Lender
to purchase participation interests in the Letters of Credit up to such Lender's
LOC Commitment as specified in Schedule 2.1(a), as such amount may be reduced
from time to time in accordance with the provisions hereof.

     "LOC Committed Amount" shall mean, collectively, the aggregate amount of
all of the LOC Commitments of the Lenders to issue and participate in Letters of
Credit as referenced in Section 2.3 and, individually, the amount of each
Lender's LOC Commitment as specified in Schedule 2.1(a).


                                       13


<PAGE>

     "LOC Documents" shall mean, with respect to any Letter of Credit, such
Letter of Credit, any amendments thereto, any documents delivered in connection
therewith, any application therefor, and any agreements, instruments, guarantees
or other documents (whether general in application or applicable only to such
Letter of Credit) governing or providing for (i) the rights and obligations of
the parties concerned or (ii) any collateral security for such obligations.

     "LOC Obligations" shall mean, at any time, the sum of (i) the maximum
amount which is, or at any time thereafter may become, available to be drawn
under Letters of Credit then outstanding, assuming compliance with all
requirements for drawings referred to in such Letters of Credit plus (ii) the
aggregate amount of all drawings under Letters of Credit honored by the Issuing
Lender but not theretofore reimbursed.

     "Mandatory Borrowing" shall have the meaning set forth in Section
2.4(b)(ii) or Section 2.3(e), as the context may require.

     "Material Adverse Effect" shall mean a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or prospects
of any of the Borrower and its Subsidiaries taken as a whole, (b) the ability of
the Borrower or any Guarantor to perform its obligations, when such obligations
are required to be performed, under this Credit Agreement, any of the Notes or
any other Credit Document or (c) the validity or enforceability of this Credit
Agreement, any of the Notes or any of the other Credit Documents or the rights
or remedies of the Administrative Agent or the Lenders hereunder or thereunder.

     "Material Agreements" shall mean contracts, notes, securities, instruments
and other agreements to which the Borrower or any of its Subsidiaries is a party
or by which it is bound which, if violated or breached, could have a Material
Adverse Effect.

     "Material Domestic Subsidiary" means any Domestic Subsidiary of the
Borrower that, together with its Subsidiaries, (i) owns more than $15,000,000 in
assets on a pro forma basis or (ii) generates more than 5% of Consolidated
EBITDA on a pro forma basis for the four fiscal quarter period most recently
ended; provided, however, that if at any time there are Domestic Subsidiaries
which are not classified as "Material Domestic Subsidiaries" but which
collectively account for greater than $40,000,000 in assets on a pro forma basis
or which collectively generate more than 20% of Consolidated EBITDA on a pro
forma basis, then the Borrower shall immediately designate one or more of such
Domestic Subsidiaries as Material Domestic Subsidiaries and cause any such
Domestic Subsidiaries to comply with the provisions of Section 5.10 hereof in a
number sufficient to comply with such requirement.

     "Material Proceedings" shall mean any litigation, investigation or other
proceeding by or before any Governmental Authority (i) which involves any of the
Credit Documents or any of the transactions contemplated hereby or thereby, or
involves the Borrower or any of its Subsidiaries as a party or the property of
Borrower or any of its Subsidiaries, and could reasonably be expected to have a
Material Adverse Effect if adversely determined, (ii) in which there has been
issued an injunction, writ, temporary restraining order or any other order of
any nature which purports to restrain or enjoin the making of any requested
Extension of Credit, the consummation of any other transaction contemplated by
the Credit Documents, or the


                                       14


<PAGE>

enforceability of any provision of any of the Credit Documents, (iii) which
involves the actual or alleged breach or violation by the Borrower or any of its
Subsidiaries of, or default by the Borrower or any of its Subsidiaries under,
any Material Agreement or (iv) which involves the actual or alleged violation by
the Borrower or any of its Subsidiaries of any applicable law.

     "Materials of Environmental Concern" shall mean any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as such
in or under any Environmental Law, including, without limitation, asbestos,
polychlorinated biphenyls and urea-formaldehyde insulation.

     "Maturity Date" shall mean the fifth anniversary of the Closing Date.

     "Moody's" shall mean Moody's Investors Service, Inc.

     "Multiemployer Plan" shall mean a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.

     "New Lender" shall have the meaning set forth in Section 2.2(d).

     "Note" or "Notes" shall mean the Revolving Notes and/or the Swingline Note,
collectively, separately or individually, as appropriate.

     "Notice of Borrowing" shall mean the written notice of borrowing as
referenced and defined in Section 2.1(b)(i) or 2.4(b)(i), as appropriate.

     "Notice of Conversion" shall mean the written notice of extension or
conversion as referenced and defined in Section 2.10.

     "Obligations" shall mean, collectively, Loans and LOC Obligations.

     "Operative Agreements" shall have the meaning ascribed to such term in
Appendix A of the Participation Agreement.

     "Participant" shall have the meaning set forth in Section 9.6(b).

     "Participation Agreement" shall mean that certain Participation Agreement,
dated as of May 9, 2003, by and among West Facilities Corporation, a Delaware
corporation, as lessee, Wachovia Development Corporation, a North Carolina
corporation, as lessor, the lenders party thereto and Wachovia, as the agent (as
previously amended and modified, and as further amended, modified, extended,
supplemented, restated and/or replaced from time to time).

     "Participation Interest" shall mean the purchase by a Lender of a
participation interest in Letters of Credit as provided in Section 2.3 and in
Swingline Loans as provided in Section 2.4.

     "Patriot Act" shall have the meaning set forth in Section 9.18.


                                       15


<PAGE>

     "PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.

     "Permitted Acquisition" shall mean an acquisition or any series of related
acquisitions by a Credit Party of the assets or all of the Capital Stock of a
Person or any division, line of business or other business unit of a Person
(such Person or such division, line of business or other business unit of such
Person referred to herein as the "Target"), in each case that is in the same
line of business (or assets used in the same line of business) as the Credit
Parties and their Subsidiaries or whereby a substantial portion of the acquired
business relies upon automated transactions, telephone representatives or
telephony technology, so long as (a) no Default or Event of Default shall then
exist or would exist after giving effect thereto; (b) the Credit Parties shall
demonstrate to the reasonable satisfaction of the Administrative Agent that the
Credit Parties will be in compliance on a pro forma basis with all of the terms
and provisions of the financial covenants set forth in Section 5.9; (c) the
Target, if a Person and if after the acquisition the Target would be a Material
Domestic Subsidiary, shall have executed and delivered to the Administrative
Agent a Joinder Agreement in accordance with the terms of Section 5.10; (d) such
acquisition is not a "hostile" public company acquisition and has been approved
by the Board of Directors and/or shareholders of the applicable Credit Party and
the public company Target; and (e) with respect to any acquisition where the
total consideration shall be (i) greater than $75,000,000 and less than or equal
to $150,000,000 the Borrower shall have delivered to the Administrative Agent
and each of the Lenders not more than thirty (30) days after the consummation of
such acquisition a reasonably detailed description of the material terms of such
acquisition (including, without limitation, the purchase price and method and
structure of payment) and of each Target and (ii) greater than $150,000,000, the
Borrower shall have delivered to the Administrative Agent and each of the
Lenders not less than five (5) Business Days prior to the consummation of such
acquisition (A) a reasonably detailed description of the material terms of such
acquisition (including, without limitation, the purchase price and method and
structure of payment) and of each Target, (B) audited financial statements of
the Target, or company-prepared financial statements that have been certified by
the Target, for the Target's two (2) most recent fiscal years and unaudited
fiscal year-to-date statements for the most recent interim periods, which
financial statements shall be consistent with any financial statements filed
with the Securities and Exchange Commission in connection with such acquisition
and (C) a certificate, in form and substance reasonably satisfactory to the
Administrative Agent, executed by a Responsible Officer of the Borrower (1)
certifying that such Permitted Acquisition complies with the requirements of
this Credit Agreement and (2) demonstrating compliance with subsections (b) and
(e) of this definition; provided, however, that an acquisition of a Target that
is not incorporated, formed or organized in the United States (a "Foreign
Target") shall only qualify as a Permitted Acquisition if each of the other
requirements set forth in this definition shall have been satisfied and the
total consideration for all such Foreign Targets does not exceed $50,000,000 in
the aggregate during the term of this Credit Agreement.

     "Permitted Investments" shall mean:

          (i) cash and Cash Equivalents;


                                       16


<PAGE>

          (ii) receivables owing to the Borrower or any of its Subsidiaries or
     any receivables and advances to suppliers or customers, in each case if
     created, acquired or made in the ordinary course of business and payable or
     dischargeable in accordance with customary trade terms;

          (iii) Investments in and loans to any Credit Parties;

          (iv) Investments in and loans to Domestic Subsidiaries of the Borrower
     that are not Guarantors solely for the purpose of purchasing third party
     debt obligations; provided that the aggregate amount of Investments and
     loans made pursuant to this clause (iv), together with the aggregate amount
     of Indebtedness incurred pursuant to Section 6.1(d)(iii), shall not exceed
     $100,000,000 at any time outstanding;

          (v) Investments in and loans to Subsidiaries of the Borrower that are
     not Guarantors (other than Investments and loans pursuant to clause (iv)
     above); provided that the aggregate amount of such Investments and loans,
     together with the aggregate amount of Indebtedness incurred pursuant to
     Section 6.1(d)(iv), shall not exceed $50,000,000 at any time outstanding;

          (vi) loans and advances to employees (other than any officer or
     director) of the Borrower or its Subsidiaries in an aggregate amount not to
     exceed $1,000,000 at any time outstanding;

          (vii) Investments (including debt obligations) received in connection
     with the bankruptcy or reorganization of suppliers and customers and in
     settlement of delinquent obligations of, and other disputes with, customers
     and suppliers arising in the ordinary course of business;

          (viii) Investments, acquisitions or transactions permitted under
     Section 6.4(b);

          (ix) the Borrower may enter into Hedging Agreements to the extent
     permitted pursuant to Section 6.1;

          (x) loans, advances and/or Investments, in an aggregate amount not to
     exceed $25,000,000 at any time outstanding, by Asset Direct Mortgage, LLC
     or any other Credit Party in connection with a mortgage loan program
     consisting of the purchase, origination and/or pooling of mortgage loans;

          (xi) Permitted Acquisitions; and

          (xii) additional loans, advances and/or Investments of a nature not
     contemplated by the foregoing clauses hereof, provided that such loans,
     advances and/or Investments made pursuant to this clause (xii) shall not
     exceed an aggregate amount of $25,000,000 at any time outstanding.


                                       17


<PAGE>

     "Permitted Liens" shall mean:

          (i) Liens created by or otherwise existing, under or in connection
     with this Credit Agreement or the other Credit Documents in favor of the
     Lenders;

          (ii) Liens in favor of a Lender hereunder in connection with Hedging
     Agreements, but only (A) to the extent such Liens secure obligations under
     Hedging Agreements with any Lender, or any Affiliate of a Lender, (B) to
     the extent such Liens are on the same collateral as to which the
     Administrative Agent on behalf of the Lenders also has a Lien and (C) if
     such provider and the Lenders shall share pari passu in the collateral
     subject to such Liens;

          (iii) purchase money Liens securing purchase money indebtedness (and
     refinancings thereof) to the extent permitted under Section 6.1(c);

          (iv) Liens for taxes, assessments, charges or other governmental
     levies not yet due or as to which the period of grace (not to exceed 60
     days), if any, related thereto has not expired or which are being contested
     in good faith by appropriate proceedings, provided that adequate reserves
     with respect thereto are maintained on the books of the Borrower or its
     Subsidiaries, as the case may be, in conformity with GAAP (or, in the case
     of Subsidiaries with significant operations outside of the United States of
     America, generally accepted accounting principles in effect from time to
     time in their respective jurisdictions of incorporation);

          (v) carriers', warehousemen's, mechanics', materialmen's, repairmen's
     or other like Liens arising in the ordinary course of business which are
     not overdue for a period of more than 60 days or which are being contested
     in good faith by appropriate proceedings;

          (vi) pledges or deposits in connection with workers' compensation,
     unemployment insurance and other social security legislation and deposits
     securing liability to insurance carriers under insurance or self-insurance
     arrangements;

          (vii) deposits to secure the performance of bids, trade contracts,
     (other than for borrowed money), leases, statutory obligations, surety and
     appeal bonds, performance bonds and other obligations of a like nature
     incurred in the ordinary course of business;

          (viii) Liens on the real property and fixtures of the Borrower located
     at or on Lots 19 and 20, Miracle Hills Park, Douglas County, Nebraska and
     all personal property located on or at such real property that is integral
     to the operation of such real property and fixtures;

          (ix) any extension, renewal or replacement (or successive extensions,
     renewals or replacements), in whole or in part, of any Lien referred to in
     the foregoing clauses; provided that such extension, renewal or replacement
     Lien shall be limited to all or a part


                                       18


<PAGE>

     of the property which secured the Lien so extended, renewed or replaced
     (plus improvements on such property);

          (x) Liens existing on the Closing Date and set forth on Schedule
     1.1(b); provided that (a) no such Lien shall at any time be extended to
     cover property or assets other than the property or assets subject thereto
     on the Closing Date and (b) the principal amount of the Indebtedness
     secured by such Liens shall not be extended, renewed, refunded or
     refinanced;

          (xi) Liens arising in connection with Capital Leases to the extent
     permitted under Section 6.1(c);

          (xii) easements, rights-of-way, restrictions, encroachments, and other
     minor defects or irregularities in title to real property, in each case
     which do not and will not interfere in any material respect with the
     operation of such real property or the ordinary conduct of the business of
     the Borrower or any of its Subsidiaries; and

          (xiii) Liens arising in connection with accounts receivable
     securitizations;

          (xiv) Liens on accounts receivable and associated collateral, lockbox
     and other collection accounts, records and/or proceeds incurred in
     connection with any Purchase Paper Facility or other non-recourse
     Indebtedness in the Credit Parties' ordinary course of business and
     consistent with past practices; and

          (xv) other Liens in addition to those permitted by the foregoing
     clauses securing Indebtedness not exceeding $1,000,000 on an individual
     basis and $10,000,000 in the aggregate outstanding at any one time.

     "Person" shall mean an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.

     "Plan" shall mean, at any particular time, any employee benefit plan which
is covered by Title IV of ERISA and in respect of which the Borrower or a
Commonly Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.

     "Prime Rate" shall have the meaning set forth in the definition of
Alternate Base Rate.

     "Properties" shall have the meaning set forth in Section 3.10(a).

     "Purchase Paper Facility" shall mean any financing arrangement involving
the purchase by the Credit Parties of commercial or consumer debt (including,
without limitation, that certain loan agreement dated as of August 15, 2001 by
and between Worldwide Asset Purchasing, LLC and CFSC Capital Corp. XXXIV and
that certain Financing Facility and Security Agreement, dated as of December 19,
2003, by and among Arrow Funding, LLC, Attention, LLC, Attention


                                       19


<PAGE>

Funding Corporation, Attention Funding Trust, and Arrow Financial Services,
LLC), as amended, modified supplemented or replaced from time to time.

     "Purchasing Lenders" shall have the meaning set forth in Section 9.6(c).

     "Recovery Event" shall mean the receipt by the Borrower or any of its
Subsidiaries of any cash insurance proceeds or condemnation award payable by
reason of theft, loss, physical destruction or damage, taking or similar event
with respect to any of their respective property or assets.

     "Register" shall have the meaning set forth in Section 9.6(d).

     "Related Fund" shall mean, with respect to any Lender or other Person who
invests in commercial bank loans in the ordinary course of business, any other
fund or trust or entity that invests in commercial bank loans in the ordinary
course of business and is advised or managed by such Lender, by an Affiliate of
such Lender or other Persons or the same investment advisor as such Lender or by
an Affiliate of such Lender or investment advisor.

     "Reorganization" shall mean, with respect to any Multiemployer Plan, the
condition that such Plan is in reorganization within the meaning of such term as
used in Section 4241 of ERISA.

     "Replaced Lender" shall have the meaning set forth in Section 2.20.

     "Replacement Lender" shall have the meaning set forth in Section 2.20.

     "Reportable Event" shall mean any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the thirty-day notice
period is waived under PBGC Reg. Section 4043.

     "Required Lenders" shall mean Lenders holding in the aggregate greater than
50% of (i) the Commitments (and Participation Interests therein) or (ii) if the
Commitments have been terminated, the outstanding Loans and Participation
Interests (including the Participation Interests of the Issuing Lender in any
Letters of Credit and of the Swingline Lender in Swingline Loans) provided,
however, that if any Lender shall be a Defaulting Lender at such time, then
there shall be excluded from the determination of Required Lenders, Obligations
(including Participation Interests) owing to such Defaulting Lender and such
Defaulting Lender's Commitments, or after termination of the Commitments, the
principal balance of the Obligations owing to such Defaulting Lender.

     "Requirement of Law" shall mean, as to any Person, the Certificate of
Incorporation and By-laws or other organizational or governing documents of such
Person, and each law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.


                                       20


<PAGE>

     "Responsible Officer" shall mean, as to (a) the Borrower, any of the
President, the Chief Executive Officer or the Chief Financial Officer or (b) any
other Credit Party, any duly authorized officer thereof.

     "Restricted Payment" shall mean (a) any dividend or other distribution,
direct or indirect, on account of any shares of any class of Capital Stock of
the Borrower or any of its Subsidiaries, now or hereafter outstanding, (b) any
redemption, retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any shares of any class of Capital
Stock of the Borrower or any of its Subsidiaries, now or hereafter outstanding,
(c) any payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of Capital
Stock of the Borrower or any of its Subsidiaries, now or hereafter outstanding,
or (d) any payment or prepayment of principal of, premium, if any, or interest
on, redemption, purchase, retirement, defeasance, sinking fund or similar
payment with respect to, any Subordinated Debt.

     "Revolving Commitment" shall mean, with respect to each Lender, the
commitment of such Lender to make Revolving Loans in an aggregate principal
amount at any time outstanding up to such Lender's Revolving Committed Amount.

     "Revolving Committed Amount" shall mean the amount of each Lender's
Revolving Commitment as specified on Schedule 2.1(a), as such amount may be
reduced from time to time in accordance with the provisions hereof.

     "Revolving Loans" shall have the meaning set forth in Section 2.1.

     "Revolving Note" or "Revolving Notes" shall mean the promissory notes of
the Borrower in favor of each of the Lenders evidencing the Revolving Loans
provided pursuant to Section 2.1(e), individually or collectively, as
appropriate, as such promissory notes may be amended, modified, supplemented,
extended, renewed or replaced from time to time.

     "S&P" shall mean Standard & Poor's Ratings Group, a division of The McGraw
Hill Companies, Inc.

     "Scheduled Funded Debt Payments" shall mean, as of any date of
determination for the Borrower and its Subsidiaries, the sum of all scheduled
payments of principal on Funded Debt for the applicable period ending on the
date of determination (including the principal component of payments due on
Capital Leases during the applicable period ending on the date of
determination).

     "Single Employer Plan" shall mean any Plan which is not a Multiemployer
Plan.

     "Specified Sales" shall mean (a) the sale, transfer, lease or other
disposition of inventory and materials in the ordinary course of business and
(b) the sale, transfer or other disposition of Permitted Investments described
in clause (i) of the definition thereof.


                                       21


<PAGE>

     "Subordinated Debt" shall mean any Indebtedness incurred by any Credit
Party which by its terms is specifically subordinated in right of payment to the
prior payment of the Credit Party Obligations on terms satisfactory to the
Required Lenders.

     "Subsidiary" shall mean, as to any Person, a corporation, partnership,
limited liability company or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such other
ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers of
such corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Credit Agreement shall
refer to a Subsidiary or Subsidiaries of the Borrower; provided, however, that
references to a "Subsidiary" or to "Subsidiaries" in this Credit Agreement shall
not include Excluded Subsidiaries.

     "Super Majority Lenders" shall mean Lenders holding in the aggregate
greater than 80% of (i) the Commitments (and Participation Interests therein) or
(ii) if the Commitments have been terminated, the outstanding Loans and
Participation Interests (including the Participation Interests of the Issuing
Lender in any Letters of Credit and of the Swingline Lender in Swingline Loans)
provided, however, that if any Lender shall be a Defaulting Lender at such time,
then there shall be excluded from the determination of Super Majority Lenders,
Obligations (including Participation Interests) owing to such Defaulting Lender
and such Defaulting Lender's Commitments, or after termination of the
Commitments, the principal balance of the Obligations owing to such Defaulting
Lender.

     "Synthetic Lease" shall mean any synthetic lease, tax retention operating
lease, off-balance sheet loan or similar off-balance sheet financing product
where such product is considered borrowed money indebtedness for tax purposes
but is classified as an operating lease in accordance with GAAP.

     "Swingline Commitment" shall mean the commitment of the Swingline Lender to
make Swingline Loans in an aggregate principal amount at any time outstanding up
to the Swingline Committed Amount, and the commitment of the Lenders to purchase
participation interests in the Swingline Loans as provided in Section
2.4(b)(ii), as such amounts may be reduced from time to time in accordance with
the provisions hereof.

     "Swingline Committed Amount" shall mean the amount of the Swingline
Lender's Swingline Commitment as specified in Section 2.4(a).

     "Swingline Lender" shall mean Wachovia.

     "Swingline Loan" or "Swingline Loans" shall have the meaning set forth in
Section 2.4(a).

     "Swingline Note" shall mean the promissory note of the Borrower in favor of
the Swingline Lender evidencing the Swingline Loans provided pursuant to Section
2.4(d), as such


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<PAGE>

promissory note may be amended, modified, supplemented, extended, renewed or
replaced from time to time.

     "Target" shall have the meaning set forth in the definition of "Permitted
Acquisitions."

     "Taxes" shall have the meaning set forth in Section 2.18.

     "Tranche" shall mean the collective reference to LIBOR Rate Loans whose
Interest Periods begin and end on the same day. A Tranche may sometimes be
referred to as a "LIBOR Tranche".

     "Transfer Effective Date" shall have the meaning set forth in each
Commitment Transfer Supplement.

     "2.18 Certificate" shall have the meaning set forth in Section 2.18.

     "UCC" shall mean the Uniform Commercial Code in effect in the State of New
York, as the same may be amended from time to time.

     "Voting Stock" shall mean, with respect to any Person, Capital Stock issued
by such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even though the right so to vote
has been suspended by the happening of such a contingency.

     "Wachovia" shall mean Wachovia Bank, National Association, together with
its successors and/or assigns.

     "West Family Group" shall mean Gary L. West and Mary E. West and any
charitable foundation or trust created by Gary L. West or Mary E. West to the
extent the board of trustees of any such charitable foundation or trust is
controlled by Thomas B. Barker and Roland J. Santoni (or any replacement of
Thomas B. Barker or Roland J. Santoni on the board of trustees that is a
Responsible Officer of the Borrower and/or a person designated by Gary L. West
and Mary E. West).

     Section 1.2 Other Definitional Provisions.

     (a) Unless otherwise specified therein, all terms defined in this Credit
Agreement shall have the defined meanings when used in the Notes or other Credit
Documents or any certificate or other document made or delivered pursuant
hereto.

     (b) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Credit Agreement shall refer to this Credit Agreement
as a whole and not to any particular provision of this Credit A