July 19, 2006

West Corporation Reports Second Quarter 2006 Results

OMAHA, Neb., July 19, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- West Corporation (Nasdaq: WSTC), a leading provider of outsourced communication solutions, today announced its second quarter 2006 results. Earnings for the quarter were in line with Company guidance prior to an after-tax expense of approximately $3 million, or $0.04 per diluted share, related to the Company's proposed recapitalization.


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

                         Three Months Ended         Six Months Ended
                              June 30,                  June 30,
                                       Percent                    Percent
                       2006      2005   Change    2006      2005   Change
    Revenue           $461.7    $369.8   24.8%   $886.4    $729.3   21.5%
    Operating income   $76.5     $66.1   15.7%   $147.9    $125.2   18.1%
    Net income         $37.8     $37.5    0.8%    $78.8     $71.0   11.0%
    Earnings per
     share (basic)     $0.54     $0.55            $1.12     $1.04

    Earnings per
     share (diluted)   $0.52     $0.53            $1.08     $1.00


"We are pleased to report operating results in line with our expectations for the second quarter," said Thomas B. Barker, Chief Executive Officer of West Corporation. "We continue to make progress with the integration of the recently completed Raindance and Intrado acquisitions and are maintaining our operational focus throughout the recapitalization process."

Consolidated Operating Results

For the second quarter ended June 30, 2006, revenues were $461.7 million compared to $369.8 million for the same quarter last year, an increase of 24.8%. Revenue from acquired entities(1) accounted for $76.2 million of this increase. Operating income for the second quarter was $76.5 million, an increase of 15.7%, versus $66.1 million in the second quarter of 2005. Net income was $37.8 million, up 0.8% compared to $37.5 million in the same quarter last year. Diluted earnings per share were $0.52 versus $0.53 in the same period of 2005.

The company reported consolidated operating margin of 16.6% in the second quarter of 2006, compared to 17.9% in the comparable quarter last year. The decline in consolidated operating margin for the quarter was primarily the result of non-cash stock-based compensation expense of approximately $3.7 million and approximately $3.0 million of after-tax expense related to the announced recapitalization.

The effective income tax rate increased to 38.8% in the second quarter of 2006 from 36.8% in the same quarter of 2005 primarily due to the non-deductible recapitalization expense of $3.0 million.

Balance Sheet and Liquidity

At June 30, 2006, West Corporation had cash and cash equivalents totaling $33.4 million and working capital of $110.2 million. Net cash flows from operating activities were $84.7 million for the second quarter. Depreciation expense was $24.8 million for the quarter and amortization expense was $11.2 million for the quarter. Quarterly adjusted EBITDA(2) was $116.5 million. Interest expense was $12.2 million for the second quarter of 2006, an increase of $8.9 million over the second quarter of 2005 due to the debt incurred to fund the Intrado and Raindance acquisitions.

At June 30, 2006, borrowings under the revolving credit facility totaled $690.0 million. The current variable interest rate on the credit facility is approximately six percent.

"During the quarter, we invested $23.2 million, or 5% of revenues, in capital expenditures to upgrade equipment and infrastructure, as well as expand facilities domestically and in the Philippines," commented Paul Mendlik, Chief Financial Officer of West Corporation. "During the second quarter, we added 700 workstations, bringing our capacity to approximately 20,000 workstations."

Proposed Recapitalization

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

Preliminary proxy materials were filed with the SEC on July 13, 2006. The transaction is currently expected to close in the fourth quarter of 2006 and is subject to customary closing conditions including the approval of West Corporation's stockholders.

Conference Call

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

About West Corporation

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

Founded in 1986 and headquartered in Omaha, Nebraska, West has a team of 28,000 employees based in North America, Europe and Asia. For more information, please visit http://www.west.com .

Forward-Looking Statements

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

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

Additional Information and Where to Find It

In connection with the proposed transaction, West Corporation filed a preliminary proxy statement with the Securities and Exchange Commission ("SEC") on July 13, 2006. West Corporation will also file a definitive proxy statement and other relevant documents with the SEC in connection with the proposed transaction, and will furnish the definitive proxy statement to stockholders of West Corporation. BEFORE MAKING ANY VOTING DECISION WITH RESPECT TO THE PROPOSED TRANSACTION, STOCKHOLDERS OF WEST CORPORATION ARE URGED TO READ THE PROXY STATEMENT AND OTHER RELEVANT MATERIALS BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. The proxy statement and other relevant materials, and any other documents filed by West Corporation with the SEC, may be obtained (when available) free of charge at the SEC's website at http://www.sec.gov . In addition, stockholders of West Corporation may obtain free copies of the documents filed with the SEC by directing a request through the Investors Relations portion of West Corporation's website at http://www.west.com or by mail to West Corporation, 11808 Miracle Hills Drive, Omaha, NE, 68154, attention: Investor Relations, telephone: (402) 963-1500. You may also read and copy any reports, statements and other information filed by West Corporation with the SEC at the SEC public reference room at 450 Fifth Street, N.W. Room 1200, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 or visit the SEC's website for further information on its public reference room.

Participants in the Solicitation

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

    (1)  Acquired entities include Sprint Corporation's conferencing assets
         (acquired in June 2005) and Raindance (acquired in April 2006) in the
         Conferencing segment and Intrado (acquired in April 2006) in the
         Communications Services segment.

    (2)  See attached reconciliation of financial measures.


                               WEST CORPORATION
                      CONDENSED STATEMENTS OF OPERATIONS
    (Unaudited, in thousands except per share and selected operating data)

                       Three Months Ended            Six Months Ended
                             June 30,          %         June 30,         %
                        2006        2005     Change   2006      2005    Change

    Revenue           $461,678    $369,788    24.8% $886,416  $729,345  21.5%
    Cost of services   200,126     165,297    21.1%  397,417   331,234  20.0%
    Selling, general
     and
     administrative
     expenses          185,049     138,386    33.7%  341,107   272,927   25.0%
    Operating income    76,503      66,105    15.7%  147,892   125,184   18.1%
    Other expense, net  10,784       2,678   302.7%   14,449     5,040  186.7%
    Income before tax   65,719      63,427     3.6%  133,443   120,144   11.1%
    Income tax expense  23,921      21,832     9.6%   48,005    41,312   16.2%
    Minority Interest    4,048       4,137    -2.2%    6,624     7,834  -15.4%
    Net income         $37,750     $37,458     0.8%  $78,814   $70,998   11.0%

    Earnings per share:
      Basic              $0.54       $0.55    -1.8%    $1.12     $1.04    7.7%
      Diluted            $0.52       $0.53    -1.9%    $1.08     $1.00    8.0%
    Weighted average
     common shares
     outstanding:
      Basic             70,499      68,579            70,238    68,513
      Diluted           72,932      71,052            72,968    70,958

    SELECTED SEGMENT
     DATA:
    Revenue:
      Communication
       Services       $248,298    $212,026    17.1% $477,727  $430,526   11.0%
      Conferencing     155,853     103,932    50.0%  292,717   192,124   52.4%
      Receivables
       Management       59,020      55,008     7.3%  119,176   108,960    9.4%
      Inter segment
       eliminations     (1,493)     (1,178)   26.7%   (3,204)   (2,265)  41.5%
      Total           $461,678    $369,788    24.8% $886,416  $729,345   21.5%

    Operating Income:
      Communication
       Services        $27,048     $29,444    -8.1%  $56,172   $60,057   -6.5%
      Conferencing      39,491      26,760    47.6%   70,531    44,913   57.0%
      Receivables
       Management        9,964       9,901     0.6%   21,189    20,214    4.8%
      Total            $76,503     $66,105    15.7% $147,892  $125,184   18.1%

    Operating Margin:
      Communication
       Services           10.9%       13.9%  -21.6%     11.8%     13.9% -15.1%
      Conferencing        25.3%       25.7%   -1.6%     24.1%     23.4%   3.0%
      Receivables
       Management         16.9%       18.0%   -6.1%     17.8%     18.6%  -4.3%
      Total               16.6%       17.9%   -7.3%     16.7%     17.2%  -2.9%


    SELECTED OPERATING
     DATA:
    Share-based
     compensation expense
     recognized ($M)       3.7         0.1      NM
    Cash flow from
     operations ($M)      84.7        76.8    10.2%
    Revolving Line of
     Credit ending
     balance ($M)        690.0       340.0      NM

    Receivables
     Management
     Metrics ($M):
    Revenue from
     portfolios sales      2.7         2.1    28.6%
    Cash collections
     applied to principal
     portfolio
     receivables          14.6        15.5    -5.8%
    Ending portfolio
     receivables          98.5        88.1    11.8%
    Ending non-recourse
     debt                 46.6        30.8    51.3%

    Ending number of
     workstations       20,000      16,900    18.3%
    Ending number of
     international
     workstations        3,400       3,000    13.3%
    Ending number of
     active West at
     Home agents         7,300       6,500    12.3%
    Ending number of
     Communication
     Services ports    121,500     132,600    -8.4%
    Ending number of
     Conferencing
     ports             150,500     109,800    37.1%


    CONDENSED BALANCE
     SHEET
                        June 30,  December 31,   %
                         2006        2005      Change
    Current assets:
      Cash and cash
       equivalents     $33,368      $30,835     8.2%
      Trust cash         5,483        3,727    47.1%
    Accounts and notes
     receivable, net   263,188      217,806    20.8%
      Portfolio
       receivables,
       current          39,269       35,407    10.9%
      Other current
       assets           45,005       28,567    57.5%
        Total current
         assets        386,313      316,342    22.1%
    Net property and
     equipment         275,753      234,871    17.4%
    Portfolio
     receivables, net   59,213       59,043     0.3%
    Goodwill         1,146,289      717,624    59.7%
    Other assets       241,558      170,782    41.4%
        Total
         assets     $2,109,126   $1,498,662    40.7%
    Current
     liabilities      $276,098     $206,295    33.8%
    Long Term
     Obligations       704,197      233,245   201.9%
    Other liabilities
     & minority
     interest           44,396       87,254   -49.1%
    Stockholders'
     equity          1,084,435      971,868    11.6%
      Total
       liabilities
       and
       stockholders
       equity       $2,109,126   $1,498,662    40.7%


    Reconciliation of Financial Measures

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


    Amounts in thousands
    Three Months Ended June 30,               2006              2005
    Cash flow from operating activities      $84,620           $76,807
    Income tax expense                        23,921            21,832
    Deferred income tax (expense) benefit    (21,114)            1,135
    Interest expense                          12,205             3,314
    Minority interest in earnings, net of
     distributions                               579            (1,309)
    Stock based compensation                  (3,663)             (148)
    Other                                       (320)             (590)
    Changes in operating assets and
     liabilities, net of business
     acquisitions                             13,417           (12,016)
    EBITDA                                   109,645            89,025
    Minority interest                          4,048             4,137
    Interest income                             (824)             (434)
    Provision for share based compensation     3,663               148
    ADJUSTED EBITDA                         $116,532           $92,876


    Six Months Ended June 30,                 2006              2005
    Cash flow from operating activities     $148,200          $136,324
    Income tax expense                        48,005            41,312
    Deferred income tax (expense) benefit    (17,480)            1,145
    Interest expense                          16,426             6,144
    Minority interest in earnings, net of
     distributions                             3,138            (3,408)
    Stock based compensation                  (7,287)             (297)
    Other                                       (569)             (860)
    Changes in operating assets and
     liabilities, net of business
     acquisitions                             16,809            (9,695)
    EBITDA                                   207,242           170,665
    Minority interest                          6,624             7,834
    Interest income                           (1,163)             (749)
    Provision for share based compensation     7,287               297
    ADJUSTED EBITDA                         $219,990          $178,047

SOURCE West Corporation

David Pleiss, Investor Relations, West Corporation, +1-402-963-1500, or
dmpleiss@west.com
http://www.prnewswire.com

Copyright (C) 2006 PR Newswire. All rights reserved.

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