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West Corporation Reports First Quarter 2013 Results And Declares Quarterly Dividend

Pro forma Adjusted Net Income represents Adjusted Net Income after giving effect to pro forma adjusted interest expense. Pro forma adjusted interest expense reflects the impact of lower debt balances and lower interest rates post IPO. This includes the savings expected for the full quarter from the anticipated redemption of the $450 million senior subordinated notes and the savings for the full quarter associated with the pricing amendment to the senior secured term loan facilities as if these transactions had been completed January 1, 2013. 

 Reconciliation of Adjusted Net Income & Pro forma Net Income from Net Income 
Amounts in thousands      
   Three Months Ended Mar. 31, 
  2013 2012 % Change
Net income  $ 3,055  $ 34,044 -91.0%
       
Amortization of acquired intangible assets  13,961  14,878  
Amortization of deferred financing costs  4,654  3,393  
Share-based compensation  3,190  133  
Sponsor management/termination fee  25,000  1,000  
IPO bonus  2,975  --   
Subordinated debt call premium  16,502  --   
Pre-tax total   66,282  19,404  
Income tax expense on adjustments  24,856  7,665  
Adjusted net income  $ 44,481  $ 45,783 -2.8%
       
Diluted shares outstanding  65,366  63,529  
Adjusted EPS - diluted  $ 0.68  $ 0.72 -5.6%
       
Pro forma interest expense change, net of tax  $ 13,622    
Pro forma adjusted net income  $ 58,103  N/A   
       
Pro forma diluted shares outstanding  84,897    
Pro forma adjusted EPS - diluted  $ 0.68  N/A   

Free Cash Flow Reconciliation

The Company believes Free Cash Flow provides a relevant measure of liquidity and a useful basis for assessing the Company's ability to fund its activities, including the financing of acquisitions, debt service, stock repurchases and distribution of earnings to shareholders. Free Cash Flow is calculated as Cash Flows from Operations less cash Capital Expenditures. Free Cash Flow is not a measure of financial performance under GAAP. Free Cash Flow should not be considered in isolation or as a substitute for Cash Flows from Operations or other liquidity measures prepared in accordance with GAAP. Free Cash Flow, as presented, may not be comparable to similarly titled measures of other companies. Set forth below is a reconciliation of Free Cash Flow to Cash Flows from Operations. 

 Reconciliation of Free Cash Flow from Operating Cash Flow 
Amounts in thousands      
   Three Months Ended Mar. 31, 
  2013 2012 % Change
Cash flows from operations   $ 98,666  $ 91,663 7.6%
Cash capital expenditures  33,542  34,073 -1.6%
Free cash flow  $ 65,124  $ 57,590 13.1%

EBITDA and Adjusted EBITDA Reconciliation

The common definition of EBITDA is "Earnings Before Interest Expense, Taxes, Depreciation and Amortization." In evaluating liquidity and performance, the Company uses earnings before interest expense, share based compensation, taxes, depreciation and amortization, and one-time IPO-related expenses, or "Adjusted EBITDA." EBITDA and Adjusted EBITDA are not measures of financial performance or liquidity under GAAP. EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for Net Income, Cash Flows from Operations or other income or cash flows data prepared in accordance with GAAP. EBITDA and Adjusted EBITDA, as presented, may not be comparable to similarly titled measures of other companies. EBITDA and Adjusted EBITDA are used by certain investors as measures to assess the Company's ability to service debt. Adjusted EBITDA is also used in the Company's debt covenants, although the precise adjustments used to calculate Adjusted EBITDA included in the Company's credit facility and indentures vary in certain respects among such agreements and from those presented below. Certain adjustments to Adjusted EBITDA were excluded from the calculations below consistent with the adjustments made for Adjusted Operating Income and Adjusted Net Income. Adjusted EBITDA, as calculated for purposes of the Company's debt covenants, includes additional adjustments to EBITDA in the three months ended March 31, 2013 and March 31, 2012 of $4,376 and $8,086, respectively. Set forth below is a reconciliation of EBITDA and Adjusted EBITDA to Cash Flows from Operations and Net Income. 

 Reconciliation of EBITDA and Adjusted EBITDA from Operating Cash Flow 
Amounts in thousands  Three Months Ended Mar. 31, 
  2013 2012
Cash flows from operating activities  $ 98,666  $ 91,663
Income tax expense  1,833  20,866
Deferred income tax expense  (4,343)  (11,518)
Interest expense and other financing charges  89,694  62,412
Provision for share-based compensation  (3,190)  (133)
Amortization of deferred financing costs  (4,654)  (3,393)
Asset impairment  --   (3,715)
Other  (28)  (79)
Changes in operating assets and liabilities, net of business acquisitions  (39,039)  4,534
EBITDA  138,939  160,637
Provision for share-based compensation  3,190  133
Sponsor management/termination fee and IPO bonus  27,975  1,000
Adjusted EBITDA  $ 170,104  $ 161,770
 
 Reconciliation of EBITDA and Adjusted EBITDA from Net Income 
Amounts in thousands  Three Months Ended Mar. 31, 
  2013 2012
Net income  $ 3,055  $ 34,044
Interest expense and other financing charges  89,694  62,412
Depreciation and amortization  44,357  43,315
Income tax expense  1,833  20,866
EBITDA  138,939  160,637
Provision for share-based compensation  3,190  133
Sponsor management/termination fee and IPO bonus  27,975  1,000
Adjusted EBITDA  $ 170,104  $ 161,770
     
     
Amounts in thousands  Three Months Ended Mar. 31, 
  2013 2012
Cash flows from operating activities  $ 98,666  $ 91,663
Cash flows used in investing activities  $ (33,963)  $ (110,652)
Cash flows from financing activities  $ 409,581  $ 20,266

 

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