OMAHA, Neb., May 02, 2016 (GLOBE NEWSWIRE) --   West Corporation (Nasdaq:WSTC), a leading provider of technology-enabled communication services, today announced its first quarter 2016 results.

Key Quarterly Highlights:
  • Adjusted organic revenue grew 5 3.5 percent
  • Free cash flow 1,2 grew 7.3 percent
  • Announced long-term agreement with AT&T in Safety Services
  • Acquired Synrevoice to expand K-12 footprint
  • Reduced debt by $30.9 million
  • Repurchased one million shares

"Growth in our core services along with expense management led to better than expected results this quarter," said Tom Barker, chairman and chief executive officer. "One of the highlights of the first quarter was announcing a significant long-term agreement with AT&T in our Safety Services segment. We expect this partnership to drive faster adoption of next generation 9-1-1 across the country over the next several years."

Select Financial Information
Unaudited, in millions except per share amounts  Three Months Ended March 31,
    2016       2015     % Change
Revenue $ 570.8     $ 565.5       0.9 %
Adjusted EBITDA from Continuing Operations 1   165.6       169.1       -2.0 %
EBITDA from Continuing Operations 1   156.9       162.1       -3.2 %
Adjusted Operating Income 1   134.1       134.1       0.0 %
Operating Income   108.9       110.7       -1.6 %
Adjusted Income from Continuing Operations 1   63.9       66.9       -4.5 %
Income from Continuing Operations   44.6       48.6       -8.4 %
Adjusted Earnings per Share from Continuing Operations - Diluted 1   0.75       0.78       -3.8 %
Earnings per Share from Continuing Operations - Diluted   0.53       0.56       -5.4 %
Free Cash Flow from Continuing Operating Activities 1,2   23.7       22.1       7.3 %
Cash Flows from Continuing Operating Activities   60.1       58.4       2.8 %
Cash Flows used in Continuing Investing Activities   (39.5 )     (38.4 )     2.8 %
Cash Flows used in Continuing Financing Activities   (70.2 )     (234.5 )     -70.0 %
                       

DividendThe Company today also announced a $0.225 per common share dividend. The dividend is payable on May 26, 2016, to shareholders of record as of the close of business on May 16, 2016.

Operating ResultsFor the first quarter of 2016, revenue was $570.8 million compared to $565.5 million for the same quarter of the previous year, an increase of 0.9 percent. Revenue from acquired entities was $7.3 million during the first quarter of 2016. Organic revenue for the quarter decreased by 0.3 percent. The Company's revenue was negatively impacted by $3.7 million from foreign currency exchange rate fluctuations and by $18.2 million from two lost clients previously disclosed in 2014 and 2015. Adjusted organic growth 5 for the first quarter was 3.5 percent. Details of the Company's revenue growth are presented in the selected financial data table below.

The Unified Communications Services segment had revenue of $362.7 million in the first quarter of 2016, a 1.8 percent decrease compared to the same quarter of 2015. This decrease was primarily due to $18.2 million from the two previously disclosed lost clients and $3.7 million from the impact of foreign currency exchange rates, offset by $2.2 million in revenue from Magnetic North, which was acquired on October 31, 2015. Adjusted organic growth 5 for the Unified Communications Services segment was 3.5 percent for the first quarter of 2016.

The Safety Services segment had revenue of $71.2 million in the first quarter of 2016, an increase of 3.8 percent from the first quarter of 2015. The increase in revenue was primarily due to sales to clients adopting new technologies, partially offset by price compression.

The Interactive Services segment had revenue of $71.7 million in the first quarter of 2016, 14.8 percent higher than the same quarter last year. This increase included $5.1 million from the acquisitions of SharpSchool, ClientTell and Synrevoice. Adjusted organic growth for the Interactive Services segment was 6.7 percent for the first quarter of 2016. Organic growth was primarily due to new clients in the education and healthcare markets and increased volumes from existing clients, partially offset by price compression.

The Specialized Agent Services segment had revenue of $68.4 million in the first quarter of 2016, an increase of 1.9 percent compared to the same quarter of the previous year. Growth in this segment was primarily driven by the Company's revenue generation and healthcare advocacy businesses.

Adjusted EBITDA 1 for the first quarter of 2016 was $165.6 million compared to $169.1 million for the first quarter of 2015, a decrease of 2.0 percent. EBITDA 1 was $156.9 million in the first quarter of 2016 compared to $162.1 million in the first quarter of 2015.

Adjusted operating income 1 was $134.1 million in both the first quarter of 2016 and 2015. Adjusted operating income as a percent of revenue was 23.5 percent in the first quarter of 2016 compared to 23.7 percent in the same quarter of 2015. Operating income was $108.9 million in the first quarter of 2016 compared to $110.7 million in the first quarter of 2015.

Adjusted income from continuing operations 1 was $63.9 million in the first quarter of 2016, a decrease of 4.5 percent from the same quarter of 2015. Income from continuing operations decreased 8.4 percent to $44.6 million in the first quarter of 2016 compared to $48.6 million in the same quarter of 2015.

Balance Sheet, Cash Flow and LiquidityAt March 31, 2016, West Corporation had cash and cash equivalents totaling $133.3 million and working capital of $231.2 million. Interest expense and other financing charges were $39.0 million during the three months ended March 31, 2016 compared to $39.5 million during the comparable period of the prior year.

The Company's net debt to pro forma adjusted EBITDA ratio, as calculated pursuant to the Company's senior secured term debt facilities 4, was 4.72x at March 31, 2016.

Cash flows from operations were $60.1 million for the first quarter of 2016 compared to $58.4 million in the same period of 2015. Free cash flow 1,2 increased 7.3 percent to $23.7 million in the first quarter of 2016 compared to $22.1 million in the first quarter of 2015. This growth was driven by an increase in cash flows from operating activities which was positively impacted by net improvements in working capital partially offset by a decrease in income from continuing operations, higher days sales outstanding and the funding of one additional payroll in the first quarter of 2016 compared to the first quarter of 2015.

"West Corporation started 2016 with another strong quarter of free cash flow," said Jan Madsen, chief financial officer. "We deployed the cash the Company generated last quarter to make West more valuable. In the first quarter, we paid down $30.9 million in debt and we invested $22.0 million to buy back stock and $9.3 million for the acquisition of Synrevoice."

During the first quarter of 2016, the Company invested $36.4 million, or 6.4 percent of revenue, in capital expenditures, primarily for software, computer equipment and to support the AT&T ESInet partnership. 

AT&T PartnershipDuring the first quarter, the Company announced a long-term agreement with AT&T to deploy a standardized, scalable nationwide architecture designed to support IP communications for public safety answering points (AT&T ESInet). This platform will be the next generation 9-1-1 offering for AT&T's 21-state footprint and elsewhere in the U.S.

Revenue expected in 2016 from this agreement is included in the Company's guidance which was provided with its fourth quarter results in February.

AcquisitionOn March 14, 2016, the Company acquired substantially all of the assets of Synrevoice Technologies, Inc. ("Synrevoice"), a leading provider of K-12 notifications in Canada. Synrevoice serves approximately three million K-12 students in Canada and approximately 1.2 million students in the U.S. Synrevoice will be combined with the Company's SchoolMessenger solutions in the Education group of its Interactive Services operating segment. The purchase price was approximately $9.3 million and was funded with cash on hand.

Share Repurchase ProgramDuring the first quarter of 2016, the Company's Board of Directors approved a share repurchase program under which the Company may repurchase up to an aggregate of $75 million of its outstanding common stock. Purchases under the program may be made from time to time through open market purchases, block transactions or privately negotiated transactions. The Company expects to fund the program using its cash on hand and cash generated from operations. The program may be suspended or discontinued at any time without prior notice.

During the first quarter of 2016, the Company repurchased one million shares of common stock for an aggregate purchase price of approximately $22.0 million, funded with cash on hand.

Conference CallThe Company will hold a conference call to discuss these topics on Tuesday, May 3, 2016 at 11:00 AM Eastern Time (10:00 AM Central Time). Investors may access the call by visiting the Financials section of the West Corporation website at www.west.com and clicking on the Webcast link. A replay of the call will be available on the Company's website at www.west.com.

About West CorporationWest Corporation (Nasdaq:WSTC) is a global provider of technology-enabled communication services. West helps manage or support essential enterprise communications with services that include unified communications services, safety services, interactive services such as automated notifications, telecom services and specialty agent services.

For over 25 years, West has provided reliable, high-quality, voice and data services. West serves clients in a variety of industries including telecommunications, retail, financial services, public safety, technology and healthcare. West has a global organization with sales and operations in the United States, Canada, Europe, the Middle East, Asia Pacific and Latin America. For more information on West Corporation, please call 1-800-841-9000 or visit www.west.com.

Forward-Looking Statements This press release contains forward-looking statements. Forward-looking statements can be identified by the use of words such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "intends," "continue" or similar terminology. These statements reflect only West's current expectations and are not guarantees of future performance or results. These statements are subject to various risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. These risks and uncertainties include, but are not limited to, competition in West's highly competitive markets; increases in the cost of voice and data services or significant interruptions in these services; West's ability to keep pace with its clients' needs for rapid technological change and systems availability; the continued deployment and adoption of emerging technologies; the loss, financial difficulties or bankruptcy of any key clients; security and privacy breaches of the systems West uses to protect personal data; the effects of global economic trends on the businesses of West's clients; the non-exclusive nature of West's client contracts and the absence of revenue commitments; the cost of pending and future litigation; the cost of defending against intellectual property infringement claims; the effects of extensive regulation affecting many of West's businesses; West's ability to protect its proprietary information or technology; service interruptions to West's data and operation centers; West's ability to retain key personnel and attract a sufficient number of qualified employees; increases in labor costs and turnover rates; the political, economic and other conditions in the countries where West operates; changes in foreign exchange rates; West's ability to complete future acquisitions, integrate or achieve the objectives of its recent and future acquisitions; and future impairments of our substantial goodwill, intangible assets, or other long-lived assets. In addition, West is subject to risks related to its level of indebtedness. Such risks include West's ability to generate sufficient cash to service its indebtedness and fund its other liquidity needs; West's ability to comply with covenants contained in its debt instruments; West's ability to obtain additional financing; the incurrence of significant additional indebtedness by West and its subsidiaries; and the ability of West's lenders to fulfill their lending commitments. West is also subject to other risk factors described in documents filed by the Company with the United States Securities and Exchange Commission. 

These forward-looking statements speak only as of the date on which the statements were made. West undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by applicable law.
WEST CORPORATION
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, in thousands except per share data)
           
   Three Months Ended March 31,
     2016        2015      
   Actual    Actual   % Change
Revenue $ 570,779     $ 565,490       0.9 %
Cost of services   241,012       239,701       0.5 %
Selling, general and administrative expenses   220,843       215,096       2.7 %
Operating income   108,924       110,693       -1.6 %
Interest expense, net   38,483       38,842       -0.9 %
Other expense (income), net   1,040       (3,839 )   NM
Income from continuing operations before tax   69,401       75,690       -8.3 %
Income tax expense attributed to continuing operations   24,846       27,056       -8.2 %
Income from continuing operations   44,555       48,634       -8.4 %
Income from discontinued operations, net of income taxes   -       31,866       -  
Net income $ 44,555     $ 80,500       -44.7 %
           
Weighted average shares outstanding:          
Basic   83,149       84,125      
Diluted   84,615       86,226      
           
Earnings per share - Basic:          
Continuing operations $ 0.54     $ 0.58       -6.9 %
Discontinued operations   -       0.38       -  
Total Earnings Per Share - Basic $ 0.54     $ 0.96       -43.8 %
           
Earnings per share - Diluted:          
Continuing operations $ 0.53     $ 0.56       -5.4 %
Discontinued operations   -       0.37       -  
Total Earnings Per Share - Diluted $ 0.53     $ 0.93       -43.0 %
           
           
SELECTED FINANCIAL DATA:          
           
       Contribution    
Changes in Revenue - 1Q16 compared to 1Q15:     to Rev. Growth    
Revenue for the three months ended Mar. 31, 2015 $ 565,490          
Revenue from acquired entities 3   7,336       1.3 %    
Revenue from two previously disclosed lost clients   (18,200 )     -3.2 %    
Estimated impact of foreign currency exchange rates   (3,690 )     -0.7 %    
Adjusted organic growth, net   19,843       3.5 %    
Revenue for the three months ended Mar. 31, 2016 $ 570,779       0.9 %    
           
           
   Three Months Ended March 31,
     2016        2015      
SELECTED REPORTABLE SEGMENT DATA:  Actual    Actual   % Change
Revenue:          
Unified Communications Services $ 362,713     $ 369,458       -1.8 %
Safety Services   71,164       68,578       3.8 %
Interactive Services   71,729       62,467       14.8 %
Specialized Agent Services   68,378       67,078       1.9 %
Intersegment eliminations   (3,205 )     (2,091 )   NM
Total $ 570,779     $ 565,490       0.9 %
           
Depreciation:          
Unified Communications Services $ 17,543     $ 17,229       1.8 %
Safety Services   4,554       4,867       -6.4 %
Interactive Services   3,920       3,359       16.7 %
Specialized Agent Services   2,784       1,647       69.0 %
Total $ 28,801     $ 27,102       6.3 %
           
Amortization:          
Unified Communications Services - SG&A $ 3,393     $ 3,255       4.2 %
Safety Services - SG&A   3,383       4,649       -27.2 %
Safety Services - COS   3,269       3,293       -0.7 %
Interactive Services - SG&A   5,055       3,795       33.2 %
Specialized Agent Services - SG&A   4,594       4,827       -4.8 %
Deferred financing costs   4,909       5,002       -1.9 %
Total $ 24,603     $ 24,821       -0.9 %
           
Share-based compensation:          
Unified Communications Services $ 4,328     $ 3,271       32.3 %
Safety Services   1,227       919       33.5 %
Interactive Services   761       581       31.0 %
Specialized Agent Services   1,350       658       105.2 %
Total $ 7,666     $ 5,429       41.2 %
           
Cost of services:          
Unified Communications Services $ 166,196     $ 168,315       -1.3 %
Safety Services   27,315       26,505       3.1 %
Interactive Services   16,152       13,662       18.2 %
Specialized Agent Services   33,151       31,571       5.0 %
Intersegment eliminations   (1,802 )     (352 )   NM
Total $ 241,012     $ 239,701       0.5 %
           
Selling, general and administrative expenses:          
Unified Communications Services $ 107,449     $ 106,265       1.1 %
Safety Services   34,876       38,871       -10.3 %
Interactive Services   49,769       43,231       15.1 %
Specialized Agent Services   30,709       26,972       13.9 %
Corporate Other   (557 )     1,496     NM
Intersegment eliminations   (1,403 )     (1,739 )     -19.3 %
Total $ 220,843     $ 215,096       2.7 %
           
Operating income:          
Unified Communications Services $ 89,068     $ 94,878       -6.1 %
Safety Services   8,973       3,202       180.2 %
Interactive Services   5,808       5,574       4.2 %
Specialized Agent Services   4,518       8,535       -47.1 %
Corporate Other   557       (1,496 )   NM
Total $ 108,924     $ 110,693       -1.6 %
           
Operating margin:          
Unified Communications Services   24.6 %     25.7 %    
Safety Services   12.6 %     4.7 %    
Interactive Services   8.1 %     8.9 %    
Specialized Agent Services   6.6 %     12.7 %    
Total   19.1 %     19.6 %    
           
           

WEST CORPORATION
 CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
           
   March 31,    December 31,   %
     2016        2015     Change
Assets:          
Current assets:          
Cash and cash equivalents $ 133,295     $ 182,338       -26.9 %
Trust and restricted cash   13,638       19,829       -31.2 %
Accounts receivable, net   389,889       373,087       4.5 %
Income taxes receivable   7,017       19,332       -63.7 %
Prepaid assets   55,942       43,093       29.8 %
Deferred expenses   64,231       65,781       -2.4 %
Other current assets   26,851       22,040       21.8 %
Assets held for sale   18,974       17,672       7.4 %
Total current assets   709,837       743,172       -4.5 %
Property and Equipment:          
Property and equipment   1,080,267       1,053,678       2.5 %
Accumulated depreciation and amortization   (744,662 )     (718,834 )     3.6 %
Net property and equipment   335,605       334,844       0.2 %
Goodwill   1,925,032       1,915,690       0.5 %
Intangible assets, net   360,117       370,021       -2.7 %
Other assets   192,107       191,490       0.3 %
Total assets $ 3,522,698     $ 3,555,217       -0.9 %
Liabilities and Stockholders' Deficit:          
Current Liabilities:          
Accounts payable $ 90,284     $ 92,935       -2.9 %
Deferred revenue   158,589       161,828       -2.0 %
Accrued expenses   203,169       220,926       -8.0 %
Current maturities of long-term debt   26,563       24,375       9.0 %
Total current liabilities   478,605       500,064       -4.3 %
Long-term obligations   3,290,373       3,318,688       -0.9 %
Deferred income taxes   108,676       102,530       6.0 %
Other long-term liabilities   181,258       186,073       -2.6 %
Total liabilities   4,058,912       4,107,355       -1.2 %
           
Stockholders' Deficit:          
Common stock   86       85       1.2 %
Additional paid-in capital   2,202,472       2,193,193       0.4 %
Retained deficit   (2,581,983 )     (2,607,415 )     -1.0 %
Accumulated other comprehensive loss   (69,563 )     (72,736 )     -4.4 %
Treasury stock at cost   (87,226 )     (65,265 )     33.6 %
Total stockholders' deficit   (536,214 )     (552,138 )     -2.9 %
           
Total liabilities and stockholders' deficit $ 3,522,698     $ 3,555,217       -0.9 %
           

Reconciliation of Non-GAAP Financial Measures

Adjusted Operating Income ReconciliationAdjusted operating income is not a measure of financial performance under generally accepted accounting principles ("GAAP"). The Company believes adjusted operating income provides a relevant measure of operating profitability and a useful basis for evaluating the ongoing operations of the Company. Adjusted operating income is used by the Company to assess operating income before the impact of acquisitions and acquisition-related costs and certain non-cash items. Adjusted operating income should not be considered in isolation or as a substitute for operating income or other profitability data prepared in accordance with GAAP. Adjusted operating income, as presented, may not be comparable to similarly titled measures of other companies. Set forth below is a reconciliation of adjusted operating income from operating income. 
Reconciliation of Adjusted Operating Income from Operating Income
Unaudited, in thousands          
   Three Months Ended March 31,
Consolidated:   2016       2015     % Change
Operating income $ 108,924     $ 110,693       -1.6 %
Amortization of acquired intangible assets   16,425       16,526       -0.6 %
Share-based compensation   7,666       5,429       41.2 %
Secondary equity offering expense   -       707       -  
M&A and acquisition-related costs   1,088       778       39.8 %
Adjusted operating income $ 134,103     $ 134,133       0.0 %
Adjusted operating income margin   23.5 %     23.7 %    
           
Unified Communications Services:          
Operating income $ 89,068     $ 94,878       -6.1 %
Amortization of acquired intangible assets   3,393       3,255       4.2 %
Share-based compensation   4,328       3,271       32.3 %
Secondary equity offering expense   -       45       -  
M&A and acquisition-related costs   491       -       -  
Adjusted operating income $ 97,280     $ 101,449       -4.1 %
Adjusted operating income margin   26.8 %     27.5 %    
           
Safety Services:          
Operating income $ 8,973     $ 3,202       180.2 %
Amortization of acquired intangible assets   3,383       4,649       -27.2 %
Share-based compensation   1,227       919       33.5 %
Secondary equity offering expense   -       15       -  
Adjusted operating income $ 13,583     $ 8,785       54.6 %
Adjusted operating income margin   19.1 %     12.8 %    
           
Interactive Services:          
Operating income $ 5,808     $ 5,574       4.2 %
Amortization of acquired intangible assets   5,055       3,795       33.2 %
Share-based compensation   761       581       31.0 %
Secondary equity offering expense   -       7       -  
M&A and acquisition-related costs   552       628       -12.1 %
Adjusted operating income $ 12,176     $ 10,585       15.0 %
Adjusted operating income margin   17.0 %     16.9 %    
           
Specialized Agent Services:          
Operating income $ 4,518     $ 8,535       -47.1 %
Amortization of acquired intangible assets   4,594       4,827       -4.8 %
Share-based compensation   1,350       658       105.2 %
Secondary equity offering expense   -       9       -  
M&A and acquisition-related costs   -       150       -  
Adjusted operating income $ 10,462     $ 14,179       -26.2 %
Adjusted operating income margin   15.3 %     21.1 %    
           
Corporate Other:          
Operating income (loss) $ 557     $ (1,496 )    
Secondary equity offering expense   -       631      
M&A and acquisition-related costs   45       -      
Adjusted operating income (loss) $ 602     $ (865 )    
                   

Adjusted Net Income and Adjusted Earnings per Share ReconciliationAdjusted net income and adjusted earnings per share (EPS) are non-GAAP measures. The Company believes these measures provide a useful indication of profitability and basis for assessing the operations of the Company without the impact of bond redemption premiums, acquisitions and acquisition-related costs and certain non-cash items. Adjusted net income should not be considered in isolation or as a substitute for net income or other profitability metrics prepared in accordance with GAAP. Adjusted net income, as presented, may not be comparable to similarly titled measures of other companies. The Company utilizes this non-GAAP measure to make decisions about the use of resources, analyze performance and measure management's performance with stated objectives. Set forth below is a reconciliation of adjusted net income from net income. 
Reconciliation of Adjusted Net Income from Net Income
Unaudited, in thousands except per share data          
CONTINUING OPERATIONS  Three Months Ended March 31,
    2016       2015     % Change
Income from continuing operations $   44,555     $   48,634       -8.4 %
           
Amortization of acquired intangible assets     16,425         16,526      
Amortization of deferred financing costs     4,909         5,002      
Share-based compensation     7,666         5,429      
Secondary equity offering expense     -          707      
M&A and acquisition-related costs     1,088         778      
Pre-tax total     30,088         28,442      
Income tax expense on adjustments     10,772         10,168      
Adjusted income from continuing operations $   63,871     $   66,908       -4.5 %
           
Diluted shares outstanding     84,615         86,226      
Adjusted EPS from continuing operations - diluted $   0.75     $   0.78       -3.8 %
           
           
DISCONTINUED OPERATIONS  Three Months Ended March 31,
    2016       2015      
Income from discontinued operations $   -      $   31,866      
           
Amortization of acquired intangible assets     -          41      
Share-based compensation     -          1,576      
M&A and acquisition-related costs     -          356      
Pre-tax total     -          1,973      
Income tax benefit on adjustments     -          756      
Adjusted income from discontinued operations $   -      $   33,083      
           
Diluted shares outstanding     84,615         86,226      
Adjusted EPS from discontinued operations - diluted $   -      $   0.38      
           
           
CONSOLIDATED  Three Months Ended March 31,
    2016       2015     % Change
Net income $   44,555     $   80,500       -44.7 %
           
Amortization of acquired intangible assets     16,425         16,567      
Amortization of deferred financing costs     4,909         5,002      
Share-based compensation     7,666         7,005      
Secondary equity offering expense     -          707      
M&A and acquisition-related costs     1,088         1,134      
Pre-tax total     30,088         30,415      
Income tax expense on adjustments     10,772         10,924      
Adjusted net income $   63,871     $   99,991       -36.1 %
           
Diluted shares outstanding     84,615         86,226      
Adjusted EPS - diluted $   0.75     $   1.16       -35.3 %
           

Free Cash Flow ReconciliationThe 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 operating activities 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 operating activities 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 from cash flows from operating activities.
Reconciliation of Free Cash Flow from Operating Cash Flow
Unaudited, in thousands          
CONTINUING OPERATIONS  Three Months Ended March 31,
    2016       2015     % Change
Cash flows from operating activities $   60,052     $   58,396       2.8 %
Cash capital expenditures     36,357         36,307       0.1 %
Free cash flow $   23,695     $   22,089       7.3 %
           
           
DISCONTINUED OPERATIONS  Three Months Ended March 31,
    2016       2015      
Cash flows from (used in) operating activities $   -      $   (5,279 )    
Cash capital expenditures     -          1,930      
Free cash flow $   -      $   (7,209 )    
           
           
CONSOLIDATED  Three Months Ended March 31,
    2016       2015     % Change
Cash flows from operating activities $   60,052     $   53,117       13.1 %
Cash capital expenditures     36,357         38,237       -4.9 %
Free cash flow $   23,695     $   14,880       59.2 %
                       

EBITDA and Adjusted EBITDA ReconciliationThe common definition of EBITDA is "Earnings Before Interest Expense, Taxes, Depreciation and Amortization." In evaluating liquidity and performance, the Company uses "Adjusted EBITDA." The Company defines Adjusted EBITDA as earnings before interest expense, share-based compensation, taxes, depreciation and amortization and transaction costs. EBITDA and Adjusted EBITDA are not measures of financial performance or liquidity under GAAP. Although the Company uses Adjusted EBITDA as a measure of its liquidity, the use of Adjusted EBITDA is limited because it does not include certain material costs, such as depreciation, amortization and interest, necessary to operate the business. EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for net income, cash flow from operating activities 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 here as the Company understands investors use it as a measure of its historical ability to service debt and compliance with covenants in its senior credit facilities. Further, Adjusted EBITDA is presented here as the Company uses it to measure its performance and to conduct and evaluate its business during its regular review of operating results for the periods presented. Set forth below is a reconciliation of EBITDA and Adjusted EBITDA from cash flow from operating activities and net income.
Reconciliation of EBITDA and Adjusted EBITDA from Operating Cash Flow
Unaudited, in thousands      
CONTINUING OPERATIONS  Three Months Ended Mar. 31,
    2016       2015  
Cash flows from operating activities $ 60,052     $ 58,396  
Income tax expense   24,846       27,056  
Deferred income tax expense   (2,377 )     (2,961 )
Interest expense and other financing charges   38,985       39,537  
Provision for share-based compensation   (7,666 )     (5,429 )
Amortization of deferred financing costs   (4,909 )     (5,002 )
Other   (434 )     (216 )
Changes in operating assets and liabilities,      
net of business acquisitions   48,384       50,767  
EBITDA   156,881       162,148  
Provision for share-based compensation   7,666       5,429  
Secondary equity offering expense   -       707  
M&A and acquisition-related costs   1,088       778  
Adjusted EBITDA $ 165,635     $ 169,062  
       
       
Cash flows from operating activities $ 60,052     $ 58,396  
Cash flows used in investing activities $ (39,460 )   $ (38,403 )
Cash flows used in financing activities $ (70,245 )   $ (234,482 )
       
       
DISCONTINUED OPERATIONS  Three Months Ended Mar. 31,
    2016       2015  
Cash flows from operating activities $ -     $ (5,279 )
Income tax expense   -       19,817  
Deferred income tax expense   -       (4,334 )
Provision for share-based compensation   -       (1,576 )
Other   -       29,596  
Changes in operating assets and liabilities,      
net of business acquisitions   -       13,500  
EBITDA   -       51,724  
Provision for share-based compensation   -       1,576  
M&A and acquisition-related costs   -       356  
Gain on sale of business   -       (48,556 )
Adjusted EBITDA $ -     $ 5,100  
       
       
Cash flows used in operating activities $ -     $ (5,279 )
Cash flows from investing activities $ -     $ 263,806  
Cash flows used in financing activities $ -     $ -  
       
CONSOLIDATED  Three Months Ended Mar. 31,
    2016       2015  
Cash flows from operating activities $ 60,052     $ 53,117  
Income tax expense   24,846       46,873  
Deferred income tax expense   (2,377 )     (7,295 )
Interest expense and other financing charges   38,985       39,537  
Provision for share-based compensation   (7,666 )     (7,005 )
Amortization of deferred financing costs   (4,909 )     (5,002 )
Other   (434 )     29,380  
Changes in operating assets and liabilities,      
net of business acquisitions   48,384       64,267  
EBITDA   156,881       213,872  
Provision for share-based compensation   7,666       7,005  
Secondary equity offering expense   -       707  
M&A and acquisition-related costs   1,088       1,134  
Gain on sale of business   -       (48,556 )
Adjusted EBITDA $ 165,635     $ 174,162  
       
CONSOLIDATED      
Cash flows from operating activities $ 60,052     $ 53,117  
Cash flows from (used in) investing activities $ (39,460 )   $ 225,403  
Cash flows used in financing activities $ (70,245 )   $ (234,482 )
               

Reconciliation of EBITDA and Adjusted EBITDA from Net Income
Unaudited, in thousands      
CONTINUING OPERATIONS  Three Months Ended Mar. 31,
    2016       2015  
Income from continuing operations $ 44,555     $ 48,634  
Interest expense and other financing charges   38,985       39,537  
Depreciation and amortization   48,495       46,921  
Income tax expense   24,846       27,056  
EBITDA   156,881       162,148  
Provision for share-based compensation   7,666       5,429  
Secondary equity offering expense   -       707  
M&A and acquisition-related costs   1,088       778  
Adjusted EBITDA $ 165,635     $ 169,062  
       
       
DISCONTINUED OPERATIONS  Three Months Ended Mar. 31,
    2016       2015  
Income from discontinued operations $ -     $ 31,866  
Depreciation and amortization   -       41  
Income tax expense   -       19,817  
EBITDA   -       51,724  
Provision for share-based compensation   -       1,576  
M&A and acquisition-related costs   -       356  
Gain on sale of business   -       (48,556 )
Adjusted EBITDA $ -     $ 5,100  
       
       
CONSOLIDATED  Three Months Ended Mar. 31,
    2016       2015  
Net income $ 44,555     $ 80,500  
Interest expense and other financing charges   38,985       39,537  
Depreciation and amortization   48,495       46,962  
Income tax expense   24,846       46,873  
EBITDA   156,881       213,872  
Provision for share-based compensation   7,666       7,005  
Secondary equity offering expense   -       707  
M&A and acquisition-related costs   1,088       1,134  
Gain on sale of business   -       (48,556 )
Adjusted EBITDA $ 165,635     $ 174,162  
               

1 See Reconciliation of Non-GAAP Financial Measures below. 2 Free cash flow is calculated as cash flows from operating activities less cash capital expenditures. 3 Revenue growth attributable to acquired entities includes SharpSchool, Magnetic North, ClientTell and Synrevoice. 4 Based on loan covenants. Covenant loan ratio is debt net of cash and excludes accounts receivable securitization debt. 5 Adjusted organic growth is provided on the Selected Financial Data tables and excludes revenue from acquired entities, revenue from the two previously disclosed lost clients and the estimated impact of foreign currency exchange rates.NM: Not Meaningful
AT THE COMPANY:       Dave PleissInvestor RelationsWest Corporation(402) 963-1500DMPleiss@west.com

Primary Logo