WEST TELESERVICES CORP, 424B1, 1996-11-26

WEST TELESERVICES CORP
424B1, 1996-11-26
BUSINESS SERVICES, NEC

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<PAGE>
Filed Pursuant to Rule 424(b)(1)
Registration No. 333-13991

5,700,000 SHARES
[LOGO OF WEST
TELESERVICES WEST TELESERVICES CORPORATION
CORP. APPEARS COMMON STOCK
HERE] (PAR VALUE $0.01 PER SHARE)

-----------

All of the 5,700,000 shares of Common Stock offered hereby are being sold by
the Company. Prior to this Offering there has been no public market for the
Common Stock. See "Underwriting" for a discussion of the factors to be
considered in determining the initial public offering price.

SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR CERTAIN RISKS RELEVANT TO AN
INVESTMENT IN THE COMMON STOCK.

The Common Stock has been approved for quotation on the Nasdaq National
Market under the symbol "WTSC."

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

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

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

<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE DISCOUNTS(1) COMPANY(2)
-------------- ------------ -----------
<S> <C> <C> <C>
Per Share............................... $18.00 $1.22 $16.78
Total(3)................................ $102,600,000 $6,925,500 $95,674,500
</TABLE>
- --------
(1) The Company, Gary L. West and Mary E. West have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933.
(2) Before deducting estimated expenses payable by the Company of $2,174,500.
(3) The Company has granted the Underwriters an option for 30 days to purchase
up to an additional 855,000 shares at the initial public offering price
per share, less the underwriting discount, solely to cover over-
allotments. If such option is exercised in full, the total initial public
offering price, underwriting discount and proceeds to Company will be
$117,990,000, $7,964,325, and $110,025,675, respectively. See
"Underwriting."

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

The shares offered hereby are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to
their right to reject any order in whole or in part. It is expected that
certificates for shares will be ready for delivery in New York, New York, on
or about December 2, 1996, against payment therefor in immediately available
funds.

GOLDMAN, SACHS & CO.
SALOMON BROTHERS INC
SMITH BARNEY INC.

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

The date of this Prospectus is November 26, 1996.
<PAGE>

[ART]

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN
THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY
BE DISCONTINUED AT ANY TIME.

2
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and the financial statements
and notes thereto appearing elsewhere in this Prospectus. Unless the context
otherwise requires and except as otherwise specified, (i) references herein to
the "Company" include West TeleServices Corporation and its direct and indirect
subsidiaries (West Telemarketing Corporation, West Interactive Corporation,
West Telemarketing Corporation Outbound, Interactive Billing Services, Inc. and
West Interactive Canada, Inc.) and (ii) the information in this Prospectus
assumes that the Underwriters' over-allotment option will not be exercised.
Except as otherwise specified, all information (financial and otherwise) in
this Prospectus has been adjusted to reflect a reorganization of the Company
and certain of its affiliates to become effective prior to the closing of the
Offering which will terminate the S Corporation tax status of five companies
affiliated with the Company (the "Reorganization"). See "Reorganization and
Termination of S Corporation Status."

This Prospectus contains forward-looking statements which involve risks and
uncertainties. The Company's actual results in the future could differ
significantly from the results discussed or implied in this Prospectus. Factors
that could cause or contribute to such differences include, but are not limited
to, those discussed in "Risk Factors," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business," as well as those
discussed elsewhere in this Prospectus.

THE COMPANY

The Company is one of the largest independent teleservices companies in the
United States, and provides a full range of customized telecommunications-based
services to business clients on an outsourced basis. The Company is a leading
provider in each of inbound operator services, automated voice response
services and outbound direct teleservices. The Company's inbound operator
services ("Inbound") consist of live operator call-processing applications such
as order capture, customer service and product support. Inbound was established
in 1986 with the goal of becoming the leading inbound teleservices operation in
the United States and represented approximately 28.9% of the Company's revenue
in 1995. The Company's automated voice response services ("Interactive")
consist of computerized call-processing applications such as automated product
information requests, computerized surveys and polling, and secure automated
credit card activation. Interactive began operations in 1989 with the goal of
establishing the leadership position in automated voice response services and
represented approximately 38.4% of the Company's revenues in 1995. The
Company's outbound direct teleservices ("Outbound") consist of live operator
direct marketing applications such as product sales and customer acquisition
and retention campaigns. Outbound began operations in 1990 with the goal of
becoming one of the leading teleservices organizations in the United States and
represented approximately 32.7% of the Company's revenue in 1995. The Company
has developed proprietary technology platforms designed to provide a high
degree of automation and reliability in all three of its businesses. This
technology also enables the Company to efficiently integrate a range of its
services. The Company believes that its ability to offer integrated services
for its clients distinguishes it from most of its competitors.

The Company targets businesses in highly competitive, consumer-based
industries, including telecommunications, insurance, banking, pharmaceuticals,
public utilities, consumer goods and computer software services, that require
large volume applications. Representative clients include: AT&T Corp. ("AT&T"),
America Online Inc., Commonwealth Edison Company, MBNA Corporation, Merck &
Co., Inc., Sun Microsystems Inc., Time-Life, Inc. and Turner Broadcasting
System, Inc. The Company's revenue and pro forma net income for 1995 were
$256.9 million and $23.6 million, respectively. The Company's revenue and pro
forma net income for the nine months ended September 30, 1996 were $235.2
million and $23.2 million, respectively.

3
<PAGE>

The Company operated approximately 4,000 telephone workstations as of
September 30, 1996 in six state-of-the-art call centers located in Nebraska,
Texas and Virginia which it uses for inbound and outbound services, and
maintained approximately 5,400 proprietary interactive voice response ports as
of September 30, 1996 for its automated voice response services. The Company
has deployed multiple automatic call distributors, predictive dialers, a
proprietary interactive voice response platform and multiple mainframe computer
systems, in combination with an intelligent workstation environment, in order
to fully automate and manage the Company's information-processing requirements.
The Company believes it has designed and implemented a sophisticated technology
platform, permitting it to provide flexible, high-quality and cost-effective
service solutions for its clients.

COMPANY STRATEGY

The Company believes that it is one of the leading providers in the
teleservices industry and is well positioned to benefit from the continued
growth in outsourced teleservices. The Company's objective is to enhance its
leading position in each of inbound, automated voice response and outbound
services. The principal elements of the Company's strategy are:

I. LEVERAGE ABILITY TO PROVIDE INTEGRATED SERVICE SOLUTIONS

The Company is able to design and implement highly flexible applications
which combine the large volume call capacity of automated voice response with
the specialized customer service capabilities of inbound and outbound services.
Furthermore, the Company leverages its ability to provide integrated services
by cross-selling its services to its clients to capture an increasing share of
their outsourced business.

II. PURSUE RECURRING AND LARGE VOLUME APPLICATIONS

III. CAPITALIZE ON STATE-OF-THE-ART TECHNOLOGY

IV. PROVIDE PREMIUM QUALITY SERVICES

The Company differentiates the quality of its services through its ability to
quickly respond to new applications and short-term volume fluctuations,
efficiently address staffing needs, effectively employ operating systems that
can process client campaign data and provide sophisticated reports as well as
through its extensive training program and an experienced management team.

V. DEVELOP LONG-TERM CLIENT RELATIONSHIPS

The Company focuses on developing long-term client relationships. The Company
seeks to develop a detailed understanding of each of its clients' specialized
businesses, which enables it to create customized solutions which meet clients'
needs and minimize client turnover.

4
<PAGE>

VI. LEVERAGE STRONG MANAGEMENT EXPERIENCE

The Company's management team possesses extensive industry experience in
inbound, automated voice response and outbound services. The Company's
management team has proven experience managing the rapid growth of the
business. The Company believes that it has distinguished itself through its
ability to attract and retain some of the most talented managers in the
industry.

REORGANIZATION

Prior to the closing of this Offering, each of the stockholders of West
Telemarketing Corporation, West Interactive Corporation and West Telemarketing
Corporation Outbound will exchange the capital stock of such company for shares
of Common Stock. Simultaneously, the stockholders of Interactive Billing
Services, Inc. and West Interactive Canada, Inc. will transfer their shares of
capital stock to West Interactive Corporation for nominal cash consideration
(such stock transfer together with the stock exchange described above, the
"Reorganization"). Pursuant to the Reorganization, the S Corporation tax status
of the five foregoing companies will be terminated. Prior to the
Reorganization, Gary L. West and Mary E. West beneficially owned in the
aggregate greater than 73.0%, and Troy L. Eaden beneficially owned 15.0%, of
the outstanding shares of common stock of each of the foregoing companies.
Following consummation of the Reorganization but prior to this Offering, Gary
L. West and Mary E. West will beneficially own in the aggregate approximately
80.1%, and Troy L. Eaden will beneficially own approximately 15.0%, of the
shares of Common Stock. West Telemarketing Corporation was founded in 1986 and
the Company was incorporated in 1994 under the laws of the State of Delaware.
The Company's principal executive offices are located at 9910 Maple Street,
Omaha, Nebraska 68134, and its telephone number is (402) 571-7700.

5
<PAGE>

THE OFFERING

Common Stock Offered in the
Offering............................ 5,700,000 shares

Common Stock Outstanding after the
Offering........................... 62,475,000 shares(1)

Use of Proceeds..................... The net proceeds from the Offering are
estimated to be $93.5 million. Of such
proceeds, the Company estimates that
approximately $27.6 million will be
used to repay certain debt, $43.9 mil-
lion will be used to repay all notes
payable to existing stockholders issued
in connection with the termination of S
Corporation tax status and the balance
will be used for working capital and
general corporate purposes including
possible acquisitions. See "Use of Pro-
ceeds."

Proposed Nasdaq National Market
symbol "WTSC"
- --------
(1) Excludes (i) 3,601,100 shares of Common Stock issuable upon exercise of
outstanding stock options issued in connection with this Offering under the
Company's 1996 Stock Incentive Plan (the "1996 Plan"), each of which has an
exercise price equal to the initial public offering price, and (ii) an
additional 5,898,400 shares of Common Stock reserved for future issuance
under the 1996 Plan.

6
<PAGE>

SUMMARY COMBINED FINANCIAL AND OPERATING DATA

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------------------------------- -----------------------------
PRO FORMA PRO FORMA
1991 1992 1993 1994 1995 1995(8) 1995 1996 1996(8)
------- -------- -------- -------- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA: (IN THOUSANDS, EXCEPT PER SHARE AND SELECTED OPERATING DATA)
Revenue................ $69,873 $101,208 $142,508 $186,512 $256,894 $256,894 $187,332 $235,188 $235,188
Cost of services....... 38,579 56,181 77,785 102,707 146,531 146,531 106,481 134,048 134,048
Selling, general and
administrative
expenses.............. 21,675 32,789 45,041 51,904 70,575 72,259 49,887 63,071 64,334
Litigation settlement.. -- -- 4,400 -- -- -- -- -- --
------- -------- -------- -------- -------- -------- -------- -------- --------
Net operating income... 9,619 12,238 15,282 31,901 39,788 38,104 30,964 38,069 36,806
Net other (expense).... (704) (600) (1,020) (1,195) (3,050) (3,050) (2,241) (2,089) (2,089)
------- -------- -------- -------- -------- -------- -------- -------- --------
Net income before pro
forma tax
provision(1).......... 8,915 11,638 14,262 30,706 36,738 35,054 28,723 35,980 34,717
Pro forma provision for
income taxes(1)....... 2,326 2,832 5,234 10,900 13,130 13,130 10,404 12,740 12,740
------- -------- -------- -------- -------- -------- -------- -------- --------
Pro forma net
income(1)............. $ 6,589 $ 8,806 $ 9,028 $ 19,806 $ 23,608 21,924 $ 18,319 $ 23,240 21,977
======= ======== ======== ======== ======== ======== ======== ======== ========
Pro forma net income
per share(1)(2)....... $ .40 $ .37 $ .31 $ .39 $ .37
======== ======== ======== ======== ========
Weighted average common
shares outstanding.... 59,324 59,324 59,324 59,324 59,324
======== ======== ======== ======== ========
SUPPLEMENTARY PRO FORMA
DATA(3):
Net income............. $ 25,170 23,486 $ 19,493 $ 24,330 23,067
======== ======== ======== ======== ========
Net income per common
share................. $ .41 $ .39 $ .32 $ .40 $ .38
======== ======== ======== ======== ========
Weighted average common
shares outstanding.... 60,857 60,857 60,857 60,857 60,857
======== ======== ======== ======== ========
SELECTED OPERATING DATA:
Operating margin....... 13.8% 12.1% 10.7% 17.1% 15.5% 16.5% 16.2%
Number of workstations
(at end of period).... 973 1,693 2,095 2,228 3,158 2,894 4,015
Number of ports (at end
of period)(4)......... 1,380 2,070 2,530 3,496 3,870 3,496 5,372
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30, 1996
------------------------------------------ --------------------------------------
PRO FORMA AS
1991 1992 1993 1994 1995 HISTORICAL PRO FORMA(5) ADJUSTED(6)(8)
------- ------- ------- ------- -------- ---------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital........ $ 38 $(4,905) $(4,742) $ 5,408 $ 6,550 $ (840) $ (2,840) $ 34,957
Property and
equipment, net....... 13,833 21,587 26,396 30,820 45,889 62,709 62,709 62,709
Total assets........... 33,198 49,546 60,225 88,880 123,452 142,368 140,368 216,249
Total debt(7).......... 17,581 26,195 23,913 32,608 41,743 47,413 91,292 23,151
Stockholders' equity... 6,488 10,047 13,850 28,593 40,218 45,797 (2,157) 141,867
</TABLE>
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(1) Prior to the Reorganization, five of the Company's affiliates were
S Corporations that were not subject to federal and certain state corporate
income taxes. The income statement data reflects a pro forma provision for
income taxes as if the reorganized Company had been subject to federal and
state corporate income taxes for all periods. The pro forma provision for
income taxes represents a combined federal and state tax rate. See
"Reorganization and Termination of S Corporation Status" and Note J to
Combined Financial Statements.
(2) Pro forma net income per share amounts were calculated using 59,324 shares,
the number of shares of Common Stock outstanding after giving effect to the
Reorganization plus those shares necessary to be issued in this Offering to
fund payment of certain notes payable to existing stockholders of three of
the Company's affiliates equal to $43.88 million and cash dividends of $2.0
million. See "Reorganization and Termination of S Corporation Status."
(3) Supplementary pro forma net income per share amounts were calculated using
60,857 shares, the number of shares of Common Stock outstanding after
giving effect to the Reorganization plus those shares necessary to be
issued in this Offering to fund payment of a portion of certain notes
payable to existing stockholders of three of the Company's affiliates equal
to $43.88 million, cash dividends of $2.0 million and the application of
the estimated proceeds of this Offering to repay certain debt of the
Company as if such application occurred on January 1, 1995 as described
under "Use of Proceeds."
(4) A port is a computer's digital interface to a single telephone line for
automated voice response call processing.
(5) Adjusted to give effect to the Reorganization. See "Reorganization and
Termination of S Corporation Status."
(6) Adjusted to give effect to payment of a portion of certain notes payable to
existing stockholders of three of the Company's affiliates equal to $43.88
million, payment of cash dividends of $2.0 million and the net deferred
income tax liability and corresponding income tax expense to be recorded by
each of five of the Company's affiliates as a result of its termination of
S Corporation status related to the Reorganization, this Offering and the
application of the estimated net proceeds therefrom as set forth under "Use
of Proceeds."
(7) See "Capitalization" and Notes B, C and D to Combined Financial Statements.
(8) Adjusted to give effect to the accounting for the minority interest under
the purchase method of accounting. Accordingly, goodwill of $50,535 was
recorded and is being amortized over 30 years. Pro forma amortization
expense totaled $1,684 and $1,263 for the year ended December 31, 1995 and
the nine months ended September 30, 1996, respectively.

7
<PAGE>

RISK FACTORS

In addition to other information in this Prospectus, the following factors
should be carefully considered in evaluating the Company and its business
before purchasing the Common Stock offered by this Prospectus. This Prospectus
contains forward-looking statements which involve risks and uncertainties. The
Company's actual results in the future could differ significantly from the
results discussed or implied in such forward-looking statements. Factors that
could cause or contribute to such a difference include, but are not limited
to, those discussed in "Risk Factors" below, "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business," as
well as those discussed elsewhere in this Prospectus.

COMPETITION

The market for teleservices is highly competitive and subject to rapid
change. Many vendors offer services that are directly competitive with certain
services offered by the Company. The Company also experiences competition from
the telemarketing operations of internal marketing departments of current and
potential clients. These include, for example, reservation centers of major
hotel chains and mail order catalog businesses. In addition, some of the
Company's services also compete with other forms of marketing such as mail,
television and radio. The Company expects competition to increase
significantly in the future from existing competitors and from a number of
companies that may enter the Company's existing or future markets. Increased
competition could have a material adverse effect on the Company.

Certain of the Company's competitors and potential competitors may have
financial and other resources substantially greater than those of the Company.
In addition, there can be no assurance that, as the Company's industry
continues to evolve, additional competitors with greater resources than the
Company will not enter the industry or that the Company's clients will not
choose to conduct more of their telephone-based sales, marketing or customer
service activities internally. See "Business--Competition."

POTENTIAL FUTURE COMPETING TECHNOLOGIES AND TRENDS

The development of new forms of direct sales and marketing techniques, such
as interactive home shopping through television, computer networks (including
the Internet) and other media, could have a material adverse effect on the
demand for the services provided by the Company. The effectiveness of
marketing by telephone could also decrease as a result of consumer saturation
and increased consumer resistance to teleservices generally and to the
services provided by the Company in particular. Although the Company attempts
to monitor industry trends and respond accordingly, there can be no assurance
that the Company will be able to anticipate and successfully respond to such
trends in a timely manner or at all. See "Business--Competition."

RISKS ASSOCIATED WITH MANAGING A RAPIDLY GROWING BUSINESS

The Company has experienced rapid growth over the past several years and
anticipates continued growth to be driven primarily by industry trends towards
outsourcing of telephone-based sales, marketing and customer service
operations and increased penetration by the Company of new and existing
clients and markets. The Company's future performance and profitability will
depend in part on (i) maintaining in place a sufficient number of highly
trained personnel to conduct product implementation, sales activity, training
and other customer support services, (ii) its ability to expand, train and
manage its employee base and (iii) its ability to successfully enhance its
operational, customer support and management systems and adapt those systems,
as necessary, to respond to changes in its business. There can be no assurance
that the Company will be able to manage its recent or any future expansion
successfully, and any inability to do so could have a material adverse effect
on the Company. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business--Industry Overview--
Evolution of the Teleservices Industry."

DEPENDENCE ON TECHNOLOGY

The Company has made significant investments in sophisticated and
specialized telecommunications and computer technology, and has focused on the
application of this technology

8
<PAGE>

to provide customized solutions to meet its clients' needs. The Company
anticipates that it will be necessary to continue to select, invest in and
develop new and enhanced technology on a timely basis in the future to
maintain its competitiveness. There can be no assurance that the Company will
be successful in anticipating technological changes or in selecting and
developing new and enhanced technology on a timely basis or at all. The
Company relies on a combination of trade secret, copyright and trademark laws,
nondisclosure and other contractual provisions and technical measures to
protect its proprietary rights utilized in connection with the delivery of its
services. There can be no assurance that these protections will be adequate to
protect its proprietary rights or that the Company's competitors will not
independently develop methods and technology that are substantially equivalent
or superior to the Company's. Although the Company believes that its
trademarks and other proprietary rights do not infringe upon the proprietary
rights of third-parties, there can be no assurance that third-parties will not
assert infringement claims against the Company. See "Business--Proprietary
Rights and Licenses" and "--Technology/Systems Development."

DEPENDENCE ON TELEPHONE SERVICE

The Company's business is significantly dependent on service provided by
long-distance and local telephone companies. A significant portion of the
Company's costs are associated with such telephone services. A significant
increase in the cost of telephone services that is not recoverable through an
increase in the price of the Company's services, or any significant
interruption in telephone services, could have a material adverse effect on
the Company. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Business--Facilities and Service
Fortification."

RISK OF BUSINESS INTERRUPTION

The Company's business is highly dependent on its computer and telephone
equipment and software systems. Although the Company has made significant
investments to establish and implement systems designed to reduce the risk of
service interruption through the use of back-up systems and redundant
operations, the temporary or permanent loss of such equipment or systems
through casualty or operating malfunction could have a material adverse effect
on the Company. See "Business--Facilities and Service Fortification" and "--
Technology/Systems Development."

DEPENDENCE ON LABOR FORCE

The teleservices industry is very labor intensive and experiences high
personnel turnover. Many of the Company's employees receive modest hourly
wages and a significant number are employed on a part-time basis. A
significant increase in the turnover rate among the Company's employees would
increase the Company's recruiting and training costs and decrease operating
efficiency and productivity. Furthermore, growth in the Company's businesses
will require it to recruit and train qualified personnel at an accelerated
rate from time to time. There can be no assurance that the Company will be
able to continue to recruit, hire, train and retain a sufficient labor force
of qualified employees in order to meet the needs of its business. A
significant portion of the Company's costs consists of wages to hourly
workers. An increase in hourly wages, costs of employee benefits or employment
taxes could have a material adverse effect on the Company. See "Business--
Personnel and Training."

RELIANCE ON MAJOR CLIENTS

A significant portion of the Company's revenue is generated from relatively
few clients. The loss of the largest client or a number of its largest clients
could have a material adverse effect on the Company. The Company's largest
client, AT&T, accounted for approximately 17%, and the Company's ten largest
clients in the aggregate accounted for approximately 50%, of the Company's
revenue in 1995. The Company generally operates under contracts with these
clients which may be terminated on 30-day notice and generally the contracts
are for a term of less than one-year. Subsequent contracts may be subject to
open bidding among the Company and its competitors. See "Business--General."

9
<PAGE>

LEGAL PROCEEDINGS

From time to time, the Company is involved in litigation relating to claims
arising out of its operations in the normal course of business. West
Interactive Corporation is a defendant in a case brought in the United States
District Court for the Southern District of Georgia, Augusta Division, on
September 12, 1991, captioned Lamar Andrews, individually and as
Representative of a Class of All Other Persons Similarly Situated, Plaintiff
v. American Telephone & Telegraph Company, et al., Defendants, No. CV 191-175.
The District Court certified a master class of all persons who paid for one or
more 900 number calls pertaining to programs offering sweepstakes, games of
chance, awards, cash or other prizes, gifts or information on unclaimed funds.
These calls were billed and collected by AT&T and U.S. Sprint Communications
Company Limited Partnership ("Sprint"). The District Court also certified a
sub-class of those persons who paid, in the State of Georgia, for one or more
such calls billed and collected by AT&T or Sprint. The complaint alleges that
the programs at issue involved, among other things, acts of unlawful gambling,
mail fraud and wire fraud in violation of the Racketeer Influenced and Corrupt
Organizations Act ("RICO"), the Communications Act of 1934, the federal common
law of communications and other state and federal laws. West Interactive
Corporation provided interactive voice processing and billing services to a
customer which conducted some of the programs at issue in the litigation. The
billing services were provided through AT&T. The action seeks recovery of
treble damages (which amount has not been specified), punitive damages, costs
and attorneys' fees. The Company's potential liability and expenses in this
matter are not covered by insurance. On September 19, 1996, the United States
Court of Appeals for the Eleventh Circuit reversed the District Court's order
certifying the classes on the ground that the class action would be
unmanageable. The plaintiffs have sought a rehearing before the Court of
Appeals. See "Business--Legal Proceedings." The Company cannot predict the
ultimate outcome of this case or the magnitude of any potential damages or
costs payable by the Company. The Company believes that the decision by the
United States Court of Appeals is a favorable development and intends to
vigorously contest the claims made in this case.

CONTROL BY EXISTING STOCKHOLDERS

Upon completion of this Offering, Gary L. West and Mary E. West will
beneficially own an aggregate of approximately 72.8% of the shares of
outstanding Common Stock (approximately 71.8% if the Underwriters' over-
allotment option is exercised in full). As a result, these stockholders are
able to elect the entire Board of Directors and to control the outcome of
virtually all other matters requiring stockholder approval. Such voting
concentration may have the effect of delaying or preventing a change in
control of the Company. See "Management--Executive Officers and Directors" and
"Principal Stockholders."

CERTAIN ANTI-TAKEOVER CONSIDERATIONS

Certain provisions of the Company's Restated Certificate of Incorporation
and Restated Bylaws could have the effect of making it more difficult for a
third-party to acquire, or of discouraging a third-party from attempting to
acquire, control of the Company. Such provisions could limit the price that
certain investors might be willing to pay in the future for shares of the
Common Stock. These provisions include a staggered board, restrictions on who
may call a special meeting of stockholders, and advance notice procedures with
regard to the nomination of candidates for election as directors and of
certain matters to be brought before an annual or special meeting of
stockholders. Certain other provisions allow the Company to issue Preferred
Stock with rights senior to those of the Common Stock without any further vote
or action by the stockholders and impose various procedural and other
requirements that could make it more difficult for stockholders to affect
certain corporate actions. These provisions could also have the effect of
delaying or preventing a change in control of the Company. The issuance of
Preferred Stock could decrease the amount of earnings and assets available for
distribution to the holders of Common Stock or could adversely affect the
rights and powers, including voting rights, of the holders of the Common
Stock. In certain circumstances, such issuance could have

10
<PAGE>

the effect of decreasing the market price of the Common Stock. The Company has
no present plans to issue any shares of Preferred Stock. In addition, the
Company is subject to the provisions of Section 203 of the Delaware General
Corporation Law, which could have similar anti-takeover effects. See
"Description of Capital Stock--Preferred Stock," "--Restated Certificate and
By-law Provisions Affecting Change in Control" and "--Section 203 of the
Delaware General Corporation Law."

GOVERNMENT REGULATION

The Company's industry has become subject to an increasing amount of federal
and state regulation in the past five years. The Federal Communications
Commission's (the "FCC") rules under the Federal Telephone Consumer Protection
Act of 1991 limit the hours during which telemarketers may call consumers and
prohibit the use of automated telephone dialing equipment to call certain
telephone numbers. The Federal Telemarketing and Consumer Fraud and Abuse
Prevention Act of 1994 (the "TCFAPA") broadly authorizes the Federal Trade
Commission (the "FTC") to issue regulations prohibiting misrepresentations in
telephone sales. The FTC's new telemarketing sales rules mandate that certain
affirmative disclosures be made in telephone sales, prohibit
misrepresentations of the cost, terms, restrictions, performance or duration
of products or services offered by telephone solicitation and specifically
address other perceived telemarketing abuses in the offering of prizes and the
sale of business opportunities or investments. While the FTC's new rules have
not caused the Company to alter its operating procedures, there can be no
assurance that additional federal or state legislation, or changes in
regulatory implementation, would not limit the activities of the Company or
its clients in the future or significantly increase the cost of regulatory
compliance.

Several of the industries in which the Company's clients operate are subject
to varying degrees of government regulation, particularly the insurance and
financial services industries. The Company could be subject to a variety of
enforcement or private actions for its failure or the failure of its clients
to comply with such regulations. The Company's telephone representatives who
sell insurance products are required to be licensed by various state insurance
commissions and to participate in regular continuing education programs, thus
requiring the Company to comply with the extensive regulations of these state
commissions. As a result, changes in these regulations or their implementation
could materially increase the Company's operating costs or otherwise have a
material adverse effect on the Company. A state insurance department is
reviewing certain practices and procedures used by the Company. The Company is
working with the insurance department to comply with all regulations. Based on
its experience in other states, its understanding of the resolutions of
similar reviews of other companies and the advice of legal counsel, the
Company believes that this matter is not likely to have a material adverse
effect on the Company. However, the Company can give no assurances regarding
the ultimate outcome of this matter. See "Business--Government Regulation."

NO PRIOR PUBLIC MARKET; POTENTIAL VOLATILITY OF STOCK PRICE

Prior to this Offering, there has been no public market for the Common
Stock, and there can be no assurance that an active trading market for the
Common Stock will develop or be sustained after this Offering. The initial
public offering price of the Common Stock offered hereby will be determined by
negotiations between the Company and representatives of the Underwriters and
may bear no relationship to the trading prices of the Common Stock after this
Offering. See "Underwriting" for a description of certain factors to be
considered in determining the initial public offering price for the Common
Stock. The trading price of the Common Stock could be subject to significant
fluctuations in response to actual or anticipated variations in the Company's
quarterly operating results and other factors, such as the introduction of new
products and services or technological innovations by the Company or its
competitors, changes in other conditions or trends in the Company's industry
or in the industries of the Company's client base, changes in governmental
regulation, or changes in securities analysts' estimates of the Company's, its
competitors', or the industry's future performance. General stock market price
declines or market volatility in the future, often unrelated to the operating
performance of particular companies, or future declines or volatility in the
prices of stocks for

11
<PAGE>

companies in the Company's industry or sector, could also affect the market
price of the Common Stock. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Underwriting."

SHARES ELIGIBLE FOR FUTURE SALE

Sales of a substantial number of shares of Common Stock in the public market
following this Offering, or the perception that such sales could occur, could
adversely affect prevailing market prices for the Common Stock. Of the
62,475,000 shares of Common Stock to be outstanding after this Offering, the
5,700,000 shares of Common Stock to be sold in this Offering will be freely
tradeable without restriction under the Securities Act of 1933, as amended
(the "Securities Act"). Of the remaining 56,775,000 outstanding shares of
Common Stock, 53,967,513 shares will be subject to lock-up agreements under
which the holders of such shares have agreed not to sell or otherwise dispose
of any of their shares for a period of 180 days after the date of this
Prospectus without the prior written consent of Goldman, Sachs & Co., except
under limited circumstances. Upon expiration of the lock-up agreements, the
53,967,513 shares of Common Stock will become eligible for sale in the public
market, subject to the provisions of Rule 144 under the Securities Act. Such
shares, however, will not become eligible for sale in the public market under
Rule 144 as currently in effect and interpreted by the staff of the Securities
and Exchange Commission (the "Commission") until November 25, 1998. The
Company intends to file a registration statement under the Securities Act
covering the sale of shares reserved for issuance under the Company's 1996
Stock Incentive Plan and shares to be reserved for future issuance under the
1996 Stock Incentive Plan. The Company has granted certain stockholders
registration rights with respect to approximately 56,775,000 shares of Common
Stock. The sale of such shares could have a material adverse effect on the
Company's ability to raise capital. See "Management--Executive Compensation--
1996 Stock Incentive Plan," "Description of Capital Stock--Registration
Rights," "Certain Transactions--Registration Rights," "Underwriting" and
"Shares Eligible for Future Sale."

IMMEDIATE AND SUBSTANTIAL DILUTION TO NEW INVESTORS

Purchasers of the shares of Common Stock offered hereby will incur immediate
and substantial dilution in the pro forma net tangible book value per share of
Common Stock from the initial public offering price. See "Dilution."

REORGANIZATION AND TERMINATION OF S CORPORATION STATUS

Prior to the closing of this Offering, each of the stockholders of West
Telemarketing Corporation ("Inbound Corp."), West Interactive Corporation
("Interactive Corp.") and West Telemarketing Corporation Outbound ("Outbound
Corp.") will exchange the capital stock of such company owned by such
stockholder for shares of Common Stock such that each of the foregoing
companies will become wholly owned subsidiaries of the Company.
Simultaneously, the stockholders of Interactive Billing Services, Inc. ("IBS")
and West Interactive Canada, Inc. ("Canada") will transfer their shares of
capital stock of IBS and Canada to Interactive Corp. for nominal cash
consideration such that each of the foregoing companies will become wholly
owned subsidiaries of Interactive Corp. (such stock transfer together with the
stock exchange described above, the "Reorganization"). In connection with
the Reorganization, approximately 24,776,610 shares of Common Stock will be
issued in exchange for the capital stock of Inbound Corp., 22,335,285 shares
of Common Stock will be issued in exchange for the capital stock of
Interactive Corp., and 9,663,105 shares of Common Stock will be issued
in exchange for the capital stock of Outbound Corp. Based on the initial
public offering price, such issuances represent approximately $445,978,980
worth of Common Stock for Inbound, approximately $402,035,130 worth of Common
Stock for Interactive and approximately $173,935,890 worth of Common Stock for
Outbound. The number of shares of Common Stock issued for the capital stock of
such companies in the Reorganization was determined based upon mutual
agreement among the existing stockholders. Since its respective date of
incorporation and through the date immediately

12
<PAGE>

preceding the effective date of the Reorganization (the "Termination Date"),
each of Inbound Corp., Interactive Corp., Outbound Corp., IBS and Canada has
been treated for federal income tax purposes as an S Corporation under the
Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"). As
such, the existing stockholders have been and are required to pay taxes based
on each of the companies' respective earnings through the Termination Date,
whether or not such amounts have been distributed to the stockholders.

Prior to the Reorganization, Gary L. West and Mary E. West beneficially
owned in the aggregate greater than 73.0%, and Troy L. Eaden beneficially
owned 15.0%, of the outstanding shares of common stock of each of the
foregoing companies. Following consummation of the Reorganization, but prior
to this Offering, Gary L. West and Mary E. West will beneficially own in the
aggregate approximately 80.1%, and Troy L. Eaden will beneficially own
approximately 15.0%, of the shares of Common Stock of the Company.

The Company does not intend to make any changes to the management of the
Company nor consolidate the operation of the businesses in connection with the
Reorganization. Upon consummation of the Reorganization, the Company's
principal assets will be the capital stock of Inbound Corp., Interactive Corp.
and Outbound Corp. and the Company intends to operate through these
subsidiaries. Inbound Corp. provides inbound operator teleservices,
Interactive Corp. provides automated voice response teleservices, Outbound
Corp. provides outbound direct teleservices, IBS provides billing and
collecting services to local exchanges with respect to pay per call events and
Canada provides large volume automated voice response services within the
territory of Canada. The Company does not intend to change the operations of
these companies in connection with the Reorganization. See "Business--
Description of Services."

Each of Inbound Corp., Outbound Corp. and Interactive Corp. (the "West
Affiliates") has made periodic distributions to its existing stockholders in
amounts approximately equal to the stockholders' corresponding tax liabilities
associated with the Company's earnings plus amounts representing a portion of
retained earnings. The West Affiliates made aggregate distributions of $5.4
million, $8.1 million, $10.5 million, $16.0 million and $25.1 million for the
years ended December 31, 1991, 1992, 1993, 1994 and 1995, respectively, and
$30.4 million through September 30, 1996. On October 31, 1996, each of the
West Affiliates declared one or more dividends payable to its current
stockholders (the West Affiliates' dividends collectively, the "First
Dividend"). The First Dividend was equal to the West Affiliates' retained
earnings as of September 30, 1996, to the extent such retained earnings have
not previously been distributed, along with a distribution representing a
return of additional paid-in capital contributed by the West Affiliates'
existing stockholders. Each of the West Affiliates has paid its portion of the
First Dividend to each of its stockholders in cash or through a note payable
issued by such West Affiliate (the West Affiliates' notes payable
collectively, the "Stockholders Notes"). The First Dividend was equal to
approximately $45.9 million, of which approximately $2.0 million was paid in
cash and approximately $43.9 million was paid through the Stockholders Notes.
The Company estimates that the Stockholders Notes will be paid by a portion of
the net proceeds to be received by the Company from this Offering. Prior to
the closing of the Reorganization, each of the West Affiliates declared one or
more additional dividends payable to its current stockholders (the West
Affiliates' dividends collectively, the "Second Dividend"). The Second
Dividend was equal to the West Affiliates' retained earnings as of November
25, 1996 prior to conversion of each of the West Affiliates to a C
Corporation, to the extent such retained earnings had not previously been
distributed, along with a distribution representing a return of additional
paid-in capital contributed by the West Affiliates' existing stockholders. The
Second Dividend was equal to approximately $6.4 million as of the Termination
Date. Each of the West Affiliates paid its portion of the Second Dividend to
each of its stockholders in cash and from existing working capital. See "Use
of Proceeds" and "Certain Transactions--Reorganization and Termination of S
Corporation Status."

Subsequent to the Termination Date, neither the Company nor any of the West
Affiliates will be an S Corporation and, accordingly, each will be subject to
federal and state income taxes. Other than

13
<PAGE>

payment of the Stockholders Notes, upon closing of this Offering, the Company
will have no liabilities with respect to distributions to the West Affiliates,
the IBS or the Canada stockholders except as set forth in this section.

In addition, each of the West Affiliates, Canada and IBS, as a result of
termination of its S Corporation status, will record a net deferred income tax
liability and corresponding income tax expense (the "Deferred Tax Liability")
effective upon the Termination Date. The amount of the Deferred Tax Liability
would have been approximately $2.1 million if the Termination Date had been
September 30, 1996, but the actual amount will be adjusted to reflect the
effect of the Company's actual operations results through the Termination
Date.

USE OF PROCEEDS

The net proceeds to the Company from the sale of shares of Common Stock
offered by the Company are estimated to be approximately $93.5 million
(approximately $107.9 million if the over-allotment option is exercised in
full), after deducting underwriting discounts and offering expenses. The
Company intends to use the net proceeds as follows: (i) approximately $27.6
million will be used to repay outstanding debt including (a) $6.0 million
expected to be outstanding at the closing of this Offering under an $8 million
revolving credit facility (the "First Credit Facility"), (b) $4.5 million
expected to be outstanding at the closing of this Offering under a $4.5
million revolving credit facility (the "Second Credit Facility"), (c) $11.0
million in bank term loans, and (d) $6.1 million in capital leases;
(ii) approximately $43.9 million will be used to repay the Stockholders Notes;
and (iii) the balance will be used for working capital and general corporate
purposes including possible acquisitions. The Company has no present
understandings, commitments or agreements, nor is it currently in negotiations
with respect to, any acquisition. The Company intends to keep the First Credit
Facility and the Second Credit Facility available for future borrowings and
intends to renew each of these facilities upon expiration.

The First Credit Facility expires in June 1997 and bears interest at .25%
below the prime rate (actual rate 8.0% at September 30, 1996). The Second
Credit Facility expires in July 1997 and bears interest at .50% below the
prime rate (actual rate 7.75% at September 30, 1996). The Stockholders Notes,
which were incurred to pay the dividend, mature in October 2002 and bear
interest at 7.0%. The Company intends (a) to retire $6.1 million of various
capital leases bearing interest at 7.0% to 9.9%, (b) to repay a $4.9 million
bank note which matures in February 2001 and bears interest at 7.5%, (c) to
repay a $2.2 million bank note which matures in June 1999 and bears interest
at the prime rate, which was 8.25% at September 30, 1996, (d) to repay a $1.5
million bank note which matures in June 1999 and bears interest at the prime
rate, which was 8.25% at September 30, 1996, (e) to repay a $1.7 million bank
note which matures in June 1999 and bears interest at the prime rate, which
was 8.25% at September 30, 1996, and (f) to repay a $673,000 mortgage note
which matures in April 1999 and bears interest at the prime rate, which was
8.25% at September 30, 1996. All long-term borrowings incurred within the last
year were used for working capital. Pending application of the proceeds as
described above, the net proceeds of this Offering will be invested in short-
term, interest-bearing securities.

DIVIDEND POLICY

The Company currently intends to retain earnings to finance the growth and
development of its business and for working capital and general corporate
purposes, and does not anticipate paying cash dividends on the Common Stock in
the foreseeable future. Any payment of dividends will be at the discretion of
the Company's 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. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" and "--Capital Expenditures."

14
<PAGE>

CAPITALIZATION

The following table sets forth short-term debt and the capitalization of the
Company as of September 30, 1996 (i) on a historical basis, (ii) on a pro
forma basis giving effect to the Reorganization, and (iii) on a pro forma
basis as adjusted to reflect the sale by the Company of 5,700,000 shares of
Common Stock pursuant to this Offering at the initial public offering price,
the application of the estimated net proceeds therefrom and the increase in
additional paid-in capital to give effect to the accounting for the minority
interest under the purchase method of accounting. See "Reorganization and
Termination of S Corporation Status," "Certain Transactions--Reorganization
and Termination of S Corporation Status," and "Use of Proceeds." This table
should be read in conjunction with the Combined Financial Statements and Notes
thereto appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
--------------------------------------
PRO FORMA
HISTORICAL PRO FORMA(1) AS ADJUSTED(2)
---------- ------------ --------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalents............... $13,080 $11,080 $ 36,428
======= ======= ========
Short-term debt:(3)
Notes payable--bank.................... $ 6,000 $ 6,000 $ --
Notes payable--financing............... 13,431 13,431 13,431
Current maturities of long-term debt... 2,422 2,422 --
Current obligations under capital
leases(4)............................. 7,389 7,389 3,363
------- ------- --------
Total short-term debt................. $29,242 $29,242 $ 16,794
======= ======= ========
Long-term obligations; less current
maturities:(3)
Obligations under capital leases, less
current maturities(4)................. $ 9,213 $ 9,213 $ 6,357
Long-term debt, less current
maturities............................ 8,958 8,958 --
Notes payable--stockholders............ -- 43,879 --
------- ------- --------
Total long-term obligation, less
current maturities................... $18,171 $62,050 $ 6,357
======= ======= ========
Total debt.............................. 47,413 91,292 23,151
------- ------- --------
Stockholders' equity:
Preferred stock, par value $.01 per
share, 10,000,000 authorized shares,
no shares issued and outstanding...... -- -- --
Common stock, par value $.01 per share,
200,000,000 authorized shares; 1,000
shares issued and outstanding actual;
56,775,000 shares issued and
outstanding pro forma, and 62,475,000
shares issued and outstanding pro
forma as adjusted..................... 50 50 625
Additional paid-in capital............. 5,261 -- 143,449
Retained earnings...................... 40,486 (2,207) (2,207)
------- ------- --------
Total stockholders' equity.............. 45,797 (2,157) 141,867
------- ------- --------
Total capitalization.................... $93,210 $89,135 $165,018
======= ======= ========
</TABLE>
- --------
(1) Reflects the effects of the Reorganization, including payment of the First
Dividend through cash and the Stockholders Notes and the incurrence of the
Deferred Tax Liability.
(2) Reflects the effects of (1), the application of the estimated net proceeds
from this Offering and the increase in additional paid-in capital to give
effect to the accounting for the minority interest under the purchase
method of accounting.
(3) See Notes B, C and D to Combined Financial Statements for information
concerning the Company's short-term debt, long-term debt and capitalized
lease obligations.
(4) The Company estimates that there will be approximately $8.9 million
outstanding under capital leases at the closing of this Offering.

15
<PAGE>

DILUTION

The net tangible book value of the Company as of September 30, 1996 was
approximately $45.4 million, or $.80 per share of Common Stock. Pro forma net
tangible book value per share represents the amount of total assets less total
liabilities, divided by the number of shares of Common Stock outstanding as of
September 30, 1996, on a pro forma basis before giving effect to the First
Dividend and deferred taxes associated with the Reorganization and this
Offering. After giving effect to the Reorganization, including the First
Dividend, and the receipt by the Company of the net proceeds from the sale of
5,700,000 shares of Common Stock offered by the Company hereby, and after
deducting the estimated underwriting discount and offering expenses to be paid
by the Company, the pro forma as adjusted net tangible book value of the
Company as of September 30, 1996, would have been $90.9 million, or $1.45 per
share. This represents an immediate increase in net tangible book value of
$.69 per share to existing stockholders and an immediate dilution of $16.55
per share to new investors purchasing shares at the initial public offering
price. The following table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............... $18.00
Pro forma net tangible book value per share as of September
30, 1996, before this Offering and the Reorganization...... $ .80
Decrease per share attributable to the First Dividend and
deferred taxes(1).......................................... (.80)
Increase per share attributable to new investors............ 1.45
-----
Pro forma net tangible book value per share as of September
30, 1996, after this Offering and the Reorganization......... 1.45
------
Dilution per share to new investors........................... $16.55
======
</TABLE>
- --------
(1) Includes amounts necessary to pay the First Dividend and record deferred
income taxes upon conversion of each of the West Affiliates, Canada and
IBS from an S Corporation to a C Corporation. See "Reorganization and
Termination of S Corporation Status," "Certain Transactions--
Reorganization and Termination of S Corporation Status."

The following table sets forth, on a pro forma basis as of September 30,
1996, after giving effect to the Reorganization, including the First Dividend,
the number of shares of Common Stock purchased from the Company, the total
consideration paid to the Company and the average price per share paid by
existing stockholders and by the new investors purchasing shares of Common
Stock from the Company in this Offering (before deducting the estimated
underwriting discount and offering expenses to be paid by the Company):

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
------------------ -------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ------------ ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders... 56,775,000 91.0% $ 50,000 -- --
New investors........... 5,700,000 9.0 102,600,000 100% $18.00
---------- ---- ------------ ---
Total................. 62,475,000 100% 102,650,000 100%
========== ==== ============ ===
</TABLE>

The foregoing tables assume no exercise of the Underwriters' over-allotment
option or of any outstanding options.

16
<PAGE>

SELECTED COMBINED FINANCIAL AND OPERATING DATA

The selected historical financial and operating data below for the periods
and at the dates indicated should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the financial statements and notes thereto included elsewhere in this
Prospectus. The Combined Financial Statements of the Company as of and for the
nine months ended September 30, 1996 and the unaudited Combined Financial
Statements as of and for the nine months ended September 30, 1995 reflect all
adjustments necessary in the opinion of the Company's management (consisting
only of normal recurring adjustments), for a fair presentation of such
financial data. The data is presented on a combined basis giving effect to the
Reorganization. The selected combined historical financial data for each of
the five fiscal years in the period ended December 31, 1995 and nine months
ended September 30, 1996 are derived from audited Combined Financial
Statements of the Company.

The pro forma unaudited combined financial and operating data has been
derived from the audited and unaudited financial statements of the Company and
should be read in conjunction with the pro forma unaudited consolidated
financial data and notes thereto included elsewhere in this Prospectus. The
pro forma results of operations for the fiscal year ended December 31, 1995
and the nine months ended September 30, 1996 are not necessarily indicative of
the results of operations that would have been achieved had the transactions
reflected therein been consummated prior to the periods in which they were
completed, or that might be attained in the future.
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
---------------------------------------------------------- -----------------------------
PRO FORMA PRO FORMA
1991 1992 1993 1994 1995 1995(8) 1995 1996 1996(8)
------- -------- -------- -------- -------- --------- -------- -------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AND SELECTED OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenue................ $69,873 $101,208 $142,508 $186,512 $256,894 $256,894 $187,332 $235,188 $235,188
Cost of services....... 38,579 56,181 77,785 102,707 146,531 146,531 106,481 134,048 134,048
Selling, general and
administrative
expenses.............. 21,675 32,789 45,041 51,904 70,575 72,259 49,887 63,071 64,334
Litigation settlement.. -- -- 4,400 -- -- -- -- -- --
------- -------- -------- -------- -------- -------- -------- -------- --------
Net operating income... 9,619 12,238 15,282 31,901 39,788 38,104 30,964 38,069 36,806
Net other (expense).... (704) (600) (1,020) (1,195) (3,050) (3,050) (2,241) (2,089) (2,089)
------- -------- -------- -------- -------- -------- -------- -------- --------
Net income before pro
forma tax
provision(1).......... 8,915 11,638 14,262 30,706 36,738 35,054 28,723 35,980 34,717
Pro forma provision for
income taxes(1)....... 2,326 2,832 5,234 10,900 13,130 13,130 10,404 12,740 12,740
------- -------- -------- -------- -------- -------- -------- -------- --------
Pro forma net
income(1)............. $ 6,589 $ 8,806 $ 9,028 $ 19,806 $ 23,608 21,924 $ 18,319 $ 23,240 21,977
======= ======== ======== ======== ======== ======== ======== ======== ========
Pro forma net income
per share(1)(2)....... $ .40 $ .37 $ .31 $ .39 $ .37
======== ======== ======== ======== ========
Weighted average common
shares outstanding.... 59,324 59,324 59,324 59,324 59,324
======== ======== ======== ======== ========
SUPPLEMENTARY PRO FORMA
DATA(3):
Net income............. $ 25,170 $ 23,486 $ 19,493 $ 24,330 $ 23,067
======== ======== ======== ======== ========
Net income per common
share................. .41 .39 .32 .40 .38
======== ======== ======== ======== ========
Weighted average common
shares outstanding.... 60,857 60,857 60,857 60,857 60,857
======== ======== ======== ======== ========
SELECTED OPERATING DATA:
Operating margin....... 13.8% 12.1% 10.7% 17.1% 15.5% 16.5% 16.2%
Number of workstations
(at end of period).... 973 1,693 2,095 2,228 3,158 2,894 4,015
Number of ports(4) (at
end of period)........ 1,380 2,070 2,530 3,496 3,870 3,496 5,372
</TABLE>

17
<PAGE>

(1) Prior to the Reorganization, each of the West Affiliates, Canada and IBS
were S Corporations that were not subject to federal and certain state
corporate income taxes. The income statement data reflects a pro forma
provision for income taxes as if the reorganized Company had been subject
to federal and state corporate income taxes for all periods. The pro forma
provision for income taxes represents a combined federal and state tax
rate. See "Reorganization and Termination of S Corporation Status,"
"Certain Transactions--Reorganization and Termination of S Corporation
Status" and Note J to Combined Financial Statements.
(2) Pro forma net income per share amounts were calculated using 59,324
shares, the number of shares of Common Stock outstanding after giving
effect to the Reorganization plus those shares necessary to be issued in
this Offering to fund payment of certain notes payable to existing
stockholders of three of the Company's affiliates equal to $43.88 million,
payment of cash dividends of $2.0 million and the net deferred income tax
liability and corresponding income tax expense to be recorded by each of
five of the Company's affiliates as a result of its termination of S
Corporation status. See "Reorganization and Termination of S Corporation
Status" and "Certain Transactions--Reorganization and Termination of S
Corporation Status."
(3) Supplementary pro forma net income per share amounts were calculated using
60,857 shares, the number of shares of Common Stock outstanding after
giving effect to the Reorganization plus those shares necessary to be
issued in this Offering to fund payment of certain notes payable to
existing stockholders of three of the Company's affiliates equal to $43.88
million, cash dividends of $2.0 million and the application of the
estimated proceeds of this Offering to repay certain debt of the Company
as if such application occurred on January 1, 1995 as described under "Use
of Proceeds."
(4) A port is a computer's digital interface to a single telephone line for
automated voice response call-processing.
(5) Adjusted to give effect to the Reorganization. See "Reorganization and
Termination of S Corporation Status" and "Certain Transactions--
Reorganization and Termination of S Corporation Status."
(6) Adjusted to give effect to payment of certain notes payable to existing
stockholders of three of the Company's affiliates equal to $43.88 million,
payment of cash dividends of $2.0 million and the net deferred income tax
liability and corresponding income tax expense to be recorded by each of
five of the Company's affiliates as a result of its termination of S
Corporation status related to the Reorganization, this Offering and the
application of the estimated net proceeds therefrom as set forth under
"Use of Proceeds."
(7) See "Capitalization" and Notes B, C and D to Combined Financial
Statements.
(8) Adjusted to give effect to the accounting for the minority interest under
the purchase method of accounting. Accordingly, Goodwill of $50,535 was
recorded and is being amortized over 30 years. Pro forma Amortization
Expenses totaled $1,684 and $1,263 for the year ended December 31, 1995
and the nine months ended September 30, 1996, respectively.

18
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

The following discussion of the Company's historical results of operations
and of its liquidity and capital resources should be read in conjunction with
"Selected Combined Financial and Operating Data" and the Combined Financial
Statements and Notes thereto appearing elsewhere in this Prospectus.

OVERVIEW

West Telemarketing Corporation was formed in 1986 and, together with its
affiliates, is one of the largest independent teleservices companies in the
United States. During the first nine months of operations, the Company focused
its resources on designing and building an automated call- processing platform
to effectively manage large volumes of inbound calls ("Inbound"). In January
1989, the Company began offering automated voice response services utilizing
its own proprietary technology platform ("Interactive"). In May 1990, the
Company began offering outbound teleservices utilizing state-of-the-art
workstations staffed by highly trained teleservices representatives
("Outbound"). The Company is a leading provider of each of these services to
businesses on an outsourced basis. The Company also believes it has
established a distinct competitive advantage in its ability to offer a range
of services through its three operating divisions (Inbound, Interactive and
Outbound) on a fully integrated basis.

REVENUE: Inbound services represented approximately 30.0% and 28.9% of total
revenue for the nine months ended September 30, 1996 and for the year ended
December 31, 1995, respectively. Revenue for inbound services is primarily
generated on the basis of the number of calls received and processed on behalf
of clients. The Company also generates revenue by providing assistance to
clients in the design and implementation of new applications.

Interactive services represented approximately 42.0% and 38.4% of total
revenue for the nine months ended September 30, 1996 and for the year ended
December 31, 1995, respectively. Revenue for interactive services is primarily
generated on the basis of total billable minutes as measured between a caller
and the Company's automated voice response units. The Company also generates
revenue by providing billing and collection services for pay per call
programs.

Outbound services represented approximately 28.0% and 32.7% of total revenue
for the nine months ended September 30, 1996 and for the year ended December
31, 1995, respectively. Revenue for outbound services is generated on an
hourly basis as calls are placed by the Company's marketing representatives on
behalf of its clients. The Company also generates revenue by providing
assistance to its clients in the design and programming of customized
applications.

EXPENSES: Costs of telecommunications services incurred by the Company are
primarily comprised of long distance transmission charges. The Company
effectively manages its telecommunications costs through a long-term services
contract with AT&T which includes an established rate schedule subject to
certain call volume commitments. As one of the largest clients of AT&T, the
Company believes it has negotiated a favorable contract at an attractive
service rate. The Company has also entered into a number of equipment
maintenance and network management contracts with AT&T in order to facilitate
reliable and efficient network operations. Rates for telecommunications
services are primarily determined by total call volume and level of network
management and technical support under contract. See "Business--Facilities and
Service Fortification."

The Company manages its direct labor costs through its flexible staffing and
scheduling initiatives. In particular, the Company has developed its own
proprietary scheduling systems which are designed

19
<PAGE>

to optimize staffing and pay levels in anticipation of fluctuating call
volumes as clients' campaigns are scheduled. The Company seeks to control its
direct labor costs by decentralizing its operations and by seeking new
geographic markets which offer attractive labor market characteristics for its
Inbound and Outbound services. Direct labor rates fluctuate based upon local
market factors such as the size and availability of a part-time workforce in
addition to local economic growth. Labor rates are adjusted, as necessary, to
attract the required number of service representatives during seasonal
fluctuations. See "Business--Call Management Systems."

Selling, general and administrative expenses consist of all expenses that
support the ongoing operation of the Company. These expenses include costs
related to division management, facilities costs, equipment depreciation and
maintenance, allowance for doubtful accounts, sales and marketing activities,
client support services, and corporate management costs. Changes in selling,
general and administrative expenses primarily reflect the addition of new
facilities over certain periods or expanded marketing activities.

Each of the West Affiliates has been treated for federal income tax purposes
as an S Corporation under the Internal Revenue Code. As a result, the
stockholders of each of the West Affiliates, rather than the West Affiliates,
have paid all federal income tax on the West Affiliates' income. Each of the
West Affiliates has made periodic distributions to its stockholders in amounts
approximately equal to its stockholders' corresponding tax liabilities
associated with such companies' earnings plus amounts representing a portion
of retained earnings. Additionally, the Company has earned state income tax
credits in Nebraska under a job creation and investment incentive program. As
a result, the West Affiliates' stockholders have paid little, if any, state
income tax in Nebraska. Subsequent to the Reorganization, the Company will be
considered a C Corporation for federal and state income tax purposes. The
Company will still be eligible for similar tax credits in Nebraska, at least
through 1998, so long as the Company continues to create additional employment
positions within that state. As the Company opens new facilities in states
without job or investment tax credits, or in states with corporate income
taxes, its effective tax rate may increase. See "Reorganization and
Termination of S Corporation Status" and "Certain Transactions--Reorganization
and Termination of S Corporation Status."

20
<PAGE>

RESULTS OF OPERATIONS

The following table sets forth the Combined Statement of Operations Data as
a percentage of revenue for the periods indicated:

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
--------------------------------- -------------------------
PRO FORMA PRO FORMA
1993 1994 1995 1995 1995 1996 1996
----- ----- ----- --------- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue................. 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Cost of services........ 54.6 55.1 57.0 57.0 56.8 57.0 57.0
Selling, general and
administrative
expenses............... 31.6 27.8 27.5 28.0 26.7 26.8 27.3
Litigation settlement... 3.1 -- -- -- -- -- --
----- ----- ----- ----- ----- ----- -----
Net operating income.... 10.7 17.1 15.5 15.0 16.5 16.2 15.7
Net other (expense)..... (0.7) (0.6) (1.2) (1.2) (1.2) (0.9) (0.9)
----- ----- ----- ----- ----- ----- -----
Net income before pro
forma
income tax expense..... 10.0 16.5 14.3 13.8 15.3 15.3 14.8
Pro forma provision for
income taxes........... 3.7 5.9 5.1 5.1 5.5 5.4 5.4
----- ----- ----- ----- ----- ----- -----
Pro forma net income.... 6.3 % 10.6% 9.2 % 8.7 % 9.8 % 9.9 % 9.4 %
===== ===== ===== ===== ===== ===== =====
</TABLE>

NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995

REVENUE: Revenue increased $47.9 million or 25.6% to $235.2 million in the
first nine months of 1996 from $187.3 million in the comparable period of
1995. The increase in revenue included $14.5 million derived from new clients
and $33.4 million derived from existing clients. The overall revenue increase
is attributable to higher call volumes.

COST OF SERVICES: Cost of services represents direct labor, telephone
expense and other costs directly related to teleservices activities. Costs of
services increased $27.5 million or 25.8% for the nine months ended September
30, 1996 to $134.0 million from $106.5 million for the comparable period of
1995. As a percentage of revenue, cost of services remained relatively
unchanged at 57.0% in the nine months ended September 30, 1996 compared to
56.8% in the comparable period of 1995.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ("SG&A"): SG&A expenses
increased by $13.2 million or 26.5% to $63.1 million for the nine months ended
September 30, 1996 from $49.9 million for the comparable period in 1995. As a
percentage of revenue, SG&A expenses increased to 26.8% for the nine months
ended September 30, 1996 from 26.7% for the comparable period in 1995. The
increase is primarily due to an increase in depreciation expense associated
with call center expansion.

NET OPERATING INCOME: Net operating income increased by $7.1 million or
22.9% to $38.1 million for the nine months ended September 30, 1996 from $31.0
million for the comparable period in 1995. As a percentage of revenue, net
operating income declined to 16.2% in the nine months ended September 30, 1996
compared to 16.5% in the comparable 1995 period due to the factors discussed
above.

NET OTHER (EXPENSE): Net other (expense) includes interest income from
short-term investments, interest income from an accounts receivable financing
program (net of the related interest expense to fund the program), interest
expense from short-term and long-term borrowings under credit facilities and
capital leases, state income taxes and other expense. Other expense remained
virtually unchanged at $2.1 million for the nine months ended September 30,
1996.

21
<PAGE>

PRO FORMA NET INCOME: Pro forma net income increased by $4.9 million or
26.8% for the nine months ended September 30, 1996, to $23.2 million from
$18.3 million for the comparable period in 1995. Pro forma net income includes
a provision for income taxes at effective rates of 37.1% for 1996 and 38.3%
for 1995. These rates reflect the combined federal and state income tax rate
of the Company as if it had been treated as a C Corporation. The decrease in
the effective tax rate is attributable to increased tax credits available
under a Nebraska incentive program.

YEARS ENDED DECEMBER 31, 1995 AND 1994

REVENUE: Revenue increased $70.4 million or 37.7% to $256.9 million in 1995
from $186.5 million in 1994. The increase in revenue included $24.2 million
derived from new clients and $46.2 million derived from existing clients. The
overall revenue increase is attributable principally to higher call volumes.

COST OF SERVICES: Cost of services increased $43.8 million or 42.6% to
$146.5 million in 1995 from $102.7 million in 1994. As a percentage of
revenue, cost of services increased to 57.0% in 1995 from 55.1% in 1994. The
increase was primarily attributable to increased labor rates experienced in
the Company's Inbound division, offset partially by lower telephone costs.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: SG&A expenses increased by
$18.7 million or 36.0% to $70.6 million for 1995 from $51.9 million for 1994.
As a percentage of revenue, SG&A expenses decreased to 27.5% in 1995 from
27.8% in 1994. The decrease as a percentage of revenue primarily reflects
greater efficiencies achieved through higher call volumes.

NET OPERATING INCOME: Net operating income increased $7.9 million or 24.8%
to $39.8 million in 1995 from $31.9 million in 1994. As a percentage of
revenue, net operating income decreased to 15.5% in 1995 from 17.1% in 1994
due to the factors discussed above.

NET OTHER (EXPENSE): Net other (expense) increased $1.8 million or 150.0% to
$3.0 million in 1995 from $1.2 million in 1994. This increase was primarily
due to increased interest expense from higher average borrowings outstanding.

PRO FORMA NET INCOME: Pro forma net income increased by $3.8 million or
19.2% to $23.6 million in 1995 from $19.8 million in 1994. Pro forma net
income includes a provision for federal and state income taxes at effective
rates of 38.0% and 36.4% for 1995 and 1994, respectively. These rates reflect
the combined federal and state income tax rate as if the Company had been
treated as a C Corporation, less applicable credits. The increase in the
effective tax rate in fiscal 1995 is attributable to higher state income taxes
due to a larger proportion of total revenues generated outside of Nebraska.

YEARS ENDED DECEMBER 31, 1994 AND 1993:

REVENUE: Revenue increased by $44.0 million or 30.9% to $186.5 million in
1994 from $142.5 million in 1993. The increase in revenue included $25.9
million derived from new clients and $18.1 million derived from existing
clients. The overall revenue increase is attributable to higher call volumes.

COST OF SERVICES: Cost of services increased $24.9 million, or 32.0%, to
$102.7 million in 1994 from $77.8 million in 1993. As a percentage of revenue,
cost of services increased to 55.1% in 1994 from 54.6% in 1993. The increase
is attributable to higher labor costs partially offset by lower telephone
costs.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: SG&A expenses increased by
$6.9 million, or 15.3%, to $51.9 million for 1994 from $45.0 million in 1993.
As a percentage of revenue, SG&A expenses decreased to 27.8% in 1994 from
31.6% in 1993. The decrease as a percentage of revenue

22
<PAGE>

principally reflects improved operating efficiencies and lower bad debt
expense. The decrease in bad debt expense was due to increased retention of
proceeds held in reserve to protect against uncollectible pay per call
billings.

NET OPERATING INCOME: Net operating income increased $16.6 million, or
108.5%, to $31.9 million in 1994 from $15.3 million in 1993. As a percentage
of revenues, net operating income increased to 17.1% in 1994 from 10.7% in
1993. In 1993, the Company recorded a one-time litigation settlement expense
of $4.4 million in connection with certain patent rights on processes used in
Interactive. Excluding the litigation settlement expense, 1993 operating
income margin would have been 13.8%.

NET OTHER (EXPENSE): Net other (expense) remained relatively unchanged at
$1.2 million in 1994 compared to $1.0 in 1993.

PRO FORMA NET INCOME: Pro forma net income increased by $10.8 million, or
120.0% to $19.8 million in 1994 from $9.0 million in 1993. Pro forma net
income includes a provision for federal and state income taxes at effective
rates of 36.4% and 37.0% for 1994 and 1993, respectively. Excluding the after-
tax one-time charge of $2.8 million from the above-noted litigation settlement
in 1993, pro forma net income would have increased $8.0 million or 67.8% in
1994 from an adjusted $11.8 million in 1993.

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary source of liquidity has been cash flow from
operations, supplemented by borrowings under its revolving bank lines of
credit.

The Company's credit facilities consist of $8.0 million and $4.5 million
revolving credit facilities, with outstanding balances of $3.5 million and
$2.5 million, respectively, at September 30, 1996. Advances under the
revolving credit facilities bear interest at the prime rate less 0.25% and
0.50%, respectively. The revolving credit facilities terminate on June 30,
1997, and July 1, 1997, respectively. Aggregate borrowings under the revolving
credit facilities are limited to 80% of eligible accounts receivable. At
September 30, 1996, the Company had term loans with banks that totaled $11.4
million, which were used to fund capital expenditures and real estate
investments. Repayment of all bank debt is secured by the Company's accounts
receivable, equipment, real estate, and other assets. In addition, the
Company's loan agreements contain certain financial covenants and
restrictions.

The Company also has a $30 million revolving bank line used to fund an
accounts receivable financing program offered to certain customers in the pay
per call industry. Borrowings under the facility are limited to a borrowing
base of pledged accounts receivable from certain of the Company's qualified
customers which are assigned by the Company to the bank. The outstanding
borrowings under this facility were $13.4 million at September 30, 1996. This
credit facility expires on June 30, 1997.

Net cash flow from operating activities increased $10.0 million or 38.5% to
$36.0 million for the nine months ended September 30, 1996, compared to $26.0
for the same period in 1995, and was $47.6 million, $33.4 million and $24.8
million for the years ended 1995, 1994 and 1993, respectively. The increase in
each period was due principally to higher net income and depreciation and
amortization each year, partially offset by increased cash used for accounts
receivable resulting from growth in revenue. Cash flow from operating
activities increased in the nine months ended September 30, 1996 compared to
the same 1995 period, due to higher net income and depreciation and
amortization.

Net cash flow used in investing activities was $16.2 million for the nine
months ended September 30, 1996 compared to $10.1 million in the same period
in 1995, and was $14.5 million, $7.9

23
<PAGE>

million, and $6.3 million for the years ended 1995, 1994, and 1993,
respectively. The increase in each period was primarily due to investments in
call centers to support the growth of the business, in addition to the
purchase of real estate in 1993 for $2.5 million and in 1995 for $3.2 million.

Net cash flow used in financing activities was $28.5 million for the nine
months ended September 30, 1996 compared to $21.3 million for the same period
in 1995, and was $25.2 million, $20.6 million and $10.9 million for the years
ended 1995, 1994, and 1993, respectively. The net cash flow used in financing
activities for all periods reflect distributions made to the existing
stockholders to cover tax liabilities as S Corp. stockholders and to provide a
return of capital, offsetting borrowings under the Company's credit
facilities, net of repayments.

The Company intends to use the net proceeds of the Offering as follows: (i)
to repay total outstanding debt of $27.6 million comprised of (a) an aggregate
of $10.5 million outstanding under its revolving credit facilities, (b) $11.0
million in term loans and (c) $6.1 million in outstanding capital leases;
(ii) approximately $43.9 million to repay the remaining balance of the
Stockholders Notes created in connection with the declaration of a dividend to
existing stockholders as part of the conversion of the Company to a C
Corporation. The balance of the net proceeds will be used for working capital
and general corporate purposes. The Company expects to renew its revolving
lines of credit when they expire and believes it could increase the amount of
credit facilities, if needed.

Capital leasing has been used to fund the majority of computer and telephone
equipment, furniture and other equipment placed into service. All capital
leases are for a three-year term with a bargain purchase option. The Company
expects to exercise its right to purchase all equipment financed by leasing
activity at maturity.

Interactive Corp. is a defendant in a case brought in the United States
District Court for the Southern District of Georgia, Augusta Division,
captioned Lamar Andrews, individually and as Representative of a Class of All
Other Persons Similarly Situated, Plaintiff v. American Telephone & Telegraph
Company, et al., Defendants, No. CV 191-175. The Company cannot predict the
ultimate outcome of this case or the magnitude of any potential damages or
costs payable by the Company. The Company, therefore, cannot predict the
affect of this matter on the future operations and financial position of the
Company. See "Business--Legal Proceedings."

CAPITAL EXPENDITURES

The Company's operations will continue to require significant capital
expenditures for capacity expansion and upgrades. Capital expenditures, which
includes the acquisition of equipment through the assumption of capital
leases, were $26.4 million in 1995, $11.5 million in 1994 and $11.5 million in
1993. The Company expects to invest approximately $35 million in capital
expenditures in 1996 (of which $26.7 million was invested through September
30, 1996). The Company projects its capital expenditures for 1997 to be
approximately $44 million, primarily for the capacity expansion and upgrades
at existing facilities and the addition of four new call centers. The Company
expects to use a portion of the proceeds from this Offering to fund 1997
projected capital expenditures, with the balance to be financed through
capital leases.

The Company believes that the cash flow from operations, together with the
net proceeds of this Offering and available borrowings under its credit
facilities will be adequate to meet its capital requirements for the
foreseeable future. The Company does not anticipate that any additional
property or assets of the Company or any of its subsidiaries, which are not
already pledged as collateral securing the credit facilities, will be required
to be pledged or any security interest granted therein, or that any of the
subsidiaries of the Company or any of their affiliates will be required to
guarantee in any additional manner such credit facilities, as a result of or
in connection with the Reorganization.

24
<PAGE>

INFLATION

The Company does not believe that inflation has had a material effect on its
results of operations. However, there can be no assurance that the Company's
business will not be affected by inflation in the future.

NEW ACCOUNTING PRONOUNCEMENT

The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 123, Accounting for Stock-Based Compensation. The
Company is required to adopt this standard for the year ending December 31,
1996. The Company has elected to adopt the disclosure requirement of this
pronouncement. The adoption of this pronouncement will have no impact on the
Company's financial position or results of operations.

25
<PAGE>

BUSINESS

GENERAL

The Company is one of the largest independent teleservices companies in the
United States, and provides a full range of customized telecommunications-
based services to business clients on an outsourced basis. The Company is a
leading provider in each of inbound operator services, automated voice
response services and outbound direct teleservices. Inbound operator services
consist of live operator call-processing applications such as order capture,
customer service and product support. Inbound was established in 1986 with the
goal of becoming the leading inbound teleservices operation in the United
States and represented approximately 28.9% of the Company's revenue in 1995.
Automated voice response services consist of computerized call-processing
applications such as automated product information requests, computerized
surveys and polling, and secure automated credit card activation. Interactive
began operations in 1989 with the goal of establishing the leadership position
in automated voice response services and represented approximately 38.4% of
the Company's revenues in 1995. Outbound direct teleservices consist of live
operator direct marketing applications such as product sales and customer
acquisition and retention campaigns. Outbound began operations in 1990 with
the goal of becoming one of the leading teleservices organizations in the
United States and represented approximately 32.7% of the Company's revenue in
1995. The Company has developed proprietary technology platforms designed to
provide a high degree of automation and reliability in all three of its
businesses. This technology also enables the Company to efficiently integrate
a range of its services. The Company believes that its ability to offer
integrated services for its clients distinguishes it from most of its
competitors.

The Company targets businesses in highly competitive, consumer-based
industries, including telecommunications, insurance, banking, pharmaceuticals,
public utilities, consumer goods and computer software services, that require
large volume applications. Representative clients include: AT&T, America
Online Inc., Commonwealth Edison Company, MBNA Corporation, Merck & Co., Inc.,
Sun Microsystems Inc., Time-Life, Inc. and Turner Broadcasting System, Inc.
The Company's revenue and pro forma net income for 1995 were $256.9 million
and $23.6 million, respectively. The Company's revenue and pro forma net
income for the nine months ended September 30, 1996 were $235.2 million and
$23.2 million, respectively.

The Company operated approximately 4,000 telephone workstations as of
September 30, 1996 in six state-of-the-art call centers located in Nebraska,
Texas and Virginia which it uses for inbound and outbound services, and
maintained approximately 5,400 proprietary interactive voice response ports as
of September 30, 1996 for its automated voice response services. The Company
has deployed multiple automatic call distributors, predictive dialers, a
proprietary interactive voice response platform and multiple mainframe
computer systems, in combination with an intelligent workstation environment,
in order to fully automate and manage the Company's information-processing
requirements. The Company believes it has designed and implemented a
sophisticated technology platform, permitting it to provide flexible, high-
quality and cost-effective service solutions for its clients.

INDUSTRY OVERVIEW

The teleservices industry facilitates direct communication between companies
and their current and prospective customers through telecommunications-based
systems. Industry sources estimate that total media advertising expenditures
(including teleservices expenditures) in the United States were approximately
$263 billion in 1995. Industry sources also estimate that teleservices
expenditures in the United States were approximately $80 billion in 1995.

ADVANTAGES OF TELESERVICES

Many industries, including telecommunications, pharmaceuticals, consumer
goods, banking and insurance, are experiencing increased competition to
attract and retain customers, and accordingly

26
<PAGE>

many businesses are seeking to expand their direct contact with current and
prospective customers. Many of these businesses are allocating more of their
advertising and customer service expenditures to teleservices which
effectively complement other marketing media such as television, radio and
print advertising and enables businesses to quantify and evaluate the
effectiveness of specific marketing expenditures. Teleservices is estimated to
be the leading direct marketing medium by which approximately 81.0 million
consumers purchased goods or services over the telephone in 1995.

EVOLUTION OF THE TELESERVICES INDUSTRY

The teleservices industry has evolved during the past ten years from
primarily single-facility, low technology environments to large, full service
organizations with multi-location, large volume call-processing centers
utilizing advanced systems. Certain independent teleservices providers have
invested an increasing amount of capital in large volume state-of-the-art call
centers and advanced network technology. Larger service providers, which can
achieve greater economies of scale, can more easily justify ongoing investment
in sophisticated call management software, predictive dialers and automatic
call distributors, to better provide premium quality and cost-effective
services. Businesses are seeking to provide greater information for consumers
to make informed purchase decisions as product and service offerings become
more complex and varied. As an example, it is estimated that in the mid-1980's
only 5% of United States companies offered toll-free lines as compared to
approximately 75% today. These toll-free lines are estimated to handle an
average of 60 million calls per day. Finally, businesses are increasingly
recognizing the economic benefits of expanding relationships with existing
customers through teleservices such as customer retention campaigns.

ROLE OF OUTSOURCING

Businesses historically have relied on in-house personnel to provide most
telephone-based services. Industry sources estimate that expenditures for the
"non-captive" portion of the industry, which is serviced on an outsourced
basis by independent teleservices companies, were approximately $6 billion in
1995 (or 8% of the estimated total industry). Based on discussions with its
clients and prospective clients, the Company believes that businesses are
increasingly outsourcing their teleservices activities in order to focus their
internal resources on their core competencies, to increase the productivity of
their marketing services and to reduce overall teleservices expenditures.
Providers of outsourced teleservices can offer clients lower overall
teleservices costs due to economies of scale in sharing the cost of new
technology among a larger base of users and higher capacity utilization rates.
The overall teleservices market is estimated to grow at approximately 8% per
year for the next five years.

COMPANY STRATEGY

I. LEVERAGE ABILITY TO PROVIDE INTEGRATED SERVICE SOLUTIONS

The Company seeks to apply its operating expertise in inbound, automated
voice response and outbound services to develop customized service solutions
which utilize the resources of each division on an integrated basis. The
Company is able to integrate its service offerings by utilizing its voice and
data networking technology and its proprietary software systems and hardware
platforms. The Company is able to design and implement highly flexible
applications which combine the large volume call capacity of automated voice
response with the specialized customer service capabilities of inbound
services. As an additional component of integration, customer follow-up can be
scheduled and initiated

27
<PAGE>

through the Company's outbound services. This integrated offering provides a
cost effective solution for the client and increases the productivity of the
Company's live operators. Furthermore, the Company leverages its ability to
provide integrated services by cross-selling its services to its clients to
capture an increasing share of their outsourced business. The Company believes
that its integrated service capabilities are a significant competitive
advantage.

II. PURSUE RECURRING AND LARGE VOLUME APPLICATIONS

The Company has developed its facilities and operations specifically to
provide effective service to clients which generate large and recurring call
volumes. The Company has established a strong track record in successfully
managing client programs which produce such volumes. The consistent revenue
streams derived from these large volume and recurring applications help the
Company manage its long-term growth.

III. CAPITALIZE ON STATE-OF-THE-ART TECHNOLOGY

The Company seeks to capitalize on its state-of-the-art technology, which
enables the Company to offer premium quality, flexible and cost-effective
service solutions to its clients. The Company believes that its significant
and continuing investment in sophisticated call center technology, including
proprietary interactive voice response technology, proprietary scheduling
systems, computer telephony integration systems, advanced call management
software systems and high speed, fault-tolerant computer systems, is a
competitive advantage. In addition, the Company's proprietary software
systems, hardware platforms and extensive networking technology allow it to
provide customized client applications and integrate two or more of its
inbound, automated voice response and outbound services. The Company
continually seeks to improve its technological capabilities.

IV. PROVIDE PREMIUM QUALITY SERVICES

The Company believes that service quality is a critical factor in a
potential client's decision to outsource its teleservices. The Company
differentiates the quality of its services through its ability to quickly
respond to new applications and short-term volume fluctuations, efficiently
address staffing needs, and effectively employ operating systems that can
process client campaign data and provide sophisticated reports. The Company
also seeks to provide premium quality services through an extensive training
program and an experienced management team. The Company believes that it
provides premium quality service to its clients and that the quality of its
service is one of its competitive advantages.

V. DEVELOP LONG-TERM CLIENT RELATIONSHIPS

The Company focuses on developing long-term client relationships. Since the
Company manages programs that interface with its clients' current or
prospective customers, the Company seeks to develop a detailed understanding
of each of its clients' specialized businesses. This process enables the
Company to create customized solutions which meet clients' needs and minimize
client turnover. As a result, the Company is better positioned to cross-sell
its services and proactively offer new applications.

VI. LEVERAGE STRONG MANAGEMENT EXPERIENCE

The Company's management team possesses extensive industry experience in
inbound, automated voice response and outbound services. The Company's
management team has proven experience managing the rapid growth of the
business. The founders of the Company are among the pioneers of key areas of
the teleservices industry and the members of the management team have
continued to contribute to the development of the teleservices industry. The
Company believes that it has distinguished itself through its ability to
attract and retain some of the most talented managers in the industry.

28
<PAGE>

DESCRIPTION OF SERVICES

The Company's organizational structure is outlined below:

[A CHART DEPICTING THE COMPANY'S ORGANIZATIONAL STRUCTURE APPEARS HERE]

I. OPERATOR TELESERVICES ("INBOUND")

Inbound provides live operator call-processing services, including order
capture and customer service applications. Inbound was established in 1986
with the goal of becoming the leading inbound teleservices operation in the
United States. It was one of the first service providers to fully automate its
operations and to develop proprietary software systems to service the
customized needs of its clients. In 1995, Inbound represented approximately
28.9% of the Company's revenue. For the nine months ended September 30, 1996,
Inbound represented approximately 30.0% of the Company's revenue. The two
divisions of Inbound are Direct Response Services and Custom Operator
Services.

DIRECT RESPONSE SERVICES. This division provides large volume inbound call-
processing services. Inbound custom designs applications to meet client
specifications for order capture, lead generation, customer service, dealer
referral and other information processing campaigns. Direct Response Services
receives incoming calls 24 hours per day, 365 days per year. Clients measure
this division's service quality by its ability to (i) process a large volume
of simultaneous incoming calls and (ii) to minimize the number of calls which
receive a busy signal. Although this division processes call volume from other
media such as radio, print and direct mail advertisements, most of its call
volume is generated via toll-free numbers appearing in television
advertisements. This type of inbound campaign requires the capability to
handle increases in call volumes over short periods of time.

The Company utilizes automatic call distributors and digital switches to
identify the toll-free number dialed by each caller. The toll-free number
specifies the particular client campaign and designates customer, product, and
service information to the operator and provides a highly structured script
designed to aid in processing the transaction. Each individual operator may
receive a call for one of hundreds of different client campaigns at any given
time. Furthermore, the Company can immediately report information captured
during the call to its client, the client's advertising agency and the
client's designated fulfillment company. Caller information and campaign call
volume summary reports are customized and may be transmitted to the client via
magnetic tape, electronic transfer or facsimile per the client's instructions.
Clients also have the ability to access real-time on-line program results by
media source. Immediate access to call volume data allows the Company's
clients to quickly determine the cost-effectiveness of various campaigns and
to adjust their media expenditures accordingly.

29
<PAGE>

CUSTOM OPERATOR SERVICES. This division provides customized teleservices
solutions on a dedicated basis to large business clients. The Company believes
that many businesses are finding it increasingly difficult to provide high
quality customer service and product support without diverting resources from
their core businesses. In addition, it is expensive for these businesses to
own, operate and maintain state-of-the-art call-processing facilities. The
Company believes there are significant growth opportunities in outsourced
teleservices for companies that can provide customized solutions on a
dedicated basis. The Company's objective for this division is to provide a
wide range of inbound telephone-based services including: (i) programs
designed to enhance or maximize customer acquisition and retention; (ii)
customer service and support; (iii) product support; (iv) collection services;
(v) customer complaint resolution; and (vi) client satisfaction information.

II. INTERACTIVE TELESERVICES ("INTERACTIVE")

Interactive provides large volume automated voice response services which
allow a caller to access information by means of a touch-tone telephone or
voice prompt. Interactive began operations in 1989 with the goal of
establishing the leadership position in automated voice response services. The
Company believes that Interactive is currently the largest, fully automated
call-processing operation in the United States. In 1995, Interactive
represented approximately 38.4% of the Company's revenues. For the nine months
ending September 30, 1996, Interactive represented approximately 42.0% of the
Company's revenues. Interactive has developed proprietary software systems and
hardware platforms to service the diverse needs of its clients and complements
the Company's live operator service offerings.

Interactive provides automated voice response services for a broad range of
applications, which include secure automated credit card activation,
information and entertainment services, polling and surveying, cellular fraud
prevention service, automated product information requests, database
management and enhancement, multiple caller conferencing, customer service and
third-party caller transfers. Interactive is measured by its ability to
process a large volume of simultaneous transactions. Additionally, Interactive
designs customized applications to meet stated client specifications and
offers a variety of voice recording services to aid in the design of an
interactive voice application.

Interactive specializes in processing large volumes of telephone
transactions generated by print, direct mail, radio and television broadcast
advertisements. Interactive's clients typically advertise a toll-free or pay
per call number designed to generate a prompt response. Interactive's
automated voice-processing platforms may be accessed 24 hours per day, 365
days per year. Interactive's proprietary software systems and hardware
platforms integrate the use of automated call distributors, digital switches
and decentralized computers for database management with remote host computer
interfaces and other peripheral processing activities. Interactive's
proprietary technology systems along with inbound and outbound services,
permit a caller to connect to a live operator to process data already captured
through automated Voice Response Units ("VRUs"). Interactive utilizes VRUs or
digital switches to identify the specific toll-free number dialed by the
caller. The toll-free number will identify the specific client campaign and
direct the call to the appropriate VRUs, switches, database machines, and
other required hardware and software needed to fulfill the requirements of the
client's application. Interactive was the first large scale platform to
incorporate advanced services such as voice recognition for callers with
rotary phones, and near real time transcription for quick data dissemination.

Interactive's clients have remote access capability to modify their scripts
and obtain instantaneous call count and program information. Interactive
reports all information captured or disseminated during a transaction to its
clients. Campaign information, summary reports and statistics are customized
to meet a client's specifications.

In connection with the provision of interactive teleservices, the Company
offers an accounts receivable financing program for certain qualified clients
designed to advance a portion of revenue

30
<PAGE>

created by the client's program prior to receipt of these funds through the
normal collection cycle. These advances are collateralized by the client's
billed receivables. The purpose of the program is to provide clients with
working capital on a weekly basis instead of having them rely on the normal
monthly collection cycle.

III. DIRECT TELESERVICES ("OUTBOUND")

Outbound provides live operator direct marketing services. Outbound began
operations in 1990 with the goal of becoming one of the leading teleservices
organizations in the United States. In 1995, Outbound represented
approximately 32.7% of the Company's revenue. For the nine months ended
September 30, 1996, Outbound represented approximately 28.0% of the Company's
revenues. Since Outbound operates in a more mature and competitive environment
than Inbound and Interactive, Outbound focuses exclusively on high volume
projects. The two divisions of Outbound are Consumer Direct Services and
Business Direct Services.

CONSUMER DIRECT SERVICES. This division provides business-to-consumer
marketing services. While client applications may include product
registration, customer acquisition and retention campaigns, lead generation,
database enhancement and management, customer service and verification
activities, the division's primary service is product sales. Outbound is
typically measured by its ability to generate the highest net revenue per
billable hour for its clients.

The Company typically initiates contact with consumers that have been
identified by a client as existing or potential customers. Integrated call
management systems utilizing large-scale predictive dialers systematically
call consumers and transfer successful connections to a designated marketing
representative. As a call is presented to a marketing representative who has
been trained for specific client applications, the consumer's name, address
and other available information are simultaneously presented along with the
client's customized script. The Company's proprietary software systems permit
clients to immediately access on-line program results and shadow monitor the
performance of all designated marketing representatives. The Company can
report information captured, summary results and more detailed statistical
analyses in a customized format for each of its clients.

BUSINESS DIRECT SERVICES. This division provides business-to-business
marketing services for clients whose target markets include thousands of small
to medium sized businesses. These applications are designed to enhance and
grow their database of information about their prospects and clients, schedule
appointments for their regional and national sales forces, and sell services
to accounts that may not warrant a face-to-face sales presentation.

OPERATIONS AND FACILITIES

The Company operated four automated voice response facilities with
approximately 4,000 telephone workstations as of September 30, 1996 and
approximately 5,400 ports as of September 30, 1996 and six state-of-the-art
call centers. Certain of the Company's call centers can be used
interchangeably by both Inbound and Outbound.

Inbound operates three large volume, automated call-processing facilities
located in Omaha, Nebraska, San Antonio, Texas and Hampton, Virginia. These
facilities consist of approximately 1,800 computer-assisted workstations. In
1995, Inbound employed an average of approximately 3,100 operators per day
with peak employment of approximately 3,800 operators per day.

Interactive operates four large volume, automated voice response platforms
located in Omaha, Nebraska (two platforms), San Antonio, Texas and Calgary,
Alberta (Canada). Interactive has a total capacity of approximately 5,600
voice response ports. Interactive is not a labor intensive business and
currently employs approximately 195 managerial, staff and administrative
personnel.

Outbound operates three large volume, automated facilities located in San
Antonio, Texas, Universal City, Texas and El Paso, Texas, and expects a fourth
facility in Killeen, Texas to become

31
<PAGE>

operational in December 1996. Outbound currently maintains approximately 2,200
computer-assisted workstations and in 1995 employed an average of 3,500
marketing representatives per day with peak employment of approximately 4,600
marketing representatives per day.

The following table summarizes the location of, and the number of telephone
workstations at each of the Company's call centers for each of Inbound,
Interactive and Outbound.

<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
CALL CENTERS TELEPHONE WORKSTATIONS VOICE RESPONSE PORTS
------------ ---------------------- --------------------
<S> <C> <C>
Inbound
Omaha, Nebraska.............. 737 --
San Antonio, Texas........... 536 --
Hampton, Virginia............ 577 --
-----
Inbound Total.............. 1,850 --
-----
Interactive
Omaha, Nebraska.............. -- 4,337(a)
San Antonio, Texas(a)........ -- 1,687
Calgary, Alberta............. -- 230
----- -----
Interactive Total.......... -- 6,254
----- -----
Outbound
San Antonio, Texas........... 1,021 --
Universal City, Texas........ 640 --
El Paso, Texas............... 504 --
Killeen, Texas............... 272(b) --
----- -----
Outbound Total............. 2,437 --
----- -----
Total.......................... 4,287 6,254
===== =====
</TABLE>
- --------
(a) Includes 882 ports which are expected to become operational in October,
November and December 1996.
(b) Currently under development. Expected to be operational in December 1996.

The Company occupies approximately 597,000 square feet of office space. All
facilities described above other than the facilities located in San Antonio,
Texas are leased.

The Company believes that its facilities are adequate for its foreseeable
needs and that additional space will be available as required. See Note D to
Combined Financial Statements for information regarding the Company's
obligations under its facilities leases.

FACILITIES AND SERVICE FORTIFICATION

The Company recognizes the importance of providing uninterrupted service for
its clients. The Company has invested significant resources to develop,
install and maintain facilities and systems designed to be highly reliable.
All of the Company's service facilities and systems are designed to maximize
system in-service time and minimize the possibility of telecommunications
outage, commercial power loss or equipment failure. The Company believes that
this level of reliability provides an important competitive advantage.

The Company utilizes redundant network architecture which substantially
reduces the possibility of a system failure and the interruption of
telecommunications service. As depicted in the diagram below, Inbound's and
Interactive's call centers are served by redundant long distance and local
access facilities. Each call center is 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-

32
<PAGE>

based self-healing network architectures. All inbound numbers directed to a
Company facility 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.

[A FLOW CHART DEPICTING THE COMPANY'S REDUNDANT LONG DISTANCE AND LOCAL ACCESS
FACILITIES APPEARS HERE]

The Company's systems also feature operational redundancy. The Company uses
automatic call distributors with dual processors and online automatic backup
and fault-tolerant mainframe computers with spontaneous dual backup for all
processors, disk management and mechanical functions. Copies of all
proprietary Company software systems and client application software reside in
a secure off-site storage facility. The Company actively monitors all critical
components of its call-processing facilities 24 hours per day, 365 days per
year. Each facility also has a stand-alone primary power system and both
battery backup and diesel generator backup power systems.

PERSONNEL AND TRAINING

The Company believes that a key component of its success is the quality of
its employees. As a large-scale service provider, the Company is continually
refining its approach to recruiting, training and managing its employees. The
Company has established procedures for the efficient weekly hiring and
training of hundreds of qualified employees. These procedures, coupled with
the Company's proprietary scheduling system, enable the Company to provide
flexible scheduling and staffing solutions to meet a client's needs for
additional resources.

The Company offers 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. Telephone representatives receive professional
training lasting from four to 21 days, depending upon the client's 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
the Company's organizational structure, standard operating procedures, and
business philosophies.

In 1995, the Company employed an average of approximately 6,600 telephone
representatives per day for its inbound services and outbound services with
peak employment of approximately 8,400 operators per day. In addition, the
Company employed as of September 30, 1996 approximately 1,800 management,
staff and administrative employees. The Company considers its relations with
its employees to be good.

CALL MANAGEMENT SYSTEMS

The Company specializes in processing large and recurring call volumes. In
each of Inbound, Interactive and Outbound, the Company works closely with its
clients to accurately project future call volumes. The Company uses the
following practices to efficiently manage its call volumes:

HISTORICAL TRENDS ANALYSES. The Company tracks weekly, daily and hourly
calling trends for individual client programs for Inbound, Interactive and
Outbound. The Company believes that the key to a cost efficient teleservices
program begins with the effective planning of future call volumes to determine
the optimal number of employees, workstations and calling ports that need to
be deployed

33
<PAGE>

each hour. Based upon the Company's experience in processing large call
volumes during the past ten years, it has accumulated the data necessary to
differentiate the calling patterns of different applications such as order
capture, lead generation and customer service.

FORECASTING CALL VOLUMES/ESTABLISHING PRODUCTION PLANS. Call volumes are
forecasted for each one-half hour increment for each day. Detailed assumptions
are made regarding average length of call, average wait time between calls,
average speed of answer, and service level targets to determine the actual
number of calls that may be processed by a workstation or voice response port
during a specific one-half hour increment. This process enables the Company to
effectively determine 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, a detailed schedule is created. These schedules are
typically forecasted six to eight weeks in advance to assist the Company's
personnel and training departments in hiring and training the desired number
of personnel. Operators and marketing representatives are given regular work
schedules that are designed to coincide with anticipated calling patterns and
trends.

The Company has developed a proprietary scheduling system that efficiently
identifies variances between staff scheduled and staff needed. The system
accommodates real-time adjustments to be made for personnel schedules as call
volume projections fluctuate. Telephone agent personnel directly interact with
the system to schedule additional hours or time off. The system is integrated
into all attendance and payroll processing systems.

FACILITY CALLING PLAN. Once staffing and scheduling plans have been
developed, each division determines how to efficiently allocate the projected
call volumes among its call centers. Each call center receives a detailed plan
outlining the projected call volumes for each day of the week and each one-
half hour increment of each day. Personnel schedules are produced to optimally
match the projected calling volumes.

NETWORK CONTROL. The Company interfaces directly with AT&T's nationwide long
distance network and has the ability to allocate call volumes among its
various call centers on command. Traffic control specialists within the
Company are responsible for comparing actual call volumes and trends to stated
staffing and scheduling plans. When necessary, adjustments can be made to fine
tune minor variances between actual call volumes and personnel that have been
scheduled by facility. As a result, calls are optimally directed to available
personnel. Network control monitors the status of all call-processing
activities on a minute-by-minute basis. Minor real time variances between
projected and actual calling trends are promptly input into the Company's
database and the call management cycle repeats.

TECHNOLOGY/SYSTEMS DEVELOPMENT

All proprietary software systems and hardware platforms for Inbound,
Interactive and Outbound permit the design and execution of highly integrated
service offerings which share consumer database files, source files, calling
records and calling lists. All systems provide clients with the ability to
directly interface and communicate with the Company's systems. The Company
currently employs approximately 380 systems analysts, programmers and
technicians to modify and enhance the Company's operating systems and to
design client applications.

QUALITY ASSURANCE

By the nature of its services, the Company establishes direct contact with
the customer base of its clients. Given the importance of this role, the
Company believes that its reputation for providing premium quality service is
critical. Both the Company and its clients shadow monitor and evaluate the
performance of telephone representatives to confirm that clients' programs are
properly implemented using clients' approved scripts and that the telephone
representatives meet clients' customer service

34
<PAGE>

standards. The Company regularly measures the quality of its services by
reviewing such variables as average length of call, calls per hour, average
speed of answer, sales per hour, rate of call abandonment and order conversion
percentages. The Company's information systems enable the Company to provide
clients with regular reports on a real-time basis as to the status of an
ongoing campaign and to transmit summary data and captured information
electronically to clients.

The Company maintains a quality assurance department for each of Inbound,
Interactive and Outbound that is responsible for the overall quality of the
services being provided. A comprehensive performance appraisal is typically
given to every telephone representative every six to eight weeks. The Company
uses statistical summaries of the performance appraisal information for its
training and operations departments to provide feedback and to identify
telephone representatives who may need additional training.

SALES AND MARKETING

The Company's sales and marketing strategy focuses on leveraging the
Company's teleservices expertise, integrated service capabilities and
reputation for premium quality service in order to cross-sell its services to
existing clients and to develop new long-term client relationships. The
Company also identifies industries that face increased competition, such as
telecommunications, insurance, banking, pharmaceuticals, consumer goods and
computer software, in which the Company can offer clients large-scale cost-
effective solutions on an outsourced basis.

The Company formulates detailed annual marketing plans. These plans contain
objectives and milestones which are tracked regularly throughout the year. The
sales organization consists of a vice president of sales for each division
that manages a group of national account managers. A national account
manager's primary responsibility is to solicit business from new prospects and
to enhance existing client relationships. Commissions are paid on both new
sales and incremental revenues generated from existing clients to provide the
appropriate incentives for national account managers. Once a client campaign
is initiated, a client services account manager is responsible for the daily
management of the campaign.

COMPETITION

The teleservices industry is highly fragmented and competitive. The
Company's competitors in the teleservices industry range from very small firms
catering to specialized applications and short-term projects to large
independent firms and the in-house operations of many clients and potential
clients. In addition, some of the Company's services compete with other forms
of marketing such as mail, television and radio. While the Company has various
competitors for each of its divisions, the Company believes that only a few
competitors currently have the capability to provide each of inbound,
automated voice-processing and outbound services. The Company believes that
the principal competitive factors in the teleservices industry are capacity,
flexibility of implementing customized solutions to clients' teleservices
needs, technological expertise and price.

PROPRIETARY RIGHTS AND LICENSES

The Company has made significant investments in the development of its
proprietary software systems and hardware platforms. The Company relies on a
combination of the protections provided by applicable copyright, trademark and
trade secret laws, as well as on confidentiality procedures, to establish and
protect its proprietary rights. The Company does not license any of its
software or hardware designs for use by others. Despite these precautions,
there can be no assurance that misappropriation of the Company's proprietary
software and hardware designs will not occur. Although the Company believes
that its intellectual property rights do not infringe upon the proprietary
rights of third-parties, there can be no assurance that third-parties will not
assert infringement claims against the Company. Further, there can be no
assurance that intellectual property protection will be available in certain
foreign countries should the Company commence operations outside North
America.

35
<PAGE>

GOVERNMENT REGULATION

Teleservices sales practices are regulated at both the federal and state
level. The significant growth of the telemarketing industry in the 1980's
produced concern over the proliferation of unsolicited teleservices calls made
to private residences. In response, Congress passed the Telephone Consumer
Protection Act of 1991 (the "TCPA") as the first attempt at regulating the
telemarketing industry. The Federal Communications Commission ("FCC") enacted
rules pursuant to the TCPA in December 1992 which prohibit the initiation of
telephone solicitations to residential telephone subscribers before 8:00 a.m.
and after 9:00 p.m. and prohibit the use of automated telephone dialing
equipment to call certain telephone numbers. The FCC rules also require the
maintenance of a list of residential consumers that have stated that they do
not want to receive telephone solicitations to ensure that companies avoid
making calls to consumers on this list.

In a further effort to combat telemarketing fraud, Congress also passed the
Federal Telemarketing Consumer Fraud and Abuse Act of 1994 ("TCFAA") which
authorized the Federal Trade Commission (the "FTC") to issue regulations
designed to prevent deceptive and abusive telemarketing acts and practices. In
1995, the FTC issued its new Telemarketing Sales Rule, which went into effect
in January 1996. The Telemarketing Sales Rule broadly defines telemarketing as
a plan, program or campaign conducted to induce the sale of goods, or services
through the use of one or more telephones and which involve more than one
interstate telephone call. The Telemarketing Sales Rule covers most outbound
telemarketing calls and certain inbound telemarketing calls. The Telemarketing
Sales Rule excludes from its coverage, among other things, (i) certain calls
initiated by customers in response to catalog offerings, (ii) calls initiated
by customers in response to mass media advertisements, except advertising
relating to investment opportunities, credit repair services, offers to
recover money lost in previous telemarketing transactions or solicitations
that represent a high likelihood of success in obtaining credit if a payment
in advance of obtaining credit is required, (iii) certain calls initiated by
customers in response to a direct mail solicitation, (iv) pay per call
services which are subject to the FTC's 900 Number Rule, and (v) business-to-
business calls except those involving the sale of nondurable office or
cleaning supplies. The Telemarketing Sales Rule sets forth certain mandatory
disclosures which must be made in connection with telephone sales, and
requires that records be kept for a period of two years. The Telemarketing
Sales Rule proscribes the making of outbound calls to consumers who have
previously requested not to be called. Telemarketers who inadvertently call
such persons can avoid liability only if they have implemented a set of "do-
not-call" procedures and have trained their personnel to abide by these
procedures. The Telemarketing Sales Rule prohibits telemarketers from making
any false or misleading statements to induce any person to pay for goods or
services, from using threats, intimidation and profane or obscene language
during calls, from causing any telephone to ring repeatedly or continuously
with intent to annoy, abuse or harass any person and from engaging in other
certain conduct. The Telemarketing Sales Rule also prohibits telemarketers
from debiting a consumer's checking, charge or similar account without the
consumer's express written authorization. Alternatively, a consumer may give
an oral authorization if the oral authorization is recorded and certain
disclosures are made. The Telemarketing Sales Rule also imposes potential
liability on companies providing substantial assistance to those engaged in
violations of the Telemarketing Sales Rule.

In addition to the FTC's new Telemarketing Sales Rule, there are numerous
state statutes and regulations governing telemarketing activities to which the
Company is subject. These statutes impose restrictions on auto-dialed recorded
message players, on solicitations initiated by or on behalf of the seller of
goods or services and on the monitoring of telephone calls of telemarketer
employees. Some states also require registration of any telemarketing campaign
prior to any solicitation or attempted solicitation in connection therewith
and impose certain mandatory disclosures which must be made during the course
of the telephone calls. A number of states also provide that a sale cannot be
final unless a written contract is delivered to and signed by the buyer and
may be canceled within three business days. At least one state also prohibits
telemarketers from requiring credit card payment. From

36
<PAGE>

time to time, bills are introduced in Congress which, if enacted, would
regulate the use of credit information. The Company cannot predict whether
this legislation will be enacted and what effect, if any, it would have on the
Company or its industry.

The FTC has also adopted regulations governing pay per call services (the
"900 Number Rule") pursuant to the Telephone Disclosure and Dispute Resolution
Act passed by Congress in 1992 ("TDDRA"). The 900 Number Rule prescribes the
content of advertising for such services, requires that certain introductory
disclosures be made (at no charge to the caller) and provides for the manner
and content of billing and collection for such services. The FCC supplements
this regulation by requiring that common carriers assign a telephone number to
a provider of interstate pay per call services and offer billing and
collection services to such a provider to assure compliance with the 900
Number Rule.

The Telecommunications Act of 1996 also contains certain provisions which
may impact upon the Company. Because of abuses that arose from pay per call
services offering toll free numbers, the 1996 Act eliminated the tariffed
service exception from the pay per call rules and required the FCC to adopt
new and more stringent rules for the use of toll free numbers for pay per call
services. The FCC has proposed rules for the use of toll free numbers for pay
per call services. The FCC has proposed rules designed to restrict the use of
toll free numbers in connection with pay per call information programming.
Among the most significant changes to the toll free number rules are that
presubscription agreements now must be executed in writing, require the use of
a PIN or other identifier unique to the subscriber and provide subscribers
with a choice of billing method--direct remit, debit prepaid account phone
bill or credit or calling card. As an alternative, information providers may
charge information services provided via toll free numbers with a prepaid
account or debit, credit, charge or calling card if there is a preamble
disclosing the costs, the point when the charges begin and billing methods.
There are also corresponding disclosure requirements for soliciting
presubscription agreements and for consumers' billing statements.

The industries served by the Company are also subject to varying degrees of
government regulation. Generally, the Company relies on its clients and their
advisors to develop the scripts to be used by the Company in making consumer
solicitations. The Company generally requires its clients to indemnify the
Company against claims and expenses arising with respect to the Company's
services performed on its clients' behalf. The Company employees who complete
sales for insurance companies are required to be licensed by various state
insurance commissions and participate in regular continuing education
programs, which are currently provided in-house by the Company. A state
insurance department is reviewing certain practices and procedures used by the
Company. The Company is working with the insurance department to comply with
all regulations. The Company has never been held financially responsible, or
been assessed any penalty, in any material respect for regulatory
noncompliance. The Company may be subject to the payment of penalties in this
matter, but based on its experience in other states, its understanding of the
resolutions of similar reviews of other companies and the advice of legal
counsel, the Company believes that this matter is not likely to have a
material adverse effect on the Company.

The Company believes it is in compliance in all material respects with all
federal and state regulations. The Company specifically trains its marketing
representatives to handle calls in an approved manner, and maintains "do not
call" lists.

There can be no assurance, however, that the Company would not be subject to
regulatory challenge for a violation of federal or state law by any of its
clients.

LEGAL PROCEEDINGS

From time to time, the Company is involved in litigation relating to claims
arising out of its operations in the normal course of business. Interactive
Corp. is a defendant in a case brought in the United States District Court for
the Southern District of Georgia, Augusta Division, on September 12, 1991,
captioned Lamar Andrews, individually and as Representative of a Class of All
Other Persons

37
<PAGE>

Similarly Situated, Plaintiff v. American Telephone & Telegraph Company, et
al., Defendants, No. CV 191-175. The District Court certified a master class
of all persons who paid for one or more 900 number calls pertaining to
programs offering sweepstakes, games of chance, awards, cash or other prizes,
gifts or information on unclaimed funds. These calls were billed and collected
by AT&T Corp. ("AT&T") and U.S. Sprint Communications Company Limited
Partnership ("Sprint"). The District Court also certified a sub-class of those
persons who paid, in the State of Georgia, for one or more such calls billed
and collected by AT&T or Sprint. The complaint alleges that the programs at
issue involved, among other things, acts of unlawful gambling, mail fraud and
wire fraud in violation of the Racketeer Influenced and Corrupt Organizations
Act ("RICO"), the Communications Act of 1934, the federal common law of
communications and other state and federal laws. Interactive Corp. provided
interactive voice processing and billing services to a customer which
conducted some of the programs at issue in the litigation. The billing
services were provided through AT&T. The action seeks recovery of treble
damages (which amount has not been specified), punitive damages, costs and
attorneys' fees. The Company's potential liability and expenses in this matter
are not covered by insurance. On September 19, 1996, the United States Court
of Appeals for the Eleventh Circuit reversed the District Court's order
certifying the classes on the ground that the class action would be
unmanageable. The plaintiffs have sought a rehearing before the Court of
Appeals. The Company cannot predict the ultimate outcome of this case or the
magnitude of any potential damages or costs payable by the Company. The
Company believes that the decision by the United States Court of Appeals is a
favorable development and intends to vigorously contest the claims made in
this case.

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<PAGE>

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The executive officers and directors of the Company and their ages as of
October 11, 1996 are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Gary L. West........................ 50 Chairman of the Board and Director(1)
Vice Chair of the Board, Secretary and
Mary E. West........................ 50 Director
Troy L. Eaden....................... 34 Chief Executive Officer and Director(1)
President, Chief Operating Officer and
Thomas B. Barker.................... 41 Director
Michael A. Micek.................... 47 Chief Financial Officer and Vice
President--Finance
Nancee R. Berger.................... 36 President--Interactive Teleservices
John W. Erwin....................... 33 President--Direct Teleservices
Lee Waters.......................... 37 Executive Vice President--Operator
Teleservices
Mark Lavin.......................... 39 Executive Vice President--Direct
Teleservices
Joseph L. Bradley................... 41 Executive Vice President--Systems and
Technology
Diane K. Ferris..................... 48 Chief Administrative Officer
</TABLE>
- --------
(1) Member of the Compensation Committee

GARY L. WEST co-founded WATS Marketing of America ("WATS") in 1978 and
remained with that company until 1985. Mr. West joined the Company in July
1987 after the expiration of a noncompetition agreement with WATS. Mr. West
has served as Chairman of the Board since joining the Company. Mr. West and
Mary E. West are husband and wife.

MARY E. WEST co-founded WATS and remained until December 1985. In January
1986, she and Mr. Eaden founded the Company. Mrs. West has served as Vice
Chair of the Company since 1987. Mrs. West and Mr. West are wife and husband.

TROY L. EADEN co-founded the Company with Mrs. West in January 1986. He has
served as the principal executive of the Company since 1989 and has formally
held the title of Chief Executive Officer since March 1995. Mr. Eaden was
employed by WATS from May 1980 to December 1985.

THOMAS B. BARKER joined the Company in 1991 as Executive Vice President of
Interactive. Mr. Barker was promoted to President and Chief Operating Officer
of the Company in March 1995. Prior to joining the Company, he served as
President and Chief Operating Officer of Cue Network Corp., a provider of
nationwide paging and satellite data distribution services.

MICHAEL A. MICEK joined the Company in 1988 and was appointed to his current
position in 1990. Prior to joining the Company, Mr. Micek was a partner in the
accounting firm of Blackman and Micek, P.C. from 1983 to 1988 and was employed
by the accounting firm of Touche Ross from 1981 to 1983.

NANCEE R. BERGER joined Interactive in 1989 as Manager of Client Services.
Ms. Berger was promoted to Vice President of Interactive in May 1994. She was
promoted to Executive Vice President of Interactive in March 1995, and to
President of Interactive Teleservices in October 1996. Before joining
Interactive, she was Senior Project Manager at Applied Communications, Inc.

39
<PAGE>

JOHN W. ERWIN joined the Company in 1988 as Executive Vice President of
Outbound. In March of 1995, Mr. Erwin became President--Direct Teleservices.
Prior to joining the Company, Mr. Erwin held a management position with Dial
America Marketing and a management and ownership position with Telcom
Communications Marketing, Inc., both of which provide outbound telemarketing
services.

LEE WATERS joined the Company in 1994 as a Vice President of Sales and
Marketing for Inbound and was promoted to Executive Vice President--Operator
Teleservices in 1996. Prior to joining the Company, he was employed by Federal
Express. From 1989 until 1992 at Federal Express, he was a District Sales
Manager of the Commonwealth District and in 1992 he became the Regional
Manager of the Catalog and Remail Services Division.

MARK LAVIN joined the Company in 1996 as Executive Vice President--Direct
Response TeleServices. From 1991 until 1996, he held various management
positions in reservation services for Radisson Hospitality Worldwide.

JOSEPH L. BRADLEY has been at the Company since its inception in 1986. Mr.
Bradley is Executive Vice President--Systems and Technology. Prior to joining
the Company, Mr. Bradley worked in information systems from 1982 to 1986 with
First Data Resources.

DIANE K. FERRIS joined the Company in 1988 as Vice President of Operations--
Inbound. In February 1991, Ms. Ferris was promoted to Chief Administrative
Officer. Prior to joining the Company, Ms. Ferris was Vice President of
Administration and Corporate Planning for Mutual of Omaha Fund Management
Company.

The Board of Directors is divided into three classes. Within 90 days
following the closing of this Offering, the Company expects to increase the
size of the Board of Directors to add two independent directors. Effective
upon the closing of this Offering, the Board of Directors will be divided into
three classes. One class of directors is elected each year at the annual
meeting of stockholders for terms of office expiring after three years. The
terms of Thomas B. Barker and one of the independent directors will expire in
1997, the terms of Troy L. Eaden and Mary E. West will expire in 1998 and the
terms of Gary L. West and the other independent director will expire in 1999.
Each director serves until the expiration of his term and thereafter until his
successor is duly elected and qualified. Executive officers of the Company are
appointed by the Board of Directors on an annual basis.

BOARD COMMITTEES

The Board of Directors has established a Compensation Committee, comprised
of Troy L. Eaden, Gary L. West and the two independent directors (the
"Compensation Committee"), which provides recommendations concerning salaries
and incentive compensation for employees of, and consultants to, the Company.
The Board of Directors will also establish an Audit Committee, which reviews
the results and scope of the annual audit of the Company's financial
statements conducted by the Company's independent accountants, the scope of
other services provided by the Company's independent accountants, proposed
changes in the Company's financial and accounting standards and principles,
and the Company's policies and procedures with respect to its internal
accounting, auditing and financial controls. The Audit Committee also makes
recommendations to the Board of Directors on the engagement of the independent
accountants as well as other matters which may come before the Audit Committee
or at the direction of the Board of Directors. The independent directors are
expected to comprise a majority of the members of the Audit Committee.

DIRECTORS' ANNUAL COMPENSATION

During the fiscal year ended December 31, 1995, members of the Board of
Directors received no directors' fees. The Company is obligated to reimburse
the members of the Board of Directors for all

40
<PAGE>

reasonable expenses incurred in connection with their attendance at directors'
meetings. No director made any claim for reimbursement in fiscal 1995.
Following this Offering, members of the Board of Directors who are not
officers or employees of the Company will receive $2,000 per meeting plus
reasonable expenses incurred in connection with their attendance at directors'
meetings. Pursuant to the 1996 Stock Incentive Plan, these directors will be
granted options to acquire 2,000 shares of Common Stock as of the date of the
Offering or upon their first election to the Board of Directors. Each director
will also be granted options to purchase 1,000 additional shares as of each of
the Company's annual stockholders meetings provided that such director remains
a member of the Board of Directors at such time. The options will become
vested and exercisable one year from the date such options are granted.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee will be composed of Troy L. Eaden, Gary L. West
and the two independent directors. See "Certain Transactions." During the
fiscal year ended December 31, 1995, the Company did not have a compensation
committee of the Board of Directors, and Troy L. Eaden made all executive
officer compensation decisions.

EXECUTIVE COMPENSATION

The following table provides certain summary information concerning
compensation earned in the fiscal years ended December 31, 1995, 1994 and
1993, by the Company's chief executive officer and the four other most highly
compensated executive officers of the Company (collectively, the "Named
Executive Officers"). There were no stock options or stock appreciation rights
outstanding during the fiscal year ended December 31, 1995.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------
FISCAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1)
--------------------------- ------ ---------- --------- ------------------
<S> <C> <C> <C> <C>
Troy L. Eaden........... 1995 234,493 0 2,850
Chief Executive Officer 1994 181,262 0 2,205
and Director 1993 165,375 0 4,134
Thomas B. Barker........ 1995 293,284 223,845 2,850
President, Chief Operat-
ing 1994 148,850 500,749 2,138
Officer and Director 1993 141,750 163,552 4,497
Michael A. Micek........ 1995 126,827 125,000 2,850
Chief Financial Officer, 1994 103,769 100,000 2,205
Vice President--Finance 1993 94,692 48,000 2,955
Lee Waters(2) .......... 1995 97,543 158,088 0
Executive Vice Presi-
dent-- 1994 63,575 0 0
Operator Services Divi-
sion 1993 -- -- --
Wayne Harper............ 1995 60,000 170,431 2,850
Vice President-- 1994 60,000 187,060 2,187
Sales and Marketing 1993 60,000 5,668 0
</TABLE>
- --------
(1) These amounts, if any, reflect matching contributions made by the Company
on behalf of each Named Executive Officer pursuant to the Company's
Employee 401(k) Retirement Plan and are in addition to the salary and
bonus shown for each Named Executive Officer.
(2) Amounts reported for Mr. Waters do not include any amounts for 1993 since
Mr. Waters joined the Company in 1994.

41
<PAGE>

1996 STOCK INCENTIVE PLAN

As of September 24, 1996, the Board of Directors adopted the 1996 Stock
Incentive Plan and the stockholders approved the 1996 Plan. The purpose of the
1996 Stock Incentive Plan is to provide a means through which the Company may
attract competent persons to become directors of the Company and through which
the Company may attract able persons to enter and remain in the employ of the
Company. Eligible persons include those regularly employed by the Company,
directors and consultants.

The 1996 Stock Incentive Plan is administered by a Committee, as defined in
the 1996 Stock Incentive Plan (the "Committee"). Awards may be granted by the
Committee to eligible persons in the form of non-qualified stock options
("NQSOs"), incentive stock options (within the meaning of Section 422 of the
Internal Revenue Code), stock appreciation rights, restricted stock awards,
phantom stock unit awards, performance share unit awards and other stock bonus
awards ("Incentive Awards"). The 1996 Stock Incentive Plan also provides for
the automatic grant of NQSOs to all non-employee directors upon the
consummation of this Offering and upon each annual stockholders meeting.

The aggregate number of shares of Common Stock that may be issued pursuant
to Incentive Awards under the 1996 Stock Incentive Plan may not exceed
9,499,500; provided, that share appreciation rights that are exercisable as an
alternative to an option will not be subject to the foregoing limitation.
Following the expiration of the applicable exemption provided for under
Section 162(m) of the Internal Revenue Code, the maximum number of shares
which may be the subject of options and stock appreciation rights granted in
any calendar year to an individual who is a "covered employee" within the
meaning of Section 162(m) of the Internal Revenue Code shall not exceed
1,000,000 shares.

In the event of a Change in Control of the Company (as defined in the 1996
Stock Incentive Plan), all Incentive Awards under the 1996 Stock Incentive
Plan will become immediately vested and exercisable. As of September 24, 1996,
Incentive Awards to purchase an aggregate of 3,601,100 shares of Common Stock
were issued and outstanding pursuant to the 1996 Stock Incentive Plan. All of
such awards were stock options issued in connection with this Offering, each
of which has an exercise price equal to the initial public offering price. It
is anticipated that the Company will file a registration statement on a Form
S-8 under the Securities Act of 1933, as amended, registering for the sale of
shares of Common Stock to be issued pursuant to the 1996 Stock Incentive Plan.

EMPLOYMENT AGREEMENTS

Pursuant to an employment agreement dated as of June 30, 1991, Troy L. Eaden
will direct the operations of the Company for an unspecified term. Mr. Eaden's
salary and bonus are determined annually by the Board of Directors. Mr.
Eaden's employment shall terminate upon certain events including Mr. Eaden's
death or disability, the sale of all or substantially all of the assets of the
Company, termination of employment by the Company for cause or without cause,
or Mr. Eaden's resignation. Upon termination of employment for any reason, the
Company shall pay Mr. Eaden all salary through the date of termination,
together with any bonuses declared by the Board of Directors with respect to
Mr. Eaden's services prior to the effective date of termination. Mr. Eaden
also agrees, for a period of two years following the termination of his
employment, not to engage in any business competing for the customers or
accounts of the Company and not to induce or attempt to induce any person
employed by the Company at the time of Mr. Eaden's termination to leave his
employment or agency with the Company.

Thomas B. Barker, Michael A. Micek, Lee Waters and Wayne Harper serve the
Company pursuant to employment agreements dated as of January 1, 1996 for
Messrs. Barker, Micek and Harper and June 25, 1996 for Mr. Waters
(collectively referred to as the "Effective Date"). The initial term of

42
<PAGE>

Messrs. Barker's, Micek's and Waters' agreement is two years and the initial
term of Mr. Harper's agreement is one year. Each agreement will be
automatically renewed, subject to prior termination, for successive one-year
periods on the second anniversary for Messrs. Barker, Micek and Waters and on
the first anniversary for Mr. Harper of the respective Effective Date and each
anniversary thereafter unless either party gives notice of non-renewal. These
agreements provide, respectively, for the employment of Mr. Barker as
President and Chief Operating Officer of the Company, for Mr. Micek as Chief
Financial Officer of the Company, for Mr. Waters as Executive Vice President
and for Mr. Harper as Vice President of Sales. Under the respective
agreements, Mr. Barker's base salary is $200,000 per year, Mr, Micek's base
salary is $140,000 per year, Mr. Water's base salary is $150,000 per year and
Mr. Harper's base salary is $80,000 per year. The agreements also provide for
an annual bonus determined at the discretion of the Board of Directors. In the
event of Mr. Barker's, Mr. Micek's, Mr. Waters' or Mr. Harper's death,
termination for cause or without cause or resignation, the Company will pay
any salary earned through the date of termination, any bonus earned at the end
of the month immediately preceding the date of termination and all vested
benefits, if any, as of the date of termination. In the event of a termination
without cause or resignation, the employment agreements provide for Messrs.
Barker, Micek, Waters and Harper to remain as consultants to the Company for
at least twenty-four months following termination of employment. If Mr.
Barker, Mr. Micek, Mr. Waters or Mr. Harper is terminated for cause, the
Company, in its sole discretion, may elect to retain such executive as a
consultant. During the consulting period, the executive will only be paid his
annual base salary.

CERTAIN TRANSACTIONS

REORGANIZATION AND TERMINATION OF S CORPORATION STATUS

Prior to the closing of this Offering, each of the stockholders of Inbound
Corp., Interactive Corp. and Outbound Corp. will exchange the capital stock of
such company owned by such stockholder for shares of Common Stock pursuant to
the Reorganization such that each of the foregoing companies will become
wholly owned subsidiaries of the Company. Simultaneously, the stockholders of
IBS and Canada will transfer their shares of capital stock of IBS and Canada
to Interactive Corp. for nominal cash consideration pursuant to the
Reorganization such that each of the foregoing companies will become wholly
owned subsidiaries of Interactive Corp.

Prior to the Reorganization, Gary L. West and Mary E. West beneficially
owned in the aggregate greater than 73.0%, and Troy L. Eaden beneficially
owned 15.0%, of the outstanding shares of common stock of each of the
foregoing companies. Following consummation of the Reorganization but prior to
this Offering, Gary L. West and Mary E. West will beneficially own in the
aggregate approximately 80.1%, and Troy L. Eaden will beneficially own
approximately 15.0%, of the shares of Common Stock of the Company.

Each of the West Affiliates has made periodic distributions to its existing
stockholders in amounts approximately equal to the stockholders' corresponding
tax liabilities associated with the Company's

43
<PAGE>

earnings plus amounts representing a portion of retained earnings. The West
Affiliates made aggregate distributions of $5.4 million, $8.1 million, $10.5
million, $16.0 million and $25.1 million for the years ended December 31,
1991, 1992, 1993, 1994 and 1995, respectively, and $30.4 million through
September 30, 1996. On October 31, 1996, each of the West Affiliates declared
the First Dividend. The First Dividend was equal to retained earnings as of
September 30, 1996, to the extent such retained earnings have not previously
been distributed, along with a distribution representing a return of
additional paid-in capital contributed by the West Affiliates' existing
stockholders. Each of the West Affiliates has paid its portion of the First
Dividend to each of its stockholders in cash or through the Stockholders
Notes. The First Dividend was equal to approximately $45.9 million, of which
approximately $2.0 million was paid in cash and approximately $43.9 million
was paid through the Stockholders Notes. The Company estimates that the
Stockholders Notes will be paid by a portion of the net proceeds to be
received by the Company from this Offering. Prior to the closing of the
Reorganization, each of the West Affiliates declared the Second Dividend. The
Second Dividend was equal to the West Affiliates' retained earnings as of
November 25, 1996 prior to conversion of each of the West Affiliates to a C
Corporation, to the extent such retained earnings had not previously been
distributed, along with a distribution representing a return of additional
paid-in capital contributed by the West Affiliates' existing stockholders. The
Second Dividend was equal to approximately $6.4 million as of the Termination
Date. Each of the West Affiliates paid its portion of the Second Dividend to
its stockholders in cash and from existing working capital.

Subsequent to the Termination Date, neither the Company nor any of the West
Affiliates will be an S Corporation and, accordingly, each will be subject to
federal and state income taxes. Other than payment of the Stockholder Notes,
upon closing of this Offering, the Company will have no liabilities with
respect to distributions to the West Affiliates, the IBS or the Canada
stockholders except as set forth in this section.

In addition, each of the West Affiliates, as a result of termination of its
S Corporation status, will record its portion of the Deferred Tax Liability
effective upon the Termination Date. The amount of the Deferred Tax Liability
would have been approximately $2.1 million if the Termination Date had been
September 30, 1996, but the actual amount will be adjusted to reflect the
effect of the Company's actual operating results through the Termination Date.

LEASE OF 9910 MAPLE STREET FACILITY

The Company leases a building located at 9910 Maple Street, Omaha, Nebraska,
which houses its corporate headquarters. The building has 42,000 square feet
of leasable space and is situated on a parcel of land of approximately 4.4
acres. This building is owned by 99-Maple Partnership, a partnership owned and
controlled by Gary L. West, the Company's Chairman of the Board, and Mary E.
West, the Company's Vice Chair of the Board. This lease commenced on April 1,
1988, and was renewed on September 1, 1994, for a term of ten years. For the
period commencing September 1, 1996, and ending August 31, 1997, the rent is
$59,600 per month, which rent increases each year thereafter at a rate of
approximately six percent. For the period commencing September 1, 2003, and
ending August 31, 2004, the rent will be $89,635 per month. In addition to
payment of rent, the Company is obligated to pay all taxes, insurance and
maintenance pertaining to the building.

REGISTRATION RIGHTS

The Company, Gary L. West, Mary E. West, Troy L. Eaden and each of the
former stockholders of the West Affiliates will enter into a Registration
Rights Agreement (the "Registration Rights Agreement") as of the closing of
the Reorganization, which, among other things, will provide that upon the
request of Gary L. West, Mary E. West or Troy L. Eaden, the Company will
register under the Securities Act any of the shares of Common Stock currently
held by or acquired in the future by the foregoing (a "Demand Registration").
Gary L. West and Mary E. West, collectively, and Troy L. Eaden,

44
<PAGE>

individually, each will have the right to request four Demand Registrations.
Each of the foregoing and each of the seven other former stockholders of the
West Affiliates will have the right, which may be exercised at any time and
from time to time in the future, to include the shares of Common Stock held by
him or her in certain other registrations of Common Stock initiated by the
Company on its own behalf or on behalf of its stockholders. Following
consummation of this Offering, Gary L. West and Mary E. West will beneficially
own in the aggregate approximately 45,451,263 shares of Common Stock, Troy L.
Eaden will beneficially own approximately 8,516,250 shares of Common Stock,
and the seven other former stockholders of the West Affiliates will
beneficially own approximately 2,807,487 shares of Common Stock. Each of their
rights under the Registration Rights Agreement is transferable. In addition,
each of the foregoing has agreed to pay his or her pro rata share of certain
costs and expenses in connection with each registration of its shares of
Common Stock.

WEST TELEMARKETING INSURANCE AGENCY

West Telemarketing Insurance Agency, Inc. ("West Insurance") is a Texas
corporation which is wholly-owned by John W. Erwin, the Company's President of
Direct Teleservices. West Insurance is a licensed insurance agency formed in
June 1996 under the laws of Texas to service a client of Outbound Corp. in the
insurance industry. These arrangements are set forth in a Personnel Company
Subscriber Service Agreement, dated as of November 12, 1996. Outbound Corp.
pays hourly fees to West Insurance for its agents' services, which fees have
averaged since July 1, 1996 approximately $162,420 per month. Neither West
Insurance nor Mr. Erwin has made any profit in connection with this
arrangement and neither is expected to do so in the future. Mr. Erwin entered
into a Stock Redemption Agreement, dated April 9, 1996, with Gary L. West,
Mary E. West and Troy L. Eaden restricting the transfer of his West Insurance
stock and providing for the option by the Wests and Mr. Eaden to acquire his
West Insurance stock in the event of his death, disability or termination of
employment with West Insurance or at any other time they desire. This Stock
Redemption Agreement has been assigned to the Company by the Wests and Mr.
Eaden, effective upon the closing of this Offering pursuant to an Assignment
and Assumption Agreement, dated as of November 12, 1996.

SALE OF ASSET

Inbound Corp. sold its 12.5% undivided interest in an aircraft to Troy L.
Eaden, a director and the Company's Chief Executive Officer, pursuant to a
Bill of Sale and Assignment dated October 30, 1996, for $642,208. This price
was determined by Michael A. Micek, Chief Financial Officer of the Company,
and represents the value of the asset as it was carried on the financial
statements of the Company. Inbound Corp. purchased the interest for $755,000
from Executive Jet Sales, Inc. pursuant to a Purchase Agreement, dated March
14, 1996.

WESTS' NOTE

In 1995, Interactive Corp. repaid a note in the amount of $975,000 to two of
its stockholders, Gary L. West and Mary E. West.

45
<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth as of September 30, 1996, certain information
regarding beneficial ownership of Common Stock adjusted pro forma to give
effect to the Reorganization by (i) each stockholder known by the Company to
be a beneficial owner of more than five percent of the Common Stock, (ii) each
of the Company's directors and Named Executive Officers, and (iii) the
directors and executive officers as a group. Except as otherwise specified,
each person in the table has sole voting and investment power as to the shares
owned. The address of each person is the Company's principal executive office,
9910 Maple Street, Omaha, Nebraska 68134.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
AFTER REORGANIZATION
BUT BENEFICIAL OWNERSHIP
PRIOR TO OFFERING(1) AFTER OFFERING
------------------------ ------------------------
NAME OF BENEFICIAL OWNER SHARES PERCENTAGE SHARES PERCENTAGE
- ------------------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Gary L. West(2)............. 45,451,263(1) 80.1% 45,451,263(1) 72.8%
Mary E. West(2)............. 45,451,263(1) 80.1 45,451,263(1) 72.8
Troy L. Eaden............... 8,516,250 15.0 8,516,250(3) 13.6
Thomas B. Barker............ -- * -- *
Michael A. Micek............ -- * -- *
Lee Waters.................. -- * -- *
Wayne Harper................ -- * -- *
All directors and executive
officers as a group
(11 persons)............... 54,959,533(1) 96.8 54,959,533(1) 88.0
</TABLE>
- --------
* Less than 1%
(1) Under the rules of the Securities and Exchange Commission, shares are
deemed to be "beneficially owned" by a person if such person directly or
indirectly has or shares (i) the power to vote or dispose of such shares
whether or not such person has any pecuniary interest in such shares, or
(ii) the right to acquire the power to vote or dispose of such shares
within 60 days, including any right to acquire through the exercise of any
option, warrant or right.
(2) Shares of Common Stock held by Gary L. West and Mary E. West are held in
joint tenancy with right of survivorship. Voting power of these shares is
shared between them.
(3) Includes 1,516,250 shares of Common Stock held by the Eaden Family Limited
Partnership (the "Eaden Partnership"), of which Mr. Eaden is a general
partner. Such shares were transferred by Mr. Eaden to the Eaden
Partnership following consummation of the Reorganization and prior to the
closing of this Offering.

46
<PAGE>

DESCRIPTION OF CAPITAL STOCK

GENERAL

The authorized capital stock of the Company consists of 200,000,000 shares
of Common Stock and 10,000,000 shares of Preferred Stock. As of November 11,
1996, there were 1,000 shares of Common Stock outstanding held of record by
two persons and no shares of Preferred Stock outstanding. Upon consummation of
the Reorganization, there will be 56,775,000 shares of Common Stock
outstanding held of record by eight persons and no shares of Preferred Stock
outstanding. Upon the closing of this Offering, there will be 62,475,000
shares of Common Stock outstanding and no shares of Preferred Stock
outstanding.

COMMON STOCK

Holders of Common Stock are entitled to one vote per share in all matters to
be voted on by the stockholders and do not have cumulative voting rights.
Subject to preferences that may be applicable to any Preferred Stock
outstanding at the time, holders of Common Stock are entitled to receive
ratably such dividends, if any, as may be declared from time to time by the
Board of Directors out of funds legally available therefor. See "Dividend
Policy." In the event of a liquidation, dissolution or winding up of the
Company, holders of Common Stock are entitled to share ratably in all assets
remaining after payment of the Company's liabilities and the liquidation
preference, if any, of any outstanding Preferred Stock. All of the outstanding
shares of Common Stock are, and the shares offered by the Company in this
Offering will be, when issued and paid for, fully paid and non-assessable.
Holders of Common Stock have no preemptive, subscription, redemption or
conversion rights. The rights, preferences and privileges of holders of Common
Stock are subject to, and may be adversely affected by, the rights of the
holders of shares of any series of Preferred Stock which the Company may
designate and issue in the future.

PREFERRED STOCK

Effective upon the closing of this Offering, the Board of Directors will
have the authority, without any further vote or action by the stockholders, to
provide for the issuance of up to 10,000,000 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 therefor. 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.
Although it is not possible to state the effect that any issuance of Preferred
Stock might have on the rights of holders of Common Stock, the issuance of
Preferred Stock may have one or more of the following effects: (i) to restrict
Common Stock dividends if Preferred Stock dividends have not been paid, (ii)
to dilute the voting power and equity interest of holders of Common Stock to
the extent that any Preferred Stock series has voting rights or is convertible
into Common Stock or (iii) to prevent current holders of Common Stock from
participating in the distribution of the Company's assets upon liquidation
until any liquidation preferences granted to holders of Preferred Stock are
satisfied. In addition, the issuance of Preferred Stock may, under certain
circumstances, have the effect of discouraging a change in control of the
Company by, for example, granting voting rights to holders of Preferred Stock
that require approval by the separate vote of the holders of Preferred Stock
for any amendment to the Restated Certificate or any reorganization,
consolidation, merger or other similar transaction involving the Company. As a
result, the issuance of such Preferred Stock may discourage bids for the
Common Stock at a premium over the market price therefor, and could have a
materially adverse effect on the market value of the Common Stock. The Board
of Directors does not presently intend to issue any shares of Preferred Stock.
See "Risk Factors--Certain Anti-Takeover Considerations."

47
<PAGE>

REGISTRATION RIGHTS

The Company, Gary L. West, Mary E. West, Troy L. Eaden and each of the
former stockholders of the West Affiliates will enter into the Registration
Rights Agreement as of the closing of the Reorganization, which, among other
things, will provide that upon the request of Gary L. West, Mary E. West or
Troy L. Eaden, the Company will register under the Securities Act any of the
shares of Common Stock currently held by or acquired in the future by the
foregoing. Gary L. West and Mary E. West, collectively, and Troy L. Eaden,
individually, each will have the right to request four Demand Registrations.
Each of the foregoing and each of the seven other former stockholders of the
West Affiliates will have the right, which may be exercised at any time and
from time to time in the future, to include the shares of Common Stock held by
him or her in certain other registrations of Common Stock initiated by the
Company on its own behalf or on behalf of its stockholders. Following
consummation of the Reorganization and this Offering, Gary L. West and Mary E.
West will beneficially own in the aggregate approximately 45,451,263 shares of
Common Stock, Troy L. Eaden will beneficially own approximately 8,516,250
shares of Common Stock, and the seven other former stockholders of the West
Affiliates will beneficially own in the aggregate approximately 2,807,487
shares of Common Stock. Each of their rights under the Registration Rights
Agreement is transferable. In addition, each of the foregoing has agreed to
pay his or her pro rata share of certain costs and expenses in connection with
each registration of its shares of Common Stock.

LIMITATIONS ON DIRECTORS' LIABILITY

The Company's Restated Certificate of Incorporation (the "Restated
Certificate") and By-laws, which will go into effect upon the closing of this
Offering, limit the liability of directors to the maximum extent permitted by
Delaware law. Delaware law provides that directors of a corporation will not
be personally liable for monetary damages for breach of their fiduciary duties
as directors, including gross negligence, except liability for (i) breach of
the directors' duty of loyalty, (ii) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of the law, (iii)
the unlawful payment of a dividend or unlawful stock purchase or redemption
and (iv) any transaction from which the director derives an improper personal
benefit. This provision of the Company's Restated Certificate has no effect on
the availability of equitable remedies such as injunction or rescission.

These provisions will not limit liability under state or federal securities
laws. The Company believes that these provisions will assist the Company in
attracting and retaining qualified individuals to serve as directors.

RESTATED CERTIFICATE AND BY-LAW PROVISIONS AFFECTING CHANGE IN CONTROL

The Restated Certificate and By-laws include certain provisions which are
intended to enhance the likelihood of continuity and stability in the
composition of the Board of Directors and which may have the effect of
delaying, deterring or preventing a future takeover or change in control of
the Company unless such takeover or change in control is approved by the Board
of Directors. Such provisions may also render the removal of the directors and
management more difficult. The Restated Certificate provides that the Board of
Directors of the Company be divided into three classes serving staggered
three-year terms. The Restated By-laws include restrictions on who may call a
special meeting of stockholders and contain an advance notice procedure with
regard to the nomination, other than by or at the direction of the Board of
Directors, of candidates for election as directors and with regard to certain
matters to be brought before an annual meeting of stockholders of the Company.

SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW

The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law ("Section 203"). Under Section 203, certain "business
combinations" between a Delaware corporation whose stock is publicly traded or
held of record by more than 2,000 stockholders and an "interested stockholder"
are prohibited for a three-year period following the date that such a
stockholder became an interested stockholder, unless (i) the corporation has
elected in its original

48
<PAGE>

certificate of incorporation not to be governed by Section 203 (the Company
did not make such an election), (ii) the transaction in which the stockholder
became an interested stockholder or the business combination was approved by
the Board of Directors of the corporation before the other party to the
business combination became an interested stockholder, (iii) upon consummation
of the transaction that made it an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the commencement of the transaction (excluding voting stock
owned by directors who are also officers or held in employee benefit plans in
which the employees do not have a confidential right to tender or vote stock
held by the plan) or (iv) the business combination was approved by the Board
of Directors of the corporation and ratified by two-thirds of the voting stock
which the interested stockholder did not own. The term "business combination"
is defined generally to include mergers or consolidations between a Delaware
corporation and an "interested stockholder," transactions with an "interested
stockholder" involving the assets or stock of the corporation or its majority-
owned subsidiaries and transactions which increase an "interested
stockholder's" percentage ownership of stock. The term "interested
stockholder" is defined generally as a stockholder who, together with
affiliates and associates, owns (or, within three years prior, did own) 15% or
more of a Delaware corporation's voting stock. Section 203 could prohibit or
delay a merger, takeover or other change in control of the Company and
therefore could discourage attempts to acquire the Company.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar of the Company's Common Stock is First
Chicago Trust Company of New York.

SHARES ELIGIBLE FOR FUTURE SALE

Upon the closing of the Offering, the Company will have outstanding
62,475,000 shares of Common Stock, assuming no exercise of the Underwriters'
over-allotment option. In addition, the Company will have reserved additional
shares of Common Stock for issuance pursuant to the 1996 Stock Incentive Plan.
Of such outstanding shares, the shares sold in connection with the Offering
will be freely tradeable in the United States without restriction under the
Securities Act, except that shares purchased by an "affiliate" of the Company,
within the meaning of the rules and regulations adopted under the Securities
Act, may be subject to resale restrictions. The remaining outstanding shares
are "restricted securities," as that term is defined under such rules and
regulations, and may not be sold unless they are registered under the
Securities Act or they are sold in accordance with Rule 144 under the
Securities Act or some other exemption from such registration requirement.

The Company and certain of its executive officers and directors have agreed
that, for a period of 180 days after the date of this Prospectus (the "lock-up
period"), they will not dispose of any shares of Common Stock or securities
convertible or exchangeable into or exercisable for any shares of Common Stock
without the prior written consent of Goldman, Sachs & Co., except under
limited circumstances. Upon expiration of the lock-up period, 53,967,513
shares of Common Stock will become eligible for sale in the public market,
subject to the provisions of Rule 144 under the Securities Act. Such shares,
however, will not become eligible for sale in the public market under Rule 144
as currently in effect and interpreted by the staff of the Commission until
November 25, 1998.

In general, under Rule 144, subject to certain conditions with respect to
the manner of sale, the availability of current public information concerning
the Company and other matters, each of the existing stockholders who has
beneficially owned shares of Common Stock for at least two years will be
entitled to sell within any three-month period that number of such shares
which does not exceed the greater of one percent of the total number of then
outstanding shares of Common Stock or the average weekly trading volume of
shares of Common Stock during the four calendar weeks preceding the date on
which notice of the proposed sale is sent to the Commission. Moreover, each of
the

49
<PAGE>

existing stockholders who is not deemed to be an affiliate of the Company at
the time of the proposed sale and who has beneficially owned his or her shares
of Common Stock for at least three years will be entitled to sell such shares
under Rule 144 without regard to such volume limitations.

The Company intends to file a registration statement under the Securities
Act to register approximately 3,601,100 shares of Common Stock reserved for
issuance under the 1996 Stock Incentive Plan, and 5,898,400 shares of Common
Stock to be reserved for future issuance under the 1996 Stock Incentive Plan,
thus permitting the resale of shares issued under the 1996 Stock Incentive
Plan by non-affiliates in the public market without restriction under the
Securities Act, subject to vesting and, in certain cases, subject to the lock-
up period. Such registration statement is expected to become effective
immediately upon filing. In addition, the Company has granted certain
registration rights to, among others, Gary L. West, Mary E. West and Troy L.
Eaden. See "Management Executive Compensation--1996 Stock Incentive Plan",
"Certain Transactions--Registration Rights" and "Description of Capital
Stock--Registration Rights."

Prior to this Offering, there has been no public market for the Common
Stock. No assurance can be given that such a market will develop or, if it
develops, will be sustained after the Offering or that the purchasers of the
shares of Common Stock will be able to resell such shares of Common Stock at a
price higher than the initial public offering price or otherwise. If such a
market develops, no prediction can be made as to the effect, if any, that
future sales of shares of Common Stock, or the availability of shares of
Common Stock for future sale, to the public will have on the market price of
the Common Stock prevailing from time to time. Sales of substantial amounts of
presently outstanding or subsequently issued Common Stock, or the perception
that such sales could occur, could adversely affect prevailing market prices
for the Common Stock and could impair the Company's ability to raise capital
in the future through an offering of its additional shares of Common Stock
that may be offered for sale or sold to the public in the future.

UNDERWRITING

Subject to the terms and conditions set forth in the underwriting agreement,
the Company has agreed to sell to each of the Underwriters named below, and
each of such Underwriters, for whom Goldman, Sachs & Co., Salomon Brothers Inc
and Smith Barney Inc. are acting as representatives, has severally agreed to
purchase from the Company the number of shares of Common Stock set forth
opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ---------
<S> <C>
Goldman, Sachs & Co................................................ 1,425,000
Salomon Brothers Inc............................................... 1,425,000
Smith Barney Inc................................................... 1,425,000
Robert W. Baird & Co. Incorporated................................. 114,000
Alex. Brown & Sons Incorporated.................................... 171,000
Dain Bosworth Incorporated......................................... 114,000
GS/2/ Securities, Inc. ............................................ 114,000
Edward D. Jones & Co., L.P. ....................................... 114,000
Kirkpatrick, Pettis, Smith, Polian Inc. ........................... 114,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated................. 171,000
Morgan Stanley & Co. Incorporated.................................. 171,000
Sands Brothers & Co., Ltd. ........................................ 114,000
Stephens Inc. ..................................................... 114,000
Unterberg Harris................................................... 114,000
---------
Total........................................................ 5,700,000
=========
</TABLE>

50
<PAGE>

Under the terms and conditions of the underwriting agreement, the
Underwriters are committed to take and pay for all of the shares offered
hereby, if any are taken.

The Underwriters propose to offer the shares of Common Stock in part
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus, and in part to certain securities dealers at
such price less a concession of $0.74 per share. The Underwriters may allow,
and such dealers may reallow, a concession not in excess of $0.10 per share to
certain brokers and dealers. After the shares of Common Stock are released for
sale to the public, the offering price and other selling terms may from time
to time be varied by the representatives.

The Company has granted the Underwriters an option exercisable for 30 days
after the date of this Prospectus to purchase up to an aggregate 855,000
additional shares of Common Stock solely to cover over-allotments, if any. If
the Underwriters exercise their over-allotment option, the underwriters have
severally agreed, subject to certain conditions, to purchase approximately the
same percentage thereof that the number of shares to be purchased by each of
them, as shown in the foregoing table, bears to the 5,700,000 shares of Common
Stock offered.

The Company and the directors and executive officers of the Company have
agreed that, during the period beginning from the date of this Prospectus and
continuing to and including the date 180 days after the date of this
Prospectus, they will not offer, sell, contract to sell or otherwise dispose
of any securities of the Company (other than pursuant to employee stock option
plans existing, or on the conversion or exchange of convertible or
exchangeable securities outstanding, on the date of this Prospectus) which are
substantially similar to the share of Common Stock or which are convertible or
exchangeable into securities which are substantially similar to the shares of
Common Stock, without the prior written consent of the representatives.

The representatives of the Underwriters have informed the Company that they
do not expect sales to accounts over which the Underwriters exercise
discretionary authority to exceed five percent of the total number of shares
of Common Stock offered by them.

Prior to this Offering, there has been no public market for the Shares. The
initial public offering price will be negotiated among the Company and the
representatives. Among the factors to be considered in determining the initial
public offering price of the Common Stock, in addition to prevailing market
conditions, will be the Company's historical performance, estimates of the
business potential and earnings prospects of the Company, an assessment of the
Company's management and the consideration of the above factors in relation to
market valuation of companies in related businesses.

The Common Stock has been approved for quotation on the Nasdaq National
Market under the symbol "WTSC".

The Company and Gary L. West and Mary E. West have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act of 1933.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for the
Company by Willkie Farr & Gallagher, New York, New York. Certain legal matters
relating to the offering will be passed upon for the Underwriters by Kirkland
& Ellis, Chicago, Illinois.

EXPERTS

The financial statements as of September 30, 1996, December 31, 1995 and
1994, for the nine months ended September 30, 1996 and for each of the three
years in the period ended December 31, 1995 included in this Prospectus and
the related financial statement schedule included elsewhere in

51
<PAGE>

the Registration Statement have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports appearing herein and
elsewhere in the registration statement, and have been so included in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Commission under the Securities Act a
Registration Statement with respect to the Common Stock offered hereby. This
Prospectus, which is part of the Registration Statement, does not contain all
of the information set forth in the Registration Statement in accordance with
the rules and regulations of the Commission. For further information with
respect to the Company and the Common Stock, reference is hereby made to the
Registration Statement and such exhibits and schedules filed as a part
thereof, which may be inspected, without charge, at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the Commission's Regional Offices in New York (7 World Trade
Center, New York, New York 10007) and Chicago (Suite 1400, Northwestern Atrium
Center, 500 West Madison Street, Chicago, Illinois 60611). Copies of such
material can be obtained from the public reference of the Commission at
prescribed rates by writing to 450 Fifth Street, N.W., Washington, D.C. 20549.
The Registration Statement may also be accessed electronically on the
Commission's World Wide Web site (http://www.sec.gov). Copies of the
Registration Statement may also be inspected at the offices of Nasdaq
Operations, 1735 K Street, N.W., Washington, D.C. 20006.

The Company intends to distribute to its stockholders annual reports
containing audited financial statements and quarterly reports containing
unaudited interim financial information for the first three quarters of each
fiscal year of the Company.

52
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
West TeleServices Corporation and subsidiaries:
Introduction to pro forma unaudited consolidated financial data......... F-2
Pro forma consolidated balance sheet as of September 30, 1996
(unaudited)............................................................ F-3
Pro forma consolidated statements of operations for the nine months
ended
September 30, 1996..................................................... F-4
Pro forma consolidated statement of operations for the year ended
December 31, 1995...................................................... F-5
Notes to pro forma consolidated financial statements.................... F-6
West Telemarketing Corporation and affiliated companies:
Independent Auditors' Report............................................ F-7
Combined balance sheets, December 31, 1994 and 1995 and September 30,
1996................................................................... F-8
Combined statements of operations, years ended December 31, 1993, 1994
and 1995 and the nine months ended September 30, 1995 (unaudited) and
1996................................................................... F-9
Combined statements of stockholders' equity, years ended December 31,
1993, 1994 and 1995 and the nine months ended September 30, 1996....... F-10
Combined statements of cash flows, years ended December 31, 1993, 1994
and 1995 and the nine months ended September 30, 1995 (unaudited) and
1996................................................................... F-11
Notes to combined financial statements.................................. F-12
West TeleServices Corporation:
Independent Auditors' Report............................................ F-19
Balance sheets, December 31, 1994 and 1995 and September 30, 1996....... F-20
Statements of operations for the period from February 18, 1994
(inception) to December 31, 1994 and for the year ended December 31,
1995 and nine months ended September 30, 1995 (unaudited) and 1996..... F-21
Statements of cash flows for the period from February 18, 1994
(inception) to December 31, 1994 and for the year ended December 31,
1995 and nine months ended September 30, 1995 (unaudited) and 1996..... F-22
Statements of stockholders' equity for the period from February 18, 1994
(inception) to December 31, 1994 and for the year ended December 31,
1995 and nine months ended September 30, 1995 (unaudited) and 1996..... F-23
Notes to financial statements........................................... F-24
</TABLE>

F-1
<PAGE>

PRO FORMA UNAUDITED CONSOLIDATED FINANCIAL DATA

The following Pro Forma Unaudited Consolidated Financial Data for West
TeleServices Corporation and West Telemarketing Corporation and affiliated
companies has been prepared based upon the historical financial results of the
companies, adjusted to give effect to the consolidation of the companies. The
Pro Forma Unaudited Consolidated Financial Data give effect to the
consolidation of the companies under the purchase method of accounting for the
minority shareholders.

The pro forma consolidated balance sheet sets forth the consolidation of the
financial positions of West TeleServices Corporation and West Telemarketing
Corporation and affiliated companies as if the Consolidation had occurred on
September 30, 1996. The pro forma consolidated statements of operations for
the nine months ended September 30, 1996 and for the year ended December 31,
1995, reflect the consolidation of West TeleServices Corporation and West
Telemarketing Corporation and affiliated companies as if each had occurred at
the beginning of the period presented.

The Pro Forma Unaudited Consolidated Financial Data should be read in
conjunction with the audited and unaudited financial statements of the Company
and the audited and unaudited combined financial statements of West
Telemarketing Corporation and affiliated companies, appearing elsewhere in
this Prospectus.

The pro forma consolidated results are intended for information purposes
only and are not necessarily indicative of the results which would have been
attained if the consolidation had been consummated at the beginning of the
period presented or which may be attained in the future.

F-2
<PAGE>

WEST TELESERVICES CORPORATION AND SUBSIDIARIES

PRO FORMA CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 1996 (UNAUDITED)
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
WEST NOTE 2
TELEMARKETING ---------------------
WEST CORPORATION PRO FORMA
TELESERVICES AND AFFILIATED CONSOLIDATION
CORPORATION COMPANIES ADJUSTMENTS NOTES PRO FORMA
------------ -------------- ------------- ------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash
equivalents........... $ 2 $ 13,080 $(2,002) (A) (B) $ 11,080
Accounts receivable,
net of allowance for
doubtful accounts..... -- 41,764 -- 41,764
Notes receivable....... -- 729 -- 729
Accounts receivable--
financing............. -- 14,569 -- 14,569
Vendor receivables..... -- 5,033 -- 5,033
Other.................. -- 2,385 -- 2,385
---- -------- ------- --------
Total current assets... 2 77,560 (2,002) 75,560
PROPERTY AND EQUIPMENT:
Land and land
improvements.......... -- 1,099 -- 1,099
Building............... -- 7,600 -- 7,600
Telephone and computer
equipment............. -- 56,807 -- 56,807
Office furniture and
equipment............. -- 18,864 -- 18,864
Leasehold
improvements.......... -- 15,361 -- 15,361
Construction in
process............... -- 1,282 -- 1,282
---- -------- ------- --------
-- 101,013 -- 101,013
Accumulated
depreciation and
amortization.......... -- (38,304) -- (38,304)
---- -------- ------- --------
-- 62,709 -- 62,709
LAND HELD FOR
DEVELOPMENT............ -- 1,583 -- 1,583
OTHER ASSETS............ -- 516 -- 516
GOODWILL................ -- -- 50,535 (D) 50,535
---- -------- ------- --------
$ 2 $142,368 $48,533 $193,903
==== ======== ======= ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable--bank.... $-- $ 6,000 $ -- $ 6,000
Notes payable--
financing............. -- 13,431 -- 13,431
Accounts payable....... -- 22,170 -- 22,170
Customer deposits and
holdbacks............. -- 12,087 -- 12,087
Accrued wages and
benefits.............. -- 3,632 -- 3,632
Accrued phone
expenses.............. -- 8,062 -- 8,062
Other current
liabilities........... 7 3,207 (7) (A) 3,207
Current maturities of
long-term debt........ -- 2,422 -- 2,422
Current obligations
under capital leases.. -- 7,389 -- 7,389
---- -------- ------- --------
Total current
liabilities........... 7 78,400 (7) 78,400
OBLIGATIONS UNDER
CAPITAL LEASES, less
current obligations.... -- 9,213 -- 9,213
LONG-TERM DEBT, less
current maturities..... -- 8,958 -- 8,958
NOTES PAYABLE TO
STOCKHOLDERS........... -- -- 43,879 (B) 43,879
DEFERRED INCOME TAXES... -- -- 2,075 (C) 2,075
COMMITMENTS AND
CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01
par value, 10,000
shares authorized, no
shares issued and
outstanding........... -- -- -- --
Common stock, $.01 par
value, 200,000 shares
authorized, 1 share
issued and
outstanding........... 1 50 (1) (A) 50
Additional paid-in
capital............... -- 5,261 45,274 (B) (D) 50,535
Retained earnings...... (6) 40,486 (42,687) (A) (B) (2,207)
---- -------- ------- --------
Total stockholders'
equity................ (5) 45,797 2,586 48,378
---- -------- ------- --------
$ 2 $142,368 $48,533 $190,903
==== ======== ======= ========
</TABLE>

See notes to pro forma consolidated financial statements.

F-3
<PAGE>

WEST TELESERVICES CORPORATION AND SUBSIDIARIES

PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED)
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE)

See notes to consolidated financial statements.

F-4
<PAGE>

WEST TELESERVICES CORPORATION AND SUBSIDIARIES

PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 1995 (UNAUDITED)
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE)

<TABLE>
<CAPTION>
WEST NOTE 2
TELEMARKETING --------------------
WEST CORPORATION PRO FORMA
TELESERVICES AND AFFILIATED CONSOLIDATION
CORPORATION COMPANIES ADJUSTMENTS NOTES PRO FORMA
------------ -------------- ------------- ------ ---------
<S> <C> <C> <C> <C> <C>
REVENUE................. $-- $256,894 $ -- $256,894
COST OF SERVICES........ -- 146,531 -- 146,531
SELLING, GENERAL AND
ADMINISTRATIVE
EXPENSES............... 2 70,575 1,682 (A) (D) 72,259
LITIGATION SETTLEMENT... -- -- --
---- -------- -------- --------
NET OPERATING INCOME.... (2) 39,788 (1,682) 38,104
OTHER INCOME (EXPENSE):
Interest income....... -- 142 -- 142
Interest income--
financing, net of
interest expense..... -- 449 -- 449
Interest expense...... -- (2,403) -- (2,403)
Other income
(expense)............ -- (1,238) -- (1,238)
---- -------- -------- --------
Net other expense... -- (3,050) -- (3,050)
---- -------- -------- --------
NET INCOME AND NET
INCOME BEFORE PRO FORMA
TAX PROVISION.......... (2) 36,738 (1,682) 35,054
INCOME TAX PROVISION.... -- -- 13,130 (C) 13,130
---- -------- -------- --------
NET INCOME.............. $ (2) $ 36,738 $(14,812) $ 21,924
==== ======== ======== ========
NET INCOME PER SHARE.... $ 0.37
========
WEIGHTED AVERAGE SHARES
OUTSTANDING............ 59,324
========
</TABLE>

See notes to pro forma consolidated financial statements.

F-5
<PAGE>

WEST TELESERVICES CORPORATION AND SUBSIDIARIES

NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS)

1. GENERAL

PROPOSED PUBLIC OFFERING OF COMMON STOCK AND STOCK EXCHANGE (UNAUDITED)--The
Companies expect to enter into a reorganization with West TeleServices
Corporation. In connection with the proposed public offering with West
TeleServices Corporation, each of the stockholders of WTC, WTCO and WIC will
exchange their respective capital stock for 56,775 shares of common stock of
West TeleServices Corporation (the "Company") and each of the stockholders of
IBS and WICI will transfer their respective capital stock to WIC for nominal
cash consideration. West TeleServices Corporation will be the parent company
for WTC, WTCO and WIC and indirectly for IBS and WIC.

2. PRO FORMA ADJUSTMENTS FOR THE CONSOLIDATION

The pro forma financial statements reflect the following adjustments related
to the consolidation:

(A) Elimination of West TeleServices Corporation's account balances
included in West Telemarketing Corporation and affiliated companies
combined results.

(B) On October 31, 1996, the Companies declared dividends aggregating
$45,879 of which $2,000 was paid in cash and $43,879 was funded through
notes payable to shareholder. Retained earnings was reduced by $40,618 and
additional paid-in capital was reduced by $5,261 due to this dividend.

(C) In connection with an initial public offering, the Companies intend
to terminate their Small Business Corporation status and would become a C
corporation and therefore, subject to Federal and state income taxes. The
pro forma tax provisions (estimated at $2,075 as of September 30, 1996)
were calculated using the asset and liability approach for financial
accounting and reporting of income taxes, and were recorded as a reduction
of retained earnings and an increase in deferred income taxes.

(D) Adjustment to give effect to the accounting for the minority interest
under the purchase method of accounting. Accordingly, goodwill of $50,535
was recorded and is being amortized over 30 years. The associated
amortization expense recorded totaled $1,684 and $1,263 for the year ended
December 31, 1995 and the nine months ended September 30, 1996,
respectively.

The goodwill recorded was calculated based upon the number of shares of
West TeleServices Corporation expected to be received by the minority
shareholders upon the exchange of their stock in West Telemarketing
Corporation and West Telemarketing Corporation Outbound multiplied times
the expected offering price. This cost was allocated entirely to goodwill
for the following reasons: the Company's basis in its assets and
liabilities is approximately equal to its book value; all current assets
and current liabilities are at fair value; property and equipment is
primarily composed of telephone and computer equipment which have a
relatively short life span of approximately five years, and the book value
is a close approximation of market value; all debt and leases are at
interest rates equivalent to current market rates; the Company's customer
list has no significant value, since essentially all contracts are for a
term of less than one year and can be cancelled on 30 days notice by either
party; subsequent contracts may be subject to open bidding among the
Company and its competitors; and the Company holds no patents and no
material operating licenses and has no other significant intangibles to
allocate purchase price to.

F-6
<PAGE>

INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
West Telemarketing Corporation
and Affiliated Companies
Omaha, Nebraska

We have audited the accompanying combined balance sheets of West
Telemarketing Corporation and Affiliated Companies as of December 31, 1994 and
1995 and September 30, 1996 and the related combined statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1995 and the related statements of operations,
stockholders' equity and cash flows for the nine months ended September 30,
1996. The combined financial statements include the accounts of West
Telemarketing Corporation and four affiliated companies, West Telemarketing
Corporation Outbound, West Interactive Corporation, West Interactive Canada,
Inc. and Interactive Billing Services, Inc. These companies are under common
ownership and management. These financial statements are the responsibility of
the Companies' management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. 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 combined financial statements present fairly, in all
material respects, the financial position of West Telemarketing Corporation
and Affiliated Companies as of December 31, 1994 and 1995 and September 30,
1996, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1995 and the nine months ended
September 30, 1996, in conformity with generally accepted accounting
principles.

/s/ Deloitte & Touche LLP

DELOITTE & TOUCHE LLP

Omaha, Nebraska
November 5,1996

*********

F-7
<PAGE>

WEST TELEMARKETING CORPORATION AND AFFILIATED COMPANIES

COMBINED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31,
----------------- SEPTEMBER 30,
1994 1995 1996
------- -------- ----------------------
HISTORICAL PRO FORMA
---------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS (NOTES B AND C)
CURRENT ASSETS:
Cash and cash equivalents (Note
J)................................ $13,971 $ 21,861 $ 13,080 $ 11,080
Accounts receivable, net of
allowance for doubtful accounts of
$1,509, $1,557, $1,670 and
$1,670............................ 25,368 35,955 41,764 41,764
Notes receivable................... 1,328 522 729 729
Accounts receivable--financing
(Note B).......................... 13,595 13,980 14,569 14,569
Vendor receivables................. 648 1,107 5,033 5,033
Other.............................. 1,462 1,972 2,385 2,385
------- -------- -------- --------
Total current assets............. 56,372 75,397 77,560 75,560
PROPERTY AND EQUIPMENT (Note D):
Land and land improvements......... 724 1,148 1,099 1,099
Building........................... 2,856 7,257 7,600 7,600
Telephone and computer equipment... 33,122 43,722 56,807 56,807
Office furniture and equipment..... 9,142 12,882 18,864 18,864
Leasehold improvements............. 5,294 7,171 15,361 15,361
Construction in process............ -- 2,843 1,282 1,282
------- -------- -------- --------
51,138 75,023 101,013 101,013
Accumulated depreciation and
amortization...................... (20,318) (29,134) (38,304) (38,304)
------- -------- -------- --------
30,820 45,889 62,709 62,709
LAND HELD FOR DEVELOPMENT............ 1,583 1,583 1,583 1,583
OTHER ASSETS......................... 105 583 516 516
------- -------- -------- --------
$88,880 $123,452 $142,368 $140,368
======= ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable--bank (Note C)....... $ 6,840 $ 6,500 $ 6,000 $ 6,000
Notes payable--financing (Note B).. 10,884 13,456 13,431 13,431
Accounts payable................... 12,088 21,511 22,170 22,170
Customer deposits and holdbacks.... 4,566 5,340 12,087 12,087
Accrued wages and benefits......... 3,495 4,649 3,632 3,632
Accrued phone expense.............. 5,419 7,192 8,062 8,062
Other current liabilities.......... 2,111 2,799 3,207 3,207
Current maturities of long-term
debt (Note C)..................... 1,743 2,208 2,422 2,422
Current obligations under capital
leases (Note D)................... 3,818 5,192 7,389 7,389
------- -------- -------- --------
Total current liabilities........ 50,964 68,847 78,400 78,400
OBLIGATIONS UNDER CAPITAL LEASES,
less current obligations (Note D)... 3,124 6,151 9,213 9,213
LONG-TERM DEBT, less current
maturities (Note C)................. 5,224 8,236 8,958 8,958
NOTES PAYABLE TO STOCKHOLDERS (Notes
E and J)............................ 975 -- -- 43,879
DEFERRED INCOME TAXES (Note J)....... -- -- -- 2,075
COMMITMENTS AND CONTINGENCIES (Notes
D, E, F, G, H and J)
STOCKHOLDERS' EQUITY (Note J):
Common stock, $1.00 par value...... 50 50 50 50
Additional paid-in capital......... 5,261 5,261 5,261 --
Retained earnings.................. 23,282 34,907 40,486 (2,207)
------- -------- -------- --------
Total stockholders' equity....... 28,593 40,218 45,797 (2,157)
------- -------- -------- --------
$88,880 $123,452 $142,368 $140,368
======= ======== ======== ========
</TABLE>

See notes to combined financial statements.

F-8
<PAGE>

WEST TELEMARKETING CORPORATION AND AFFILIATED COMPANIES

COMBINED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------- --------------------
1993 1994 1995 1995 1996
-------- -------- -------- ----------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUE.................... $142,508 $186,512 $256,894 $187,332 $235,188
COST OF SERVICES........... 77,785 102,707 146,531 106,481 134,048
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES... 45,041 51,904 70,575 49,887 63,071
LITIGATION SETTLEMENT (Note
G)........................ 4,400 -- -- -- --
-------- -------- -------- -------- --------
NET OPERATING INCOME....... 15,282 31,901 39,788 30,964 38,069
OTHER INCOME (EXPENSE):
Interest income........... 212 144 142 102 273
Interest income--
financing, net of
interest expense of $884,
$1,223, $1,784, $1,356
and $954................. 86 234 449 318 450
Interest expense.......... (1,511) (1,606) (2,403) (1,806) (1,906)
Other income (expense).... 193 33 (1,238) (855) (906)
-------- -------- -------- -------- --------
Net other expense......... (1,020) (1,195) (3,050) (2,241) (2,089)
-------- -------- -------- -------- --------
NET INCOME AND NET INCOME
BEFORE PRO FORMA TAX
PROVISION................. $ 14,262 $ 30,706 $ 36,738 $ 28,723 $ 35,980
-------- -------- -------- -------- --------
PRO FORMA INFORMATION
(Note J) (unaudited):
Income tax provision...... $ 5,234 $ 10,900 $ 13,130 $ 10,404 $ 12,740
======== ======== ======== ======== ========
Net income................ $ 9,028 $ 19,806 $ 23,608 $ 18,319 $ 23,240
======== ======== ======== ======== ========
</TABLE>

See notes to combined financial statements.

F-9
<PAGE>

WEST TELEMARKETING CORPORATION AND AFFILIATED COMPANIES

COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY

YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 AND
THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
TOTAL
COMMON PAID-IN RETAINED STOCKHOLDERS'
STOCK CAPITAL EARNINGS EQUITY
------ ------- -------- -------------
<S> <C> <C> <C> <C>
BALANCE, January 1, 1993................ $30 $5,261 $ 4,756 $ 10,047
Distributions to stockholders......... -- -- (10,459) (10,459)
Net income and net income before pro
forma tax provision.................. -- -- 14,262 14,262
--- ------ -------- --------
BALANCE, December 31, 1993.............. 30 5,261 8,559 13,850
Stock issuance........................ 20 -- -- 20
Distributions to stockholders......... -- -- (15,983) (15,983)
Net income and net income before pro
forma tax provision.................. -- -- 30,706 30,706
--- ------ -------- --------
BALANCE, December 31, 1994.............. 50 5,261 23,282 28,593
Distributions to stockholders......... -- -- (25,113) (25,113)
Net income and net income before pro
forma tax provision.................. -- -- 36,738 36,738
--- ------ -------- --------
BALANCE, December 31, 1995.............. 50 5,261 34,907 40,218
Distributions to stockholders ........ -- -- (30,401) (30,401)
Net income and net income before pro
forma tax provision.................. -- -- 35,980 35,980
--- ------ -------- --------
BALANCE, September 30, 1996............. $50 $5,261 $ 40,486 $ 45,797
=== ====== ======== ========
</TABLE>

See notes to combined financial statements.

F-10
<PAGE>

WEST TELEMARKETING CORPORATION AND AFFILIATED COMPANIES

COMBINED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 AND
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------- -------------------
1993 1994 1995 1995 1996
-------- ------- -------- ----------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income.................. $ 14,262 $30,706 $ 36,738 $ 28,723 $35,980
Adjustments to reconcile net
income to net cash flows
from operating activities:
Depreciation and
amortization.............. 5,868 7,086 10,127 7,352 9,387
(Gain) loss on sale of
equipment................. -- (1) 148 19 (151)
Changes in operating assets
and liabilities:
Accounts receivable....... (1,035) (9,553) (10,954) (6,326) (5,870)
Other assets and vendor
receivables.............. 338 (518) (1,540) (1,352) (4,272)
Accounts payable.......... 1,560 4,848 9,423 (5,346) 659
Other current liabilities
and accrued expenses..... 3,835 848 3,615 2,899 261
-------- ------- -------- -------- -------
Net cash flows from
operating activities... 24,828 33,416 47,557 25,969 35,994
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of property and
equipment.................. (7,353) (7,655) (16,824) (11,361) (16,721)
Proceeds from disposal of
property and equipment..... 3 2 1,165 490 640
Issuance of notes
receivable................. (541) (985) -- -- (1,150)
Proceeds from payments of
notes receivable........... 1,638 760 1,173 817 1,004
-------- ------- -------- -------- -------
Net cash flows from
investing activities... (6,253) (7,878) (14,486) (10,054) (16,227)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from issuance of
debt....................... 3,900 2,733 7,123 5,896 10,321
Payments of debt............ (3,180) (1,895) (3,644) (1,921) (9,384)
Payments of capital lease
obligations................ (4,028) (4,176) (5,193) (3,932) (4,717)
Payments of note to
stockholder................ (405) (313) (975) (975) --
Net change in line of credit
agreement.................. 300 2,240 (340) 660 (500)
Net change in accounts
receivable financing and
note payable--financing.... -- (2,712) 2,187 1,467 (614)
Distributions to
stockholders............... (10,459) (15,983) (25,113) (23,112) (30,401)
Advances from AT&T.......... (1,461) -- -- -- --
Proceeds from issuance of
stock...................... -- 20 -- -- --
Increase (decrease) in
customer deposits and
holdbacks.................. 4,412 (529) 774 518 6,747
-------- ------- -------- -------- -------
Net cash flows from
financing activities... (10,921) (20,615) (25,181) (21,399) (28,548)
-------- ------- -------- -------- -------
NET CHANGE IN CASH AND CASH
EQUIVALENTS................. 7,654 4,923 7,890 (5,484) (8,781)
CASH AND CASH EQUIVALENTS,
Beginning of Period......... 1,394 9,048 13,971 13,971 21,861
-------- ------- -------- -------- -------
CASH AND CASH EQUIVALENTS,
End of Period............... $ 9,048 $13,971 $ 21,861 $ 8,487 $13,080
======== ======= ======== ======== =======
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid during the period
for interest............... $ 2,388 $ 2,726 $ 4,048 $ 3,148 $ 2,889
======== ======= ======== ======== =======
SUPPLEMENTAL SCHEDULE OF
NONCASH INVESTING
ACTIVITIES:
Acquisition of equipment
through assumption of
capital lease obligations.. $ 4,158 $ 3,854 $ 9,592 $ 5,187 $ 9,975
======== ======= ======== ======== =======
Reduction of accounts
receivable through issuance
of notes receivable........ $ 513 $ 1,005 $ 367 $ 208 $ 61
======== ======= ======== ======== =======
</TABLE>

See notes to combined financial statements.

F-11
<PAGE>

WEST TELEMARKETING CORPORATION AND AFFILIATED COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 AND
NINE MONTHS ENDED SEPTEMBER 30, 1995 (UNAUDITED) AND 1996
(DOLLARS IN THOUSANDS)

A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS DESCRIPTION--West Telemarketing Corporation and affiliated
companies (the "Companies") are teleservices companies which provide a full
range of customized telecommunications services to business clients through
its call centers throughout the United States. West Telemarketing Corporation
(WTC), located in Omaha, Nebraska and San Antonio, Texas, provides inbound
teleservices to national, multi-media advertisers. West Interactive
Corporation (WIC), located in Omaha, Nebraska, provides inbound recorded
message services to national multi-media advertisers. West Telemarketing
Corporation Outbound (WTCO), located in San Antonio, Texas, provides outbound
sales marketing services to national multi-media advertisers. West Interactive
Canada, Inc. (WICI) has administrative offices located in Omaha, Nebraska and
equipment located in Calgary, Alberta, Canada provides inbound recorded
message services to North American multi-media advertisers. Interactive
Billing Services, Inc. (IBS) is located in Omaha, Nebraska, provides billing
and financing services to telecommunication providers and users.

Each of the Companies has 10,000 shares of common stock authorized with
exception of WTC which has 100,000 shares authorized. The shares of WICI and
IBS were issued during 1994. Each of the Companies has 10,000 shares issued
and outstanding (See Note J).

BASIS OF COMBINATION--The combined financial statements include the accounts
of WTC, WIC, WTCO, WICI, IBS and other insignificant subsidiaries whose
operations are interrelated. All material affiliated party transactions and
balances have been eliminated in the combined financial statements.

REVENUE RECOGNITION--WTC recognizes revenues at the time calls are answered
by a telemarketing representative based on the number of calls received and
processed on behalf of clients. WIC and WICI recognize revenue at the time
calls are received or sent by automated voice response units and is billed
based on call duration. WTCO recognizes revenue on an hourly rate basis at the
time the telemarketing representatives place calls to consumers on behalf of
its clients. The customer is obligated to pay for these services when these
activities have been performed.

CASH AND CASH EQUIVALENTS--For purposes of the statement of cash flows, the
Companies consider short-term investments with maturities of three months or
less at acquisition to be cash equivalents.

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 payable are deemed to be reasonable estimates of
their fair values. Interest rates that are currently available to the
Companies for the reissuance of debt with similar terms and remaining
maturities are used to estimate fair values of the notes payable.

PROPERTY AND EQUIPMENT--Property and equipment are recorded at cost.
Depreciation expense is based on the estimated useful lives of the assets and
is calculated on accelerated and straight-line methods. The Companies'
buildings have estimated useful lives of 31.5 years and the majority of the
other assets have estimated useful lives of five years.

F-12
<PAGE>

WEST TELEMARKETING CORPORATION AND AFFILIATED COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

INTANGIBLES--Included in other assets are the costs of billing agreements
with various telephone companies. Amortization expense is calculated on the
straight line method over the five year estimated useful lives of the
contracts.

CUSTOMER DEPOSITS AND HOLDBACKS--WIC obtains directly from the billing and
collection agent revenue generated from its customers' programs. WIC retains a
specified amount of the revenue and remits the remainder to its customers. The
retained amount is based upon the collection history of the customer's program
success and is necessary to allow for potential caller adjustments which may
be filed within one year of the actual phone calls.

WTC and WIC obtain security deposits from certain customers, which are
refunded to the customers when WTC and WIC discontinue servicing the
customers' programs.

COST OF SERVICES--Cost of services includes labor, telephone and other
expense directly related to teleservices activities.

INCOME TAXES--The Companies have elected to be treated as "Small Business
Corporations" for income tax purposes. Under this election, all income and
expense flow through to the stockholders on a pro rata basis for income tax
purposes. Accordingly, no provision for income taxes has been made, except for
certain state taxes which are applicable to "Small Business Corporations."

In connection with an initial public offering (See Note J), the Companies
intend to terminate their Small Business Corporation status and would become a
C corporation and therefore, subject to Federal and state income taxes.

The pro forma tax provisions were calculated using the asset and liability
approach for financial accounting and reporting of income taxes.

USE OF ESTIMATES--The preparation of financial statements in conformity with
generally accepted accounting principles 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.

NEW ACCOUNTING PRONOUNCEMENT--The Financial Accounting Standards Board has
issued Statement of Financial Accounting Standards No. 123, Accounting for
Stock-Based Compensation. The Companies are required to adopt this standard
for the year ending December 31, 1996. The Companies have elected to adopt the
disclosure requirement of this pronouncement. The adoption of this
pronouncement will have no impact on the Companies' financial position or
results of operations.

INTERIM FINANCIAL STATEMENTS--In the opinion of management of the Companies,
the accompanying unaudited combined financial statements contain all
adjustments (consisting only of normal recurring accruals) necessary to
present fairly the financial position as of September 30, 1995 and the results
of operations and cash flows for the nine months ended September 30, 1995. The
results of operations for the nine months ended September 30, 1995 and 1996
are not necessarily indicative of the results to be expected for the full
year.

B. ACCOUNTS RECEIVABLE FINANCING PROGRAM

WIC maintains a line of credit with four participating banks in the amount
of $30,000, outstanding amounts payable totaled $10,884, $13,456 and $13,431
at December 31, 1994 and 1995 and September 30, 1996, respectively, bearing
interest at .5% below the prime rate (actual rate 7.75% at

F-13
<PAGE>

WEST TELEMARKETING CORPORATION AND AFFILIATED COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

September 30, 1996) to fund customer advances for itself and IBS.
Substantially all assets of WIC are pledged as collateral on the line of
credit which expires June 30, 1997. WIC and IBS have advances to customers
through their accounts receivable financing programs aggregating $13,595,
$13,980 and $14,569 at December 31, 1994 and 1995 and September 30, 1996,
respectively. Under terms of the programs, advances are collateralized by the
customer's accounts receivable from unrelated national billing services. WIC
and IBS charge interest at the prime rate plus 3.0% (11.25% at September 30,
1996).

C. LONG-TERM DEBT AND CREDIT ARRANGEMENTS

WTC has revolving lines of credit aggregating $4,500 at two banks which
expire in July, 1997. The note requires interest at .5% below prime (actual
rate 7.75% at September 30, 1996). WTCO had revolving lines of credit
aggregating $8,000 at two banks which expire in June, 1997 and bear interest
at .25% below the prime rate (actual rate 8.0% at September 30, 1996). At
September 30, 1996, outstanding borrowings under these lines of credit totaled
$6,000.

Long-term debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
-------------- -------------------
1994 1995 1995 1996
------ ------- ----------- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
Note payable to bank (modified on February
1, 1996), due in monthly installments of
$50 including interest with final balloon
payment on February 1, 2001. The note
accrues interest at 7.5%................... $2,298 $ 5,110 $ 5,160 $ 4,953
Note payable to bank, (modified on June 28,
1996), due in monthly installments of $79
including interest, payable until maturity
in June, 1999. The note bears interest at
the prime rate (8.25% at September 30,
1996)...................................... 1,274 1,648 1,801 2,305
Note payable to bank (modified on June 11,
1996), due in monthly installments of $54
including interest at the prime rate (8.25%
at September 30, 1996) maturing June 11,
1999....................................... 1,195 1,278 1,401 1,566
Note payable to bank, due in monthly
installments of $63 including interest,
payable until maturity in June, 1999. The
note bears interest at the prime rate
(8.25% at September 30, 1996).............. -- -- -- 1,844
Mortgage note payable to bank, due in
monthly installments of $25 including
interest at the prime rate (8.25% at
September 30, 1996), maturing April 25,
1999....................................... 1,085 883 936 712
Notes payable to bank, paid in 1996......... 1,115 1,525 1,645 --
------ ------- ------- -------
6,967 10,444 10,943 11,380
Less current maturities..................... 1,743 2,208 2,159 2,422
------ ------- ------- -------
$5,224 $ 8,236 $ 8,784 $ 8,958
====== ======= ======= =======
</TABLE>

F-14
<PAGE>

WEST TELEMARKETING CORPORATION AND AFFILIATED COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

Future principal payments at September 30, 1996 are as follows:

<TABLE>
<S> <C>
Remaining 1996.................................................... $ 577
1997.............................................................. 2,470
1998.............................................................. 2,684
1999.............................................................. 1,495
2000.............................................................. 288
2001 and thereafter............................................... 3,866
-------
$11,380
=======
</TABLE>

Substantially all assets of the Companies are pledged as collateral on their
debt. The agreements contain restrictive covenants which, among other things,
require the maintenance of certain ratios and minimum tangible net worth, as
defined in the agreements.

D. LEASES

The Companies lease certain land, buildings and equipment under operating
and capital leases which expire at varying dates through September, 2006. The
Companies' rent expense was $1,599, $1,360, $1,807, $1,320 and $2,007 for the
years ended December 31, 1993, 1994 and 1995, and the nine months ended
September 30, 1995 and 1996, respectively. On all real estate leases, the
Companies 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 two five-year options. All of the capital leases call for transfer
of ownership or contain bargain purchase options at the end of the lease term.
Amortization of assets purchased through capital lease agreements is included
in depreciation expense. The following information applies to those leases
exclusive of related party leases as discussed in Note E:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
--------------- -------------
1994 1995 1996
------- ------- -------------
<S> <C> <C> <C>
Assets under capital leases consist of:
Telephone and computer equipment............. $11,442 $15,278 $19,008
Office furniture and equipment............... 1,584 1,874 3,346
------- ------- -------
Total cost.................................. 13,026 17,152 22,354
Accumulated depreciation....................... 3,113 4,099 4,175
------- ------- -------
Net book value................................. $ 9,913 $13,053 $18,179
======= ======= =======
</TABLE>

F-15
<PAGE>

WEST TELEMARKETING CORPORATION AND AFFILIATED COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

Future minimum payments under non-cancellable operating and capital leases
with initial or remaining terms of one year or more and minimum future lease
payments and present value of the net minimum lease payments are as follows:

<TABLE>
<CAPTION>
OPERATING CAPITAL
YEAR ENDING DECEMBER 31, LEASES LEASES
------------------------ --------- -------
<S> <C> <C>
Remaining 1996............................................ $ 634 $ 2,200
1997...................................................... 2,222 8,290
1998...................................................... 1,853 5,766
1999...................................................... 1,538 2,121
2000...................................................... 1,335 --
2001 and thereafter....................................... 3,717 --
------- -------
Total minimum obligations................................. $11,299 18,377
=======
Less interest at 4.6% to 9.9%............................. 1,775
-------
Present value of net minimum lease payments............... 16,602
Less current portion...................................... 7,389
-------
$ 9,213
=======
</TABLE>

E. RELATED PARTY TRANSACTIONS

WTC leases office space owned by a partnership whose partners are majority
stockholders of WTC. The lease expires August 31, 2004, and is accounted for
as an operating lease. Required lease payments are as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
------------------------
<S> <C>
Remaining 1996..................................................... $179
1997............................................................... 730
1998............................................................... 773
1999............................................................... 820
2000............................................................... 869
</TABLE>

Lease expense was $522, $562, $649, $481 and $512 for the years ended
December 31, 1993, 1994 and 1995 and the nine months ended September 30, 1995
and 1996, respectively.

At December 31, 1993, WIC was indebted to the majority stockholder for $235.
The note was paid in 1994. At December 31, 1993 and 1994, WIC was indebted to
the majority stockholder for $975. The note was paid in 1995. Total interest
expense associated with the notes was $95, $76 and $59 for the years ended
December 31, 1993 and 1994 and the nine months ended September 30, 1995,
respectively.

At December 31, 1993, WTCO was indebted to stockholders for $78. The notes
were paid in 1994. Total interest expense associated with the notes was $5 and
$3 for the years ended December 31, 1993 and 1994, respectively.

F. EMPLOYEE BENEFIT PLAN

The Companies have a 401(k) plan which covers substantially all of their
employees. Under the plan, the Companies will match employee contributions up
to 7% of their gross salary. The Companies

F-16
<PAGE>

WEST TELEMARKETING CORPORATION AND AFFILIATED COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

matching contributions are 100% vested after the employee has attained five
years of service. Total contributions under the plan were $289, $406, $564,
$411 and $355 for the years ended December 31, 1993, 1994 and 1995, and the
nine months ended September 30, 1995 and 1996, respectively.

G. LITIGATION SETTLEMENT

In December, 1993, WIC settled a patent infringement suit with a competitor.
Under the settlement WIC paid $4,400 to the competitor to terminate the
dispute. WIC is also required to pay a fee for use of the technology through
2008 of an annual minimum of $250, up to an aggregate minimum of $3,000 and a
maximum annual limit of $1,000. When aggregate use fees of $3,000 have been
incurred, future years are not subject to minimum or maximum annual
limitations. During the years ended December 31, 1994 and 1995 and the nine
months ended September 30, 1995 and 1996, WIC incurred use fees of $339, $560,
$385 and $764, respectively, related to this agreement.

H. COMMITMENTS AND CONTINGENCIES

The Companies are defendants in a number of lawsuits and claims for various
amounts, which arise out of the normal course of business. WIC is a defendant
in a case brought in the United States District Court for the Southern
District of Georgia, Augusta Division, on September 12, 1991, captioned Lamar
Andrews Individually and as Representative of a Class of All Other Persons
Similarly Situated, Plaintiff v. American Telephone & Telegraph Company, et
al., Defendants, No. CV 191-175. The District Court certified a master class
of all persons who paid for one or more 900 number calls pertaining to
programs offering sweepstakes, games of chance, awards, cash or other prizes,
gifts or information on unclaimed funds. These calls were billed and collected
by AT&T Corp. ("AT&T") and U.S. Sprint Communications Company Limited
Partnership ("Sprint"). The District Court also certified a sub-class of those
persons who paid, in the State of Georgia, for one or more such calls billed
and collected by AT&T or Sprint. The complaint alleges that the programs at
issue involved, among other things, acts of unlawful gambling, mail fraud or
wire fraud in violation of the Racketeer Influenced and Corrupt Organizations
Act ("RICO"), the Communications Act of 1934, the federal common law of
communications and other state and federal laws. WIC provided interactive
voice processing and billing services to a customer which conducted some of
the programs at issue in the litigation. The billing services were provided
through AT&T. The action seeks recovery of treble damages (which amount has
not been specified), punitive damages, costs and attorneys' fees. The
Company's potential liability and expenses in this matter are not covered by
insurance. On September 19, 1996, the United States Court of Appeals for the
Eleventh Circuit reversed the District Court's order certifying the classes on
the ground that the class action would be unmanageable. Subsequent to this
decision, the Appellees have filed with the Eleventh Circuit a Petition for
Rehearing and Suggestion for Rehearing En Banc. In the opinion of management
and the Companies' legal counsel, the Companies are unable to form an opinion
as to the likelihood of an unfavorable outcome or an estimate of the amount or
range of any potential loss related to this case. The Companies believe that
the decision by the United States Court of Appeals is a favorable development
and intend to vigorously contest the claims made in this case.

I. SIGNIFICANT CUSTOMERS

The Companies have 20 major customers who accounted for approximately 66% of
total revenues for the nine months ended September 30, 1996. The Companies had
one customer who accounted for approximately 13% to 17% of revenues for the
periods presented. The Companies had another customer account for
approximately 11% of revenues for the year ended December 31, 1993.

F-17
<PAGE>

WEST TELEMARKETING CORPORATION AND AFFILIATED COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONCLUDED)

J. SUBSEQUENT EVENTS

DIVIDENDS--On October 31, 1996, the Companies declared dividends aggregating
$45,879, of which $2,000 was paid in cash and $43,879 was funded through notes
payable to shareholders.

PROPOSED PUBLIC OFFERING OF COMMON STOCK AND STOCK EXCHANGE (UNAUDITED)--The
Companies expect to enter into a reorganization with West TeleServices
Corporation. In connection with the proposed public offering by West
TeleServices Corporation, each of the stockholders of WTC, WTCO and WIC will
exchange their respective capital stock for 56,775,000 shares of common stock
of West TeleServices Corporation (the "Company") and each of the stockholders
of IBS and WICI will transfer their respective capital stock to WIC for nominal
consideration. West TeleServices Corporation will be the parent company for
WTC, WTCO and WIC and indirectly for IBS and WIC.

PRO FORMA INFORMATION (UNAUDITED)--The pro forma combined balance sheet of
the Companies as of September 30, 1996 reflects (1) the net deferred income tax
liability which will be recorded by the Companies as a result of the
termination of their S Corporation status prior to the closing date of the
Companies initial public offering ("Offering") contemplated by the Company
(estimated at $2,075 as of September 30, 1996) and (2) a distribution payable
to the stockholders of three of the Companies of such Companies' retained
earnings and additional paid-in capital ($45,879 as of September 30, 1996). The
deferred income tax liability will represent the tax effect of the cumulative
differences between the financial reporting and income tax bases of certain
assets and liabilities as of the termination of S Corporation status, and will
be recorded as additional income tax expense in the quarter in which the
Offering is completed. The actual deferred income tax liability recorded will
be adjusted to reflect the effect of operations of the Companies for the period
from October 1, 1996 through the termination of their S Corporation status. The
actual amount distributed will also be adjusted to reflect the taxable income
during that period, and any distributions made to the stockholders during that
time period. The Companies' pro forma net deferred income tax liability as of
September 30, 1996 is comprised principally of depreciation.

PRO FORMA STATEMENTS OF OPERATIONS (UNAUDITED)--Prior to the closing of the
Offering and simultaneous to the Reorganization, the Companies will terminate
their status as S Corporations and will be subject to federal and state income
taxes thereafter. Accordingly, for informational purposes, the accompanying
combined statements of operations for the three years ended December 31, 1995
and the nine months ended September 30, 1995 and 1996 include unaudited pro
forma adjustment for the income taxes which would have been recorded if the
Companies had not been S Corporations, based on the tax laws in effect during
the respective periods.

F-18
<PAGE>

INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
West TeleServices Corporation
Omaha, Nebraska

We have audited the accompanying balance sheets of West TeleServices
Corporation as of December 31, 1994 and 1995 and September 30, 1996 and the
related statements of operations, stockholders' equity and cash flows for the
period from February 18, 1994 (inception) to December 31, 1994 and for the
year ended December 31, 1995 and the related statements of operations,
stockholders' equity and cash flows for the nine months ended September 30,
1996. These financial statements are the responsibility of the Companies'
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of West TeleServices Corporation as of
December 31, 1994 and 1995 and September 30, 1996, and the results of their
operations and their cash flows for the period from February 18, 1994
(inception) to December 31, 1994 and for the year ended December 31, 1995 and
the nine months ended September 30, 1996, in conformity with generally
accepted accounting principles.

/s/ Deloitte & Touche LLP

Deloitte & Touche LLP
Omaha, Nebraska
November 5, 1996

F-19
<PAGE>

WEST TELESERVICES CORPORATION

BALANCE SHEETS
DECEMBER 31, 1994 AND 1995 AND SEPTEMBER 30, 1996
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31,
--------------- SEPTEMBER 30,
1994 1995 1996
------ ------ -------------
<S> <C> <C> <C>
Assets
Cash and Cash Equivalents........................ $ 4 $ 2 $ 2
====== ====== ===
Liabilities and Stockholders' Equity
Other Liabilities................................ $ 6 $ 6 $ 7
Stockholders' Equity:
Preferred stock, $.01 par value, 10,000 shares
authorized, no shares issued and outstanding... -- -- --
Common stock, $.01 par value, 200,000 shares
authorized, 1 share issued and outstanding..... 1 1 1
Retained earnings............................... (3) (5) (6)
------ ------ ---
Total stockholders' equity..................... (2) (4) (5)
------ ------ ---
$ 4 $ 2 $ 2
====== ====== ===
</TABLE>

See notes to financial statements.

F-20
<PAGE>

WEST TELESERVICES CORPORATION

STATEMENTS OF OPERATIONS
FOR THE PERIOD FROM FEBRUARY 18, 1994 (INCEPTION) TO DECEMBER 31,
1994 AND FOR THE YEAR ENDED DECEMBER 31, 1995 AND NINE MONTHS
ENDED SEPTEMBER 30, 1995 (UNAUDITED) AND 1996
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
-------------- ----------------
1994 1995 1995 1996
------ ------ ----------- ----
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenue..................................... $ -- $ -- $-- $--
Cost of Services............................ -- -- -- --
Selling, General and Administrative Ex-
penses..................................... 3 2 2 1
------ ------ ---- ----
Net income(loss)............................ $ (3) $ (2) $ (2) $ (1)
====== ====== ==== ====
</TABLE>

See notes to financial statements.

F-21
<PAGE>

WEST TELESERVICES CORPORATION

STATEMENTS OF CASH FLOWS
FOR THE PERIOD FROM FEBRUARY 18, 1994 (INCEPTION) TO DECEMBER 31, 1994 AND FOR
THE YEAR ENDED DECEMBER 31, 1995 AND NINE MONTHS ENDED SEPTEMBER 30, 1995
(UNAUDITED) AND 1996
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
SEPTEMBER 30,
----------------
1994 1995 1995 1996
---- ---- ----------- ----
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net loss........................................ $ (3) $ (2) $ (2) $ (1)
Adjustments to reconcile net income to net cash
flows from operating activities:
Changes in operating assets and liabilities:
Other liabilities............................. -- -- -- 1
---- ---- ---- ----
Net cash flows from operating activities..... (3) (2) (2) --
Cash Flows from Financing Activities:
Proceeds from issuance of common stock.......... 1 -- -- --
---- ---- ---- ----
Net Change in Cash and Cash Equivalents.......... (2) (2) (2) --
Cash and cash equivalents, Beginning of year..... 6 4 4 2
---- ---- ---- ----
Cash and cash equivalents, end of year........... $ 4 $ 2 $ 2 $ 2
==== ==== ==== ====
</TABLE>

See notes to financial statements.

F-22
<PAGE>

WEST TELESERVICES CORPORATION

STATEMENTS OF STOCKHOLDERS' EQUITY
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
TOTAL
COMMON RETAINED STOCKHOLDERS'
STOCK EARNINGS EQUITY
------ -------- -------------
<S> <C> <C> <C>
Issuance of Common Stock, at incorporation....... $ 1 $-- $ 1
Net income (loss)............................... -- (3) (3)
---- ---- ---
Balance, December 31, 1994....................... 1 (3) (2)
Net income (loss)............................... -- (2) (2)
---- ---- ---
Balance, December 31, 1995....................... 1 (5) (4)
Net income (loss)............................... -- (1) (1)
---- ---- ---
Balance, September 30, 1996...................... $ 1 $ (6) $(5)
==== ==== ===
</TABLE>

See notes to financial statements.

F-23
<PAGE>

WEST TELESERVICES CORPORATION

NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM FEBRUARY 18, 1994 (INCEPTION) TO DECEMBER 31, 1994
AND FOR THE YEAR ENDED DECEMBER 31, 1995 AND NINE MONTHS ENDED
SEPTEMBER 30, 1995 (UNAUDITED) AND 1996
(DOLLARS IN THOUSANDS)

A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS DESCRIPTION--West TeleServices Corporation (the "Company") was
incorporated on February 18, 1994 (formerly West Infoservices, Inc.) and has
had no significant business operations since its incorporation.

INCOME TAXES--The Company has elected to be treated as a "Small Business
Corporation" for income tax purposes. Under this election, all income and
expense flow through to the stockholders on a pro rata basis for income tax
purposes. Accordingly, no provision for income taxes has been made, except for
certain state taxes which are applicable to "Small Business Corporations."

NEW ACCOUNTING PRONOUNCEMENT--The Financial Accounting Standards Board has
issued Statement of Financial Accounting Standards No. 123, Accounting for
Stock-Based Compensation. The Company is required to adopt this standard for
the year ending December 31, 1996. The Company has elected to adopt the
disclosure requirement of this pronouncement. The adoption of this
pronouncement will have no impact on the Company's financial position or
results of operations.

INTERIM FINANCIAL STATEMENTS--In the opinion of management of the Company,
the accompanying unaudited consolidated financial statements contain all
adjustments (consisting only of normal recurring accruals) necessary to
present fairly the financial position as of September 30, 1995 and the results
of operations and cash flows for the nine months ended September 30, 1995. The
results of operations for the nine months ended September 30, 1995 and 1996
are not necessarily indicative of the results to be expected for the full
year.

B. SUBSEQUENT EVENTS

PROPOSED PUBLIC OFFERING OF COMMON STOCK AND STOCK EXCHANGE (UNAUDITED)--The
Company expects to sell 5,700,000 shares of common stock to the public in
connection with an initial public offering (the Offering). Prior to the
closing of the proposed public offering, each of the stockholders of West
Telemarketing Corporation (WTC), West Telemarketing Corporation Outbound
(WTCO) and West Interactive Corporation (WIC) will exchange their respective
capital stock for 56,775,000 shares of common stock of West TeleServices
Corporation.

1996 STOCK INCENTIVE PLAN (UNAUDITED)--During September, 1996, the Company
and its stockholders adopted the 1996 Stock Incentive Plan. The Plan
authorizes the issuance of up to 9,499,500 shares of common stock to officers
and employees.

As of September 24, 1996, the Company granted options for 3,601,100 shares
in connection with the Offering at an exercise price equal to the initial
public offering price. These options were granted at fair value and vest over
ten years.

F-24
<PAGE>

WEST TELESERVICES CORPORATION

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

PREFERRED STOCK--The Board of Directors of West TeleServices Corporation 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 therefor. 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.

F-25
<PAGE>

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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN
WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO ITS DATE.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................................................... 3
Risk Factors............................................................. 8
Reorganization and Termination of S Corporation Status................... 12
Use of Proceeds.......................................................... 14
Dividend Policy.......................................................... 14
Capitalization........................................................... 15
Dilution................................................................. 16
Selected Combined Financial and Operating Data........................... 17
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 19
Business................................................................. 26
Management............................................................... 39
Certain Transactions..................................................... 43
Principal Stockholders................................................... 46
Description of Capital Stock............................................. 47
Shares Eligible for Future Sale.......................................... 49
Underwriting............................................................. 50
Legal Matters............................................................ 51
Experts.................................................................. 51
Additional Information................................................... 52
Index to Financial Statements............................................ F-1
</TABLE>

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

THROUGH AND INCLUDING DECEMBER 21, 1996 (THE 25TH DAY AFTER THE DATE OF THIS
PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER
OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PRO-
SPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PRO-
SPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOT-
MENTS OR SUBSCRIPTIONS.

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5,700,000 SHARES

WEST TELESERVICES CORPORATION

COMMON STOCK
(PAR VALUE $0.01 PER SHARE)

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

[LOGO OF WEST TELESERVICES CORPORATION APPEARS HERE]

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GOLDMAN, SACHS & CO.

SALOMON BROTHERS INC

SMITH BARNEY INC.

REPRESENTATIVES OF THE UNDERWRITERS

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