WEST TELESERVICES CORP, S-1, 1996-10-11

WEST TELESERVICES CORP
S-1, 1996-10-11

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 11, 1996
REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

---------------
WEST TELESERVICES CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 7389 47-0777362
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
INCORPORATION OR
ORGANIZATION)

---------------
9910 MAPLE STREET
OMAHA, NEBRASKA 68134
(402) 571-7700
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

---------------
TROY L. EADEN
CHIEF EXECUTIVE OFFICER
WEST TELESERVICES CORPORATION
9910 MAPLE STREET
OMAHA, NEBRASKA 68134
(402) 571-7700
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

---------------
COPIES TO:
JOHN S. D'ALIMONTE VIRGIL K. JOHNSON CARTER W. EMERSON
WILLKIE FARR & ERICKSON & SEDERSTROM, P.C. KIRKLAND & ELLIS
GALLAGHER 10330 REGENCY PARKWAY DRIVE 200 RANDOLPH DRIVE
ONE CITICORP CENTER OMAHA, NEBRASKA 68114 CHICAGO, ILLINOIS 60601
153 EAST 53RD STREET (402) 397-2200 (312) 861-2000
NEW YORK, NEW YORK
10022
(212) 821-8000
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
---------------
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED PRICE(2) REGISTRATION FEE
- -------------------------------------------------------------------------------
<S> <C> <C>
Common Stock, par value $.01 per share... $128,000,000 $38,787(3)
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Includes shares which may be sold pursuant to the Underwriters' over-
allotment option.
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457 under the Securities Act of 1933, as amended.
(3) This amount was wired to the account of the Securities and Exchange
Commission (the "Commission") at Mellon Bank in payment of the required
registration fee due in connection with this Registration Statement.

---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

CROSS REFERENCE SHEET

CROSS-REFERENCE SHEET FURNISHED PURSUANT TO ITEM 501(B) OF REGULATION S-K
SHOWING LOCATION IN THE PROSPECTUS OF INFORMATION REQUIRED BY ITEMS OF FORM S-
1.

<TABLE>
<CAPTION>
FORM S-1 ITEM NUMBER AND CAPTION CAPTION IN PROSPECTUS
-------------------------------- ---------------------
<C> <S> <C>
1. Forepart of the Registration
Statement and Outside Front Facing Page; Cross Reference Sheet;
Cover Page of Prospectus.... Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back
Cover Pages Inside Front and Outside Back Cover Pages
of Prospectus............... of Prospectus
3. Summary Information, Risk
Factors and Ratio of Facing Page; Prospectus Summary; Summary
Earnings to Fixed Charges... Combined Financial Data; Risk Factors
4. Use of Proceeds.............. Prospectus Summary; Use of Proceeds
5. Determination of Offering Outside and Inside Front Cover Pages of
Price....................... Prospectus; Underwriting
6. Dilution..................... Risk Factors; Dilution
7. Selling Security Holders..... Not Applicable
8. Plan of Distribution......... Outside Front Cover Page of Prospectus;
Underwriting
9. Description of Securities to Prospectus Summary; Dividend Policy;
be Registered............... Capitalization; Description of Capital
Stock; Shares Eligible for Future Sale
10. Interests of Named Experts Legal Matters
and Counsel.................
11. Information with Respect to Inside and Outside Front Cover Pages of
the Registrant.............. Prospectus; Additional Information;
Prospectus Summary; Risk Factors; Use of
Proceeds; Dividend Policy; Capitalization;
Selected Combined Financial Data;
Management's Discussion and Analysis of
Financial Condition and Results of
Operations; Business; Management; Certain
Transactions; Principal Stockholders;
Description of Capital Stock; Shares
Eligible for Future Sale; Underwriting;
Financial Statements
12. Disclosure of Commission
Position on Indemnification Not Applicable
for Securities Act
Liabilities.................
</TABLE>
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED OCTOBER 11, 1996

[LOGO]
SHARES
WEST TELESERVICES CORPORATION
COMMON STOCK
(PAR VALUE $0.01 PER SHARE)

-----------

All of the shares of Common Stock offered hereby all being sold by the
Company. Prior to this Offering there has been no public market for the Common
Stock. It is currently estimated that the initial public offering price will be
between $ and $ per share. See "Underwriting" for a discussion of the
factors to be considered in determining the initial public offering price.

SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR CERTAIN RISKS RELEVANT TO AN
INVESTMENT IN THE COMMON STOCK.

Application will be made to have the Common Stock 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............................... $ $ $
Total(3)................................
</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 $ .
(3) The Company has granted the Underwriters an option for 30 days to purchase
up to an additional 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 $ , $ , and $ ,
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 , 1996, against payment therefor in immediately available funds.

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

-----------

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

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.

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

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 predecessors and
subsidiaries 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 Operation" 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. Inbound operator services consist of
live operator call-processing applications such as order capture, customer
service and product support. 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. Outbound direct teleservices consist of live operator direct
marketing applications such as product sales and customer acquisition and
retention campaigns. The Company has developed its own proprietary technology
platforms which enable it to integrate two or more 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 $22.8 million, respectively.

The Company currently operates approximately 4,000 telephone workstations in
six state-of-the-art call centers located in Nebraska, Texas and Virginia which
it uses for inbound and outbound services, and currently maintains
approximately 5,600 proprietary interactive voice response ports 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 the most sophisticated technology platforms in the
teleservices industry, permitting it to provide flexible, high-quality and
cost-effective service solutions for its clients.

3
<PAGE>

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.

THE OFFERING

Common Stock Offered in the shares
Offering............................

Common Stock Outstanding after the shares(1)
Offering...........................

Use of Proceeds..................... The net proceeds from the Offering are
estimated to be $120 million. Of such
proceeds, the Company estimates that
approximately $47.3 million will be
used to repay certain debt, $41.2 mil-
lion will be used to pay a portion of
notes payable to existing stockholders
issued in connection with the Reorgani-
zation, $20.0 million will be used to
fund capital expenditures and the bal-
ance will be used for working capital,
general corporate purposes including
possible acquisitions. See "Use of Pro-
ceeds."

Proposed Nasdaq National Market "WTSC"
symbol
- --------
(1) Excludes (i) shares of Common Stock issuable upon exercise of
outstanding stock options issued under the Company's 1996 Stock Incentive
Plan (the "1996 Plan") and (ii) an additional shares of Common Stock
reserved for future issuance under the 1996 Plan.

4
<PAGE>

SUMMARY COMBINED FINANCIAL INFORMATION

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
----------------------------------------------- ------------------
1991 1992 1993 1994 1995 1995 1996
------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT SHARE, PER SHARE AND SELECTED OPERATING
INCOME STATEMENT DATA: DATA)
Revenue................ $69,873 $101,208 $142,508 $186,512 $256,894 $124,242 $154,467
Cost of services....... 38,579 56,181 77,785 102,707 146,531 70,140 87,968
Selling, general and
administrative
expenses.............. 21,675 32,789 45,041 51,904 70,575 31,894 40,298
Litigation settlement.. -- -- 4,400 -- -- -- --
------- -------- -------- -------- -------- -------- --------
Net operating income... 9,619 12,238 15,282 31,901 39,788 22,208 26,201
Net other expense...... (704) (600) (1,020) (1,195) (3,050) (1,213) (1,337)
------- -------- -------- -------- -------- -------- --------
Net income before pro
forma tax
provision(1).......... 8,915 11,638 14,262 30,706 36,738 20,995 24,864
Pro forma provision for
income taxes(1)....... 2,326 2,832 5,234 10,900 13,130 7,625 8,770
------- -------- -------- -------- -------- -------- --------
Pro forma net
income(1)............. $ 6,589 $ 8,806 $ 9,028 $ 19,806 $ 23,608 $ 13,370 $ 16,094
======= ======== ======== ======== ======== ======== ========
Pro forma net income
per share(1)(2)....... $ $ $
======== ======== ========
SUPPLEMENTARY PRO FORMA
DATA:
Net income(3).......... $ 26,330 $ 14,708 $ 17,304
======== ======== ========
Net income per common
share(3).............. $ $ $
======== ======== ========
Weighted average common
shares outstanding....
======== ======== ========
SELECTED OPERATING DATA:
Operating margin....... 13.8% 12.1% 10.7% 17.1% 15.5% 17.9% 17.0%
Number of workstations
(at end of period).... 973 1,693 2,095 2,228 3,158 2,894 3,438
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, JUNE 30, 1996
------------------------------------------ ----------------------------------
PRO FORMA AS
1991 1992 1993 1994 1995 ACTUAL PRO FORMA(5) ADJUSTED(6)
------- ------- ------- ------- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital........ $ 38 $(4,905) $(4,742) $ 5,408 $ 6,550 $ 4,669 $ 4,669 $ 36,180
Property and equipment,
net. . 13,833 21,587 26,396 30,820 45,889 49,004 49,004 49,004
Total assets........... 33,198 49,546 60,225 88,880 123,452 128,705 128,705 128,705
Total debt(7).......... 17,581 26,195 23,913 32,608 41,743 47,334 88,489 --
Stockholders' equity... 6,488 10,047 13,850 28,593 40,218 41,205 (2,124) 117,876
</TABLE>
- --------
(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 I to
Combined Financial Statements.
(2) Pro forma net income per share amounts were calculated using 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 $41.15 million. See
"Reorganization and Termination of S Corporation Status."
(3) Supplementary pro forma net income per share amounts were calculated using
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 $41.15
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 $41.15
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.

5
<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

6
<PAGE>

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--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 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
AT&T Corp. ("AT&T") and various 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."

7
<PAGE>

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 16.2%, and the Company's ten largest
clients in the aggregate accounted for approximately 47.8%, of the Company's
revenue in 1995. The Company generally operates under contracts with these
clients which may be terminated on short notice. See "Business--General."

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,
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. The action seeks recovery of
treble damages (which amount has not been specified), punitive damages, costs
and attorneys' fees. On September 19, 1996, the United States Court of Appeals
for the Eleventh Circuit ( F.3d (11th Cir. 1996)) 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 is unable to form an
opinion as to the likelihood of an unfavorable outcome of the case.

CONTROL BY EXISTING STOCKHOLDERS

Upon completion of this Offering, Gary L. West and Mary E. West will
beneficially own an aggregate of approximately % of the shares of
outstanding Common Stock (approximately % 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" 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.

8
<PAGE>

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 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. 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 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."

9
<PAGE>

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
shares of Common Stock to be outstanding after this Offering, the 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 outstanding shares of Common Stock, 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 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
, 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 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 Agreement," "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 (based on an assumed
initial public offering price of $ per share of Common Stock, the midpoint
of the estimated initial public offering price range). 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."), West Telemarketing Corporation Outbound ("Outbound
Corp."), Interactive Billing Services, Inc. ("IBS") and West Interactive
Canada, Inc. ("Canada") will exchange the capital stock of such company owned
by such stockholder for shares of Common Stock of the Company (the
"Reorganization"). Since its respective date of incorporation and through the
date immediately preceding the effective date of the Reorganization (the
"Termination Date"), each of the foregoing companies 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.

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. Prior to the closing of the
Reorganization, each of the West Affiliates intends to declare one or more
dividends payable to

10
<PAGE>

its current stockholders (the West Affiliates' dividends, collectively, the
"Dividend"). The Dividend will be equal to the Company's estimate of the West
Affiliates' retained earnings prior to conversion of each of the West
Affiliates to a C Corporation, 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. The Company estimates that the Dividend will equal approximately
$54.2 million as of the Termination Date. Each of the West Affiliates will pay
its portion of the Dividend to each of its stockholders through a note payable
issued by such West Affiliate and guaranteed by the Company pursuant to the
Reorganization (the West Affiliates' notes payable collectively, the
"Stockholders Notes"). The Company estimates that approximately $13.0 million
of the Dividend will be paid from the West Affiliates' or the Company's
existing working capital and approximately $41.2 million of the Dividend will
be paid by a portion of the net proceeds to be received by the Company from
this Offering. See "Use of Proceeds" and "Certain Transactions."

The Termination Date will occur not later than the date immediately prior to
the date of the closing of this Offering. 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 Stockholders Notes, upon closing of this Offering,
the Company will have no liabilities with respect to distributions to the West
Affiliates' 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 $2.2 million if the Termination Date had been
June 30, 1996, but the actual amount will be adjusted to reflect the effect of
the Company's actual operations results through the Termination Date.

The Company and each of the stockholders of the West Affiliates are parties
to a Tax Indemnification Agreement (the "Tax Agreement") relating to their
respective income tax liabilities. The Tax Agreement provides that the Company
will indemnify the stockholders against any adjustments causing an increase in
the stockholders' federal and state income tax liability (including interest
and penalties) related to the Company's tax years prior to the closing of this
Offering, unless such adjustments result in or are related to a corresponding
decrease in the stockholders' federal and state income tax liability with
respect to another S Corporation taxable year. Subject to certain limitations,
the Tax Agreement also provides that the Company will be indemnified by the
stockholders with respect to federal and state income taxes (plus interest and
penalties) shifted from a S Corporation taxable year to a Company taxable year
subsequent to the closing of this Offering. Since the stockholders have not
given any security for their indemnification obligation, the Company's ability
to collect such payments is dependent upon the financial condition of the
stockholders at the time any such indemnification obligation arises. The
Company is not aware of any tax adjustments which may arise under the Tax
Agreement. The Tax Agreement further provides that to the extent that the
accumulated taxable income of each of the West Affiliates prior to each of its
conversions to a C Corporation, as subsequently established in connection with
the filing of the each of the West Affiliate's respective tax returns for the
short S Corporation tax year, is less than such entity's portion of the
Dividend relating to such entity's Distributions, the stockholders who receive
such amount will make a payment equal to such difference to the Company, and
if such accumulated taxable income is greater than such entity's portion of
the Dividend relating to such entity's Distributions, the Company will make an
additional distribution equal to such difference to such stockholders, in
either case, with interest thereon. Any payment made by the Company to the
stockholders pursuant to the Tax Agreement may be considered by the Internal
Revenue Service or the state taxing authorities to be nondeductible by the
Company for income tax purposes. See "Use of Proceeds," "Certain Transactions"
and Note H to Combined Financial Statements.

11
<PAGE>

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 $120 million
(approximately $ million if the over-allotment option is exercised in
full), after deducting underwriting discounts and offering expenses, and
assuming an offering price of $ per share. The Company intends to use the
net proceeds as follows: (i) approximately $47.3 million will be used to repay
outstanding debt including (a) $6.0 million outstanding under an $8 million
revolving credit facility (the "First Credit Facility"), (b) $3.0 million
outstanding under a $4.5 million revolving credit facility (the "Second Credit
Facility"), (c) $15.8 million outstanding under a $30 million accounts
receivable financing facility (the "Customer Financing Facility"), (d) $11.3
million in bank term loans, and (e) $11.2 million in capital leases;
(ii) approximately $41.2 million will be used to pay the remaining balance of
the Stockholders Notes; (iii) approximately $20.0 million will be used to fund
anticipated capital expenditures related to additional call center facilities,
enhancements to the Company's proprietary software systems and hardware
platforms and additional automated voice response units; and (iv) the balance
will be used for working capital, general corporate purposes and possible
acquisitions. The Company has no present understandings, commitments or
agreements, nor is it currently in negotiations with respect to, any
acquisition.

The First Credit Facility expires in June 1997 and bears interest at .25%
below the bank's prime rate (8.25% at June 30, 1996.) The Second Credit
Facility expires in July 1997 and bears interest at .50% below the prime rate
(8.25% at June 30, 1996.) The Third Credit Facility expires in June 1997 and
bears interest at .50% below the prime rate (8.25% at June 30, 1996). The
Stockholders Notes, which were incurred to pay the dividend, mature in and
bear interest at %. The Company intends (a) to retire $11.2 million of
various capital leases bearing interest at 7.1% to 9.5%, (b) to repay a $5.0
million bank note which matures in February 2001 and bears interest at 7.5%,
(c) to repay a $2.5 million bank note which matures in June 1999 and bears
interest at the prime rate, which was 8.25% at June 30, 1996, (d) to repay a
$1.0 million bank note which matures in June 1999 and bears interest at the
prime rate, which was 8.25% at June 30, 1996, (e) to repay a $2.0 million bank
note which matures in April 1999 and bears interest at the prime rate, which
was 8.25% at June 30, 1996, and (f) to repay a $771,000 mortgage note which
matures in April 1999 and bears interest at the prime rate, which was 8.25% at
June 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
Operation--Liquidity and Capital Resources."

12
<PAGE>

CAPITALIZATION

The following table sets forth short-term debt and the capitalization of the
Company as of June 30, 1996 (i) on an actual basis, (ii) on a pro forma basis
giving effect to the Reorganization, including payment of the Dividend through
the Stockholders Notes, and the incurrence of the Deferred Tax Liability, and
(iii) on a pro forma basis as adjusted to reflect the sale by the Company of
shares of Common Stock pursuant to this Offering at an assumed initial
public offering price of $ per share and the application of the estimated
net proceeds therefrom. See "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>
JUNE 30, 1996
--------------------------------
(UNAUDITED)
PRO FORMA
ACTUAL PRO FORMA(1) AS ADJUSTED
------- ------------ -----------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalents..................... $15,177 $15,177 $ 46,688
======= ======= ========
Short-term debt:(2)
Notes payable--bank.......................... $ 9,050 $ 9,050 $ --
Notes payable--financing..................... 15,762 15,762 --
Current maturities of long-term debt......... 2,379 2,379 --
Current obligations under capital leases..... 5,584 5,584 --
------- ------- --------
Total short-term debt....................... $32,775 $32,775 $ --
======= ======= ========
Long-term obligations; less current
maturities:(2)
Obligations under capital leases............. $ 5,639 $ 5,639 $ --
Long-term debt, less current maturities...... 8,920 8,920 --
Notes payable--stockholders.................. -- 41,155 --
------- ------- --------
Total long-term obligation, less current
maturities................................. $14,559 $55,714 $ --
======= ======= ========
Total debt.................................... 47,344 88,489 --
------- ------- --------
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; shares
issued and outstanding actual; shares
issued and outstanding pro forma, and
shares issued and outstanding pro forma as
adjusted.................................... 50 50 50
Additional paid-in capital................... 5,261 -- 120,000
Retained earnings............................ 35,894 (2,174) (2,174)
------- ------- --------
Total stockholders' equity.................... 41,205 (2,124) 117,876
------- ------- --------
Total capitalization.......................... $88,539 $86,365 $117,876
======= ======= ========
</TABLE>
- --------
(1) Reflects the effects of the Reorganization, including payment of the
Dividend through the Stockholders Notes and the incurrence of the Deferred
Tax Liability.
(2) 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.

13
<PAGE>

DILUTION

The pro forma net tangible book value of the Company as of June 30, 1996 was
approximately $41 million, or $ 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
June 30, 1996, on a pro forma basis before giving effect to the Reorganization
and this Offering. After giving effect to the Reorganization, including the
Dividend, and the receipt by the Company of the net proceeds from the sale of
shares of Common Stock offered by the Company hereby, assuming an initial
public offering price of $ , and after deducting the estimated underwriting
discount and offering expenses to be paid by the Company, the pro forma net
tangible book value of the Company as of June 30, 1996, would have been $
million, or $ per share. This represents an immediate increase in net
tangible book value of $. per share to existing stockholders and an immediate
dilution of $ 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............... $
Pro forma net tangible book value per share as of June 30,
1996, before this Offering and the Reorganization..........
Decrease per share attributable to the Dividend and deferred
taxes(1)................................................... ( )
Increase per share attributable to new investors............
------
Pro forma net tangible book value per share as of June 30,
1996, after this Offering and the Reorganization.............
----
Dilution per share to new investors........................... $
====
</TABLE>
- --------
(1) Includes amounts necessary to pay the 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."

The following table sets forth, on a pro forma basis as of June 30, 1996,
after giving effect to the Reorganization, including the 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 TOTAL
PURCHASED CONSIDERATION
-------------- -------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------ ------- ------ ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders............ %
New investors.................... %
----- --- ----- --- ---
Total.......................... 100% 100%
===== === ===== ===
</TABLE>

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

14
<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 unaudited Combined Financial Statements of the Company as of
and for the six months ended June 30, 1996, 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 six months ended June 30, 1995 are
derived from audited Combined Financial Statements of the Company.

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
----------------------------------------------- ------------------
1991 1992 1993 1994 1995 1995 1996
------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT SHARES, PER SHARE AND SELECTED
OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenue................ $69,873 $101,208 $142,508 $186,512 $256,894 $124,242 $154,467
Cost of services....... 38,579 56,181 77,785 102,707 146,531 70,140 87,968
Selling, general and
administrative
expenses.............. 21,675 32,789 45,041 51,904 70,575 31,894 40,298
Litigation settlement.. -- -- 4,400 -- -- -- --
------- -------- -------- -------- -------- -------- --------
Net operating income... 9,619 12,238 15,282 31,901 39,788 22,208 26,201
Net other expense...... (704) (600) (1,020) (1,195) (3,050) (1,213) (1,337)
------- -------- -------- -------- -------- -------- --------
Net income before pro
forma tax
provision(1).......... 8,915 11,638 14,262 30,706 36,738 20,995 24,864
Pro forma provision for
income taxes(1)....... 2,326 2,832 5,234 10,900 13,130 7,625 8,770
------- -------- -------- -------- -------- -------- --------
Pro forma net
income(1)............. $ 6,589 $ 8,806 $ 9,028 $ 19,806 $ 23,608 $ 13,370 $ 16,094
======= ======== ======== ======== ======== ======== ========
Pro forma net income
per share(1)(2)....... $ $ $
======== ======== ========
SUPPLEMENTARY PRO FORMA
DATA:
Net income(3).......... $ 26,330 $ 14,708 $ 17,304
======== ======== ========
Net income per common
share(3)..............
======== ======== ========
Weighted average common
shares outstanding....
======== ======== ========
SELECTED OPERATING DATA:
Operating margin....... 13.8% 12.1% 10.7% 17.1% 15.5% 17.9% 17.0%
Number of workstations
(at end of period).... 973 1,693 2,095 2,228 3,158 2,894 3,438
Number of ports(4) (at
end of period)........ 1,380 2,070 2,530 3,496 3,870 3,496 5,372
</TABLE>

15
<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" and
Note I to Combined Financial Statements.
(2) Pro forma net income per share amounts were calculated using 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 the Stockholders Notes equal to
$41.15 million. See "Reorganization and Termination of S Corporation
Status."
(3) Supplementary pro forma net income per share amounts were calculated using
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 the Stockholders Notes equal
to $41.15 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 the Stockholders Notes
equal to $41.15 million and the Deferred Tax Liability 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.

16
<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 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 31.5% and 28.9% of total
revenue for the six months ended June 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 40.8% and 38.4% of total
revenue for the six months ended June 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 27.7% and 32.7% of total revenue
for the six months ended June 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 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

17
<PAGE>

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."

18
<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 SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
--------------------- -------------------
1993 1994 1995 1995 1996
----- ----- ----- -------- --------
<S> <C> <C> <C> <C> <C>
Revenue......................... 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Cost of services................ 54.6 55.1 57.0 56.5 56.9
Selling, general and
administrative expenses........ 31.6 27.8 27.5 25.7 26.1
Litigation settlement........... 3.1 -- -- -- --
----- ----- ----- -------- --------
Net operating income............ 10.7 17.1 15.5 17.8 17.0
Other income (expense).......... (0.7) (0.6) (1.2) (0.9) (0.9)
----- ----- ----- -------- --------
Net income before pro forma
income tax expense............. 10.0 16.5 14.3 16.9 16.1
Pro forma income tax expense.... 3.7 5.9 5.1 6.1 5.7
----- ----- ----- -------- --------
Pro forma net income............ 6.3 % 10.6% 9.2 % 10.8 % 10.4 %
===== ===== ===== ======== ========
</TABLE>

SIX MONTHS ENDED JUNE 30, 1996 AND 1995

REVENUE: Revenue increased $30.3 million or 24.4% to $154.5 million in the
first six months of 1996 from $124.2 million in the comparable period of 1995.
The increase in revenue included $5.4 million derived from new clients and
$24.9 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 $17.9 million or 25.5% for the first six months ended June 30, 1996
to $88.0 million from $70.1 million for the comparable period of 1995. As a
percentage of revenue, cost of services increased to 56.9% in the six months
ended June 30, 1996 from 56.5% in the comparable period of 1995, principally as
a result of higher telephone costs attributable to a lower margin mix of
interactive revenues.

19
<PAGE>

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ("SG&A"): SG&A expenses
increased by $8.4 million or 26.3% to $40.3 million for the six months ended
June 30, 1996 from $31.9 million for the comparable period in 1995. As a
percentage of revenue, SG&A expenses increased to 26.1% for the six months
ended June 30, 1996 from 25.7% 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 $4.0 million or
18.0% to $26.2 million for the six months ended June 30, 1996 from $22.2
million for the comparable period in 1995. As a percentage of revenue, net
operating income declined to 17.0% in the six months ended June 30, 1996
compared to 17.8% in the comparable 1995 period due to the factors discussed
above.

OTHER INCOME (EXPENSE): Other income (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 $1.3 million for the six months ended June 30, 1996.

PRO FORMA NET INCOME: Pro forma net income increased by $2.7 million or
20.1% for the six months ended June 30, 1996, to $16.1 million from $13.4
million for the comparable period in 1995. Pro forma net income includes a
provision for income taxes at effective rates of 35.3% for 1996 and 36.3% 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 42.7% 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.

OTHER INCOME (EXPENSE): Other income (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

20
<PAGE>

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 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%.

OTHER INCOME (EXPENSE): Other income (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.

21
<PAGE>

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 $6.0 million and
$3.0 million, respectively, at June 30, 1996. Advances under the revolving
credit facilities bear interest at the banks' 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 June 30,
1996, the Company had term loans with banks that totaled $11.3 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 $15.8 million at June 30, 1996. This
credit facility expires on June 30, 1997.

Net cash flow from operating activities was $20.9 million for the six months
ended June 30, 1996, compared to $20.6 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 was relatively unchanged in the
six months ended June 30, 1996 compared to the same 1995 period, as higher net
income and depreciation and amortization was offset by lower payables due
principally to timing differences.

Net cash flow used in investing activities was $9.1 million for the six
months ended June 30, 1996 compared to $12.0 million in the same period in
1995, and was $14.9 million, $16.9 million, and $13.9 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 $18.5 million for the six
months ended June 30, 1996 compared to $10.2 million for the same period in
1995, and was $24.8 million, $11.6 million and $13.2 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. shareholders and to provide a
return on capital, offsetting borrowings under the Company's credit
facilities, net of repayments.

22
<PAGE>

The Company intends to use the net proceeds of the Offering as follows: (i)
to repay total outstanding debt of $47.3 million comprised of (a) an aggregate
of $9.0 million outstanding under its revolving credit facilities, (b) $15.8
million outstanding under its customer account receivable financing facility,
(c) $11.3 million in term loans and (d) $11.2 million in outstanding capital
leases; (ii) approximately $41.2 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, including funding up to $20 million of the
projected $23 million in capital expenditures for 1997. 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.

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 $20 million in capital
expenditures in 1996 (of which $9.6 million was invested through June 30,
1996). The Company projects its capital expenditures for 1997 to be
approximately $23 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 short
term 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.

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.

23
<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. 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. Outbound direct teleservices consist of live operator
direct marketing applications such as product sales and customer acquisition
and retention campaigns. The Company has developed its own proprietary
technology platforms which enable it to integrate two or more 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
$22.8 million, respectively.

The Company currently operates approximately 4,000 telephone workstations in
six state-of-the-art call centers located in Nebraska, Texas and Virginia
which it uses for inbound and outbound services, and currently maintains
approximately 5,600 proprietary interactive voice response ports 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 the most sophisticated technology platforms in the
teleservices industry, 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
in the United States were approximately $236 billion in 1995. Industry sources
also estimate that teleservices expenditures 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 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.

24
<PAGE>

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). 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. In fact, while the
overall teleservices market is estimated to grow at approximately 8% per year
for the next five years, the Company believes that the outsourced teleservices
market in which the Company competes is growing at a significantly faster
rate.

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 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 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.

25
<PAGE>

II. PURSUE RECURRING 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 one of the industry's most extensive
training programs and experienced management teams. 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 believes that its management team possesses more industry
experience in each of inbound, automated voice response and outbound divisions
than any of its competitors. 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.

26
<PAGE>

DESCRIPTION OF SERVICES

The Company's organizational structure is outlined below:

LOGO

I. OPERATOR SERVICES ("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. 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, approximately 90% 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.

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

27
<PAGE>

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 SERVICES ("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. 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.

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. 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.

28
<PAGE>

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 currently operates four automated voice response facilities with
approximately 4,000 telephone workstations and approximately 5,600 ports 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 2,700 operators per day with
peak employment of approximately 3,200 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 180 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 operational in December 1996. Outbound
currently maintains approximately 2,200 computer-assisted workstations and in
1995 employed an average of 2,400 marketing representatives per day with peak
employment of approximately 3,000 marketing representatives per day.

29
<PAGE>

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.............. -- 4,347(a)
San Antonio, Texas(a)........ -- 1,687
Calgary, Alberta............. -- 230
----- -----
Interactive Total.......... -- 6,264
----- -----
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 6,264
===== =====
</TABLE>
- --------
(a) Includes 644 ports which are expected to become operational in 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 what it believes to be the most reliable facilities and systems in
the teleservices industry. 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.

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-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.

30
<PAGE>

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 4,900 telephone
representatives per day for its inbound services and outbound services with
peak employment of approximately 6,200 operators per day. In addition, the
Company currently employs approximately 1,600 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 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.

31
<PAGE>

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 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.

32
<PAGE>

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 more than one 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.

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.

33
<PAGE>

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 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 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 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 tarriffed
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

34
<PAGE>

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 has never been held
financially responsible for regulatory noncompliance by a client. 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.

The Company believes it is in compliance 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, 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 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. The action seeks recovery of treble damages
(which amount has not been specified), punitive damages, costs and attorneys'
fees. On September 19, 1996, the United States Court of Appeals for the
Eleventh Circuit ( F.3d (11th Cir. 1996)) 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 is unable to form an opinion as to the likelihood of an
unfavorable outcome of the case.

35
<PAGE>

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The executive officers, directors and other key employees 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.................... 51 Chairman of the Board and Director(1)
Vice Chair of the Board, Secretary and
Director
Mary E. West.................... 50
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 Services
John W. Erwin................... 33 President--Direct Teleservices
Lee Waters...................... 37 Executive Vice President--Operator Services
Mark Lavin...................... 39 Executive Vice President--Direct Response
Services
Joseph L. Bradley............... 41 Executive Vice President--Systems and
Technology
Dianne K. Ferris................ 48 Chief Administration Officer and Vice
President--Corporate Administration
</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 Services in October 1996. Before joining Interactive,
she was Senior Project Manager at Applied Communications, Inc.

36
<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 both management and ownership
positions with Dial America Marketing and 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
Services 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 Services. 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.

DIANNE K. FERRIS joined the Company in 1988 as Vice President of
Operations--Inbound. In February 1991, Ms. Ferris was promoted to Vice
President--Corporate Administration and Chief Administration 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
and administers the Company's 1996 Stock Incentive Plan. 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.

37
<PAGE>

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 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 1,000
shares for each year of service. The options will become vested and
exercisable at the end of the director's term in office.

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) Consists of amounts, if any, deferred by each Named Executive Officer
pursuant to the Company's Employee 401(k) Retirement Plan.
(2) Amounts reported for Mr. Waters do not include any amounts for 1993 since
Mr. Waters joined the Company in 1994.

38
<PAGE>

1996 STOCK INCENTIVE PLAN

In 1996, the Board of Directors adopted the 1996 Stock Incentive Plan
and prior to the closing of this Offering, it is anticipated that the
stockholders will approve 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 ;
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
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. Prior to the date of this
Prospectus, Incentive Awards to purchase an aggregate of shares of Common
Stock will be issued and outstanding pursuant to the 1996 Stock Incentive
Plan. 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
will also receive certain employment benefits equal to those received by other
executive level employees of the Company. 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 and Lee Waters serve the Company pursuant
to employment agreements dated as of January 1, 1996 for Messrs. Barker and
Micek and June 25, 1996 for Mr. Waters (collectively referred to as the
"Effective Date"). The initial term of each agreement is two years and they
will be automatically renewed, subject to prior termination, for successive
one-year periods on the second anniversary of the respective Effective Date
and each anniversary thereafter unless

39
<PAGE>

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 and for Mr. Waters as Executive Vice President. Under the
respective agreements, Mr. Barker's base salary is $200,000 per year, Mr,
Micek's base salary is $140,000 per year and Mr. Water's base salary is
$150,000 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 or Mr. Water'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 and Waters to remain
as consultants to the Company for at least twenty-four months following
termination of employment. If Mr. Barker, Mr. Micek or Mr. Waters 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., Outbound Corp., IBS and Canada will exchange the
capital stock of such company owned by such stockholder for shares of Common
Stock pursuant to the Reorganization. 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 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 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. Prior to the closing of the Reorganization, the
West Affiliates intend to declare the Dividend. The Dividend will be equal to
the Company's estimate of its retained earnings prior to conversion of the
West Affiliates to a C Corporation, 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. The Company estimates that the Dividend will equal
approximately $54 million as of the Termination Date. Each of the West
Affiliates will pay its portion of the Dividend to its stockholders from its
existing working capital or through the issuance of Stockholder Notes. The
Company estimates that approximately $13 million of the Dividend will be paid
from the West Affiliates' or the Company's existing working capital and
approximately $41 million will be paid by a portion of the net proceeds to be
received by the Company from this Offering.

The Termination Date will occur not later than the date immediately prior to
the date of the closing of this Offering. 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 its
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 $2.2 million if the Termination Date had been
June 30, 1996, but the actual amount will be adjusted to reflect the effect of
the Company's actual operating results through the Termination Date.

The Company and each of the stockholders of the West Affiliates are parties
to the Tax Agreement relating to their respective income tax liabilities. The
Tax Agreement provides that the Company will indemnify the stockholders
against any adjustments causing an increase in the stockholders' federal and
state income tax liability (including interest and penalties) related to the

40
<PAGE>

Company's tax years prior to the closing of this Offering, unless such
adjustments result in or are related to a corresponding decrease in the
stockholders' federal and state income tax liability with respect to another S
Corporation taxable year. Subject to certain limitations, the Tax Agreement
also provides that the Company will be indemnified by the stockholders with
respect to federal and state income taxes (plus interest and penalties)
shifted from a S Corporation taxable year to a Company taxable year subsequent
to the closing of this Offering. Since the stockholders have not given any
security for their indemnification obligation, the Company's ability to
collect such payments is dependent upon the financial condition of the
stockholders at the time any such indemnification obligation arises. The
Company is not aware of any tax adjustments which may arise under the Tax
Agreement. The Tax Agreement further provides that to the extent that the
accumulated taxable income of each of the West Affiliates prior to each of its
conversions to a C Corporation, as subsequently established in connection with
the filing of the each of the West Affiliate's respective tax returns for the
short S Corporation tax year, is less than such entity's portion of the
Dividend relating to such entity's Distributions, the stockholders who receive
such amount will make a payment equal to such difference to the Company, and
if such accumulated taxable income is greater than such entity's portion of
the Dividend relating to such entity's Distributions, the Company will make an
additional distribution equal to such difference to such stockholders, in
either case, with interest thereon. Any payment made by the Company to the
stockholders pursuant to the Tax Agreement may be considered by the Internal
Revenue Service or the state taxing authorities to be nondeductible by the
Company for income tax purposes. See "Use of Proceeds," "Certain Transactions"
and Note H to Combined Financial Statements. See "Reorganization and
Termination of S Corporation Status."

LEASE OF 9910 MAPLE STREET FACILITY

The Company leases a building located a 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 Chairman 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 (6%). 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, individually,
each will have the right to request four Demand Registrations. Each of the
foregoing and each of the 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. 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.

WESTS' NOTE

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

41
<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth as of September 30, 1996, certain information
regarding beneficial ownership of the Company's 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
Company's 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.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO OFFERINGS(1) AFTER OFFERINGS
------------------------- -------------------------
NAME OF BENEFICIAL OWNER SHARES PERCENTAGE SHARES PERCENTAGE
- ------------------------ ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Gary L. West(2)......... 80.1%
Mary E. West(2)......... 80.1
Troy L. Eaden........... 15.0
Thomas B. Barker........
Michael A. Micek........
Lee Waters..............
Wayne Harper............
All Directors and
executive officers as a
group ( persons)......
</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.

42
<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. Upon the closing of
this Offering, there will be 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."

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

43
<PAGE>

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 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. 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 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

44
<PAGE>

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 .

SHARES ELIGIBLE FOR FUTURE SALE

Upon the closing of the Offering, the Company will have outstanding
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, 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 ,
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 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 shares of Common Stock reserved for issuance
under the 1996 Stock

45
<PAGE>

Incentive Plan, and 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. At the date
of this Prospectus, options to purchase an aggregate of shares of Common
Stock are outstanding under the 1996 Stock Incentive Plan. An additional
shares of Common Stock are available for future grants under the 1996 Stock
Incentive Plan. In addition, the Company has granted certain registration
rights to, among others, Gary L. West, Mary E. West and Troy L. Eaden. See
"Management", "Certain Transactions--Registration Rights" and "Description of
Capital Stock--Registration Rights Agreement."

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
UNDERWRITERS SHARES
------------ ---------
<S> <C>
Goldman, Sachs & Co................................................
Salomon Brothers Inc...............................................
Smith Barney Inc...................................................

----
Total........................................................
====
</TABLE>

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 $ per share. The Underwriters may allow,
and such dealers may reallow, a concession not in excess of $ 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
additional shares of Common Stock solely to cover over-allotments, if any. If
the Underwriters exercise their over-allotment option, the

46
<PAGE>

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
shares of Common Stock offered.

The Company and Gary L. West and Mary E. West 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.

Application will be made to list the Common Stock on the Nasdaq National
Market under the symbol "WTSC" or such other symbol as the Company may select.

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 June 30, 1995, December 31, 1995 and 1994,
for the six months ended June 30, 1995 and for each of the three years in the
period ended December 31, 1995 included in this Prospectus and the related
financial statement schedules included elsewhere in 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

47
<PAGE>

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.

48
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
West Telemarketing Corporation and Affiliated Companies:
Independent Auditors' Report............................................. F-2
Combined balance sheets, December 31, 1994 and 1995 and June 30, 1996
(unaudited)............................................................. F-3
Combined statements of operations, years ended December 31, 1993, 1994
and 1995 and the six months ended June 30, 1995 and 1996 (unaudited).... F-4
Combined statements of stockholders' equity, years ended December 31,
1993, 1994 and 1995 and the six months ended June 30, 1996 (unaudited).. F-5
Combined statements of cash flows, years ended December 31, 1993, 1994
and 1995 and the six months ended June 30, 1995 and 1996 (unaudited).... F-6
Notes to combined financial statements................................... F-7
</TABLE>

F-1
<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 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 and cash flows for the six
months ended June 30, 1995. 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 common 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 financial statements present fairly, in all material
respects, the combined financial position of West Telemarketing Corporation
and affiliated companies as of December 31, 1994 and 1995 and June 30, 1995,
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 six months ended June 30,
1995, in conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP

Omaha, Nebraska
March 1, 1996
(October 10, 1996 as to Notes H and I)

F-2
<PAGE>

WEST TELEMARKETING CORPORATION AND AFFILIATED COMPANIES

COMBINED BALANCE SHEETS

DECEMBER 31, 1994 AND 1995 AND JUNE 30, 1996
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31,
----------------- JUNE 30,
1994 1995 1996
------- -------- -------------------
PRO FORMA
ACTUAL (NOTE I)
-------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS (NOTES B AND C)
CURRENT ASSETS:
Cash and cash equivalents............. $13,971 $ 21,861 $ 15,177 $ 15,177
Accounts receivable, net of allowance
for doubtful accounts of $1,359,
$1,557 and $1,413.................... 25,368 35,955 39,053 39,053
Notes receivable...................... 1,328 522 1,120 1,120
Accounts receivable--financing (Note
B)................................... 13,595 13,980 16,242 16,242
Other................................. 2,110 3,079 6,018 6,018
------- -------- -------- --------
Total current assets................ 56,372 75,397 77,610 77,610
PROPERTY AND EQUIPMENT (Note D):
Land and land improvements............ 724 1,148 1,066 1,066
Building.............................. 2,856 7,257 7,397 7,397
Telephone and computer equipment...... 33,122 43,722 50,229 50,229
Office furniture and equipment........ 9,142 12,882 14,734 14,734
Leasehold improvements................ 5,294 7,171 10,001 10,001
Construction-in-process............... -- 2,843 606 606
------- -------- -------- --------
51,138 75,023 84,033 84,033
Accumulated depreciation and
amortization......................... (20,318) (29,134) (35,029) (35,029)
------- -------- -------- --------
30,820 45,889 49,004 49,004
LAND HELD FOR DEVELOPMENT............... 1,583 1,583 1,583 1,583
OTHER ASSETS............................ 105 583 508 508
------- -------- -------- --------
$88,880 $123,452 $128,705 $128,705
======= ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable--bank (Note C).......... $ 6,840 $ 6,500 $ 9,050 $ 9,050
Notes payable--financing (Note B)..... 10,884 13,456 15,762 15,762
Accounts payable...................... 12,088 21,511 17,157 17,157
Customer deposits and holdbacks....... 4,566 5,340 7,888 7,888
Accrued wages and benefits............ 3,495 4,649 4,657 4,657
Accrued phone expense................. 5,419 7,192 8,086 8,086
Other current liabilities............. 2,111 2,799 2,378 2,378
Current maturities of long-term debt
(Note C)............................. 1,743 2,208 2,379 2,379
Current obligations under capital
leases (Note D)...................... 3,818 5,192 5,584 5,584
------- -------- -------- --------
Total current liabilities........... 50,964 68,847 72,941 72,941
OBLIGATIONS UNDER CAPITAL LEASES, less
current obligations (Note D)........... 3,124 6,151 5,639 5,639
LONG-TERM DEBT, less current maturities
(Note C)............................... 5,224 8,236 8,920 8,920
NOTE PAYABLE TO STOCKHOLDERS (Note E)... 975 -- -- 41,155
DEFERRED INCOME TAXES................... -- -- -- 2,174
COMMITMENTS AND CONTINGENCIES (Notes D,
E, F, G, H and I)
STOCKHOLDERS' EQUITY:
Common stock, $1.00 par value (Note
I)................................... 50 50 50 50
Additional paid-in capital............ 5,261 5,261 5,261 --
Retained earnings..................... 23,282 34,907 35,894 (2,174)
------- -------- -------- --------
Total stockholders' equity.......... 28,593 40,218 41,205 (2,124)
------- -------- -------- --------
$88,880 $123,452 $128,705 $128,705
======= ======== ======== ========
</TABLE>

See notes to combined financial statements.

F-3
<PAGE>

WEST TELEMARKETING CORPORATION AND AFFILIATED COMPANIES

COMBINED STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 AND THE SIX MONTHS ENDED JUNE 30,
1995 AND 1996
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
---------------------------- ---------------------
1993 1994 1995 1995 1996
-------- -------- -------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUE.................... $142,508 $186,512 $256,894 $124,242 $154,467
COST OF SERVICES........... 77,785 102,707 146,531 70,140 87,968
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES... 45,041 51,904 70,575 31,894 40,298
LITIGATION SETTLEMENT (Note
G)........................ 4,400 -- -- -- --
-------- -------- -------- -------- --------
NET OPERATING INCOME....... 15,282 31,901 39,788 22,208 26,201
OTHER INCOME (EXPENSE):
Interest income.......... 212 144 142 56 171
Interest income--
financing, net of
interest expense of
$884, $1,223, $1,784,
$947 and $621........... 86 234 449 185 280
Interest expense......... (1,511) (1,606) (2,403) (1,177) (1,240)
Other income (expense)... 193 33 (1,238) (277) (548)
-------- -------- -------- -------- --------
Net income and net income
before pro forma tax
provision............... (1,020) (1,195) (3,050) (1,213) (1,337)
-------- -------- -------- -------- --------
PRO FORMA INFORMATION (Note
I) (unaudited):
Income tax provision..... $ 5,234 $ 10,900 $ 13,130 $ 7,625 $ 8,770
======== ======== ======== ======== ========
Net income............... $ 9,028 $ 19,806 $ 23,608 $ 13,370 $ 16,094
======== ======== ======== ======== ========
Net income per share..... $ $
======== ========
Weighted average shares
outstanding.............
======== ========
</TABLE>

See notes to combined financial statements.

F-4
<PAGE>

WEST TELEMARKETING CORPORATION AND AFFILIATED COMPANIES

COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY

YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 AND THE SIX MONTHS ENDED JUNE 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 ($ per
share)............................... -- -- (10,459) (10,459)
Net income............................ -- -- 14,262 14,262
--- ------ -------- --------
BALANCE, December 31, 1993.............. 30 5,261 8,559 13,850
Stock issuance........................ 20 -- -- 20
Distributions to stockholders ($ per
share)............................... -- -- (15,983) (15,983)
Net income............................ -- -- 30,706 30,706
--- ------ -------- --------
BALANCE, December 31, 1994.............. 50 5,261 23,282 28,593
Distributions to stockholders ($ per
share)............................... -- -- (25,113) (25,113)
Net income............................ -- -- 36,738 36,738
--- ------ -------- --------
BALANCE, December 31, 1995.............. 50 5,261 34,907 40,218
Distributions to stockholders ($ per
share) (unaudited)................... -- -- (23,877) (23,877)
Net income (unaudited)................ -- -- 24,864 24,864
--- ------ -------- --------
BALANCE, June 30, 1996 (unaudited)...... $50 $5,261 $ 35,894 $ 41,205
=== ====== ======== ========
</TABLE>

See notes to combined financial statements.

F-5
<PAGE>

WEST TELEMARKETING CORPORATION AND AFFILIATED COMPANIES

COMBINED STATEMENTS OF CASH FLOWS

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

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 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 $ 20,995 $24,864
Adjustments to reconcile
net income to net cash
flows from operating
activities:
Depreciation and
amortization........... 5,868 7,086 10,127 4,612 6,094
(Gain) loss on sale of
equipment.............. -- (1) 148 30 (138)
Changes in operating
assets and liabilities:
Accounts receivable.... (1,035) (9,553) (10,954) (7,471) (3,159)
Other assets........... 338 (518) (1,540) (244) (2,864)
Accounts payable....... 1,560 4,848 9,423 1,472 (4,354)
Other current
liabilities and
accrued expenses...... 3,835 848 3,615 1,236 481
-------- -------- -------- -------- -------
Net cash flows from
operating
activities.......... 24,828 33,416 47,557 20,630 20,924
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of property and
equipment............... (7,353) (7,655) (16,824) (8,185) (6,791)
Proceeds from disposal of
property and equipment.. 3 2 1,165 154 529
Issuance of notes
receivable.............. (541) (985) -- (208) (1,050)
Proceeds from payments of
notes receivable........ 1,638 760 1,173 588 513
Net change in accounts
receivable--financing... 2,310 (9,015) (385) (4,388) (2,262)
-------- -------- -------- -------- -------
Net cash flows from
investing
activities.......... (3,943) (16,893) (14,871) (12,039) (9,061)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from issuance of
debt.................... 3,900 2,733 7,123 5,521 9,642
Payments of debt......... (3,180) (1,895) (3,644) (1,947) (8,787)
Payments of capital lease
obligations............. (4,028) (4,176) (5,193) (2,722) (2,929)
Payments of note to
stockholder............. (405) (313) (975) -- --
Net change in line of
credit agreement........ 300 2,240 (340) 1,660 2,550
Distributions to
stockholders............ (10,459) (15,983) (25,113) (19,219) (23,877)
Net change in notes
payable--financing...... (2,310) 6,303 2,572 6,232 2,306
Advances from AT&T....... (1,461) -- -- -- --
Proceeds from issuance of
stock................... -- 20 -- -- --
Increase (Decrease) in
customer deposits and
holdbacks............... 4,412 (529) 774 279 2,548
-------- -------- -------- -------- -------
Net cash flows from
financing
activities.......... (13,231) (11,600) (24,796) (10,196) (18,547)
-------- -------- -------- -------- -------
NET CHANGE IN CASH AND
CASH EQUIVALENTS......... 7,654 4,923 7,890 (1,605) (6,684)
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 $ 12,366 $15,177
======== ======== ======== ======== =======
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid during the
period for interest..... $ 2,388 $ 2,726 $ 4,048 $ 2,078 $ 1,675
======== ======== ======== ======== =======
SUPPLEMENTAL SCHEDULE OF
NONCASH INVESTING
ACTIVITIES:
Acquisition of equipment
through assumption of
capital lease
obligations............. $ 4,158 $ 3,854 $ 9,592 $ 4,843 $ 2,809
======== ======== ======== ======== =======
Reduction of accounts
receivable through
issuance of notes
receivable.............. $ 513 $ 1,005 $ 367 $ 208 $ 61
======== ======== ======== ======== =======
</TABLE>

See notes to combined financial statements.

F-6
<PAGE>

WEST TELEMARKETING CORPORATION AND AFFILIATED COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 AND THE SIX MONTHS ENDED JUNE 30,
1995 AND 1996 (UNAUDITED)
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS DESCRIPTION--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 leased 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. The five companies, collectively,
are referred to as the "Companies".

Each of the Companies has 100,000 shares of common stock authorized with the
exception of WICI and IBS which each has 10,000 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 I).

BASIS OF COMBINATION--The combined financial statements include the accounts
of WTC, WIC, WTCO, WICI and IBS. The Companies are under common ownership and
management. All affiliated party transactions and balances have been
eliminated in the combined financial statements.

REVENUE RECOGNITION--WTC recognizes revenue on the basis of calls received.
WIC and WICI recognize revenue on the basis of minutes of calls received and
calls sent. WTCO recognizes revenue on the basis of billable hours. IBS
recognizes revenue based on a percentage of telephone records billed.

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.

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.

F-7
<PAGE>

WEST TELEMARKETING CORPORATION AND AFFILIATED COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

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 customers's
program 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.

In connection with an initial public offering (See Note I), 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 revenue 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 June 30, 1996 and the results of
operations and cash flows for the six months ended June 30, 1996. The results
of operations for the six months ended June 30, 1996 are not necessarily
indicative of the results to be expected for the full year.

RECLASSIFICATIONS--Certain reclassifications have been made in the prior
year financial statements to conform to the 1996 presentation and to conform
with Regulation S-X.

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 $15,762
at December 31, 1994 and 1995 and June 30, 1996, respectively, bearing
interest at the national bank rate plus 0.5% (actual rate 8.75% at

F-8
<PAGE>

WEST TELEMARKETING CORPORATION AND AFFILIATED COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

June 30, 1996) to fund customer advances for itself and IBS. The line of
credit expired June 30, 1996 and was subsequently renewed with an expiration
date of June 30, 1997. Substantially all assets of WIC are pledged as
collateral on the line of credit. WIC and IBS have advances to customers
through their accounts receivable financing programs aggregating $13,595,
$13,980 and $16,242 at December 31, 1994 and 1995 and June 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 national bank rate plus 3.0% (11.25% at June
30, 1996).

C. LONG-TERM DEBT AND CREDIT ARRANGEMENTS

WTC has revolving lines of credit aggregating $4,500 at two banks which
expired in June, 1996. The notes require interest at the corporate base rate,
as established by the banks, (actual rate 8.25% at June 30, 1996). These lines
of credit were subsequently renewed with an expiration date of July 1, 1997
and at an interest rate .5% below prime. WTCO had revolving lines of credit
aggregating $8,000 at two banks which expire in June, 1997 and bear interest
at .25% below the banks' base rate (actual rate 8% at June 30, 1996). At June
30, 1996, outstanding borrowings under these lines of credit totaled $9,050.

Long-term debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------- JUNE 30,
1994 1995 1996
------ ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Note payable to bank (modified on February 1,
1996), due in monthly installments of $50
including interest with a final balloon payment on
February 1, 2001. The note accrues interest at
7.5% ............................................. $2,298 $ 5,110 $ 5,006
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 June 30, 1996) ................................ 1,274 1,648 2,500
Note payable to bank (modified on June 11, 1996),
due in monthly installments of $54 including
interest at the New York prime rate (8.25% at June
30, 1996) maturing June 11, 1999 ................. 1,195 1,278 1,022
Note payable to bank, due in monthly installments
of $63 including interest, payable until maturity
in June, 1999. The note bears interest at the New
York prime rate (8.25% at June 30, 1996) ......... -- -- 2,000
Mortgage note payable to bank, due in monthly
installments of $25 including interest at the
prime rate (8.25% at June 30, 1996), maturing
April 25, 1999 ................................... 1,085 883 771
Notes payable to bank, paid in 1996 ............... 1,115 1,525 --
------ ------- -------
6,967 10,444 11,299
Less current maturities............................ 1,743 2,208 2,379
------ ------- -------
$5,224 $ 8,236 $ 8,920
====== ======= =======
</TABLE>

F-9
<PAGE>

WEST TELEMARKETING CORPORATION AND AFFILIATED COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

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

<TABLE>
<S> <C>
Remaining 1996..................................................... $ 1,168
1997............................................................... 2,486
1998............................................................... 2,282
1999............................................................... 1,209
2000............................................................... 288
2001 and thereafter................................................ 3,866
-------
$11,299
=======
</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, $954 and $1,213 for the
years ended December 31, 1993, 1994 and 1995, and the six months ended June
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,
--------------- JUNE 30,
1994 1995 1996
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Assets under capital leases consist of:
Telephone and computer equipment............... $11,442 $15,278 $15,603
Office furniture and equipment................. 1,584 1,874 2,769
------- ------- -------
Total Cost.................................... 13,026 17,152 18,372
Accumulated Depreciation......................... 3,113 4,099 4,389
------- ------- -------
Net Book Value................................... $ 9,913 $13,053 $13,983
======= ======= =======
</TABLE>

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............................................ $ 1,647 $ 3,319
1997...................................................... 2,941 5,646
1998...................................................... 2,466 3,064
1999...................................................... 981 324
2000...................................................... 807 --
2001 and thereafter....................................... 1,512 --
------- -------
Total minimum obligations................................. $10,354 12,353
=======
Less interest at 7.1% to 9.5%............................. 1,130
-------
Present value of net minimum lease payments............... 11,223
Less current portion...................................... 5,584
-------
$ 5,639
=======
</TABLE>

F-10
<PAGE>

WEST TELEMARKETING CORPORATION AND AFFILIATED COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

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...................................................... $351
1997................................................................ 730
1998................................................................ 773
1999................................................................ 820
2000................................................................ 869
</TABLE>

Lease expense was $522, $562, $649, $318 and $340 for the years ended
December 31, 1993, 1994 and 1995 and the six months ended June 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 and June 30, 1995,
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 $45
for the years ended December 31, 1993 and 1994 and the six months ended June
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 matching contributions are 100%
vested after the employee has attained five years of service. Total
contributions under the plan were $289, $406, $564, $288 and $220 for the
years ended December 31, 1993, 1994 and 1995, and the six months ended June
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, 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 limitations.
During the years ended December 31, 1994 and 1995 and the six months ended
June 30, 1995 and 1996, WIC incurred use fees of $339, $560, $250 and $281,
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, 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

F-11
<PAGE>

WEST TELEMARKETING CORPORATION AND AFFILIATED COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

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. The action seeks recovery of
treble damages (which amount has not been specified), punitive damages, costs
and attorneys' fees. On September 19, 1996, the United States Court of Appeals
for the Eleventh Circuit ( F.3d (11th Cir. 1996)) reversed the District
Court's order certifying the classes on the ground that the class action would
be unmanageable. 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 and each of the stockholders of WTC, WTCO and WIC are parties
to a Tax Indemnification Agreement (the "Tax Agreement") relating to their
respective income tax liabilities. The Tax Agreement provides that the Company
will indemnify the stockholders for any adjustments causing an increase in the
stockholders' federal and state income tax liability (including interest and
penalties) related to the Companies' tax years prior to the closing of this
Offering, unless such adjustments result in or are related to a corresponding
decrease in the stockholders' federal and state income tax liability with
respect to another S Corporation taxable year. Subject to certain liabilities,
the Tax Agreement also provides that the Company will be indemnified by the
stockholders with respect to federal and state income taxes (plus interest and
penalties) shifted from a S Corporation taxable year to a Company taxable year
subsequent to the closing of this Offering.

I. SUBSEQUENT EVENTS

PROPOSED PUBLIC OFFERING OF COMMON STOCK--Immediately preceding the closing
of the proposed public offering, each of the stockholders of WTC, WTCO, WIC,
IBS and WICI will exchange its respective capital stock for shares of common
stock of West TeleServices Corporation (the "Company"). Under the proposed
offering, approximately shares of common stock will be registered for
sale to the public.

PRO FORMA INFORMATION (UNAUDITED)--The pro forma combined balance sheet of
the Companies as of June 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 shortly before the effective date of
the Company's initial public offering ("Offering") contemplated by this
Prospectus (estimated at, $2,174 as of June 30, 1996) and (2) a distribution
payable to the stockholders of the Companies' retained earnings and additional
paid-in capital (estimated at $41,155 as of June 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 are completed. The actual deferred income tax liability recorded will
be adjusted to reflect the effect of operations of the Companies for the
period from July 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 June 30, 1996 is comprised principally of
depreciation.

F-12
<PAGE>

WEST TELEMARKETING CORPORATION AND AFFILIATED COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONCLUDED)

PRO FORMA INCOME STATEMENT (UNAUDITED)--Shortly before the effective date of
the Offering, 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 income for the
three years ended December 31, 1995 and the six months ended June 30, 1995 and
1996 include unaudited pro forma adjustments 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.

PRO FORMA NET INCOME PER SHARE (UNAUDITED)--Pro forma net income per share
was calculated by dividing pro forma net income by the weighted average number
of shares of common stock outstanding for the respective periods.

1996 STOCK INCENTIVE PLAN--Subsequent to June 30, 1996, the Company and its
stockholders adopted the 1996 Stock Incentive Plan. The Plan authorizes the
issuance of up to shares of common stock to officers and employees.

In , 1996 the Company granted options for shares at an exercise
price of $ per share. These options were granted at fair value.

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.

J. SIGNIFICANT CUSTOMERS

The Companies have 20 major customers who accounted for approximately 60% of
total revenue for the six months ended June 30, 1996. The Companies had one
customer who accounted for approximately 13% to 16% of revenue for the periods
presented. The Companies had another customer account for approximately 11% of
revenue for the year ended December 31, 1993.

F-13
<PAGE>

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

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............................................................. 6
Reorganization and Termination of S Corporation Status................... 10
Use of Proceeds.......................................................... 12
Dividend Policy.......................................................... 12
Capitalization........................................................... 13
Dilution................................................................. 14
Selected Combined Financial and Operating Data........................... 15
Management's Discussion and Analysis of Financial Condition and Results
of Operation............................................................ 17
Business................................................................. 24
Management............................................................... 36
Certain Transactions..................................................... 40
Principal Stockholders................................................... 42
Description of Capital Stock............................................. 43
Shares Eligible for Future Sales......................................... 45
Underwriting............................................................. 46
Legal Matters............................................................ 47
Experts.................................................................. 47
Additional Information................................................... 47
Index to Financial Statements............................................ F-1
</TABLE>

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

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

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

WEST TELESERVICES CORPORATION

COMMON STOCK
(PAR VALUE $0.01 PER SHARE)

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

[LOGO]

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

GOLDMAN, SACHS & CO.

SALOMON BROTHERS INC

SMITH BARNEY INC.

REPRESENTATIVES OF THE UNDERWRITERS

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

PART II.

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following represents the Registrant's estimate of expenses in connection
with the issuance and distribution of the securities being registered
hereunder. Except for the SEC registration fee, the NASD filing fee, and the
Nasdaq National Market listing fee, all amounts are estimates.

<TABLE>
<CAPTION>
AMOUNT
-------
<S> <C>
Securities and Exchange Commission registration fee................. $38,787
National Association of Securities Dealers, Inc. filing fee......... 13,300
Nasdaq National Market listing fees................................. *
Transfer agent and registrar fees and expenses...................... *
Legal fees and expenses............................................. *
Accounting fees and expenses........................................ *
Printing and engraving expenses..................................... *
Blue Sky fees and expenses (including counsel fees)................. *
Miscellaneous....................................................... *
-------
Total............................................................. $ *
=======
</TABLE>
- --------
* To be completed by amendment

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law (the "DGCL") empowers a
Delaware corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of such corporation) by reason of the
fact that such person is or was a director, officer, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise. A
corporation may indemnify such person against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. A corporation may, in advance of the final disposition of any
civil, criminal, administrative or investigative action, suit or proceeding,
pay the expenses (including attorneys' fees) incurred by any officer or
director in defending such action, provided that the director or officer
undertakes to repay such amount if it shall ultimately be determined that he
is not entitled to be indemnified by the corporation.

A Delaware corporation may indemnify officers and directors in an action by
or in the right of the corporation to procure a judgment in its favor under
the same conditions, except that no indemnification is permitted without
judicial approval if the officer or director is adjudged to be liable to the
corporation. Where an officer or director is successful on the merits or
otherwise in the defense of any action referred to above, the corporation must
indemnify him against the expenses (including attorneys' fees) which he
actually and reasonably incurred in connection therewith. The indemnification
provided is not deemed to be exclusive of any other rights to which an officer
or director may be entitled under any corporation's by-laws, agreements, vote
or otherwise.

The Registrant's Restated Certificate of Incorporation provides that the
Registrant, to the fullest extent authorized by the DGCL, as the same exists
or may hereafter be amended (but, in the case of any such amendment, only to
the extent that such amendment permits the Registrant to provide

II-1
<PAGE>

broader indemnification rights than such law permitted the Registrant to
provide prior to such amendment), shall indemnify a director or officer of the
Registrant or a person who is or was serving at the request of the Registrant
as director, trustee, officer, employee or agent of another corporation or of
a partnership, joint venture, trust or other enterprise, including service
with respect to an employee benefit plan, who was or is made (or threatened to
be made) a party to a civil, criminal, administrative or investigative
proceeding (an "indemnified person"). The Restated Certificate of
Incorporation also provides that expenses incurred by an indemnified person
may be paid in advance by the Registrant, subject to any limitations or
requirements imposed by the DGCL and the Registrant's Restated By-laws.

The Restated Certificate of Incorporation provides that a director of the
Company will not be personally liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the Company
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, which concerns unlawful
payments of dividends, stock purchases or redemptions or (iv) for any
transaction from which the director derived an improper personal benefit.

While the Restated Certificate of Incorporation provides directors with
protection from awards for monetary damages for breaches of their duty of
care, it does not eliminate such duty. Accordingly, the Restated Certificate
of Incorporation will have no effect on the availability of equitable remedies
such as an injunction or rescission based on a director's breach of his or her
duty of care. The provisions of the Restated Certificate of Incorporation
described above apply to an officer of the Company only if he or she is a
director of the Company and is acting in his or her capacity as director, and
do not apply to officers of the Company who are not directors.

Reference is made to the Underwriting Agreement (Exhibit 1) which provides
for indemnification of the Company, its directors, officers and controlling
persons.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

In reliance upon Section 4(2) of the Securities Act of 1933, the Company
entered into an Agreement and Plan of Reorganization, dated as of ,
1996, with all of the stockholders of each of the West Affiliates. Pursuant to
this agreement, the stockholders received in the aggregate shares of
Common Stock in exchange for all of their respective holdings of capital stock
in each of the West Affiliates.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) EXHIBITS

<TABLE>
<C> <S>
1.01 Underwriting Agreement*
3.01 Restated Certificate of Incorporation of the Company*
3.02 Restated By-laws of the Company*
4.01 Form of Common Stock Certificate*
5.01 Form of Opinion regarding legality*
10.01 Registration Rights Agreement*
10.02 Tax Indemnity Agreement*
10.03 Lease, dated September 1, 1994, by and between the Company and 99-
Maple Partnership*
10.04 1996 Stock Incentive Plan*
</TABLE>

II-2
<PAGE>

<TABLE>
<C> <S>
10.05 Agreement and Plan of Reorganization*
10.06 Employment Agreement with Thomas B. Barker*
10.07 Employment Agreement with Michael A. Micek*
10.08 Employment Agreement with Troy L. Eaden*
10.09 Employment Agreement with Lee Waters*
10.10 Employment Agreement with Wayne Harper*
11.01 Computation of Earnings per Share*
21.01 Subsidiaries of the Company*
23.01 Consent of Willkie Farr & Gallagher (included in Exhibit 5.01)
23.02 Consent of Deloitte & Touche LLP
24.01 Power of Attorney (included on Page II-4)
27.01 Financial Data Schedule
</TABLE>
- --------

* To be filed by amendment

(b) FINANCIAL STATEMENT SCHEDULES

The following financial statement schedule, not included in the Prospectus,
is included as part of the Registration Statement immediately following the
signature page:

Schedule II Valuation and Qualifying Accounts

All other schedules either are inapplicable or not required or the
information is included in the consolidated financial statements and therefore
have been omitted.

ITEM 17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.

The Registrant hereby undertakes that:

(a) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
a registration statement in reliance upon Rule 430A and contained in the
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(b) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

(c) The Registrant shall provide to the Underwriters, at the closing
specified in the Underwriting Agreement, certificates in such denominations
and registered in such names as required by the Underwriters to permit
prompt delivery to each purchaser.

II-3
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF OMAHA, STATE OF
NEBRASKA, ON OCTOBER 11, 1996.

West TeleServices Corporation

/s/ Troy L. Eaden
By: _________________________________
TROY L. EADEN
CHIEF EXECUTIVE OFFICER

POWER OF ATTORNEY

We, the undersigned officers and directors of West TeleServices Corporation,
hereby severally and individually constitute and appoint Troy L. Eaden, Thomas
B. Barker and Michael A. Micek, and each of them, the true and lawful
attorneys and agents of each of us to execute in the name, place and stead of
each of us (individually and in any capacity stated below) any and all
amendments to this Registration Statement on Form S-1 and all instruments
necessary or advisable in connection therewith and to file the same with the
Securities and Exchange Commission, each of said attorneys and agents to have
power to act with or without the other and to have full power and authority to
do and perform in the name and on behalf of each of the undersigned every act
whatsoever necessary or advisable to be done in the premises as fully and to
all intents and purposes as any of the undersigned might or could do in
person, and we hereby ratify and confirm our signatures as they may be signed
by our said attorneys and agents and each of them to any and all such
amendment and amendments.

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.

SIGNATURE TITLE DATE

/s/ Gary L. West Chairman of the Board October 11,
_____________________________________ of Directors 1996
GARY L. WEST

/s/ Mary E. West Vice Chair of the October 11,
_____________________________________ Board of Directors 1996
MARY E. WEST

/s/ Troy L. Eaden Director and Chief October 11,
_____________________________________ Executive Officer 1996
TROY L. EADEN (Principal Executive
Officer)

/s/ Thomas B. Barker Director, President October 11,
_____________________________________ and Chief Operating 1996
THOMAS B. BARKER Officer

/s/ Michael A. Micek Chief Financial October 11,
_____________________________________ Officer (Principal 1996
MICHAEL A. MICEK Financial and
Accounting Officer)

II-4
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Stockholders and Board of Directors
West Telemarketing Corporation
and affiliated companies

We have audited the combined financial statements of West Telemarketing
Corporation and affiliated companies as of December 31, 1995 and 1994, and for
each of the three years in the period ended December 31, 1995, and have issued
our report thereon included in this Registration Statement. Our audits also
included the financial statement schedule of West Telemarketing Corporation
and affiliated companies, listed in Item 16(b). This financial statement
schedule is the responsibility of the Companies' management. Our
responsibility is to express an opinion based on our audits. In our opinion,
such financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.

Omaha, Nebraska
March 1, 1996
<PAGE>

SCHEDULE II

WEST TELEMARKETING CORPORATION AND AFFILIATED COMPANIES

COMBINED VALUATION ACCOUNTS
THREE YEARS ENDED DECEMBER 31, 1995
(AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
ADDITIONS-
BALANCE, CHARGED TO DEDUCTIONS- BALANCE,
BEGINNING COST AND ACCOUNTS END OF
OF YEAR EXPENSES CHARGED-OFF YEAR
DESCRIPTION --------- ---------- ----------- --------
<S> <C> <C> <C> <C>
December 31, 1995--Allowance for
doubtful accounts.................. $1,509 $2,361 $2,313 $1,557
------ ------ ------ ------
December 31, 1994--Allowance for
doubtful accounts.................. $2,156 $1,636 $2,283 $1,509
------ ------ ------ ------
December 31, 1993--Allowance for
doubtful accounts.................. $1,108 $3,522 $2,474 $2,156
------ ------ ------ ------
</TABLE>
<PAGE>

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT EXHIBIT DOCUMENT PAGE
NUMBER DESCRIPTION NUMBER
------- ---------------- ----------
<C> <S> <C>
1.01 Underwriting Agreement*
3.01 Restated Certificate of Incorporation of the Company*
3.02 Restated By-laws of the Company*
4.01 Form of Common Stock Certificate*
5.01 Form of Opinion regarding legality*
10.01 Registration Rights Agreement*
10.02 Tax Indemnity Agreement*
10.03 Lease, dated September 1, 1994 by and between the Company
and 99-Maple Partnership*
10.04 1996 Stock Incentive Plan*
10.05 Agreement and Plan of Reorganization*
10.06 Employment Agreement with Thomas B Barker*
10.07 Employment Agreement with Michael A. Micek*
10.08 Employment Agreement with Troy L. Eaden*
10.09 Employment Agreement with Lee Waters*
10.10 Employment Agreement with Wayne Harper*
11.01 Computation of Earnings per Share*
21.01 Subsidiaries of the Company*
23.01 Consent of Willkie Farr & Gallagher (included in Exhibit
5.01)
23.02 Consent of Deloitte & Touche LLP, Independent Auditors
24.01 Power of Attorney (included on page II-4)
27.01 Financial Data Schedule
</TABLE>
- --------
* To be filed by amendment

<PAGE>

Exhibit 23.02

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Registration Statement of West TeleServices
Corporation on Form S-1 of our report on the combined financial statements of
West Telemarketing Corporation and affiliated companies dated March 1, 1996
(October 10, 1996 as to Notes H and I), appearing in the Prospectus, which is
part of this Registration Statement, and of our report dated March 1, 1996
relating to the financial statement schedule appearing elsewhere in this
Registration Statement.

We also consent to the reference to us under the heading "Experts" in such
Prospectus.

DELOITTE & TOUCHE LLP
Omaha, Nebraska

October 10, 1996

<PAGE>
<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> $15,177
<SECURITIES> 0
<RECEIVABLES> $57,828
<ALLOWANCES> $1,413
<INVENTORY> 0
<CURRENT-ASSETS> $77,610
<PP&E> $84,033
<DEPRECIATION> $35,029
<TOTAL-ASSETS> $128,705
<CURRENT-LIABILITIES> $72,941
<BONDS> $14,559
0
0
<COMMON> $50
<OTHER-SE> $41,155
<TOTAL-LIABILITY-AND-EQUITY> $128,205
<SALES> 0
<TOTAL-REVENUES> $154,467
<CGS> 0
<TOTAL-COSTS> $87,968
<OTHER-EXPENSES> $40,298
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> $789
<INCOME-PRETAX> $24,864
<INCOME-TAX> 0
<INCOME-CONTINUING> $24,864
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $24,864
<EPS-PRIMARY> 0
<EPS-DILUTED> 0

</TABLE>