UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-K

Commission File Number 000-21771

West Corporation

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (402) 963-1200

Securities registered pursuant to Section 12(b) of the Act: None.

Securities registered pursuant to Section 12 (g) of the Act:

Common Stock, par value $0.01 per share

(Title of class)

      Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes þ          No o

      Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     o

      Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).     Yes þ          No o

      The aggregate market value of the voting common equity held by non-affiliates (computed by reference to the average bid and asked price of such common equity) as of June 30, 2004, the last business day of the registrant’s most recently completed second fiscal quarter was approximately $566.3 million. At February 18, 2005, 68,386,683 shares of common stock of the registrant were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

      Portions of the registrant’s proxy statement for the 2005 annual meeting of stockholders are incorporated into Part III.

TABLE OF CONTENTS

FORWARD LOOKING STATEMENTS

      This report contains forward-looking statements. These forward-looking statements include estimates regarding:

      Forward-looking statements can be identified by the use of words such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “intends,” “continue,” or the negative of such terms, or other comparable terminology. Forward-looking statements also include the assumptions underlying or relating to any of the foregoing statements. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including the risks discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Factors and elsewhere in this report.

      All forward-looking statements included in this report are based on information available to us on the date hereof. We assume no obligation to update any forward-looking statements.

PART I.

Overview

      West Corporation provides business process outsourcing services focused on helping our clients communicate more effectively with their customers. We help our clients maximize the value of their customer relationships and derive greater value from each transaction that we process. Some of the nation’s leading enterprises trust us to manage their most important customer contacts and communication transactions. Companies in highly competitive industries choose us for our ability to efficiently and cost effectively deliver large and complex services and our ability to provide a broad portfolio of voice transaction services. We deliver our services through three segments; Communication Services, Conferencing Services and Receivables Management. Each segment leverages our core competencies of managing technology, telephony and human capital.

      Our communication services include both agent and automated services. Our agent services provide clients with a comprehensive portfolio of services driven by both customer–initiated (inbound) and West-initiated (outbound) transactions. We offer our clients large volume transaction processing capabilities, including order processing, customer acquisition, customer retention and customer care. Our agent communication services are primarily consumer applications but we also support business-to-business applications. Our automated services operate over 137,000 Interactive Voice Response ports, which provide large-volume, automated voice response services to clients. Examples of our automated services include automated credit card activation, prepaid calling card services, automated product information requests, answers to frequently

asked questions, utility power outage reporting, and call routing and call transfer services. Our Communication Services segment operates a network of customer contact centers and automated voice and data processing centers throughout the United States and in Canada, India, Jamaica and the Philippines. Our home agent service utilizes agents throughout the United States.

      Our conferencing services include an integrated suite of audio, video and web conferencing services. These worldwide services range from basic automated solutions to highly complex, operator-assisted and event driven solutions. Our video conferencing services provide basic video conferencing with the additional ability to visually share documents and presentations. Our web conferencing services provide web conferencing and interactive web-casting services. Our Conferencing Services segment operates facilities in the United States, the United Kingdom, Canada, Singapore, Australia, Hong Kong, Japan and New Zealand.

      Our receivables management operations include first party collections, contingent/ third-party collections, governmental collections, commercial collections and purchasing and collecting charged-off consumer and commercial debt. Charged-off debt consists of defaulted obligations of individuals and companies to credit originators, such as credit card issuers, consumer finance companies, and other holders of debt. The Receivables Management segment also provides contingent/ third party collections, first party collection efforts on pre-charged-off receivables and collection services for the U.S. Department of Education and other governmental agencies. Our Receivables Management segment operates facilities in the United States, Jamaica and Mexico.

      West Corporation, a Delaware corporation, is headquartered in Omaha, Nebraska. Our principal executive offices are located at 11808 Miracle Hills Drive, Omaha, Nebraska. Our telephone number is (402) 963-1200. Our website address is www.west.com. All of our SEC reports are available free of charge on our website.

      None of the information on our website or any other website identified herein is part of this report. All website addresses in this report are intended to be inactive textual references only.

Communication Services

      Our Communication Services segment operates in the customer relationship management (“CRM”) industry. The CRM function generally refers to a company’s direct marketing and customer service functions especially those that are provided through customer contact centers. Once intended to serve as a pure marketing or support function, contact centers have undergone significant changes in functionality over the last several years. In particular, the scope of customer interaction has expanded greatly from single purpose — usually only support or marketing — to multi-dimensional, often combining customer support, sales, marketing and technical support.

      Contact centers experience significant fluctuations in support and service demand. Many companies have found that it is not cost-effective to maintain excess contact center capacity and that they are not well equipped to accommodate fluctuations in demand.

      Companies traditionally relied on in-house personnel and infrastructure to perform sales, direct marketing and customer service. However, driven by increasing competition and the evolution of the customer service function, businesses continue to outsource CRM activities to focus on their core competencies and reduce costs. Outsourced CRM providers may offer clients lower overall contact center costs due to economies of scale, sharing the cost of new technology among a larger base of users, and higher capacity utilization rates. By turning to an outsourced CRM provider, companies get access to leading edge contact center technology without the cash outlay or maintenance costs that accompany such top-tier platforms.

      The outsourced CRM industry has evolved from primarily single-facility, low technology environments to large, full service organizations with multi-location, large-volume contact centers that use advanced systems. Some independent CRM providers have invested in large-volume state-of-the-art contact centers and advanced network technology. Larger service providers, who can achieve greater economies of scale, can more

easily justify ongoing investment in sophisticated call management software, predictive dialers and automatic call distributors, which generally provide better quality and more cost-effective services.

      We are one of the few providers that offers a comprehensive portfolio of outsourced CRM services. These services are driven predominately by customer-initiated transactions that include order processing, customer acquisition, customer retention, customer service and product sales applications. This segment has four primary service offerings: dedicated agent, shared agent, business services and automated services.

      We aim to enhance our position as a leading provider of integrated CRM solutions. To this end, our strategy is to offer an integrated suite of agent-based and automated CRM solutions that are customized to address each client’s unique needs. We implement this strategy by providing high quality services, providing integrated service solutions, emphasizing recurring and large volume programs, capitalizing on state-of-the-art technology and leveraging our strong management experience.

      Integrated Service Solutions. We develop customized and integrated service solutions that are capable of incorporating multiple service offerings. We integrate our service offerings by using our voice and data networking technology and our software systems and hardware platforms. We also design and implement highly flexible applications, combining the large volume capacity of automated voice response with our specialized agent services. Integration of our services provides a cost-effective, comprehensive solution for the client and increases the effectiveness of our agents. We believe our ability to offer integrated service solutions is critical to growing, expanding and retaining our client relationships. During 2004, we generated over 50% of our revenue from clients that use two or more of our service offerings.

      Recurring and Large Volume Programs. Our strategy is to target clients with large volume programs. We generally seek growth-oriented clients who need customized applications, which often leads to long-term relationships. We have established a track record of successfully managing large volume client programs.

      Technology. Our technology platform enables us to offer premium quality, flexible and cost-effective service solutions that are tailored to each client’s unique needs. We currently employ more than 950 information technology professionals to modify and enhance our operating systems and to design client programs. Examples of our technology include:

      Strong Management Experience. We have distinguished ourselves through our ability to attract and retain some of the most talented managers in the outsourced CRM industry. The executive officers who are responsible for our day-to-day management have, on average, over ten years of experience.

      We develop a detailed understanding of our clients’ unique business requirements to more effectively manage interaction with our clients’ current and prospective customers. This allows us to create customized solutions that consistently meet and exceed our clients’ needs. As a result, we can cross-sell our services and proactively offer new applications. Our top 10 clients have been using our services for an average of over seven years.

      We believe that service quality is a critical factor in a potential client’s decision to outsource its customer service and sales functions. We differentiate the quality of our services through our ability to:

We provide premium quality service through an extensive training program and an experienced management team. We believe that the quality of our service is one of our competitive advantages.

      We recognize the importance of providing uninterrupted service for our clients. We have invested significant resources to develop, install and maintain facilities and systems that are designed to be highly reliable. Our facilities and systems are designed to maximize system in-service time and minimize the possibility of a telecommunications outage, a commercial power loss or an equipment failure.

      We use redundant network architecture, which substantially reduces the possibility of a system failure and the interruption of telecommunications service. Most of our contact centers are 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. Most telephone numbers that are directed to our contact centers 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.

      Our systems also feature operational redundancy. We use automatic call distributors with dual cores (CPU & I/ O modules) and online automatic backup, as well as fault-tolerant mainframe computers with spontaneous dual backup for processors, disk management and mechanical functions. We store copies of all proprietary software systems and client application software in a secure off-site storage facility. We actively monitor all critical components of our contact centers 24 hours per day, 365 days per year. Many of our facilities also have stand-alone primary power systems, which include both battery backup and diesel generator backup power systems

      We specialize in processing large and recurring transaction volumes. We work closely with our clients to accurately project future transaction volumes. We use the following practices to efficiently manage our transaction volumes:

      Historical Trend Analyses. We track weekly, daily and hourly trends for individual client programs. We believe that the key to a cost efficient CRM program begins with the effective planning of future volumes to determine the optimal number of sites, employees, workstations and voice response ports that need to be deployed each hour. We have years of data that we use to determine the transaction patterns of different applications such as order capture, lead generation and customer service.

      Forecasting Call Volumes and Establishing Production Plans. We forecast volumes for inbound calls to shared agents for each one-half hour increment for each day. We then use historical data regarding average handle time, average wait time, average speed of answer and service level targets to determine the actual number of transactions that may be processed by a workstation or voice response port during a specific one-half hour increment. This process enables the effective determination of 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, we create a detailed staffing schedule. These schedules are typically forecasted six to eight weeks in advance to assist the personnel and training departments in hiring and training the desired number of personnel. Agents are given regular work schedules that are designed to coincide with anticipated transaction patterns and trends. We have developed a proprietary scheduling system, known as Spectrum, that efficiently identifies variances between staff scheduled and staff needed. The system accommodates real-time adjustments for personnel schedules as volume projections fluctuate. Agent personnel directly interact with the system through kiosks located in the contact center or the Internet to schedule additional hours or excused time.

      Network Control Center. Our multiple remote sites present unique challenges in delivering consistent premium quality service. Our Network Control Center, based in Omaha, Nebraska, operates 24 hours a day, 365 days a year and uses both internal and external systems to effectively create and operate this remote site environment. We interface directly with long distance carriers and have the ability to allocate call volumes among our various contact centers on command with the assistance of sophisticated third party routing products. Our traffic control specialists compare actual volumes and trends to stated staffing and scheduling plans. When necessary, we can adjust for minor variances between actual and projected volumes and personnel by facility. As a result, transactions are optimally directed to available personnel, which maximizes the utilization of personnel and improves efficiency. The Network Control Center monitors the status of processing activities on a minute-by-minute basis. Minor real time variances between projected and actual trends are promptly entered into our database and used to develop future campaigns and staffing levels. During times of unexpected events, such as weather-related situations, we can immediately react and, whenever

possible, redirect transactions to an unaffected site to satisfy the business needs of our clients. We have global call handling capabilities with approximately 13,200 seats in the U.S., 5,500 U.S. home agents and 2,500 seats in other countries. For each individual client, we determine how best to deliver the optimal mix of service quality and cost through the use of automation and available labor sources. We identify the optimal solution from our “best shore” alternatives including automated, domestic, offshore, home agent offerings, or a combination thereof.

      Our proprietary home agent service offers an attractive midpoint price solution between domestic shared agent service and offshore solutions. Our home agent solution also offers a number of other advantages:

      We offer our clients large-scale, cost-effective solutions on an outsourced basis to help companies acquire, retain and grow their customer relationships. Our sales and marketing strategy focuses on leveraging our expertise, integrated service capabilities and reputation for premium quality service to cross-sell our services to existing clients and to develop new long-term client relationships. We also identify potential new clients with aggressive growth objectives and premium brands in industries that face increased competition.

      We formulate detailed annual sales and marketing plans for our Communication Services segment. These plans contain objectives and milestones, which we track regularly throughout the year. Our sales organization is organized and trained to focus on specific industries and overall client needs. Our objective is to sell integrated solutions to prospective and existing clients. We pay commissions on both new sales and incremental revenues generated from new and existing clients to sales professionals.

      Our competitors in the CRM solutions industry range from very small firms catering to specialized programs and short-term projects, to large independent firms. We also compete with the in-house operations of many existing clients and potential clients. We believe that only one or two competitors have the capability to provide a full suite of outsourced CRM solutions. The principal competitive factors in this industry include: quality of service, range of service offerings, flexibility and speed of implementing customized solutions to meet clients’ needs, capacity, industry-specific experience, technological expertise and price.

      We specialize in processing large and recurring volumes on behalf of our clients. Our ability to consistently staff and manage our agents across geographically dispersed contact centers is critical to providing premium quality service. We apply standardized practices in our contact centers to ensure uniform quality of service. We maintain strong centralized control to assure rigorous adherence to management practices, including quality assurance, and to provide daily staffing plans for each individual site.

      We continuously monitor and evaluate the performance of our agents to ensure that we meet or exceed both our own and our clients’ quality standards. Our quality assurance testing includes monitoring agent and consumer contacts. We encourage our clients to participate in all aspects of the quality assessment.

      We have direct contact with our clients’ customers. Given the importance of this role, we believe that our ability to provide premium quality service is critical. West and our clients shadow-monitor and evaluate the performance of agents to confirm that clients’ programs are properly implemented using clients’ approved

scripts and that the agents meet clients’ customer service standards. We regularly measure the quality of our services by reviewing such variables as average handle time, volume, average speed of answer, sales per hour, rate of abandonment, quota attainment and order conversion percentages. We provide clients with regular reports on the status of ongoing campaigns and transmit summary data and captured information electronically to clients.

      We maintain quality assurance functions throughout our various agent-based service offering organizations. These quality assurance groups are responsible for the overall quality of the services being provided. We use statistical summaries of the performance appraisal information for our training and operations departments to provide feedback and to identify agents who may need additional training.

      See Note 13 to our Consolidated Financial Statements for a summary of the revenues, operating income and total assets for our Communication Services segment for each of the last three fiscal years.

Conferencing Services

      The conferencing services industry consists of audio, video and web conferencing services that are marketed to businesses and individuals worldwide. Web services include data conferencing, collaboration, web-casting, and the delivery of commercial, online training and education applications.

      An important trend in the conferencing services industry is the growth of unattended conferencing, which are services that do not use an operator. Customers like unattended conferencing because it is easy to use and it costs less than attended conferencing calls. Over the last several years, the market for conferencing services has been subject to significant demand and pricing fluctuations. From a demand perspective, efforts by businesses, private organizations and state governments to reduce costs have led to business travel reductions, which has increased demand for conferencing services. From a pricing perspective, increasing competition and financial instability among some of the larger audio conferencing providers has led providers to reduce prices. In addition, as long distance telephone rates have fallen competition between carriers and service providers has caused additional reductions in conferencing prices.

      Our Conferencing Services segment offers an integrated suite of conferencing services including audio, video and web conferencing. Our capabilities include a broad spectrum of conferencing solutions from the most basic automated audio solutions (reservationless) to highly complex, operator-assisted, event-driven and multimedia solutions. Our Conferencing Services’ client base includes many Fortune 500 companies. In addition to a strong presence in the United States, including 29 domestic sales offices, the segment’s reach extends to sales offices and operations facilities around the world in Europe, Canada, Australia, New Zealand, Singapore, Hong Kong and Japan. This segment has four primary service offerings: operator assisted, automated, video conferencing and web conferencing.

      We have positioned ourselves as a leading provider of high-touch conferencing services. Unlike many of our competitors, we maintain a direct sales force that is focused exclusively on understanding our clients’ needs and delivering conferencing solutions. We train “Meeting Consultants” to assist clients in cultivating strong meeting leadership skills and in techniques to increase participation in geographically dispersed meetings. This high-touch, service-intensive effort is a differentiating characteristic of our conferencing services business relative to our competitors. Our strategy is to:

      Our Conferencing Services segment manages sales and marketing through three dedicated channels, National Accounts, Direct Sales and the Internet. National Accounts sales representatives sell to Fortune 500 companies with each representative working eight to twelve assigned accounts. Direct Sales consultants primarily focus on “non-Fortune 500 accounts.” Direct Sales meeting consultants cover a much larger client base, primarily through a call center, and are assigned a number of prospects to call each week. We also have international professional sales representatives providing local market expertise and intelligence.

      Our subsidiary ConferenceCall.com uses Internet marketing to acquire customers. ConferenceCall.com’s primary customer acquisition vehicle involves using Internet-based search engines to identify potential

purchasers of conferencing services. ConferenceCall.com places paid advertisements on search pages of major Internet search engine sites. When a potential customer searches for “conference calls” or similar keywords, our paid advertisements are among the first search results to appear. Search engine companies auction off positioning for selected search terms in a dynamic fashion thus allowing individual advertisers to bid on the “next click through” for any given search term. The strength of ConferenceCall.com’s marketing program lies in its ability to automatically monitor ad placement on all of the major search engines and ensure optimal positioning on each of these search sites.

      A December 31, 2003 study by Frost and Sullivan, indicates that, based on revenue, we are the third largest provider of conferencing services in the world. This market is highly competitive. Our competitors in the conferencing solutions industry range from large long distance carriers such as AT&T, MCI, Sprint and Global Crossing to independent providers such as Premier Global Services, Inc. and Genesys Conferencing. We believe that we have been able to grow market share in recent years due to our relatively large, geographically dispersed sales force dedicated solely to providing conferencing solutions on a global basis. Some competitors sell conferencing services as part of a bundled product and therefore may not be as focused on meeting specific conferencing solution needs.

      The competitive outlook in the conferencing services industry varies across the types of conferencing services provided. The number of competitors in the audio conferencing services industry is steadily decreasing as the industry continues to consolidate in the wake of pricing pressures and technological advances. However, as video and web conferencing services continue to develop, new vendors are entering the marketplace and offering a broader range of conferencing solutions.

      See Note 13 to our Consolidated Financial Statements for a summary of the revenues, operating income and total assets for our Conferencing Services segment for each of the last three fiscal years.

Receivables Management

      We entered the receivables management market through our acquisition of Attention in August 2002 and significantly expanded our presence in this industry through our August 2004 acquisition of Worldwide.

      Debt collection companies have existed since the emergence of consumer credit. The sale of distressed debt to recovery specialists, however, arose in the 1980s. As the distressed debt market developed in the 1980s, regular buyers of debt emerged and banks began selling not only distressed commercial and industrial loans but also charged-off consumer credit card debt.

      The receivables management market is large, growing and highly fragmented, with outstanding non-mortgage consumer debt alone expected to reach $2.8 trillion by 2010. Approximately 6,000 companies generate roughly $10 billion in annual revenue within the distressed consumer debt recovery industry, 15 of which purchase about 80% of the debt sold annually.

      We provide first-party and third-party collection services to companies in various industries including healthcare, automotive, telecommunications, financial services and retail. We also provide commercial collection services, government collections and debt purchasing. The service offerings for the receivables management segment include: first-party collections, contingent/third-party, government, commercial and debt purchasing.

      We were attracted to the receivables management business for a number of reasons: (i) the market is large, growing and highly fragmented; (ii) we believe we can leverage our technology and scale efficiencies; and (iii) the segment represents a higher growth and higher margin business to which over time we can transition a portion of our outbound capacity.

      We purchase distressed and defaulted accounts and consumer credit receivables. We service these defaulted portfolios via telephone, mailings and litigation with the goal of recovering all or a portion of the amount due on the individual loans purchased within the portfolio. We use two portfolio lenders who advance 80% to 85% of the purchase price with West financing the remaining 15% to 20% of each portfolio. The debt from the financing companies has a variable interest rate, with the lenders also sharing in the final profits of the portfolio after all collection efforts, principal, and interest has been repaid. The debt from the financing company is non-recourse to us and is collateralized by all receivable portfolios within a loan series. Each loan series contains a group of portfolio asset pools, which have an aggregate original principal amount of approximately $20 million.

      The receivables management and collection industry is highly competitive and fragmented. We compete with a large number of providers including large national companies as well as regional and local firms. Many large clients retain multiple receivables management and collection providers, which exposes us to continuous competition in order to remain a preferred vendor. We believe that the primary competitive factors in obtaining and retaining clients are the ability to provide customized solutions to a client’s requirements, personalized service, sophisticated call and information systems and price.

      Debt purchasing is subject to additional competitive factors. Competitive pressures affect the availability and pricing of receivable portfolios. In addition, there continues to be a consolidation of credit card issuers, which have been a principal source of receivable purchases. This consolidation has decreased the number of sellers in the market and, consequently, could over time, give the remaining sellers increasing market strength in the price and terms of the sale of charged-off credit card accounts.

      See Note 13 to our Consolidated Financial Statements for a summary of the revenues, operating income and total assets for our Receivables Management segment for each of the last three fiscal years.

      The remainder of this section applies to our entire consolidated enterprise.

Personnel and Training

      We believe that a key component of our success is the quality of our employees. As a large-scale service provider, we continually refine our approach to recruiting, training and managing our employees. We have established procedures for the efficient weekly hiring, scheduling and training of hundreds of qualified employees. These procedures enable us to provide flexible scheduling and staffing solutions to meet client needs.

      We offer 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. Operators receive professional training lasting from four to 35 days, depending upon the client 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 our organizational structure, standard operating procedures and business philosophies.

      At December 31, 2004, we employed approximately 28,000 employees. Approximately 24,600 were employed in the Communication Services segment, approximately 1,900 were employed in the Conferencing Services segment, and approximately 1,500 were employed in the Receivables Management segment. Approximately 5,000 of these employees were employed in management, staff and administrative positions. We consider our relations with our employees to be good. None of our employees are represented by a labor union.

Technology and Systems Development

      Our software and hardware systems, as well as our network infrastructure, are designed to offer high-quality and integrated solutions. We have made significant investments in reliable hardware systems and integrate commercially available software when appropriate. Because our technology is client focused, we often rely on proprietary software systems developed in-house to customize our services. Our significant achievements include:

      Our network facilities and systems are designed to maximize system in-service time and minimize the possibility of failure. Our infrastructure is designed to reduce the possibility of system or site downtime or interruption of the telecommunications service. We use commercially available and time-proven voice switching equipment. Our back-end systems, including client billing are primarily internally developed.

Proprietary Rights and Licenses

      We rely on a combination of applicable copyright, patent, trademark and trade secret laws, as well as on confidentiality procedures, to establish and protect our proprietary rights. We have been issued six patents, two of which came through the InterCall acquisition, and have 60 pending patent applications pertaining to intelligent upsells, transaction processing, call center and agent management, data collection, reporting and verification, micro payments, conferencing and credit card processing. Despite these precautions, we cannot assure you that third-parties will not misappropriate our proprietary technology. Although we believe that our intellectual property rights do not infringe upon the proprietary rights of third parties, we cannot assure you that third parties will not assert infringement claims against us. Further, we operate in many foreign jurisdictions. We cannot assure you that we will be able to protect our intellectual property in these or other foreign jurisdictions.

Reliance on Major Clients

      A significant portion of our revenue is generated from relatively few clients. The loss of a significant client could seriously harm us. We had two customers that accounted for approximately 18% of our total revenue in 2004. The revenue generated by these two customers results from over 40 programs which utilize technology from agent based, automated and conferencing services. During 2004, our 100 largest clients represented 69% of our revenues.

Foreign Operations

      At December 31, 2004, our total revenue and assets outside the United States were less than 10% of our consolidated revenue and assets.

      Our Communication Services segment operates facilities in Victoria, British Columbia, Makati City, Philippines and Kingston and Montego Bay, Jamaica. Our Communication Services segment also contracts for workstation capacity in Mumbai, India. Currently, these contracts are denominated in U.S. dollars. These call centers receive or initiate calls only from or to customers in North America. Under the Mumbai arrangement, we do not own the assets or directly employ any personnel.

      Our Conferencing Services segment has international sales offices in Canada, Australia, Hong Kong, Ireland, the United Kingdom, Singapore, Germany, Japan and France. Our conferencing services segment operates facilities in the United States, the United Kingdom, Canada, Singapore, Australia, Hong Kong and New Zealand.

      Our Receivables Management segment operates facilities in Jamaica and Mexico.

Government Regulation

      Teleservices sales practices are regulated at both the federal and state level. The Telephone Consumer Protection Act (“the TCPA”), which was enacted in 1991, authorized and directed the Federal Communications Commission (the “FCC”) to enact rules to regulate the telemarketing industry. In December 1992, the FCC enacted rules, which place restrictions on the methods and timing of telemarketing sales calls.

      On July 3, 2003, the FCC issued a Report and Order setting forth amended rules and regulations implementing the TCPA. The rules, with a few exceptions, became effective August 25, 2003. These rules included: (1) restrictions on calls made by automatic dialing and announcing devices; (2) limitations on the use of predictive dialers for outbound calls; (3) institution of a national “do-not-call” registry in conjunction with the Federal Trade Commission (the “FTC”); (4) guidelines on maintaining an internal “do-not-call” list and honoring “do-not-call” requests; and (5) requirements for transmitting caller identification information.

The “do-not-call” restrictions took effect October 1, 2003. The caller identification requirements became effective January 29, 2004. The FCC also included rules restricting facsimile advertisements. These rules became effective July 1, 2004.

      The Federal Telemarketing Consumer Fraud and Abuse Act of 1994 authorizes the FTC to issue regulations designed to prevent deceptive and abusive telemarketing acts and practices. The FTC issued its Telemarketing Sales Rule (the “TSR”), which went into effect in January 1996. The TSR applies to most direct teleservices telemarketing calls and certain operator teleservices telemarketing calls and generally prohibits a variety of deceptive, unfair or abusive practices in telemarketing sales.

      The FTC amended the TSR in January 2003. The majority of the amendments became effective March 31, 2003. The changes that were adopted that could materially adversely affect the Company, the Company’s clients and/or the Company’s industry include: (1) subjecting a portion of the Company’s inbound calls to additional disclosure requirements from which such calls were previously exempt; (2) prohibiting the disclosure or receipt, for consideration, of unencrypted consumer account numbers for use in telemarketing; (3) application of the TSR to charitable solicitations; (4) additional disclosure statements relating to certain products and services; (5) additional authorization requirements for payment methods that do not have consumer protections comparable to those available under the Electronic Funds Transfer Act or the Truth in Lending Act, or for telemarketing transactions involving pre-acquired account information and fee-to-pay conversion offers; (6) institution of a national “do-not-call” registry; (7) limitations on the use of predictive dialers for outbound calls; and (8) additional disclosure requirements relating to upsells, especially those involving negative option features. The “do-not-call” restrictions became effective October 1, 2003.

      In addition to the federal legislation and regulations, there are numerous state statutes and regulations governing telemarketing activities, which do or may apply to the Company. For example, some states also place restrictions on the methods and timing of telemarketing calls and require that certain mandatory disclosures be made during the course of a telemarketing call. Some states also require that telemarketers register in the state before conducting telemarketing business in the state. Many of these statutes have an exemption for publicly-traded companies.

      The Company employees who are involved in certain types of sales activity, such as activity regarding insurance or mortgage loans, are required to be licensed by various state commissions or regulatory bodies and to comply with regulations enacted by those entities.

      The industries served by the Company are also subject to varying degrees of government regulation, including laws and regulations relating to contracting with the government and data security. The Company is subject to some of the laws and regulations associated with government contracting as a result of the Company’s contracts with its clients and also as a result of contracting directly with the United States and its agencies. With respect to marketing scripts, the Company relies on its clients and their advisors to develop the scripts to be used by the Company in making consumer solicitations on behalf of its clients. The Company generally requires its clients to indemnify the Company against claims and expenses arising with respect to the scripts provided by its clients.

      The Company specifically trains its marketing representatives to handle calls in an approved manner and believes it is in compliance in all material respects with all federal and state telemarketing regulations. There can be no assurance, however, that the Company would not be subject to regulatory challenge for a violation of federal or state law.

      The accounts receivable management and collection business is regulated both at the federal and state level. The federal Fair Debt Collection Practices Act (the “FDCPA”) regulates any person who regularly collects or attempts to collect, directly or indirectly, consumer debts owed or asserted to be owed to another person. The FDCPA establishes specific guidelines and procedures that debt collectors must follow in communicating with consumer debtors, including the time, place and manner of such communications. Further, it prohibits harassment or abuse by debt collectors, including the threat of violence or criminal prosecution, obscene language or repeated telephone calls made with the intent to abuse or harass. The FDCPA also places restrictions on communications with individuals other than consumer debtors in

connection with the collection of any consumer debt and sets forth specific procedures to be followed when communicating with such third parties for purposes of obtaining location information about the consumer debtor. Additionally, the FDCPA contains various notice and disclosure requirements and prohibits unfair or misleading representations by debt collectors. The accounts receivable management and collection business is also subject to the Fair Credit Reporting Act (the “FCRA”), which regulates the consumer credit reporting industry and which may impose liability to the extent that the adverse credit information reported on a consumer to a credit bureau is false or inaccurate. The FTC has the authority to investigate consumer complaints against debt collection companies and to recommend enforcement actions and seek monetary penalties. The accounts receivable management and collection business is also subject to state regulation. Some states require that debt collection companies be licensed.

      The Receivable Management and Communication Services segments provide services to healthcare clients, which as providers of healthcare services are considered “covered entities” under the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”). As covered entities, our clients must comply with standards for privacy, transaction and code sets, and data security. Under HIPAA, we are a “business associate”, which requires that we protect the security and privacy of “protected health information” provided to us by our clients for the collection of payments for healthcare services. We have implemented HIPAA compliance training and awareness programs for our healthcare service employees. We also have undertaken an ongoing process to test data security at all relevant levels. In addition, we have reviewed physical security at all healthcare operation centers and have implemented systems to control access to all work areas.

      Several of the industries served by each of the three segments are also subject to varying degrees of government regulation. Although compliance with these regulations is generally the responsibility of the clients, the Company could be subject to a variety of enforcement or private actions for our failure or the failure of our clients to comply with such regulations.

      Our corporate headquarters is located in Omaha, Nebraska. Our owned headquarters facility encompass approximately 125,000 square feet of office space.

      We own four facilities totaling approximately 236,000 square feet, which we use as Communication Services contact centers. We own one facility in Omaha, Nebraska totaling 27,000 square feet, which is used for administrative activities. Through a synthetic lease agreement, we lease one location encompassing approximately 158,000 square feet. This location is used for both administrative and Communication Services production activities.

      As of December 31, 2004, our Communications Services segment leased or contracted for the use of contact centers and automated voice and data processing centers totaling approximately 1,400,000 square feet in 17 states and four foreign countries: Mumbai, India, Victoria, British Columbia, Canada; Makati City, Philippines and Montego Bay and Kingston, Jamaica.

      As of December 31, 2004, our Conferencing Services segment owned two operator assisted conferencing centers totaling approximately 42,000 square feet in two U.S. locations and leased another totaling approximately 52,000 square feet. Our Conferencing Service segment leased two operator assisted conferencing centers in the United Kingdom and Australia totaling approximately 8,000 and 7,000 square feet, respectively. Our Conferencing Services segment also leased approximately 140,000 square feet of office space for sales and administrative offices in 16 states and 7 foreign countries. Our Conferencing Services segment also owned a facility of approximately 68,000 square feet used for administrative activities in the U.S.

      As of December 31, 2004, our Receivables Management segment leases twelve contact centers totaling approximately 300,000 square feet in nine U.S. locations. Also, our Receivables Management segment leases approximately 60,000 square feet of office space for administrative activities and a contact center totaling approximately 4,000 square feet in Jalisco, Mexico.

      The following table summarizes the geographic location of and the number of computer-assisted telephone workstations, voice response ports or conferencing ports by geographic region at our contact centers as of December 31, 2004.

      We believe that our facilities are adequate for our current requirements and that additional space will be available as required. See Note 5 of Notes to Consolidated Financial Statements included elsewhere in this report for information regarding our lease obligations.

      From time to time, we are subject to lawsuits and claims which arise out of our operations in the normal course of our business. West and certain of our subsidiaries are defendants in various litigation matters in the ordinary course of business, some of which involve claims for damages that are substantial in amount. We believe, except for the items discussed below for which we are currently unable to predict the outcome, the disposition of claims currently pending will not have a material adverse effect on our financial position, results of operations or cash flows.

      Sanford v. West Corporation et al., No. GIC 805541, was filed February 13, 2003 in the San Diego County, California Superior Court. The original complaint alleged violations of the California Consumer Legal Remedies Act, Cal. Civ. Code §§ 1750 et seq., unlawful, fraudulent and unfair business practices in violation of Cal. Bus. & Prof. Code §§ 17200 et seq., untrue or misleading advertising in violation of Cal. Bus. & Prof. Code §§ 17500 et seq., and common law claims for conversion, unjust enrichment, fraud and deceit, and negligent misrepresentation, and sought monetary damages, including punitive damages, as well as restitution, injunctive relief and attorneys fees and costs. The complaint was brought on behalf of a purported class of persons in California who were sent a Memberworks, Inc. (“MWI”) membership kit in the mail, were charged for an MWI membership program, and were allegedly either customers of what the complaint contended was a joint venture between MWI and West Corporation (“West”) or West Telemarketing Corporation (“WTC”) or wholesale customers of West or WTC. WTC and West filed a demurrer in the trial court on July 7, 2004. The court sustained the demurrer as to all causes of action in plaintiff’s complaint, with leave to amend. WTC and West received an amended complaint and filed a renewed demurrer. The Court on January 24, 2005 entered an order sustaining West and WTC’s demurrer with respect to five of the seven causes of action including all causes of action that allow punitive damages.

      Plaintiffs had previously filed a complaint in the United States District Court for the Southern District of California against WTC and West and MemberWorks Incorporated alleging, among other things, claims under 39 U.S.C. § 3009. The federal court dismissed the federal claims against WTC and West and declined to exercise supplemental jurisdiction over the remaining state law claims. Plaintiff proceeded to arbitrate her claims with MemberWorks Incorporated and refiled her claims as to WTC and West in the Superior Court of San Diego County, California as set forth above. Plaintiff in the state action has contended in her pleadings that the order of dismissal in federal court was not a final order and that the federal case is still pending. The District Court on December 30, 2004 affirmed the arbitration award between plaintiff and Memberworks

Incorporated. Plaintiff filed a Notice of Appeal on January 28, 2005. WTC and West are currently unable to predict the outcome or reasonably estimate the possible loss, if any, or range of losses associated with these claims.

      Brandy L. Ritt, et al. v. Billy Blanks Enterprises, et al. was filed in January 2001 in the Court of Common Pleas in Cuyahoga County, Ohio, against two of West’s clients. The suit, a purported class action, was amended for the third time in July 2001 and West Corporation was added as a defendant at that time. The suit, which seeks statutory, compensatory, and punitive damages as well as injunctive and other relief, alleges violations of various provisions of Ohio’s consumer protection laws, negligent misrepresentation, fraud, breach of contract, unjust enrichment and civil conspiracy in connection with the marketing of certain membership programs offered by West’s clients. On February  6, 2002, the court denied the plaintiffs’ motion for class certification. On July 21, 2003, the Ohio Court of Appeals reversed and remanded the case to the trial court for further proceedings. The plaintiffs have filed a Fourth Amended Complaint naming West Telemarketing Corporation as an additional defendant and a renewed motion for class certification. One of the defendants, NCP Marketing Group, filed bankruptcy and on July 12, 2004 removed the case to federal court. Plaintiffs have filed a motion to remand the case back to state court. All defendants opposed that motion. In addition, one of the defendants moved to transfer the case from the United States District Court for the Northern District of Ohio to the Bankruptcy Court in Nevada. Plaintiffs objected to the transfer. On October 29, 2004, the district court referred the case to the Bankruptcy Court for the Northern District of Ohio. It is uncertain when the case will be tried. West Corporation and West Telemarketing Corporation are currently unable to predict the outcome or reasonably estimate the possible loss, if any, or range of losses associated with this claim.

      No matter was submitted to a vote of security holders in the fourth quarter of the fiscal year covered by this report.

Executive Officers

      Our executive officers are as follows:

      Gary L. West co-founded WATS Marketing of America (“WATS”) in 1978 and remained with that company until 1985. Mr. West joined us in July 1987 after the expiration of a noncompetition agreement with

WATS. Mr. West has served as Chairman of the Board since joining us. Mr. West and Mary E. West are husband and wife.

      Mary E. West co-founded WATS and remained with that company until 1985. In January 1986, she founded West. Mrs. West has served as our Vice Chair since 1987. Mrs. West and Mr. West are wife and husband.

      Thomas B. Barker joined us in 1991 as Executive Vice President of West Interactive Corporation. Mr. Barker was promoted to President and Chief Operating Officer in March 1995. Mr. Barker was promoted to President and Chief Executive Officer in September 1998.

      Nancee R. Berger joined West Interactive Corporation in 1989 as Manager of Client Services. Ms. Berger was promoted to Vice President of West Interactive Corporation in May 1994. She was promoted to Executive Vice President of West Interactive Corporation in March 1995, and to President of West Interactive Corporation in October 1996. She was promoted to Chief Operating Officer in September 1998 and to President and Chief Operating Officer in January 2004.

      J. Scott Etzler joined InterCall in June 1998 as President and Chief Operating Officer and was Chief Executive Officer from March 1999 until InterCall was acquired by us in May, 2003. Mr. Etzler has served as President of InterCall since the acquisition in May 2003.

      Jon R. (Skip) Hanson joined us in 1991 as a Business Analyst. In October 1999, he was promoted to Chief Administrative Officer and Executive Vice President of Corporate Services.

      Mark V. Lavin joined us in 1996 as Executive Vice President — West Telemarketing Corporation, was promoted to President in September 1998. From 1991 until 1996, he served in several key management roles within the hotel industry organizations, including Vice President of Carlson Hospitality Worldwide Reservation Center and General Manager of the Hyatt Reservation Center.

      Michael E. Mazour joined West Telemarketing Corporation in 1987 as Director — Data Processing Operations. Mr. Mazour was promoted to Vice President, Information Services of West Telemarketing Corporation Outbound in 1990, to Senior Vice President, Client Operations in 1995, to Executive Vice President in 1997 and to President in January 2004. He was named President of West Business Services, LP in November 2004.

      Paul M. Mendlik joined us in 2002 as Executive Vice President, Chief Financial Officer & Treasurer. Prior to joining us, he was a partner in the accounting firm of Deloitte & Touche LLP from 1984 to 2002.

      Jim Richards serves as President of West Asset Management, Inc. Previously, Mr. Richards co-founded and served as President of Attention LLC which was acquired by us in August 2002. Mr. Richards has over 30 years of industry experience.

      Steve M. Stangl joined West Interactive Corporation in 1993 as Controller. In 1998, Mr. Stangl was promoted to President of West Interactive Corporation. In January 2004, Mr. Stangl was promoted to President, Communication Services.

      Todd B. Strubbe joined West Direct, Inc. in July 2001, as President and was appointed President of West Interactive Corporation in January 2004. Previously, he was President and Chief Operating Officer of CompuBank, N.A. He was with First Data Corporation from 1995 to 2000 as Managing Director, Systems Architecture and Product Development and Vice President of Corporate Planning and Development. Prior to joining First Data, Mr. Strubbe was with McKinsey & Company, Inc.

      Michael M. Sturgeon joined us in 1991 as a National Account Manager, West Interactive Corporation. In September 1994, Mr. Sturgeon was promoted to Vice President of Sales and Marketing. In March 1997, Mr. Sturgeon was promoted to Executive Vice President, Sales and Marketing for the Company.

PART II

      Our common stock is traded on the Nasdaq National Market under the symbol “WSTC.” The following table sets forth, for the periods indicated, the high and low sales prices of our common stock as reported on the Nasdaq National Market.

      As of February 18, 2005, there were 66 holders of record of our common stock. As of the same date, we had 68,458,927 shares of common stock issued and 68,386,683 outstanding. No dividends have been declared with respect to our common stock since our initial public offering. We currently intend to use earnings to finance the growth and development of our business and do not anticipate paying cash dividends on our common stock in the foreseeable future. Any payment of dividends will be at the discretion of our 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.

Equity Compensation Plan Information

      Pursuant to the terms of the Deferred Compensation Plan, eligible management, non-employee directors or highly compensated employees may elect to defer a portion of their compensation and have such deferred compensation invested in the same investments made available to participants of the 401(k) plan or notionally in our common stock. We match 50% of any amounts notionally invested in common stock, where matched amounts are subject to a five-year vesting schedule with 20% vesting each year. The maximum number of shares of common stock available under the Deferred Compensation Plan was 1,000,000.

      The following table sets forth, for the periods presented and at the dates indicated, our selected historical consolidated financial data. The selected consolidated historical income statement and balance sheet data has been derived from our audited historical consolidated financial statements. Our consolidated financial statements as of December 31, 2004 and 2003, and for the years ended December 31, 2004, 2003 and 2002, which have been audited by Deloitte & Touche LLP, independent auditors, are included elsewhere in this Annual Report. The information is qualified in its entirety by the detailed information included elsewhere in this Annual Report and should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and the “Consolidated Financial Statements and Notes” thereto included elsewhere in this Annual Report.

Key 2004 Events

Recent Events

      On December 1, 2004, we acquired ECI Conference Call Services LLC (ECI) for approximately $52 million. ECI is a provider of conferencing services, particularly operator-assisted calls. ECI is being integrated into our Conferencing Services segment, but will maintain its separate brand and market presence. The results of operations of ECI have been consolidated with our operating results since the acquisition date, December 1, 2004.

      On November 15, 2004, we amended our bank credit facility and synthetic lease. The amendments to the bank credit facility: (i) terminate the previously outstanding $200 million term loan, (ii) increase the revolving credit available to us from $250 million to $400 million; (iii) reduce the minimum and maximum interest rates; (iv) reduce the minimum and maximum commitment fees; (v) release the previously granted security interest; and (vi) amend certain negative covenants to provide us with more operating flexibility.

      The amendments to the synthetic lease: (i) reduce the minimum amount payable over LIBOR for advances in excess of 12% of the property costs from 100 basis points to 75 basis points; (ii) reduce the maximum amount payable over LIBOR for advances in excess of 12% of the property costs from 200 basis points to 125 basis points; (iii) reduce the minimum amount payable over LIBOR for advances not in excess of 12% of the property costs from 150 basis points to 125 basis points; (iv) reduce the maximum amount payable over LIBOR for advances not in excess of 12% of the property costs from 200 basis points to 175 basis points; (v) reduce the maximum amount payable over the alternative base rate for advances in excess of 12% of the property cost from 75 basis points to 25 basis points; and (vi) reduce the maximum amount payable over the alternative base rate for advances not in excess of 12% of the property costs from 125 basis points to 75 basis points.

Outlook

      On December 15, 2004, we announced our 2005 financial outlook. In that announcement, we stated that revenue expectations for our Communication Services segment are between $835 and $850 million with expected operating margins between 12% and 13%. Revenue expectations for our Conferencing Services segment are between $355 and $375 million with operating margins between 21.5% and 22.5%. Revenue expectations for the Receivables Management segment are between $185 million and $200 million with operating margins between 17% and 17.5%.

Results of Operations

      In 2003 we began reporting results in two reportable segments: Communication Services and Conferencing Services. With the acquisition of Worldwide on August 1, 2004, we began reporting results in a third reportable segment, Receivables Management. Prior to the Worldwide acquisition the financial results of Attention were included in the Communication Services segment. Prior period segment disclosures have been reclassified to reflect this change.

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

      Revenue: Revenue increased $229.0 million, or 23.2%, to $1,217.3 million in 2004 from $988.3 million in 2003. $165.3 million of this increase was derived from the acquisitions of InterCall, ConferenceCall.com, Worldwide and ECI, which closed on May 9, 2003, November 1, 2003, August 1, 2004 and December 1, 2004, respectively. During 2004, revenue from our largest 100 customers, included $28.5 million of revenue derived from new clients.

      During the year ended December 31, 2004, our largest 100 clients represented 69% of revenues compared to 77% and 89% for the years ended December 31, 2003 and 2002, respectively. This reduced concentration is due to the acquisitions in 2004 and 2003 and reduced revenue from AT&T. We had one customer, AT&T, that accounted for 9% of total revenue for the year ended December 31, 2004 compared to 15% and 19% of total revenue for the years ended December 31, 2003 and 2002, respectively.

      Communication Services revenue increased $23.6 million, or 3.0%, to $817.7 million. This revenue increase was offset by a decline in outbound consumer revenue of $46.1 million due to a planned reduction in outbound consumer calling. Automated services decreased $35.1 million due largely to a reduction in volume of prepaid calling services. We believe this trend in prepaid calling services will continue.

      Conferencing Services revenue increased $141.7 million, or 88.1%, to $302.5 million. The increase in revenue included $106.3 million from the full year impact of the 2003 acquisitions of InterCall and ConferenceCall.com, which were acquired on May 9, 2003 and November 1, 2003, respectively, and the acquisition of ECI which occurred on December 1, 2004.

      Receivables Management revenue increased $65.3 million to $99.4 million. The 2004 and 2003 Receivables Management revenue includes Attention (previously included in Communication Services) and 2004 Receivables Management revenue includes Worldwide since its acquisition on August 1, 2004. The increase in revenue included $56.4 million from the acquisition of Worldwide. Sales of portfolio receivables during the five months ended December 31, 2004 resulted in net revenue of $2.4 million.

      Cost of Services: Cost of services represents direct labor, variable telephone expense and other costs directly related to providing services to clients. Cost of services increased $101.7 million, or 23.1%, to $542.0 million, from $440.3 million for the comparable period of 2003. The acquisitions of InterCall, ConferenceCall.com, Worldwide and ECI increased cost of services by $55.2 million. As a percentage of revenue, cost of services increased to 44.6% for 2004, compared to 44.5% in 2003.

      Communication Services cost of services increased $24.6 million, or 6.6%, in 2004 to $397.0 million. The increase is primarily due to higher labor costs associated with the increase in revenue. As a percentage of revenue, communication services cost of services increased to 48.5% in 2004, compared to 46.9%, in 2003. During 2004, new contact centers were opened in Niles, Ohio and in Makati City, Philippines. In addition, two outbound contact centers and approximately 800 workstations were converted to the inbound dedicated agent business. The transition costs from this activity contributed to an increase in cost of services.

      Conferencing Services cost of services increased $47.3 million, or 96.8%, in 2004 to $96.1 million. The 2003 cost of services represents a partial year as InterCall and ConferenceCall.com were acquired on May 9, 2003 and November  1, 2003, respectively. As a percentage of revenue, Conferencing Services cost of services increased to 31.8% in 2004, compared to 30.4%, for the comparable period in 2003.

      Receivables Management cost of services increased $31.0 million, or 157.2%, in 2004 to $50.6 million. The 2004 and 2003 Receivables Management cost of services includes Attention (previously included in Communication Services) and Worldwide since its acquisition on August 1, 2004. As a percentage of revenue, Receivable Management cost of services decreased to 50.9% in 2004, compared to 57.7%, for the comparable

period in 2003. This reduction as a percentage of revenue is due to the acquisition of Worldwide, which historically had a lower percentage of cost of services to revenue than did Attention.

      Selling, General and Administrative Expenses: SG&A expenses increased $82.5 million, or 20.4%, to $487.5 million in 2004 from $405.0 million for the comparable period of 2003. The acquisitions of InterCall, ConferenceCall.com, Worldwide and ECI increased SG&A expense by $62.1 million. As a percentage of revenue, SG&A expenses decreased to 40.0% in 2004, compared to 41.0% in 2003. This decrease is partially attributed to the acquisition of Worldwide, which historically had a lower percentage of SG&A to revenue than our previously consolidated entities. This decrease as a percentage of revenue was accomplished despite an increase in depreciation of $6.4 million and amortization of $7.3 million in 2004.

      Communication Services SG&A expenses increased $3.4 million, or 1.1%, to $315.1 million. The conversion of workstations from outbound to inbound, discussed previously under cost of services, increased SG&A expenses as a percent of revenue. Also, during 2004, site expansion activities took place in seven domestic contact centers and three international contact centers contributing to increases in SG&A and capital expenditures. As a percentage of revenue, Communication Services SG&A expenses decreased to 38.5% in 2004 compared to 39.3% in 2003. This reduction was partially due to lower bad debt expense, which decreased to $3.2 million in 2004 compared to $8.8 million in 2003.

      Conferencing Services SG&A expenses increased $60.3 million, or 76.5%, to $139.1 million. The 2003 SG&A represents a partial year as InterCall and ConferenceCall.com were acquired on May 9, 2003 and November 1, 2003, respectively. As a percentage of revenue, Conferencing Services SG&A expenses decreased to 46.0% in 2004 compared to 49.0% in 2003. The decline in SG&A as a percentage of revenue is partially due to synergies achieved with the acquisition of ConferenceCall.com.

      Receivables Management SG&A expenses increased $19.3 million, or 133.1%, to $33.8 million. The 2004 and 2003 Receivables Management SG&A includes Attention (previously included in Communication Services) and Worldwide since its acquisition on August 1, 2004. As a percentage of revenue, Receivables Management SG&A decreased to 34.0% in 2004, compared to 42.5% in 2003. This reduction as a percentage of revenue is due to the acquisition of Worldwide, which historically had a lower percentage of SG&A to revenue than did Attention as well as the ability to spread these expenses over a larger revenue base.

      Operating Income: Operating income increased by $44.8 million, or 31.3%, to $187.9 million in 2004 from $143.1 million for the comparable period of 2003. As a percentage of revenue, operating income increased to 15.4% in 2004 compared to 14.5% in 2003 due to the factors discussed above for revenue, cost of services and SG&A expenses.

      Communication Services operating income decreased by $4.3 million, or 3.9%, to $105.6 million in 2004. As a percentage of revenue, Communication Services operating income decreased to 12.9% in 2004 compared to 13.9% in 2003 due to the factors discussed above for revenue, cost of services and SG&A expenses.

      Conferencing Services operating income increased by $34.1 million, or 102.7%, to $67.3 million in 2004. The 2003 operating income represents a partial year as InterCall and ConferenceCall.com were acquired on May 9, 2003 and November 1, 2003, respectively. As a percentage of revenue, Conferencing Services operating income increased to 22.2% in 2004 compared to 20.6% in 2003.

      Receivables Management operating income increased by $15.0 million, in 2004. The 2004 and 2003 Receivables Management operating income includes Attention (previously included in Communication Services) and 2004 operating income includes Worldwide since its acquisition on August 1, 2004. As a percentage of revenue, Receivables Management operating income increased to 15.1% in 2004, compared to (0.2)% in 2003.

      Other Income (Expense): Other income (expense) includes sub-lease rental income, interest income from short-term investments and interest expense from short-term and long-term borrowings under credit facilities and portfolio notes payable. Other income (expense) in 2004 was $(6.4) million compared to $(3.3) million in 2003. The change in other expense in 2004 is primarily due to interest expense on increased outstanding debt incurred for acquisitions and interest expense on portfolio notes payable.

      Minority Interest: Effective September 30, 2004, one of our portfolio receivable lenders, CFSC Capital Corp. XXXIV, exchanged its rights to share profits in certain portfolio receivables for an approximate 30% minority interest in one of our subsidiaries, Worldwide Asset Purchasing, LLC. We became a party to the CFSC Capital Corp. relationship as a result of the Worldwide acquisition. The minority interest in the earnings of Worldwide Asset Purchasing, LLC for 2004 was $2.6 million.

      Net Income: Net income increased $25.3 million, or 28.8%, to $113.2 million in 2004 compared to $87.9 million in 2003. Diluted earnings per share were $1.63 compared to $1.28 in 2003.

      Net income includes a provision for income tax expense at an effective rate of approximately 36.8% for 2004. This compares to 37.0% in 2003.

      Revenue: Revenues increased $167.6 million, or 20.4%, to $988.3 million in 2003 from $820.7 million in 2002. The increase in revenue included $10.4 million of revenue derived from new clients and $187.3 million derived from the acquisitions of Dakotah Direct, Attention, InterCall and ConferenceCall.com, which closed on March 1, 2002, August 1, 2002, May 9, 2003 and November 1, 2003, respectively. The overall revenue increase was partially offset by lower call volumes in certain product lines in the Communication Services segment. In addition, pricing pressures and concessions continue in both the Communication Services and Conferencing Services segments.

      During the year ended December 31, 2003, our largest 100 clients represented 77% of revenues compared to 89% and 86% for the years ended December 31, 2002 and 2001, respectively. This reduced concentration is due to the InterCall acquisition. For the year ended December 31, 2003, InterCall had over 27,000 customers. We had one customer, AT&T, that accounted for 15% of total revenue for the year ended December 31, 2003 and 19% and 21% of total revenue for the years ended December 31, 2002 and 2001, respectively. These percentages do not include the former Wireless and Broadband units of AT&T, which were divested from AT&T in 2002.

      Communication Services revenue for the year ended December 31, 2003, decreased $14.2 million, or 1.8%, to $794.0 million for the year ended December 31, 2002.

      Conferencing Services revenue for 2003 was $160.7 million. This 2003 revenue is derived from the acquisitions of InterCall and ConferenceCall.com During 2003, the average rate per minute declined while total minutes grew. This is consistent with a recent trend of declining rates offset by increasing minute volumes.

      Receivables Management revenue for 2003 was $34.1 million. This represents a full year of operation for Attention. The 2002 Receivable Management revenue represented Attention’s revenue from the date of acquisition, August 1, 2002.

      Cost of Services: Cost of services represents direct labor, telephone expense and other costs directly related to providing services to clients. Cost of services increased $41.0 million, or 10.3%, in 2003 to $440.3 million, from $399.3 million for the comparable period of 2002. As a percentage of revenue, cost of services decreased to 44.5% for 2003, compared to 48.7%, for the comparable periods in 2002. This reduction was primarily due to the acquisition of InterCall, which historically has had a lower percentage of direct costs to revenue than our Communication Services segment.

      Communication Services costs of services decreased $19.5 million, or 5.0%, in 2003 to $372.3 million, from $391.8 million for the comparable period of 2002. As a percentage of revenue, Communication Services cost of services decreased to 46.9% for 2003, compared to 48.5% in 2002. The decrease in cost of services as a percentage of revenue can be attributed primarily to continued control of variable labor costs, a greater percentage of call volumes of certain product lines which traditionally have a lower direct cost as a percent of revenue than other Communication Services operations and the exiting of the 900 services provided by the Communication Services segment during 2002 which had higher direct costs as a percentage of revenue than other Communication Services product offerings. In 2003, the Communication Services segment incurred a $3.0 million charge related to the sale of one contact center and closing of three other contact centers. Similarly, in 2002, the Communication Services segment incurred a $2.5 million charge related to the closing of several contact centers.

      Conferencing Services cost of services for 2003 was $48.8 million or 30.4% of revenue and represents cost of services incurred since the acquisition of InterCall and ConferenceCall.com on May 9, 2003 and November  1, 2003, respectively.

      Receivables Management cost of services for 2003 was $19.7 million. This represents a full year of operation for Attention. The 2002 Receivable Management cost of services represented Attention’s cost of services from the date of acquisition, August 1, 2002.

      Selling, General and Administrative Expenses: SG&A expenses increased $90.1 million, or 28.6%, to $405.0 million for 2003 from $314.9 million for the comparable period of 2002. The acquisition of InterCall and ConferenceCall.com increased SG&A expense by $78.8 million. As a percentage of revenue, SG&A expenses increased to 41.0% for 2003, compared to 38.4% in 2002. This increase is partially attributed to increases in depreciation of $16.7 million and amortization of $7.9 million for 2003. Salaries and benefits in the Communications Services segment increased $10.5 million or 6.6%. Partially offsetting the increase in SG&A for 2003 was a $14.5 million reduction of bad debt expense to $10.0 million for 2003.

      Communication Services SG&A expenses increased by $0.7 million, or 0.2%, to $311.7 million for 2003 from $311.0 million for the comparable period of 2002. As a percentage of revenue, SG&A expenses increased to 39.3% in 2003, compared to 38.5% in 2002. Bad debt expense decreased $15.6 million to $8.9 million for 2003 from $24.5 million for 2002. This reduction in bad debt expense was due to improvements in the quality of our accounts and notes receivable. We believe that the bad debt expense experienced in 2002 was unusual and that this year’s experience is more representative of normal historical trends.

      Conferencing Services SG&A expenses were $78.8 million or 49.0% of revenue and represents cost of services incurred since the acquisition of InterCall and ConferenceCall.com on May 9, 2003 and November 1, 2003, respectively.

      Receivables Management SG&A expenses for 2003 was $14.5 million. This represents a full year of operation for Attention. The 2002 Receivable Management SG&A expenses represented Attention’s SG&A expenses from the date of acquisition, August 1, 2002.

      Operating Income: Operating income increased by $36.6 million, or 34.4%, to $143.1 million for 2003 from $106.5 million for the comparable period of 2002. As a percentage of revenue, operating income increased to 14.5% for 2003 compared to 13.0% in 2002 due to the factors discussed above for revenue, cost of services and SG&A expenses.

      Communication Services operating income increased by $4.5 million, or 4.2%, to $110.0 million for 2003 up from $105.5 million for the comparable period of 2002.

      Conferencing Services operating income was $33.2 million or 20.6% of revenue and represents operating income since the acquisition of InterCall and ConferenceCall.com on May 9, 2003 and November 1, 2003, respectively.

      Receivables Management operating income for 2003 was $(0.1) million. This represents a full year of operation for Attention. The 2002 Receivable Management operating income represented Attention’s operating income from the date of acquisition, August 1, 2002.

      Other Income (Expense): Other income (expense) includes sub-lease rental income, interest income from short-term investments and interest expense from short-term and long-term obligations. Other income (expense) totaled $(3.3) million in 2003 compared to $2.1 million in 2002. The change is primarily due to interest expense of $4.8 million on the debt incurred for the acquisitions of InterCall and ConferenceCall.com. Interest expense in 2003 totaled $5.5 million compared to $2.4 million in 2002. Interest income was $0.7 million in 2003 compared to $2.8 million in 2002. The change in interest income is primarily due to lower average cash balances and lower average interest rates during 2003.

      Net Income: Net income increased $19.3 million, or 28.1%, to $87.9 million in 2003 compared to $68.6 million in 2002. Diluted earnings per share were $1.28 compared to $1.01 in 2002.

      Net income includes a provision for income tax expense at an effective rate of approximately 37.0% for 2003. This compares to 36.6% in 2002.

Liquidity and Capital Resources

      The following table summarizes our cash flows by category for the periods presented (in thousands):

      Our primary cash requirements include the funding of the following:

      Our primary source of liquidity has been cash flow from operations, supplemented by borrowings under our bank credit facilities. In addition, we had unrestricted cash of $21.3 million as of December 31, 2004, which is available to meet our cash requirements.

      Net cash flow from operating activities increased $26.3 million, or 13.4%, to $222.5 million for 2004, compared to net cash flows from operating activities of $196.2 million for 2003. The increase in net cash flows from operating activities is due primarily to an increase in net income, accounts payable and other liabilities. Non-cash depreciation and amortization expense also contributed to the increase in operating cash flows. This increase in operating cash flow was partially offset by an increase in accounts receivable and other assets.

      Days sales outstanding, a key performance indicator we utilize to monitor the accounts receivable average collection period and assess overall collection risk, was 50 days at December 31, 2004, and ranged from 48 to 50 days during the year. At December 31, 2003, the days sales outstanding was 49 days and ranged from 48 to 52 days during the year.

      Net cash used in investing activities decreased $212.2 million or 44.6% to $263.2 million for 2004, compared to net cash used in investing activities of $475.4 million for 2003. The decrease in cash used in investing activities was due to acquisition costs incurred in 2003 for the acquisition of InterCall and ConferenceCall.com relative to the acquisition costs incurred in 2004 for the acquisitions of Worldwide and ECI. We invested $59.9 million in capital expenditures during 2004 compared to $46.3 million for 2003. Investing activities also included the purchase of receivable portfolios for $28.7 million and the cash proceeds applied to amortization of receivable portfolios of $19.7 million. We did not utilize any new capital lease financing during 2004.

      Net cash from financing activities decreased $118.5 million or 71.0% to $48.3 million for 2004, compared to net cash flow from financing activities of $166.8 million for 2003. The primary source of financing in 2004 was $230.0 million in net borrowings on our revolving credit facility, which we used for the acquisitions of Worldwide and ECI. The primary source of financing in 2003 was the $200.0 million term loan that we used for the acquisition of InterCall. During 2004, net cash from financing activities was partially offset by repaying the outstanding balance on the term loan of $192.0 million and payments on portfolio notes payable (which we assumed in the Worldwide acquisition) of $28.5 million. Proceeds from issuance of portfolio notes payable were $25.3 million. Proceeds from our stock-based employee benefit programs were $14.6 million in 2004 compared to $8.9 million in 2003.

      We funded the acquisition of Worldwide with approximately $49.1 million of cash on hand and approximately $95.0 million of borrowings from our revolving credit facility. In addition, we assumed approximately $49.0 million of Worldwide liabilities. We funded the acquisition of ECI with approximately $13.2 million of cash on hand and approximately $40.0 million of borrowings from our revolving credit facility.

      We have a $400 million revolving bank credit facility for general cash requirements. We also have two specialized credit facilities for the purchase of receivable portfolios.

      Bank Facility. On November 15, 2004, we amended and restated the two bank credit facilities we entered into during 2003. The effect of this amendment and restatement was to terminate the $200.0 million four-year term loan, that had a $137.5 million unpaid balance and increase the borrowing capacity of the revolving credit facility from $250.0 million to $400.0 million. The maturity date of the new credit facility is

November 15, 2009. The facility bears interest at a variable rate over a selected LIBOR based on our leverage. At December 31, 2004, $230.0 million was outstanding on the revolving credit facility, which was the highest period end balance of the revolving credit facility. The average daily outstanding balance of the revolving credit facility during 2004, was $57.8 million. The effective annual interest rate, inclusive of debt amortization costs, on the revolving credit facility for the year ended December 31, 2004 was 3.42%. The commitment fee on the unused revolving credit facility at December 31, 2004, was 0.175%. The amended and restated facility bears interest at a minimum of 75 basis points over the selected LIBOR and a maximum of 125 basis points over the selected LIBOR. All our obligations under the facility are unconditionally guaranteed by substantially all of our domestic subsidiaries. The facility contains various financial covenants, which include a consolidated leverage ratio of funded debt to adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) which may not exceed 2.5 to 1.0 and a consolidated fixed charge coverage ratio of adjusted EBITDA to the sum of consolidated interest expense, scheduled funded debt payments, scheduled payments on acquisition earn-out obligations and income taxes paid, which must exceed 1.2 to 1.0. Both ratios are measured on a rolling four-quarter basis. We were in compliance with the financial covenants at December 31, 2004.

      Cargill Facility. As of September 30, 2004, through a majority-owned subsidiary, Worldwide Asset Purchasing, LLC (WAP), we amended WAP’s revolving financing facility with a third party specialty lender, CFSC Capital Corp. XXXIV. The lender is also a minority interest holder in WAP. Pursuant to this arrangement, we will borrow 80% to 85% of the purchase price of each portfolio purchase made from CFSC Capital Corp. XXXIV and we will fund the remainder. Interest accrues on the debt at a variable rate of 2% over prime. The debt is non-recourse and is collateralized by all receivable portfolios within a loan series. Each loan series contains a group of portfolio asset pools that have an aggregate original principal amount of approximately $20 million. Payments are due monthly over two years from the date of origination. At December 31, 2004, we had $28.5 million of non-recourse portfolio notes payable outstanding under this facility.

      Sallie Mae Facility. In December 2003, we, through our wholly-owned subsidiary Attention, LLC, established a $20 million revolving financing facility with a third-party specialty lender and capitalized a consolidated special purpose entity (“SPE”) for the sole purpose of purchasing defaulted accounts receivable portfolios. We have agreed to finance under the amended facility the purchase of $60.0 million in receivable portfolios over the next three years as follows: $10.0 million by July 31, 2005, $25.0 million of cumulative purchases by July 31, 2006 and the balance by July 31, 2007. Pursuant to this credit facility, we will be required to finance a minimum of $12.0 million of the purchases and the third party lender will finance the remainder of the purchases on a non-recourse basis. Interest accrues on the debt at a variable rate equal to the greater of (i) prime plus 2% or (ii) 50 basis points above the lenders actual cost of funds. In certain circumstances, we may extend the three-year period to four years. These assets will be purchased by us, transferred to the SPE and sold to a non-consolidated qualified special purpose entity (“QSPE”).

      We will perform collection services on the receivable portfolio for a fee, recognized when cash is received. The SPE and the third party lender will also be entitled to a portion of the profits of the QSPE to the extent cash flows from collections are greater than amounts owed by the QSPE, after repayment of all servicing fees, loan expense and return of capital. On December 31, 2004, the SPE had a note receivable from the QSPE for $1.6 million. Also, on December 31, 2004, $2.6 million of the $20.0 million revolving financing facility had been utilized.

Contractual Obligations

      As described in “Financial Statements and Supplementary Data,” we have contractual obligations that may affect our financial condition. However, based on management’s assessment of the underlying provisions and circumstances of our material contractual obligations, there is no known trend, demand, commitment, event or uncertainty that is reasonably likely to occur which would have a material effect on our financial condition or results of operations.

      The following table summarizes our contractual obligations at December 31, 2004 (dollars in thousands):

The table above excludes variable interest expense under our credit facility and amounts paid for taxes.

      The acquisition earn out commitments, noted above, represent commitments incurred for the acquisitions of Tel Mark Sales and Attention, which were completed in 2002. Under the Tel Mark Sales commitment there is a provision for a contingent earn-out with a maximum earn-out of $5.0 million per year based on revenue growth. In 2004, the final year of this contingent earn-out, an accrual of $3.67 million was recorded. In the Attention acquisition, additional consideration is payable over the three year period between 2005 and 2007, which will range from a minimum of $16.5 million to a maximum of $25.0 million, based on Attention satisfying certain earnings objectives during the years ending December 31, 2004 through 2006. During 2004, $5.0 million was paid under this commitment. At December 31, 2004, the remaining $16.5 minimum payment was accrued in accrued expenses and other long term liabilities.

Capital Expenditures

      Our operations continue to require significant capital expenditures for technology, capacity expansion and upgrades. Capital expenditures were $59.9 million for the year ended December 31, 2004, which were funded through operations and use of our bank credit facility. Capital expenditures were $46.3 million for the year ended December 31, 2003. Capital expenditures for the year ended December 31, 2004 consisted primarily of equipment purchases, the cost of new call centers in the Philippines and Ohio as well as upgrades at existing facilities. We currently project our capital expenditures for 2005 to be approximately $60.0 to $70.0 million primarily for capacity expansion and upgrades at existing facilities.

      We believe that the cash flows from operations, together with existing cash and cash equivalents and available borrowings under our bank credit facility will be adequate to meet our capital requirements for at least the next 12 months. Our credit facility, discussed above, includes covenants which allow us the flexibility to issue additional indebtedness that is pari passu with or subordinated to the existing credit facilities in an aggregate principal amount not to exceed $400.0 million, allow us to incur capital lease indebtedness in an aggregate principal amount not to exceed $25.0 million and allow us to incur accounts receivable securitization indebtedness in an aggregate principal amount not to exceed $100.0 million and non-recourse indebtedness in an aggregate principal amount not to exceed $150.0 million without requesting a waiver from the lender. We may pledge additional property or assets of our subsidiaries, which are not already pledged as collateral securing existing credit facilities or any of our affiliates. We or any of our affiliates may be required to guarantee any existing or additional credit facilities.

Off-Balance Sheet Arrangements

      We amended a lease for two buildings from a development company in 2003. The development company is not a variable interest entity as defined by Financial Accounting Standards Board (“FASB”) Interpretation No. 46R, Consolidation of Variable Interest Entities (an interpretation of ARB No. 51) (“FIN 46R”). The initial lease term expires in 2008. There are three renewal options of five years each subject to mutual agreement of the parties. The lease facility bears interest at a variable rate over a selected LIBOR, which resulted in an annual effective interest rate of 2.80% at December 31, 2004. On December 13, 2004, the San Antonio building was sold and is therefore no longer subject to the terms of the synthetic lease agreement. We may, at any time, elect to exercise a purchase option of approximately $30.5 million for the Omaha building. If we elect not to purchase the building or renew the lease, the building would be returned to the lessee for remarketing. We have guaranteed a residual value of 85% to the lessor upon the sale of the building. At December 31, 2004, the fair value of the guaranteed residual value for the Omaha building was approximately $1.149 million and is included in other long term assets and other long term liabilities.

      Sallie Mae Facility. In December 2003, we established a $20.0 million revolving financing facility with a third-party specialty lender and capitalized a consolidated special purpose entity (“SPE”) for the sole purpose of purchasing defaulted accounts receivable portfolios. These assets will be purchased by us, transferred to the SPE and sold to a non-consolidated qualified special purpose entity (“QSPE”).

      We will perform collection services on the receivable portfolios for a fee, recognized when cash is received. The SPE and the third party lender will also be entitled to a portion of the profits of the QSPE to the extent cash flows from collections are greater than amounts owed by the QSPE, after repayment of all servicing fees, loan expense and return of capital. At December 31, 2004, the SPE had a note receivable from the QSPE for $1.6 million. Also, at December 31, 2004, $2.6 million of the $20.0 million revolving financing facility had been utilized.

      During 2004 we amended this financing facility. We agreed to finance under the amended facility the purchase of $60.0 million in receivable portfolios over the next three years as follows: $10.0 million by July 31, 2005, $25.0 million of cumulative purchases by July 31, 2006 and the balance by July 31, 2007. Pursuant to this facility, we will be required to finance a minimum of $12.0 million of the purchases and the third party lender will finance the remainder of the purchases on a non-recourse basis. In certain circumstances, we may extend the three year period to four years.

Inflation

      We do not believe that inflation has had a material effect on our results of operations. However, there can be no assurance that our business will not be affected by inflation in the future.

Critical Accounting Policies

      The process of preparing financial statements requires the use of estimates on the part of management. The estimates used by management are based on our historical experiences combined with management’s understanding of current facts and circumstances. Certain of our accounting policies are considered critical as they are both important to the portrayal of our financial condition and results and require significant or complex judgment on the part of management. We believe the following represent our critical accounting policies as contemplated by Securities and Exchange Commission Financial Reporting Release No. 60, “Cautionary Advice Regarding Disclosure About Critical Accounting Policies.”

      Revenue Recognition. The Communication Services segment recognizes revenue for customer-initiated, agent based services, including order processing, customer acquisition, customer retention and customer care in the month that calls are answered by an agent based on the number of calls and/or minutes received and processed on behalf of clients. For agent based services that we initiate including order processing, customer acquisition, customer retention and customer care, revenue is recognized on an hourly basis or on a success rate basis in the month that we place calls to consumers on behalf of clients. Automated services revenue is

recognized in the month that the calls are received or sent by automated voice response units and is billed based on call duration.

      The Conferencing Services segment recognizes revenue when services are provided and generally consists of per-minute charges. Revenues are reported net of any volume or special discounts.

      The Receivables Management segment recognizes contingency fee revenue in the month collection payments are received based upon a percentage of cash collected or other agreed upon contractual parameters.

      The acquisition of Worldwide on August 1, 2004 resulted in us adopting a critical accounting policy for revenue recognition of purchased receivables. We believe that the amounts and timing of cash collections for our purchased receivables can be reasonably estimated and therefore, we utilize the effective interest method of accounting for our purchased receivables as set forth in Accounting Standards Executive Committee Practice Bulletin 6 (“PB6”). Selection of this revenue recognition policy, versus the cash recovery method, is based on our historical results and our knowledge of the industry. In accordance with this revenue recognition policy, each pool of receivables is recorded at historical cost and statistically modeled to determine its projected cash flows based on historical cash collections for pools with similar characteristics. The relevant factors in computing the cash flow are the timing, which typically averages from 50 to 60 months, and amount of cash to be received. An internal rate of return (“IRR”) is established for each pool of receivables based on the projected cash flows and applied to the balance of the pool. The resulting revenue recognized is based on the IRR applied to the remaining balance of each pool of accounts. The effective interest method is used to allocate cash collections between revenue and amortization of the portfolios (principal reduction). Revenue is recognized over the period of the purchased receivables anticipated cash flow using the resulting yield. In the event that cash collected would be inadequate to amortize the carrying value, an impairment charge would be taken. In the event that cash collected would result in an excess amortization of the carrying value, the IRR would be adjusted. Periodically the receivables management segment will sell all or a portion of a pool to third parties. Proceeds of these sales are also recognized in revenue under the effective interest method.

      Application of PB6 requires the use of estimates to calculate a projected IRR for each pool. These estimates are based on historical cash collections. If future cash collections are materially different in amount or timing than projected cash collections, earnings could be affected either positively or negatively. Higher collection amounts or cash collections that occur earlier than projected cash collections will have a favorable impact on IRR, revenues and amortization of portfolios. Lower collection amounts or cash collections that occur later than projected cash collections will have an unfavorable impact on IRR, revenues and amortization of portfolios. For the five months ended December 31, 2004, that Worldwide’s operations were included in our results, every 100 basis point change in the average amortization rate for all pools would have affected year-to-date revenue by approximately $0.5 million.

      Allowance for Doubtful Accounts and Notes Receivable. Our allowance for doubtful accounts and notes receivable reflects reserves for receivables to reduce receivables and notes receivable to amounts expected to be collected. Management uses significant judgment in estimating uncollectible amounts. In estimating uncollectible amounts, management considers factors such as overall economic conditions, industry-specific economic conditions, historical customer performance and anticipated customer performance. While management believes the processes effectively address our exposure to doubtful accounts, changes in the economy, industry or specific customer conditions may require adjustment to the allowance for doubtful accounts recorded.

      Goodwill and Other Intangible Assets. As a result of acquisitions made from 2002 through 2004, our recorded goodwill as of December 31, 2004 was $573.9 million and the recorded value of other intangible assets as of December 31, 2004 was $99.0 million. Two matters arise with respect to these assets that require significant management estimates and judgment: 1) the valuation in connection with the initial purchase price allocation and 2) the ongoing evaluation of goodwill and other intangible assets for impairment. In connection with these acquisitions, a third-party valuation was performed to assist management in the determination of the purchase price allocation between goodwill and other intangible assets. The purchase price allocation process requires estimates and judgments as to certain expectations and business strategies. If the actual results differ from the assumptions and judgments made, the amounts recorded in the consolidated financial

statements could result in a possible impairment of the intangible assets and goodwill or require acceleration in amortization expense. In addition, SFAS No. 142 Goodwill and Other Intangible Assets, requires that goodwill be tested annually using a two-step process. The first step is to identify a potential impairment. The second step measures the amount of the impairment loss, if any. Any changes in key assumptions about the businesses and their prospects, or changes in market conditions or other externalities, could result in an impairment charge and such a charge could have a material effect on our financial condition and results of operations.

      Stock Options. Our employees are periodically granted stock options by the Compensation Committee of the Board of Directors. As allowed under accounting principles generally accepted in the United States of America (“GAAP”), we do not record any compensation expense on the income statement with respect to options granted to employees. Alternatively, under GAAP, we could have recorded a compensation expense based on the fair value of employee stock options. As described in Note 1 in the Consolidated Financial Statements, had we recorded a fair value-based compensation expense for stock options, diluted earnings per share would have been $0.07 to $0.20 less than what we reported for 2004, 2003 and 2002.

      Income Taxes. We account for income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes.” We recognize current tax liabilities and assets based on an estimate of taxes payable or refundable in the current year for each of the jurisdictions in which we transact business. As part of the determination of our current tax liability, we exercise considerable judgment in evaluating positions we have taken in our tax returns. We have established reserves for probable tax exposures. These reserves, included in current tax liabilities, represent our estimate of amounts expected to be paid, which we adjust over time as more information becomes available. We also recognize deferred tax assets and liabilities for the estimated future tax effects attributable to temporary differences (e.g., book depreciation versus tax depreciation, etc.). The calculation of current and deferred tax assets and liabilities requires management to apply significant judgment related to the application of complex tax laws, changes in tax laws or related interpretations, uncertainties related to the outcomes of tax audits and changes in our operations or other facts and circumstances. Further, we must continually monitor changes in these factors. Changes in such factors may result in changes to management estimates and could require us to adjust our tax assets and liabilities and record additional income tax expense or benefits.

Recent Accounting Pronouncements

      In December 2004, the Financial Accounting Standards Board issued SFAS No. 123R, “Share-Based Payment” (“SFAS 123R”), which requires companies to measure and recognize compensation expense for all stock-based payments at fair value. SFAS 123R is effective for all interim periods beginning after June 15, 2005 and thus, will be effective for West beginning with the third quarter of 2005. Early adoption is encouraged and retroactive application of the provisions of SFAS 123R to the beginning of the year that includes the effective date is permitted, but not required. Based on the unvested outstanding options at December 31, 2004, we estimate the effect on 2005 net income of adopting SFAS 123R in July will be approximately $5.0 million.

      In December 2003, the Accounting Standards Executive Committee issued Statement of Position 03-3, “Accounting for Certain Loans of Debt Securities Acquired in a Transfer”. This Statement of Position (“SOP”) addresses accounting for differences between contractual cash flows and cash flows expected to be collected from an investor’s initial investment in loans or debt if those differences are attributable, at least in part, to credit quality. Increases in expected cash flows should be recognized prospectively through adjustment of IRR while decreases in expected cash flows should be recognized as an impairment. The SOP is effective for loans acquired in fiscal years beginning after December 15, 2004 and should be applied prospectively to loans acquired on or before December 15, 2004 as it applies to decreases in expected cash flows. Our preliminary evaluation of the effects of this SOP indicate the impact on our results of operations will not be material.

Risk Factors

      An investment in our common stock involves risks. You should carefully consider the following risks before making an investment decision. If any of these risks occurs, our business, financial condition, liquidity and results of operations could be seriously harmed, in which case the price of our common stock could decline and you could lose all or a part of your investment.

      Our growth has been enhanced through acquisitions of other businesses. We continue to pursue strategic acquisitions. If we are unable to make appropriate acquisitions on reasonable terms our financial results may be below the expectations of securities analysts and our investors.

      In addition, when considering an acquisition, we determine whether such acquisition will allow us to achieve certain objectives including: operational synergies, reduced costs and expenses, increased revenues, additional clients, increased market share, new products and capabilities. To the extent that we are unable to achieve our planned objectives from an acquisition, this may affect our financial results.

      The United States Congress, FCC, FTC and various states have promulgated and enacted rules and laws that govern the methods and processes of making and completing telephone solicitations and sales and the collection of consumer debt. We believe that our operating procedures currently comply in all material respects with presently effective provisions of these rules and laws. There can be no assurance, however, that we would not be subject to agency or state proceedings alleging violation of such rules and laws. Future rules and laws may require us to modify our operations or service offerings in order to effectively meet our clients’ service requirements, and there can be no assurance that additional regulations would not limit our activities or significantly increase the cost of regulatory compliance. For further discussion of regulatory issues, see Item 1 — Business “Government Regulations.”

      Even if we comply with the rules and laws, the restrictions imposed by such regulations may generally adversely impact our business. Our clients may reduce the volume of business they outsource. Regulations regarding the use of technology, such as restrictions on automated dialers or the required transmittal of caller-identification information, may further reduce the efficiency or effectiveness of our operations. However, we cannot predict the impact state and federal regulations may have on our business or whether such impact may adversely affect or limit our operations. Our clients are also subject to varying degrees of government regulation, particularly in the telecommunications, insurance and financial services industries. We may be subject to a variety of enforcement or private actions for non-compliance or our clients’ non-compliance with such regulations. There is increasing Federal and state interest in privacy protection, some aspects of which could impose additional regulatory pressure on the business of our clients and, less directly, on our business. Such pressures could impact our business if it has the effect of reducing the demand for our services or exposes us to potential liability.

      We face significant competition in our markets and expect this competition will intensify. The principal competitive factors in our industries are technological expertise, service quality, sales and marketing skills, the ability to develop and implement customized products and services and the cost of services. In addition, we believe there has been an industry trend to move agent-based operations towards offshore sites. Such movement could result in excess capacity in the United States where most of our current capacity exists. The trend towards international expansion by foreign and domestic competitors and continuous technological changes may bring new and different competitors into our markets and may erode profits because of reduced prices. Our competitors’ products and services and pricing practices, as well as the timing and circumstances of the entry of additional competitors into our markets may harm our business.

      Our Communication Services segment’s business and growth depends in large part on the industry trend toward outsourcing CRM solutions and services. There can be no assurance that this trend will continue, as organizations may elect to perform such services themselves. A significant change in this trend could seriously harm our business, financial condition, results of operations and cash flows. Additionally, there can be no assurance that our cross-selling efforts will cause clients to purchase additional services from us or adopt a single-source outsourcing approach.

      Our Conferencing Services segment faces competitive pressures as the audio conferencing services industry continues to consolidate in response to pricing pressures and technological advances. Video and web conferencing services continue to develop as new vendors are entering the marketplace offering a broader range of conferencing solutions.

      The consumer debt collection industry is highly competitive and fragmented. We compete with a wide range of other purchasers of charged-off consumer receivables, third party collection agencies, other financial service companies and credit originators and other owners of debt that manage their own charged-off consumer receivables. Some of these companies have substantially greater personnel and financial resources than we do. Furthermore, during the past year some of our competitors have raised substantial amounts of capital, the proceeds from which may be used, at least in part, to fund expansion and to increase their purchases of charged-off portfolios. In addition, companies with greater financial resources than we have may elect in the future to enter the consumer debt collection business. Competitive pressures affect the availability and pricing of receivable portfolios as well as the availability and cost of qualified debt collectors.

      We face bidding competition in our acquisition of charged-off consumer receivable portfolios. We believe successful bids generally are awarded based on a combination of price, service and relationships with the debt sellers. Some of our current competitors, and possible new competitors, may have more effective pricing and collection models, greater adaptability to changing market needs and more established relationships in our industry than we have. Moreover, our competitors may elect to pay prices for portfolios that we determine are not reasonable and, in that event, our volume of portfolio purchases may be diminished. In addition, there continues to be a consolidation of credit card issuers, which have been a principal source of our receivable purchases. This consolidation has decreased the number of sellers in the market which may, over time, give the remaining sellers increasing market strength and adversely affect the price and other terms of charged-off credit card accounts.

      If we are unable to adapt to changing market conditions, we may experience reduced access to portfolios of charged-off consumer receivables in sufficient amounts at appropriate prices. If this were to occur, our business may be seriously harmed.

      Federal and state consumer protection, privacy and related laws and regulations extensively regulate the relationship between debt collectors and debtors. Federal and state laws may limit our ability to recover on our charged-off consumer receivables regardless of any act or omission on our part. Some laws and regulations applicable to credit card issuers may preclude us from collecting on charged-off consumer receivables we purchase if the credit card issuer previously failed to comply with applicable law in generating or servicing those receivables. Additional consumer protection and privacy protection laws may be enacted that would impose additional or more stringent requirements on the enforcement of and collection on consumer receivables.

      Any new laws, rules or regulations as well as existing consumer protection and privacy protection laws, may adversely affect our ability to collect on our charged-off consumer receivable portfolios and seriously harm our business. In addition, federal and state governments are considering, and may consider in the future, other legislative proposals that would further regulate the collection of consumer receivables. Although we cannot predict if or how any future legislation would impact our business, any failure to comply with any current or future laws applicable to us could limit our ability to collect on our charged-off consumer receivable portfolios, which could reduce our profitability and harm our business.

      Our profitability is influenced significantly by our call center capacity utilization. We attempt to maximize utilization. However, we have significantly higher utilization during peak periods. From time to time we assess the expected long-term capacity utilization of our contact centers. Accordingly, we may, if deemed necessary, consolidate or close under-performing centers in order to maintain or improve utilization and margins. We may not be able to achieve or maintain optimal contact center capacity utilization. If we lose one or more significant clients, or if the volume of calls from any such client or clients decline, or if a significant contract is not implemented in the time frame and budget anticipated, our operating results are likely to be harmed unless and until we are able to reduce expenses proportionally or successfully negotiate contracts with new clients to generate additional revenues at a comparable level.

      We depend on telephone and data service provided by various local and long distance telephone companies. Because of this dependence, any change to the telecommunications market that would disrupt these services or limit our ability to obtain services at favorable rates could harm our business. We have taken steps to mitigate our exposure to the risks associated with rate fluctuations and service disruption by entering into long-term contracts. There is no obligation, however, for these vendors to renew their contracts with us or to offer the same or lower rates in the future, and such contracts are subject to termination or modification for various reasons outside of our control. A significant increase in the cost of telephone services that is not recoverable through an increase in the price of our services, or any significant interruption in telephone services, could seriously harm our business.

      If we are unable to purchase charged-off consumer receivables from credit originators on acceptable terms and in sufficient amounts, our business will be harmed. The availability of portfolios that generate an appropriate return on our investment depends on a number of factors both within and outside of our control, including:

      The CRM and receivables management industries are very labor intensive and experience high personnel turnover. Many of our employees receive modest hourly wages and, although we employ a significant number of full-time employees, many are nevertheless employed on a part-time basis. Some of our operations require specially trained employees. We must recruit and train qualified personnel at an accelerated rate from time to time. We may not be able to continue to hire, train and retain a sufficient labor force of qualified employees. A significant portion of our costs consists of wages to hourly workers. An increase in hourly wages, costs of employee benefits or employment taxes could seriously harm our business.

      We operate or rely upon businesses in numerous countries outside the United States. We may expand into additional countries and regions. There are risks inherent in conducting business internationally, including: exposure to currency fluctuations, longer payment cycles, greater difficulties in accounts receivable collection, uncertainty regarding intellectual property protection, difficulties in complying with a variety of foreign laws, unexpected changes in regulatory requirements, difficulties in staffing and managing foreign operations, political instability and potentially adverse tax consequences. If one or more of such factors occurs our business could be harmed.

      In 2004, 2003 and 2002, our 100 largest clients represented 69%, 77% and 89% of total revenue, respectively. One customer, AT&T, accounted for 9% of our total revenue in 2004 and 15% and 19% of total revenue in 2003 and 2002, respectively. If we fail to retain a significant amount of business from AT&T or any of our other significant clients, our business could be seriously harmed. Many of our contracts are cancelable by the client at any time or on short-term notice, and clients may unilaterally reduce their use of our services under these contracts without penalty. Thus, our contracts with our clients do not ensure that we will generate a minimum level of revenue.

      We serve clients and industries that have experienced a significant level of consolidation in recent years. Additional consolidating transactions could occur in which our clients acquire additional businesses or are acquired. The loss of any significant client could seriously harm our business.

      We entered into a number of forward-flow contracts during 2004. These contracts commit a debt seller to regularly sell charged-off receivables to us and commit us to purchase receivables for a fixed percentage of the face amount. Consequently, our results of operations could be harmed if the fixed percentage price is higher than the appropriate market value. Worldwide has entered into such contracts in the past and plans to do so in the future depending on market conditions. To the extent new or existing competitors enter into forward-flow contracts, the pool of portfolios available for purchase may be diminished.

      Third parties may infringe or misappropriate our patents, trademarks, trade names, trade secrets or other intellectual property rights, which could seriously harm our business. The actions we take to protect our intellectual property may not be adequate. Litigation may be necessary to enforce our intellectual property rights, protect our trade secrets or determine the validity and scope of the proprietary rights of others. We may not be able to prevent infringement of our intellectual property rights or misappropriation of our proprietary information. Any infringement or misappropriation could harm any competitive advantage we currently derive or may derive from our proprietary rights. In addition, third parties may assert infringement claims against us. Any claims and any resulting litigation could subject us to significant liability for damages. An adverse determination in any litigation of this type could require us to design around a third party’s patent or to license alternative technology from another party. In addition, litigation is time-consuming and expensive to defend and could result in the diversion of our time and resources. Any claims from third parties may also result in limitations on our ability to use the intellectual property subject to these claims.

      The software that we have purchased and developed to provide our products and services may contain undetected errors. Although we generally engage in extensive testing of our software prior to introducing the software onto any of our networks and/or product equipment, errors may be found in the software after the software goes into use. Any of these errors may result in partial or total failure of our networks, additional and unexpected expenses to fund further product development or to add programming personnel to complete a development project, and loss of revenue because of the inability of clients to use our service or the cancellation of services by significant customers.

      We have invested in sophisticated and specialized computer and telephone technology. Our business relies on this technology to provide customized solutions to meet our client’s needs. We anticipate that it will be necessary to continue to select, invest in and develop new and enhanced technology on a timely basis in the future in order to maintain our competitiveness. Our future success will depend in part on our ability to continue to develop technology solutions that keep pace with evolving industry standards and changing client demands. Our products and services are dependent upon our ability to protect the equipment and data at our facilities against damage that may be caused by fire, power loss, technical failures, unauthorized intrusion, natural disasters, sabotage and other similar events. Despite taking a variety of precautions, we have experienced downtime in our infrastructure from time to time and we may experience downtime in the future. These types of service interruptions could result in the loss of significant clients and revenue.

      The market price of our common stock has fluctuated significantly during the past several years and may continue to do so in the future. The market price of our common stock could be subject to significant fluctuations in response to various factors or events, including among other things, the depth and liquidity of the trading market of the common stock, quarterly variations in actual liquidity of the trading market of our common stock, quarterly variations in actual and anticipated operating results, growth rates, changes in estimates by analysts, change of analyst coverage, market conditions in the industries in which we compete, announcements by competitors, the loss of a significant client or a significant change in our relationships with a significant client, regulatory actions, litigation, including class action litigation, and general economic conditions.

      In the past, securities class action litigation often has been brought against companies following periods of volatility in the market price of their securities. We may be the target of similar litigation in the future. Securities litigation could result in substantial costs and divert management’s attention and resources, which could cause serious harm to our business, financial condition and results of operations.

      Gary West, our Chairman, and Mary West, our Vice Chair of the Board of Directors, beneficially own approximately 68% of our outstanding common stock. As a result, Mr. and Mrs. West can exercise significant control over the outcome of substantially all matters requiring action by our stockholders. Mr. and Mrs. West can demand registration of their shares, which may have a material affect on our stock price volatility.

      The risks of war and potential terrorist attacks on our operations cannot be estimated. However, we believe war and terrorist attacks could disrupt our operations. For example the agent-based business may

experience significant reductions in call volume during the initial phases of any significant event, and the conferencing business may experience significant increases in call volume.

      We face uncertainties relating to the pending litigation described in “Item 3. Legal Proceedings.” We also cannot predict whether any other material suits, claims, or investigations may arise in the future based on the same claims as those described in “Item 3. Legal Proceedings” or other claims that may arise in the ordinary course of business. Regardless of the outcome of any of these lawsuits or any future actions, claims, or investigations relating to the same or any other subject matter, we may incur substantial defense costs and such actions may cause a diversion of management time and attention. Also, it is possible that we may be required to pay substantial damages or settlement costs which could seriously harm our business, financial condition, results of operations and cash flows.

Market Risk Management

      Market risk is the potential loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and changes in the market value of investments.

Interest Rate Risk

      As of December 31, 2004, we had $230.0 million outstanding under our revolving bank credit facility and $30.5 million of a synthetic lease obligation. The revolving bank credit facility and the synthetic lease obligation bear interest at a variable rate.

      On November 15, 2004, we amended and restated the two bank credit facilities we entered into during 2003. The effect of this amendment and restatement was to terminate the $200.0 million four-year term loan, that had a $137.5 million unpaid balance and increase the borrowing capacity of the revolving credit facility from $250.0 million to $400.0 million. The new maturity date of the credit facility is November 15, 2009. The facility bears interest at a variable rate over a selected LIBOR based on our leverage. At December 31, 2004, $230.0 million was outstanding on the revolving credit facility. The highest period end balance of the revolving credit facility was on December 31, 2004. The average daily outstanding balance of the revolving credit facility during 2004 was $57.8 million. The effective annual interest rate, inclusive of debt amortization costs, on the revolving credit facility for the year ended December 31, 2004 was 3.42%. The commitment fee on the unused revolving credit facility at December 31, 2004, was 0.175%. The amended and restated facility bears interest at a minimum of 75 basis points over the selected LIBOR and a maximum of 125 basis points over the selected LIBOR. At December 31, 2004 the contractual interest rate was 87.5 basis points over the selected LIBOR. Based on our obligation under this facility at December 31, 2004, a 50 basis point change would increase or decrease annual interest expense by approximately $1.2 million.

      We are party to a synthetic lease agreement that had an outstanding balance of $30.5 million at December 31, 2004. The synthetic lease has interest terms similar to that of the revolving credit facility and bears interest at a variable rate over a selected LIBOR based on our leverage, which adjusts quarterly in 12.5 or 25 basis point increments. The weighted average annual interest rate at December 31, 2004 was 4.0%. The lease bears interest at a minimum of 75 basis points over the selected LIBOR and a maximum of 125 basis points over the selected LIBOR. Based on our obligation under this synthetic lease at December 31, 2004, a 50 basis point change would increase or decrease annual interest expense by approximately $153,000.

      We do not believe that changes in future interest rates on these variable rate obligations would have a material effect on our financial position, results of operations, or cash flows. We have not hedged our exposure to interest rate fluctuations.

Foreign Currency Risk

      On December 31, 2004, the Communication Services segment had no material revenue or assets outside the United States. The Communication Services segment has a contract for workstation capacity in Mumbai, India, which is denominated in U.S. dollars. This contact center receives or initiates calls only from or to customers in North America. We have no ownership of the personnel or assets at this foreign location. The facilities in Canada, Jamaica and the Philippines operate under revenue contracts denominated in U.S. dollars. These contact centers receive calls only from customers in North America under contracts denominated in U.S. dollars.

      In addition to the United States, the Conferencing Services segment operates facilities in the United Kingdom, Canada, Singapore, Australia, Hong Kong, Japan and New Zealand. Revenues and expenses from these foreign operations are typically denominated in local currency, thereby creating exposure to changes in exchange rates. Changes in exchange rates may positively or negatively affect our revenues and net income attributed to these subsidiaries.

      For the year ended December 31, 2004, revenues and assets from non-U.S. countries were less than 10% of consolidated revenues and assets. We do not believe that changes in future exchange rates would have a material effect on our financial position, results of operations, or cash flows. We have not entered into forward exchange or option contracts for transactions denominated in foreign currency to hedge against foreign currency risk.

Investment Risk

      We do not use derivative financial or commodity instruments. Our financial instruments include cash and cash equivalents, accounts and notes receivable, accounts payable and long-term obligations. Our cash and cash equivalents, accounts receivable and accounts payable balances are short-term in nature and do not expose us to material investment risk.

      The information called for by this item is incorporated from our Consolidated Financial Statements and Notes thereto set forth on pages F-1 through F-28.

      None.

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

      Under the supervision and with the participation of our management, including the principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act). Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this annual report.

      Additionally, our principal executive officer and our principal financial officer determined that there have been no significant changes to our internal control over financial reporting during the last quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

      Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of management, including our principal executive officer, we conducted an evaluation of the

effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control — Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2004.

      Our management’s assessment of the effectiveness of our internal control over financial reporting as of December 31, 2004 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which is included herein.

February 17, 2005

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

West Corporation

Omaha, Nebraska

      We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control Over Financial Reporting, that West Corporation and subsidiaries (the “Company”) maintained effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.

      We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

      A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

      Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

      In our opinion, management’s assessment that the Company maintained effective internal control over financial reporting as of December 31, 2004, is fairly stated, in all material respects, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

      We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, 2004 of the Company and our report dated February 18, 2005 expressed an unqualified opinion on those consolidated financial statements and financial statement schedule.

Omaha, Nebraska

February 18, 2005

PART III

      The information required by Item 10 is incorporated by reference from our definitive proxy statement for the 2005 annual meeting of stockholders.

      Our Code of Ethical Business Conduct is located on our website at www.west.com under Investor Relations.

      The information required by Item 11 is incorporated by reference from our definitive proxy statement for the 2005 annual meeting of stockholders.

      The information required by Item 12 is incorporated by reference from our definitive proxy statement for the 2005 annual meeting of stockholders.

      The information required by Item 13 is incorporated by reference from our definitive proxy statement for the 2005 annual meeting of stockholders.

      The information required by Item 14 is incorporated by reference from our definitive proxy statement for the 2005 annual meeting of stockholders.

PART IV

      Exhibits identified in parentheses below, on file with the SEC, are incorporated by reference into this report.