PACW PacWest Bancorp

* Revenues increased 5.4% from the fourth quarter of 2005, principally as a result of a settlement payment received in the first quarter of 2006, which was unrelated to the pending AT&T settlement. First quarter revenues declined 30.2% from the first quarter of 2005 primarily due to the sale of the enterprise customer base that occurred in the first quarter of 2005. STOCKTON, Calif., May 3 /PRNewswire-FirstCall/ -- Pac-West Telecomm, Inc. (NASDAQ:PACW), a provider of traditional and next-generation voice communications services, today announced its results for the first quarter of 2006. Hank Carabelli, Pac-West's President and CEO, commented, "We are pleased with our financial performance, while remaining on track with the first phase of our planned national expansion to cover greater than 50% of the U.S. population. Our Eastern region SuperPop is now operational, and markets have started turning up. We plan to offer both our growth and mature product suites as markets go live, and anticipate that our VeriSign alliance services will be available across our newly expanded footprint in early fourth quarter." Carabelli continued, "Based on early indications from our new voice service provider customers, as well as analyst estimates for the growth of VoIP, we believe the dramatic shift to IP-based communications is well underway. Our planned nationwide infrastructure platform is expected to position us to enable the multitude of new entrants who are driving this shift to IP-based communications." Operating Highlights First quarter total minutes of use decreased 6.7% to 11.2 billion compared to 12.0 billion in the fourth quarter of 2005 and decreased from 12.2 billion in the first quarter of 2005 primarily due to a customer moving the majority of their traffic onto their own network. Financial Highlights ($ in millions, except Three months ended per share amounts) Mar. 31, Dec. 31, Mar. 31, 2006 2005 2005 Total revenues $19.6 $18.6 $28.1 Net income (loss) ($4.3) ($6.3) $17.3 Diluted net income (loss) per share ($0.11) ($0.17) $0.45 Cash, cash equivalents & short-term investments $23.8 $26.7 $21.9 Minutes of use (billions) 11.2 12.0 12.2 Revenues -- First quarter revenues increased 5.4% from the fourth quarter of 2005, principally as a result of a settlement payment received in the first quarter of 2006, which was unrelated to the pending AT&T settlement. First quarter revenues declined 30.2% from the first quarter of 2005, primarily due to the sale of the enterprise customer base that occurred in the first quarter of 2005. Expenses -- Network expense decreased during the first quarter of 2006 to $9.0 million, a decrease of 8.2% and 15.1% compared to fourth quarter 2005 and first quarter 2005, respectively, due to supplier credits received during the first quarter of 2006. Selling, general and administrative expenses (SG&A) were $13.6 million in the first quarter of 2006, a decrease of $0.5 million from $14.1 million from the fourth quarter of 2005 primarily due to more costs capitalized for product development associated with our network expansion and lower consultant fees. SG&A expenses in the first quarter decreased 7.5% from $14.7 million in the first quarter of 2005 primarily due to the reduction in employees in connection with the sale of the enterprise customer base during the first quarter of 2005. Reimbursed transition expenses (RTE) relate to network and administrative services provided by the company under a Transition Service Agreement (TSA) entered into with TelePacific Corp. in connection with the sale of the enterprise customer base that obligates the company to provide transition services to TelePacific at our estimated cost. RTE were $2.9 million in the first quarter of 2006, a decrease of $0.4 million from $3.3 million in the fourth quarter of 2005 due primarily to the transfer of certain services and related costs directly to TelePacific and to the migration of certain customers off of our network. No such reimbursed expenses occurred during the first quarter of 2005. Depreciation and amortization for the first quarter of 2006 was $2.8 million, a decrease from $3.1 million in the fourth quarter of 2005, due primarily to some assets becoming fully depreciated. Depreciation and amortization for the first quarter of 2006 decreased $1.0 million from $3.8 million in the first quarter of 2005 due to the sale of the enterprise customer base during the first quarter of 2005. Net income (loss) -- Net loss for the first quarter of 2006 was $4.3 million compared to a net loss of $6.3 million in the fourth quarter of 2005 due to factors discussed in the preceding paragraphs. The net income in the first quarter 2005 was primarily due to the sale of the enterprise customer base during the first quarter of 2005. Liquidity -- Cash, cash equivalents and short-term investments decreased $2.9 million to $23.8 at the end of the first quarter of 2006 from $26.7 million at the end of the fourth quarter of 2005 due primarily to the semi- annual payment of interest on our Senior Notes. Investor Call Management will hold an investor conference call on Wednesday, May 3, 2006 at 1:30 p.m. Pacific Time / 4:30 p.m. Eastern Time to discuss the quarterly results. Investors are invited to participate by dialing 1-888-291-0829 or 706-679-7923. The call will be simultaneously webcast on Pac-West's website at http://www.pacwest.com/investor. An audio replay will be available two hours following the live call through May 17, 2006 by dialing 1-800-642-1687 or 706-645-9291 (passcode #8196571). Supplemental Financial and Operational Data Additional supplemental financial and operational data can be accessed in a summary that is posted on Pac-West's website at http://www.pacwest.com/investor/supplemental. Pac-West's filings with the SEC are also available online at http://www.pacwest.com/investor. About Pac-West Telecomm, Inc. Pac-West is a provider of advanced communications services that enable traditional and next-generation providers, carriers, and service providers to efficiently design, deploy, and deliver integrated communication solutions. Currently, Pac-West has operations in California, Nevada, Washington, Arizona, Utah, Oregon, Idaho, Colorado and Washington, D.C. Founded in 1980, Pac-West Telecomm, Inc. has been offering communication services to its customers since 1982 and has been a leading provider of wholesale services to Internet Service Providers. For more information, visit http://www.pacwest.com/. Forward-Looking Statements In this press release, our use of the words "outlook," "expect," "anticipate," "estimate," "forecast," "project," "likely," "objective," "plan," "designed," "goal," "target," and similar expressions is intended to identify forward-looking statements. While these statements represent our current judgment on what the future may hold, and we believe these judgments are reasonable, actual results may differ materially due to numerous important risk factors that are described in our Annual Report on Form 10-K for the period ended December 31, 2005, as filed with the SEC on March 29, 2006, which may be revised or supplemented in subsequent reports filed by us with the SEC. Such risk factors include, but are not limited to: our level of indebtedness; an inability to generate sufficient cash to service our indebtedness; regulatory and legal uncertainty with respect to intercarrier compensation payments received by us; other regulatory changes; the migration to broadband Internet access affecting dial-up Internet access; the loss of key executive officers could negatively impact our business prospects; an increase in our network expenses; migration of our enterprise customer base to U.S. TelePacific Corp. occurring sooner than contemplated; the possible delisting of our common shares from the Nasdaq Capital Market; customer acceptance of products, such as VoIP; and our principal competitors for local services and potential additional competitors have advantages that may adversely affect our ability to compete with them. Pac-West Telecomm, Inc. Condensed Consolidated Statements of Operations (In thousands except per share amounts) Three Months Ended March 31, (unaudited) 2006 2005 Revenues $19,628 $28,131 Costs and expenses: Network expenses (exclusive of depreciation shown separately below) 9,000 10,566 Selling, general and administrative 13,582 14,673 Reimbursed transition expenses (2,904) -- Depreciation and amortization 2,832 3,750 Restructuring charges 15 384 Total operating expenses 22,525 29,373 Loss from operations (2,897) (1,242) Interest expense, net 1,375 2,806 Other income, net -- (21,896) (Loss) income before income taxes (4,272) 17,848 Income tax expense -- 509 Net (loss) income $(4,272) $17,339 Basic weighted average number of shares outstanding 37,206 36,803 Diluted weighted average number of shares outstanding 37,206 38,889 Basic net (loss) income per share ($0.11) $0.47 Diluted net (loss) income per share ($0.11) $0.45 Condensed Consolidated Balance Sheets (In thousands) Mar. 31, Dec. 31, 2006 2005 (unaudited) Cash, cash equivalents and short-term investments $23,800 $26,681 Trade accounts receivable, net 7,936 7,806 Prepaid expenses and other current assets 4,105 4,299 Total current assets 35,841 38,786 Property and equipment, net 47,248 39,458 Other assets, net 913 1,079 Total assets $84,002 $79,323 Accounts payable and accrued liabilities $15,436 $12,931 Other current liabilities 11,478 9,563 Total current liabilities 26,914 22,494 Long-term debt 47,501 43,350 Other liabilities, net 430 242 Total liabilities 74,845 66,086 Stockholders' equity 9,157 13,237 Total liabilities and stockholders' equity $84,002 $79,323 DATASOURCE: Pac-West Telecomm, Inc. CONTACT: media, John Amaya, +1-209-926-4195, or , or investors, Reid Cox, +1-209-926-3417, or , both of Pac-West Telecomm, Inc. Web site: http://www.pacwest.com/

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