UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 10-Q

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[X]       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
             SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2003

OR

[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from ________to _________

Commission file number    000-27743



Pac-West Telecomm, Inc.



|California                                                     | 68-0383568                             
|-------------------------------------------------------------- | ---------------------------------------
|(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number)

1776 W. March Lane, Suite 250
Stockton, California     95207

(209) 926-3300







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 reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [   ]

Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act).  YES [  ]  NO [X]

As of June 30, 2003, the Company had an aggregate of 36,450,054 shares of common stock issued and outstanding.









Pac-West Telecomm, Inc.

            Report on  Form 10-Q for the Quarterly Period Ended June 30, 2003
                                   Table Of Contents



|PART I.   FINANCIAL INFORMATION                                                                                                                               | Page No.
|------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------
|                                                                                                                                                              |         
|Item 1.   Financial Statements (Unaudited)                                                                                                                    |         
|                                                                                                                                                              |         
|Consolidated Balance Sheets as of June 30, 2003
         and December 31, 2002                                                                                | 3       
|                                                                                                                                                              |         
|Consolidated Statements of Operations and Comprehensive
         Income (Loss) - Three and six month periods
          
         ended June 30, 2003 and 2002 | 4       
|                                                                                                                                                              |         
|Condensed Consolidated Statements of Cash Flows
          
         for the six-month periods ended June 30, 2003 and 2002                                    | 5       
|                                                                                                                                                              |         
|Notes to Unaudited Condensed Consolidated Financial Statements                                                                                                | 6       
|                                                                                                                                                              |         
|Item 2.   Management's Discussion and Analysis of Financial
                      Condition and Results of Operations                                         | 14      
|                                                                                                                                                              |         
|Item 3.   Quantitative and Qualitative Disclosures About Market Risk                                                                                          | 26      
|                                                                                                                                                              |         
|Item 4.   Controls and Procedures                                                                                                                             | 26      
|                                                                                                                                                              |         
|PART II.  OTHER INFORMATION                                                                                                                                   |         
|                                                                                                                                                              |         
|Item 1.   Legal Proceedings                                                                                                                                   | 27      
|                                                                                                                                                              |         
|Item 4.  Submission of Matters to a Vote of Security Holders                                                                                                  | 27      
|                                                                                                                                                              |         
|Item 6.   Exhibits and Reports on Form 8-K                                                                                                                    | 27      
|                                                                                                                                                              |         
|Signatures                                                                                                                                                    | 30      

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PAC-WEST TELECOMM, INC.

                     Condensed Consolidated Balance Sheets

                                (Unaudited)

`June 30,      December 31,
                                                               2003           2002
                                                           -------------  -------------

                           ASSETS
Current Assets:
   Cash and cash equivalents............................. $  54,017,000  $  28,050,000
   Short-term investments................................            --     29,209,000
   Trade accounts receivable, net of allowances of
      $1,361,000 and $1,660,000, respectively ...........    20,143,000     12,624,000
   Prepaid expenses and other current assets.............     3,820,000      4,304,000
   Deferred tax assets...................................     4,569,000      4,569,000
                                                           -------------  -------------
       Total current assets..............................    82,549,000     78,756,000
Property and equipment, net..............................   139,414,000    160,768,000
Other assets, net........................................     3,589,000      3,492,000
                                                           -------------  -------------
       Total assets...................................... $ 225,552,000  $ 243,016,000
                                                           =============  =============

            LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
   Accounts payable...................................... $   5,559,000  $  10,058,000
   Current obligations under capital leases..............     6,170,000      7,881,000
   Fiber IRU liability...................................            --      4,200,000
   Accrued interest on Senior Notes......................     5,345,000      5,522,000
   Other accrued liabilities ............................    16,660,000     19,649,000
   Deferred revenues.....................................       719,000        755,000
                                                           -------------  -------------
       Total current liabilities.........................    34,453,000     48,065,000
                                                           -------------  -------------
Senior Notes.............................................    95,102,000     95,102,000
Notes payable............................................        65,000         30,000
Capital leases, less current portion.....................            --      2,311,000
Deferred revenues, less current portion..................       490,000        527,000
Deferred income taxes....................................     9,383,000      9,745,000
                                                           -------------  -------------
       Total liabilities.................................   139,493,000    155,780,000
                                                           -------------  -------------
Commitments and Contingencies (Note 11)
Stockholders' Equity:
   Common stock, $.001 par value; 100,000,000 shares
       authorized 36,450,054 and 36,444,094 shares issued
       and outstanding, respectively.....................        36,000         36,000
   Additional paid-in capital............................   183,602,000    183,668,000
   Note receivable from stockholder......................      (200,000)      (200,000)
   Accumulated deficit...................................   (97,179,000)   (96,026,000)
   Accumulated other comprehensive loss..................      (200,000)      (156,000)
   Deferred stock compensation...........................            --        (86,000)
                                                           -------------  -------------
       Total stockholders' equity........................    86,059,000     87,236,000
                                                           -------------  -------------
       Total liabilities and stockholders' equity........ $ 225,552,000  $ 243,016,000
                                                           =============  =============`

See accompanying notes to unaudited condensed consolidated financial statements.



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PAC-WEST TELECOMM, INC.

               Condensed Consolidated Statements of Operations

                      and Comprehensive Income (Loss)

                               (Unaudited)

`Three-Month Periods Ended     Six-Month Periods Ended
                                                            June 30,                    June 30,
                                                    --------------------------  --------------------------
                                                        2003          2002          2003          2002
                                                    ------------  ------------  ------------  ------------
Revenues.......................................... $ 45,723,000  $ 38,499,000  $ 76,238,000  $ 81,591,000

Costs and Expenses:
    Cost of sales.................................    7,005,000    14,007,000    17,703,000    27,767,000
    Selling, general and administrative...........   13,968,000    16,164,000    28,890,000    30,497,000
    Depreciation and amortization.................   10,467,000    10,182,000    24,615,000    20,142,000
    Restructuring charge..........................      125,000     9,304,000       125,000     9,304,000
    Impairment of assets..........................           --     7,153,000            --     7,153,000
                                                    ------------  ------------  ------------  ------------
      Total operating expenses....................   31,565,000    56,810,000    71,333,000    94,863,000
                                                    ------------  ------------  ------------  ------------
        Income (loss) from operations.............   14,158,000   (18,311,000)    4,905,000   (13,272,000)
                                                    ------------  ------------  ------------  ------------
Other (Income) Expense:
    Interest expense, net.........................    3,402,000     4,001,000     6,392,000     8,675,000
    Gain on repurchase of bonds...................           --            --            --   (11,942,000)
    Other expense.................................        8,000         1,000        17,000         1,000
                                                    ------------  ------------  ------------  ------------
      Total other (income) expense, net...........    3,410,000     4,002,000     6,409,000    (3,266,000)
                                                    ------------  ------------  ------------  ------------
      Income (loss) before provision
      (benefit) from income taxes ................   10,748,000   (22,313,000)   (1,504,000)  (10,006,000)
Income tax expense (benefit)......................    1,577,000    (8,925,000)     (351,000)   (4,002,000)
                                                    ------------  ------------  ------------  ------------
      Net income (loss) .......................... $  9,171,000  $(13,388,000) $ (1,153,000) $ (6,004,000)
                                                    ============  ============  ============  ============

Basic and diluted income (loss) per share......... $       0.25  $      (0.37) $      (0.03) $      (0.17)

Basic weighted average shares outstanding.........   36,450,774    36,279,184    36,450,054    36,208,866

Diluted weighted average shares
    outstanding...................................   36,772,991    36,279,184    36,450,054    36,208,866

Comprehensive gain (loss):
    Net income (loss)............................. $  9,171,000  $(13,388,000) $ (1,153,000) $ (6,004,000)
      Other comprehensive gain (loss).............       48,000       130,000       (44,000)      (11,000)
                                                    ------------  ------------  ------------  ------------
      Comprehensive income (loss)................. $  9,219,000  $(13,258,000) $ (1,197,000) $ (6,015,000)
                                                    ============  ============  ============  ============`

See accompanying notes to unaudited condensed consolidated financial statements.



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PAC-WEST TELECOMM, INC.

          Condensed Consolidated Statements of Cash Flows

                         (Unaudited)

`Six Month Period Ended
                                                                        June 30,
                                                                ----------------------------
                                                                   2003           2002
                                                                -------------  -------------
Operating activities:
    Net loss.................................................. $  (1,153,000) $  (6,004,000)
    Adjustments to reconcile net loss to net cash
      provided by operating activities:
        Depreciation and amortization.........................    24,615,000     20,142,000
        Amortization of deferred financing costs..............       210,000        432,000
        Amortization of deferred stock compensation...........            --         52,000
        Impairment of assets..................................            --      7,153,000
        Non-cash restructuring charges........................            --      3,216,000
        Gain on repurchase of bonds...........................            --    (11,942,000)
        Allowance for doubtful accounts receivable............            --      1,511,000
        Provision for inventory obsolescence..................            --      1,148,000
        Deferred income taxes ................................      (432,000)     3,094,000
        Loss on disposal of property and equipment............        17,000          1,000
        Changes in operating assets and liabilities:
            Accounts receivable...............................    (7,519,000)     1,233,000
            Inventories.......................................            --        350,000
            Prepaid expenses and other current assets.........       484,000        354,000
            Other assets......................................       (60,000)        59,000
            Accounts payable and other accrued liabilities....    (7,498,000)     6,739,000
            Accrued interest .................................      (177,000)      (894,000)
                                                                -------------  -------------
        Net cash provided by operating activities.............     8,487,000     26,644,000
                                                                -------------  -------------
Investing activities:
    Purchase of property and equipment........................    (3,195,000)   (13,949,000)
    Proceeds from disposal of property and equipment..........        25,000         80,000
    (Purchases) redemptions of short-term investments, net....    29,165,000     (9,379,000)
                                                                -------------  -------------
        Net cash provided by (used in) investing activities...    25,995,000    (23,248,000)
                                                                -------------  -------------
Financing activities:
    Proceeds (payments) from borrowings under Senior Credit Fa            --    (10,000,000)
    Principal payments on Fiber IRU...........................    (4,200,000)    (8,620,000)
    Net proceeds from borrowings under notes payable..........        42,000             --
    Proceeds from stock option exercises......................        20,000        116,000
    Principal payments on capital leases......................    (4,022,000)    (3,948,000)
    Payments for deferred financing costs.....................      (355,000)      (100,000)
    Repurchase of Senior Notes payable........................            --     (8,288,000)
                                                                -------------  -------------
        Net cash used in financing activities.................    (4,315,000)   (12,220,000)
                                                                -------------  -------------
        Net increase (decrease) in cash and cash equivalents..    30,167,000    (27,444,000)
Cash and cash equivalents:
    Beginning of period.......................................    28,050,000     64,029,000
                                                                -------------  -------------
    End of period............................................. $  58,217,000  $  36,585,000
                                                                =============  =============
Supplemental Disclosure of Cash Flow Information:
    Cash paid for interest.................................... $   6,772,000  $  10,248,000`

See accompanying notes to unaudited condensed consolidated financial statements.





PAC-WEST TELECOMM, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

AS OF AND FOR THE THREE AND SIX-MONTH PERIODS ENDED JUNE 30,
2003

The terms "the Company," "Pac-West," "we," "our," "us," and similar terms
used in this Form 10-Q, refer to Pac-West Telecomm, Inc.

1. Organization and Basis of Presentation
2. Description and Summary of Significant Accounting Policies
3. Concentration of Customers and Suppliers
4. Restructuring Charges
5. Long Lived Assets
6. Gain on Repurchase of Bonds
7. Income Taxes
8. Comprehensive Income (Loss)
9. Property and Equipment
10. Long-Term Debt and Capital Lease Obligations:
11. Commitments and Contingencies:
12. Other Recent Pronouncements:
13. Related Party Transactions:
14. Subsequent Events:

On July 1, 2003, the Company announced that Henry R.
Carabelli, formerly the Company's President and Chief Operating Officer, had
assumed the position of President and Chief Executive Officer. Mr. Carabelli
succeeded Wallace W. Griffin, formerly the Company's Chairman and Chief
Executive Officer. Mr. Griffin will continue to serve as Chairman of the board
of directors.



In July 2003, the Company was notified by SBC California of
SBC's intention to invoke the Federal Communication Commission's Intercarrier
ISP Compensation Order, effective August 1, 2003.  The FCC Order creates
separate intercarrier compensation arrangements, including rates, terms and
conditions, for "presumed ISP-bound" traffic.  The terms and
conditions for implementing the FCC Order are unclear at this time, but may
result in lower reciprocal compensation rates used to compensate the Company
than other pricing methodologies available to SBC.



In July 2003, Verizon California filed a lawsuit naming the
California Public Utilities Commission (CPUC) and Pac-West as codefendants.
Verizon's lawsuit seeks to overturn, in part, a May 2003 decision by the CPUC
approving an arbitrated interconnection agreement between Verizon and Pac-West,
which was entered into on June 2, 2003. Among other allegations, Verizon claims
that the May 2003 decision improperly required Verizon to pay Pac-West over $20
million for the delivery of telephone calls to ISPs over the eighteen months
prior to May 2003 than is permitted under federal law.  Pac-West believes the
issues raised in this suit are clearly defined in the 1996 Telecom Act, and have
previously been tried and ruled in favor of competitive telecom providers. Pac-
West strongly disagrees with the allegations set forth in the lawsuit, feels
that they are without merit, and intends to vigorously defend its interests.



On August 11, 2003, the Company received notice from the
Nasdaq Stock Market that it had evidenced compliance with all requirements
necessary for continued listing on The Nasdaq SmallCap Market, as set forth in a
decision rendered by a Nasdaq Listing Qualifications Panel on July 22, 2003.
This decision specified that the Company was required to demonstrate a closing
bid price of at least $1.00 per share and, immediately thereafter, to sustain
compliance with that minimum threshold for at least ten consecutive trading
days.  The bid price for the Company's common shares has closed above $1.00
since July 25, 2003 through the date of this report.  Consequently, the Nasdaq
Listing Qualifications Panel has determined to continue listing of the Company's
common shares on The Nasdaq SmallCap Market and to close its hearing file with
respect to the matter.







ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Except for the historical information contained herein,
this report contains forward-looking statements, subject to uncertainties and
risks. In this Quarterly Report on Form 10-Q, 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, 2002, as filed with the SEC on March 31, 2003,
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 substantial
indebtedness; an inability to generate sufficient cash to service our
indebtedness; the declining rate at which reciprocal compensation payments are
determined; regulatory and legal uncertainty with respect to reciprocal
compensation payments received by us; the inability to expand our business as a
result of the unavailability of funds to do so; failure to successfully
implement our restructuring plan; the possible delisting of our common shares
from the Nasdaq SmallCap Market; adverse affects on our operations as a result
of the covenants in our senior notes indenture; competition from the ILECs and
other competitors and potential competitors, including those competitors with
lower cost structures.



Overview

Pac-West is a provider of integrated communications
services in the western United States. Our customers include Internet service
providers and enhanced communications service providers, collectively referred
to as service providers (SPs), and small and medium-sized enterprise (SME)
businesses, many of which are communications intensive users

We built our facilities-based network to capitalize on the
significant growth in Internet usage and in the related demand for local
telephone service by SPs, as well as the increasing demand of SME businesses for
customized and integrated voice and data communications services. We believe the
statewide footprint of our network, which encompasses all of the major
metropolitan areas of California, provides us with a significant competitive
advantage over ILECs and other CLECs, particularly with regard to SP customers.
Our ubiquitous network within the State of California enables SPs to provide
their business and residential customers with access to Internet, paging and
other data and voice services from almost any point in the state through a local
call. We believe the breadth of our product offerings and the structure of our
network enable us to generate high network utilization, and strong gross profit
margins.  In addition, by providing levels of customer service that we believe
is higher than that of our competitors we believe that we differentiate
ourselves in the marketplace.  We believe that this focus on superior customer
service on a company-wide basis, which we have internally branded as "Five
Star," will provide us with the ability to sustain high levels of customer
loyalty and allow us to achieve benchmark industry levels of turnover in
customers, which we refer to as  "churn".





For the three-month periods ended June 30, 2003 and 2002, we
had net revenues of approximately $45.7million and $38.5 million,
respectively. Included in net revenues for the three-month period ended June 30,
2003 were $10.0 million of amounts earned by the Company for services rendered
in prior periods but withheld by certain ILECs. The amounts collected
represented 21.9% of our total revenues for the three-month period ended June
30, 2003.  Operating expenses for the three-month periods ended June 30, 2003
and 2002 were $31.6 million and $56.8 million, respectively. Operating expenses
for the three-month period ended June 30, 2002 include $9.3 million of
restructuring charges and $7.2 million of asset impairment charges. Operating
expenses for the three-month period ended June 30, 2003 are net of $4.9 million
of negotiated vendor credits recorded under the cost of sales and selling,
general and administrative expense categories. Net income (loss) for the three-
month periods ended June 30, 2003 and 2002 were $9.2 million and ($13.4)
million, respectively.



For the six-month periods ended June 30, 2003 and 2002, we
had net revenues of approximately $76.2million and $81.6 million,
respectively. Included in net revenues for the six-month period ended June 30,
2003 and 2002 were $10.0 million and $4.8 million, respectively, of amounts
earned by the Company for services rendered in prior periods but withheld by
certain ILECs.  The amounts collected represented 13.1% and 5.9% of our total
revenues for the six-month periods ended June 30, 2003 and 2002, respectively.
Operating expenses for the six-month periods ended June 30, 2003 and 2002 were
$71.3 million and $94.9 million, respectively. Operating expenses for the six-
month period ended June 30, 2002 include $9.3 million of restructuring charges
and $7.2 million of asset impairment charges. Operating expenses for the six-
month period ended June 30, 2003 are net of $4.9 million of negotiated vendor
credits.  Net loss for the six-month periods ended June 30, 2003 and 2002 was
($1.2) million and ($6.0) million, respectively.  Net loss for the six-month
period ended June 30, 2002 included a gain on repurchase of bonds of $11.9
million.



EBITDA represents earnings before interest expense, net;
income taxes; depreciation and amortization. EBITDA for the three-month periods
ended June 30, 2003 and 2002 was $24.6 million and ($8.1) million, respectively.
EBITDA for the six-month periods ended June 30, 2003 and 2002 were $29.5 million
and $18.8 million, respectively. We believe EBITDA is a common measure used by
analysts and investors as well as a means to evaluate our capacity to meet our
service obligations. The Company uses EBITDA as an internal measurement tool and
has also included EBITDA performance goals in its 2003 compensation plans.
Accordingly, we are including EBITDA in our discussion of financial performance
as we believe that its presentation provides useful and relevant information.
The table below reconciles EBITDA to the Company's net cash provided by
operating activities.

`Three-Month Periods Ended     Six-Month Periods Ended
                                                            June 30,                    June 30,
                                                    --------------------------  --------------------------
                                                        2003          2002          2003          2002
                                                    ------------  ------------  ------------  ------------
                                                    (unaudited)   (unaudited)   (unaudited)   (unaudited)
EBITDA............................................ $ 24,617,000  $ (8,130,000) $ 29,503,000  $ 18,811,000
Less:
    Net gain on bond repurchase...................           --            --            --    11,942,000
    Non-cash restructuring charges................           --    (3,216,000)           --    (3,216,000)
    Impairment of assets..........................           --    (7,153,000)           --    (7,153,000)
    Change in operating assets and liabilities....   11,181,000   (19,872,000)   14,834,000    (8,990,000)
    Interest expense, net.........................    3,402,000     4,001,000     6,392,000     8,675,000
    Current income tax benefit ...................           --    (7,096,000)           --    (7,096,000)
    Allowance for doubtful accounts receivable....           --      (750,000)           --    (1,511,000)
    Amortization of deferred financing costs......     (105,000)     (206,000)     (210,000)     (432,000)
    Amortization of deferred stock compensation...           --       (26,000)           --       (52,000)
                                                    ------------  ------------  ------------  ------------
      Net cash provided by operating activities... $ 10,139,000  $ 26,188,000  $  8,487,000  $ 26,644,000
                                                    ============  ============  ============  ============`





Pac-West is California's second largest local business
market competitor based on access lines as reported by the CPUC.  As of June 30,
2003, we had 403,751 total DS-0 (digital signal level of 64,000 bits per second)
equivalent lines in service, referred to as "lines" going forward, an
increase of 83,709 or 26.2% from June 30, 2002.  Total lines include wholesale
and on-network retail line equivalents. The Company has also segregated small to
medium-size lines into on-network and off-network components as related to the
Company's decision to exit a number of off-network lines of business.  For the
three-month periods ended June 30, 2003 and 2002 our minutes of use were 10.0
billion and 7.7 billion, respectively, an increase of 2.4 billion, or 31.0%. For
the six-month periods ended June 30, 2003 and 2002 our minutes of use were 19.4
billion and 15.4 billion, respectively, an increase of 4.0 billion, or
26.4%.



In 2001 and 2002, in response to a weak economy and increased
competitive pressure resulting from lower than expected demand for
telecommunications services and overcapacity in our industry, we restructured
certain aspects of our operations.  In particular, among other things, we
suspended expansion plans in certain states, exited certain lower margin product
and service markets, closed certain switch facilities and implemented certain
other cost-savings initiatives.   In addition during the second quarter of 2003,
the Company recorded additional restructuring charges of $206,000 relating to
office space in San Diego, California. The Company currently occupies
approximately 25% of the total space, but due to the specialized nature of these
facilities and current economic conditions we no longer anticipate finding a
tenant for the available contiguous space. The amount of the reserve recorded is
equal to the monthly lease payment on the unoccupied space multiplied by the
remaining months on the lease. In addition, during the three-month period ended
June 30, 2003, the Company reversed $81,000 of previously recorded restructuring
charges relating to professional fees that were anticipated but never charged to
the Company. As of June 30, 2003, the Company has a remaining liability of
$600,000 for this restructuring reserve relating to facilities.



On May 28, 2002, our common stock ceased being quoted on the
Nasdaq National Market and began being quoted on the Nasdaq SmallCap Market as a
result of our failure to comply with the Nasdaq's minimum bid price requirement.
To regain compliance with this requirement, the minimum closing bid price of our
stock must close at $1.00 or above per share for a period of 10 consecutive
business days.  On March 19, 2003, the Company was notified by Nasdaq that we
had until May 12, 2003, to regain compliance with the minimum bid price
requirement.  On May 19, 2003, we received notification from the Nasdaq Listing
Qualifications Panel that our securities were subject to delisting from the
Nasdaq SmallCap Market. We appealed the decision and requested a hearing with
Listing Qualifications Panel to present our plan to regain compliance with the
minimum bid price requirement



On or about April 29, 2003, we mailed to our shareholders a
proxy statement, which, among other things, solicited their proxies with respect
to a proposal to amend our articles of incorporation to provide for a reverse
share split. As described in our proxy statement, the reverse share split was
designed to increase the market price of our common shares above $2.00 per
share, which is above the Nasdaq minimum bid requirement of $1.00, in order to
maintain our listing on the Nasdaq Small Cap Market. On June 9, 2003, at the
annual shareholders meeting, the reverse split plan was approved by our
shareholders giving our board of directors the authority to subsequently approve
the amendment and implement the reverse share split at its discretion based upon
its evaluation as to if and when such action would be most advantageous to us
and our shareholders.



On June 26, 2003, we appeared before a Nasdaq Listing
Qualifications Panel and presented our plan to regain compliance with the
minimum bid price requirement and request additional time to do so.  We received
a decision from the Nasdaq Listing Qualifications Panel which, subject to
satisfaction of certain conditions, provides that the Company is required to
demonstrate a closing bid price of at least $1.00 per shares on or prior to
September 22, 2003 and, immediately thereafter, to sustain compliance with that
minimum threshold for at least ten consecutive trading days until September 22,
2003.



On August 11, 2003, the Company received notice from the Nasdaq Stock Market
that it had evidenced compliance with all requirements necessary for continued
listing on The Nasdaq SmallCap Market, as set forth in the decision rendered by
the Nasdaq Listing Qualifications Panel.  The bid price for the Company's common
shares has closed above $1.00 since July 25, 2003 through the date of this
report.  Consequently, the Nasdaq Listing Qualifications Panel has determined to
continue listing of the Company's common shares on The Nasdaq SmallCap Market
and to close its hearing file with respect to the matter.  Consequently, the
Company has no plans at this time to implement the reverse split approved by its
shareholders on June 9, 2003.



Factors Affecting Operations:

Revenues.   We derive our revenues from monthly
recurring charges, usage charges and amortization of initial non-recurring
charges. The Company provides services to both retail and wholesale customers.
Monthly recurring charges include the fees paid by customers for lines in
service and additional features on those lines, as well as equipment collocation
services. Usage charges consist of fees paid by end users for each call made,
fees paid by ILECs as reciprocal compensation for completion of their customers'
calls through our network, and access charges paid by carriers for long distance
traffic terminated on our network. Initial non-recurring charges consist of fees
paid by end users for the installation of our service. These payments and
related costs up to the amount of revenues are recognized as revenue and expense
ratably over the term of the service contracts, which is generally 24 to 36
months. In accordance with Staff Accounting Bulletin No. 101 "Revenue
Recognition in Financial Statements," the Company recognizes revenue when there
is persuasive evidence of an arrangement, delivery of the product or performance
of the service has occurred, the selling price is fixed or determinable and
collectibility is reasonably assured.



A substantial portion of our revenue is derived from
reciprocal compensation paid by ILECs with which we have interconnection
agreements (ICAs). The revenues from these carriers are the result of ICAs we
have entered into with them that provide for the transport and termination of
local telecommunication traffic.  Reciprocal compensation payments are currently
an important source of revenue for the Company, and as a result, the failure,
for any reason, of one or more ILECs from which we receive reciprocal
compensation payments to make all or a significant portion of such payments in
the future could adversely affect our financial condition. Key drivers of
reciprocal compensation revenue  are the number of calls we terminate, the
minutes of use associated with such calls and the rates we are compensated at by
the ILECs. During 2002, we experienced a decrease of approximately 57.6% in the
average rate at which we are compensated by the ILECs.   From the six-month
period ended June 30, 2002 to the six-month period ended June 30, 2003, the
average reciprocal compensation rate at which we are compensated by the ILECS
decreased by approximately 33.8%.  However to date, the Company has been
successful in partially offsetting the impact of the rate reductions on its
revenues due to increases in both the number of calls we terminate and in the
total minutes of use associated with such calls. The right of CLECs, such as the
Company, to receive reciprocal compensation is the subject of numerous
regulatory and legal challenges, further described below. During the three-month
period ended March 31, 2003, the Company received cash payments from a carrier
that was disputing the charges and the Company accordingly recorded an accrued
liability for the amounts received rather than record the revenue. During the
three-month period ended June 30, 2003, agreement was reached on the treatment
of the amounts being disputed, and the Company recognized the reciprocal
compensation revenue that had been disputed. For instances when the reciprocal
compensation payments are not in dispute, the Company will continue to recognize
reciprocal compensation as revenue when received in cash or when collectibility
is reasonably assured.



On May 16, 2002, the California Public Utilities Commission
implemented an Unbundled Network Element (UNE) pricing structure for local
traffic exchanged with SBC in California. The impact of this pricing structure
has reduced the Company's reciprocal compensation revenues by approximately $2.0
million per month since its implemenation.  During the quarter ended June 30,
2003, the Company finalized new ICAs with both SBC and Verizon. These new three-
year agreements establish the rules under which the Company and SBC or Verizon
can interconnect their networks to allow for the exchange of traffic, and the
recovery of costs associated with exchanging such traffic. However, the ICA with
SBC also recognizes that SBC, if authorized to do so, may implement the Federal
Communications Commission (FCC) Intercarrier Internet Service Provider (ISP)
order. SBC has notified the Company of its election to implement the FCC order
beginning August 1, 2003.  The FCC order creates separate intercarrier
compensation arrangements, including rates, terms and conditions, for
"presumed ISP-bound" traffic. The terms and conditions for
implementing the FCC Order are unclear at this time, but will likely result in a
further reduction in the reciprocal compensation  rate used to compensate the
Company than other pricing methodologies available to SBC.  It is the Company's
belief that organic growth in minutes of use, revenues generated from business
lines other than reciprocal compensation and other actions the Company may take
will assist in mitigating the overall revenue impact.  The Company is currently
assessing the implementation requirements of the order, and any related
operational and financial impacts to the company. Under the ICA the Company
reserved its rights to argue whether SBC is legally entitled to implement the
FCC ISP plan.







The terms of these ICAs may incent the Company to modify its
existing network. However, in recognition of the complexity of this
determination and the time required to enact such a modification, the CPUC has
granted the Company until February of 2004 to modify its network. If the Company
elects to make such modifications to its network the Company estimates one time
expenses associated with the implementation of such modifications to be
approximately $3.0 million and a corresponding increase in on-going expense of
$4.0 million per year.  The ICAs also authorize the Company to charge tandem
switching and transport where appropriate. The Company expects that reciprocal
compensation will continue to represent a significant portion of our revenues in
the future.





Cost of Sales.  Costs of sales are comprised primarily of
leased transport charges, usage charges for long distance and intrastate calls
and, to a lesser extent, reciprocal compensation we pay to other companies
related to calls that originate with a Pac-West customer and terminate on the
network of an ILEC or other CLEC. Our leased transport charges include the lease
payments we incur for the transmission facilities, or circuits, used to connect
our customers to our switches and to connect to the ILEC and other CLEC
networks.  Due to our strategy of leasing rather than building our own transport
facilities our operating costs provide for gross margins in excess of 50%. Our
lease commitments often have initial lease terms in excess of one-year from the
commitment date. When the lease commitment is fulfilled, the lease often
converts to a month-to-month agreement and thus reduces our future lease
commitments.



Selling, General and Administrative Expenses. Our
selling, general and administrative expenses include network development,
administration and maintenance costs, selling and marketing, customer service,
provisions for doubtful accounts, information technology, billing, corporate
administration and personnel.



Economic Conditions in the State of California. The
current economic conditions in California may raise concerns. The state's
economy continues to recover, but at a slower rate than the national average.
There has been modest employment growth, but limited growth in wages and
salaries. While the Company does not believe that current economic conditions in
California will materially impact near-term financial results, we cannot
guarantee that it will not have an impact in the future.



Telecommunication Industry Trends. Competition in the
communication services market has resulted in the consolidation of CLECs, a
trend we expect to continue. In order to grow our business and better serve our
customers, we continue to consider new business models and strategies, including
potential acquisitions or new business lines that would result in organic
growth.  We believe that the statewide footprint of our network, which
encompasses all of the major metropolitan areas of California, provides us with
a significant competitive advantage that will enable us to successfully compete
in the future, but we cannot guarantee that we will be able to sustain continued
growth.



Quarterly Operating and Statistical Data:

The following tables summarize the unaudited results of
operations as a percentage of revenues for the three and six-month periods ended
June 30, 2003 and 2002. Revenues for the three-month period  ended June 30, 2003
include a payment received in connection with previously withheld reciprocal
compensation of $10.0 million.   Revenues for the six-month period ended June
30, 2003 include a payment received in connection with previously withheld
reciprocal compensation of $5.5 million.  Revenues for the six-month period
ended June 30, 2002 include a payment received in connection with previously
withheld reciprocal compensation of $4.8 million. The following data should be
read in conjunction with the unaudited condensed consolidated financial
statements and notes thereto included elsewhere in this report:

`Three-Month Periods Ended     Six-Month Periods Ended
                                                            June 30,                    June 30,
                                                    --------------------------  --------------------------
                                                        2003          2002          2003          2002
                                                    ------------  ------------  ------------  ------------

Consolidated Statements of Operations Data:          UNAUDITED

Revenue...........................................        100.0 %       100.0 %       100.0 %       100.0 %
Cost of sales and operating expenses..............         15.3 %        36.4 %        23.2 %        34.0 %
Selling, general and administrative expenses......         30.5 %        42.0 %        37.9 %        37.4 %
Depreciation and amortization expenses............         22.9 %        26.4 %        32.3 %        24.7 %
Restructuring charge..............................          0.3 %        24.2 %         0.2 %        11.4 %
Impairment of assets..............................           -- %        18.6 %          -- %         8.8 %
Income (loss) from operations.....................         31.0 %       (47.6)%         6.4 %       (16.3)%
Gain on repurchase of bonds.......................           -- %          -- %          -- %        14.6 %
Net income (loss) ................................         20.1 %       (34.8)%        (1.5)%        (7.4)%`





















The following table sets forth unaudited statistical data for
each of the specified three-month periods of 2003 and 2002. The operating and
statistical data for any quarter are not necessarily indicative of results for
any future period.

`Quarter Ended
                                     -----------------------------------------------------
                                               2003                   2002
                                     --------------------  -------------------------------
                                     June 30,   March 31,   Dec 31,   Sept. 30,  June 30,
                                     ---------  ---------  ---------  ---------  ---------
                                                           (unaudited)
Ports equipped.....................   998,400    940,800    940,800    944,644    944,644
Lines sold to date.................   407,774    341,494    335,851    328,649    323,249
Lines in service to date...........   403,751    337,294    327,021    324,100    320,042
Quarterly minutes of use
 switched (in millions)............    10,030      9,394      8,532      8,211      7,656
Capital expenditures
 (in thousands).................... $   1,445  $   1,750  $   2,733  $   3,511  $   6,461
Employees..........................       402        402        414        402        406`



Three-Month Period Ended June 30, 2003 Compared to the Three-Month Period
Ended June 30, 2002

The significant revenue components and operational
metrics of the Company for the three-month periods ended June 30, 2003 and 2002
are as follows:

`Three-Month Periods Ended June 30
Revenues:                                               2003          2002        % Change
                                                    ------------  ------------  ------------
                                                     UNAUDITED

Reciprocal compensation........................... $ 23,839,476  $ 16,061,191          48.4 %
Direct billings to SP customers...................   10,788,230    11,080,258          (2.6)%
Direct billings to SME customers..................    4,323,629     3,059,477          41.3 %
Outbound local and long distance..................    3,268,259     3,310,366          (1.3)%
Dedicated transport...............................    1,334,061     2,452,102         (45.6)%
Switched access...................................    1,900,000     2,400,000         (20.8)%
COAM..............................................       93,848       131,155         (28.4)%
Other.............................................      176,043         4,744       3,610.9 %
                                                    ------------  ------------
Total revenues.................................... $ 45,723,546  $ 38,499,293          18.8 %
                                                    ============  ============

Operational metrics:
DS-0 equivalent lines in service .................      403,751       320,042          26.2 %
Minutes of use (in billions) .....................         10.0           7.7          31.0 %`





Consolidated revenues for the three-month period
ended June 30, 2003 increased by $7.2 million, or 18.8%, to $45.7 million from
$38.5 million for the three-month period ended June 30, 2002. The increase in
revenues is primarily the result of an increase of $8.8 million in reciprocal
compensation, which includes $10.0 million of previously withheld reciprocal
compensation billings that were recorded in the three-month period ended June
30, 2003. For the three-month periods ended June 30, 2003 and 2002, reciprocal
compensation was $23.8 million and $16.1 million, respectively, and accounted
for approximately 52.1% and 41.7%, respectively, of our total revenues. The
remainder of the variance from the three-month periods ended June 30, 2003 and
2002 is comprised of increases in direct billings to SME customers, offset by
decreases in dedicated transport revenues, switched access revenues and direct
billings to SP customers.  Although the Company has experienced a significant
decrease in the reciprocal compensation rate at which we are compensated by the
ILECs over the last twelve months, to date, the Company has been successful in
partially offsetting the impact of the rate reductions on its revenues due to
increases in both the number of calls we terminate and in the total minutes of
use associated with such calls.



The total lines in service increased by 83,709 or 26.2% to
403,751 as of June 30, 2003 from 320,042 lines as of June 30, 2002. Billable
minutes of use were 10.0 billion for the three-month period ended June 30, 2003,
an increase of approximately 2.4 billion or 31.0% from 7.6 billion billed
minutes during the three-month period ended June 30, 2002.



The number of inbound local minutes subject to reciprocal
compensation revenues in accordance with ICAs were 9.8 billion and 7.5 billion
for the quarters ended June 30, 2003 and 2002 respectively. The year over year
increase of 2.3 billion billable minutes of use from June 30, 2002 to 2003
represented a 31.4% increase.   The favorable increase in inbound local minutes
was offset by a decline in the reciprocal compensation rates from June 30, 2002
to 2003. Net of the effect of the payments received related to prior periods for
reciprocal compensation of $10.0 million during the three-month period ended
June 30, 2003, reciprocal compensation revenues decreased $2.3 million or 14.3%
from $16.1 million in the three-month period ended June 30, 2002 to $13.8
million for the three-month period ended June 30, 2003. Total reciprocal
compensation revenue, inclusive of all payments, for the quarter ended June 30,
2003 was $23.8 million.



Direct billings to SP customers decreased during the three-
month period ended June 30, 2003 from the same period in 2002 by $0.3 million,
or 2.9%, to $10.8 million from $11.1 million during the three-month period ended
June 30, 2002. While lines in service to this market increased from 271,802
lines at June 30, 2002 to 342,952 lines in service at June 30, 2003, an increase
in lines of 71,150, or 26.2%, revenue per line decreased due to competitive
pressures, resulting in the revenue decrease from period to period.



Direct billings to SME business customers increased in the
three-month period ended June 30, 2003 from the same period in 2002 by $1.3
million, or 41.3% to $4.3 million from $3.0 million during the quarter ended
June 30, 2002. This change was primarily due to introduction of new services for
SME customers in 2003 combined with an increase in lines in service from 48,240
lines at June 30, 2002 to 60,799 lines in service at June 30, 2003, an increase
in lines of 12,559, or 26.0%.



Outbound local and long distance revenues, including 800,
888, and 877 numbers and travel card calls, decreased by less than $0.1 million
during the three-month period ended June 30, 2003 from the same period in 2002.
Although total minutes of local and long distance billed remained basically
unchanged from quarter to quarter, the small decline in revenues from the three-
month period ended June 30, 2002 from the three-month period ended June 30, 2003
was due to a small decline in the average rate per minute charged to customers
for local and long distance services.



The $1.1 million, or 45.6%, decrease in dedicated transport
revenues to $1.3 million during the quarter ended June 30, 2003 from $2.5
million during the quarter ended June 30, 2002 primarily relates to the loss of
revenues from exiting the DSL business.



Switched access revenues decreased in the three-month period
ended June 30, 2003 from the same period in 2002 by $0.5 million, or 20.8% to
$1.9 million from $2.4 million in the quarter ended June 30, 2002.

The significant costs and expenses of the Company for the three-month periods
ended June 30, are as follows:

`Three-Month Periods Ended June 30
Costs and expenses (in millions):                       2003          2002        % Change
                                                    ------------  ------------  ------------
                                                     UNAUDITED

Cost of sales..................................... $  7,005,000  $ 14,007,000         (50.0)%
Selling, general and administrative...............   13,968,000    16,164,000         (13.6)%
Depreciation and amortization.....................   10,467,000    10,182,000           2.8 %
                                                    ------------  ------------
Total costs and expenses.......................... $ 31,440,000  $ 40,353,000         (22.1)%
                                                    ============  ============`



Our consolidated cost of sales for the quarter ended June
30, 2003 decreased by $7.0 million, or 50.0%, to $7.0 million from $14.0 million
for the corresponding period in 2002. The decrease in expense for the quarterly
periods is primarily the result of $4.1 million in negotiated vendor credits
recorded in the three-month period ended June 30, 2003.  We continue to
experience an increase in network operations associated with a higher level of
telecommunications activity, however our operating costs are declining from
prior periods as a result of discontinuing certain low-margin products and
services, specifically products and services related to COAM equipment and DSL,
and improving capital utilization. Although we continue to look for ways to
continue to reduce our operating costs, we cannot guarantee that our cost of
sales will continue to decline in the future.



Our consolidated selling, general and administrative expenses
for the three-month period ended June 30, 2003 decreased $2.2 million, or 13.6%,
to $14.0 million from $16.2 million for the corresponding period in 2002. The
decrease is primarily the result of decreases in provisions for doubtful
accounts of approximately $0.8 million, resulting from the quality of our
customers, and approximately $0.8 million of negotiated vendor credits.
Selling, general and administrative expenses were 29.9% and 42.0% of revenues
for the three-month periods ended June 30, 2003 and 2002, respectively.  The
decrease in selling, general and administrative expenses as a percentage of
revenues is due to the combination of an increase in gross revenues from the
three-month period ended June 30, 2002 to the three-month period ended June 30,
2003 and from the previously discussed decrease in expenses.



Our consolidated depreciation and amortization expense
for the three-month period ended June 30, 2003 increased $0.3 million to $10.5
million, from $10.2 million for the same period in 2002.  Depreciation and
amortization as a percentage of revenues decreased to 22.4% for the three-month
period ended June 30, 2003 from 26.4% from the same period ended 2002. The
increase in depreciation and amortization expense is primarily due to additional
depreciation expense incurred on purchases of equipment placed in service since
June 30, 2002.



Our consolidated interest expense, net for the three-
month period ended June 30, 2003 decreased $0.6 million, or 14.8%, to $3.4
million from $4.0 million for the same period ended 2002. Interest expense is
net of interest income.  Interest expense over these two periods is primarily
related to our Senior Notes issued on January 29, 1999, including amortization
of related deferred financing costs associated with the offering over a period
of ten years.  As a result of repurchasing some of our Senior Notes during 2002,
interest expense declined between quarters.



The Company's effective income tax rates for the quarters
ended June 30, 2003 and 2002 reflect the applicable Federal and state statutory
income tax rates. For the quarters ended June 30, 2003 and 2002, the Company's
effective income tax rate was 14.7% and 40.0%, respectively.





Six-Month Period Ended June 30, 2003 Compared to the Six-Month Period
Ended June 30, 2002



The significant revenue components and operational metrics of
the Company for the six-month periods ended June 30, 2003 and 2002, are as
follows:

`Six-Month Periods Ended June 30
Revenues:                                               2003          2002        % Change
                                                    ------------  ------------  ------------
                                                     UNAUDITED

Reciprocal compensation........................... $ 33,241,118  $ 39,552,501         (16.0)%
Direct billings to SP customers...................   21,055,447    21,195,232          (0.7)%
Direct billings to SME customers..................    7,920,912     5,966,692          32.8 %
Outbound local and long distance..................    6,503,503     6,685,869          (2.7)%
Dedicated transport...............................    3,121,565     4,750,462         (34.3)%
Switched access...................................    3,600,000     2,900,000          24.1 %
COAM..............................................      266,461       369,706         (27.9)%
Other.............................................      529,188       170,510         210.4 %
                                                    ------------  ------------
Total revenues.................................... $ 76,238,194  $ 81,590,972          (6.6)%
                                                    ============  ============

Operational metrics:
DS-0 equivalent lines in service .................      403,751       320,042          26.2 %
Minutes of use (in billions) .....................       19.424        15.370          26.4 %`







Consolidated revenues for the six-month period ended June 30,
2003 decreased by $5.4 million, or 6.6%, to $76.2 million from $81.6 million for
the six-month period ended June 30, 2002. The decrease in revenues is primarily
the result of a decrease of $6.3 million in reciprocal compensation, which
includes $5.5 million and $4.8 million of previously withheld reciprocal
compensation billings earned by the Company in prior periods, but withheld by
certain ILECs, that were recorded in the six-month periods ended June 30, 2003
and 2002, respectively. For the six-month periods ended June 30, 2003 and 2002,
reciprocal compensation was $33.2 million and $39.6 million, respectively, and
accounted for approximately 43.6% and 48.5%, respectively, of our total
revenues. The remainder of the variance from the six-month periods ended June
30, 2003 and 2002 is comprised of a decrease in dedicated transport revenues,
offset by increases in direct billings to SME customers and switched access
revenues.  During 2002, we experienced a decrease of approximately 57.6% in the
reciprocal compensation average rate at which we are compensated at by the
ILECs.  From the six-month period ended June 30, 2002 to the six-month period
ended  June 30, 2003, the reciprocal compensation rate at which we are
compensated by the ILECs decreased by approximately 33.8%. However, to date, the
Company has been successful in partially offsetting the impact of the rate
reductions on its revenues due to increases in both the number of calls we
terminate and in the total minutes of use associated with such calls.



The total lines in service increased by 83,709 or 26.2% to
403,751 as of June 30, 2003 from 320,042 lines as of June 30, 2002. Billable
minutes of use were 19.4 billion for the six-month period ended June 30, 2003,
an increase of approximately 4.0 billion or 26.4% from 15.4 billion billed
minutes during the six-month period ended June 30, 2002.



The number of inbound local minutes subject to reciprocal
compensation revenues in accordance with ICAs were 19.0 billion and 15.0 billion
for the six-month periods ended June 30, 2003 and 2002, respectively, while the
year over year increase of 4.0 billion billable minutes of use from June 30,
2002 to 2003 represented a 26.9% increase.  However, the favorable increase in
inbound local minutes was offset by a decline in the reciprocal compensation
rates from June 31, 2002 to 2003. Net of the effect of the payments received
related to prior periods for reciprocal compensation of $5.5 million during the
six-month period ended June 30, 2003 and $4.8 million during the six-month
period ended June 30, 2002, reciprocal compensation revenues decreased $11.6
million or 33.3% from $34.8 million in the six-month period ended June 30, 2002
to $23.2 million for the six-month period ended June 30, 2003. Total reciprocal
compensation revenue, inclusive of all payments, was $33.2 million and $39.6
million for the six-month periods ended June 30, 2003 and 2002,
respectively.



Direct billings to SP customers decreased during the six-
month period ended June 30, 2003 from the same period in 2002 by $0.1 million,
or 0.7%, to $21.1 million from $21.2 million during the six-month period ended
June 30, 2002. While lines in service to this market increased from 271,802
lines at June 30, 2002 to 342,952 lines in service at June 30, 2003, an increase
in lines of 71,150, or 26.2%, revenue per line decreased due to competitive
pressures, resulting in the revenue decrease from period to period.



Direct billings to SME business customers increased in the
six-month period ended June 30, 2003 from the same period in 2002 by $1.9
million, or 32.8% to $7.9 million from $6.0 million during the quarter ended
June 30, 2002. This change was primarily due to introduction of new services for
SME customers in 2003 combined with an increase in lines in service from 48,240
lines at June 30, 2002 to 60,799 lines in service at June 30, 2003, an increase
in lines of 12,559, or 26.0%.



Outbound local and long distance revenues, including 800,
888, and 877 numbers and travel card calls, decreased by $0.2 million during the
six-month period ended June 30, 2003 from the same period in 2002. The decline
in revenue from 2002 to 2003 resulted from the combination of lower total
minutes of local and long distance billed for the six-month in 2003 as compared
to 2002 combined with a decline in the average rate per minute charged to
customers for local and long distance services from 2003 to 2002.



The $1.6 million, or 34.3%, decrease in dedicated transport
revenues to $3.1 million during the six-month period ended June 30, 2003 from
$4.7 million during the six-month period ended June 30, 2002 primarily relates
to the loss of revenues from exiting the DSL business.



Switched access revenues increased in the six-month period
ended June 30, 2003 from the same period in 2002 by $0.7 million, or 24.1% to
$3.6 million from $2.9 million in the six-month period ended June 30, 2002.



The significant costs and expenses of the Company for the
six-month periods ended June 30, are as follows:

`Six-Month Periods Ended June 30
Costs and expenses (in millions):                       2003          2002        % Change
                                                    ------------  ------------  ------------
                                                     UNAUDITED

Cost of sales..................................... $ 17,703,000  $ 27,767,000         (36.2)%
Selling, general and administrative...............   28,890,000    30,497,000          (5.3)%
Depreciation and amortization.....................   24,615,000    20,142,000          22.2 %
                                                    ------------  ------------
Total costs and expenses.......................... $ 71,208,000  $ 78,406,000          (9.2)%
                                                    ============  ============`





Our consolidated cost of sales for the six-month period ended
June 30, 2003 decreased by $10.1 million, or 36.2%, to $17.7 million from $27.8
million for the corresponding period in 2002. The decrease in expense for the
six-month periods is primarily the result of the combination of $4.1 million in
negotiated vendor credits recorded in the six-month period ended June 30,
2003.We continue to experience an increase in network operations associated with
a higher level of telecommunications activity, our operating costs are declining
from prior periods as a result of discontinuing certain low-margin products and
services, specifically products and services related to COAM equipment and DSL,
and improving capital utilization. Although we continue to look for ways to
continue to reduce our operating costs, we cannot guarantee that our cost of
sales will continue to decline in the future.



Our consolidated selling, general and administrative expenses
for the six-month period ended June 30, 2003 decreased $1.6 million, or 5.3%, to
$28.9 million from $30.5 million for the corresponding period in 2002. The
decrease is primarily the result of decreases in bad debt expense of $1.6
million, resulting from the quality of our customers and improved collections
activities, a reduction in legal expenses of approximately $1.0 million and
negotiated vendor credits of approximately $0.8 million, partially offset by
primarily higher equipment and insurance expenses.  Selling, general and
administrative expenses were 37.4% of revenues for both of the six-month periods
ended June 30, 2003 and 2002.  Selling, general and administrative expenses as a
percentage of revenues stayed constant as the decrease in gross revenues from
the six-month periods ended June 30, 2002 to the similar period ended June 30,
2003 was offset by a similar percentage decrease in expenses for the same two
comparison periods.



Our consolidated depreciation and amortization expense
for the six-month period ended June 30, 2003 increased $4.5 million to $24.6
million, from $20.1 million for the same period in 2002.  Depreciation and
amortization as a percentage of revenues increased to 31.9% for the six-month
period ended June 30, 2003 from 24.7% for the same period ended 2002.  The
increase in depreciation and amortization expense is primarily related to the
fact that during January, 2003, the Company reduced the useful life for phone
equipment provided to customers and computer hardware from 5 years to 3 years.
In addition, the Company extended the useful life of certain leasehold
improvements from 10 years to up to 20 years. For phone equipment provided to
customers and computer hardware that had already been depreciated three years or
longer as of January 2003, the change in the estimated useful lives resulted in
those assets being fully depreciated in the three-month period ended March 31,
2003. Total equipment fully depreciated in the quarter was approximately $2.5
million. For phone equipment provided to customers and computer hardware that
had not been depreciated three years or longer as of January 2003, the change in
the estimated useful lives resulted in an increase in monthly depreciation
expense. The change in depreciation expense is prospective only as the increase
in depreciation expense only applies to current and future periods. The increase
in depreciation expense related to the useful life change was approximately $1.6
million for the three-month period ended March 31, 2003, but will decrease over
time as assets become fully depreciated. The change in the useful life of the
leasehold improvements resulted in a decrease in amortization expense on a
prospective basis of less than $0.1 million for the three-month period ended
March 31, 2003.



Our consolidated interest expense, net for the six-month
period ended June 30, 2003 decreased $2.3 million, or 26.1%, to $6.4 million
from $8.7 million for the same period ended 2002. Interest expense is net of
interest income.  Interest expense over these two periods is primarily related
to our Senior Notes issued on January 29, 1999, including amortization of
related deferred financing costs associated with the offering over a period of
ten years.  As a result of repurchasing some of our Senior Notes during 2002,
interest expense declined between quarters.



The Company's effective income tax rates for the six-month
periods ended June 30, 2003 and 2002 reflect the applicable Federal and state
statutory income tax rates. For the six-month periods ended June 30, 2003 and
2002, the Company's effective income tax rate was 23.4% and 40.0%,
respectively.

Liquidity and Capital Resources:

Net cash provided by operating activities was $8.5
million for the six-month period ended June 30, 2003 as compared to net cash
provided by operating activities of $26.6 million for the same period ended in
2002. Net cash provided by operating activities for the period ended June 30,
2003 includes payments received from ILECs for amounts previously owed, but
withheld, during 2002 that totaled $5.5 million. Net cash provided by operating
activities for the period ended June 30, 2002 includes $4.8 million in ILEC
payments previously owed, but withheld, $11.9 million of gain on bond
redemptions, $9.3 million of restructuring charges and $7.2 million of asset
impairment charges. Excluding these transactions in both comparison periods, the
net cash provided by operating activities decreased $14.3 million for the six-
month period ended June 30, 2003 over 2002. The significant activities which
contributed to the period versus period decrease were: a decrease of $14.2
million in accounts payable and accrued liabilities, an increase of $8.8 million
in accounts receivable, due primarily to the timing of payments from our largest
customers, and a $3.5 million decrease in income taxes receivable. Partially
offsetting the decreases in operating cash were: a $4.9 million improvement in
operating profits and an increase in our depreciation and amortization expenses
of $4.5 million due primarily to the Company's decision to reduce the useful
lives for phone equipment provided to customers and computer hardware from 5
years to 3 years.



Net cash provided by investing activities was $26.0
million for the six-month period ended June 30, 2003 compared to a net use of
cash by investing activities of $23.2 million for the six-month period ended
June 30, 2002. During the six-month period ended June 30, 2003 the Company
redeemed $29.2 million of short-term investments as compared to $9.4 million of
purchases of short-term investments during the six-month period ended June 30,
2002. The short-term investments were redeemed and moved to cash and cash-
related accounts during the six-month period ended June 30, 2003. Purchases of
property and equipment decreased to $3.2 million during the six-month period
ended June 30, 2003 as compared to $13.9 million during the same period in 2002
as the Company was able to re-deploy existing or under-utilized equipment rather
than purchase new equipment.



Net cash used in financing activities was $8.5 million
for the six-month period ended June 30, 2003 compared to $30.8 million for the
same period ended 2002. The significant activities which contributed to the
period versus period decrease were: during the six-month period ended June 30,
2002 the Company repaid $10.0 million from borrowings under a Senior Credit
Facility and paid $8.3 million to repurchase some of its outstanding Senior
Notes.  In addition, the Company paid $8.6 million during the six-month period
ended June 30, 2002 related to its Fiber IRU Agreement with Qwest. For the same
period in 2003 the Company paid only $4.2 million.



The telecommunications service business is capital intensive.
Our operations have required substantial capital investment for the design,
acquisition, construction and implementation of our network. Capital
expenditures, were $3.2 million and $13.9 million for the six-month periods
ended June 30, 2003 and 2002, respectively.Approximately $0.9 million
of capital expenditures are included in construction projects in progress as of
June 30, 2003 and therefore are not being depreciated until they are placed in
service at a  later date. In response to the sluggish economy and the
significant negative industry trends including bankruptcies and depressed
valuations of public telecommunication companies, we have undertaken various
initiatives intended to not only maximize our performance, but to take advantage
of emerging opportunities. Our business plan, as currently contemplated,
anticipates capital expenditures, excluding acquisitions, of approximately $15.4
million for the next twelve months. The terms of two of the Company's ICAs
incent us to modify our existing network.  If the company elects to make the
modifications to its network capital expenditures over the next twelve month may
increase by amounts up to $4.0 million. However, the actual cost of capital
expenditures during the final six months of 2003 and the first six months of
2004 will depend on a variety of factors. Accordingly, our actual capital
requirements may exceed, or fall below, the amounts described above.



We continue to review all of our debt obligations and are
considering various alternatives to continue to reduce such obligations,
including, among other things, the repurchase of additional Senior Notes in the
open market and in privately negotiated transactions. In addition, we are
currently considering various alternatives to replace our senior credit facility
which expired in 2002. However, there can be no assurance we will be successful
in obtaining additional capital sources at rates and terms acceptable to the
Company. Our principal sources of funds for 2003 are anticipated to be current
cash and short-term investment balances and cash flows from operating
activities. We believe that these funds will provide us with sufficient
liquidity and capital resources for us to fund our business plan for the next 12
months. No assurance can be given, however, that this will be the case. As
currently contemplated, we expect to fund, among other things, our semi-annual
interest payments of approximately $6.4 million each, anticipated capital
expenditures of approximately $15.4 million and capital lease payments
(including interest) of approximately $6.2 million. The foregoing statements do
not take into account acquisitions which, if made, are expected to be funded
through a combination of cash and equity or the repurchase of any of our
remaining outstanding senior notes.  Depending upon our rate of growth and
profitability, among other things, we may require additional equity or debt
financing to meet our working capital requirements or capital needs.  There can
be no assurance that additional financing will be available when required, or,
if available, will be on terms satisfactory to us. Key factors which could
affect our liquidity include: future demand of our services; financial stability
of our customers; outcomes of regulatory proceedings involving reciprocal
compensation; capital expenditures; and our debt payments.



Our senior notes indenture contains financial and other
covenants that restrict, among other things, our ability to incur additional
indebtedness, incur liens, pay dividends or make certain other restricted
payments, consummate certain asset sales, enter into certain transactions with
affiliates, merge or consolidate with any other person or sell, assign,
transfer, lease, convey or otherwise dispose of substantially all of our assets.
Such limitations could limit corporate and operating activities, including our
ability to respond to market conditions to provide for unanticipated capital
investments or to take advantage of business opportunities. The Company believes
that it is in compliance with its financial covenants.



The Company purchases its switching equipment and products
from several suppliers.  During the normal course of business, the Company may
enter into agreements with certain of its suppliers, which allow these suppliers
to have equipment or inventory available for purchase based upon criteria as
defined by the Company.   As of June 30, 2003, the Company did not have any
material future purchase commitments to purchase equipment or inventory from any
of its vendors.









ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK



The SEC's rule related to market risk disclosure requires
that we describe and quantify our potential losses from market risk sensitive
instruments attributable to reasonably possible market changes. Market risk
sensitive instruments include all financial or commodity instruments and other
financial instruments that are sensitive to future changes in interest rates,
currency exchange rates, commodity prices or other market factors. We are not
exposed to market risks from changes in foreign currency exchange rates or
commodity prices. We do not hold derivative financial instruments nor do we hold
securities for trading or speculative purposes. At June 30, 2003, we had an
outstanding $95.1 million principal amount of fixed rate notes due 2009, and
consequently we currently have no risk exposure associated with increasing
interest rates on our debt.   Additionally, we are exposed to changes in
interest rates on our investments in cash equivalents and short-term
investments.  Substantially all of our investments in cash equivalents and
short-term investments are in money market funds that hold short-term investment
grade commercial paper, treasury bills or other U.S. government obligations.
Currently this reduces our exposure to long-term interest rate changes.  We do
not use interest rate derivative instruments to manage our exposure to interest
rate changes. A hypothetical 100 basis point decline in short-term interest
rates would reduce the annualized earnings on our $54.0 million of cash and cash
equivalents and short-term investments at June 30, 2003 by approximately $0.5
million.





ITEM 4.	CONTROLS AND PROCEDURES

Within 180 days prior to the filing of this Report, the
Company carried out an evaluation, under the supervision and with the
participation of the Company's management, including the Chief Executive Officer
and Chief Financial Officer, of the effectiveness of the design and operation of
the Company's "disclosure controls and procedures" (as defined in Rule
13a-14(c) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), in accordance with Rule 13a-15 of the Exchange Act. Based on that
evaluation, the Chief Executive Officer and Chief Financial Officer, together
with the other members of management participating in the evaluation, concluded
that the Company is in compliance with the requirements of Rule 13a-15(a) of the
Exchange Act and that the Company's disclosure controls and procedures are
effective.



There have been no significant changes in the Company's
internal controls or in other factors that could significantly affect internal
controls subsequent to the date of the Company's evaluation of its disclosure
controls and procedures. It should be recognized that the design of any system
of controls is based upon certain assumptions about the scope of the tasks to be
performed and the environment in which the tasks are to be performed. As such,
the Company's internal controls provide the Company with a reasonable assurance
of achieving their intended effect.













PART II

OTHER INFORMATION

ITEM 1. Legal Proceedings

See Notes 11 and 15 to the Unaudited Condensed
Consolidated Financial Statements included elsewhere in this Form 10-Q and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations-Factors Affecting Operations-Revenues" for a description of
certain legal proceedings involving the Company.



ITEM 4.  Submission of Matters to a Vote of Security
Holders

The Company's Annual Meeting of Shareholders was held on
June 9, 2003.  The following proposals were adopted by the margins
indicated:

1	To elect three members of our Board of Directors to hold office for a
term of three years.



|                   | Number of Shares
|------------------ | ----------------
|                   | For             
|                   |                 
|Wallace W. Griffin | 21,176,611      
|Jerry L. Johnson   | 21,207,236      
|John K. LaRue      | 21,189,323      



1. To approve of the amendment to our Articles of
Incorporation giving effect to a reverse split of our common shares.



|For              | 20,485,083
|---------------- | ----------
|Against          | 1,047,489 
|Abstain          | 31,674    
|Broker Non-Votes | 0         





|For              | 21,362,158
|---------------- | ----------
|Against          | 135,824   
|Abstain          | 66,264    
|Broker Non-Votes | 0         



ITEM 6. Exhibits and Reports on Form 8-K

1. Exhibits

10.68	Interconnection Agreement between Pacific Bell Telephone Company
d/b/a SBC Pacific Bell Telephone Company and Pac-West Telecomm, Inc. for the
State of California dated May 15, 2003.

10.69	Interconnection Agreement between Verizon California Inc. and Pac-
West Telecomm, Inc. for the State of California dated May 28, 2003.

31.1 Certification  by  Henry R. Carabelli, Chief Executive
Officer pursuant to  Section 302,of the  Sarbanes-Oxley Act of 2002.

31.2Certification  by  H. Ravi Brar, Chief Financial Officer
pursuant to  Section 302,of the  Sarbanes-Oxley Act of 2002.

32.1Certification by Henry R. Carabelli , Chief Executive officer
pursuant to Section  906 of the Sarbanes-Oxley Act of 2002.

32.2Certification by H. Ravi Brar, Chief Financial Officer pursuant to Section
906 of the   Sarbanes-Oxley Act of 2002.





Note:  ITEMS 2, 3 and 5 are not applicable and have been omitted.







1. Reports on Form 8-K



On April 30, 2003, we furnished pursuant to Item 9 of Form 8-K a copy of
our press release issued on April 30, 2003, containing our 2003 first quarter
results.

On May 13, 2003, we furnished pursuant to Item 9 of Form 8-K a
copy of our press release issued on May 8, 2003, containing the
announcement of the vote by the California Public Utilities Commission on a new
interconnection agreement between the Company and SBC Communications.

On May 19, 2003, we furnished pursuant to Item 9 of Form 8-K a
copy of our press release issued on May 19, 2003, containing the Company's
decision to appeal a delisting determination made by the Nasdaq SmallCap
Market.

On May 28, 2003, we furnished pursuant to Item 9 of Form 8-K a
copy of our press release issued on May 23, 2003, containing the Company's
comments on above average recent equity trading volumes.

On June 2, 2003, we furnished pursuant to Item 9 of Form 8-K a
copy of our press release issued on June 2, 2003, containing the Company's
announcement of a new interconnection agreement between the Company and Verizon
Communications.

















SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized on August 14, 2003.









PAC-WEST TELECOMM, INC.

/s/ Henry R. Carabelli

_____________________________

Henry R. Carabelli

President and Chief Executive Officer

















/s/ H. Ravi Brar

______________________________

H. Ravi Brar

Chief Financial Officer

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