SAVILLE SYSTEMS PLC
424B4, 1996-06-20
COMPUTER PROGRAMMING SERVICES
Previous: WATERHOUSE INVESTORS CASH MANAGEMENT FUND INC, 485APOS, 1996-06-20
Next: WESTELL TECHNOLOGIES INC, S-1/A, 1996-06-20



<PAGE>

                                               Filed pursuant to Rule 424(b)(4)
                                               Registration No. 333-4199
 


                                     LOGO

                     2,400,000 American Depositary Shares
                                 Representing
                           2,400,000 Ordinary Shares
 
                                  -----------
 
  Each American Depositary Share ("ADS") offered hereby represents the right
to receive one Ordinary Share, $0.0025 par value, of Saville Systems PLC
("Saville" or the "Company"), a public limited company incorporated under the
laws of the Republic of Ireland. The ADSs offered hereby will be sold in the
form of American Depositary Receipts ("ADRs"). See "Description of Share
Capital" and "Description of American Depositary Receipts."
 
  Of the 2,400,000 ADSs offered hereby, 100,000 ADSs are being offered by the
Company and 2,300,000 ADSs are being offered by the Selling Shareholders. See
"Principal and Selling Shareholders." The Company will not receive any of the
proceeds from the sale of ADSs by the Selling Shareholders. The Company's ADSs
are quoted on the Nasdaq National Market under the symbol "SAVLY." On June 19,
1996, the last reported sale price of the Company's ADSs was $26.00 per ADS.
See "Price Range of ADSs."
 
                                  -----------
 
 THE ADSS OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS" ON
                                PAGE 6 HEREOF.
 
                                  -----------
 
 THESE SECURITIES  HAVE NOT  BEEN APPROVED OR  DISAPPROVED BY  THE SECURITIES
   AND EXCHANGE COMMISSION OR  ANY STATE SECURITIES  COMMISSION NOR HAS THE
    SECURITIES AND EXCHANGE COMMISSION  OR ANY STATE SECURITIES COMMISSION
      PASSED UPON  THE  ACCURACY  OR ADEQUACY  OF  THIS  PROSPECTUS. ANY
       REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
 
     A  COPY OF  THIS  DOCUMENT, HAVING  ATTACHED  THERETO THE  DOCUMENTS
           SPECIFIED HEREIN, HAS BEEN DELIVERED TO THE REGISTRAR OF
                COMPANIES  IN  THE  REPUBLIC  OF  IRELAND  FOR
                      REGISTRATION.
 
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                  PRICE    UNDERWRITING   PROCEEDS    PROCEEDS
                                   TO      DISCOUNTS AND     TO      TO SELLING
                                 PUBLIC     COMMISSIONS  COMPANY(1) SHAREHOLDERS
- --------------------------------------------------------------------------------
<S>                            <C>         <C>           <C>        <C>
Per ADS......................    $26.00        $1.30       $24.70      $24.70
- --------------------------------------------------------------------------------
Total(2).....................  $62,400,000  $3,120,000   $2,470,000 $56,810,000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
(1) Before deducting expenses of the offering estimated at $500,000 payable by
    the Company.
(2) Certain of the Selling Shareholders have granted the Underwriters a 30-day
    option to purchase up to 360,000 additional ADSs solely to cover over-
    allotments, if any. To the extent that the option is exercised, the
    Underwriters will offer the additional ADSs at the Price to Public shown
    above. If the option is exercised in full, the total Price to Public,
    Underwriting Discounts and Commissions and Proceeds to Selling
    Shareholders will be $71,760,000, $3,588,000, and $65,702,000,
    respectively. See "Underwriting."
 
                                  -----------
 
  The ADSs are offered by the several Underwriters, subject to prior sale,
when, as and if delivered to and accepted by them, and subject to the right of
the Underwriters to reject any order in whole or in part. It is expected that
delivery of ADRs evidencing the ADSs will be made at the offices of Alex.
Brown & Sons Incorporated, Baltimore, Maryland, on or about June 25, 1996.
 
Alex. Brown & Sons
     INCORPORATED
                   Furman Selz
 
                                 Hambrecht & Quist
 
                                                          Montgomery Securities
 
                 THE DATE OF THIS PROSPECTUS IS JUNE 20, 1996.
<PAGE>
 

Picture of puzzle with the following
captions appears here:

              Customer Care

              Event Processing

              Billing

              Post Billing

              Saville Systems



  IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE AMERICAN
DEPOSITARY SHARES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
 
  IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND OTHER SELLING
GROUP MEMBERS OR THEIR AFFILIATES MAY ENGAGE IN PASSIVE MARKET MAKING
TRANSACTIONS IN THE ADSS ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE
10B-6A UNDER THE SECURITIES EXCHANGE ACT OF 1934. SEE "UNDERWRITING."
<PAGE>



 
Customer Care:

Customer care enables the customer service representative to interact with the 
customer and input, maintain and access customer information beginning at the 
customer's initial service request and continuing through the conclusion of 
service.  Key functionalities within this application include:  Customer 
Initiation, Bill Cycle Assignment, Phone Number Assignment, Calling Card 
Assignment, Inventory Administration, Customer Hierarchy, Customer Search, 
Switch Interface, Customer History, Invoice Messaging, System Notation, 
Directory Listing, Lead Generation and Management, Customer Information 
Maintenance

Billing:  Billing integrates customer usage-based charges with recurring charges
and other credits and adjustments to create the periodic service invoice. Key 
functionalities within this application include:  Multiple Bill Pulls, Rerating,
Discounting, Invoice Generation, Invoice Hierarchy, Multi-Currency, 
Multi-Language, Auto Balancing, Recurring Charges, Taxation, Quick Invoicing, 
Management Reporting, Revenue Reporting
<PAGE>



 
Saville Systems:

        Software solutions that collect, price and invoice customer usage for 
local, long distance and wireless telecommunications service providers.  Key 
functionalities include:  customer care, event processing, billing and post
billing.

        Event Processing:  Event processing encompasses the collection, 
conversion and rating of customer call detail records used in the production of
the service invoice.  Key functionalities within this application include: Data 
Collection, Data Distribution, Conversion/Reformatting, Validation, Guiding, 
Rating, Reporting, Error Management, External Interfaces.

        Post Billing:  Post billing is the primary interface with the service 
provider's accounting system and relates to the invoicing and remittance of the 
periodic service invoice.  Key functionalities within this application include: 
Payment Processing, Adjustments, Deposit and Deposit Interest, Accounts 
Receivable,  Collections and Treatment, Financial Reporting, Commissioning, 
Accounting Interface, Trouble Reporting.
<PAGE>
 
                               PROSPECTUS SUMMARY
 
  The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements and notes thereto appearing
elsewhere in this Prospectus.
 
  Certain of the information contained in this summary and elsewhere in this
Prospectus, including under "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business," including information with
respect to the Company's plans and strategies for its business and related
financing, are forward-looking statements. For a discussion of important
factors that could cause actual results to differ materially from these
forward-looking statements, see "Risk Factors."
 
                                  THE COMPANY
 
  Saville creates innovative, high quality, customized billing solutions for
service providers in the increasingly competitive global telecommunications
industry. The Company's billing systems are designed to enable these service
providers to quickly bring new offerings in voice, video and data
communications to market, while billing accurately and reliably for these
services. Working closely with its customers, Saville utilizes its library of
proprietary software applications to provide each customer with a customized,
flexible and cost-effective billing solution. The Company has typically
continued to serve as a billing partner for its customers by implementing new
systems as the customer enters new service categories or geographic markets,
and by further developing and enhancing the customer's installed systems in
response to changes in the customer's service offerings, marketing strategies
and network technology. In addition, Saville offers its customers the option of
having Saville operate the billing system in one of the Company's in-house
service bureaus.
 
  The market for telecommunications services is becoming increasingly
competitive due to worldwide deregulation and privatization. New entrants are
competing for market share with established service providers by providing
discounted service access, offering competitive prices and introducing new
features and services, such as customized usage-based calling plans. In
addition, technological advances are permitting telecommunications service
providers to offer a variety of new features and services to their customers
such as caller ID, call waiting and voice mail. These and other developments
have increased the complexity and variety of telecommunications services, as
service providers seek to differentiate themselves by being more responsive to
their customers and by expanding the number of telecommunications services and
features they offer.
 
  These market trends have created the need for sophisticated and flexible
billing solutions because telecommunications service providers can compete only
if they are able to efficiently and accurately bill customers for the varied
services and features they provide. As a result of their multiple and evolving
billing needs, many established telecommunications service providers are
replacing or augmenting their existing billing systems, which are often
difficult and time consuming to modify. In addition, many emerging
telecommunications service providers are seeking external billing solutions
because efficient, flexible billing software is often too costly and time
consuming for them to develop internally.
 
  Saville has developed, and continuously refines, its sophisticated base
software applications, which it combines and customizes to meet the current and
evolving requirements of its customers. The Company's systems are designed to
operate in a multiservice environment, capable of billing local exchange, long
distance and wireless (cellular, paging and satellite) telecommunications
services. These systems are designed to support the discrete service offerings
of large telecommunications service providers, including industry-leading
customers such as AT&T Corporation ("AT&T") and Sprint Corporation ("Sprint"),
or to serve as the complete billing systems of emerging and small- to medium-
sized service providers, including customers such as Energis Communications
Limited ("Energis"), a United Kingdom long distance telecommunications service
provider, and Frontier Communications of Rochester Inc. ("Frontier"), a local
exchange carrier. The Company supports its customers through offices in Galway,
Ireland; Burlington, Massachusetts; Edmonton, Alberta; and Toronto, Ontario.
 
 
                                       3
<PAGE>
 
                                  RISK FACTORS
 
  The ADSs offered hereby involve a high degree of risk. See "Risk Factors."
 
                                  THE OFFERING
 
<TABLE>
<S>                                 <C>
ADSs offered by the Company........    100,000
ADSs offered by the Selling
 Shareholders......................  2,300,000
Ordinary Shares to be outstanding
 after the offering................ 17,676,406(1)
Use of proceeds.................... For working capital and other general
                                     corporate purposes. See "Use of Proceeds."
Nasdaq National Market symbol...... SAVLY
</TABLE>
 
                      SUMMARY CONSOLIDATED FINANCIAL DATA
                     (in thousands, except per share data)
 
<TABLE>
<CAPTION>
                                   YEARS ENDED DECEMBER    THREE MONTHS ENDED
                                            31,                 MARCH 31,
                                  ------------------------ --------------------
                                   1993     1994    1995    1995    1996
                                  -------  ------- ------- ------- -------
<S>                               <C>      <C>     <C>     <C>     <C>    
CONSOLIDATED STATEMENT OF INCOME (LOSS)
 DATA:
  Total revenues................. $ 9,309  $20,073 $30,296 $ 7,462 $10,555
  Income from operations.........      15    6,856   8,116   2,701   2,237
  Minority interest share in
   subsidiaries' net income
   (loss)(2).....................     (23)     154      70       6      (2)
  Net income.....................      13    5,357   6,382   2,038   2,042
  Net income per share........... $  0.00  $  0.34 $  0.40 $  0.13 $  0.11
  Shares used in computing net
   income per share (in thou-
   sands)........................  15,667   15,721  16,151  15,797  18,685
</TABLE>
 
<TABLE>
<CAPTION>
                                                             MARCH 31, 1996
                                            DECEMBER 31, ----------------------
                                                1995     ACTUAL  AS ADJUSTED(3)
                                            ------------ ------- --------------
<S>                                         <C>          <C>     <C>
CONSOLIDATED BALANCE SHEET DATA:
  Cash and cash equivalents................   $23,722    $21,449    $23,419
  Working capital..........................    28,109     29,767     31,737
  Total assets.............................    36,031     38,822     40,792
  Long-term debt (excluding current por-
   tion)...................................        44        --         --
  Total shareholders' equity...............    30,924     32,920     34,902
</TABLE>
- --------
(1) Based on the number of shares outstanding as of March 31, 1996. Excludes
    1,836,299 Ordinary Shares issuable upon exercise of options outstanding on
    that date, of which options to purchase 422,213 Ordinary Shares were then
    exercisable. See "Management--Share Options" and Note 8 of Notes to
    Consolidated Financial Statements. Excludes up to approximately 77,000
    Ordinary Shares issuable upon the exercise of options by certain Selling
    Shareholders in connection with this offering. See "Principal and Selling
    Shareholders."
(2) In connection with the restructuring of the Company effected in September
    1995, certain shares of the Company's Canadian and United States
    subsidiaries were retained by Invoice Systems (Canada), Inc. ("Invoice
    Systems"), a shareholder of the Company. Over 94% of the voting securities
    of Invoice Systems are owned or controlled by Bruce A. Saville, the
    Company's founder and Chairman of the Board of Directors. Invoice Systems
    has agreed not to sell or transfer any securities of the Company, unless it
    contributes a proportionate number of shares in each of the subsidiaries to
    the Company. Invoice Systems must contribute all of its shares in the
    subsidiaries no later than September 1, 2005. Prior to the initial public
    offering of the ADSs in November 1995 and prior to this offering, the
    minority interest retained by Invoice Systems represented approximately 15%
    and 12%, respectively, in each of the subsidiaries, which amounts have been
    reflected in the consolidated financial data contained herein. Upon the
    sale of ADSs by Invoice Systems (for the benefit of Bruce A. Saville) in
    this offering and the corresponding contribution of shares in each of the
    subsidiaries, the minority interest will represent approximately 9% in each
    of the subsidiaries (approximately 8% if the Underwriters' over-allotment
    option is exercised in full). See "The Company," "Principal and Selling
    Shareholders" and Notes 1 and 8 of Notes to Consolidated Financial
    Statements.
(3) Adjusted to give effect to the sale of the 100,000 ADSs offered by the
    Company hereby at a public offering price of $26.00 per ADS and the
    application of the estimated net proceeds therefrom, and as adjusted to
    reflect the reduction in the minority interest from approximately 12% to
    approximately 9% in each of the subsidiaries as a result of the sale of
    ADSs by Invoice Systems (for the benefit of Bruce A. Saville) and the
    corresponding contribution of shares in each of the subsidiaries of the
    Company. Excludes any proceeds to the Company from the possible exercise of
    options to purchase up to 77,000 Ordinary Shares by certain Selling
    Shareholders in connection with this offering. See "Use of Proceeds" and
    "Principal and Selling Shareholders."
 
                                       4
<PAGE>
 
 
  Except as otherwise noted, all information in this Prospectus (i) assumes no
exercise of the Underwriters' over-allotment option; (ii) assumes no exercise
of options to purchase up to 77,000 Ordinary Shares by certain Selling
Shareholders in connection with this offering; (iii) gives retroactive effect
to the restructuring of the Company effected in September 1995, pursuant to
which Saville Systems U.S., Inc. ("Saville U.S.") and Saville Systems Canada,
Ltd. ("Saville Canada") became majority-owned subsidiaries of the Company; and
(iv) reflects the 400-for-1 division of all outstanding Ordinary Shares on
September 27, 1995, and subsequent share dividend of 2.725 Ordinary Shares for
each post-division share. See "The Company," "Certain Transactions," "Principal
and Selling Shareholders," "Description of Share Capital," "Underwriting" and
Note 8 of Notes to Consolidated Financial Statements.
 
                                ----------------
 
  No action has been or will be taken in any jurisdiction by the Company, any
Selling Shareholder or any Underwriter that would permit a public offering of
the ADSs or the Ordinary Shares or possession or distribution of this
Prospectus in any jurisdiction where action for that purpose is required, other
than in the United States and certain states within the United States. Persons
into whose possession this Prospectus comes are required by the Company, the
Selling Shareholders and the Underwriters to inform themselves about, and to
observe any restriction as to, the offering of the ADSs and the distribution of
this Prospectus.
 
                                ----------------
 
  Saville's financial statements are presented in United States dollars and are
prepared in accordance with generally accepted accounting principles ("GAAP")
in the United States. In this Prospectus, references to "dollars" or "$" are to
United States dollars, references to "CDN$" are to Canadian dollars and
references to "IR(Pounds)" are to Irish pounds. Except as otherwise stated
herein, all monetary amounts in this Prospectus have been presented in United
States dollars. The exchange rate of Canadian dollars and Irish pounds for
United States dollars, as reported in The New York Times as quoted from Dow
Jones Telerate as of 3:00 p.m. on March 29, 1996, was US$1.00=CDN$1.36
(equivalent to CDN$1.00=US$0.74) and US$1.00=IR(Pounds)0.63 (equivalent to
IR(Pounds)1.00=US$1.57).
 
                                ----------------
 
  Saville Systems is a trademark of the Company. This Prospectus also includes
trademarks, trade names and service marks of companies other than Saville.
 
                                ----------------
 
                        ENFORCEMENT OF CIVIL LIABILITIES
                  UNDER UNITED STATES FEDERAL SECURITIES LAWS
 
  Saville is a public limited company incorporated under the laws of the
Republic of Ireland. Certain of Saville's directors and officers, Selling
Shareholders and experts named herein are nonresidents of the United States,
and a significant portion of the assets of Saville and such persons are located
outside the United States. As a result, it may not be possible for investors to
effect service of process within the United States upon such persons or to
enforce against them in U.S. courts judgments predicated upon the civil
liability provisions of the laws of the United States, including the federal
securities laws. Saville has been advised by McCann FitzGerald, its Irish
counsel, that there is doubt as to the enforceability against such persons in
the Republic of Ireland, whether in original actions or in actions for the
enforcement of judgments in U.S. courts, of civil liabilities predicated solely
upon the laws of the United States, including the federal securities laws.
 
 
                                       5
<PAGE>
 
                                 RISK FACTORS
 
  In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the ADSs
of the Company offered by this Prospectus.
 
  Reliance on Significant Customers. The Company's total revenues from its
four largest customers during 1995 and the first three months of 1996
represented approximately 73.4% and 73.0%, respectively, of total revenues.
AT&T, Energis and Unitel Communications Inc. ("Unitel") each accounted for
over 10% of the Company's total revenues in 1995, and AT&T and Sprint
accounted for 49.3% and 12.0%, respectively, of the Company's total revenues
in the first three months of 1996. This concentration of customers can cause
the Company's revenues and earnings to fluctuate from quarter to quarter,
based on these customers' requirements and the timing of their orders.
Although the Company believes it has good relationships with its largest
customers and has in the past received a substantial portion of its revenues
from repeat business with established customers, none of the Company's major
customers has any obligation to purchase additional products or services, and
these customers generally have acquired fully-paid licenses to their installed
systems. Therefore, there can be no assurance that any of the Company's major
customers will continue to purchase new systems, systems enhancements and
services in amounts similar to previous years. A significant decrease in
business from any of its major customers would have a material adverse effect
on the Company's results of operations and financial condition. Additionally,
the acquisition by a third party of one of the Company's major customers could
result in the loss of that customer and have a material adverse effect on the
Company's results of operations. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations," "Business--Customers" and Note
12 of Notes to Consolidated Financial Statements.
 
  Fluctuations in Quarterly Operating Results. The Company has experienced
fluctuations in its quarterly operating results and anticipates that such
fluctuations will continue and could intensify. Fluctuations in operating
results may result in volatility in the price of the ADSs. Although the
Company was profitable in each of the last ten quarters, there can be no
assurance that such profitability will continue in the future or that the
levels of profitability will not vary significantly among quarterly periods.
The Company's operating results may fluctuate as a result of many factors,
including increased competition, the size and timing of significant client
projects and license fees, cancellations of significant projects by customers,
changes in operating expenses, changes in Company strategy, personnel changes,
foreign currency exchange rates and general economic factors. In addition,
prior to the Company's initial public offering, the Company granted options to
purchase an aggregate of 691,448 Ordinary Shares, all of which are currently
exercisable, at exercise prices below estimated fair market value at the date
of grant, and compensation expense is being recorded over the related vesting
periods. Compensation expense of $95,000 and $42,000 was recorded for the year
ended December 31, 1995 and the three months ended March 31, 1996,
respectively. In the second quarter of 1996, the Company will record
additional compensation expense of $31,000 as a result of the final vesting of
these options.
 
  The Company's expense levels are based in significant part on its
expectations regarding future revenues. Accordingly, the Company may be unable
to adjust spending in a timely manner to compensate for any unexpected revenue
shortfall. Any significant revenue shortfall could therefore have a material
adverse effect on the Company's results of operations. In addition, the
Company hired a significant number of employees in 1995 and the first quarter
of 1996, including several senior executives, and expects to continue hiring
additional sales, marketing and software development employees during 1996.
This significant increase in its workforce has reduced the Company's operating
margins during the second half of 1995 and the first quarter of 1996, and the
Company expects that this increase will continue to affect the Company's
operating margins in the short term. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Quarterly Information."
 
  Management of Expanding Operations. Recently, the Company has expanded its
operations rapidly, which has placed significant demands on the Company's
administrative, operational and financial personnel and systems. Additional
expansion by the Company may further strain the Company's
 
                                       6
<PAGE>
 
management, financial and other resources. There can be no assurance that the
Company's systems, procedures, controls and existing space will be adequate to
support expansion of the Company's operations. The Company's future operating
results will substantially depend on the ability of its officers and key
employees to manage changing business conditions and to implement and improve
its operational, financial control and reporting systems. If the Company is
unable to respond to and manage changing business conditions, the quality of
the Company's services, its ability to retain key personnel and its results of
operations could be materially adversely affected. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Management."
 
  Highly Competitive Market; Competition. The market for telecommunications
billing systems is highly competitive, and the Company expects this
competition to increase. The Company competes with both independent providers
of billing systems and services and with internal billing departments of
telecommunications service providers. The Company anticipates continued growth
and competition in the telecommunications industry and consequently, the
entrance of new competitors into the billing systems market in the future.
 
  The Company believes that its ability to compete depends in part on a number
of competitive factors outside its control, including the development by
others of software that is competitive with the Company's services and
products, the price at which others offer comparable services and products,
the extent of competitors' responsiveness to customer needs and the ability of
the Company's competitors to hire, retain and motivate key personnel. In
addition, the Company competes with a number of companies that have
substantially greater financial, technical, sales, marketing and other
resources, as well as greater name recognition, than the Company. As a result,
the Company's competitors may be able to adapt more quickly to new or emerging
technologies and changes in customer requirements, or to devote greater
resources to the promotion and sale of their products than can the Company.
There can be no assurance that the Company will be able to compete
successfully with its existing competitors or with new competitors. See
"Business--Competition."
 
  Developing Market and New Service Providers. The Company provides customized
software billing solutions to telecommunications service providers in the
local exchange, long distance and wireless markets. Although these markets
have experienced significant growth and have been characterized by increased
deregulation and competition in recent years, there can be no assurance that
such trends will continue at similar rates, if at all, or that the Company
will be able to effectively market and sell its billing systems. In addition,
many new entrants into the telecommunications market lack significant
financial and other resources. The Company's future success depends in large
part on its ability to develop new customer relationships with successful
telecommunications service providers. There can be no assurance that the
Company will be able to develop such relationships or that service providers
that become customers of the Company will be successful. As the Company has
been dependent historically on a limited number of long-term customer
relationships, the failure of the Company's customers to compete effectively
in the telecommunications market could have a material adverse effect on the
Company's business and results of operations. See "Business--Industry
Background."
 
  Reliance on AS/400. Currently, the Company's billing software runs primarily
on the IBM AS/400 platform, although the Company recently completed developing
software for UNIX-based operating systems. While the AS/400 platform currently
represents a leading platform for existing and new billing systems, there can
be no assurance that other platforms will not emerge as an industry standard.
If there should be a rapid shift away from the current use of the AS/400
platform by many telecommunications service providers for billing, the Company
would be required to expend substantial capital resources to develop new
software and would be likely to experience delays or losses in customer
orders, and as a result, its business would be materially adversely affected.
See "Business--Strategy" and "--Material Contracts--AT&T."
 
  Rapid Technological Change. The market for the Company's products and
services is characterized by rapidly changing technology, evolving industry
standards and changing customer needs. Therefore, the Company's success will
depend upon its ability to enhance its existing products and to introduce new
 
                                       7
<PAGE>
 
products and features to meet changing customer requirements. The Company is
continuing to devote significant resources to refining and expanding its base
software modules and to enhancing its recently completed billing software that
operates on UNIX-based operating systems. There can be no assurance that the
Company will successfully complete these projects or that the Company's
present or future products will satisfy the evolving needs of the
telecommunications market. If the Company were unable, due to resource,
technological or other constraints, to adequately anticipate or respond to
such changes, the Company's business and results of operations would be
materially adversely affected. See "Business--Strategy," "--Customers" and "--
Material Contracts--AT&T."
 
  New Management; Dependence on Key Personnel. The current management
structure and the senior management team of the Company have been in place for
a relatively short time. These individuals have not, therefore, been
significantly involved in other than the most recent operating history of the
Company. The Company's future success depends in large part on the continued
service of its key management, sales, product development and operational
personnel, and on its ability to continue to attract, motivate and retain
highly qualified employees, including technical, managerial and sales and
marketing personnel. The Company expects to continue to expand the number of
employees engaged in sales, marketing and product development. The inability
to hire and retain qualified personnel or the loss of the services of key
personnel could have a material adverse effect upon the Company's current
business, new product development efforts and future business prospects.
Although the Company has entered into employment agreements with its key
executives and certain senior managers and employees that contain covenants
not to compete with the Company, there can be no assurance that the Company
will be able to retain such key executives, senior managers and employees. If
such personnel do not remain active in the Company's business, the Company's
operations could be materially adversely affected. See "Business--Employees"
and "Management."
 
  Operations Outside the United States. In 1995 and the first three months of
1996, the Company's sales outside the United States represented a significant
portion of the Company's total revenues. The Company expects that non-U.S.
operations will continue to account for a significant portion of its revenues
and intends to continue to expand its operations outside of the United States.
In addition, the Company is incorporated in the Republic of Ireland and its
research and development organization is located outside the United States.
The Company's business outside the United States is subject to risks such as
fluctuations in exchange rates, difficulties or delays in developing and
supporting non-English language versions of the Company's products, political
and economic conditions in various jurisdictions, unexpected changes in
regulatory requirements, tariffs and other trade barriers, difficulties in
staffing and managing foreign operations and longer accounts receivable
payment cycles. There can be no assurance that such factors will not have a
material adverse effect on the Company's revenues outside the United States or
its overall financial performance. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and Note 11 of Notes to
Consolidated Financial Statements.
 
  Currency Fluctuations. While the Company's consolidated financial statements
are prepared in United States dollars, the Company's Canadian subsidiary has a
functional currency other than the United States dollar, and a significant
portion of the Company's revenues are denominated in currencies other than the
United States dollar. Fluctuations in exchange rates may have a material
adverse effect on the Company's results of operations, particularly its
operating margins, and could also result in exchange losses. The impact of
future exchange rate fluctuations on the Company's results of operations
cannot be accurately predicted. To date, the Company has not sought to hedge
the risks associated with fluctuations in exchange rates, but may undertake
such transactions in the future. The Company currently does not have a policy
relating to hedging. There can be no assurance that any hedging techniques
implemented by the Company would be successful or that the Company's results
of operations will not be materially adversely affected by exchange rate
fluctuations. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
 
  Concentration of Ownership. Following this offering, the Company's executive
officers, directors and their affiliates together will beneficially own
approximately 28.1% of the outstanding Ordinary Shares
 
                                       8
<PAGE>
 
of the Company (as determined in accordance with the rules of the Securities
and Exchange Commission). The beneficial owners of a majority of the Company's
outstanding Ordinary Shares voting in an election of directors may elect all
directors nominated for election and may determine the outcome of certain
corporate actions requiring shareholder approval irrespective of how other
shareholders of the Company may vote. This concentration of ownership,
therefore, may have the effect of delaying or preventing a change in control
of the Company. See "Management," "Principal and Selling Shareholders" and
"Description of Share Capital."
 
  Risk of Increasing Taxes. The Company has significant operations and
generates a substantial portion of its taxable income in the Republic of
Ireland and, under an incentive tax program due to terminate in 2010, is taxed
on its "manufacturing income" at a 10% rate, which is substantially lower than
United States tax rates. For Irish tax purposes, most of the Company's
operating income earned in the Republic of Ireland is considered
"manufacturing income." Other types of income such as income earned by the
Company on its cash investments and income earned by Saville U.S. and Saville
Canada are not considered "manufacturing income." To qualify for the 10% tax
rate, the Company must satisfy certain conditions, including achieving target
employment levels in the Republic of Ireland and rendering computer services
there. Although the Company believes that it satisfies these conditions, there
can be no assurance that the Company will continue to qualify for this 10% tax
rate. If the Company could no longer qualify for this 10% tax rate or if the
tax laws were rescinded or changed, the Company's net income could be
materially adversely affected. In addition, if United States, Canadian or
other foreign tax authorities were to challenge successfully the manner in
which profits are recognized among the Company and its subsidiaries, the
Company's effective tax rate could increase, and its cash flow and results of
operations could be materially adversely affected. To date, no tax authority
has challenged the manner in which profits are recognized among the Company
and its subsidiaries, but there can be no assurance that such a challenge will
not occur in the future. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Taxation."
 
  Risks Associated with Intellectual Property. The Company regards its
software products as proprietary and relies primarily on a combination of
statutory and common law copyright, trademark and trade secret laws, customer
licensing agreements, employee and third-party nondisclosure agreements and
other methods to protect its proprietary rights. The Company generally enters
into confidentiality agreements with its employees, consultants, clients and
potential clients and limits access to, and distribution of, its proprietary
information. Despite these precautions, it may be possible for a third party
to copy or otherwise obtain and use the Company's technology without
authorization, or to develop similar technology independently. Furthermore,
the laws of certain countries in which the Company sells its products do not
protect the Company's software and intellectual property rights to the same
extent as do the laws of the United States. The Company does not include in
its software any mechanisms to prevent or inhibit unauthorized use, but
generally requires the execution of an agreement that restricts copying and
use of the Company's products. If unauthorized copying or misuse of the
Company's products were to occur to any substantial degree, the Company's
business and results of operations could be materially adversely affected.
There can be no assurance that the Company's means of protecting its
proprietary rights will be adequate or that the Company's competitors will not
independently develop similar technology.
 
  Although the Company has not received any notices from third parties alleging
infringement claims, there can be no assurance that third parties will not claim
that the Company's current or future products infringe the proprietary rights of
others. The Company expects that software developers will increasingly be
subject to such claims as the number of products and competitors providing
software and services to the telecommunications industry grows and overlaps
occur. Any such claim, with or without merit, could result in costly litigation
or might require the Company to enter into royalty or licensing agreements. Such
royalty or licensing agreements, if required, may not be available on terms
acceptable to the Company or at all. See "Business--Proprietary Rights and
Licenses."
 
  Differences in Shareholders' Rights between United States and Irish
Corporations. The Company is incorporated under the laws of the Republic of
Ireland. The rights of holders of Ordinary Shares and,
 
                                       9
<PAGE>
 
therefore, certain of the rights of ADS holders, are governed by Irish law,
including the Companies Acts of the Republic of Ireland, and by the Company's
Articles of Association and certain laws of the European Union. These rights
differ in certain respects from the rights of shareholders in typical United
States corporations. In particular, Irish law significantly limits the
circumstances under which shareholders of Irish corporations may bring
derivative actions. See "Description of Share Capital."
 
  Volatility of ADS Price. The market price of the Company's ADSs has
increased significantly since the Company's initial public offering of ADSs in
November 1995. See "Price Range of ADSs." The period since the initial public
offering was marked by generally rising stock prices, favorable industry
conditions and improved operating results of the Company, all of which are
subject to change. The trading price of the ADSs could be subject to wide
fluctuations in response to the announcement of operating results that differ
from financial analysts' projections, changes in such projections, quarter-to-
quarter variations in operating results, announcements of technological
innovations or new products by the Company or its competitors and other
events. In addition, in recent years the stock market in general, and the
shares of technology companies in particular, have experienced extreme price
and volume fluctuations. This volatility has had a substantial effect on the
market prices of securities issued by many companies for reasons unrelated to
their operating performance. These broad market fluctuations may adversely
affect the market price of the ADSs. The Company has not listed or applied for
listing of the Ordinary Shares on any market in the United States or
elsewhere, and it is not expected that a public market for the Ordinary Shares
will develop after this offering. See "Price Range of ADSs" and
"Underwriting."
 
  Shares Eligible for Future Sale. Sales of a substantial number of ADSs in
the public market (by conversion of outstanding Ordinary Shares into ADSs or
otherwise) following this offering could adversely affect the market price of
the ADSs and could adversely affect the Company's ability to raise capital.
Upon completion of this offering, approximately 17,676,406 Ordinary Shares
will be outstanding. In addition to the 5,750,000 shares sold in the Company's
initial public offering and the 2,400,000 shares offered hereby, approximately
72,105 shares have been registered on a Form S-8 registration statement and
are eligible for sale in the public market without restriction. In addition,
approximately 8,312,287 Ordinary Shares will be available for conversion into
ADSs and sale in the public market in August 1996, and the remaining 1,142,014
will become available for conversion into ADSs and sale in the public market
at various dates between January 1997 and November 1997, subject to compliance
with Rule 144 under the Securities Act of 1933, as amended (the "Securities
Act"). Approximately 9,647,671 Ordinary Shares are subject to lock-up
agreements with the representatives of the Underwriters under which the
holders of such Ordinary Shares have agreed not to sell or otherwise dispose
of any of their Ordinary Shares or ADSs for a period of 90 days after the date
of this Prospectus without the prior written consent of Alex. Brown & Sons
Incorporated, which consent may be given at any time and without notice. In
addition, the holders of 9,454,301 Ordinary Shares following this offering
have the right under certain circumstances to require the Company to register
under the Securities Act their shares for resale to the public. See
"Management--Shares Options," "Shares Eligible for Future Sale" and
"Underwriting."
 
  As of March 31, 1996, options to purchase an aggregate of 1,144,851 Ordinary
Shares had been granted and were outstanding under the Company's 1995 Share
Option Plan (the "1995 Option Plan"), of which 187,500 were then exercisable.
In addition, options to purchase an aggregate of 691,448 Ordinary Shares had
been granted pursuant to certain non-plan options, all of which are currently
exercisable and eligible for resale pursuant to Rules 144 and 701. See
"Management--Share Options" and "Shares Eligible for Future Sale--Options."
 
  Effect of Anti-Takeover Provisions. The Company's Articles of Association
provide for a classified Board of Directors serving staggered terms of three
years, which could delay or impede the removal of incumbent directors. In
addition, Irish law requires that any action by written consent must be
unanimous. These provisions may have the effect of deterring hostile takeovers
or delaying or preventing changes in control or management of the Company,
including transactions in which shareholders might otherwise receive a premium
for their shares over then current market prices. In addition, these
provisions may limit the ability of shareholders to approve transactions that
they may deem to be in their best interests. See "Management--Board
Composition and Compensation."
 
                                      10
<PAGE>
 
                                  THE COMPANY
 
  Saville was founded in 1982 in Canada as a message processing and billing
software provider to telephone companies in Canada. The Company's United
States office was added in 1991 and its European office was added in 1993. The
Company currently provides billing solutions to telecommunications service
providers serving markets around the world.
 
  On September 27, 1995, Saville Systems Canada, Ltd. ("Saville Canada") and
Saville Systems U.S., Inc. ("Saville U.S.") became majority-owned subsidiaries
of the Company. This restructuring was accomplished through the contribution
of shares of Saville Canada and Saville U.S. to the Company by shareholders of
the subsidiaries who previously beneficially owned identical percentages of
all three companies and through the contribution of all shares of 2916746
Canada, Inc., a Canadian holding corporation whose only material asset is
shares of stock in Saville Canada.
 
  Certain shares of Saville Canada and Saville U.S. were retained by Invoice
Systems (Canada), Inc. ("Invoice Systems"). Over 94% of the voting securities
of Invoice Systems are owned or controlled by Bruce A. Saville, the Company's
founder and Chairman of the Board of Directors. At the time of the
restructuring, Invoice Systems entered into a share restriction and
contribution agreement with the Company, pursuant to which Invoice Systems is
prohibited from selling or transferring any securities of the Company, unless
it first contributes a proportionate percentage of its shares in each of the
subsidiaries to the Company. In addition, Invoice Systems must contribute all
of its remaining shares in the subsidiaries by September 1, 2005. Prior to
this offering, the minority interest retained by Invoice Systems represented
approximately 12% in each of the subsidiaries. Upon the sale of ADSs by
Invoice Systems (for the benefit of Bruce A. Saville) in this offering and the
corresponding contribution of shares in each of the subsidiaries, the minority
interest will represent approximately 9% in each of the subsidiaries
(approximately 8% if the Underwriters' over-allotment option is exercised in
full). See "Principal and Selling Shareholders" and Notes 1 and 8 of Notes to
Consolidated Financial Statements.
 
  The Company was incorporated in the Republic of Ireland in June 1993 as
Saville Systems Ireland Limited, a private limited company. On November 9,
1995 the Company was re-registered as a public limited company and changed its
name to Saville Systems PLC. Unless the context otherwise requires, references
to the "Company" or to "Saville" are to Saville Systems PLC ("Saville
Ireland") and its consolidated subsidiaries. The Company's principal executive
office is located at IDA Business Park, Dangan, Galway, Ireland, and its
telephone number at that address from the United States is (011) 353-9-152-
6611. The address of the Company's United States subsidiary is 25 Burlington
Mall Road, Sixth Floor, Burlington, MA 01803 and its telephone number at that
address is (617) 270-6500. The address of the Company's Canadian subsidiary is
4445 Calgary Trail, Seventh Floor, Edmonton, AB Canada T6H 5R7 and its
telephone number at that address is (403) 430-2000.
 
                            REPORTS TO SHAREHOLDERS
 
  The Company intends to furnish to its shareholders annual reports containing
audited consolidated financial statements and a report thereon by its
independent chartered accountants and quarterly reports for the first three
quarters of each fiscal year containing unaudited interim consolidated
financial information. The Company's consolidated financial statements are
prepared in accordance with accounting principles generally accepted in the
United States.
 
                                      11
<PAGE>
 
                                USE OF PROCEEDS
 
  The net proceeds to the Company from the sale of the 100,000 ADSs
representing 100,000 Ordinary Shares offered by the Company hereby are
estimated to be $1,970,000 after deducting underwriting discounts and
commissions and estimated offering expenses.
 
  The Company expects to use the net proceeds for working capital and general
corporate purposes. Pending use of the net proceeds for the above purposes,
the net proceeds of this offering will be invested in investment-grade, short-
term, interest-producing investments, including governmental obligations and
other money market instruments, or in dividend-producing investments in
investment-grade companies.
 
                                DIVIDEND POLICY
 
  On September 25, 1995, the Company paid a cash dividend of $3.0 million on
its Ordinary Shares, which it determined to pay primarily due to the
incurrence of certain tax liabilities by its majority shareholders as a result
of their ownership interests in the Company and the Company's classification
at that time as a "Controlled Foreign Corporation." See "Taxation." Except for
such payment, Saville has never declared or paid any cash dividends on its
Ordinary Shares. The Company currently intends to retain all future earnings
to finance future operations and therefore does not anticipate paying any cash
dividends in the foreseeable future. Moreover, under the Companies Acts of the
Republic of Ireland, dividends may only be paid out of the profits of the
Company legally available for distribution. See "Description of Share Capital"
and "Irish Exchange Control Regulations."
 
                              PRICE RANGE OF ADSS
 
  The Company's ADSs have been traded on the Nasdaq National Market under the
symbol "SAVLY" since November 16, 1995. Each ADS represents one Ordinary Share
of the Company. Prior to November 16, 1995, neither the ADSs nor the Company's
Ordinary Shares were publicly traded. Neither the ADSs nor the Ordinary Shares
of the Company are traded on any market, foreign or domestic, other than the
quoting of ADSs on the Nasdaq National Market. The following table sets forth,
for the periods indicated, the high and low sale prices of the ADSs as
reported on the Nasdaq National Market.
 
<TABLE>
<CAPTION>
                                                                 HIGH     LOW
                                                                ------- -------
<S>                                                             <C>     <C>
1995
  Fourth Quarter
   (November 16, 1995 to December 29, 1995).................... $17.375 $ 9.50
1996
  First Quarter................................................ $19.00  $13.875
  Second Quarter
   (April 1, 1996 to May 16, 1996)............................. $34.75  $18.625
</TABLE>
 
  On June 19, 1996, the last reported sale price of the Company's ADSs was
$26.00 per ADS. The depositary for the ADRs representing the ADSs is the Bank
of New York (the "Depositary"), 48 Wall Street, New York, New York 10286. On
May 16, 1996, the Company had approximately 31 holders of Ordinary Shares of
record. The Depositary is the holder of record of the Ordinary Shares
evidenced by the ADSs.
 
                                      12
<PAGE>
 
                                CAPITALIZATION
 
  The following table sets forth the capitalization of the Company as of March
31, 1996 and as adjusted to reflect the sale by the Company of 100,000 ADSs
representing 100,000 Ordinary Shares offered by the Company hereby and the
application of the estimated net proceeds therefrom as described in "Use of
Proceeds" and the reduction in the minority interest from approximately 12% to
approximately 9% in each of the subsidiaries as a result of the sale of ADSs
by Invoice Systems (for the benefit of Bruce A. Saville) and the corresponding
contribution of shares in each of the subsidiaries of the Company. This table
should be read in conjunction with the Consolidated Financial Statements and
related Notes thereto included elsewhere in this Prospectus.
 
<TABLE>
<CAPTION>
                                                             MARCH 31, 1996
                                                           --------------------
                                                                     PRO FORMA
                                                                        AS
                                                           ACTUAL   ADJUSTED(2)
                                                           -------  -----------
                                                             (IN THOUSANDS)
<S>                                                        <C>      <C>
Current portion of long-term debt......................... $    84    $    84
                                                           =======    =======
Long-term debt (excluding current portion)................      --         --
                                                           -------    -------
Shareholders' equity:
  Ordinary Shares, $0.0025 par value; 40,000,000 shares
   authorized; 17,576,406 shares issued and outstanding;
   17,676,406 issued and outstanding as adjusted(1).......      44         44
  Deferred Shares, IR(Pounds)1.00 par value; 30,000 shares
   authorized, issued and outstanding.....................      48         48
  Additional paid-in capital..............................  23,591     25,573
  Retained earnings.......................................   9,286      9,286
  Cumulative translation account..........................     (49)       (49)
                                                           -------    -------
    Total shareholders' equity............................  32,920     34,902
                                                           -------    -------
     Total capitalization................................. $32,920    $34,902
                                                           =======    =======
</TABLE>
- --------
(1) Excludes 1,836,299 Ordinary Shares reserved for issuance upon exercise of
    options outstanding as of March 31, 1996 at a weighted average exercise
    price of $6.61 per Ordinary Share (of which options to purchase 422,213
    Ordinary Shares were then exercisable). See "Management--Share Options."
(2) Excludes any proceeds to the Company from the possible exercise of options
    to purchase up to 77,000 Ordinary Shares by certain Selling Shareholders
    in connection with this offering.
 
                                      13
<PAGE>
 
                     SELECTED CONSOLIDATED FINANCIAL DATA
 
  The selected consolidated financial data set forth below have been derived
from the consolidated financial statements of the Company for the periods
indicated, which, except in the case of the consolidated financial statements
for the year ended December 31, 1991 and the three months ended March 31, 1995
and 1996, have been audited by Ernst & Young, independent auditors. Management
believes that the unaudited consolidated financial statements for the year
ended December 31, 1991 and the unaudited interim consolidated financial
statements for the three months ended March 31, 1995 and 1996 reflect all
adjustments, consisting only of normal and recurring adjustments, necessary
for a fair presentation of the financial data for such periods. Results of
operations for the three months ended March 31, 1996 are not necessarily
indicative of the results to be expected for the entire year. This selected
consolidated financial data should be read in conjunction with the audited
Consolidated Financial Statements and the Notes thereto and Management's
Discussion and Analysis of Financial Condition and Results of Operations
included elsewhere in this Prospectus.
 
<TABLE>
<CAPTION>
                                                                     THREE MONTHS
                                                                         ENDED
                                YEARS ENDED DECEMBER 31,               MARCH 31,
                         ------------------------------------------ ---------------
                          1991     1992     1993     1994    1995    1995    1996
                         -------  -------  -------  ------- ------- ------- -------
                                  (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                      <C>      <C>      <C>      <C>     <C>     <C>     <C>
CONSOLIDATED STATEMENTS
 OF INCOME (LOSS) DATA:
 Revenues:
 Services............... $ 4,097  $ 4,967  $ 8,857  $17,597 $25,084 $ 5,845 $ 9,032
 License fees...........     --       --       452    2,476   5,212   1,617   1,523
                         -------  -------  -------  ------- ------- ------- -------
   Total revenues.......   4,097    4,967    9,309   20,073  30,296   7,462  10,555
                         -------  -------  -------  ------- ------- ------- -------
 Costs and expenses:
 Cost of services.......   2,531    2,989    5,038    8,640  12,221   2,878   4,478
 Cost of license fees...     --       --         9       31      65      14      22
 Sales and marketing....     267      239      862    1,391   1,519     333     637
 Research and
  development...........     --       --       --       184   1,591     133     860
 General and
  administrative........   1,799    2,022    3,385    2,971   6,784   1,403   2,321
                         -------  -------  -------  ------- ------- ------- -------
   Total costs and
    expenses............   4,597    5,250    9,294   13,217  22,180   4,761   8,318
                         -------  -------  -------  ------- ------- ------- -------
 Income (loss) from
  operations............    (500)    (283)      15    6,856   8,116   2,701   2,237
 Other income
  (expense), net........     (32)     (45)       7      252     208      75     243
                         -------  -------  -------  ------- ------- ------- -------
 Income (loss) before
  income taxes..........    (532)    (328)      22    7,108   8,324   2,776   2,480
 Provision for income
  taxes.................      (5)       8       32    1,597   1,872     732     440
                         -------  -------  -------  ------- ------- ------- -------
 Income (loss) before
  minority interest.....    (527)    (336)     (10)   5,511   6,452   2,044   2,040
 Minority interest
  share in
  subsidiaries' net
  income (loss)(1)......     (66)       7      (23)     154      70       6      (2)
                         -------  -------  -------  ------- ------- ------- -------
 Net income (loss)...... $  (461) $  (343) $    13  $ 5,357 $ 6,382 $ 2,038 $ 2,042
                         =======  =======  =======  ======= ======= ======= =======
 Net income (loss) per
  share................. $ (0.03) $ (0.02) $  0.00  $  0.34 $  0.40 $  0.13 $  0.11
                         =======  =======  =======  ======= ======= ======= =======
 Dividends per share....     --       --       --       --  $  0.19     --      --
                         =======  =======  =======  ======= ======= ======= =======
 Shares used in
  computing net income
  (loss) and dividends
  per share ............  15,667   15,667   15,667   15,721  16,151  15,797  18,685
                         =======  =======  =======  ======= ======= ======= =======
</TABLE>
 
<TABLE>
<CAPTION>
                                          DECEMBER 31,
                               -------------------------------------- MARCH 31,
                                1991    1992    1993    1994   1995     1996
                               ------  ------  ------  ------ ------- ---------
                                         (IN THOUSANDS)
<S>                            <C>     <C>     <C>     <C>    <C>     <C>
CONSOLIDATED BALANCE SHEET
 DATA:
 Cash and cash equivalents.... $   28  $   14  $  697  $3,509 $23,722  $21,449
 Working capital (deficiency).   (137)   (238)    (13)  5,800  28,109   29,767
 Total assets.................  1,471   1,606   3,207   9,857  36,031   38,822
 Long-term debt (excluding
  current portion)............    352     560     --      689      44      --
 Total shareholders' equity
  (deficit)...................    (87)   (468)    189   5,452  30,924   32,920
</TABLE>
- --------
(1) In connection with the restructuring of the Company effected in September
    1995, certain shares of the Company's Canadian and United States
    subsidiaries were retained by Invoice Systems. Invoice Systems has agreed
    not to sell or transfer any securities of the Company, unless it
    contributes a proportionate number of shares in each of the subsidiaries
    to the Company. Invoice Systems must contribute all of its shares in the
    subsidiaries no later than September 1, 2005. Prior to the initial public
    offering of the ADSs in November 1995 and prior to this offering, the
    minority interest retained by Invoice Systems represented approximately
    15% and 12%, respectively, in each of the subsidiaries, which amounts have
    been reflected in the consolidated financial data contained herein. Upon
    the sale of ADSs by Invoice Systems (for the benefit of Bruce A. Saville)
    in this offering and the corresponding contribution of shares in each of
    the subsidiaries, the minority interest will represent approximately 9% in
    each of the subsidiaries (approximately 8% if the Underwriters' over-
    allotment option is exercised in full). See "The Company," "Principal and
    Selling Shareholders" and Notes 1 and 8 of Notes to Consolidated Financial
    Statements.
 
                                      14
<PAGE>
 
               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS
 
OVERVIEW
 
  The Company creates innovative, high quality, customized billing solutions
for service providers in the global telecommunications industry. The Company
utilizes its library of proprietary software to provide its customers with
customized, flexible, cost-effective billing systems. Saville typically
continues its relationships with customers by implementing new systems as the
customers enter new service categories or geographic markets and by further
developing and enhancing installed systems in response to its customers'
needs. In addition, Saville offers its customers the option of having Saville
operate the billing system in one of the Company's in-house service bureaus.
 
  The Company's strategy is to continue targeting growth-oriented
telecommunications service providers by leveraging its multi-market experience
and to establish and maintain long-term relationships with its customers. The
successful implementation of the Company's strategy has resulted in revenue
growth over the comparable preceding period of 115.6% and 50.9% in 1994 and
1995, respectively, and of 41.5% in the three months ended March 31, 1996. A
significant portion of the Company's revenues has been concentrated among its
four largest customers: AT&T, Energis, Sprint and Unitel. These customers, in
the aggregate, accounted for 73.4% of total revenues in 1995 and 73.0% of
total revenues for the three months ended March 31, 1996.
 
  The Company derives revenues from two sources: services and license fees.
Revenues from services relate (i) primarily to the development of new systems
and enhancement of existing installed systems and related customer maintenance
and training, which is largely billed on a time and materials basis, and (ii)
to a lesser extent, service bureau operations, whereby a customer contracts
with the Company to operate its billing system in a Company-maintained service
bureau. Service revenues accounted for 95.1%, 87.7%, 82.8% and 85.6% of total
revenues for 1993, 1994 and 1995 and the three months ended March 31, 1996,
respectively. The Company recognizes revenues from services in the period in
which the services are provided. License fees comprise the remainder of the
Company's revenues and are largely recognized at the time of delivery of the
product to the customer, provided that the Company has no significant related
obligations or collection uncertainties remaining. Where there are significant
obligations related to the development and enhancement of the software
installed, license fees are recorded over the expected term of the related
contracts. As a result, the amount of revenues realized by the Company from
license fees in a particular period depends largely on the number of product
installations during that period, and the extent to which any significant
obligations are outstanding.
 
  Cost of services is comprised primarily of the salaries and benefits of
software development, technical, service bureau and client service personnel.
It also includes operating costs of computer equipment and travel expenses.
 
  Cost of license fees consists of the royalty expense for use by the Company
of software that the Company has developed for clients and that is
incorporated into the Company's base software.
 
  Sales and marketing expenses consist of the salaries and benefits of those
employees involved in this function as well as related travel and promotional
expenses.
 
  Research and development expenses are comprised of the salaries and benefits
of the employees involved in internal software development. Prior to 1994,
Company software was developed for customer applications, and related expenses
were included in costs of services for those periods. In 1994, the Company
commenced internally funded research and development efforts. To date, the
Company has not capitalized any software development costs.
 
                                      15
<PAGE>
 
  General and administrative expenses consist mainly of the salaries and
benefits of management and administrative personnel and general office
administration expenses (rent and occupancy, telephone and other office supply
costs) of the Company. It also includes training and recruitment expenses for
all employees, professional fees and depreciation.
 
  In connection with the restructuring of the Company effected in September
1995, certain shares of Saville U.S. and Saville Canada were retained by
Invoice Systems. Over 94% of the voting securities of Invoice Systems are
owned or controlled by Bruce A. Saville, the Company's founder and Chairman of
the Board of Directors. Immediately after the restructuring, the minority
interest retained by Invoice Systems represented approximately 15% in each of
the subsidiaries, which interest was reduced to approximately 12% following
the Company's initial public offering in November 1995, and these amounts have
been reflected in the Consolidated Financial Statements and consolidated
financial data included herein. Invoice Systems has agreed not to sell or
transfer any securities of the Company, unless it contributes a proportionate
number of shares in each of the subsidiaries to the Company, and in any event
to contribute all of its remaining interest in the subsidiaries to the Company
by September 1, 2005. As a result of the sale of ADSs by Invoice Systems (for
the benefit of Bruce A. Saville) in this offering and the corresponding
contribution of shares in each of the subsidiaries to the Company, the
minority interest will be reduced to approximately 9% (approximately 8% if the
Underwriters' over-allotment option is exercised in full). No assurance can be
made as to the rate at which the remaining minority interest will be
contributed to the Company, if at all, prior to September 1, 2005.
 
  The Company earns significant taxable income in the Republic of Ireland, the
"manufacturing income" of which is taxed at a rate substantially lower than
tax rates in the United States and Canada. The Company anticipates that it
will continue to benefit from this tax treatment until the treatment
terminates in 2010, although the extent of the benefit could vary from period
to period, and there can be no assurance that the Company's tax situation will
not change. See "Risk Factors--Risk of Increasing Taxes."
 
RESULTS OF OPERATIONS
 
  The following table sets forth for the periods indicated the percentage of
total revenues represented by certain items in the Company's Consolidated
Statements of Income.
 
<TABLE>
<CAPTION>
                                          PERCENTAGE OF TOTAL REVENUES
                                      -----------------------------------------
                                         YEARS ENDED       THREE MONTHS ENDED
                                        DECEMBER 31,            MARCH 31,
                                      -------------------  --------------------
                                      1993   1994   1995     1995       1996
                                      -----  -----  -----  ---------  ---------
<S>                                   <C>    <C>    <C>    <C>        <C>
Revenues:
 Services...........................   95.1%  87.7%  82.8%      78.3%      85.6%
 License fees.......................    4.9   12.3   17.2       21.7       14.4
                                      -----  -----  -----  ---------  ---------
  Total revenues....................  100.0  100.0  100.0      100.0      100.0
                                      -----  -----  -----  ---------  ---------
Costs and expenses:
 Cost of services...................   54.0   43.0   40.3       38.5       42.4
 Cost of license fees...............    0.1    0.2    0.2        0.2        0.2
 Sales and marketing................    9.3    6.9    5.0        4.5        6.0
 Research and development...........    0.0    0.9    5.3        1.8        8.2
 General and administrative.........   36.4   14.8   22.4       18.8       22.0
                                      -----  -----  -----  ---------  ---------
  Total costs and expenses..........   99.8   65.8   73.2       63.8       78.8
                                      -----  -----  -----  ---------  ---------
Income from operations..............    0.2   34.2   26.8       36.2       21.2
 Other income, net..................    0.0    1.3    0.7        1.0        2.3
                                      -----  -----  -----  ---------  ---------
Income before income taxes..........    0.2   35.5   27.5       37.2       23.5
 Provision for income taxes.........    0.3    8.0    6.2        9.8        4.2
                                      -----  -----  -----  ---------  ---------
Income (loss) before minority inter-
 est................................   (0.1)  27.5   21.3       27.4       19.3
 Minority interest share in subsidi-
  aries' net income (loss)..........   (0.2)   0.8    0.2        0.1        0.0
                                      -----  -----  -----  ---------  ---------
 Net income.........................    0.1%  26.7%  21.1%      27.3%      19.3%
                                      =====  =====  =====  =========  =========
</TABLE>
 
                                      16
<PAGE>
 
THREE MONTHS ENDED MARCH 31, 1995 AND 1996
 
  Revenues. Total revenues increased 41.5% from $7.5 million in the three
months ended March 31, 1995 to $10.6 million in the three months ended March
31, 1996. The growth in total revenues resulted from increased demand for the
Company's services.
 
  Services. Service revenues increased 54.5% from $5.8 million in the three
months ended March 31, 1995 to $9.0 million in the three months ended March
31, 1996. The increase in service revenues was primarily due to increased
demand for software enhancements from existing clients and, to a lesser
extent, customizations for new clients.
 
  License Fees. License fee revenues remained relatively constant at $1.6
million in the three months ended March 31, 1995 compared to $1.5 million in
the three months ended March 31, 1996. License fee revenues are largely
dependent on the number of installations in the period.
 
  Cost of Services. Cost of services increased 55.6% from $2.9 million in the
three months ended March 31, 1995 to $4.5 million in the three months ended
March 31, 1996, but remained relatively constant as a percentage of service
revenues, increasing slightly from 49.2% to 49.6% over the same periods,
respectively. The increase in expenses was primarily due to additional
personnel hired to support the increased volume of business.
 
  Cost of License Fees. Cost of license fees increased 57.1% from $14,000 in
the three months ended March 31, 1995 to $22,000 in the three months ended
March 31, 1996. This increase was due to employee sales commissions earned on
a new installation, partially offset by a reduction in royalties paid to a
third party in connection with certain license fees.
 
  Sales and Marketing. Sales and marketing expenses increased 91.3% from
$333,000 in the three months ended March 31, 1995 to $637,000 in the three
months ended March 31, 1996. This increase was primarily due to the expansion
of the Company's sales force in the latter half of 1995. The Company
anticipates that continued expansion of its sales force in North America and
its intention to establish a stronger sales presence in Europe will increase
its sales and marketing expenses through the remainder of 1996.
 
  Research and Development. Research and development expenses increased from
$133,000 in the three months ended March 31, 1995 to $860,000 in the three
months ended March 31, 1996. This increase was due to increased development
efforts by the Company in creating new and enhanced billing and customer care
products. To date, the Company has not capitalized any software development
costs. The Company intends to continue to increase its investment in research
and development efforts in the future and expects that research and
development expenses will increase as a percentage of revenues in future
periods.
 
  General and Administrative. General and administrative expenses increased
65.4% from $1.4 million in the three months ended March 31, 1995 to $2.3
million in the three months ended March 31, 1996. This increase was
attributable to the costs of building infrastructure to support the growth in
the Company's employee base and the expansion of the Company's business.
 
  Other Income (Expense), Net. Other income (expense), net primarily includes
interest income, interest expense and foreign exchange gains and losses. Other
income, net of other expenses, increased 224.0% from $75,000 in the three
months ended March 31, 1995 to $243,000 in the three months ended March 31,
1996. This increase was primarily the result of interest earned on cash and
cash equivalents from the net proceeds from the Company's initial public
offering in November 1995.
 
  Provision for Income Taxes. The Company recorded a tax provision of $732,000
in the three months ended March 31, 1995 representing a 26.4% effective tax
rate compared to $440,000 representing a 17.7% effective tax rate in the three
months ended March 31, 1996. The Company's effective tax rate is largely
dependent on the proportion of the Company's income earned in different tax
jurisdictions. The
 
                                      17
<PAGE>
 
Company is currently eligible for a 10% tax rate on "manufacturing income"
earned in the Republic of Ireland. The rate is not available for other types
of income such as income earned by the Company on its cash investments. This
eligibility is the reason that the Company's effective tax rate is below the
Irish standard rate of 38%, and below the statutory rates of Canada and the
United States. There can be no assurances that the Company will continue to be
eligible for this 10% tax rate in future periods. See "Risk Factors--Risk of
Increasing Taxes" and "Taxation."
 
YEARS ENDED DECEMBER 31, 1994 AND 1995
 
  Revenues. Total revenues increased 50.9% from $20.1 million in 1994 to $30.3
million in 1995. A substantial portion of the growth in total revenues
resulted from an increase in revenues from the Company's existing client base.
Both service and license fee revenues increased as described below.
 
  Services. Service revenues increased 42.5% from $17.6 million in 1994 to
$25.1 million in 1995. The increase was due to more developmental programming
services being provided to existing clients by way of enhancements to existing
installations and through development of new projects for clients on both
AS/400 and UNIX platforms. Service bureau revenues also contributed to this
overall increase as service bureau revenues increased 46.9% from $2.6 million
in 1994 to $3.8 million in 1995, due to growth in existing service bureau
clients' call traffic and, to a lesser extent, to new clients choosing to
utilize the Company's service bureaus.
 
  License Fees. License fee revenues increased 110.5% from $2.5 million in
1994 to $5.2 million in 1995. Two new AS/400 installations were completed in
1995 and three license fees were earned on two partially completed UNIX
projects and one partially completed AS/400 project. The remainder of the fees
on these incomplete projects are expected to be earned in the first half of
1996 as the Company completes the development and enhancement for these
projects. In addition, during 1995, the Company continued to earn license fees
with respect to installations made in prior years as the Company completed
certain work on such installations resulting in additional license fees.
 
  Cost of Services. Cost of services increased 41.4% from $8.6 million in 1994
to $12.2 million in 1995, but decreased slightly as a percentage of service
revenues from 49.1% to 48.7%. The increase in total expenses was primarily due
to additional personnel hired during the period to support the growth of the
Company's business.
 
  Cost of License Fees. Cost of license fees increased 109.7% from $31,000 in
1994 to $65,000 in 1995 due to the increase in license fees earned by the
Company which, in turn, required the Company to pay additional royalties.
 
  Sales and Marketing Expenses. Sales and marketing expenses increased 9.2%
from $1.4 million in 1994 to $1.5 million in 1995, but decreased as a
percentage of total revenues from 6.9% to 5.0%. Sales and marketing expenses
in 1994 included a settlement payment of $740,000 related to the termination
of a service contract for marketing of the Company's software with a former
executive and shareholder. Excluding this settlement payment, sales and
marketing expenses increased $868,000 and increased as a percentage of total
revenues from 3.2% to 5.0%. The increase in 1995 was due primarily to the
development of a direct sales force within North America.
 
  Research and Development Expenses. Prior to 1994, Company software was
developed for customer applications, and related expenses were included as
part of cost of services in those periods. Research and development expenses
increased from $184,000 in 1994 to $1.6 million in 1995. In 1994, the Company
commenced internally funded research and development efforts. This increase is
attributable to additional development efforts undertaken during 1995 with
respect to the UNIX-based billing software being developed jointly with AT&T,
and continued internally funded research and development efforts on the AS/400
product.
 
                                      18
<PAGE>
 
  General and Administrative Expenses. General and administrative expenses
increased 128.3% from $3.0 million in 1994 to $6.8 million in 1995. These
expenses also increased as a percentage of total revenues from 14.8% to 22.4%.
This increase in expenses was primarily attributable to the growth in the
business of the Company. Significant areas in which the Company increased
spending included the addition of senior and middle management, employee
training, relocation to larger office space in both Edmonton and Toronto and
general expenses related to an increased number of employees. In addition, in
1995 the Company recorded an allowance for doubtful accounts of $370,000 and
compensation expenses of $95,000 in connection with certain options that were
granted to employees having an exercise price below the then fair market
value.
 
  Other Income (Expense), Net. Other income decreased 17.5% from $252,000 in
1994 to $208,000 in 1995. The Company's increased profitability, and the
proceeds from the Company's public offering in 1995 resulted in the Company
having substantially higher cash balances which, in turn, generated greater
interest income. This increase in income was partially offset, however, by
foreign exchange losses.
 
  Provision for Income Taxes. The Company recorded a tax provision of $1.6
million in 1994, representing an effective tax rate of 22.5%, as compared to a
provision of $1.9 million in 1995, representing an effective tax rate of
22.5%. The rate may vary period to period due to income being earned in
different jurisdictions. The Company is currently eligible for a 10% tax rate
on "manufacturing income" earned in the Republic of Ireland. The rate is not
available for other types of income, such as income earned by the Company on
its cash investments. This eligibility is the reason that the Company's
effective tax rate is below the Irish standard rate of 38%, effective April 1,
1995, and below the statutory rates of Canada and the United States. There can
be no assurance that the Company will continue to be eligible for this 10% tax
rate. See "Risk Factors--Risk of Increasing Taxes" and "Taxation."
 
YEARS ENDED DECEMBER 31, 1993 AND 1994
 
  Revenues. Total revenues increased 115.6% from $9.3 million in 1993 to $20.1
million in 1994. A substantial portion of the growth in total revenues
resulted from an increase in revenues from AT&T and the addition of Energis as
a significant customer. Both service and license fee revenues increased as
described below.
 
  Services. Service revenues increased 98.7% from $8.9 million in 1993 to
$17.6 million in 1994. Prior to 1993, the Company began its involvement with
two major U.S. telecommunications service providers as well as Canada's second
largest long distance carrier. In late 1993, the Company commenced development
in Europe for its fourth major client. The increase in service revenues in
1994 was primarily attributable to the increase in both developmental
programming services and service bureau operations for this European client
and the Company's other major clients in 1994.
 
  License Fees. Until 1993, the Company did not charge a license fee to its
clients. License fee revenues increased 447.8% from $452,000 in 1993 to $2.5
million in 1994. The increase in license fees from 1993 to 1994 was due to two
new site installations of billing software in 1994 for which development and
enhancement was ongoing throughout the year. In addition, license fees earned
in 1994 on an installation made in 1993 increased from prior year amounts due
to a change in the formula used to calculate the fee and the increase in the
call volume. The balance of license fee revenues in 1994 related to an
installation made by the Company in 1993 with additional license fee payment
requirements as the Company completed additional work on that installation.
 
  Cost of Services. Cost of services increased 71.5% from $5.0 million in 1993
to $8.6 million in 1994. As a percentage of service revenues, however, cost of
services decreased from 56.9% to 49.1%. The dollar increases in cost of
services were primarily due to additional personnel hired to support the
growth in the Company's business. Cost of services decreased as a percentage
of service revenues as a result of a change in the sales mix weighted towards
higher-margined services.
 
 
                                      19
<PAGE>
 
  Cost of License Fees. The Company began to recognize cost of license fees
during 1993 at the same time that it began to recognize license fee revenues.
Cost of license fees increased 244.4% from $9,000 in 1993 to $31,000 in 1994
due to the increase in license fees earned by the Company which, in turn,
required the Company to pay additional royalties.
 
  Sales and Marketing Expenses. Sales and marketing expenses increased 61.4%
from $862,000 in 1993 to $1.4 million in 1994. Sales and marketing expenses of
$1.4 million in 1994 included a $740,000 settlement payment in connection with
the termination of a services contract for marketing of the Company's software
with a former executive and shareholder. Excluding this settlement payment,
sales and marketing expenses decreased 24.5% from $862,000 in 1993 to $651,000
in 1994. As a percentage of revenues, sales and marketing expenses decreased
from 9.3% to 6.9%. The 1993 expenses included substantial consulting service
fees paid to a former executive and shareholder with respect to his
involvement in sales and marketing. Those consulting services terminated in
the first half of 1994 (resulting in the settlement payment described above).
The current Chairman of the Board of the Company was primarily responsible for
sales and marketing during 1994. Accordingly, a substantial portion of sales
and marketing expenses for 1994 was an allocation of the compensation paid to
the Chairman of the Board for his time spent on sales and marketing.
 
  Research and Development Expenses. Prior to 1994, Company software was
developed for customer applications, and related expenses were included as
part of cost of services in those periods. In 1994, the Company commenced
internally funded research and development efforts. Research and development
expenses were $184,000 in 1994. This amount was primarily attributable to
development efforts undertaken with respect to the UNIX-based billing software
being developed jointly with AT&T.
 
  General and Administrative Expenses. General and administrative expenses
decreased 12.2% from $3.4 million in 1993 to $3.0 million in 1994. As a
percentage of total revenues, these expenses decreased from 36.4% to 14.8%. In
1994, the Company recorded compensation expense of $12,000 in connection with
certain options that were granted to employees having an exercise price below
the then fair market value. The relatively higher general and administrative
expenses in 1993, as compared to 1994, was attributable to a number of
factors, including $1.4 million in management bonuses paid primarily to the
former President and, at that time, majority shareholder of the Company
(currently serving as Chairman of the Board), largely offset by higher
management salaries, bonuses, recruitment fees incurred in connection with the
search for a new senior management team for the Company, professional fees
incurred in connection with the completion of contracts with significant new
clients, and increases in general and administrative expenses to support the
growth in the Company's business.
 
  Other Income (Expense), Net. Other income increased from $7,000 in 1993 to
$252,000 in 1994 primarily due to the Company's higher profits in 1994 which
resulted in greater cash reserves earning interest during that period and
because of foreign currency gains.
 
  Provision for Income Taxes. In 1993, the tax provision of the Company was
$32,000 and in 1994 the tax provision was $1.6 million. The Company's
effective tax rate in 1994 was 22.5%. The Company did not begin operations in
the Republic of Ireland until 1993, and as a result, the 1993 tax provision
relates to the entity which is now the Company's Canadian subsidiary. The
Company is eligible for a 10% tax rate on "manufacturing income" earned in the
Republic of Ireland. This rate is not available for other types of income,
such as income earned by the Company on its cash investments. This eligibility
is the reason that the Company's effective tax rate is below the Irish
standard rate of 38%, effective April 1, 1995, and below the statutory rates
of Canada and the United States. There can be no assurance that the Company
will continue to be eligible for this 10% tax rate. See "Risk Factors--Risk of
Increasing Taxes" and "Taxation."
 
 
                                      20
<PAGE>
 
QUARTERLY INFORMATION
 
  The following table presents selected unaudited consolidated financial
information for the Company's last nine quarters, as well as the percentage of
the Company's total revenues represented by each item. In the opinion of the
Company's management, this unaudited information reflects all adjustments,
consisting only of normal recurring adjustments, necessary to present fairly
this information when read in conjunction with the Consolidated Financial
Statements and Notes thereto appearing elsewhere in this Prospectus. The
Company's operating results for any one quarter are not necessarily indicative
of results for any future period.
 
<TABLE>
<CAPTION>
                                                            QUARTER ENDED
                         -------------------------------------------------------------------------------------
                         MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31  MARCH 31,
                           1994      1994     1994      1994     1995      1995     1995     1995      1996
                         --------- -------- --------- -------- --------- -------- --------- -------  ---------
                                                            (IN THOUSANDS)
<S>                      <C>       <C>      <C>       <C>      <C>       <C>      <C>       <C>      <C>
Revenues:
 Services...............  $3,723    $4,282   $4,524    $5,068   $5,845    $6,549   $5,807   $6,883    $ 9,032
 License fees...........     216       463      926       871    1,617     1,054    1,239    1,302      1,523
                          ------    ------   ------    ------   ------    ------   ------   ------    -------
  Total revenues........   3,939     4,745    5,450     5,939    7,462     7,603    7,046    8,185     10,555
                          ------    ------   ------    ------   ------    ------   ------   ------    -------
Costs and expenses:
 Cost of services.......   1,861     1,944    2,164     2,671    2,878     2,957    2,930    3,456      4,478
 Cost of license fees...       6         5       10        10       14        15       24       12         22
 Sales and marketing....     192       879      133       187      333       332      370      484        637
 Research and
  development...........       8        45       63        68      133       289      553      616        860
 General and
  administrative........     418       630      834     1,089    1,403     1,666    1,687    2,028      2,321
                          ------    ------   ------    ------   ------    ------   ------   ------    -------
  Total costs and
   expenses.............   2,485     3,503    3,204     4,025    4,761     5,259    5,564    6,596      8,318
                          ------    ------   ------    ------   ------    ------   ------   ------    -------
Income from operations..   1,454     1,242    2,246     1,914    2,701     2,344    1,482    1,589      2,237
 Other income (expense),
  net...................      (3)       54      --        201       75        57        8       68        243
                          ------    ------   ------    ------   ------    ------   ------   ------    -------
Income before income
 taxes..................   1,451     1,296    2,246     2,115    2,776     2,401    1,490    1,657      2,480
 Provision for income
  taxes.................     397       152      530       518      732       475      388      277        440
                          ------    ------   ------    ------   ------    ------   ------   ------    -------
Income before minority
 interest...............   1,054     1,144    1,716     1,597    2,044     1,926    1,102    1,380      2,040
 Minority interest share
  in subsidiaries' net
  income (loss).........      98        10       46       --         6        37       48      (21)        (2)
                          ------    ------   ------    ------   ------    ------   ------   ------    -------
  Net income............  $  956    $1,134   $1,670    $1,597   $2,038    $1,889   $1,054   $1,401    $ 2,042
                          ======    ======   ======    ======   ======    ======   ======   ======    =======
</TABLE>
 
                                      21
<PAGE>
 
<TABLE>
<CAPTION>
                                                             QUARTER ENDED
                         -------------------------------------------------------------------------------------
                         MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31,
                           1994      1994     1994      1994     1995      1995     1995      1995     1996
                         --------- -------- --------- -------- --------- -------- --------- -------- ---------
<S>                      <C>       <C>      <C>       <C>      <C>       <C>      <C>       <C>      <C>
Revenues:
 Services...............    94.5%    90.2%     83.0%    85.3%     78.3%    86.1%     82.4%    84.1%     85.6%
 License fees...........     5.5      9.8      17.0     14.7      21.7     13.9      17.6     15.9      14.4
                           -----    -----     -----    -----     -----    -----     -----    -----     -----
  Total revenues........   100.0    100.0     100.0    100.0     100.0    100.0     100.0    100.0     100.0
                           -----    -----     -----    -----     -----    -----     -----    -----     -----
Costs and expenses:
 Cost of services.......    47.2     41.0      39.7     45.0      38.5     38.9      41.6     42.2      42.4
 Cost of license fees...     0.2      0.1       0.2      0.2       0.2      0.2       0.3      0.2       0.2
 Sales and marketing....     4.9     18.5       2.4      3.2       4.5      4.4       5.3      5.9       6.0
 Research and
  development...........     0.2      0.9       1.2      1.1       1.8      3.8       7.9      7.5       8.2
 General and
  administrative........    10.6     13.3      15.3     18.3      18.8     21.9      23.9     24.8      22.0
                           -----    -----     -----    -----     -----    -----     -----    -----     -----
  Total costs and
   expenses.............    63.1     73.8      58.8     67.8      63.8     69.2      79.0     80.6      78.8
                           -----    -----     -----    -----     -----    -----     -----    -----     -----
Income from operations..    36.9     26.2      41.2     32.2      36.2     30.8      21.0     19.4      21.2
 Other income (expense),
  net...................    (0.0)     1.1       0.0      3.4       1.0      0.8       0.1      0.8       2.3
                           -----    -----     -----    -----     -----    -----     -----    -----     -----
Income before income
 taxes..................    36.9     27.3      41.2     35.6      37.2     31.6      21.1     20.2      23.5
 Provision for income
  taxes.................    10.1      3.2       9.8      8.7       9.8      6.3       5.5      3.4       4.2
                           -----    -----     -----    -----     -----    -----     -----    -----     -----
Income before minority
 interest...............    26.8     24.1      31.4     26.9      27.4     25.3      15.6     16.8      19.3
 Minority interest share
  in subsidiaries' net
  income (loss).........     2.5      0.2       0.8      0.0       0.1      0.5       0.7     (0.3)      0.0
                           -----    -----     -----    -----     -----    -----     -----    -----     -----
  Net income............    24.3%    23.9%     30.6%    26.9%     27.3%    24.8%     14.9%    17.1%     19.3%
                           =====    =====     =====    =====     =====    =====     =====    =====     =====
</TABLE>
 
  The Company's quarterly operating results have in the past and may in the
future vary significantly depending on factors such as increased competition,
the size and timing of significant client projects and license fees,
cancellations of significant projects by customers, changes in operating
expenses, changes in Company strategy, personnel changes, foreign currency
exchange rates and general economic factors. See "Risk Factors--Fluctuations
in Quarterly Operating Results."
 
  The Company's expense levels are based, in part, on its expectations as to
future revenues. If revenue levels are below expectations, operating results
are likely to be adversely affected. Net income may be disproportionately
affected by a reduction in revenues because a proportionately smaller amount
of the Company's expenses varies with its revenues. As a result, the Company
believes that period-to-period comparisons of its results of operations are
not necessarily meaningful and should not be relied upon as indications of
future performance.
 
  During 1995 and the first three months of 1996, the Company made significant
investments in personnel and infrastructure to support anticipated future
growth. These strategic investments have adversely impacted earnings in the
second half of 1995 and the first quarter of 1996, and the Company expects
that these strategic investments will continue to impact earnings in the short
term.
 
                                      22
<PAGE>
 
LIQUIDITY AND CAPITAL RESOURCES
 
  Cash and cash equivalents decreased $2.3 million from $23.7 million at
December 31, 1995 to $21.4 million at March 31, 1996. The decrease was
primarily due to an increase in accounts receivable. Funds were also used to
purchase fixed assets and to repay capital lease obligations.
 
  As of March 31, 1996, the Company had $12.7 million in net accounts
receivable. As of April 29, 1996, the Company had collected 29.5% of the
balance. Approximately $397,000 of the balance remaining outstanding at April
29, 1996 is greater than 180 days old. The age of the accounts as of March 31,
1996 was comparable with recent quarters.
 
  As of May 1, 1996, the Company had no material commitments for capital
expenditures. The Company believes that the net proceeds from the sale of the
ADSs in this offering, together with existing cash and cash equivalents and
funds generated by operations, will be sufficient to meet its anticipated
liquidity and working capital requirements for at least the next twelve
months.
 
FOREIGN CURRENCY EXPOSURE
 
  Sales outside of the United States represented a significant portion of the
Company's total revenues in 1995 and the first three months of 1996. A
substantial amount of the Company's revenues derived from sales outside the
United States are invoiced and paid in currencies other than the United States
dollar, primarily Pounds Sterling and Canadian dollars. The impact of foreign
currency translation has not been material to the Company's operations. See
"Risk Factors--Currency Fluctuations."
 
RECENTLY ISSUED ACCOUNTING STANDARDS
 
  The Financial Accounting Standards Board has issued SFAS No. 123,
"Accounting for Stock Based Compensation," which is effective for the
Company's December 31, 1996 year end. SFAS No. 123 allows an entity to
continue the application of the accounting prescribed by Accounting Principles
Board Opinion (APB) No. 25, "Accounting for Stock Issued To Employees,"
however, pro forma footnote disclosures of net income and earnings per share,
as if SFAS No. 123 had been applied, are required. The Company intends to
continue its current accounting under APB No. 25 and provide the required pro
forma footnote disclosures commencing with its fiscal 1996 year end financial
statements.
 
                                      23
<PAGE>
 
                                   BUSINESS
 
  Saville creates innovative, high quality, customized billing solutions for
service providers in the increasingly competitive global telecommunications
industry. The Company's billing systems are designed to enable these service
providers to quickly bring new offerings in voice, video and data
communications to market, while billing accurately and reliably for these
services. Working closely with its customers, Saville utilizes its library of
proprietary software applications to provide each customer with a customized,
flexible and cost-effective billing solution. The Company has typically
continued to serve as a billing partner for its customers by implementing new
systems as the customer enters new service categories or geographic markets,
and by further developing and enhancing the customer's installed systems in
response to changes in the customer's service offerings, marketing strategies
and network technology. In addition, Saville offers its customers the option
of having Saville operate the billing system in one of the Company's in-house
service bureaus.
 
  The Company's systems are designed to operate in a multiservice environment,
capable of billing local exchange, long distance and wireless (cellular,
paging and satellite) telecommunications services for service providers
offering programs with subscribers numbering in the thousands to subscribers
numbering in the millions. Saville's billing systems may be implemented to
support discrete service offerings of large telecommunications service
providers, including industry-leading customers such as AT&T and Sprint, or as
the complete billing system of emerging and small- to medium-sized
telecommunications service providers, including customers such as Energis, a
United Kingdom long distance carrier, and Frontier, a local exchange carrier
serving Rochester, New York.
 
INDUSTRY BACKGROUND
 
  The Telecommunications Industry
 
  The telecommunications services industry in the United States generated over
$190 billion in revenue in 1994 and is becoming increasingly competitive due
to deregulation and the development of new service technologies. Competition
in this market began to increase in 1984 when AT&T was required to divest its
local telephone operations, and the long distance market was opened to new
entrants. By 1994, there were over 500 long distance service providers in a
market that was primarily dominated by AT&T a decade earlier. New long
distance competitors, such as MCI Communications Corp. ("MCI") and Sprint,
initially competed by providing discounted service and later by offering new
features and services, such as customized usage-based calling plans. As a
result of increased competition, consumer long distance rates have been
reduced by over 60% from 1984 to 1994 while overall long distance industry
revenues have increased from $38.8 billion in 1984 to $67.4 billion in 1994.
 
  Local exchange primarily remains a regulated market. Improved switching
technology is permitting local exchange telecommunications service providers
to offer a variety of new features and services to their customers such as
caller ID, call waiting, voice mail and others. New service-based
technologies, which facilitated the commercial introduction of cellular
telephony in the mid-1980's and the current licensing of radio frequencies
allocated for Personal Communications Services ("PCS"), have substantially
increased the complexity and variety of telecommunications services, as
providers seek to compete and differentiate themselves with enhanced
telecommunications service offerings.
 
  The Telecommunications Act of 1996 is expected to increase competition in
the telecommunications service market in the United States by allowing local,
long distance and cable companies to offer competing services, provided they
meet specified regulatory benchmarks. Many service providers are expected to
compete by offering multiple services, including combinations of local
exchange, long distance, wireless and data communications services, to
customers in single geographic markets.
 
  Internationally, privatization and deregulation are resulting in increased
international competition and the emergence of newly authorized
telecommunications service providers. For example, approximately
 
                                      24
<PAGE>
 
150 new communications licenses were granted in the United Kingdom during the
period between 1991 and 1995. When new markets are opened to competition,
local and emerging service providers within these markets typically compete
for market share with more established carriers, such as AT&T and British
Telecommunications PLC, initially by providing access to service and then by
providing competitive prices and introducing new features and services. In
addition, technological advances and global expansion by multinational service
providers are opening markets in less developed countries to enhanced
telecommunications services and competition.
 
  As a result of these factors, telecommunications service providers are
differentiating themselves by being more responsive to customers and by
expanding the number of telecommunications services and features they offer.
These trends, in turn, have created the need for sophisticated and flexible
billing solutions. Telecommunications service providers can compete only if
they are able to efficiently and accurately bill customers for the varied
services and features they provide.
 
  Telecommunications Billing
 
  Telecommunications billing is the process of collecting and pricing customer
telecommunications usage in order to generate residential and business
telephone invoices for local, long distance and wireless service. Billing
systems typically interact with most aspects of the telecommunications network
and generally incorporate data collection, processing and invoice generation.
The billing function continues to evolve from primarily a service support
function to a revenue enhancement tool used to differentiate services, such as
competitive long distance rate plans offered by AT&T, Sprint, MCI and others.
Within the regulated local exchange market, billing systems support features
made available by new switching technologies such as caller ID, call waiting
and voice mail. The rapid pace of technological change coupled with the
emphasis on time to market for new services and features places a significant
burden on the telecommunications service provider to install and then modify
its billing system quickly. This has created significant demand for software
that can perform all functions in a timely, accurate, cost-effective manner
for a variety of services.
 
  Established telecommunications service providers have existing billing
systems, many of which are maintained in-house. Frequently, however, these
systems were designed prior to deregulation to provide a single-service
billing function. These older systems generally are difficult to maintain and
modify and often do not meet the multiple and evolving needs of the
telecommunications service provider. Many of these service providers are
therefore seeking to replace or augment their in-house billing systems through
outsourced billing solutions.
 
  Many emerging telecommunications service providers lack billing systems. One
of the primary challenges that these newer service providers face is to bring
new services to market quickly. They typically focus their capital resources
on developing networking and switching technology and on creating marketable
services rather than on creating billing systems. These providers typically
seek external billing solutions because efficient, flexible billing solutions
are often too costly and time consuming to develop internally.
 
THE SAVILLE SOLUTION
 
  Saville provides advanced billing solutions that address a spectrum of
billing and customer care functions, ranging from sales support and order
processing, through actual invoice calculation and production to management
reporting and marketing analysis. The Company's billing systems are designed
to enable telecommunications service providers to meet their primary
competitive objectives, including:
 
     . Reducing costs of development, implementation, operation and
       enhancement of core systems
 
     . Reducing time to market for new services and features
 
     . Improving marketing and planning through better customer information
 
     . Enhancing customer retention by providing accurate and useful
       information to customers
 
                                      25
<PAGE>
 
  Saville has developed, and continuously refines, its sophisticated base
software applications, which it combines and customizes to meet the current
and evolving requirements of its customers. The Company develops close,
ongoing relationships with its customers to identify customer needs, and then
designs and implements a customized billing solution that can operate on a
stand-alone basis or interface with a provider's existing billing system.
Saville typically continues to work closely with its customers after initial
implementation, particularly as customers require additional customized
billing applications that enable them to offer new features and services,
expand into additional geographic markets or operate with new network
technologies and protocols. In addition, the Company provides ongoing support,
maintenance and training related to the customer's billing system. Saville
also offers its customers the option of retaining the Company to operate all
or part of the customized billing system at a Company-maintained service
bureau.
 
  In order to meet the significant technological challenges in developing and
implementing telecommunications billing software, as of March 31, 1996, 315 of
Saville's 447 employees were dedicated primarily to software development. The
experience and expertise of Saville's personnel enable Saville to provide
billing solutions for the varied requirements of the Company's global client
base, which includes local exchange, long distance and wireless service
providers, as well as providers of other specialty applications, such as data
communications and audio- and video-conferencing services. The Company has
developed relationships with customers ranging from small service providers to
industry leaders such as AT&T and Sprint. Based on its experience with these
customers, the Company believes that it is a leader in providing billing
software systems for small- to medium-sized telecommunications service
providers as well as to large telecommunications service providers that
utilize the Company's software and services to support new market expansions
or as an integral component of a larger billing system.
 
STRATEGY
 
  The Company's objective is to be a market leader in providing billing
solutions to the global telecommunications industry. The critical elements of
the Company's strategy include:
 
  Develop and Maintain Long-Term Customer Relationships. Saville seeks to
establish and maintain long-term working relationships with its customers,
which enable the Company to gain an ongoing understanding of customer needs.
The implementation of features that meet these needs makes the Company's
billing solutions a critical competitive component of the customer's service
offering. This customer-driven focus is key to creating a loyal customer base
and providing product direction. In 1995, 99.0% of the Company's total
revenues was derived from service providers who were customers in 1994.
 
  Focus on Growth-Oriented Telecommunications Service Providers and Leverage
Existing Multi-Market Experience. The Company's marketing emphasis is on two
types of telecommunications service providers. First, the Company focuses on
existing providers who are either replacing their older billing systems,
augmenting their existing systems to support new features and services or
adding new billing systems to enable them to expand into new geographic
markets. Second, the Company focuses on emerging providers that are expected
to offer new types of services such as PCS or that are entering existing
service markets newly opened to competition. These emerging providers require
sophisticated and flexible billing solutions like the Company's that can be
deployed on a timely and cost-effective basis. In addition, as the
telecommunications industry continues to evolve, with individual providers
offering more diverse services, these providers require increasingly flexible
billing systems. The Company believes that its experience in providing billing
services to multiple markets within the telecommunications industry, including
local exchange, long distance and wireless, provides it with a significant
competitive advantage.
 
  Expand Internal Software Development. Saville is focusing its internal
software development on capturing and refining its existing software features
into Company-standard software modules, which are designed to work together
and serve as the base for further customized systems. In addition, the Company
 
                                      26
<PAGE>
 
plans to expand the number of features available in its modules. The Company
expects that this effort will reduce the amount of customization required for
each system and enable customers to initiate services more rapidly. The
Company believes that these improvements will be particularly important for
the more complex billing requirements expected to arise as the
telecommunications market converges and single providers offer a more varied
array of services.
 
  Expand Direct Sales and Develop Strategic Relationships. The Company has
recently begun to invest significantly in the development of a direct sales
force and sales support organization to focus on new customer opportunities in
North America and Europe. The Company is also seeking to create additional
strategic distribution and marketing alliances as a means of expanding new
business opportunities and entering new markets. For example, the Company
provides billing solutions to divisions of AT&T and Sprint in a number of
markets now being addressed by those divisions.
 
  Support Leading Hardware Platforms. Saville intends to continue to develop
and support software for the IBM AS/400 platform, which is widely used
throughout the telecommunications industry and which the Company believes will
continue to be a leading platform for telecommunications billing systems. The
Company also recently completed joint development with AT&T of a UNIX-based
billing system, which the Company believes will offer additional opportunities
to provide billing solutions through AT&T. See "--Customers--AT&T" and "--
Material Contracts--AT&T." In addition, the Company is also developing a UNIX-
based billing system for use on personal computers or workstations by small
wireless local-loop telecommunications service providers, particularly in
developing countries such as China.
 
  Develop and Offer Complementary Customer Applications. The Company's long-
term strategy includes the expansion of its product offerings to include
software applications complementary to the billing system. The Company's
software currently interfaces with other aspects of the customer's operating
systems. To the extent the Company successfully expands its suite of software
products, the Company believes that it can take advantage of its established
position in the billing systems market and leverage its existing customer
accounts and distribution channels to promote the sale of new product
offerings.
 
PRODUCTS AND SERVICES
 
  The Company's primary business is the development and subsequent delivery or
operation of billing solutions to meet its customers' specific needs. Due to
the flexibility inherent in the Company's software and the expertise of its
software development personnel, the Company is able to develop solutions that
allow service providers to bill for multiple services on a single invoice.
This functionality is key to enabling telecommunications service providers to
offer on a cost-effective basis multiple services such as local, long
distance, cellular and data communications.
 
  The Company's customer relationships typically begin with the Company
providing, on a time and materials basis, system design, customization and
installation services. After the system is in operation, the Company continues
the relationship by providing upgrading, ongoing system management and system
enhancement to accommodate new telecommunications services and technologies.
The customer can choose either to operate the billing system directly,
resulting in a license fee to the Company, or may choose to retain the Company
to perform all or a substantial part of the customer's billing operations in a
Company- maintained service bureau, resulting in ongoing processing fees.
 
 
                                      27
<PAGE>
 
  Software Applications Modules
 
  The Company uses its library of proprietary software to provide each of its
customers with a customized billing solution. The Company's software makes
extensive use of relational databases, which allow billing rates and other key
parameters to be changed without reprogramming the software code. The
Company's software may be grouped into four general categories: Customer Care,
Event Processing, Billing and Post Billing. These categories include hundreds
of discrete software functionalities.
 
  Customer Care. Customer care enables the customer service representative to
interact with the customer and input, maintain and access customer information
beginning at the customer's initial service request and continuing through the
conclusion of service. Key functionalities within this application include:
 
            Customer Initiation           Switch Interface
            Bill Cycle Assignment         Customer History
            Phone Number Assignment       Invoice Messaging
            Calling Card Assignment       System Notation
            Inventory Administration      Directory Listing
            Customer Hierarchy            Lead Generation and Management
            Customer Search               Customer Information Maintenance
 
  Event Processing. Event processing encompasses the collection, conversion
and rating of customer call detail records used in the production of the
service invoice. Key functionalities within this application include:
 
            Data Collection               Rating
            Data Distribution             Reporting
            Conversion/Reformatting       Error Management
            Validation                    External Interfaces
            Guiding
 
  Billing. Billing integrates customer usage-based charges with recurring
charges and other credits and adjustments to create the periodic service
invoice. Key functionalities within this application include:
 
            Multiple Bill Pulls           Auto Balancing
            Rerating                      Recurring Charges
            Discounting                   Taxation
            Invoice Generation            Quick Invoicing
            Invoice Hierarchy             Management Reporting
            Multi-Currency                Revenue Reporting
            Multi-Language
 
  Post Billing. Post billing is the primary interface with the service
provider's accounting system and relates to the invoicing and remittance of
the periodic service invoice. Key functionalities within this application
include:
 
            Payment Processing            Financial Reporting
            Adjustments                   Commissioning
            Deposit and Deposit Interest  Accounting Interface
            Accounts Receivable           Trouble Reporting
            Collections and Treatment
 
  Development and Enhancement Services
 
  Saville provides ongoing development and enhancement services to nearly all
of its customers on a time and materials basis. The Company establishes a
relationship with a customer at the design stage,
 
                                      28
<PAGE>
 
when the Company assists the customer in designing the required billing system
based on the customer's market segment, network configuration and protocols
and other customer-specific requirements. The Company then develops customized
applications of the Company's base software for the customer. Once the Company
develops a billing system, its relationship with the customer usually
continues with ongoing development, maintenance, training, systems analysis
and further expansion of systems to accommodate new products and technologies.
Frequently, a customer will initially retain Saville because of its ability to
develop and install a basic billing system in a relatively short time and then
continue to retain Saville to develop enhancements for the installed system.
As of March 31, 1996, the Company had 20, 185 and 110 employees providing
ongoing development and enhancement services in its Galway, Edmonton and
Toronto facilities, respectively.
 
  Service Bureaus
 
  A customer of the Company may elect to contract with the Company to operate
its billing system in a Company-maintained service bureau. In a typical
service bureau arrangement, the Company develops the customer's billing system
and installs it in one of the Company's technical data centers. The customer
then transmits its customer usage data to the Company, or the Company obtains
the information directly from the switch. In either case, the Company
processes and rates the information using the billing system developed for the
customer and then either (i) transmits the processed and rated information to
a third party or the customer for printing and mailing or, less frequently,
(ii) prints and mails the invoice.
 
  Customers are charged a negotiated fee for utilizing the Company's service
bureaus. This fee is typically comprised of a charge per invoice produced and
a charge per call based on the amount and type of information contained in the
bill's call detail record. The Company's service bureau contracts typically
have three-year terms.
 
SALES AND MARKETING AND CUSTOMER SUPPORT
 
  Historically, the Company's sales and marketing activities were handled by a
small group of senior executives of the Company whose experience in the
telecommunications industry, coupled with Saville's reputation for providing
high-quality software solutions, resulted in "word-of-mouth" sales. More
recently, the Company has established a direct sales organization to support
the sales and marketing activities of senior executives. The Company's sales
strategy is to pursue strategic relationships with its customers through a
consultative sales process, working closely with customers to understand and
define their needs and determine how they can be addressed by the Company's
products. The Company, through ongoing sales, maintenance, training and
systems analysis activities, maintains close contact with its existing
customers in order to determine the customers' evolving requirements for
updates and enhancements to their billing systems. For new customers, the
Company generally has a lengthy sales cycle that typically requires
involvement of the Company's senior executives and systems design personnel.
 
  The Company's sales force focuses on local exchange, long distance and
wireless (cellular, satellite, paging and PCS) opportunities primarily in
North America. The Company believes that it has significant growth
opportunities outside North America due to increased deregulation and the
resulting competition in these markets. To date, the Company has primarily
pursued these opportunities through certain of its existing customers who are
expanding into other markets around the world. The Company plans to continue
to expand its sales and marketing efforts in these markets through the
expansion of its direct sales force, particularly in its Galway, Ireland
location, and through the establishment of additional strategic distribution
and marketing alliances. During 1993, 1994, 1995 and the three months ended
March 31, 1996, sales by Saville Ireland and Saville Canada represented
approximately 85.8%, 95.1%, 84.6% and 79.3%, respectively, of the Company's
total revenues. A significant portion of sales by Saville Ireland are made to
United States-based customers. United States-based customers who purchase
products from either Saville Ireland or Saville U.S. may, in turn, deploy the
products sold to them outside of the United States. See Note 11 of Notes to
Consolidated Financial Statements.
 
                                      29
<PAGE>
 
  The Company has technical support capabilities in Canada and the Republic of
Ireland. The Company is expanding its customer service and support
capabilities to provide technical support to its customers on a 24-hour per
day, 7-day per week basis. The Company believes that it is essential to
provide a high level of reliable service to customers in order to solidify
customer relationships and to be the vendor of choice when new services or
system expansions are sought by its customers.
 
  In October 1995, the Company entered into a non-binding letter of intent
with General Electric Capital Corporation ("GE Capital") to form a strategic
marketing alliance. Under the anticipated terms of the alliance, which the
Company and GE Capital are still negotiating, GE Capital and the Company would
jointly offer turnkey billing solutions to telecommunications service
providers in North America. GE Capital would provide billing fulfillment
services such as bill printing, remittance processing and recovery services.
Saville would develop, install and manage the billing software for the
alliance's customers on an exclusive basis. Both companies would provide sales
and service support. Because the Company and GE Capital are still negotiating
the terms of this alliance, there can be no assurance that they will enter
into a definitive agreement or that the alliance will be of benefit to the
Company.
 
CUSTOMERS
 
  The Company provides its software and services to a range of
telecommunications service providers, including those providing local
exchange, long distance, wireless, and audio- and video-conferencing services.
The Company's typical customers are small- to medium-sized telecommunications
service providers that require complete billing systems, and large service
providers that require the Company's software and services to support new
market expansions or as integral components of larger billing systems.
 
  During 1995 and the first three months of 1996, the Company's four largest
customers accounted for approximately 73.4% and 73.0%, respectively, of the
Company's total revenues. AT&T, Energis and Unitel each accounted for over 10%
of the Company's total revenues in 1995, and AT&T and Sprint accounted for
49.3% and 12.0%, respectively, of the Company's total revenues in the first
three months of 1996. See "Risk Factors--Reliance on Significant Customers."
 
  A description of the types of work performed and services provided by the
Company for certain of its customers follows.
 
  AT&T
 
  AT&T is the largest telecommunications company in the United States. The
Company began its relationship with AT&T in 1993 by providing domestic billing
services. The Company currently provides domestic or international billing
services to four divisions of AT&T. The Company worked with AT&T to develop
the billing system for a program designed to provide AT&T calling cards to
international telecommunications customers with direct billing to the user's
commercial credit card. The Company also developed a single feature,
inexpensive method of billing AT&T's small business customers. The Company
provides ongoing support and service for this software. The Company has also
recently developed UNIX-based billing software jointly with AT&T. See "--
Strategy" and "--Material Contracts."
 
  Ed Tel Inc. ("Ed Tel")
 
  Ed Tel is an Edmonton-based public telecommunications provider owned by
Telus Corp. The Company began designing a long distance billing system for Ed
Tel in 1982. The Company continues to provide ongoing support and maintenance
to Ed Tel. See "--Material Contracts."
 
  Energis
 
  The Company has been working with Energis since 1994, when Energis began
providing long distance services in the United Kingdom. The Company developed
a complete turnkey billing system for
 
                                      30
<PAGE>
 
Energis to support its entry into the long distance market. The Company also
provided on-site facilities management to Energis, including systems
maintenance, technical support and operational staffing. See "--Material
Contracts."
 
  Sprint
 
  In 1994, Sprint was the third largest long distance service provider in the
United States. The Company has provided domestic and international billing
services to Sprint for the past three years. For one division of Sprint, the
Company provides long distance billing systems to international subsidiaries
of Sprint and expects to continue to support Sprint's entry into certain new
international markets. For a second division, the Company implemented an
automated billing system that manages the on-demand use of video conferencing
products and services, including network usage, access fees, equipment
purchases and other charges. See "--Material Contracts."
 
  Unitel
 
  In 1992, the Company began working with Unitel, Canada's second largest long
distance carrier, to develop a billing system that would support both
residential and small business customers. The Company enhanced its base
software modules to support Unitel's entrance into the Canadian long distance
market. The Company has continued to upgrade and enhance this billing system
for Unitel since installation in order to bill for new features, such as
calling card billing, and to interface with other network technology and
operating systems. See "--Material Contracts."
 
  Frontier
 
  Frontier is a local exchange carrier located in Rochester, New York, the
first competitive local exchange market in the United States. Frontier
contracted with the Company in September 1994 to provide domestic billing
services that integrate local, long distance and cellular services on a single
invoice. Saville operates the billing system through its Toronto service
bureau under a three year agreement.
 
COMPETITION
 
  The market for telecommunications billing systems is highly competitive, and
the Company expects this competition to increase. The Company competes with
both independent providers of billing systems and services and with the
internal billing departments of telecommunications service providers. The
Company expects that the continued growth of the telecommunications industry
will encourage new competitors to enter the telecommunications billing market
in the future.
 
  The Company believes that the principal competitive factors in its market
include responsiveness to client needs, timeliness of implementation, quality
of service, price, project management capability and technical expertise. The
Company also believes that its ability to compete depends in part on a number
of competitive factors outside its control, including the development by
others of software that is competitive with the Company's services and
products, the price at which competitors offer comparable services and
products, the extent of competitors' responsiveness to customer needs and the
ability of the Company's competitors to hire, retain and motivate key
personnel.
 
  In addition, the Company competes with a number of companies that have
substantially greater financial, technical, sales, marketing and other
resources, as well as greater name recognition than the Company. As a result,
the Company's competitors may be able to adapt more quickly to new or emerging
technologies and changes in customer requirements, or to devote greater
resources to the promotion and sale of their products than can the Company.
 
PROPRIETARY RIGHTS AND LICENSES
 
  The Company does not currently hold any patents and relies upon a
combination of statutory and common law copyright, trademark and trade secret
laws to establish and maintain its proprietary rights to
 
                                      31
<PAGE>
 
its products. The Company believes that, because of the rapid pace of
technological change in the telecommunication and software industries, the
legal protections for its products are less significant factors in the
Company's success than the knowledge, ability and experience of the Company's
employees, the frequency of product enhancements and the timeliness and
quality of support services provided by the Company.
 
  The Company generally enters into confidentiality agreements with its
employees, consultants, clients and potential clients and limits access to,
and distribution of, its proprietary information. Use of the Company's
software products is usually restricted to specified locations and is subject
to terms and conditions prohibiting unauthorized reproduction or transfer of
the software products. The Company also seeks to protect the source code of
its software as a trade secret and as a copyrighted work. See "Risk Factors--
Risks Associated with Intellectual Property."
 
EMPLOYEES
 
  As of March 31, 1996, the Company employed a total of 447 employees. None of
the Company's employees is represented by a labor union. The Company has
experienced no work stoppages and believes that its employee relations are
good.
 
PROPERTIES
 
  The Company leases office space at the following locations: Galway, Toronto,
Edmonton and Burlington, Massachusetts. The Galway office is the Company's
corporate headquarters and is used for software development and customer
support. The Burlington office is primarily used for sales and marketing,
corporate development and finance. The Edmonton and Toronto locations are
primarily used for software development, customer support and service bureau
operations.
 
  The following shows information concerning the Company's leased facilities:
 
<TABLE>
<CAPTION>
    LOCATION                                    SQUARE FOOTAGE LEASE EXPIRATION
    --------                                    -------------- -----------------
<S>                                             <C>            <C>
    Galway, Ireland............................      4,000         April 1, 2004
    Burlington, Massachusetts..................      2,977     November 30, 1996
    Edmonton, Alberta..........................     38,060        April 30, 2000
    Toronto, Ontario...........................     19,626      January 31, 2005
    Toronto, Ontario...........................     42,958         June 30, 2005
</TABLE>
 
  The Company believes that its facilities are adequate for its current needs
and that suitable additional space will be available as required.
 
MATERIAL CONTRACTS
 
  The following is a summary of certain of the Company's material contracts:
 
  AT&T
 
  In January 1994, the Company entered into a five year agreement with AT&T
(the "AT&T Agreement") pursuant to which the Company licenses its existing
AS/400-based billing software to AT&T in connection with billing systems to be
provided by the Company to AT&T. Pursuant to the AT&T Agreement, the Company
has jointly developed with AT&T UNIX-based telecommunications billing
software.
 
  The AT&T Agreement provides that for each project in which AT&T utilizes the
Company's AS/400-based software, AT&T must retain the Company to install and
maintain the software. AT&T is not, however, required to license any minimum
amount of the Company's base software. To the extent AT&T hires the Company to
install its base software, AT&T must pay to the Company license and
development fees as well as other fees for the particular services provided by
the Company.
 
                                      32
<PAGE>
 
  Under the AT&T Agreement, the Company maintains its ownership interest in
the AS/400 base software licensed to AT&T, and AT&T owns any additional
applications developed specifically for AT&T. The jointly-developed UNIX
product is jointly owned by AT&T and the Company. AT&T and the Company may
also agree, prior to creation of additional applications for either platform,
that those applications will be jointly owned. The AT&T Agreement provides
AT&T and the Company the right to use the other party's technology; however,
AT&T has agreed not to license the Company's AS/400 base software and other
technology to certain of the Company's competitors specified in the AT&T
Agreement, and the Company has agreed not to license AT&T's technology to
AT&T's competitors in certain countries. Furthermore, the Company and AT&T
have each agreed not to license jointly-owned technology (including the UNIX-
based software developed by the parties) to certain of their respective
competitors as specified in the AT&T Agreement.
 
  After the initial five-year period, the AT&T Agreement will automatically
renew for two successive twelve month periods. The AT&T Agreement may be
terminated by either party upon 30 days written notice after January 1, 1996,
provided that all work then in progress must either be completed or
terminated. The AT&T Agreement may also be terminated at any time upon 45 days
notice by the non-defaulting party upon a material default by the other party.
 
  Ed Tel
 
  Pursuant to a Marketing and License Agreement between Ed Tel and the
Company, effective as of January 1, 1992, the Company licenses certain
technology from Ed Tel, which technology represents a portion of the Company's
core billing software. Saville Canada is required to pay royalties to Ed Tel
based on a percentage of the annual increase in total revenues of Saville
Canada over Saville Canada's base revenue established in 1991. The original
agreement expired on December 31, 1995. The Company has entered into a five
year extension of this agreement with royalties fixed at CDN$50,000
(approximately $37,000 at March 29, 1996) annually during the extension
period. The Company has also agreed not to provide telecommunications billing
services in Alberta to other service providers so long as the Company is
providing core processing services to Ed Tel. Ed Tel may terminate the
agreement upon 15 days notice upon a breach of the agreement by the Company.
 
  The Company has also entered into a Core Processing Agreement with Ed Tel
effective January 1, 1992, whereby the Company provides service bureau
functions, including data processing for third parties, as well as software
development and provision of licensed software to Ed Tel. Ed Tel may terminate
this agreement upon four months notice to the Company.
 
  Energis
 
  The Company has entered into an agreement with Energis whereby the Company
agreed to install the Company's billing and record keeping software on Energis
computer equipment under a perpetual and irrevocable license granted by the
Company to Energis to use such software in the United Kingdom. In addition,
the Company agreed to develop, at the request of Energis from time to time and
based on Energis' functional specifications, certain customized billing,
rating and customer interface software, which will be owned by Energis. The
Company also entered into a Support and Maintenance Agreement with Energis to
provide maintenance and support services for the software licensed and
developed thereunder. The Support and Maintenance Agreement is terminable by
Energis after January 1, 1996 by giving three months' written notice and by
the Company after October 8, 1997 by giving twelve months' written notice.
 
  Sprint
 
  The Company has entered into two agreements with entities affiliated with
Sprint. First, the Company has entered into an agreement with Sprint
Communications Company, L.P. ("Sprint Communications")
 
                                      33
<PAGE>
 
whereby the Company has developed an invoice, billing and customer interface
system for use with the video teleconferencing services provided by Sprint
Video Group, a division of Sprint, and provides certain rating, billing and
reporting services on a remote batch processing basis for Sprint's video
teleconferencing services. The Company also agreed to grant to Sprint
Communications a fully paid-up, non-exclusive license to use the Company's
base billing, rating and customer interface software for a one- time payment
of a license fee.
 
  This agreement, effective May 24, 1993, terminated by its terms on May 24,
1996. The Company is in the process of negotiating an extension to this
agreement, however, there can be no assurance that the parties will enter into
such an extension.
 
  The Company also entered into an agreement with Sprint International
Communications Corporation ("Sprint International") pursuant to which the
Company has developed and provided Sprint International with a billing system
for its affiliated non-U.S. telecommunications service providers for the long
distance market and has assisted Sprint International in operating these
systems through a service bureau arrangement. In addition, the Company has
agreed, at the request of Sprint International from time to time, to make
enhancements to the software in connection with the modifications and
supplements to the services to be provided thereunder and the extension of
services to other international markets. The Company will retain proprietary
rights in the base software and related enhancements, but has agreed not to
license the software developed specifically for Sprint International to a
third party without the prior consent of Sprint International. The Company
also granted Sprint International an option to purchase a perpetual, non-
exclusive, non-transferable license from the Company to use the Company's
software in the United Kingdom.
 
  This agreement continues until April 19, 1997 and will continue for
successive renewal terms of one year each, unless otherwise terminated by
either party upon notice given at least 90 days prior to the end of the
initial or renewal term.
 
  Unitel
 
  The Company entered into a development and support agreement with Unitel
pursuant to which the Company has developed a billing system to support both
residential and small commercial customers and created certain customer-
specific applications owned by Unitel. The parties also entered into a
software license agreement by which the Company licensed to Unitel its base
software and the documentation relating to any enhancements made pursuant to
this agreement. The development and support agreement continues until July
1998. This agreement may be terminated by Unitel if the concurrent software
license agreement between the parties is terminated, and by either party upon
a default by the other party.
 
LEGAL PROCEEDINGS
 
  The Company is not party to any legal proceedings.
 
                                      34
<PAGE>
 
                                  MANAGEMENT
 
EXECUTIVE OFFICERS AND DIRECTORS
 
  The directors and executive officers of the Company are as follows:
 
<TABLE>
<CAPTION>
              NAME                AGE                    POSITION
              ----                ---                    --------
<S>                               <C> <C>
Bruce A. Saville.................  51 Chairman of the Board of Directors
John J. Boyle, III...............  49 President, Chief Executive Officer and
                                       Director
Marc J. Venator..................  39 Chief Financial Officer
Padraig W. Kenny.................  35 Managing Director, Ireland
John J. Kiley....................  40 Senior Vice President, Sales and Marketing
Michael A. Shulist...............  40 Senior Vice President, Operations
John A. Blanchard, III...........  53 Director
Brian E. Boyle(1)................  48 Director
William F. Cunningham(1)(2)......  51 Director
Richard A. Licursi(2)............  48 Director
Fergus G. McGovern...............  67 Director
David P. Mixer(1)(2).............  44 Director
James B. Murray, Jr..............  49 Director
John W. Sidgmore.................  44 Director
</TABLE>
- --------
(1) Member of Compensation Committee.
(2) Member of Audit Committee.
 
  Mr. Saville founded the Company in 1982 and served as the Company's
President and Chief Executive Officer until becoming the Company's Chairman of
the Board of Directors in August 1994. Prior to founding the Company, Mr.
Saville served as the General Manager of Compu/Data Ltd., a computer service
bureau, from 1976 until 1982. From 1974 to 1976, Mr. Saville served as Manager
of Systems and Procedure for Northern Telephone Limited, a telephone company.
Prior to that time, Mr. Saville was a programmer and Programmer/Systems
Analyst for Goodyear Tire & Rubber Company and then for the Canada System
Group (CSG).
 
  Mr. John J. Boyle has served as the Company's President and Chief Executive
Officer since August 1994. From 1981 to August 1994, Mr. Boyle served in
various management positions with CSC Intelicom, a global supplier of
information technology, most recently as Senior Vice President of Work
Process/ Network Practice. Prior to 1981, Mr. Boyle held various management
positions with New England Telephone & Telegraph Company over the course of 14
years.
 
  Mr. Venator has been Saville's Chief Financial Officer since joining the
Company in April 1995. From March 1992 to April 1995, Mr. Venator was
Corporate Controller for Systems Software Associates, Inc., a provider of
applications software to industrial businesses worldwide. Mr. Venator served
as Manager, Corporate Financial Reporting for the Quaker Oats Company, a
manufacturer of foods, pet foods and beverages, from November 1988 to March
1992. Prior to November 1988, Mr. Venator served for three years as Manager,
Corporate Reporting of Gould, Inc., and for seven years with Coopers & Lybrand
in various audit positions.
 
  Mr. Kenny has served as Managing Director, Ireland since joining the Company
in May 1995. From March 1990 to May 1995, Mr. Kenny served in various
positions with AT&T, most recently as Project Manager of AT&T wireless
services. Prior to 1990, Mr. Kenny served for 12 years with Telecom Eireann, a
telecommunications operating company in the Republic of Ireland, most recently
as Head of Marketing in the International Division.
 
  Mr. Kiley has served as Senior Vice President, Sales and Marketing of the
Company since October 1995. From January 1994 to September 1995, Mr. Kiley
served as President and Chief Operating Officer of
 
                                      35
<PAGE>
 
Performance Software, Inc., a provider of commercial UNIX server based
automated software testing products and services. From November 1992 to
November 1993, Mr. Kiley served as Vice President, Consulting of Oracle Corp.,
a provider of systems integration, application development and consulting
services. From January 1979 to November 1992, Mr. Kiley served in a variety of
positions, including most recently Vice President Eastern Sales, with Comshare
Inc., a software provider.
 
  Mr. Shulist has served as Senior Vice President, Operations of the Company
since March 1995. From June 1991 to March 1995, Mr. Shulist served in various
positions with Unitel, a long distance provider in Canada, most recently as
Vice President of Customer and Network Maintenance. Mr. Shulist was a Director
in charge of Customer Services Development at Bell Canada, a
telecommunications company, from August 1990 to June 1991.
 
  Mr. Blanchard has been a director of the Company since December 1994. Since
May 1995, Mr. Blanchard has served as President and Chief Executive Officer of
Deluxe Corporation, a publicly-held company that manufactures banking forms.
From January 1994 through April 1995, he served as Executive Vice President of
General Instrument Corporation, a publicly-held electronics systems and
components company. From April 1991 through May 1993, Mr. Blanchard served as
Chairman and Chief Executive Officer of Harbridge Merchant Services, a
privately-held credit card processing company. Between 1965 and 1990, Mr.
Blanchard held a variety of senior executive positions with AT&T. Mr.
Blanchard is also a director of Telular Corp., a publicly-held communications
equipment manufacturing company.
 
  Mr. Brian E. Boyle has been a director of the Company since January 1995.
Since January 1994, Mr. Boyle has served in various positions and is currently
Vice Chairman of Boston Communications Group, Inc., a wireless communications
company. From July 1990 to September 1993, Mr. Boyle served as Chief Executive
Officer of Credit Technologies, Inc., a supplier of customer application
software for the cellular telephone industry. Prior to 1990, Mr. Boyle founded
and operated a number of ventures servicing the telecommunications industry,
including APPEX Corp. (now EDS Personal Communications Division, a division of
EDS Corporation, a global telecommunications service company) and Leasecomm
Corp., a micro-ticket leasing company. Mr. Boyle is also a director of several
private companies.
 
  Mr. Cunningham has been a director of the Company since March 1995. Mr.
Cunningham is a senior partner with McGovern, Hurley, Cunningham, a Toronto-
based chartered accounting firm, which he co-founded in 1984. Mr. Cunningham
is a member of the Canadian Institute of Chartered Accountants, the Canadian
Tax Foundation and the Estate Planning Council of Toronto.
 
  Mr. Licursi has been a director of the Company since December 1994. In June
1994, Mr. Licursi founded Phoenix Wireless Group, Inc., a developer of
software-based systems and services for wireless telecommunications, and
currently serves as its President and Chief Executive Officer. From November
1992 to June 1994, Mr. Licursi served as Senior Vice President of the
Worldwide Telecom Delivery Unit of SHL Systemhouse, Inc., a telecommunications
billing software provider. Mr. Licursi served as President of Abraxus
International, Inc., a telecommunications consulting company, from February
1991 to November 1992 and prior to February 1991, Mr. Licursi served as
President of Cincinnati Bell Information Systems, Inc, a telecommunications
company.
 
  Mr. McGovern has been a director of the Company since June 1995. From
January 1989 until his retirement in April 1994, Mr. McGovern was Chief
Executive Officer of Telecom Eireann, a national telecommunications operating
company in the Republic of Ireland. Mr. McGovern has also served on the
Executive Committee of the Confederation of Irish Industry, as Chairman and
President of the Irish Management Institute, as Trustee of the International
Institute of Communications and as Chairman of Cablelink, the largest cable
television company in the Republic of Ireland. He is currently a director of
the Irish Gas Board (a state-owned national gas utility) and a member of the
Board of the Graduate School of Business of University College Dublin.
 
 
                                      36
<PAGE>
 
  Mr. Mixer has been a director of the Company since April 1994. Since its
inception in March 1989, Mr. Mixer has been a Managing Director of Columbia
Capital Corporation, a Virginia-based investment services company specializing
in the telecommunications industry. Since 1988, Mr. Mixer has also been the
President of Bay Cellular, a cellular communications company. Mr. Mixer is a
member of the Board of Directors of Telular Corporation.
 
  Mr. Murray has been a director of the Company since January 1994. Since its
inception in March 1989, Mr. Murray has been a Managing Director of Columbia
Capital Corporation and since January 1995, has been a director of The
Columbia Group Incorporated. From January 1990 to January 1993, Mr. Murray was
also the President of Randolph Cellular Corp., a cellular communications
company. Mr. Murray is a member of the Board of Directors of several
privately-held telecommunications companies, including GO Communications
Corporation, Merrick Tower Corporation, Contact New Mexico, Inc. and Columbia
Spectrum Management, Inc.
 
  Mr. Sidgmore has been a director of the Company since December 1994. Since
June 1994, Mr. Sidgmore has been the President and Chief Executive Officer and
director of UUNet Technologies, Inc., a provider of worldwide internet
services. From 1989 to June 1994, Mr. Sidgmore served as President and Chief
Executive Officer of CSC Intelicom. From 1975 to 1989, Mr. Sidgmore was
employed by General Electric Information Services ("GEIS"), a provider of
telecommunications and computing services and a division of General Electric
Co., where he was Vice President and General Manager of GEIS North America.
 
  Executive officers of the Company are elected by and serve at the discretion
of the Board of Directors. There are no family relationships among any of the
executive officers or directors of the Company.
 
BOARD COMPOSITION AND COMPENSATION
 
  Under Irish company law, the Company must have a minimum of two directors.
The Company's Articles of Association set the maximum number of directors of
the Company at twelve, which number may be changed by a resolution of the
shareholders. The Company's Articles of Association divide the Company's Board
of Directors into three classes and provide that the members of each class of
Directors will serve for staggered three-year terms. The Board currently
consists of three Class I Directors (Messrs. Cunningham, Mixer and McGovern),
four Class II Directors (Messrs. Blanchard, Brian Boyle, Licursi and Sidgmore)
and three Class III Directors (Messrs. John Boyle, Murray and Saville), whose
initial terms will expire upon the election and qualification of directors at
the annual general meeting of shareholders held following the years ending
December 31, 1998, 1996 and 1997, respectively. At each annual general meeting
of shareholders, directors will be reelected or elected for a full term of
three years to succeed those directors whose terms are expiring.
 
  The Board of Directors has established an Audit Committee and a Compensation
Committee. The Audit Committee oversees actions taken by the Company's
independent auditors, recommends the engagement of auditors and reviews any
internal audits the Company may perform. The current members of the Audit
Committee are Messrs. Cunningham, Licursi and Mixer. The Compensation
Committee approves the compensation of executives of the Company, makes
recommendations to the Board of Directors with respect to standards for
setting compensation levels and administers the Company's 1995 Share Option
Plan. The current members of the Compensation Committee are Messrs. Brian
Boyle, Cunningham and Mixer.
 
  Non-employee directors receive $1,000 per meeting attended for their
services as members of the Board of Directors and are reimbursed for their
expenses in attending Board and Committee meetings. Directors who serve on the
Audit Committee or Compensation Committee receive $500 for each such committee
meeting attended. In 1995, each of the Company's current non-employee
directors (other than Messrs. Cunningham, McGovern, Mixer and Murray) was
granted an option to purchase 20,806 Ordinary
 
                                      37
<PAGE>
 
Shares at an exercise price of $2.40 per share. Additional options may be
granted to members of the Board of Directors in the future under the Company's
1995 Share Option Plan. See "--Share Options" and Note 8 of Notes to
Consolidated Financial Statements.
 
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
  The current members of the Compensation Committee are Messrs. Brian Boyle,
Cunningham and Mixer. During 1994 and part of 1995, Mr. John Boyle, the
Company's President and Chief Executive Officer since August 1994, served on
the Company's Compensation Committee. Mr. John Boyle ceased to serve on the
Compensation Committee in June 1995.
 
EXECUTIVE COMPENSATION
 
  Summary Compensation Table. The following table sets forth certain
information relating to compensation earned by the Company's Chief Executive
Officer and each of its other executive officers whose compensation exceeded
$100,000 for the year ended December 31, 1995 (the "Named Executive
Officers"):
 
                          SUMMARY COMPENSATION TABLE
 
<TABLE>
<CAPTION>
                                                         LONG-TERM
                              ANNUAL COMPENSATION(1)  COMPENSATION(2)
                             ------------------------ ---------------
                                                        SECURITIES
                                                        UNDERLYING        ALL OTHER
NAME AND PRINCIPAL POSITION    SALARY($)    BONUS($)    OPTIONS(#)    COMPENSATION($)(3)
- ---------------------------  ------------- ---------- --------------- ------------------
<S>                          <C>  <C>      <C>        <C>             <C>
Bruce A. Saville(4)......    1995 $200,000 $      --       23,095          $   --
 Chairman of the Board of    1994  266,667  1,376,839         --            13,403
 Directors and Former
 President and Chief
 Executive Officer
John J. Boyle, III(5)....    1995  214,000    160,500     371,684              --
 President and Chief         1994  129,462     50,000     150,490            2,123
 Executive Officer
Marc J. Venator(6).......    1995  102,116     30,082     180,940           21,574
 Chief Financial Officer
Michael A. Shulist(4)(7).    1995   91,832     27,456     133,228            1,184
</TABLE>
- --------
(1) In accordance with the rules of the Securities and Exchange Commission,
    other compensation in the form of perquisites and other personal benefits
    has been omitted because such perquisites and other personal benefits
    constituted less than the lesser of $50,000 or ten percent of the total
    annual salary and bonus reported for the executive officer during the
    years reported.
(2) The Company did not grant any restricted stock awards or stock
    appreciation rights during the years reported. The Company does not have
    any long term incentive plan.
(3) Consists of amounts paid by the Company for automobile lease payments in
    the case of Messrs. Saville and Shulist. Consists of amounts paid by the
    Company for insurance premiums in the case of Mr. Boyle. Consists of
    amounts paid by the Company for relocation expenses in the case of Mr.
    Venator.
(4) Amounts reflected in this section have been converted into U.S. dollars at
    the conversion ratio in effect on December 29, 1995 as reported in the New
    York Times on that date (US$1.00 = CDN$1.36 equivalent to
    CDN$1.00 = US$0.73).
(5) Mr. Boyle joined the Company in August 1994. See "--Employment
    Agreements."
(6) Mr. Venator joined the Company in April 1995. See "--Employment
    Agreements."
(7) Mr. Shulist joined the Company in March 1995. See "--Employment
    Agreements."
 
                                      38
<PAGE>
 
  Option Grants. The following table provides information on option grants
made during the year ended December 31, 1995 to the Named Executive Officers:
<TABLE>
<CAPTION>
                                                                              POTENTIAL
                                                                             REALIZABLE
                                                                          VALUE AT ASSUMED
                                                                            ANNUAL RATES
                                                                              OF SHARE
                                                                                PRICE
                                                                          APPRECIATION FOR
                                        INDIVIDUAL GRANTS                  OPTION TERM(1)
                         ----------------------------------------------- -------------------
                                                    EXERCISE
                                      % OF TOTAL    PRICE PER
                          OPTIONS   OPTIONS GRANTED ORDINARY  EXPIRATION
 NAME                    GRANTED(#)  TO EMPLOYEES   SHARE($)     DATE       5%       10%
 ----                    ---------- --------------- --------- ---------- -------- ----------
<S>                      <C>        <C>             <C>       <C>        <C>      <C>
Bruce A. Saville........   23,095         1.3%       $ 8.66      9/1/05  $125,781 $  318,753
John J. Boyle, III......  166,450         9.5          2.40      1/1/00   110,513    244,204
                          129,734         7.4          8.66      9/1/05   706,561  1,790,564
                           75,000         4.3         10.00    11/21/00   207,211    457,883
                              500         --          10.00    12/21/95        21         41
Marc J. Venator.........   41,612         2.4          2.40      1/1/00    27,628     61,050
                          101,328         5.8          8.66      9/1/05   551,855  1,398,510
                           37,500         2.1         10.00    11/21/00   103,606    228,941
                              500         --          10.00    12/21/95        21         41
Michael A. Shulist......   41,612         2.4          2.40      1/1/00    27,628     61,050
                           53,616         3.1          8.66      9/1/05   292,005    739,998
                           37,500         2.1         10.00    11/21/00   103,606    228,941
                              500         --          10.00    12/21/95        21         41
</TABLE>
 
                     OPTION GRANTS DURING FISCAL YEAR 1995
 
- --------
(1) This column shows the hypothetical gains or option spreads of the options
    granted based on the fair market value of the Ordinary Shares on the date
    of grant and assumed annual compound share appreciation rates of 5% and
    10% over the term of the options. The assumed rates of appreciation are
    mandated by the rules of the Securities and Exchange Commission and do not
    represent the Company's estimate or projection of future share prices.
    Actual gains, if any, on option exercises are dependent on the timing of
    such exercise and the future performance of the Company's ADSs. There can
    be no assurance that the rates of appreciation assumed in this table can
    be achieved. Values shown are net of the option exercise price, but do not
    include deductions for taxes or other expenses associated with the
    exercise.
 
  Option Exercises and Unexercised Option Holdings. The following table
provides information regarding certain option exercises and unexercised share
options held as of December 31, 1995 by each of the Named Executive Officers:
 
             AGGREGATE OPTION EXERCISES AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
                                                             ORDINARY SHARES        VALUE OF UNEXERCISED
                                                         UNDERLYING UNEXERCISED         IN-THE-MONEY
                                                         OPTIONS AT YEAR-END(#)   OPTIONS AT YEAR-END($)(2)
                                                        ------------------------- -------------------------
                            ORDINARY
                             SHARES
                            ACQUIRED         VALUE
 NAME                    ON EXERCISE(#) REALIZED ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
 ----                    -------------- --------------- ----------- ------------- ----------- -------------
<S>                      <C>            <C>             <C>         <C>           <C>         <C>
Bruce A. Saville........        0           $    0              0       23,095    $        0   $  129,101
John J. Boyle, III(3)...      500            2,063        156,756      364,918     1,513,676    3,394,379
Marc J. Venator.........      500            2,063         25,000      155,440       106,250    1,112,651
Michael A Shulist.......      500            2,063         25,000      107,728       106,250      845,941
</TABLE>
 
- --------
(1) The values in this column represent the last reported sale price of the
    Company's ADSs on the Nasdaq National Market on the exercise date
    (December 21, 1995), $14.125, less the respective option exercise price.
(2) The values in this column represent the last reported sale price of the
    Company's ADSs on the Nasdaq National Market on December 29, 1995, $14.25,
    less the respective option exercise price.
(3) Shares exercisable include 56,593 shares which became exercisable on
    January 1, 1996.
 
EMPLOYMENT AGREEMENTS
 
  The Company has entered into the following employment agreements with the
Named Executive Officers:
 
  The Company is a party to an employment agreement with Mr. Saville for the
three year period ending August 2, 1997. Pursuant to the agreement, Mr.
Saville serves as the Chairman of the Board of Directors of the Company and is
entitled to receive an initial annual base salary of $200,000, subject to
 
                                      39
<PAGE>
 
adjustment, in the discretion of the Board of Directors, based upon a
consideration of Mr. Saville's individual performance and the overall
performance of the Company. The Company may terminate Mr. Saville's employment
only for cause.
 
  The Company is also a party to an employment agreement with Mr. Boyle for
the three year period ending August 7, 1997. Pursuant to the agreement, Mr.
Boyle serves as the Chief Executive Officer of the Company and is entitled to
receive an initial annual base salary of $200,000, subject to cost-of-living
adjustments after the first year. In addition to his base salary, Mr. Boyle is
eligible to receive an incentive bonus of up to 75% of his base salary at the
end of each calendar year during the term of the agreement and at the
expiration of the agreement. The amount of any such bonus is dependent upon
Mr. Boyle's individual performance and the overall performance of the Company,
as determined by the Board of Directors of the Company.
 
  Pursuant to Mr. Boyle's agreement, the Company agreed to grant Mr. Boyle
non-statutory share options to purchase the number of Ordinary Shares
described below within 60 days of the end of calendar years 1994, 1995 and
1996 and within 60 days after the termination of the agreement. The number of
Ordinary Shares subject to each option to be granted to Mr. Boyle on each of
such dates is determined by dividing (i) three times the sum of Mr. Boyle's
base salary and bonus during the relevant period by (ii) the market price of
the Ordinary Shares on the date of grant. Such options are exercisable at a
price per share equal to the fair market value of the Ordinary Shares on the
date of grant. Pursuant to this formula, at the end of calendar year 1994, Mr.
Boyle was granted an option to purchase 166,450 Ordinary Shares at an exercise
price of $2.40 per Ordinary Share and, in lieu of his grant within 60 days of
the end of 1995, has been granted an option to purchase 129,734 Ordinary
Shares at an exercise price of $8.66 per share.
 
  In addition, Mr. Boyle's agreement required him to purchase 80,460 Ordinary
Shares at a purchase price per share of $2.49. Saville U.S. loaned Mr. Boyle
$100,000 of the purchase price on a full recourse basis with interest accruing
at the Prime Rate as established by Chase Manhattan Bank, with the principal
due on the last day of the term of the agreement. Mr. Boyle pledged the shares
as security for such loan. If Mr. Boyle's employment with the Company is
terminated for cause (as defined in the agreement) or if Mr. Boyle resigns
prior to the expiration of the term of the agreement, the Company may, subject
to applicable law, repurchase all Ordinary Shares of the Company held by Mr.
Boyle at a price equal to Mr. Boyle's purchase price paid for those shares. If
Mr. Boyle's employment is terminated other than for cause, or upon Mr. Boyle's
resignation, the Company may repurchase such shares at their then fair market
value.
 
  The Company may terminate Mr. Boyle's employment at any time with or without
cause. In the event the Company terminates Mr. Boyle's employment without
cause, if Mr. Boyle resigns or if Mr. Boyle's duties are materially diminished
such that his ability to function as Chief Executive Officer is impaired, he
is eligible to receive the amount of his salary and the maximum bonus payment
to which he would have been entitled to receive for the lesser of (i) one year
or (ii) the remainder of his employment term. Such payment shall be made in
equal monthly installments over the period during which Mr. Boyle would be
entitled to receive such payments if still employed by the Company.
 
  The Company has also entered into employment agreements with Messrs. Venator
and Shulist. Pursuant to these agreements, the Company is obligated to pay a
base salary of $150,000 and CDN $160,000 (approximately $118,400 at March 29,
1996) to Messrs. Venator and Shulist, respectively. In addition, each of
Messrs. Venator and Shulist is entitled to receive a year-end bonus based on a
combination of individual and Company performance. Upon joining the Company,
Messrs. Venator and Shulist were each granted an option to purchase 41,612
Ordinary Shares at an exercise price of $2.40 per share. The Company may
terminate the employment of Messrs. Venator and Shulist with or without cause.
If the Company terminates the employment of either executive without cause
during the first two years of his employment, the Company must pay such
executive an amount equal to his salary for the lesser of (i) one year or (ii)
the number of months remaining in the first two years of such executive's
employment.
 
 
                                      40
<PAGE>
 
SHARE OPTIONS
 
  1995 Share Option Plan. The Company's 1995 Share Option Plan (the "1995
Option Plan") was adopted by the Board of Directors in August 1995 and
approved by the shareholders of the Company in September 1995. The 1995 Option
Plan provides for the grant of options to purchase Ordinary Shares to
employees, officers and directors of, and consultants and advisers to, the
Company and its subsidiaries. Under the 1995 Option Plan, the Company may
grant options that are intended to qualify as incentive stock options within
the meaning of Section 422 of the United States Internal Revenue Code of 1986,
as amended (the "Code") ("incentive stock options"), or options not intended
to qualify as incentive stock options ("non-statutory options"). Incentive
stock options may only be granted to employees of the Company. A total of
2,980,000 Ordinary Shares may be issued upon the exercise of options granted
under the 1995 Option Plan. The maximum number of shares with respect to which
options may be granted to any employee under the 1995 Option Plan shall not
exceed 223,500 Ordinary Shares during any calendar year.
 
  The 1995 Option Plan is administered by the Compensation Committee of the
Board of Directors. Subject to the provisions of the 1995 Option Plan, the
Compensation Committee has the authority to select the employees to whom
options are granted and determine the terms of each option, including (i) the
number of Ordinary Shares subject to the option, (ii) when the option becomes
exercisable, (iii) the option exercise price, which, in the case of incentive
stock options, must be at least 100% (110% in the case of incentive stock
options granted to a shareholder owning in excess of 10% of the Company's
Ordinary Shares) of the fair market value of the Ordinary Shares as of the
date of grant, and (iv) the duration of the option (which, in the case of
incentive stock options, may not exceed ten years).
 
  Payment of the option exercise price may be made in cash (or by delivery of
a promissory note payable on terms specified by the Compensation Committee) in
a manner consistent with Section 422 of the Code and Rule 16b-3 ("Rule 16b-3")
under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Options are not assignable or transferable except by will or the laws of
descent and distribution and, in the case of non-statutory options, pursuant
to a qualified domestic relations order (as defined in the Code).
 
  As of March 31, 1996, the Company had 447 employees, all of whom were
eligible to participate in the 1995 Option Plan. As of March 31, 1996, options
to purchase an aggregate of 1,144,851 Ordinary Shares had been granted and
were outstanding under the 1995 Option Plan.
 
  The Compensation Committee may, in its sole discretion, include additional
provisions in any option or award granted or made under the 1995 Option Plan,
including without limitation restrictions on transfer, repurchase rights,
commitments to pay cash bonuses, to make, arrange for or guaranty loans or to
transfer other property to optionees upon exercise of options, or such other
provisions as shall be determined by the Compensation Committee, so long as
not inconsistent with the 1995 Option Plan or applicable law. The Compensation
Committee may also, in its sole discretion, accelerate or extend the date or
dates on which all or any particular option or options granted under the 1995
Option Plan may be exercised.
 
  Other Option Grants. Prior to adopting the 1995 Option Plan, the Company
granted options to purchase 691,448 shares to certain of its officers and
directors at a weighted average exercise price of $2.25 per share, all of
which are currently exercisable.
 
  1996 Employee Share Purchase Plan. The Company's 1996 Employee Share
Purchase Plan (the "1996 Purchase Plan") was adopted by the Board of Directors
in March 1996 and approved by the shareholders in April 1996. The 1996
Purchase Plan authorizes the issuance of up to an aggregate of 1,000,000
Ordinary Shares to participating employees.
 
                                      41
<PAGE>
 
  The 1996 Purchase Plan is administered by the Compensation Committee of the
Board of Directors which is authorized to decide questions of eligibility and
to make rules and regulations for the administration and interpretation of the
1996 Purchase Plan. With certain exceptions, all employees employed by the
Company prior to the applicable offering commencement date are eligible to
participate in the 1996 Purchase Plan. As of March 31, 1996, the Company had
approximately 447 eligible employees. Directors who are not employees of the
Company are not eligible to participate in the 1996 Purchase Plan.
 
  The Company will make one or more offerings ("Offerings") to employees to
purchase Ordinary Shares under the 1996 Purchase Plan. During each Offering,
the maximum number of shares which may be purchased by a participating
employee will be determined on the first day of the Offering period. In any
event, no employee may receive Ordinary Shares in any calendar year period
that are valued in excess of $25,000, as determined on the first day of the
applicable Offering period or Offering periods. An employee may elect to have
up to 10% deducted from his or her regular salary for the purpose of acquiring
shares under the 1996 Purchase Plan. The price at which an employee's option
is exercised is the lower of (i) 85% of the average of the closing price of
the ADSs on the Nasdaq National Market on the five trading days immediately
preceeding the day that the Offering commences or (ii) 85% of the average of
the closing price of the ADSs on the Nasdaq National Market on the five
trading days immediately preceding the day that the Offering terminates.
 
                             CERTAIN TRANSACTIONS
 
RELATED PARTY LOANS
 
  Between 1990 and 1994, Pro/38 Inc., a Canadian corporation wholly owned by
the family of Bruce A. Saville, Chairman of the Board of the Company, loaned
varying amounts to Saville Systems Canada, Ltd. ("Saville Canada"), which were
repaid from time to time. In August 1994, the outstanding balance of this loan
was converted to a CDN$250,000 (approximately $185,000 at March 29, 1996) term
loan, bearing interest at a variable rate based on the Prime Rate as
established by Chase Manhattan Bank, which is due June 1, 1997. The
outstanding balance of this note was repaid with the proceeds of the Company's
initial public offering in November 1995.
 
  Throughout 1991 and 1992, The InVoice Group, Inc., a Virginia corporation
affiliated with Columbia Saville Investors, L.P. and Columbia Saville Ireland
Investors, L.P., both significant shareholders of the Company, loaned to
Invoice Systems, Inc., the predecessor entity to Saville Systems U.S., Inc.
("Saville U.S."), an aggregate of $559,600, $300,000 of which bore interest at
the federal short term borrowing rate and $259,600 of which bore interest at a
fixed rate of 20%. James B. Murray, Jr. and David P. Mixer, both directors of
the Company, are limited partners of Columbia Saville Investors, L.P. and
Columbia Saville Ireland Investors, L.P. and are shareholders of Columbia
Capital Corporation, the general partner of Columbia Saville Investors, L.P.
The principal and interest of this debt were forgiven by the lender as
described below.
 
  In June 1992, advances were made by Mr. Saville to Saville Canada for
working capital purposes, the outstanding balance of which aggregated
approximately CDN$125,000 (approximately $92,500 at March 29, 1996) at
December 31, 1992. This indebtedness had no fixed terms of repayment, did not
bear interest and was repaid in full by June 30, 1993.
 
  In April 1993, Saville U.S. was capitalized with a contribution of $90,000
by Invoice Systems (Canada), Inc., a Canadian corporation controlled by Mr.
Saville, a contribution of $60,000 by The InVoice Group, Inc. and the
forgiveness of approximately $651,000 of principal and interest owed by
Invoice Systems, Inc. to The InVoice Group, Inc.
 
                                      42
<PAGE>
 
  In June 1993, advances were made by Mr. Saville to Saville Canada for
working capital purposes, the outstanding balance of which aggregated
approximately $222,000 at December 31, 1993. This indebtedness had no fixed
terms of repayment, did not bear interest and was repaid by December 31, 1994.
 
  Pursuant to a shareholders' agreement made in August 1994, certain
shareholders of the Company were committed to loan the Company up to
$2,000,000 on a pro rata basis when and as called upon by the Company's Board
of Directors. No funds were requested by the Company under this agreement. In
connection with this agreement, Grannarville Interest Group Inc.
("Grannarville"), a Canadian company majority-owned by Mr. Saville, loaned
Saville Canada $500,000 pursuant to a note due August 1, 1997 and bearing
interest at a variable rate based on the Prime Rate as established by Chase
Manhattan Bank. $200,000 of this note was repaid in September 1995 and the
remainder was repaid in November 1995.
 
TRANSACTIONS WITH COLUMBIA CAPITAL CORPORATION AND ITS AFFILIATES
 
  In April 1993, Invoice Systems (Canada), Inc. sold a portion of its interest
in Saville Canada to 2916746 Canada Inc., a Canadian corporation affiliated
with Columbia Saville Investors, L.P.
 
  In August 1994, Columbia Saville Investors, L.P. purchased from Invoice
Systems (Canada), Inc. a portion of the shares of the Company. Approximately
one-half of the purchase price for these shares was paid in cash and the
remainder was financed by a note payable to Invoice Systems (Canada), Inc.
This note was guaranteed by a pledge of the shares purchased by Columbia
Saville Investors, L.P. to Invoice Systems (Canada), Inc.
 
  In August 1994, for an aggregate purchase price of approximately $157,418,
Invoice Systems (Canada), Inc. sold Columbia Capital Corporation, the general
partner of Columbia Saville Investors, L.P., and eight individuals affiliated
with Columbia Capital Corporation, an option to purchase, in the aggregate,
1,490,000 Ordinary Shares of the Company at an exercise price of $2.01 per
share multiplied by a factor designed to account for the period of time
elapsed since the grant. This option was exercised in full in September 1995
for an aggregate exercise price of approximately $3,510,410.
 
  In August 1994, Columbia Saville Investors, L.P. granted to Shawmut National
Ventures Corporation, a shareholder of the Company, an option to purchase
84,930 Ordinary Shares at an aggregate exercise price of $52,472.50 multiplied
by a factor designed to account for the period of time elapsed since the
grant. Shawmut National Ventures Corporation paid to Columbia Saville
Investors, L.P. approximately $157,418 in consideration of the grant of the
option. This option was exercised immediately after the closing of the
Company's initial public offering in November 1995.
 
  In its capacity as an underwriter in the Company's initial public offering,
The Columbia Group Incorporated (the "Columbia Group") purchased an aggregate
of 230,000 ADSs pursuant to an Underwriting Agreement among the Company and
the underwriters of the initial public offering. Following this offering,
approximately 40.4% of the Company's outstanding Ordinary Shares will be held
by affiliates of the Columbia Group. In addition, James B. Murray, Jr. and
David P. Mixer, directors of the Company, are shareholders of the Columbia
Group, and Mr. Murray is a director of the Columbia Group. See "Principal and
Selling Shareholders" and "Underwriting."
 
  On November 8, 1995, Columbia Saville Ireland Investors, L.P., Columbia
Saville Investors, L.P., Columbia Capital Corporation and certain individuals
associated with such entities agreed, pursuant to a stock purchase agreement,
to sell an aggregate of 750,000 Ordinary Shares to certain unaffiliated third
parties at a price per share of $10.00.
 
                                      43
<PAGE>
 
OTHER TRANSACTIONS
 
  In April 1993, Saville U.S. paid Oliver Bush, the former President of
Saville U.S., approximately $100,000, net of expenses, in settlement of
certain disputes and obligations. At the same time, Saville Canada contracted
with Qolus Financial Corporation ("Qolus"), a Canadian company (a majority of
which was owned by Mr. Bush), to provide consulting services to Saville
Canada. Over a twelve month period, Saville Canada paid Qolus approximately
$174,000 for such services. In June 1994, Saville Canada, Saville U.S.,
shareholders of both of those entities, Qolus and Mr. Bush terminated this
consulting agreement and certain options which had been granted to Mr. Bush by
affiliates of Columbia Saville Investors, L.P. to purchase shares of the
Company. $740,000 was paid by the Company and $25,000 was paid by Columbia
Saville Investors, L.P. to Qolus and Mr. Bush in connection with the
termination of these options and Mr. Bush's affiliation with the Company.
 
  Dale Saville, Mr. Saville's wife, served as Vice President of Administration
and Finance of the Company from 1985 to December 1994 and, at the time of the
termination of her employment, was paid an annual salary of CDN$81,600
(approximately $60,384 at March 29, 1996). In 1995, Saville Canada paid
CDN$85,900 (approximately $63,566 at March 29, 1996) to Dalgran Systems Group,
Inc., a Canadian company owned by Dale Saville, for consulting services
relating to Ms. Saville's responsibilities as Vice President of Administration
and Human Resources.
 
  During the period January 1, 1992 to September 30, 1995, the Company paid
fees of CDN$69,700 (approximately $51,578 at March 29, 1996) to M.H.C.
Financial Consultants Ltd. for consulting services and CDN$75,000
(approximately $55,500 at March 29, 1996) to McGovern, Hurley, Cunningham for
accounting services. William F. Cunningham, a chartered accountant with an
approximately 23% ownership interest in each of M.H.C. Financial Consultants
and McGovern, Hurley, Cunningham, is a director of the Company.
 
  The Company has entered into employment agreements with each of Padraig W.
Kenny and John J. Kiley, executive officers of the Company. Pursuant to these
agreements, the Company is obligated to pay a base salary of IR(Pounds) 65,000
(approximately $102,050 at March 29, 1996) and $150,000 to Messrs. Kenny and
Kiley, respectively. In addition, each of these executive officers is entitled
to receive a year-end bonus based on a combination of individual and Company
performance. Upon joining the Company, Mr. Kiley was granted an option to
purchase 100,000 Ordinary Shares at an exercise price of $10.00 per share. The
Company may terminate the employment of these executives with or without
cause, subject, in the case of Mr. Kenny, to certain limitations imposed by
Irish law. In the case of Mr. Kiley, if the Company terminates such employment
without cause during the first two years of employment, the Company must pay
an amount equal to such executive's salary for the lesser of (i) one year or
(ii) the number of months remaining in the first two years of his employment.
 
  In September 1995, the Company paid a dividend of $3.0 million to the
shareholders of the Company, which it determined to pay primarily due to the
incurrence of certain tax liabilities by its majority shareholders as a result
of their ownership interests in the Company and the Company's classification
at that time as a "Controlled Foreign Corporation." See "Dividend Policy" and
"Taxation."
 
  The Company believes that the terms of the foregoing transactions involving
the Company were no less favorable to the Company than could have been
obtained from unaffiliated third parties. All future transactions between the
Company and its officers, directors and affiliates will be on terms no less
favorable to the Company than could be obtained from unrelated third parties
and will be approved by a majority of the Board of Directors and by a majority
of the disinterested members of the Company's Board of Directors.
 
                                      44
<PAGE>
 
                      PRINCIPAL AND SELLING SHAREHOLDERS
 
  The following table sets forth certain information regarding the beneficial
ownership of the Company's Ordinary Shares as of June 15, 1996 and as adjusted
to reflect the sale of the ADSs offered hereby by (i) each person known by the
Company to be the beneficial owner of more than 5% of the outstanding Ordinary
Shares, (ii) each director and Named Executive Officer of the Company, (iii)
each Selling Shareholder and (iv) all directors and executive officers of the
Company as a group. Unless otherwise indicated, the persons named in this
table have sole voting and sole investment power with respect to all shares
shown as beneficially owned, subject to community property laws where
applicable.
 
<TABLE>
<CAPTION>
                                      SHARES                       SHARES
                                   BENEFICIALLY                 BENEFICIALLY
                                  OWNED PRIOR TO               OWNED AFTER THE
                                    OFFERING(1)      SHARES      OFFERING(1)
                                 -----------------   BEING    -----------------
   NAME OF BENEFICIAL OWNER       NUMBER   PERCENT OFFERED(2)  NUMBER   PERCENT
   ------------------------      --------- ------- ---------- --------- -------
<S>                              <C>       <C>     <C>        <C>       <C>
OFFICERS, DIRECTORS AND 5%
 SHAREHOLDERS:
Bruce A. Saville(3)............  1,750,394  10.0%    468,915  1,281,479   7.3%
 Saville Systems PLC
 4445 Calgary Trail
 Edmonton, AB
 Canada, T6H 5R7
David P. Mixer(4)..............  1,590,714   9.1%      2,969  1,587,745   9.0%
James B. Murray, Jr.(4)........  1,590,714   9.1%      2,969  1,587,745   9.0%
Mark Warner(4).................  1,590,714   9.1%      2,969  1,587,745   9.0%
Robert Blow(4).................  1,513,189   8.6%      2,825  1,510,364   8.5%
Columbia Capital
 Corporation(5)................  1,328,428   7.6%  1,328,428          0    *
 201 N. Union St.
 Alexandria, VA 22314
John J. Boyle, III(6)..........    478,319   2.7%     60,804    417,515   2.3%
Marc J. Venator(7).............     82,433    *       18,375     64,058    *
Michael A. Shulist(8)..........     81,839    *       13,546     68,293    *
Padraig W. Kenny(9)............     40,375    *        8,687     31,688    *
John A. Blanchard, III(10).....     20,806    *            0     20,806    *
Brian E. Boyle(11).............     20,806    *            0     20,806    *
William F. Cunningham(10)......     20,806    *            0     20,806    *
Richard A. Licursi(10).........     20,806    *            0     20,806    *
Fergus G. McGovern(10).........     20,806    *            0     20,806    *
John W. Sidgmore(10)...........     20,806    *            0     20,806    *
All officers and directors as a
 group (14 persons)(12)........  7,068,052  38.6%  1,904,695  5,163,357  28.1%

OTHER SELLING SHAREHOLDERS:
Mark Kington(4)................    769,181   4.4%      1,436    767,745   4.3%
Fleet Growth Resources, Inc. ..    655,780   3.7%    175,969    479,811   2.7%
Applewood Associates, L.P.(13).    200,000   1.1%     80,000    120,000    *
Woodland Venture, L.P.(14).....    100,000    *       40,000     60,000    *
Andrew Dong(15)................     77,531    *        9,429     68,102    *
Ronald Howe(15)................     75,207    *        9,196     66,011    *
Stuart Palace(15)..............     72,301    *        8,906     63,395    *
Glenn Pociluyko(15)............     71,901    *        8,866     63,035    *
Seneca Venture, L.P.(16).......     70,000    *       28,000     42,000    *
R. Philip Herget(4)............     41,244    *           77     41,167    *
Barton Schneider(4)............     41,244    *        5,283     35,961    *
</TABLE>
 
                                      45
<PAGE>
 
<TABLE>
<CAPTION>
                                       SHARES                     SHARES
                                    BENEFICIALLY               BENEFICIALLY
                                   OWNED PRIOR TO            OWNED AFTER THE
                                    OFFERING(1)     SHARES     OFFERING(1)
                                   --------------   BEING    ------------------
     NAME OF BENEFICIAL OWNER      NUMBER PERCENT OFFERED(2) NUMBER    PERCENT
     ------------------------      ------ ------- ---------- --------- --------
<S>                                <C>    <C>     <C>        <C>       <C>
Neil P. Byrne(4).................. 24,964    *          47      24,917     *
Kuwait Middle East Financial
 Investment Company(17)........... 10,000    *      10,000           0     *
KME Ventures III, L.P.(18)........ 10,000    *      10,000           0     *
Harry Hopper(4)...................  6,328    *         811       5,517     *
Mark McCormack(19)................  4,523    *       1,493       3,030     *
</TABLE>
- --------
 * Represents less than 1% of the total.
(1) The number of Ordinary Shares outstanding prior to this offering includes
    (i) 17,576,406 Ordinary Shares outstanding as of June 15, 1996 and (ii)
    shares issuable by the Company pursuant to options held by the respective
    person or group which may be exercised within 60 days after June 15, 1996
    ("Presently Exercisable Options"). The number of Ordinary Shares deemed
    outstanding after this offering includes an additional 100,000 Ordinary
    Shares which are being offered for sale by the Company in this offering.
    Beneficial ownership is determined in accordance with rules of the
    Securities and Exchange Commission that deem shares to be beneficially
    owned by any person who has or shares voting or investment power with
    respect to such shares. Presently Exercisable Options are deemed to be
    outstanding and to be beneficially owned by the person or group holding
    such options for the purpose of computing the percentage ownership of such
    person or group but are not treated as outstanding for the purpose of
    computing the percentage ownership of any other person or group.
(2) If the Underwriters exercise their over-allotment option to purchase up to
    360,000 ADSs, then the following shareholders named in the table above
    will sell up to the following number of additional ADSs: Invoice Systems
    (Canada), Inc., 74,120 shares; Mr. Mixer, 47,317 shares; Mr. Murray,
    47,317 shares; Mr. Warner, 47,317 shares; Mr. Blow, 45,010 shares; Mr.
    John Boyle, 9,611 shares; Mr. Venator, 2,905 shares; Mr. Shulist, 2,141
    shares; Mr. Kenny, 1,373 shares; Mr. Kington, 22,879 shares; Fleet Growth
    Resources, Inc., 27,815 shares; Applewood Associates, L.P., 12,400 shares;
    Woodland Venture, L.P., 6,200 shares; Mr. Dong, 1,490 shares; Mr. Howe,
    1,454 shares; Mr. Palace, 1,408 shares; Mr. Pociluyko, 1,401 shares;
    Seneca Venture, L.P., 4,400 shares; Mr. Herget, 1,227 shares; Mr.
    Schneider, 1,072 shares; Mr. Byrne, 743 shares; Mr. Hopper, 164 shares;
    and Mr. McCormack, 236 shares.
(3) Includes 2,894 shares issuable pursuant to Presently Exercisable Options
    and 1,747,500 shares owned of record by Invoice Systems (Canada), Inc. Mr.
    Saville indirectly owns 94.68% of the voting securities of Invoice Systems
    (Canada), Inc., and the remainder of such securities are held by certain
    employees of the Company and a trust of which Mr. Saville and his wife are
    co-trustees.
(4) Excludes shares held by Columbia Capital Corporation. Messrs. Blow,
    Kington, Mixer, Murray and Warner are officers, directors and stockholders
    of Columbia Capital Corporation and may be deemed to beneficially own such
    shares. Messrs. Byrne, Herget, Hopper and Schneider are employees of
    Columbia Capital Corporation. Each of Messrs. Blow, Byrne, Herget, Hopper,
    Kington, Mixer, Murray, Schneider and Warner disclaims beneficial
    ownership of the shares held by Columbia Capital Corporation, except to
    the extent of such individual's direct pecuniary interest therein.
(5) Messrs. Blow, Kington, Mixer, Murray and Warner are officers, directors
    and stockholders of Columbia Capital Corporation and may be deemed to
    beneficially own these shares. Each of Messrs. Blow, Kington, Mixer,
    Murray and Warner disclaims beneficial ownership of the shares owned by
    Columbia Capital Corporation, except to the extent of such individual's
    direct pecuniary interest therein. Excludes shares held by Messrs. Blow,
    Byrne, Herget, Hopper, Kington, Mixer, Murray, Schneider and Warner, who
    are employees of Columbia Capital Corporation, and as to whose shares
    Columbia Capital Corporation disclaims beneficial ownership.
(6) Includes 397,359 shares issuable pursuant to Presently Exercisable
    Options. Does not include 129,734 shares issuable upon the exercise of
    options not exercisable within 60 days of June 15, 1996.
(7) Includes 81,933 shares issuable pursuant to Presently Exercisable Options,
    some of which will be exercised in connection with this offering. Does not
    include 101,328 shares issuable upon the exercise of options not
    exercisable within 60 days of June 15, 1996.
(8) Includes 81,339 shares issuable pursuant to Presently Exercisable Options,
    some of which will be exercised in connection with this offering. Does not
    include 53,616 shares issuable upon the exercise of options not
    exercisable within 60 days of June 15, 1996.
(9) Includes 39,875 shares issuable pursuant to Presently Exercisable Options,
    some of which will be exercised in connection with this offering. Does not
    include 46,494 shares issuable upon the exercise of options not
    exercisable within 60 days of June 15, 1996.
(10) Comprised solely of shares issuable pursuant to Presently Exercisable
     Options
(11) Comprised solely of shares issuable pursuant to Presently Exercisable
     Options that are held in trust for the benefit of Mr. Boyle's children.
     Mr. Boyle disclaims beneficial ownership of these shares.
(12) Includes (i) shares held by Columbia Capital Corporation (of which
     Messrs. Mixer and Murray are officers, directors and stockholders) and
     (ii) 728,236 shares issuable pursuant to Presently Exercisable Options,
     some of which will be exercised in connection with this offering.
 
                                      46
<PAGE>
 
(13) Excludes 100,000 shares and 70,000 shares owned by Woodland Venture, L.P.
     ("Woodland") and Seneca Venture, L.P. ("Seneca"), respectively, one of
     whose general partners is also a general partner of Applewood Associates,
     L.P. ("Applewood")
(14) Excludes 250,000 shares and 70,000 shares owned by Applewood and Seneca,
     respectively, one of whose general partners is also a general partner of
     Woodland.
(15) Includes 43,700 shares issuable pursuant to Presently Exercisable
     Options, some of which will be exercised in connection with this
     offering. Does not include 16,755 shares issuable upon the exercise of
     options not exercisable within 60 days of May 1, 1996. Shares owned
     include shares held by Invoice Systems (Canada), Inc., of which such
     Selling Shareholders are minority stockholders.
(16) Excludes 250,000 shares and 100,000 shares owned by Applewood and
     Woodland, respectively, one of whose general partners is also a general
     partner of Seneca.
(17) Excludes 10,000 shares owned by KME Ventures III, L.P. Excludes 10,000
     shares owned by Kuwait Middle East Financial Investment Company, which
     owns the general partner of KME Ventures III, L.P.
(18) Excludes 10,000 shares owned by Kuwait Middle East Financial Investment
     Company. Excludes 10,000 shares owned by KME Ventures III, L.P., whose
     general partner is owned by Kuwait Middle East Financial Investment
     Company.
(19) Does not include 10,404 shares issuable upon the exercise of options not
     exercisable within 60 days of June 15, 1996.
 
                                      47
<PAGE>
 
                         DESCRIPTION OF SHARE CAPITAL
 
  The following brief descriptions of the Company's share capital and certain
provisions of the Company's Articles of Association do not purport to be
complete and are subject to and are qualified in their entirety by reference
to the provisions of the Company's Articles of Association.
 
GENERAL
 
  The authorized share capital of the Company is $100,000 and IR(Pounds)30,000
divided into 40,000,000 Ordinary Shares (nominal value $0.0025 per share), and
30,000 Deferred Shares (nominal value IR(Pounds)1.00 per share), respectively.
All of the Ordinary Shares issued and outstanding are fully paid, duly
authorized and validly issued. Holders of Ordinary Shares, as such, have no
conversion, preemptive or other subscription rights (except as described below
under "Preemptive Rights"), and there are no redemption provisions applicable
to the Ordinary Shares. There are no appraisal rights under Irish law for
dissenting shareholders. In the following description, a "shareholder" is the
person registered in the Company's Register of Members as the holder of the
relevant share. The Bank of New York, as depositary (the "Depositary"), is the
shareholder of record in respect of those Ordinary Shares represented by ADSs
against which ADRs are issued pursuant to the Deposit Agreement. The rights
attaching to ADSs are described below under "Description of American
Depositary Receipts."
 
  Irish law requires that a certain amount of the Company's share capital be
denominated in Irish pounds, and the Deferred Shares meet this requirement.
The Deferred Shares carry no voting or dividend rights and carry only minimal
rights on a liquidation.
 
  On September 27, 1995, the Company completed a 400-for-1 division of all
Ordinary Shares and subsequently declared and allotted a share dividend of
2.725 Ordinary Shares for each post-division share outstanding.
 
RIGHTS ON A LIQUIDATION OR WINDING-UP
 
  In the event of a liquidation, dissolution or winding up of the Company, the
holders of Ordinary Shares will be entitled to receive the amount paid up
thereon plus an additional amount of $100,000 for every $0.000025 paid up
thereon out of the assets, if any, remaining for distribution after payment of
debts and liabilities and after provision has been made for each class of
shares, if any, having preference over the Ordinary Shares. Any remaining
surplus assets will then be distributed to the holders of Deferred Shares to
the extent of the amount paid up thereon and any balance will be distributed
pro rata to the holders of Ordinary Shares.
 
DIVIDENDS
 
  Holders of Ordinary Shares are entitled to receive such dividends as may be
recommended by the Board of Directors of the Company and approved by the
shareholders and/or such interim dividends as the Board of Directors of the
Company may decide. Except for the dividend paid on September 25, 1995, no
cash dividends have been paid on the Ordinary Shares in any of the six fiscal
years immediately preceding the issue of this Prospectus. Under Irish law,
dividends may be paid only out of profits available for distribution, namely,
accumulated realized profits less accumulated realized losses.
 
VOTING RIGHTS
 
  Voting at any general meeting of shareholders is by a show of hands unless a
poll (i.e., a written vote) is duly demanded. Votes may be given either
personally or by proxy. Subject to the Articles of Association
 
                                      48
<PAGE>
 
and to any rights or restrictions attaching to any class or classes of shares,
on a show of hands each shareholder present in person and every proxy has one
vote but so that no individual can have more than one vote, and on a poll each
shareholder shall have one vote for each share of which he is the holder.
Where there is an equality of votes, whether on a show of hands or on a poll,
the chairman of the meeting is entitled to a casting vote in addition to any
other vote he may have. A poll may be demanded by (i) the chairman of the
meeting, or (ii) at least three shareholders present (in person or by proxy)
entitled to vote at the meeting, or (iii) any shareholder or shareholders
present (in person or by proxy) representing not less than one-tenth of the
total voting rights of all the shareholders entitled to vote at the meeting,
or (iv) any shareholder or shareholders present (in person or by proxy)
holding shares conferring the right to vote at the meeting being shares on
which there have been paid up sums in the aggregate equal to not less than
one-tenth of the total sum paid up on all the shares conferring that right.
The Depositary has agreed to demand a poll at all general meetings of
shareholders.
 
  A majority of votes cast is required to pass ordinary resolutions, however,
a 75% vote in favor of the resolution is required for the adoption of special
resolutions. A special resolution is required to effect certain actions, for
example, to alter the Memorandum or Articles of Association, to change the
name of the Company or to make a determination to wind up either voluntarily
or by court action. Where there is more than one class of shares, variation of
the rights attached to any class of shares requires the approval of a special
resolution of the shareholders of the class in question or the consent in
writing of the holders of 75% of the shares of that class. Shareholders do not
have cumulative voting rights for the election of directors. For a description
of the method by which the Ordinary Shares held by the Depositary are voted,
see "Description of American Depositary Receipts--Voting of Deposited
Securities."
 
SHAREHOLDER MEETINGS
 
  Irish law provides for two types of shareholder meetings, the annual general
meeting and the extraordinary general meeting. An annual general meeting must
be held once every calendar year within nine months of the fiscal year end
provided that no more than fifteen months may elapse between such meetings.
Extraordinary general meetings of a company may be convened by the board of
directors or at the request of shareholders holding not less than one-tenth of
such of the paid-up capital as carries the right of voting at general
meetings. Shareholders must receive at least 21 days' written notice of an
annual general meeting and of an extraordinary general meeting convened for
the passing of a special resolution and at least 14 days' written notice of
other extraordinary general meetings. The Articles of Association provide that
a quorum for a general meeting is three persons entitled to vote at the
meeting, each being a shareholder or proxy.
 
  Under Irish law, the Company's annual general meeting must take place in the
Republic of Ireland, unless all shareholders entitled to attend and vote at
such meeting consent in writing to the meeting being held elsewhere or a
resolution providing that the meeting be held elsewhere has been passed at the
preceding annual general meeting. At the Company's 1996 Annual General
Meeting, the Company's shareholders passed a resolution authorizing the
holding of the 1997 Annual General Meeting of Shareholders in the United
States.
 
ISSUANCE OF SHARES
 
  Irish law restricts the power of the directors of a company (other than
under certain employee share plans) to allot shares or to grant share
subscription rights and rights to convert any security into shares unless
either the articles of association of such company or a resolution of the
shareholders authorizes the board of directors to do so. No such authority may
be given for a period in excess of five years. By an ordinary resolution of
the Company's shareholders passed on September 27, 1995, the Board of
Directors has been authorized to allot up to 35,972,000 Ordinary Shares during
the period ending on September 27, 2000. Notwithstanding this authority, the
rules of the Nasdaq National Market specify certain circumstances in which the
shareholders by ordinary resolution must authorize the allotment of shares,
e.g., where the allotment would result in a change of control of the Company.
In addition, the Company may not pay, directly or indirectly, a commission in
excess of 10% of the price at which shares are issued to any person in
consideration of his subscribing for or procuring subscriptions for those
shares or of his agreeing to do so.
 
                                      49
<PAGE>
 
PREEMPTIVE RIGHTS
 
  Irish law provides that, in general, a company may not allot any shares (or
grant a right to subscribe for or to convert any securities into shares in a
company) for cash unless it has first offered those shares, on a pro rata
basis, to the existing shareholders of the company. This preemptive right may
be disapplied for a period of up to five years by the articles of association
of the company or by a special resolution passed by the shareholders of the
company. By a special resolution of the shareholders of the Company passed on
September 27, 1995, this preemptive right was disapplied in respect of all
allotments of shares to be made by the Board of Directors pursuant to the
authorization given to them by the ordinary resolution referred to above under
"Issuance of Shares".
 
DERIVATIVE ACTION SUITS
 
  As a general principle of Irish law, only a company itself can be the proper
plaintiff for the purposes of maintaining proceedings in respect of wrongs
done to the company. Neither an individual shareholder nor any group of
shareholders has any right of action in such circumstances. There are,
however, certain exceptions to this principle available under equitable
principles on a case-by-case basis. For example, the controlling shareholders
cannot perpetrate a fraud on the minority shareholders or commit an act that
is illegal or ultra vires. Additionally, if a company purports to act on the
strength of a decision by a simple majority of votes where such a decision
requires more than a simple majority, an individual shareholder is entitled to
bring suit. In certain circumstances, if controlling shareholders fail to
institute proceedings in the name of the company when such proceedings are
properly called for, one or more of the aggrieved minority shareholders may
apply to the court to bring what has come to be known as a derivative action,
namely an action that derives from the injury to the company rather than the
injury to individual shareholders. The defendants in any such proceedings
would normally be the company itself and those persons who are alleged to have
committed the wrong.
 
MEMBERS' SUITS
 
  In contrast to a derivative action, Irish law permits an action by a
shareholder in his own right where he alleges that his personal rights have
been infringed. Such a shareholder may commence a suit in a representative
capacity on behalf of himself and other affected consenting shareholders of
the same class if their rights are identical. Additionally, under Irish law
any shareholder of a company who claims that the affairs of the company are
being conducted, or that the powers of the directors of the company are being
exercised, in a manner oppressive to him or any of the shareholders (including
himself) or in disregard of his or their interests as shareholders, may apply
to the courts for an appropriate order.
 
INTERLOCKING AND INTERESTED DIRECTORS
 
  Irish law provides that it shall be the duty of a director of a company who
is any way, whether directly or indirectly, interested in a contract or
proposed contract with the company to declare the nature of his interest at a
meeting of the directors of the company. Under the Company's Articles of
Association, a director may not, subject to certain exceptions, vote at a
meeting of the directors on any resolution concerning a matter in which he
has, directly or indirectly, a material interest or a duty that conflicts with
the interests of the Company, nor may a director be counted in the quorum
present at a meeting in relation to a resolution on which such director is not
entitled to vote.
 
DISCLOSURE REQUIREMENTS
 
  Under Irish law, a person who has or acquires an interest in 5% or more of
the issued voting share capital of any class of a public limited company (such
as the Company) must notify such company (in the prescribed manner and
normally within five business days) of his interest and of certain
circumstances and events affecting that interest. In general, such a person
must give notice of any change in his interest above the 5% level and any
reduction in his interest which takes it below the 5% level. Any interest of a
 
                                      50
<PAGE>
 
person in an ADS, either direct or through a spouse, a minor child, a company
which he is deemed to control or, in certain circumstances, other persons with
whom he is acting in concert, would be regarded for this purpose as an
interest in the Ordinary Share represented by that ADS. Failure by any person
to notify punctually and properly is an offense, and as a consequence of such
failure (except where it relates to his ceasing to be interested in shares) no
right or interest in respect of the relevant shares will be enforceable by
him, directly or indirectly, by action or legal proceeding. Application may be
made to the Irish courts to remove this restriction, but this would not be
successful unless the court was satisfied that the failure to notify was not
due to any deliberate act or omission on the part of the applicant. In
addition, the company is obliged to keep a register showing all notifications
received and to keep it open to inspection by the public. Furthermore, the
company may also (and is obliged on a request by shareholders holding not less
than 10% of its paid-up voting capital to) require a person whom the company
believes to be interested in the voting share capital to disclose information
concerning the interests in the relevant shares. If such person fails to
provide the information requested, the company may apply to the court for an
order restricting the voting, dividend and transfer rights in respect of the
relevant shares.
 
  Under the Articles of Association, the Board of Directors may require a
holder of Ordinary Shares to disclose, among other things, the identity of the
persons having beneficial interests in those shares and the nature of any
arrangements with any persons regarding the disposition or voting of those
shares. If the directors determine that the holder of the relevant shares has
not provided a satisfactory disclosure, the directors may restrict the voting,
dividend and transfer rights in respect of those shares.
 
IRISH MERGERS LEGISLATION
 
  Subject to certain exceptions and if certain financial thresholds are
exceeded, any person or persons acting in concert proposing to acquire
Ordinary Shares or ADSs must provide advance notice of such acquisition to the
Minister for Enterprise and Employment of the Republic of Ireland if, after
such acquisition, that person or those persons would obtain the right to
shares carrying more than 25% of the voting rights in the Company. Failure to
so notify is an offense under Irish law, and title to the Ordinary Shares
concerned will not pass unless either clearance for such acquisition has been
obtained from such Minister or the prescribed statutory period following
notification of such acquisition has expired without the Minister having
prohibited the proposed acquisition.
 
PRESENTATION OF FINANCIAL STATEMENTS TO SHAREHOLDERS
 
  The Board of Directors is required to present to the shareholders at each
annual general meeting the statutory consolidated financial statements of the
Company and its subsidiaries and a report by the directors on the state of
affairs of the Company and its subsidiaries.
 
PURCHASE OF OWN SHARES
 
  Under Irish law, a company may, if so authorized by its articles of
association, purchase its own shares, including redeemable shares. The Company
has such an authority in its Articles of Association. This power may not be
exercised by the Company unless, in the case of a purchase other than on a
recognized stock exchange (currently, the Irish Stock Exchange is the only
recognized stock exchange for this purpose), the terms of the contract
relating to such purchase have first been authorized by a special resolution
of the Company before the contract is entered into and, in the case of a
purchase on a recognized stock exchange, the purchase has first been
authorized by an ordinary resolution of the Company.
 
TRANSFER AGENT AND REGISTRAR
 
  The Transfer Agent and Registrar for the Ordinary Shares is Allied Irish
Bank, p.l.c., Registrars' & New Issue Department, Bankcentre, Ballsbridge,
Dublin 4, Ireland. The Transfer Agent and Registrar for the ADSs is The Bank
of New York.
 
                                      51
<PAGE>
 
                                   TAXATION
 
  The statements of United States, Irish and Canadian tax laws set out below
are based on the laws, regulations, administrative rulings and practices of
the United States Internal Revenue Service (the "IRS"), the Revenue
Commissioners of Ireland and Revenue Canada in force and as interpreted by the
relevant taxation authorities as of the date of this Prospectus and are
subject to any changes in United States, Irish or Canadian law, or in the
interpretation thereof by the relevant taxation authorities, or in the double
taxation conventions between the Republic of Ireland and the United States
(the "Conventions") and between the Republic of Ireland and Canada, occurring
after such date (the Conventions were ratified in 1951 and are currently being
renegotiated).
 
  The following is a general summary of certain Republic of Ireland and United
States federal income tax consequences of the purchase, ownership and
disposition of ADSs evidenced by ADRs for U.S. Holders. For purposes of this
discussion, a "U.S. Holder" means an individual citizen or resident of the
United States for United States federal income tax purposes, a corporation or
partnership created or organized under the laws of the United States or any
state thereof or the District of Columbia, or an estate or trust the income of
which is subject to U.S. federal income taxation regardless of its source, in
each case who (i) is not also a resident of, or ordinarily resident in, the
Republic of Ireland for Irish tax purposes, (ii) is not engaged in trade or
business in the Republic of Ireland through a permanent establishment and
(iii) does not own, directly, indirectly or by attribution, 10% or more of the
shares of the Company (by vote or value).
 
  This summary is of a general nature only and does not discuss all aspects of
United States and Irish taxation that may be relevant to a particular
investor. The summary deals only with ADRs held as capital assets and does not
address special classes of purchasers, such as dealers in securities, U.S.
Holders whose functional currency is not the United States dollar and certain
U.S. Holders (including, but not limited to, insurance companies, tax-exempt
organizations, financial institutions and persons subject to the alternative
minimum tax) who may be subject to special rules not discussed below. In
particular the following summary does not address the adverse tax treatment of
U.S. Holders who own, directly, or by attribution, 10% or more of the
Company's outstanding voting stock in the event that the Company were to be
classified as a "Controlled Foreign Corporation" for United States federal
income tax purposes. Although the Company was not a Controlled Foreign
Corporation at March 31, 1996, there can be no assurance that it will not be a
Controlled Foreign Corporation in the future.
 
  PROSPECTIVE PURCHASERS OF ADSs ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS
WITH RESPECT TO THE UNITED STATES FEDERAL, STATE AND LOCAL TAX CONSEQUENCES,
AS WELL AS WITH RESPECT TO THE TAX CONSEQUENCES IN THE REPUBLIC OF IRELAND AND
OTHER JURISDICTIONS, OF THE OWNERSHIP OF ADSs AND THE ORDINARY SHARES
REPRESENTED THEREBY APPLICABLE IN THEIR PARTICULAR TAX SITUATIONS.
 
  For purposes of the Conventions and the Internal Revenue Code of 1986, as
amended (the "Code"), U.S. Holders will be treated as the owners of the
Ordinary Shares represented by ADSs evidenced by ADRs.
 
TAXATION OF THE COMPANY
 
  Republic of Ireland Taxation. For Irish tax purposes, the residence of a
company is in the jurisdiction where the central management and control of the
company is located. Companies which are resident in the Republic of Ireland
are subject to Irish corporation tax on their total profits (wherever arising
and, generally, whether or not remitted to the Republic of Ireland). The
question of residence is essentially one of fact. It is the present intention
of the Company's management to manage and control the Company from the
Republic of Ireland, so that the Company will be resident in the Republic of
Ireland.
 
  The standard rate of Irish corporation tax on both trading and non-trading
income is currently 38%. However, in 1980, the Irish government enacted
legislation, with the approval of the European Union,
 
                                      52
<PAGE>
 
enabling companies to pay a reduced 10% rate of tax on profits from the
manufacture of goods in the Republic of Ireland and certain other activities
deemed to be the manufacture of goods. Current legislation provides that the
reduced rate will be available until 2010. Certain activities of the Company
in the Republic of Ireland qualify for the 10% rate. See "Risk Factors--Risk
of Increasing Taxes."
 
  United States Taxation. Under the Convention relating to income taxation
(the "Income Tax Convention"), the Company will generally not be subject to
United States federal income tax unless it engages in a trade or business in
the United States through a permanent establishment. The Company currently
operates in the United States through Saville U.S., its subsidiary. Saville
Ireland intends to conduct its business activities in a manner that will not
result in its being considered to be engaged in a trade or business or to have
a permanent establishment in the United States, even though Saville U.S. is a
United States taxpayer. Dividends paid by Saville U.S. to the Company will
generally be subject to United States withholding tax at the rate of 5%, which
tax should generally be creditable by the Company against Irish corporation
tax. Saville U.S. is currently subject to United States federal and state
income taxation at a rate of approximately 41%.
 
  Canadian Taxation. The Company carries on business in Canada through Saville
Canada. Saville Canada is currently subject to Canadian federal and provincial
taxation at a rate of approximately 44.5%. Entities other than Saville Canada
would be subject to Canadian taxation only with respect to income derived by
them from Canada in the form of royalties, license fees, interest, dividends
and similar payments, from the disposition of "taxable Canadian property" (as
defined in the Income Tax Act (Canada)) or from business activities carried on
through permanent establishments in Canada as determined under tax treaties
entered into by Canada with the Republic of Ireland and the United States.
Dividends paid by Saville Canada to the Company will generally be subject to
Canadian withholding tax at a rate of 15%, which tax should generally be
creditable against Irish corporation tax.
 
TAXATION OF DIVIDENDS
 
  Republic of Ireland Taxation. The Company does not expect to pay cash
dividends for the foreseeable future. Should the Company begin paying
dividends, the dividends will carry an imputed tax credit (the "Tax Credit").
The amount of the Tax Credit is calculated as a weighted average of tax
credits applicable to different portions of the dividend, which vary depending
on the nature of the income out of which the dividend is paid. Accordingly,
dividends paid out of profits taxable at the standard corporation tax rate of
38% carry a Tax Credit equal to 23/77 of the amount of such dividend;
dividends paid out of profits taxable at the 10% incentive corporation tax
rate carry a Tax Credit equal to 1/18 of the amount of such dividend.
 
  The Company would be required, when paying a dividend in respect of the
Ordinary Shares, to account to the Revenue Commissioners of Ireland for a
payment known as advance corporation tax ("ACT") equal to the amount of the
Tax Credit. ACT would be available for setoff against the corporation tax
liability of the Company on its profits exclusive of taxable gains.
 
  Persons who are neither resident nor ordinarily resident in the Republic of
Ireland do not have an Irish income tax liability on dividends received from
Irish resident companies. Although a net Irish income tax is imposed, the
income tax liability of each such person is restricted to the amount of the
Tax Credit attaching to the dividend and, as the Tax Credit is allowed against
the restricted liability, the Irish income tax liability is fully offset by
the Tax Credit. Individuals are liable for Irish health and employment levies
of 2.25% on such dividends. There is no Irish withholding tax on dividends
paid by an Irish resident company.
 
  United States Taxation. For United States federal income tax purposes, the
gross amount (i.e., including the amount of the Tax Credit) of any dividend
paid (to the extent of the current or accumulated earnings and profits of the
Company) will be included in gross income and treated as foreign source
dividend income in the year the shareholder becomes entitled to such dividend.
The dividend will not be eligible for the dividends-received deduction allowed
to United States corporations. The amount includable in income will be the
United States dollar value of the payment on the date of payment
 
                                      53
<PAGE>
 
regardless of whether the payment is in fact converted into United States
dollars. Generally, gain or loss (if any) resulting from currency fluctuations
during the period from the date any dividend is paid to the date such payment
is converted into United States dollars will be treated as ordinary income or
loss. The IRS has ruled privately that a U.S. Holder will be eligible for a
United States foreign tax credit under Article XIII of the Income Tax
Convention for the Irish tax imposed on a dividend paid by an Irish company.
The amount of the allowable foreign tax credit will not exceed the amount of
the Irish Tax Credit described above. Although private letter rulings are not
binding authority and are directed only to the taxpayer who requests them,
they are considered persuasive in determining the position of the IRS.
 
  If the U.S. Holder is a United States partnership, trust or estate, the
foreign tax credit will be available only to the extent that the income
derived by such partnership, trust or estate is subject to United States tax
as the income of a resident either in its hands or in the hands of its
partners or beneficiaries, as the case may be.
 
TAXATION OF CAPITAL GAINS
 
  A U.S. Holder is not subject to Irish capital gains tax on the disposal of
ADSs quoted on the Nasdaq National Market. It is the intention of the
Company's management to continue the Company's quotation on the Nasdaq
National Market.
 
  Subject to the discussion below under the heading "Passive Foreign
Investment Company Considerations," a U.S. Holder will be liable for United
States federal income tax on such gains to the same extent as on any other
gains from sales or dispositions of shares.
 
  A U.S. Holder that is liable for both Irish and U.S. tax on a gain on the
disposal of the ADSs will generally be entitled, subject to certain
limitations and pursuant to the Income Tax Convention, to credit the amount of
Irish capital gains or corporation tax, as the case may be, paid in respect of
such gain against such U.S. Holder's United States federal income tax
liability. Such gain is, however, likely to be considered to be from sources
within the United States, which may effectively limit the amount of foreign
tax credit allowed to the U.S. Holder.
 
PASSIVE FOREIGN INVESTMENT COMPANY CONSIDERATIONS
 
  The Company will be classified as a passive foreign investment company
("PFIC") for United States federal income tax purposes in the year of the
offering or in subsequent years if either (i) 75% or more of its gross income
is passive income or (ii) on average for the taxable year, 50% or more of its
assets (by value or, if the Company so elects or if the Company is classified
as a Controlled Foreign Corporation for United States federal income tax
purposes, by adjusted tax bases) produce or are held for the production of
passive income. While there can be no assurance, the Company expects, based on
projections of its income and assets and the manner in which the Company
intends to manage its business, that it will not be a PFIC. The Company will
monitor its status and will, promptly following the end of each taxable year,
notify shareholders if it believes that it is properly classified as a PFIC
for that taxable year. The consequences of the Company being classified as a
PFIC will depend in part on whether an election (a "QEF Election") to treat
the Company as a qualified electing fund (a "QEF") under Section 1295 of the
Code is, with respect to the particular U.S. Holder, in effect for each
taxable year in such U.S. Holder's holding period in which the Company is a
PFIC.
 
  If the Company is a PFIC during a U.S. Holder's holding period for its ADSs
and the U.S. Holder does not make a QEF Election, the U.S. Holder will
generally be required to pay a special U.S. tax (the "Special Tax"), in lieu
of the U.S. tax that would otherwise apply, if such U.S. Holder (a) realizes a
gain on disposition of ADSs or (b) receives an "excess distribution" from the
Company on ADSs. An "excess distribution" is a distribution that exceeds 125%
of the average distribution over the shorter of the preceding three years or
the U.S. Holder's holding period. For purposes of calculating the Special Tax,
a gain on disposition or "excess distribution" would be treated as having been
realized by the U.S. Holder over such U.S. Holder's holding period for its
ADSs. The amount of the Special Tax would be the sum of
 
                                      54
<PAGE>
 
the taxes resulting from the following calculations: (i) the amount deemed
realized in the taxable year of disposition or "excess distribution"
(including amounts allocated to any period prior to the first taxable year of
the Company in which it becomes a PFIC) would be includable in gross income as
ordinary income for the taxable year of disposition or "excess distribution",
(ii) amounts deemed realized in each of the other taxable years would be taxed
at the highest marginal U.S. federal income tax rates in effect for the
applicable class of taxpayer in the year of deemed realization and (iii) an
additional tax in the form of an interest charge would be imposed on the tax
deemed deferred from the year of deemed realization to the year of actual
realization. The tax liability with respect to amounts deemed realized in
years prior to the taxable year of disposition or "excess distribution" cannot
be offset by any net operating losses, and gains (but not losses) realized on
the sale of ADSs cannot be treated as capital, even if the ADSs are held as
capital assets.
 
  The Special Tax would not apply to any disposition of ADSs by a U.S. Holder,
or to any distribution by the Company to such U.S. Holder, if a QEF Election
is in effect with respect to that U.S. Holder for each of the years during
such U.S. Holder's holding period that the Company is a PFIC, and the U.S.
Holder complies with certain reporting requirements (discussed below).
 
  The Company will comply with all reporting requirements necessary for a U.S.
Holder to make a QEF Election and will, promptly following the end of any
taxable year in which the Company determines that it is properly classified as
a PFIC, provide registered holders of Ordinary Shares with U.S. addresses
(including the Depositary), and to other registered shareholders on request,
information necessary for such an election. The Depositary has agreed to
distribute such information to registered holders of ADRs.
 
  If a U.S. Holder makes a QEF Election, the U.S. Holder would be currently
taxable on its pro rata share of the Company's ordinary earnings and net
capital gain (at ordinary income and capital gains rates, respectively) for
each taxable year of the Company that the Company is classified as a PFIC,
even if no dividend distributions were received. Once a QEF election is made,
it will apply to all subsequent years that the Company is a PFIC and may be
revoked only with the consent of the IRS. A U.S. Holder will not be currently
taxed on the ordinary income and net capital gain of a QEF for any year that
the QEF is not classified as a PFIC. Prospective investors should consult
their own tax advisers concerning the merits of making a QEF Election if the
Company is a PFIC for any taxable year. In addition, certain classes of
investors, such as regulated investment companies and tax-exempt entities, may
be subject to special rules and should consult their own tax advisers
concerning the application of the United States federal income tax rules
governing PFICs in their particular circumstances.
 
  Under current U.S. law, if the Company is a PFIC in any year, a U.S. Holder
must file an annual return on IRS Form 8621, which describes the income
received (or deemed to be received pursuant to a QEF Election) from the
Company and any gain realized on a disposition of ADSs.
 
U.S. INFORMATION REPORTING AND BACKUP WITHHOLDING
 
  Generally, the amount of dividends paid to U.S. Holders of ADSs, the name
and address of the recipient and the amount, if any, of tax withheld must be
reported annually to the IRS. A similar report is sent to the U.S. Holder.
 
  Backup withholding tax at the rate of 31% will apply to certain payments
made to U.S. Holders who fail to furnish certain identifying information under
the United States information reporting rules. Amounts withheld from payments
will be allowed as a credit against such U.S. Holders' United States federal
income tax liability.
 
                                      55
<PAGE>
 
IRISH CAPITAL ACQUISITIONS TAX
 
  Irish capital acquisitions tax ("CAT") applies to gifts and inheritances (i)
where the person making the gift or inheritance is domiciled in the Republic
of Ireland at the date of the gift or inheritance or (ii) to the extent that
the property of which the gift or inheritance consists is situated in the
Republic of Ireland at the date of the gift or inheritance. The person by whom
CAT is primarily payable is the person who receives the gift or inheritance.
Persons who are secondarily liable include the donor, an agent, trustee,
personal representative or other person in whose care the property
constituting the gift or inheritance or the income therefrom is placed. All
taxable gifts and inheritances received by an individual since June 2, 1982
are aggregated and only the excess over a certain tax-free threshold is taxed.
The tax-free threshold is dependent on the relationship between the donor and
donee and the aggregation of all previous gifts and inheritances. The tax-free
threshold amounts currently range from IR(Pounds)12,170 (approximately $19,107
at March 29, 1996) in the case of persons who are not related to one another
to IR(Pounds)24,340 (approximately $36,644 at March 29, 1996) in the case of
gifts and inheritances received from a brother, sister or from a brother or
sister of a parent or from a grandparent to IR(Pounds)182,550 (approximately
$286,603 at March 29, 1996) in the case of gifts and inheritances received
from a parent. Gifts and inheritances passing between spouses are exempt from
CAT. CAT is charged at progressive rates ranging in the case of gifts from 15%
to 30% and in the case of inheritances from 20% to 40%.
 
  Although ADSs may be held by persons who are neither domiciled nor resident
in the Republic of Ireland, the underlying Ordinary Shares are deemed to be
situated in the Republic of Ireland because the Company is required to
maintain its Ordinary Share register in the Republic of Ireland. Accordingly,
ADSs may be subject to CAT notwithstanding the fact that the holder may be
domiciled and/or resident outside of the Republic of Ireland. The Convention
between the United States and the Republic of Ireland relating to estate taxes
generally provides for CAT paid on inheritances in the Republic of Ireland to
be credited against tax payable in the United States and for tax paid in the
United States to be credited against tax payable in the Republic of Ireland,
based on priority rules set forth in that Convention, in a case where an ADS
is subject to both Irish CAT with respect to inheritance and U.S. federal
estate tax. The Convention does not apply to gifts.
 
  In addition to gift and inheritance taxes, a probate tax of 2% applies to
the value of all assets passing under the will or intestacy of an Irish-
domiciled person other than to the spouse of the deceased. Where the deceased
was not domiciled in the Republic of Ireland, only assets situated in Ireland
are liable for this tax.
 
UNITED STATES GIFT AND ESTATE TAX
 
  An individual U.S. Holder will be subject to United States gift and estate
taxes with respect to the ADRs in the same manner and to the same extent as
with respect to other types of personal property.
 
IRISH STAMP DUTY
 
  Irish stamp duty, which is a tax on certain documents, is payable on all
transfers of Ordinary Shares in companies incorporated in the Republic of
Ireland wherever the instrument of transfer may be executed. In the case of a
sale, stamp duty will be charged at the rate of IR(Pounds)1.00 for every
IR(Pounds)100 (or part thereof) of the amount of value of the consideration
(i.e., purchase price). Where the consideration for the sale is expressed in a
currency other than Irish pounds, the duty will be charged on the Irish pound
equivalent calculated at the rate of exchange prevailing on the date of the
transfer. In the case of a transfer by way of gift (subject to certain
exceptions) or for a consideration less than the market value of the shares
transferred, stamp duty will be charged at the above rate on such market
value.
 
  A transfer to the Depositary or custodian of Ordinary Shares for deposit
under the Deposit Agreement in return for ADRs will be similarly chargeable
with stamp duty as will a transfer of Ordinary Shares from the Depositary or
the custodian upon surrender of an ADR for the purpose of the withdrawal of
the underlying Ordinary Shares in accordance with the terms of the Deposit
Agreement, unless, in either case, the transfer does not relate to a sale or
contemplated sale or any other change in the beneficial ownership of such
Ordinary Shares, in which case the transfer will be chargeable with nominal
duty of IR(Pounds)10.
 
                                      56
<PAGE>
 
  Transfers of ADRs are exempt from Irish stamp duty as long as the ADSs are
quoted on the Nasdaq National Market or any recognized stock exchange in the
United States.
 
  The person accountable for payment of stamp duty is the transferee or, in
the case of a transfer by way of gift or for a consideration less than the
market value, both parties to the transfer. Stamp duty is normally payable
within 30 days after the date of execution of the transfer. Late or inadequate
payment of stamp duty will result in liability to interest, penalties and
fines.
 
                  DESCRIPTION OF AMERICAN DEPOSITARY RECEIPTS
 
  The following is a summary of certain provisions of the Deposit Agreement
(the "Deposit Agreement") entered into by the Company, The Bank of New York,
as depositary (the "Depositary"), and the registered holders of ADRs (the
"Owners") and the owners of a beneficial interest in book entry ADRs (the
"Beneficial Owners"), pursuant to which the ADRs are to be issued.
 
  This summary does not purport to be complete and is subject to and qualified
in its entirety by reference to the Deposit Agreement, including the form of
ADR. Terms used herein and not otherwise defined will have the meanings set
forth in the Deposit Agreement. Copies of the Deposit Agreement and the
Memorandum and Articles of Association of the Company are available for
inspection at the Corporate Trust Office of the Depositary, currently located
at 101 Barclay Street, New York, New York 10286, and, at the principal office
of the agent of the Depositary (the "Custodian"), currently located at the
Dublin office of A.I.B. Custodial Services. Copies of the Deposit Agreement
can also be inspected by holders of the ADRs and copied at the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549. The Depositary's principal executive office is located at 48 Wall
Street, New York, New York 10286.
 
AMERICAN DEPOSITARY RECEIPTS
 
  ADRs evidencing ADSs are issuable by the Depositary pursuant to the Deposit
Agreement. Each ADS will represent one Ordinary Share or evidence of the right
to receive one Ordinary Share (together with any additional Ordinary Shares at
any time deposited or deemed deposited under the Deposit Agreement and any and
all other securities, cash and property received by the Depositary or the
Custodian in respect thereof and at such time held under the Deposit
Agreement, "Deposited Securities"). Only persons in whose names ADRs are
registered on the books of the Depositary will be treated by the Depositary
and the Company as Owners.
 
DEPOSIT, TRANSFER AND WITHDRAWAL
 
  The Depositary has agreed, subject to the terms and conditions of the
Deposit Agreement, that upon delivery to the Custodian of Ordinary Shares (or
evidence of rights to receive Ordinary Shares) and pursuant to appropriate
instruments of transfer in a form satisfactory to the Custodian, the
Depositary will, upon payment of the fees, charges and taxes provided in the
Deposit Agreement, execute and deliver at its Corporate Trust Office to, or
upon the written order of, the person or persons named in the notice of the
Custodian delivered to the Depositary or requested by the person depositing
such Ordinary Shares with the Depositary, an ADR or ADRs, registered in the
name or names of such person or persons, and evidencing any authorized number
of ADSs requested by such person or persons.
 
  Upon surrender at the Corporate Trust Office of the Depositary of an ADR for
the purpose of withdrawal of the Deposited Securities represented by the ADSs
evidenced by such ADR, and upon payment of the fees of the Depositary for the
surrender of ADRs, governmental charges and taxes provided in the Deposit
Agreement, and subject to the terms and conditions of the Deposit Agreement,
the Owner of such ADR will be entitled to delivery, to the Owner or upon the
Owner's order, of the amount of Deposited Securities at the time represented
by one or more ADSs evidenced by such ADR. The forwarding of share
certificates, other securities, property, cash and other documents of title
for such delivery will be at the risk and expense of the Owner.
 
                                      57
<PAGE>
 
  No Ordinary Share will be accepted for deposit unless accompanied by
evidence satisfactory to the Depositary that any necessary approval has been
granted by the governmental body in the Republic of Ireland, if any, which is
then performing the function of the regulation of currency exchange or which
has jurisdiction over foreign investment or regulated foreign ownership of
Irish companies, if any.
 
  Subject to the terms and conditions of the Deposit Agreement and any
limitations established by the Depositary, the Depositary may deliver ADRs
prior to the receipt of Ordinary Shares (a "Pre-Release") and deliver Ordinary
Shares upon the receipt and cancellation of ADRs which have been Pre-Released,
whether or not such cancellation is prior to the termination of such Pre-
Release or the Depositary knows that such ADR has been Pre-Released. The
Depositary may receive ADRs in lieu of Ordinary Shares in satisfaction of a
Pre-Release. Each Pre-Release must be (i) preceded or accompanied by a written
representation from the person to whom the ADRs or Ordinary Shares are to be
delivered that such person, or its customer, owns the Ordinary Shares or ADRs
to be remitted, as the case may be and will hold such Ordinary Shares or ADRs
in trust for the Depositary until their delivery to the Depositary and deliver
such Ordinary Shares or ADRs upon the Depositary's request, (ii) at all times
fully collateralized with cash or such other collateral as the Depositary
deems appropriate, (iii) terminable by the Depositary on not more than five
business days' notice and (iv) subject to such further indemnities and credit
regulations as the Depositary deems appropriate.
 
DIVIDENDS, OTHER DISTRIBUTIONS AND RIGHTS
 
  Subject to any restrictions imposed by Irish law, regulations or applicable
permits, the Depositary is required to convert or cause to be converted into
dollars, to the extent that in its judgment it can do so on a reasonable basis
and can transfer the resulting dollars to the United States, all cash
dividends and other cash distributions denominated in a currency other than
dollars, including Irish pounds ("Foreign Currency"), that it receives in
respect of the deposited Ordinary Shares, and to distribute the resulting
dollar amount (net of reasonable and customary expenses incurred by the
Depositary in converting such Foreign Currency) to the Owners entitled
thereto, in proportion to the number of ADSs representing such Deposited
Securities evidenced by ADRs held by them, respectively. Such distribution may
be made upon an averaged or other practicable basis without regard to any
distinctions among Owners on account of exchange restrictions or the date of
delivery of any ADR or ADRs or otherwise. The amount distributed to the Owners
of ADRs will be reduced by any amount on account of taxes to be withheld by
the Company or the Depositary. See "--Liability of Owner for Taxes".
 
  If the Depositary determines that in its judgment any Foreign Currency
received by the Depositary or the Custodian cannot be converted on a
reasonable basis into dollars transferable to the United States, or if any
approval or license of any government or agency thereof which is required for
such conversion is denied or in the opinion of the Depositary is not
obtainable, or if any such approval or license is not obtained within a
reasonable period as determined by the Depositary, the Depositary may
distribute the Foreign Currency received by the Depositary or the Custodian
to, or in its discretion may hold such Foreign Currency uninvested and without
liability for interest thereon for the respective accounts of, the Owners
entitled to receive the same. If any such conversion of Foreign Currency, in
whole or in part, cannot be effected for distribution to some of the Owners
entitled thereto, the Depositary may in its discretion make such conversion
and distribution in dollars to the extent permissible to the Owners entitled
thereto, and may distribute the balance of the Foreign Currency received by
the Depositary to, or hold such balance uninvested and without liability for
interest thereon for, the respective accounts of, the Owners entitled thereto.
 
  If the Company declares a dividend in, or free distribution of, Ordinary
Shares, the Depositary may, and will if the Company so requests, distribute to
the Owners of outstanding ADRs entitled thereto, in proportion to the number
of ADSs evidenced by the ADRs held by them respectively, additional ADRs
evidencing an aggregate number of ADSs that represents the amount of Ordinary
Shares received as such dividend or free distribution, subject to the terms
and conditions of the Deposit Agreement with respect
 
                                      58
<PAGE>
 
to the deposit of Ordinary Shares and the issuance of ADSs evidenced by ADRs,
including the withholding of any tax or other governmental charge and the
payment of fees of the Depositary. The Depositary may withhold any such
distribution of ADRs if it has not received satisfactory assurances from the
Company that such distribution does not require registration under the
Securities Act or is exempt from registration under the provisions of such
Act. In lieu of delivering ADRs for fractional ADSs in the event of any such
dividend or free distribution, the Depositary will sell the amount of Ordinary
Shares represented by the aggregate of such fractions and distribute the net
proceeds in accordance with the Deposit Agreement. If additional ADRs are not
so distributed, each ADS will thenceforth also represent the additional
Ordinary Shares distributed upon the Deposited Securities represented thereby.
 
  If the Company offers or causes to be offered to the holders of any
Deposited Securities any rights to subscribe for additional Ordinary Shares or
any rights of any other nature, the Depositary will have discretion as to the
procedure to be followed in making such rights available to any Owners of ADRs
or in disposing of such rights for the benefit of any Owners and making the
net proceeds available in United States dollars to such Owners or, if by the
terms of such rights offering or for any other reason, the Depositary may not
either make such rights available to any owners or dispose of such rights and
make the net proceeds available to such Owners, then the Depositary shall
allow the rights to lapse; provided, however, if at the time of the offering
of any rights the Depositary determines in its discretion that it is lawful
and feasible to make such rights available to all Owners or to certain Owners
but not to other Owners, the Depositary may distribute to any Owner to whom it
determines the distribution to be lawful and feasible, in proportion to the
number of ADSs held by such Owner, warrants or other instruments therefor in
such form as it deems appropriate. If the Depositary determines in its
discretion that it is not lawful and feasible to make such rights available to
certain Owners, it may sell the rights, warrants or other instruments in
proportion to the number of ADSs held by the Owners to whom it has determined
it may not lawfully or feasibly make such right available, and allocate the
net proceeds of such sales for the account of such Owners otherwise entitled
to such rights, warrants or other instruments, upon an averaged or other
practical basis without regard to any distinctions among such Owners because
of exchange restrictions or the date or delivery of any ADR or ADRs, or
otherwise. The Depositary will not be responsible for any failure to determine
that it may be lawful or feasible to make such rights available to Owners in
general or any Owner or Owners in particular.
 
  In circumstances in which rights would not otherwise be distributed, if an
Owner of ADRs requests the distribution of warrants or other instruments in
order to exercise the rights allocable to the ADSs of such Owner, the
Depositary will make such rights available to such Owner upon written notice
from the Company to the Depositary that (a) the Company has elected in its
sole discretion to permit such rights to be exercised and (b) such owner has
executed such documents as the Company has determined in its sole discretion
are reasonably required under applicable law. Upon instruction pursuant to
such warrants or other instruments to the Depositary from such Owner to
exercise such rights, upon payment by such Owner to the Depositary for the
account of such Owner of an amount equal to the purchase price of the Ordinary
Shares to be received in exercise of the rights, and upon payment of the fees
of the Depositary as set forth in such warrants or other instruments, the
Depositary will, on behalf of such Owner, exercise the rights and purchase the
Ordinary Shares, and the Company shall cause the Ordinary Shares purchased to
be delivered to the Depositary on behalf of such Owner. As agent for such
Owner, the Depositary will cause the Ordinary Shares so purchased to be
deposited, and will execute and deliver ADRs to such Owner, pursuant to the
Deposit Agreement.
 
  The Depositary will not offer rights to Owners having an address in the
United States unless both the rights and the securities to which such rights
relate are either exempt from registration under the Securities Act with
respect to a distribution to all Owners or are registered under the provisions
of the Securities Act; provided, that nothing in the Deposit Agreement will
create, or be construed to create, any obligation on the part of the Company
to file a registration statement with respect to such rights or underlying
securities or to endeavor to have such a registration statement declared
effective. If an Owner
 
                                      59
<PAGE>
 
of ADRs requests the distribution of warrants or other instruments,
notwithstanding that there has been no such registration under the Securities
Act, the Depositary will not effect such distribution unless it has received
an opinion from recognized counsel in the United States for the Company upon
which the Depositary may rely that such distribution to such Owner is exempt
from such registration. The Depositary will not be responsible for any failure
to determine that it may be lawful or feasible to make such rights available
to Owners in general or any Owner in particular.
 
  Whenever the Depositary receives any distribution other than cash, Ordinary
Shares or rights in respect of the Deposited Securities, the Depositary will
cause the securities or property received by it to be distributed to the
Owners entitled thereto, after deduction or upon payment of any fees and
expenses of the Depositary or any taxes or other governmental charges, in
proportion to their holdings, respectively, in any manner that the Depositary
may reasonably deem equitable and practicable for accomplishing such
distribution; provided, however, that if in the opinion of the Depositary such
distribution cannot be made proportionately among the Owners entitled thereto,
or if for any other reason (including, but not limited to, any requirement
that the Company or the Depositary withhold an amount on account of taxes or
other governmental charges or that such securities must be registered under
the Securities Act in order to be distributed to Owners or Beneficial Owners)
the Depositary deems such distribution not to be feasible, the Depositary may
adopt such method as it may deem equitable and practicable for the purpose of
effecting such distribution, including, but not limited to, the public or
private sale of the securities or property thus received, or any part thereof,
and the net proceeds of any such sale (net of the fees of the Depositary) will
be distributed by the Depositary to the Owners entitled thereto as in the case
of a distribution received in cash.
 
  If the Depositary determines that any distribution of property (including
Ordinary Shares and rights to subscribe therefor) is subject to any taxes or
other governmental charges which the Depositary is obligated to withhold, the
Depositary may, by public or private sale, dispose of all or a portion of such
property in such amount and in such manner as the Depositary deems necessary
and practicable to pay such taxes or charges and the Depositary will
distribute the net proceeds of any such sale after deduction of such taxes or
charges to the Owners entitled thereto in proportion to the number of ADSs
held by them, respectively.
 
  Upon any change in nominal or par value, split-up, consolidation or any
other reclassification of Deposited Securities, or upon any recapitalization,
reorganization, merger or consolidation or sale of assets affecting the
Company or to which it is a party, any securities which shall be received by
the Depositary or Custodian in exchange for, in conversion of, or in respect
of Deposited Securities will be treated as new Deposited Securities under the
Deposit Agreement, and the ADSs will thenceforth represent, in addition to the
existing Deposited Securities, the right to receive the new Deposited
Securities so received in exchange or conversion, unless additional ADRs are
delivered pursuant to the following sentence. In any such case the Depositary
may, after consultation with the Company, and will, if the Company so
requests, execute and deliver additional ADRs as in the case of a distribution
in Ordinary Shares, or call for the surrender of outstanding ADRs to be
exchanged for new ADRs specifically describing such new Deposited Securities.
 
RECORD DATES
 
  Whenever any cash dividend or other cash distribution shall become payable
or any distribution other than cash shall be made, or whenever rights shall be
issued with respect to the Deposited Securities, or whenever for any reason
the Depositary causes a change in the number of Ordinary Shares that are
represented by each ADS, or whenever the Depositary shall receive notice of
any meeting of holders of Ordinary Shares or other Deposited Securities, or
whenever the Depositary shall find it necessary or convenient, the Depositary
will fix a record date, which shall be the record date, if any, established by
the Company for such purpose or, if different, as close thereto as
practicable, (a) for the determination of the Owners who will be (i) entitled
to receive such dividend, distribution or rights, or the net proceeds
 
                                      60
<PAGE>
 
of the sale thereof, or (ii) given instructions for the exercise of voting
rights at any such meeting, or (b) on or after which each ADS will represent
the changed number of Ordinary Shares, all subject to the provisions of the
Deposit Agreement.
 
VOTING OF DEPOSITED SECURITIES
 
  Upon receipt of notice of any meeting or solicitation of consents or proxies
of holders of Ordinary Shares or other Deposited Securities, if requested in
writing by the Company, the Depositary will, as soon as practicable
thereafter, mail to all Owners a notice, the form of which notice will be in
the sole discretion of the Depositary, containing (a) the information included
in such notice of meeting received by the Depositary from the Company, (b) a
statement that the Owners as of the close of business on a specified record
date will be entitled, subject to any applicable provision of Irish law and of
the Memorandum and Articles of Association of the Company, to instruct the
Depositary as to the exercise of the voting rights, if any, pertaining to the
amount of Ordinary Shares or other Deposited Securities represented by their
respective ADSs, (c) a statement that Owners who instruct the Depositary as to
the exercise of their voting rights will be deemed to have instructed the
Depositary or its authorized representative to call for a poll with respect to
each matter for which instructions are given, subject to any applicable
provisions of Irish law and of the Company's Memorandum and Articles of
Association and (d) a statement as to the manner in which such instructions
may be given, including an express indication that instructions may be given
or deemed given in accordance with the last sentence of this paragraph if no
instruction is received, to the Depositary to give a discretionary proxy to a
person designated by the Company. Upon the written request of an Owner on such
date, received on or before the date established by the Depositary for such
purpose, the Depositary will endeavor, insofar as practicable, to vote or
cause to be voted the amount of Ordinary Shares or other Deposited Securities
represented by the ADSs evidenced by such ADRs in accordance with the
nondiscretionary instructions set forth in such request. Accordingly, pursuant
to the Company's Memorandum and Articles of Association and applicable Irish
law, the Depositary will cause its authorized representative to attend each
meeting of holders of Ordinary Shares and call for a poll as instructed in
accordance with clause (c) above for the purpose of effecting such vote. The
Depositary will not vote or attempt to exercise the right to vote that
attaches to the Ordinary Shares or other Deposited Securities, other than in
accordance with such instructions or deemed instructions.
 
  The Deposit Agreement provides that if no instructions are received by the
Depositary from any Owner with respect to any of the Deposited Securities
represented by the ADS evidenced by such Owner's ADRs on or before the date
established by the Depositary for such purpose, the Depositary will deem such
Owner to have instructed the Depositary to give a discretionary proxy to a
person designated by the Company with respect to such Deposited Securities and
the Depositary will give a discretionary proxy to a person designated by the
Company to vote such Deposited Securities, under circumstances and according
to the terms as set forth in the Deposit Agreement: provided, that no such
instructions will be deemed given and no such discretionary proxy will be
given with respect to any matter as to which the Company informs the
Depositary in writing that the Company does not wish such proxy to be given.
 
  There can be no assurance that the Owners generally or any Owner in
particular will receive the notice described in the preceding paragraph
sufficiently prior to the date established by the Depositary for the receipt
of instructions to ensure that the Depositary will in fact receive such
instructions on or before such date. Neither the Depositary nor the Company
shall be responsible for any failure to carry out any instructions to vote any
of the Deposited Securities, or for the manner in which any such vote is cast
or the effect of any such vote, provided that any such action or non-action is
in good faith.
 
                                      61
<PAGE>
 
REPORTS AND OTHER COMMUNICATIONS
 
  The Depositary will make available for inspection by ADR Owners at its
Corporate Trust Office any reports and communications, including any proxy
soliciting material, received from the Company, which are both (a) received by
the Depositary as the holder of the Deposited Securities and (b) generally
made available to the holders of such Deposited Securities by the Company. The
Depositary also will send to the Owners copies of such reports when furnished
by the Company pursuant to the Deposit Agreement. Any such reports and
communications, including any proxy soliciting material, furnished to the
Depositary by the Company will be furnished in English.
 
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
 
  The form of ADRs and any provisions of the Deposit Agreement may at any time
and from time to time be amended by agreement between the Company and the
Depositary in any respect which they may deem necessary or desirable without
the consent of the Owners of ADRs; provided, however, that any amendment that
imposes or increases any fees or charges (other than taxes and other
governmental charges, registration fees, cable, telex or facsimile
transmission costs, delivery costs or other such expenses), or which otherwise
prejudices any substantial existing rights of ADR Owners, will not take effect
as to outstanding ADRs until the expiration of 30 days after notice of any
amendment has been given to the Owners of outstanding ADRs. Every Owner of an
ADR, at the time any amendment becomes effective, will be deemed, by
continuing to hold such ADR, to consent and agree to such amendment and to be
bound by the Deposit Agreement as amended thereby. In no event will any
amendment impair the right of the Owner of any ADR to surrender such ADR and
receive therefore the Deposited Securities represented thereby, except to
comply with mandatory provisions of applicable law.
 
  The Depositary will at any time at the direction of the Company terminate
the Deposit Agreement by mailing notice of such termination to the Owners of
the ADRs then outstanding at least 90 days prior to the date fixed in such
notice for such termination. The Depositary may likewise terminate the Deposit
Agreement by mailing notice of such termination to the Company and the Owners
of all ADRs then outstanding if, any time after 90 days have expired after the
Depositary will have delivered to the Company a written notice of its election
to resign, a successor depositary will not have been appointed and accepted
its appointment, in accordance with the terms of the Deposit Agreement. If any
ADRs remain outstanding after the date of termination of the Deposit
Agreement, the Depositary thereafter will discontinue the registration of
transfers of ADRs, will suspend the distribution of dividends to the Owners
thereof and will not give any further notices or perform any further acts
under the Deposit Agreement, except the collection of dividends and other
distributions pertaining to the Deposited Securities, the sale of rights and
other property and the delivery of underlying Ordinary Shares, together with
any dividends or other distributions received with respect thereto and the net
proceeds of the sale of any rights or other property, in exchange for
surrendered ADRs (after deducting, in each case, the fees of the Depositary
for the surrender of an ADR and other expenses set forth in Deposit Agreement
and any applicable taxes or governmental charges). At any time after the
expiration of one year from the date of termination, the Depositary may sell
the Deposited Securities then held thereunder and hold uninvested the net
proceeds of such sale, together with any other cash, unsegregated and without
liability for interest, for the pro rata benefit of the Owners that have not
theretofore surrendered their Receipts, such Owners thereupon becoming general
creditors of the Depositary with respect to such net proceeds. After making
such sale, the Depositary will be discharged from all obligations under the
Deposit Agreement, except to account for net proceeds and other cash (after
deducting, in each case, the fee of the Depositary and other expenses set
forth in the Deposit Agreement for the surrender of an ADR and any applicable
taxes or other governmental charges).
 
CHARGES OF DEPOSITARY
 
  The Depositary will charge any party depositing or withdrawing Ordinary
Shares or any party surrendering ADRs or to whom ADRs are issued (including,
without limitation, issuance pursuant to a
 
                                      62
<PAGE>
 
stock dividend or stock split declared by the Company or an exchange of stock
regarding the ADRs or Deposited Securities or a distribution of ADRs pursuant
to the Deposit Agreement) where applicable: (1) taxes and other governmental
charges; (2) such registration fees as may from time to time be in effect for
the registration of transfers of Ordinary Shares generally on the share
register of the Company or the appointed agent of the Company for transfer and
registration of Ordinary Shares and applicable to transfers of Ordinary Shares
to the name of the Depositary or its nominee or the Custodian or its nominee
on the making of deposits or withdrawals; (3) such cable, telex and facsimile
transmission expenses as are expressly provided in the Deposit Agreement to be
at the expense of persons depositing Ordinary Shares or Owners; (4) such
expenses as are incurred by the Depositary in the conversion of Foreign
Currency pursuant to the Deposit Agreement; (5) a fee not in excess of $5.00
per 100 ADSs (or portion thereof) for the issuance and surrender,
respectively, of ADRs pursuant to the Deposit Agreement; (6) a fee not in
excess of $0.02 per ADS (or portion thereof) for any cash distribution made
pursuant to the Deposit Agreement; (7) a fee for the distribution of
securities pursuant to the Deposit Agreement, such fee being in an amount
equal to the fee for the execution and delivery of ADSs referred to above
which would have been charged as a result of the deposit of such securities
(for purposes of this clause 7 treating all such securities as if they were
Ordinary Shares), but which securities are instead distributed by the
Depositary to Owners and the net proceeds distributed; and (8) a fee not in
excess of $1.50 per certificate for an ADR or ADRs for transfers made pursuant
to the Deposit Agreement.
 
  The Depositary, pursuant to the Deposit Agreement, may own and deal in any
class of securities of the Company and its affiliates and in ADRs. The fees of
the Depositary may differ from those charged by other depositaries for
services rendered in connection with ADSs and ADRs. A schedule of fees charged
pursuant to the Deposit Agreement is available without charge from the
Depositary at its principal executive office located at 48 Wall Street, New
York, New York 10286. Each registered holder of an ADR will receive 30 days
notice of any change in the fees charged by the Depositary.
 
LIABILITY OF OWNER FOR TAXES
 
  If any tax or other governmental charge shall become payable by the
Custodian or the Depositary with respect to any ADR or any Deposited
Securities represented by the ADS evidenced by such ADR, such tax or other
governmental charge will be payable by the Owner or Beneficial Owner of such
ADR to the Depositary. The Depositary may refuse to effect any transfer of
such ADR or any withdrawal of Deposited Securities underlying such ADR until
such payment is made, and may withhold any dividends or other distributions,
or may sell for the account of the Owner or Beneficial Owner thereof any part
or all of the Deposited Securities underlying such ADR and may apply such
dividends, distributions or the proceeds of any such sale to pay any such tax
or other governmental charge and the Owner or Beneficial Owner of such ADR
will remain liable for any deficiency.
 
DISCLOSURE OF INTERESTS
 
  Each ADR Owner agrees to comply with the Company's Articles of Association,
as they may be amended from time to time, and the laws of the Republic of
Ireland, if applicable, with respect to any disclosure requirements regarding
ownership of Ordinary Shares, all as if such ADRs were, for this purpose, the
Ordinary Shares represented thereby. Each ADR Owner has agreed to be bound by
the provisions of the Deposit Agreement mandating compliance with the
disclosure requirements of Irish company law. See "Description of Share
Capital--Disclosure Requirements."
 
GENERAL
 
  Neither the Depositary nor the Company nor any of their respective
directors, employees, agents or affiliates will be liable to any Owner or
Beneficial Owner of ADRs, if by reason of any provision of any present or
future law or regulation of the United States, the Republic of Ireland or any
other country, or of any other governmental or regulatory authority or stock
exchange, or by reason of any provision,
 
                                      63
<PAGE>
 
present or future, of the Memorandum and Articles of Association of the
Company, or by reason of any provision of any securities issued or distributed
by the Company, or any offering or distribution thereof, or by reason of any
act of God or war or other circumstances beyond its control, the Depositary or
the Company or any of their respective directors, employees, agents, or
affiliates shall be prevented, delayed or forbidden from, or be subject to any
civil or criminal penalty on account of, doing or performing any act or thing
which by the terms of the Deposit Agreement or the Deposited Securities it is
provided will be done or performed; nor will the Depositary or the Company
incur any liability to any Owner or Beneficial Owner of any ADR by reason of
any nonperformance or delay, caused aforesaid, in the performance of any act
or thing which by the terms of the Deposit Agreement it is provided will or
may be done or performed, or by reason of any exercise of, or failure to
exercise, any discretion provided for under the Deposit Agreement. Where, by
the terms of a distribution pursuant to the Deposit Agreement, or an offering
pursuant to the Deposit Agreement, or for any other reason, such distribution
or offering may not be made available to Owners, and the Depositary may not
dispose of such distribution or offering on behalf of such Owners and make the
net proceeds available to such Owners, then the Depositary will not make such
distribution or offering, and will allow the rights, if applicable, to lapse.
 
  The Company and the Depositary assume no obligation nor will they be subject
to any liability under the Deposit Agreement to Owners or Beneficial Owners of
ADRs, except that they agree to perform their respective obligations
specifically set forth under the Deposit Agreement without negligence or bad
faith.
 
  The ADRs are transferable on the books of the Depositary, provided that the
Depositary may close the transfer books at any time or from time to time when
deemed expedient by it in connection with the performance of its duties or at
the written request of the Company. As a condition precedent to the execution
and delivery, registration of transfer, split-up, combination or surrender of
any ADR or withdrawal of any Deposited Securities, the Depositary, the
Custodian or the Registrar may require payment from the person presenting the
ADR or the depositor of the Ordinary Shares of a sum sufficient to reimburse
it for any tax or other governmental charge and any stock transfer or
registration fee with respect thereto (including any such tax or charge and
fee with respect to Ordinary Shares being deposited or withdrawn) and payment
of any applicable fees payable by the Owners and Beneficial Owners of ADRs.
The Depositary may refuse to deliver ADRs, to register the transfer of any ADR
or to make any distribution on, or related to, Ordinary Shares until it has
received such proof of citizenship or residence, exchange control approval or
other information as it may deem necessary or proper. The delivery, transfer,
registration or transfer of outstanding ADRs and surrender of ADRs generally
may be suspended or refused during any period when the transfer books of the
Depositary, the Company or the Foreign Registrar are closed or if any such
action is deemed necessary or advisable by the Depositary or the Company, at
any time or from time to time.
 
  The Depositary keeps books at its Corporate Trust Office for the
registration and transfer of ADRs, which at all reasonable times is open for
inspection by the Owners, provided that such inspection will not be for the
purpose of communications with Owners in the interest of a business or object
other than the business of the Company or a matter related to the Deposit
Agreement or the ADRs.
 
  The Depositary may appoint one or more co-transfer agents for the purpose of
effecting transfers, combinations and split-ups of ADRs at designated transfer
offices on behalf of the Depositary. In carrying out its functions, a co-
transfer agent may require evidence of authority and compliance with laws and
other requirements by Owners or persons entitled to ADRs and will be entitled
to protection and indemnity to the same extent as the Depositary.
 
GOVERNING LAW
 
  The Deposit Agreement is governed by the laws of the State of New York.
 
 
                                      64
<PAGE>
 
                        SHARES ELIGIBLE FOR FUTURE SALE
 
  Upon completion of this offering, the Company will have approximately
17,676,406 Ordinary Shares outstanding, based upon shares outstanding as of
March 31, 1996. The 5,750,000 ADSs sold in the Company's initial public
offering and the 2,400,000 ADSs offered hereby and the 8,150,000 Ordinary
Shares they represent will be freely tradeable without restriction or further
registration under the Securities Act, except that any shares purchased by
"affiliates" of the Company, as that term is defined in Rule 144 ("Rule 144")
under the Securities Act ("Affiliates"), may generally only be sold in
compliance with the limitation of Rule 144 described below.
 
SALES OF RESTRICTED SHARES
 
  Approximately 9,454,301 of the remaining 9,526,406 Ordinary Shares
outstanding are deemed "Restricted Shares" under Rule 144. These Restricted
Shares will not be eligible for resale under Rule 144 until after the
expiration of a two-year holding period from the date such Restricted Shares
were acquired from, and the full purchase price therefor was paid to, the
Company or an Affiliate, and may be resold in the public market only in
compliance with the registration requirements of the Securities Act or
pursuant to a valid exemption therefrom. Of these shares, 8,312,287 shares
will be eligible for conversion to ADSs and resale pursuant to Rule 144 in
August 1996; and 1,142,014 shares will be eligible for conversion into ADSs
and resale pursuant to Rule 144 at various dates between January 1, 1997 and
November 8, 1997, all upon expiration of their respective two-year holding
periods. Approximately 9,647,671 of the Restricted Shares are subject to the
lock-up agreements described below (the "Lock-up Agreements"). In addition,
9,454,301 Restricted Shares are entitled to registration rights as described
below.
 
  In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including an Affiliate, who has beneficially
owned Restricted Shares for at least two years is permitted to sell, within
any three-month period, a number of such shares (in the form of ADSs or
otherwise) that does not exceed the greater of (i) one percent of the then
outstanding ADSs (approximately 176,764 shares immediately after this
offering) or (ii) the average weekly trading volume in the ADSs on the Nasdaq
National Market during the four calendar weeks preceding the date on which
notice of such sale is filed, provided certain requirements concerning
availability of public information, manner of sale and notice of sale are
satisfied. Affiliates must comply with the restrictions and requirements of
Rule 144, other than the two-year holding period requirement, in order to sell
Ordinary Shares (in the form of ADSs or otherwise) which are not restricted
securities. In addition, under Rule 144(k), a person who is not an Affiliate
and has not been an Affiliate for at least three months prior to the sale and
who has beneficially owned Restricted Shares for at least three years may
resell such shares (in the form of ADSs or otherwise) without compliance with
the foregoing requirements. In meeting the two and three year holding periods
described above, a holder of Restricted Shares can include the holding periods
of a prior owner who was not an Affiliate. The two and three year holding
periods described above do not begin to run until after the full purchase
price or other consideration is paid by the person acquiring the Restricted
Shares from the issuer or an Affiliate.
 
  The Securities and Exchange Commission has proposed an amendment to Rule 144
which would reduce the holding period required for shares subject to Rule 144
to become eligible for sale in the public market from two years to one year,
and from three years to two years in the case of Rule 144(k).
 
  As of March 31, 1996, options to purchase an aggregate of 1,144,851 Ordinary
Shares had been granted and were outstanding under the 1995 Option Plan, of
which 187,500 were then exercisable. The Company has registered the shares
issuable under the 1995 Option Plan pursuant to a registration statement on
Form S-8. In addition, options to purchase an aggregate of 691,448 Ordinary
Shares had been granted pursuant to certain non-plan options, all of which are
currently exercisable and eligible for resale pursuant to Rules 144 and 701.
See "Management--Share Options."
 
 
                                      65
<PAGE>
 
LOCK-UP AGREEMENTS
 
  The Company, certain Selling Shareholders and all executive officers and
directors of the Company, who in the aggregate will hold, following the
offering, approximately 9,647,671 Ordinary Shares, have agreed, pursuant to
the Lock-up Agreements, that they will not, directly or indirectly, without
the prior written consent of Alex. Brown & Sons Incorporated, offer, sell,
offer to sell, contract to sell, or otherwise dispose of any ADSs or Ordinary
Shares, or any securities convertible into or exercisable for ADSs or Ordinary
Shares, beneficially owned by them for a period of 90 days after the date of
this Prospectus, except that the Company may issue up to 691,448 Ordinary
Shares under outstanding non-plan options and may grant options to purchase
Ordinary Shares under its 1995 Option Plan and 1996 Share Purchase Plan. The
Company has agreed with the Underwriters that it will not, except as described
above, grant options to purchase Ordinary Shares which are exercisable prior
to 90 days after the date of this Prospectus.
 
REGISTRATION RIGHTS
 
  At the completion of this offering, certain securityholders of the Company
will be entitled to require the Company to register under the Securities Act
up to a total of 9,454,301 Ordinary Shares (the "Registrable Shares") under
the terms of (i) an agreement (the "First Registration Agreement") among the
Company and certain securityholders of the Company holding an aggregate of
8,872,301 Ordinary Shares (the "First Rightsholders") and (ii) an agreement
(the "Second Registration Agreement") among the Company and certain other
securityholders of the Company holding an aggregate of 582,000 Ordinary Shares
(the "Second Rightsholders").
 
  Pursuant to the terms of the First Registration Agreement and the Second
Registration Agreement, in the event the Company proposes to register any of
its securities under the Act at any time or times, the First Rightsholders and
the Second Rightsholders, subject to certain exceptions, are entitled to
include Registrable Shares in such registration. However, the managing
underwriter of any such offering may exclude for marketing reasons some or all
of such Registrable Shares from such registration. In addition, certain of the
First Rightsholders have, subject to certain conditions and limitations,
additional rights to require the Company to prepare and file a registration
statement under the Securities Act with respect to the Registrable Shares held
by such First Rightsholders at any time six months or more after the
termination of the effectiveness of a previous registration statement.
 
  The Second Rightsholders also have, subject to certain conditions and
limitations, additional rights to require the Company to prepare and file a
registration statement under the Securities Act with respect to the
Registrable Shares held by such Second Rightsholders at any time during the
period between six months and twelve months after the closing of the Company's
initial public offering. In addition, the Company must register all
Registrable Shares held by the Second Rightsholders on the later to occur of
the first anniversary of the closing of the Company's initial public offering
or on such later date as the Company becomes eligible to file a Registration
Statement on Form S-3.
 
  The Company is generally required to bear the expense of all such
registrations, except underwriting discounts and commissions.
 
                                      66
<PAGE>
 
                                 UNDERWRITING
 
  Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below (the "Underwriters"), through their Representatives,
Alex. Brown & Sons Incorporated, Furman Selz LLC, Hambrecht & Quist LLC and
Montgomery Securities, have severally agreed to purchase from the Company and
the Selling Shareholders the following respective numbers of ADSs at the
public offering price less the underwriting discounts and commissions set
forth on the cover page of this Prospectus:
 
<TABLE>
<CAPTION>
                                                                        NUMBER
        UNDERWRITER                                                     OF ADSS
        -----------                                                     -------
   <S>                                                                 <C>
   Alex. Brown & Sons Incorporated....................................   600,000
   Furman Selz LLC....................................................   600,000
   Hambrecht & Quist LLC..............................................   600,000
   Montgomery Securities..............................................   600,000
                                                                       ---------
     Total............................................................ 2,400,000
                                                                       =========
</TABLE>
 
  The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent and that the Underwriters will
purchase all of the ADSs offered hereby if any of such ADSs are purchased.
 
  The Company and the Selling Shareholders have been advised by the
Representatives that the Underwriters propose to offer the ADSs to the public
at the public offering price set forth on the cover page of this Prospectus
and to certain dealers at such price less a concession not in excess of $0.75
per ADS. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of $0.10 per ADS to certain other dealers. After the
public offering, the offering price and other selling terms may be changed by
the Representatives.
 
  Certain of the Selling Shareholders have granted to the Underwriters an
option, exercisable not later than 30 days after the date of this Prospectus,
to purchase up to 360,000 additional ADSs at the public offering price less
the underwriting discounts and commissions set forth on the cover page of this
Prospectus. To the extent that the Underwriters exercise such option, each of
the Underwriters will have a firm commitment to purchase approximately the
same percentage thereof that the number of ADSs to be purchased by it shown in
the above table bears to 2,400,000, and such Selling Shareholders will be
obligated, pursuant to the option, to sell such ADSs to the Underwriters. The
Underwriters may exercise such option only to cover over-allotments made in
connection with the sale of ADSs offered hereby. If purchased, the
Underwriters will offer such additional ADSs on the same terms as those on
which the 2,400,000 ADSs are being offered.
 
  The Underwriting Agreement contains covenants of indemnity among the
Underwriters, the Company and the Selling Shareholders against certain civil
liabilities, including liabilities under the Securities Act.
 
  The Company, certain of the Selling Shareholders, and all executive officers
and directors of the Company, who in the aggregate will hold, following the
offering, approximately 9,647,671 Ordinary Shares, have agreed, pursuant to
the Lock-up Agreements, that they will not, directly or indirectly, without
the prior written consent of Alex. Brown & Sons Incorporated, offer, sell,
offer to sell, contract to sell or otherwise dispose of any Ordinary Shares or
ADSs or securities convertible into or exercisable for ADSs or Ordinary Shares
beneficially owned by them for a period of 90 days after the date of this
Prospectus without the prior written consent of Alex. Brown & Sons
Incorporated, except that the Company may, without such consent, issue shares
upon the exercise of outstanding non-plan options or grant options pursuant to
the Company's 1995 Option Plan and 1996 Share Purchase Plan. Alex. Brown &
Sons Incorporated may, in its sole discretion and at any time without notice,
release all or any portion of the securities subject to Lock-up Agreements.
The Company has agreed with the Underwriters that it will not, except as
described above, grant options to purchase Ordinary Shares which are
exercisable prior to 90 days after the date of this Prospectus. See "Shares
Eligible for Future Sale."
 
                                      67
<PAGE>
 
  The Representatives have advised the Company and the Selling Shareholders
that the Underwriters do not intend to confirm sales to any accounts over
which they exercise discretionary authority.
 
  In connection with this offering, certain Underwriters and selling group
members (if any) or their respective affiliates who are qualified registered
market makers on the Nasdaq National Market may engage in passive market
making on the Nasdaq National Market in accordance with Rule 10b-6A under the
Exchange Act during the two business day period before the commencement of
offers or sales of the ADSs in this offering. The passive market making
transactions must comply with applicable volume and price limits and be
identified as such. In general, a passive market maker may display its bid at
a price not in excess of the highest independent bid for such security; if all
independent bids are lowered before the passive market maker's bid, however,
such bid must then be lowered when certain purchase limits are exceeded.
 
  This offering will be made pursuant to the provisions of schedule E to the
By-Laws of the National Association of Securities Dealers, Inc. ("Schedule
E"). Under the provisions of Schedule E, the Company is deemed to be an
affiliate of The Columbia Group Incorporated (the "Columbia Group"), an
Underwriter in this offering. In addition, following the offering,
approximately 40.4% of the Company's outstanding Ordinary Shares will be held
by affiliates of the Columbia Group. In addition, James B. Murray, Jr. and
David P. Mixer, directors of the Company, are shareholders, officers and
directors of entities affiliated with the Columbia Group, and Mr. Murray is a
director of the Columbia Group. Accordingly, under Schedule E, the public
offering price can be no higher than that recommended by a "qualified
independent underwriter" meeting certain standards. In accordance with
Schedule E, Alex. Brown & Sons Incorporated is serving as a qualified
independent underwriter in pricing this offering and in conducting due
diligence with respect to the Company.
 
                                 LEGAL MATTERS
 
  The validity of the Ordinary Shares represented by the ADSs offered hereby
and certain legal matters under Irish law will be passed upon by McCann
FitzGerald, Irish counsel for the Company. Certain legal matters under United
States law in connection with this offering will be passed upon for the
Company and the Selling Shareholders by Hale and Dorr, Boston, Massachusetts.
Certain matters in connection with the offering will be passed upon on behalf
of the Underwriters by Testa, Hurwitz & Thibeault, LLP, Boston, Massachusetts,
counsel for the Underwriters. Testa, Hurwitz & Thibeault, LLP and Hale and
Dorr will rely upon McCann FitzGerald with respect to certain matters governed
by Irish law.
 
                                    EXPERTS
 
  The consolidated financial statements of the Company at December 31, 1995
and 1994, and for each of the years in the three year period ended December
31, 1995, appearing in this Prospectus and Registration Statement, have been
audited by Ernst & Young, independent auditors, as set forth in its reports
thereon appearing elsewhere herein and in the Registration Statement, and are
included in reliance upon such reports given upon the authority of such firm
as experts in accounting and auditing.
 
                            ADDITIONAL INFORMATION
 
  The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
 
                                      68
<PAGE>
 
the Commission's Regional Offices in New York (Seven World Trade Center, Suite
1300, New York, New York 10048), and Chicago (Suite 1400, Northwestern Atrium
Center, 500 West Madison Street, Chicago, Illinois 60661). Copies of such
material can also be obtained at prescribed rates from the Public Reference
Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street
N.W., Washington, D.C. 20549. The Company's ADSs are listed for trading on the
Nasdaq National Market under the trading symbol SAVLY. Reports, proxy
statements and other information about the Company may also be inspected at
the offices of the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, D.C. 20006.
 
  The Company has filed with the Commission, Washington, D.C. 20549, a
Registration Statement (which term shall include all amendments, exhibits and
schedules thereto) on Form S-1 under the Securities Act with respect to the
ADSs offered hereby. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all of the information set forth in
the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission, to which Registration
Statement reference is hereby made. Statements made in this Prospectus as to
the contents of any contract, agreement or other document referred to are not
necessarily complete. With respect to each such contract, agreement or other
document filed as an exhibit to the Registration Statement, reference is made
to the exhibit for a more complete description of the matter involved, and
each such statement shall be deemed qualified in its entirety by such
reference. The Registration Statement and the exhibits thereto may be
inspected and copied at prescribed rates at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the regional offices of the Commission
located at Seven World Trade Center, 13th Floor, New York, New York 10048 and
500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
 
                      IRISH EXCHANGE CONTROL REGULATIONS
 
  Irish exchange control regulations ceased to apply from and after December
31, 1992. Except as indicated below, there are no restrictions on non-
residents of the Republic of Ireland dealing in domestic securities, which
includes shares or depositary receipts of Irish companies such as the Company,
and dividends and redemption proceeds are freely transferable to non-resident
holders of such securities.
 
  The Financial Transfers Act, 1992 gives power to the Minister for Finance of
the Republic of Ireland to make provision for the restriction of financial
transfers between the Republic of Ireland and other countries. Financial
transfers are broadly defined and include all transfers which would be
movements of capital or payments within the meaning of the treaties governing
the European Communities. The acquisition or disposal of ADRs representing
shares issued by an Irish incorporated company and associated payments may
fall within this definition. In addition, dividend, redemption and liquidation
payments in respect of shares in an Irish incorporated company would fall
within this definition. Currently, orders under this Act prohibit any
financial transfer to or by the order of or on behalf of residents of the
Federal Republic of Yugoslavia (Serbia and Montenegro), Iraq and Libya, unless
permission for the transfer has been given by the Central Bank of Ireland.
 
  The Company does not anticipate that orders under the Financial Transfers
Act, 1992 will have a material effect on its business.
 
                                      69
<PAGE>
 
                              SAVILLE SYSTEMS PLC
 
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
Report of Independent Auditors............................................  F-2
Consolidated Balance Sheets as of December 31, 1994 and 1995 and March 31,
 1996.....................................................................  F-3
Consolidated Statements of Income for the years ended December 31, 1993,
 1994 and 1995 and the three months ended March 31, 1995 and 1996.........  F-4
Consolidated Statements of Changes in Shareholders' Equity for the the
 years ended December 31, 1993, 1994 and 1995 and the three months ended
 March 31, 1996...........................................................  F-5
Consolidated Statements of Cash Flows for the years ended December 31,
 1993, 1994 and 1995 and the three months ended March 31, 1995 and 1996...  F-6
Notes to Consolidated Financial Statements................................  F-7
</TABLE>
 
                                      F-1
<PAGE>
 
REPORT OF INDEPENDENT AUDITORS
 
To the Directors of Saville Systems PLC
 
  We have audited the accompanying consolidated balance sheets of Saville
Systems PLC and its subsidiaries as of December 31, 1995 and 1994 and the
related consolidated statements of income, changes in shareholders' equity and
cash flows for each of the years in the three year period ended December 31,
1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
 
  We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
 
  In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Saville Systems PLC and its subsidiaries at December 31, 1995 and 1994 and
the consolidated results of their operations and their cash flows for each of
the years in the three year period ended December 31, 1995 in conformity with
accounting principles generally accepted in the United States.
 
/s/ Ernst & Young
 
Chartered Accountants
 
Galway, Ireland January 26, 1996
 
                                      F-2
<PAGE>
 
                              SAVILLE SYSTEMS PLC
 
                          CONSOLIDATED BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                              DECEMBER 31,
                                           ---------------------    MARCH 31,
                                             1994       1995          1996
                                           ---------  ----------  --------------
                                                                   (UNAUDITED)
                                            (IN THOUSANDS OF U.S. DOLLARS)
<S>                                        <C>        <C>         <C>
ASSETS
Current Assets
  Cash and cash equivalents............... $   3,509  $   23,722    $   21,449
  Accounts receivable, less allowance for
   doubtful accounts of $0, $370 and $447,
   respectively...........................     5,611       8,177        12,734
  Prepaid expenses and other assets.......       170       1,056         1,271
                                           ---------  ----------    ----------
                                               9,290      32,955        35,454
                                           ---------  ----------    ----------
Property and equipment, net [note 3]......       517       2,335         2,624
Long-term receivable [note 4].............                   741           744
Loan to an officer [note 5]...............        50
                                           ---------  ----------    ----------
    Total assets.......................... $   9,857  $   36,031    $   38,822
                                           =========  ==========    ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
  Accounts payable........................ $     678  $    1,079    $    1,438
  Accrued compensation and related
  benefits................................       724       1,527         1,414
  Accrued royalties.......................       315         663           500
  Income taxes payable....................     1,101       1,228         1,668
  Other current liabilities...............       547         296           583
  Related party advances [note 5].........        14
  Current portion of long-term debt [note
  6]......................................       111          53            84
                                           ---------  ----------    ----------
                                               3,490       4,846         5,687
                                           ---------  ----------    ----------
Long-term debt [note 6]...................       689          44
Minority interest [note 8]................       226         217           215
                                           ---------  ----------    ----------
                                                 915         261           215
                                           ---------  ----------    ----------
Commitments and contingencies [note 7]
Shareholders' equity
  Share capital [note 8]..................        10          92            92
  Additional paid-in capital [note 8].....     1,662      23,636        23,591
  Retained earnings.......................     3,862       7,244         9,286
  Cumulative translation account [note 8].       (82)        (48)          (49)
                                           ---------  ----------    ----------
    Total shareholders' equity............     5,452      30,924        32,920
                                           ---------  ----------    ----------
    Total liabilities and shareholders'
     equity............................... $   9,857  $   36,031    $   38,822
                                           =========  ==========    ==========
</TABLE>
 
                             See accompanying notes
 
                                      F-3
<PAGE>
 
                              SAVILLE SYSTEMS PLC
 
                       CONSOLIDATED STATEMENTS OF INCOME
 
<TABLE>
<CAPTION>
                                                                 THREE MONTHS ENDED
                            YEARS ENDED DECEMBER 31,                  MARCH 31,
                          ----------------------------------- -------------------------
                            1993        1994        1995          1995         1996
                          ----------  ----------- ----------- ------------ ------------
                                                              (UNAUDITED)  (UNAUDITED)
                          (IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE DATA)
<S>                       <C>         <C>         <C>         <C>          <C>
Revenue:
  Services..............  $    8,857  $    17,597 $    25,084   $   5,845    $    9,032
  License fees..........         452        2,476       5,212       1,617         1,523
                          ----------  ----------- -----------   ---------    ----------
   Total revenues.......       9,309       20,073      30,296       7,462        10,555
                          ----------  ----------- -----------   ---------    ----------
Expenses:
  Cost of services......       5,038        8,640      12,221       2,878         4,478
  Cost of license fees..           9           31          65          14            22
  Sales and marketing...         862        1,391       1,519         333           637
  Research and
  development...........                      184       1,591         133           860
  General and
  administrative........       3,385        2,971       6,784       1,403         2,321
                          ----------  ----------- -----------   ---------    ----------
   Total costs and
   expenses.............       9,294       13,217      22,180       4,761         8,318
                          ----------  ----------- -----------   ---------    ----------
Income from operations..          15        6,856       8,116       2,701         2,237
  Other income, net
  [note 9]..............           7          252         208          75           243
                          ----------  ----------- -----------   ---------    ----------
Income before income
taxes...................          22        7,108       8,324       2,776         2,480
  Provision for income
   taxes
   [note 10]............          32        1,597       1,872         732           440
                          ----------  ----------- -----------   ---------    ----------
Income (loss) before
minority interest.......         (10)       5,511       6,452       2,044         2,040
  Minority interest
   share in
   subsidiaries' net
   income (loss)........         (23)         154          70           6            (2)
                          ----------  ----------- -----------   ---------    ----------
Net income..............  $       13  $     5,357 $     6,382   $   2,038    $    2,042
                          ==========  =========== ===========   =========    ==========
Net income per share....  $     0.00  $      0.34 $      0.40   $    0.13    $     0.11
                          ==========  =========== ===========   =========    ==========
Shares used in computing
 net income per share
 (in thousands).........      15,667       15,721      16,151      15,797        18,685
</TABLE>
 
 
 
                             See accompanying notes
 
                                      F-4
<PAGE>
 
                              SAVILLE SYSTEMS PLC
 
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
      (INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1996 IS UNAUDITED)
 
<TABLE>
<CAPTION>
                            SHARE CAPITAL    ADDITIONAL RETAINED  CUMULATIVE      TOTAL
                          ------------------  PAID-IN   EARNINGS  TRANSLATION SHAREHOLDERS'
                            SHARES   AMOUNTS  CAPITAL   (DEFICIT)   ACCOUNT      EQUITY
                          ---------- ------- ---------- --------- ----------- -------------
                               (IN THOUSANDS OF U.S. DOLLARS, EXCEPT NUMBER OF SHARES)
<S>                       <C>        <C>     <C>        <C>       <C>         <C>
Balance at December 31,                       $     1    $  (476)    $  7        $  (468)
1992....................
 Ordinary Shares issued.       2,980   $ 0
 Cash, notes and
  interest payable
  converted to paid-in
  capital...............                          681                                681
 Dividends paid by      
  subsidiary............                                     (29)                    (29) 
 Net income.............                                      13                      13
 Foreign currency        
  translation adjustment                                               (8)            (8) 
                          ----------   ---    -------    -------     ----        -------
Balance at December 31, 
 1993...................       2,980     0        682       (492)      (1)           189 
 Ordinary Shares issued.  14,897,020    10                                            10
 Increase in paid-in     
  capital...............                          980       (980) 
 Dividends paid by       
  subsidiary............                                     (23)                    (23) 
 Net income.............                                   5,357                   5,357
 Foreign currency       
  translation adjustment                                              (81)           (81) 
                          ----------   ---    -------    -------     ----        -------
Balance at December 31, 
 1994...................  14,900,000    10      1,662      3,862      (82)         5,452 
 Ordinary Shares issued.   2,676,406    34     25,772                             25,806
 Deferred Shares issued.      30,000    48        (48)
 Shares issued by      
  subsidiary companies..                          148                                148 
 Public offering costs..                       (3,914)                            (3,914)
 Reduction in minority  
  interest..............                          116                                116 
 Note receivable on sale
  of shares by
  subsidiary prior to
  reorganization........                         (100)                              (100)
 Dividends paid.........                                  (3,000)                 (3,000)
 Net income.............                                   6,382                   6,382
 Foreign currency       
  translation adjustment                                               34             34 
                          ----------   ---    -------    -------     ----        -------
Balance at December 31, 
 1995...................  17,606,406    92     23,636      7,244      (48)        30,924 
 Net income.............                                   2,042                   2,042
 Public offering costs..                          (45)                               (45)
 Foreign currency       
  translation adjustment                                               (1)            (1) 
                          ----------   ---    -------    -------     ----        -------
Balance at March 31,     
 1996...................  17,606,406   $92    $23,591    $ 9,286     $(49)       $32,920 
                          ==========   ===    =======    =======     ====        =======
</TABLE>
 
                            See accompanying notes.
 
                                      F-5
<PAGE>
 
                              SAVILLE SYSTEMS PLC
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                     YEARS ENDED           THREE MONTHS ENDED
                                    DECEMBER 31,                MARCH 31,
                                -----------------------  -----------------------
                                1993    1994     1995       1995        1996
                                -----  -------  -------  ----------- -----------
                                                         (UNAUDITED) (UNAUDITED)
                                       (IN THOUSANDS OF U.S. DOLLARS)
<S>                             <C>    <C>      <C>      <C>         <C>
Cash flows from operating
activities:
 Net income...................  $  13  $ 5,357  $ 6,382    $ 2,038     $ 2,042
 Adjustments to reconcile net
  income to net cash provided
  by operating activities:
  Depreciation and            
   amortization................    63      222      360         60         147 
  Allowance for doubtful        
   accounts....................                     370        168          75 
  Minority interest in net       
   income......................   (23)     154       70          6          (2) 
 Changes in operating assets
  and liabilities:
  Accounts receivable.........   (933)  (3,476)  (2,936)    (2,112)     (4,632)
  Other current assets........    (14)     (87)    (886)        81        (215)
  Long term receivable........                     (741)
  Accounts payable and other    
   accrued liabilities........   (133)     237      401        297         359 
  Accrued compensation and      
   benefits...................    308      415      803        134        (113) 
  Accrued royalties...........     95      220      348         71        (163)
  Income taxes payable........      2    1,099      127       (395)        440
  Other current liabilities...    223      324     (251)      (162)        287
                                -----  -------  -------    -------     -------
    Net cash provided by (used
       in) operating
       activities.............   (399)   4,465    4,047        186      (1,775)
                                -----  -------  -------    -------     -------
Cash flows from investing
activities:
 Purchase of property and        
  equipment...................    (72)    (327)  (2,178)      (537)       (428) 
                                -----  -------  -------    -------     -------
    Net cash used in investing   
     activities...............    (72)    (327)  (2,178)      (537)       (428) 
                                -----  -------  -------    -------     -------
Cash flows from financing
activities:
 Loan repayments from an           37        7       50
officer.......................
 Proceeds from long-term debt.             500
 Repayment of long-term debt..             (57)    (703)       (34)        (13)
 Advances from related         
  parties.....................  1,817      759 
 Repayments to related         
  parties.....................   (807)  (2,423)     (14)       (21) 
 Additional paid-in capital...    150                           35
 Proceeds from share           
  issuances...................              10   25,880         66 
 Dividends paid by subsidiary
    prior to company
    reorganization............    (34)     (25)
 Public offering costs........                   (3,914)                   (45)
 Dividends paid...............                   (3,000)
                                -----  -------  -------    -------     -------
    Net cash provided by (used
       in) financing
       activities.............  1,163   (1,229)  18,299         46         (58)
                                -----  -------  -------    -------     -------
Effect of exchange rate        
 changes on cash.............      (9)     (97)      45         16         (12) 
                                -----  -------  -------    -------     -------
 Net increase (decrease) in    
  cash and cash equivalents...    683    2,812   20,213       (289)     (2,273) 
  Cash and cash equivalents,     
   beginning of period........     14      697    3,509      3,509      23,722 
                                -----  -------  -------    -------     -------
  Cash and cash equivalents,   
   end of period..............  $ 697  $ 3,509  $23,722    $ 3,220     $21,449 
                                =====  =======  =======    =======     =======
Supplement disclosure of cash
flow information:
  Cash paid for interest......  $   7  $    71  $   182    $    17     $     6
                                =====  =======  =======    =======     =======
  Cash paid for income taxes..  $  17  $   471  $ 1,894    $ 1,125
                                =====  =======  =======    =======
  Computer equipment under             
   capital lease..............         $   177 
                                       =======
  Note receivable from sale of                 
   shares.....................                  $   100    $   100 
                                                =======    =======
</TABLE>
 
                            See accompanying notes.
 
                                      F-6
<PAGE>
 
                              SAVILLE SYSTEMS PLC
 
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
                                MARCH 31, 1996
    (TABULAR INFORMATION IS IN THOUSANDS OF U.S. DOLLARS, UNLESS OTHERWISE
                                  SPECIFIED)
       (INFORMATION AS AT MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED
                     MARCH 31, 1995 AND 1996 IS UNAUDITED)
 
(1) ORGANIZATION
 
  Saville Systems PLC (formerly Saville Systems Ireland Limited) (the
"Company") is a company incorporated under the laws of the Republic of Ireland
in 1993.
 
  Saville Systems Ireland Limited, Saville Systems Canada, Ltd. ("Saville
Canada") and Saville Systems U.S. Inc. ("Saville U.S.") were companies under
common control and with identical share ownership structures.
 
  On September 27, 1995, Saville Canada and Saville U.S. (collectively, the
"Subsidiaries") became majority-owned subsidiaries of the Company (the
"Restructuring"). The Restructuring was accomplished through the contribution
of shares of the Subsidiaries to the Company by all but one of the
shareholders of the Subsidiaries who previously owned, directly or indirectly,
identical percentages of all three companies; and through the contribution of
100% of the shares of 2916746 Canada, Inc., a Canadian holding corporation
whose only material asset is shares in Saville Canada.
 
  The Restructuring has been accounted for in a manner similar to a pooling of
interests and accordingly the consolidated financial statements of the Company
include the results of the Company and its two subsidiaries since their
inception, which in the case of Saville Canada was 1982 and Saville U.S. was
1991. The share capital of the subsidiaries has been presented as additional
paid-in capital in these consolidated financial statements.
 
  An approximate 15% interest in Saville Canada and Saville U.S. was not
contributed by one of the shareholders as at the date of Restructuring and has
been presented as a minority interest. As at December 31, 1995 and as at March
31, 1996 this minority interest has decreased to approximately 12%.
 
  The Company's principal line of business is the design and development of
customized billing solutions for the use of its customers in the global
telecommunications industry. In addition, the Company licenses the use of its
software to customers throughout the world and operates its software for
certain customers under a service bureau arrangement. The Company's principal
markets are currently located in the United States, Europe and Canada.
 
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  The consolidated financial statements have been prepared by management in
accordance with accounting principles generally accepted in the United States.
The preparation of financial statements in conformity with such principles
requires management to make estimates and assumptions that affect the reported
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenue and
expenses during the reporting periods. Actual results could differ from those
estimates.
 
  The unaudited interim consolidated financial statements, in the opinion of
management, reflect all adjustments (consisting only of normal and recurring
adjustments) necessary for a fair presentation of the results of the interim
periods ended March 31, 1995 and 1996 and the financial position at March 31,
1996.
 
                                      F-7
<PAGE>
 
                              SAVILLE SYSTEMS PLC
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
    (TABULAR INFORMATION IS IN THOUSANDS OF U.S. DOLLARS, UNLESS OTHERWISE
                                  SPECIFIED)
       (INFORMATION AS AT MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED
                     MARCH 31, 1995 AND 1996 IS UNAUDITED)

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
 
  Basis of presentation and principles of consolidation. These consolidated
financial statements include the accounts of the Company and its subsidiaries.
All intercompany accounts and transactions have been eliminated on
consolidation.
 
  Revenue recognition. Services are provided primarily on a time and materials
basis for which revenue is recognized in the period that the services are
provided. These services primarily include system design, customization and
installation services, upgrades, ongoing system management, system
enhancements and service bureau processing fees.
 
  Revenue from the licensing of software rights is recognized at the time of
delivery of the product to the customer, provided that the Company has no
significant related obligations or collection uncertainties remaining. Where
there are significant obligations related to the development and enhancement
of the software delivered, license fees are recorded over the expected term of
the related contract.
 
  Foreign currency translation. The Company uses the United States dollar as
the unit of measurement of its financial statements, as a significant portion
of the Company's operating and financing activities are transacted in United
States dollars. The functional currencies of the Company's subsidiaries are
their local currencies.
 
  Transactions and balances denominated in currencies other than the
functional currencies of the Company or its subsidiaries are remeasured in the
applicable functional currency. Translation adjustments arising on such
remeasurement are included in the determination of net income.
 
  The balance sheets of the Company's foreign subsidiaries are translated at
year-end rates of exchange and results of operations are translated at
weighted average rates of exchange for the fiscal period reported. Translation
adjustments resulting from this process are recorded in shareholders' equity
as an adjustment to the cumulative translation account.
 
  Property and equipment. Property and equipment are stated at cost.
Depreciation is computed using various methods over the estimated useful lives
as follows:
 
<TABLE>
<CAPTION>
                                                          RATE       BASIS
                                                          ----       -----
   <S>                                                    <C>  <C>
   Furniture and equipment............................... 20%  Declining balance
   Computer equipment.................................... 25%  Straight-line
   Leasehold improvements................................ 20%  Straight-line
   Automobiles........................................... 30%  Declining balance
</TABLE>
 
  Gains or losses resulting from sales or retirements are recorded as
incurred, at which time related costs and accumulated depreciation are removed
from the accounts. Maintenance and repairs are expensed as incurred.
 
  Leases. Leases are recorded as capital or operating leases. Any lease where
substantially all of the benefits and risks related to the ownership of the
leased asset are transferred to the lessee, as defined by Statement of
Financial Accounting Standards (SFAS) No. 13, "Leases," is accounted for as if
the asset were acquired and as if the obligation were assumed as of the date
of lease. All other leases are recorded as operating leases and payments are
expensed as they become due.
 
                                      F-8
<PAGE>
 
                              SAVILLE SYSTEMS PLC
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
    (TABULAR INFORMATION IS IN THOUSANDS OF U.S. DOLLARS, UNLESS OTHERWISE
                                  SPECIFIED)
       (INFORMATION AS AT MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED
                     MARCH 31, 1995 AND 1996 IS UNAUDITED)

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICES--(CONTINUED)
 
  Software development costs. Software development costs, principally the
design and development of billing software, are expensed as incurred. Costs
incurred after technological feasibility has been established, as defined by
SFAS No. 86, "Software Development Costs," have not been significant.
 
  Stock options. The Company records compensation expense relating to stock
based compensation in accordance with Accounting Principles Board Opinion No.
25 (APB No. 25) "Accounting for Stock Issued to Employees" and related
interpretations.
 
  Income tax. Income taxes are accounted for in accordance with SFAS No. 109,
"Accounting for Income Taxes." Under this method, the Company provides
deferred and prepaid taxes for temporary differences in the recognition of
income and expense for financial reporting and tax accounting purposes.
 
  Net income per share. Net income per share is computed based upon the
weighted average number of Ordinary Shares and dilutive share equivalents
outstanding and gives effect to certain adjustments described below. Share
equivalents are not included in the per share calculations where the effect of
their inclusion would be antidilutive, except that, in accordance with
Securities and Exchange Commission requirements, common and common share
equivalents issued during the twelve month period prior to the filing of the
initial public offering have been included in the calculation as if they were
outstanding for all periods, using the treasury stock method and the initial
public offering price.
 
  Cash equivalents. Cash equivalents are recorded at cost which approximates
market value, and include only short-term highly liquid investments with
maturities at the date purchased of less than three months.
 
(3) PROPERTY AND EQUIPMENT
 
<TABLE>
<CAPTION>
                               DECEMBER 31,       DECEMBER 31,          MARCH 31,
                                   1994               1995                1996
                             ----------------- ------------------- -------------------
                                  ACCUMULATED         ACCUMULATED         ACCUMULATED
                             COST DEPRECIATION  COST  DEPRECIATION  COST  DEPRECIATION
                             ---- ------------ ------ ------------ ------ ------------
   <S>                       <C>  <C>          <C>    <C>          <C>    <C>
   Furniture and equipment.  $339     $104     $1,503     $266     $1,711     $333
   Computer equipment......   231      108        744      207        881      246
   Computer equipment under   177       44        182       91        183      103
   capital lease...........
   Leasehold improvements..    71       54        521       59        612       88
   Automobiles.............    26       17         28       20         28       21
                             ----     ----     ------     ----     ------     ----
                             $844     $327     $2,978     $643     $3,415     $791
                             ----     ----     ------     ----     ------     ----
   Net book value..........        $517              $2,335              $2,624
                                   ====              ======              ======
</TABLE>
 
(4) LONG-TERM RECEIVABLE
 
  The Company has made arrangements with one of its customers whereby the
payment of one half of certain license fees earned during the period from
January 1, 1995 to December 31, 1995 are deferred. These amounts are non-
interest bearing, and minimum monthly repayments of approximately $100,000
(approximately CDN$135,000) will commence on the earlier of reaching an
established level of total revenues from this customer or, August 31, 1998.
 
 
                                      F-9
<PAGE>
 
                              SAVILLE SYSTEMS PLC
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
    (TABULAR INFORMATION IS IN THOUSANDS OF U.S. DOLLARS, UNLESS OTHERWISE
                                  SPECIFIED)
       (INFORMATION AS AT MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED
                     MARCH 31, 1995 AND 1996 IS UNAUDITED)

(5) RELATED PARTY TRANSACTIONS AND BALANCES
 
  In addition to promissory notes payable to companies controlled by an
officer, Grannarville Interest Group Inc. and Pro/38 Inc., as described in
Note 6, the following balances were outstanding with related parties:
 
  As at December 31, 1994 a demand loan bearing no interest was outstanding to
an officer of the Company in the amount of $50,000. The loan was fully repaid
during 1995.
 
<TABLE>
<CAPTION>
                                            DECEMBER 31, DECEMBER 31, MARCH 31,
                                                1994         1995       1996
                                            ------------ ------------ ---------
   <S>                                      <C>          <C>          <C>
   Related Party Advances
   Advances from Columbia Capital
   Corporation, a shareholder..............     $10
   Interest payable on promissory notes....       4
                                                ---          ---         ---
                                                $14
                                                ===          ===         ===
</TABLE>
 
  In 1995, Saville U.S. extended a loan to an officer in the amount of
$100,000 due August 1, 1997 in connection with the issue of shares of Saville
U.S. This loan is presented as a reduction of additional paid-in capital in
the statement of changes in shareholders' equity (note 8). Interest is payable
on a quarterly basis at the annual Chase Manhattan Bank Prime Rate (8 1/4% at
March 31, 1996).
 
  Details of the Company's transactions with related parties are as follows:
 
<TABLE>
<CAPTION>
                                                               THREE MONTHS
                                                 YEARS ENDED       ENDED
                                                 DECEMBER 31,    MARCH 31,
                                                -------------- --------------
                                                1993 1994 1995  1995    1996
                                                ---- ---- ---- ------  ------
   <S>                                          <C>  <C>  <C>  <C>     <C>   
   Interest expense on Pro/38 Inc. demand note
   payable
    and promissory note.......................  $15  $15  $ 11 $    3
   Interest expense on Grannarville Interest
   Group Inc. promissory note.................        17    36     11
   Interest expense, InVoice Group Inc., a
   shareholder................................   20
   Consulting fees paid to a related party of
   a shareholder..............................              75     26
   Commitment fee paid to Fleet Bank, a
   shareholder................................        25
                                                ---  ---  ---- ------  ------
                                                $35  $57  $122    $40
                                                ===  ===  ==== ======  ======
</TABLE>
 
(6) LONG-TERM DEBT
 
<TABLE>
<CAPTION>
                                                         DECEMBER 31,
                                                         -------------
                                                                       MARCH 31,
                                                          1994   1995    1996
                                                         ------ ------ ---------
<S>                                                      <C>    <C>    <C>
Related parties:
Grannarville Interest Group Inc. promissory note
Interest at the annual Chase Manhattan Bank Prime Rate
 was payable monthly...................................  $  500
Pro/38 Inc. promissory note
Interest at the annual Chase Manhattan Bank Prime Rate
 was payable monthly...................................     157
Other parties:
Capital lease obligation
Payable in 24 monthly payments of $5 and one payment of
 $44 at the end of the lease (7.2% interest rate). The
 lease is denominated in Canadian dollars..............     143   $97     $84
                                                         ------ -----     ---
                                                            800    97      84
Less amount due within one year........................     111    53      84
                                                         ------ -----     ---
                                                           $689   $44
                                                         ====== =====     ===
</TABLE>
 
                                     F-10
<PAGE>
 
                              SAVILLE SYSTEMS PLC
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
    (TABULAR INFORMATION IS IN THOUSANDS OF U.S. DOLLARS, UNLESS OTHERWISE
                                  SPECIFIED)
       (INFORMATION AS AT MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED
                     MARCH 31, 1995 AND 1996 IS UNAUDITED)
 
(7) COMMITMENTS AND CONTINGENCIES
 
  The Company is committed to make operating lease payments on premises,
computer hardware, and equipment under agreements which expire over the next
five years as follows:
 
<TABLE>
<S>          <C>                                         <C>
  March 31,  1997....................................... $2,471
             1998.......................................  2,160
             1999.......................................  1,599
             2000.......................................    866
             2001.......................................    451
             Thereafter.................................    951
                                                         ------
                                                         $8,498
                                                         ======
</TABLE>
 
  Total rental expense was approximately $639,000, $992,000 and $1,950,000 for
the years ended December 31, 1993, 1994 and 1995, respectively, and
approximately $419,000 and $754,000 for the three months ended March 31, 1995
and 1996, respectively.
 
  Saville Canada entered into an exclusive agreement with Ed Tel Inc. to
market and license a Message Processing System whereby Saville Canada was
required to pay royalties based on a percentage of the annual increase in
total gross revenue of Saville Canada over base revenue established in 1991.
The royalty expense for the years ended December 31, 1993, 1994 and 1995 was
$125,000, $328,000 and $655,000, respectively, and for the three months ended
March 31, 1995 and 1996 was $135,000 and $10,500, respectively. The original
agreement expired on December 31, 1995. The Company has entered into a five
year extension period with the royalties fixed at CDN$50,000 annually for that
period.
 
(8) SHARE CAPITAL
 
  Details of the authorized and issued share capital are as follows:
<TABLE>
<CAPTION>
                                                            DECEMBER
                                                               31,
                                                            --------- MARCH 31,
                                                            1994 1995   1996
                                                            ---- ---- ---------
<S>                                                         <C>  <C>  <C>
 Authorized
  40,000,000 Ordinary Shares, nominal value $0.0025 per
             share
      30,000 Deferred Shares, nominal value IR(Pounds)1.00
             per share
 Issued
  17,576,406 Ordinary Shares (1995--17,576,406, 1994--
             14,900,000)..................................  $10  $44     $44
      30,000 Deferred Shares (1995--30,000, 1994--nil)....        48      48
                                                            ---  ---     ---
                                                            $10  $92     $92
                                                            ===  ===     ===
</TABLE>
 
  (a) Authorized share capital
 
  Upon incorporation, the Company's authorized share capital comprised 100,000
Ordinary Shares.
 
  On January 20, 1995, the Company redesignated each of its Ordinary Shares
authorized and issued to be Class A voting, convertible, participating shares
and increased its authorized share capital by 100,000 Class B non-voting,
convertible, participating shares which ranked pari passu in all respects with
the Class A shares. Each fully paid Class B non-voting, convertible,
participating share could be converted at any
 
                                     F-11
<PAGE>
 
                              SAVILLE SYSTEMS PLC
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
    (TABULAR INFORMATION IS IN THOUSANDS OF U.S. DOLLARS, UNLESS OTHERWISE
                                  SPECIFIED)
       (INFORMATION AS AT MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED
                     MARCH 31, 1995 AND 1996 IS UNAUDITED)

(8) SHARE CAPITAL--(CONTINUED)
 
time into a Class A voting, convertible, participating share on the basis of
one to one. Likewise, each fully paid Class A voting, convertible,
participating share could be converted at any time into a Class B non-voting,
convertible, participating share on the basis of one to one.
 
  In connection with the Restructuring, authorized share capital was amended
by the cancellation of 100,000 Class B shares, the redesignation of Class A
shares as Ordinary Shares with a nominal value of $0.0025 per share and the
authorization of 30,000 Deferred Shares with a nominal value of IR(Pounds)1.00
per share. Authorized capital was then increased to 40,000,000 Ordinary
Shares.
 
  (b) Issued share capital
 
  An analysis of the number of shares issued and outstanding for the three
year period ended December 31, 1995 and for the three months ended March 31,
1996 is as follows:
 
  . during 1993, the Company issued 2,980 Ordinary Shares for cash
consideration of $2;
 
  . during 1994, the Company issued 14,897,020 Ordinary Shares for cash
consideration of $9,998;
 
  . on January 20, 1995, the Company's 14,900,000 issued and outstanding
    Ordinary Shares were redesignated as Class A shares;
 
  . during the year ended December 31, 1995, the Company issued 176,406
    Ordinary Shares to officers and employees for cash consideration of
    $805,808 and conducted a public offering issuing 2,500,000 ordinary shares
    for total gross proceeds of $25,000,000.
 
  In connection with the Restructuring, 15,004,300 Class A shares were
redesignated as 15,004,300 Ordinary Shares, one additional Ordinary Share was
issued, and the Company issued 30,000 Deferred Shares. In addition, on
September 27, 1995, the Company completed a 400-for-1 division of all Ordinary
Shares and subsequently declared and allotted a share dividend of 2.725
Ordinary Shares for each post-division share outstanding. All outstanding
shares and per share amounts in these consolidated financial statements have
been retroactively adjusted to reflect this share division and dividend. The
division and dividend were approved by the shareholders by unanimous written
consent on September 27, 1995.
 
  (c) Additional paid-in capital
 
  During 1993, shareholders of Saville U.S. contributed additional capital to
this subsidiary comprising cash of $150,000 and forgiveness of debt totalling
$651,019. This contribution has been reflected as an increase in additional
paid-in capital in the amount of $681,000 and an increase in minority interest
of $120,019.
 
  During 1994, Saville Canada reorganized its share capital, reducing its
retained earnings and increasing its share capital by an amount of $1,153,985.
The increase in this subsidiary's share capital has been reflected as an
increase in additional paid-in capital in these financial statements in the
amount of $980,000 and an increase in minority interest of $173,985.
 
 
                                     F-12
<PAGE>
 
                              SAVILLE SYSTEMS PLC
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
    (TABULAR INFORMATION IS IN THOUSANDS OF U.S. DOLLARS, UNLESS OTHERWISE
                                  SPECIFIED)
       (INFORMATION AS AT MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED
                     MARCH 31, 1995 AND 1996 IS UNAUDITED)

(8) SHARE CAPITAL--(CONTINUED)
 
  During 1995 and prior to the Restructuring described in note 1, 70.04 shares
of Saville Canada and 6.135 shares of Saville U.S. were issued for aggregate
cash consideration of $174,000 and a note receivable of $100,000. The
aggregate cash consideration, net of the note receivable, has been reflected
in these financial statements as additional paid-in capital in the amount of
$148,000 and an increase in minority interest of $26,000.
 
  (d) Dividends
 
  Shareholders are entitled to receive dividends as may be recommended by the
Board of Directors of the Company and approved by the shareholders, which will
be declared and paid in United States dollars. Under Irish Company law,
dividends are payable only out of profits available for distribution, where
profits are determined in accordance with accounting principles generally
accepted in the Republic of Ireland. The amount available for distribution to
shareholders includes only the retained earnings of the Company, and not that
of its subsidiaries, calculated in accordance with accounting principles
generally accepted in the Republic of Ireland which amounted to approximately
$9,057,000 at March 31, 1996.
 
  (e) Minority interest
 
  Concurrent with the Restructuring of the Company, the minority shareholder
has entered into a share restriction and contribution agreement which
prohibits the minority shareholder from transferring any securities of the
Company, unless a proportionate number of Subsidiary shares are contributed to
the Company. The minority shareholder must contribute all of its shares in the
Subsidiaries no later than September 1, 2005.
 
  (f) Share options
 
  During the years ended December 31, 1994 and 1995 prior to the restructuring
described in note 1, the Company granted share "option units' to certain
officers, directors and employees of the Company. Each option unit was
comprised of 1 Class A share of the Company, 1 common share of Saville Canada
and .0875 common shares of Saville U.S. upon exercise of the option unit.
 
  In connection with the Restructuring, each option unit outstanding at that
date was exchanged for options which entitle the holder to 1 Ordinary Share
for each option exercised.
 
 
                                     F-13
<PAGE>

 
                              SAVILLE SYSTEMS PLC
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
    (TABULAR INFORMATION IS IN THOUSANDS OF U.S. DOLLARS, UNLESS OTHERWISE
                                  SPECIFIED)
       (INFORMATION AS AT MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED
                     MARCH 31, 1995 AND 1996 IS UNAUDITED)

(8) SHARE CAPITAL--(CONTINUED)
 
  The following table summarizes the activity in options to March 31, 1996,
after giving effect to the reorganization:
 
<TABLE>
<CAPTION>
                                  NUMBER OF ORDINARY SHARES
                            -------------------------------------
                            AVAILABLE FOR                         EXERCISE PRICE
                                GRANT     UNEXERCISED EXERCISABLE   PER SHARE
                            ------------- ----------- ----------- --------------
<S>                         <C>           <C>         <C>         <C>
Balance at December 31,
1993 and 1992.............
Granted...................                   150,490               $      1.68
                                           ---------
Balance at December 31,
1994......................                   150,490
                                           ---------
Granted...................                   540,958                      2.40
1995 Share Option Plan
adopted...................    2,980,000
Granted...................   (1,205,748)   1,205,748                8.66-10.00
Vested....................                              367,309          10.00
Exercised.................                   (72,105)   (72,105)         10.00
Expired...................                    (1,030)    (1,030)         10.00
Cancelled.................       21,922      (21,922)                     8.66
                             ----------    ---------    -------
Balance at December 31,
1995......................    1,796,174    1,802,139    294,174
                             ----------    ---------    -------
Granted...................      (35,088)      35,088               15.00-16.63
Vested....................                              128,039
Cancelled.................          928         (928)                     8.66
                             ----------    ---------    -------
Balance at March 31, 1996.    1,762,014    1,836,299    422,213
                             ==========    =========    =======
</TABLE>
 
  Vesting of the 150,490 options having an exercise price of $1.68 per share
and the 540,958 options having an exercise price of $2.40 per share was
accelerated upon completion of the initial public offering, such that all of
these options become fully exercisable by May 19, 1996. These options were
granted below estimated fair market value at the date of grant and
compensation expense is being recorded over the related vesting periods.
Compensation expense of $12,000 and $95,000 was recorded in the years ended
December 31, 1994 and 1995, respectively, and $42,000 was recorded for the
three months ended March 31, 1996. In future periods, the Company will record
additional compensation expense of $31,000 as these options vest. These
options generally expire 5 years from date of grant.
 
  On August 21, 1995, the Board of Directors approved the 1995 Share Option
Plan which provides for the grant of stock to employees, officers, directors,
consultants and advisors of the Company. These options generally expire ten
years from the date of grant and vest over periods of one to five years.
 
  During the period ended March 31, 1996, the Company adopted the 1996
Employee Share Purchase Plan for certain officers and employees of the
Company.
 
  (g) Cumulative translation account
 
  Changes in the Canadian dollar exchange rate relative to the United States
dollar has caused the adjustments to the cumulative translation account.
 
                                     F-14
<PAGE>
 
                              SAVILLE SYSTEMS PLC
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
    (TABULAR INFORMATION IS IN THOUSANDS OF U.S. DOLLARS, UNLESS OTHERWISE
                                  SPECIFIED)
       (INFORMATION AS AT MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED
                     MARCH 31, 1995 AND 1996 IS UNAUDITED)
 
(9) OTHER INCOME
<TABLE>
<CAPTION>
                                          YEARS ENDED      THREE MONTHS ENDED
                                          DECEMBER 31,          MARCH 31,
                                         ----------------  --------------------
                                         1993  1994  1995    1995       1996
                                         ----  ----  ----  ---------  ---------
<S>                                      <C>   <C>   <C>   <C>        <C>
Interest income......................... $  9  $118  $369       $ 18       $311
Interest on long-term debt..............  (20)  (24)  (61)       (14)        (2)
Other interest expense..................  (26)  (54)  (15)        (3)        (4)
Foreign exchange gains (losses), net....        182   (70)        74        (76)
Other...................................   44    30   (15)                   14
                                         ----  ----  ----  ---------  ---------
                                         $  7  $252  $208       $ 75       $243
                                         ====  ====  ====  =========  =========
</TABLE>
 
(10) INCOME TAXES
 
  The provision for income taxes consists of the following:
 
<TABLE>
<CAPTION>
                                             YEARS ENDED     THREE MONTHS ENDED
                                             DECEMBER 31,         MARCH 31,
                                          ------------------ -------------------
                                          1993  1994   1995    1995      1996
                                          ---- ------ ------ --------- ---------
<S>                                       <C>  <C>    <C>    <C>       <C>
Current:
  Ireland................................      $  533 $1,165      $482      $396
  Foreign................................ $32   1,064    707       250        44
                                          ---  ------ ------ --------- ---------
                                          $32  $1,597 $1,872      $732      $440
                                          ===  ====== ====== ========= =========
</TABLE>
 
  Pretax income (loss) from foreign operations amounted to $350,000 $2,078,000
and $1,677,000 for the years ended December 31, 1993, 1994 and 1995,
respectively, and $383,000 and $(312,000) for the three months ended March 31,
1995 and 1996, respectively.
 
  The effective income tax rate differed from the statutory federal income tax
rate due to:
 
<TABLE>
<CAPTION>
                                                             YEARS ENDED
                                                            DECEMBER 31,
                                                        -----------------------
                                                        1993    1994     1995
                                                        -----  -------  -------
<S>                                                     <C>    <C>      <C>
Standard Irish federal income tax rate................   40.0%    40.0%    38.5%
Computed tax provision................................  $   9  $ 2,843  $ 3,205
Tax relief on Irish manufacturing operations..........          (1,539)  (1,750)
Foreign tax rate differences..........................     10       93       95
Change in valuation allowance in respect of subsidiary
losses................................................    (91)      27      152
Other.................................................    104      173      170
                                                        -----  -------  -------
                                                        $  32  $ 1,597  $ 1,872
                                                        =====  =======  =======
Per share effect of the tax relief on Irish
manufacturing operations..............................  $      $  0.10  $  0.11
                                                        =====  =======  =======
</TABLE>
 
  The Company has significant operations and generates a substantial portion
of its taxable income in the Republic of Ireland, and under an incentive tax
program due to terminate in 2010, is taxed on its "manufacturing income" at a
10% rate. To qualify for the 10% tax rate, the Company must satisfy certain
conditions, including achieving target employment levels in the Republic of
Ireland and rendering computer services there. The Irish standard rate was
reduced from 40% to 38% effective April 1, 1995.
 
                                     F-15
<PAGE>
 
                              SAVILLE SYSTEMS PLC
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
    (TABULAR INFORMATION IS IN THOUSANDS OF U.S. DOLLARS, UNLESS OTHERWISE
                                  SPECIFIED)
       (INFORMATION AS AT MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED
                     MARCH 31, 1995 AND 1996 IS UNAUDITED)

(10) INCOME TAXES--(CONTINUED)
 
  Deferred income taxes reflect loss carryforwards and the tax effects of
temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income tax purposes.
Significant components of the Company's deferred taxes as of December 31, 1994
and December 31, 1995 are as follows:
 
<TABLE>
<CAPTION>
                                                                     DECEMBER
                                                                        31,
                                                                     ----------
                                                                     1994  1995
                                                                     ----  ----
<S>                                                                  <C>   <C>
Deferred tax assets:
  Loss carryforwards................................................  272   120
Depreciation........................................................   28    60
                                                                     ----  ----
                                                                      300   180
Valuation allowance for deferred tax assets......................... (300) (180)
                                                                     ----  ----
Net deferred taxes..................................................
                                                                     ====  ====
</TABLE>
 
  A valuation allowance of 100% has been recorded to offset noncurrent
deferred tax assets due to the uncertainty of realizing the benefit of these
assets. The valuation allowance decreased by $120,000 in the year ended
December 31, 1995.
 
  For federal income tax purposes at December 31, 1995 the Company's foreign
subsidiary, Saville U.S., had approximately $300,000 of net operating loss
carryforwards which expire in the year 2007.
 
  Undistributed earnings of the Company's foreign subsidiaries amount to
approximately $881,000 at December 31, 1995. Those earnings are considered to
be indefinitely reinvested and, accordingly, no provision for withholding
taxes has been provided thereon. Upon distribution of those earnings in the
form of dividends or otherwise, the Company would be subject to withholding
taxes payable in the amount of approximately $132,000 to various foreign
governments. Determination of the amount of the unrecognized deferred income
tax liability is not practicable because of the complexities associated with
its hypothetical calculation; however, unrecognized foreign tax credit
carryforwards would be available to reduce some portion of the liability.
 
(11) INDUSTRY AND GEOGRAPHIC INFORMATION
 
  The Company and its subsidiaries operate primarily in one industry segment,
the development and marketing of proprietary customer administration and
billing systems. Transfers between geographic areas are accounted for using
methods designed to approximate comparable arm's length amounts. Such
transfers are eliminated in the consolidated financial statements.
Identifiable assets are those assets that can be directly associated with a
particular geographic area.
 
 
                                     F-16
<PAGE>
 
                              SAVILLE SYSTEMS PLC
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
    (TABULAR INFORMATION IS IN THOUSANDS OF U.S. DOLLARS, UNLESS OTHERWISE
                                  SPECIFIED)
       (INFORMATION AS AT MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED
                     MARCH 31, 1995 AND 1996 IS UNAUDITED)

(11) INDUSTRY AND GEOGRAPHIC INFORMATION--(CONTINUED)
 
  The following is a summary of operations within geographic areas.
<TABLE>
<CAPTION>
                                                         ADJUSTMENTS
                                               UNITED        AND
                            IRELAND   CANADA   STATES   ELIMINATIONS  CONSOLIDATED
                            --------  -------  -------  ------------- ------------
<S>                         <C>       <C>      <C>      <C>           <C>
Quarter ended March 31,
1996
  Sales to unaffiliated     $ 6,586   $ 1,788  $2,181                   $10,555
 customers................
  Transfers between                     4,511             $ (4,511)
 geographic areas.........
                            -------   -------  ------     --------      -------
    Total revenues........  $ 6,586   $ 6,299  $2,181     $ (4,511)     $10,555
                            =======   =======  ======     ========      =======
  Operating profit (loss).  $ 2,389   $  (541) $  368     $     21      $ 2,237
                            =======   =======  ======     ========      =======
  Identifiable assets.....  $29,357   $ 6,052  $3,695     $   (282)     $38,822
                            =======   =======  ======     ========      =======
Year ended December 31,
 1995
  Sales to unaffiliated     $16,519   $ 9,098  $4,679                   $30,296
 customers................
  Transfers between            (210)   11,309     210     $(11,309)
 geographic areas.........
                            -------   -------  ------     --------      -------
    Total revenues........  $16,309   $20,407  $4,889     $(11,309)     $30,296
                            =======   =======  ======     ========      =======
  Operating profit........  $ 6,141   $ 1,534  $  357     $     84      $ 8,116
                            =======   =======  ======     ========      =======
  Identifiable assets.....  $27,737   $ 5,598  $2,995     $   (299)     $36,031
                            =======   =======  ======     ========      =======
Year ended December 31,
 1994
  Sales to unaffiliated     $10,470   $ 8,612  $  991                   $20,073
 customers................
  Transfers between                     5,950      40     $ (5,990)
 geographic areas.........
                            -------   -------  ------     --------      -------
    Total revenues........  $10,470   $14,562  $1,031     $ (5,990)     $20,073
                            =======   =======  ======     ========      =======
  Operating profit (loss).  $ 4,753   $ 2,091  $ (119)    $    131      $ 6,856
                            =======   =======  ======     ========      =======
  Identifiable assets.....  $ 5,545   $ 4,793  $1,157     $ (1,638)     $ 9,857
                            =======   =======  ======     ========      =======
Year ended December 31,
 1993
  Sales to unaffiliated     $   101   $ 7,888  $1,320                   $ 9,309
 customers................
  Transfers between                     1,167             $ (1,167)
 geographic areas.........
                            -------   -------  ------     --------      -------
    Total revenues........  $   101   $ 9,055  $1,320     $ (1,167)     $ 9,309
                            =======   =======  ======     ========      =======
  Operating profit (loss).  $   (77)  $   192  $  150     $   (250)     $    15
                            =======   =======  ======     ========      =======
  Identifiable assets.....  $   352   $ 3,387  $1,203     $ (1,735)     $ 3,207
                            =======   =======  ======     ========      =======
</TABLE>
 
  All of the sales to unaffiliated customers for Ireland are export sales for
all periods presented. Of these export sales, sales to customers located in
the United States accounted for 0%, 54.4% and 68.0% for the years ended
December 31, 1993, 1994 and 1995, respectively, and 66.2% and 77.5% for the
three months ended March 31, 1995 and 1996, respectively. Sales to customers
located in the United Kingdom and Europe accounted for the balance of export
sales for all periods presented.
 
                                     F-17
<PAGE>

 
                              SAVILLE SYSTEMS PLC
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
    (TABULAR INFORMATION IS IN THOUSANDS OF U.S. DOLLARS, UNLESS OTHERWISE
                                  SPECIFIED)
       (INFORMATION AS AT MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED
                     MARCH 31, 1995 AND 1996 IS UNAUDITED)

(12) SALES TO MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK
 
  The Company has contracts with certain customers which comprise a
significant portion of consolidated revenues as follows:
<TABLE>
<CAPTION>
                                                                  THREE MONTHS
                                                 YEARS ENDED          ENDED
                                                 DECEMBER 31,       MARCH 31,
                                                ----------------  ---------------
                                                1993  1994  1995   1995     1996
                                                ----  ----  ----  ------   ------
<S>                                             <C>   <C>   <C>   <C>      <C>
AT&T Corporation...............................  13%   28%   37%      37%      49%
Sprint Corporation.............................   3     5     9        9       12
Energis Communications Limited.................   1    24    16       19        5
Unitel Communications Limited..................  45    18    11       15        7
Ed Tel, Inc....................................  19     9     5        5        3
Blood Trac Systems Inc.........................  12     8     4        6        3
                                                ---   ---   ---   ------   ------
                                                 93%   92%   82%      91%      79%
                                                ===   ===   ===   ======   ======
</TABLE>
 
  Financial instruments which potentially subject the Company to
concentrations of credit risk consists of cash and cash equivalents and trade
receivables. The Company sells its products to customers primarily in the
telecommunications industry within North America. The Company performs ongoing
credit evaluations of its customers and does not require collateral. The
Company provides an allowance for potential credit losses and such losses were
not material during the periods reported.
 
  The aggregate accounts receivable balances relating to the above customers
totalled $4,729,000 and $6,853,000 at December 31, 1994 and 1995,
respectively, and $10,943,000 at March 31, 1996. In addition, the long-term
receivable of $741,000 at December 31, 1995 and $744,000 at March 31, 1996
relates to one of these customers.
 
  The Company's cash and cash equivalents include approximately $20,791,000
and $19,631,000 as at December 31, 1995 and March 31, 1996, on deposit with
one institution, the majority of which is invested in short-term commercial
paper.
 
(13) GOVERNMENT ASSISTANCE
 
  The Company is eligible for government assistance in certain jurisdictions
for certain expenditures incurred. The Company accrues and offsets these
eligible grants against the related costs. The amounts included in income were
$124,000 and $196,000 for the years ended December 31, 1994 and 1995,
respectively, and $nil and $52,000 for the three months ended March 31, 1995
and 1996, respectively.
 
(14) RECENTLY ISSUED ACCOUNTING STANDARDS
 
  The Financial Accounting Standards Board has issued SFAS No. 123,
"Accounting for Stock Based Compensation," which is effective for the
Company's December 31, 1996 year end. SFAS No. 123 allows an entity to
continue the application of the accounting prescribed by APB No. 25, however,
pro forma footnote disclosures of net income and earnings per share, as if
SFAS No. 123 had been applied, are required. The Company intends to continue
its current accounting under APB No. 25 and provide the required pro forma
footnote disclosures commencing with its fiscal 1996 year end financial
statements.
 
                                     F-18
<PAGE>
 
 ADDITIONAL INFORMATION REQUIRED PURSUANT TO THE COMPANIES ACTS, 1963 TO 1990,
                          OF THE REPUBLIC OF IRELAND
 
  1. The nominal share capital of Saville Systems PLC (the "Company") is
$100,000 and IR(Pounds)30,000 divided into 40,000,000 Ordinary Shares of
$0.0025 each and 30,000 Deferred Shares of IR(Pounds)1.00 each of which
17,576,406 Ordinary Shares and 30,000 Deferred Shares have been issued and are
fully paid.
 
  2. The Articles of Association of the Company provide as follows with regard
to the remuneration of Directors:
 
    (a) Ordinary remuneration of Directors
 
    The ordinary remuneration of the Directors shall be determined from
    time to time by an ordinary resolution of the Company and shall be
    divisible (unless such resolution shall provide otherwise) among the
    Directors as they may agree, or, failing agreement, equally, except
    that any Director who shall hold office for only part of the period in
    respect of which such remuneration is payable shall be entitled only to
    rank in such division for a proportion of the remuneration related to
    the period during which he has held office.
 
    (b) Special remuneration of Directors
 
    Any Director who holds any executive office (including for this purpose
    the office of Chairman or Deputy Chairman) or who serves on any
    committee, or who otherwise performs services which in the opinion of
    the Directors are outside the scope of the ordinary duties of a
    Director, may be paid such extra remuneration by way of salary,
    commission or otherwise as the Directors may determine.
 
    (c) Expenses of Directors
 
    The Directors may be paid all travelling, hotel and other expenses
    properly incurred by them in connection with their attendance at
    meetings of Directors or committees of Directors or general meetings or
    separate meetings of the holders of any class of shares or of
    debentures of the Company or otherwise in connection with the discharge
    of their duties.
 
    (d) Entitlement to grant pensions
 
    The Directors may provide benefits, whether by way of pensions,
    gratuities or otherwise, for any Director, former Director or other
    officer or former officer of the Company or to any person who holds or
    has held any employment with the Company or with any body corporate
    which is or has been a subsidiary or associated company of the Company
    or a predecessor in business of the Company or of any such subsidiary
    or associated company and to any member of his family or any person who
    is or was dependent on him and may set up, establish, support, alter,
    maintain and continue any scheme for providing all or any such benefits
    and for such purposes any Director accordingly may be, become or remain
    a member of, or rejoin, any scheme and receive or retain for his own
    benefit all benefits to which he may be or become entitled thereunder.
    The Directors may pay out of the funds of the Company any premiums,
    contributions or sums payable by the Company under the provisions of
    any such scheme in respect of any of the persons or class of persons
    above referred to who are or may be or become members thereof.
 
                                      A-1
<PAGE>
 
  3. The following are the names, addresses and descriptions of the Directors:
 
<TABLE>
<CAPTION>
          NAME                        ADDRESS                           DESCRIPTION
          ----                        -------                           -----------
<S>                      <C>                               <C>
Bruce A. Saville........ c/o Saville Systems PLC           Chairman of the Board of Directors
                          4445 Calgary Trail
                          7th Floor
                          Edmonton, Alberta
                          T6H 5R7
John J. Boyle, III...... c/o Saville Systems PLC           President and Chief Executive Officer;
                          25 Burlington Mall Rd.           Corporate Director
                          Sixth Floor
                          Burlington, MA 01803
John A. Blanchard, III.. c/o Deluxe Corporation            Corporate Director
                          1080 West Country Rd. F
                          Shoreview, MN 55126-8201
Brian E. Boyle.......... c/o Boston Communications Group   Corporate Director
                          One McKinley Square
                          Boston, MA 02109
William F. Cunningham... c/o McGovern, Hurley & Cunningham Corporate Director
                          2005 Sheppard Ave. East
                          Suite 503
                          North York, Ontario
                          M2J 5B4
Richard A. Licursi...... c/o Phoenix Wireless Group, Inc.  Corporate Director
                          2300 Maitland Center Parkway
                          Suite 200
                          Maitland, FL 32751
Fergus G. McGovern...... 8 Foxrock Avenue                  Corporate Director
                          Foxrock
                          Dublin 18
                          Ireland
David P. Mixer.......... c/o Columbia Capital Corporation  Corporate Director
                          5586 Post Road
                          Suite 110
                          Greenwich, RI 02818
James B. Murray, Jr..... c/o Columbia Capital Corporation  Corporate Director
                          ""0'' Court Square
                          P.O. Box 1465
                          Charlottesville, VA 22902
John W. Sidgmore........ c/o UUNet Technologies            Corporate Director
                          3060 Williams Drive
                          Suite 601
                          Fairfax, VA 22031
</TABLE>
 
                                      A-2
<PAGE>
 
  4. The minimum amount which, in the opinion of the Directors, must be raised
by the Company by the sale of the ADSs being sold by the Company in this
offering in order to provide the sums required to be provided in respect of
each of the following matters:
 
    (a) the purchase price of any property purchased or to be purchased which
  is to be defrayed in whole or in part out of the proceeds of the issue;
 
    (b) any preliminary expenses payable by the Company, and any commission
  so payable to any person in consideration of his agreeing to subscribe for,
  or of his procuring or agreeing to procure subscriptions for, any shares of
  the Company;
 
    (c) the repayment of any moneys borrowed by the Company in respect of any
  of the foregoing matters;
 
    (d) working capital;
 
is nil.
 
  5. The subscription lists will open at 10:00 a.m. on June 20, 1996 and may
be closed at any time thereafter.
 
  6. The price at which ADSs are being offered to the public in this offering
will be payable in full on application.
 
  7. As of March 31, 1996, the Company had outstanding options to purchase an
aggregate of 1,836,299 Ordinary Shares. Additional information with respect to
these options is as follows:
 
<TABLE>
<CAPTION>
                                                       NUMBER
                                                         OF    EXERCISE
      DATE OF GRANT                                    OPTIONS  PRICE     TERM
      -------------                                    ------- -------- --------
      <S>                                              <C>     <C>      <C>
      July 8, 1994.................................... 150,490   $1.68   5 years
      January 1, 1995................................. 416,122   $2.40   5 years
      March 1, 1995................................... 104,030   $2.40   5 years
      June 1, 1995....................................  20,806   $2.40   5 years
      September 1, 1995............................... 827,113   $8.66  10 years
      November 16, 1995............................... 305,500  $10.00  10 years
      December 21, 1995...............................  73,135  $10.00  10 years
      January 1, 1996.................................  24,088  $16.38  10 years
      January 8, 1996.................................   3,000  $15.00  10 years
      January 15, 1996................................   3,000  $16.30  10 years
      March 1, 1996...................................   5,000  $16.63  10 years
</TABLE>
 
As of the date of this Prospectus, options to purchase an additional 3,000
Ordinary Shares have been granted at an exercise price of $18.75 per share
with a term of ten years.
 
The Company did not receive consideration for the grant of the options
described above. Copies of the option agreements and other records relating to
the options described above may be inspected at the offices of the Company at
IDA Business Park, Dangan, Galway, Ireland, during normal business hours on
any weekday (Saturdays and public holidays excepted) for a period of 14 days
after the date of this Prospectus.
 
  8. The Company will pay or allow to the Underwriters, in consideration of
their obligations to purchase and offer to the public the 100,000 ADSs which
are being sold by the Company in this offering, commissions and discounts
aggregating approximately $130,000, being at the rate of $1.30 per each such
ADS.
 
  9. The estimated amount of the expenses of the offering, including
underwriting commissions and discounts is $3,120,000 of which $630,000 will be
payable by the Company and the balance of $2,490,000 will be payable by the
Selling Shareholders. If the Underwriters exercise in whole or in part their
option to purchase additional ADSs from the Selling Shareholders, the
estimated amount of further expenses of up to $468,000 thereby incurred will
be payable by the Selling Shareholders. The net amount of the consideration
estimated to be received by the Company in respect of the ADSs comprised in
the offering is $1,970,000.
 
 
                                      A-3
<PAGE>
 
  10. The following contracts (not being contracts entered into in the
ordinary course of business) have been entered into within the five years
immediately preceding the date of this document and are or may be material:
 
<TABLE>
<CAPTION>
                                   DESCRIPTION
                                   -----------
 <C>    <S>                                                                <C>
        Form of Underwriting Agreement.
        Underwriting Agreement between the Company, certain shareholders
           of the Company and Alex. Brown & Sons Incorporated, Hambrecht
           & Quist LLC and The Columbia Group Incorporated, as
           representatives of the several underwriters, dated November
           15, 1995.
        Deposit Agreement, dated as of November 15, 1995.
        Contribution Agreement between the Registrant and certain
           shareholders of the Registrant, dated as of September 27,
           1995.
        Stock Restriction Agreement and Contribution Agreement between
           Invoice Systems (Canada) Inc. and the Company, dated as of
           September 27, 1995.
        Contribution Agreement between the Registrant, 2916746 Canada,
           Inc. and Columbia Saville Ireland Investors, L.P., dated as
           of September 27, 1995.
        1995 Share Option Plan.
        Amended and Restated Employment Agreement between the Registrant
           and Bruce A. Saville, dated as of August 2, 1994.
        Employment Agreement between the Registrant and John J. Boyle,
           III, dated as of July 8, 1994, amended as of January 31,
           1995.
        Employment Letter Agreement between Saville Systems Ireland
           Limited and Padraig W. Kenny, dated March 30, 1995.
        Employment Letter Agreement between Saville Systems U.S., Inc.
           and Michael A. Shulist, dated February 21, 1995.
        Employment Letter Agreement between Saville Systems U.S., Inc.
           and Marc J. Venator, dated March 22, 1995.
        Employment Letter Agreement between the Registrant and John J.
           Kiley, dated as of October 17, 1995.
        Sublease between Evered Bardon USA, Inc. and Saville Systems
           U.S., Inc., dated December 1, 1994.
        Lease Agreement between Barbican Properties Inc. and Saville
           Systems Canada, Ltd. made as of May 1, 1995.
        Letter Agreement between Barbican Properties Inc. and Saville
           Systems Canada, Ltd. dated July 19, 1995.
        Indenture between Orfus Investments and Saville Systems Canada,
           Ltd. dated November 25, 1994.
        Lease between Clybaun Construction Limited, Saville Systems
           Ireland Limited, Saville Systems Canada, Ltd. and Anglo Irish
           Bank Corporation PLC, dated April 27, 1994.
        Deed between Saville Systems Ireland Limited and Clybaun
           Construction Limited, dated April 27, 1994.
        Lease between Clybaun Construction Limited, Saville Systems
           Ireland Limited and Remington Fox Ireland Limited, dated July
           1, 1994.
        Promissory Note in the amount of $500,000 executed by Saville
           Systems Canada, Ltd. in favor of 167,818 Canada Ltd (now
           known as Grannarville Interest Group Ltd.), dated August 2,
           1994.
        Agreement between Saville Systems Ireland Limited, Saville
           Systems Canada, Ltd. and Industrial Development Agency
           (Ireland), dated June 9, 1995.
</TABLE>
 
                                      A-4
<PAGE>
 
<TABLE>
<CAPTION>
            DESCRIPTION
            -----------
 <C> <S>                        <C>
     Intellectual Property
        Purchase Agreement
        between the
        Registrant and
        Saville Systems
        Canada, Ltd., made as
        of July 1, 1993.
 
     Letter Agreement between
        Saville Systems
        Canada, Ltd. and Ed
        Tel, Inc., dated June
        30, 1995.
 
     Sublease Agreement
        between Saville
        Systems U.S., Inc.
        and Boston Private
        Bank & Trust Company,
        dated November 22,
        1995.
 
     Lease Agreement between
        Saville Systems
        Canada, Ltd. and
        Orfus Investments,
        dated
        April 25, 1996.
 
     Indemnity Agreement
        between the
        Registrant and Orfus
        Investments, dated
        April 25, 1996.
 
     1996 Employee Share
        Purchase Plan.
</TABLE>
 
  A copy of each of the above-mentioned agreements may be inspected at the
offices of the Company at IDA Business Park, Dangan, Galway, Ireland during
normal business hours on any weekday (Saturdays and public holidays excepted)
for a period of 14 days after the date of this Prospectus.
 
  11. The auditors of the Company are Ernst & Young, Chartered Accountants, of
Kiltartan House, Forster Street, Galway, Republic of Ireland.
 
  12. The Company has been carrying on business since August 1993.
 
  13. Ernst & Young and McCann FitzGerald have given and not withdrawn their
respective written consents to the issue of this document with the inclusion
therein of the references to them, and of their report in the case of Ernst &
Young, in the form and context in which they are included.
 
  14. Copies of the material contracts and consents referred to in paragraphs
10 and 13 above were attached to the copy of this document which has been
delivered to the Registrar of Companies in the Republic of Ireland for
registration.
 
                                      A-5
<PAGE>





 

[Picture of billing invoice appears here]

[Saville Systems logo appears here]



<PAGE>
 
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
 
 NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PRO-
SPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, ANY SELLING SHAREHOLDER
OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY
PERSON OR BY ANYONE IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE
HEREOF.
 
                                 ------------
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
Prospectus Summary........................................................    3
Risk Factors..............................................................    6
The Company...............................................................   11
Reports to Shareholders...................................................   11
Use of Proceeds...........................................................   12
Dividend Policy...........................................................   12
Price Range of ADSs.......................................................   12
Capitalization............................................................   13
Selected Consolidated Financial Data......................................   14
Management's Discussion and Analysis of Financial Condition and Results of
 Operations...............................................................   15
Business..................................................................   24
Management................................................................   35
Certain Transactions......................................................   42
Principal and Selling Shareholders........................................   45
Description of Share Capital..............................................   48
Taxation..................................................................   52
Description of American Depositary Receipts...............................   57
Shares Eligible for Future Sale...........................................   65
Underwriting..............................................................   67
Legal Matters.............................................................   68
Experts...................................................................   68
Additional Information....................................................   68
Irish Exchange Control Regulations........................................   69
Index to Consolidated Financial Statements................................  F-1
Additional Information Required by the Irish Companies Act................  A-1
</TABLE>
 
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
 
                                   2,400,000
                          American Depositary Shares
 
                                 Representing
 
                           2,400,000 Ordinary Shares
 
                                     LOGO
 
                                 ------------
                                  PROSPECTUS
                                 ------------
 
                              Alex. Brown & Sons
                                 INCORPORATED
 
                                  Furman Selz
 
                               Hambrecht & Quist
 
                             Montgomery Securities
 
 
 
                                 June 20, 1996
 
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------


© 2022 IncJournal is not affiliated with or endorsed by the U.S. Securities and Exchange Commission